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Marginal costs in general acute care hospitals: A comparison among California, New York and Canada

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  • Korinna K. Hansen
  • Jack Zwanziger

Abstract

In the present paper we offer a detailed comparison of hospital costs between California and New York and two Canadian provinces (Ontario and British Columbia) in 1981 and 1985. We find that production technologies differ significantly between the two countries and between California and New York. Marginal costs and their distributions also differ across jurisdictions and across different size hospitals. Marginal cost levels were the lowest in Canadian hospitals for almost all outputs in both years and their distribution was also the tightest. Some very mild scale effects were also present in the acute care production. Hospitals in California experienced for the most part increasing marginal costs for acute care, whereas Canadian hospitals showed the reverse pattern. In New York we find a weak negative scale effect in acute care production. Density estimates conditional on hospital output reinforce these results.

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  • Korinna K. Hansen & Jack Zwanziger, 1996. "Marginal costs in general acute care hospitals: A comparison among California, New York and Canada," Health Economics, John Wiley & Sons, Ltd., vol. 5(3), pages 195-216, May.
    • Handle: RePEc:wly:hlthec:v:5:y:1996:i:3:p:195-216
    DOI: 10.1002/(SICI)1099-1050(199605)5:33.0.CO;2-Q
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    References listed on IDEAS

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    1. Haber, Susan G. & Zwanziger, Jack & Anderson, Jack Geoffrey M. & Thorpe, Kenneth E. & Newhouse, Joseph P., 1992. "Hospital expenditures in the United States and Canada: do hospital worker wages explain the differences?," Journal of Health Economics, Elsevier, vol. 11(4), pages 453-465, December.
    2. Rogowski, Jeannette A. & Newhouse, Joseph P., 1992. "Estimating the indirect costs of teaching," Journal of Health Economics, Elsevier, vol. 11(2), pages 153-171, August.
    3. Breyer, Friedrich, 1987. "The specification of a hospital cost function : A comment on the recent literature," Journal of Health Economics, Elsevier, vol. 6(2), pages 147-157, June.
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    2. Miika Linna & Unto Häkkinen & Mikko Peltola & Jon Magnussen & Kjartan Anthun & Sverre Kittelsen & Annette Roed & Kim Olsen & Emma Medin & Clas Rehnberg, 2010. "Measuring cost efficiency in the Nordic Hospitals—a cross-sectional comparison of public hospitals in 2002," Health Care Management Science, Springer, vol. 13(4), pages 346-357, December.
    3. Dranove, David, 1998. "Economies of scale in non-revenue producing cost centers: Implications for hospital mergers," Journal of Health Economics, Elsevier, vol. 17(1), pages 69-83, January.
    4. Galina Besstremyannaya, 2015. "Heterogeneous effect of residency matching and prospective payment on labor returns and hospital scale economies," Discussion Papers 15-001, Stanford Institute for Economic Policy Research.
    5. Linna, Miika & Hakkinen, Unto & Magnussen, Jon, 2006. "Comparing hospital cost efficiency between Norway and Finland," Health Policy, Elsevier, vol. 77(3), pages 268-278, August.
    6. Medin, Emma & Häkkinen, Unto & Linna, Miika & Anthun, Kjartan S. & Kittelsen, Sverre A.C. & Rehnberg, Clas, 2013. "International hospital productivity comparison: Experiences from the Nordic countries," Health Policy, Elsevier, vol. 112(1), pages 80-87.

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