4. You are running a busy dialysis clinic. You collect differing amounts from patients depending on what kind of insurance they have. Self-pays pay $100 per visit; those with private insurance pay $75 per visit; those with Medicare pay $50 per visit; and those with Medicaid pay $35 per visit. The patient population is 10% self-pay, 40% privately insured, 30% Medicare, and 20% Medicaid.

The cost of providing dialysis to a patient is constant. You spend $10 in power and supplies and $20 in labor. The real budget breaker is the dialysis machine, however, which costs $1 million.

1. What is the break-even quantity for your practice?
2. If the machine can service 100,000 patients before needing to be replaced, what is a reasonable capital cost to apply to each patient?
3. Given your answer to b, how much money do you make or lose on each type of patient? (Do you see why some doctors refuse to treat Medicaid patients?)