Explain the essential differences between marginal costs pricing and full costs pricing

QUESTION

1. Explain the essential differences between marginal costs pricing and full costs pricing? Should full cost pricing include indirect costs? Why or why not?2. If market research indicates that a healthcare provider could not cover its variable costs for radiology treatments at current rates paid to other providers by insurers and individuals, should the healthcare provider begin offering radiology treatments? Why or why not? 3. The Tysons Clinic is in negotiations with Mountain Health Insurer. The clinic currently runs at 70 percent of its capacity and Mountain Health would improve utilization to 85%. The average costs per admissions (Full costs) is $4000 and variable costs per admission are $2500. Mountain Health offers revenues equal to $3500 per admission. Should Tysons accept Mountain Health’s price offer and guaranteed admissions? 4. Define a relative value unit, and outline a schedule of three health services with relative value units of 3, 7, and 12 and estimate their prices base on your definition and valuation of a relative value unit.

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