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Agglomeration and Cost Economies for Washington State Hospital Services

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  • Cohen, Jeffrey P.
  • Morrison Paul, Catherine

Abstract

Hospital cost efficiency is dependent on the potential to generate cost economies, which imply lower costs for hospitals that are, for example, larger or more diversified. Although scale and scope economies have been recognized in the literature on hospital costs, agglomeration economies due to hospital clustering have received little attention. We consider the impact of such spatial linkages, which may result from labor pooling or knowledge spillovers, by including a measure of other hospitals' proximity in a flexible cost function model. We find significant agglomeration economies for the Washington State hospitals in our dataset; geographic concentration appears to reduce costs for most treatment centers. We also find significant scale economies, and some evidence of scope economies from complementarities between outputs and among treatment centers.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:regeco:v:38:y:2008:i:6:p:553-564
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    Cited by:

    1. Li, Jing, 2013. "Intermediate input sharing in the hospital service industry," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 888-902.
    2. Baltagi, Badi H. & Yen, Yin-Fang, 2014. "Hospital treatment rates and spillover effects: Does ownership matter?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 193-202.
    3. Helda Azevedo & Céu Mateus, 2014. "Cost effects of hospital mergers in Portugal," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 999-1010, December.
    4. Dean M. Hanink, 2010. "Perspectives on Regional Change: A Review Essay on "Handbook of Regional Growth and Development Theories"," Growth and Change, Wiley Blackwell, vol. 41(1), pages 3-27.
    5. Andrew Friedson & Jing Li, 2015. "The impact of agglomeration economies on hospital input prices," Health Economics Review, Springer, vol. 5(1), pages 1-15, December.
    6. Li, Jing, 2014. "The influence of state policy and proximity to medical services on health outcomes," Journal of Urban Economics, Elsevier, vol. 80(C), pages 97-109.
    7. 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.
    8. Stefan Felder & Harald Tauchmann, 2013. "Federal state differentials in the efficiency of health production in Germany: an artifact of spatial dependence?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 21-39, February.
    9. repec:eee:forpol:v:83:y:2017:i:c:p:88-98 is not listed on IDEAS
    10. Mark Burkey, 2012. "Decomposing geographic accessibility into component parts: methods and an application to hospitals," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(3), pages 783-800, June.
    11. Cohen, Jeffrey P. & Osleeb, Jeffrey P. & Yang, Ke, 2014. "Semi-parametric regression models and economies of scale in the presence of an endogenous variable," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 252-261.

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