Deck 7: Medical Education, Organization, and Business Practices

Question 1

Of the 1,750 students expected to graduate with an M.D. from U.S. medical schools this year, the average debt per student will exceed $100,000.

Answer 1

False

Question 2

The federal government, through its control over the American Medical Association, held the physician supply constant for most of the 20^th century.

Answer 2

False

Question 3

The level of international medical school graduates entering the U.S. for residency training programs has been trending upward for the past 20 years.

Answer 3

False

Question 4

Economies of scale mean that a group physician practice is likely to return more income to physicians than an individual practice.

Question 5

Strict rules about the conduct of physicians are rooted in the agency relationship between doctor and patient.

Question 6

If the amount billed to a patient increases because the surgeon encountered difficulties during surgery which required additional medical interventions, this is an example of price discrimination.

Question 7

For physicians in an individual practice, foregoing average higher earnings of physicians in group practice represents a rational economic decision.

Question 8

A local dentist provides a deep discount for dental care to his elderly patients; a 10% discount to the uninsured patients; but is able to charge substantially more than "usual, customary and reasonable charges" to all other patients. It is an example of price discrimination and is an informal way for patients in wealthier circumstances to subsidize patients with less financial resources.

Question 9

Charging higher premiums to women of child bearing age than to men of the same age is an example of price discrimination.

Question 10

The idea of comparative advantage and the rule that marginal productivity of physician office inputs per dollar spent should be equal over inputs are good in theory, but in practice may conflict with patient preferences.

Question 11

One of the advantages of belonging to a group practice is that it allows physicians to use their time more efficiently, compared to a solo practice.

Question 12

One of the key provisions in the Patient Protection and Affordable care Act offers incentives to physician offices to implement electronic medical records (EMR). The idea behind EMR is to increase physicians' efficiency, as well as quality of patient care. It is an expensive technology, requiring a significant investment of time and financial resources, especially at startup. It is safe to predict that group practices will be less likely to adopt EMR, compared to physicians in solo practices.

Question 13

The total cost of attending medical school is covered by payments from all of the following sources except

A) tuition payments from students.
B) patient fees.
C) Stark law.
D) government subsidies or donations to medical schools.
E) National Institutes of Health research funding.

Question 14

It is common for many fertility physicians to run their own individual offices where they see patients. It is also common for many of the same fertility physicians not to set up their own surgical and lab facilities, necessary for performing in-vitro fertilization (IVF), and other infertility treatments and procedures. Rather, many of them choose to share one well equipped facility. Which of the following must be true about the business organization in this particular sector?

A) Substantial economies of scale are realized by each fertility physician who runs his/her own individual office to see the patients.
B) Substantial economies of scale are realized by each fertility physician who runs his/her own IVF lab / surgical facility.
C) Substantial economies of scale are realized by those fertility physicians who collectively share one IVF lab / surgical facility.
D) Each fertility physician who runs his/her own individual office to see the patients can significantly increase their revenue if opting instead to have one large group practice with other fertility physicians.
E) Each fertility physician who collectively shares one IVF lab / surgical facility with other fertility physicians can significantly increase their revenue if opting instead to set up such facility of their own.

Question 15

One of the best ways to learn how the complicated healthcare system in the U.S. works is to

A) examine the legal basis of the provision of healthcare in the U.S.
B) follow the trail of money and trace the self-interest of all the parties involved.
C) understand how the goal of serving public interests drives the actions of all the parties involved.
D) carefully read and analyze healthcare-related reports and arguments in news media.
E) stay up-to-date with the latest medical research findings.

Question 16

Two events that were most effective in bringing about licensure of physicians were

A) increases in the number of hospitals and development of effective anesthesia.
B) influx of foreign physicians and increase in medical school enrollees.
C) development of effective anesthesia and antiseptics.
D) increases in demand for physicians and increases in the number of nurses.
E) increases in sepsis and increases in the number of physician assistants.

Question 17

Increasing the physician supply can be achieved through all the following ways except

A) increasing the number of medical schools.
B) increasing the number of foreign medical school graduates allowed to train in the U.S.
C) changing immigration laws to allow more foreign physicians to practice in U.S.
D) early retirement of practicing physicians.
E) providing more federal and state funding to medical schools which increase enrollment.

Question 18

When assessing the market demand and supply of physicians, economists look at all of the following except

A) trends in the number of non-M.D. physicians, chiropractors, and physician substitutes.
B) trends in the retirement rates of physicians.
C) population growth.
D) academic publication records of practicing physicians.
E) the number of students applying to medical schools.

Question 19

The Stark laws (1989 and 1993) ban physicians from referring patients to facilities in which the physician has a financial interest, such as a specialty hospital, radiation lab, or clinical lab. The Stark laws address

A) the problem of adverse selection.
B) the high standards imposed on the agency relationship between physician and patient.
C) moral hazard on the part of doctors.
D) induced demand by physicians.
E) unethical behavior by patients.

Question 20

If a physician receives a bonus for referring a patient for cardiac surgery to a specialty hospital nearby his office,

A) the patient has violated the Patient Protection and Affordable Care Act.
B) the physician has violated the Stark law.
C) the patient will probably receive better care than if he had gone to another hospital.
D) the patient's insurance company will always refuse to pay the bill.
E) the patient's insurance company will probably investigate price discrimination.

Question 21

In the absence of empirical evidence, professional norms in treatment of certain medical conditions are observed to prevail. Differences from one geographic area to another are found. This is an example of

A) small area variation.
B) price discrimination.
C) adverse selection.
D) moral hazard.
E) large area variation.

Question 22

An HMO may monitor the diagnoses and treatments of participating physicians to determine how closely physicians follow observed norms of care or designated clinical pathways. This is a means of measuring

A) quality.
B) fraud.
C) billing errors.
D) accounting compliance.
E) efficacy of treatments.

Question 23

The age-adjusted rate of hospitalization (per 10,000 person years) for chronic lung disease varies much more than the rate of hospitalization for inguinal hernia repair. A good explanation for this variation might be

A) chronic lung disease affects more people than inguinal hernia does.
B) physicians must prefer hospitalization for treatment of chronic lung disease.
C) physicians must prefer hospitalization for inguinal hernia treatment.
D) scientific evidence must be greater for treatment of chronic lung disease than for treatment of inguinal hernia.
E) very few alternatives except surgery and hospitalization exist for inguinal hernia repair compared with alternative treatments for chronic lung disease.

Question 24

One would expect that price elasticity will be greater for __________ than for __________.

A) medical school tuition; medical school entrance exam preparation course tuition.
B) appendectomies; dental exams.
C) tonsillectomies; flu shots.
D) medical school entrance exam preparation course tuition; medical school tuition.
E) emergency room care; an annual mammogram.

Question 25

Clinical pathways based on evidence-based medicine are often cited as the wave of the future in patient care. Is it likely that in the near future payments will only be approved when evidence-based medical efficacy of the selected treatment can be proven?

Question 26

Explain why patients in hospitals are generally insensitive to price, but buyers of health insurance are sensitive to price differences in health insurance policies. Be sure to include an explanation of why insurance companies are very price competitive.

Question 27

Explain why the expansion of physician supply at the level which maintained a ratio of 1.33 physicians per thousand population and allowed for population growth rate of 1% per year was criticized by the late 1960s as causing a shortage of physicians.

Question 28

Explain some of the characteristics of health care which are conducive to price discrimination.

Question 29

Explain why government incentives to increase the number of physicians by increasing the number of medical graduates in the U.S. may take years to have any effect. Be sure to discuss the typical training and career cycle of a physician.

Question 30

According to the Stark law, physician self-referrals are illegal. The law allows an In-Office Ancillary Services Exception, however, when the physician can refer the patient for necessary testing on equipment located directly in the physician's office, such as diagnostic imaging equipment. Discuss your opinion about the impact of this exception on all the parties involved: patients, physicians, insurers, and the society.