Discussion
Assuming the graphs are drawn to the same scale, consider the break-even charts-cost-volume-profit (CVP) graphs-below for two competing providers operating in a fee-for-service environment.
On the basis of your understanding of variable cost rate, per-unit revenue, contribution margin, and fixed costs, answer the following questions:
How would the given graphs change if the providers were operating in a discounted fee-for-service environment?
How would these graphs change in a capitated environment? Which provider is in the best position to grow its business?