Question 1

In 1977, a medication to fight heart disease cost $1,000 and had a mortality rate of 80% after 1 year. Surgery cost $25,000 and had a mortality rate of 60% after 1 year. In 2012, a medication to fight heart disease cost $150 and has a mortality rate of 30%. Surgery costs $10,000 and has a mortality rate of 10%. One should expect expenditures on heart disease treatments to escalate because

Accepted Answer

The reduction in both cost and mortality rate for surgery from 1977 to 2012 makes it a more attractive option for individuals, leading to an increase in the number of people opting for surgery, thereby increasing overall expenditures on heart disease treatments.

Question 2

Considering all the confusion about hospital charges, costs and prices, what is the most common way for private insurers to develop a set of reimbursement rates they will use with every particular hospital?

Accepted Answer

Most private insurers use Medicare reimbursement rates as a benchmark for setting their own reimbursement rates to hospitals, often paying a certain percentage above those rates. This approach provides a standardized basis for negotiations and helps insurers ensure their rates are competitive and reflective of the broader healthcare market.

Question 3

Which of the following hospital inputs can be considered fixed for at least a 3-month period?

Accepted Answer

The answer of Which of the following hospital inputs can...

Question 4

Economists might point to the existence of so many blood collection services in strip malls and not in hospitals as evidence of economies of scale in blood collection services. Please explain why this might or might not be true.

Accepted Answer

The answer of Economists might point to the existence of...

Question 5

Explain why the prospective payment system enacted by the institution of DRG payments was intended to reduce cost escalation in hospitals. What system did it replace?

Accepted Answer

The answer of Explain why the prospective payment system enacted...

Question 6

In what areas did hospitals seek to increase revenues after the institution of administered pricing of DRGs? Did this increase economic efficiency?

Accepted Answer

The answer of In what areas did hospitals seek to...

Question 7

Please discuss who wins and who loses ever since the Certificate of Need (CON) legislation has been enacted to restrict the addition of any new hospital beds, such as beds for cardiac care.

Accepted Answer

The answer of Please discuss who wins and who loses...

Question 8

In 1977, a medication to fight heart disease cost $1,000 and had a mortality rate of 80% after 1 year. Surgery cost $25,000 and had a mortality rate of 60% after 1 year. In 2012, a medication to fight heart disease cost $150 and has a mortality rate of 30%. Surgery costs $10,000 and has a mortality rate of 10%. As a result of technological improvements, in this particular case medical costs can be expected to escalate. Is this response to technological advances typical for most products in the economy, or unique to healthcare only? Discuss why or why not, using the market for cell phones for comparison.

Accepted Answer

The answer of In 1977, a medication to fight heart...

Question 9

As shown in Table 9.3, average hospital cost per patient day is the lowest for hospitals with 50 to 99 beds is continuously increasing as hospital size increases beyond that point, and is the highest for hospitals with 500 beds or more. Explain how is this possible in a highly competitive hospital environment? How can such large hospitals (500 beds or more) still stay in business? Discuss.

Accepted Answer

The answer of As shown in Table 9.3, average hospital...

Quiz 9: Management and Regulations of Hospital Costs