The scaling question is a good one. There are a _LOT_ of businesses where marginal cost is much less than average cost, due to capital and fixed expenses, and transaction costs that are more about setup and initial exploration rather than scaling with supply.
To the extent that healthcare suppliers are in this category, it’s quite believable that they’d negotiate steep discounts for a “excess” business, which they can undertake without needing additional capital or headcount. But they cannot give those discounts to a majority of their customers or they’ll go out of business.
Effectively, these discounts may be “leftover capacity” from the more expensive insurance-paid traffic that these suppliers get.
The scaling question is a good one. There are a _LOT_ of businesses where marginal cost is much less than average cost, due to capital and fixed expenses, and transaction costs that are more about setup and initial exploration rather than scaling with supply.
To the extent that healthcare suppliers are in this category, it’s quite believable that they’d negotiate steep discounts for a “excess” business, which they can undertake without needing additional capital or headcount. But they cannot give those discounts to a majority of their customers or they’ll go out of business.
Effectively, these discounts may be “leftover capacity” from the more expensive insurance-paid traffic that these suppliers get.