Abstract:

Objective To analyse the economies of scale in public hospitals in Zhejiang Province. Methods One hundred and twenty-five public hospitals in Zhejiang Province with qualification no less than class two level two were selected as sample hospitals. Douglas production function was employed to analyse the relationship between investment and output in sample hospitals between 2004 to 2006, with two types of production models established by medical service and incomes in hospitals as dependent variables. Results From 2004 to 2006, the medical service and incomes of sample hospitals were in line with economies of scale. The production increase rate was higher than investment increase rate. The medical service, incomes, total assets and number of staff in class three hospitals were higher than those in class two hospitals （P=0.000）. Conclusion Economies of scale is the ultimate incentive to continuous outstretch for hospitals. Hospitals should rationally control the scale so as to avoid problems in medical service caused by overstretch.

Key words: public hospital, economies of scale, Zhejiang Province