Health insurance increasingly requires patients to pay more of their hospital bills through coinsurance. Managed care plans are negotiating with hospitals and doctors for care at fixed prices. Below is a demand graph, and below that is a corresponding table. Press the Change Elasticity button to see how elasticity changes depending on competition. The third graph shows what happens if there is partial customer loyalty, if some customers will buy your product even if its price is a little higher than the competitor's.
Customer loyalty makes the market more stable.
This means there's much less chance of a price cutting war. You certainly won't start one by cutting your price. For providers of health care, physicians, other practitioners, and hospitals, patient loyalty reduces the elasticity of demand and helps keep prices up. Managed care companies buy service from providers and sell it to patients. They stand in the market between the providers and the patients.