Supply of Primary Care workforce

Supply of Primary Care workforce

Supply of Primary Care Workforce

Scenario: Your hospital has an opportunity to participate with an Accountable Care Organization (ACO) contract with 20,000 ACO patients. The ACO patient population
expects about 2,000 avoidable hospitalizations per year with a potential savings of $20 million, which will be shared as follows: 50% revenue to the insurer and 50%
revenue to the hospital. The ACO patient population will require an average of six office visits per year, and 120,000 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) that analyzes the
efficiency of 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
needed; 2) reimbursement method: salary or fee-for-service; 3) recommendations for financial incentives to address the challenges of supplier-induced demand and how to
ensure efficiency. Interpret the net profit from the ACO contract based on your recommendations. Explain the rationale behind your recommendations, including the
impact made by your financial calculations.

Financial Data

ACO revenue: Number of ACO patients 20,000

Potential savings: Number of avoidable hospitalizations per patient 0.1 Total avoidable hospitalizations per year 2,000 Cost per avoidable hospitalization $10,000
Total cost of avoidable hospitalizations $20,000,000

Demand for healthcare/utilization: Number of office visits per patient 6 Total office visits per year 120,000
© 2015 Laureate Education, Inc. Page 1 of 2
Healthcare Financial Management and Economics
Week 4 Assignment
Supply of Primary Care Workforce
Scenario: Your hospital has an opportunity to participate with an Accountable Care
Organization (ACO) contract with 20,000 ACO patients. The ACO patient population
expects about 2,000 avoidable hospitalizations per year with a potential savings of $20
million, which will be shared as follows: 50% revenue to the insurer and 50% revenue to
the hospital. The ACO patient population will require an average of six office visits per
year, and 120,000 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) that analyzes the efficiency of 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
needed; 2) reimbursement method: salary or fee-for-service; 3) recommendations for
financial incentives to address the challenges of supplier-induced demand and how to
ensure efficiency. Interpret the net profit from the ACO contract based on your
recommendations. Explain the rationale behind your recommendations, including the
impact made by your financial calculations.
Financial Data
ACO revenue:
Number of ACO patients 20,000
Potential savings:
Number of avoidable hospitalizations per patient 0.1
Total avoidable hospitalizations per year 2,000
Cost per avoidable hospitalization $10,000
Total cost of avoidable hospitalizations $20,000,000
Demand for healthcare/utilization:
Number of office visits per patient 6
Total office visits per year 120,000
© 2015 Laureate Education, Inc. Page 2 of 2
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
Productivity:
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
Note: Students are to complete this template based on Assignment information and to insert it into a MS Word Document for submission.

Expenses Bonus
Number Visits Salary FFS Salary FFS
Number of physicians $ $ $ $
Number of nurse practitioners $ $ $ $
Totals

Salary FFS
Revenues $ $
Expenses $ $
Profit $ $

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