The system of hospital care provision in Germany: An overview

To understand the discussion about the DRG payment system, it is helpful to give a short overview of the German system of providing hospital services. We will do this in a graphical way. In Figure 8.1 three modules determine the structure: first, the module of the providers which are the hospitals, second, the module of demand which is subdivided into a financing and a consuming element, third, the module of co-ordinating supply and demand. The co-ordinating module again, is computed out of two elements: planning by the states (‘Länder’) and the reimbursement system.

Demand

We begin with a brief explanation of the demand side. Demand is based on the needs of the population, which depend on several demographic factors. Some import figures are illustrated in Table 8.1.

Health care in Germany is based on the principle of social insurance rooted in the time of Bismarck, enacted in 1883.

By the year 2050, dramatic challenges are expected. The population will decrease by 10 million; people older than sixty-five will increase by about 15 million. At the moment the health expenditures of the last group are financed at a share of 50 percent by the younger generation, which will itself dwindle by about 20 million. This scenario makes all politicians nervous.