TITLE:
Short-Run Cost Minimization and Capacity Utilization of Regional Public Hospitals in South Korea
AUTHORS:
Sang-Mok Kang, Moon-Hwee Kim
KEYWORDS:
Regional Public Hospitals, Cost Minimization, Capacity Utilization, Data Envelopment Analysis
JOURNAL NAME:
Modern Economy,
Vol.6 No.1,
January
12,
2015
ABSTRACT: This paper intends to obtain the short-run average cost minimization and
capacity utilization over 34 regional public hospitals in South Korea from 2007
to 2010 using Data Envelopment Analysis (DEA). Also, it explores the average
cost for each hospital in order to determine whether the cost is increasing or
decreasing. The annual capacity utilization rate, using an adjusted number of patients
as an output, was 0.49, and by using value added as an output was 0.56, on
average. Only Jeju showed the highest level of capacity utilization regardless
of output type. It indicates that almost all regional public hospitals, except
for Jeju, have not run with full capacity, and have been in the decreasing area
in the short-run average cost curve during the same period.