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Relative economic efficiency in Texas nursing facilities: A profit function analysis

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Abstract

The purpose of this analysis is to examine the relative economic efficiency of profit-seeking versus nonprofit nursing facilities. A Cobb-Douglas profit function is used on cross-sectional data to determine the technical efficiency, price efficiency, and overall economic efficiency of Texas nursing facilities. Ownership form influences the profit level of the firm. Profit-seeking firms are more economically efficient than their nonprofit counterparts. Inclusion of price efficiency analyses reinforces profit-seeking firms’ superior technical efficiency. Additionally, nursing facilities are price takers in the output market as well as in resource markets, indicating effective industry regulation.

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Authors and Affiliations

  1. University of Texas Medical Branch-Galveston, Galveston, USA

    Kris Joseph Knox

  2. Department of Finance and Economics, Southwest Texas State University, 601 University Drive, 78666, San Marcos, Texas

    Eric C. Blankmeyer & J. R. Stutzman

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  1. Kris Joseph Knox
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  2. Eric C. Blankmeyer
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  3. J. R. Stutzman
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Correspondence to Kris Joseph Knox.

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Knox, K.J., Blankmeyer, E.C. & Stutzman, J.R. Relative economic efficiency in Texas nursing facilities: A profit function analysis. J Econ Finan 23, 199–213 (1999). https://doi.org/10.1007/BF02757705

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