. What price should be set?

You have been asked to establish a pricing structure for
radiology on a per-procedure basis. Present budgetary data is
presented below:
Budgeted Procedures $10,000 Budgeted Cost $400,000 Desired
Profit $80,000
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%
1. What rate must be set to generate the required $80,000 in
profit in the preceding example?
2. If the forecasted volume increased to 12,000 procedures and
budgeted costs increased to $440,000, while all other variables
remained constant, what price should be established?
3. 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?

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