Deck 15: The Long-Term Care Industry

Question 1

Which of the following is a provider of long-term care?

A) For-profit hospitals
B) Assisted living facilities
C) Senior centers
D) Non-profit hospitals
E) Both b and c

Answer 1

E

Question 2

The market demand for long-term care represents a derived demand.

Answer 2

False

Question 3

Prospective payment systems raise costs, improve quality, and result in more severe patient case-mixes.

Answer 3

False

Question 4

Evidence suggests that nursing homes can substantially reduce their average total cost of production by increasing the amount of patients served due to substantial economies of scale.

Question 5

Retrospective payment systems _______ costs, _______ quality, and result in _______ severe patient case-mixes.

A) raise; diminish; more
B) raise; improve; less
C) decrease; improve; more
D) raise; improve; more
E) decrease; diminish; less

Question 6

Scale economies allow long-term care facilities to substantially decrease costs with only slight quality reductions.

Question 7

The market demand for medical services represents a _______, unlike the _______ for long-term care.

A) supplier-induced demand; derived demand
B) basic demand; derived demand
C) derived demand; basic demand
D) basic demand; supplier-induced demand
E) derived demand; supplier-induced demand

Question 8

Which of the following are reasons why larger amounts of the population fail to purchase long-term care insurance?

A) Adverse selection
B) Moral hazard
C) Intertemporal risk
D) Both a and b
E) All of the above

Question 9

Which of the following has been shown to discourage competition in the long-term care industry?

A) Certificates of need
B) Sunk costs
C) Scale economies
D) Predominance of Medicaid
E) None of the above

Question 10

Which of the following might cause an increase in the demand for long-term care?

A) Aging population
B) Increased prevalence of HIV
C) Advances in medical technology
D) Increased utilization of primary care
E) Increased health

Question 11

What is the largest purchaser of nursing home services?

A) Medicare
B) Medicaid
C) Private insurance
D) Out-of-pocket
E) Other

Question 12

Prospective payment systems _______ costs, _______ quality, and result in _______ severe patient case-mixes.

A) raise; diminish; more
B) raise; improve; less
C) decrease; improve; more
D) raise; improve; more
E) decrease; diminish; less

Question 13

Barriers to entry in the nursing home industry are relatively low.

Question 14

Which of the following best describes a typical nursing home?

A) For-profit ownership with 200 beds
B) Non-profit ownership with 50 beds
C) For-profit ownership with 100 beds
D) For-profit ownership with 50 beds
E) Non-profit ownership with 100 beds

Question 15

According to the Scanlon model, a decrease in Medicaid reimbursement rates will lead to _______.

A) increase in the amount of privately-insured patients served
B) increase in the amount of Medicaid patients served
C) decrease in the price charged to privately-insured patients
D) no changes in the patient mix served
E) increase in the price charged to privately-insured patients