University of Maryland Global Campus Health & Medical Worksheet

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Assessment #6: Case Study of Physician Practice Management and Relative Value Unit Analysis (15%) DUE-Sunday at Midnight

In this assessment, you will evaluate the physicians’ practice financial condition based on the following Relative Value Unit (RVU) calculations and analysis:

  1. Average and Marginal Costs per RVU,
  2. Total Average Cost,
  3. Total Marginal Cost per CPT code, and
  4. 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:

  1. Review the article How Managerial Accountants Make Physician’s Practices More Profitable
  2. From this financial information, calculate the three RVU calculations:
  3. Average and Marginal Costs per RVU,
  4. Total Average Cost, and 
  5. Total Marginal cost per CPT code.  
    1. Write a conclusion about the physician practice’s financial condition and discuss how you can assist the physicians in using these costs in making informed decisions.

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).