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The Size and Service Offering Efficiencies of U.S. Hospitals

Author

Listed:
  • Gary D. Ferrier

    () (Walton College of Business, University of Arkansas)

  • Hervé Leleu

    () (LEM-CNRS (UMR 8179), IESEG School of Management)

  • James Moises

    () (Department of Emergency Medicine, Tulane University)

  • Vivian Valdmanis

    () (Department of Health Policy and Public Health, University of the Sciences in Philadelphia)

Abstract

Hospital productivity has been a research topic for over two decades. We expand on this research to include measures of dis/economies of scope. By using the Free Coordination Hull (FCH) we are able to determine if hospitals in our sample can become more efficient if they provide more services (diseconomies of scope) or if two smaller hospitals with a reallocation of resources could become more efficient (economies of scope). Using data from the American Hospital Association for the years 2004-2007, we found variations among hospital markets (measured by the Core Based Statistical Area). We can determine whether dis/economies of scope exist by comparing the results from two linear programming problems. Focusing on four markets: Los Angeles, Philadelphia, Madison, WI, and New Orleans we found variations in how best these hospitals operating in these markets could change in order to increase both scale and scope efficiencies. This approach could be used by policy makers and managers in order to reduce costs by sharing, reducing, or expanding services in hospitals. Findings from a study such as this should aid reform programs by providing more information on the sources of hospital inefficiency.

Suggested Citation

  • Gary D. Ferrier & Hervé Leleu & James Moises & Vivian Valdmanis, 2009. "The Size and Service Offering Efficiencies of U.S. Hospitals," Working Papers 2009-ECO-09, IESEG School of Management.
  • Handle: RePEc:ies:wpaper:e200909
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    References listed on IDEAS

    as
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    8. Kittelsen, Sverre A.C. & Magnussen, Jon, 2009. "Economies of scope in Norwegian hospital production - A DEA analysis," HERO On line Working Paper Series 2003:8, Oslo University, Health Economics Research Programme.
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    Cited by:

    1. Brandon Pope & Andrew Johnson, 2013. "Returns to scope: a metric for production synergies demonstrated for hospital production," Journal of Productivity Analysis, Springer, vol. 40(2), pages 239-250, October.

    More about this item

    Keywords

    Hospital; Efficiency; Economies of Scope; Hospital Markets;

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