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Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland

  • Medhi Farsi

    (Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Massimo Filippini

    ()

    (Istituto microeconomia e economia pubblica (MecoP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera)

This paper explores the cost structure of Swiss hospitals, focusing on differences due to teaching activities and those across different ownership and subsidization types. A stochastic total cost frontier with a Cobb-Douglas functional form has been estimated for a panel of 150 general hospitals over the six-year period from 1998 and 2003. Inpatient cases adjusted by DRG cost weights and ambulatory revenues are considered as two separate outputs. The adopted econometric specification allows for unobserved heterogeneity across hospitals. The results indicate that the time-invariant unobserved factors could account for considerable cost differences that could be only partly due to inefficiency. The results suggest that teaching activities are an important cost driving factor and hospitals that have a broader range of specialization are relatively more costly. The excess costs of university hospitals can be explained by more extensive teaching activities as well as the relatively high quality of medical units. However, even after controlling for such differences university hospitals have shown a relatively low cost-efficiency especially in the first two or three years of the sample period. The analysis does not provide any evidence of significant efficiency differences across ownership and subsidization categories.

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Paper provided by USI Università della Svizzera italiana in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 0606.

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Length: 34 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:lug:wpaper:0606
Contact details of provider: Web page: https://www.bul.sbu.usi.ch

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