Production Factors, Productivity Dynamics and Quality Gains as Determinants of Healthcare Spending Growth in U.S. Hospitals

Bank of Mexico Working Paper 2013-13

43 Pages Posted: 7 Nov 2013

See all articles by Juan Contreras

Juan Contreras

Bank for International Settlements (BIS) - Monetary and Economic Department

Elena Patel

University of Utah - Department of Finance

Ignez Tristao

Inter-American Development Bank (IDB)

Date Written: September 29, 2013

Abstract

We analyze the contribution of production factors to revenue growth in almost the complete universe of U.S. hospitals, accounting for quality and productivity. Production factors (capital, labor, energy, materials and drugs) contributed 70% (drugs alone contributed 52%), better health outcomes (higher quality) contributed 5%, and better use of resources (productivity) contributed 25%. We find increasing returns to scale, a markup of between 15% and 36% and a much larger productivity dispersion in the hospital sector than the one found in manufacturing, with gains coming mainly from within-hospital productivity growth and almost zero coming from net entry.

Keywords: Healthcare cost growth, Healthcare productivity, Health production

JEL Classification: D24, I12, E22

Suggested Citation

Contreras, Juan and Patel, Elena and Tristao, Ignez, Production Factors, Productivity Dynamics and Quality Gains as Determinants of Healthcare Spending Growth in U.S. Hospitals (September 29, 2013). Bank of Mexico Working Paper 2013-13. Available at SSRN: https://ssrn.com/abstract=2344549 or http://dx.doi.org/10.2139/ssrn.2344549

Juan Contreras (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Elena Patel

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Ignez Tristao

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
139
Abstract Views
968
rank
222,983
PlumX Metrics