Value-Based Healthcare in Germany from Free Price-Setting to a Regulated Market

A report from The Economist Intelligence Unit Value-based Healthcare in Germany From free price-setting to a regulated market

SPONSORED BY: Value-based healthcare in Germany From free price-setting to a regulated market

Contents

About this report 2

Introduction 3

Chapter 1: The evolution of health technology assessment and pharmaceutical pricing reform 5

Chapter 2: New focus on providers and outcomes 9

Conclusion 13

About this report

Value-based healthcare in Germany: From free and experience: price-setting to a regulated market is a report l Dr Clemens Guth, executive director, Artemed by The Economist Intelligence Unit (EIU), commissioned by Gilead Sciences. It looks at the l Dr Günther Jonitz, president, Berlin Chamber evolution of health technology assessment and of Physicians pharmaceutical pricing reform in Germany and l Dr Axel Mühlbacher, professor of health examines the new focus on providers and health economics and healthcare management, outcomes. Hochschule Neubrandenburg

In July-August 2015 The EIU conducted l Dr Thorsten Schlomm, professor of urology four interviews with experts on value-based and member of faculty, Martini-Klinik healthcare in Germany, including senior The EIU bears sole responsibility for the content healthcare executives and practitioners as well of this report. The findings and views expressed as academics. The insights from these in-depth in the report do not necessarily reflect the views interviews appear throughout the report. The of the sponsor. Andrea Chipman was the author of EIU would like to thank the following individuals the report, and Martin Koehring was the editor. (listed alphabetically) for sharing their insight September 2015

2 © The Economist Intelligence Unit Limited 2015 Value-based healthcare in Germany From free price-setting to a regulated market

Introduction

Germany has one of the oldest national government is trying to evaluate health healthcare systems in Europe, and for the last outcomes. Some of the most controversial 15 years it has had an infrastructure in place reforms in recent years have involved the for assessing new medications, treatments and assessment and pricing of pharmaceutical healthcare pathways. Yet despite its leadership products, the reverberations of which are still in these areas, the German healthcare system being felt in the German drug market. In 2011 has come relatively late to focusing on health Germany imposed maximum reimbursement outcomes. prices for all new reimbursable treatments following the assessment of their added In recent years, however, this has begun to therapeutic value. This put an end to the free change, spurred on partly by greater demand pricing era in Germany. from patients and by a string of media stories that have drawn attention to the quality of The efficiency frontier is the approach chosen healthcare. in Germany to assess costs and benefits of therapeutic alternatives within a therapy area. At the same time, despite a series of reforms, However, as will be discussed in Chapter 1, this most of these stories have been centred on approach is not yet used systematically, and the process of delivering care, rather than on the system will have to be adapted accordingly, measuring patient outcomes and experiences. because this methodology is relatively new.

“The term ‘value-based healthcare’ doesn’t The most recent set of healthcare legislation,1 translate well into German,” says Dr Clemens which is going through its final readings in the Guth, executive director of Artemed, a private Bundestag (the German parliament) before hospital and nursing-home operator in Germany, coming into effect in January 2016, contains and co-author of a book on value-based measures to carry out benefit assessments of 1 Federal Ministry of Health, healthcare in Germany with Michael Porter, a medical devices and to evaluate the quality “Krankenhausversorgung Harvard University professor who coined the of healthcare, including the introduction of zukunftsfest machen”, term. Value-based healthcare looks at health discounts and surcharges depending on the July 2nd 2015. Available at outcomes of treatment relative to cost. quality of the services provided. The new http://www.bmg.bund.de/ legislation will also aim to make the quality presse/pressemitteilungen/ pressemitteilungen-2015-3/ Nevertheless, there are signs that the reports of hospitals more patient-friendly. khsg-bundestag.html

Meanwhile, a few hospitals around the country, Germany), already provide insightful lessons in notably the Martini-Klinik (a specialist centre how to improve the experience of patients (see for prostate surgery in Hamburg, northern case study in Chapter 2).

4 © The Economist Intelligence Unit Limited 2015 Value-based healthcare in Germany From free price-setting to a regulated market

Chapter 1: The evolution of health technology assessment and 1 pharmaceutical pricing reform

Germany’s healthcare system and health with the country’s 16 Länder (states) and technology assessment (HTA) regime have been designated self-governing institutions. in place for more than a decade. Yet efforts to measure quality have largely emphasised cost The focal point for decision-making at the savings in recent years, and the ultimate impact of nexus of these government institutions is initiatives involving the pharmaceutical industry the Federal Joint Committee (Gemeinsamer are still being weighed up. Bundesausschuss, or G-BA), established in 2004 with responsibility for both appraisal and decision-making in the ambulatory and inpatient A venerable system… sectors. An independent, self-governing body Although Germany’s health insurance system with the ability to issue directives, the G-BA is dates back to Bismarck’s social legislation in the the paramount decision-making body in the SHI late 19th century, much of the country’s current system and co-ordinates HTA.2 decision-making structure is considerably more recent. The G-BA includes the Medical Evaluation Subcommittee, which prioritises technologies Like other European countries, Germany for evaluation, requests the submission of guarantees healthcare to all citizens, but expert evidence and assesses its quality, and unlike many of its neighbours, which fund recommends whether technologies should health coverage through general taxation, be included in the SHI benefits package. A 2 most Germans are covered by the Statutory Velasco-Garrido, M, A separate Valuation Committee, which includes Zentner and R Busse, Health Insurance (SHI) system (Gesetzliche representatives of physicians’ associations and “Health systems, health Krankenversicherung, or GKV), which consists of the SHI, determines which technologies will be policy and health 134 sickness funds financed by both employee reimbursed. technology assessment”, and employer payroll taxes. Just 11% of Germans in: Velasco-Garrido, M, R Borlum Kristensen et al are covered by private health insurance. There are two main HTA agencies that help to (eds), Health technology co-ordinate the data on which the G-BA bases its While Germany’s federal government has no role assessment and health decisions. First, the German Agency for Health in healthcare delivery, it shares responsibility for policy-making in Europe– Technology Assessment (Deutsche Agentur für Current status, challenges public health and the management of hospital Health Technology Assessment, or DAHTA) is and potential. Copenhagen: budgets as well as regulatory decision-making charged with establishing and maintaining a WHO Regional Office for Europe, 2008, pp. 53-78.

database system, including its own HTA reports cost-effectiveness ratio (ICER) approach, which as well as those produced by other national and measures the difference in costs between two international organisations. The DAHTA evaluates possible interventions divided by the difference in HTA reports for inclusion in the information outcomes. Instead, the IQWiG judges treatments system. according to their “efficiency frontier”, in which all available compounds are compared Second, the Institute for Quality and Efficiency using the total benefits in relation to their total in Health Care (Institut für Qualität und costs. However, at the time of its introduction Wirtschaftlichkeit im Gesundheitswesen, or the efficiency frontier approach lacked real-life IQWiG), now the leading HTA body compiling examples of its use in the healthcare space, not reports for the G-BA, produces evidence-based only in Germany but also everywhere else.4 3 “Pharmaceutical HTA and guidelines for epidemiologically important Reimbursement Process – diseases, acts on requests for HTA from the G-BA “The theoretical idea of the efficiency frontier Germany”, ISPOR Global Health Systems Road Map. and occasionally the Federal Ministry of Health, is that we take findings from clinical trials and, Available at http://www. gives recommendations to the G-BA for drugs, based on these clinical data, try to identify ispor.org/htaroadmaps/ operating procedures and medical devices, and the best strategy within a disease class or germany.asp produces reports. It currently has a budget of treatment,” says Axel Mühlbacher, professor of €30bn. health economics and healthcare management 4 Ibid. at Hochschule Neubrandenburg, a university The IQWiG’s initial remit was limited to the 5 Epstein, D, “The use of of applied sciences in northern Germany. In Comparative Effectiveness assessment of the benefits and harm of drug contrast to NICE, he adds, the G-BA does not use Research and Health intervention and to preparing non-binding the IQWiG’s efficiency frontier to make allocation Technology Assessment recommendations for the G-BA. It has gained new decisions across disease classes. Rather than in European countries: responsibilities through health reforms, allowing deciding, for example, between brain surgery current situation and the agency to make cost-benefit assessments as prospects for the and lung-cancer treatment, the system attempts well as evaluate clinical practice guidelines and future”, March 20th to determine the most effective or efficient 2014. Available at www. submit recommendations on disease management treatment within each category. ugr.es/~davidepstein/ programmes for chronic conditions such as heart HTA%20in%20 disease and diabetes.3 It is not just that the efficiency frontier is more european%20countries. a theoretical concept than a proven effective docx Earlier this year the government established the practical tool to assess value in healthcare. What Institute for Quality Assurance and Transparency 6 Vale, L, “Health is more, the German system is not perceived in Health Care (Institut für Qualitätssicherung 5 Technology Assessment as using pharmacoeconomics systematically. and Economic Evaluation: und Transparenz im Gesundheitswesen, or IQTiG), The approach has been criticised by health Arguments for a National designed to develop and implement quality economists because “what interventions lie Approach”, Value in assurance measures in the healthcare system. on the efficiency frontier will depend upon the Health, Vol. 13, No. 6, pp. The IQWiG and IQTiG have a complementary method used to measure benefits”, and without 859–861, September/ relationship, says Dr Günther Jonitz, president of October 2010. a commonly accepted method of measuring the Berlin Chamber of Physicians. “The [IQWiG] benefits, “it is difficult to draw judgments 7 Klingler C et al, looks at everything on its way into the system, about efficient allocation of resources across “Regulatory space and and the [IQTiG] looks at all of the results of what is therapeutic areas”.6 the contextual mediation happening in the system,” he explains. of common functional The preference for the efficiency frontier approach pressures: Analyzing the may have cultural reasons. According to a 2013 factors that led to the …but with major economic limitations 7 German Efficiency Frontier Unlike other HTA agencies, such as the UK’s paper by academics at the London School of approach”, Health Policy, National Institute for Health and Care Excellence Economics, the development of the efficiency Vol. 109, No. 3, March (NICE), the IQWiG does not use the incremental frontier was associated with cultural reluctance 2013, pp. 270-280. to frame healthcare decisions around cost-based 6 © The Economist Intelligence Unit Limited 2015 Value-based healthcare in Germany From free price-setting to a regulated market valuations of human health. The authors found to be the best comparator. For drugs that are that the efficiency frontier approach “responds to judged to be an improvement on the comparator, an environment characterised by a need to deny, companies can negotiate a price in line with or 8 or to ignore, the need to ration healthcare, and a even higher than what they had originally asked London School of Economics, “Why should deep aversion to describing the benefits of health for, but if the level of innovation is not deemed the German approach to gains in monetary terms”. The approach also sufficient, it is left to the government to set prices health economic evaluation 11 “reduces any political risk that might be involved at a lower level with reference to the comparator. differ so markedly from in a discussion of healthcare rationing and approaches in other EU postpones the debate about what an acceptable Under AMNOG, pharmaceutical companies set Member States?” Health and threshold [for demonstrating cost-effectiveness] the initial price for new drugs after they are Social Policy blog, February 27th 2013. Available at might be”.8 approved, but this price is only valid for a year. During this time the G-BA reviews the company’s http://blogs.lse.ac.uk/ healthandsocialcare/ The German system is therefore still in the process “value dossier”—the evidence demonstrating 2013/02/27/why-should- of being adapted to the new methodology, which a drug’s ability to shorten the period of illness, the-german-approach- is relatively new compared with cost-effectiveness reduce side effects or improve quality of life—with to-health-economic- approaches in the UK, for example, which have help from the IQWiG and determines the level of evaluation-differ-so- been in place for much longer. added benefit of the new drug compared with the markedly-from-approaches- relevant comparator.12 in-other-eu-member- states/ The end of the free pricing era As of May 2014 the G-BA had assessed 79 products Those therapies that the IQWiG determines to be 9 “Pharmaceutical HTA and and determined that 50% of them had no added innovative and those without any therapeutic Reimbursement Process – benefit.13 This compares with a reimbursement Germany”, ISPOR Global equivalent are exempt from categorisation, and failure rate of 41% for NICE decisions during the Health Systems Road Map. until 2011 Germany was one of the few countries 2000-13 period.14 Available at http://www. where these therapies were fully reimbursed at ispor.org/htaroadmaps/ 9 manufacturer’s prices on market entry. Pharmaceuticals with a turnover of less than €1m germany.asp a year or those that are only used in hospitals are The G-BA can limit or exclude the prescription of 10 Paris, V and Belloni, A, excluded from the early benefit assessment. So- pharmaceuticals if they have proved inadequate “Value in Pharmaceutical called “orphan drugs” for rare diseases are also Pricing”, OECD Health or if another, more efficient treatment option with exempt if their turnover with statutory health Working Papers, No. 63, comparable diagnostic or therapeutic benefits insurance is less than €50m; for orphan drugs 2013, p.18. is available: excluded treatments end up on with higher revenues, pharmaceutical companies negative lists for drugs that are not reimbursed.10 11 “The evolution of also need to prove an additional benefit.15 The G-BA is under no obligation to take the IQWiG in Germany’s However, even those treatments that show added IQWiG’s recommendations and has chosen not to drug pricing policy”, benefits may be subject to a minimum price PMlive.com, September follow the agency’s advice on several occasions. reduction of 7%, unless this option is retracted 3rd 2013. Available at during price negotiations.16 http://www.pmlive.com/ In December 2010 rising prices for new drug pharma_intelligence/the_ therapies and a stagnating European economy There has been a backlash from the industry. evolution_of_iqwig_in_ led Germany to push through the Act on the Law germanys_drug_pricing_ Japan’s Eisai and Switzerland’s Novartis have on the Reorganisation of the Pharmaceutical policy_493674 already withdrawn medicines from the German Market (Arzneimittelmarktneuordnungsgesetz, market owing to their inability to agree on a 12 Sackman, JE and M or AMNOG), which aims to limit the cost of mutually beneficial price with payers. In July Kuchenreuther, “Germany pharmaceuticals, especially those that had 2015 Denmark’s Novo Nordisk said it would stop Post AMNOG: Insights for previously been exempt from reference prices. BioPharma”, BioPharm selling its Tresiba long-acting insulin in Germany International, Vol. 27, Issue AMNOG requires the G-BA and the IQWiG to judge because of a price dispute with the National 11, p. 2. new treatments according to what they consider Association of Statutory Health Insurance Funds, 13 Ibid.

which represents the statutory healthcare and newly negotiated reimbursement amounts as the long-term care insurers in Germany. The decision public source for referencing, rather than the followed the IQWiG’s conclusion that Tresiba product’s original launch price, as has been the did not represent added benefit on its own or case in the past.18 in combination with other diabetes drugs for teenagers and children. Novo Nordisk officials With regard to the German hospital sector, a said the agency had used as a price comparator parallel reform process aimed at reducing costs “ordinary human insulin, a product that was and focusing more on outcomes and performance launched in the 1980s”.17 than previously has been under way in recent years. The next chapter will look at some of these Dr Jonitz and other industry observers reforms and present a case study of how German believe that such “opt-outs” could become healthcare provision is moving more towards more common; a recent update to the AMNOG value-based healthcare. legislation allows the government to publish the

14 Grignolo, A, Achieving Convergence In Global Regulatory Approvals And Market Access For True Innovation. Presentation to the 26th Annual EuroMeeting, 25th-27th March 2014, Vienna, Austria. Available at http://www.epaccontrol. com/common/sitemedia/ PrePost/PostPDFs/36710. pdf

15 “AMNOG – evaluation of new pharmaceutical”, GKV-Spitzenverband. Available at https://www. gkv-spitzenverband. de/english/statutory_ health_insurance/ amnog___evaluation_ of_new_pharmaceutical/ amnog___evaluation_of_ new_pharmaceutical_1.jsp

16 “Germany Post AMNOG”, p. 2.

17 “Novo Nordisk Halts Sale of Tresiba Insulin in Germany over Pricing Dispute”, The Wall Street Journal, July 2nd 2015.

18 “Germany Post AMNOG”, p. 3

8 © The Economist Intelligence Unit Limited 2015 Value-based healthcare in Germany From free price-setting to a regulated market

Chapter 2: New focus on providers and 2 outcomes

German healthcare provision has traditionally for policymakers. In just one state, North Rhine- had a reputation for excellence, with many Westphalia, 300 hospitals serve a population of reform initiatives seeking to control costs and 18m, while in the Netherlands just 70 hospitals streamline the number of inpatient units. treat a population of nearly the same size. As it has introduced performance measures, the Historically, there have been some efforts government has intensified efforts to encourage to collect data on healthcare outcomes in the closure of low-volume inpatient units or the Germany. In the early 1970s efforts to implement merger of institutions into regionalised and more the quality management of childbirth on specialised centres of care, but rivalries within a nationwide basis led doctors to collect the system have made these efforts politically information on survival rates to justify the fraught. closure of some very small units. “German healthcare politics have one goal, A 2000 healthcare reform law introduced and that is shutting down hospitals, reducing diagnostic reimbursement groups (DRGs) and the number of hospitals and the number of at the same time required hospitals to adopt doctors,” Dr Jonitz adds. “The real goal should be quality management systems. Starting in 2005, optimising rather than decimating care.” the legislation also required hospitals to make publicly available biannual quality reports. The struggle to rationalise healthcare While these quality reports initially focused provision on structural measures, such as diagnostic 19 Jochem, M and S Klein, Because German healthcare provision has equipment, staff size and qualifications and Patient satisfaction traditionally been perceived as high-quality, processes, from 2007 hospitals were required in German hospitals: patients expect a superior standard of care from to begin reporting limited data on outcome results of the biggest their local hospital. survey on hospital quality. Although these reforms fell short of the quality. Presentation traditional definition of value-based healthcare, However, that assumption has come under threat to the European Health they provided a degree of transparency about in recent years, according to Dr Guth, as reports Management Association 19 hospital care that was accessible to patients. of hospital mismanagement and poor outcomes annual conference, Innsbruck, June 26th 2009. have raised questions about the level of quality in At the same time, an oversupply of hospitals in Available at: http://www. the German hospital system. Germany has remained a central preoccupation ehma.org/files/Markus%20 Jochem.pdf

“Before, people thought care was expensive, to hospital within 30 days of being discharged, but with high costs comes high quality. People there is no additional payment for the physician now realise that neither spending a lot of money or hospital, Dr Guth notes. At the same time, nor having an outpatient hospital or physician there is an incentive to hold off from a full launch around the corner means you get excellent care,” of P4P until standards are raised. he says. The transition to more value-based healthcare This realisation has in part been fuelled by provision in Germany has also been complicated greater transparency about outcomes available by some of the anomalies within the system. For on the Internet, including published hospital example, while all inpatient care is reimbursed, rankings, and by increasing numbers of patients patients pay out-of-pocket for similar procedures accessing these data. in an outpatient setting. Because hospital care is based on the DRG system and outpatient care One way in which German healthcare authorities is invoiced according to physician fee schedules, are looking to improve quality is by increasing the process of collecting data and evaluating minimal volumes for procedures and creating outcomes and value across the system is centralised healthcare units that specialise in potentially more challenging.21 particular diseases or procedures. There is also a greater effort being made to 20 Charlesworth, A et al, The introduction of DRGs, a bundled payment “Reforming payment for improve integrated care in Germany. Between health care in Europe to system, was aimed both at reducing some 2004 and 2008 statutory health insurers (SHIs) achieve better value”, The costs by establishing a fixed fee for treatment held 1% of ambulatory and hospital care budgets Nuffield Trust, August 2012, categories independent of the length of stay to use as incentives for providers to develop pp. 5 and 21. Available at (previously, hospitals were paid on a per-diem integrated care. The majority of these cases http://www.nuffieldtrust. basis) and at directing care to centres with involved both hospital care and rehabilitation org.uk/sites/files/nuffield/ greater expertise. Under the DRG system, publication/120823_ services. Professor Mühlbacher notes that in one reforming-payment-for- hospitals do not receive the full payment for some of the more successful programmes in south-west health-care-in-europev2. medical conditions if the care they provide is Germany, Gesundes Kinzigtal, a regional health pdf below a specified volume, based on evidence that management company, works with providers and higher volumes of care provided for a particular 21 SHIs to provide integrated care; the programme Obermann, K et al, DRG can lead to better clinical outcomes. There Understanding the German includes bundled payments to healthcare have also been some efforts to provide quality- Healthcare System, pp. providers, with any profits from more efficient 186 and 202. Available at related incentives to outpatient doctors through care distributed across providers.22 http://miph.umm.uni- the Disease Management Programmes; there heidelberg.de/miph/cms/ are no comparable financial incentives for Despite the success of Gesundes Kinzigtal, upload/pdf/GHCS_Kap._1. hospitals.20 the incentive system was discontinued in pdf 2011, following renewed problems reconciling The next step, according to Dr Guth, is a “pay for 22 Charlesworth, Reforming integrated care with Germany’s fragmented performance” (P4P) system to encourage high- payment for health care health provision and insurance system, Professor in Europe, pp. 25-26; and quality outcomes and provide an assessment of Mühlbacher says. Busse, R, M Blümel et al, the value of care. The IQTiG could potentially “Tackling Chronic Disease provide a foundation for the introduction of such “What we thought integration could be, and how in Europe: strategies, a system, according to Dr Guth and also Professor it could very easily reorganise the healthcare interventions and Mühlbacher. system, didn’t take place,” he explains, adding challenges”, European that he was sceptical about the immediate future Observatory on Health To a limited extent, P4P measures are already Systems and Policies, of integrated care in Germany if the system did Observatory Studies Series, embedded in the current DRG system; if a patient not attempt to undergo radical change. No. 20, 2010, p. 37. undergoes a hip operation and is then readmitted

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Dr Jonitz argues that German healthcare still for two decades. faces an inherent leadership dilemma. “The German healthcare system, according to the The data are collected, stored and analysed by Basic Law, is the task of the Länder, but all the an independent statistician, and every surgeon instruments to guide the healthcare system are attends two yearly meetings to examine the on the national level. So those who are leaders by results. “We have a good relationship with our law don’t have the instruments to carry out the patients, and our patients are willing to give this process.” information because we explain that this is key for their good experience,” Professor Schlomm One way of solving this conundrum, he suggests, explains. would be to create regionalised healthcare funds through which some of the SHI money is given to The existence of such comprehensive data has the Länder governments to promote their special helped surgeons to modify their procedures with goals. dramatic results. After noticing that one member of the team had particularly low incontinence rates in his patients following surgery, other Martini-Klinik: Providing a model for Martini-Klinik colleagues looked at the data and assessing outcomes found that the differences related to the amount Martini-Klinik, part of the University of Hamburg- of the urinary sphincter muscle preserved; Eppendorf in northern Germany, is an example because the shape of the muscle is different of a high-level specialty centre. The hospital, in every person, patients were losing different which specialises in prostate surgery, has been amounts of the muscle during surgery. collecting data on outcomes for more than 20 years, making it unique in Germany and possibly By following the lead of the surgeon in question in Europe, according to Thorsten Schlomm, a and preserving a specific length of the sphincter professor of urology and member of the Martini- in each patient, other Martini-Klinik colleagues Klinik faculty. were able to double early rates of continence. The clinic now has an incontinence rate of less By having patients complete a detailed than 5% in its prostatectomy patients, down questionnaire before and after surgery, the from 8-10% in 2007, before the procedure was Martini-Klinik has amassed a sizeable collection modified, and compared with an average of 20% of real-world data that help its physicians to elsewhere in Germany today. fine-tune their surgical methods and reduce complications. The willingness of Martini-Klinik surgeons to learn from one another and submit to peer review Radical prostatectomies are characterised by would seem to fly in the face of conventional particularly high rates of incontinence and wisdom about the surgical profession, often impotence following surgery, side-effects that viewed as one of the more competitive branches can markedly change a patient’s quality of life. of medicine. According to Professor Schlomm, In 1992 the clinic started to measure oncological his colleagues recognise that their collaborative and function outcomes following surgery by success benefits everyone. asking patients to complete a 70-question survey prior to surgery, covering their quality While the Martini-Klinik model is rare, there are of life and sexual and urinary function; several other examples of specialised care centres in of these questions are repeated again one week Germany, including the Schön Klinik, a family- after surgery, three months afterwards and then owned hospital group with clinics throughout annually, with response rates of more than 90%. the country, which focuses on orthopaedics and In some cases, the clinic has followed up patients neurology.

Professor Schlomm notes that the Martini-Klinik The Martini-Klinik provides a good case study of employs a team of six full-time data entry staff, how value-based healthcare could be introduced an expensive model that not every hospital can on a wider basis in Germany within a specialised afford to follow. In addition, he says, it is difficult care context. The hospital’s commitment to to compel doctors to record their outcome data, expanding its database of patient outcomes, and too tempting for them to be selective about and its willingness to share best practice among the information they share. Patients, on the staff surgeons and revise its surgical methods other hand, have a clear interest in documenting accordingly, are likely to contribute to improved their disease history. value—and these methods could be applied successfully to other parts of the country’s healthcare system.

12 © The Economist Intelligence Unit Limited 2015 Value-based healthcare in Germany From free price-setting to a regulated market

Conclusion

While the concept of value-based healthcare continued reluctance in Germany to discuss the appears to be spreading in Germany, physicians threshold for demonstrating cost-effectiveness and analysts argue that the raft of healthcare and express the value of human health in reforms over the past couple of decades has monetary terms, reflected in the adoption of the provided the wrong incentives and failed to efficiency frontier approach. The German system tackle the main problems facing the system, is still clearly in the process of being adapted to namely rising prices, uneven quality and a the new methodology, which has been in place scarcity of specialised, high-volume centres for a much shorter period of time than the cost- for treating priority conditions such as chronic effectiveness approaches in the UK, for example. diseases. A number of possible strategies could help to “We’ve talked about healthcare costs for the past alleviate the cost burden while still focusing on 40 years, and we’re starting to talk about quality, health outcomes. Pay for performance is one such but we won’t solve it in the next five years,” says example; giving the regions greater power to Dr Guth. take charge of healthcare policy is another. The example of the Martini-Klinik shows how better Rising demands on the health system and budget data collection focused on the patient experience constraints mean that policymakers will continue can improve results. By adopting such measures, to look for ways to cut costs, and these pressures the German system can move towards meaningful have the potential to influence the incentives ways of measuring the value of the healthcare it built into the health system. However, there is provides.

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