Question

CHAPTER 7: SERVICE LINE COSTING AND PRICING

Homework 3.4, Chapter 7

Assume that a primary care physician practice performs only physical examinations, with three different levels, depending upon the depth and complexity of each exam. An RVU analysis determined the required RVUs for each exam as indicated below. The total costs to run the practice, including diagnostic, as well as the annual projected number of examinations for each level are also listed below.

Exam	RVU's	# Exams
Level I	20	2,500
Level II	30	1,000
Level III	40	500
Total exams		4,000
Total costs	$750,000

a. Using RVU methodology, what is the estimated cost per RVU?

b. What is the estimated cost per type of exam?

Level I:

Level II:

Level III:

c. Based on the cost per exam, what is the estimated annual cost for each exam?

Level I:

Level II:

Level III:

Answer 1

a)Est. cost per RVU:	RVUs	Exams	RVUs X Exams
Level 1 =	20	2500	50000
Level 2 =	30	1000	30000
Level 3 =	40	500	20000
Totals			100000
Total Costs			750000
Cost per RVUs			7.5
b)Cost Per Exam:	RVUs	Cost per RVUs	Cost per Exam
Level 1 =	20	7.5	150
Level 2 =	30	7.5	225
Level 3 =	40	7.5	300
c) Estimated annual
cost of each exam:	Exams	Cost per Exam	Exam Annual cost
Level 1 =	2500	150	375000
Level 2 =	1000	225	225000
Level 3 =	500	300	150000
Totals			750000