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Stochastic Demand for Hospitals and Optimizing "Excess" Bed Capacity

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Abstract

This paper addresses the issue of hospital bed capacity by considering the stochastic demand for United States hospitals. An equilibrium condition for the optimal number of "excess" beds is derived and applied using a cost function estimated with a panel data model for the period 1987-1992. Results indicate that it may be difficult to justify the costliness of existing levels of empty hospital beds. The Department of Justice and the Federal Trade Commission should be cognizant of the potential effects of hospital mergers on undesirable excess bed capacity.

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Authors and Affiliations

  1. U.S. Department of Veterans Affairs Management Science Group, 200 Springs Road, Bedford, MA, 01730

    Kathleen Carey

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  1. Kathleen Carey
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Carey, K. Stochastic Demand for Hospitals and Optimizing "Excess" Bed Capacity. Journal of Regulatory Economics 14, 165–188 (1998). https://doi.org/10.1023/A:1008009302343

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