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Relative economic efficiency in Texas nursing facilities: A profit function analysis

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  • Kris Knox
  • Eric Blankmeyer
  • J. Stutzman

Abstract

The purpose of this analysis is to examine the relative economic efficiency of profit-seeking versus nonprofit nursing facilities. A Cobb-Douglas profit function is used on cross-sectional data to determine the technical efficiency, price efficiency, and overall economic efficiency of Texas nursing facilities. Ownership form influences the profit level of the firm. Profit-seeking firms are more economically efficient than their nonprofit counterparts. Inclusion of price efficiency analyses reinforces profit-seeking firms’ superior technical efficiency. Additionally, nursing facilities are price takers in the output market as well as in resource markets, indicating effective industry regulation. Copyright Springer 1999

Suggested Citation

  • Kris Knox & Eric Blankmeyer & J. Stutzman, 1999. "Relative economic efficiency in Texas nursing facilities: A profit function analysis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 23(3), pages 199-213, September.
    • Handle: RePEc:spr:jecfin:v:23:y:1999:i:3:p:199-213
    DOI: 10.1007/BF02757705
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    5. Cowing, Thomas G., 1978. "The Effectiveness of Rate-of-Return Regulation: An Empirical Test Using Profit Functions," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.),Production Economics: A Dual Approach to Theory and Applications, volume 2, chapter 8, McMaster University Archive for the History of Economic Thought.
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    Cited by:

    1. Jwu-Rong Lin & Erin Hui-Chuan Kao & Shuo-Chun Weng & Ellen Rouyer, 2019. "A Study of Frailty, Mortality, and Health Depreciation Factors in Older Adults," IJERPH, MDPI, vol. 17(1), pages 1-11, December.
    2. Boyce, John R. & Hollis, Aidan, 2005. "Governance of electricity transmission systems," Energy Economics, Elsevier, vol. 27(2), pages 237-255, March.
    3. Roman Mennicken & Boris Augurzky & Heinz Rothgang & Jürgen Wasem, 2014. "Explaining differences in remuneration rates of nursing homes in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 401-410, May.
    4. Alice Tran & Kim-Huong Nguyen & Len Gray & Tracy Comans, 2019. "A Systematic Literature Review of Efficiency Measurement in Nursing Homes," IJERPH, MDPI, vol. 16(12), pages 1-18, June.
    5. Knox, Kris Joseph & Blankmeyer, Eric C. & Trinidad, José A. & Stutzman, J.R., 2009. "Predicting bankruptcy in the Texas nursing facility industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(3), pages 1047-1064, August.

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