Economies of Scale and Efficiency Measurement in Switzerland's Nursing Homes
AbstractThis paper examines the cost efficiency in the nursing home industry, an issue of concern to Swiss policy makers because of the explosive growth of national expenditure on elderly care and the aging of the population. A stochastic cost frontier model has been applied to a panel of 1780 observations from 356 nursing homes operating over 1998-2002 in Switzerland. We compare the estimation results from different econometric techniques focusing on the specification of unobserved heterogeneity across firms. The potential effects of such unobserved factors on the estimation results and their interpretation have been discussed. The findings suggest that the economies of scale are an important potential source of cost reduction in a majority of Swiss nursing homes. Moreover the average performance of a representative nursing home is very close to the estimated best practice.
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Bibliographic InfoArticle provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.
Volume (Year): 144 (2008)
Issue (Month): III (September)
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More information through EDIRC
cost efficiency; economies of scale; nursing homes; stochastic frontier; panel data;
Other versions of this item:
- Medhi Farsi & Massimo Filippini & Diego Lunati, 2008. "Economies of scale and efficiency measurement in Switzerland's Nursing homes," Quaderni della facoltÃ di Scienze economiche dell'UniversitÃ di Lugano 0801, USI Università della Svizzera italiana.
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
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