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

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  • Schwierz, Christoph

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.

Suggested Citation

  • Schwierz, Christoph, 2009. "Expansion in Markets with Decreasing Demand – For-Profits in the German Hospital Industry," Ruhr Economic Papers 106, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  • Handle: RePEc:zbw:rwirep:106
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    References listed on IDEAS

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    1. Sujoy Chakravarty & Martin Gaynor & Steven Klepper & William B. Vogt, 2006. "Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 345-361.
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    8. Augurzky, Boris & Krolop, Sebastian & Gülker, Rosemarie & Schmidt, Christoph M. & Schmidt, Hartmut & Schmitz, Hendrik & Schwierz, Christoph & Terkatz, Stefan, 2009. "Krankenhaus Rating Report 2009: Im Auge des Organs," RWI Materialien 53, RWI - Leibniz-Institut für Wirtschaftsforschung.
    9. 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.
    10. Mary E. Deily & Niccie L. McKay & Fred H. Dorner, 2000. "Exit and Inefficiency: The Effects of Ownership Type," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 734-747.
    11. 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.
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    13. repec:zbw:rwimat:053 is not listed on IDEAS
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    Cited by:

    1. repec:zbw:rwirep:0517 is not listed on IDEAS
    2. Adam Pilny, 2014. "Mergers and Acquisitions in the German Hospital Market – Who are the Targets?," Ruhr Economic Papers 0518, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. repec:wly:hlthec:v:26:y:2017:i:5:p:566-581 is not listed on IDEAS
    4. Pilny, Adam, 2014. "Mergers and Acquisitions in the German Hospital Market – Who are the Targets?," Ruhr Economic Papers 518, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Adam Pilny, 2014. "Explaining Differentials in Subsidy Levels among Hospital Ownership Types in Germany," Ruhr Economic Papers 0517, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. repec:zbw:rwirep:0518 is not listed on IDEAS
    7. Paloyo, Alfredo R., 2009. "Co-pay and Feel Okay: Evidence of Illusory Health Gains from a Health Insurance Reform," Ruhr Economic Papers 142, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Adam Pilny, 2017. "Explaining Differentials in Subsidy Levels Among Hospital Ownership Types in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 566-581, May.
    9. Mareike Heimeshoff & Jonas Schreyögg & Oliver Tiemann, 2014. "Employment effects of hospital privatization in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(7), pages 747-757, September.

    More about this item

    Keywords

    Hospital ownership; privatization; hospital market structure;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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