What is Returns to Scale

Proven cost-effectiveness of innovative technologies is more and more a necessary condition for implementation in clinical practice. But proven cost-effectiveness itself does not guarantee successful implementation of an innovation. A reason for this could be the potential discrepancy between efficiency on the long run, on which cost-effectiveness is based, and efficiency on the short run. In economics, long run and short run efficiency are discussed in the context of economies of scale. This chapter addresses the usefulness of cost-effectiveness for decision making considering the potential discrepancy between long run and short run efficiency of innovative technologies in healthcare, the potential consequences for implementation in daily clinical practice, explores diseconomies of scale in Dutch hospitals, and makes suggestions for what strategies might help to overcome hurdles to implement innovations due to that short run-long run efficiency discrepancy.