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.