Analyzing Bay Pines Medical Center’s Financial Statement

After gaining an understanding of
the components of a financial statement, analyzing and applying what the
components represent, in terms of future planning, are the most important
aspects of working in healthcare finance. Consider the following data and make
your best analysis of per member per month (PMPM) rates, considering reductions
in utilization or pricing.

Bay Pines Medical Center estimates
that a capitated population of 50,000 would have the following base case
utilization and total cost characteristics:

In addition to medical costs, Bay
Pines allocates 10 percent of the total premium for administration/reserves.

Tasks:

On the basis of your data analysis,
respond to the following:

• What is the PMPM rate that Bay Pines must set to cover
  medical costs plus administrative expenses?
• What would be the rate if a utilization management
  program were to reduce utilization within each patient service category by
  10 percent? And by 20 percent?
• Consider the initial base case utilization assumption.
  What rate would be set if the average cost on each service were reduced by
  10 percent?
• Assume that both utilization and cost reductions were
  made. What would the premium be?

Submission Details:

• Present your analysis as a 3-page report in a Microsoft
  Word document formatted in APA style.
• On a separate page, cite all sources using APA format.