IDEAS home Printed from
   My bibliography  Save this article

Economies of scale and scope in the Danish hospital sector prior to radical restructuring plans


  • Kristensen, Troels
  • Olsen, Kim Rose
  • Kilsmark, Jannie
  • Lauridsen, Jørgen T.
  • Pedersen, Kjeld Møller


The Danish hospital sector faces a significant rebuilding program driven by recent regional reform and guidelines for acute admission hospitals. Within the next 5–10 years, the number of public hospitals offering acute admission will be reduced from 35 to approximately 20 larger hospitals. As the administrative data may be biased during the middle of a restructuring process our objective was to analyze whether the configuration of Danish public hospitals was subject to economies of scale and scope prior to the restructuring plans.

Suggested Citation

  • Kristensen, Troels & Olsen, Kim Rose & Kilsmark, Jannie & Lauridsen, Jørgen T. & Pedersen, Kjeld Møller, 2012. "Economies of scale and scope in the Danish hospital sector prior to radical restructuring plans," Health Policy, Elsevier, vol. 106(2), pages 120-126.
  • Handle: RePEc:eee:hepoli:v:106:y:2012:i:2:p:120-126 DOI: 10.1016/j.healthpol.2012.04.001

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Tao, Hung-Lin & Yuan, Ming-Ching, 2005. "Optimal scale of a public elementary school with commuting costs--a case study of Taipei county," Economics of Education Review, Elsevier, vol. 24(4), pages 407-416, August.
    2. Troels Kristensen & Peter Bogetoft & Kjeld Pedersen, 2010. "Potential gains from hospital mergers in Denmark," Health Care Management Science, Springer, vol. 13(4), pages 334-345, December.
    3. Daniel Bilodeau & Pierre-Yves Crémieux & Pierre Ouellette, 2002. "Hospital Technology in a Nonmarket Health Care System," Southern Economic Journal, Southern Economic Association, vol. 68(3), pages 511-529, January.
    4. 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.
    5. Anni Ankjær-Jensen & Pernille Rosling & Lone Bilde, 2006. "Variable prospective financing in the Danish hospital sector and the development of a Danish case-mix system," Health Care Management Science, Springer, vol. 9(3), pages 259-268, August.
    6. Jason Sutherland & Colin Preyra, 2006. "A mixture model approach to updating payment weights with an application to ICD-10 implementation," Health Care Management Science, Springer, vol. 9(4), pages 349-357, November.
    7. Miika Linna, 1998. "Measuring hospital cost efficiency with panel data models," Health Economics, John Wiley & Sons, Ltd., vol. 7(5), pages 415-427.
    8. Davis, Karen & Russell, Louise B, 1972. "The Substitution of Hospital Outpatient Care for Inpatient Care," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 109-120, May.
    9. Magnussen, Jon & Hagen, Terje P. & Kaarboe, Oddvar M., 2007. "Centralized or decentralized? A case study of Norwegian hospital reform," Social Science & Medicine, Elsevier, vol. 64(10), pages 2129-2137, May.
    10. Ahgren, Bengt, 2008. "Is it better to be big?: The reconfiguration of 21st century hospitals: Responses to a hospital merger in Sweden," Health Policy, Elsevier, vol. 87(1), pages 92-99, July.
    11. Roller, Lars-Hendrik, 1990. "Proper Quadratic Cost Functions with an Application to the Bell System," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 202-210, May.
    12. Manning, Willard G., 1998. "The logged dependent variable, heteroscedasticity, and the retransformation problem," Journal of Health Economics, Elsevier, vol. 17(3), pages 283-295, June.
    13. Hughes, David & McGuire, Alistair, 2003. "Stochastic demand, production responses and hospital costs," Journal of Health Economics, Elsevier, vol. 22(6), pages 999-1010, November.
    14. Lynk, William J., 1995. "The creation of economic efficiencies in hospital mergers," Journal of Health Economics, Elsevier, vol. 14(5), pages 507-530, December.
    15. Vassilis H. Aletras, 1999. "A comparison of hospital scale effects in short-run and long-run cost functions," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 521-530.
    16. Kroneman, Madelon & Siegers, Jacques J., 2004. "The effect of hospital bed reduction on the use of beds: A comparative study of 10 European countries," Social Science & Medicine, Elsevier, vol. 59(8), pages 1731-1740, October.
    17. Preyra, Colin & Pink, George, 2006. "Scale and scope efficiencies through hospital consolidations," Journal of Health Economics, Elsevier, vol. 25(6), pages 1049-1068, November.
    18. Hall, Robert E, 1973. "The Specification of Technology with Several Kinds of Output," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 878-892, July-Aug..
    19. Newhouse, Joseph P., 1994. "Frontier estimation: How useful a tool for health economics?," Journal of Health Economics, Elsevier, vol. 13(3), pages 317-322, October.
    20. Kolari, James & Zardkoohi, Asghar, 1990. " Economies of Scale and Scope in Thrift Institutions: The Case of Finnish Cooperative and Savings Banks," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(3), pages 437-451.
    21. Eakin, B Kelly & McMillen, Daniel P & Buono, Mark J, 1990. "Constructing Confidence Intervals Using the Bootstrap: An Application to a Multi-Product Cost Function," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 339-344, May.
    22. Cohen, Jeffrey P. & Morrison Paul, Catherine, 2008. "Agglomeration and Cost Economies for Washington State Hospital Services," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 553-564, November.
    23. Smet, Mike, 2002. "Cost characteristics of hospitals," Social Science & Medicine, Elsevier, vol. 55(6), pages 895-906, September.
    24. Vita, Michael G., 1990. "Exploring hospital production relationships with flexible functional forms," Journal of Health Economics, Elsevier, vol. 9(1), pages 1-21, June.
    25. Tong Li & Robert Rosenman, 2001. "Estimating hospital costs with a generalized Leontief function," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 523-538.
    26. Breyer, Friedrich, 1987. "The specification of a hospital cost function : A comment on the recent literature," Journal of Health Economics, Elsevier, vol. 6(2), pages 147-157, June.
    27. Adam Wagstaff & Guillem Lopez, 1996. "Hospital costs in Catalonia: a stochastic frontier analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 3(7), pages 471-474.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Cinzia Di Novi & Dino Rizzi & Michele Zanette, 2016. "Larger is Better: the Scale Effects of the Italian Local Healthcare Authorities Amalgamation Program," Working Papers 2016:04, Department of Economics, University of Venice "Ca' Foscari".
    2. Clemens, Timo & Michelsen, Kai & Commers, Matt & Garel, Pascal & Dowdeswell, Barrie & Brand, Helmut, 2014. "European hospital reforms in times of crisis: Aligning cost containment needs with plans for structural redesign?," Health Policy, Elsevier, vol. 117(1), pages 6-14.
    3. repec:eee:ejores:v:266:y:2018:i:2:p:716-735 is not listed on IDEAS
    4. repec:eee:hepoli:v:121:y:2017:i:5:p:525-533 is not listed on IDEAS
    5. Buzzacchi, Luigi & Scellato, Giuseppe & Ughetto, Elisa, 2016. "Frequency of medical malpractice claims: The effects of volumes and specialties," Social Science & Medicine, Elsevier, vol. 170(C), pages 152-160.
    6. repec:bla:ijhplm:v:32:y:2017:i:2:p:e160-e184 is not listed on IDEAS
    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.
    8. Jonek Kowalska, Izabela, 2015. "Challenges for long-term industry restructuring in the Upper Silesian Coal Basin: What has Polish coal mining achieved and failed from a twenty-year perspective?," Resources Policy, Elsevier, vol. 44(C), pages 135-149.

    More about this item


    Economies of scale; Economies of scope; Hospitals; Cost function;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor 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 Behavior
    • 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
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:hepoli:v:106:y:2012:i:2:p:120-126. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu) or (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.