Two medical organizations have recently examined their cost structures. The first group is a radiology practice with a significant investment in diagnostic imaging equipment. The second group is a single- specialty pediatric practice. The cost analysis reveals the following distribution:

Explain the implications of these differing cost structures of each medical group in terms of contracting with MCOS.

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Fixed Cost Variable Cost Indirect Cost Radiology Group 70% 20% 10% Pediatric Group 20% 50% 30%