Health Physician Behavior and Provider Payments Worksheet

Louisiana State University Health Physician Behavior and Provider Payments Worksheet

QUESTION 1

Inducing demand poses absolutely no financial risk to providers.

True

False

Question 2

Physicians in group practices have a lower degree of market power in comparison to physicians in solo practices.

True

False

The profit maximizing firm produces where MR = AC.

True

False

Question 4

Economic theory suggests that supplier-induced demand results in

a. an increase in positive as well as negative externalities of production.

b. an increase in the demand of unnecessary good and services.

c. more suppliers entering the market.

d. a decrease in the marginal cost of production.

Question 5

The notion that, at a high wage, individuals might supply less labor is represented by which graph?

a. The demand for labor under perfect competition

b. The backward-bending supply curve for labor

c. The price-making firm under monopolistic competition

d. The production function of capital and labor

Question 6

The target income hypothesis is one explanation for which kind of physician behavior?

a. Capitated payment

b. Economies of scope

c. Supplier-induced demand

d. Monopoly power

Question 7

When the physician-to-population ratio increases, the supply for labor curve ____________.

a. shifts right

b. remains unchanged

c. shifts left

d. shifts up

Question 8

Which of the following is not an example of market power in healthcare?

a. The ability to set a low price

b. Having for-profit corporate status

c. The ability to set a high price

d. Obtaining higher reimbursement rates from insurance companies

Question 9

Which type of market structure best describes the physician market?

a. Perfectly competitive

b. Monopolistically competitive

c. Oligopoly

d. Monopoly

Question 10

With monopolistically competitive firms, an increase in competition could spur a desire to increase the quality of the products sold. If this occurs, which of the following is a reasonable expectation?

a. A decrease in the average cost of production

b. A decrease in the equilibrium price

c. An increase in the marginal cost of production

d. All of the above

Question 11

In a principal-agent relationship, the agent acts on behalf of the principal.

True

False

Which one of the following is an implication of agency theory, as applied to the health sector?

a. Patients will seek to increase payments to the health care providers

b. Patients will seek to reduce effort

c. Health care providers fully inform their patients

d. The optimal level of health care may not be provided

Question 13

Which two of the following provider payment mechanisms doesn’t produce an incentive to over-supply or induce the demand? (Select 2.)

a. Fee-for-service

b. Capitation

c. Performance-based payment

d. Salary

Question 14

So long as patient’s utility factors into a health care professional’s own utility function, the health care professional’s actions will maximize the patient’s utility.

True

False

Question 15

This question has been thrown out, as there are multiple correct answers, but only one answer was allowed.

Which of the following factors can serve to limit a health care professional from acting in their own personal interest (excluding their own interest in their patient’s welfare)?

a. Financial incentives in their contracts

b. The existence of peer review and professional regulation

c. Their belief in a set of medical ethics

d. Uninformed patients

Question 16

A fee-for-service payment mechanism for compensating health care professionals will always lead to an increase in the provision of services.

True

False

Question 17

‘Cream skimming,’ under a capitation system, refers to:

a. a medical treatment that is needlessly expensive.

b. doctors favoring patients with costly to treat conditions.

c. doctors favoring patients that require less attention.

d. patients selecting doctors based on the quality of service.

Question 18

The quality of care under a capitation system can be improved by:

a. allowing health care providers to choose their own patients.

b. having patients be randomly assigned to health care providers.

c. allowing patients to choose their health care providers.

d. limiting the system to low-income regions.

Question 19

Identify a provider payment mechanism that produces an incentive to under-supply health services.

a. Salary

b. Capitation

c. Fee-for-service

d. Performance-based payment

Question 20

Identify a provider payment mechanism that can be used to increase the provision of specific services.

a. Capitation

b. Salary

c. Fee-for-service

d. Performance-based payment

Question 21

Identify the mechanism for reimbursing hospitals that provides the least incentive for the efficient use of resources.

a. Payment per day

b. Global budgets

c. Payment per case

d. Line-item budgets

Question 22

Identify the hospital reimbursement mechanism that is most likely to lead to ‘cream skimming.’

a. Payment per case

b. Line-item budgets

c. Global budgets

d. Payment per day

Question 23

Capitation shifts a great deal of the risk to the provider because a set dollar amount for each patient must cover all care for an entire group of patients, no matter the actual charges.

True

False

Question 24

The collection of funds that can be used for financing a given population’s health care so that contributors share risks is called:

a. collective action.

b. fund pooling.

c. purchasing.

d. universal coverage.