Before beginning work on this discussion forum, please review the link “Doing Discussion Questions Right,” the expanded grading rubric for the forum, and any specific instructions for this topic.
Before the end of the Week, begin commenting on at least two of your classmates’ responses. You can ask technical questions or respond generally to the overall experience. Be objective, clear, and concise. Always use constructive language, even in criticism, to work toward the goal of positive progress. Submit your responses in the Discussion Area.
Review the CVP-graph PDF for more information on CVP graphs and how to read them. Assuming the graphs are drawn to the same scale, consider the break-even charts—cost-volume-profit (CVP) graphs—below for two competing providers operating in a fee-for-service environment. On the basis of your understanding of variable cost rate, per-unit revenue, contribution margin, fixed costs, and the CVP graphs above, answer the following questions:
- Explain how the CVP graphs would change if the providers were operating in a discounted fee-for-service environment.
- Explain how the CVP graphs would change in a capitated environment. Evaluate which provider is in the best position to grow its business.
- Provide reasons for and evidence in support of your responses.