The Size and Service Offering Efficiencies of U.S. Hospitals

Gary Ferrier, Hervé Leleu, James Moises () and Vivian Valdmanis
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James Moises: Department of Emergency Medicine, Tulane University

No 2009-ECO-09, Working Papers from IESEG School of Management

Abstract: Hospital productivity has been a research topic for over two decades. We expand on this research to include measures of dis/economies of scope. By using the Free Coordination Hull (FCH) we are able to determine if hospitals in our sample can become more efficient if they provide more services (diseconomies of scope) or if two smaller hospitals with a reallocation of resources could become more efficient (economies of scope). Using data from the American Hospital Association for the years 2004-2007, we found variations among hospital markets (measured by the Core Based Statistical Area). We can determine whether dis/economies of scope exist by comparing the results from two linear programming problems. Focusing on four markets: Los Angeles, Philadelphia, Madison, WI, and New Orleans we found variations in how best these hospitals operating in these markets could change in order to increase both scale and scope efficiencies. This approach could be used by policy makers and managers in order to reduce costs by sharing, reducing, or expanding services in hospitals. Findings from a study such as this should aid reform programs by providing more information on the sources of hospital inefficiency.

Keywords: Hospital; Efficiency; Economies of Scope; Hospital Markets (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-09
New Economics Papers: this item is included in nep-eff and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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