Cost Behavior In Chinese Public Hospitals

[Purposer]Under the background of increasing scale of public hospitals in our country, study on costs behavior emerged from this has been a practical and pressing subject. Theoretically, study on cost behavior of public hospital can provide exploration on whether the public hospital in our country has scale economy and offer new evidence for study on scale economy of multiple-output public institutions including hospitals all over the world. Practically, the study and exploration on cost behavior under the background of expansion in scale of public hospitals in our country presently provide theoretical support to scale development of hospitals, contribute to improvement of technical efficiency of medical resources, offer decision-making basis of efficient allocation of resources to policy makers and improve the efficiency in use of health resources.[Methods]Data applied in this study sources from the data disclosed by the government, health statistics annuals, Chinese and foreign literature database, field investigation data and expert interviews. Empirical study employs econometric methods mainly, which completes model parameter estimation and future analysis by establishment of cross sectional data cost Weigted Least Squares(WLS) model and measurement model of fixed effects of panel data. Based on systematical summary and analysis on relevant theories of cost behavior, this paper proposes and defines cost behavior of public hospitals. It establishes cost function model of hospitals to make example analysis on cost behavior of public hospital in Henan Province on the basis of descriptive statistical analysis on cost behavior of public hospitals in Henan Province, make analysis and judgment on marginal cost, scale economy and fitted curve behavior of economies of scope and definite the relationship between hospital beds scale and cost behavior.[Results]1. Beds scale, output and vaiable cost of the public hospitals in Henan Province has had an obvious increas since2008to2011, including the number of beds, outpatient amount, the number of admission and variable cost at sample average level have increased from292,147,000,9,500and52.89million yuan in2008to392,184,000,13,600and98.96million yuan in2011respectively, with increase rates of34%,25%,42%and47%in4years.2. Estimation results of cross sectional data WLS model indicate, in the four years, sample hospitals show diseconomies of scale with surplus; public hospitals with beds scale of100-150may have clear scale economy; hospitals with beds scale of150-700have diseconomies of scale; the hospitals with beds scale of over700can regain scale economy through future expansion of scale. The value of economies of scope of general hospital is apparently higher than special hospital.3. Estimation results of panel data FE model show that there are increases in beds scale and marginal cost of sample hospitals during this four years; S value and scale economy value declines as with the expansion of beds scale, hospitals with beds of100-300have a faster declining speed, hospitals with beds of300-600declines relatively smoothly, hospitals with beds of more than600declines significantly faster.4. Comparision of estimation parameters of cross sectional data WLS model and panel data FE model shows that cross sectional data model has biased error overestimating output varable coefficient, which is resulted from the failure of control over invisible factors including medical quality and management capability.[Conclusions]1. According to results of sample data statistics,urban hospitals and hospitals located in the area with higher degree of economic and social development have relatively faster expanding speed both of scale and outputs,compared to the other sample hospitals.2.According to estimation parameters of panel data FE model,Marginal cost behavior of outpatient and hospitalization is showed as U-shaped curve, conforming to expectation of economy theory.3. According to results of panel data FE model, the marginal cost of both hospitalization and outpatient show the similarly behavior,the economies of scope of sample hospitals increase gradually as with expansion of beds scale. The value of economies of scope of general hospital is apparently higher than special hospital.4. Estimation results require to be treated with caution if the application of cross sectional data to functional estimation of hospital cost, especially any involvement of determination of scale economy problem, if the invisible effects can not be controled and eliminated, there will be some inconsistency of judgment with actual situation.[Innovations and Deficiencies]This study analyzes and describes the relationship between hospital scale and cost from the angle of cost behavior, conducts empirical analysis on cost behaviors of public hospital with increases in scale and output, showing that the public hospitals in Henan Province can have decreasing scale economy as with increases in scale and output, which provides new evidence for study on hospital scale economy in the filed of theory at home and abroad. Establishment of cross sectional data WLS model and panel data FE model enrich the content of study on function calculation model of hospital cost. It draws out curve equation of relationship between marginal cost, scale economy value, value of economies of scope and bed scale, with application value. As with restrictions from objective conditions, this study also has some deficiencies including that it fails to include public hospital of traditional Chinese medicine, introduce variables reflecting market concentration degree into specified model and find an appropriate instrumental variables of invisible factors including medical quality and management capability.