Health care management science
-
Health Care Manag Sci · Sep 2001
A quality-adjusted cost function in a regulated industry: the case of Dutch nursing homes.
The primary objective of this paper is to examine the cost structure of the Dutch nursing home industry, using econometric techniques. In this paper we present a model that combines economic behaviour and quality of services measured by a latent variable. ⋯ Estimating this quality-adjusted cost function and the corresponding cost share equations indicates that quality is negatively related to the input prices of nurses and other personnel, indicating that nursing homes have a preference for labour. We also show that the quality-adjusted model is superior to a model with exogenous quality.