On Hospital Competition: Quality, Efficiency, and Ownership

In this research we will focus on three topics which we think are particularly relevant for hospital competition: i) quality, ii) efficiency, and iii) ownership.i) Quality of health care is the most important good of the health production process. The present thesis presents both a theoretical (Chapter 2) and an empirical (Chapter 5) approach to assess the effect of competition on quality of care.ii) The health economy also merits attention because of its sheer size e.g. with respect to public and private spending, the labor force, research and development, or capital investments. In many industrialised countries, approximately one third of health care expenditure is generated by inpatient care. For this reason hospitals are in the focus of many studies on health care costs and production. Since the main cost drivers -technological change, demographic change, and the increase of chronic diseases- are difficult to control by policy makers, it is important to detect and reduce inefficiencies in this market. Therefore, hospital inefficiency is one main aspect in our research presented in Chapters 3 and 4. iii) Asymmetric information and other market failures (for example externalities or public goods) or historic developments often lead to the simultaneous existence of different ownership types in one market serving a similar population of agents. In Germany and in comparable economies, three types of hospitals can be found: private for-profit, private non-profit, and public. The ownership has been in the focus of considerable research. Here, we study the effect of the ownership type on the production of quality of care and efficiency from a theoretical (Chapter 2) and empirical perspective (Chapters 3 and 4). Our research sheds some light on market outcomes by hospital ownership type given their respective underlying objectives.