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Agglomeration and Cost Economies for Washington State Hospital Services

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  • Cohen, Jeffrey P.
  • Morrison Paul, Catherine

Abstract

Hospital cost efficiency is dependent on the potential to generate cost economies, which imply lower costs for hospitals that are, for example, larger or more diversified. Although scale and scope economies have been recognized in the literature on hospital costs, agglomeration economies due to hospital clustering have received little attention. We consider the impact of such spatial linkages, which may result from labor pooling or knowledge spillovers, by including a measure of other hospitals' proximity in a flexible cost function model. We find significant agglomeration economies for the Washington State hospitals in our dataset; geographic concentration appears to reduce costs for most treatment centers. We also find significant scale economies, and some evidence of scope economies from complementarities between outputs and among treatment centers.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 38 (2008)
Issue (Month): 6 (November)
Pages: 553-564

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Handle: RePEc:eee:regeco:v:38:y:2008:i:6:p:553-564

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Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Hospital costs Agglomeration economies Clustering;

References

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Cited by:
  1. Kristensen, Troels & Olsen, Kim Rose & Kilsmark, Jannie & Lauridsen, Jørgen T. & Pedersen, Kjeld Møller, 2012. "Economies of scale and scope in the Danish hospital sector prior to radical restructuring plans," Health Policy, Elsevier, vol. 106(2), pages 120-126.
  2. Stefan Felder & Harald Tauchmann, 2013. "Federal state differentials in the efficiency of health production in Germany: an artifact of spatial dependence?," The European Journal of Health Economics, Springer, vol. 14(1), pages 21-39, February.
  3. Li, Jing, 2013. "Intermediate input sharing in the hospital service industry," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 888-902.
  4. Mark Burkey, 2012. "Decomposing geographic accessibility into component parts: methods and an application to hospitals," The Annals of Regional Science, Springer, vol. 48(3), pages 783-800, June.

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