Question:

1. A model of the determinants of health combines three economic variables and two economic relationships. 

For instance, the three economic variables are: 

• the amount a patient pays for a visit to a physiotherapist (P);
• the number of times the patient visits the physiotherapist (V); and
• the length of time it takes the patient to recover from a rotator cuff (shoulder) injury (D) (max.=365 days).

The two economic relationships are: 

• the number of visits (V)=18-$0.09 (P).

In other words, if the price is zero, the patient will make 18 visits in order to receive treatment for this injury. If the price is $200, the patient will make zero visits. 

• the number of days to recover (365-D).

In this case, the number of healthy days (D) in the next year will be 180 + 5V. If the number of visits is zero, the patient will have 180 healthy days and it will take 185 (365 - 180) days to recover from the rotator cuff injury. If the number of visits is 18, the patient will have 270 [180 + 5(18)] healthy days, and the time to recover from the injury will be 95 days (365 - 270). 

Use the above information to determine the relationship between price and health status in this model. In other words, solve for D and for P, and set up two equations: one showing the value of D in terms of P; and one showing the value of P in terms of D. Once you have determined the two equations, provide an interpretation of each equation. 

2.       

a. Calculate the number of physicians, per thousand population in Canada, from 2002 to 2005. What conclusions can be drawn about the physician coverage of Canada's  opulation?

b. Calculate the per capita usage of physician services in Canada for each of the above four years, and determine the annual percentage changes in per capita usage. (Show all of your work to earn full marks.)

3. Green Shield Insurance provides NEMO Corporation with coverage for prescriptions, dental work, and extended health services. Each subscriber uses $435 worth of dental services per year; $410 worth of prescriptions per year; and $385 worth of extended health coverage per year. Green Shield has a 25 percent copayment clause, and a loading factor of 65 percent. NEMO will pay 50 percent of the plan costs. What is the annual and monthly premiums charged to the employees of NEMO corporation? 

4.   The services of a certified psychologist cost $110 per hour, and an extended health plan covers 50 percent of that cost. Under the plan, the clients covered used 625 hours of this service in a typical three-month period. To save money, the extended health plan reduced its coverage to 40 percent of the cost. As a result, the clients covered reduced their use of this service to 482 hours in a typical three-month period.

a. Calculate the total cost of providing this insured service to the plan before and after the change in coverage.

b. Based on the data above, calculate the elasticity of demand for the services of a certified psychologist. (Show all of your work to earn full marks.) Interpret the elasticity of demand, and explain the behaviour of the clients covered based upon this interpretation.

5. The northern community of Assiniboine Narrows has a population of 12,000. It has one medical clinic with three doctors, each working 40 hours per week. Each doctor sees four patients per hour. The clinic would like to hire one or two more doctors. 

The mortality rate in the community is 11 per 1,000 population. This rate will fall to 9.5 per thousand if one doctor is added and to 9 per thousand if two doctors are added. Each new doctor will cost the system $250,000 per year. 

An alternative plan is to bring in two home care nurses. Each home care nurse will see two patients per hour. The addition of the first nurse will reduce the mortality rate by 0.8 per thousand, and the addition of a second nurse will reduce the mortality rate by 0.6 per thousand. Each home care nurse will cost the system $100,000 per year. 

Use calculations to examine the alternatives available to Assiniboine Narrows. Then, based on your calculations, make a recommendation as to the preferred course of action. Ensure that you calculate the output and outcome of each additional health professional.

6. Assume a given demand curve for massage therapy services. In the context of providing massage therapy services, list, and describe in detail, five different variables that may cause an increase in the demand for these services.

7. In 2006, a hospital with 135 beds had 8,795 admissions. The average length of stay for each patient was 4.7 days. Assuming full capacity is 100 percent, calculate the occupancy rate of the hospital for 2006. Also, calculate the hospital capacity for 2006.

8. Based on the information given in the Canada Health Act as well as the information provided in your Study Guide, write a description of how medical services are funded in Canada. Be sure to describe the services covered under the following three areas: hospital care, medical care, and areas not currently funded (unless one has supplementary health insurance).

9. Using the relationship between the price of a visit to a physiotherapist and the quantity of visits demanded, define and distinguish among the direction, the slope, and the position of an economic relationship.

10. Following her knee replacement operation, Mrs. Purtik was sent to a long-term care
facility for rehab for a period of time. She now receives home care and makes visits to a physiotherapist. How many providing agencies would be responsible for Mrs. Purtik's treatment and care in a traditional health care system? How many providing agencies would be involved in her case in a regionalized health care system? Explain your answer in both cases.

11. In the context of hospital care, define and distinguish among occupancy rate, capacity, and utilization. 

12. Discuss the role and interrelationships between the following economic units in the operation of Canada's health care system: consumers, suppliers, third parties, and regulators.