Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : A US National Health Care System? -- Ignore unavailable to you. Want to Upgrade?

To: J_F_Shepard who wrote (36272)	4/28/2014 10:02:58 PM
From: i-node	Read Replies (2) \| Respond to of 42652

>> Can you show a concrete example of a business turning down $99 because it can't get the $100 needed to make a profit and as a result take a $100 loss instead of a $10 loss. Based on your question I do not believe you can understand the answer. However, I will try. The easiest example is hotels. If you go to a website like hotels.com you can find rooms in hotels that are virtually empty on some nights. Yet, they aren't offered at $10 and probably not even at $20. Why not? In my town, the cheapest, crappiest hotel I know of can be rented for $39. Yet, probably on 3-4 rooms are rented tonight. As you know, the price set by hotels.com is determined by the facility's owner. Why would they not rent the other 40 or so rooms for $20 for the night if they could? The answer, of course, is that it costs more than $20 to clean the room. And in fact, the variable expense of cleaning room is the minimum price any hotel can sensibly charge for a room. It takes 30-45 minutes of labor to properly clean a room, plus the time for laundry, cost of cleaning supplies, coffee for the coffee maker, etc. Were you to take a course in microeconomics, on the first day your professor would say to you: "If you don't get anything else out of this course, you must remember this: MC=MR. Marginal Cost = Marginal Revenue. That's where you operate." The reason for this is that profits are ALWAYS maximized by operating at that level of output where the marginal cost of production is equal to the marginal revenue from selling that item (less disposition costs). As long as MR-MC > 0, you want to sell it because that will maximize profits of the firm. The same is true of drug manufacturers, who sell the latest pills for $10 in the US while selling the same product in some other country for $1. It is a safe bet the marginal cost of producing the drug is about 99 cents. So, you see concrete examples on a daily basis.

To: J_F_Shepard who wrote (36272)	4/29/2014 6:57:06 PM
From: Lane3	2 Recommendations Recommended By i-node TimF Read Replies (1) \| Respond to of 42652

I imagine medical providers do the same...ie if they can get higher paying customers they will give them priority, but in lieu of that they will take whatever they can get..... Even if your rationale were valid, it would apply even less to primary care doctors than to airlines, which is what this discussion is about. Primary care doctors, unless perhaps if they are just starting out in private practice, do not have empty slots. There aren't enough of them to go around. If they are fully booked already, the choice to take on a new patient who doesn't pay his way vs time off to play golf or enjoy their kids is not a tough one. There is no incentive to take on yet another Medicaid patient. It's like any pro bono work. Professionals will usually do some. They do out of a sense of obligation to give back or do it for cases that they find interesting or because is expected in their social set or they want accolades for their charity work. They don't do it because it makes financial sense. Your comparison with airline seats is somewhat more apt wrt use of equipment like a CT scanner but it doesn't work at all with PCP's.