German Hospitals And Wages Growth

Health expenditure growth in Germany's hospital sector is to be pegged to the rate of increase in public-sector wages, following the passing of draft legislation in the lower house of parliament.

This immediate application of the brake is expected to avoid financial collapse by the health funds and provide room for far-reaching reform in the hospital and out-patient sectors of the health service, said health Minister Horst seehofer. In the last three years, he said, fund expenditures on treatment in clinics had risen 24% to 80 billion Deutschemarks ($54.14 billion), double the growth rate of fund income.

He urged state governments to ensure the legislation goes through the upper house rapidly so it can take effect quickly (it will be retrospective to January 1, 1996). However, there are considerable objections, from social Democrat states and from the prime ministers of Bavaria and Baden-Wuerttemberg, who do not want their March elections complicated by hospital spending debates. The German Hospitals Association has urged the government to abandon the bill for 1996 and to institute a budgetary system on a different basis in 1997.