Question

Assume that a gastroenterologist provides three levels of examination: 1, II and III, that vary in depth and complexity. An RVU analysis indicates that a Levell examination requires 14 RVUs, a Level Il exam 28 RVUS, and a Level Ill exam 42 RVUS. The total costs to run the practice, including a diagnostic laboratory, amount to $700,000 annually, and the numbers of examinations administered annually are 3,360 Level I, 1,120 Level 11 560 Level III. a. Using RVU methodology, what is the estimated cost per type of examination? b. If the goal of the practice is to earn 25 percent profit margin on each examination, how should the examinations be priced? Hint: Use table(s) to organize your data/solutions.

Answer 1

@ There are three types of exam lie. Level 1 exam, Level I exom and Level I exam. examination let estimated cost per type of be the be Total cost = 33 Gox + 11200+ 560 x = 8700000 - 50 40x = $700,000 x = $ 100 000 5040 x = $138.89 - . The estimated cost per type of examination Level 1 = 3360x = 3360X$138.89 $ 466,666.67 Level 2 - 11201 - 1120X8138.89 . $155555.56 Level 3 =560x2560X8 13889-87777777 6 if the goal of the practice is to earn 25%. Profit margin on each examination. The price of each examination is calculated below cost per exam= 8 138.89 tro Giyan) Botit menin - 25%. " New price of each examination karsg4 412089 -$138.89 + 257.7 ($138.89). - $ 138.89 $34.72 = $ 173.61 New prica of for each will be $ 173.61