The original assumptions behind all the calculations are provided in the following table

Total cost	$100,000
Total volume	1,000
Average cost	$100
Desired net income	$5,000
Payer volumes
Medicare (payment rate = $95)	400
Medicaid (payment rate = $75)	100
Managed Care #1 (payment rate =$110	300
Managed Care # 2 (pay 80% of charges)	100
Uninsured (pay 10% of charges)	100
Total all payers	1,000

Case 1. Use the assumptions outlined in the table above. The hospital is facing pressure from public-interest groups to control the prices it charges. Assume that the hospital is able through various efficiencies to cut its per-visit cost by 5%. It also negotiates a 7% increase with managed-care plan #1. Assuming all other factors are unchanged, what is the new required price?

Case 2. Go back to the original assumptions outlined in the table above (imagine you didnt just do Case #1). Notice that managed care plan #1 receives a much lower price in return for sending a larger volume of patients. Managed care plan #2 wants to pay a lower cost per case and is willing to send 250 more patients to the clinic in return for a rate of $110 per case. So for managed care #2 there will be a total of 350 patients. However, in reality the average cost per case will drop to $90 per patient due to the economies of scale. All other assumptions are unchanged. What is the new required price?

To complete assignment:

• Please fill in a table for each Case. You can use the template I provide (see below), or the Excel doc I posted
• Input all the fields just like the example in the Practice Exercise doc. Include your calculations so I know where your numbers are coming from.
• At the end answer the question each case is asking

Payers	Computation
Medicare
Medicaid
Managed Care #1
Subtotal first group
Managed Care #2
Uninsured
Subtotal second group
Total (Subtotal 1+2)
(Less costs)
Total profit