Activity: You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budget data is presented below:
Budgeted procedures: 10,000
Budgeted cost $400,000
Desired profit $80,000
It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:
Payer Volume% Discount %
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self-pay 5 40
50%
2. What rate must be set to generate the required $80,000 in profit in the preceding example?