our hospital has been approached by a major HMO to perform all their MS-DRG 470 cases (major joint procedures). They have offered a flat price of $10,000 per case. You have reviewed your charges for MS-DRG 470 during the last year and found the following profile:

Average Charge	$15,000
Average LOS	5 Days
Routine Charge	$3,600	Cost/Charge 0.80	Variable Cost % 60
Operating Room	2,657	0.80	80
Anesthesiology	293	0.80	80
Lab	1,035	0.70	30
Radiology	345	0.75	50
Medical Supplies	4,524	0.50	90
Pharmacy	1,230	0.50	90
Other Ancillary	1,316	0.80	60
Total Ancillary	$11,400	0.75	50

The HMO in the above example has indicated that their doctors use less expensive joint implants. If this less expensive implant were used, your medical supply charges would be reduced by $2,000. What is the estimated reduction in variable cost?