Question
Your practice has marginal costs of $10 per patient, average costs of $50 per patient, and average collections of $80 per patient. You currently make
Your practice has marginal costs of $10 per patient, average costs of $50 per patient, and average collections of $80 per patient. You currently make a profit of $18,000 per month. You have an opportunity to sign a contract with an HMO. The contract will bring new patients into the practice, but will only pay $40 per visit. Assume that the contract would have no impact on fixed costs. Each HMO patient:
will make you $30 better off in the short run
will make you $40 better off in the short run
will make you $10 worse off in the short run
will make you $40 worse off in the short run
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