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Trends and regional variation in rates of orthopaedic surgery in Germany: the impact of competition

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A Commentary to this article was published on 21 January 2020

Abstract

Competition in hospital services has been fostered in an increasing number of OECD countries with the goal that hospitals improve quality and/or efficiency. With the same intention competition has been promoted in Germany when introducing a system of prospective payments based on diagnosis-related groups (DRGs) in 2003. Beyond its intended effects, however, the reform led to a substantial increase in hospital activity, particularly for orthopaedic surgery. To shed more light on these developments, this paper analyses the relationship between the rates of certain orthopaedic surgical procedures and hospital competition across and within each of Germany’s 402 districts. We measured competition with the Herfindahl–Hirschman Index (HHI) based on market shares for hip replacements, knee replacements and spine surgeries. Using spatial panel regression, which allows for spatial dependency and unobserved individual heterogeneity, we found that the rate of hip and knee replacements rose as market concentration increased. A potential explanation might be that hospitals specialize in these particular procedures.

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Fig. 1
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Notes

  1. It needs to be mentioned that most of those studies were conducted in a managed care environment.

  2. A list of the excluded ICD codes can be found in Table 6 in the Online appendix.

  3. A list of all OPS codes considered in our analysis can be found in Table 8 in the Online appendix.

  4. The licensing of hospitals is regulated by Section 108 SGB V. If a hospital is licensed, it means that statutory health insurers absorb the costs of inpatient treatment for those patients who have statutory health insurance.

  5. For 2006, 2008 and 2010 we obtained the number of hospitals per 100,000 population in each district. Hospitals providing only psychiatric care and day clinics were excluded from the analysis to guarantee comparability of the hospitals in our sample. We imputed missing data for 2007, 2009 and 2011 through linear interpolation.

  6. A list of the considered ICD codes can be found in Table 9 in the Online appendix.

  7. The spatial error model is a special case of the SDM if \(~\theta = - \rho \beta\).

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Funding

This project was funded by the German Federal Ministry of Education and Research (BMBF, grant number 01EH1202A).

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Correspondence to Natalie Baier.

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Baier, N., Sax, LM. & Sundmacher, L. Trends and regional variation in rates of orthopaedic surgery in Germany: the impact of competition. Eur J Health Econ 20, 163–174 (2019). https://doi.org/10.1007/s10198-018-0990-2

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