What the customer is willing to pay for a product or service would be the price.

What the customer is willing to pay for a product or service would be the price.

1. “Although Americans and foreigners alike tend to think of the U.S. health care system as being a market-driven system, the prices actually paid for health care goods and services in that system have remained remarkably opaque.” (Reinhardt, 2006) In the today’s Healthcare market place, prices are muddy and difficult to predict, explain, or even defend. Everything else that Americans buy is not like healthcare it is more black and white. Healthcare services can seem impossible for the customer to shop for. Most patients often make purchases without knowing the cost for the care they are receiving or even fully knowing what is being charged to them. When the bill arrives (weeks later) it is filled with ambiguous information: diagnosis and procedure codes, unfamiliar line items, and unclear calculations involving total charges, deductibles, and co-payments. As major purchases go; very few of us would be willing to buy a house or a car under these type situations. But this is precisely how today’s healthcare is purchased all the time by patients all over the U.S. Princeton economist Uwe Reinhardt has described US healthcare pricing as “chaos behind a veil of secrecy.” (Reinhardt, 2006)

Healthcare is paid for through a multi-part billing of transactions that occur between providers, insurance companies, and other stakeholders. Each group of billers have an incentive to charge different amounts to different patients and they keep the amounts a secret which allows each party to maximize their profits. Unlike most other companies who sell a product they are very transparent of pricing to be competitive in the market. Having this allows for companies to show how the compare to their competition and against the rest of the market to get your business.

Most people would think that cost and price is the same thing, but they have different meaning. Cost refers to typically the expense that is incurred for a product or service being sold. What the customer is willing to pay for a product or service would be the price. The costs would include items like manufacturing, materials, marketing and anything the company spends on the produce. Depending on the amount of cost it takes to produce a product can have a large impact on both the price of the product and the profit earned from its sale. Because the difference between the cost and the price would be the profit, it is only logical that the larger the difference the larger the profit. “Every company must determine the price customers will be willing to pay for their product or service, while also being mindful of the cost of bringing that product or service to market.” (Difference, 2014) That is where the seller needs to ensure that they get enough profit to make it worth the cost of the product to make or provide.

2. Healthcare is very difficult to pinpoint an upfront price for the consumer, there are different entities involved in healthcare pricing Insurance company and coders that all play a part in the overall price of healthcare services and this is mostly after services have been rendered. As Jeffrey pointed out the general population does not understand healthcare pricing because when the bills show up weeks or months later they are filled with ambiguous information like diagnosis codes, confusing calculations, charges and deductibles. Healthcare is a major purchase, but unlike every other major purchase people make this one is according to the U.S. Princeton economist Uwe Reinhart has described as “chaos behind a veil of secrecy.” (Reinhardt, U. E., 2016). As Sumetria mentions it can be difficult to find the right prices to charge in healthcare because insurance companies have contracts that may be negotiated with a fee schedule with Medicare or Medicaid (Marlowe, D., n.d.). Denae covered the fact that cost and price can seem to have a similar meaning but are actually different. Price is the amount that is charged for healthcare services while cost is the amount actually paid (Art of Medicine, 2015). It can be very difficult to have standard costs for the healthcare system because they are not a flat rate situation for all patients.


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What the customer is willing to pay for a product or service would be the price.


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