Investigating The Costs Stickiness Of Hospital

This study aimed at investigating the costs stickiness of hospitals of Shiraz University of Medical Sciences. Firstly, the costs stickiness behavior was examined based on total hospital costs. Then, it was done at medical and nonmedical service costs levels. Based on regression analysis, results showed that there was costs stickiness just on nonmedical costs (support and general). The behavior of total and medical costs was in the opposite direction in comparison with revenue reduction, that is, while revenues decreased the costs were still rising. As revenues increase by 1 percent, the aforesaid costs increase by 0.64 percent. In addition, as the former decreases by 1 percent, the latter decreases by 0.01 percent. However, considering the total and medical expenses, behavior of the expenses is not sticky. In such a case, when revenues grow by 1 percent, the total expenses increase by 0.67 percent and when the revenues reduce by 1 percent, expenses increase by 0.14 percent. Moreover, the rise of revenues by 1 percent leads to increase in the medical expenses by 0.70 percent and the reduction of revenues by 1 percent generates  an increase in the expenses by 0.26 percent. The main reason could be related to the goal and objective of public hospitals, which are public treatment and providing health service. Additionally, their activities are essentially different from profit-oriented units that all are seeking for profit. Therefore, while revenue decreased, managers did not seek for reducing the medical costs. They also increased the costs with a slower pace in comparison with the periods they increased in revenue.