Ruhr Economic Papers

Ruhr Economic Papers #198

Is there a Future for Small Hospitals in Germany?

by Boris Augurzky and Hendrik Schmitz

RWI, 08/2010, 17 S./p., 8 Euro, ISBN 978-3-86788-224-8



We analyse the financial performance of small German hospitals based on balance sheet data of about 1,000 hospitals in 2007. Measures of financial performance are the earnings before interest, tax, depreciation, and amortisation (EBITDA) and the probability of default (PD). We find that, on average, small hospitals have more financial difficulties than large ones. However, there is considerable heterogeneity among small hospitals. While small private-for-profit hospitals tend to perform very well, small public hospitals face considerable financial problems. Apart from ownership, we find that specialisation, less subsidies in absolute terms, and a higher share of lump-sum subsidies are associated with a better financial performance.

JEL-Classification: I11, I18

Keywords: Hospital ownership; financial performance