Question

1. Why is favorable selection a problem for hospitals? Why is adverse selection a problem for insurers?
2. Give two examples of how governance and stewardship of different kinds of health systems changes the tools available to improve quality and access or to reduce costs (iron triangle).
3. Describe how differences between the way fee-for-service and HMOs are organized should affect health care costs.

Answer 1

1. Favourable selection means the hospitals select the group of population where their health service needs are below than average. So the hospitals scope of services may reduced. This makes inefficient running of hospitals in all scope of services.

Adverse selection in means, where the buyer is beneficiary.The buyer have better knowledge about their health status. He makes policies much beneficial to him. That is it gives benefit to the buyer in less cost. So the insurance company need to spend more to the beneficiary. It makes the insurer loss. This is the problem for him.

2. Two types of governance and stewardship are authoritarian leader and democratic leader. The authoritarian leader makes all terms and conditions according to his idea without any suggestions from the workers or experts. He follows strict in all work. He have confidence on his own ideas.This type of governance may lead the organisation in a better quality, better access and reduced cost only if his plan is good. The other one is democratic leader. He is selected by the wokers. He guide the group well. He has friendly manner of governance of work. Hence he get much support from the workers. It have chance to have both loss of iron triangle or betterment of iron triangle. The workers may not any tension in work accomplishments hence it can affect the iron triangle. (Iron triangle in health care is quality, reduced cost, access). The work of the manager is to improve the iron triangle of healthcare it is possible only if he is that much capable of better governance.

3. Fee for service means where the physician cost seperate for each services he provided. Get pay directly from clients. It makes the health care cost high. While the other HMO is health maintenance organisation created for the benefit sake of clients by the government or organisation. Where it takes the responsibility for the health care costs of the client. Hence their cost for health service is reduced.