Use the information from problems 1 - 3 in solving problems 4 and 5. Assume that you are the hospital administrator and that the health plan has offered you a capitated contract at the PMPM rate that you computed in problem 1. You believe, however, that you can control utilization better than is reflected in the table above. You believe the actual utilization will be 370 per 1,000 persons. The number of covered lives is 25,000. Your cost per case is $1,100. (For purposes of this problem, ignore marginal costs, contribution margins, etc.)

Per member utilization rate = 400/1000 = 0.40

PMPM (P1) = ( Per member utilization rate * Cost) / 12 = (0.40*1,000)/12 = $33.33

However, patient pays co-pays, which helps cost shift some of the PMPM away from the MCO, thus,

Co-pay PMPM (P2) = (Per member rate*Co-pay amount)/12 = (0.1*150)/12 = $1.25

Net PMPM (P3) = PMPM - Co-pay PMPM = $33.33 - $1.25 = $32.08

I need assistance answering these two questions below***

Calculations are already done I just don't understand how to answer the two written questions below

4. What is the hospitals total revenue from this contract? 5. Would your hospital realize a profit on this contract?