health care economics

| October 22, 2018

Health
Care Economics
Assignment
2
.lms.athabascau.ca/mod/assignment/view.php?id=2715″ title=”Click to Continue > by Supreme Savings Plugin”>Instructions

It contains 12 questions in all.
Prepare
written responses to all questions. Although your responses should be concise,
ensure that you answer all portions of each question as completely as possible.
.

Questions

1. Given a supply curve for ultrasound clinics, predict how the supply curve
will shift (i.e., increase or decrease) in each of the following situations
(justify your prediction in each case).
a. The
technology used for ultrasound equipment has a breakthrough that dramatically
lowers the cost of the.lms.athabascau.ca/mod/assignment/view.php?id=2715″ title=”Click to Continue > by Supreme Savings Plugin”>ultrasound machine.
b. The
wages of the clinic’s support staff are increased.
c. New
ultrasound equipment reduces patient examination times.
d.
Local utility rates increase.
2.
Predict the impact on the supply and/or demand for physiotherapy services in
each of the situations described below. In each case, draw a graph that
includes an original supply and demand curve as well as the new, predicted
supply or demand curve. Note:You are
not required to.lms.athabascau.ca/mod/assignment/view.php?id=2715″ title=”Click to Continue > by Supreme Savings Plugin”>submitthe
graphs; however, you mustindicate
the supply and/or demand curve shifts, the direction of each shift, and the
predicted changes in equilibrium price and quantity (increase, decrease, or
indeterminate).

a. Physiotherapy services are covered less generously by provincial.lms.athabascau.ca/mod/assignment/view.php?id=2715″ title=”Click to Continue > by Supreme Savings Plugin”>health plansthan
previously.

b. Physiotherapy professional associations significantly raise their entrance
standards.

c. An aging population incurs more muscle and joint injuries that require
physiotherapy treatments.

d. Events b. and c. occur simultaneously.
3. You
are the manager of a health clinic that is located in a building owned by four
physician partners. The clinic owners hire all the clinic staff, including
doctors, nurses, lab technicians, and office staff.

a. Based on what you have learned in the context of this course, identify and
discuss
the decisions that would need to be made in order to efficiently operate this
clinic in both the short run and the long run.

b. Discuss and classify the clinic input costs—fixed inputs and variable
inputs—in the
short run. Provide specific examples of both types of inputs.

4. Economic theory suggests that as plant size increases, the average cost of
production
should fall. However, when examining the operation of large health and medical
facilities, the opposite is often the case. Identify and discuss at least two
factors that may contribute to diseconomies of scale in the operation of a
large urban hospital.
5.
Given a demand curve for a drug that reduces the.lms.athabascau.ca/mod/assignment/view.php?id=2715″ title=”Click to Continue > by Supreme Savings Plugin”>joint painassociated
with arthritis, what effect would each of the following circumstances have on
the demandor thequantity demandedof this
drug? In each case, explain whyyou
have predicted such a change.

a. An increase in the percentage copayment of insurance coverage, which raises
the
out-of-pocket price for the drug for the insured client.

b. A reduction in fees charged by chiropractors, which lowers the out-of-pocket
price for chiropractic services, which are a substitute treatment for
prescribing medication.

c. An aging of the population—more elderly people are experiencing joint pain.

d. A new TV advertisement
convinces people that this drug is extremely effective in reducing the joint
discomfort associated with arthritis.

6. Improved Access (IA), a
local charity devoted to helping inner city residents, has opened a downtown,
drop-in medical clinic. The space rents for $3,500 a month (including
utilities), and equipment leases cost $45,000 per year.IA
has hired two nurse
practitioners at $7,200 a month each, and a receptionist,
whose monthly wage is
$3,300. Benefit costs for all staff are $36,600 per year. Office costs,
including telephone rentals are $1,500 per month.IA staff
are paid on salary, which
is not dependent upon the volume of patients seen.
Clinic supplies are $40
per patient, and the clinic sees 975 patients a month.
Use the
above information to calculate the following monthly costs for IA’s clinic:

Total Fixed Cost (TFC):
Total Variable Cost (TVC):
Total Cost (TC):
Average Fixed Cost (AFC):
Average Variable Cost (AVC):
Average Total Cost (ATC):

7. a. Describe the assumptions of the monopoly model, as it applies to health
and medical
services, where price discrimination takes place.

b. Describe the assumptions of the market model, as it applies to health and
medical
services, where suppliers can induce consumer demand.

8. Four common bases of payment for physicians are salary, fee for service, fee
per
visit, and capitation. Describe the effect each payment basis has on output.
Also discuss studies that have examined the relative costs and benefits of each
payment system.
9. The
table below indicates the total weekly costs of operating an X-ray clinic at
different volumes of output (i.e., X-rays).

# of X-rays

Total
Operating Cost/Week

$

Average Total
Cost

$

Marginal Cost

$

0

9,200

20

16,300

40

22,350

60

28,800

80

34,400

100

45,200

120

58,000

a. Do the necessary calculations to enter the correct amounts in the last two
columns. Remember, marginal cost is defined as the extra cost of providing the
service to one more patient.

b. What is the fixed cost of running the X-ray clinic? How do you know?

c. Given the fixed cost above, what is the total variable cost of providing 80
X-rays?
What is the average variable cost at that output level?

10. The average total cost of operating a surgical room is $700 per case if the
volume
is 100 cases, and $690 per case if the volume is 110 cases. What is total cost
at each of these two volumes? What is the marginal cost of another case within
this range?

11. Extended care facilities are paid on a per diem basis, and they have an
upward sloping supply curve. What will be the effect on supply or quantity
supplied in each of
the following cases:
a. a
reduction in the real per diem rate paid to the extended care facility?
b. an
increase in wages paid to the staff who work in the extended care facility?
c. a
new cleaner that allows the extended care facility to hire fewer custodial
staff?
d. a
greater supply of home care services (a substitute for extended care
facilities)?
12. The
federal agency responsible for covering the cost of dental care for low-income
seniors has set a rate of $100 for various dental treatments. In addition to
these seniors, dentists have patients who pay for their dental services. The
demand curve for each dentist is shown below.

Out-of-Pocket Price

Quantity of Dental Treatments
Demanded

$160

0

145

3

130

6

115

9

100

12

85

15

70

18

Each
dentist also has a cost schedule, as shown below.

Quantity of Dental Treatments
Demanded

Total Cost

0

$ 250

3

350

6

550

9

850

12

1,250

15

1,750

18

2,350

a. If each dentist in this system works on a profit-maximizing basis, how many
treatments will be provided to both the paying patients and to the federally
funded seniors? (Show your work by tabulating appropriate columns for TR and
TC, as well as forMR andMC.)

b. What would the number of paying patients and federally funded seniors be if
the
federal funding agency raised its rate to $120 per treatment? (Show all your
work.)

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