Profit efficiency and ownership of German hospitals

Abstract

This paper investigates the cost and profit efficiency of German hospitals and their variation with ownership type. It is motivated by the empirical finding that private (for-profit) hospitals - having been shown to be less cost efficient in the past - on average earn higher profits than public hospitals. We conduct a Stochastic Frontier Analysis on a multifaceted administrative German data set combined with the balance sheets of 541 hospitals of the years 2002-2006. The results show no significant differences in cost efficiency but higher profit efficiency of private than of publicly owned hospitals.

Federal state differentials in the efficiency of health production in Germany: an artifact of spatial dependence?

“…Since economic status and health are frequently found to be positively correlated, we expect a negative coefficient estimate for the former control and a positive coefficient for the latter. We further include hospital ownership as an explanatory variable for efficiency (for recent studies with mixed results, see Herr, 2008, andHerr et al, 2011). Ownership is measured in terms of share in total hospital beds, with public ownership serving as the reference.…”

“…Sloan, 2000;Street, 2003;Chen et. al., 2005;Harrison et al, 2004;Staat, 2006;Herr, 2008;Pilyavsky & Staat, 2008;Herr et al, 2011), but also nursing homes (e.g. Anderson et al, 1999;Crivelli et al, 2002Björkgreen et al, 2004), general practitioners and primary care facilities (e.g.…”

Is There a Future for Small Hospitals in Germany?

“…As regards evidence from Europe, Herr et al (2010) find that German private for-profit hospitals are more profit efficient than public ones. Augurzky et al (2009) find that private for-profit hospitals have a lower risk of default than public hospitals.…”

Explaining Differentials in Subsidy Levels Among Hospital Ownership Types in Germany

“…Previous studies examining differences between ownership types of German hospitals focus predominantly on the financial sustainability, cost and profit efficiency or the responsiveness to changes in demand for hospital services (see e.g. Augurzky et al 2012;Schwierz 2011;Herr et al 2011;Herr 2008). …”