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Is there a Future for Small Hospitals in Germany?

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  • Augurzky, Boris
  • Schmitz, Hendrik

Abstract

We analyse the financial performance of small German hospitals based on balance sheet data of about 1,000 hospitals in 2007. Measures of financial performance are the earnings before interest, tax, depreciation, and amortisation (EBITDA) and the probability of default (PD). We find that, on average, small hospitals have more financial difficulties than large ones. However, there is considerable heterogeneity among small hospitals. While small private-for-profit hospitals tend to perform very well, small public hospitals face considerable financial problems. Apart from ownership, we find that specialisation, less subsidies in absolute terms, and a higher share of lump-sum subsidies are associated with a better financial performance.

Suggested Citation

  • Augurzky, Boris & Schmitz, Hendrik, 2010. "Is there a Future for Small Hospitals in Germany?," Ruhr Economic Papers 198, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:198
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    References listed on IDEAS

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    1. repec:zbw:rwirep:0123 is not listed on IDEAS
    2. Augurzky, Boris & Engel, Dirk & Schmidt, Christoph M. & Schwierz, Christoph, 2009. "Ownership and Financial Performance in the German Hospital Sector," Ruhr Economic Papers 123, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    4. Simpson, John, 1995. "A note on entry by small hospitals," Journal of Health Economics, Elsevier, vol. 14(1), pages 107-113, May.
    5. Bruce Hollingsworth & Andrew Street, 2006. "The market for efficiency analysis of health care organisations," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1055-1059, October.
    6. Augurzky, Boris & Gülker, Rosemarie & Krolop, Sebastian & Schmidt, Christoph M. & Schmidt, Hartmut & Schmitz, Hendrik & Terkatz, Stefan, 2010. "Krankenhaus Rating Report 2010: Licht und Schatten," RWI Materialien 59, RWI - Leibniz-Institut für Wirtschaftsforschung.
    7. 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, October.
    8. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    9. Boris Augurzky & Dirk Engel & Christoph M. Schmidt & Christoph Schwierz, 2009. "Ownership and Financial Performance in the German Hospital Sector," Ruhr Economic Papers 0123, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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    Cited by:

    1. Sriubaite, Ieva, 2021. "Who will be the mediator? Local politics and hospital closures in Germany," Ruhr Economic Papers 897, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Agnieszka Bem & Rafał Siedlecki & Paweł Prędkiewicz & Patrizia Gazzola & Bożena Ryszawska & Paulina Ucieklak-Jeż, 2019. "Hospitals’ Financial Health in Rural and Urban Areas in Poland: Does It Ensure Sustainability?," Sustainability, MDPI, vol. 11(7), pages 1-17, April.

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    More about this item

    Keywords

    hospital ownership; financial performance;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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