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

	# 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

The hospital's fixed csots are $38 million. a. What is the hospital's net income? - I know this is $2,000,000.00

b. Assume that half of the 100,000 covered lives in the commercial payer group will be moved into a capitated plan. All utilization cost data remain the same. What per member per month rate will the hospital have to charge to retain its Part a net income? I don't understand how to calculate this.

c. What overall net income would be produced if the admission rate of the capitated group were reduced from the comercial level by 10%? I don't understand how to calculate this.

d. Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200? I don't understand how to calculate this.

This is all the information I have. There is no additional information on the capitated plan. I have found other answers to this question but they deduce the number of admissions from the "PennCare" group, not the "Commercial" group.

7.4 Assume that Valley Forge Hospital has only the following three payer groups: Commercial PennCare Mcdicare Number of Average Revenue Variable Cost Admisions per Admission per Admission $5,000 4,500 7,000 1,000 4,000 8,000 S3,000 4,000 2,500 The hospital's fixed costs are $38 million. a. What is the hospital's net income? 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 incomc: c. What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent? d. Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to S2,200