The Right Price to Charge in Health Care, Essay Example

Do you think that finding the right price to charge in health care is more difficult or less difficult than in other industries?

Finding the right price to charge in health care is more difficult than other industries. Often health care is not perceived as a for profit entity. Therefore, the philosophy of sickness often connotes that customers cannot pay for the item they are purchasing, which happens to be health care services. Providers then feel that it is unethical to turn away sick people because prices are too high and they cannot afford to pay. Consequently, the price is compromised out of a sense of empathy, unlike if someone visits a furniture store tom purchase an item or a car dealership (Agency for Health Care Research and Quality, 2014).

In what ways is health care pricing strategies different than in other industries?

Health care pricing strategies are based on a fixed price range set for particular service/s. In the managed care system providers must comply with set prices if they are participating in Medicare/Medicaid payment schemes. These schemes cater for citizens who cannot afford health care costs. Therefore, it is morally inappropriate for providers to go beyond the set prices in servicing beneficiaries. Other industries do not services specific customers sent from state entities called beneficiaries. They serve the public at a competitive price based on cost of production (Cox, 2006).

Explain the relationship between costs and prices.

Costs relate to resources used to manufacture a product. It could range from materials, skills, transportation and overhead expenses to get the product marketed. Price is cost plus anticipated profit manufacturers expect to derive in covering costs of the entire operation of a product or business entity. The relationship between price and costs involves price must cover costs and a surplus (Kongstvedt, 2001).

Should the healthcare organizations set some products/services in a discounted rate to attract more customers? And why?

In my opinion health care organizations will always have customers because people will inevitably become ill. However, as individual health care organizations the competition lies in which hospital, clinic or doctors will ill people choose to visit? With managed care they will visit the ones their plans specify since there is very little choice. As such, it would seem that discounted rates would not encourage beneficiaries to choose a particular institution above another (Agency for Health Care Research and Quality, 2014).

References

Agency for Health Care and Quality (2014).Health Care Cost.  Retrieved on March 10^th, 2014 from http://www.ahrq.gov/research/findings/factsheets/costs/health-care/index.htm

Cox, T. (2006). Professional caregiver insurance risk: A brief primer for nurse executives and decision makers. Nurse Leader, 4(2): 48–51.

Kongstvedt, P. (2001). The Managed Health Care Handbook (4^th ed) Aspen Publishers, Inc.