Hospital Cost Functions for Developing Countries

38 Pages Posted: 20 Apr 2016

See all articles by Roumeen Islam

Roumeen Islam

World Bank

Howard Barnum

affiliation not provided to SSRN

Date Written: November 30, 1992

Abstract

There is extensive literature on hospital cost functions for industrial countries, but very little literature for developing countries. Yet the issues facing policy-makers in all countries are much the same: are hospitals overcapitalized, as is often claimed of U.S. hospitals? Are hospitals inefficient in other respects? Do hospitals vary in efficiency? Are private hospitals more efficient than their public counterparts? Should hospitals specialize or provide a broad range of services? Should costs be reduced by concentrating cases in fewer hospitals? The authors critically survey the techniques available for analyzing hospital costs and review the few hospital cost-function studies undertaken for developing countries. Although the paper is intended primarily for those working in developing countries, the discussion for cost function methodology has broad implications for interpreting econometric cost functions and for examining economies of scale and scope in both developing and industrial countries. The authors survey of econometric techniques is not uncritical. They question, for example, the validity of recent tests of over-capitalization undertaken on American hospitals. They also make general observations about the methods used to investigate economies of scope and economies of scale.

Keywords: Economic Theory & Research, Environmental Economics & Policies, Business in Development, Business Environment, Banks & Banking Reform

Suggested Citation

Islam, Roumeen and Barnum, Howard, Hospital Cost Functions for Developing Countries (November 30, 1992). World Bank Policy Research Working Paper No. 1044, Available at SSRN: https://ssrn.com/abstract=629140

Roumeen Islam (Contact Author)

World Bank ( email )

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Howard Barnum

affiliation not provided to SSRN

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