Better Get Sick in Germany

By: Sam Vaknin, Ph.D.

Also published by United Press International (UPI)

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The Germans, ever the pragmatic sort, call their hospitals - "houses of the sick" or "houses of those suffering". In English the word "hospital" derives from Latin and denotes hosting or hospitality. This may well be the main difference between the German health system and the Anglo-Saxon one. While the former is geared to perform a function - the latter is also concerned with the social and economic contexts of healthcare.

The German national health insurance is inordinately comprehensive. It even reimburses its clients for a few prophylactic weeks at a health spa (Kurort). Medicines - including the over the counter generic sort - are taken extremely seriously. They can be bought only in pharmacies.

This coincides with the guild-like and cartelized character of German business. But, even so, Germans find the thought of Aspirin made available in a supermarket reprehensible. Pharmacists are allowed to prescribe medicines for minor ailments, though.

There are many forms of health insurance. The Privatpatient is covered by a foreign, or German private health plan. The much lauded statutory national healthcare system - the Krankeskasse - insures the Kassenpatienten, about 90 percent of the population.

Various national health insurers - BEK, DAK, AOK - compete for the lucrative business of catering to the needs of an ageing and affluent population. Healthcare provision is even more diversified: some providers are federal, others regional, local, voluntary, or private.

In "Healthcare Reform in Germany in Comparative Perspective", Christina Altenstetter of the Graduate School and European Union Studies Center of the City University of New York, summarizes the principles that guided German healthcare since 1883:

"... Membership in the national health insurance program is mandated by law; the administration of the health insurance program is delegated to non-state bodies with representatives of the insured and employers; entitlement to benefits is linked to past contributions rather than need; benefits and contributions are related to earnings; and financing is secured through wage taxes levied on the employer and the employee."

German bureaucracies implausibly combine efficiency with red tape. The healthcare system is no exception. It has been running smoothly since Bismarck's days. The national insurers issue to their members "Krankenscheine" - booklets with coupons or vouchers. Many of them also help obtain the indispensable social security (i.e., identity) card.

Insured patients are entitled to one free consultation every 3 months. The coupon used in lieu of payment is redeemed by the insurance company which pays the doctors. Recognizing the dangers of over-visitation and over-consumption of free services and drugs, in Germany patients partly pay for everything else - from medicines to corrective contact lenses.

Hospital admittance - to both private and public facilities - is conditioned upon referral by a doctor. This apparently onerous demand served to virtually eliminate waiting lists together with the hypochondriacs, factitious disorders, and impostors that infest hospitals elsewhere.

"We have free choice of physicians, we have practically no waiting lists" - bragged Prof. Friedrich Breyer of the University of Konstanz in an interview to the BBC. He added wryly: "I wouldn't call the (British) NHS the envy of the world." Germany spends c. 8 percent of its larger GDP on public healthcare - 40 percent more than Britain. Add to this private expenditure on health and the figure balloons to 12 percent of GDP - almost twice Britain's.

British Conservatives are so impressed that they dispatched their Health Spokesman, Dr. Liam Fox, MP, on a fact-finding mission to German wonderland.

The BBC ("On the Record", December 2001) marvels that two thirds of German patients with prostate cancer survive five years after diagnosis - compared to less than one half in Britain. With leukemia, two fifths of German patients live on for five years - but only 28 percent of Britons do.

Patients can change doctors once a quarter. Within each quarter they require a referral from their original physician. This hybrid system of doctor-referral cum autonomous choice combines the best of both the General Practitioner (GP) model - and the self-referral model.

But not all is wunderbar.

Germany's healthcare market is consumer-tilted (it is called "patient orientation"). Healthcare providers are subject to rigorous quality inspections and, too often, meddlesome micromanagement. Suppliers - like medical device manufacturers - are less cosseted.

Jacoti Insights publishes "Mapping the Maze through Germany". The latest controversial healthcare reforms suppressed sales throughout the $10 billion sector in the last three years - despite a market receptive, not to say addicted, to new technology.

The reform consists of the introduction of the DRG - Diagnosis Related Group - case-based reimbursement system as of January 2004. It is only the latest in a series of panicky cost containment initiatives. Cost awareness has caused the number of hospitals in Germany to decline considerably over the last decade. Many facilities became more specialized.

According to a report by Thorsten Korner and Friedrich Wilhelm Schwartz from the Hanover medical School ("Recent Healthcare Reforms and Hospital Financing in Germany"), the country has 7 beds per 1000 people and a hospital occupancy rate of 80 percent.

This represents a massive decline from 1991 - of 15 percent in the western Lander and 25 percent in the eastern Lander. Another 2 beds per 1000 people can be found in - mostly private - preventative and rehabilitative centers. One quarter of more than 2000 hospitals - but only 7 percent of all beds - are private. Still, as the public sector shrank by one quarter - the private sector mushroomed by 60 percent.

More than a million people (in a population of just over 80 million) work in healthcare - one eighth of them physicians. These figures mask a 10 percent contraction of the private health sector workforce - compared to 5 percent in the public segment. Thus, the average staffing per bed is one of the lowest in the OECD.

The number of doctors increased by 10 percent in the last decade but all other medical professions - including nurses - suffered sharp cutbacks. Moreover, despite an increase of admissions by 9 percent in the west and 30 percent in the east - the average length of stay has dropped precipitously by 25 percent in the west and 35 percent in the east.

Many hospitals find it difficult to adjust to the new, profit and loss (deficit) orientated environment. Mini-"revolutions" such as fixed budgets, prospective payments, and the shift from in-patient to out-patient treatments as represented by ambulatory surgery, integrative care, and disease management initially met with stiff resistance.

The forthcoming transition to case-fee reimbursement, for instance, forces hospitals to invest massive amounts of resources in information technology and re-training. This led to a wave of mergers, alliances, and acquisitions.

It wasn't always this way. A 1972 law on hospital financing provided hospitals with a "full cost coverage". The state footed all investment bills while the various "sickness funds" and private patients financed all the operational costs. The resulting growth in healthcare costs was exponential.

The "Health Insurance Cost Containment Act" of 1977 tried in vain to stem the flood. Contributions by the funds were effectively frozen. When this failed, an increasingly alarmed Bundestag tried a variety of solutions in 1989, 1993, 1996, 1998, 1999, and 2000: sectoral budgets, price lists for providers, reference prices for medicines, cost limits on procurement of medical technology, restrictions on the number of physicians per geographical unit, and, finally, unpopular co-payment schemes.

While expenditures per capita stabilized - contribution rates skyrocketed by 40 percent between 1975 and 1999. As the population ages, demand for healthcare is likely to increase. As technology invades every nook and cranny of medicine, further investments are required. As costs skyrocket, budget tightening and micromanagement will increase together with a commensurate shift of power from physician to administrator.

To cap it all, Christina Altenstetter notes the possible conflict with the European Union:

"... It is difficult to predict the future role of the European Court of Justice in raising the question whether national fees schedule and benefits catalog are a violation of free trade because corporatist decision-making by German organized medicine and sickness funds is in conflict with European competition policy. If the Court were to rule on this issue against corporatism and price fixing in national practices, impressive changes can be anticipated (in the) long term."

German healthcare is comprehensive and efficient. It is also unsustainably expensive. Patients pay twice - indirectly through their heavy taxes and directly in medical fees and the cost of medicines. A guild-like, corporatist approach still stifles the competitive provision of services.

The hidden costs of such monopolistic and cartel behavior is best evident in ambulatory surgery. Only recently were hospitals allowed to provide this service - previously the preserve of the ambulatory care services. Now half of all hospitals have ambulatory surgery units and the costs of most such procedures has fallen off a cliff.

Also Read

The Dying Breed - Healthcare in Eastern Europe

The Sickly State of Public Hospitals

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