IDEAS home Printed from
   My bibliography  Save this article

Determinants of variation in the cost of inpatient stays versus outpatient visits in hospitals: A multi-country analysis


  • Adam, Taghreed
  • Evans, David B.


Information on hospital costs is key to many types of economic and financial analyses, yet many countries lack reliable estimates due partly to the time and resources required to undertake detailed costing studies. Accordingly, some analysts have used simple rules of thumb to estimate hospital unit costs, e.g., total hospital costs are allocated between departments assuming that the cost of an inpatient day equals a fixed number of outpatient visits. This paper first explores the extent to which these simple rules apply within and across countries. It then identifies determinants of variation in the relationship between the cost of outpatient visits and inpatient days, then uses the estimated relationship to calculate average costs of inpatient and outpatient stays for countries where data are not yet available. Cost information from 832 hospitals in 28 countries are used. We show that simple rules of thumb do not prove to be an accurate basis for cost estimates. The ratio of inpatient to outpatient unit costs varies with GDP per capita, hospital size, ownership, and occupancy rate. We show how the estimated relationship can be used to calculate a mean cost of inpatient stays and outpatient visits, taking into account differences in the levels of key determinants, and argue that, in the absence of a representative sample of hospital costing studies, this method can be used to estimate unit costs in the interim. Moreover, we suggest that the observed great variation in unit costs for similar hospitals in the same country means that this method might well be preferable to basing policy advice on the results of costing studies that cover only one, or a few hospitals, which might well be outliers.

Suggested Citation

  • Adam, Taghreed & Evans, David B., 2006. "Determinants of variation in the cost of inpatient stays versus outpatient visits in hospitals: A multi-country analysis," Social Science & Medicine, Elsevier, vol. 63(7), pages 1700-1710, October.
  • Handle: RePEc:eee:socmed:v:63:y:2006:i:7:p:1700-1710

    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. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    2. Edgar A. Peden & Mark S. Freeland, 1998. "Insurance effects on US medical spending (1960-1993)," Health Economics, John Wiley & Sons, Ltd., vol. 7(8), pages 671-687.
    3. Liu, Xingzhu & Hsiao, William C. L., 1995. "The cost escalation of social health insurance plans in China: Its implication for public policy," Social Science & Medicine, Elsevier, vol. 41(8), pages 1095-1101, October.
    4. World Bank, 2000. "World Development Indicators 2000," World Bank Publications, The World Bank, number 13828.
    5. 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.
    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. Tom Stargardt, 2008. "Health service costs in Europe: cost and reimbursement of primary hip replacement in nine countries," Health Economics, John Wiley & Sons, Ltd., vol. 17(S1), pages 9-20.


    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:socmed:v:63:y:2006:i:7:p:1700-1710. 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). 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.