The insolvency risk faced by Germany's rehabilitation clinics was probably significantly reduced during 2007 and 2008. The reason, as revealed in the current "Reha Rating Report 2009" by RWI Essen, ADMED GmbH and HCB GmbH, was improved utilization of clinic capacities. According to the report, only about one-fifth of Germany's rehab institutions now face a high risk of insolvency, compared with almost a quarter in 2006. However, on account of costly collective agreements as well as the impact of the financial crisis and of the new health fund, the risk is likely to increase again from 2010 on. Improvement should be seen in the long term as a result of Germany's demographic development. Yet it is unlikely that all of Germany's rehab clinics will survive the next ten years.

Probably about one-fifth to one-sixth of Germany's rehabilitation institutions ran a high risk of insolvency in 2007 and 2008, while more than half experienced no major business problems and the rest were somewhere in between. This is the conclusion presented in the "Reha Rating Report 2009" prepared by RWI Essen in cooperation with healthcare consultants ADMED GmbH and the Institute for Health Care Business GmbH (HCB). The report is based on balance sheet data from rehab clinics for 2006, from which figures were extrapolated for 2007 and 2008. The situation of rehab clinics has thus improved over 2006. No statistically significant differences in insolvency risk were found with regard to public/private administration, urban/rural location, eastern, western, northern and southern Germany or between chains and individual clinics.

Differences were however seen in capacity utilization depending on the body responsible for the clinic. Specifically, privately operated rehabilitation clinics utilized 71.3% of capacities in 2006, substantially less than public clinics at 87%. The highest capacity utilization, at 93.9%, was seen for clinics operated by Deutsche Rentenversicherung (DRV). It has also been observed that many rehab patients seek treatment outside their own region. On the average, 17% seek treatment within their own region, 30% in a neighboring region and more than half at a clinic even farther away.

Rehabilitation sector forecast to recover only gradually after 2010

The number of inpatient rehab and preventive care institutions has been falling for some time. Between 1997 and 2006, the number of clinics dropped by 9.5% to 1,225, while the average duration of stay fell by 6% during this period. At the same time, the number of cases decreased by 17% to 1.8 million and the number of bed occupancy days by 10%. The fields of specialization experiencing the greatest growth were psychiatry with an increase of 75% and neurology (+70%).

In view of improved utilization of clinic capacities in 2007 (and probably also in 2008), the situation of clinics should noticeably improve temporarily in 2008 and 2009 despite more costly collective agreements. Yet the higher pay settlements are likely to have a retarded impact beginning in 2010; together with the repercussions of the financial crisis and cost pressures introduced by the centralized health fund this will likely result in the situation worsening considerably. As a result of changing demographics and a consequent increase in patient demand of 6.3% between 2006 and 2020, the rehabilitation sector is likely to recover only gradually in the long term, with the number of rehab clinics at high risk of insolvency decreasing compared to the reference year 2006. If, on the other hand, the average duration of stay falls by 2020, the number of occupancy days and consequently the extent of capacity utilization will decrease despite a growing number of cases.

Not all rehab clinics will survive the next ten years

According to the researchers, it will likely prove hard for a number of rehab clinics to defend their market position in the next ten years. An increased tendency to form chains is therefore expected, both within the rehab sector and across sectors. Meanwhile, a number of clinics will probably close down. From an economic standpoint, this would lead to more productive use of limited resources, i.e. the remaining clinics could improve their use of capacities to a considerable extent.

In carrying out the study, data provided by the Federal Statistical Office on all of Germany's rehabilitation and preventive care clinics was analyzed along with 100 annual financial statements covering a total of 172 institutions. Complete data was available only up to 2006, so that the figures for 2007 and 2008 are based partly on forecasts.

For further information, please contact:
Dr. Boris Augurzky (RWI Essen), Phone:+49 201 8149-203, e-mail
Dr. Sebastian Krolop (ADMED GmbH), Phone:+49 2238 475-300,
Sabine Weiler ( RWI Press Office), Phone: +49 201 8149-213, e-mail

This press release is based on the study "Reha Rating Report 2009 - Trügerische Erholung?"("Deceptive Recovery?"). The executive summary (only in German) is available as a pdf file herehttp://www.rwi-essen.de/presse or at www.admed.com. The complete study can be ordered at a price of 190 euros incl. VAT and shipping from RWI Essen, ADMED GmbH or HCB GmbH.

RWI Essen, ADMED GmbH and HCB GmbH have jointly issued a number of expert reports on the health sector, including the recent "Krankenhaus Rating Report 2008" ("Hospital Rating Report 2008").