Question

A general practitioner's office takes roughly 20 minutes to process a patient from start to finish. Medical supplies and general overhead per visitor is $6, the receptionist earns $15/hour and the doctor's salary is a flat $100,000 /year. The office is owned with no mortgage. Currently the doctor sees about 15,000 patients a year. Assume the patient base is incapable of rising. Assume the receptionist is sent home if there is no work. What is the incremental cost of a visit? What is the average cost?

Answer #1

**Total cost for 15000 patients**

Doctor salary - $100,000

Medical supplies and general overhead - 6 x 15000 = $90,000

Number of hours the receptionist is employed ( in hours ) - 15000 x 20 / 60 = 5,000 ( since each patient takes 20 minutes to be processed )

Cost of receptionist = 15 x 5,000 - $75,000

Total cost = 100,000 + 90,000 + 75,000 = $265,000

Incremental cost is the cost of treating one additional patient.

One additional patient would need medical supplies and general overhead and the receptionist needs to stay for 20 additional minutes.

Therefore, the incremental cost = 6 + (20/60)*15 = 6 + 5 =
**$11**

Average cost = Total cost / number of patients = 265,000 / 15000
= **$17.67**

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 7 minutes ago

asked 16 minutes ago

asked 23 minutes ago

asked 24 minutes ago

asked 31 minutes ago

asked 31 minutes ago

asked 50 minutes ago

asked 52 minutes ago

asked 56 minutes ago

asked 57 minutes ago

asked 59 minutes ago