2. Activity: You have been asked to establish a pricing structure for radiology
ID: 2453450 • Letter: 2
Question
2. Activity: You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budget data is presented below:
Budgeted procedures: 10,000
Budgeted cost $400,000
Desired profit $80,000
It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:
Payer Volume% Discount %
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self-pay 5 40
50%
Question: #2 What rate must be set to generate the required $80,000 in profit in the preceding example?
Explanation / Answer
Weighted Discount => (0.4 * 0.04 ) + ( 0.30 * 0.10) + ( 0.2. * 0.10) + ( 0.10 * 0.40)
=> 0.106
Price => {(400000 / 10000 ) + [ (80000 + 4000 (40 - 38 ) ) / 5000 ] } / ( 1- 0.106 )
=> (40 + 17.60 ) / 0.0.894
=> $64.43
Rate must be set to generate the required $80,000 in profit is $ 64.43
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.