Top insights into the German Healthcare Market

September 30, 2015 | ÄrzteZeitung

The University Medical Faculty on the “area of tension” in politics and economics – An Interview with Ekkehard Zimmer by Patrick A. Haberland, Partner at DHR International.


Patrick A. Haberland: You wrote the thesis for your diploma on a large German automobile manufacturer, despite your professional career being in healthcare. From your current point of view: What could the industrial and the health sector learn from each other?

Ekkehard Zimmer: There are a number of examples where the German health sector could learn from the industrial sector. The measures of success are basically the same and only differ marginally in terms of priority. These include employee performance, customer and patient orientation, company culture, innovation, data processing and quality of results. These standards are predominantly set and developed by the industrial sector based on their conclusiveness, implementation and goal orientation. The most innovative ideas are then adopted by the health sector.
Of course there are also lessons to be learnt by the industrial sector, particularly in the development of fundamental and application-oriented medical research. The speed at which research findings are implemented into clinical day-to-day practice and the strict adherence to compliance regulations are other lessons to be taught by the health sector. With closer cooperation between the industrial and health care sectors, especially when developing partnerships with clinics, both sectors could learn alongside each other, as opposed to “from” one another. The goal here is to overcome boundaries, get to know the interests of the collaborating partner and create win-win scenarios for all parties.
The biggest problem with this is that the regulatory framework of the German healthcare sector is both complex and inflexible, and is strongly bound by political and professional lobbyism. This unfortunately restricts freedom. These issues, such as advertised bidding instead of negotiation in procurement, mainly impact public hospitals as private clinics are not governed by this regulation.

From your point of view, how international is today’s healthcare?

Globally, the medical sector has been operating internationally for decades. Medical care and research is organized on a worldwide scale, new findings are directly exchanged, and this medical progress – also supported by internationally operating businesses – is gigantic. However, state healthcare is not part of this knowledge-hungry and innovation-seeking dynamic. As with the implementation of the DRG System, there are of course similar international healthcare systems who we sometimes borrow ideas from. That said, in Germany, we tend to opt for an alternative route and in our attempts to make improvements our endeavors often fail. A very good example is the strictly separated ambulatory and in-patient medical care which causes avoidable redundancy and additional costs. Another instance is the so-called discount for a patient’s short stay of residency in the DRG system. There to prevent an unjustified and too early medical discharge, you won’t find this in another DRG system worldwide. It is because of those unknown special regulations in our state laws, that international suppliers have a hard time gaining access to the German health sector market.

We met in Dubai at the Arab Health Conference. What did you think about the UAE health sector?

I was as equally impressed by Dubai, the city, as I was the Arab Health conference itself. As members of the Saxony Health Ministry delegation, we had a very good insight to the country’s health sector and the general situation there. Essentially, the international health sector community came together in Dubai to exchange expertise and to do business. 
The UAE are currently undergoing radical change. Due to their rapid economic growth and being one of the richest countries in the world, they have to bring in highly-qualified employees from overseas in order to further develop. Their life expectancy is similar to Europe’s, but the dramatic increase of wealth over the last 4 to 5 decades has led to a severe increase in diseases associated with affluence, such as diabetes which is up 25%, as well as oncological illnesses. Because there is still state censorship the demand for westernized infrastructure, steady administration and high quality healthcare cannot be guaranteed simultaneously. It’s not even about money. On the one hand I was fascinated; on the other hand I felt alienated, probably due in part to the differing cultures.

University medical care vs. maximal provider – where do you see the differences?

The differences are in the research and teachings, the student mass, the interdisciplinary view of the patient, the collective review, and the determining of treatment. The process in a teaching hospital is not worse as such, but it usually takes longer. The training of students by sickbeds and the attendance of student doctors in all clinical areas, from endoscopy to surgery, lead to delays which are not shown in the DRG system and therefore not financed. This is a significant problem.
The turnover of medical employees is the main reason that the processes need to be constantly monitored and measured in indicators. In addition, the liberty of research and teaching entrenched in our Basic Law causes the service provider to view a goal within the health sector as “one of many”, rather than looking at it exclusively and implementing it thoroughly. In the end, that’s why the efficiency and profitability is not as high as a maximal provider. However, the medical performance and achievement of results – patient benefit – is often higher through multidisciplinary treatment processes and, luckily, the German patient has the option to freely choose his doctor and hospital.

Science and research are now subject to cost cutting measures out of economic necessity. Do you see a masterplan to resolve this and restore funding?

I believe science and research were always at risk of funding cuts out of economic necessity; irrespective of whether this is advertised, highly-evaluated external funding from the DFG (German remedial action community) or the BMBF (Federal Ministry of Education and Research), or resource cuts from an industrial enterprise for a clinical study. 
The point is, there are resources available and a result is expected. That result may be to find out whether a scientific hypothesis is true or false, but those results represent new findings which lead to the exciting discoveries in medical science you often hear about. In individual cases perhaps it makes sense to deviate, to have the possibility to experiment and make discoveries through trial and error, after all, this is how some inventions and great ideas came to life. Fundamentally, the basic rule is that the researcher is sensible with his entrusted resources just like a doctor with his medical care or a salesman with his business. Being economical with your given resources can often lead to higher efficiency and added value, so any extra can be made available for other subjects. I think that‘s a reasonable, sensible and good approach.

You know both worlds, the shareholder-compelled corporation and the public teaching hospital with its political intervening. How does this influence the management approach?

Relatively speaking, it’s easier in a corporation. Success is measured by profit, which must increase to satisfy shareholders. A public company also needs to focus on positive quarterly growth and publication of important events. The core medical business focus is on reaching goals and is result oriented. All influencing factors are secondary to this approach and, at the end, only serve to increase revenue. This is totally clear to everyone, supervisory board, management and employees; everyone goes in the same direction. 
The world of university medical care with integration models and corporation models is very complex. A teaching hospital with public sponsorship has a versatile core business, which includes not only medical care but also research and teaching along with further education of consultants. This is clear to the sponsor, supervisory board, management and employees; but often forgotten in day-to-day business. The governing bodies for teaching hospitals are in most cases the Ministry of Science and the Ministry of Finances, which are represented in the hospital‘s supervisory board by either the Minister, State Secretary or Head of Department. You often see the Ministry of Health participating too. All three Ministries have different interests and, in individual cases, cannot come to an agreement. It’s often a similar scenario on the board of directors. Clearly there is no common goal in place amongst the leadership. Due to differing expectations, the board of directors often finds itself caught between the Ministries, and sometimes also between political and company interests. This is the reason why time served on a medical or commercial board of directors at a university hospital is so much shorter than it is in DAY 30 companies. 
The management approach of successful university hospitals is in developing common goals, translating them into a simple and achievable plan and bringing everyone together with a common purpose so it’s easier to stay on task. To achieve this it takes discipline, skill, commitment, persistence, sometimes a cool head and the always needed stroke of luck.

How much management and commercial know-how can the public sector absorb?

In relation to commercial know-how, the sky is the limit. Defined goals, clear structures, efficient processes, business indicators, monitoring, transparency, sensible decision making, are all non-existing or inchoate. The exceptions to this rule are luminous and successful examples. 
In relation to management by and large there is only one answer - “too little” Of course it’s said the public sector has management at the highest level, but those are very few exceptions, and seem to me to be exaggerated. In business, management must ensure that actions, competency and responsibility all converge. On this basic requirement it often fails. In short, this means that where you hold responsibility and accountability, you should also have the power to authorize what is necessary - and the freedom to demonstrate this principle. It’s a prerequisite in private business – the mentality of ‘just do it!” In my experience this principle is not very common in the public sector, although there are rare and pleasant exceptions in hospital management.

Nathaniel Hook, a London partner at DHR International, asked 50 leaders from Healthcare IT to name the 5 most important focuses for the future of healthcare (see 1.-5. below). Would you agree that these are challenges you face as manager of a health care provider?

The biggest challenge for the German health sector is the financing of IT equipment and the processing of big data. The Government urgently needs to intervene. In relation to American hospitals, we find ourselves in an IT stone age. There are no paperless hospitals in Germany, and this is an issue that has been discussed for 20 years. Defining our IT status are media disruptions, poor performing and antiquated equipment and archiving systems, as well as scanned paper posing as ‘electronic’ patient files.  
The coalescing of medical technology, management engineering and IT is, neither structural nor content-related, sufficiently covered and often the much publicized telemedicine is still taking baby steps. Data protection as regards to the consenting patient and his data rights on the other hand are very distinctive.

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TOP 5 focuses for the future of healthcare

1) Implementation NOT technological innovation is key
Whilst it is clear that technology has the potential to radically transform how healthcare is delivered, there are still challenges around the convergence of healthcare and technology in the new digital landscape. Now that we have the technology, the focus is around implementation rather than further innovation.
The question is how to best adopt and utilize what we already have at our disposal?

2) Power to the people
Central to the engagement of the consumer is the personalization of healthcare delivery through patient empowerment. Consumer/wearable technologies will enable individuals to take control of their own healthcare, as they will be able to monitor and self-manage existing conditions – interacting with healthcare professionals as appropriate via Skype, smart phones and tablets should become the ‘ new normal’.

3) Information overload
As people become more empowered, information - or more specifically how best to disseminate information to consumers and healthcare professionals alike - is an increasingly critical consideration.
One thing that has never been in short supply within healthcare is information – a trend that has accelerated in recent years through the ever burgeoning availability of data. However, the free availability of information from a wide range of sources creates its own challenges, as patients take an increasingly proactive role in their own self-diagnosis and treatment options.

4) Increased recruitment diversity
Whilst the sector is known for its traditional career paths and emphasis on sector expertise, the drive for innovation and commercial reinvention is helping to drive an increased willingness to recruit leaders from outside of the sector, adding diversity to top teams. Pharmaceutical companies are increasingly looking to the world of big data and multi-channel marketing to find and attract leaders with the experience and capabilities to drive genuine transformation – interestingly the opportunity to move into healthcare is often viewed as very attractive to candidates from other sectors.

5) Big Data vs cyber security
The evolution of big data continues apace. IBM recently announced a partnership with Apple, Medtronic and J&J, to connect the data from the Apple Watch to healthcare providers and insurers. IBM is now providing a huge cloud-based and secure database, as well as analytical tools.
In tandem with the big data revolution, cyber security has risen up the priority list. Data security and patient record privacy is critical for patient trust and the relationship between healthcare professionals and their patients. As such, more investment is needed in cyber-security to protect patient information and there is a concurrent need to shift the narrative to ensure consumers understand the potential clinical benefits associated with the effective, yet anonymous, utilization of the huge repository of data that sits within the NHS and other public health systems worldwide. The media has a critical role to play in this regard.
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Finally: What has been your most important guiding principle in your management career to date?

Be inclusive!

Leadership in a hospital is no longer about maintaining order & obedience. A leader should be a good role model and should be respectful. Leadership means being persuasive in your arguments, keeping an open mind, making and implementing decisions quickly and owning up to your mistakes early so that they can be rectified.

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