Assume that a primary care physician practice performs only physical examinations. However, there… 1 answer below »

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.

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a. Using RVU methodology, what is the estimated cost per type of examination?

b. If the goal of the practice is to earn a 20 percent profit margin on each examination, how should the examinations be priced?