Abstract
coming decade with hospital mergers and closures as well as construction of new
hospitals. There is a clear trend towards fewer and larger hospitals. The evidence for
economies of scale and scope underpinning these decisions is lacking, however. The
present study applies a hybrid translog cost function to examine whether there are
unexploited economies of scale and scope in the current configuration of the Danish
hospital sector. Cross section data relating to Danish public hospitals in year 2004
were analyzed. Issues relating to hospital definition, hospital production, functional
form, scale and scope testing are addressed. Stochastic frontier analysis and linearregression
are used to examine sensitivity to the assumption of cost-minimization.
Economies of scale and diseconomies of scope were identified in connection with
hospital outputs in the largest hospitals (200+ beds). Furthermore, the assumption of
cost-minimization had little influence on the results. Results for the smallest hospitals
(less than 200 beds) showed economies of both scale and scope.
Translated title of the contribution | An investigation of economies of scale and scope in the Danish hospital service |
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Original language | Danish |
Journal | Nationaløkonomisk tidsskrift |
Volume | 147 |
Issue number | 1 |
Pages (from-to) | 28-52 |
Number of pages | 25 |
ISSN | 0028-0453 |
Publication status | Published - 2009 |
Keywords
- hospital service
- economies of scale
- economies of scope
- business economics
- health economics
- econometric estimation
- stochastic frontier analysis
- cost function