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Hospital Cost Function In A Non-Market Health Care System

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  • Daniel Bilodeau
  • Pierre-Yves Crémieux
  • Pierre Ouellette

Abstract

This paper examines whether a competitive model of the firm appropriately describes the behavior of hospitals in a non-market environment. This test is based on the best database yet available in the hospital sector. We show that properties of the non-market hospitals'cost functions are compatible with short-term, but not long-term, cost-minimizing behavior. This is consistent with results of similar analyses in the U.S. hospital market and suggests that Québec hospitals, which operate in a non-market environment, might not behave fundamentally differently from their U.S. counterparts. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • 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.
  • Handle: RePEc:tpr:restat:v:82:y:2000:i:3:p:489-498
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    Cited by:

    1. Frankovic, Ivan & Kuhn, Michael, 2018. "Health insurance, endogenous medical progress, and health expenditure growth," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2018, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    2. Piacenza, Massimiliano & Turati, Gilberto & Vannoni, Davide, 2010. "Restructuring hospital industry to control public health care expenditure: The role of input substitutability," Economic Modelling, Elsevier, vol. 27(4), pages 881-890, July.
    3. Kathleen Carey & Theodore Stefos, 2011. "Controlling for quality in the hospital cost function," Health Care Management Science, Springer, vol. 14(2), pages 125-134, June.
    4. Laudicella, Mauro & Olsen, Kim Rose & Street, Andrew, 2010. "Examining cost variation across hospital departments-a two-stage multi-level approach using patient-level data," Social Science & Medicine, Elsevier, vol. 71(10), pages 1872-1881, November.
    5. Lukas Kwietniewski & Mareike Heimeshoff & Jonas Schreyögg, 2017. "Estimation of a physician practice cost function," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(4), pages 481-494, May.
    6. Jens Prüfer, 2011. "Competition And Mergers Among Nonprofits," Journal of Competition Law and Economics, Oxford University Press, vol. 7(1), pages 69-92.
    7. Justin Trogdon & Donatus Ekwueme & Sujha Subramanian & Wesley Crouse, 2014. "Economies of scale in federally-funded state-organized public health programs: results from the National Breast and Cervical Cancer Early Detection Programs," Health Care Management Science, Springer, vol. 17(4), pages 321-330, December.
    8. Cremieux, Pierre-Yves & Ouellette, Pierre, 2001. "Omitted variable bias and hospital costs," Journal of Health Economics, Elsevier, vol. 20(2), pages 271-282, March.
    9. Simona VASILACHE & Mihaela Cornelia PREJMEREAN, 2008. "Estimation of the Romanian hospitals efficiency in relation to hospital market competition," Management & Marketing, Economic Publishing House, vol. 3(3), Autumn.
    10. Juan Contreras & Elena Patel & Ignez Tristao, 2013. "Production Factors, Productivity Dynamics and Quality Gains as Determinants of Healthcare Spending Growth in U.S. Hospitals," Working Papers 2013-13, Banco de México.
    11. 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.
    12. 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.
    13. Ollinger, Michael & Guthrie, Joanne, 2015. "Economies of Scale, the Lunch-Breakfast Ratio, and the Cost of USDA School Breakfasts and Lunches," Economic Research Report 212480, United States Department of Agriculture, Economic Research Service.
    14. P. Prezerakos & N. Maniadakis & D. Kaitelidou & N. Kotsopoulos & J. Yfantopoulos, 2007. "Measuring Across Hospital Efficiency and Productivity: The Case of Second Regional Health Authority of Attica," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 83-96.
    15. Crémieux, Pierre-Yves & Gadbois, Denis & Ouellette, Pierre, 1998. "Une analyse de la performance des CLSC au Québec," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(2), pages 157-181, juin.
    16. Ouellette, Pierre & Vierstraete, Valerie, 2004. "Technological change and efficiency in the presence of quasi-fixed inputs: A DEA application to the hospital sector," European Journal of Operational Research, Elsevier, vol. 154(3), pages 755-763, May.
    17. Mike Smet, 2007. "Measuring performance in the presence of stochastic demand for hospital services: an analysis of Belgian general care hospitals," Journal of Productivity Analysis, Springer, vol. 27(1), pages 13-29, February.
    18. Marcelin Joanis & David Boisclair & Claude Montmarquette, 2004. "La santé au Québec : des options pour financer la croissance," CIRANO Project Reports 2004rp-04, CIRANO.
    19. Benoit Dervaux & Gary Ferrier & Herve Leleu & Vivian Valdmanis, 2004. "Comparing French and US hospital technologies: a directional input distance function approach," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1065-1081.
    20. Pedro Barros & Sara Machado, 2010. "Money for nothing?," Health Care Management Science, Springer, vol. 13(3), pages 234-255, September.
    21. Ollinger, Michael & Ralston, Katherine L. & Guthrie, Joanne F., 2011. "School Breakfast and Lunch Costs: Are There Economies of Scale?," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103191, Agricultural and Applied Economics Association.

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