SANTA FE MEMORIAL HOSPITAL is a community hospital in Green Bay, Wisconsin. Recently, the hospital and its affiliated physi- cians formed Santa Fe Healthcare, a physician-hospital organization (the PHO). The PHO is close to signing its first contract to provide exclusive local healthcare services to enrollees in BadgerCare (the Plan), the local Blue Cross Blue Shield of Wisconsin HMO. For the past several years, the Plan has contracted with a different Green Bay PHO, but financial difficulties at that organization have prompted the Plan to consider Santa Fe Healthcare as an alternative. In the pro- posed contract, the PHO will assume full risk for patient utilization. In fact, the proposal calls for the PHO to receive a fixed premium of $200 per member per month from the Plan, which it then can allo- cate to cach provider component in any way it deems best using any reimbursement method it chooses. The PHO's executive director, Dr. George O'Donnell, a cardiolu- gist and recent graduate of the University of Wisconsin's Nonresident Program in Administrative Medicine, is evaluating the Plan's proposal. To help do this, Dr. O'Donnell hired a consulting firm that specializes in PHO contracting. The first task of the consulting firm was to review the PHO's cur- rent medical panel and estimate the number of physicians, by specialty, required to support the Plan's patient population of 50,000, assuming aggressive utilization management. The results in Exhibit 32. I show that the PHO's medical panel currently consists of 249 physicians, while the number of physicians required to support the Plan's patient population 221 @ HAP, 2014. Reproduction without permission is prohibited