[Concentration of Emergency Departments: the wrong way to economize]. / Concentratie van de spoedeisende hulp.

In this paper we investigate whether it is economically beneficial to concentrate Emergency Departments (EDs) in large hospitals. We recognise economies of scale and economies of chain. The latter reflect the effects on costs of patients receiving further treatments in hospital, be it admissions or out-patient appointments, after visiting the ED. We conclude that there are product-specific economies of scale. On the one hand, hospitals benefit by increasing ED services. However, this is not in line with the diseconomies of scale observed for larger hospitals as a whole. This contradiction is called the economies of scale paradox. There are internal incentives to upscale services, such as EDs, in order to benefit from the product-specific economies of scale. However, a price is to be paid by the hospital for the upscaling of its ED. Based on these results, the resulting recommendation for policy development is that, in spite of the fact that concentrating EDs seems to be advantageous, upscaling of EDs must be rejected.

Empirical assessment of the economic behaviour of Dutch general hospitals.

We study the cost structure and efficiency of Dutch general hospitals over the period 1985-1995. Several studies on the efficiency of hospitals now exist. Most of them start from the assumption that hospital management attempts to minimize cost. We went beyond this assumption by trying to collect empirical evidence on management behaviour with respect to patient selection. We did so by estimating both the direct cost function and the indirect cost function as proposed by Färe and Primont and compared the results. We found that acknowledging the possibility of output reallocation increases the validity of optimizing models in the hospital sector but a complete indirect optimizing model ignores that some output categories are less flexible especially in the short run. Endogenous shifts in the allocation of patients appear to be realized through time by increased specialization of hospitals. We suggest that a mixed direct-indirect cost model is probably preferable.