ECONOMIES OF SCALE

Economies of Scale and Critical Access Hospitals

Economies of Scale and Critical Access Hospitals

Introduction

In an analysis of data from more than 4,500 hospitals serving Medicare beneficiaries, critical access hospitals (CAHS, no more than 25 acute care beds, located more than 35 miles from the nearest hospital) were less clinical skills, as worse processes of care and higher mortality rates for patients with myocardial infarction, congestive heart failure or pneumonia, compared to non-CAHs, according to a study in the July 6 issue of the journal JAMA.

The CAH designation was created to ensure the proximity access to basic and emergency hospital near his home about 20 percent of the US population lives in rural areas.

Nature And Extent Of Economies Of Scale Specific To Critical Access Hospitals

The literature on the economics of the hospital identifies many factors that can generate differences in costs between institutions level of efficiency equal. The size of the institution and its range of activity, quality of care, the difference in the characteristics of patients treated load and the factors of production are recognized as contributing factors to explain cost variations between institutions (Posnett, 1999). Our analysis of the literature indicates that rates must be adjusted to best take into account these factors, which are not always controllable by the public but still directly impacting costs. Furthermore, examination of hospital activity shows a strong French partition of care between public and private sectors, corresponding to different profiles of institutions. Ignore these differences in the profiles in a pricing policy may jeopardize the ability of the system hospital to provide care and equity of access (Greene, 2008).

There are inevitable differences in economies of csale, its nature and extent, that can be justified by a irreducible heterogeneity between different types of institutions. The literature on variations in hospital ...