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Economies of scale and scope in the provision of diagnostic techniques and therapeutic services in Portuguese hospitals

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This article analyses the provision of auxiliary clinical services that are typically carried out within the hospital. We estimate a flexible cost function for three of the most important (cost-wise) diagnostic techniques and therapeutic services in Portuguese hospitals: Clinical Pathology, Medical Imaging, and Physical Medicine and Rehabilitation. Our objective in carrying out this estimation is the evaluation of economies of scale and scope in the provision of these services. For all services, we find evidence of economies of scale and some evidence of economies of scope. We also find evidence of diminishing returns to management, whereby larger hospitals appear to have surpassed their optimal size. These results have important policy implications and can be related to the ongoing discussion of where and how should hospitals provide these services.

Keywords: D24; I12; I18; clinical services; economies of scale; economies of scope; hospitals; translog cost function

Document Type: Research Article


Affiliations: 1: Faculdade de Economia e Gestão,Universidade Católica Portuguesa, Rua Diogo Botelho, 1327Porto 4169-005, Portugal 2: Nova School of Business and Economics, Universidade Nova de Lisboa, Lisboa, Portugal

Publication date: February 1, 2013

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