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Does Higher Cost Inefficiency Imply Higher Profit Inefficiency? - Evidence on Inefficiency and Ownership of German Hospitals

  • Annika Herr
  • Hendrik Schmitz
  • Boris Augurzky

This paper investigates cost and profit efficiency of German hospitals. More specifically, it deals with the question how hospital efficiency varies with ownership, patient structure and other exogenous factors, which are neither inputs nor outputs of the production process. We conduct a Stochastic Frontier Analysis (SFA) on a multifaceted administrative German dataset combined with the balance sheets of 374 hospitals for the years 2002 to 2005.The results indicate that private (for-profit) and (private) non-profit hospitals are on average less cost efficient but more profit efficient than publicly owned hospitals.

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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 0132.

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Length: 28 pages
Date of creation: Aug 2009
Handle: RePEc:rwi:repape:0132
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  1. repec:zbw:rwimat:041 is not listed on IDEAS
  2. Augurzky, Boris & Budde, Rüdiger & Krolop, Sebastian & Schmidt, Christoph M. & Schmidt, Hartmut & Schmitz, Hendrik & Schwierz, Christoph & Terkatz, Stefan, 2008. "Krankenhaus Rating Report 2008: Qualität und Wirtschaftlichkeit," RWI Materialien 41, RWI - Leibniz-Institut für Wirtschaftsforschung.
  3. DEPRINS, Dominique & SIMAR, Léopold, . "Estimation de frontières déterministes avec facteurs exogènes d'inefficacité," CORE Discussion Papers RP 862, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Berger, Allen N. & Mester, Loretta J., 1997. "Inside the black box: What explains differences in the efficiencies of financial institutions?," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 895-947, July.
  5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, December.
  6. repec:adr:anecst:y:1989:i:14 is not listed on IDEAS
  7. repec:adr:anecst:y:1989:i:14:p:06 is not listed on IDEAS
  8. Bruce Hollingsworth, 2008. "The measurement of efficiency and productivity of health care delivery," Health Economics, John Wiley & Sons, Ltd., vol. 17(10), pages 1107-1128.
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