HM820 - Class 10 (Non Profits)

Question 1

Are nonprofits or for profit hospitals more likely to provide profitable services?

Answer 1

For profit hospitals are more likely to offer the more profitable services. For profits are more likely to respond to offering profitable services, nonprofits do offer them or not as much. Non profits still respond to economic incentives but not to the extent for profits do

Question 2

What is Uncompensated Care

Answer 2

Care that hospitals provide for which they are not paid (example: uninsured person coming to the emergency room)

Note: Each additional uninsured person costs hospitals approx $800 each year - more often non-profit hospitals attract uninsured or undocumented

Question 3

What happens when health insurers convert to for-profit status?

Raise premiums, keep premiums the same, lower premiums

Answer 3

Raise premiums

BCBS when it was a non for profit, it wasn’t exploiting its monopoly status, but then when it switched to for-profit it did start to raise premiums and exploit their monopoly position

Question 4

Are non profit hospitals just for profits in disguise

Answer 4

No

Question 5

What is the Cost Shifting Hypothesis

Answer 5

So cost shifting itself, in this setting is when medicaid prices decrease, hospitals will charge private patients more to offset the prices.

In reality this is a myth! Its a matter of quantity - Lower prices - this doesn’t actually happen

This is NOT what actually happens

Question 6

Suppose medicaid reimbursement rate goes down. Will hospitals raise prices for private patients?

Answer 6

Hospitals will LOWER prices for private patients when medicaid prices go down - which is counter intuitive to the cost shifting hypothesis

BUT its a quantity play - hospitals want to attract more private patients so hospitals lower private prices to attract more commercially insured patients