Health Care Economics

How do you explain and predict hospital behaviors if using the utility-maximizing (quality - quantity) and physician control models, individually? (Please use figures/graphs to explain the models).

© SolutionLibrary Inc. 9836dcf9d7

Solution Preview

... chooses the levels of quantity and quality that satisfy its utility function. In this model, we expect that hospitals will achieve higher levels of quality by increasing costs. Hospitals will use profits from more profitable services to pay for less profitable ones. They will compete with each other by quickly adopting the latest technologies, and prices will rise as a result.

In the Physician control model (Pauly & Redisch, 1973), ...