For the following problem, the initial assumptions are provided in the table below.
Total cost $100,000
Total volume 1,000
Average cost $100
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
Medicare and Medicaid presently account for 50% of the volume. The hospital wishes to reduce its dependence on government payers. Assume that Medicare volume is reduced to 350 patients and Medicaid volume is reduced to 80 patients. The volume from managed-care plan #1 rises to 350 patients from 300. The volume from managed-care plan #2 increases to 120 patients. Thus, total volume is unchanged at 1,000 visits. What is the new price necessary assuming all other factors are unchanged?
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