Assume that you are the administrator of a multispecialty medical group composed of thirty physicians. A hazardous waste disposal site in the community has recently been evaluated by the Environmental Protection Agency (EPA). The owner of the site, West Bank Chemicals, has agreed, in an out-of-court settlement, to pay a lump-sum cash payment to all former employees who have already been diagnosed with one of the three classes of cancer or who develop one of these cancers within the next five years. In addition, West Bank Chemicals has agreed to pay for an annual physical examination for each former employee with cancer for the next five years. West Bank Chemicals has approached your medical group about making a single, lump-sum cash payment for provision of the annual physicals. West Bank Chemicals will also pay for treatment of all former employees for a period of ten years after the closure of the disposal site. (The company representative tells you that this lump-sum cash payment can be charged against the company’s current year profits on its income statement.) West Bank Chemicals has requested a proposal outlining your groups requested lump-sum cash payment.

a. How would knowledge of five-year survival rates help you predict the likely future volume of annual physicals for this bid proposal for West Bank Chemicals?

b. How would incidence information help you predict the likely future volume of patients who will seek treatment?

c. What other information would be helpful in preparing your medical group’s proposal?