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The economization of healthcare

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Interview with Kalle Kunkel,
ver.di union secretary for the Charité and for
Charité Facility Management (CFM), April 2017

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The economization of healthcare in Germany
has gathered momentum since the 80s.

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Since then, there is a tendency

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to introduce market-based
management tools

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and to rely more on competition.

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The most radical steps were

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first of all that in 1997

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all forms fixed staffing levels
in the hospitals

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were abolished.

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Until then, at least for normal nursing,

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there was the so-called
nursing personell regulation.

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It was supended in 1996

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and then abolished in 1997.

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It was said that such planning regulations

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are in the way of the new goal

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of establishing more elements of
competition in the healthcare sector.

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So that was the first step.

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The second step was the introduction
of the fee-per case system

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with diagnosis-related groups (DRG).

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This was in 2003,

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but the process had started earlier,
maybe since 2000.

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This was the point when hospitals

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were no longer paid for the costs

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that they actually incur.

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Now, for each individual diagnosis,

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meaning for each patient with
a specific diagnosis,

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only a defined fee per case is paid.

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This was definitely a break,

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because since then
each illness or diagnosis

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has a price tag attached to it.

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The important mechanism
that was introduced by this

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was that the hospitals

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that were able to treat the patients

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at this price, or even at a lower price,

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were able to make a profit.

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And those who were not able to

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treat the patients at this price,

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will make losses.

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One of the prerequisites for this

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is something that has only been
possible since the 1980's:

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the fact that hospitals are allowed to
make profits or losses in the first place.

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Because there was a time in Germany

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- it's hard to imagine this today -

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where hospitals were forbidden
to make a profit.

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This means that there was
an accurate account at the end of the year,

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this was the so-called
full cost coverage.

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If the hospital could prove that it had
operated in an economically efficient way

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then its eventual losses were balanced.

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And if there were profits,
they had to be paid back.

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So this system was abolished.

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And we can say that the introduction
of the fee-per-case system

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was one further step in
establishing the health care system

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as a care economy, as a market.

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Since then, we have seen more and more

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hospital beds, and entire hospitals

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being managed by private firms.

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Ten or fifteen year ago, private firms

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had a market share of 10-15%.

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By now they have a share of 30%.

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What is interesting here,

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is that private firms mostly
go for the profitable cases.

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So now we are facing an important question.

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Healtcare is a service
of public general interest.

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So the hospitals that are publicly owned,

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as well as those that are
run by welfare organisations

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such as churches etc.,

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they see it as their duty

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- or they are obliged
by their public mandate -

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to actually deliver this public service.

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 That is, to maintain something
like emergency care

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and the entire spectrum of treatments,

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while private hospitals are in a
position to have their pick.

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Also, when private firms buy hospitals,

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 they tend to specialize more and more

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on those treatments that are profitable.

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And in this process they also try to do

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as many of the profitable operations
as they can.

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Consequences for the hospital staff

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One of the consequences
of this development was

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a massive reduction of
non-phyisican hospital staff.

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For example, when it comes to nurses,

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since 1996/1997, when the nursing staff
regulations were abolished,

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50.000 nursing jobs were cut

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until the mid-2010's.

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Interesting enough,
in the same time period

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physician's jobs were created.

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The hospitals had an incentive to do so,

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to have as many physicians who perform as
many treatments and operations as possible.

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On the other hand, all care work
that is necessary

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immediately before and after
the medical intervention,

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and which is also important
for the recovery process,

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is seen as a financial burden.

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That's the reason for the massive cuts.

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For the employees, this results in a
massive increase of their workload.

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By now, Germany has one of the
worst nurse-patient ratios

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of all European countries.

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The figures vary, depending on the study,

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between 1:12 and 1:13 on average.

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If you take Norway as a benchmark,

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in Norway, there is one nurse caring for

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a little more than five patients,
on average.

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This has lead to a situation where,
increasingly, nurses feel burnt-out.

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They cannot finish their work,
they work unpaid hours of overtime.

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Another important element is that

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they cannot live up to their own standards.

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This means that each day when I go home
from work, I feel dissatified.

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with how I manage do my work
- or how I do not manage it any more.

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And this is one of the most important
triggers for a burnout.

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And while the workload was strategically 
increased through job cuts,

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We also saw the hospitals

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starting to profit from 
the low-wage sector

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which had been established 
by the "agenda reform"

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of the social democratic /  
Green party government.

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They did so by outsourcing everything

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that they call "not directly patient-related".

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To sum it up, 
they have outsourced all areas

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which they believe they can get away with,

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because of the position that 
these employees have

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on the politically determined 
labour market.

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These are classical low-wage sector
jobs that were outsourced.

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The wage level of the employees of 
Charité Facility Management (CFM)

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is at 60% of the wage level 
of the regular Charité staff.

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This is one of the tendencies 
that we noticed.

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It is combined with collaborations 
with private partner firms.

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At the Charité it is set up in such a way

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that a private consortium holds 49%

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of the firm Charité Facility Management.

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This consortium is actually responsible
for all of the operating business.

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Exactly how much money do they extract
out of this and at which point?

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This is something that is 
kept from the public,

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because the respective contracts 
are not made public.

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The whole thing  is a veritable scandal.

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A public institution making contracts

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worth millions of Euros,

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and we don't know exactly 
what is written in these contracts.

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Up to date, CFM is inhibiting the 
constitution of a correct supervisory board

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through which employee representatives
would have the possibility

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- they would have to repect secrecy -

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but they would have the right 
to inspect these contracts.

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Also we as a union would have the 
opportunity to be present and to inspect.

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We believe that this is 
one of the reasons that CFM

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has blocked the constitution of a correct
supervisory board for many years now.

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Until today, even though court has ruled 
at the beginning of this year

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that a supervisory board needs to be 
formed, they still try to play for time.

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the profits

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The question of profits or surplusses
can be discussed on several levels.

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First of all: 
We have private hospital companies

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That fact is widely talked about, 
at the moment.

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In Germany, we have the largest 
hospital corporations in Europe.

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And they extract millions or billions 
of Euros from the system.

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And we have to remember that 
these are health insurance funds.

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This is money that the insured persons pay 
to ensure good healthcare service.

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And this money ends up 
as profit of the corporations.

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That's one side of it.

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When we get to the second side, that's 
where things become a bit complicated.

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The corporations say: "Well, we do 
re-invest a large portion of that money."

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And this is partially true.

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What is also important here: 
The communal hospitals,

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just like the hospitals that are run 
by non-profit organisations,

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in this respect at least,
they all behave the same way.

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The communal and non-profit hospitals also

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make a profit, or have a a net revenue.

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They also try to extract that 
from the system. Why?

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Because the public authorities, 
the federal states in this case,

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would normally have to 
pay the investment costs,

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which would be necessary to 
maintain the hospital infrastructure.

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We have a so-called two-pillar system:

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Health insurances pay for the treatments,
and for the operational expenses.

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The federal states pay the costs that 
are necessary for the infrastructure.

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Buildings, procurement 
of technology, and so on.

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It is commonly known that 
they do not sufficiently do this.

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We have studies that were 
conducted by the hospital

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which say that only approximately half 
of the real investments of the hospitals

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are funded by the public sector.

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The rest comes from 
so-called own resources.

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This again is one of these 
ideologial plastic phrases.

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What it actually means, is:

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Funds that were originally 
intended for financing treatment

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for financing proper wages 
and proper staffing levels,

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these funds that come 
from the insured persons

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are used to meet financial obligations 
of the federal states.

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This is an important point 
because it has larger implications

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On one hand it has to do with 
this whole question of austerity,

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meaning that the so-called saving of money,
which takes place,

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really means that the federal states 
do not meet a legal obligation

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and instead the community of insured 
persons is held liable for it.

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The second dimension of this is that 
hospitals do not make

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all necessary investments, but only those 
that cannot be delayed any more.

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So an enormous investment backlog 
has been created.

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The federal states say, well,

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we have financial problems.

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For example, property taxes 
have been abolished,

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and this has had a big impact 
on the federal states,

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as it had been a state tax.

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So for many years now, 
their investments have been decreasing.

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The nominal value of the investments, the
total numbers, as well as their percentage.

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This means that the share of the investments 
made by the states decreases each year.

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So any discussion about working conditions,

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about the conditions 
of healthcare in hospitals

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is inextricably connected with discussions 
about tax politics, fiscal politics.

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And each party, or each organisation,

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who says we want to improve things here,

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without answering the question how the 
federal staes can meet their obligations,

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so that we do not force the hospitals,
at leat those who are not profit-oriented,

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to use their operating funds 
to transfer them to contruction sites,

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any such party or organization 
is basically hypocritical.

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Conclusion

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What we can see here is that we are facing
quite a large cartel of interests.

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who wants things to stay as they are.

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The federal states, 
Berlin here for example,

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in this state we would probaly need ...

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Well, not probably, these are calculations 
of the hospital institutions themselves,

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we would need 250 to 260 million Euros
each year

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in overall investments for the hospitals.

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Berlin is currently paying 
about 100 million.

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There's a 150 million gap.

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Now we would have to ask:
"How do we get there?"

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The government coalition has decided 
to pay some debts instead.

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The states are interested in a 
continuation of the status quo.

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From a fiscal point of view, the hospitals 
take it out of their operating costs

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they will continue to do so because 
financing it any other way is difficult.

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The large hospital corporations 
are of course interested

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in keeping the system profit-oriented.

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The position of the health 
insurances is a bit peculiar:

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Normally, they should be interested in 
having a rational control mechanism.

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But for a few year now, they 
have also taken the position

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of promoting market-based solutions.

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So, the way we see it at the moment,

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is that the only ones that represent 
a rational, fact-oriented postion here

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are actually the employees.

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This is why, 
about two years ago at the Charité,

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we went on strike.

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Because we noticed that on the 
question of staffing levels,

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in a politial context, the arguments 
have been presented years ago.

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The connection that Mr. Gröhe's 
big expert commission

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has found just two months ago,
that there is

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a relation between the number of 
nurses and the health of their patients,

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normally, this should be common sense.

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Even if that is not enough,
studies exist since ten years ago,

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that have compared 
evaluations of this fact.

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Mortality increases with each additional 
patient that a nurse has to care for.