The Production and Cost of Ambulatory Medical Care In Community Health Centers

Fred Goldman, Michael Grossman

NBER Working Paper No. 907
Issued in June 1982
NBER Program(s):Health Economics

An assessment of the efficiency of Federally funded community health centers (CHCs) in delivering ambulatory medical care to poverty populations reveals that the centers' input decisions reflect departures from cost-minimizing behavior. In particular, they employ too few physician aids (nurses and physician assistants) relative to primary care physicians and too many medical support and ancillary personnel relative to primary care physicians. The CHC system-wide cost reduction due to the elimination of allocative inefficiency is estimated at $32 million in 1978 dollars or 6 percent of total cost. This modest cost reduction and evidence that allocative inefficiency is not more widespread among CHCs than among private sector physicians seriously question the conventional wisdom that services in the public sector are produced less efficiently than in the private sector. Support is also reported for the hypothesis that, since grants are not tied to particular services rendered, centers who derive most of their revenue from this source relative to Medicaid and private insurance have a greater incentive to provide a given mix of services in the least-cost method.

download in pdf format
   (1208 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0907

Published: Goldman, Fred and Michael Grossman. "The Production and Cost of Ambulatory Medical Care In Community Health Centers." Advances in Health Economics and Health Services Research, edited by Richard M. Schettler and Louis F. Rossoter, Vol. 4, Greenwich, Conn.: JAI Press, (1983), pp. 1-56.

Users who downloaded this paper also downloaded* these:
Goldman and Grossman w1020 The Impact of Public Health Policy: The Case of Community Health Centers
Skinner and Staiger w14865 Technology Diffusion and Productivity Growth in Health Care
Grossman w7078 The Human Capital Model of the Demand for Health
Reder Some Problems in the Measurement of Productivity in the Medical Care Industry
Auster, Leveson, and Sarachek The Production of Health, an Exploratory Study
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us