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Business Economics Economics For Healthcare Managers

a) The anticipated visits when the marketing department estimates medicare visits equal to 5 - (1.0 × C) + (-6.5 × T O ) + (5 × T R ) + (0.01 × Y) where (C) copayment is $20, waiting time (T O ) is 30 minutes, and waiting time in competitor’s clinic (T R ) is 40 minutes, and per capita income (Y) is $40,000. Introduction: Businesses use market forecasting to assume the performance that they can perform in their target markets in the future. Revenue refers to the entire amount of money that is made by selling products and services in the market and it is essential to the business's core operations. In this case, C (copayment) is $20 T O (waiting time in the organization) = 30 minutes T R (waiting time in competitors’ organization) = 40 minutes And, Y (Per Capita Income) = $40,000. Therefore, medicare visits are equal to: = 5 - 1 .0×C + (-6 .5×T O ) + (5×T R ) + 0 .01×Y = 5 - (1×20) + (-6 .5×30) + (5×40) + ( .01×40,000) = 5 - 20 - 195 + 200 + 400 = 390 visits b) The anticipated revenue when the medicare fee is $120. Introduction: Businesses use market forecasting to assume the performance that they can perform in their particular target markets in the future. Revenue refers to the entire amount of money that is made by selling products and services in the market and it is essential to the business's core operations. Number of visits which are calculated for Medicare is 390 and Medicare’s allowed fee is $120. Then, the Total Revenue would be: = Price× Quantity = $120×390 = $46,800 c) What can change the forecasted revenue and visits? Introduction: Businesses use market forecasting to assume the performance that they can perform in their target markets in the future. Revenue refers to the entire amount of money that is made by selling products and services in the market and it is essential to the business's core operations. In this case, the number of visitors and income through the given equation will change as they depend on any of the factors of calculation. The alteration to the Copay is most likely the biggest one, though because fewer people will go to the visit since they are paying more as the co-pay approaches the genuine price. It can happen because the moral hazard of overusing the product would increase with lower co-pays. After all, they aren't paying the full price. Moreover, patients only think about their co-pay at the time of service due to which adjustments in the co-pay may influence the frequency of visits even though Medicare's reimbursement rate remains constant.

a) The anticipated visits when the marketing department estimates medicare visits equal to 5 - (1.0 × C) + (-6.5 × T O ) + (5 × T R ) + (0.01 × Y) where (C) copayment is $20, waiting time (T O ) is 30 minutes, and waiting time in competitor’s clinic (T R ) is 40 minutes, and per capita income (Y) is $40,000. Introduction: Businesses use market forecasting to assume the performance that they can perform in their target markets in the future. Revenue refers to the entire amount of money that is made by selling products and services in the market and it is essential to the business's core operations. In this case, C (copayment) is $20 T O (waiting time in the organization) = 30 minutes T R (waiting time in competitors’ organization) = 40 minutes And, Y (Per Capita Income) = $40,000. Therefore, medicare visits are equal to: = 5 - 1 .0×C + (-6 .5×T O ) + (5×T R ) + 0 .01×Y = 5 - (1×20) + (-6 .5×30) + (5×40) + ( .01×40,000) = 5 - 20 - 195 + 200 + 400 = 390 visits b) The anticipated revenue when the medicare fee is $120. Introduction: Businesses use market forecasting to assume the performance that they can perform in their particular target markets in the future. Revenue refers to the entire amount of money that is made by selling products and services in the market and it is essential to the business's core operations. Number of visits which are calculated for Medicare is 390 and Medicare’s allowed fee is $120. Then, the Total Revenue would be: = Price× Quantity = $120×390 = $46,800 c) What can change the forecasted revenue and visits? Introduction: Businesses use market forecasting to assume the performance that they can perform in their target markets in the future. Revenue refers to the entire amount of money that is made by selling products and services in the market and it is essential to the business's core operations. In this case, the number of visitors and income through the given equation will change as they depend on any of the factors of calculation. The alteration to the Copay is most likely the biggest one, though because fewer people will go to the visit since they are paying more as the co-pay approaches the genuine price. It can happen because the moral hazard of overusing the product would increase with lower co-pays. After all, they aren't paying the full price. Moreover, patients only think about their co-pay at the time of service due to which adjustments in the co-pay may influence the frequency of visits even though Medicare's reimbursement rate remains constant.

Economics For Healthcare Managers

Economics For Healthcare Managers

4th Edition

ISBN: 9781640550483

Author: Robert H. Lee

Publisher: Health Administration Pr

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Chapter 9, Problem 5E

Chapter 9, Problem 7E

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Suppose you are collecting data from a country like Japan where the government sets the price of healthcare. Each prefecture in Japan has a different set of prices (for example, Tokyo has higher prices than rural Hokkaido). Data for 1999 are displayed in the table below. Region Outpatient Visits per Month Price per Visit Tokyo 1.25 25 Hokkaido 1.75 15 (4 points) What is the arc price elasticity of demand for health care consumers in Japan (using only these data)? (4 points) Suppose that incomes are generally much higher in Tokyo than Hokkaido. Is your answer to the last question an overestimate or underestimate of price elasticity? Justify your answer. (c) (4 points) Using your estimated elasticity, what would the demand for health care be if the price in Tokyo were raised to 30 per visit? What would the demand in Hokkaido be if the price were lowered to 5 per visit?

Demand studies in health care have provided estimates of both income and price elasticity. Estimates of income elasticity are usually above +1.0. Estimates of price elasticity typically range between -0.1 and -.75 (with hospital services at the lower end and elective services at the upper end). What information do these estimates convey? What does the price elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions? What does the income elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions?

How can healthcare systems address the inelastic demand for emergency care to prevent unchecked and exorbitant pricing for patients?

Chapter 9 Solutions

Economics For Healthcare Managers

Ch. 9 - Prob. 1E Ch. 9 - Prob. 6E

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