Access denied: Germany's national health-care system was the envy of the world - until financial crisis hit - assessment of the German program - adaptation of 1994 article from the German magazine Der Speigel

IT WAS 11 o'clock in the morning, as she was vacuuming, that the Bonn housewife suddenly felt a stabbing pain in her stomach. She grew dizzy and broke out in a cold sweat; her pulse was almost non-existent. The doctor on call who came with the ambulance diagnosed life-threatening abdominal bleeding.

The doctor reported the case to the nearest hospital and set off with her blue light flashing. Over the radio she told the hospital that the 62-year-old patient's condition was deteriorating rapidly and a difficult operation would be necessary. This must have made the hospital doctors change their minds. Suddenly Outpatient would not accept the woman. The doctor in the casualty department announced, to the surprise of the doctor on call, that "all operating tables are being used." The patient had to be driven across town to the University Surgical Clinic.

The director of the clinic, Andreas Hirner, who saved the patient's life with an emergency operation, has an explanation for her nightmare journey: "An operation like this, in which there can be complications, can easily cost 20,000 Deutschmarks [around $12,750]. It was quite simply too expensive for them."

Annali Kauer had a similar experience. "The pain was so bad I could have screamed," says the 46-year-old shop assistant from Upper Hesse, who had a nerve trapped by a displaced thoracic vertebra. Despite the pain, she drove herself the 25 miles to the Marburg University Clinic--and was brusquely turned away. "Seehofer's new law" means that we can do X-rays only "in an emergency," she was told.

The ear, nose, and throat (ENT) chinic at Cologne University also cited Health Minister Horst Seehofer's law. Patients at the clinic were given a leaflet in which the director of the hospital explained that his hospital would not, in fact, be able to perform operations, even in cases where the condition was life-threatening and surgery "could not be postponed," since every bed was full. But doctors unofficially told the patients the real reason was that there was no money available for surgery. No hospital in the area was prepared to look after the ailing patients.

Out of Control

THESE CASES, and many others like them, are side effects of the cost-control program designed by Health Minister Seehofer and approved by the Bundestag in 1992. In the past, hospitals could exceed their budgets to almost whatever extent they wanted. Cost increases were passed on to the health-insurance funds in the form of an increased daily rate. The longer a patient spent in a hospital bed, the more money came in. As a result, the total health-care budget grew by almost 10 per cent a year. Between 1980 and 1992, the annual payments by health-insurance funds to hospitals alone rose from DM25.5 billion to more than DM50 billion. In 1992 the health-insurance funds registered a record deficit of DM9.4 billion.

Under this system, German hospitals became over-staffed and inefficient. Between 1960 and 1990, the number of hospital beds and the number of patients treated in them did not quite double, while the number of hospital doctors tripled, from 30,700 to 96,200. In some hospitals, there are three or four staff members for each bed. The beds themselves, which cost DM300 to DM700 per day, came to be used by patients who could have been cared for more effectively at home or in a nursing home. And the hospitals grew accustomed to lavishing funds on the latest diagnostic and therapeutic machinery, which generate additional income through reimbursements for procedures.

Health Minister Seehofer's law was intended to force hospitals to operate economically. Since the beginning of 1993, the health-insurance funds have been giving hospitals fixed sums, based on their 1992 budgets. Spending increases--whether due to inflation, medical progress, or higher staff costs--are no longer allowed to exceed the growth rate of the basic wage. Under Seehofer's law, as of 1996 the daily-rate system will be replaced by "per-case flat-rate payments" for certain types of hospital treatment and "special payments" for certain operations, such as hip replacements.

Seehofer is trying to introduce "more competition" into the medical profession and to stop hospitals from charging excessive sums. Per-case flat-rate payments mean that it will no longer pay to keep patients in beds for long periods; fixed prices for operations are supposed to put an end to unnecessary and costly examinations.

In financial terms, the reforms have been successful. In 1993 the health-insurance funds turned a profit of DM10.2 billion. For the first time in years the insured can count on a reduction in the level of their contributions. And there seems to be still more room for savings. In 1993 hospitals received 5 per cent more from the health-insurance funds than in the previous year. Other service providers were thriftier: general practitioners spent 3 per cent more and dentists only 2.2 per cent more.

Before the reforms were introduced, hospital doctors showed hardly any interest in cost management. They routinely did second examinations instead of relying on the judgment of general practitioners. To be on the safe side, they examined everything their array of instruments was capable of diagnosing. They did not have the faintest idea of the cost of a laboratory analysis or of a computerized tomography scan. All that is changing.