A supply-demand model of health care financing with an by Ricardo A. Bitran

By Ricardo A. Bitran

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Extra resources for A supply-demand model of health care financing with an application to Zaire: a training tool

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Case 1: Single-Product FacilityTwo Break-Even Solutions Exist Figure 2-2c. Case 2: Single-Product FacilityBreak-Even Not Possible, External Subsidy is Needed 7. From Atkinson and Stiglitz 1980, p. 463. 8. With an external subsidy, breaking even is defined here as the ability to generate sufficient revenue to cover total costs net of subsidy. Page 8 Both points meet the break-even condition because total revenue (price times quantity demanded) equals total cost (average cost times quantity demanded).

The implicit assumption that leads to preference for point (Q2, P2) over (Q1, P1) is that consumption of service at level Q1 is below the socially desired level of consumption; that is, at level Q1 there is underconsumption of the service. Page 9 among competing sectors (health, education, and so forth). How should it go about deciding how much to allocate to each facility? A precise answer to this question is beyond the scope of this study, but it is safe to say that subsidy allocation criteria will depend on equity considerations, externalities, and size of the market.

Health center labor costs are depicted in figure 3-5 as a function of the amount of health services produced by that provider. Labor costs are computed with the model by type of health service (deliveries, for example) and by type of medical provider (such as a nurse). For example, to compute monthly nurse costs associated with deliveries, the model proceeds as follows. First, it computes the daily demand for deliveries. Second, based on the amount of time spent by a nurse per delivery, it computes the total number of nurse-minutes required daily to satisfy demand.

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