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HEALTH

How private investors are buying up healthcare practices in Germany

Hundreds of health practices in Germany have been purchased by private investors in recent years - and a new investigation suggests that patient care is suffering as a result.

Waiting room German GP
A sign at a GP's surgery in Rödermark, Hesse, directs patients to the waiting room. Photo: Andreas Arnold/dpa

The German healthcare system generally has a positive reputation. In a recent survey conducted by The Local, many readers reported that they were largely satisfied with the ease of getting a doctor’s appointment and the health insurance system. 

However, a new investigation has revealed a worrying trend in medical practices: according to ARD, doctor’s surgeries are increasingly being seen as an attractive proposition for private investors, leading to mass purchases of practices across the country. The study reveals that the influence of these investors may be having a direct impact on the cost of treatment and patient care.

Here’s what we know so far. 

What’s going on?

Over the past few years, equity companies have increasingly turned their gaze on the German healthcare sector, seeing medical practices as a way to make significant returns on investments. 

According to ARD’s Panorama, more than 500 practices are now owned by private equity firms in the field of ophthalmology (eye care) alone.

READ ALSO: ‘It works’: Your verdict on the German health insurance system

The trend isn’t only restricted to ophthalmology: investors are also taking over practices of dentists, radiologists, orthopaedists, gynaecologists, kidney specialists, internists and general practitioners all across Germany. 

Due to the fact that these purchases often take place behind closed doors, data on the scale of buy-ups isn’t readily available. Indeed, the changes have largely gone unnoticed in the public sphere.

Investors vehemently deny that the treatments in these practices are getting worse or more expensive, but a new study conducted by the IGES Institute on behalf of the Association of Statutory Health Insurance Physicians in Bavaria (KVB) suggests the opposite.

Researchers now believe that profit motives in these practices are having a major impact on patient care.  

Is the cost of treatment higher at equity-firm owned practices?

The IGES study analysed data from seven different medical practices from 2018 to 2019 and concluded that cost of treatment at an investor-owned practice tended to be around 10 percent higher than in other practices for the exact same procedures.

READ ALSO: How to make the most of reward schemes on your German health insurance

According to the study, the higher fees are “solely due to the characteristic of ownership” and were completely divorced from aspects of treatment and patient outcomes. This led the researchers to conclude that practices owned by financial investors were far more profit-oriented than their non-investor-led counterparts.

Wolfgang Krombholz, board member of the KVB, said he was concerned that the healthcare system would only be oriented towards earning opportunities if politicians didn’t act soon. “It is important to us to recognise what kind of developments are going on at the moment,” he told ARD. “And that these developments are limited in the future.”

What impact does this have on patient care?

According to the IGES research and investigations carried out by Panorama, the impact of this profit motive on patient care is significant.

“Ophthalmology has become a business,” one ophthalmologist who had worked for two investor-led surgeries told Panorama. “It is simply a business in which as much money as possible is to be made.”

In her interview, she revealed that she was told to “upsell” as many procedures to patients as she could – particularly those that the patient would have to pay for themselves. She said one of the main treatments being pushed was cataracts surgery since simple operations can be especially lucrative for investors. This is backed up by the yearly financial reports of the healthcare brands.

A sign for a dentist's practice in Dresden, Saxony

A sign for a dentist’s practice in Dresden, Saxony. Photo: picture alliance/dpa/dpa-Zentralbild | Robert Michael

In dentistry, too, sweeping acquisitions have occurred over the past few years, resulting in increased economic pressure in the hundreds of surgeries now under the control of investors. 

One dentist, for example, told Panorama that she was regularly presented with “motivational” diagrams by the practice owners. The charts showed the profits she’d made with bridges, crowns or implants – and how much more the top dentists in the chain had achieved. 

The dentist, who wished to remain anonymous, said she was shocked to find out that patients had received treatment from her that was not yet necessary – including drilling into healthy teeth. In addition, she said she was pressured to bill the health insurance companies as much as possible. 

READ ALSO: What you should know about Germany’s plans to roll out e-prescriptions

Are politicians doing anything about it? 

Some politicians have wanted to limit the intervention of investors in the healthcare sector for some time – including the Bavarian MP Martina Stamm-Fibich (SPD).

“If we have a structure where doctors are clearly presented with financial figures, it has nothing to do with our care as we organise it in Germany,” Stamm-Fibich told Panorama.

“The state health ministers passed a joint resolution last November that says that the steadily increasing share of investor-supported practices in health care is noted with growing concern”, she explained.

Martina Stamm-Fibich (SPD) gives a speech in parliament

Martina Stamm-Fibich (SPD) gives a speech in parliament. Stamm-Fibich is one of the politicians calling for limitations on the purchase of practices by private equity firms. Photo: picture alliance / dpa | Monika Skolimowska

“The ministers are calling for more transparency and have asked the Federal Ministry of Health to initiate legislation to limit the purchase of further practices.”

When questioned by Panorama, the Federal Ministry of Health said that restrictions on purchasing medical practices would be difficult to enact due to legal concerns.

However, the Bavarian Minister of Health, Klaus Holetschek (CSU), sees the current study by the KVB as a reason to debate the issue.

“We will take a look at where there are undesirable developments and then take action,” he told NDR and BR. 

READ ALSO: Climate, weed and citizenship : The new German government’s roadmap

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MONEY

Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 

READ ALSO:

What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life

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