Cost Efficiency Modelling in Health Care Foodservice Operations

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Assaf, Albert and Matawie, K. M (2008) Cost Efficiency Modelling in Health Care Foodservice Operations. International Journal of Hospitality Management, 27 (4). pp. 604-613. ISSN 0278-4319


Cost efficiency and cost data in the health care foodservice sector have many interesting features. Traditional productivity approaches and empirical studies are yet to address many of these features, as they are limited to partial ratios and restricted parametric techniques. In this paper, we introduce and demonstrate the Stochastic Frontier Approach to this sector, and analyze the level of cost efficiency and its determinants. The approach is tested in a cross-sectional data set from a sample of 101 health care foodservice operations in Australia and the USA. Results indicate that the average level of cost efficiency is around 76.5% which suggests that health care foodservice operations could reduce their input costs by as much as 23.5% without decreasing their total output. Further, the coefficients of the inefficiency component, estimated simultaneously with the stochastic frontier model, indicate that both the level of manager’s experience and the level of manager’s education are significant determinants of cost efficiency.

Item type Article
Official URL
Subjects Historical > Faculty/School/Research Centre/Department > School of Hospitality Tourism and Marketing
Historical > FOR Classification > 1505 Marketing
Historical > SEO Classification > 9102 Microeconomics
Keywords ResPubID15299, ResPubID16415. cost efficiency; health care foodservice; stochastic frontier approach
Citations in Scopus 18 - View on Scopus
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