Ass1w4 | Management homework help



Number of Physicians
Number of Nurse Practitioners


Healthcare Financial Management and Economics

Week 4 Assignment

Assignment: Supply of Primary Care Workforce

Scenario: Your hospital has an opportunity to participate with an Accountable Care
Organization (ACO) contract with 100,000 ACO patients. The ACO patient population
expects about 10,000 avoidable hospitalizations per year with a potential savings of
$100 million, which will be shared 50% revenue to the insurer and 50% revenue to the
hospital. The ACO patient population will require an average of 6 office visits per year,
and 600,000 total office visits will need to be supplied by your primary care workforce.

To prepare for this Assignment:

Based on the scenario and financial data provided by the course instructor, conduct a
financial projection (revenues, expenses, and profit) which analyzes the efficiency in the
supply of health services.

The Assignment:

In a 2- to 3-page Word document that includes tables and/or calculations, make
recommendations on the following: 1) number of physicians and nurse practitioners; 2)
reimbursement method: salary or fee-for-service; 3) recommendations for financial
incentives to address challenges of supplier induced demand and ensure efficiency.
Interpret the net profit from the ACO contract based on your recommendations. Support
your recommendations with rationale, including how the financial calculations impacted
your recommendations.

Financial Data

ACO revenue:
Number of ACO patients 100,000

Potential savings:
Number of avoidable hospitalizations per patient 0.1
Total avoidable hospitalizations per year 10,000
Cost per avoidable hospitalization $10,000
Total cost of avoidable hospitalizations $100,000,000

Demand for healthcare/utilization:
Number of office visits per patient 6

Total office visits per year 600,000

Supply of workforce/expense:
Employed providers (salary)
Physician salary per year $200,000
Nurse practitioner salary per year $100,000
Contracted providers (fee-for-service)
Physician fee per visit $100
Nurse practitioner fee per visit $50

Physician visits per year 3,000
Nurse practitioner visits per year 2,000

Financial incentives:
Salary bonus to ensure efficiency 10%
Bonus fee per visit to ensure efficiency $1

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