Salary based reimbursement method:

Salary based Method

Number of Physicians

100

Physician salary per year

200,000

Total physician salary

20,000,000

Number of Nurse practitioners

150

Nurse practitioner salary per year

100,000

Total Nurse practitioner salary

15,000,000

Salary paid

35,000,000

Salary bonus to ensure efficiency

10%

Total Salary paid

$38,500,000

Fee-for-service Method:

Number of Physicians-100

Physician fee per visit-100

Physician visits per year-3,000

Physician salary- 30,000,000

Bonus fee per visit to ensure efficiency 1

Total bonus fee- 300,000

Total physician salary- 30,300,000

Number of Nurse practitioner- 150

Nurse practitioner fee per visit-50

Nurse practitioner visits per year- 2,000

Nurse practitioner salary- 15,000,000

Bonus fee per visit to ensure efficiency-1

Total bonus fee300,000

Total Nurse practitioner salary-15,300,000

Total Salary paid-45,600,000

"The hospital would earn the net profit of $10,000,000 (50% of 20,000,000) from the ACO contract that would be related to potential savings of avoidable hospitalizations. By making the ACO contract, the hospital may earn $ 10 million because total savings earned from avoidable hospitalizations would be shared in 50-50 ratio to the insurer and hospital"-

Here's the scenario: : Your hospital has an opportunity to participate with an Accountable Care Organization (ACO) contract with 50,000 ACO patients. The ACO patient population expects about 5,000 avoidable hospitalizations per year with a potential savings of $50 million, which will be shared 50% revenue to the insurer and 50% revenue to the hospital. The ACO patient population will require an average of 6 office visits per year, and 300,000 total office visits will need to be supplied by your primary care workforce. To prepare for this Assignment: Based on the scenario and financial data provided by the course instructor, conduct a financial projection (revenues, expenses, and profit) which analyzes the efficiency in the supply of health services. How can I calculate the net profit for this scenario?

here are the financial data:

Financial Data ACO revenue: Number of ACO patients 50,000 Potential savings: Number of avoidable hospitalizations per patient 0.1 Total avoidable hospitalizations per year 5,000 Cost per avoidable hospitalization $10,000 Total cost of avoidable hospitalizations $50,000,000 Demand for healthcare/utilization: Number of office visits per patient 6 Total office visits per year 300,000 Supply of workforce/expense: Employed providers (salary) Physician salary per year $200,000 Nurse practitioner salary per year $100,000 Contracted providers (fee -for -service) Physician fee per visit $100 Nurse practitioner fee per visit $50 Productivity: Physician visits per year 3,000 Nurse practitioner visits per year 2,000 Financial incentives: Salary bonus to ensure efficiency 10% Bonus fee per visit to ensure efficiency $1

How do i find out the revenue, profit and expenses for salary vs fee-for-fee payments listed above?