Public Health Care

Nicole Lieb, Ludwig Maximilian University of Munich

Relevance of the Practice

The principle of the welfare state (Article 20(1) of the Basic Law [BL]) obliges the federal government, the Länder and the local governments to ensure a functional and efficient health infrastructure within the scope of their respective responsibilities. The urban local government’s (ULG’s) and as well rural local government’s (RLG’s) task is not to guarantee health care (in terms of planning and funding), but rather to provide services, especially the actual medical treatment.[1] Regarding this medical treatment, it is important to differentiate between inpatient and outpatient treatment.[2] The satisfactory fulfilment of this commitment is faced with a number of challenges: The demographic development not only changes the clinical pictures of patients, but at the same time an above-average number of older people live in rural areas which have a higher and more differentiated need for care than younger people who tend to move to urban areas. In addition, the average age of general practitioners in particular is very high.[3] This leads to the danger of considerable gaps in rural care and overprovision in the urban region.[4] The problem is not an undersupply in itself but an unequal distribution. Health insurance in Germany is a compulsory insurance and is conceived as a dual insurance system. Instead of statutory health insurance, citizens have the option – and for various occupational groups even the obligation – of choosing private health insurance. The dual health insurance system also favours the development because the different remuneration levels provide incentives to settle in affluent urban areas where many privately insured people live.[5] The Federal Statistical Office has calculated that almost 90 per cent of the population living in urban regions in Germany reach the nearest hospital with a basic supply within 15 minutes while in rural regions only 64 per cent of the population are able to reach this.[6]

Description of the Practice

In oversupplied urban areas is only a limited number of approvals for panel doctors (Kassenarzt), whereby for private medical activities no approval restrictions are made. The reason for this is that it would constitute a constitutionally justifiable encroachment on the fundamental right to freedom of occupation (Article 12 BL), and such restrictions would overall not automatically lead to more settlement in underserved rural areas. Rather should options be taken into consideration which tie in earlier, e.g. to allocate a place to study only on the condition that the student will later be established as a practitioner in rural areas. However, this is a political and legislative question and not a responsibility of local governments. Due to demographic change, the greatest challenge local governments are facing is in the area of health care, especially in structurally weak rural regions. Various measures must therefore be taken to prevent the threat of a shortage of doctors and to ensure that care is provided close to where people live and in line with their needs in the future. The lack of doctors in rural areas can be divided into two manifestations. Regarding the inpatient sector hospitals in rural areas have shortage of skilled personnel, whereas in the outpatient sector a lack of general practitioners and specialists in the form of individual practices can be located. Potential solutions can be created by RLGs either as the responsible body of a hospital or of a medical care center[7] (paragraph 95 SGB V). The provision of services as an individual doctor by a local government is essentially excluded.[8]

The right of local governments to self-government in Article 28(2) BL guarantees the right to handle all affairs of the local community on their own responsibility. This is sufficient only insofar as the definition is fulfilled, what means that larger tasks have to be split up into subtasks. One example to illustrate such a situation is the area of health care: the financing of nationwide health insurance is not a local task, but the operation of a hospital is. It is recognized that the guarantee of self-government includes (also) the economic activity of the local government. In 2017, 37.1 per cent of the hospitals in Germany were privately owned, 34.1 per cent by non-profit organizations and 28.8 per cent by public authorities.[9] If one considers the distribution of hospital ownership between local governments and private individuals, a decline in public ownership and an increase in private hospitals can be noted. The assumption of the ownership of a hospital and its termination are not subject to free local government’s policy decisions. The legal basis is rather the local government’s obligatory responsibility to subsidiary guarantee a basic supply laid down in the respective Länder hospital laws. In contrast to the outpatient sector here is no lack of the legal basis of competence for local government’s participation, but rather of the political will and financial strength of RLGs.[10] Regarding hospital ownership, municipalities or more likely counties and districts can be owner of the hospital, a public company can be set up to run the hospital or as a third option the task can be given away to a private company.[11] When setting up a public company local governments are subject to certain regulations which vary in each of the Länder. What most Local Codes[12] have in common is the need for a public purpose, an appropriate balance between performance and expected needs and a subsidiarity clause. Some of the Länder declare local government’s economic activity admissible if the public purpose pursued can be fulfilled ‘just as well and economically’ by the local government as by private companies. In other – stricter – Länder it is required that the public purpose ‘is not or cannot be fulfilled just as well and economically by another’, i.e. that the local government must be able to fulfil the purpose concerned better and more economically.

Outpatient medical care is largely provided by private contract physicians. In the recent past it can be observed that young doctors no longer want to take on the economic risk of having their own practice, but rather strive for a separation between the medical profession and the entrepreneurial side. With regard to rural undersupply in the outpatient sector (individual GP practices), however, there is as already mentioned a competence problem. As one step to face the challenges, local governments have been allowed to set up Medical Care Centers (MCC) since 2015.[13] This makes it easier for local governments to operate an MCC, as they can now set up such an MCC in the form of a private company, a public-law administration, an institution under public law or in the form of a public company. They will thus be provided with an instrument for ensuring medical care, especially in rural areas, which is a novelty in the form of contract physician law that has hitherto been characterized by the provision of private law services.[14] The strengthening of local MCC ownership is to be welcomed, especially with regard to underserved areas, and will lead to an increase in public run MCCs in the future. This correlates well with the legislator’s vision of mastering rural undersupply by involving local governments more closely.[15] But with new possibilities, also legal challenges have to be taken into account. Local governments are only allowed to operate economically to a certain extent, especially with regard to MCC the problem of how to deal with the profits generated from it. If RLGs decide to operate an MCC under their own management, they must of course also comply with EU state aid law.

Since many municipalities are not financially able to run a hospital or MCC on their own, the issue also affects other report sections like changing the present financial arrangements (report section 3 on local finances), establishing inter-municipal cooperation or even amalgamations (report section 4 on local government structure) or enabling more intergovernmental relations and support (report section 5 on intergovernmental relations). As the dissatisfaction of the rural population rises, they will want to play an increasingly important role in decision-making processes or even think about ways of forcing universal health care (report section 6 on people’s participation).

Assessment of the Practice

The influence of local governments on policy decisions in the context of health care is not particularly great. Rather decisions to ensure nationwide coverage are made at federal level, as shown recently by the Federal Ministry of the Interior’s ‘Plan for Germany – Equivalent Living Conditions’.[16] As stated there, one of the goals for the future is to ensure the provision of good medical and nursing care and local elder care services for everyone.[17] This is a major challenge, in particular as a result of future demographic developments. At this point, some suggestions and recommendations for action can be made for the future: a cross-sectoral approach to health care, better coordination of emergency care, the promotion and expansion of telemedicine and the promotion of young doctors in the regions.[18] Another effort to respond to the shortage of skilled workers in German hospitals was the creation of a new health profession which enables doctors to delegate medical services. The ‘physician assistant’ starts at the interface between nurse and physician.[19] Health care in rural and underdeveloped areas will need to focus more on health care across sectors with regional development aspects such as mobility and accessibility, digital networking and empowerment in an overall context. This can and must be achieved above all through a more regional and flexible approach. The lack of general practitioners in rural areas is a symptom behind the challenge of more regionalized health care. The guiding idea is to open up scope for local and state-related design within the fields of prevention, curative medicine (with the sectors of medical care and hospital care), rehabilitation and care de lege lata and de lege ferenda. The allocation of specific responsibilities to the local level proves to be functional if the requirements for high-quality and economic health care can be better met there. Field-wide, the structural interlocking is described as a future task of coordinating character and it is proposed to entrust this task to the local governments.

References to Scientific and Non-Scientific Publications

Burgi M, Kommunale Verantwortung und Regionalisierung von Strukturelementen in der Gesundheitsversorgung (Nomos 2013)

Council of Experts for the Assessment of Developments in the Health Care Sector, ‘Needs-Oriented Management of Health Care’ (expert opinion, SVR Gesundheit 2018) <>

—— ‘Needs-Oriented Supply – Perspectives for Rural Regions and Selected Performance Areas’ (expert opinion, 2014)           <>

Henneke HG (ed), Kommunale Verantwortung für Gesundheit und Pflege (Boorberg 2012); in particular the contribution of Burgi M, ‘Kompetenzverteilung zwischen Bund, Ländern, Kommunen und Sozialverwaltungsträgern im Gesundheitssektor‘

Kingreen T and Kühling J, ‘Kommunen als Trägerinnen Medizinischer Versorgungszentren – Sozialversicherungs-, kommunal- und wirtschaftsrechtliche Vorgaben‘ (2018) 21 DÖV 890

Plagemann F and Ziegler O, ‘Kommunale Trägerschaft von MVZ‘ (2016) 131 DVBl 1432

Seehofer H, Klöckner J and Giffey F, ‘Plan for Germany – Equivalent Living Conditions’ (Federal Ministry of the Interior, Building and Community 2019)  <;jsessionid=4FEE6DA8F5956740EEF8A5CDCFE87FD0.2_cid287?__blob=publicationFile&v=4>

Welti F, ‘Soziale Selbstverwaltung und Bürgerbeteiligung im sozialen Gesundheitswesen‘ in Veith Mehde, Ulricht Ramsauer and Margrit Seckelmann (eds), Staat, Verwaltung, Information – Festschrift für Hans Peter Bull (Duncker und Humblot 2011)

[1] In Bavaria the municipalities have according to Art 11 of the Bavarian Constitution (following up Art 28 BL) the right to organize and administer their own affairs. In addition, Art 83 of the Bavarian Constitution lists numerous individual tasks of the municipalities in a non-exhaustive list which includes amongst others ‘local health care’.

[2] Unlike in the past, it is no longer always possible to draw a clear dividing line between outpatient and inpatient treatment. On the contrary, due to some relaxation it is now also possible to provide outpatient care within the framework of a hospital. The extent to which this can be softened in the future in order to guarantee nationwide care has to be observed, but cannot be further developed at this point.

[3] In Bavaria for example every third GP is over 60 years old and will therefore retire in the foreseeable future.

[4] See Thorsten Kingreen and Jürgen Kuehling, ‘Municipalities as Responsible Body of Medical Care Centers – Social Security, Municipal and Commercial Law Requirements’ (2018) 21 DÖV 890.

[5] Council of Experts for the Assessment of Developments in the Health Care Sector, ‘Bedarfsgerechte Versorgung − 

Perspektiven für ländliche Regionen und ausgewählte Leistungsbereiche‘ (expert opinion, SVR Gesundheit 2014) <> 349, Sec 441.

[6] See therefore the press release from 29 April 2019: ‘Wie lange brauche ich bis zum nächsten Krankenhaus‘              <;jsessionid=FB87075D2D825969E260232728B9AC04.internet721>.

[7] In German: Medizinisches Versorgungszentrum (MVZ).

[8] Illustrated by Martin Burgi, ‘Distribution of Responsibilities between the Federal Government, the Länder, Local Governments and Social Administration Bodies in the Health Sector‘ in Hans-Günter Henneke (ed), Local Responsibility for Health Care (Boorberg 2012) 36-38.

[9] But it has to be taken into account: Because private institutions are usually equipped with fewer beds and are therefore smaller hospitals while public hospitals are usually three times as large, nearly every second bed (48.0%) was in a public hospital, a third of the hospital beds (33.2%) were in a non-profit hospital and only a good sixth (18.7%) in a private hospital. See Statistisches Bundesamt, ‘Gesundheit. Grunddaten der Krankenhäuser‘ (subject-matter series 12, Destatis 2018)              <> 8.

[10] See for a clear description Martin Burgi, Local Responsibility and Regionalization of Structural Elements in Health Care (Nomos 2013) 72-74.

[11] Details of the various possibilities and forms of privatization of a hospital and its limits cannot be discussed at this point, but see for further information: Martin Burgi, Kommunalrecht (6th edn, CH Beck 2019) para 17 – Economic Activity and Privatization.

[12] i.e. Municipal Codes (Gemeindeordnungen), County Codes (Kreisordnungen) as well as District Codes (Bezirksordnungen).

[13] According to the earlier legal situation, an MCC owner could only be an actor who was himself a service provider, for example a hospital. Since the last amendment, local governments can now themselves be the owners of a MCC.

[14] For the social insurance, municipal and economic law conditions for the MCC founded by municipalities see Kingreen and Kühling, Municipalities as Responsible Body of Medical Care Centers, above.

[15] This conclusion is drawn by Florian Plagemann and Ole Ziegler, ‘Kommunale Trägerschaft von MVZ‘ (2016) 131 DVBl 1432, 1442.

[16] ‘Unser Plan für Deutschland – gleichwertige Lebensverhältnisse überall‘ (Federal Ministry of the Interior 2019) <;jsessionid=4FEE6DA8F5956740EEF8A5CDCFE87FD0.2_cid287?__blob=publicationFile&v=4>.

[17] See ibid 102-104.

[18] As outlined in the above-mentioned ‘Plan for Germany – Equivalent Living Conditions’ 103-104.

[19] The studies at the Baden-Wuerttemberg Cooperative State University in Karlsruhe take three years and alternate between lecture hall and hospital. See, for more information, <>.