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Hospital Cost and Efficiency in a Regime of Stringent Regulation

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Author Info
Donald F. Vitaliano (Rensselaer Polytechnic Institute)
Mark Toren (New York State Department of Health)

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Abstract

A stochastic frontier cost function is fitted to data for 219 New York hospitals (1991). Economic inefficiency is estimated to be about 18 percent, comparable to published estimates for hospitals nationwide. Hospitals with over 300 beds are notably more efficient, and those with more Medicare patients are also more efficient. A reduction in excess bed capacity to control costs appears warranted. Rochester area hospitals, where a system of monopsony reimbursement exists, are more efficient. Unionized hospitals are less efficient. The stringent regulatory system in New York does not appear to effectively control costs or to affect efficiency.

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File URL: http://college.holycross.edu/eej/Volume22/V22N2P161_175.pdf
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Publisher Info
Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 22 (1996)
Issue (Month): 2 (Spring)
Pages: 161-175
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Handle: RePEc:eej:eeconj:v:22:y:1996:i:2:p:161-175

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Related research
Keywords: Hospital; Hospitals; Medicare;

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Find related papers by JEL classification:
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gian Paolo Barbetta & Gilberto Turati & Angelo Zago, 2004. "Behavioral Differences Between Public and Private Not-For-Profit Hospitals in the Italian National Health Service," Working Papers 12, Università di Verona, Dipartimento di Scienze economiche. [Downloadable!]
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  2. Cyril Chang & Jennifer Troyer, 2009. "The impact of TennCare on hospital efficiency," Health Care Management Science, Springer, vol. 12(3), pages 201-216, September. [Downloadable!] (restricted)
  3. Sujoy Chakravarty & Martin Gaynor & Steven Klepper & William B. Vogt, 2006. "Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 345-361. [Downloadable!]
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  4. Berta, P & Callea, G & Martini, G & Vittadini, G, 2009. "The effects of upcoding, cream skimming and readmissions on the Italian hospitals efficiency: a population–based investigation," MPRA Paper 17671, University Library of Munich, Germany. [Downloadable!]
  5. Michael D. Rosko, 2001. "Cost efficiency of US hospitals: a stochastic frontier approach," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 539-551. [Downloadable!]
  6. J.L.T. Blank & A.H.Q.M. Merkies, 2004. "Empirical assessment of the economic behaviour of Dutch general hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 265-280. [Downloadable!]
  7. Mehdi Farsi & Massimo Filippini, 2008. "Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 335-350. [Downloadable!]
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  8. Annika Frohloff, 2007. "Cost and Technical Efficiency of German Hospitals – A Stochastic Frontier Analysis," Ruhr Economic Papers 0002, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  9. Gillian Currie & Cam Donaldson & Mingshan Lu, 2003. "What Does Canada Profit from the For-Profit Debate on Health Care?," Canadian Public Policy, University of Toronto Press, vol. 29(2), pages 227-251, June. [Downloadable!] (restricted)
  10. Mehdi Farsi, 2008. "The temporal variation of cost-efficiency in Switzerland’s hospitals: an application of mixed models," Journal of Productivity Analysis, Springer, vol. 30(2), pages 155-168, October. [Downloadable!] (restricted)
  11. Andrew Worthington, 1999. "An Empirical Survey Of Frontier Efficiency Measurement Techniques In Healthcare Services," School of Economics and Finance Discussion Papers and Working Papers Series 067, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
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