Interactions between hospital admissions, cost per day and average length of stay

Abstract

Hospital cost per day (COST), annual admissions per capita (ADMIT), and average length of stay (ALOS) are important health policy variables because each variable provides important information about hospital industry performance. This study uses country-level data to explore the empirical relationships between COST, ADMIT, and ALOSin three steps: OLS estimation, application of the Wu-Hausman endogeneity test, and re-estimation with two-stage least squares. The major results are (i) ADMITand ALOSexert exogenous influences on COSTand (ii) ADMITand ALOSare endogenously related with possible one-way casuality from ADMITto ALOS.