Germany begins major reform of its hospital sector

Germany's upper house of parliament has passed the law on the restructuring of the hospital sector, paving the way for its gradual implementation starting January 2025 and ending in 2029. The chamber representing Germany's 16 federal states passed the law following a heated debate, with the center-right Christian Democrats demanding more leeway for the implementation.

The hospital reform is the brainchild of Health Minister Karl Lauterbach, who described the reform as "nothing short of a revolution." Speaking at an annual doctors' conference in early May, the German health minister said the reform plans they had been working on for two years marked a "Zeitenwende" (turning of the times) in German health care — an allusion to the military overhaul Chancellor Olaf Scholz announced after Russia's full-scale invasion of Ukraine in February 2022.

A new way to pay hospitals

The two-pronged hospital reform will change the way German hospitals are financed and impose new care standards.

Germany has the highest number of hospital beds per capita in the European Union, at 7.9 beds per 1,000 inhabitants, compared to the EU average of 5.3. But maintaining these is expensive. According to Lauterbach, this has left many hospitals on the brink of bankruptcy. The result is that patients are being kept in hospital unnecessarily so hospitals can charge health insurers extra money — which in turn drives up the whole country's health costs and insurance contributions.

The reform means that hospitals will no longer be paid per treatment — instead, they will get a guaranteed income for making certain services available. This, it is hoped, will alleviate the financial pressure on hospitals to pack in as many operations and treatments as they can, even if they are poorly qualified to carry them out.

This measure is supposed to ensure that patients needing complex treatments are referred to specialists earlier. This, according to the Health Ministry, will reduce health costs in the long run, as patients stand a better chance of being cured and are less likely to fall victim to mistakes, as hospital staff will be less rushed and overworked. Lauterbach has claimed this reform will save tens of thousands of lives a year.

Too many hospitals

"The hospital reform is right and important," Dirk Heinrich, an ear-nose-throat specialist and chairman of the doctors' association Virchowbund, told DW. "We do have too much in-patient care, but what is happening now is way too little. Reforming the hospitals without a comprehensive outpatient treatment reform, and without emergency care reform, won't make a difference."

Eugen Brysch, chairman of patients' protection organization Deutsche Stiftung Patientenschutz was also skeptical. "In the field of outpatient medical care, elderly, chronically ill and care-dependent people will find it almost impossible to find a new doctor," he said.

Germany also struggles with a lack of doctors' offices in rural areas, as fewer doctors want to live there. The Health Ministry wants to tackle this issue by offering extra money for clinics in rural areas. Here again, Brysch was cautious. 

"The fact that better earning opportunities are now being created will not in itself lead to more doctors in rural areas. After all, other location factors also play a role," he said.

One issue has been resolved in the new reforms: a cap on payments for general practitioners. Doctors have long complained about this budget limit — and occasionally gone on strike over it — because they say it often forces them to treat patients for free. Scrapping the cap, Lauterbach hopes, will provide doctors with incentives to take on more patients.

Heinrich welcomed this move, but again, said it failed to go far enough. "It stops halfway because the budgets remain in place for specialist doctors," he said. "It's no use for a patient if they get an appointment quicker at their family doctor but then have to wait months for a specialist."

Hospital reform — the steps ahead

"A few hundred hospitals will close," Lauterbach told the tabloid Bild am Sonntag after the reform passed the Bundestag, the lower house of parliament, in October. There isn't enough medical demand for these hospitals, he added, explaining that one-third of all hospital beds are empty and still there aren't enough nurses.

"We have such an inefficient system, in no other country in Western Europe is life expectancy lower than in Germany," Lauterbach said, arguing that "centralization will improve the quality of care."

Health insurance contributions are set to increase next year also due to the reform. However, Lauterbach told Bild am Sonntag that he does not expect any further increases in the following year, if his health reform proposals are implemented.

Edited by: Rina Goldenberg

This article has been updated to reflect the passing of the law on November 22, 2024.

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