ABSTRACT

To investigate the adequacy of the widely used Cobb-Douglas and transcendental logarithmic (translog) models of the production functions of hospital inpatient services, the authors fitted these and additive models to data for the four most productive health services of 10 public hospitals in Galicia, Spain (the same four in each). Production, measured as admissions weighted in accordance with their diagnosis-related groups (DRGs), was treated as a function of physician full-time equivalents as surrogate labor factor and number of beds as surrogate capital factor. The results suggest that while the Cobb-Douglas and translog models suffice to represent the production functions of services with low average DRG weight, the greater flexibility of additive models is required for services with higher average DRG weight when only these two inputs are considered.