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  The health-care economy is replete with unusual and even unique economic relationships. One of the least understood involves the peculiar roles of producer or “provider” and purchaser or “consumer” in the typical doctor-patient relationship. In most sectors of the economy, it is the seller who attempts to attract a potential buyer with various inducements of price, quality, and utility, and it is the buyer who makes the decision. Where circumstances permit the buyer no choice because there is effectively only one seller and the product is relatively essential, government usually asserts monopoly and places the industry under price and other regulations. Neither of these conditions prevails in most of the health-care industry.

  In the health-care industry, the doctor-patient relationship is the mirror image of the ordinary relationship between producer and consumer. Once an individual has chosen to see a physician—and even then there may be no real choice—it is the physician who usually makes all significant purchasing decisions: whether the patient should return “next Wednesday,” whether X-rays are needed, whether drugs should be prescribed, etc. It is a rare and sophisticated patient who will challenge such professional decisions or raise in advance questions about price, especially when the ailment is regarded as serious.

  This is particularly significant in relation to hospital care. The physician must certify the need for hospitalization, determine what procedures will be performed, and announce when the patient may be discharged. The patient may be consulted about some of these decisions, but in the main it is the doctor’s judgments that are final. Little wonder then that in the eyes of the hospital it is the physician who is the real “consumer.” As a consequence, the medical staff represents the “power center” in hospital policy and decision-making, not the administration.

  Although usually there are in this situation four identifiable participants—the physician, the hospital, the patient, and the payer (generally an insurance carrier or government)—the physician makes the essential decisions for all of them. The hospital becomes an extension of the physician; the payer generally meets most of the bona fide bills generated by the physician/hospital; and for the most part the patient plays a passive role. In routine or minor illnesses, or just plain worries, the patient’s options are, of course, much greater with respect to use and price. In illnesses that are of some significance, however, such choices tend to evaporate, and it is for these illnesses that the bulk of the health-care dollar is spent. We estimate that about 75-80 percent of health-care expenditures are determined by physicians, not patients. For this reason, economy measures directed at patients or the general public are relatively ineffective.

  1. The author’s primary purpose is to

  (A) speculate about the relationship between a patient’s ability to pay and the treatment received

  (B) criticize doctors for exercising too much control over patients

  (C) analyze some important economic factors in health care

  (D) urge hospitals to reclaim their decision-making authority

  (E) inform potential patients of their health-care rights

  2. It can be inferred that doctors are able to determine hospital policies because

  (A) it is doctors who generate income for the hospital

  (B) most of a patient’s bills are paid by his health insurance

  (C) hospital administrators lack the expertise to question medical decisions

  (D) a doctor is ultimately responsible for a patient’s health

  (E) some patients might refuse to accept their physician’s advice

  3. According to the author, when a doctor tells a patient to “return next Wednesday,” the doctor is in effect

  (A) taking advantage of the patient’s concern for his health

  (B) instructing the patient to buy more medical services

  (C) warning the patient that a hospital stay might be necessary

  (D) advising the patient to seek a second opinion

  (E) admitting that the initial visit was ineffective

  4. The author is most probably leading up to

  (A) a proposal to control medical costs

  (B) a discussion of a new medical treatment

  (C) an analysis of the causes of inflation in the United States

  (D) a study of lawsuits against doctors for malpractice

  (E) a comparison of hospitals and factories

  5. The tone of the passage can best be described as

  (A) whimsical

  (B) cautious

  (C) analytical

  (D) inquisitive

  (E) defiant

  6. With which of the following statements would the author be likely to agree?

  I. Most patients are reluctant to object to the course of treatment prescribed by a doctor or to question the cost of the services.

  II. The more serious the illness of a patient, the less likely it is that the patient will object to the course of treatment prescribed or to question the cost of services.

  III. The payer, whether insurance carrier or the government, is less likely to acquiesce to demands for payment when the illness of the patient is regarded as serious.

  (A) I only

  (B) II only

  (C) I and II only

  (D) II and III only

  (E) I, II, and III

  7. The author’s primary concern is to

  (A) define a term

  (B) clarify a misunderstanding

  (C) refute a theory

  (D) discuss a problem

  (E) announce a new discovery

  8. The most important feature of a “consumer” as that term is used in line 33 of the passage is that the “consumer” is the party that

  (A) pays for goods or services

  (B) delivers goods or services

  (C) orders goods or services

  (D) reimburses a third party for goods or services

  (E) supplies goods and services to a third party

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