Chapter 10 The Hospital Services Market Test Bank Answers

Chapter 10: The Hospital Services Market

Multiple Choice

1. This study was the catalyst for the early 20^th century reform of medical education in the United States. What was it?

1. Coolidge Commission.
2. Hill-Burton Committee.
3. Mangrum Report.
4. Flexner Report.
5. Kaiser Foundation Study.

2. In the 19^th century hospitals had notorious reputations—questionable places to visit, risky places to stay. What advances changed all this?

1. Development of the germ theory of disease.
2. Advances in medical technology.
3. Availability of health insurance to pay the bills.
4. All of the above.

3. The dominant factor affecting medical care delivery and finance in the 1960s was

1. the Hill-Burton Act.
2. prospective payment for hospitals.
3. the creation of Medicare and Medicaid.
4. the explosive growth of managed care.
5. the passage of ERISA.

4. The dominant factor affecting medical care delivery and finance in the 1980s was

1. the Hill-Burton Act.
2. prospective payment for hospitals.
3. creation of Medicare and Medicaid.
4. the explosive growth of managed care.
5. ERISA.

5. The dominant factor affecting medical care delivery and finance in the 1990s was

1. the Hill-Burton Act.
2. prospective payment for hospitals.
3. creation of Medicare and Medicaid.
4. the explosive growth of managed care.
5. ERISA.

6. Which of the following statements is true concerning the trend in hospital care between in-patient and out-patient services since the mid-1980s?

1. Both have been declining.
2. Out-patient services have been static while in-patient services have been declining.
3. Out-patient services have increased substantially because admissions are down.
4. Both have been growing.
5. There has been no noticeable trend in either in-patient or outpatient services.

7. In order to be a successful price discriminator, a provider must have a degree of market power (depicted by a downward-sloping demand curve) and meet what other condition(s)?

1. Prospective customers must be categorized according to willingness-to-pay.
2. Opportunities for resale of the good or service must be limited.
3. Customers cannot know that multiple prices are being charged.
4. The provider must have excess capacity to accommodate the extra business.
5. Both a and b.

8. Congressional studies report that Medicare payments fall 11 percent below the cost of treating patients while private insurance patients pay 29 percent more than cost. This phenomenon is called

1. price discrimination.
2. the Medigap.
3. cost-shifting.
4. cost-plus pricing.
5. revenue enhancing.

9. The predominate organizational form for U.S. hospitals is not-for-profit. Why?

1. The profit motive corrupts human behavior.
2. For-profit hospitals do not provide charity care.
3. Private not-for-profit hospitals engage in most of the medical research.
4. The not-for-profit form provides the most benefits to physicians.
5. All of the above.

10. Using the physician-control model to explain hospital behavior leads to which of the following conclusions?

1. Other medical inputs tend to be over used to maximize physicians’ productivity.
2. The use of operating rooms will be maximized with little excess capacity.
3. Physicians will strive to utilize the nursing staff efficiently.
4. All investment decisions will be based on optimal resource use.
5. All of the above are conclusions of the physician-control model.

11. The merger of two community hospitals located in the same geographic market is called

1. vertical integration.
2. horizontal integration.
3. a leveraged buyout.
4. a conglomerate merger.
5. a real shame since one of the hospitals will likely close.

12. Economies of scale exist when

1. long-run average costs decline as output increases.
2. long-run average costs are constant.
3. long-run average costs increase as output increases.
4. short-run average costs decline.
5. short-run average costs increase.

13. Horizontal integration allows firms to do all of the following except

1. take advantage of cost savings due to economies of scale.
2. reduce administrative costs.
3. create brand identity.
4. fully integrate with primary care clinics and acute care nursing facilities.

14. Consolidation activity in the hospital industry

1. has slowed due to government regulations.
2. has created a large number of nationwide for-profit hospital chains.
3. has occurred almost exclusively at the local level.
4. occurs for same reasons that cause consolidation in other industries.