Table 3 reports the estimated parameter values for health output (patients treated) production functions of both RHFs and UHFs. These estimated regression results in Table 3 indicate that, for both RHFs and UHFs, the role of infrastructure (in terms of large parameter values for beds as compared to other inputs) in the production process is more dominant than other remaining inputs, namely, health professionals.
Based on the estimated supply and output elasticities from Tables 2 and 3, respectively, and exogenously given profile for total cost and total stock of registered health professionals, we can now directly compute the optimal expansion paths for inputs, and output for both UHFs and RHFs using the reduced form expressions derived from the optimisation problem.
In the following we present ex-ante simulation results, relying on two strategies: (a) standard strategy based on normal optimisation approach adopted earlier; and (b) constrained strategy based on an optimisation problem in which the beds in UHFs are now fixed at the baseline year 1992 level until they become equal to those of the standard strategy.
* Actual number of beds in UHFs in the baseline year 1991-92 appeared to be greater than what an optimal optimisation strategy would stipulate by over 13 percent.
* As for the doctors in the UHFs, cost-effective strategy suggests roughly the same number of doctors as the actual but with significantly higher salaries by the end of the plan period by about 11 percent as shown in Table 5.
Our optimisation model predicts recurring outlays of over 5 and 2.5 times that of development expenditures for UHFs and RHFs, respectively, in 1992-93.
The optimisation results in Table 6 suggest that about ten percent efficiency gains can be made in UHFs and RHFs.