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HEALTH CARE ECONOMIC COMPETITION MODELS
In a discussion of competitive healthcare economic models, assumptions must include normal demand quantities, many fully informed patients and the fact that physicians cannot directly influence demand for medical care. These assumptions, although fluid, also preclude that patient buyers are large enough to have any influence over price and result in the following”:
- In a “pure monopoly”, there is only one provider with a unique service. The doctor is a “price maker” and charges whatever s/he wishes.
- In an “oligopoly”, there are a few physicians who provide similar services. For example, when it becomes clear to Dr. Smith and Dr. Jones that neither can win their price war, oli-gopolists return prices to prior, but still inflated levels!
- In “monopolistic competition”, there are many providers with differentiated services. For example, should Dr. Jones decide to have evening hours, she may charge a premium for her fees if Dr. Jones doe not follow suit.
- Finally, when “pure competition” occurs, there are many physicians, providing providing similar and substitutable services. Marketing and advertising does not affect fees, and prices are determined by supply and demand. The doctors become “price takers” by accepting fees arrived at by practicing competitively.
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Filed under: "Ask-an-Advisor", Career Development, CMP Program, Glossary Terms, Health Economics, Health Insurance, Healthcare Finance | Tagged: books, CMP, competition, demand, ecoomic models, healthcare, monopoly, oligopoly, pure competition, pure monopoly, supply | Leave a comment »
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