IDEAS home Printed from
   My bibliography  Save this paper

Benchmarking the Health Sector in Germany – An Application of Data Envelopment Analysis


  • Matthias Staat

    (University of Mannheim)

  • Maik Hammerschmidt

    (University of Mannheim)


At present, a first round of hospital benchmarking as required by German law on health care reform takes place. After extensive discussions between hospitals and insurance companies, which are jointly responsible to deliver benchmarking results, a method with some peculiar characteristics was chosen. In this paper it is argued that the deficiencies of said method could be overcome by using Data Envelopment Analysis (DEA). The reasons that make DEA an advisable tool for policy decisions within the context of relative performance evaluation in the health care sector are discussed. In order to illustrate the potential of nonparametric frontier estimation for hospital benchmarking in Germany, a comparison of hospitals, which provide the same basic clinical care, is carried out. Controlling for differences in the case mix and for possible heterogeneity of the services which hospitals provide, substantial productivity differences can be detected. Beyond simply identifying inefficient providers DEA leads to additional insight about the reasons of inefficiency and to useful management implications.

Suggested Citation

  • Matthias Staat & Maik Hammerschmidt, 2003. "Benchmarking the Health Sector in Germany – An Application of Data Envelopment Analysis," HEW 0309003, EconWPA.
  • Handle: RePEc:wpa:wuwphe:0309003
    Note: Type of Document - Word; prepared on IBM PC; to print on HP;

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Marco Grasso, 2002. "Una misurazione del benessere nelle Regioni italiane," Working Papers 41, University of Milano-Bicocca, Department of Economics, revised Jan 2002.
    2. Alkire, Sabina, 2002. "Dimensions of Human Development," World Development, Elsevier, vol. 30(2), pages 181-205, February.
    3. repec:mul:je8794:doi:10.1429/1601:y:2002:i:2:p:261 is not listed on IDEAS
    4. Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
    5. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
    6. Sudhir Anand & Amartya Sen, 2000. "The Income Component of the Human Development Index," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 1(1), pages 83-106.
    7. Des Gasper, 2002. "Is Sen's Capability Approach an Adequate Basis for Considering Human Development?," Review of Political Economy, Taylor & Francis Journals, vol. 14(4), pages 435-461.
    8. Ravallion, Martin, 1997. "Good and bad growth: The human development reports," World Development, Elsevier, vol. 25(5), pages 631-638, May.
    9. Mozaffar Qizilbash, 1996. "Capabilities, well-being and human development: A survey," Journal of Development Studies, Taylor & Francis Journals, vol. 33(2), pages 143-162.
    10. D. North, 1997. "Institutional Changes: A Framework of Analysis," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
    11. repec:ems:euriss:23177 is not listed on IDEAS
    12. Jonathon M. Harris, "undated". "00-04 "Basic Principles of Sustainable Development."," GDAE Working Papers 00-04, GDAE, Tufts University.
    13. Sudhir Anand and Amartya Sen, 1994. "Human development Index: Methodology and Measurement," Human Development Occasional Papers (1992-2007) HDOCPA-1994-02, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    14. Basil M. H. Sharp, 2001. "Sustainable Development: Environment and Economic Framework Integration," Treasury Working Paper Series 01/27, New Zealand Treasury.
    15. Charles Gore, 1997. "Irreducibly social goods and the informational basis of Amartya Sen's capability approach," Journal of International Development, John Wiley & Sons, Ltd., vol. 9(2), pages 235-250.
    16. M. Qizilbash, 2001. "Sustainable Development: Concepts and Rankings," Journal of Development Studies, Taylor & Francis Journals, vol. 37(3), pages 134-161.
    17. Sen, Amartya, 1991. "Welfare, preference and freedom," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 15-29, October.
    18. Sen, Amartya, 1995. "Rationality and Social Choice," American Economic Review, American Economic Association, vol. 85(1), pages 1-24, March.
    19. Jonathan M. Harris, 2001. "Basic Principles of Sustainable Development," Development and Comp Systems 0106006, EconWPA.
    20. Gasper, D.R., 2002. "Is Sen's Capability Approach an Adequate Basis for Considering Human Development," ISS Working Papers - General Series 50674, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    21. Grasso Marco, 2002. "Una misurazione del benessere nelle regioni italiane," Politica economica, Società editrice il Mulino, issue 2, pages 261-292.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Annika Frohloff, 2007. "Cost and Technical Efficiency of German Hospitals – A Stochastic Frontier Analysis," Ruhr Economic Papers 0002, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. Thomas Czypionka & Markus Kraus & Susanne Mayer & Gerald Röhrling, 2014. "Efficiency, ownership, and financing of hospitals: The case of Austria," Health Care Management Science, Springer, vol. 17(4), pages 331-347, December.
    3. Helmut Herwartz & Christoph Strumann, 2014. "Hospital efficiency under prospective reimbursement schemes: an empirical assessment for the case of Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(2), pages 175-186, March.
    4. Teresa Curristine & Zsuzsanna Lonti & Isabelle Joumard, 2007. "Improving Public Sector Efficiency: Challenges and Opportunities," OECD Journal on Budgeting, OECD Publishing, vol. 7(1), pages 1-41.
    5. repec:zbw:rwirep:0002 is not listed on IDEAS
    6. Frohloff, Annika, 2007. "Cost and Technical Efficiency of German Hospitals – A Stochastic Frontier Analysis," Ruhr Economic Papers 2, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item


    Health care reform benchmarking relative performance evaluation Data Envelopment Analysis;

    JEL classification:

    • I19 - Health, Education, and Welfare - - Health - - - Other
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwphe:0309003. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.