Medicare and Medicaid presently account for 50% 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 (MC#1) rises to 320 patients from 300. The volume from managed care plan #2 (MC#2) increases to 110 patients. Thus, total volume is unchanged at 1,000 visits. What is the new price necessary assuming all other factors are unchanged?
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 the hospital is able, through various efficiencies, to cut its per-visit cost by 5%. It also negotiates a 7% increase with MC#1. Assuming all other factors are unchanged, what is the new required price?