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Assessment #6: Case Study of Physician Practice Management and Relative Value Unit Analysis (15%) DUE-SATURDAY at Midnight
In this assessment, you will evaluate the physicians’ practice financial condition based on the following Relative Value Unit (RVU) calculations and analysis:
- Average and Marginal Costs per RVU,
- Total Average Cost,
- Total Marginal Cost per CPT code, and
- Analyzing the information to assist the physicians in using these costs appropriately and making informed decisions.
You will be graded based on your understanding of the calculations, the accuracy of your calculations, the validity of your conclusions and your ability to clearly communicate your analysis. To complete this assignment, follow these steps:
- Review the article How Management Accountants Make Physician Practices More Profitable.
- From this financial information, calculate the three RVU calculations:
- Average and Marginal Costs per RVU,
- Total Average Cost, and
- Total Marginal cost per CPT code.
- In proper APA format, write a 3-5 page paper (include a cover and reference page not included in page count). For each RVU calculation, in a paragraph:
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- Calculate the costs,
- Show your calculations, and
- Write a conclusion about the physicians practice’s financial condition and discuss how you can assist the physicians in using these costs in making informed decisions.
*Please use headings for each paragraph and category to decipher the discussion and organize the paragraphs.
Use the following assumptions:
Assume that during the FY2016 year, Lovely Life LLC historical costs were $750,000 when 11,000 RVUs were produced and $950,000 when 14,000 RVUs were produced. The contract specifies that the number of RVUs per service CPT code are five (5).
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High Fixed Costs
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$950,000
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#RVUs high point
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14,000
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Low Fixed Costs
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$750,000
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#RVUs low point
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11,000
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#RVUs per CPT
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5
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Projected #RVUs for the coming month
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10,000
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You will be graded based on the following rubric.
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90-100
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80-89
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70-79
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20 Points
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The student demonstrates a thorough understanding of the meaning of the calculations and their applicability to the organization being analyzed.
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The student demonstrates a reasonable but not complete understanding of the meaning of the calculations chosen and their applicability to the organization being analyzed.
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The student demonstrates a limited understanding of the meaning of the calculations chosen and their applicability to the organization being analyzed.
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The student does not demonstrate an understanding of the meaning of the calculations or how they can be used to assess the organization’s financial condition.
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All of the calculations are calculated accurately
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Only 2 of the calculations are calculated accurately
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Only 1 of the calculations are calculated accurately
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None of the calculations are calculated accurately.
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The student draws accurate conclusions for each of the calculations and for the overall financial health of the organization.
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The student draws some accurate conclusions for each of the calculations and for the overall financial health of the organization. There are a few mistakes
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The student draws few accurate conclusions for each of the calculations and for the overall financial health of the organization. There are several mistakes
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The student’s conclusions for each of the calculations are inaccurate and the overall conclusion on the financial health of the organization is not valid.
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Writing quality: Writes clearly, concisely, and with few errors. Easy to understand. APA formatting and use of headings.
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Writing quality: Writes with some errors but the paper can be readily understood. Minor issues with APA formatting. Use of headings.
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Writing quality: paper includes numerous errors. Requires some effort to understand. APA formatting issues and no headings.
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Writing quality: The paper is poorly written and is difficult to understand. No APA format and headings used.
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