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A Production Function For Physician Services Revisited

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  • Norman K Thurston
  • Anne M. Libby

Abstract

We revisit Reinhardt's (1972) commonly used production function for physician services. This production function, although appropriate in some settings, is not adequate for more detailed studies. The generalized linear production function (Diewart, 1971) is an attractive alternative for this application: it admits zero values for inputs and allows the estimation of complex technical relationships. We find that, from 1965-1988, the technical relationships that describe the production process for physician services are remarkably stable. By empirically estimating the parameters of this more general production function, we provide crucial evidence about the q-complementarity of health worker inputs, the first of its kind in the literature on health labor markets. © 2002 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • Norman K Thurston & Anne M. Libby, 2002. "A Production Function For Physician Services Revisited," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 184-191, February.
    • Handle: RePEc:tpr:restat:v:84:y:2002:i:1:p:184-191
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    1. Yuichi Watanabe & Haruko Noguchi & Yoshinori Nakata, 2020. "How efficient are surgical treatments in Japan? The case of a high-volume Japanese hospital," Health Care Management Science, Springer, vol. 23(3), pages 401-413, September.
    2. 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.
    3. Sisira Sarma & Rose Anne Devlin & William Hogg, 2010. "Physician's production of primary care in Ontario, Canada," Health Economics, John Wiley & Sons, Ltd., vol. 19(1), pages 14-30, January.
    4. Andrew J. Epstein & Sean Nicholson & David A. Asch, 2013. "The Production of and Market for New Physicians' Skill," NBER Working Papers 18678, National Bureau of Economic Research, Inc.
    5. Vidoli, Francesco & Pignataro, Giacomo & Benedetti, Roberto, 2022. "Identification of spatial regimes of the production function of Italian hospitals through spatially constrained cluster-wise regression," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    6. Galina Besstremyannaya & Sergei Golovan, 2023. "Measuring heterogeneity in hospital productivity: a quantile regression approach," Journal of Productivity Analysis, Springer, vol. 59(1), pages 15-43, February.
    7. Timothy Gunning & Robin Sickles, 2013. "Competition and market power in physician private practices," Empirical Economics, Springer, vol. 44(2), pages 1005-1029, April.
    8. 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.
    9. Rosella Levaggi & Michele Moretto & Paolo Pertile, 2023. "Dynamic, incentive-compatible contracting for health services," Working Papers 2023.16, Fondazione Eni Enrico Mattei.
    10. Lukas Kwietniewski & Jonas Schreyögg, 2018. "Efficiency of physician specialist groups," Health Care Management Science, Springer, vol. 21(3), pages 409-425, September.
    11. Francetic, Igor & Gibson, Jon & Spooner, Sharon & Checkland, Katherine & Sutton, Matt, 2022. "Skill-mix change and outcomes in primary care: Longitudinal analysis of general practices in England 2015–2019," Social Science & Medicine, Elsevier, vol. 308(C).
    12. Andrew J. Epstein & Sean Nicholson & David A. Asch, 2016. "The Production of and Market for New Physicians’ Skill," American Journal of Health Economics, MIT Press, vol. 2(1), pages 41-65, January.
    13. Timothy Gunning & Robin Sickles, 2011. "A multi-product cost function for physician private practices," Journal of Productivity Analysis, Springer, vol. 35(2), pages 119-128, April.
    14. Mareike Heimeshoff & Jonas Schreyögg & Lukas Kwietniewski, 2014. "Cost and technical efficiency of physician practices: a stochastic frontier approach using panel data," Health Care Management Science, Springer, vol. 17(2), pages 150-161, June.
    15. Maude Laberge & Walter P. Wodchis & Jan Barnsley & Audrey Laporte, 2016. "Efficiency of Ontario primary care physicians across payment models: a stochastic frontier analysis," Health Economics Review, Springer, vol. 6(1), pages 1-10, December.
    16. James F. Burgess, 2012. "Productivity Analysis in Health Care," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 34, Edward Elgar Publishing.
    17. Paul E. Brockway & Matthew K. Heun & João Santos & John R. Barrett, 2017. "Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation," Energies, MDPI, vol. 10(2), pages 1-23, February.
    18. Firouz Gahvari, 2014. "Second-Best Taxation of Incomes and Non-Labor Inputs in a Model with Endogenous Wages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(6), pages 917-935, December.
    19. Xia, Xing, 2021. "Barrier to Entry or Signal of Quality? The Effects of Occupational Licensing on Minority Dental Assistants," Labour Economics, Elsevier, vol. 71(C).
    20. Kiplagat, Isabella & Mugo, Mercy & Oleche, Martine O., 2021. "Provider Process Quality of Healthcare and its Determinants in Kenya," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    21. Lukas Kwietniewski & Jonas Schreyögg, 2018. "Profit efficiency of physician practices: a stochastic frontier approach using panel data," Health Care Management Science, Springer, vol. 21(1), pages 76-86, March.
    22. Kim Olsen & Dorte Gyrd-Hansen & Torben Sørensen & Troels Kristensen & Peter Vedsted & Andrew Street, 2013. "Organisational determinants of production and efficiency in general practice: a population-based study," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(2), pages 267-276, April.

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