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COHERE - Centre of Health Economics Research, University of Southern Denmark COHERE Working Paper
COHERE - Centre of Health Economics Research, University of Southern Denmark

No 2008:11:
Hospitalers omkostninger, struktur og effektivitet. En undersøgelse af stordrifts- og samdriftsfordele i det danske sygehusvæsen

Troels Kristensen (), Kjeld Møller Pedersen () and Kim Rose Olsen ()

Abstract: The Danish hospital sector is facing a major restructuring over the coming decade that will involve hospital mergers and closures as well as construction of new hospitals. There is a clear trend towards fewer and larger hospitals. The evidence for economies of scale and scope underpinning these decisions is lacking, however. The present study applies a hybrid translog cost function to examine whether there are unexploited economies of scale and scope in the current configuration of the Danish hospital sector. Cross section data relating to Danish public hospitals in year 2004 were analyzed. Issues relating to hospital definition, hospital production, functional form, scale and scope testing were addressed. Stochastic frontier analysis and OLS-regression were used to examine sensitivity to the assumption of cost-minimization. Economies of scale and diseconomies of scope were identified in connection with hospital outputs in the largest hospitals (200+ beds). Furthermore, the assumption of cost-minimization had little influence on the results. Results for the smallest hospitals (less than 200 beds) showed economies of both scale and scope.

Keywords: Economies of scale; economies of scope; hospital cost function; cost function; hospital efficiency; translog.; (follow links to similar papers)

JEL-Codes: C13; D24; H42; I11; I12; L38; L44; (follow links to similar papers)

31 pages, October 23, 2008

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