Increasing cost pressure, shortage of staff, investment backlog – more and more hospitals need to merge with others to survive. Apart from the decreasing capital investments of the federal states, especially the implementation of DRGs (Monopolkommission 2008, 313) and the possibility of integrated health care lead to an enormous cost pressure.
In Germany, there is a dual hospital funding. The costs of operation are beared by payments of health insurance funds. Investment costs for new buildings or the replacement of capital goods are payed by the federal states. However, these allowances of investment are on the decrease for years, which leads to investment backlogs in hospital (Augurzky et al. 2009, 93). This implies that hospitals are supposed to invest, but their funds are too small to do so. In the long run, the economic efficiency suffers because it cannot compete with other hospitals regarding the technological progress (Augurzky et al. 2009, 13). The introduction of DRGs [Diagnosis Related Groups], the basis of calculation for hospitals, lead to an increasing pressure of working economically. In the old system, every day of a patient’s stay in the hospital was refunded based on same-day hospital and nursing charges. In the new system, only occupant days within a predetermined period of hospitalization. The preterm discharge or a discharge exceeding the period of hospitalization results in discounts in payments, which often do not allow cost recovery (Eveslage 2006, 37-39). Accordingly, hospitals are under pressure to treat their patients fast and discharge them within the preset period. This requires efficient and economical operations. An additional burden is the growing competition in the sector of ambulatory care. As a result of the strong medical progress, more and more operations, which were formerly bound to be performed in hospital, can nowadays be done ambulant. Another innovation in the German health care system are medical service centers [Medizinische Versorgungszentren]. They will soon be capable to take over the primary health care in rural areas and replace major hospitals there, because they are able to work more economic (Augurzky et al. 2009, 162). On the whole, the pressure on hospitals increased steadily in the past years. Many hospitals are not capable to assert themselves on the market under today’s conditions solitary. 12 per cent of the economically weak hospitals are expected to shut down by 2020. (Augurzky et al. 2009, 124).
Table of Contents
Chapter 1 - Introduction
Chapter 2 - Consolidation in general
Chapter 3 - Advantages of Consolidation of Hospitals
Chapter 4 - Disadvantages of Consolidation of Hospitals
Chapter 5 - Conclusion
Objectives & Core Topics
This paper examines the increasing trend of hospital consolidation as a response to growing economic pressure in the German healthcare sector, evaluating whether these mergers effectively reduce costs and enhance quality. It explores the drivers of such consolidations, the legal framework in Germany, and the potential benefits and risks associated with market concentration in healthcare.
- Economic pressure and DRG implementation in hospitals
- General definitions and stages of consolidation
- Synergy effects in hospital operations
- Legal criteria and competition policy
- Risks of market monopoly and quality measurement challenges
Excerpt from the Book
Chapter 3 - Advantages of Consolidation of Hospitals
A consolidation of hospitals leads to synergy effects which are useful for the cooperating partners. These synergetic effects can be divided into operative effects, effects on the production management, fiscal effects, administrative effects and also in effects on the research and the development. The hospital gains great potential concerning cost-cutting measures, if these synergies are carried out (Köninger 2008, 122). The operative synergy is about the merging of the same functions. This leads to savings of production factors because, for example, expensive equipment does not have to be bought twice (Klauber, Rober and Schnellschmidt 2006, 60). Altogether, the operative synergetic effects lead to decreasing general expenses and to an increasing economic efficiency (Budzinski and Kerber 2003, 42). A better device usage and an internal division of work with specialization advantages are the achievement of synergies in production management. The higher number of patients accompanied by the increased material usage offer the implementation of decreased purchase prices (Budzinski and Kerber 2003, 43).
Summary of Chapters
Chapter 1 - Introduction: This chapter outlines the rising financial pressures on German hospitals, driven by DRG implementation, staffing shortages, and competition, which necessitate mergers for survival.
Chapter 2 - Consolidation in general: This section defines the consolidation process, its economic objectives, and the four distinct phases of implementation including cultural alignment.
Chapter 3 - Advantages of Consolidation of Hospitals: This chapter analyzes various synergy effects—ranging from operative to fiscal—that can lead to cost-cutting and improved efficiency in hospital management.
Chapter 4 - Disadvantages of Consolidation of Hospitals: This chapter discusses the risks of consolidation, focusing on potential monopolies, decreased innovation, and the failure of many mergers due to poor integration of "soft factors."
Chapter 5 - Conclusion: This chapter synthesizes the trade-off between economic efficiency and market power, suggesting that while cost savings are possible, they are not guaranteed to improve patient care quality.
Keywords
Hospital Consolidation, DRG, Healthcare Economics, Synergy Effects, Market Monopoly, Competition, Cost Management, Hospital Mergers, Healthcare Quality, Efficiency, Administrative Barriers, Vertical Consolidation, Horizontal Consolidation.
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines whether hospital consolidations in Germany successfully address financial instability while simultaneously improving or maintaining the quality of patient care.
What are the central themes of the study?
The central themes include the economic impact of DRG systems, the mechanics of business consolidation, the realization of synergy effects, and the competition-related challenges posed by hospital mergers.
What is the main research question?
The research explores the balance between cost-cutting measures and the potential for increased market power, specifically asking: "Consolidation of Hospitals – Decreasing costs and increasing quality?"
Which scientific methods are utilized?
The work utilizes a literature-based analysis, reviewing academic studies, institutional reports (such as the Monopolkommission and DKI), and existing legal frameworks to evaluate consolidation outcomes.
What does the main part of the work cover?
The main body details the theoretical foundations of consolidation, the operational and fiscal advantages of merging, and the significant risks regarding monopolistic behavior and organizational failures.
Which keywords best characterize this work?
Key concepts include Hospital Consolidation, Healthcare Economics, Synergy Effects, Market Concentration, and Healthcare Quality.
What role do "soft factors" play in consolidation failure?
According to the text, while financial and structural factors are often well-prepared, the neglect of "soft factors" such as personnel integration and strategic organizational alignment frequently leads to the failure of consolidation processes.
What is the Monopolkommission's recommendation regarding quality?
The Monopolkommission recommends the development of a quality index that lists treatment measures and cure rates for individual hospitals to empower patients to make informed choices based on valuation.
- Quote paper
- Sarah Pinsdorf (Author), 2011, Consolidation of hospitals, Munich, GRIN Verlag, https://www.grin.com/document/270276
