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Break-ups of municipal health centre federations: Expenditure and efficiency effects

Author

Listed:
  • Mika Kortelainen

    ()

  • Kalevi Luoma
  • Antti Moisio

Abstract

Empirical evidence on economies of scale in healthcare is mostly based on the cost effects of hospital mergers. In contrast to earlier studies, this paper approaches the economies of scale issue by analysing the break-ups of municipal health centre federations. We use the difference-in-difference models to evaluate the break-up impacts on costs, outputs and efficiency of health centres in Finland between 1990 and 2003. To address potential non-random or endogenous treatment assignment we also utilize propensity score difference-in-difference approach. For cost efficiency estimation we use the non-parametric order-alpha method that is more suitable for small samples than the traditional efficiency estimators. Our results show that healthcare costs have grown considerably faster for the seceded health centres than for the similar non-seceded ones, while outputs have increased more for the former than for the latter group. Interestingly, we find the impact of break-ups to be insignificant on the productive efficiency of health centres.

Suggested Citation

  • Mika Kortelainen & Kalevi Luoma & Antti Moisio, 2014. "Break-ups of municipal health centre federations: Expenditure and efficiency effects," ERSA conference papers ersa14p1144, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa14p1144
    as

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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa14/e140826aFinal01144.pdf
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    References listed on IDEAS

    as
    1. Dranove, David, 1998. "Economies of scale in non-revenue producing cost centers: Implications for hospital mergers," Journal of Health Economics, Elsevier, vol. 17(1), pages 69-83, January.
    2. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
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    4. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    5. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    6. Hannes Suppanz, 2008. "Improving Cost-Effectiveness in the Health Care Sector in Iceland," OECD Economics Department Working Papers 645, OECD Publishing.
    7. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    8. Aragon, Y. & Daouia, A. & Thomas-Agnan, C., 2005. "Nonparametric Frontier Estimation: A Conditional Quantile-Based Approach," Econometric Theory, Cambridge University Press, vol. 21(02), pages 358-389, April.
    9. Dranove, David & Lindrooth, Richard, 2003. "Hospital consolidation and costs: another look at the evidence," Journal of Health Economics, Elsevier, vol. 22(6), pages 983-997, November.
    10. Preyra, Colin & Pink, George, 2006. "Scale and scope efficiencies through hospital consolidations," Journal of Health Economics, Elsevier, vol. 25(6), pages 1049-1068, November.
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    More about this item

    Keywords

    economies of scale; health care; municipalities; difference-in-difference;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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