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Economic costs of healthcare

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What does healthcare (hospital) organization produce (it can be a good or service)? What are the production costs for a hospital organization? What are the fixed costs? The variable costs? What economic costs does a hospital likely overlook when computing its "profits"? Explain the profit maximizing condition in terms of a hospital. If you work for a "nonprofit" firm, what do you think is the appropriate level of output for your hospital? Why?

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The solution examines the economic costs of healthcare. The profit maximizing conditions in terms of a hospital is discussed.

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A healthcare organization provides services such as health care and medical services including laboratory tests. The production cost of a hospital organization is composed of both variable and fixed costs. Among its variable costs or inputs are drugs and medical supplies, and utilities while salaries of personnel such as medical residents, nurses, other medical staff, ...

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