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How would these graphs change in a capitated environment

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Discussion

Assuming the graphs are drawn to the same scale, consider the break-even charts-cost-volume-profit (CVP) graphs-below for two competing providers operating in a fee-for-service environment.

36_CVP-Graphs.jpg

On the basis of your understanding of variable cost rate, per-unit revenue, contribution margin, and fixed costs, answer the following questions:

How would the given graphs change if the providers were operating in a discounted fee-for-service environment?

How would these graphs change in a capitated environment? Which provider is in the best position to grow its business?

Reference no: EM131648245

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