The basic ABC system is tranformed to include revenues. Using the table below, d
ID: 2491221 • Letter: T
Question
The basic ABC system is tranformed to include revenues. Using the table below, discuss the differences in the process costs for the FMMG Medical Group and MCCS and the database average. Compare the patient encounters of each business model and the database average per surgeon. How are the different models used in the two practices apparent in these comparisons?
Total Cost of Processes MCCS FMMG Database Avg Process Abbvn Service Patients in the Office $39,970 $347,045 $212,046 SPO Service Patients in the Hospital $94,018 $186,764 $173,192 SPH Obtain Insurance Authorization $94,743 $45,930 $28,991 Auth Billing $20,487 $64,950 $26,234 Bill Collect Payments $17,979 $54,199 $26,234 Collect Resolve Collection Disputes $13,799 $58,333 $32,792 Disputes Maintain Medical Records $43,342 $69,705 $57,133 MMR Schedule & Coord. Surgeries $121,783 $30,915 $36,415 Sched Provide Info to 3rd Parties $23,805 $16,989 $17,230 3rd pties Teaching & Research $0 $0 $297 T&R Maintain Prof. Education $51,411 $31,118 $37,163 MPE TOTAL $521,337 $905,948 $666,845 Total Reimbursement Processes $147,008 $223,412 $133,369 Reimb Sustain & Manage Business $191,547 $153,906 $121,203 Sust Bus Maintain Facility $59,429 $223,180 $121,203 Facility Number of MDs 4 3 4.1 Number of no-charge office visits 1,424 1,188 1,038 # of charge office visits 288 1,975 422 # of charge hospital visits 530 779 97 # of surgeries/procedures 1,312 639 727 Indirect cost/unit: No-charge office visit $41 $139 $190 Charge office visit $82 $169 $227 Charge hospital visit $26 $45 $66 Surgery $324 $581 $505Explanation / Answer
MCCS, has more no. of MD as compare to FMMG, they have 3 MD and MCCS has 4. The cost charged by FMMG is way more than MCCS, It seems their cost of service is higher than MCCS. No. of Surgery done by MCCS is much more than FMMG, Per MD perform (1312/4) = 328 surgeries in MCCS, while in FMMG per MD perform surgery of (639/3)= 213 surgeries, as per the avg database, MCCS MD are performing more surgeiries as compare to market standard, hence they are using the economies of scale and hence their cost on Surgery service is much lower as compare to FMMG. MCCS is charging $324 per surgery while FMMG charges $581for MCCS since they perform more no. of surgeries they incurr more no. of Insurance, hence their incurance cost ois higher than FMMG. MCCS has higher schedule & Coordinate surgeries, since they perform more no. of surgeries. No. of no charge office visits are more for MCCS, since one can easilt interpret they have more no. of cutomers to serve, due to their uniquness in lower cost. Both busineses have divided their processes as per the activity and then allocate the cost hence they are getting right cost to perform the activity. But as compare to MCCs FMMG has way highner charge office visit, that is the nain driver in bringing the revenue, while the main driver for bringing the revenue to MCCS is higher no. of surgery performed.
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