Posted: November 13th, 2015

Economic

Economic

Business: UAMS
Background: Under the UAMS brand name resides a College of Medicine, a College of

Pharmacy, a College of Nursing, a College of Health Professions, and a College of

Public Health.  Also, UAMS is home to an Eye Institute, Myeloma Institute,

Psychiatric Research Institute, Institute on Aging, Cancer Institute, and a Spine

and Neuroscience Institute. You can, if you want, go to UAMS for medical services,

such as primary care, various surgeries, neonatal ICU, and women’s health. And

more.

(1)    Agency question: we’ve been talking about agents as individuals, but let’s

go up a level or two. The UAMS Colleges are also agents for the principal (which is

the UA System). Suppose you were Chancellor of UAMS. Suppose the UA System approved

a 2% raise pool, and grants you the authority to allocate the 2% across the 5 UAMS

Colleges. How do you decide which College gets more than 2% in additional salary,

and which College gets less than 2% in additional salary? To simplify this further,

you can consider just the College of Medicine (trains physicians) and College of

Nursing (trains nurses). How do you determine which College deserves a bigger raise

pool? Be sure to think explicitly about moral hazards.

(2)    Horizontal Dimension question: Recently Arkansas State University received

approval to open a medical school to train osteopathic physicians. The graduates of

the program (DO’s), have the same basic training as MD’s—so for the sake of the

question, we will call them equals. Arkansas State said the new medical school is

necessary because Arkansas ranks 49th in the country for physicians per capita—

which implies that the demand for more “doctor” education exists, and we will

assume Arkansas State is correct. So assuming UAMS has competent leadership, the

only explanation for why UAMS did not expand its Medical School to meet the unmet

demand must be on the cost-side.  What cost-side factors should UAMS consider

before expanding its Medical School? Would these cost-side factors tend to yield

economies of scale, or diseconomies of scale? (You can assume that medical school

education is just like an MBA, but with more live hands-on applications. Or, if

you’d rather, you could answer the same question but for all the different nursing

schools in Little Rock—why not just have one? Or, if you prefer, answer the same

question about the MBA program—what does cost-side factors say about the best size

of the UALR MBA program?)

(3)    Vertical Dimension question: UAMS has its own physicians, but also

outsources a lot of physician services—like surgery—to outside suppliers. Typically

the services occur within facilities operated by UAMS, but the physicians

themselves are fundamentally independent contractors. So why would UAMS do this?

Why use a mix of “within-the-firm” employees and “outside-the-firm” independent

contractors for physician services? Be sure the words agency, scale and transaction

costs appear in your answers.

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A GOOD DISCOUNT 🙂