Deck 6: Physicians

Question 1

A large, economically efficient medical practice will most likely employ non-physician inputs such as lab technicians, sophisticated computer systems, physician assistants, and nurses, in greater numbers than will a smaller medical practice.

Answer 1

True

Question 2

Malpractice liability insurance makes up about 10% of gross revenues for most physician practices.

Answer 2

False

Question 3

Much of the differences in physicians' salaries can be explained by the reputation of the medical school from which they graduated.

Answer 3

False

Question 4

Medicare payments make up the bulk of physician revenues.

Question 5

Asymmetric information in the physician/patient relationship has to do with the fact that a patient generally knows more about personal family background than the physician does.

Question 6

My optometrist remarked that he pays his barber more to cut his hair than he typically earns from one of the major insurance plans for a vision screening. I expect that the licensure for barbers is stricter than that for optometrists.

Question 7

In the short run, the supply curve for physicians is essentially downward sloping due to the licensure requirements.

Question 8

General practitioners pay hospitals a percentage of the revenues they received from patients who stay in the hospital.

Question 9

The major components of an RBRV calculation are physician work, practice expenses and malpractice insurance.

Question 10

Most physicians who accept a Medicare assignment generally employ the practice of balance billing their Medicare patients.

Question 11

Income potential will be higher in those physician specialties where insurance covers most of the charges, with little out-of-pocket cost to the consumer (e.g. surgeries); while income potential will be lower in those physician specialties where patients commonly face copayments and deductibles.

Question 12

Amount of required training is the primary determinant of the income potential in any given physician specialty.

Question 13

In the late 20^th century, many methods were used to pay physicians for services rendered. The most popular methods include all the following except payment

A) as a base salary.
B) according to a schedule of fee-for-service (FFS).
C) based on usual, customary, reasonable (UCR) charges.
D) based on resource based relative values(RBRVs).
E) based on patient outcomes.

Question 14

Which method(s) of payment to physicians will most likely result in higher total charges due to volume of services provided?

A) Capitation.
B) Salary.
C) Fee-for-service (FFS).
D) RBRVs.
E) Methods based on patient outcomes.

Question 15

The method of payment to physicians which might cause concern about under provision of medical care is

A) capitation.
B) salary.
C) fee-for-service (FFS).
D) RBRVs.
E) outcomes.

Question 16

The variation in salary and total compensation for hospital administrators is much greater than that of hospital emergency room physicians. The president of a large, teaching hospital may earn multiples of the salary of the president of a smaller, community hospital. Physicians employed by hospital emergency rooms will have very a much smaller variation in salary. One reason for this is

A) physicians work more hours than administrators.
B) variability in skill levels between the best and the worst in the field.
C) similarity in certification requirements.
D) similarity in licensure requirements.
E) variability in educational backgrounds.

Question 17

The agency relationship between physicians and patients is due to

A) uncertainty about need for care.
B) uncertainty about treatment quality and outcomes.
C) licensure rules.
D) educational backgrounds of physicians.
E) nonprofit status of hospitals.

Question 18

Information asymmetry

A) exists because individuals know their own characteristics and health risks better than physicians can.
B) exists because physicians know their patients' characteristics and health risks better than the patient can.
C) exists when patients learn more about their illness from WebMD than from their physician.
D) exists because physicians have a large store of human capital accumulated in medical care knowledge so it costs them less on the margin to evaluate an individual's medical problem than it does the patient.
E) exists because transactions costs are high in health care.

Question 19

According to the quality hypothesis of licensure, one would expect the degree of licensure to be greater for __________ than __________.

A) eyeglass fitting; eye examination by optometrist.
B) psychological counseling; psychiatric counseling.
C) treatment of open wound that requires stitches; cutting of fingernails on a diabetic patient.
D) contact lens sale; contact lens fitting.
E) flu shot; blood test.

Question 20

According to the monopoly rents hypothesis of licensure,

A) physicians will seek to limit the use of foreign trained physicians.
B) only physicians should dispense flu shots.
C) allergists should welcome the new supply of herbalists in the field of allergy treatment.
D) nurse practitioners should be welcome substitutes for physicians for performing annual gynecological exams.
E) insurance has little role in insuring current profit levels are protected.

Question 21

Suppose we allocate a budget for flu shots between physicians and licensed physician assistants. Let MBP equal the marginal benefit from physician administering flu shot and MCP equal the marginal cost of physician administering flu shot. Let MBA equal the marginal benefit from physician assistant administering flu shot and MCA equal the marginal cost of physician assistant administering flu shot.

-Currently, the MB_P/MC_P < MB_A/MC_A. We can correctly conclude that

A) too many flu shots are being given by physician assistants.
B) too many flu shots are being given by physicians.
C) too many flu shots are being given by physician assistants relative to physicians.
D) too many flu shots are being given by physicians relative to physician assistants.
E) an optimal allocation cannot be found.

Question 22

Suppose we allocate a budget for flu shots between physicians and licensed physician assistants. Let MBP equal the marginal benefit from physician administering flu shot and MCP equal the marginal cost of physician administering flu shot. Let MBA equal the marginal benefit from physician assistant administering flu shot and MCA equal the marginal cost of physician assistant administering flu shot.

-Assume that the marginal cost of a physician is constant at $500 per hour. The marginal cost of a physician assistant is constant at $50 per hour. Productivity in terms of flu shots per hour is as shown in the following table. ?

$\begin{array}{|c|c|c|} \hline \text { \# Hours } & \text { Physician Productivity, } & \text {Assistant Productivity, }\\ \text { } & \text { Shots per Hour} & \text { Shots per Hour }\\\hline0& 0&0\\ \hline1&24&18\\\hline 2&44&35\\\hline 3&50&48\\\hline \end{array}$

Currently, 1 physician hour and 2 assistant hours are employed giving flu shots. We can correctly conclude that

A) too many flu shots are being given by physician assistants.
B) too many flu shots are being given by physicians.
C) too many flu shots are being given by physician assistants relative to physicians.
D) too many flu shots are being given by physicians relative to physician assistants.
E) an optimal allocation cannot be found.

Question 23

Physicians often issue prescriptions and referrals for medical services rendered by other providers and, in most cases, they do not stand to benefit financially from those transactions. Suppose, an insurer introduces the following initiative: every time the physician does not prescribe an expensive MRI (magnetic resonance imaging), which may cost anywhere between $700 to more than $2,000 per scan, to a patient complaining of a headache, the doctor is paid a $100 bonus by the insurer. Which of the following will not be true regarding the outcomes of this new policy?

A) Physicians will now have an incentive to prescribe MRI scans less often.
B) This policy is likely to increase physicians' income.
C) This policy is likely to decrease insurer's profits.
D) If widely adopted, this policy is likely to decrease overall spending on imaging services.
E) It is likely that patient outcomes will not be significantly affected, as the threat of being sued for malpractice provides powerful reasons not to withhold medically necessary procedures.

Question 24

Discuss why, although direct payments to physicians make up less than the ¼ of all health care expenditures, physicians' effect on health care expenditures is much greater than that.

Question 25

If the median income for cosmetic surgeons is more than twice that for all physicians, why aren't there more cosmetic surgeons? (Please include some explanation of the physicians' labor-leisure choice and utility from job choice).

Question 26

Discuss the idea of the hospital as the physician's workshop. Why might this idea be more fitting for some specialties, like cardiac surgeons, rather than others, like radiologists?

Question 27

Why might capitation be easier to employ in a younger population than in an older population?

Question 28

Give some reasons for and against the idea that paying emergency room physicians a salary might provide an incentive for lower productivity than if they are paid by volume of services performed.

Question 29

In most cases, the physician's charges and the actual payments to the physician by the insurer are not the same, and often differ significantly, as can be seen in a typical "Explanation of Benefits" statement. Why do these differences exist? Does anyone ever pay full charges?

Question 30

Consider the following scenario. A well-established physician is an owner of his own medical practice, has steady clientele, works 35 hours per week, and his income is about $350,000 a year. Recently it was brought to his attention that there is an opportunity to further expand his business, by opening a satellite office in a nearby county. He could earn an additional $50,000 a year by increasing his work hours to 50 hours per week and splitting his week between the two offices.
Is it likely he will pursue this additional income? Why, or why not?