Biomaterial Database

Hospital efficiency and transaction costs: a stochastic frontier approach. 2009

Martijn Ludwig, and Wim Groot, and Frits Van Merode

Casemix, The Netherlands.

The make-or-buy decision of organizations is an important issue in the transaction cost theory, but is usually not analyzed from an efficiency perspective. Hospitals frequently have to decide whether to outsource or not. The main question we address is: Is the make-or-buy decision affected by the efficiency of hospitals? A one-stage stochastic cost frontier equation is estimated for Dutch hospitals. The make-or-buy decisions of ten different hospital services are used as explanatory variables to explain efficiency of hospitals. It is found that for most services the make-or-buy decision is not related to efficiency. Kitchen services are an important exception to this. Large hospitals tend to outsource less, which is supported by efficiency reasons. For most hospital services, outsourcing does not significantly affect the efficiency of hospitals. The focus on the make-or-buy decision may therefore be less important than often assumed.

UI	MeSH Term	Description	Entries
D009426	Netherlands	Country located in EUROPE. It is bordered by the NORTH SEA, BELGIUM, and GERMANY. Constituent areas are Aruba, Curacao, and Sint Maarten, formerly included in the NETHERLANDS ANTILLES.	Holland,Kingdom of the Netherlands
D006276	Health Facility Size	The physical space or dimensions of a facility. Size may be indicated by bed capacity.	Hospital Size,Facility Size, Health,Facility Sizes, Health,Health Facility Sizes,Hospital Sizes,Size, Health Facility,Size, Hospital,Sizes, Health Facility,Sizes, Hospital
D006739	Hospital Administration	Management of the internal organization of the hospital.	Hospital Organization and Administration,Organization and Administration, Hospital,Administration, Hospital
D013269	Stochastic Processes	Processes that incorporate some element of randomness, used particularly to refer to a time series of random variables.	Process, Stochastic,Stochastic Process,Processes, Stochastic
D017059	Models, Econometric	The application of mathematical formulas and statistical techniques to the testing and quantifying of economic theories and the solution of economic problems.	Econometric Models,Econometric Model,Model, Econometric
D017598	Efficiency, Organizational	The capacity of an organization, institution, or business to produce desired results with a minimum expenditure of energy, time, money, personnel, material, etc.	Efficiency, Administrative,Productivity, Organizational,Program Efficiency,Administrative Efficiency,Organizational Productivity,Efficiency, Program,Organizational Efficiency,Program Efficiencies
D020416	Outsourced Services	Organizational activities previously performed internally that are provided by external agents.	Outsourcing,Services, Outsourced,Outsourced Service