IHP 450 Module 3 MINI CASE STUDY.doc - Running head MINI...

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Running head: MINI CASE STUDY 1 Mini Case Study Melissa DeLeon Southern New Hampshire University: IHP 450 January 24, 2020
MINI CASE STUDY 2 Mini Case Study The physicians in an office practice are looking for ways to improve profitability without raising rates. It is helpful to look at the equation in which the clinic would break even, “Profit = Revenue – (Fixed Costs + [Variable Cost per Unit X Volume])” (Nowicki, 2018, p.178). The total revenue would be the charge of the visit x volume, and the total cost would be the unit cost x volume (Nowicki, 2018). Fixed costs remain constant such as monthly facility fees (Nowicki, 2018). The breakeven point is the sweet spot where variable costs are managed and profit is able to take hold (Nowicki, 2018). The breakeven point in units is below the variable costs line because “total costs equal variable costs per unit, which remain constant, plus fixed costs per unit, which decline as volume increases” (Nowicki, 2018, p.176). The factor which can be controlled is volume and variable costs (Nowicki, 2018).

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