You are the Director of Finance for ABC Hospital and you were asked by department supervisors in finance and accounting to discuss and address the staff on the following: The impact of what would happen financially to the organization over time if its prices were set at full costs and the impact of prices if they were set at marginal costs, the importance of the P&L statement and breakeven analysis. Provide examples and rationale for your responses.

Part 1: Include in your discussion to the staff the difference between a price setter and a price taker and explain if most providers may be classified strictly as price setters or price takers.

Part 2: Include in your discussion the concept of price shifting and target costing, making sure to apply it to your context and the current healthcare environment. Discuss the importance of ethical principles in healthcare pricing.