Estimating hospital costs: A multiple-output analysis

This study explores a new approach to estimating the cost of inpatient and outpatient services provided by hospitals. Data from a nationwide survey of non-federal, short-term, U.S. hospitals are used to make cost estimates based on a multiple-output cost function. The results provide information on the structure of hospital costs, and include estimates of the marginal and average incremental cost of outpatient care. Because of the innovative specification of the cost function, the study is of interest for its methodology as well as empirical results.