Total cost $100,000
Total volume 1,000
Average cost $100
Payer volumes
Medicare (payment rate = $95) 400
Medicaid (payment rate = $75) 100
Managed Care # 1 (payment rate = $110) 300
Managed Care # 2 (pay 80% of charges) 100
Uninsured (pay 10% of charges) 100
Total all payers 1,000
Desired net income $5,000
Start with the original assumptions. The hospital is facing pressure from public-interest groups to control the prices it charges to the uninsured. Assume that the hospital is able through various efficiencies to cut its per-visit cost by 5%. It also negotiates a 7% increase with managed-care plan #1. Assuming all other factors are unchanged, what is the new required price?