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Empirical assessment of the economic behaviour of Dutch general hospitals

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  • J.L.T. Blank
  • A.H.Q.M. Merkies

Abstract

We study the cost structure and efficiency of Dutch general hospitals over the period 1985–1995. Several studies on the efficiency of hospitals now exist. Most of them start from the assumption that hospital management attempts to minimize cost. We went beyond this assumption by trying to collect empirical evidence on management behaviour with respect to patient selection. We did so by estimating both the direct cost function and the indirect cost function as proposed by Färe and Primont and compared the results. We found that acknowledging the possibility of output reallocation increases the validity of optimizing models in the hospital sector but a complete indirect optimizing model ignores that some output categories are less flexible especially in the short run. Endogenous shifts in the allocation of patients appear to be realized through time by increased specialization of hospitals. We suggest that a mixed direct–indirect cost model is probably preferable. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • J.L.T. Blank & A.H.Q.M. Merkies, 2004. "Empirical assessment of the economic behaviour of Dutch general hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 265-280, March.
    • Handle: RePEc:wly:hlthec:v:13:y:2004:i:3:p:265-280
    DOI: 10.1002/hec.824
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    References listed on IDEAS

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    1. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
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    3. Jensen, Gail A & Morrisey, Michael A, 1986. "The Role of Physicians in Hospital Production," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 432-442, August.
    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. Donald F. Vitaliano & Mark Toren, 1996. "Hospital Cost and Efficiency in a Regime of Stringent Regulation," Eastern Economic Journal, Eastern Economic Association, vol. 22(2), pages 161-175, Spring.
    6. 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.
    7. Baumol, William J, 1993. "Health Care, Education and the Cost Disease: A Looming Crisis for Public Choice," Public Choice, Springer, vol. 77(1), pages 17-28, September.
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    Cited by:

    1. Jos Blank & Evelien Eggink, 2014. "The impact of policy on hospital productivity: a time series analysis of Dutch hospitals," Health Care Management Science, Springer, vol. 17(2), pages 139-149, June.
    2. Jos Blank, 2013. "Maximizing public value for subsidized non-profit firms: a mathematical economic model," Journal of Productivity Analysis, Springer, vol. 40(2), pages 173-183, October.
    3. Jos Blank, 2009. "Non-maximizing output behavior for firms with a cost-constrained technology," Journal of Productivity Analysis, Springer, vol. 31(1), pages 27-32, February.
    4. Blank, Jos L. T. & Vogelaar, Iris, 2004. "Specifying technical change: a research on the nature of technical change in Dutch hospital industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(3), pages 448-463, July.
    5. Jos L. T. Blank & Bart L. Van Hulst, 2009. "Productive innovations in hospitals: an empirical research on the relation between technology and productivity in the Dutch hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 18(6), pages 665-679, June.

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