[Vertical integration and contracting-out in generic hospital services in Spain]

This study examines the factors that influence make or buy decisions corresponding to four generic services (housekeeping, laundry, food services, and maintenance and security) in Spanish hospitals (3,160 transactions in 790 hospitals).

The empirical estimation of a logistic model based on hospital utility maximization is presented. Factors included in the model are not only those related to transaction costs, but also those related to public intervention and the political dimension.

A total of 55.7% of hospitals contracted-out at least one of the generic services. The services most frequently contracted-out were housekeeping and maintenance and security(45.1 and 32.5%, respectively). In contrast, the services (94.3% and 80.1%, respectively). Hospital size (economies of scale), measured by the number of beds, was one of the most important factors influencing make or buy decisions.

We find evidence that economies of scale are related to a higher level of vertical integration, while specialization and for-profit objectives favor the decision to contract-out. The choice of organizational model for laundry services presents a different pattern from that of the other three services. Empirical results show that some asset specificity could be present in laundry services.