1) You are the practice manager of a 8-physician primary care group, in a metrop
ID: 2804315 • Letter: 1
Question
1) You are the practice manager of a 8-physician primary care group, in a metropolitan area, that is just beginning to experience capitated reimbursement from managed care companies. A managed care company has approached you to determine whether your group would be willing to provide primary care services on a capitated basis. The managed care company indicates that it is rounding out its network and in all likelihood will close their panel within thirty to sixty days. The managed care company indicates that it is willing to pay a capitation rate of S17.00 PMPM for each covered life selecting your group. You take this information to the governing board of the practice along with the current operating statistics for the practice These are as follows: 8 PTS. Total Costs per visit = $50.00 Historical average patient visits per member per year (PMPY) 3.2 Estimated Members to be served = 25,000 a. What are the advantages and disadvantages of entering into a capitated relationship with the managed care company? be hat ted anual profit or los for the practice on the business from the managed care company? c. Suppose the actual cost per visit for the year was $55.00. What is the actual profit or loss? d. Suppose the actual cost per visit was $55.00 and average visits per year were 3.4. What is the actual profit or loss?Explanation / Answer
Part - B
Sales per Member = 17*3.20
=54.40 Per Visit
Cost =50 Per Visit
Profi =54.40-50.00
=4.40
Amount of profit =4.40*25000
= $ 110,000
Part -C
If Actual Cost 55
Sales Per Member =54.40
Cost =55
Loss Per Visit =0.60 per Visit
Amount of Loss = 25000*0.60
=$ 15,000
Part - D
Sales =17*3.40 per Visit
=57.8
Cost =55
Profit per Vist =2.8 per Visit
Total Amount of Profit = 2.80*25000
=$ 70,000
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