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Question - Scenario: You have been asked to establish a pricing structure for radiology on a per-procedure basis. Current budgetary data is shown 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 $38.00 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
Self-Pay
5
40
50%
Required -
1. What rate must be set to generate the required $80,000 in profit?
2. If the forecasted volume increased to 12,000 procedures and budgeted costs increased to $440,000, while all other variables remained constant, what price should be established?
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