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Expansion in Markets with Decreasing Demand – For-Profits in the German Hospital Industry

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Author Info
Christoph Schwierz ()

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Abstract

Over the last 20 years, acute care hospitals in most OECD have built up costly overcapacities. From the perspective of economic policy, it is desirable to know how hospitals of different ownership form respond to changes in demand and are probably best suited to deal with existing overcapacities. This paper examines ownership-specific differences in the responsiveness to changes in demand for hospital services in Germany between 1996 and 2006. With respect to the speed of adaptation to changes in demand, the study finds for-profit ownership to be superior to public and nonprofit ownership. Further, it is shown that declining demand can contribute to the expansion of for-profits through conversions by mainly publicly owned hospitals. Thus, the study finds evidence that to some extent the privatization of the hospital sector may be an adequate answer to reduce excess capacities.

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Publisher Info
Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0106.

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Length: 27 pages
Date of creation: May 2009
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Handle: RePEc:rwi:repape:0106

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Related research
Keywords: Hospital ownership; privatization; hospital market structure;

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Find related papers by JEL classification:
I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
I12 - Health, Education, and Welfare - - Health - - - Health Production
L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs

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References listed on IDEAS
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  1. Daniel P. Kessler & Mark B. McClellan, 2002. "The Effects of Hospital Ownership on Medical Productivity," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 488-506, Autumn.
  2. Sloan, Frank A. & Picone, Gabriel A. & TaylorJr., Donald H. & Chou, Shin-Yi, 2001. "Hospital ownership and cost and quality of care: is there a dime's worth of difference?," Journal of Health Economics, Elsevier, vol. 20(1), pages 1-21, January. [Downloadable!] (restricted)
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This page was last updated on 2009-11-17.

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