The health economics literature contains contradictory empirical findings regarding the cost of an empty hospital bed. Recent empirical studies which account for the endogeneity of reserve capacity produce high estimates of these costs, while earlier studies and industry experts maintain that empty beds are cheap. This paper provides evidence which helps to reconcile the controversy. The cost of excess bed capacity will depend upon staffing levels of different types of labor in the hospital. We provide a relationship between capacity utilization, productive efficiency, and the cost of empty beds, and then compare the utilization of bed capacity in four very different market environments. These are the highly regulated, public Norwegian hospitals, who face very little competitive pressure, and the unregulated, private California hospitals, divided into three groups with variation in ownership and competitive environment. We find considerable variation in input utilization and excess capacity, with different implications for the cost of empty beds across the hospital groups and their respective market environments. Our findings suggest that the cost of an empty bed varies with market conditions, hence the seemingly contradictory findings in the literature are to be expected. Our findings also suggest an interesting area of future research: the impact of managed care on reserve capacity in hospitals.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 6 (1999) Issue (Month): 3 (November) Pages: 383-398 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
References listed on IDEAS 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.: