Economies of Scale and Efficiency Measurement in Switzerland's Nursing Homes

Mehdi Farsi, Massimo Filippini and Diego Lunati

Swiss Journal of Economics and Statistics (SJES), 2008, vol. 144, issue III, 359-378

Abstract: This paper examines the cost efficiency in the nursing home industry, an issue of concern to Swiss policy makers because of the explosive growth of national expenditure on elderly care and the aging of the population. A stochastic cost frontier model has been applied to a panel of 1780 observations from 356 nursing homes operating over 1998-2002 in Switzerland. We compare the estimation results from different econometric techniques focusing on the specification of unobserved heterogeneity across firms. The potential effects of such unobserved factors on the estimation results and their interpretation have been discussed. The findings suggest that the economies of scale are an important potential source of cost reduction in a majority of Swiss nursing homes. Moreover the average performance of a representative nursing home is very close to the estimated best practice.

Keywords: cost efficiency; economies of scale; nursing homes; stochastic frontier; panel data (search for similar items in EconPapers)
JEL-codes: C13 C21 D24 H70 I11 I18 L30 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sjes.ch/papers/2008-III-5.pdf (application/pdf)

Related works:
Working Paper: Economies of scale and efficiency measurement in Switzerland's Nursing homes (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ses:arsjes:2008-iii-5

Access Statistics for this article

Swiss Journal of Economics and Statistics (SJES) is currently edited by Marius Brülhart

More articles in Swiss Journal of Economics and Statistics (SJES) from Swiss Society of Economics and Statistics (SSES) Contact information at EDIRC.
Bibliographic data for series maintained by Kurt Schmidheiny ().