Sure Care Health Maintenance Organization is seeking a managed care contract with a local manufacturing plant.
Sure Care estimates that the cost of providing preventative and curative care for the 300 employees and their families will be $36,000 per month.
The manufacturing company offered Sure Care a premium bid of $200 per employee per month.
If Sure Care accepts this bid and contracts with the manufacturing firm, will Sure Care earn a profit or loss for the year? How much?
Describe the steps you used to solve this question.
Minimizing Errors in Projections
Break even analysis utilizes both current and projected figures. In a rapidly changing economy, there are many individuals who are finding that their initial break-even analyses were incorrect.
In your opinion, what could be done to minimize errors in projections?