This paper reports on a study of expense preference behavior in a conditional sample of hospitals (before and after adoption of contract-management arrangements), using an extension of Mester's (1989) test. To identify expense preference parameters, input demand equations are considered in...

This paper explores potential realization of gains by hospitals that are managed on a day-to-day basis by external organizations under formal contracts. It draws from the incentives literature, which postulates that managers of firms where ownership is separated from control will employ an input...