Healthcare Management


a.) Provide clear, concise and thorough responses to each question!

b.) 500 words for each question

c.) Provide evidence for each question and cite sources


  1. Suppose that upon graduating, you accept a position in hospital administration at a large urban hospital. Specifically, your initial job is to allocate resources across two disparate divisions within the hospital: the OB/GYN service and the Psychology Clinic. These two divisions have very little overlap, so $1 invested in the Psychology Clinic has no direct effect on the OB/GYN service. Suppose you are given a fixed amount of money to hire new physician assistants.
    1. Draw a production function for each division (two graphs) of output (number of patients seen) as a function of physician assistants. Assume that capital (i.e., the facility size) is fixed and that both divisions are operating in a productively efficient manner.
    2. Referring to your graphs, describe the opportunity cost of devoting $1 to the Psychology Clinic.
    3. Demonstrate on your graphs a set of points (one for each division) that would be allocatively efficient. Explain why you chose these points.
    4. Suppose a new technology arises that complements physician assistants in the production of OB/GYN cases. Redraw both production functions. How does the opportunity cost of $1 of investment in the Psychology Clinic change?  Explain. If the answer is ambiguous, describe the factors that would be important in the answer.
  2. Physician assistants have long argued that they have the ability to provide as much as 70% of the medical services provided by primary care physicians at a much lower cost. Yet government regulations, which are called scope of practice laws, limit their ability to work independently of physicians. As we have discussed, these laws vary significantly by state. Consider a potential reform by the federal government in which all statutes limiting the activities of physician assistants were eliminated. Explain in words how such a reform would affect physician wages, physician assistant wages, and quality of care. Prior to the reform, you are asked to study its potential effects. How might you go about forecasting the effects?  What are some limitations to your forecasts?
  3. A popular topic in health policy is the issue of price transparency—requirements that physicians, hospitals, and other providers make public the level of charge for various services.
    1. Summarize the evidence that exists on the extent to which price transparency measures actually get patients to resort to providers that charge less.
    2. As we’ve discussed, charges are not the same as actual payments. What are some practical problems with a price transparency measure that requires the public revelation of payments?
    3. Suppose a payment transparency measure were enacted, such that the payment for every claim were made public. What are some ways in which this may change future negotiations between providers and payers over payment levels.
  4. Health Maintenance Organizations’ (HMOs) health insurance plans tend to spend considerably less per patient than fee-for-service health insurance plans. Discuss some reasons that this is the case.
  5. Suppose the relevant market definition for a nursing home is the zip code. Consult this website developed by Medicare

Choose two geographically adjacent nursing home markets that have both for-profit and not-for-profit nursing homes and compute the Herfindahl-Hirschman Index (HHI) for each market based on the number of licensed beds. In each market, what percentage of the nursing homes are for-profit?  In writing, explain what your results tell you about the degree of market concentration in each market.  What do the HHI figures tell you about any potential price differences that may exist across the two markets? Now recalculate the HHI assuming that the two zip codes constitute one market. Has HHI changed? Why?

Target Audience:

Healthcare management, Business management

Paper Format:

2,500 words, Double-spaced, 12-point Times New Roman font, with 1” margins around.