Hospital Market

1. Health Economics
Hospital Markets

2. Doctor’s best patient

3. Doctor’s best patient
sick people who live long

4. All Hospitals

5. All Hospitals
organized as physician
cooperatives

6. Patients
PayersProviders

7. Hospitals are a business

8. Hospitals are a business
revenues from whatever
source must exceed costs
or they disappear

9. Hospital productivity

10. Hospital productivity
beds
admissions
inpatient days
revenue per inpatient days

11. Hospital types

12. Hospital types
primary
secondary
tertiary
quaternary

13. Primary

14. Primary
ob-gyn
internal
general surgery
radiology and lab

15. Secondary

16. Secondary
cardio
respiratory
physical therapy
more sophisticated eqp

17. Tertiary

18. Tertiary
heart surgery
chemo
even more sophisticated

19. Quaternary

20. Quaternary
university research
most sophisticated

21. Concentration

22. Concentration
most are small and local

23. Barriers to Entry

24. Barriers to Entry
Certificate of Need
CON
high construction cost
learn by watching or doing

25. Buyers

26. Buyers
3% individual consumers
40% insurance
57% government

27. Monopoly - Oligopoly

28. Monopoly - Oligopoly
one seller
few sellers

29. Monopsony - Oligopsony

30. Monopsony - Oligopsony
one buyer
few buyers

31. Advertising

32. Advertising
industry expansion
market share increase
protection against payer

33. Eddie
Willie
Betrays
Willie
1Year
Silent
Silent
Betrays
Eddie
1Year
Eddie
Goes Free
Willie
10Years
Willie
Goes Free
Eddie
10Years
Willie
5Years
Eddie
5Years
Prisoner's
Dilemma

34. Collusion

35. Collusion
agree not to compete
not advertise

36. Society wants

37. Society wants
low cost
high quality

38. Society wants

39. Society wants
low cost
high quality

40. Not-for-Profit

41. Not-for-Profit
motivated by other factors

42. Not-for-Profit
motivated by other factors
human motivation

43. Not-for-Profit
motivated by other factors
human motivation
money

44. Not-for-Profit
motivated by other factors
human motivation
money
status and prestige

45. Not-for-Profit
motivated by other factors
human motivation
money
status and prestige
maximize personal utility

46. Not-for-Profit
motivated by other factors
human motivation
money
status and prestige
maximize personal utility

47. Not-for-Profit

48. Not-for-Profit
prestige and salaries
quantity
quality
quantity and quality
management expense

49. Quantity Maximize

50. Quantity Maximize
make as large as possible
board and management
bigger than you

51. Quality Maximize

52. Quality Maximize
equipment
inelastic demand
quest for status
better than you

54. Quality

55. Quantity
Quality

56. Quantity
Quality
Who decides?

57. Quantity
Quality
Who decides?
A

58. Quantity
Quality
Who decides?
A
B

59. Quantity
Quality
Who decides?
A
B
increase status?

60. Managerial Expense Model

61. Managerial Expense Model
management uses authority
to divert funds to serve
their self-interests

62. Five Ps

63. Five Ps
pay
perquisites
power
prestige
patronage

64. managers vs. directors

65. managers vs. directors
asymmetric information
who are you to question my
expertise?