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Grandview Clinic has fixed costs of $2.2 million and an average variable cost rate of $14 per visit. Its sole payer, an HMO, has proposed

Grandview Clinic has fixed costs of $2.2 million and an average variable cost rate of $14 per visit. Its sole payer, an HMO, has proposed an annual capitation payment of $158 for each of its 19,507 members. Past experience indicates the population served will average two visits per year. What profit gain can be realized if the clinic can lower per-member utilization to 1.8 visits?

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