A local laboratory performs 3 levels level I II III of bloo

A local laboratory performs 3 levels (level I, II & III) of blood tests. A relative value unit (RVU) analysis indicates that a level I examination requires 3 RVU\'s, a level II exam requires 9 RVU\'s & a level III exam 15 RVUs. The total costs to run the laboratory amount to $200,000 anyally & the number of tests administered annually are 1,000 level I tests, 1700 level II tests & 300 level III tests.

a) briefly explain the RVU method & the relationship among 3 levels of test

b) Using RUV what is the estimated cost per RVU?

c)what is the estimated cost per each type of test?

d)To have 15% profit, how should the level III test be priced?

Solution

1. Rvu is a formula used by physicians. The relationship among three levels of test is level 1 requires 3 rvu , level 2 requires 9, level 3 requires 15 for one exam. So, their ratio of use of rvu is 3:9:15.

2. Annually, number of tests administered are level 1: 1000, level 2 : 1700 & level 3 : 300. So, in total they require,

(1000*3)+(1700*9)+(300*15) RVU\'s = 22,800Ruv for all three test annually. Therefore, cost of one RVU = 200000/22800= 8.772 $.

3. Cost per each type of test :

Level 1 : 8.772 *3 = 26.316 $

Level 2 : 8.772*9 = 78.948 $

Level 3 : 8.772*15 = 131.58 $

4.To have 15 % profit, 200000+ 15 % = 230000 should be recovered. Therefore, 230000/22800 RVU = 10.088 $.

Therefore, cost of level 3 test shall be: (10.088*15) = 151.32 $.