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Economies Of Scale And Scope: The Case Of Specialty Hospitals

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  • Kathleen Carey
  • James F. Burgess Jr.
  • Gary J. Young

Abstract

type="main" xml:id="coep12062-abs-0001"> The recent growth of physician-owned hospitals specializing in orthopedic and surgical specialty services in the United States has generated considerable controversy, yet there is little understanding of the economic logic of organizing hospital services around these single specialties. This article takes a multiple output hospital cost function approach to an empirical investigation of whether single specialty hospitals (SSHs) exhibit economies of scale and economies of scope as keys to new insights into that logic. We applied generalized estimating equation techniques to a sample of 80 SSHs and 883 general hospital competitors over the 1998–2008 period. Results indicated large underlying scale differences across the organizational types. Simulation analysis revealed the potential for exploitation of economies of scope gained from shifting output from SSHs to general hospitals. (JEL I18, L23)

Suggested Citation

  • Kathleen Carey & James F. Burgess Jr. & Gary J. Young, 2015. "Economies Of Scale And Scope: The Case Of Specialty Hospitals," Contemporary Economic Policy, Western Economic Association International, vol. 33(1), pages 104-117, January.
    • Handle: RePEc:bla:coecpo:v:33:y:2015:i:1:p:104-117
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    File URL: http://hdl.handle.net/10.1111/coep.2015.33.issue-1
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    Citations

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    Cited by:

    1. Detlef Klimpe & Ludwig Kuntz & Desdemona Möller & Michael Wittland, 2016. "Supply Chain Management für Dienstleistungsunternehmen – Sind Medizinische Versorgungszentren als Mittel der (Downstream) Supply Chain Integration ein Erfolgsmodell für deutsche Krankenhäuser? [Sup," Schmalenbach Journal of Business Research, Springer, vol. 68(1), pages 111-134, April.
    2. Kao, Chiang & Pang, Rui-Zhi & Liu, Shiang-Tai & Bai, Xue-Jie, 2021. "Optimal expansion paths for hospitals of different types: Viewpoint of scope economies and evidence from Chinese hospitals," European Journal of Operational Research, Elsevier, vol. 289(2), pages 628-638.
    3. Michael Freeman & Nicos Savva & Stefan Scholtes, 2021. "Economies of Scale and Scope in Hospitals: An Empirical Study of Volume Spillovers," Management Science, INFORMS, vol. 67(2), pages 673-697, February.
    4. Ferreira, D.C. & Marques, R.C. & Nunes, A.M., 2018. "Economies of scope in the health sector: The case of Portuguese hospitals," European Journal of Operational Research, Elsevier, vol. 266(2), pages 716-735.
    5. Vomhof, Markus, 2016. "Hospital competition with heterogeneous patient groups: Incentives and regulation," Ruhr Economic Papers 624, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Yia-Wun Liang & Wen-Yi Chen & Yu-Hui Lin, 2015. "Estimating a Hospital Production Function to Evaluate the Effect of Nurse Staffing on Patient Mortality in Taiwan: The Longitudinal Count Data Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 154-169, December.
    7. Sagaon-Teyssier, Luis & Fressard, Lisa & Mora, Marion & Maradan, Gwenaëlle & Guagliardo, Valérie & Suzan-Monti, Marie & Dray-Spira, Rosemary & Spire, Bruno, 2016. "Larger is not necessarily better! Impact of HIV care unit characteristics on virological success: results from the French national representative ANRS-VESPA2 study," Health Policy, Elsevier, vol. 120(8), pages 936-947.

    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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