The administrator of the small acute-care hospital can evaluate the economic value of the new managed care business in a number of ways, including:

• Direct financial analysis: This would involve comparing the hospital’s current reimbursement levels with the reimbursement levels under the managed care contract. The administrator would also need to consider the hospital’s expected volume of managed care patients.
• Risk analysis: The administrator would need to assess the financial risks associated with the managed care contract. These risks could include changes in patient volume, changes in reimbursement rates, or changes in the managed care plan’s utilization management procedures.
• Strategic analysis: The administrator would need to consider the impact of the managed care contract on the hospital’s overall strategic goals. For example, the contract could help the hospital to attract new patients, expand its services, or improve its financial stability.

In addition to these factors, the administrator would also need to consider the hospital’s specific circumstances. For example, if the hospital is facing financial challenges, the managed care contract may be an attractive option, even if it does not generate a profit.

Here are some additional considerations that the administrator may want to take into account:

• The hospital’s market share. If the hospital has a large market share, it may be able to negotiate a more favorable managed care contract.
• The hospital’s patient mix. If the hospital has a high percentage of high-cost patients, it may be more difficult to negotiate a profitable managed care contract.
• The hospital’s financial stability. If the hospital is financially stable, it may be more willing to accept a managed care contract with lower reimbursement levels.

Ultimately, the decision of whether or not to enter into a managed care contract is a complex one. The administrator will need to weigh the financial risks and rewards carefully before making a decision.