The association of hospital profitability and digital maturity - An explorative study using data from the German DigitalRadar project.

INTRODUCTION: German hospitals largely rely on public investments for digitization. As these have been insufficient, hospitals had to use own profits to foster digital transformation. Thus, we assess if profitability affects digital maturity, and what other factors might be influential. METHODS: We use digital maturity data from the DigitalRadar (DR) project (2021) and financial statement data from the Hospital Rating Report from 2017 to 2019 (n = 860). We run linear regressions with the DR-score (continuous variable from 0 to 100) as dependent and three-year average EBITDA margin as independent variable. Besides, we conduct subgroup analyses stratifying by chain size. RESULTS: A one percentage point EBITDA margin increase is associated with a 0.359 points DR-score increase (p<0.01). This relationship holds in significance and holds or increases in magnitude for all specifications except when adding chain beds (0.212 point DR-score increase, p<0.05). Besides, chain membership and chain size are positively and significantly associated with hospitals' DR-score. EBITDA margins of the subgroups "large chains" and "Big 3″, i.e., the three largest chains, were strongly associated with the DR-score (2.685 and 3.197 points DR-score increase respectively, p<0.01). CONCLUSIONS: Higher profitability is associated with higher digital maturity. Larger chains are digitally more mature, because (1) they might follow a chain-wide IT-strategy, (2) can standardize IT-architecture, and policies and (3) might cross-finance investments.

Self-perceived job insecurity and the demand for medical rehabilitation: does fear of unemployment reduce health care utilization?

An inverse relationship between job insecurity and sickness absence has been established in the literature, which is explained by employees avoiding to send signals of both poor health and uncooperative behavior towards the employer. In this paper, we focus on whether the same mechanism applies to the demand for medical rehabilitation measures. This question has recently gained much interest in the context of the current public debate on presenteeism. Using county-level unemployment rates as instrument for the employees' fear of job loss on the individual level, we find that an increase in subjective job insecurity substantially decreases the probability of participating in medical rehabilitation.

Concentration of gynaecology and obstetrics in Germany: is comprehensive access at stake?

Financial soundness will become more and more difficult in the future for all types of hospitals. This is particularly relevant for gynaecology and obstetrics departments: while some disciplines can expect higher demand due to demographic changes and progress in medicine and medical technology, the inpatient sector for gynaecology and obstetrics is likely to lose patients in line with these trends. In this paper we estimate future demand for gynaecology and obstetrics in Germany and develop a cost model to calculate the average profitability in this discipline. The number of inpatient cases in gynaecology and obstetrics can be expected to decrease by 3.62% between 2007 and 2020 due to the demographic change and a potential shift from inpatient to outpatient services. Small departments within the fields of gynaecology and obstetrics are already incurring heavy losses, and the anticipated decline in cases should increase this financial distress even more. As such, the further centralisation of services is indicated. We calculate travel times for gynaecology and obstetrics patients and estimate the anticipated changes in travel times by simulating different scenarios for this centralisation process. Our results show that the centralisation of hospital services in gynaecology and obstetrics may be possible without compromising comprehensive access as measured by travel times.

Explaining differences in remuneration rates of nursing homes in Germany.

Remuneration rates of German nursing homes are prospectively negotiated between long-term care insurance (LTCI) and social assistance on the one side and nursing homes on the other. They differ considerably across regions while there is no evidence for substantial differences in care provision. This article explains the differences in the remuneration rates by observable characteristics of the nursing home, its residents and its region with a special focus on the largest federal state of North Rhine Westphalia, in which the most expensive nursing homes are located. We use data from the German Federal Statistical Office for 2005 on all nursing homes that offer full-time residential care for the elderly. We find that differences in remuneration rates can partly be explained by exogenous factors. Controls for residents, nursing homes and district characteristics explain roughly 30 % of the price difference; 40 % can be ascribed to a regionally different kind of negotiation between nursing homes and LTCI. Thirty percent of the raw price difference remains unexplained by observable characteristics.

What accounts for the regional differences in the utilisation of hospitals in Germany?

There are huge regional variations in the utilisation of hospital services in Germany. In 2007 and 2008 the states of Hamburg and Baden-Württemberg had on average just under 38 % fewer hospitalisations per capita than Saxony-Anhalt. We use data from the DRG statistics aggregated at the county level in combination with numerous other data sources (e.g. INKAR Database, accounting data from the National Association of Statutory Health Insurance Physicians (KBV), Federal Medical Registry, Germany Hospital Directory, population structure per county) to establish the proportion of the observed regional differences that can be explained at county and state levels. Overall we are able to account for 73 % of the variation at state level in terms of observable factors. By far the most important reason for the regional variation in the utilisation of in-patient services is differences in medical needs. Differences in the supply of medical services and the substitutability of outpatient and inpatient treatment are also relevant, but to a lesser extent.

Demand, selection and patient outcomes in German acute care hospitals.

This paper examines the effects of variation in unexpected demand on patient outcomes in acute care German hospitals. Naturally, an unexpected surge in demand may negatively affect the quality of care and thus patient outcomes, such as in-hospital mortality. We estimate models explaining patient outcomes depending on demand, unobservable patient selection and seasonal factors, as well as patient-specific risk factors and unobservable hospital and department fixed-effects. The main message of this analysis is that hospitals are well prepared to deal with this unexpected volatility in demand, as by and large it does not negatively affect patient outcomes. Hospitals seem to deal with high unexpected workload by steering the patients' length of stay relating to their severity of illness. Elective patients are discharged earlier, while discharges of high-risk emergency patients are postponed.

Ownership and financial sustainability of German acute care hospitals.

This paper considers the role of ownership form for the financial sustainability of German acute care hospitals over time. We measure financial sustainability by a hospital-specific yearly probability of default (PD) trying to mirror the ability of hospitals to survive in the market in the long run. The results show that private ownership is associated with significantly lower PDs than public ownership. Moreover, path dependence in the PD is substantial but far from 100%, indicating a large number of improvements and deteriorations in financial sustainability over time. Yet, the general public hospitals have the highest path dependence. Overall, this indicates that public hospitals, which are in a poor financial standing, remain in that state or even deteriorate over time, which may be conflicting with financial sustainability.

Profit efficiency and ownership of German hospitals.

This paper investigates the cost and profit efficiency of German hospitals and their variation with ownership type. It is motivated by the empirical finding that private (for-profit) hospitals - having been shown to be less cost efficient in the past - on average earn higher profits than public hospitals. We conduct a Stochastic Frontier Analysis on a multifaceted administrative German data set combined with the balance sheets of 541 hospitals of the years 2002-2006. The results show no significant differences in cost efficiency but higher profit efficiency of private than of publicly owned hospitals.

Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach.

This paper examines effects of the German social health insurance system's reference drug program (RDP) for prescription drugs on ex-factory prices. Moreover, we analyze whether manufacturers adapt prices of their products that are not subject to reference pricing as a consequence of changes in reference prices of their products that are subject to reference pricing. We use econometric panel data methods based on a large panel data set of nearly all German prescription drugs on a monthly basis between October 1994 and July 2005. They provide information on ex-factory prices, reference prices, manufacturers, type of prescription drug, and market entries and exits. Our results show that there is no full price adjustment: A 1%-change in reference prices leads to a 0.3%-change in market prices. Price adjustment, however, is fast - it mostly happens in the first month. Furthermore, the first introduction of a reference price reduces market prices of the affected products by approximately 7%. Finally, we observe a significant time effect that is positive in the market without reference prices and negative in the market with reference prices.