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Efficiency, ownership, and financing of hospitals: The case of Austria

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Abstract

While standard economic theory posits that privately owned hospitals are more efficient than their public counterparts, no clear conclusion can yet be drawn for Austria in this regard. As previous Austrian efficiency studies rely on data from the 1990s only and are based on small hospital samples, the generalizability of these results is questionable. To examine the impact of ownership type on efficiency, we apply a Data Envelopment Analysis which extends the existing literature in two respects: first, it evaluates the efficiency of the Austrian acute care sector, using data on 128 public and private non-profit hospitals from the year 2010; second, it additionally focusses on the inpatient sector alone, thus increasing the comparability between hospitals. Overall, the results show that in Austria, private non-profit hospitals outperform public hospitals in terms of technical efficiency. A multiple regression analysis confirms the significant association between efficiency and ownership type. This conclusive result contrasts some international evidence and can most likely be attributed to differences in financial incentives for public and private non-profit hospitals in Austria. Therefore, by drawing on the example of the Austrian acute care hospital sector and existing literature on the German acute care hospital sector, we also discuss the impact of hospital financing systems and their incentives on efficiency. This paper thus also aims at providing a proof of principle, pointing out the importance of the respective market conditions when internationally comparing hospital efficiency by ownership type.

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Notes

  1. As Hollingsworth [31] shows in his review, DEA is the preferred method for efficiency analyses in the health care sector compared to other related techniques such as Stochastic Frontier Analyses (SFA) and the Malmquist index.

  2. Due to lacking data concerning secondary costs, three out of the 131 Austrian fund hospitals had to be excluded from the analysis.

  3. The planning of health care provision in Austria is carried out for 32 regions of provision.

  4. To check for potential endogeneity of the capacity and HHI variables, we applied the Hausman test to the regression model. No indication for endogeneity was found in either case.

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Acknowledgments

We wish to thank Helmut Hofer, Monika Riedel and Ludwig Strohner for their valuable comments on an earlier draft of this paper. We also gratefully acknowledge the three anonymous reviewers’ comments that greatly improved this article.

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Authors and Affiliations

  1. Department for Economics and Finance, Institute for Advanced Studies (Vienna), Stumpergasse 56, 1060, Vienna, Austria

    Thomas Czypionka, Markus Kraus & Gerald Röhrling

  2. Department of Socioeconomics, Institute for Social Policy, Vienna University of Economics and Business (WU), Building 4, Welthandelsplatz 1, 1020, Vienna, Austria

    Susanne Mayer

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  1. Thomas Czypionka
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  2. Markus Kraus
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  4. Gerald Röhrling
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Correspondence to Thomas Czypionka.

Appendix

Appendix

Table 7 Spearman rank correlation coefficients between input and output variables, model 1
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Table 8 Spearman rank correlation coefficients between input and output variables, model 2
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Table 9 Scale efficiency: model 1
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Table 10 Scale efficiency: model 2
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Table 11 SFA estimation results: model 1
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Table 12 SFA estimation results: model 2
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Table 13 Regression analysis for SFA efficiency scores: model 1
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Table 14 Regression analysis for SFA efficiency scores: model 2
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Table 15 Spearman rank correlation coefficients between efficiency scores for different specifications
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Czypionka, T., Kraus, M., Mayer, S. et al. Efficiency, ownership, and financing of hospitals: The case of Austria. Health Care Manag Sci 17, 331–347 (2014). https://doi.org/10.1007/s10729-013-9256-9

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