Question 1

In the 19^th century hospitals had notorious reputations-questionable places to visit, risky places to stay.What advances changed all this? A)Development of the germ theory of disease. B)Advances in medical technology. C)Availability of health insurance to pay the bills. D)All of the above.

Accepted Answer

The development of the germ theory of disease led to better understanding of the spread of infections and the need for cleanliness in hospitals. Advances in medical technology, such as the invention of antibiotics and surgical procedures, improved the quality of care. The availability of health insurance helped patients afford medical care. All these factors together helped to improve the reputation of hospitals and made them safer places for patients to receive treatment.

Question 2

Economies of scale exist when&#10;A)long-run average costs decline as output increases.&#10;B)long-run average costs are constant.&#10;C)long-run average costs increase as output increases.&#10;D)short-run average costs decline.&#10;E)short-run average costs increase.

Accepted Answer

Economies of scale exist when long-run average costs decline as output increases. This means that as the firm increases its production and expands its scale, it benefits from lower costs per unit of production. This occurs due to various factors such as increased specialization, better utilization of resources, and bulk purchasing.

Question 3

The dominant factor affecting medical care delivery and finance in the 1980s was&#10;A)the Hill-Burton Act.&#10;B)prospective payment for hospitals.&#10;C)creation of Medicare and Medicaid.&#10;D)the explosive growth of managed care.&#10;E)ERISA.

Accepted Answer

The dominant factor affecting medical care delivery and finance in the 1980s was the implementation of the prospective payment system for hospitals, which was introduced as part of the Social Security Amendments of 1983. This system, also known as diagnosis-related groups (DRGs), established fixed reimbursement rates for medical procedures and hospital stays based on the patient's diagnosis, rather than the actual costs incurred by the hospital. This led to cost-containment efforts by hospitals and providers, and had a significant impact on the organization and financing of healthcare during this time period.

Question 4

The predominate organizational form for U.S.hospitals is not-for-profit.Why?&#10;A)The profit motive corrupts human behavior.&#10;B)For-profit hospitals do not provide charity care.&#10;C)Private not-for-profit hospitals engage in most of the medical research.&#10;D)The not-for-profit form provides the most benefits to physicians.&#10;E)All of the above.

Accepted Answer

The not-for-profit form removes rents from the hospital and gives these rents to physicians.

Question 5

Which of the following statements is true concerning the trend in hospital care between in-patient and out-patient services since the mid-1980s?&#10;A)Both have been declining.&#10;B)Out-patient services have been growing while in-patient services have been declining.&#10;C)Out-patient services have been declining while in-patient services have been growing.&#10;D)Both have been growing.&#10;E)There has been no noticeable trend in either in-patient or outpatient services.

Accepted Answer

The answer of Which of the following statements is true...

Question 6

Horizontal integration allows firms to do all of the following except&#10;A)take advantage of cost savings due to economies of scale.&#10;B)reduce administrative costs.&#10;C)create brand identity.&#10;D)fully integrate with primary care clinics and acute care nursing facilities.

Accepted Answer

Horizontal integration involves the acquisition or merger of companies that operate in the same industry or market. It can lead to cost savings, reduced administrative costs, and the creation of a strong brand identity. However, fully integrating with primary care clinics and acute care nursing facilities would fall under vertical integration, which involves the acquisition or merger of companies at different stages of the supply chain. Therefore, option D is the exception as it refers to vertical integration, not horizontal integration.

Question 7

In order to be a successful price discriminator, a provider must have a degree of market power (depicted by a downward-sloping demand curve) and meet what other condition(s)?&#10;A) Prospective customers must be categorized according to willingness-to-pay.&#10;B) Opportunities for resale of the good or service must be limited.&#10;C) Customers cannot know that multiple prices are being charged.&#10;D) The provider must have excess capacity to accommodate the extra business.&#10;E) Both a and b.

Accepted Answer

A successful price discriminator must have market power and be able to categorize customers according to their willingness-to-pay. Additionally, opportunities for resale must be limited to prevent arbitrage and undercutting of prices. Customers do not necessarily need to be unaware of multiple prices being charged, but the provider must be able to control the price discrimination to avoid upsetting customers and damaging its reputation. Excess capacity can be helpful, but it is not a necessary condition for price discrimination to succeed. Therefore, both options A and B are correct.

Question 8

This study was the catalyst for the early 20^th century reform of medical education in the United States.What was it? A)Coolidge Commission. B)Hill-Burton Committee. C)Mangrum Report. D)Flexner Report. E)Kaiser Foundation Study.

Accepted Answer

The Flexner Report was a study published in 1910 that evaluated the quality of medical education in the United States and Canada. It highlighted major shortcomings in medical education and called for significant reform, leading to the closure of many substandard medical schools and the elevation of standards for medical education. The Flexner Report is often credited with modernizing medical education in the United States and is considered a pivotal moment in the history of American medicine.

Question 9

Consolidation activity in the hospital industry&#10;A)has slowed due to government regulations.&#10;B)has created a large number of nationwide for-profit hospital chains.&#10;C)has occurred almost exclusively at the local level.&#10;D)occurs for reasons that are different from those that cause consolidation in other industries.

Accepted Answer

The answer of Consolidation activity in the hospital industry&#10;A)has slowed...

Question 10

Using the physician-control model to explain hospital behavior leads to which of the following conclusions?&#10;A)Other medical inputs tend to be over used to maximize physicians' productivity.&#10;B)The use of operating rooms will be maximized with little excess capacity.&#10;C)Physicians will strive to utilize the nursing staff efficiently.&#10;D)All investment decisions will be based on optimal resource use.&#10;E)All of the above are conclusions of the physician-control model.

Accepted Answer

The physician-control model suggests that physicians, who have significant control over hospital resources, may overuse medical inputs to enhance their productivity, rather than focusing on optimal resource use or efficiency.

Question 11

The dominant factor affecting medical care delivery and finance in the 1960s was&#10;A)the Hill-Burton Act.&#10;B)prospective payment for hospitals.&#10;C)the creation of Medicare and Medicaid.&#10;D)the explosive growth of managed care.&#10;E)the passage of ERISA.

Accepted Answer

The answer of The dominant factor affecting medical care delivery...

Question 12

The merger of two community hospitals located in the same geographic market is called&#10;A)vertical integration.&#10;B)horizontal integration.&#10;C)a leveraged buyout.&#10;D)a conglomerate merger.&#10;E)a real shame since one of the hospitals will likely close.

Accepted Answer

The answer of The merger of two community hospitals located...

Question 13

The dominant factor affecting medical care delivery and finance in the 1990s was&#10;A)the Hill-Burton Act.&#10;B)prospective payment for hospitals.&#10;C)creation of Medicare and Medicaid.&#10;D)the explosive growth of managed care.&#10;E)ERISA.

Accepted Answer

The answer of The dominant factor affecting medical care delivery...

Question 14

Congressional studies report that Medicare payments fall 11 percent below the cost of treating patients while private insurance patients pay 29 percent more than cost.This phenomenon is called&#10;A)price discrimination.&#10;B)the Medigap.&#10;C)cost-shifting.&#10;D)cost-plus pricing.&#10;E)revenue enhancing.

Accepted Answer

The answer of Congressional studies report that Medicare payments fall...

Deck 9: The Hospital Services Market