Update on suggested regulatory changes in the German hospital landscape 

More than eight months after the issue of the White Paper (Eckpunktepapier) regarding a fundamental reform of the German hospital system, the German Minister of Health, Karl Lauterbach, has now presented a draft bill.

In the draft bill, the Minister specifies his ideas of the reform and suggests, i.a., a strengthening of the financial resilience of German hospitals. Today, hospitals in Germany are considered chronically underfunded and inefficient. As a consequence, the suggested changes are mainly aimed at reducing the system of flat rates (per patient or treatment): Currently, hospitals receive a lump sum per patient (or treatment, respectively). The draft bill now provides for a fixed income for the procurement and provision of staff, infrastructure, and medical technology. The aim is to prevent hospitals from treating as many patients as possible in order to generate turnover. The draft bill suggests that hospitals shall receive 60 percent of their remuneration for the provision of those services and only 40 percent per patient, making it less likely that patients are treated for commercial rather than medical reasons. 

A second important objective of the draft bill is the establishment of uniform quality standards. In the draft bill, the co-financing system by the health insurance funds on the one hand, and the German countries on the other hand is used as an instrument to establish those standards: Service levels (Leistungsgruppen) shall be precisely defined, and extra money from the German federal government shall be awarded for restructuring activities and the provision of specialty expertise, e.g. for pediatric, obstetrics, stroke or intensive care units. 

The countries remain competent for the hospital planning and, hence, for awarding service levels. However, the extra money from the federal government shall be bound to qualitative and quantitative criteria regarding infrastructure and personnel.

Details of the service levels and distribution of the extra money are still fairly unclear, and the bill provides for lots of exceptions, e.g. for structurally weak regions. However, the draft bill has the potential to drastically change the German hospital landscape. It shall come into effect in 2025 and be fully rolled-out by the end of 2028.

"The suggested changes are likely to reduce the inefficient incentive for hospitals to expand case volumes", comments Matthias Wiedenfels, Ashurst's senior healthcare expert. "The bill will also contribute to a consolidation in the hospital market, whereas the extra money from the government may drive innovation and provide for more investment security."

Ashurst is familiar with all implications of the current and the new German hospital law including the latest regulatory changes. We are actively advising clients at the forefront of the German hospital market, uniquely combining legal with industrial expertise.