Economies of scale in federally-funded state-organized public health programs: results from the National Breast and Cervical Cancer Early Detection Programs

Justin G. Trogdon, Donatus U. Ekwueme, Sujha Subramanian, Wesley Crouse

This study investigates the existence of economies of scale in the provision of breast and cervical cancer screening and diagnostic services by state National Breast and Cervical Cancer Early Detection Program (NBCCEDP) grantees. A translog cost function is estimated as a system with input factor share equations. The estimated cost function is then used to determine output levels for which average costs are decreasing (i.e., economies of scale exist). Data were collected from all state NBCCEDP programs and District of Columbia for program years 2006-2007, 2008-2009 and 2009-2010 (N = 147). Costs included all programmatic and in-kind contributions from federal and non-federal sources, allocated to breast and cervical cancer screening activities. Output was measured by women served, women screened and cancers detected, separately by breast and cervical services for each measure. Inputs included labor, rent and utilities, clinical services, and quasi-fixed factors (e.g., percent of women eligible for screening by the NBCCEDP). 144 out of 147 program-years demonstrated significant economies of scale for women served and women screened; 136 out of 145 program-years displayed significant economies of scale for cancers detected. The cost data were self-reported by the NBCCEDP State programs. Quasi-fixed inputs were allowed to affect costs but not economies of scale or the share equations. The main analysis accounted for clustering of observations within State programs, but it did not make full use of the panel data. The average cost of providing breast and cervical cancer screening services decreases as the number of women screened and served increases.