question :Dr. Spok, hospital medical director, tells you:Most doctors have been on the medical staff for at least ten years. There is little loyalty to the hospital, and most doctors also have admitting privileges at St. Teresas, a newer hospital with better facilities. While it is a hassle for the doctors to drive the 25 miles from San Marcos to St. Teresas to see patients, there are a few good reasons for the doctors to admit their patients to St. Teresas. St. Teresas has a hospitalist and pays physicians for menial service assignments like committee work (a practice that County has refused to implement).me e tI n gw I t H mr. sA lt e rMr. Salter, chief executive officer, states:I just dont understand why we are losing money. I spent a considerable amount of time recruiting new doctors while keeping the existing doctors happy. The new, younger doctors just dont seem to have a sense of loyalty to County. Furthermore, Ive tried to establish a family atmosphere for our employees that stresses getting along well with others in return for job security. Everyone seems happyeveryone except Mr. Finance Myway, whom youll be replacing. He and I both started in January 2015 and he seemed increasingly frustrated with the way I do things herehe just didnt fit in. I tried to accommodate him by implementing some of his recommendations, even though they were against my better judgmentlike charging visitors for parking, which generated $100,000 in other operating revenue in 2017, but I have discontinued the practice for 2018 because no other organization in San Marcos, other than the university, charges for parking. And when I announced that I was bringing in more business to the hos-pital by entering into a two-year capitated managed care agreement with the city (it expires this month)we get $250 per month per family for taking care of the 300 city employees and their families, whether theyre sick or notMr. Myway threw a fit at an executive team meeting. He claimed that my decisions were driving County deeper into the red, and as a result, I had to show Mr. Myway the highway for insubordination. That happened last month

1-Analyze my capitated managed care agreement with the city. Using differential cost analysis for 2017 data, tell me the full cost profit/loss and the differential cost profit/loss. Should we renew the contract for next year at present rates, or should we ask for a rate increase and if so, how much rate increase do we need to cover our full cost? To cover our differential cost