Question

Is profit maximization the same thing as shareholder wealth maximization? Why or why not? Describe the primary distinction between prospective payment and retrospective payment. Why is the unreimbursed cost of Medicare most often not included as an element of community benefit?

Answer 1

I have answered to all the three parts of the question.

a) profit maximisation is not the same as wealth maximisation because profit maximisation code time value of money and does not consider risk 4 uncertainty factors whereas wealth maximisation considers the above factors and focuses on Increasing overall walue of business as a whole and thereby strive to serve long term objective of the firm. b) The primary difference between prospective payment & retrospective payment is that prospective payments gives a no of benefits and in return prouiders receive the same payment for the plans where as retrospective payment plans pay healthcare providers based on actual service charges. c) unreimbursed cost of medicare is oftenly not included in the elements of community benefit due to the pattern of deduction of co-payments associated with the medicare it mainly depends upon the relationship between medicare and the payments of costs, which it shares with the respective benefits.