Estimation of Production Function in Hospitals of Yazd University of Medical Sciences (2003 - 2011)

Hospitals are the most expensive and important component of medical care systems. More than 70% of health budget and a large share of employment were allocated to the health section of each country. Therefore, the use of economic analysis for optimal allocation and effective use of hospital resources is important.

The present study was performed to estimate the production function of Shahid Saddughi Yazd University of Medical Sciences hospitals by panel data over a period of 11 years in 13 hospitals. The Cobb – Douglas function were applied for estimation in which dependent variable is patient admission as production and explanatory variables include the number of nurses, doctors and beds.

Production elasticity of physician, nurse and number of beds were EY.P = 0.18, EY.N = -0.2 and EY.B = 0.5, respectively. Final product of physician, nurse and number of beds were measured 44, 19 and 27 units, separately.

The highest production elasticity is related to the number of beds and then physician and nurse, respectively. Therefore, managers should consider to the factor production elasticity in their short term decisions based on response to the demand increasing for services.