An Empirical Analysis of Cost Efficiency in Non-profit and Public Nursing Homes

Mehdi Farsi and Massimo Filippini

Annals of Public and Cooperative Economics, 2004, vol. 75, issue 3, pages 339-365

Abstract: This paper examines the issue of cost-efficiency in Switzerland's nursing homes, an issue of concern to policy makers because of the rapid growth of elderly care expenditure and the aging of the population. The fact that nursing homes in Switzerland exist in different institutional forms, private for-profit, government and non-profit status, raises the issue of their relative cost efficiency. A panel data of 17 public and 19 nonprofit nursing homes operating over the 9-year period from 1993 to 2001, in one of the 26 Swiss cantons, Ticino, is studied. Ticino's nursing homes are heavily regulated and monitored by the canton's authorities. However, given that in public firms there are more bureaucratic constraints and agency problems, one can expect a relatively low level of cost-efficiency. In this paper the effect of institutional form on efficiency is studied using a translog stochastic cost-frontier model. Several specifications are used to study the robustness of the results. The results suggest that the institutional form influences the efficiency of the studied nursing homes in that non-profit foundations are likely to be more cost-efficient than the nursing homes operated by government administration. The results also suggest that a great majority of the nursing homes in the sample do not fully benefit from scale economies. This implies that efficiency gains can be obtained with larger capacities or joint operations. Copyright CIRIEC, 2004.

Date: 2004
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... &year=2004&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1370-4788

Access Statistics for this article

Annals of Public and Cooperative Economics is edited by Fabienne Fecher

More articles in Annals of Public and Cooperative Economics from Blackwell Publishing
Series data maintained by Christopher F. Baum ().