Intermediate Input Sharing in the Hospital Service Industry

48 Pages Posted: 15 Nov 2015

See all articles by Jing Li

Jing Li

Singapore Management University

Date Written: September 8, 2013

Abstract

This paper addresses two related questions that help to explain geographic variation in access to medical services. The first question examines the existence of agglomeration economies in the hospital service industry. The second considers whether the sharing of intermediate inputs contributes to spillovers from spatial concentration of hospital services. These questions are addressed by estimating a bivariate probit model that explicitly controls for potential correlations between whether a service is provided and how the service is provided. Three key findings are obtained. First, hospitals in more concentrated areas are more likely to outsource intermediate services to specialized intermediate service suppliers. This suggests that agglomeration economies exist in the hospital service industry and are generated in part through the sharing of intermediate inputs. Second, the presence of nearby small hospitals increases the tendency to outsource, which is consistent with a “Chinitz” effect identified elsewhere in the literature. Third, the agglomeration effect attenuates geographically.

Keywords: Agglomeration, Health Care, Input Sharing, Outsourcing

JEL Classification: R00, R30, I00

Suggested Citation

Li, Jing, Intermediate Input Sharing in the Hospital Service Industry (September 8, 2013). Available at SSRN: https://ssrn.com/abstract=2690639 or http://dx.doi.org/10.2139/ssrn.2690639

Jing Li (Contact Author)

Singapore Management University ( email )

90 Stamford Road
178903
Singapore

HOME PAGE: http://www.mysmu.edu/faculty/lijing/

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