Problem
A surgeon currently earns $250,000 a year performing 100 surgeries on Medicare patients. On order to contain costs, Medicare institutes a reimbursement reduction of 20%, reducing the per surgery payment from $2,500 per case to $2,000. How many surgeries will the physician have to perform to maintain his income of $250,000 after the reimbursement reductions are put into place? Assume a quality improvement program will increase a hospital's revenue by 1%, increase treatment costs by 0.5%, and add $500,000 in administrative costs. What will be the impact on the organization's net income if its revenues, total treatment costs, and administrative expenses are currently $100,000,000, $70,000,000 and $25,000,000?