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# 2. Use the information and table below to solve problems

### Customer Question

2. Use the information and table below to solve problems a-d. For the following four problems, start with the price-setting example from the text or see the table below. The initial assumptions are provided in the table below: Total cost \$100,000 Total
volume 1,000 Average cost \$100 Payer volumes Medicare (payment rate = \$95) 400 Medicaid (payment rate = \$75) 100 Managed Care # ***** (payment rate = \$110) 300 Managed Care # ***** (pay 80% of charges) 100 Uninsured (pay 10% of charges) 100 Total all payers 1,000
Desired net income \$5,000 Price-Setting Example (page 141) Total Cost \$100,000 Total Volume 1,000 Average cost \$100 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 Desired net income \$5,000 A. Medicare and Medicaid presently account for 50 percent of the volume. The hospital wishes to reduce its dependence on government payers. Assume
that Medicare volume is reduced to 380 patients and Medicaid volume is reduced to 90 patients. The volume from managed-care plan #1 rises to 320 patients from 300. The volume from the managed-care plan #2 increases to 110 patients. Thus, total volume is unchanged
at 1,000 visits. What must the new price be, assuming all other factors are unchanged? B. Start with the original assumptions. The hospital is facing pressure from public interest groups to control the prices it charges to the uninsured. Assume that, through
various efficiencies, the hospital is able to cut its per-visit cost by five percent. It also negotiates a seven percent increase with managed-care plan #1. Assuming all other factors are unchanged, what is the new required price? C. Start with the original
assumptions. Notice that managed care plan #1 receives a much lower price in return for sending a larger volume of patients. Managed care plan #2 (MC#2) wants to pay a lower cost per case and is willing to send 250 more patients (350 total from MC#2) to the
clinic in return for a rate of \$110 per case. Assume that the average cost per case drops to \$90, due to the economies of scale. All other assumptions are unchanged. What is the new required price? D. Start with the assumptions in problem (c). Now, assume
that the additional volume does not enable enough economies-of-scale to reduce the average cost per case as much as originally anticipated. Assume now that the average cost per case drops to only \$95. What is the new required price?
Submitted: 2 years ago.
Category: Multiple Problems
Expert:  F. Naz replied 2 years ago.
Customer: replied 2 years ago.
Total Cost \$100,000
Total Volume 1,000
Average cost \$100
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
Desired net income \$5,000
C. Start with the original assumptions. Notice that managed care plan #1 receives a much lower price in return for sending a larger volume of patients. Managed care plan #2 (MC#2) wants to pay a lower cost per case and is willing to send 250 more patients (350 total from MC#2) to the clinic in return for a rate of \$110 per case. Assume that the average cost per case drops to \$90, due to the economies of scale. All other assumptions are unchanged. What is the new required price?
D. Start with the assumptions in problem (c). Now, assume that the additional volume does not enable enough economies-of-scale to reduce the average cost per case as much as originally anticipated. Assume now that the average cost per case drops to only \$95. What is the new required price?
Customer: replied 2 years ago.
Would it be possible to get my answers by 10 pm tonight?
Expert:  F. Naz replied 2 years ago.
Please provide price setting example on page 141 and also mention your deadline in hours from now, thanks.
R
Customer: replied 2 years ago.
I have provided price setting see above. I will repeat it again! can I get the answer by tomorrow morning (by 9 am). If not, I I I will not need your assistance. I have to submit my homework by 10 am. Thank You!
Example on page 141
Total Cost \$100,000
Total Volume 1,000
Average cost \$100
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
Desired net income \$5,000
Expert:  F. Naz replied 2 years ago.
Sorry unable to do it, thanks.
Customer: replied 2 years ago.
Would it be possible to get my answer by 9 am???