Your health care business is beginning to take shape. You’ve chosen products or
ID: 1106675 • Letter: Y
Question
Your health care business is beginning to take shape. You’ve chosen products or services to offer, come up with a business model, and looked at your fixed and variable costs. Now you have to decide how to set your prices. For this assignment, determine your prices and when you will make a profit. Be sure to answer the following questions for the health care business photos below. 2. Based on your analysis, which pricing method would be the best for you to use in your health care business and why?Identify the variable and fixed costs associated with your selected health care business. Discuss how these costs are affected by changes in productivity levels. Determine what steps you could take to reduce at least two of those costs. (15 points) 1. Fixed Costs Rent Dental Supplies Utilities Average Dentist Salary Dental Assistants Annual $32,500 $24,000 $9,500 $140,000 $65,000 $32,750 Monthly $2,708 $2,000 $792 $11,667 $5,417 $2,729 Daily (for 30 days a month) $90 $67 $26 $389 $181 $91 Dental Hygienists Total $303,750 $25,313 $844 Variable Cost: Other (charts office supplies) $2,500 $208 $7 Daily Sales for Break Even = Daily Fixed Cost + Daily Variable Cost $844+$7 -$851 At Propose fee of $160 per patient, Number of minimum patients to be attended daily for break- even=$851/$160 =5.32= 6 patients Any additional patient seen after 6th patient adds to profits. For reducing fixed costs: (a) Rents and Salaries can be renegotiated as per the size and level of operations. Further, variable pays may be introduce based on the number of patients attended Rationing of supplies and use of utilities may be done for reducing fixed costs. (b) For reducing variable costs: (a) Number of patients may be increased by effective sales promotion and advertising, that will help reduce variable cost per patient and adds to profits.
Explanation / Answer
In health care system one should practice perfect price discrimination that is charging everyone equal to their willingness to pay . Thus maximizing the total surplus or profit.
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