Discussion 1: Break-even Analysis
Sure Care Health Maintenance Organization is seeking a managed care contract with a local manufacturing plant.
Sure Care estimates that the cost of providing preventative and curative care for the 300 employees and their families will be $36,000 per month.
The manufacturing company offered Sure Care a premium bid of $200 per employee per month.
If Sure Care accepts this bid and contracts with the manufacturing firm, will Sure Care earn a profit or loss for the year? How much?
Describe the steps you used to solve this question.
Discussion 2: Minimizing Errors in Projections
Break even analysis utilizes both current and projected figures. In a rapidly changing economy, there are many individuals who are finding that their initial break-even analyses were incorrect.
In your opinion, what could be done to minimize errors in projections?