deutschekrankenhausgesellschaft basics of the financing system for hospitals in germany hope –...

DEUTSCHEDEUTSCHEKRANKENHAUSKRANKENHAUS

GESELLSCHAFTGESELLSCHAFT

Basics of the Financing System for Hospitals in

Germany

HOPE – President’s Committee

Pärnu, Estonia - 07 May 2007

Georg Baum, Director General

German Hospital Federation



Georg Baum

The German Hospital Federation

The German Hospital Federation represents

hospitals in all health policy decisions and is the

partner of politicians, institutions, associations and

scientific groups.

As a national association, the German Hospital

Federation represents 28 member associations:

• 16 state associations,

• 12 national organisations.



Georg Baum

„German Experiences with the Implementation of a DRG-SystemGerman Experiences with the Implementation of a DRG-System“

Hospital Data Germany (2003)



Georg Baum

D EU 15

(~2000)

Health Expenditure (in % GDP)

10,9 9,1

Expenditure on In-Patient Care (in % GDP)

3,9 3,3

In-Patient Beds (acute care) (per 1.000 persons)

6,1* 4,3 (1998)

Use of In-Patient Care (per 100 persons)

21,1* 18,9 (1998)

LOS (acute care) 8,6* 7,2 (1998)

German Hospital Sector in Comparison, German Hospital Sector in Comparison, approx. 2002approx. 2002

„ German Experiences with the Implementation of a DRG-SystemGerman Experiences with the Implementation of a DRG-System“

Sources: OECD, 2004; Federal Statistical Office 2004 (* Data for 2002); Basys (Eu15), 2004.Sources: OECD, 2004; Federal Statistical Office 2004 (* Data for 2002); Basys (Eu15), 2004.



Georg Baum

The system of hospital financing

1995 2000 2005Statutory health insurance 39.7 44.5 49.0

Private health insurers 4.1 4.7 5.0 *

States (capital costs) 3.9 2.8 2.7* 2004

Expenditure on in-patient care in bill. EURDevelopment from 1993 to 2005



Georg Baum

General framework of the hospital system

1995 2000 2004public hospitals 863 744 671

beds 319,999 283,537 255,775charity-based hospitals 845 813 712

beds 212,459 200,611 179,682private hospitals 373 446 444

beds 32,166 38,966 53,976

Allocation of general hospitals according to their ownership



Georg Baum

Ownership of hospitals in GermanyOwnership of hospitals in Germany




Georg Baum

Number of beds in 2003 according to hospital ownersNumber of beds in 2003 according to hospital owners




Georg Baum

The system of hospital financing

The principle of dual financing (introduced in 1972)

Investments (capital costs) are financed through the States

• Assets with an average economic life of more than three years

Running costs are financed through the sickness funds(55 Billion E)

The financing through the States is effected by

• Flat-rate grants (usually in relation to the number of beds)

• Case-by-case grants

• Total 2.7 Billion E

Special rules for university hospitals.



Georg Baum

Changes in the remuneration system of German Changes in the remuneration system of German hospitalshospitals




Georg Baum

Targets of the G-DRG-ImplementationTargets of the G-DRG-Implementation

More transparency, efficiency, qualityMore transparency, efficiency, quality

Improved performance-oriented reimbursement, better allocation of financial resources

Improved internal and external comparability of in-patient services

Utilisation of additional profitability reserves (LOS, optimisation of operational and organisational structure)




Georg Baum

Main players

Self-government partner

* Associations sickness-funds

* Associations of Hospitals

* together with DRG-Institute www.g-drg.de

Ministry of Health www.bmgs.bund.de

* takes over if negotiations on level of self-government fail

DIMDI for ICD + ICPM (OPS) www.dimdi.de

* federal agency under Ministry responsibility




Georg Baum

Keyelements

DRG Value – each DRG has a relative weight in comparison to the cost of other cases that is adjusted each year

up to seven comorbidity splits are possible

calculation of relative cost-weights nationwide (real costs)

price-setting via base rate (statewide)




Georg Baum

Steering elements

annual negotiation of the statewide base rate

* wage-rate as growth limitation

* increase of cases reduces the growth of base rate

annual adjustment of the system

* annual cost-monitoring with new calculations and

* clinical adjustments incl. adopting new procedures and new technologies




Georg Baum

Calculation Basis 2005Calculation Basis 2005

Number of hospitals 148

Total number of cases used 2,5 Mio. (ca. 15 %)




Georg Baum

The road to a German DRG-System30/6/2000: Decision made by Selbstverwaltung (self-administration)

Selection of the Australian AR-DRG version 4.1

Source Result 2003

AR-DRG 4.1

664 Case Groups

G-DRG 1.0

664 DRGs

National CW

Result 2004

G-DRG 2004

824 DRGs

National CW

25 additional fees (1 calc.)

Result 2005

G-DRG 2005

845 DRGsRefinedNational CW

71 additional fees


G-DRG 2006

954 DRGsRefinedNational CW

83 additional fees

Result 2006



Georg Baum

Schedule for implementation of DRGs

Optional Year

2003 2004 20082005

From individual budgets to a uniform price system on state level

Budget NeutralityIndividual Base rates

Convergence Phase

2009

UniformPrices

From the budget system to DRGs



Georg Baum

2003 Optional Year2003 Optional Year- voluntary DRG-billing- 95% budget-loss compensation- 75% budget-exceed comp.- Notification period 31.10.2002, prolonged till 31.12.2002 (exemption from zero-growth)

Budget NeutralityBudget Neutrality Convergence PhaseConvergence Phase2004 Compulsory 2004 Compulsory

DRG-billingDRG-billing

- 40% budget-loss comp.- 65% budget-exceed comp.

- stage to stage adjustment of budgets/hospital individual base-rates to state-wide base-rates: 2005: 15% , 2006-2008: each with 20%, 2009: 25% - for expensive hospitals rising upper limit of adjustment in percent of hospital budget: from 1% in 2005 till 3% in 2009

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hosp

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state-wide base-rate

Bu

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ind

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1.1.20101.1.2003 1.1.2004 1.1.2005 1.1.2006 1.1.2007 1.1.2008 1.1.2009

Upper limit of adjustment in % of hospital budget

1%1,5%

2%

2,5%

3%

15%20%

20%20%

25%

15%20%

20%20%

25%

adjustment-rates for hospital budgets

low

-pric

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w-p

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hosp

itals

hosp

itals

Schedule for the G-DRG-ImplementationSchedule for the G-DRG-Implementation




Georg Baum

Functionality of the convergence phase

Budget neutrality until the year 2004 (DRGs are brought to account by

individual base rates)

From 2005 the individual base rates will be assimilated to uniform base

rates according to the States

The process of assimilation takes 5 years with steps of 15, 20, 20, 20 and

25 percent.

The reduction of a hospital budget is limited to 1.0, 1.5, 2.0, 2.0 and 3.0

percent in these years.

In 2009 uniform base rates on State level




Georg Baum


2005 2006State EUR EURBaden-Württemberg 2,774.57 2,814.85Bayern 2,710.50 2,737.07Berlin 2,999.81 2,955.00Brandenburg 2,612.31 2,642.56Bremen 2,866.00 2,849.57Hamburg 2,920.41Hessen 2,737.99 2,786.58Mecklenburg-Vorp. 2,585.00Niedersachsen 2,735.79 2,756.03NRW 2,679.80 2,687.23Rheinland-Pfalz 2,888.10 2,956.53Saarland 2,923.02 2,902.82Sachsen 2,654.68 2,711.18Sachsen-Anhalt 2,620.30 2,730.00Schleswig-Holstein 2,619.63 2,653.10Thüringen 2624.98 2,722.50

Base rates on State level 2005 / 2006



Georg Baum

The DRG financing system

Elements of hospital financing

Uniform cost weights or prices on national level

• case-related relative cost weights for defined case groups

(DRGs)

• per diem cost weights for reduction for short-term

treatments and transferred patients

• per diem cost weights for surcharges for outliers

• additional fees with uniform prices

• supplements for assisting persons

• reduction for hospitals not participating in medical

emergency service



Georg Baum

Individuel Elements of hospital financing

Individually negotiated prices between hospitals and health insurers

• DRGs without uniform cost weights

• additional fees without uniform prices

• fees for semi-in-patient treatments

• financing of separately defined institutions

• additional fees for innovations in diagnostics and treatments

• Individual cost weights in the case of highly specialized health care

• supplements to secure care in isolated areas

• supplements for centres with specialized tasks

The DRG financing system



Georg Baum

Results

The DRG-system is nation-wide introduced.

96% of the hospitals account with DRGs

More than 50 Billions E and 15 Mio.cases

Besides US highest rate in world

It is accepted by the major stakeholders.

Only some doctors-associations are in worry of the“ economisation“

No more money.

The spendings of the funds for hospitals) increased not more than in the past.

More winners than loosers

About 60% of the hospitals have increasing base-rates in the convergenz-process

The loosing hospitals are primarily the great hospitals (maximum providers)

Due to the anual adjustments in calculation-methods and medical differentiations the high level treatments are much better weighted – some loosers became winners !



Georg Baum

Results

The efficiency of our hospitals increased Incentive to make profits – the need to prevent deficitsCost-transparency and the higher comparability caused a lot of activities to gather a better performance

Reduction of people working in hospitals - but more doctors

l.o.s. declines continiously

Portfolio adjustmentsSpezialisations and corporations with other hospitals (common drug-supply or IT)Hospital-fusions / public to privat

More activities in the out-patient treatments and corporations with office based doctors



Georg Baum

Results

Quality did not suffer

There are no negative reports or bloody releases known

Increase of quality insurance activities due to new rules



Georg Baum

Further frameworks must be decidedFurther frameworks must be decided

From statewide base rates to nation-wide?

Our postion: we need more time

Base rate as administered prices or reference-price withnegotiation options for the individual hospitals withindividual sickness funds?

Our postion: administered fixed prices

One common budget with all funds or selected contracts

Our position: common

Integrating capital-investment financing in the DRGs

From dualistic to monistic




Georg Baum

Our central problems

The new system is better than the old - but it protects not against unexpected cost-contain measures of the government

The latest health care reform act introduced a price-reduction of 0,5% in 2007/8

total 380 Mio. E every year

Since 10 years there is a steady decline in the investment-money which the regional states provide – hospitals have to help themself

The costs increase faster than the revenues

- Doctor wages increased

- VAT-increased

- Energy-costs a.s.o



Georg Baum

New forms of intersectoral cooperation

Contact:

Deutsche Krankenhausgesellschaft e.V.

Wegelystraße 3

10623 Berlin

Tel: +49 (0)30 – 39801 1000

Fax: +49 (0)30 – 39801 3011

Mail: [email protected]

Internet: www.dkgev.de



Georg Baum

THANK YOU VERY MUCH

FOR YOUR ATTENTION !

deutschekrankenhausgesellschaft basics of the financing system for hospitals in germany hope –...

Documents

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drgsystem slide

hospital system slide

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associations of hospitals

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