8.) Hospitals Flashcards
What is the volume-outcome relationship?
The observed positive correlation between the number of procedures performed and patient outcomes.
Which two hypotheses can be used to explain the volume-outcome hypothesis?
Learning by doing: performance improves the more the task is completed.
Selected referral: physician refer their patients to the most skilled hospital workers, who in turn produce the best results.
What is a hospitalist?
A physician who has specialised in hospital care. Most patients who require hospital care are managed by their primary care doctor but recently there has been a move towards more hospitalists.
How to different hospitals compete with each other?
The market is model as a differentiated product oligopoly as there are significant barriers to entry and differences between the products supplied, the firms are not perfect substitutes for each other.
How do hospitals display market power?
Oligopolist firms are not price takers, they can price above marginal cost and earn positive economic profits.
What is the moral hazard problem with hospitals being oligopolies?
If there is a fixed payment for hospital visits (or free with the NHS) there is no incentive for patients for search for the lower priced hospitals. Little price competition between hospitals.
What is the medical arms race hypothesis?
Hospitals compete on quality by adopting the best medical technologies available to appeal to physicians and patients. May lead to the over-consumption of medical technology.. Can be worse for patient outcomes if it leads to rising expenditures and redundancies of staff.
What are the costs and benefits of not-for-profit organisations?
Exempt from corporate income tax, donors receive tax deductions for donations. However, cannot sell stock to raise capital, cannot distribute profits amongst owners, restricted to certain charitable activities.
What is the government failure theory?
Non profit organisations arise when political processes failure to provide as much of a charitable good as some people want. NFP firms organise the labour and capital of the people who demand more charity.
What is the altruistic motives theory?
Some entrepreneurs have altruistic motives and organise NFP firms achieve them.
What is the asymmetric information theory?
NFP firms exist because donors cannot observe how for profits will use their donations and do not trust them.
What is the for-profits in disguise theory?
NFP firms are profit-maximising, taking advantage of the legal benefits of NFP status.
How to hospitals charge?
They have a list of charges for different procedures and services which are billed to the uninsured. Large insurance companies can negotiate down these prices. Better hospitals can charge higher to insurances as if they are not included as the insurer’s hospital of choice the patients may switch insurance company so they can go to the best hospitals.
What is uncompensated care?
Hospital costs that are not covered by out-of-pocket payments, public insurance or private insurance. Estimates of 6-7% of hospital care is uncompensated.
Who pays for uncompensated care?
Nobody, it is taken out of hospital profits, subsidised by government or passed on in the form of higher prices to other customers.
