MARGINAL COSTS IN GENERAL ACUTE-CARE HOSPITALS - A COMPARISON AMONG CALIFORNIA, NEW-YORK AND CANADA

In the present paper we offer a detailed comparison of hospital costs between California and New York and two Canadian provinces (Ontario an d British Columbia) in 1981 and 1985. We find that production technolo gies differ significantly between the two countries and between Califo rnia and New York. Marginal costs and their distributions also differ across jurisdictions and across different size hospitals. Marginal cos t levels were the lowest in Canadian hospitals for almost all outputs in both years and their distribution was also the tightest. Some very mild scale effects were also present in the acute care production. Hos pitals in California experienced for the most part increasing marginal costs for acute care, whereas Canadian hospitals showed the reverse p attern. In New York we find a weak negative scale effect in acute care production. Density estimates conditional on hospital output reinforc e these results.