Phlexible Physical Therapy (PPT) Monthly Cost Calculation

What is PPT's total monthly cost?

A. $56,750

B. $37,500

C. $55,000

D. $63,450

Explanation:

To calculate Phlexible Physical Therapy (PPT)'s total monthly cost, we need to consider the different types of sessions and their associated costs. None of the given options A, B, C, or D match the correct total monthly cost of $131,750.

First, let's calculate the cost for sessions performed for commercially insured patients. PPT performs 500 fee-for-service sessions for commercially insured patients, and they are paid $50 per session. So the cost for these sessions is 500 x $50 = $25,000.

Next, let's calculate the cost for sessions performed for HMO members. PPT performs 500 sessions for HMO members, and they are paid $5 per member per month (PMPM). As they have a contract covering 10,000 members, the monthly payment from the HMO is 10,000 x $5 = $50,000. The cost for providing 50 sessions to underserved patients free of charge does not contribute to the total cost, as these are provided as a community benefit.

To calculate the total monthly cost, we need to consider the fixed cost and variable cost. The fixed cost is given as $20,000 per month, and the variable cost is $35 per session. As PPT provides 1,050 sessions per month, the variable cost is 1,050 x $35 = $36,750.

Adding up all the costs, the total monthly cost is $25,000 + $50,000 + $20,000 + $36,750 = $131,750.