Cost structure of osteopathic hospitals and their local counterparts in the USA: Are they any different?

Due to the emphasis on preventive care and less invasive solutions to medical problems, osteopathic hospitals may deliver cost efficient and cost effective care. This study examines the cost structure of osteopathic hospitals and compares their performance to a local control group selected from allopathic hospitals. Osteopathic hospitals are identified in the 1999 American Hospital Association (AHA) data and matched to local allopathic hospitals with respect to location, bed size, system, for-profit and teaching status. Cost functions are estimated for both groups of hospitals, and significant differences in input, output and costs are highlighted. Results show that osteopathic hospitals are more costly and less productive in comparison to their counterparts. Inefficient production of outpatient services and high cost of medical education are two reasons for the poor performance.