Question

Assume that a primary care physician practice performs only physical examinations. However, there are three levels of examination—I,
II, and III—that vary in depth and complexity. An RVU analysis indicates that a Level I examination requires 10 RVUs, a Level II exam 20 RVUs, and a Level III exam 30 RVUs. The total costs

to run the practice, including a diagnostic laboratory, amount to $500,000 annually, and the numbers of examinations administered annually are 2,400 Level I, 800 Level II, and 400 Level III.

1. Using RVU methodology, what is the estimated cost per type of

   examination?

2. If the goal of the practice is to earn a 20 percent profit margin on

   each examination, how should the examinations be priced?

Answer 1

IF ANY QUERY, FEEL FREE TO ASK Solution 1 Average Cost of RVU Particulars Level. Level II Level III Total RVU Total Cost Average Cost per RVU Sale Price per RVU where, Total RVUs per level Total RVUS Average Cost per RVU Sale Price per RVU RVUs Number of Exam Total RVUs per level 10 2400 24000 20 800|| 16000 300 400 12000 52000 500000 9.62 12.02 RVUs x Number of Exam Sum of RVUs of all level Total Cost / Total RVUS Average Cost per RVU / (1 - margin%) 2 Examination Pricing Particulars Levell Level II Level III RVUs Sale Price per RVU Examination Price 10 12.02 120.19 20 12.02 240.38 30 12.02 360.58 Examination Price = RVUs x Sale Price per RVU