It is simple for hospitals and employers to develop an effective hedging strategy. This involves forecasting how much of a health service or product will be provided or consumed, and then buying or selling an equivalent amount of futures to lock in the present-day price.
The same technique is used by farmers and food companies in the agriculture industry, crude oil producers and refineries in the energy industry, and manufacturers and banks in the foreign exchange industry.
The arithmetic calculations to arrive at a hedging position can be done in one's head or on the back of an envelope. The following calculator makes it even easier.
1. Download the Wolfram CDF player
2. Download the US Health Futures calculator
3. Run the files (note: you may be prompted to "Enable Dynamics")