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GERMANY: An Introduction to Healthcare

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GERMANY: An Introduction to Healthcare  

For more than 100 years, Germany's healthcare system has been characterized by the 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 390 billion Euros. 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. Following the elections in September 2021, the new Minister of Health is expected to no longer prioritise the acceleration of digitisation. Rather, the handling of the COVID-19 pandemic situation is the highest priority.

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 dialysis services the focus shifts to investment opportunities in orthopedic service providers. The legislator still assesses this development closely because there are concerns that the prospect of profits might outweigh the quality of the provision of care. Political stakeholders on the state level push strongly toward stricter regulations. Hence, legislative impediments constantly have to be foreseen and considered.

Even though the legislature's activities towards the digitisation of service providers itself and their means of communication with all stakeholders the challenges following the process of digitisation still have to be faced.

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.

The outpatient services are historically mainly provided by self-employed physicians. However, the physicians themselves turn out to be shy of investments in practices owned by themselves. Hence, stakeholders are constantly developing business models offering infrastructure and personnel as a service so that physicians are enabled to run practices on short terms with lower financial risks. Since the applicable regulations do not yet reflect the design of such models, legal advice needs to be foresighted.