Relative Efficiency, Scale Effect, and Scope Effect of Public Hospitals: Evidence from Australia

Jian Wang (), Zhong Zhao and Amir Mahmood ()
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Jian Wang: Shandong University
Amir Mahmood: University of Newcastle, Australia

No 2520, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using the 1997-1998 New South Wales public-hospitals comparison data, we investigate the hospital-level inefficiency by applying a stochastic-frontier multiproduct cost function. We use a flexible translog cost function to reduce the measurement errors of the outputs of the hospital. The main findings are: First, inefficiency accounts for 9.3% of total hospital costs in large hospitals and 11.3% in small hospitals, when including complexity indicators. Second, diseconomies of scale exist in very large hospitals, whereas scale economies appear in very small hospitals. Third, scope effects are found in both large and small hospitals. Fourth, small hospitals are more labor-intensive than large hospitals are.

Keywords: translog cost function; economies of scale and scope; efficiency; public hospital (search for similar items in EconPapers)
Pages: 27 pages
Date: 2006-12
New Economics Papers: this item is included in nep-com, nep-eff, nep-hea and nep-sea
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Citations: View citations in EconPapers (6)

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