Economies of scale and scope in public health: An analysis of food hygiene services provided by local health departments in Florida

Local health departments (LHDs) across the United States deliver a range of essential public health services, yet little is known about the costs that LHDs incur in providing these services and the factors that may cause costs to vary both within and across health departments. This report first describes the variations in the costs of one core public health activity commonly provided by LHDs: food hygiene services. It then analyzes the factors that drive LHDs' cost of service provision focusing on the role of economies of scale and economies of scope. Using data for all LHDs in Florida for 2008 and 2010, the study found that the costs of providing food hygiene services varied substantially across LHDs. Economies of scale are demonstrated in multivariate analysis findings as providing greater volumes of services was associated with lower per unit costs. Providing a greater scope of public health services, on the other hand, does not appear to affect the costs of food hygiene services. An in-depth understanding of their cost structure presents an opportunity for LHDs to communicate to policymakers information about the resources needed to provide core public health services. Moreover, it allows public health practitioners to engage in activities aimed at increasing the efficiency of service provision. This study is a first step in the search for evidence of economies of scale that may help to lower costs and increase efficiency.