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Eur J Health Econ (2014) 15:747757 DOI 10.1007/s10198-013-0520-1
ORIGINAL PAPER
Employment effects of hospital privatization in Germany
Mareike Heimeshoff Jonas Schreygg
Oliver Tiemann
Received: 16 July 2012 / Accepted: 8 July 2013 / Published online: 24 July 2013 Springer-Verlag Berlin Heidelberg 2013
Abstract The main argument for the ongoing privatization process is that privatization will lead to an increase in efciency, which has been conrmed by a large number of studies. An important argument against privatization is that privatization may lead to employment reductions. In the hospital sector, potential employment reductions might also lead to a decrease in the quality of care. This is the rst study to investigate the employment effects of different types of hospital privatization (i.e., for-prot vs non-prot privatization) on different categories of staff. A combination of propensity score matching and difference-in-difference methods was used to identify the causal effect. We found large employment reductions after for-prot privatization, while there were no permanent reductions after nonprot privatization. Moreover, even for-prot privatization does not affect all types of staff. While there are large reductions in non-clinical staff, we could not detect any reduction in the number of physicians. The consequences of the detected employment effects of privatization have to be addressed in greater detail in future research.
Keywords Hospital privatization Employment effects
Propensity score matching Difference-in-difference
JEL Classication L33 J11 J12 J63
Introduction
Over the past two decades, a large number of hospitals have been privatized in the German hospital market. The
main argument for privatization has been that it increases efciency and competitiveness, which has been conrmed by a large number of studies [1, 2]. A range of concerns, however, have been voiced about the negative consequences of privatization. An important argument against privatization is that it may lead to employment reductions [3, 4]. Because 60 % of all hospital expenditure in Germany is accounted for by staff costs [5], it seems likely that increases in protability and efciency in this sector will come at the expense of staff reductions, which would lead to a decrease in staff-to-patient ratios and consequently to a higher patient load. Also, staff reductions in the hospital sector may lead to a decrease in the quality of care, as a large number of studies found...