Estimating cost-function at hospitals of Qazvin University of Medical Sciences (2001-2005)

Abstract Background: Hospitals like other economic firms should practice the economic analysis scheme to improve their productivity and efficiency. Objective: To estimate the cost-function of hospitals affiliated to Qazvin University of Medical Sciences during the period of 2001-2005. Methods: This was a cross-sectional study conducted at 4 university hospitals. The data were initially collected through information forms followed by statistical analysis using SPSS. Findings: The cost elasticity of overall expense to labor price, capital rate and production was 0.56, 0.34 and 0.28, respectively. Out of the overall operatic costs, annual fixed cost was 78% and annual variable cost 22%. Personnel and non-personnel costs were 64% and 36% of overall operatic costs, respectively. Conclusion: In a cost-behavior approach, the hospitals under study were demonstrated to have increasing return to scale, yet the average and marginal costs of production could be decreased by developing production quantity and also selection of optimal capacity.