Baptist Hospital has visits from a charge-based FFS payer.Baptist has the inform

Question

Baptist Hospital has visits from a charge-based FFS payer.Baptist has the information below that can help you identify how profitable it is on FFS basis.The payer now wants to move all 50 of its enrollees to a capitation system.What per member per month (PMPM) rate must be set on these patients to maintain the current profit level? $_________ (round to two decimal places)

FFS revenues per visit = $20

Variable cost per visit = $5

Fixed cost (annual) = $300

FFS Visits (annual) = 100

FFS revenues per visit = $20

Variable cost per visit = $5

Fixed cost (annual) = $300

FFS Visits (annual) = 100

Explanation / Answer

FFS revenues per visit = $20

Less- Variable cost per visit = $5

Contribution = $15

Total contribution = $ 1500

Less- fixed cost = 300

Profit = $ 1200

Profit per unit = $ 12

per member per month (PMPM) rate must be set on these patients to maintain the current profit level

= 1500 = 50(X-5)

X = 35

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