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Health Care: Number of Healthy Days vs. Price of Treatments

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Use the information below to determine the relationship between price and health status in this model. In other words, solve for D and for P, and set up two equations: one showing the value of D in terms of P; and one showing the value of P in terms of D. Once you have determined the two equations, provide an interpretation of each equation.

A model of the determinants of health combines three economic variables and two economic relationships.

For instance, the three economic variables are:

the amount a patient pays for a visit to a physiotherapist (P);
the number of times the patient visits the physiotherapist (V); and
the length of time it takes the patient to recover from a rotator cuff (shoulder) injury (D) (max. = 365 days).

The two economic relationships are:

the number of visits (V) = 18 - $0.09 (P).

In other words, if the price is zero, the patient will make 18 visits in order to receive treatment for this injury. If the price is $200, the patient will make zero visits.

the number of days to recover (365 - D).

In this case, the number of healthy days (D) in the next year will be 180 + 5V. If the number of visits is zero, the patient will have 180 healthy days and it will take 185 (365 - 180) days to recover from the rotator cuff injury. If the number of visits is 18, the patient will have 270 [180 + 5(18)] healthy days, and the time to recover from the injury will be 95 days (365 - 270).

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Solution Summary

How to substitute equations to solve for healthy days and price of treatments in terms of each other.

See Also This Related BrainMass Solution

Pay-for-Performance vs. Fee For Service Compensation Model

The fee-for-service model of health care is neutral with regard to differences in the quality of health care. The pay-for-performance (P4P) model of health care attempts to set targets to measure quality care. If quality targets are met, providers are rewarded financially. This model is gaining increased popularity in both the public and private sectors. It is, however, not without its critics.

In this week's Discussion, you and your colleagues will compare and contrast the pay-for-performance model and the fee-for-service model of health care.

To prepare for this Discussion:

Consider how the P4P model affects the overall quality and profit margin of health care.
Consider how the traditional fee-for-service model affects the overall quality and profit margins of health care providers.

By Day 4, post a comprehensive response to the following:

What are the underlying goals of P4P and fee-for-service models?
Are there risks to patients in a P4P model?
If you were a patient, which model would you prefer the hospital to follow? Why?
If you were a provider, which model would you prefer to be paid for? Why?

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