Does Higher Cost Inefficiency Imply Higher Profit Inefficiency? Evidence on Inefficiency and Ownership of German Hospitals (original) (raw)
Related papers
Effects of Ownership on Hospital Efficiency in Germany
BuR - Business Research, 2009
The objective of our study was to evaluate the efficiency of public, private for-profit, and private non-profit hospitals in Germany. First, bootstrapped data envelopment analysis (DEA) was used to evaluate the efficiency of a panel (n = 1,046) of public, private for-profit, and private non-profit hospitals between 2002 and 2006. This was followed by a second-step truncated linear regression model with bootstrapped DEA efficiency scores as dependent variable. The results show that public hospitals performed significantly better than their private for-profit and non-profit counterparts. In addition, we found a significant positive association between hospital size and efficiency, and that competitive pressure had a significant negative impact on hospital efficiency.
Hospital ownership and efficiency: A review of studies with particular focus on Germany
Health Policy, 2012
The German hospital market has been subject over the past two decades to a variety of healthcare reforms. Particularly the introduction of diagnosis-related groups (DRGs) in 2004 aimed to increase efficiency of hospitals. The objective of the paper is to review recent studies comparing the efficiency of German public, private non-profit and private for-profit hospitals. The results of the studies are quite mixed. However, in line with the evidence found in studies from other countries, especially the US, the evidence from Germany suggests that private ownership (i.e., private non-profit and private for-profit) is not necessarily associated with higher efficiency compared to public ownership. This may be a surprising result to many policy makers as private for-profit hospitals are often perceived the most efficient ownership type by the public.
Cost efficiency of US hospitals: a stochastic frontier approach
Health Economics, 2001
This study examined the impact of managed care and other environmental factors on hospital inefficiency in 1631 US hospitals during the period 1990-1996. A panel, stochastic frontier regression model was used to estimate inefficiency parameters and inefficiency scores.
Applied Economics Letters
This paper aims to identify the relationship between the output-oriented technical efficiency of Italian private hospitals and their ownership structure. Using the one-step Stochastic Frontier Analysis technique, we explain technical efficiency throughout a set of variables capturing the firm's shareholder activity, ownership concentration, and managerial ownership. Results suggest that (1) technical efficiency is positively affected by managerial ownership, and (2) private hospitals are more efficient when ownership concentration is low.
Public vs. Private in Hospital Efficiency: Exploring Determinants in a Competitive Environment
International Journal of Public Administration, 2017
This study investigates the determinants of efficiency in an Italian regional health system and estimates the effect exerted by ownership on hospitals' performance. To achieve this aim, the Veneto region was considered as a case study and a full dataset (2011-2012) containing nonpublicly available technical data and cost and income items was analyzed. Efficiencies are measured applying a three-stage data envelopment analysis (DEA). Our results suggest that private hospitals perform better than public hospitals in productivity and cost saving, not considering the effect of other environmental and operational variables such as length of stay and beds per capita.
The European Journal of Health Economics, 2014
The introduction of prospective hospital reimbursement based on diagnosis-related groups (DRG) has been a conspicuous attempt to decelerate the steady increase of hospital expenditures in the German health sector. In this work, the effect of the financial reform on hospital efficiency is subjected to empirical testing by means of two complementary testing approaches. On the one hand, we apply a two-stage procedure based on nonparametric efficiency measurement. On the other hand, a stochastic frontier model is employed that allows a onestep estimation of both production frontier parameters and inefficiency effects. To identify efficiency gains as a consequence of changes in the hospital incentive structure, we account for technological progress, spatial dependence and hospital heterogeneity. The results of both approaches do not reveal any increase in overall efficiency after the DRG reform. In contrast, a significant decline in overall hospital efficiency over time is observed.
On the impact of ownership structure and hospital efficiency in Italy
In the paper we evaluate the technical efficiency of Italian hospitals for the years 1995 to1998. We adopt parametric and non-parametric approaches to evaluate the impact of different ownership structures on the hospital technical efficiency. We use Data Envelopment Analysis with an output oriented model (more appropriate within a PPS system) for the non-parametric approach. We also adopt a parametric approach using COLS technique to estimate a translog output distance function, to accommodate multiple inputs and outputs. Our findings suggest that public owned hospitals are more efficient than their not-for-profit counterpart when the number of discharged patients is considered as one of the outputs (together with the number. of day hospital treatments and that of emergency room treatments); this result is robust to the two different approach. On the contrary, the two t echniques of estimation produce different results when the number of in-patient days is considered as output.
Electronic physician, 2016
Introduction: Hospitals are the most expensive health services provider in the world. Therefore, the evaluation of their performance can be used to reduce costs. The aim of this study was to determine the efficiency of the hospitals at the Kurdistan University of Medical Sciences using stochastic frontier analysis (SFA). Methods: This was a cross-sectional and retrospective study that assessed the performance of Kurdistan teaching hospitals (n = 12) between 2007 and 2013. The Stochastic Frontier Analysis method was used to achieve this aim. The numbers of active beds, nurses, physicians, and other staff members were considered as input variables, while the inpatient admission was considered as the output. The data were analyzed using Frontier 4.1 software. Results: The mean technical efficiency of the hospitals we studied was 0.67. The results of the Cobb-Douglas production function showed that the maximum elasticity was related to the active beds and the elasticity of nurses was negative. Also, the return to scale was increasing. Conclusion: The results of this study indicated that the performances of the hospitals were not appropriate in terms of technical efficiency. In addition, there was a capacity enhancement of the output of the hospitals, compared with the most efficient hospitals studied, of about33%. It is suggested that the effect of various factors, such as the quality of health care and the patients' satisfaction, be considered in the future studies to assess hospitals' performances.
Measuring Technical Inefficiency in Private and Public Hospitals Using Initial Treatment Methods
Journal of Economics Studies and Research, 2015
The debate over how to solve the problem of rising health care costs has produced a vast amount of literature in many different fields. In particular, economists have developed a method known as stochastic frontier analysis which can be used to estimate how inefficiencies within the health care industry can contribute to rising health care costs. Most studies of this nature estimate a best practice frontier focusing only on the long-run outcomes of hospitals, using variables such as patient days and mortality rates as proxies. In this study we approach the issue of hospital efficiency differently by estimating the best practice production frontier for the initial treatment of patients admitted for heart attack, heart failure, or pneumonia. We are particularly interested in analyzing what role (if any) hospital ownership plays in determining technical inefficiency. According to bureaucracy theory, it is hypothesized that non-profit and for-profit hospitals will exhibit greater efficiency relative to public hospitals. Our results reveal some evidence that private hospitals are in fact more efficient than public hospitals in two out of the three medical conditions analyzed.