Many hospitals have regularly scheduled surgery and active emergency departments. Based on the information in the Mini-Case “Medical Economies of Scope,” could it be more cost effective to have separate emergency centers? What do you think are the reasons for these economies or diseconomies of scope?

Mini-Case: Medical Economies of Scope (Perloff and Brander, P. 182, 2020) "Empirical studies show that some medical production processes have economies of scope, others have none, and some have diseconomies of scope. Is it cost effective to separate outpatient and inpatient surgical procedures in a general hospital, or should outpatient surgeries be provided separately? Carey, Burgess, and Young (2015) estimate small scope economies (SC = 0.12) at the median for-profit hospital.

Gonçalves and Barros (2013) examined whether providing auxiliary clinical services in Portuguese hospitals is cost effective. They did not find economies of scope between the clinical chemistry service and other medical services, so outsourcing that service would not raise costs. However, in medical imaging, computed tomography exhibits scope economies with most other services, which suggests that outsourcing computed tomography would raise the costs of producing those other outputs.

Freeman, Savva, and Scholtes (2018) found significant diseconomies of scope between emergency admissions and non-emergency admissions in English hospitals. However, within the emergency category, there are positive economies of scope between the different major specialties. Non-emergency admissions do not exhibit economies of scope across specialties. The authors conclude that significant gains would arise from concentrating emergency care in hospitals focusing on emergency services."