Estimation of production function in hospitals of Mashhad University of Medical Sciences (1996-2008)

In the hospital، as an economic firm، economic analysis should be utilized for optimal use of resources and production facilities. In microeconomics، the hospital economic behavior can be analyzed through the production function as a firm producing health services. The aim of this study was to estimate the production function and to determine the economic behavior in hospitals of Mashhad University of Medical Sciences. This analytical study was conducted on all hospitals (11 hospitals) of Mashhad University of Medical Sciences in 2010. The double-log Cobb-Douglas production function was used to estimate the economic behavior of the production and service delivery. Data were collected in panel form (combined) and by survey method for a period of 13 years. Finally، the econometric software Eviews 5 was used to estimate the model. Physicians (0. 57)، nurses (0. 36)، beds (0. 24)، technology (0. 0004) and other personnel (-0. 07) inputs had the most effect on hospital production (the number of inpatient admissions)، respectively. Determination coefficient (R2=0. 99) and Durbin-Watson test (D. W=1. 98) values fall within favorable range. Total production function coefficient was more than 1. 1. The results showed the great importance of physicians to increase the production (the number of inpatient admissions). Since the production function of Iranian hospitals is often increasing returns to scale، investment on production inputs can predict the increasing rise of production.