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

Abstract

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.