Ever think about the problem of coming up with pricing to make a facility a viable choice when compared to home services? A reader recently submitted a paper entitled, The Pricing Problem, that examines how an assisted living provider should price their facility to compete with home-care services through the use of “game theory”. You’ve probably heard of game theory before but if you want a refreshed course, click here. The author, Jeff Cole, is a student at Princeton University and wrote this paper after working last summer for a small assisted living company in California.
The article reviews the decisions regarding moving into assisted care and makes assumptions that are applied to the model in order to achieve a baseline for providing a pricing model/tool. This model provides a simplified view of the complicated process of the pricing mechanics of senior living that tries to incorporate some variances such as regional factors, economic environments (local and and national), and individual beliefs. While the article may be construed as academic, clearly Mr. Cole has just scratched the surface in his attempt to apply game theory to senior living / senior housing pricing models.
For the full text of the article, click here for “The Pricing Problem” by Jeff Cole.