The three key flaws in Karl Lauterbach's hospital reform

The three key flaws in Karl Lauterbach's hospital reform

Karl Lauterbach, Germany’s Minister of Health, aims to bring about a significant overhaul to the hospital system. His reform intends to shift the focus of hospital treatment from economic considerations back to medical needs, with the hope of creating a more patient-centered health care system.

The idea is to restructure funding and introduce standardized quality measures. However, despite these goals, experts have raised concerns about critical flaws in the proposed plan.

Funding concerns

The financing of Lauterbach’s reform has come under fire from various stakeholders, including health insurance companies and social organizations. One of the major points of contention is the establishment of a €50 billion transformation fund, split equally between the statutory health insurance (SHI) system and the states.

This shift marks a break from the current "dual financing" system, where states are responsible for the funding of hospital infrastructure, while SHI covers operating costs, such as salaries.

Critics argue that this will place an unfair burden on SHI members, particularly as private insurance holders will not be contributing. The proposal could increase health insurance premiums for the public, with an expected additional cost of €30 annually for employees with a monthly income of €3,500.

This raises significant concerns over the fairness of the reform and whether it will lead to higher costs for the general population.

Payment system flaws

A central component of the reform is changing how hospitals are paid. The current system incentivizes hospitals to perform as many procedures as possible due to the use of case-based payments.

Lauterbach's plan seeks to counteract this by implementing a system where 60% of hospital funding would be tied to maintaining treatment capacity, while only 40% would depend on the number of procedures carried out.

However, many experts believe this adjustment fails to address the core issue. There are fears that smaller hospitals in rural areas, which have fewer patients, could be particularly at risk.

These facilities, despite playing an essential role in providing local care, might struggle financially under the new system, ultimately leading to closures. The German Hospital Federation (DKG) has echoed concerns that the reform does not align with the actual medical needs of various regions.

Long-term sustainability and insolvency risks

One of the most pressing concerns is that the proposed reforms won’t be fully implemented until 2029. Until then, many hospitals could face severe financial difficulties.

Rising operational costs, combined with declining patient numbers—a trend that worsened during the COVID-19 pandemic—have already created a fragile situation for many institutions. Without interim financial support, critics fear that numerous hospitals could be forced into insolvency before the reform takes effect.

Municipalities have already had to inject €3 billion to keep their hospitals afloat in 2024 alone, underlining the urgency of the issue. Unions and other stakeholders are calling for a financial bridge to prevent widespread hospital closures and to avoid the negative consequences for patients and hospital workers alike.

Personal perspective

From my perspective, Karl Lauterbach’s hospital reform, while well-intentioned, seems to overlook some of the immediate, practical needs of the healthcare system. The financial strain that could be placed on smaller hospitals and patients, especially in rural areas, is concerning.

The long-term nature of the reform also raises questions about its feasibility, especially considering the financial health of many hospitals today.

While reform is undoubtedly necessary, I believe a more balanced approach is essential—one that addresses both the short-term survival of hospitals and the long-term goals of improving care quality. Balancing these competing demands will be the key to achieving a truly effective and sustainable healthcare system.