Title: Estimating the optimal size of secondary healthcare providers in Slovenia

Authors: Patricia Blatnik; Štefan Bojnec

Addresses: Economic Department, Faculty of Management, University of Primorska, Cankarjeva 5, Koper, Slovenia ' Economic Department, Faculty of Management, University of Primorska, Cankarjeva 5, Koper, Slovenia

Abstract: One of the fundamental problems of healthcare systems is how to ensure efficient performance of secondary healthcare providers. Economic efficiency is related to the volume of production therefore, one of the remaining key issues is the optimal size of secondary healthcare providers. The chief goal of our study was to determine the most typical form of long-term cost function and the optimal size of secondary healthcare providers in Slovenia. Our results show that hospitals would function with the lowest possible costs per one unit of output when treating between 188,000 and 243,000 patients annually. The average price of an individual service should be set above the minimum of long-term average costs, indicating that a general hospital is of the optimal size when treating between 246,000 and 275,000 patients annually. Expert knowledge on different types of long-term costs and service prices can be a useful tool for any hospital management. The estimations provided by our study can be usefully employed by management teams of general hospitals primarily during the decision-making processes regarding future business operations.

Keywords: efficiency; cost function; average costs; marginal costs; price of healthcare services; economies of scale; diseconomies of scale; optimal size; patients; general hospitals; Slovenia.

DOI: 10.1504/IJSE.2019.096571

International Journal of Sustainable Economy, 2019 Vol.11 No.1, pp.81 - 97

Received: 10 Jul 2018
Accepted: 01 Aug 2018
Published online: 05 Dec 2018 *

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