Deficits of Public Hospitals in Germany: Empirical Findings From 1998 - 2004

Abstract

Background: Traditionally, the structure of German hospital service markets is character-ized by publicly, privately and charitably funded acute care hospitals. Yet, only public hospitals may fall back on the general budget resources of their owners if deficits should be produced. Problem: The empirical extent of the deficits, however, has not been com-piled. Additionally, a systematic, econometric process of identifying the reasons for the deficits does not exist. Methods: The first step is to determine the level and development of the deficits in the 16 German federal states during the period of 1998 to 2004. Then, as a second step, the reasons for the deficits will be analyzed with the help of fixed effects es-timations. Results: Throughout the surveyed period of 1998 to 2004 the deficits amounts to more than 2 billion Euros in Germany. In 2004 a maximum value of more than 3 billion Euros is reached despite numerous sales of public clinics. Fixed effects estimations suggest that the duration of treatment and the number of employees have a significant positive in-fluence on the development of the deficits while the number of cases and the volume of investment subsidies have a significant negative influence. Conclusion: The analysis shows high deficits in publicly funded hospitals and determines statistically significant causes. Nevertheless, fixed effect estimations also show that the differences between the individual federal states can not wholly be explained. Consequently further research is necessary.