Charlie Anderson recently began a new job as the office manager for a prominent medical clinic. He

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Charlie Anderson recently began a new job as the office  manager for a prominent medical clinic. He has just received a bill from Med-Count, one of the labs  that performs tests for the clinic. In reviewing the bill, Charlie notices that the lab has charged the  clinic $25 for a complete blood count test. The clinic, however, bills patients or their insurance companies $90 for the test, and that is the amount that most insurance companies will pay on the patient’s  behalf. Thus, the clinic is earning a $65 profit on each blood test it orders. After a bit more investigation, Charlie finds similar profit margins on a number of other lab tests. He is concerned about the  billing practice and suspects the clinic may have selected the lab based on its low cost rather than on  the lab’s qualifications and the accuracy of its test results. He also wonders if the tests’ profit potential  is driving doctors to order unnecessary tests. 


Required

Read Opinion 11.3.1 of the American Medical Association’s Code of Medical Ethics (https://www  .ama-assn.org/delivering-care/fees-medical-services). Based on this opinion, do you believe that the  clinic’s billing for lab tests is an acceptable business practice? Discuss your reasoning.

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Managerial Accounting

ISBN: 9781119577669

4th Edition

Authors: Charles E. Davis, Elizabeth Davis

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