GERMANY: An Introduction to Healthcare

GERMANY: An Introduction to Healthcare 

For more than 100 years, Germany's healthcare system has been characterised by statutory health insurance. Nowadays, approximately 73 out of 83 million inhabitants are covered by statutory health insurance whereas only 10 million patients are privately insured. Germany's yearly expenditures on health amount to EUR390 billion. This corresponds to around 11% of GDP. The statutory health insurance funds spend approximately EUR220 billion a year on services for their insured. Hence the statutory health insurance funds have an important impact on all stakeholders in the German life sciences business. This leads to a highly regulated healthcare system with a major emphasis on the cost-benefit ratio of services provided.

In addition to the density and quantity of regulations healthcare is one of the most complex and rapidly changing regulatory branches. Since the beginning of the current legislation with Jens Spahn taking the office of Minister of Health in mid 2017, an almost disruptive change in the statutory health insurance is to be observed. Prior to the COVID-19 situation, the ministry's focus was put on the acceleration of digitisation. These activities were slowed down in 2020 by the pandemic but are still ongoing. The digital health industry made use of the implemented regulations on Digital Health Applications on panel doctors' prescriptions, and several applications had market access with plenty of applicants including the pharmaceutical industry on the verge of market access.

The COVID-19 pandemic situation still challenges all stakeholders and leads to constant actions by the legislature. The legislation focuses on handling the testing programmes, vaccination strategy, and treatment of persons suffering from COVID-19 as well as economic support for service providers which are severely hit by the pandemic implications.

In-patient and out-patient services are regulated by national laws. Public and private hospitals as well as out-patient service providers also have to follow regulations on the state level and have to deal with local authorities.

All in all, legal advice for the healthcare industry has to cover many areas. This obviously includes legal know-how and expertise on healthcare regulation and extends to, inter alia, mergers and acquisitions, antitrust and competition, public procurement and data protection.

Current Developments and Challenges for the Industry

The German healthcare industry offers interesting investment opportunities. The main targets for financial and strategic investors are in-patient medical care centres and nursing homes. Investors' activities increased even in the pandemic situation. After a market consolidation in the areas of radiology, laboratory medicine, and dialyses services, the focus shifts to investment opportunities in orthopaedic service providers. The legislature still assesses this development closely because there are concerns that the prospect of profits might outweigh the quality of the provision of care. Hence, legislative impediments have constantly to be foreseen and considered.

Digitisation of service providers itself and their means of communication with all stakeholders is a massive challenge for the healthcare sector. The legislature strongly emphasises this in its agenda and monitors the development closely so reactions can be on short notice, and all parties need to be agile at all times. Since the federal elections might lead to a new Minister of Health stakeholders are cautious with forecasts on whether this process will remain highly accelerated. Hence, legal advice has to be focused not only on existing regulations but has to consider legislative activities as well.

Mail-order pharmacies are constantly challenged by the representatives of stationary pharmacists and their attempts to jeopardise mail-order business in general with legal actions and attempts to influence the legislature to prohibit mail order sales or at least decrease the economic attractiveness of this business model.