Do waiting times reduce hospital costs?

Using a sample of 137 hospitals over the period 1998-2002 in the English National Health Service, we estimate the elasticity of hospital costs with respect to waiting times. Our cross-sectional and panel-data results suggest that at the sample mean (103 days), waiting times have no significant effect on hospitals' costs or, at most, a positive one. If significant, the elasticity of cost with respect to waiting time from our cross-sectional estimates is in the range 0.4-1. The elasticity is still positive but lower in our fixed-effects specifications (0.2-0.4). In all specifications, the effect of waiting time on cost is non-linear, suggesting a U-shaped relationship between hospital costs and waiting times. However, the level of waiting time which minimises total costs is always below ten days.