To Speed Up Results and Improve Patient Counseling in His

question 27

Essay

To speed up results and improve patient counseling in his new solo family practice, Dr. Jones decides to buy an in-office, point of care hemoglobin A1C test kit. He goes online and finds a document on point of care testing (Attachment A). He thinks this could be a good investment for his practice.
It looks as if this might be a win-win for Dr. Jones and his patients and he's ready to buy it, but his wife is a health care financial manager. She knows that a break-even analysis is the best way to determine if the purchase will be worthwhile to the practice. She decides to do some research, too. She finds lots of information, too. (Attachment B).
Dr. Jones rents a small suite of offices in an old house in Smallville, Kansas. He has an exam room, a bathroom, a waiting room, a front desk, and an office. Dr. Jones employs one part-time (20 hours per week) certified medical assistant who earns $20,000/year or about $400/week or about $20/hour.
At this point in his career, Dr. Jones has 1000 patients in his files, and about 20% (200) have diabetes mellitus (DM). Of the 200, about 100 have poorly controlled DM and 100 have well-controlled DM.
Using the information above, answer the following questions.
What types of costs and revenues does Mrs. Jones include in her break-even analysis?
Based on the documents and the number of patients with DM, how many patient tests does Mrs. Jones estimate will be feasible in the first year of owning the machine?
Which of the costs are fixed, variable, and semivariable?
What are the low and high estimates for costs on this purchase?
What hidden costs might there be that are not in these documents?
What are the low and high estimates for revenues on this purchase?
Based on her findings, what does Mrs. Jones recommend to Dr. Jones about this purchase?

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Definitions:

Buyers

Buyers are individuals or entities that purchase goods or services in a market.

Price Floor

A government or regulatory imposed limit on how low a price can be charged for a product or a service, aimed at protecting producers.

Minimum Wage

The lowest legal hourly wage that employers can pay workers, set by government policy to ensure a basic standard of living for workers.

Minimum-Wage Laws

Regulations establishing the lowest amount that employers can legally pay their workers per hour of labor.