In 2017, the health care industry saw a boom of hospital merger announcements. What economics argument can hospital use to justify mergers?

In 2017, the health care industry saw a boom of hospital merger announcements. What economics argument can hospital use to justify mergers? That is, what are the positive consequences of allowing mergers to take place? Identify the concept. What are the potential negative consequences for consumers?

You have a choice to hire a doctor that would be able to see 2184 patients annually with an annual salary of $180,000 or a Registered Nurse with an annual salary of $67,000 that would be able to see 1561 patients per year. All else equal, would you hire a Registered Nurse or a Doctor?

Technological change may reduce costs in health care when it improves productivity of health care resources. However, in some cases technological changes may increase costs. A) Why would we, as a society, be willing to accept and pay for cost increasing technologies in health care? B) Provide examples of cost increasing and cost decreasing technological innovations in health care.

It may seem that there are a lot of job openings for nurses at any point in time suggesting that there is a shortage of nurses in a hospital setting. Explain why a typical hospital cannot simply increase wages to attract more nurses.

Discuss three theories explaining how hospital behave (Hint: three theories)

Who is ultimately paying for the uncompensated care?

What is cost-shifting in health care?

Explain the concept of supplier-induced demand (SID). What is it?

Explain using a graph how in case of natural monopoly a monopolist is underproducing and charging higher price compared to social optimal level. Upload your image here.

In the utility maximizing model, what forces limit provider’s ability and willingness to engage in SID?

Would you expect more or less SID as a result of the increase in the number of medical school graduate? Explain.

Explain the concept of small area variations (SAV). What is it?

What factors contribute to SAV?

Demonstrate on the graph that overutilization as well underutilization is wasteful. Upload your image here.