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b.Suppose an HMO offers to generate 500 operations a year but offers to pay only $300 per operation. Should we agree to this arrangement? We

b.Suppose an HMO offers to generate 500 operations a year but offers to pay only $300 per operation. Should we agree to this arrangement? We currently perform 2,500 operations per year and have the capacity to handle 3,000 per year easily.

(1)What is the cost per operation at 2,500 per year? 370

(2)What is the cost per operation at 3,000 per year? 350

(3)What is your decision?

c.Does this incremental impact concern only HMO/PPO negotiations, or does it have wider implications?

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