You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

Budgeted Procedures 15,000

Budgeted Cost $600,000

Desired Profit $120,000

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 10 10

Self Pay 5 40

50%

Question # 13

What rate must be set to generate the required $120,000 in profit in the preceding example?

Question # 14

If the forecasted volume increased to 18,000 procedures and budgeted costs increased to $684,000, while all other variables remained constant, what price should be established?

Question # 15

Assume that the only change in the original example data is that Blue Cross raises their discount to 20 percent. What price should be set?