Question

In class several models of non-profit hospital were presented. Compare and contrast the approach and predicitions of the following models:

(1) The Newhouse Model

(2) The Pauly-Redisch Model

(3) The Phelps Model

(4) The Harris Model

Diagrams are not needed.

Answer 1

1) new house model

• It maximizes the utility to a breakeven point
• It is done from quantity of services produced and the quality of services
• Utility maximization implies selection of least cost input combinations .
• it does NOT mean the hospital achieves allocative efficiency
• NFP hospitals will produce quality to a greater extent than FPs due to presence of quality in utilities

2) The Pauly Redisch Model

• Physician workshop
• physicians use hospitals to maximize their income
• Managers control hospital decision making and act to increase their own income
• Hospitals control the stock of inputs
• physicians direct the flow of inputs

3) The Harris Model

• maximize capacity and quality
• Multiple firms loosely joined by a complex set of relations based on market
• Differences arise from monitoring the use of resource and responding to physician demand for excess capacity
• When the patients arrive they expect MD to represent their interests
• And they ensures that the resources are avilable to treat them

Im not sure about Phelps model ... Even though i doubt whether such exists

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