iven the following data for Metropolitan Medical Center (“MMC”) for 2019, answer the questions posed here:
| Medicare | Medicaid | Commercial Insurance | Uninsured/Self-pay | |
| Patient Encounters | 33,000 | 11,000 | 50,000 | 6,000 |
| Price/Encounter | $10,000 | $10,000 | $10,000 | $10,000 |
| Collection/ Encounter | $4,000 | $2,000 | $7,000 | $1,000 |
| Total Revenue | $132,000,000 | $22,000,000 | $350,000,000 | $6,000,000 |
| Total Expenses | $498,000,000 | |||
| Total Profit | $12,000,000 |
Answer the following questions:
- Assume that Medicare reduces its average payment (the “collection” amount) by ten percent (10%) for 2020 and that the quantity of encounters will remain stable for Medicare. What can MMC do to maintain its 2019 profit level?
- What changes in prices or collections for the other payers would have to happen to maintain profit at 2019 levels? How much would those changes amount to in per encounter and total terms?
- Given your proposed actions from the first two questions, what would you expect to be the impact on quantity of encounters demanded from the commercial insurance plan and uninsured business lines at MMC?
- Finally, take on the role of the executives of the commercial insurance plan? What do you see as the impact on the insurance plan and what (if anything) can you do about it?
Be sure that you cite concepts from this and any prior lessons in your response. Please cite any authoritative literature that guides your responses to these challenges.
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