The German Bundestag passed a major healthcare reform law in mid-October, and it cleared its final obstacle on Friday morning when it narrowly garnered approval from the Bundesrat, the legislative body representing the federal states.
The reform has faced significant resistance from the federal states, which oversee hospital planning in Germany. There was uncertainty over how the Bundesrat would vote until the last moment. In a dramatic twist, Brandenburg Premier Dietmar Woidke, a fellow Social Democrat alongside Chancellor Olaf Scholz and Health Minister Karl Lauterbach, dismissed his reform-supporting health minister during the debate to secure his vote against the current proposal.
A key element of the reform is a new reimbursement model for hospitals. Currently, hospitals are paid based on the number of procedures they perform, which has led to concerns about unnecessary surgeries. Under the new system, 60 percent of hospital costs will be covered through fixed payments that account for maintaining staff and equipment for specific procedures. This aims to reduce financial incentives for unnecessary operations. Additionally, hospitals will need to adhere to stringent quality standards to receive funding for procedures.
The reform is designed to consolidate Germany’s hospital system, ensuring that only large, well-equipped facilities handle complex surgeries, such as cancer treatments. To support this overhaul, a transformation fund will be established to cover reorganization expenses, including the merging or closure of some of Germany’s approximately 1,700 hospitals.
Although the law is set to take effect on January 1, 2025, the full implementation of the new structure will be phased in gradually, concluding by 2029.
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