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Predicting hospital behavior

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How do you explain and predict hospital behaviors if using the utility-maximizing (quality - quantity) and physician control models, individually? (Please use figures/graphs to explain the models).

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This solution discusses predicting hospital behavior using the utility-maximizing and physician control models.

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Quantity-Quality Model was developed by Newhouse (1970). He proposed that hospitals are biased against producing low-quality products, which profit-maximizing firms would likely offer. Their utility is measured both they the quantity of patients discharged and the quality of care they receive. A tradeoff exists between quality and quantity because the hospital has limited resources. See the attached file "hospital." It shows how the ...

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