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Consider the equation for costs per hospital discharge: cost/discharge = (days/discharge) × (service intensity/day) × (cost/service unit) (a) Suppose that cost/service unit increased by 10 percent and days/discharge stayed constant. If we know that cost/discharge increased by 15 percent, then what happened to the service intensity? Why? (b) In part a, what can we say about quality of care? (c) Can we be sure that if we reduced the number of days per discharge that costs would fall? Why or why not?
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