MHA 710 Healthcare Economics Exam 3 Latest Update 2025-2026 Questions with Correct Answers, Exams of Nursing

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MHA 710 Healthcare Economics Exam 3

Latest Update 2025- 2026 Questions with

Correct Answers and Verified (Score A)

Louisiana State University

The amount that Medicare pays a hospital for treating a Medicare patient is determined: a. at the point when the diagnosis is made. b. at the time of admission to the hospital. c. before the patient sees a physician. d. after the hospital bill is reviewed by Medicare auditors. e. after medical services are provided. a. at the point when the diagnosis is made. Compared to the not-for-profit organizational form, the for-profit environment a. allows for the transfer of assets. b. lacks a profit motive. c. gives shareholders higher returns on their investment d. provides patients with higher quality of care. e. does not provide charity care.

a. allows for the transfer of assets. What is the most significant cost of attending medical school? a. Books and incidentals b. Room and board c. Tuition and fees d. The income foregone d. The income foregone Using the physician-control model to explain hospital behavior leads to which of the following conclusions? a. Other medical inputs tend to be overused to maximize physicians' productivity. b. All investment decisions will be based on optimal resource use. c. The use of operating rooms will be maximized with little excess capacity. d. Physicians will strive to use the nursing staff efficiently. a. Other medical inputs tend to be overused to maximize physicians' productivity. Economies of scale exist when: a. long-run average costs decline as output increases. b. long-run average costs increase as output increases. c. long-run average costs are constant.

The rate of return on an investment in medical education: a. will increase with an increase in the availability of student loans. b. is inversely related to the number of years in the profession. c. is much higher than the rate of return on an undergraduate business degree. d. is inversely related to income. e. is inversely related to the length of time spent in formal schooling e. is inversely related to the length of time spent in formal schooling Suppose the market for nursing services in a local community is so dominated by a single community hospital that, for all practical purposes, it is considered a monopsony. Using the diagram below, answer the question. What is the equilibrium wage and level of employment under monopsony? a. W0 and E b. W2 and E c. W0 and E d. W0 and E e. W1 and E c. W0 and E

The following diagram depicts the market for physicians' services that is originally in equilibrium at the point where demand and supply (D0 and S0) intersect. As physician supply increases from S0 to S1, an even larger concurrent shift in demand from D0 to D1: a. will increase demand for physicians' services, but not spending. b. will cause overall spending on physicians' services to increase. c. will result in a new equilibrium at P2 and Q2. d. will result in a decrease in the price of physicians' services. e. will force physicians to limit the number of patients they see. a. will increase demand for physicians' services, but not spending. The merger of two community hospitals located in the same geographic market is called: a. a conglomerate merger. b. a leveraged buyout. c. horizontal integration. d. vertical integration. e. a real shame, as one of the hospitals will likely close. c. horizontal integration. The expanded use of prospective payment in hospitals has changed the nature of competition in that market. Which of the following statements is true?

Which of the following statements is true about cost shifting in hospitals? a. Regardless of payer mix, hospitals are taking full advantage of their bargaining power with payers who are able to cost shift. b. Capacity-constrained medical providers are not able to cost shift. c. The positive correlation coefficient between cost-to-payment ratios for various payers indicates that cost shifting is taking place. d. The ability to cost shift depends on a hospital's payer mix. e. Classic Ramsey pricing can be interpreted in different ways, leading researchers into arguing that if it looks like cost shifting, it probably is cost shifting. d. The ability to cost shift depends on a hospital's payer mix. This study was the catalyst for the early twentieth century reform of medical education in the United States. What was it? a. Hill-Burton Committee b. Mangrum Report c. Coolidge Commission d. Flexner Report e. Kaiser Foundation Study d. Flexner Report

Changes caused by the shift from charge-based rates to negotiated rates has had which of the following results? a. Charging master rates serve as a powerful guide for optimal resource allocation in the industry. b. The change has increased the importance of Ramsey pricing principles in setting rates. c. Most hospitals experience a gap between the amount they receive from their payers and the amount billed, with receipts as low as 20 percent of amount billed. d. A growing percentage of patients with insurance are paying billed rates. c. Most hospitals experience a gap between the amount they receive from their payers and the amount billed, with receipts as low as 20 percent of amount billed.

2. If the market were perfectly competitive instead of dominated by a monopsonist, what would the equilibrium wage and level of employment be? a. W1 and E b. W2 and E c. W0 and E d. W0 and E e. W0 and E a. W1 and E What is the most significant cost of attending medical school? a. Tuition and fees b. Books and incidentals

According to surveys by the Medical Group Management Association, the average primary care physician earned approximately _______ in 2010. a. $125, b. $150, c. $185, d. $200, e. $225,000. d. $200,00 0 Surgical specialists earn more than general/family practice physicians. Which of the following statements is not true regarding this income differential? a. Surgeons earn more because their practice costs, including medical malpractice insurance is higher. b. Surgeons earn more to compensate them for the extra years spent as residents. c. Physicians' incomes are determined to a large extent by supply and demand conditions with respect to each specialty. d. Surgeons will always earn more than general practitioners because they are smarter than general practitioners. e. Surgeons earn more than general practitioners because cutting into people is messy. d. Surgeons will always earn more than general practitioners because they are smarter than general practitioners.

The rate of return on an investment in medical education a. is inversely related to the length of time spent in formal schooling. b. is inversely related to income. c. will increase with an increase in the availability of student loans. d. is much higher than the rate of return on an undergraduate business degree. e. is inversely related to the number of years in the profession. e. is inversely related to the number of years in the profession. Physicians who own their own diagnostic testing facilities tend to order more tests, charge higher fees for them, and have higher total bills to patients. This practice of self-referral is an example of a. moral hazard. b. adverse selection. c. res ipsa loquitur. d. physician-induced demand. e. cognitive dissonance. d. physician-induced demand. The observed variations in practice patterns in different regions of the country are difficult to eliminate a. because of the many alternative treatment options available for most ailments. b. due to the localized nature of most medical practice.

Suppose the number of medical school graduates continues to increase over the next decade. Which of the following is true? a. Physicians' salaries must fall. b. Physicians' salaries must rise. c. Physicians' salaries will fall only if the demand for medical services falls. d. Physicians' salaries will fall if the demand for medical services rises more than the supply of physicians rises. e. Physicians' salaries will rise if the demand for medical services rises more than the supply of physicians rises. e. Physicians' salaries will rise if the demand for medical services rises more than the supply of physicians rises. Physicians' salaries increased substantially over the decade 1995-2005 from an average of $215,000 to $315,000. What is the best explanation for this? a. Physicians were smarter in 2005 than in 1995. b. The supply of physicians has increased. c. The supply of physicians has decreased. d. The demand for physicians has increased. e. The demand for physicians has decreased. d. The demand for physicians has increased. Starting salaries for female OB/GYNs are higher than those of male OB/GYNs. What is the best explanation for this? a. Female OB/GYNs have more human capital than male OB/GYNs.

b. Female OB/GYNs are smarter than male OB/GYNs. c. The demand for female OB/GYNs is greater than the demand for male OB/GYNs. d. The demand for female OB/GYNs is less than the demand for male OB/GYNs. e. More males are in OB/GYN residency programs than females. c. The demand for female OB/GYNs is greater than the demand for male OB/GYNs. This study was the catalyst for the early twentieth-century reform of medical education in the United States. What was it? a. Coolidge Commission b. Hill-Burton Committee c. Mangrum Report d. Flexner Report e. Kaiser Foundation Study d. Flexner Report In the nineteenth century, hospitals had notorious reputations—they were questionable places to visit, risky places to stay. What advances changed all this? a. Development of the germ theory of disease b. Advances in medical technology c. Availability of health insurance to pay the bills

b. prospective payment for hospitals. c. creation of Medicare and Medicaid. d. the explosive growth of managed care. e. ERISA. d. the explosive growth of managed care. Which of the following statements is true concerning the trend in hospital care between in-patient and out-patient services since the mid-1980s? a. Both have been declining. b. Out-patient services have been static, while in-patient services have been declining. c. Out-patient services have increased substantially because admissions are down. d. Both have been growing. e. There has been no noticeable trend in either in-patient or outpatient services. c. Out-patient services have increased substantially because admissions are down. 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)? a. Prospective customers must be categorized according to willingness-to-pay. b. Opportunities for resale of the good or service must be limited. c. Customers cannot know that multiple prices are being charged. d. The provider must have excess capacity to accommodate the extra business. e. Both a and b.

e. Both a and b. 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 a. price discrimination. b. the Medigap. c. Cost shifting. d. cost-plus pricing. e. revenue enhancing. c. Cost shifting. The predominate organizational form for U.S. hospitals is not-for-profit. Why? a. The profit motive corrupts human behavior. b. For-profit hospitals do not provide charity care. c. Private not-for-profit hospitals engage in most of the medical research. d. The not-for-profit form provides the most benefits to physicians. e. All of the above. d. The not-for-profit form provides the most benefits to physicians. Using the physician-control model to explain hospital behavior leads to which of the following conclusions?

a. long-run average costs decline as output increases. Horizontal integration allows firms to do all of the following except a. take advantage of cost savings due to economies of scale. b. reduce administrative costs. c. create brand identity. d. fully integrate with primary care clinics and acute care nursing facilities. d. fully integrate with primary care clinics and acute care nursing facilities. Consolidation activity in the hospital industry a. has slowed due to government regulations. b. has created a large number of nationwide for-profit hospital chains. c. has occurred almost exclusively at the local level. d. occurs for same reasons that cause consolidation in other industries. d. occurs for same reasons that cause consolidation in other industries. What is the most important factor leading to rising health care costs in the United States since 1980? a. The increased use of expensive medical technology b. The aging U.S. population c. The increased cost of malpractice insurance for providers

d. Rising incomes for physicians e. The rising cost of pharmaceutical drugs a. The increased use of expensive medical technology Rent-seeking behavior results in a. increased economic activity by promoting efficiency. b. lower economic activity by diverting resource to less-productive uses. c. a more equitable distribution of income and wealth. d. lower prices throughout the economy. e. greater income and wealth in the private sector. b. lower economic activity by diverting resource to less-productive uses. Of the new drugs introduced in the United States between 1940 and 1990, what percentage were discovered by U.S. firms? a. 15 percent b. 30 percent c. 45 percent d. 60 percent e. 75 percent d. 60 percent