Hospital Cost Functions
The hospital sector has been one of the most rapidly growing sectors in the American economy; expenditures on hospital services have been growing at an annual rate of 14% since 1965 (26). In 198 1 personal expenditures on hospital care were 1 18 billion dollars or 4% of the gross national product (26); an average day in a short-term hospital cost $284.33, while an average stay cost $2, 1 7 1 . 20 (2). The size and importance of the hospital sector has attracted much attention from health services researchers. Considerable resources have been directed to the estimation of hospital cost functions. Investigators have examined the factors that affect the level of hospital costs at a period of time and the factors that affect the increase in costs over time.