Purchase Solution

Comparison of pharmaceurical employees' health care programs

Not what you're looking for?

Ask Custom Question

Prydain Pharmaceuticals is reviewing it employee health-care program. Currently, the company pays a fixed fee of $300 per month for each employee, regardless of the number or dollar amount of medical claims filed. Another health-care provider, ABC Health, has offered to charge the company $100 per month per employee and $30 per claim filed. If your calculations result in non-integer (non whole numbers) results, please leave them that way and do not round the results to integer values.

a) Based on this information, over what range of claims filed per month per employee should Pyrdain stay with its current program and for what range should it select ABC Health's offer?

b) Suppose that the average number of claims filed per month per employee is currently five (5). ABC Health has indicated that the $30 per claim filed is negotiable. With everything else being the same, what is the maximum Prydain would be willing to pay to be indifferent between the two plans?

d) Suppose a third insurer, MedCare, charges $200 per month per employee and $10 per claim filed. Over what range of claims filed per month would Pyrdain prefer each of the two alternatives? For this analysis, do not consider the current plan (fixed fee of $300 per month per employee).

Purchase this Solution

Solution Summary

A comparison of pharmaceutical employees' health care programs are examined.

Solution Preview

Prydain Pharmaceuticals is reviewing it employee health-care program. Currently, the company pays a fixed fee of $300 per month for each employee, regardless of the number or dollar amount of medical claims filed. Another health-care provider, ABC Health, has offered to charge the company $100 per month per employee and $30 per claim filed. If your calculations result in non-integer (non whole numbers) results, please leave them that way and do not round the results to integer values.

a) Based on this information, over what range of claims filed per month per employee should Pyrdain ...

Solution provided by:
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution


Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.