A Hospital Had Capitation Agreements with Several Health Maintenance Organizations

question 10

Multiple Choice

A hospital had capitation agreements with several health maintenance organizations to provide services.The hospital received $12 million of capitation fees for the year.The hospital also calculated that: (a) its costs to provide these services were $11.8 million;and (b) the value of these services at established billing rates were $16 million.How should the hospital report this information on the face of its financial statements?

• A)report $200,000 as a separate item of revenue,labeled net premium revenue.
• B)add $16 million to Net patient service revenue,and deduct $4 million in a separate item labeled Adjustment for capitation premiums.
• C)report Premium revenue of $12 million as a separate item of revenue,and report cost of serving HMO patients of $11.8 million as a separate item of expense.
• D)report premium revenue of $12 million as a separate item of revenue,if significant.

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Definitions:

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A situation in game theory where all players make their decisions and execute their strategies at the same time without knowledge of the other players' choices.

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A concept within game theory where each player's strategy is optimal given the strategies of all other players, and no player has anything to gain by changing only their own strategy.

Simultaneous Game

A strategic game where all players make their decisions at the same time, often used in the context of game theory to analyze competitive situations.