Assume that Valley Forge Hospital has only the following 3 Payer groups: ...
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Accounting
Assume that Valley Forge Hospital has only the following 3 Payer groups:
| # of admissions | average revenue per admission | variable cost per admission | |
| Commercial | 1,000 | $5,000 | $3,000 |
| PennCare | 4,000 | 4,500 | 4,000 |
| Medicare | 8,000 | 7,000 | 2,500 |
The hospitals fixed costs are $38 million.
a. what is the hospital's net income?
b. Asume that half of the 100,000 covered lived in the commecial payer group will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to tretain its part a net income?
c. What overall net income would be produced if the admission rate of the capitated group were reduced form the commercial level by 10%?
d. Assuming the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200?
* This is all of the information that was provided to solve the problem.
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