Relative Value Unit Analysis

Paper details
In this assessment, you will 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
Total Marginal cost per CPT code.
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