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Reimbursing for the costs of teaching and research in finnish hospitals: A stochastic frontier analysis


  • Miika Linna


  • Unto Häkkinen


In this study stochastic frontier cost function was used to estimate the teaching and research costs of Finnish hospitals. Predicted efficiency adjusted costs were calculated and compared to evaluate the current level of teaching and research reimbursement. The efficiency adjustment had significant impact on the marginal and average cost estimates of the teaching and research output. The results suggest that the average rate of teaching and research reimbursement should be approximately 14.6% of the total operating costs in university teaching hospitals. The main finding was that the university teaching hospitals were underfunded with respect to both research and teaching output. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Miika Linna & Unto Häkkinen, 2006. "Reimbursing for the costs of teaching and research in finnish hospitals: A stochastic frontier analysis," International Journal of Health Economics and Management, Springer, vol. 6(1), pages 83-97, March.
  • Handle: RePEc:kap:ijhcfe:v:6:y:2006:i:1:p:83-97 DOI: 10.1007/s10754-006-6256-z

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    References listed on IDEAS

    1. Dalton, Kathleen & Norton, Edward C., 2000. "Revisiting Rogowski and Newhouse on the indirect costs of teaching: a note on functional form and retransformation in Medicare's payment formulas," Journal of Health Economics, Elsevier, vol. 19(6), pages 1027-1046, November.
    2. Rogowski, Jeannette A. & Newhouse, Joseph P., 1992. "Estimating the indirect costs of teaching," Journal of Health Economics, Elsevier, vol. 11(2), pages 153-171, August.
    3. Sloan, Frank A. & Feldman, Roger D. & Steinwald, A. Bruce, 1983. "Effects of teaching on hospital costs," Journal of Health Economics, Elsevier, vol. 2(1), pages 1-28, March.
    4. Zuckerman, Stephen & Hadley, Jack & Iezzoni, Lisa, 1994. "Measuring hospital efficiency with frontier cost functions," Journal of Health Economics, Elsevier, vol. 13(3), pages 255-280, October.
    5. Kittelsen, Sverre A.C. & Magnussen, Jon & Piro, Fredrik Niclas, 2009. "Hva betyr forskning, utdanning og reisetid for sykehusenes kostnader?," HERO On line Working Paper Series 2002:18, Oslo University, Health Economics Research Programme.
    6. Nicholson, Sean & Song, David, 2001. "The incentive effects of the Medicare indirect medical education policy," Journal of Health Economics, Elsevier, vol. 20(6), pages 909-933, November.
    7. Miika Linna & Unto Häkkinen & Eero Linnakko, 1998. "An econometric study of costs of teaching and research in Finnish hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 7(4), pages 291-305.
    8. Guillem López-Casasnovas & Marc Saez, 1999. "The impact of teaching status on average costs in Spanish hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 641-651.
    9. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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    Cited by:

    1. Adelaide Ippolito & Vincenzo Viggiani, 2014. "Positioning matrix of economic efficiency and complexity: a case study in a university hospital," International Journal of Health Planning and Management, Wiley Blackwell, vol. 29(4), pages 362-372, October.
    2. G. Fiorentini & S. Robone & R. Verzulli, 2016. "How do hospital-specialty characteristics influence health system responsiveness? An empirical evaluation of in-patient care in the Italian Region of Emilia-Romagna," Working Papers wp1077, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Mehmet Gok & Erkut Altındağ, 2015. "Analysis of the cost and efficiency relationship: experience in the Turkish pay for performance system," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(5), pages 459-469, June.


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