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Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland

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Author Info

  • Medhi Farsi

    (Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Massimo Filippini

    () (Istituto microeconomia e economia pubblica (MecoP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera)

Abstract

This paper explores the cost structure of Swiss hospitals, focusing on differences due to teaching activities and those across different ownership and subsidization types. A stochastic total cost frontier with a Cobb-Douglas functional form has been estimated for a panel of 150 general hospitals over the six-year period from 1998 and 2003. Inpatient cases adjusted by DRG cost weights and ambulatory revenues are considered as two separate outputs. The adopted econometric specification allows for unobserved heterogeneity across hospitals. The results indicate that the time-invariant unobserved factors could account for considerable cost differences that could be only partly due to inefficiency. The results suggest that teaching activities are an important cost driving factor and hospitals that have a broader range of specialization are relatively more costly. The excess costs of university hospitals can be explained by more extensive teaching activities as well as the relatively high quality of medical units. However, even after controlling for such differences university hospitals have shown a relatively low cost-efficiency especially in the first two or three years of the sample period. The analysis does not provide any evidence of significant efficiency differences across ownership and subsidization categories.

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Bibliographic Info

Paper provided by USI Università della Svizzera italiana in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 0606.

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Length: 34 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:lug:wpaper:0606

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Web page: http://www.library.lu.usi.ch

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Keywords: general hospitals; teaching hospitals; stochastic frontier; cost efficiency;

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References

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Citations

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Cited by:
  1. Annika Herr, 2008. "Cost and technical efficiency of German hospitals: does ownership matter?," Health Economics, John Wiley & Sons, Ltd., vol. 17(9), pages 1057-1071.
  2. Vincenzo Atella & Federico Belotti & Silvio Daidone & Giuseppe Ilardi & Giorgia Marini, 2012. "Cost-containment policies and hospital efficiency: evidence from a panel of Italian hospitals," CEIS Research Paper 228, Tor Vergata University, CEIS, revised 13 Apr 2012.
  3. Mehdi Farsi, 2008. "The temporal variation of cost-efficiency in Switzerland’s hospitals: an application of mixed models," Journal of Productivity Analysis, Springer, vol. 30(2), pages 155-168, October.
  4. Philippe K Widmer & Peter Zweifel & Mehdi Farsi, 2010. "Accounting For Heterogeneity In The Measurement of Hospital Performance," Economics Discussion / Working Papers 10-21, The University of Western Australia, Department of Economics.
  5. Piacenza, Massimiliano & Turati, Gilberto & Vannoni, Davide, 2010. "Restructuring hospital industry to control public health care expenditure: The role of input substitutability," Economic Modelling, Elsevier, vol. 27(4), pages 881-890, July.
  6. Zeynep Or & Thomas Renaud & Laure Com-Ruelle, 2009. "One price for all? Sources of cost variations between public and private hospitals," Working Papers DT25, IRDES institut for research and information in health economics, revised May 2009.
  7. Helmut Herwartz & Christoph Strumann, 2012. "On the effect of prospective payment on local hospital competition in Germany," Health Care Management Science, Springer, vol. 15(1), pages 48-62, March.
  8. Medhi Farsi & Massimo Filippini & Diego Lunati, 2008. "Economies of scale and efficiency measurement in Switzerland's Nursing homes," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0801, USI Università della Svizzera italiana.
  9. Liu, Gordon G. & Li, Lin & Hou, Xiaohui & Xu, Judy & Hyslop, Daniel, 2009. "The role of for-profit hospitals in medical expenditures: Evidence from aggregate data in China," China Economic Review, Elsevier, vol. 20(4), pages 625-633, December.
  10. Pedro Barros & Sara Machado, 2010. "Money for nothing?," Health Care Management Science, Springer, vol. 13(3), pages 234-255, September.

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