The University of North Carolina at Pembroke
MPM 574--Health Economics
Practice Questions--Chapter 11  Answers

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 1.  What seems to be the shape of the average cost curve for hospitals?
U-shaped      p. 301
Is there evidence that significant economies of scale exist?

 2.  What barriers to entry have tended to keep new hospitals from forming?

 3.  Most community hospitals in 1995 were in which size category?
Small, less than 100 beds.  Table 11.1
Of all community hospital admissions in 1995, most were to which size of hospital?
The category in Table 11.1 with the most admissions was the large category, 500+.  This is an open-ended category.  The percentage of admissions to hospitals in the 500-600 range is probably much lower than the 21.6% of all admissions.
What was the next largest category?
The real hump in the admissions distribution is in the 200-300 bed range.

 4.  How would physicians want a hospital's profits to be used and how would they differ from the hospital trustees' interests?  How would they be similar?
The trustees want prestige and they want to serve the community.  They recognize that they need to attract physicians to achieve these goals.  So trustees' interests and physicians' interests may overlap.
Physicians want better facilities, more facilities so they have to wait less, more aides.

 5.  How would a hospital set the prices for its services if it wants to serve as many people as possible without going in the red?  if it wants to maximize its profits?

 6.  When did community hospitals' total number of beds peak?  total admissions?

last updated April 2, 2002, by Jim Frederick
copyright 2002 Jim Frederick