Valet Parking by the Half-Hour

DESCRIPTION

In a hurry while taking my mom to the Heart Hospital, I decided to use valet parking. I assumed that, as is standard at restaurants, there would be a fixed charge. To my delighted surprise (given that this was to be a very short visit), the valet parking marginal price was by the half hour: $1 for the first, $.50 for the second, $1 for the third, $.50 for the fourth, etc., up to $5 maximum for any stay over 3 hours.

There was essentially no fixed price component-it was a nonlinear one-part tariff. This struck me as unusual, since the costs of valet parking the car are almost entirely fixed-putting the car away once and taking it out. I wonder why the hospital uses this pricing model? Are they trying to be nice to the many elderly, low-income patients? Are the costs somehow passed on in everyone’s medical bill?


alisandro

Ampco System Parking. This company is known for doing some unusual things. My guess the Hosiptal approves the rates.

Healthcare consultant

The pricing suggests that the hospital is providing a courtesy valet.

David Lasker

Come on, has no one been to a hospital before? Appointments take about 3 hours (15 minutes with the doctor, 2 hrs and 45 mins in the wait room) so all of those other prices are just window dressing to make it not look like a fixed charge of 5 dollars per stay. Frankly, I think the pricing structure is related to the expectation of how long you are staying and the reality, which is usually much much longer.

Rajveer

I completely agree with others that parking costs increase with time. The longer a car is parked, the longer that space is unavailable for another car.
So the question is why do most hotels do not charge variable rates. Instead hotel rates are significantly higher and people are likely to spend less time in a hotel than in a hospital: a typical meal takes lasts only 2 hours whereas in a hospital there are diagnostics, bills, medicines and supplies to be taken care of.
This way hotels actually charge much more than the cost of parking. The hospitals are just employing a fairer time-dependent charging system.

Mike (Hamilton, Ontario)

Doc's reply is correct.

This price structure yields a Pareto optimal (and efficient) solution given that consumers wish to cost minimize stays of part-hours under 30-min. This price structure has non-linear rebates for unused services where services are assumed to be sold in 60-min incraments.

chupatribra

My first guess agrees with David Lasker. It's psychological to make visitors feel good - or direct their anger at the hospital for taking so long. On the other hand, with the first-in/last-out stacking model, the parkers need to offer incentive for those who can make their trips quick (picking up, dropping off, etc.) to do so.