Production function for modeling hospital activities. The case of Polish county hospitals

Abstract

The aim of the article is to present the use of production function as a source of knowledge for managers of county hospitals to make rational decisions so as to achieve economic efficiency, including naturally the financial efficiency. The healthcare sector in each country differs from other sectors of the economy. The economically effective operation of county hospitals in Poland is very difficult due to all their determinants. Therefore, all economic analyses should be used to help hospital managers achieve this goal, and production function remains underestimated as a source of knowledge. The Cobb-Douglas and translog production functions were used as sources of knowledge for decision-making by county hospitals. Total number of patient-days was a dependent variable; and the total number of beds, the number of doctors and nurses (in full time equivalents, FTEs) and costs (of materials, electricity, services) were a set of explanatory variables. The significance of explanatory variables most often appeared in models accounting for the workload of nurses. On the other hand, the greatest fit measured with the residual standard error was characterised by models accounting for the number of beds. For each type of production function, the diversified results obtained show the properties of production function. This kind of knowledge is not provided by analyses which are not based on production functions.