Further evidence that hospital production is inefficient

Whether hospitals now use resources more efficiently than they did 10 to 15 years ago is unclear. This paper analyzes the level of hospital inefficiency in a longitudinal set of 186 Florida hospitals in continuous operation over the period 1982-1993. A frontier cost function comprising six outputs and six factor prices is estimated to obtain inefficiency residuals. The analysis suggests that inefficiency levels are high and essentially unchanged over the period in question.