Abstract
BackgroundThe relative lack of flexibility of parametric models has led to the development of nonparametric regression techniques based on the family of generalized additive models. However, despite the potential advantages of using Generalized Additive Model (GAM) in practice many models have, until now, not been sufficiently explored in health economics problems.It could be interesting to calculate a new flexible hospital production function by means of a GAM including interactions and to compare it with the classic model Cobb-Douglas in the prediction of the behavior of productive factors.MethodThe flexible model considered has been the AM including the beds-facultative interaction. The covariates “Hospital”, being a categorical variable and “Year” being a continuous variable, have also been included in the model. Based on the estimation of the model penalized thin plate splines will be used to represent smoothed functions. In this configuration, the smoothed parameters will be estimated via REML.ResultsCobb-douglas model fits well for the production functions of the more general clinical and surgical services, while the GAM adjusts better in the case of more specialized medical services.ConclusionsGeneralized Additive Models are more flexible than parametric models, providing a better fit in the presence of non-linear relationships and thus allowing more accurate prediction values. The results of this study suggest that AM is a promising technique for the areas of research and application in health economics.
Highlights
The relative lack of flexibility of parametric models has led to the development of nonparametric regression techniques based on the family of generalized additive models
Generalized Additive Models are more flexible than parametric models, providing a better fit in the presence of non-linear relationships and allowing more accurate prediction values
The results of this study suggest that additive model (AM) is a promising technique for the areas of research and application in health economics
Summary
The relative lack of flexibility of parametric models has led to the development of nonparametric regression techniques based on the family of generalized additive models. Production functions are a fundamental component of all economies [1] and the analysis of production functions has been used by economists since the 1930s to study efficiency, and it is one of the econometric methods most commonly used by health economists [8]. In relation to these production models, the concept is defined first, the model is specified, the input and output are measured and, the function is used for the measurement of hospital efficiency. Theoretical and empirical studies have frequently questioned the validity of the Cobb–Douglas parametric model as a representation of the production of health care services [20]
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