Kristensen, Troels () (University of Southern Denmark) Møller Pedersen, Kjeld () (University of Southern Denmark) Rose Olsen, Kim () (University of Southern Denmark)
Abstract
The Danish hospital sector is facing a major restructuring over the coming decade that will involve hospital mergers and closures as well as construction of new hospitals. There is a clear trend towards fewer and larger hospitals. The evidence for economies of scale and scope underpinning these decisions is lacking, however. The present study applies a hybrid translog cost function to examine whether there are unexploited economies of scale and scope in the current configuration of the Danish hospital sector. Cross section data relating to Danish public hospitals in year 2004 were analyzed. Issues relating to hospital definition, hospital production, functional form, scale and scope testing were addressed. Stochastic frontier analysis and OLS-regression were used to examine sensitivity to the assumption of cost-minimization. Economies of scale and diseconomies of scope were identified in connection with hospital outputs in the largest hospitals (200+ beds). Furthermore, the assumption of cost-minimization had little influence on the results. Results for the smallest hospitals (less than 200 beds) showed economies of both scale and scope.
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Publisher Info
Paper provided by Institute of Public Health - Health Economics, University of Southern Denmark in its series Health Economics Papers with number
2008:11.
Find related papers by JEL classification: C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets I12 - Health, Education, and Welfare - - Health - - - Health Production L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
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