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The Impact of Private for-Profit Hospital Ownership on Costs and Quality of Care – Evidence from Germany

Author

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  • Ansgar Wübker
  • Christiane Wuckel

Abstract

What is the impact of private for-profit (PfP) hospital ownership on costs and quality of care? In light of a substantial and increasing share of PfP hospitals in many hospital markets like the USA or Germany, this is an important question. We estimate the effect of PfP ownership on hospital 30-day- and 1-year-mortality outcomes and hospital costs by focusing on heart attacks and pneumonia, two very common conditions in healthcare markets. We use rich administrative hospital data from Germany for the years 2006–2015. Applying differential distance as instrument for hospital choice, we imitate randomization of patients into PfP hospitals. Our results suggest that PfP hospitals have no higher mortality rates for heart attack treatment than public ones. For pneumonia patients, we even find lower 30-day-mortality rates of PfP hospitals compared to public hospitals. Finally, we show that PfP hospitals have higher hospital costs than public or private not-for-profit hospitals for both conditions.

Suggested Citation

  • Ansgar Wübker & Christiane Wuckel, 2019. "The Impact of Private for-Profit Hospital Ownership on Costs and Quality of Care – Evidence from Germany," CESifo Economic Studies, CESifo Group, vol. 65(4), pages 373-401.
    • Handle: RePEc:oup:cesifo:v:65:y:2019:i:4:p:373-401.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifz005
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    Cited by:

    1. Knutsson, Daniel & Tyrefors, Björn, 2020. "The Quality and Efficiency Between Public and Private Firms: Evidence from Ambulance Services," Working Paper Series 1365, Research Institute of Industrial Economics, revised 01 Jul 2021.
    2. Fredrik Andersson & Henrik Jordahl & Jens Josephson, 2019. "Outsourcing Public Services: Contractibility, Cost, and Quality," CESifo Economic Studies, CESifo Group, vol. 65(4), pages 349-372.

    More about this item

    Keywords

    hospital ownership; health care expenditures; quality of care; instrumental variables;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L8 - Industrial Organization - - Industry Studies: Services
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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