Assume that Valley Forge Hospital has only the following three payer groups:

Payer Number of Admissions Average Revenue per Admission Variable Cost per Admission Commercial 1,000 $5,000 $3,000 PennCare 4,000 4,500 4,000 Medicare 8,000 7,000 2,500

B. Assume that half of the 100,000 covered lives in the commercial payer group will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to retain its Part a net income?