Ownership and Financial Performance in the German Hospital Sector

27 Pages Posted: 22 Oct 2009

See all articles by Boris Augurzky

Boris Augurzky

Rhine-Westphalia Institute for Economic Research (RWI-Essen); IZA Institute of Labor Economics

Dirk Engel

University of Applied Sciences Stralsund; Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Christoph M. Schmidt

RWI - Leibniz-Insitut für Wirtschaftsforschung (RWI Essen); Ruhr-Universität Bochum (RUB); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)

Christoph Schwierz

European Commission -DG ECFIN

Date Written: July 1, 2009

Abstract

This paper considers the role of ownership form for the financial performance of German acute care hospitals and its development over time.We measure financial performance by a hospital-specific yearly probability of default (PD). Using a panel of hospital data, our models allow for state dependence in the PD as well as unobserved individual heterogeneity. We find that private ownership is more likely to be associated with sound levels in financial performance than public ownership. Moreover, state dependence in the PD is substantial, albeit not ownership-specific.Finally, our evidence suggests that overall efficiency may be enhanced most by closing down some loss-making public hospitals rather than by their restructuring, especially because the German hospital market has substantial excess capacities.

Keywords: Hospitals ownership, financial performance, state dependence

JEL Classification: I11, I18

Suggested Citation

Augurzky, Boris and Engel, Dirk and Schmidt, Christoph M. and Schwierz, Christoph, Ownership and Financial Performance in the German Hospital Sector (July 1, 2009). Ruhr Economic Paper No. 123, Available at SSRN: https://ssrn.com/abstract=1491559 or http://dx.doi.org/10.2139/ssrn.1491559

Boris Augurzky (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

45128 Essen
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Dirk Engel

University of Applied Sciences Stralsund ( email )

Zur Schwedenschanze 15
Stralsund, DE 18437
Germany

HOME PAGE: http://www.fh-stralsund.de

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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Essen, DE 45128
Germany

Christoph M. Schmidt

RWI - Leibniz-Insitut für Wirtschaftsforschung (RWI Essen) ( email )

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Essen, 45128
Germany
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Ruhr-Universität Bochum (RUB)

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D-44780 Bochum
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Christoph Schwierz

European Commission -DG ECFIN ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium