Deck 11: Microeconomics in the Hospital Firm: Competition, Regulation, the Profit Motive, and Patient Care

Question 1

Why do all nurses, regardless of their career aspirations, need to learn about the topics of microeconomics and cost accounting?

Answer 1

It is essential for all nurses to learn about microeconomics and cost accounting to improve communication between nurse leaders and non-provider hospital decision makers, such as the chief executive officer or chief financial officer.

Question 2

What core competencies does the American Organization of Nurse Executives (AONE) recommend to prepare for a leadership position in a health care organization? How can these skills be obtained?

Answer 2

Core competencies of AONE include: analyses of supply and demand data; analysis of financial statements; articulation of business models based on economics, strategic, and business planning; and development of future business skill sets in leadership team members. These skills can be achieved through leadership conferences, continuing education, and obtaining a graduate degree in nursing administration.

Question 3

Why does the health care industry not follow the usual economic theory of supply and demand?

Answer 3

The health care industry does not follow the usual theory of supply and demand because the focus is on reimbursement based on patient outcomes. A facility providing higher quality care leads to higher patient satisfaction scores in addition to better reimbursement for services. Healthcare consumers will seek care at the facility with higher patient satisfaction scores.

Question 4

What are some costs of regulation of the US health care system? Are they all necessary? What would happen if one or all of the regulatory agencies were not funded?

Question 5

Should hospitals and other health care organizations make a profit? Why or why not?

Question 6

Is the cost of high quality health care more expensive than poor quality? Defend your answer.

Question 7

How does a per diem rate agreement work? What are the advantages and disadvantages of the financial approach to the health care institution and to the patient?

Question 8

There is strong evidence that appropriate nurse-to-patient staffing ratios lead to better patient outcomes. Should each state mandate nurse-to-patient staffing ratios? Why or why not? Should the federal government establish a national standard?

Question 9

What is the purpose of a safety net hospital? What are the risks for their competitive position internally and externally?

Question 10

What is the business case for the implementation and maintenance of electronic medical records?