Using the information provided, estimate total gross and net patient service revenue per hospital currently (2022). What is each hospital’s operating margin in terms of dollars and percentage? Based on this, who is doing well, and who is not? Who has the most to gain and lose as the current
environment changes?
2. Based on what you know will happen with the next year, re-calculate the estimates from question #1 for 2023. In your estimate, assume that commercial, Medicaid, and uninsured patients still pay the same % of charges. As you consider the population that moves into commercial insurance and Medicaid, you can assume that each hospital continues to take the same share of each payer category (in other words, if hospital A had 20% of the commercial visits in 2022, they will have 20% in 2023). You can also assume that total community visits and charge and cost per visit numbers will
remain as they were in 2022.
3. Based on everything you’ve read, the payers putting products into the health exchanges want to market these as true, lower-cost options. To get there, they will not reimburse as much as other commercial products. In fact, your best estimate is that they will pay 120% of the Medicare reimbursement rate. If that is the case, how does your estimate of 2023 performance change? Is this good or bad? You may want to answer that question from the perspective of the region as a whole and then for each hospital. Assuming it was optional, would you recommend that St. Sebastian
participate in the exchange-based products?

Patient visits Commercial

Patient visits Commercial Medicare Medicaid Uninsured/
Self-pay
Mercy 82,000 104,000 22,000 20,500
St. Sebastian 100,500 100,200 12,500 8,500
Gen. Pediatric 71,000 3,500 112,500 15,000
Gen. University 65,000 46,000 47,500 26,500
Community Total 318,500 253,700 194,500 70,500