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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 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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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
Date of revision:
Handle: RePEc:rwi:repape:0106
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  1. 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.
  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., 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.
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