If an HMO covered 150,000 lives, 25 myocardial infactions to occur each year wit

Question

If an HMO covered 150,000 lives, 25 myocardial infactions to occur each year within the covered lives, would expect a length of stay of 4.5 days for each MI, and had to pay an average of $950 per day for each day the MI patient was in the hospital, what would the PMPM cost to the HMP be?
What would have to be charged to the patient of employer if the HMO had adminisrative costs equaling 10% of its costs and it wanted a profit margin of 7%?
What if the HMO' shareholders demaned a 9% profit margin?
What would the premium be in this case?

Pleae show me your work how you get the answer.
thank you

Explanation / Answer

Total MI's per year 25 Average time per MI 4.5 Days Total time per year (4.5*25) 112.5 Days Charge per day $950 Total charge per year (950 * 112.5) $106,875 If PMPM means Per member Per month 106875/25/12 Average PMPM $356.25 If 7% profit marging is require: Total cost is $106,875 Administrative cost (106875 *10%) $10,687.50 Total cost $117,562.50 Required profit margin on collection(117562.5*7/93) $8,848.79 Total Premium $126,411.29 If profit margin on cost (117562.5*7%) $8,229.38 Total Premium $125,791.88 If 9% profit margin is require: Total cost is $106,875 Administrative cost (106875 *10%) $10,687.50 Total cost $117,562.50 Required profit margin on collection(117562.5*9/91) $11,627.06 Total Premium $129,189.56 If profit margin on cost (117562.5*9%) $10,580.63 Total Premium $128,143.13 Thank you.... Total MI's per year 25 Average time per MI 4.5 Days Total time per year (4.5*25) 112.5 Days Charge per day $950 Total charge per year (950 * 112.5) $106,875 If PMPM means Per member Per month 106875/25/12 Average PMPM $356.25

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