Two medical organizations have recently examined their cost structures. The first group is a radiology practice with a significant investment in diagnostic imaging equipment. The second group is a single-specialty pediatric practice. The cost analysis reveals the following distribution:

Radiology Group Pediatric Group

Fixed Cost 70% 20%

Variable Cost 30% 80%

Explain the implications of these differing cost structures of each medical group in terms of contracting with managed care organizations.