HANSE Interim Team Research: Is the German hospital system in the emergency room? How can the urgently needed structural change be mastered?
The financial imbalance of German hospitals has been a recurring topic in the healthcare sector for several years. The situation has continued to deteriorate in 2023.
As part of a HANSE Group project for a client operating in the healthcare sector, HANSE Interim examined the key market trends and decisive developments and analyzed their significance and impact on the future opportunities and risks of the industry.
Market situation in the hospital sector
In a survey conducted by the DKI in July 2023, almost all general hospitals (96%) stated that they are not in a position to finance the current cost increases in personnel and material costs from regular revenues in the long term. 63% rated their liquidity situation as poor or very poor.
The economic outlook is also viewed pessimistically.
69% of hospitals consider their economic existence to be seriously threatened until the planned hospital reform takes effect in 2027.
The main problem areas include staff shortages, financing difficulties, inflation and investment backlogs, which continue to represent a burden for hospitals.
In addition, there are issues such as ongoing market consolidation and outpatient care.
Recently, the demand for interim managers in the healthcare sector has also increased significantly at HANSE Interim. This trend reflects the growing need to deploy qualified managers on a temporary basis in order to be able to react flexibly to the particular challenges and changes in the healthcare sector.
Companies and facilities are increasingly recognizing the value that experienced interim managers bring to increase efficiency and process quality and maintain quality standards.
Many hospital operators have also recognized that adjustments are necessary and are working on realigning their hospitals.
The pressure is high, which is also shown by assessments of the development of hospital numbers.
For example, 83% of participants in a hospital survey in May 2023 (managing directors and medical directors) expect the number of clinics in Germany to fall from 1,887 (2021) to between 1,250 and 1,750 by 2028.
In the period from 2028 to 2033, the number of clinics is expected to fall further, particularly due to the increase in outpatient care. 73% of respondents estimate that the number of clinics will then fall to a level of 1,000 to 1,500.
Anzahl der deutschen Krankenhäuser und eingeschätzte Bandbreite der Zahl bis 2028 und 2033
* von einer Mehrheit eingeschätzte Bandbreite (vgl. Erläuterungen im Text)
The German hospital sector therefore faces major challenges in the coming years.
Which trends and innovations can play a formative role in the future and help providers to master the urgently needed structural change?
- Cooperations, takeovers and mergers are becoming increasingly important. In order to better leverage synergies, experts assume that mergers and acquisitions of hospitals in particular will continue to increase in the coming years.
- Outpatient treatment in hospitals is one of the key objectives in healthcare. According to experts, in an international comparison, too many services are provided on an inpatient basis that can be provided more effectively and economically on an outpatient basis in surgeries. On the hospital side, however, this affects smaller, unspecialized providers in particular, who are barely able to compensate for the drop in revenue.
In addition to the closure of loss-making specialist departments, options for action include the expansion of hospital outpatient departments, the purchase of practices and doctor’s surgeries as well as the establishment of outpatient surgical practices, medical care centers (MVZ) or integrated healthcare centers.
- Another top topic for those responsible (alongside telemedicine, robotics and IoT) is the use of artificial intelligence (AI). Operators assume that in the next ten years, the technology will play a significant role in process optimization in the areas of image recognition and decision support, time series and root cause analyses, as well as in auditing and human resources.
- For many years, the issue of skills shortages has dominated the agenda throughout the healthcare sector. The shortage means that available bed capacity cannot be filled due to a lack of nursing staff, or forces operators to resort to considerably more expensive temporary staff. Hospitals are currently taking measures to build up their own training capacities and increase the attractiveness of the workplace (“work-life balance”). Although the staff shortage is expected to ease somewhat due to hospital closures, part-time rates are also on the rise.
- Digitalization – On the patient side, the COVID-19 pandemic has accelerated the transformation. Hospitals are encountering increased patient acceptance of virtual health and other digital innovations as well as increasing participation in decision-making
Conclusion
The financial imbalance of German hospitals is a persistent problem that has worsened in 2023. Significant advances in digitalization, networking and innovation, as well as changes in the world of work, are the key drivers for hospitals. Hospitals must adapt to the changing conditions at an accelerated pace in order to remain competitive.
What developments do you see in this market in the future?
With best regards
Your HANSE Interim Management
Andreas Lau
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