The German Bundesrat has passed the country’s controversial new hospital reform. What do the coming healthcare changes mean for patients?

Hospital reform passes in German Bundesrat

Germany’s hospital reform will become law on January 1, 2025, after passing through the Bundesrat, the upper house of the German parliament, on November 22.

Under the new law, the government will reorganise how federal funding is distributed to hospitals to improve treatment quality and reduce financial pressure on clinics. The changes will be gradually implemented in Germany’s 1.700 hospitals over the next few years until 2029.

Why is the German hospital reform being introduced?

Currently, the German healthcare system allocates government funding to hospitals based on the number of patients they treat. Federal Health Minister Karl Lauterbach (SPD) argues that this system means hospitals, particularly those in areas with a small population, take on too many patients or patients with serious illnesses whom they aren’t equipped to treat, to secure funding.

The new law will introduce the guaranteed “Vorhaltepauschal” (retention lump sum). This means that clinics will not be financed based on the number of patients they treat but on the number of services offered, such as staff numbers, emergency services or specific medical equipment available on site.

Clinics will only be able to provide specialised treatment at any stage if they have the staff capacity and equipment, while patients will be referred to specialists sooner. Under the new system, 60 percent of a hospital’s funding will be based on the specialised services offered. Lauterbach argues that this will disincentivise hospitals from offering unnecessary medical interventions.

What does the hospital reform mean for patients?

"We will see more specialisation," said Lauterbach, explaining which changes he expects the reform to bring. "At the same time, we will see that small hospitals in rural areas can make a living from what they do particularly well."

Since reunification, hospitals in Germany have faced a dire financial shortfall and have become increasingly vulnerable to closure. 

The reform should increase the quality of healthcare services for people living in rural areas. To reckon with a dearth of specialists in rural Germany, patients requiring specialist treatment will be able to visit specialist doctors working in hospitals as outpatients, rather than having to travel far to see a specialist physician.

Referring patients to specialist doctors sooner will reduce healthcare costs in the long run, since people will be cured faster and hospital staff will be less overwhelmed with patients.

The new law will also spell hospital closures, but Lauterbach insists these closures will be in areas where hospitals are overabundant. Hospitals in large cities, and specifically in western German cities, are likely to be worst affected by closures.

"It is quite clear that we will have a few hundred fewer hospitals in 10 years at the latest,” Lauterbach told Bild and Sonntag when the reform passed the Bundestag in October, “We don't have the medical needs for these hospitals.” While Germany has the highest proportion of available hospital beds in the EU, with 7,9 beds per 1.000 inhabitants, one-third of all beds are empty.

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