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Expansion in markets with decreasing demand‐for‐profits in the German hospital industry

  • Christoph Schwierz

Over the last 20 years, acute-care hospitals in most OECD countries have built up costly overcapacities. From the perspective of economic policy, it is desirable to know how hospitals of different ownership forms respond to changes in demand and are probably best suited to deal with existing overcapacities. This article 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 increasing demand, the study finds for‐profit ownership to be superior to public and nonprofit ownership. However, contrary to other ownership types, for‐profits also tend to expand in markets with decreasing demand – mainly through conversions of publicly owned hospitals. Thus, in short term, the privatization of the hospital sector may slow down the reduction of excess capacities and be therefore socially wasteful. Copyright (C) 2010 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1624
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 20 (2011)
Issue (Month): 6 (June)
Pages: 675-687

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Handle: RePEc:wly:hlthec:v:20:y:2011:i:6:p:675-687
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Sloan, Frank A., 2000. "Not-for-profit ownership and hospital behavior," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 21, pages 1141-1174 Elsevier.
  2. Boris Augurzky & Sebastian Krolop & Rosemarie Gülker & Christoph M. Schmidt & Hendrik Schmitz & Christoph Schwierz & Stefan Terkatz, 2009. "Krankenhaus Rating Report 2009 – Im Auge des Orkans," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 160, December.
  3. Sloan, Frank A. & Picone, Gabriel A. & Taylor, Donald H., Jr. & Chou, Shin-Yi, 2000. "Hospital Ownership and Cost and Quality of Care: Is There a Dime's Worth of Difference?," Working Papers 00-11, Duke University, Department of Economics.
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