The document discusses using a health production function to allocate resources between two programs in Detroit, Michigan. Program 1 is "Bariatricity Detroit", which establishes bariatric surgery centers. Program 2 is "Healthy Lifestyles Detroit", which provides education and coaching on healthy behaviors. The health production function shows that allocating funding to the smaller Program 2 would yield larger decreases in diabetes rates among low-income individuals due to diminishing returns. Marginal analysis also supports funding Program 2, as its marginal cost per individual is lower than Program 1's. The executive summary should recommend funding the lower-cost Program 2 to maximize health outcomes efficiently.

1. CU Health & Medical Question
Write a executive summary recommending resource investment in a program based on its
potential to deliver positive health and economic outcomes.As a health care professional,
you must have a foundational, high-level understanding of health care economics:One part
of this foundation comes from understanding: The basic laws of economics as they apply to
the health care industry.How the health care system creates unique economic challenges
and burdens on all stakeholders.Another part of this foundation comes from
understanding: The history and trends in health care economics around such topics as the
role of the government and government programs such as Medicare and Medicaid.Trends in
patient payments.The resulting changes in health care expenditures, as well as areas for
improvement in the health care system (Feldstein, 2012).Another key is understanding the
concepts and processes involved in the production of health care: Multiple inputs influence
health and wellness.Medical care is only one input, although a significant one.The health
production function and decision rules for allocating health care resources is a key
component of the first assessment in this course. For this assessment, think about the ways
in which health production efficiency, both technical and economical, can help drive
decisions on the allocation of resources (inputs) to drive improved patient health and
results (outcomes) (Feldstein, 2012).ReferenceFeldstein, P. J. (2012). Health care economics
(7th ed.). Clifton Park, NY: Delmar.Demonstration of ProficiencyBy successfully completing
this assessment, you will demonstrate your proficiency in the course competencies through
the following assessment scoring guide criteria:Competency 1: Analyze historical
perspectives and current trends in the health care industry. Describe the current state of a
health care organization with regards to alignments to historical health care industry
trends.Explain how a health care organization needs to change to better align itself with
current trends in the health care industry.Competency 3: Analyze the evolving economic
reimbursement trends, methods, and technology. Analyze two current programs in a health
care setting with regards to the inputs required to operate and its outputs with regards to
health outcome rates and patients served.Competency 4: Analyze how economic and
stakeholder influences affect operational planning and decision making. Propose whether to
reallocate, maintain, or increase funding for current programs based upon available
resources and projects outputs.Explain how opinions and agendas of stakeholders influence
decisions related to the funding of programs in a health care setting.Competency 5:
Communicate in a manner that is scholarly, professional, and respectful of the diversity,
dignity, and integrity of others and is consistent with expectations for health care

2. professionals. Write following APA style for in-text citation, quotes, and references.Write
clearly and logically, with correct use of spelling, grammar, punctuation, and
mechanics.Professional ContextThe ability to research, examine, and determine the most
efficient ways to allocate resources in order to produce to best health outcomes is a key
competency for health care economic professionals. In the complex field of health care,
there will always be multiple ways and multiple programs in which an organization can
invest resources. It is the health care economics professional’s responsibility to examine the
cost of the inputs in comparison to the historic or projected output of health and then make
recommendations regarding investment. Looking at investment is not always entirely about
the amount of positive outputs—technical efficiency, economic efficiency, and stakeholder
priorities will all also play a part (Feldstein, 2012). Being able to not only understand and
crunch the numbers, but also navigate these other considerations, is vital in becoming an
effective health care economics professional.ScenarioYou are a health care economics
professional with specific expertise in using a health production function to allocate
resources. A member of the Board of Directors has asked you to prepare an executive
summary that will help the board understand the current practices of the organization and
where the organization should align itself in light of current and emerging trends.
Additionally, you have been asked to analyze the inputs and outputs of two current
programs in the organization in order to make allocation recommendations about how to
best utilize the available resources to achieve the best possible outputs for the
programs.InstructionsThis assessment has three main parts:The first part is your
examination of the organization’s current practices and alignments with historical health
care trends, as well as how the organization needs to change to align itself with current and
emerging trends.The second part is your analysis of two existing programs that could be
candidates for further investment (Note: You may use two program examples from your
textbook, your own research, or your own organization as the context for your analysis and
this executive summary.).The third part is your proposal on how to allocate resources for
the two programs, as well as a brief explanation of how the views of the stakeholders
influenced your decision making project.If you have not already, it may be helpful to
complete the formative activity to check your understanding of the economic concepts
relevant to this assessment.Economic Elements in Health Care | Transcript. Consult the
scoring guide to make sure you are meeting the communication criteria and achieving your
desired rubric level.Part I: Current State of Organization and Potential Changes to Align with
TrendsDescribe the current state of a health care organization with regards to alignments to
historical health care industry trends. (Competency 1) For this, use either an organization
that you currently or previously had worked for, have researched as an organization you
would like to work for in the future, or one that was present in the textbook or other
research you conducted.Explain how a health care organization needs to change to better
align itself with current trends in the health care industry. (Competency 1) Continue using
the organization that you described to meet the first scoring guide criteria.Part II: Analysis
of Current ProgramsAnalyze two current programs in a health care setting with regards to
the inputs required to operate and its outputs with regards to health outcome rates and
patients served. (Competency 3) As noted in the instructions above, you may use program

3. examples from your textbook, your own research, or your own organization. Be sure you
choose examples for which you can report the inputs, outputs, and approximate patients
served.Part III: Resource Allocation and Stakeholder ReflectionsPropose whether to
reallocate, maintain, or increase funding for current programs based upon available
resources and projects outputs. (Competency 4) Use the two programs you analyzed in Part
II. It will be helpful to cite evidence (literature, your textbook, or current health
improvement initiatives [like those being pursued via your state’s Department of Health] to
help support your proposals.Explain how opinions and agendas of stakeholders influence
decisions related to the funding of programs in a health care setting. (Competency 4) Make
explicit reference to the stakeholders and their statements in the Scenario section for this
assessment, or to specific examples from your current or former career
experiences.Additional RequirementsWritten Communication: Prepare an executive
summary free of errors that detract from the overall message. Writing must be clear,
precise, and scholarly, with concepts that flow in a logical order.References: Cite at least
three references from peer-reviewed journals, in addition to your text.Length: Submit a 2–
3-page executive summary, not including any title or reference page.APA: Use correct APA
style and formatting. You may find it helpful to use the following: APA Style Paper Tutorial
[DOCX].APA Style Paper Template [DOCX].APA Style and Format.Economic Elements in
Healthcare activityDetermining the Allocation of Resources for Two Programs Using the
Health Production FunctionThe purpose of a production function is to analyze inputs (i.e.,
funding and resources) and outputs (i.e., improved health) to identify the least costly
combination of inputs to achieve the desired output.This media piece shows how the health
production function can help healthcare leaders make resource allocation decisions to help
achieve economically efficient objectives of healthcare services programs.In Detroit, there
are two state-funded healthcare services programs with the goal of reducing diabetes
prevalence rates in obese individuals with low income living in impoverished areas within
the city. The State of Michigan has funding available to make two payments one month
apart, and would like to choose only one of these programs in which to invest funding for
the program’s expansion. The state wishes to make the most economically efficient decision
to improve the health of the most people in need.Program 1: “Bariatricity Detroit” is a large
program with a strategic objective to establish additional Bariatric Surgery Centers in
selected hospitals for obese patients with diabetes to undergo bariatric weight loss
surgeries.Program 2: “Healthy Lifestyles Detroit” is a small program with a strategic
objective to increase education and coaching focused on healthy eating, lifestyle and
behavioral change and increased physical activities for low-income, obese individuals with
diabetes.The first step in using a Health Production Function is to define inputs and
outputs:1 of 7What are the desired outputs (or objective) to be achieved for each program?
For the state?This question has not yet been answered.Outputs (or objectives) are the
results, or goals, you are trying to achieve. Looking at the case study, the following are
generally what each program and the state of Michigan are trying to achieve.Program 1
objective = Establish additional Bariatric Surgery Centers in selected hospitals to provide
weight loss surgery to obese individuals with diabetes.Program 2 = Increase education and
coaching focused on healthy eating, lifestyle and behavioral change and increased physical

4. activities for low-income, obese individuals with diabetes.State program goals = Reduce
diabetes rates in obese individuals with low income living in impoverished areas within the
city. Make the most economically efficient decision to help the most people in need.2 of
7What are the possible inputs needed for establishing Bariatric Surgery Centers?This
question has not yet been answered.Inputs are the resources that are needed to operate a
given program or service. Some example of inputs that would be required to establish and
operate the Bariatric Surgery Center for Program 1 would be:FundingHospital
StaffingLicensing of the added facilitiesSurgical suite costsBariatric surgeon costs3 of
7What are the possible inputs needed for establishing Bariatric Surgery Centers?This
question has not yet been answered.Again, inputs are the resources needed to operate a
program or service. Some of the resources needed to increase the capacity of Program 2
are:FundingEducation materialsBehavioral coachesThe second step in using a Health
Production Function is to define the relationship between the output (goal or objective) to
be achieved and the inputs (i.e., funding and resources) are available to work towards
achieving each program’s defined objectives.This diagram shows that the relationship
between a program’s inputs and outputs is curvilinear. When a program is relatively small,
additional inputs devoted to that program (A1 and A2) are likely to result in relatively large
increases in the program’s output. As additional resources are allocated to that program,
the total output will continue to increase, but at a more gradual rate. If a program is
relatively large, additional inputs devoted to that program (A3 and A4) are likely to result in
small increases in the program’s output (Q3 and Q4). Finally, increases in output for both
programs will become negligible even though the program’s inputs may continue to
increase.According to the Health Production Function, there is a law of diminishing returns
to consider when making funding allocation decisions. Funding is referred to as a fixed
input, because the state can only provide funding of the same amount two times.4 of 7In the
example health production curve, consider A1/Q1 and A2/Q2 to be the Healthy Lifestyle
Detroit Program and A3/Q3 and A4/Q4 to be Bariatricity Detroit. For the two programs in
Detroit, how does the Health Production Function and the law of diminishing returns
work?This question has not yet been answered.There is no single right answer for this, but
below are a number of points to consider when analyzing the graph, the health production
function, and law of diminishing returns.If the state allocated funding amounts A1 and A2 to
the smaller program 2, “Healthy Lifestyles Detroit,” this would result in large changes to
health outputs Q1 and Q2, specifically, larger decreases in the rates of diabetes in low
income, obese individuals.If the state allocated funding amounts A3 and A4 to the larger
program 1, “Bariatricity Detroit,” this would result in small changes to health outputs Q3
and Q4, specifically, smaller decreases in the rates of diabetes in obese individuals. Of note,
Bariatricity Detroit is not designed for low-income, obese individuals, but rather, for
individuals with insurance that will provide coverage for weight loss surgeries.At this point,
the health production function shows that the most economically efficient decision for the
state would be to provide funding to the smaller program which would have larger health
outputs; that is, a larger decrease in diabetes rates in low-income, obese individuals.The
final step in using a Health Production Function is to consider variable inputs (inputs that
change depending on the level of production) and marginal outputs (the additional outputs

5. produced by adding a unit of input) for each of the programs.5 of 7Of your previously
defined inputs, which would be considered variable inputs for each of the two programs
and why?This question has not yet been answered.Variable InputsThe two programs that
the state can choose to provide funding for are very different in terms of their approaches
and the costs associated with program expansion. Aside from funding, which is a fixed
input, there are variable inputs for each program. Variable inputs must be considered
because they add to the total inputs needed to achieve desired program objectives.For
Bariatricity Detroit, the larger program, aside from funding which is a fixed input, the
possible inputs that were defined – hospital staffing, licensing of the added facilities,
surgical suite costs, bariatric surgeon costs – are variable. For example, costs related to
hospital staffing of a bariatric surgery center depend on how many staff are already
available in the hospital and how many new staff need to be hired.For Healthy Lifestyles
Detroit, the smaller program, aside from funding which is a fixed input, the variable inputs
defined were educational materials and behavioral coaches.6 of 7When the costs of
increasing a program’s size are not equal, the comparison cannot simply be made between
the changes in output of the two programs. The relevant criterion for allocating resources to
programs having different benefits and costs is to select those programs whose marginal
benefit per dollar spent is greatest(Feldstein, 2012).How might marginal outputs be
important in your comparison of Bariatricity Detroit and Healthy Lifestyles Detroit from an
economic and output efficiency point of view? Consider the health production curve from
the previous question to help give some more context to your response.This question has
not yet been answered.Marginal OutputsFor Bariatricity Detroit, assume that an expansion
of this program would result in a decrease in diabetes prevalence by 30 obese individuals.
The marginal cost of achieving that increased benefit is $300,000.In comparison, an
expansion in Healthy Lifestyles Detroit yields, as a marginal benefit, a decrease in diabetes
prevalence by 20 low income, obese individuals at a marginal cost of $100,000.Dividing the
marginal cost by the marginal benefit (MC/MB) yields a cost of $10,000 per individual
patient the Bariatricity Detroit program and $5,000 per individual patient in Healthy
Lifestyles Detroit.It is clear from such an analysis that the state should allocate funding to
expand Healthy Lifestyles Detroit.Conclusion7 of 7When making a decision about allocating
funding and resources, what are the steps you should be taking and the types of information
you should be considering to drive and justify your choices?This question has not yet been
answered.There is no single correct answer to this question, however, one process for
making these types of economic and programmatic decisions could be outlined as
follows:First, define and consider important aspects of the outputs and the inputs. These
might include:specific population group whose health is to be affectedgoals of
stakeholdersobjectives of programsdesired outcomes and/or resultscosts associated with
each programvariable and fixed inputs needed to expand each programNext, define the
relationship between inputs and outputs for each program. Keep in mind that:the
relationship is curvilinearthere is a law of diminishing returnsthe smaller program will have
larger outputs initiallythe larger program will have smaller outputs initiallyThird, marginal
effect on health of each of the programs should be empirically estimated.And last, to use the

6. decision rule that resources should be allocated to those programs whose marginal benefit
per dollar spent is greatest.Health Production Function Scoring Guide