Health expenditures significantly affect life expectancy at the age of 65 years in OECD countries. One recent example of this approach is production function estimation for health in the Organization for Economic Co-operation and Development (OECD) countries, which postulates that life expectancy at the age of 65 years depends on health expenditures, medical technology, and lifestyle. Findings in this literature include a positive relationship between medical care and health demographics (such as education and income) and health and avoiding risky behaviors (such as smoking and other substance abuse) and health. The production of health approach involves a more general specification of the production process, including a variety of societal factors as inputs, such as consumption of medical care, technology, demographics, and personal health habits. This article describes all three approaches with a primary focus on production functions and on efficiency analysis. A third approach examines medical care production efficiency more specifically through stochastic frontier or data envelopment analysis techniques. Another strand examines the technological relationship between medical care and the inputs that are used to produce medical care. Some of these studies focus on the production function for general and regress health (such as reduced mortality) against a variety of factors. Production function studies in health economics have taken three divergent approaches. Cohen, in Encyclopedia of Health Economics, 2014 Introduction: Distinction between Production Functions for Medical Care versus Production Functions for Health Working Papers in Health Policy and Management, vol. (2010) Determinants of hospital costs and performance variation: Methods, models and variables for the EuroDRG project. Street A, Scheller-Kreinsen D, Geissler A, Busse R. A production function analysis of English maternity hospitals. Third International Conference on System Science in Health Care 1984, pp 542–545 In: van Eimeren W, Engelbrecht R, Flagle CD, editors. A Production Function Model of the Maternity Hospital. Economic analysis for health service efficiency: Econometric studies of the British National Health Service (Contributions to economic analysis). Paris: OECD Publishing 2020.įeldstein MS. Health at a Glance: Europe 2020: State of Health in the EU Cycle. This kind of knowledge is not provided by analyses which are not based on production functions. For each type of production function, the diversified results obtained show the properties of production function. On the other hand, the greatest fit measured with the residual standard error was characterised by models accounting for the number of beds. The significance of explanatory variables most often appeared in models accounting for the workload of nurses. 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 Cobb-Douglas and translog production functions were used as sources of knowledge for decision-making by county hospitals. 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 economically effective operation of county hospitals in Poland is very difficult due to all their determinants. The healthcare sector in each country differs from other sectors of the economy. 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.
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