Question
A dental office is considering a contract from the local university to provide dental services for 10,000 students. Service Annual Number of Services Used Check
A dental office is considering a contract from the local university to provide dental services for 10,000 students.
Service | Annual Number of Services Used |
Check up and cleaning | 7000 |
Filling/ cavity repair visits | 1500 |
Root canal procedures | 100 |
Crowns | 250 |
Here are what it costs to perform each of the procedures
Service | Cost |
Check up and cleaning | $100 |
Filling/ cavity repair visits | $350 |
Root canal procedures | $1250 |
Crowns | $750 |
The dental office knows they have to upgrade some of their major equipment in the near future so they have a policy of marking up (increasing) their cost of producing each service by 10% to build up a reserve fund for these purchases.
A) What should the dental office charge the university in a Fee for Service basis for each of the services?
B) The university offered the dental office a Capitated payment Contract for $12.25 per student per month (PMPM). Should the dental office accept the contract? Why or why not.
C) After negotiating contracts the cost of a check up and cleaning increased to $110. What PMPM should the dental office to the university based on this updated cost information? Assume all the other criteria (such as building a reserve fund for equipment replacement) remain the same.
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