Regulation, ownership and efficiency in the Swiss nursing home industry.

Switzerland is a federal State where policy decisions regarding long-term care regulation are by rights incumbent upon regional and local governments. This situation is in part responsible for the large number of small nursing homes operating in Switzerland. Moreover, long-term care for the elderly is supplied by public, private for-profit and non-profit nursing homes, respectively. The paper presents an econometric estimation of a stochastic cost frontier using cross-section data for a sample of 886 Swiss nursing homes operating in 1998. The results of this analysis are used to examine the relationship between cost efficiency, the alternative institutional forms and the different regulatory settings.