Question

2. explain the concept of “diseconomies of scale” and discuss how a physician-firm might encounter this issue. Then, consider two ways in which the physician-firm might pay its physicians: fee-for-service or salary. Discuss which of these payment schemes might be best for limiting diseconomies and any negative impacts such a payment scheme might have for patients.

Answer 1

Diseconomies of scale is characterized as the increase in cost for a firm with increment in creation as size of firm expands. It is inverse of economies of scale which says there is a decrement in cost with Increase in creation. If there should be an occurrence of a physician firm with increment in yield there is an expansion In installment or cost of doctors which lead to expanded expense.

Fees for service or Expenses for-administration: it is the manner by which a section of pay or fixed rate is given to doctor for administration and a piece of it is kept by firm as commission. If there should be an occurrence of little yield it is favored as it lessens weight of paying a fixed compensation Compensation: on the off chance that firm size is excessively enormous, at that point firm should pick pay strategy for paying as it cut down also, diminishes cost. They need not to pay the doctor a level of pay. Charges for-administration is useful for patients as doctor will get a piece of installment for every patient so he will concentrate all the more yet in instance of pay he won't mind much As he will be getting a compensation Which don't relies upon number of patients