New entrant comes late to the bidding process

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Suppose that a new entrant comes late to the bidding process, and plans a super competitive bid of $13,900 per case. This is a new orthopedic institute that is made up of several orthopedic surgical groups. They have their own diagnostic facilities and can bring all of the rehabilitation assets that they’ll need. They also have a direct relationship with a device manufacturer and believe they can cut the cost of devices used down to $2,500 per case. They only thing they lack are the actual surgical facilities. They offer to lease OR time from each of the hospitals at $2,400 per case. Are the hospitals likely to accept that offer? What happens to the economic profit of each hospital if they do/ do not accept the offer?

Reference no: EM131091305

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