A) Distinguish between the concentration ratio and the herfindahi-hirschman index (HHI). What are the limitations of these measures within the context of the pharmaceutical industry?
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Get Help Now!b) If the interest group theory applies to hospitals, why doesn’t it also apply to nursing homes? Would a doctor-owned, for-profit hospital be as attractive to physicians as a nonprofit hospital?
c) Can we say which are the most efficient hospitals nonprofits or for-profits? Which are the most efficient nursing homes? What qualifications apply to our present knowledge in each case? What is your view?
d) Explain why it is often claimed that hospitals compete for doctors rather than patients. What are some of the implications of this phenomenon, assuming that it is true?
e) Even nonprofit hospitals must earn a profit explain in view of the European and Canadian health system.
f) Suppose that the licensure requirements for health care providers were eliminated. Use supply-and-demand analysis to predict what may happen to the price and quantity of health care services. Are there other considerations, in particular, mechanism that could evolve to replace licensure?
g) Direct-to-consumer (DTC) advertising of prescription drugs is growing rapidly. List several products with which you have become familiar as a result of such advertising. Discuss the pros and cons of DTC advertising from the perspective of physicians and patients
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a) Distinguish between the concentration ratio and the herfindahi-hirschman index (HHI). What are the limitations of these measures within the context of the pharmaceutical industry?
The two measures have a fair amount of correlation as both are indicators of firm size, calculated in different way.
Herfindahl-Hirschman Index
The Herfindahl-Hirschman Index or HHI, is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them It is defined as the sum of the squares of the market shares of the 50 largest firms (or summed over all the firms if there are fewer than 50)[1] within the industry, where the market shares are expressed as percentages….
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