Teaching hospital costs: the effects of medical staff characteristics

This article examines the effect of medical staff behavior on the cost of hospital-based care and graduate medical education, and shows its implications for estimation of hospital costs. The empirical work brings a unique new data source for these characteristics to the estimation process. Our results indicate that there are important economies of scale and scope in hospital production, both for inpatient stays and for residency training. Controlling for medical staff characteristics significantly reduces the estimated costs of residency training. Staff characteristics may be capturing aspects of the quality of inpatient care and residency training provided by the hospital.