The costs of new organisational and financial freedom: The case of English NHS trusts

In this paper we estimate hospital costs and evaluate economies of scale and scope using a generalised multiproduct cost function and a sample of English NHS trusts with di¤erent types of ownership, namely Foundation Trusts and non Foundation Trusts. Evaluating the behaviour of di¤erent types of hospitals separately might be particularly helpful for the design, and future developments, of the optimal provider reimbursement tari¤. Also it might shed some light on the ability of di¤erent types of hospitals to pro t from the existence of economies of scale and scope. Results show that, even though these two group of providers do not exhibit di¤erences regarding economies of scale, Foundation Trusts exhibit global diseconomies of scope while non Foundation Trusts exhibit global scope economies.