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Scope and scale inefficiencies in physician practices

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Author Info

  • Robert Rosenman

    (Department of Economics, Washington State University, USA)

  • Daniel Friesner

    (School of Business Administration, Gonzaga University, USA)

Abstract

Using a national data set, this paper looks at the efficiency of physician practices, focusing on scopes of service by comparing single specialty groups and multispecialty groups. An analysis of efficiency using DEA indicates that there are scope inefficiencies from combining different types of providers into a single practice. Most of the inefficiency is due to technical rather than allocative reasons. In addition, we find that larger practices are able to capture efficiencies of scope, but incur inefficiencies of scale. Copyright © 2004 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 13 (2004)
Issue (Month): 11 ()
Pages: 1091-1116
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:13:y:2004:i:11:p:1091-1116

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Frech, H E, III & Ginsburg, Paul B, 1974. "Optimal Scale in Medical Practice: A Survivor Analysis," The Journal of Business, University of Chicago Press, vol. 47(1), pages 23-36, January.
  2. Vitaliano, Donald F. & Toren, Mark, 1994. "Cost and efficiency in nursing homes: a stochastic frontier approach," Journal of Health Economics, Elsevier, vol. 13(3), pages 281-300, October.
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  5. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
  6. Marder, William D. & Zuckerman, Stephen, 1985. "Competition and medical groups : A survivor analysis," Journal of Health Economics, Elsevier, vol. 4(2), pages 167-176, June.
  7. Gaynor, M. & Gertler, P., 1996. "Moral hazard and Risk Speading in Partnerships," Papers 96-09, RAND - Reprint Series.
  8. Martin Gaynor, 1989. "Competition within the Firm: Theory Plus Some Evidence from Medical Group Practice," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 59-76, Spring.
  9. Chilingerian, Jon A., 1995. "Evaluating physician efficiency in hospitals: A multivariate analysis of best practices," European Journal of Operational Research, Elsevier, vol. 80(3), pages 548-574, February.
  10. Reinhardt, U, 1972. "A Product Function for Physician Services," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 55-66, February.
  11. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  12. Gaynor, Martin & Pauly, Mark V, 1990. "Compensation and Productive Efficiency of Partnerships: Evidence from Medical Group Practice," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 544-73, June.
  13. Yasar Ozcan, 1998. "Physician benchmarking: measuring variation in practice behavior in treatment of otitis media," Health Care Management Science, Springer, vol. 1(1), pages 5-17, September.
  14. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  15. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
  16. Lisa C. DeFelice & W. David Bradford, 1997. "Relative inefficiencies in production between solo and group practice physicians," Health Economics, John Wiley & Sons, Ltd., vol. 6(5), pages 455-465.
  17. Dor, Avi, 1994. "Non-minimum cost functions and the stochastic frontier: On applications to health care providers," Journal of Health Economics, Elsevier, vol. 13(3), pages 329-334, October.
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Citations

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Cited by:
  1. Daniel Friesner & Ron Mittelhammer & Robert Rosenman, 2006. "Inferring the Latent Incidence of Inefficiency from DEA Estimates and Bayesian Priors," Working Papers 2006-8, School of Economic Sciences, Washington State University.
  2. Eila Kankaanpää & Ismo Linnosmaa & Hannu Valtonen, 2011. "Public health care providers and market competition: the case of Finnish occupational health services," The European Journal of Health Economics, Springer, vol. 12(1), pages 3-16, February.
  3. John Schneider & Pengxiang Li & Donald Klepser & N. Peterson & Timothy Brown & Richard Scheffler, 2008. "The effect of physician and health plan market concentration on prices in commercial health insurance markets," International Journal of Health Care Finance and Economics, Springer, vol. 8(1), pages 13-26, March.
  4. Grace Lordan, 2007. "Measuring efficiency in health care: an application to out of hours primary care services in the island of Ireland," Health, Econometrics and Data Group (HEDG) Working Papers 07/08, HEDG, c/o Department of Economics, University of York.
  5. Murillo-Zamorano, Luis R. & Petraglia, C., 2008. "Technical efficiency in primary health care: does quality matter?," MPRA Paper 10725, University Library of Munich, Germany.
  6. Rajitkanok Puenpatom & Robert Rosenman, 2008. "Efficiency of Thai provincial public hospitals during the introduction of universal health coverage using capitation," Health Care Management Science, Springer, vol. 11(4), pages 319-338, December.
  7. Daniel Friesner & Matthew McPherson & Robert Rosenman, 2006. "Are Hospitals Seasonally Inefficient? Evidence from Washington State Hospitals," Working Papers 2006-3, School of Economic Sciences, Washington State University.

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