Returns to Scale Models

Health care managers can seek alternative evaluations to assess which components of their organization are contributing to the inefficiency of their organization, such as the size of their operation, poor organizational factors, flow processes, or other related factors. For example, a small hospital, in certain instances, may appear less efficient compared to larger ones, and this may be due to its scale size. On the other hand, the reverse can be seen as well, due to diseconomies of scale, which occurs when larger hospitals may be operating inefficiently due to other reasons, such as poor management or a lack of strategic focus.