MHA 710 Exam 1 Questions with Correct Solutions Latest Version

MHA 710 Exam 1 Questions with Correct Solutions Latest Version What is "economics"? - Answers A Map for decision making. Economics analyzes the allocation of scarce resources. What are some of the specific challenges faced by managers in healthcare? - Answers 1. The central roles of risk and uncertainty 2. The complexities created by insurance 3. The perils produced by information asymmetries 4. The problems posed by not-for-profit organizations 5. The rapid and confusing course of technical and institutional change What does asymmetric information mean? Can you give an example? - Answers When one party in a transaction has less information than the other party. For example, physicians and other healthcare providers usually understand patients' medical options better than patients do. Unaware of their choices, patients may accept recommendations for therapies that are not cost-effective or, recognizing their vulnerability to physicians' self-serving advice, may resist recommendations made in their best interest. What is adverse selection? - Answers A situation that occurs when buyers have better information than sellers. For example, high-risk consumers are willing to pay more for insurance than low-risk consumers are. (Organizations that have difficulty distinguishing high-risk from low-risk consumers are unlikely to be profitable.) What is the problem of scarcity? - Answers Demand for a good or service is greater than the availability What does it mean to say people are assumed to make choices rationally? - Answers focuses on individuals' efforts to best realize their goals, given their resources. What does it mean to says resources are scarce? - Answers Anything useful in consumption or production that has alternative uses. What is opportunity cost? - Answers Potential loss from a missed opportunity. Passing up the next best choice. What does "marginal" refer to? - Answers The examination of the costs and benefits through a small change in the production of goods What does efficiency refer to? - Answers No way to rearrange production of goods in a way that makes one person more better off without making somebody else worse off. How well an economy uses scare resources to meet the needs/wants of their customers How do positive economic statements differ from normative economic statements? - Answers Positive economics is objective while normative economics is subjective. Facts/ What is vs What should be How can economics be applied to the health sector? - Answers Describe, Explain, Evaluate, Plan As we progress through the chapters, think about the special characteristics that apply to the health sector that might limit the applicability of traditional economic models. - Answers Social determinants of health, few insurance companies that providers rely on, not a perfectly competitive market How are healthcare products both outputs and inputs? Can you give an example? - Answers Products (goods and services are considered products) are commonly both inputs and outputs. For example, a surgical tool is an input into a surgery and an output of a surgical tool company. Similarly, the surgery itself can be considered an output of the surgical team or an input into the health of the patient. What is a life year? And what is it used for in the context of this chapter? - Answers One additional year of life. It can equal one added year of life for an individual or an average of 1/nth of a year of life for n people. An example is spending $1 million by reducing childhood obesity and saving thousands of lives or using if for colonoscopies in 81 year old african american men and saving few lives. What are examples of interventions that have the most impact on life years and those that have less impact? - Answers Interventions with the most include antismoking, reducing childhood obesity, and multidisciplinary measurement of heart failure. Interventions with the least include colonoscopies for african american men who are 81 or 76 and multidisciplinary heart failure measurement with exercise. How does healthcare spending per person in the US compare to other countries? - Answers US spends far more per person on healthcare than any other large countries. How does US life expectancy at birth compare to other countries? - Answers 27 out of 34 of the OECD countries (bad!) Has the US achieved the same increases in life expectancy relative to their changes in spending as in other countries? - Answers From one perspective, this increase in life expectancy reflects impres-sive performance. From another, it does not compare well to the performance of other industrialized countries. For example, French life expectancy at birth rose from 79.2 years in 2000 to 82.4 years in 2015, and costs increased less than half as much in France as in the United States Why might we want to measure healthcare spending as a share of GDP instead of just healthcare spending per person? - Answers What appears to be higher spending, however, might just be the effects of inflation. To avoid inaccuracies resulting from changes in the value of money, economists use two strategies. The simplest and most reliable strategy to report spend-ing uses shares of national income, or gross domestic product (GDP). This examination of shares removes the effects of inflation What does inflation measure? - Answers Changes in level of price or goods over time How have expenditures by healthcare sector changed since 2000? - Answers Hospitals' share of total spending has risen by 2.0 percent since 2000, reflecting the continuing consolidation of services into health systems. Rapid increases in prices and intensity (which we cannot separate at this point) explain most of this increase. Spending on pharmaceuticals has risen sharply. spending for physicians' services claims nearly a fifth of total spending. The share has fallen since 2000 resulting from consolidation into systems and increasing spending on pharmaceuticals. steady decline in the share of direct consumer payments for healthcare. Broader and more complete insurance coverage explains this trend. Rapid expansion of the healthcare sector has been a feature of American life for most of this century, but its pace has clearly slowed. healthcare spending in 2000 claimed 12.5 percent of national income. By 2016, it had risen to 17.2 percent of national income. However, in contrast to the rapid expansion of previous years, the share plateaued between 2009 and 2013. What are some of the disruptive changes happening in the healthcare system? - Answers rapid technological change, the shrinking share of direct consumer payments, the rapid growth of the healthcare sector, the rapid growth of the outpatient sector, the slower growth of the inpatient sector, the steady increase in the number of uninsured Americans.