Abstract
New Zealand's public hospitals provide ‘free’ secondary health care to the public through taxation funding. Since these hospitals vary by both size and range of services provided, the possibility of more porductive resource use is of explicit interest. A translog variable cost function is estimated for New Zealand public hospitals using 1987 cross-section data. An analysis of sthe function reveals the marginal costs, short-run and long-run economies of scale and input factor substitution possibilities. Results suggest that a transfer of both patients with less severe conditions and staff from teachin hospitals to say, country hospitals will result in a short-run decareased total cost to the system. The long run economies of scale estimates suggest that efficiency gains could result from downsizing large hospitals, merging smaller hospitals and increasing patient turnover. Partial elasticites of demand indicate the asymmetric nature of factor substitution and the effect of specific inputs, such as nurses, ...
Published Version
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