a1-s2 Ifor teacher\'s use] Econ 240: Assignment 1: Costs and Benefits for Questi
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a1-s2 Ifor teacher's use] Econ 240: Assignment 1: Costs and Benefits for Question Set 1 Use this information together with the instructions on your Question Set to answer the questions For Question 1: STAFFING COSTS and BENEFITS- URGENT CARE CENTER All costs and benefits are per year Labor Cost o 1 Primary Care Physician o 1 Nurse Practitioner Salary $150,000 Salary $ 92,000 Benefits Measured as Lives Saved A 20% increase in primary care physicians leads to a 6% decrease in all-cause mortality. [1] Given the number of physicians already practicing in the county, an urgent care center with three primary care physicians would represent a 0.52% increase in physicians, and an urgent care center with four primary care physicians would represent a 0.70% increase in physicians. Working from these numbers, we can calculate the benefits of the urgent care center under different staffing options, measured as additional lives saved each year: 3 physicians 0.158 additional lives saved each year 4 physicians 0.210 additional lives saved each year . [1] Starfield. Barbara. Leiyu Shi. Atu Grover and James Macinko. The Effects of Specialist Supply on Populations Note: relating NPs to the size of a population. Many such studies have of course been performed for the contribution of overall health care facilities to rural health. Because we have no data on the Undoubtedly nurse practioners contribute to lives saved, but I could not find empirical data marginal contribution of NPs to reduced mortality, we are 1 NP yields the same benefit as having 3 physicians presuming that having 3 physicians and Copyright Patricia Awerbuch, 2014. This work may not be used. reproduced, or distributed outside the Drexel LeBow College of Busin without the express written permission of the author ess course Econ 240 Economics of Health Care Systems Page 1 of 1 309 words ? ??- O Type here to searchExplanation / Answer
Solution:
Given: All terms in per year basis
Labor costs: 1 primary care physician costs $150,000; 1 nurse practitioner(NP) costs $92,000
Benefits: 3 physicians (or as per the given information in first attachment, 3 physicians + 1 NP) save 0.158 additional lives; 4 physicians save 0.210 additional lives
STAFFING OPTIONS- OPTION 1: 3 physicians + 1 NP, OPTION 2: 4 physicians
Q1: Finding total costs of each staffing option:
Total cost under option 1 = 3*150000 + 1*92000 = $542,000
Total cost under option 2 = 4*150000 = $600,000
Q2: Converting salary costs and dividing into additional lives saved under each option:
For option 1, dividing total salary cost by $100,000 = 542000/100000 = 5.42 units of $100,000
Dividing these units into lifes saved by this option: 5.42/0.158 = 34.304 (approx)
For option 2, dividing total salary cost by $100,000 = 600000/100000 = 6 units of $100,000
Dividing these units into lives saved under this option: 6/0.210 = 28.571 (approx)
Q3: So, benefit per $100,000 resource for option 1 = 34.304 and benefit per $100,000 resource for option 2 = 28.571
Opportunity cost of choosing option 1, rather than option 2 = (benefit of option 2) / (benefit of option 1)
= 28.571/34.304 = 0.833 (approx)
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