A Production Function For Physician Services Revisited

We revisit Reinhardt's (1972) commonly used production function for physician services. This production function, although appropriate in some settings, is not adequate for more detailed studies. The generalized linear production function (Diewart, 1971) is an attractive alternative for this application: it admits zero values for inputs and allows the estimation of complex technical relationships. We find that, from 1965-1988, the technical relationships that describe the production process for physician services are remarkably stable. By empirically estimating the parameters of this more general production function, we provide crucial evidence about the q-complementarity of health worker inputs, the first of its kind in the literature on health labor markets. © 2002 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology