Problem $3$

South Lancaster Clinic has fixed costs of $$4,000,000$ and an average variable cost rate of $$60$ per $v$ sole payer, an HMO, has proposed an annual capitation payment of $$300$ per each of its $40,000$ members $=$$$12,000,000$ regardless of the number of visits. Past experience indicates the populati served will average two visits per year $($for a total of $40,000$ members $2$ visits per member $=80,0$ visits$).$

a$.$ Construct the group's base case projected P&L statement.

b$.$ Sketch out a CVP analysis graph depicting the base case situation with number of visits $($volume the x$-$axis. See Exhibit $5-10.($Hint: complete the following table. Use Excel to produce the sketch. done, copy$/$paste the sketch below$).$

$\backslash$table$[[$# of Visits,Revenue,Fixed Costs,Total Costs$],[0,,,],[8,000,,,],[16,000,,,],[24,000,,,],[32,000,,,],[40,000,,,],[48,000,,,],[56,000,,,],[64,000,,,],[72,000,,,],[80,000,,,],[88,000,,,],[96,000,,,],[104,000,,,],[112,000,,,],[120,000,,,],[128,000,,,],[136,000,,,],[144,000,,,],[152,000,,,],[160,000,,,]]$

c$.$ Compare and contrast this graph with the one in Problem $2,$ part g of this hor $$ vork.