Hospital ownership and efficiency: a review of studies with particular focus on Germany

The German hospital market has been subject over the past two decades to a variety of healthcare reforms. Particularly the introduction of diagnosis-related groups (DRGs) in 2004 aimed to increase efficiency of hospitals. The objective of the paper is to review recent studies comparing the efficiency of German public, private non-profit and private for-profit hospitals. The results of the studies are quite mixed. However, in line with the evidence found in studies from other countries, especially the US, the evidence from Germany suggests that private ownership (i.e., private non-profit and private for-profit) is not necessarily associated with higher efficiency compared to public ownership. This may be a surprising result to many policy makers as private for-profit hospitals are often perceived the most efficient ownership type by the public.     

Patient satisfaction in Bangkok: the impact of hospital ownership and patient payment status.

INTRODUCTION: Patient satisfaction with care received is an important dimension of evaluation that is examined only rarely in developing countries. Evidence about how satisfaction differs according to type of provider or patient payment status is extremely limited. OBJECTIVE: To (i) compare patient perceptions of quality of inpatient and outpatient care in hospitals of different ownership and (ii) explore how patient payment status affected patient perception of quality. METHODS: Inpatient and outpatient satisfaction surveys were implemented in nine purposively selected hospitals: three public, three private for-profit and three private non-profit. RESULTS: Clear and significant differences emerged in patient satisfaction between groups of hospitals with different ownership. Non-profit hospitals were most highly rated for both inpatient and outpatient care. For inpatient care public hospitals had higher levels of satisfaction amongst clientele than private for-profit hospitals. For example 76% of inpatients at public hospitals said they would recommend the facility to others compared with 59% of inpatients at private for-profit hospitals. This pattern was reversed for outpatient care, where public hospitals received lower ratings than private for-profit ones. Patients under the Social Security Scheme, who are paid for on a capitation basis, consistently gave lower ratings to certain aspects of outpatient care than other patients. For inpatient care, patterns by payment status were inconsistent and insignificant. CONCLUSIONS: The survey confirms, to some extent, the stereotypes about quality of care in hospitals of different ownership. The results on payment status are intriguing but warrant further research.     

Changes in hospital efficiency after privatization

We investigated the effects of privatization on hospital efficiency in Germany. To do so, we obtained bootstrapped data envelopment analysis (DEA) efficiency scores in the first stage of our analysis and subsequently employed a difference-in-difference matching approach within a panel regression framework. Our findings show that conversions from public to private for-profit status were associated with an increase in efficiency of between 2.9 and 4.9%. We defined four alternative post-privatization periods and found that the increase in efficiency after a conversion to private for-profit status appeared to be permanent. We also observed an increase in efficiency for the first three years after hospitals were converted to private non-profit status, but our estimations suggest that this effect was rather transitory. Our findings also show that the efficiency gains after a conversion to private for-profit status were achieved through substantial decreases in staffing ratios in all analyzed staff categories with the exception of physicians and administrative staff. It was also striking that the efficiency gains of hospitals converted to for-profit status were significantly lower in the diagnosis-related groups (DRG) era than in the pre-DRG era. Altogether, our results suggest that converting hospitals to private for-profit status may be an effective way to ensure the scarce resources in the hospital sector are used more efficiently.     

Hospital mission and cost differences.

The results show no significant differences on average length of stay, cost per patient day, or cost per admission among non-profit, government, and for-profit hospitals when controlling for bed capacities, occupancy rates, number of Medicare/Medicaid days, and hospitals without nurseries. For-profit hospital manhours per patient day were significantly lower than non-profit and government hospitals. This is an important finding because patient-care delivery is labor-intensive. A majority of for-profit hospitals do not have nurseries, which means that they should have more manhours per patient day. As indicated earlier, the manhours for hospitals with nurseries are higher than those for hospitals without nurseries. This indicates cost-cutting behavior on the part of a majority of for-profit hospitals. This method of limiting expenditures by decreasing labor costs associated with certain services is consistent with profit-maximization. The findings of this study with regard to cost differences among non-profit and for-profit hospitals contradict previous research. However, a recent study by Kralewski, Gifford and Porter (1988) noted that whereas ownership, when considered alone, differentiates hospitals, when evaluated within each community, most of the investor-owned and non-for-profit hospital differences disappear. Similar questions have been raised as to whether non-profit hospitals truly differ from for-profit hospitals (Pauly 1987). Caution needs to be exercised in attempting to extrapolate the findings of this study, because of the dynamic health care environment. Hospital ownership changes over time, reimbursement rules affect behavior, and internal factors in organizational operation affect outcomes. These should be considered in future studies exploring organizational mission and cost differences.     

公立医院改制的动力、特点与相关政策

该文根据现场调查,对公立医院转制为民办非营利性医院或民办营利性医院的动力和阻力进行了角色分析,揭示了目前公立医院转制的特点和问题,并对公立医院的改制提出了政策建议:建立公立医院转制的原则和程序,制定医院资产评估和拍卖的管理办法,转化医院职工的身份,减少改革成本.     

Community benefits in a changing health care market

Market changes in the health industry--mergers, acquisitions, and other transactions--are eliminating many of the traditional sources of care for people who have no insurance or poor coverage. There are fewer public or private nonprofit hospitals with a charitable mission. Moreover, through Medicaid contracting, a portion of the funds that once supported broad public health goals now go to private HMOs that serve only their own members. Advocates are responding with the demand that health providers--nonprofit and for-profit, hospitals and health plans--collaborate with the residents of communities where they do business to improve people's health.     

不同举办主体的两家非营利性医疗机构历史和现状的比较

目的 :比较两家不同举办主体的医疗机构在发展历程、规模、服务能力的差异,揭示社会资本办医之困境。方法 :通过深度访谈和问卷调查,对两家医院历史和运营数据进行描述性分析。结果 :两家不同举办主体的医疗机构,在发展演变、医院规模、医疗服务能力等方面存在差异。结论 :管理创新是促进民营医院发展的重要因素;人才短缺是制约民营医院发展的重要因素;政府扶持是保证民营医院发展的重要因素。     

不同举办主体的两家非营利性医疗机构财务经营和持续发展比较研究

目的:比较两家不同举办主体的医疗机构在经济运行情况和社会效益方面的差异,揭示社会资本办医之困境。方法 :通过深度访谈和问卷调查,对两家医院经济运行和社会效益等指标和数据进行描述性分析。结果 :两家不同举办主体的医疗机构,在经济运行状况和持续发展能力方面存在差异。结论 :公立医院的经济运行状况和持续发展能力好于民营医院。     

A Financial Ratio Analysis of For-Profit and Non-Profit Rural Referral Centers

ABSTRACT:  Context: National financial data show that rural referral center (RRC) hospitals have performed well financially. RRC hospitals' median cash flow margin ratio was 10.04% in 2002 and grew to 11.04% in 2004. Purpose: The aim of this study is to compare the ratio analysis of key operational and financial performance measures of for-profit RRCs to those of private, non-profit RRCs. Methods: To control for accounting aberrations within a given year, we selected RRCs that reported 3 consecutive fiscal years of Centers for Medicare and Medicaid Services (CMS) cost report data, starting with fiscal year 2004 and ending with fiscal year 2006. Given a limited sample size of 28 for-profit RRCs and 127 non-profits, we used the non-parametric median test to assess median differences in operational and key financial measures between the 2 groups. Findings: For-profit RRCs treated less complex cases and reported fewer discharges per bed and fewer occupied beds than did non-profits. However, for-profit RRCs staffed their beds with fewer full-time-equivalent (FTE) personnel and served a higher proportion of Medicaid patients. For-profit RRCs generated operating cash flow margins in excess of 19%, compared to only 8.1% for non-profits, and maintained newer plant and equipment. Conclusion: For-profit RRCs generated a substantially higher cash flow margin by controlling their operating costs.     

Hospitals, managed care, and the charity caseload in California

We ask whether increasing HMO penetration causes hospitals to cut back on charity care using California hospital discharge data for 1988-1996. There is little evidence at the hospital level that private hospitals respond to HMOs by turning away uninsured and/or Medicaid patients. In the for-profit sector hospitals actually reduce the share of privately insured patients and increase the shares of Medicare patients and Medicaid births. Apparently, HMO penetration reduces the price paid by privately insured patients, making them relatively less attractive to for-profit hospitals.     

The Changing Landscape of Hospital Capacity in Large Cities and Suburbs: Implications for the Safety Net in Metropolitan America

An analysis of trends in hospital use and capacity by ownership status and community poverty levels for large urban and suburban areas was undertaken to examine changes that may have important implications for the future of the hospital safety net in large metropolitan areas. Using data on general acute care hospitals located in the 100 largest cities and their suburbs for the years 1996, 1999, and 2002, we examined a number of measures of use and capacity, including staffed beds, admissions, outpatient and emergency department visits, trauma centers, and positron emission tomography scanners. Over the 6-year period, the number of for-profit, nonprofit, and public hospitals declined in both cities and suburbs, with public hospitals showing the largest percentage of decreases. By 2002, for-profit hospitals were responsible for more Medicaid admissions than public hospitals for the 100 largest cities combined. Public hospitals, however, maintained the longest Medicaid average length of stay. The proportion of urban hospital resources located in high poverty cities was slightly higher than the proportion of urban population living in high poverty cities. However, the results demonstrate for the first time, a highly disproportionate share of hospital resources and use among suburbs with a low poverty rate compared to suburbs with a high poverty rate. High poverty communities represented the greatest proportion of suburban population in 2000 but had the smallest proportion of hospital use and specialty care capacity, whereas the opposite was true of low poverty suburbs. The results raise questions about the effects of the expanding role of private hospitals as safety net providers, and have implications for poor residents in high poverty suburban areas, and for urban safety net hospitals that care for poor suburban residents in surrounding communities.     

Association of ownership and system affiliation with the financial performance of rehabilitation hospitals.

This study used a cross-sectional design in which regression models were used to test the association of ownership and system affiliation of private rehabilitation hospitals with profit, revenue and expense measures. The study also examined the association of ownership and system affiliation with other choice variables. The study found that new for-profit rehabilitation hospitals had higher revenues and expenses than older non-profit rehabilitation hospitals. In addition, new for-profit hospitals charged more for their ancillary services and treated more of their patients on an inpatient basis. Study findings show higher revenues and expenses per adjusted discharge for new for-profit facilities. Given the cost-based system of reimbursement for Medicare, there appears to be a strong incentive for new for-profits to maximize costs.     

The effects of ownership and ownership change on nursing home industry costs.

OBJECTIVE. This study examines the effects of ownership type and ownership change on nursing home cost structures, differentiating patient care costs from plant costs. DATA SOURCES. Administrative data from the Michigan Department of Social Services, Medical Services Administration (Medicaid), and the Michigan Department of Public Health are used. Cost data are based on audited cost reports for 393 nursing care facilities in Michigan in 1989. Other facility characteristics are based on data from the 1989 annual licensing and certification survey conducted by the Michigan Department of Public Health. STUDY DESIGN. A series of ordinary least squares regressions is estimated, in which the dependent variable is either per diem patient costs or per diem plant costs. Ownership types are defined as chain, proprietary non-chain, freestanding non-profit, government-owned, and hospital-based facilities. Pooled estimation techniques, as well as separate regressions by ownership type, are presented to test for interaction effects. Key variables include whether a facility changed ownership in the preceding five years and whether chain facilities are in-state- or out-of-state-owned, in addition to size, payer mix, and case mix. PRINCIPAL FINDINGS. Behavioral differences among nursing home ownership types in respect to patient care costs tended to distinguish government-owned and hospital-based facilities from the freestanding homes rather than the usual distinction between for-profit and not-for-profit classes. Variables traditionally included in nursing home cost studies, such as size, occupancy, payer mix and case mix, were found to have similar effects on per diem patient care costs for freestanding non-profit homes as well as for chain proprietary facilities. With regard to the effects of ownership change on per diem plant and per diem patient costs, however, there are few differences among ownership types. Chain and non-chain for-profit facilities, non-profit homes, and hospital long-term care units that had changed ownership reported significantly higher per diem plant costs than facilities without a change of ownership, but did not spend more on patient-related costs. Michigan Medicaid plant reimbursement system policy changes instituted in 1985 to promote continued ownership of facilities were not entirely successful. CONCLUSIONS. Non-profit homes look increasingly like their for-profit counterparts with respect to spending on patient care costs. Increased competition for the more lucrative private-pay patients, coupled with declining state Medicaid reimbursement to nursing homes, may have blurred the historical distinctions between the non-profit and for-profit sectors in the nursing home industry. An exception to increasing homogeneity within the nursing home industry is the tendency of proprietary homes to experience more frequent changes of ownership, which results in higher capital costs passed on to state Medicaid programs. Findings from this study indicate that while facility sales increase per diem plant costs, they do not result in increased spending for direct patient care, suggesting that state Medicaid programs may be indirectly subsidizing facility sales with no accompanying increase in expenditures for patient care. To discourage frequent facility sales, state Medicaid programs may need to consider alternative methods of reimbursing nursing home owners for capital costs.     

Do hospitals respond to changing incentive structures? Evidence from Medicare’s 2007 DRG restructuring

In 2007, the Centers for Medicare and Medicaid restructured the diagnosis related group (DRG) system by expanding the number of categories within a DRG to account for complications present within certain conditions. This change allows for differential reimbursement depending on the severity of the case. We examine whether this change incentivized hospitals to upcode patients as sicker to increase their reimbursements. Using the National Inpatient Survey data from HCUP from 2005 to 2010 and three methods to detect the presence of upcoding, our most conservative estimate is an additional three percent of reimbursement is attributable to upcoding. We find evidence of upcoding in government, non-profit, and for-profit hospitals. We find spillover effects of upcoding impacting not only Medicare payers, but also private insurance companies as well.     

The Impact of Asymmetric Information and Ownership on Nursing Home Access

A consistent pattern in the nursing home industry is that non-profit institutions serve a lower proportion of Medicaid patients than do for-profit facilities. This is contrary to the expectation that non-profit, altruistically motivated firms should serve a larger proportion of the less profitable Medicaid patients than proprietary firms. The literature confirms this pattern empirically, but provides no theoretical basis for it, which is the contribution of this paper. Specifically, we show theoretically that information disparities between providers and consumers regarding quality fosters an environment in which the percentage of uninformed consumers is a key factor in determining public-private patient mix.JEL classification: I11, L31     

On the efficiency of public, welfare and private hospitals in Germany over time: a sectoral data envelopment analysis study.

This paper examines the efficiency of the German hospital sector over time and the relative efficiency of public, welfare (both nonprofit) and private (for-profit) hospital sectors using data from the Federal Statistics Office of German hospitals. Efficiency scores were computed using data envelopment analysis. The absolute efficiency of the hospital sector as a whole was found to have improved between 1991 and 1996. In this comparison, the empirical results showed that the hospitals in the public and welfare sector are relatively more efficient than private hospitals. Our results suggest that public, welfare and private hospital sectors have different best-practice frontiers; and that public and welfare hospital sectors appear to use relatively fewer resources than private hospitals. These results suggest differences in quality of care arising from ownership.     

Profits in medicine: a context and an accounting.

The U.S. health care industry is composed of a dynamic mixture of profit and non-profit entities. These sectors sometimes compete in the same activities and may have virtual monopolies over other activities. Estimates of the relative and absolute sizes and growth trends of the profit and non-profit sectors are developed in this article. These estimates show that approximately 39 percent of total health care expenditures in the U.S. in 1975 went to for-profit institutions, generating $3.3 billion in profit. This represented 7 percent of for-profit and 2.8 percent of total expenditures. Some for-profit subsectors grew more rapidly and others less rapidly than total health care expenditures. As a whole, the for-profit sector grew faster than the non-profit sector before and after Medicare and Medicaid were introduced as well as during the period when price controls were in effect. The relative growth of the for-profit sector was greatest right after the introduction of Medicare and Medicaid. The true significance of profit lies not in numbers, but in the effects that the drive for profit have on the nature and quality of health and health care. This is discussed in the final section.     

昆明市社会办医近五年政策回顾及成效分析

本文进行近五年云南省昆明市社会办医政策的回顾,从准入、支持、监管3方面系统整理现行政策要点。对2011年至2014年昆明市民营医院发展情况进行梳理,认为市场鱼目混珠,社会观念仍未转变,政策仍不全面,缺乏优秀人才是阻碍社会办医发展的障碍。同时建议以公立医疗机构为主导、非公立医疗机构共同发展的原则下,大力推进与扶持社会办医力量;制定具体化及长久化政策;增强市场监管,打造诚信品牌,转变社会观念。以期为全国其他地区鼓励社会办医发展的政策制定提供经验借鉴。     

Provision of sexual health services to adolescent enrollees in Medicaid managed care

OBJECTIVES: This Seattle project measured sexual health services provided to 1112 Medicaid managed care enrollees aged 14 to 18 years. METHODS: Three health maintenance organizations (HMOs) that provide Medicaid services for a capitated rate agreed to participate. These included a non-profit staff-model HMO, a for-profit independent practice association (IPA), and a non-profit alliance of community clinics. Analyses used health maintenance organizations' administrative data, chart reviews, and Medicaid encounter data. RESULTS: Health maintenance organizations provided primary care to 54% and well care to 20% of Medicaid enrollees. Girls were more likely than boys to have their sexual history taken or to be given condom counseling. Only 27% of sexually active girls were tested for chlamydia, with significantly lower rates of testing among those who spoke English as a second language. The nonprofit staff-model plan outperformed the for-profit independent practice association on most measures. CONCLUSIONS: Substantial room for improvement exists in sexual health services delivery to adolescent Medicaid managed care enrollees.