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Hospital Policy and Productivity – Evidence from German States

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  • Alexander Karmann
  • Felix Roesel

Abstract

Total factor productivity (TFP) growth allows for additional healthcare services under restricted resources. We examine whether hospital policy can stimulate hospital TFP growth. We exploit variation across German federal states in the period 1993–2013. State governments decide on hospital capacity planning (number of hospitals, departments, and beds), ownership, medical students, and hospital investment funding. We show that TFP growth in German hospital care reflects quality improvements rather than increases in output volumes. Second‐stage regression results indicate that reducing the length of stay is generally a proper way to foster TFP growth. The effects of other hospital policies depend on the reimbursement scheme: Under activity‐based (German Diagnosis‐related Group) hospital funding, scope‐related policies (privatization and specialization) come with TFP growth. Under fixed daily rate funding, scale matters to TFP (hospital size and occupancy rates). Differences in capitalization in East and West Germany allow to show that deepening capital may enhance TFP growth if capital is scarce. We also show that there is less scope for hospital policies after large‐scale restructurings of the hospital sector. Copyright © 2016 John Wiley & Sons, Ltd.

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  • Alexander Karmann & Felix Roesel, 2017. "Hospital Policy and Productivity – Evidence from German States," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 1548-1565, December.
    • Handle: RePEc:wly:hlthec:v:26:y:2017:i:12:p:1548-1565
    DOI: 10.1002/hec.3447
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    Cited by:

    1. Niklas Potrafke, 2020. "Dragnet-Controls and Government Ideology," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(5), pages 485-501, July.
    2. Insa Koné & Bettina Maria Zimmermann & Karin Nordström & Bernice Simone Elger & Tenzin Wangmo, 2019. "A scoping review of empirical evidence on the impacts of the DRG introduction in Germany and Switzerland," International Journal of Health Planning and Management, Wiley Blackwell, vol. 34(1), pages 56-70, January.
    3. 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.
    4. Björn Kauder & Manuela Krause & Niklas Potrafke, 2021. "Do Left-wing Governments Decrease Wage Inequality among Civil Servants? Empirical Evidence from the German States," Public Finance Review, , vol. 49(1), pages 106-135, January.
    5. Potrafke, Niklas & Roesel, Felix, 2020. "The urban–rural gap in healthcare infrastructure: does government ideology matter?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 54(3), pages 340-351.
    6. Avdic, Daniel & Moscelli, Giuseppe & Pilny, Adam & Sriubaite, Ieva, 2019. "Subjective and objective quality and choice of hospital: Evidence from maternal care services in Germany," Journal of Health Economics, Elsevier, vol. 68(C).
    7. Daniel Avdic & Tugba Bueyuekdurmus & Giuseppe Moscelli & Adam Pilny & Ieva Sriubaite, 2018. "Subjective and objective quality reporting and choice of hospital: Evidence from maternal care services in Germany," CINCH Working Paper Series 1803, Universitaet Duisburg-Essen, Competent in Competition and Health.
    8. Adam Pilny & Felix Roesel, 2020. "Are Doctors Better Health Ministers?," American Journal of Health Economics, University of Chicago Press, vol. 6(4), pages 498-532.
    9. Levaggi, Laura & Levaggi, Rosella, 2020. "Is there scope for mixed markets in the provision of hospital care?," Social Science & Medicine, Elsevier, vol. 247(C).
    10. See, Kok Fong & Ng, Ying Chu, 2021. "Do hospital reform and ownership matter to Shenzhen hospitals in China? A productivity analysis," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 145-155.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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