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Measuring performance in the presence of stochastic demand for hospital services: an analysis of Belgian general care hospitals

  • Mike Smet

    ()

Since demand for hospital services is subject to substantial variability, the relationship between uncertain demand, excess capacity, hospital costs and performance should be investigated thoroughly. In this paper a waiting time indicator to proxy hospital standby capacity is incorporated into a multi-product translog cost function for Belgian general care hospitals. The indicator is derived from queuing theory and improves on the conventionally used (inverse of the) occupancy rate. The multi-product stochastic frontier specification allows calculation of cost elasticities and marginal cost of seven hospital departments, as well as the degree of economies of scale and scope and enables identification of differences in efficiency. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11123-006-0021-7
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Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 27 (2007)
Issue (Month): 1 (February)
Pages: 13-29

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Handle: RePEc:kap:jproda:v:27:y:2007:i:1:p:13-29
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100296

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  1. Daniel Bilodeau & Pierre-Yves Crémieux & Pierre Ouellette, 2000. "Hospital Cost Function In A Non-Market Health Care System," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 489-498, August.
  2. Martin Gaynor & Gerard F. Anderson, 1993. "Uncertain Demand, The Structure of Hospital Costs, and the Cost of EmptyHospital Beds," NBER Working Papers 4460, National Bureau of Economic Research, Inc.
  3. Keeler, Theodore E. & Ying, John S., 1993. "Hospital Costs and Excess Bed Capacity: A Statistical Analysis," Department of Economics, Working Paper Series qt7cb0d9zc, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. Smet, Mike, 2002. "Cost characteristics of hospitals," Social Science & Medicine, Elsevier, vol. 55(6), pages 895-906, September.
  5. Andrew Street & Rowena Jacobs, 2002. "Relative performance evaluation of the English acute hospital sector," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1109-1119.
  6. Hughes, David & McGuire, Alistair, 2003. "Stochastic demand, production responses and hospital costs," Journal of Health Economics, Elsevier, vol. 22(6), pages 999-1010, November.
  7. Dawson, Diane & Goddard, Maria & Street, Andrew, 2001. "Improving performance in public hospitals: a role for comparative costs?," Health Policy, Elsevier, vol. 57(3), pages 235-248, September.
  8. Grannemann, Thomas W. & Brown, Randall S. & Pauly, Mark V., 1986. "Estimating hospital costs : A multiple-output analysis," Journal of Health Economics, Elsevier, vol. 5(2), pages 107-127, June.
  9. Mulligan, James G., 1985. "The stochastic determinants of hospital-bed supply," Journal of Health Economics, Elsevier, vol. 4(2), pages 177-181, June.
  10. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-81, August.
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