Providing Insurance and Physician Shortage in Germany

According to the Cambridge Dictionary, a shortage is “a situation in which there is not enough of something” or “a situation in which there is less of something than people want or need”. Shortages occur in most daily life’s, beginning at the coffee shop in the morning when croissants are no longer available, continuing at the supermarket where you only get peaches instead of nectarines and ending in the evening when there are no more discounted shoes left, as other people went to the store earlier. Shortages happen so often, that one usually isn’t bothered too much and does not view them as important or overly dramatic. We just comment with “it happens”. But shortages in health care are a more severe problem. 20% of the American population lives in rural areas, but only 10% of physicians practice in rural areas1(Gamm LD, Hutchinson LL, Dabney BJ, Dorsey AM, 2003). There are seven oncologists in Wyoming while more than 1,800 are working in California2(KFF, 2019). One can only find nine diabetes specialists in North Dakota, while more than 900 are in New York2(KFF,2019). But not only the distribution of physicians and specialists in the US is alarming. Its rather the total number of overall physicians that is scary. The shortage of physicians will rise to more than 120,000 in 2032, a 6-times increase from today’s number according to a study from the “Association of American Medical Colleges”, published in 2019. But not only America is struggling with a physician shortage. The physician-per-1000-population ratio in Germany is nearly double as high with 4.2 physicians11. But Germany also has to face similar issues and must solve similar problems. So are there maybe solutions that Germany has developed that could be useful for the US?

A physician shortage in Germany has been discussed in the media for multiple years and many patients have experienced not only long wait times but also complete denial for an appointment. But still, the “GKV” (the head organization of public insurance, the insurance type most Germans are enrolled in) is fully convinced that the country only has to face very little “rural shortages” combined with an oversupply of care in specific urban areas. According to a study published by the “GKV” in 2010, only one state district in eastern Germany has a shortage of primary care physicians. Also, a shortage in hospitals is not existent4. So, are we over-dramatizing the issue? Three other organizations that are in contrast to the GKV not based on insurance, but organized from and for physicians spoke about severe shortage problems and could validate this with multiple data sources already many years ago. So as with all topics, there are two viewpoints. But not only primary care and hospitals are affected by shortages. The problem has already reached medial science. It is already difficult to recruit young graduates in science. This issue will be intensified due to the overall physician shortage. And in case fewer people are working in those professions, the timeframe for research has to be extended as less human resources are available to work on the upcoming tasks.

What Has Happened to the Supply and Demand Side in Recent Years?

On the demand side, first people get older. And the most aging generation is the baby boomers, which according to their age nowadays are the ones that are in need of most healthcare and thus cause the highest consumption. Second, the population in Germany has been growing in recent years, around 1% each year. The supply side is a bit more complicated. At first glance, there has been no major change on the supply side. This side consists first out of the newly employed doctors (in ambulant or stationary treatment) and the ones, that retire –mostly due to age reasons. And second out of the immigration from foreign countries and the migration of German physicians.

The number of physicians is slowly rising for multiple years, mostly around 2%6. According to the “GKV”, this gives evidence that a physician shortage is non-existent. Overall, the average age of physicians has also been rising in past years, with now reaching 52 years (retirement age in Germany is around late 60s)7. While new graduates and retirees display a sad picture, (im-)migration is not doing better. Less than 1% of physicians leaving Germany looks pretty good at first glance. But only half of the leaving physicians get “replaced” with immigrating ones –which then have to pass their exam in order to practice medicine legally. This negative migration balance is not only bad for patient coverage. As tuition fees for medicine are nearly non-existent in Germany, the public sector has spent more than 200,000 Euro for each migrating graduate. In case you also consider all school expenses until they reached their high-school diploma, this number nearly reaches 300,000 Euro8. Not only negative migration is a factor that limits the number of physicians. According to the latest published data from the federal ministry of health, the university dropout rate is around 10%9. However, this data is from 2002, so possibly outdated. Other “losses in apprenticeship” to consider are graduates that do not register in a doctors’ organization (“Ärztekammer”) past their studies. Those decide to not practice medicine and rather work in economic or political positions, for instance. This number amounts to around 11.6%7. One still has to consider that this number includes graduates that do not register at a doctors’ organization but still practice medicine, like physicians at government agencies.

Another major point that mostly stays unconsidered is the volume and amount of work per physician. The working-hours for male physicians are declining around 6% between the years 2000 and 20077. The overall ongoing trend towards a reduction of working hours and work-life-balance thus seems to also be present within medical professions. With the ongoing attractive employment situation for physicians, we might experience an intensifying acceleration effect. In the case of low physician supply, physicians are more likely to enforce shorter working hours which makes the supply even tighter.

Thus, it is insufficient to only consider the past and future development of physicians in numbers in order to assess the supply of medical services. As in every study, the collection and interpretation of data highly matters. Taking a deeper look in cities. Even though the whole city appears to be covered pretty well, in most cases, there is still a geographic shortage depending on the urban district. While “good” and “rich” districts are covered pretty well, others face a shortage. On the whole, the city does not appear in the statistic, but people living in the “wrong” district are not adequately covered.

How Does the Shortage Affect the Iron Triangle?

In order to assess cost, one has to dive deeper into the payment system in Germany. As insurance is mandatory, one only can decide between public and private insurance (the latter is dependent on your wage and provides added benefits to the public plan, such as exclusive access to specialists without referral). Cost for the average insured patient is hard to observe, as the public insurance (where most Germans are enrolled in) usually covers all the services first without having the patient receive an invoice. Physicians are provided with a lump sum per patient for each quarter from the public insurance, independent of the number of times that the physician sees the patient. Because of this, many physicians are not able to treat high-cost public insured patients at the end of March (as the quarter ends) and will close their office completely for them. For private insured patients, the cost structure is different. After the patient gets treated, the doctor sends an invoice to the patient (and not insurance), which then has to be paid in mostly a short time interval. Doctors are thus able to work with a mix-calculation. Because of this, doctors are eager to get paid before the current quarter is over- in order to cover their costs. Thus, cost changes are only observable for private insured patients and more likely to occur here. As 8 in 9 people in Germany are insured public, cost changes in the privately insured population affect fewer people. In addition, premia for private insurance are nearly not capped with rising age, while access (or re-enrolment) to public insurance (with limited premia) can be denied depending on age and health condition. Those factors make private insured people a small group that overall is able to cover more costs, making a cost increase at this side of the health system most likely. Quality will for sure be affected by the ongoing shortage, possibly in two ways. First, physicians will be forced to work overtime. This will lead to exhausted doctors that, even though they highly try to provide the best care possible for their patients, are no longer able to provide the level of quality that they provided multiple years ago when working conditions were better. Second, due to the limited time intervals physicians are more likely to overlook severe conditions and diseases, just for the reason that they do not have the time to perform additional and time-consuming tests. Access will be more limited but has to be considered in two different ways, depending on the insurance type. As doctors earn more money with privately insured patients, they are more likely to extend access for them and limit access for public insured ones. But as the majority of Germans are insured in the public program, the overall access will be reduced, leading to more wait time and reduced patient satisfaction.

However, patients can have a direct influence on the iron triangle. Their insurance type is the ticket. Physicians earn more money with treating privately insured patients, as they can invoice the “basic”, public insurance rate times a multiplier (mostly between 2 and 5). So, when a physician can either treat 3 public insured patients or one private insured patient, the choice to mostly treat private insured patients, or those only is understandable. Private insured patients thus have faster access to care and possibly also a higher quality, as more resources can be allocated to them. Less than nine million people are insured privately, more than 70 million public. Still, the revenue of orthopaedics in Germany only consists to 50% of public insured patients. Are those less sick and require fewer treatments? Of course not, they are just less profitable and are getting less treated because of this. An accusation of the doctors would be wrong. They only get a lump sum per patient per quarter year, independent how often this patient comes in for treatments.

One example out of my own experience. I got injured after a sport accident and called an orthopaedic specialist. The medical assistant assumed on the phone that I am in public insurance and offered me an appointment in 7 weeks, even though it was an acute injury. When I decided to go directly to the doctor’s office and showed a private insurance card, I was able to see the specialists within only 2 hours of wait time. So, is a change in insurance type now the best way for one to deal with shortages? In the short term and egoistic view, possibly yes. You would no longer have to wait for an appointment and rather could call a concierge doctor service, available only for private insured patients some larger cities. But in the long term, insurance premia rise nearly uncapped for privately insured people and it does not change anything about the root causes of the shortages. The most important issue about shortages is the imbalance in the physician density between rural and urban areas. So, the focus should be on attracting physicians to unpopular areas.

What Are Now the Right Incentives to Provide?

One here has to differentiate between women and men. A factor that is intensifying the imbalance between rural and urban areas is the distribution problem after finishing studies and residency. The overall growing number of female doctors is –in contrast to their male colleagues- way more often connected with their partners that work in professions that are mostly located in agglomeration areas and not offered in rural areas. The decision to follow the partner into the city is totally understandable but intensifies the already existing trend to locating oneself in big cities and urban areas. According to data provided by the government from 2005, around 8% of physicians younger than 35 years’ work more than 60 hours per week9. A reduction of working hours accompanied by improving the working conditions seems like a good method to decrease the migration rate and might function as an incentive to attract young physicians to rural areas. However, as most overtime is not recorded, this might not work in reality and is even harder in rural areas. How realistic is it to send your neighbor's sick children after an 8-hour workday away?

As the number of physicians can hardly be increased in the short term, why not work on the effective allocation of the already limited time? Why not use modern technology for it? Calling a patient via video would either safe a primary care physician a long drive to a patient’s home or safe the patient an exhausting journey to reach the doctor’s office. A doctor would be consulted via video transmission and be able to assess the patient’s condition via a sighting-check. This approach could easily be realized. Nearly everybody is now in possession of a video-capable phone. And if not, physician assistants or nurses could perform patient visits and transfer the collected data directly into the practice. The doctor would then be consulted via video conference, if necessary. This system could reduce the volume and hours spent on administration and thus save time for physicians and patients.

As good and realistic this solution sounds, one factor might become a major obstacle: network coverage. With 98% LTE coverage in Germany, nearly the whole country is basically capable of using the proposed approach via video calling. But as with all data, the devil is in the detail. The majority of the uncovered area is rural and highly likely to be also the area where already doctor shortages exist. Which doctor would like to open up a practice in a village where LTE and internet coverage is your last problem, as not even cable phone wires are available? With a large radius of patient residences in rural areas, one cannot guarantee that video calling will work for all of them. But at least, the method could be used in urban areas to improve time allocation.

A second, more realistic solution is also addressing the time allocation. Due to bad organization and no-shows, doctors are highly likely to experience spare time in their schedules. So why not save the administrative effort and implement a nationwide online-appointment system? The doctor's schedules could be accessed and patients book appointments directly. This saves organizational work for physician assistants (that can now fully concentrate on patients) and provides a high level of transparency. Canceled appointments are immediately free again and can be allocated directly. As good as this approach might sound, the two-class-insurance system will make it more difficult. Public insured patients produce less revenue and this revenue is also dependent on geographic location. Who can accuse a doctor who just does not want to work in an area where not even every patient treatment is covered? In the end, this person also has to cover his or her own personal lifestyle, and possibly has to take care of a family. Quite difficult with overtime and a break-even calculation.

My solution approach would, therefore, be two-stepped. First, implementing the online booking system and improving it with a designated double-booking window for acute, publicly insured patients (only accessible by physician assistants). Patients that cannot wait until the next quarter begins would hereby get a possibility to be seen by a doctor immediately with a limited amount of wait time or directly in case the “first booker” shows up late or cancels. Second, both the insurance and payment process have to be targeted. In order to improve the admission of publicly insured patients, doctors must get more flexibility for their invoice and revenue collection system. A certain percentage of patients that could be booked “on the next quarter” from an accounting perspective would reduce the pressure on physicians and improve access for patients as well. In addition, with more flexibility offered by public insurance, the prevalence of a “two-class health system” would be reduced and an overall, fair and equal level of access to and quality of care would be implemented. And for people that still want to feel special, supplementary insurance is the way to go.