ABSTRACT
This chapter attempts to define the concept "economies of scale" as it is conceived in the literature of economics, to discuss the uses of the concept in the field of health care, to consider proper applications of the concept to the production of health services, and finally to relate the concept to some empirical data recently collected by the author as part of a research project designed to measure scale economies in the practice of internal medicine. It intends to test a number of hypotheses that flow from the observations and theories discussed above against data from the study. The concept of economies of scale derives from that area of economics concerned with understanding the activities and operations of productive enterprises—microeconomics. The concept is a significant component of microeconomics because it attempts to explain how various resources may be combined within any given firm in the most efficient manner.
