The Welfare Effects of Single Rooms in German Nursing Homes: A Structural Approach

Annika Herr and A. Saric

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: We analyze the welfare effects of single rooms in German nursing homes using a large panel dataset containing information on prices, residents, and facility characteristics for the years 2007 and 2009. We estimate a one-level nested logit model of demand and, based on the model of bargaining between payers and providers, recover the marginal costs and markups. We then analyze a counterfactual scenario under which only single rooms are offered. According to our estimates, if no corresponding total capacity changes occur, this policy increases consumer surplus by 1.8% and providers’ variable profits by 5.1%. However, under the scenario of reduced capacities, where double rooms are simply transformed into single rooms, consumer surplus decreases by 6.6% and providers’ variable profits by 16.2%. To ensure the positive welfare effects of a single room policy, the supply of nursing home places must be secured by investing in new facilities.

Keywords: single rooms; nursing homes; policy simulation; structural models; bargaining (search for similar items in EconPapers)
JEL-codes: I11 I18 L13 L51 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-cmp and nep-dcm
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Citations: View citations in EconPapers (5)

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