Pricing Procedures of Medical Professionals
The pricing procedure of private medical practitioners has been under close scrutiny in the recent months as well-known doctor, Susan Lim has been found guilty of 94 charges. The main trigger of her trial was the accusation by Brunei officials that she had overcharged the sister of Brunei’s queen.
The healthcare service, unlike any other form of service industries, is heavily subjected to the scrutiny of ethics. The medical profession emphasises on the idea of curing and healing above the remunerations they obtain from such services. As a result, the common assumption that firms aim to maximise profit cannot hold. Hence, critics against Dr Lim’s behaviour questions that her intention behind her prices detracts from ethics and instead aims at profit maximising. The main questions that arise from this incident would then involve how doctors should price their service, whether price discrimination is an acceptable practice in the medical profession and lastly, should the SMC step in to regulate the pricing of private healthcare. These will be examined purely from an Economics point of view.
Currently, the private medical care market is one of an oligopoly. It is difficult to enter the industry due to high start-up cost to provide luxurious services; it also requires a doctor’s license as well as renowned proficiency in medicine. The current service providers such as Raffles Medical Group are also very well-established thus it will be difficult to establish a new brand name amongst the pre-existing groups.
Dr Lim claimed that she has been adhering to market prices; we assume that her firm is profit maximising. Hence, her firm will operate at a quantity (Q0) where marginal cost equates to marginal revenue. At the same time, she would be charging at price P0. The firms are also highly interdependent on each other as there are only a few firms in the industry. This is illustrated in the article where private doctors benchmark their prices against their peers. Such
The healthcare service, unlike any other form of service industries, is heavily subjected to the scrutiny of ethics. The medical profession emphasises on the idea of curing and healing above the remunerations they obtain from such services. As a result, the common assumption that firms aim to maximise profit cannot hold. Hence, critics against Dr Lim’s behaviour questions that her intention behind her prices detracts from ethics and instead aims at profit maximising. The main questions that arise from this incident would then involve how doctors should price their service, whether price discrimination is an acceptable practice in the medical profession and lastly, should the SMC step in to regulate the pricing of private healthcare. These will be examined purely from an Economics point of view.
Currently, the private medical care market is one of an oligopoly. It is difficult to enter the industry due to high start-up cost to provide luxurious services; it also requires a doctor’s license as well as renowned proficiency in medicine. The current service providers such as Raffles Medical Group are also very well-established thus it will be difficult to establish a new brand name amongst the pre-existing groups.
Dr Lim claimed that she has been adhering to market prices; we assume that her firm is profit maximising. Hence, her firm will operate at a quantity (Q0) where marginal cost equates to marginal revenue. At the same time, she would be charging at price P0. The firms are also highly interdependent on each other as there are only a few firms in the industry. This is illustrated in the article where private doctors benchmark their prices against their peers. Such