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.
Similar content being viewed by others
Notes
It needs to be mentioned that most of those studies were conducted in a managed care environment.
A list of the excluded ICD codes can be found in Table 6 in the Online appendix.
A list of all OPS codes considered in our analysis can be found in Table 8 in the Online appendix.
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.
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.
A list of the considered ICD codes can be found in Table 9 in the Online appendix.
The spatial error model is a special case of the SDM if \(~\theta = - \rho \beta\).
References
OECD: Competition in Hospitals Services. http://www.oecd.org/daf/competition/50527122.pdf (2012). Accessed 4 June 2018
Gaynor, M., Town, R.J.: Competition in Health Care Markets. In: Pauly, M.V., Mcguire T.G., Barros, P.P. (eds.) Handbook of Health Economics, pp. 499–637. Elsevier: (2011)
Melnick, G.A., Zwanziger, J., Bamezai, A., Pattison, R.: The effects of market structure and bargaining position on hospital prices. J. Health Econ. 11(3), 217–233 (1992)
Kessler, D.P., McClellan, M.B.: Is hospital competition socially wasteful? Q. J. Econ. (2000). https://doi.org/10.1162/003355300554863
Cooper, Z., Gibbons, S., Jones, S., McGuire, A.: Does hospital competition save lives? Evidence from the English NHS patient choice Reforms. Econ. J. (London, England) (2011). https://doi.org/10.1111/j.1468-0297.2011.02449.x
Braun, T., Rau, F., Tuschen, K.H.: Die DRG-Einführung aus gesundheitspolitischer Sicht. Eine Zwischenbilanz. In: Klauber, J., Robra, B.-P., Schellschmidt, H. (eds.) Krankenhausreport 2007. Krankenhausvergütung - Ende der Konvergenzphase? vol. 2007. Schattauer, Stuttgart [u.a.] (2007)
Geissler, A., Scheller-Kreinsen, D., Busse, R.: Germany: Understanding G-DRGs. In: Busse, R., Geissler, A., Quentin, W., Wiley, M. (eds.) Diagnosis-related groups in Europe. Moving towards transparency, efficiency and quality in hospitals. European Observatory on Health Systems and Policies series, pp. 243–271. Open University Press, Maidenhead (2011)
Cots, F., Chiarello, X.S., Castells, X., Quentin, W.: DRG-based hospital payment: Intended and unintended consequences. In: Busse, R., Geissler, A., Quentin, W., Wiley, M. (eds.) Diagnosis-related groups in Europe. Moving towards transparency, efficiency and quality in hospitals. European Observatory on Health Systems and Policies series, pp. 75–92. Open University Press, Maidenhead (2011)
Augurzky, B., Gülker, R., Mennicken, R., Felder, S., Meyer, S., Wasem, J., Gülker, H., Siemssen, N.: Mengenentwicklung und Mengensteuerung stationärer Leistungen: Endbericht - Mai 2012. Forschungsprojekt im Auftrag des GKV Spitzenverbandes: (2012)
Reifferscheid, A., Thomas, D., Wasem, J.: Zehn Jahre DRG-System in Deutschland - Theoretische Anreizwirkungen und empirische Evidenz. In: Klauber, J., Geraedts, M., Friedrich, J., Wasem, J. (eds.) Krankenhausreport 2013. Mengendynamik: mehr Menge, mehr Nutzen? Schattauer, Stuttgart (2013)
Augurzky, B., Kopetsch, T., Schmitz, H.: What accounts for the regional differences in the utilisation of hospitals in Germany? Eur J Health Econ (2013). https://doi.org/10.1007/s10198-012-0407-6
Nolting, H.Z.K., Deckenbach, B., Gottberg, A.L.K., Klemperer, D., Westrick, G., Schwenk, M.: U.: Healthcare fact check. Regional Variations in German Healthcare. https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/Report_VV_FC_Regional_variations_2011.pdf (2011). Accessed 23 May 2017
Storz-Pfennig, P.: Germany: Geographic variations in health care. In: OECD Health Policy Studies, pp. 245–265. OECD Publishing (2014)
Kumar, A., Schoenstein, M.: Managing Hospital Volumes: Germany and Experiences from OECD Countries. OECD Health Working Papers: (2013). https://doi.org/10.1787/5k3xwtg2szzr-en
Arrow, K.J.: Uncertainty and the Welfare Economics of Medical Care. Am. Econ. Rev. 53, 941–973 (1963)
Richardson, J.R.J., Peacock, S.J.: Supplier-induced demand. Appl. Health Econ. Health Policy (2006). https://doi.org/10.2165/00148365-200605020-00003
Roemer, M.: Bed supply and hospital utilization: a natural experiment. Hospitals 35, 36–42 (1961)
Fuchs, V.R.: The supply of surgeons and the demand for operations. J. Hum. Resour (1978). https://doi.org/10.2307/145247
Ellis, R.P., McGuire, T.G.: Provider behavior under prospective reimbursement. Cost sharing and supply. J. Health Econ. 5(2), 129–151 (1986)
Robinson, J.C., Luft, H.S.: The impact of hospital market structure on patient volume, average length of stay, and the cost of care. J Health Econ 4(4), 333–356 (1985)
Lüngen, M., Büscher, G.: Mengensteigerung in der stationären Versorgung: Wo liegt die Ursache? In: Klauber, J., Geraedts, M., Friedrich, J., Wasem, J. (eds.) Krankenhausreport 2013. Mengendynamik: mehr Menge, mehr Nutzen? Schattauer, Stuttgart (2013)
Steffen, P., Offermanns, M.: Erfolgskritische Faktoren von Krankenhausfusionen. Forschungsgutachten im Auftrag der Schubert Unternehmensgruppe und der Bank für Sozialwirtschaft. Deutsches Krankenhausinstitut (2011)
Ward, M.D., Gleditsch, K.S.: Spatial Regression Models. Sage university papers series. Quantitative Applications in the Social Sciences, vol. 155. Sage Publications, Thousand Oaks (2008)
Skinner, J.: Causes and consequences of regional variations in health care. In: Pauly, M.V., Mcguire T.G., Barros, P.P. (eds.) Handbook of Health Economics, pp. 45–93. Elsevier (2011)
Pierdzioch, S.: Preisbereinigung der Dienstleistungen von Krankenhäusern in den Volkswirtschaftlichen Gesamtrechnungen. Wirtschaft und Statistik. 10, 845–851 (2008)
Rhoades, S.A.: Market share inequality, the HHI, and other measures of the firm-composition of a market. Rev Ind Organ. (1995). https://doi.org/10.1007/BF01024300
Motta, M.: Competition Policy. Theory and Practice. Cambridge University Press, Cambridge (2004)
Schmid, A., Ulrich, V.: Konzentration und Marktmacht bei Krankenhäusern. Gesundh ökon Qual Manag. (2012). https://doi.org/10.1055/s-0031-1273379
Schmid, A., Ulrich, V.: Consolidation and concentration in the German hospital market: The two sides of the coin. Health Policy. (2013). https://doi.org/10.1016/j.healthpol.2012.08.012
Judge, A., Welton, N.J., Sandhu, J., Ben-Shlomo, Y.: Geographical variation in the provision of elective primary hip and knee replacement: the role of socio-demographic, hospital and distance variables. J. Public Health. (2009). https://doi.org/10.1093/pubmed/fdp061
Deutsche Krankenhausgesellschaft: Bestandsaufnahme zur Krankenhausplanung und Investitionsfinanzierung in den Bundesländern. http://www.dkgev.de/dkg.php/cat/159/aid/11446/title/Bestandsaufnahme_zur_Krankenhausplanung_und_Investitionsfinanzierung_in_den_Bundeslaendern_%28Stand%3A_Januar_2014%29 (2014). Accessed 23 May 2017
Schäfer, T., Pritzkuleit, R., Jeszenszky, C., Malzahn, J., Maier, W., Günther, K., Niethard, F.: Trends and geographical variation of primary hip and knee joint replacement in Germany. Osteoarthritis and Cartilage: (2013). https://doi.org/10.1016/j.joca.2012.11.006
Marmot, M.G., Wilkinson, R.G.: Social Determinants of Health, 2nd edn. Oxford University Press, Oxford (2011)
Joines, J.D., Hertz-Picciotto, I., Carey, T.S., Gesler, W., Suchindran, C.: A spatial analysis of county-level variation in hospitalization rates for low back problems in North Carolina. Soc Sci Med 56(12), 2541–2553 (2003)
Hawker, G.A., Guan, J., Croxford, R., Coyte, P.C., Glazier, R.H., Harvey, B.J., Wright, J.G., Williams, J.I., Badley, E.M.: A prospective population-based study of the predictors of undergoing total joint arthroplasty. Arth. Rheumat. (2006). https://doi.org/10.1002/art.22146
Gesundheitliche Lage der Männer in: Deutschland. Beiträge zur Gesundheitsberichterstattung des Bundes. Robert-Koch-Institut, Berlin (2014)
Eichhorst, W.: T.E.: Erwerbstätigkeit im Lebenszyklus. Benchmarking Deutschland: Steigende Beschäftigung bei Jugendlichen und Älteren. IZA Res. Rep. 34 (2011)
Mundlak, Y.: On the pooling of time series and cross section data. Econometrica (1978). https://doi.org/10.2307/1913646
Snijders, T.A.B., Bosker, R.J.: Multilevel analysis. An introduction to basic and advanced multilevel modeling, 2nd edn. Sage, Los Angeles (2012)
Elhorst, J.P.: Applied spatial econometrics: raising the bar. Spat. Econ. Anal. (2010). https://doi.org/10.1080/17421770903541772
Franzese, R.J., Hays, J.C.: Spatial Econometric Models of Cross-Sectional Interdependence in Political Science Panel and Time-Series-Cross-Section Data. Political Analysis: (2007). https://doi.org/10.1093/pan/mpm005
LeSage, J.P., Pace, R.K.: Introduction to spatial econometrics. Statistics, Textbooks and Monographs. CRC Press, Boca Raton (2009)
U.S. Department of Justice and the Federal Trade Commission: Horizontal Merger Guidelines. https://www.justice.gov/atr/horizontal-merger-guidelines-08192010#5c (2010). Accessed 23 May 2017
Kristensen, T., Bogetoft, P., Pedersen, K.M.: Potential gains from hospital mergers in Denmark. Health Care Manag. Sci. (2010). https://doi.org/10.1007/s10729-010-9133-8
Schäfer, T., Pritzkuleit, R., Hannemann, F., Günther, K., Malzahn, J., Niethard, F., Krauspe, R.: Trends und regionale Unterschiede in der Inanspruchnahme von Wirbelsäulemoperationen. In: Klauber, J., Geraedts, M., Friedrich, J., Wasem, J. (eds.) Krankenhausreport 2013. Mengendynamik: mehr Menge, mehr Nutzen? pp. 111–133. Schattauer, Stuttgart (2013) (2013)
Krabbe-Alkemade, Y.J.F.M., Groot, T.L.C.M., Lindeboom, M.: Competition in the Dutch hospital sector: an analysis of health care volume and cost. The European journal of health economics: HEPAC (2017). https://doi.org/10.1007/s10198-016-0762-9
Barros, P.P., Brouwer, W.B.F., Thomson, S., Varkevisser, M.: Competition among health care providers: helpful or harmful? Eur. J. Health Econ. HEPAC Health Econ. Prevent. Care (2016). https://doi.org/10.1007/s10198-015-0736-3
Gemeinsamer Bundesausschuss: Pressemitteilung: G-BA legt vier Leistungsbereiche für die Erprobung von Qualitätsverträgen fest. https://www.g-ba.de/downloads/34-215-688/18_2017-05-18_Qualitaetsvertraege_Leistungsbereiche.pdf (2017). Accessed 23 May 2017
RDC of the Federal Statistical Office and Statistical Offices of the Länder: DRG Statistic, 2006-2011, own calculations (2012)
BBSR Bonn: Inkar Daten. http://www.inkar.de/ (2018). Accessed 28 June 2018
Funding
This project was funded by the German Federal Ministry of Education and Research (BMBF, grant number 01EH1202A).
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflict of interest.
Ethics
An ethic approval was not required for this study.
Electronic supplementary material
Below is the link to the electronic supplementary material.
Rights and permissions
About this article
Cite this article
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
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10198-018-0990-2