Incorporating efficiency in hospital-capacity planning in Germany

Abstract

Hospital occupancy is a key metric in hospital-capacity planning in Germany, even though this metric neglects important drivers of economic efficiency, for example treatment costs and case mix. We suggest an alternative metric, which incorporates economic efficiency explicitly, and illustrate how this metric can be used in the hospital-capacity planning cycle. The practical setting of this study is the hospital capacity planning process in the German federal state of Rheinland-Pfalz. The planning process involves all 92 acute-care hospitals of this federal state. The study is based on standard hospital data, including annual costs, number of cases--disaggregated by medical departments and ICD codes, respectively--length-of-stay, certified beds, and occupancy rates. Using the developed metric, we identified 18 of the 92 hospitals as inefficient and targets for over-proportional capacity cuts. On the upside, we identified 15 efficient hospitals. The developed model and analysis has affected the federal state's most recent medium term planning cycle.