[MUSIC] Now it's time for the math geek portion of the class. Healthcare spend, or TME, which stands for total medical expense, for a population is typically expressed as a PMPM, or per member per month, or PMPY, per member per year. If you reflect back on the information we discussed earlier that indicated that healthcare spent in 2016 was $10,348 per person, that is an example of a PMPY statistic. We will spend this next lesson breaking down what is meant by TME and how it is derived. TME is a function of the number of services provided and the cost per service. And at its simplest level, TME is equal to volume times price. Examples of healthcare services include physician office visits, MRIs, prescriptions for antibiotics, or a hospital stay to deliver a baby. The number of services provided is a function of the type of population that is receiving healthcare services. And more specifically, the age, gender, and health status of a population will determine the number of health care services provided. The cost per service is a function of the type of services provided, and the type of medical professional that provides the services, as well as the intensity of those services. Price is the fee that is paid for a given healthcare service by the insurance company or government entity. For example, the amount of money paid to a doctor for an office visit or the amount paid to a pharmacy for a prescription to be filled. The price will vary depending on the type of service. For example, a doctor visit versus a lab test. Price can also vary depending on who provides the service. For example, doctor visit versus a nurse practitioner visit at an urgent care center. Lastly, the price can vary depending on the intensity of the service. For example, getting an MRI as opposed to an x-ray. Let's look at a common example you might have experienced at some point in your life, a sore throat. Have you stopped to think about all of the services provided when you seek medical care for a sore throat, and how they may differ if you went to a doctor's office versus going to the local urgent care center? In a common doctor's office visit, you may have several different and distinct services all being paid to different providers. So for the same symptoms of a sore throat, depending on where healthcare services are delivered, the cost per service can vary, and the number of services provided can also vary, as emergency rooms may do more testing than urgent care centers or primary care physicians. We'll continue to discuss this basic formula. I encourage you to note that TME will increase if the number of services or the cost per service increases. And likewise, TME can be reduced if the number of services is reduced, or the cost per service is lower. At its most simplistic level, in order to reduce healthcare spending, you need to reduce the number of services provided and or reduce the cost of those services. This is easier said than done, and with the earlier example, you can start to see how many variables there are when factoring in specific doctors, locations, prescriptions, or labs that can be used. The solution to rising healthcare costs involves a multifaceted approach, focusing on reducing number and cost of services and engaging all stakeholders to drive the change. [MUSIC]