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solution

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. A 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 amount to $500,000 annually, including a diagnostic laboratory, and the number of examinations administered annually are 2,400 Level I, 800 Level II, and 400 Level III.

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?

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