Evaluate the physicians’ practice financial condition based on the following Relative
Value Unit (RVU) calculations and analysis:
Average and Marginal Costs per RVU,
Total Average Cost,
Total Marginal Cost per CPT code, and
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:
Review the article How Managerial Accountants Make Physician's Practices More Profitable
From this financial information, calculate the three RVU calculations:
Average and Marginal Costs per RVU,
Total Average Cost, and

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:
Calculate the costs,
Show your calculations, and
Write a conclusion about the physician 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 Total Fixed Costs
$950,000

RVUs high point

14,000
Low Total Fixed Costs
$750,000

RVUs low point

11,000

RVUs per CPT

5
Projected #RVUs for the coming month
10,000
Preferred language style  Simple (Easy vocabulary, simple grammar constructions)

Sample Solution