Efficiency, ownership, and financing of hospitals: The case of Austria

Abstract

While standard economic theory posits that privately owned hospitals are more efficient than their public counterparts, no clear conclusion can yet be drawn for Austria in this regard. As previous Austrian efficiency studies rely on data from the 1990s only and are based on small hospital samples, the generalizability of these results is questionable. To examine the impact of ownership type on efficiency, we apply a Data Envelopment Analysis which extends the existing literature in two respects: first, it evaluates the efficiency of the Austrian acute care sector, using data on 128 public and private non-profit hospitals from the year 2010; second, it additionally focusses on the inpatient sector alone, thus increasing the comparability between hospitals. Overall, the results show that in Austria, private non-profit hospitals outperform public hospitals in terms of technical efficiency. A multiple regression analysis confirms the significant association between efficiency and ownership type. This conclusive result contrasts some international evidence and can most likely be attributed to differences in financial incentives for public and private non-profit hospitals in Austria. Therefore, by drawing on the example of the Austrian acute care hospital sector and existing literature on the German acute care hospital sector, we also discuss the impact of hospital financing systems and their incentives on efficiency. This paper thus also aims at providing a proof of principle, pointing out the importance of the respective market conditions when internationally comparing hospital efficiency by ownership type.

Do private hospitals outperform public hospitals regarding efficiency, accessibility, and quality of care in the European Union? A literature review

“…NFP hospitals in Germany and Italy also show convergent efficiency scores according to a total of 4 studies . Two studies, from Austria and Germany, reasoned that private providers are more efficient than public hospitals . The German study analyzed the process of privatization, whereby hospitals that converted to FP status also increased their efficiency.…”

“…The Austrian DRG system only covers up to 50% of hospital costs, and additional funds come from states and operational‐deficit coverage, determined ex post by the local authorities. Such funds disproportionally accrue to public providers placing the private sector at bay, but possibly also increasing their incentives to operate more cost conscious …”

“…The studies that estimated technical and/or cost efficiency use a DEA [19][20][21][22] or an SFA model. [23][24][25][26][27] Other studies contrast multiple approaches, SFA versus DEA.…”

Measuring Efficiency of the New Zealand District Health Boards: An Empirical Research Using Two‐Stage Data Envelopment Analysis

“…Additionally, the relationship between efficiency and other factors has also been examined, such as the effect of urbanity, ownership (public and private) and type of hospital (for-profit and non-profit hospital; teaching and non-teaching). Generally, the evidence suggests that private hospitals are more efficient than public hospitals (Czypionka et al, 2013;Kaya Samut & Cafrı, 2016).…”

Desempenho do contrato de gestão e a situação econômico-financeira dos hospitais gerais administrados por organizações sociais de saúde: uma análise no Estado de São Paulo

“…A título de exemplo, variáveis como número de leitos, quantidade de médicos, enfermeiros, funcionários e número de equipamentos, são comumente utilizadas como insumos. Os produtos frequentemente utilizados referem-se à quantidade realizada de internações, partos, saídas hospitalares e por vezes, indicadores de qualidade como percentual de pacientes em tratamento em determinada área médica (Czypionka et al, 2014;Magnussen, 1996;Masiye, 2007;Nayar & Ozcan, 2008). Discutir a eficiência no processo de contratualização é um tópico recorrente, no entanto, conforme retrata a revisão de literatura apresentada por Mills e Broomberg (1998), os estudos concluem que existem evidências limitadas e por vezes contraditórias quanto: ao impacto da contratualização sobre a eficiência, as condições necessárias para alcançar ganhos de eficiência, os aspectos do desenho do contrato que podem impactar no comportamento do prestador de serviço e na eficiência como consequência, e por fim a capacidade do governo em regular e monitorar efetivamente o contratado, que pode indicar ganhos de eficiência.…”