1. What features distinguish the physician-firm from physicians themselves? (Phelps, problem 3, pg. 174).
- Nature of employment distinguishes the two.
- The ultimate responsibility of the patient within the firm’s confinement also distinguishes the two..
2. “Physicians earn above-competitive wages, and the best evidence of this is the very high annual incomes that some doctors earn.” Comment. (Phelps, problem 4, pg. 174) This could be due to the fact that minor procedure (which can be done several in a day) presents the best return. They also get more than their earning power due to the fact that revenue from business activities are not considered in the event the physician is an investor.
3. “The increasing costs of medical care can all be directly attributed to increased medical malpractice insurance costs.” Comment. (Phelps, problem 5, pg. 174)
The increase in cost can be attributed to the fact that, malpractice insurance companies have managed to raise premiums for the doctors in order to compensate for their falling investment returns. However, if they medical practitioners are making less amount of money from their respective investments, it would only leave the insurance companies to increase their rates.
4. When one thinks about economies of scale, one might conclude that physician firms should be very large. What economic forces outside the physicians-firms might cause them to limit themselves to relatively small sizes? (Hint: what would happen to firm size if doctors went to patients’ homes rather than patients coming to doctors’ office?) (Phelps, problem 6, pg. 174). The firm size would become smaller due to the fact that, doctors now will opt to work from the home since they will be getting more and quick money.
5. If demand for physicians services increases dramatically (as happened in the 1960s), what are the potential sources of increased supply of physician labor? (Phelps, problem 7, pg. 174)
Works Cited
Blackwelder, R. (2013, May 7). Independent nurse practitioners are not the primary care solution. Retrieved from Kevin MD: http://www.kevinmd.com/blog/2013/05/independent-nurse-practitioners-primary-care-solution.html
Kowalczyk, L. (2005, June 1). Study suggests insurers raise rates to make up for investment declines. Retrieved from Make them accounrable: http://makethemaccountable.com/myth/RisingCostOfMedicalMalpracticeInsurance.htm
Lo B, Field MJ Editors. (2009). Institute of Medicine (US) Committee on Conflict of Interest in Medical Research, Education, and Practice. Washington, DC: National Academies Press (US).
Rosenthal, E. (2014, January 18). Patients’ Costs Skyrocket; Specialists’ Incomes Soar. Retrieved from New York Times: http://www.nytimes.com/2014/01/19/health/patients-costs-skyrocket-specialists-incomes-soar.html?_r=0
