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Specialization and production cost efficiency: evidence from ambulatory surgery centers

Kathleen Carey () and Jean M. Mitchell ()
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Kathleen Carey: Boston University School of Public Health
Jean M. Mitchell: Georgetown University

International Journal of Health Economics and Management, 2018, vol. 18, issue 1, No 5, 83-98

Abstract: Abstract In the U.S. health care sector, the economic logic of specialization as an organizing principle has come under active debate in recent years. An understudied case is that of ambulatory surgery centers (ASCs), which recently have become the dominant provider of specific surgical procedures. While the majority of ASCs focus on a single specialty, a growing number are diversifying to offer a wide range of surgical services. We take a multiple output cost function approach to an empirical investigation that compares production economies in single specialty ASCs with those in multispecialty ASCs. We applied generalized estimating equation techniques to a sample of Pennsylvania ASCs for the period 2004–2014, including 73 ASCs that specialized in gastrointestinal procedures and 60 ASCs that performed gastrointestinal as well as other specialty procedures. Results indicated that both types of ASC had small room for expansion. In simulation analysis, production of GI services in specialized ASCs had a cost advantage over joint production of GI with other specialty procedures. Our results provide support for the focused factory model of production in the ASC sector.

Keywords: Ambulatory surgery centers; Specialization; Cost (search for similar items in EconPapers)
JEL-codes: I10 L23 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s10754-017-9225-9

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International Journal of Health Economics and Management is currently edited by Leemore Dafny, Robert Town, Mark Pauly, David Dranove and Pedro Pita Barros

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Handle: RePEc:kap:ijhcfe:v:18:y:2018:i:1:d:10.1007_s10754-017-9225-9