In its sixth issue, the “Krankenhaus Rating Report” (Hospital Rating Report), first presented to the public at the 2010 Capital City Congress for Medicine and Health (Hauptstadtkongress 2010 - Medizin und Gesundheit) in Berlin, once again investigates the economic status of German hospitals. The collective study of the RWI, ADMED GmbH and HCB GmbH shows that the financial situation of the clinics has improved in 2009 and 2010 in spite of the financial crisis, but may still decline again as of 2011. Communal clinics in particular will feel the high degree of debt which their municipalities are in. This will necessitate further progress in productivity; a shakeout of the market is also conceivable in some regions. It is necessary to create new, economically sustainable forms of care, especially in rural areas, by such means as fully integrating the outpatient and inpatient sectors.

After 2008, a difficult year for hospitals, there was evidence of better results for 2009 and 2010 – in spite of the financial crisis – due to unparalleled increases in revenue resulting from the Hospital Financing Reform Act (Krankenhausfinanzierungsreformgesetz - KHRG). After 2008, approximately 16.4% of all hospitals exhibited an increased risk of insolvency and were in the “red zone”; this figure dropped to only about 11% in 2009, and is estimated at 8% for 2010. But after that, the clinics' financial situation is expected to worsen again. Average annual cost reductions of 0.25% through improvements in productivity will be necessary as of 2011 in order to prevent 18% of hospitals from being in the “red zone” by 2020. These are the findings reached by in the sixth edition of the Krankenhaus Rating Report, prepared jointly by RWI, the Institute for Healthcare Business GmbH and ADMED GmbH, and its results were presented to the public for the first time at the 2010 Capital City Congress for Medicine and Health (Hauptstadtkongress 2010 - Medizin und Gesundheit) in Berlin.

According to the study, the hospitals were able to increase the number of cases by 2% to 17.5 million in 2008, although the number of inpatient hospitalizations per inhabitant varied widely. At the same time, the number of employees rose by 0.7% to 797,500 full-time workers. Although the costs per full-time employee increased between 2002 and 2008 by 16.5% (medical service) and 8-11% (non-medical service), the proportion of personnel costs compared to overall costs dropped from 65.2% to 60.5% during the same period. This is presumably attributable to outsourcing and improved work processes.

For the first time, the Krankenhaus Rating Report covers more than 1,000 clinics

The Krankenhaus Rating Report 2010 is based on a sampling of 713 annual financial reports from 2007 and 2008 and projections of the costs and revenues for 2010. In total, the annual financial reports cover 1,032 hospitals. This represents a further expansion of the data underlying the report. The data indicates that the supply structures of 2008 have hardly changed. The number of beds fell slightly by 3,500 to 503,000, the number of hospitals to 2,067. However, the market concentration between 2000 and 2007 has increased markedly. While the top 10 organizations owned 25% of the hospitals in the year 2000, the figure was already 29% in 2007.

It can be anticipated that wages for medical and non-medical personnel with continue to grow disproportionately by the year 2020. In addition, the requirement for personnel is expected to rise by 8% for physicians, by 4-5% in nursing and by 5-6% in the other medical services. Further improvements in productivity are necessary in order to counteract the rising wages and need for personnel. The current slowdown in investment of around € 12.6 billion will make these improvements more difficult. For this reason, the study recommends more efficient use of the scarce investment resources by allocating them across the board instead of in individual funding measures.

New forms of care are necessary in rural areas

The number of cases is expected to increase by 11% by the year 2020. But plummeting lengths of stay mean that surplus bed capacity is expected to rise from less than 10% at present to approximately 30% if no further adjustments are made.

It is anticipated on the medium to long-term that it will not be possible to maintain the current hospital infrastructure to the full extent, especially in rural areas. Comparisons – both international and within Germany – show that regions with a low population concentration could be provided for more inexpensively than is currently the case, without even reducing the security of care. This makes it necessary to create new, economically sustainable forms of care in some regions, for instance, by fully integrating the outpatient and inpatient sectors. Such options could consist of medical care centers with beds, as well as hospitals which adopt outpatient medical specialist care in addition to mobile general practitioners and nurses. The goal must be to provide good first aid and emergency care.

Small, communal and rural clinics in particular are threatened with closure

Revenues are expected to increase less heavily than costs with all hospitals on the long term. Some hospitals will presumably have to close for economic reasons over the course of the decade. In conjunction with improvements in productivity, this would lead to a situation in which hardly any clinics would still be in the red zone by 2020. Tendentially, small public or rural hospitals are threatened with closure. Small hospitals should specialize in a smaller number of services in sufficiently great quantity, since clinics with one or two specialized departments perform markedly better in the ratings than those with three or more departments. Publicly sponsored clinics have greater economic difficulties on the average, although some of them have an excellent rating as well. However, the municipalities’ sinking tax revenue and the clinics’ declining overall situation as of 2011 lead to expectations of an increasing number of privatizations. This especially applies to hospitals in parts of Lower Saxony, Rhineland-Palatinate, southern Hesse as well as in parts of Baden-Württemberg and Bavaria.

Germany exhibits great differences in ratings from region to region. While hospitals in Saxony, Rhineland-Palatinate/Saarland and North Rhine-Westphalia are performing quite well, the situation in Schleswig-Holstein/Hamburg, Hesse, Bavaria and Lower Saxony/Bremen is below average. The reasons for this are very specific to each federal state and cannot be ascertained individually. Bavaria, for example, has a great many small clinics which rate more poorly on the average. Whereas in Baden-Württemberg, with just as many small clinics, the situation of the small hospitals is good on the average. Furthermore, municipal clinics in Germany are distributed quite heterogeneously; the proportion of them is particularly high in the south. In contrast, the connection between patient satisfaction and the hospital’s rating as well as between (publicly accessible) quality measures and the rating is clear-cut. Apparently, economic efficiency and quality go hand in hand and create the conditions for satisfied patients. Lastly, it has been shown that purely psychiatric clinics have a good rating.

For further information, please contact:
Dr. Boris Augurzky (RWI Essen) Tel.: +49 201 81 49-203
Dr. Sebastian Krolop (ADMED GmbH) Tel.: +49 2238 47 53 00
Sabine Weiler (Press office RWI) Tel.: +49 201 81 49-213

This press release is based on the study “Krankenhaus Rating Report 2010: Licht und Schatten” (Hospital Rating Report 2010: Light and Shade). The report includes graphic charts on maps of Germany and hospital benchmarks. The executive summary is available from www.rwi-essen.de/publikationen/rwi-materialien/ as Issue 59 of the “RWI : Materialien” and from www.admed.com as a PDF file. The complete study can be ordered at a price of 265 euros incl. VAT from RWI Essen, HCB GmbH or ADMED GmbH.