Skip to main content
SpringerLink
Log in

Employment effects of hospital privatization in Germany

  • Original Paper
  • Published:
The European Journal of Health Economics Aims and scope Submit manuscript

Abstract

The main argument for the ongoing privatization process is that privatization will lead to an increase in efficiency, which has been confirmed by a large number of studies. An important argument against privatization is that privatization may lead to employment reductions. In the hospital sector, potential employment reductions might also lead to a decrease in the quality of care. This is the first study to investigate the employment effects of different types of hospital privatization (i.e., for-profit vs non-profit privatization) on different categories of staff. A combination of propensity score matching and difference-in-difference methods was used to identify the causal effect. We found large employment reductions after for-profit privatization, while there were no permanent reductions after non-profit privatization. Moreover, even for-profit privatization does not affect all types of staff. While there are large reductions in non-clinical staff, we could not detect any reduction in the number of physicians. The consequences of the detected employment effects of privatization have to be addressed in greater detail in future research.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. Megginson, W.L., Netter, J.M.: From state to market: a survey of empirical studies on privatization. J. Econ. Lit. 39(2), 321–389 (2001)

    Article  Google Scholar 

  2. Tiemann, O., Schreyögg, J.: Changes in hospital efficiency after privatization. Health Care Man. Sci. 15(4), 310–326 (2012)

    Article  Google Scholar 

  3. López-de-Silanes, F., Shleifer, A., Vishny, R.W.: Privatization in the United States. RAND J. Econ. 28(3), 447–471 (1997)

    Article  Google Scholar 

  4. Megginson, W.L.: The financial economics of privatization. Oxford University Press, USA (2005)

    Book  Google Scholar 

  5. Statistical Office of Germany: Betriebswirtschaftliche Eckdaten von Krankenhäusern (2011)

  6. Aiken, L.H., Clarke, S.P., Sloane, D.M., Sochalski, J., Silber, J.H.: Hospital nurse staffing and patient mortality, nurse burnout, and job dissatisfaction. JAMA J. Am. Med. Assoc. 288(16), 1987–1993 (2002)

    Article  Google Scholar 

  7. Aiken, L.H., Sloane, D.M., Lake, E.T., Sochalski, J., Weber, A.L.: Organization and outcomes of inpatient AIDS care. Med. Care 37(8), 760 (1999)

    Article  CAS  PubMed  Google Scholar 

  8. Rafferty, A.M., Clarke, S.P., Coles, J., Ball, J., James, P., McKee, M., Aiken, L.H.: Outcomes of variation in hospital nurse staffing in English hospitals: cross-sectional analysis of survey data and discharge records. Int. J. Nurs. Stud. 44(2), 175–182 (2007)

    Article  PubMed Central  PubMed  Google Scholar 

  9. Tarnow-Mordi, W., Hau, C., Warden, A., Shearer, A.: Hospital mortality in relation to staff workload: a 4-year study in an adult intensive-care unit. Lancet 356(9225), 185–189 (2000)

    Article  CAS  PubMed  Google Scholar 

  10. Augurzky, B., Engel, D., Schmidt, C.M., Schwierz, C.: Ownership and financial sustainability of German acute care hospitals. Health Econ. 21(7), 811–824 (2012)

    Article  PubMed  Google Scholar 

  11. Barbetta, G.P., Turati, G., Zago, A.M.: Behavioral differences between public and private not-for-profit hospitals in the Italian national health service. Health Econ. 16(1), 75–96 (2007)

    Article  PubMed  Google Scholar 

  12. Farsi, M., Filippini, M.: Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland. Health Econ. 17(3), 335–350 (2008)

    Article  PubMed  Google Scholar 

  13. Herr, A.: Cost and technical efficiency of German hospitals: does ownership matter? Health Econ. 17(9), 1057–1071 (2008)

    Article  PubMed  Google Scholar 

  14. Herr, A., Schmitz, H., Augurzky, B.: Profit efficiency and ownership of German hospitals. Health Econ. 20(6), 660–674 (2011)

    Article  PubMed  Google Scholar 

  15. Jensen, P.H., Webster, E., Witt, J.: Hospital type and patient outcomes: an empirical examination using AMI readmission and mortality records. Health Econ. 18(12), 1440–1460 (2009)

    Article  PubMed  Google Scholar 

  16. Milcent, C.: Hospital ownership, reimbursement systems and mortality rates. Health Econ. 14(11), 1151–1168 (2005)

    Article  PubMed  Google Scholar 

  17. Schwierz, C.: Expansion in markets with decreasing demand-for-profits in the German hospital industry. Health Econ. 20(6), 675–687 (2011)

    Article  PubMed  Google Scholar 

  18. Pilyavsky, A., Staat, M.: Health care in the CIS countries. Eur. J. Health Econ. 7(3), 185–191 (2006)

    Article  Google Scholar 

  19. Steinmann, L., Dittrich, G., Karmann, A., Zweifel, P.: Measuring and comparing the (in)efficiency of German and Swiss hospitals. Eur. J. Health Econ. 5(3), 216–226 (2004)

    Article  PubMed  Google Scholar 

  20. Picone, G., Chou, S.Y., Sloan, F.: Are for-profit hospital conversions harmful to patients and to Medicare? RAND J. Econ. 33(3), 507–523 (2002)

    Article  PubMed  Google Scholar 

  21. Shen, Y.C.: Changes in hospital performance after ownership conversions. Inquiry 40(3), 217–234 (2003)

    PubMed  Google Scholar 

  22. Federal Statistical Office of Germany: Krankenhausstatistik (Teil I: Grunddaten, Teil II: Diagnosen und Teil III: Kostennachweis) der Jahre 1996–2008, Antrag 1133-2009. (2011)

  23. Carey, K.: A panel data design for estimation of hospital cost functions. Rev. Econ. Stat. 79(3), 443–453 (1997)

    Article  Google Scholar 

  24. Shleifer, A.: A theory of yardstick competition. RAND J. Econ. 16(3), 319–327 (1985)

    Article  Google Scholar 

  25. Schreyögg, J., Tiemann, O., Busse, R.: Cost accounting to determine prices: how well do prices reflect costs in the German DRG-system? Health Care Man. Sci. 9(3), 269–279 (2006)

    Article  Google Scholar 

  26. Blundell, R., Dias, M.C.: Evaluation methods for non-experimental data. Fiscal Stud. 21(4), 427–468 (2000)

    Article  Google Scholar 

  27. Rubin, D.B.: The use of matched sampling and regression adjustment to remove bias in observational studies. Biometrics 29(1), 185–203 (1973)

    Article  Google Scholar 

  28. Smith, J.A., Todd, P.E.: Does matching overcome LaLonde’s critique of nonexperimental estimators? J. Econ. 125(1–2), 305–353 (2005)

    Article  Google Scholar 

  29. Girma, S., Görg, H.: Evaluating the foreign ownership wage premium using a difference-in-differences matching approach. J. Int. Econ. 72(1), 97–112 (2007)

    Article  Google Scholar 

  30. Lehto, E., Böckerman, P.: Analysing the employment effects of mergers and acquisitions. J. Econ. Behav. Organ. 68(1), 112–124 (2008)

    Article  Google Scholar 

  31. Austin, P.C.: A critical appraisal of propensity-score matching in the medical literature between 1996 and 2003. Stat. Med. 27(12), 2037–2049 (2008)

    Article  PubMed  Google Scholar 

  32. Austin, P.C.: Some methods of propensity-score matching had superior performance to others: results of an empirical investigation and Monte Carlo simulations. Biom. J. 51(1), 171–184 (2009)

    Article  PubMed  Google Scholar 

  33. Rosenbaum, P.R.: Optimal matching for observational studies. J. Am. Stat. Assoc. 84(408), 1024–1032 (1989)

    Article  Google Scholar 

  34. Imai, K., King, G., Stuart, E.A.: Misunderstandings between experimentalists and observationalists about causal inference. J. R. Stat. Soc. Ser. A 171(2), 481–502 (2008)

    Article  Google Scholar 

  35. Palangkaraya, A., Yong, J.: Effects of competition on hospital quality: an examination using hospital administrative data. Eur. J. Health Econ. 14(3), 1–15 (2012)

    Google Scholar 

  36. Tiemann, O., Schreyögg, J.: Effects of ownership on hospital efficiency in Germany. BuR. 2(2), 115–145 (2009)

  37. Cook, A., Gaynor, M., Stephens Jr, M., Taylor, L.: The effect of a hospital nurse staffing mandate on patient health outcomes: evidence from California’s minimum staffing regulation. J. Health Econ. 31(2), 340–348 (2012)

    Article  PubMed  Google Scholar 

  38. Ludwig, M., Van Merode, F., Groot, W.: Principal agent relationships and the efficiency of hospitals. Eur. J. Health Econ. 11(3), 291–304 (2010)

    Article  PubMed Central  PubMed  Google Scholar 

  39. Thomas, J.W., Hofer, T.P.: Accuracy of risk-adjusted mortality rate as a measure of hospital quality of care. Med. Care 37(1), 83 (1999)

    Article  CAS  PubMed  Google Scholar 

  40. Busse, R., Nimptsch, U., Mansky, T.: Measuring, monitoring, and managing quality in Germany’s hospitals. Health Aff. 28(2), 294–304 (2009)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Hamburg Center for Health Economics, University of Hamburg, Esplanade 36, 20354, Hamburg, Germany

    Mareike Heimeshoff, Jonas Schreyögg & Oliver Tiemann

Authors
  1. Mareike Heimeshoff
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jonas Schreyögg
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Oliver Tiemann
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Mareike Heimeshoff.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Heimeshoff, M., Schreyögg, J. & Tiemann, O. Employment effects of hospital privatization in Germany. Eur J Health Econ 15, 747–757 (2014). https://doi.org/10.1007/s10198-013-0520-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10198-013-0520-1

Keywords

JEL Classification

Search

Navigation