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Explaining differences in remuneration rates of nursing homes in Germany

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  • Roman Mennicken
  • Boris Augurzky
  • Heinz Rothgang
  • Jürgen Wasem

Abstract

Remuneration rates of German nursing homes are prospectively negotiated between long-term care insurance (LTCI) and social assistance on the one side and nursing homes on the other. They differ considerably across regions while there is no evidence for substantial differences in care provision. This article explains the differences in the remuneration rates by observable characteristics of the nursing home, its residents and its region with a special focus on the largest federal state of North Rhine Westphalia, in which the most expensive nursing homes are located. We use data from the German Federal Statistical Office for 2005 on all nursing homes that offer full-time residential care for the elderly. We find that differences in remuneration rates can partly be explained by exogenous factors. Controls for residents, nursing homes and district characteristics explain roughly 30 % of the price difference; 40 % can be ascribed to a regionally different kind of negotiation between nursing homes and LTCI. Thirty percent of the raw price difference remains unexplained by observable characteristics. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Roman Mennicken & Boris Augurzky & Heinz Rothgang & Jürgen Wasem, 2014. "Explaining differences in remuneration rates of nursing homes in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 401-410, May.
    • Handle: RePEc:spr:eujhec:v:15:y:2014:i:4:p:401-410
    DOI: 10.1007/s10198-013-0483-2
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    1. Nyman, John A, 1994. "The Effects of Market Concentration and Excess Demand on the Price of Nursing Home Care," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 193-204, June.
    2. Eichhorst, Werner & Hinz, Tina & Marx, Paul & Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian & Thode, Eric & Tobsch, Verena, 2012. "Geringfügige Beschäftigung: Situation und Gestaltungsoptionen," IZA Research Reports 47, Institute of Labor Economics (IZA).
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    8. Augurzky, Boris & Krolop, Sebastian & Mennicken, Roman & Schmidt, Hartmut & Schmitz, Hendrik & Terkatz, Stefan, 2011. "Pflegeheim Rating Report 2011: Boom ohne Arbeitskräfte?," RWI Materialien 68, RWI - Leibniz-Institut für Wirtschaftsforschung.
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    Cited by:

    1. Arndt R. Reichert & Magdalena A. Stroka, 2018. "Nursing home prices and quality of care — Evidence from administrative data," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 129-140, January.
    2. Herr, Annika & Nguyen, Thu-Van & Schmitz, Hendrik, 2015. "Does quality disclosure improve quality? Responses to the introduction of nursing home report cards in Germany," DICE Discussion Papers 176, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Thomas Bauer & Magdalena Stroka, 2013. "Female labour supply and nursing home prices," Health Care Management Science, Springer, vol. 16(3), pages 258-270, September.
    4. Stroka-Wetsch, Magdalena A. & Talmann, Anna & Linder, Roland, 2016. "Does competition in the out-patient sector improve quality of medical care? Evidence from administrative data," Ruhr Economic Papers 638, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Herr, Annika & Hottenrott, Hanna, 2016. "Higher prices, higher quality? Evidence from German nursing homes," Health Policy, Elsevier, vol. 120(2), pages 179-189.
    6. Herr, A. & Saric, A., 2016. "The Welfare Effects of Single Rooms in German Nursing Homes: A Structural Approach," Health, Econometrics and Data Group (HEDG) Working Papers 16/23, HEDG, c/o Department of Economics, University of York.
    7. Karmann, Alexander & Sugawara, Shinya, 2022. "Comparing the German and Japanese nursing home sectors: Implications of demographic and policy differences," CEPIE Working Papers 02/22, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    8. Herr, Annika & Nguyen, Thu-Van & Schmitz, Hendrik, 2016. "Public reporting and the quality of care of German nursing homes," Health Policy, Elsevier, vol. 120(10), pages 1162-1170.
    9. Visintin, Stefano & Elvira, Marta & Rodríguez-Lluesma, Carlos, 2013. "Job (in)stability in the European Long-Term Care Workforce," IESE Research Papers D/1078, IESE Business School.
    10. Stroka, Magdalena A., 2021. "Regional variation in the supply of general and medical practitioners and its consequences for inpatient service utilization," Ruhr Economic Papers 877, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    Nursing homes; Determinants of remuneration rates; Regional price differences; I11; I18;
    All these keywords.

    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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