Hen 368 lecture 12 hospital market
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Transcript of Hen 368 lecture 12 hospital market
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Health EconomicsHospital Markets
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Doctor’s best patient
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Doctor’s best patient
sick people who live long
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All Hospitals
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All Hospitals
organized as physician cooperatives
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Patie
nts
Payers
Providers
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Hospitals are a business
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Hospitals are a business
revenues from whatever
source must exceed costs
or they disappear
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Hospital productivity
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Hospital productivity
beds
admissions
inpatient days
revenue per inpatient days
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Hospital types
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Hospital types
primary
secondary
tertiary
quaternary
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Primary
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Primary
ob-gyn
internal
general surgery
radiology and lab
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Secondary
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Secondary
cardio
respiratory
physical therapy
more sophisticated eqp
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Tertiary
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Tertiary
heart surgery
chemo
even more sophisticated
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Quaternary
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Quaternary
university research
most sophisticated
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Concentration
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Concentration
most are small and local
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Barriers to Entry
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Barriers to Entry
Certificate of Need
CON
high construction cost
learn by watching or doing
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Buyers
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Buyers
3% individual consumers
40% insurance
57% government
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Monopoly - Oligopoly
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Monopoly - Oligopoly
one seller
few sellers
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Monopsony - Oligopsony
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Monopsony - Oligopsony
one buyer
few buyers
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Advertising
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Advertising
industry expansion
market share increase
protection against payer
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Eddie
Willie
Betrays
Willie1 Year
Silent
Silent
Betrays
Eddie1 Year
EddieGoes Free
Willie10 Years
WillieGoes Free
Eddie10 Years
Willie5 Years
Eddie5 Years
Prisoner's
Dilemma
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Collusion
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Collusion
agree not to compete
not advertise
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Society wants
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Society wants
low cost
high quality
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Society wants
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Society wants
low cost
high quality
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Not-for-Profit
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Not-for-Profit
motivated by other factors
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Not-for-Profit
motivated by other factorshuman motivation
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Not-for-Profit
motivated by other factorshuman motivation
money
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Not-for-Profit
motivated by other factorshuman motivation
moneystatus and prestige
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Not-for-Profit
motivated by other factorshuman motivation
moneystatus and prestige
maximize personal utility
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Not-for-Profit
motivated by other factorshuman motivation
moneystatus and prestige
maximize personal utility
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Not-for-Profit
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Not-for-Profit
prestige and salariesquantityquality
quantity and qualitymanagement expense
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Quantity Maximize
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Quantity Maximize
make as large as possibleboard and management
bigger than you
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Quality Maximize
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Quality Maximize
equipment inelastic demandquest for statusbetter than you
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Quality
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Quantity
Quality
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Quantity
Quality
Who decides?
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Quantity
Quality
Who decides?A
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Quantity
Quality
Who decides?A
B
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Quantity
Quality
Who decides?A
B
increase status?
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Managerial Expense Model
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Managerial Expense Model
management uses authority to divert funds to serve
their self-interests
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Five Ps
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Five Pspay
perquisitespower
prestigepatronage
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managers vs. directors
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managers vs. directors
asymmetric information
who are you to question my expertise?