At a recent strategic planning retreat of a 40 ­person multispecialty group, the

Question

At a recent strategic planning retreat of a 40 ­person multispecialty group, the administrator made a presentation that focused on the coming year’s plans to establish the organization’s first two primary care satel­lites, which would be located in the two growing sub­urbs of the community. These new additions would require the hiring of four family practitioners and other support staff. When the administrator finished her pre­sentation, one of the most senior physicians stood up and said, “This is a foolish expenditure. We’re so busy now in this group, we can’t even see another patient. Our revenue was up 14 percent according to the previous financial presentation we heard. There is no reason to change what we’re doing.” How might you respond to this physician?

Explanation / Answer

I will elobrate the cost and benefits associated with opening up new clinics in suburban area.

The demand for medication and hospital is inelastic . So if we open a new clinics in suburban area we can curb the rising demand in area and charge price such that we earn profits. Also this will help us in extending our chain of hospitals to other areas and thus it would help in capturing the market share.

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