Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Cost effects of hospital mergers in Portugal
AU - Azevedo, Helda
AU - Mateus, Ceu
PY - 2014/12
Y1 - 2014/12
N2 - The Portuguese hospital sector has been restructured by wide-ranging hospital mergers, following a conviction among policy makers that bigger hospitals lead to lower average costs. Since the effects of mergers have not been systematically evaluated, the purpose of this article is to contribute to this area of knowledge by assessing potential economies of scale to explore and compare these results with realized cost savings after mergers. Considering the period 2003-2009, we estimate the translog cost function to examine economies of scale in the years preceding restructuring. Additionally, we use the difference-in-differences approach to evaluate hospital centres (HC) that occurred between 2004 and 2007, comparing the years after and before mergers. Our findings suggest that economies of scale are present in the pre-merger configuration with an optimum hospital size of around 230 beds. However, the mergers between two or more hospitals led to statistically significant post-merger cost increases, of about 8 %. This result indicates that some HC become too large to explore economies of scale and suggests the difficulty of achieving efficiencies through combining operations and service specialization.
AB - The Portuguese hospital sector has been restructured by wide-ranging hospital mergers, following a conviction among policy makers that bigger hospitals lead to lower average costs. Since the effects of mergers have not been systematically evaluated, the purpose of this article is to contribute to this area of knowledge by assessing potential economies of scale to explore and compare these results with realized cost savings after mergers. Considering the period 2003-2009, we estimate the translog cost function to examine economies of scale in the years preceding restructuring. Additionally, we use the difference-in-differences approach to evaluate hospital centres (HC) that occurred between 2004 and 2007, comparing the years after and before mergers. Our findings suggest that economies of scale are present in the pre-merger configuration with an optimum hospital size of around 230 beds. However, the mergers between two or more hospitals led to statistically significant post-merger cost increases, of about 8 %. This result indicates that some HC become too large to explore economies of scale and suggests the difficulty of achieving efficiencies through combining operations and service specialization.
KW - Costs and Cost Analysis
KW - Health Care Costs
KW - Health Facility Merger
KW - Models, Economic
KW - Portugal
U2 - 10.1007/s10198-013-0552-6
DO - 10.1007/s10198-013-0552-6
M3 - Journal article
C2 - 24379130
VL - 15
SP - 999
EP - 1010
JO - European Journal of Health Economics
JF - European Journal of Health Economics
SN - 1618-7601
IS - 9
ER -