ESTIMATING AN HEDONIC TRANSLOG COST FUNCTION FOR THE HOME HEALTH-CAREINDUSTRY

Medicare home health care plays an important role in providing cost ef fective care for the chronically ill and elderly. Long seen as a cost effective substitute for nursing home care, home care has become even more important with expenditures increasing by 31.4% from 1990 to 1996 . The purpose of this paper is to provide a short run cost analysis of a sample of home health care providers to gain insight into the effic ient provision of home health care services. This paper is a significa nt improvement over previous studies in that it uses a nationwide data base to more accurately represent the multiproduct nature of the indus try and uses an hedonic translog cost estimation with desirable econom ic properties.