Economics is about allocation of limited resources to their best use. Similar to the rest of economy, healthcare sector must follow certain criteria in allocating limited resources (inputs) such as hospital services, pharma, RN services, physician service

Chapter 4 focuses on supply side concepts and theories that is not unique or specific to medical care sector but true to all production/supply side activities. Please review recorded lecture for Feldstein Chapter 4 

Questions for Chapter 4- Production of Healthcare

1. Economics is about allocation of limited resources to their best use. Similar to the rest of economy, healthcare sector must follow certain criteria in allocating limited resources (inputs) such as hospital services, pharma, RN services, physician services etc. to production of medical care. Explain why in economic thinking, we are concerned about ‘marginal’ or ‘incremental’ contribution of input(s) to output and not ‘total’ contribution of inputs. Also discuss the economic law the captures the logic for tracing ‘marginal’ input contribution to output.
2.  What is a production function for health? How would you use it to explain changes in health status over time?
3.  Assume you are a consultant to an HMO that is being evaluated on how well it improves the health status of its enrolled population. What information would you need and how would you use it to advise the HMO on how to allocate its resources?
4. You have been hired by Medicaid (state run program in support of medical care for indigent) to advise the director on how to reduce infant mortality among women eligible for Medicaid. What are the various alternative programs you would suggest, and how would you allocate funds between them to achieve the greatest reduction in infant mortality for a given budget?
5.  How can employers use the concept of a health production function for decreasing their employees’ medical expenditures?