Your marketing department estimates that Medicare urology visits equal 5 − (1.0 × C ) + (−6.5 × T O ) + (5 × T R ) + (0.01 × Y ). Here, C denotes the Medicare copayment (now $20), T O is waiting time in your clinic (now 30 minutes), T R is waiting time in your competitor’s clinic (now 40 minutes), and Y is per capita income (now $40,000).
a. How many visits do you anticipate?
b. Medicare’s allowed fee is $120. What revenue do you anticipate?
c. What might change your forecast of visits and revenue?