Chapter 11
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Which of the following has been a major contributing factor to the growing bad debt issue among U.S. hospitals over the past 20 years?

  • The large income disparity in the United States
  • The rising cost of uninsured individuals
  • The growing attitude that people are not required to pay their bills
  • The increasing number of consumers with high-deductible health plans (correct)

    • A hospital-centric health system that operates clinics within school systems might be said to have integrated:

  • vertically.
  • forward. (correct)
  • backward.
  • horizontally.

    • Which entity in the distribution channel can form a vertical marketing system?

  • Wholesaler
  • Retailer
  • Manufacturer
  • Any member of the channel can form a vertical marketing system. (correct)

    • In which of the following is production and distribution combined within one vertical marketing system?

    <p>Corporate vertical marketing system</p> Signup and view all the answers

    In which of the following is there coordination between channel members but not common ownership?

    <p>Administered vertical marketing system</p> Signup and view all the answers

    Administered vertical marketing systems occur when one member of the channel:

    <p>is more powerful than the others.</p> Signup and view all the answers

    An administered vertical marketing system is best represented by which of the following programs?

    <p>The Urgent Care Center at O'Hare, which is run by the University of Illinois Health System</p> Signup and view all the answers

    When a tertiary care organization opens primary care satellites, it can be said to be integrating:

    <p>forward.</p> Signup and view all the answers

    Kaiser, a large multispecialty clinic, made the strategic decision in some of their locations to open and operate their own hospitals. In this instance, Kaiser was integrating:

    <p>backward.</p> Signup and view all the answers

    When members on the same level of the distribution channel have agreements to perform certain functions for the distribution channel, it is a(n):

    <p>cooperative vertical marketing system.</p> Signup and view all the answers

    The disintermediation paradigm involves the:

    <p>elimination of the middleman in the channel.</p> Signup and view all the answers

    When a middleman links the end user to the provider, it is considered:

    <p>reintermediation.</p> Signup and view all the answers

    Channel conflict can be:

    <p>vertical or horizontal.</p> Signup and view all the answers

    If an orthopedic group decided to open its own freestanding surgical center, the hospital CEO would view this as a source of what type of conflict?

    <p>Vertical conflict</p> Signup and view all the answers

    An anesthesiology group is under contract to staff a hospital's anesthesiology service. It believes it can provide coverage by having a provider to the operating room for an emergency surgery within 15 minutes. The hospital wants a 5- to 10-minute standard for the anesthesiologist to be present. This difference in understanding responsibilities represents what type of conflict?

    <p>Domain</p> Signup and view all the answers

    The organization or entity in the channel who can dictate policies to others in the channel is referred to as the channel:

    <p>commander.</p> Signup and view all the answers

    Manufacturers tend to be channel commanders when:

    <p>the brand names are well known.</p> Signup and view all the answers

    When there are a large number of suppliers and a large number of entities who distribute the product to the end user, the channel commander tends to be:

    <p>the wholesaler.</p> Signup and view all the answers

    Walmart tends to be a channel commander because it has a:

    <p>large number of outlets.</p> Signup and view all the answers

    In metropolitan areas where there are a large number of community hospitals all offering a relatively similar array of clinical services, the channel commander may well be the:

    <p>doctors.</p> Signup and view all the answers

    Which of the following is not a source of power?

    <p>Relative</p> Signup and view all the answers

    Using a threat to force a member of the channel to engage in a particular action or behavior is implementing which form of power?

    <p>Coercive</p> Signup and view all the answers

    MD Anderson is well known for its diagnosis and treatment of cancer. In this instance, the organization might be said to have which form of power?

    <p>Referent</p> Signup and view all the answers

    Value-based reimbursement is based on what source of power?

    <p>Reward</p> Signup and view all the answers

    Which of the following is not one of the three criteria that define a true retail market?

    <p>Costs are restructured to a lower cost point.</p> Signup and view all the answers

    As transparency has increasingly been a factor in health care, which aspects of a true retail market has it impacted?

    <p>Both the alignment of supply and demand and engaged and informed consumers.</p> Signup and view all the answers

    The retail positioning matrix has which two major dimensions to configure retailers?

    <p>Breadth of product lines and the value added</p> Signup and view all the answers

    Cincinnati Children's Hospital would be in which quadrant of the retail positioning matrix?

    <p>Narrow product line and high value added</p> Signup and view all the answers

    In the retail mix, the goods and services components refer to:

    <p>the breadth and depth of the product line.</p> Signup and view all the answers

    Offering consumers the opportunity to pay with a credit card provides the value of possession utility.

    <p>True</p> Signup and view all the answers

    Use of the eReferral system has been growing because of efficiency and cost per referral.

    <p>False</p> Signup and view all the answers

    The Internet of Things can result in greater disintermediation within health care.

    <p>True</p> Signup and view all the answers

    Some rehabilitation facilities will help shape and design orthotic devices for patients as needed. In this instance, these organizations are adding the middleman value of form design utility.

    <p>False</p> Signup and view all the answers

    To accept risk-sharing contracts, it is important for health systems to assure clinical standardization as a necessary strategy.

    <p>True</p> Signup and view all the answers

    Form utility is actually changing the product or altering its form to better fit the needs of the customer.

    <p>True</p> Signup and view all the answers

    Organizations establish hybrid channels to broaden market coverage.

    <p>True</p> Signup and view all the answers

    In designing the ideal channel, middlemen are not needed and can always be replaced, because they add little value.

    <p>False</p> Signup and view all the answers

    The middleman can always be eliminated, but the functions they provide cannot be; they just shift.

    <p>True</p> Signup and view all the answers

    Functional shifting is the concept that different middlemen can always perform different functions as required by the manufacturer.

    <p>False</p> Signup and view all the answers

    Companies such as Google and Facebook provide medical care to their employees on-site. This is an example of functional shifting.

    <p>True</p> Signup and view all the answers

    Parents using a CellScope app and otoscope attachment demonstrate the principal of the wheel of retailing.

    <p>False</p> Signup and view all the answers

    Soda is distributed in selective distribution intensity.

    <p>False</p> Signup and view all the answers

    In deciding the level of distribution intensity for any product or service, the key determinant is how much effort the consumer will spend in searching for the product or service.

    <p>True</p> Signup and view all the answers

    When a manufacturer wants greater control over how a product is displayed in a retail environment, the optimum distribution intensity strategy is selective.

    <p>True</p> Signup and view all the answers

    Gunderson Lutheran Clinic in Wisconsin has primary care clinics in almost 30 locations throughout the state. This distribution intensity strategy might be considered intensive.

    <p>True</p> Signup and view all the answers

    The Hospital for Special Surgery in New York City is well known for orthopedic care. It has a couple of locations in New York and in Florida. This level of distribution intensity would be considered exclusive.

    <p>False</p> Signup and view all the answers

    Vertical marketing systems describe the independent levels of the channel of distribution when they operate at optimum efficiency in distribution of goods or services.

    <p>False</p> Signup and view all the answers

    A vertical marketing system is when functions in the channel performed by the intermediary are integrated at the most optimum point for efficiency.

    <p>True</p> Signup and view all the answers

    A hospital has decided to develop and operate primary care satellite clinics. This is an example of backward integration in the channel of distribution.

    <p>False</p> Signup and view all the answers

    A major tertiary center has decided to open several ambulatory clinics in the region as well as primary care satellites throughout the state in which it operates. This is an example of forward integration.

    <p>True</p> Signup and view all the answers

    When an organization that operates at some level in the channel of distribution moves to a level that is closer to the customer, this move can be described as forward integration.

    <p>True</p> Signup and view all the answers

    With a corporate vertical marketing system, production and distribution of a product are combined under one entity.

    <p>True</p> Signup and view all the answers

    An administered vertical marketing system is when channel partners coordinate programs for the distribution of a product or service but there is not common ownership.

    <p>True</p> Signup and view all the answers

    Many hospitals are now operating walk-in clinics within supermarkets and discount chains. This would be an example of a corporate vertical marketing system.

    <p>False</p> Signup and view all the answers

    Integrated delivery systems in which care is coordinated and delivered at the appropriate level of intensity might be considered a vertical marketing system.

    <p>True</p> Signup and view all the answers

    Many hospitals have a physician–hospital organization in which physicians and hospitals collaborate with third parties to contract for patient care. This entity might best be described as an administered vertical marketing system.

    <p>True</p> Signup and view all the answers

    Urgent care centers operated at airports but staffed and managed by nearby university academic centers are an example of franchised vertical marketing systems.

    <p>False</p> Signup and view all the answers

    Cooperatives are agreements among channel members who exist on the same horizontal level of the channel of distribution.

    <p>True</p> Signup and view all the answers

    Franchising is a form of vertical marketing system.

    <p>True</p> Signup and view all the answers

    Reintermediation in the healthcare channel would be represented by a company such as Zocdoc.

    <p>True</p> Signup and view all the answers

    Channel conflict can be indirect or direct.

    <p>False</p> Signup and view all the answers

    Horizontal conflict occurs when there is conflict between two members of the channel at the same level.

    <p>True</p> Signup and view all the answers

    When a group of orthopedists establishes their own surgery center and the hospital’s CEO and board of trustees are upset with the medical group, this is an example of horizontal conflict.

    <p>False</p> Signup and view all the answers

    Domain conflict is when two parties have a different understanding of the goals and objectives to be accomplished.

    <p>False</p> Signup and view all the answers

    When the physicians in a community and the hospital administration try to outsmart each other in terms of strategic moves, this might be considered a stage of “felt” conflict.

    <p>True</p> Signup and view all the answers

    The channel commander is the largest member in the channel.

    <p>False</p> Signup and view all the answers

    If a manufacturer pays large margins, this can lead to it becoming a channel commander.

    <p>True</p> Signup and view all the answers

    An insurance company threatens to pull its contract from a large medical group if its rates are not accepted. Most of the medical group’s patients have this insurance provider. The insurance company is using referent power.

    <p>False</p> Signup and view all the answers

    A structural sign that health care is evolving to a true retail market is that retail centers set to receive health care are now appearing nationally.

    <p>False</p> Signup and view all the answers

    The fact that intermediaries help align supply and demand and that there are more engaged consumers along with restructured prices indicate a true retail market.

    <p>False</p> Signup and view all the answers

    On the demand side of a true retail market, companies are now providing incentives for consumers to engage in healthy behaviors.

    <p>True</p> Signup and view all the answers

    In the retail positioning matrix, the ideal position is a high value-added, broad product line.

    <p>False</p> Signup and view all the answers

    The decision of the goods and services as well as the distribution and communication component an organization bundles is the retail mix.

    <p>True</p> Signup and view all the answers

    New retail forms always enter the market and replace existing forms by having a broader array of services; this is referred to as the wheel of retailing.

    <p>False</p> Signup and view all the answers

    In the wheel of retailing concept, over time as a new entrant evolves, it adds services, raises margins and prices, and leaves itself susceptible to new entrants.

    <p>True</p> Signup and view all the answers

    Many urgent care clinics are now adding specialty clinics within their facilities. This demonstrates the underlying principle of forward integration.

    <p>False</p> Signup and view all the answers

    Study Notes

    Chapter 11 - Additional Quiz Questions and Answers

    • Question 1: A major contributing factor to growing bad debt among US hospitals is the large income disparity and increasing number of consumers with high-deductible health plans.

    • Question 2: A hospital-centric health system with clinics in schools has integrated vertically.

    • Question 3: Any entity in the distribution channel (manufacturer, retailer, wholesaler) can form a vertical marketing system.

    • Question 4: A corporate vertical marketing system combines production and distribution within one system.

    • Question 5: Administered vertical marketing systems have coordination between channel members, but not common ownership.

    • Question 6: In administered vertical marketing systems, one channel member is more powerful than others, coordinates multiple products/services, and coordinates revenue/information systems for multiple members. (All of these are correct).

    • Question 7: An example of an administered vertical marketing system is the Urgent Care Center at O'Hare, run by the University of Illinois Health System

    • Question 8: Opening primary care satellites by tertiary care organizations represents vertical integration.

    • Question 9: Kaiser opening its own hospitals represents vertical integration.

    • Question 10: Agreements between channel members to perform functions for the distribution channel constitute a horizontal, vertically integrated marketing system.

    • Question 11: Disintermediation involves eliminating the middleman in the channel.

    • Question 12: When a middleman links the end user to the provider, it is a direct channel provision.

    • Question 13: Channel conflict can be vertical or horizontal, simple or complex.

    • Question 14: An orthopedic group opening its own freestanding surgical center is considered vertical conflict.

    • Question 15: A conflict occurs when anesthesiology group and hospital have differing standards for emergency surgery presence times. This is a domain conflict.

    • Question 16: The channel commander is the entity that dictates policies to others in the channel.

    • Question 17: Manufacturers often are channel commanders when delivery costs are high and brand names are well-known.

    • Question 18: When there are numerous suppliers and entities distributing products, the wholesaler tends to be the channel commander.

    • Question 19: Walmart has often been cited as a channel commander due to a good pricing policy, and a large number of outlets, and a well-known brand name.

    • Question 20: In areas with numerous community hospitals offering similar services, often the doctors are the channel commanders

    • Question 21: Not a source of power: Relative power

    • Question 22: Using a threat to ensure a member of the channel carries out an action is coercive power.

    • Question 23: MD Anderson, well-known for cancer, has referent power (recognition as a clinical leader is a type of power)

    • Question 24: Value-based reimbursement is based on economic power (a stronger form of power relates to ability to pay)

    • Question 25: Intermediaries help align supply/demand and demand driven by engaged consumers, are the criteria that define retail markets; restructuring supply/demand costs (or reducing costs) are not part of defining a true retail market.

    • Question 26: Transparency has impacted alignment of supply and demand and engaged consumers.

    • Question 27: The retail positioning matrix considers breadth of product lines and value added.

    • Question 28: Cincinnati Children's Hospital would be in the quadrant of a narrow product line and high value added

    • Question 29: The goods and services components in retail mix refer to breadth and depth of product lines.

    • Question 30: The wheel of retailing describes how retail organizations start up and decline.

    • Question 31-40: True/False questions regarding various marketing concepts including risk-sharing contracts, form utility, hybrid channels, middlemen, functional shifting, and the wheel of retailing. The answers are mixed regarding true or false

    • Questions 41-50: True/False questions about channel leadership/power dynamics, coercive/reward power, referential points of power, and channel conflict. The answers are mixed regarding true or false

    • Question 51-60: True/False questions regarding retail market trends, challenges, and strategies. Questions deal with signs of evolving retail health care markets, factors that indicate an emerging retail market, value-based health care, and components of retail mix. The answers are mixed regarding true or false

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