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Nonparametric analysis of returns to scale in the US hospital industry

Author

Listed:
  • Paul W. Wilson

    (Department of Economics, University of Texas, Austin, USA)

  • Kathleen Carey

    (Management Science Group, US Department of Veterans Affairs, Bedford, USA, and School of Public Health, Boston University, USA)

Abstract

This paper presents new estimates of scale economies for US hospitals. We show that the common translog specification of hospital costs is a misspecification, and employ nonparametric, local linear estimation with both continuous and discrete covariates. A bootstrap method is used to provide inferences regarding ray scale economies and expansion path scale economies for a large sample of hospitals covering 1984-1996. We find evidence of changes in the structure of hospital costs over the sample period, as well as evidence of locally optimal hospital sizes. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Paul W. Wilson & Kathleen Carey, 2004. "Nonparametric analysis of returns to scale in the US hospital industry," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(4), pages 505-524.
  • Handle: RePEc:jae:japmet:v:19:y:2004:i:4:p:505-524
    DOI: 10.1002/jae.801
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    File URL: http://qed.econ.queensu.ca:80/jae/2004-v19.4/
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    References listed on IDEAS

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    2. Gilbert, R. Alton & Wheelock, David C. & Wilson, Paul W., 2004. "New evidence on the Fed's productivity in providing payments services," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2175-2190, September.
    3. Teresa D. Harrison, 2007. "Consolidations and closures: an empirical analysis of exits from the hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 16(5), pages 457-474.
    4. Leleu, Hervé & Moises, James & Valdmanis, Vivian, 2012. "Optimal productive size of hospital's intensive care units," International Journal of Production Economics, Elsevier, vol. 136(2), pages 297-305.
    5. Theodore Stefos & James Burgess & Jeffrey Cohen & Laura Lehner & Eileen Moran, 2012. "Dynamics of the mental health workforce: investigating the composition of physicians and other health providers," Health Care Management Science, Springer, vol. 15(4), pages 373-384, December.
    6. Michael Christl & Monika Köppl–Turyna, 2018. "Tax competition and the political economy of public employment: a model for Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(3), pages 607-638, August.
    7. 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.
    8. James F. Burgess, 2012. "Productivity Analysis in Health Care," Chapters,in: The Elgar Companion to Health Economics, Second Edition, chapter 34 Edward Elgar Publishing.
    9. Jean-Philippe Boussemart & Hervé Leleu & Viviane Valdmanis, 2013. "Price of Medicaid and Uncompensated Care compared to Medicare and Private care: A translog shadow pricing approach for Floridian hospital outputs," Working Papers 2013-ECO-02, IESEG School of Management.
    10. Massimo Filippini & Nevenka Hrovatin & Jelena Zorić, 2008. "Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods," Journal of Productivity Analysis, Springer, vol. 29(2), pages 169-182, April.
    11. repec:kap:ijhcfe:v:18:y:2018:i:1:d:10.1007_s10754-017-9225-9 is not listed on IDEAS
    12. 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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