Factors determining the response of hospitals to demand uncertainty

Ana Rodriguez-Alvarez, David Roibás () and Alan Wall

No 2009/04, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: A feature of hospitals is that they face uncertain demand for the services they offer. To cover fluctuations in demand they need to maintain reserve capacity in the form of beds, equipment, personnel etc in order to minimize the probability of excess queuing or turning away patients, creating a trade-off between reserve capacity and economic costs. Using a simple theoretical framework we show how the reserve capacity established can depend on institutional characteristics that can affect the objective of the hospital. In particular, we show that private and public hospitals can provide different levels of reserve capacity. In an empirical application using a panel data set of Spanish hospitals over the period 1996-2006 we model reserve capacity using a distance frontier approach. Our results show that private hospitals do not generally contract as much reserve capacity in response to demand uncertainty, although for some services they contract more capacity than public hospitals.

Keywords: Hospitals; demand uncertainty; technical efficiency; distance function (search for similar items in EconPapers)
JEL-codes: D24 D81 I10 (search for similar items in EconPapers)
Pages: 25
Date: 2009
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Citations: View citations in EconPapers (1)

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