You manage the only medical clinic in Morrill County, a very rural region located in western Nebraska. In fact, yours is the only clinic within a 150 mile radius of your location. You are faced with increased costs of providing services to this local population. To determine if rate increases for service is possible given market conditions, you hired an economist estimate the price and income elasticities for the medical services you provide to Morrill County residents. Your economist provides you with the following demand equation: In(Q) = 0.45 - 0.15*In(P) + 0.70*In(I), where Q measures the number of patients receiving medical care, P is the average rate charged for providing service (and is correlated with the cost of service), and I is the Income of patients receiving medical care. From this, you can conclude that you should increase rates when incomes decrease to avoid losses in revenues. you can increase clinic revenues by decreasing rates. you can increase clinic revenues by increasing rates. you will experience increased clinic revenues during economic recessions.
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15. This is less than 1, which means demand is inelastic. This means that an increase in price will lead to an increase in total revenue, and a decrease in price will lead to a decrease in total revenue. So, you can increase clinic revenues by increasing Show more…
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Akash M.
You are the manager of a Family Practice clinic in a healthcare system that utilizes productivity benchmarks to monitor staffing efficiency. Your clinic has consistently been at or very near benchmark productivity levels. The physicians in your clinic have requested that you hire two additional support staff to make the clinic run smoother. The process for approval requires a pro forma analysis to be done with Finance and shared with your Vice President to garner her support. Use the below information to answer the below questions. Benchmark: 2.20 productive hours per clinic visit Annual budgeted clinic visits: 20,000 Average hourly wage of clinic staff: $25.00 Productive FTE/Total FTE: 88% Average net reimbursement per visit: $65.00 Please respond to the following questions: 1. How many additional clinic visits are required to keep your clinic at benchmark if you hire two additional 1.0 FTE support staff? 2. Is adding the number of visits you calculated above positive or negative financially? Assume all variable costs other than staffing costs are negligible. 3. How might a payor mix shift to more Medicare/Medicaid patients at your clinic change the calculation in part 2? Cite at least one external reference.
A report from the Center for American Progress states that administration costs for healthcare in the United States are well above those in other high-income countries, accounting for 8.3 percent of spending in the healthcare sector, compared to a global average of about 3 percent. According to the report, average billing and insurance-related costs per patient encounter include $215 for inpatient surgery, $62 for an emergency room visit, and $20 for a primary care visit. The report noted that a structural overhaul of finance and pricing in the healthcare industry would greatly help in eliminating excess administrative costs, but moving to a complete single-payer healthcare system is not mandatory. According to the report, setting uniform rates where all health insurers pay the same price for services would go a long way to reducing administrative costs. Source: Sarah Kilff, "2 charts that show our healthcare administrative costs are really high," vox.com, April 8, 2019. The article discusses the high administrative costs of healthcare in the United States. Even if private insurance companies were more efficient and brought administrative costs down, consumers would pay more than the full cost of medical treatment. This would result in the market equilibrium price and quantity of medical services being less than the efficient equilibrium price and quantity.
Jennifer S.
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