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Do Agglomeration Economies Exist in the Hospital Services Industry

Author

Listed:
  • Laurie J. Bates

    (Bryant University)

  • Rexford E. Santerre

    (University of Connecticut)

Abstract

Given the importance of knowledge flows and the continued emphasis on face-to-face encounters especially for medical care, close proximity of hospitals may be essential for the efficient delivery of medical care. That is, hospital productivity might be greater where hospitals cluster and allow knowledge to more easily and quickly disperse among personnel in the various organizations. To add to the understanding about agglomeration economies in the hospital services sector, this study analyzes how the clustering of hospitals in the various metropolitan areas of the US affects industry wide productivity. The multiple regression analysis is conducted on a cross-sectional basis for both 1993 and 1999 and by using first differencing of the data between the two years. The observed productivity improvements resulting from the clustering of hospitals provides yet another justification for encouraging a larger number of hospitals in metropolitan areas.

Suggested Citation

  • Laurie J. Bates & Rexford E. Santerre, 2005. "Do Agglomeration Economies Exist in the Hospital Services Industry," Eastern Economic Journal, Eastern Economic Association, vol. 31(4), pages 617-628, Fall.
    • Handle: RePEc:eej:eeconj:v:31:y:2005:i:4:p:617-628
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume31/V31N4P617_628.pdf
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    References listed on IDEAS

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    2. Li, Jing, 2013. "Intermediate input sharing in the hospital service industry," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 888-902.
    3. Dean M. Hanink, 2010. "Perspectives on Regional Change: A Review Essay on Handbook of Regional Growth and Development Theories," Growth and Change, Wiley Blackwell, vol. 41(1), pages 3-27, March.
    4. Andrew Friedson & Jing Li, 2015. "The impact of agglomeration economies on hospital input prices," Health Economics Review, Springer, vol. 5(1), pages 1-15, December.
    5. Wang, Xuliang & Xu, Lulu & Ye, Qin & He, Shi & Liu, Yi, 2022. "How does services agglomeration affect the energy efficiency of the service sector? Evidence from China," Energy Economics, Elsevier, vol. 112(C).
    6. Stephen Sheppard & Michael Hellstern, 2014. "Fatal Attraction: health care agglomeration and its consequences," Department of Economics Working Papers 2014-05, Department of Economics, Williams College, revised Nov 2014.
    7. Cohen, Jeffrey P. & Morrison Paul, Catherine, 2008. "Agglomeration and Cost Economies for Washington State Hospital Services," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 553-564, November.
    8. Cohen, Jeffrey P. & Osleeb, Jeffrey P. & Yang, Ke, 2014. "Semi-parametric regression models and economies of scale in the presence of an endogenous variable," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 252-261.

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