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Reserve Capacity Of Public And Private Hospitals In Response To Demand Uncertainty

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  • Ana Rodriguez‐Alvarez
  • David Roibás
  • Alan Wall

Abstract

A feature of hospitals is that they face uncertain demand for the services they offer. To cover fluctuations in demand, they need to maintain reserve service capacity in the form of beds, equipment, personnel, etc. to minimize the probability of excess queuing or turning away patients, creating a trade‐off between reserve service capacity and economic costs. Using a simple theoretical framework, we show how the reserve capacity established depends on institutional characteristics that can affect the objective of the hospital. In particular, we show that private and public hospitals may provide different levels of reserve capacity. In an empirical application using a panel data set of Spanish hospitals over the period 1996–2006, we model reserve service capacity using a distance frontier approach. Our results show that private hospitals generally react to a lesser extent to demand uncertainty than public hospitals. Copyright © 2011 John Wiley & Sons, Ltd.

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  • Ana Rodriguez‐Alvarez & David Roibás & Alan Wall, 2012. "Reserve Capacity Of Public And Private Hospitals In Response To Demand Uncertainty," Health Economics, John Wiley & Sons, Ltd., vol. 21(7), pages 839-851, July.
    • Handle: RePEc:wly:hlthec:v:21:y:2012:i:7:p:839-851
    DOI: 10.1002/hec.1755
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    References listed on IDEAS

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    1. Ana Rodríguez-Álvarez & David Roibás-Alonso & Alan Wall, 2013. "The response of decentralized health services to demand uncertainty and the role of political parties in the Spanish public health system," Journal of Productivity Analysis, Springer, vol. 40(3), pages 357-365, December.

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