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P 4-6: University Physician Compensation Physicians practicing in Eastern University's hospital have the following compensation...

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P 4-6: University Physician Compensation Physicians practicing in Eastern University's hospital have the following compensation doctor bills the patient (or Blue Cross Blue Shield) for his or her services. The doctor expenses incurred in the clinic, including nurses, medical malpractice insurance, and equipment. Each doctor has a stated salary target (e.g., $100,000). For patient fees olet the salary target, less expenses, the doctor retains 30 percent of the additional net fees. For examale a S150,000 is billed and collected from patients, and expenses of $40,000 are paid, then the doctor ret $3,000 of the excess net fees [30 percent of ($150,000 -$40,000 - S100,000)] and Eastem Univerit receives $7,000. If $120,000 of fees are collected and $40,000 of expenses are incurred, the physcia agreement Eat doctor pays for all secretaries, supplic, net cash flow is $80,000 and Eastern University receives none of the fees. Required: Critically evaluate the existing compensation plan and recommend any changes. 4-7: American InterConnect

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