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The German hospital reforms have become a farce

When German health minister Karl Lauterbach proposed his hospital reforms, he probably imagined himself as the hero of the drama, striding across the political stage and heroically redefining an oversupplied market. Instead, increasingly he looks to have penned a farce.

Lauterbach’s plan had three elements. The first was to reclassify hospitals – this would limit the activity they are able to carry out with the smallest only able to provide basic care and surgery.

The second was to reform the tariff – currently this is on a case-by-case basis which encourages overactivity by only paying hospitals when they do something, regardless of whether it’s necessary or not. The plan was to instead give hospitals a lump sum in addition to the case-by-case payments. The government (somewhat naively?) believed this would reduce the amount of overactivity, as the payment would guarantee survival without the need to be overactive.

This would, thirdly, eventually mean some smaller, surplus-to-requirements hospitals would close and a large portion of treatment could be moved to an outpatient basis.

To be fair to Lauterbach, the German market is indeed plagued by overactivity. This is bad for patients, and for the state. Closing down some hospitals is one way to solve this and Lauterbach’s plan originally aimed to do this. But it looks like his plan to close hospitals will actually save them! The minister conceded as much in a speech to the German parliament recently, where he declared fears about hospital closures were unfounded. In fact, his reform to the tariff could actually prevent those on the verge of bankruptcy from closing.

In fairness, Lauterbach’s hands are tied. A legal report commissioned by the government of Bavaria declared the central government could not close hospitals without a greenlight from the regions. Regional governments – responsible to regional electors – are obviously keen to keep hospitals open instead of closing them. Closing hospitals can mean losing votes, and if there’s one thing a politician likes it’s votes. But by pursuing the less controversial aspects of the reform in the absence of everything else, Lauterbach’s solution to an overburdened healthcare system appears now to be (a) to keep hospitals open and (b) pay them more.

What is additionally confusing is why Lauterbach is continuing with the reform at all. While reclassifying the specialties of hospitals will reduce overactivity somewhat, it won’t be as impactful as allowing hospitals to close. As many as 20% of German hospitals were at risk of closing last year (or being snapped up by canny investors). HBI understands the basic reason is they don’t have that many patients. Many of these hospitals were saved by an €8bn inflation bailout last year, and these will be further saved by the lump sum tariff (subscribers can read more here). Why not let these hospitals close and then implement reforms which would limit activity?

This is also damaging for the private sector. Lauterbach plans to crack down on PE investors owning MVZs, outpatient facilities with two or more doctors. When the hospital reform required more outpatient care, this looked untenable. Now investors should be worried that Lauterbach can turn his attention to them. Politics aside, Germany has very low levels of outpatient care despite this being cheaper for the state. Any aggressive move against PE in outpatient care would be very poor for the health service.

It stinks of Lauterbach now being unwilling to make unpopular decisions – surprising given his history of being happy to say unpopular things! Private operators believed the original plan by the health minister was necessary, his attacks on PE notwithstanding. The compromise appears so poorly thought out that it could actually make things worse. But for any budding playwrights, a politician pursuing one goal and achieving the opposite would make a delightful theatre outing.

To read more on the reforms, including expert analysis, click here.

We would welcome your thoughts on this story. Email your views to Joe Quiruga or call 0207 183 3779.