Hospital reform: What the major operation brings to the clinics

The start began on St. Nicholas Day 2022, when a commission presented recommendations. Almost two years later, the Bundestag decided on a fundamental reorganization of clinics in Germany. Health Minister Karl Lauterbach (SPD) speaks of a “revolution” and the biggest reform in 20 years. The goals: less financial pressure and more specialization for more complicated procedures. But the plans are far from undisputed. What does the major operation mean for the patients?

Why is reform needed anyway?

According to experts, Germany has too many clinics compared to neighboring countries. There are big problems: financial difficulties, staff shortages, and according to the Ministry of Health, a third of the 480,000 beds are not occupied.

Lauterbach sees the reform as an emergency brake: without changes there is a risk of hospital insolvencies, poor treatment and long journeys. It is clear that Germany does not have the medical needs or the staff for 1,700 hospitals. The aim is therefore to ensure that the houses that are really needed have an adequate economic basis.

What disincentives have there been so far?

Clinics currently receive a flat rate per patient or treatment case (flat rate per case). According to Lauterbach, this leads to a “hamster wheel effect” of doing as many treatments as possible in the cheapest possible way, or even creates incentives for unnecessary treatments. A popular example is the knee prosthesis, which is installed where it may not even be necessary.

According to the draft law, there is also a risk that some clinics will carry out difficult treatments for which they lack the experience or will no longer offer supposedly less lucrative medical services.

How should this be remedied?

The per-case remuneration system introduced 20 years ago is to be fundamentally changed. In the future, there should be a fixed base of 60 percent of the remuneration simply for the fact that clinics have a basic set of staff and equipment for certain services, regardless of the number of cases.

The fire brigade is not only paid when there is a fire, argued the commission that developed proposals for the reform. There should be extra surcharges for clinics with pediatrics, obstetrics, intensive care and accident medicine, special stroke wards and emergency care.

What should be done about the quality of treatment?

The new fixed remuneration is to be given to a clinic for “performance groups” that the state assigns to it. They represent medical services in a more precise manner than roughly named specialist departments. The starting point should be 65 groups, which largely go back to a model from North Rhine-Westphalia – such as “spinal surgeries” or “leukemia”.

Uniform quality specifications for specialist personnel and equipment are also defined. Lauterbach repeatedly made it clear that there were no compromises to be made. This is intended to ensure that cancer treatments, for example, are carried out in clinics with specialist knowledge.

What does this mean for the clinic network?

The states responsible for hospital planning should control the change. You could say, for example, whether there are two or four locations for spine surgery in a region, explained Lauterbach. The new retention allowance is intended to secure livelihoods, especially for smaller houses in the countryside. In general, quality criteria should also be met in collaborations.

The states should also be able to declare locations to be “cross-sector care facilities” that combine inpatient treatment with outpatient and nursing services “close to home,” as the draft states. In areas where there are no specialist and general practitioner practices, patients should be able to go to hospital for such treatments in the future.

Are financial aid planned?

The law provides for financial injections. From this year onwards, cost increases at the clinics, including the collective wages of all employees, will no longer only be half financed by the health insurance companies, but rather fully. In order to support the major change to the new structures, there will also be a “transformation fund” from which up to 25 billion euros could flow from 2026 to 2035 – provided that countries contribute the same amount. The money should come from funds from statutory health insurance funds and – depending on their share of the treatments – from private health insurance companies.

Is the major renovation worth it?

In the draft, the ministry points to “efficiency gains and reduced spending” through more coordinated, higher quality care. Annual spending by statutory health insurance funds on clinics has recently risen to 94 billion euros. That was a third of the total performance expenditure.

The health insurance companies support greater specialization for more quality – but warn of a further “cost avalanche” in an already tense financial situation. The clinics and the states are also demanding faster financial injections, as some hospitals would otherwise no longer be able to achieve the reform, which will only take a few years to take effect.

What’s next?

The traffic light coalition stands together on reform, as Lauterbach likes to emphasize. However, disputes continue to simmer with the states – and the law still has to be passed by the Federal Council. It is no longer designed in such a way that it requires approval. However, the state chamber could send it to the joint mediation committee with parliament and thus slow it down.

The reform is scheduled to come into force on January 1, 2025. The new structure will then be gradually implemented until 2029. It is planned that the states will assign their clinics the designated service groups by the end of 2026. The financing will then be gradually converted to the new system in 2027 and 2028, as the ministry explains.