Based on this infomration answer the following 3. Prepare different scenarios th

Question

Based on this infomration answer the following

3. Prepare different scenarios that assume that you invest in measures to improve revenues and reduce utilization (prepare one that shows you reducing utilization, one that shows you improving revenue, and a third that shows improvement in both

4. Prepare a five year projection of your Hospital internal Revenues and Expenses (again taking into account inflation and membership growth) that assumes you do take the deal and make improvements. As you model ways to improve Plan performance by reducing utilization, be sure that your hospital revenue/expense model reflects the reduced utilization.

Assuming that the ‘right’ answer is the one that maximizes net revenue to the IDS, what should you do? Explain why that is your recommendation. Are there any of the assumptions that were made along the way that you’d find fault with? What happens to your modeling if those are wrong?

Part A: Year 1 (2017) Year 2 (2018) Year 3 (2019) Year 4 (2020) Year 5 (2021) Revenues Inc-Dec/YR CMS Revenue $680.00 1% $686.80 $693.67 $700.60 $707.61 $714.69 Member Premium Revenue Allocated $680.00 $686.80 $693.67 $700.60 $707.61 $714.69 Membership per month 10,000 2,000 12,000 14,000 16,000 18,000 20,000 1 Total Revenue/Year $98,899,200.00 $116,536,224.00 $134,516,098.56 $152,843,916.99 $171,524,840.18 Year 1 (2017) Year 2 (2018) Year 3 (2019) Year 4 (2020) Year 5 (2021) Expenses Inc-Dec/YR Inpatient Claims $240.00 1% $242.40 $244.82 $247.27 $249.74 $252.24 Oytpatient Claims $125.00 1% $126.25 $127.51 $128.79 $130.08 $131.38 Physician Claims $140.00 $140.00 $140.00 $140.00 $140.00 $140.00 Ancillary Claims $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 Part D (retail Rx) $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 Total Medical Costs $625.00 $628.65 $632.34 $636.06 $639.82 $643.62 Goal Medical Expense 578 1% $583.78 $589.62 $595.51 $601.47 $607.48 Membership per month 10,000 2,000 12,000 14,000 16,000 18,000 20,000 Total Expense/Year $90,525,600.00 $106,232,532.00 $122,123,494.08 $138,201,220.15 $154,468,480.39 MER Total 91.91% 91.53% 91.16% 90.79% 90.42% 90.06% Goal MER 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% GoalTotal Expense $84,064,320.00 $99,055,790.40 $114,338,683.78 $129,917,329.44 $145,796,114.15 Net Revenue No Investment $8,373,600.00 $10,303,692.00 $12,392,604.48 $14,642,696.84 $17,056,359.79 $62,768,953.11 Goal Net revenue no investment $14,834,880.00 $17,480,433.60 $20,177,414.78 $22,926,587.55 $25,728,726.03 Surplus or Deficit $(6,461,280.00) $(7,176,741.60) $(7,784,810.30) $(8,283,890.71) $(8,672,366.24) ******** IT System/People Investment $500,000.00 $500,000.00 $500,000.00 $500,000.00 $500,000.00 $500,000.00 Year 1 (2017) Year 2 (2018) Year 3 (2019) Year 4 (2020) Year 5 (2021) Expenses Inc-Dec/YR Inpatient Claims $240.00 -4% $230.40 $221.18 $212.34 $203.84 $195.69 Oytpatient Claims $125.00 -4% $120.00 $115.20 $110.59 $106.17 $101.92 Physician Claims $140.00 $140.00 $140.00 $140.00 $140.00 $140.00 Ancillary Claims $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 Part D (retail Rx) $105.00 $105.00 $105.00 $105.00 $105.00 $105.00 Total Medical Costs $625.00 $610.40 $596.38 $582.93 $570.01 $557.61 Membership per year 10,000 2,000 12,000 14,000 16,000 18,000 20,000 Total Expense/Year $87,897,600.00 $100,192,512.00 $111,922,298.88 $123,122,482.79 $133,826,648.31 MER Total 91.91% 88.88% 85.98% 83.20% 80.55% 78.02% Goal MER 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% GoalTotal Expense $84,064,320.00 $99,055,790.40 $114,338,683.78 $129,917,329.44 $145,796,114.15 Net Revenue Investment Yr 1 Start $10,501,600.00 $15,843,712.00 $22,093,799.68 $29,221,434.20 $37,198,191.87 $114,858,737.74 Goal Net revenue Investment Yr 1 $14,834,880.00 $17,480,433.60 $20,177,414.78 $22,926,587.55 $25,728,726.03 Surplus or Deficit $(4,333,280.00) $(1,636,721.60) $1,916,384.90 $6,294,846.65 $11,469,465.84

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