Question

5) Using the closed-staff physician control model developed by Pauly-Redisch, explain how the optimal number of physicians is determined. Use a graph.

Answer 1

fanly and Radisch are the pioneers to give importance on the active role of the physician ton a model of hospital behavior. / The assumptions are mentioned below. (₂) The goal is to maximize net hospital Income per member of medical statt. (8) Inputs employed to the porut at which marginal contribution of each physician's revence is "zero" Total Revenue - operating cost Size of medical staff ARP ARP MRP According to the closed Revenue model , ARP will he maymaiset when m, physicians are employed by the hospital. mechi cal doctors are salaried at wage of s, equilibrium statt is ₂ cohere MRP S. In cloged model , staff members decide them numbers themselves. In an open modee where hospital de crites the number of stott, equilibrium size of medical stoff de M3, where ARP = s.