# Assume That A Radiologist Group Practice Has The Following Cost Structure

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1. Assume that a radiologist group practice has the following cost structure: Fixed costs: \$500,000 Variable cost per procedure \$25 Charge (revenue) per procedure \$100 Furthermore, assume that the group expects to perform 7,500 procedures in the coming year. a. Construct the group’s base case projected P & L statement Total revenue (\$100 x 7,500) = \$750,000 Total variable cost (\$25x7500) =\$187,000 Fixed cost=\$500,000 Total rev-total var cost-fixed cost=profit 62,500 b. What is the group’s contribution margin? What is the breakeven point? Contribution margin: \$75X7500=\$562,500 which is sufficient to cover the clinics fixed costs of \$500,000 and provide a (562,500-500,000)=\$62,500 profit. Breakeven point: net income(profit)=revenue-fixed costs-var costs…show more content…
What volume is required to provide a pretax profit of \$100,000? A pretax profit of \$200,000? (100 X vol) – (25 X vol) – 500,000=100,000 (75 X vol) – 500,000 = 100,000 75 X vol – 600,000/75 = 8,000 Total volume = 8,000 d. Sketch out a CVP analysis graph depicting the base case situation e. Now assume that the practice contracts with one HMO, and the plan proposes a 20 percent discount from charges. Redo questions a, b, c, d, under these condition. 2. General hospital, a not-for-protift acutue care facility, has the following cost structure for its inpatient services Fixed costs: \$10,000,000 Variable cost per procedure \$200 Charge (revenue) per procedure \$1000 The hospital expect to hav a patient load of 15,000 inpatient days next year a. Construct the hostpital’s base projected P&L