[Concentration of Emergency Departments: the wrong way to economize]

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.