[SOLVED] Hays County Integrated Delivery System (Hays) case

HEA 472 Hays County Integrated Delivery System (Hays) case
Project Report Notes and Outline
IMPORTANT NOTES:
Remember to read the case in the textbook and understand the “Meeting with Mr. Salter” content of the notes on page 396.
Meeting with Mr. Salter Mr. Salter, chief executive officer, states: I just don’t understand why we are losing money. I spent a considerable amount of time recruiting new doctors while keeping the existing doctors happy. The new, younger doctors just don’t seem to have a sense of loyalty to County. Furthermore, I’ve tried to establish a “family atmosphere” for our employees that stresses getting along well with others in return for job security. Everyone seems happy—everyone except Mr. Finance Myway, whom you’ll be replacing. He and I both started in January 2015 and he seemed increasingly frustrated with the way I do things here—he just didn’t fit in. I tried to accommodate him by implementing some of his recommendations, even though they were against my better judgment—like charging visitors for parking, which generated $100,000 in other operating revenue in 2017, but I have discontinued the practice for 2018 because no other organization in San Marcos, other than the university, charges for parking. And when I announced that I was bringing in more business to the hospital by entering into a two-year capitated managed care agreement with the city (it expires this month)—we get $250 per month per family for taking care of the 300 city employees and their families, whether they’re sick or not—Mr. Myway threw a fit at an executive team meeting. He claimed that my decisions were driving County deeper into the red, and as a result, I had to show Mr. Myway the highway for insubordination. That happened last month.
Read and understand the question #8 on page 397. (Ignore the part about differential cost profit/loss)
Analyze my capitated managed care agreement with the city. Using differential cost analysis for 2017 data, tell me the full cost profit/loss and the differential cost profit/loss. Should we renew the contract for next year at present rates, or should we ask for a rate increase and if so, how much rate increase do we need to cover our full cost? To cover our differential cost?
Re-read the ZOOM Class Agenda for 4/15 to use as guideline material.
Read and understand the contents of Table II on page 403.
Read and understand the contents of Tables IV-A, IV-B, and IV-C on page 405.
Remember the formula “Profit=Revenue-Expenses” and think about what reasonable assumptions you want to make regarding analysis of expenses.
PROJECT REPORT OUTLINE
⦁ Introduction: Introduce your report to the reader and indicate the purpose of the report.
⦁ Revenue: Identify and discuss the revenue and calculations coming to Hays.
⦁ Expenses: Indicate your reasonable assumptions used to identify and analyze expenses of the contract to Hays for the delivery of services to City employees.
⦁ Profitability: Discuss your calculations and resultant capitated managed care contract profitability.
⦁ Conclusion: Provide your result and discussion. Discuss the financial and strategic rationale for your answer to Mr. Salter’s question.
The report should probably be four to five pages in length to be complete.
HEA 472 Hays County Integrated Delivery System Capitated Contract with the City – Revenue Analysis
1. Covered employees/families: 300 employees
2. Per member per month premium amount per family: $250.00
3. Number of months annually covered: 12 months
Revenue calculation: 300 families X $250.00 per month per family X 12 moths per year = $900,000 revenue per year