skeleton notes 6 part 2 Flashcards
consumers lack ______ to shop around. what kind of demand?
time
inelastic
consumers face high search ______
costs
used to measure the level of concentration in the market
Herfindahl Hirshman Index
what is the formula for HHI
Σsi^2
what is si
market share for a firm
a higher h-index suggests ____ concentration, _______ competition
more
less
find HHI for if 5 hospitals serve equal portions of the local population
H = (1/5)^2 + (1/5)^2 + (1/5)^2 + (1/5)^2 + (1/5)^2
=5(1/2)^2
TYPICALLY more competition leads to better ______ and _________
quality
lower price
Ubiguity of _______ hinders price competition
insurance
patients are typically referred to hospitals by ________ so hospitals compete for ______
physicians
physicians
greater competition among hospitals for physicians can result in redundancy and overconsumption of medical technologies/services
medical arms race hypothesis
this can actually increase costs without improving quality
medical arms race hypothesis
(T or F?) hospitals and insurers both private and public never negotiate rates
false
rates vary with relative ____________________ of hospital and insurer
bargaining power
(T or F?) the same hospital may receive different rates from different insurer
true
hospital charges not covered by out-of-pocket payments, public insurance, or private insurance (upwards of 7%)
uncompensated care
higher prices paid by richer payment cover care given to the poor (cross-subsidation)
cost shifting
What does Fuchs say about the relationship between efficiency, hospital size and number of services offered?
there are substantial economies of scale for hospitals.
larger hospitals –> greater efficiency and \more services
