This also lowers marginal cost but raises fixed cost. With less qualified personnel spending less time with each patient, Joan's may hire an economist to do a study showing that her quality is not significantly worse than before and may be better in some ways. The study's cost adds to fixed cost, but may help stimulate some demand. Here's Joan's new cost table. Fixed cost is higher.
Marginal cost is generally lower than before.
Joan's is making profit again. This starts the competition cycle again, though, as other firms enter the market and start driving prices down again. We're almost done. Just one more point to make. The idea of comparing marginal cost with the price can be applied to cost-effectiveness analysis.