2. Appalachia Area Clinic provides primary care services. They offer 2 types of services: routine...
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Accounting
2. Appalachia Area Clinic provides primary care services. They offer 2 types of services: routine office visits and complex office visits. You have performed a review of last years financials using the RVU method and have determined the average fully allocated total cost (not including any profit target) for Appalachia Area Clinic to provide each routine office visit is $100 and $175 per complex office visit.
AAC serves 2 patient populations: Medicaid and Self pay who pay out of pocket at the time of service.
Medicaid
Self-Pay
Service
# Visits
Price Paid
# Visits
Price Paid
Routine Office Visits
1500
$50
3500
?
Complex Office Visits
300
$90
700
$200
The Board of Directors of Appalachia Area Clinic has decided to drop complex visits from their service menu and only offer Routine Visits. Their assumptions about the number of Routine Visits they will provide remain the same (i.e. 1500 Medicaid patients and 3500 self-pay patients),as does the cost of providing routine office visits ($100 per visit).
How much would they need to charge self-pay patients for a routine office visit when that is the only service they are providing?
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