The optimum size of the portuguese public hospital

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

In a context of intensive structural reform, this paper estimates optimum bed-sizes for the Portuguese public hospitals. Considering costs and production data for the period 2003-2006, we estimate a production-theoretic quadratic cost-function, adjusted to better describe the underlying technology. Room for short-run scale-economies exploitation is found, but long-run scale-diseconomies are unambiguous. In light of these predictions and of an optimum around 233 fully-occupied beds, there is mixed evidence of potential gains from two hospital mergers and from one of the forthcoming constructions of public hospitals. The results are expected to contribute to shape the hospital network in a cost-efficient manner.