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In this assessment, you will evaluate the physicians’ practice financial condition based on the
following Relative Value Unit (RVU) calculations and analysis:
a. Average and Marginal Costs per RVU,
b. Total Average Cost,
c. Total Marginal Cost per CPT code, and
d. 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 Management Accountants Make Physician Practices More
Profitable.
2. From this financial information, calculate the three RVU calculations:
a. Average and Marginal Costs per RVU,
b. Total Average Cost, and
c. Total Marginal cost per CPT code.
3. In proper APA format, write a 3-5 page paper (include a cover and reference page not
included in page count). For each RVU calculation, in a paragraph:
1.
a. Calculate the costs,
b. Show your calculations, and
c. Write a conclusion about the physicians practice’s financial condition and discuss how you
can assist the physicians in using these costs in making informed decisions.
*Please use headings for each paragraph and category to decipher the discussion and organize
the paragraphs.
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).
High Fixed Costs
\$950,000
#RVUs high point
14,000
Low Fixed Costs
\$750,000
#RVUs low point
11,000
#RVUs per CPT
5
Projected #RVUs for the coming month
10,000

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