Please read the case and answer the question at the end of the case.

Title: Last-chance saloon GM prepares to close five factories, attracting Donald Trump’s ire Mary Barra is responding to customers’ soaring appetite for SUVs and pickups

By: Print edition | Business, The Economist.Nov 29th 2018 | NEW YORK

THE CAR industry’s changing fortunes have left a deep mark on Detroit’s urban landscape. Once-bustling factories such as the Fisher body plant, Ford’s Highland Park and the Packard plant became vast, abandoned graphitized shells—a sad reminder of the former might of America’s “motor city”. Now General Motors’s Hamtramck assembly plant looks likely to join the list of closed facilities. On November 26th GM announced that Hamtramck, along with four other factories in North America, and two more unspecified plants elsewhere, would not be assigned new vehicles or components to put together after next year.

News of the cost-cutting initially sent GM’s shares soaring. In total it will trim its North American workforce by a substantial 15%. Another Michigan plant is among those to be idled, as well as facilities in Ohio and Maryland, and in Ontario, Canada. The day after the announcement, however, criticism from President Donald Trump sent shares the other way. Mr Trump tweeted that he was “very disappointed” in Mary Barra, GM’s chief executive, noting that she was not shutting down plants in Mexico or China: “The US saved General Motors, and this is the THANKS we get!” He threatened to cut off GM’s access to federal subsidies for electric cars (although industry-watchers noted that this is not a concern, since GM has mostly used up its permit. Mr Trump is not the only disgruntled politician. Justin Trudeau, Canada’s prime minister, tried to reassure workers about the proposed closure of the plant at Oshawa, on the shores of Lake Ontario, where GM started making cars over half a century ago. After trade liberalisation led to tighter integration of the North American car market, cars became Oshawa’s lifeblood. When the financial crisis pushed GM towards bankruptcy, Canada joined America in bailing out the company to save local jobs.

QUESTION:

The swirl of forces upending the industry means GM probably had little choice but to take some action. As an independent economist, do you agree with the action taken by Ms Mary Barra, GM’s chief executive? Your answer must be supported by the appropriate data and information; and discussed using the appropriate concepts, theories and tools you have learned in Managerial Economics.

Med City’s Diabetes Management Care Group

The prevalence of diabetes in populations throughout the world is increasing, and its management is a challenge. The incidence of diabetes in a population is directly correlated with obesity, although many other risk factors are at play, including genetics. Health departments and health ministries engage in ongoing debates about the effectiveness and practicality of reducing risk by aggressively managing diet and exercise, managing risk more effectively by training more health professionals, and establishing specialized diabetes clinics, among other interventions. As a chronic condition, diabetes requires patients to have regular visits to primary care physicians and consultations with specialists. Furthermore, diabetes puts patients with other diseases at higher risk for hospitalization for any acute condition.

Med City Hospital is a well-recognized institution that has been deliv- ering care in Med City for many years. The hospital uses an electronic healthrecord (EHR) system developed by HRecord, one of the largest vendors in the market. Some patients with diabetes visit the hospital’s emergency department (ED) when their diabetes is not properly managed and causes complications. The hospital is reimbursed by insurance plans for patients who are admitted through the ED or by Medicare or Medicaid for the specific ED visit. ED visits have been on the rise, and so have repeat visits, which sometimes tax the already busy department. The ED staff have been calling for an expansion. The hospital’s leadership is focused on finding a solution.

Most primary care physicians in the Med City region practice in groups, although some practice independently. They have built their practices on the strength of access, reputation for quality, and patient loyalty. They are reimbursed primarily on a per-visit basis through a range of insurance plans, including Medicare. An ACO has been initiated, which gives physicians incen- tives to base treatment on value—but only for a defined population. These physicians have built long-lasting relationships with their patients and pro- vide some of the diabetes care; they also refer patients to endocrinologists and other specialists. Some physicians fear their patients will retain the specialists for treatment using their treatment protocols. Some physicians have access to the hospital EHR, whereas others are developing informa- tion systems that link through a health information exchange (HIE) system.

Med City forms a study group to give guidance on providing person- alized, integrated, quality care for patients who have diabetes and other chronic care needs. A number of physicians are invited to join the study, but, after an initial meeting, mostly young generalists attend. A few of them point out the benefits of involving other health professionals in developing care plans, such as dietitians and nurses. These discussions generate consider- able debate about the merits of hiring registered dietitians, nutritionists, nurse educators, diabetes nurse practitioners, and physician assistants. These discussions are spirited and consistent with the culture of the inno- vation institute at the hospital, whose motto is “Everyone comes to the ‘commons’ and is heard.” Everyone agrees that allied health professionals bring knowledge that is important for treating this patient population. The chief objection is that these professionals are expensive, and reimbursement rates do not factor them into the payment scheme. The primary care clinics in the area do employ nurses, most of whom left the hospital because of its long and irregular hours.

Because they will be part of a developing ACO in the region, some physi- cians point out that they will have access to EHRs that enable them to obtain patient information. Others argue that they cannot effectively manage chronic cases through the current HIE system. There is considerable discussion on what reimbursement rates will be and how services can be optimized and financially rewarded. Despite the challenges ahead, the hospital is interested in forming a care network; it is working on identifying key outcomes and negotiating a bundled-payment scheme based on the cost of providing evidence-based, effective, and coordinated care. Through such a care network, the hospital hopes to coordinate diabetes care management and be rewarded for it.

Question that needs to be answered

1. How should medical information and knowledge of care management be shared among the stakeholders?

Table 10-4

Refer to Table 10-4. Take into account private and external costs and assume the quantity of output is always a whole number (that is, fractional units of output are not possible). The maximum total surplus that can be achieved in this market is

Group of answer choices

$19.

$21.

$24.

$28.