Healthcare Assignment

Chapter02withProblem01.xlsx

Problem 1

9/1/14	UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
		Chapter 2 -- Health Insurance
PROBLEM 1
Families First is a managed care plan that has been asked to submit a premium bid to ABC Company, a large
manufacturer in its service area. The premium bid includes the primary care for all of the ABC employees.
ABC has provided information about the age and gender of its employees, and Families First has identified
average primary care utilization rates from its own databases. This information is shown below:
	ABC Company		Average primary care
	Number of	Number of	visits per year
Age band	males	females	Males	Females
20-29	285	325	2.10	3.18
30-39	96	100	2.60	3.52
40-49	53	57	3.28	3.93
50-59	36	36	4.14	4.43
60+	7	5	4.98	5.04
Each primary care physician can handle about 3,000 patient visits per year, for which he or she is paid
$180,000. What primary care rate (PMPM) will Families First propose to ABC Company?
ANSWER