The governance of the health system is complex and decentralized, involving both the federal and state levels, as well as corporatist bodies of self-governance. Health care in Germany is primarily funded through the SHI system. The sickness funds collect contributions, which are pooled and reallocated via the Gesundheitsfonds based on risk adjustment. Unlike SHI, PHI premiums are based on age and health risk rather than income. General tax revenue also funds various purposes in the health care system, with legislatures determining budgets at both federal and state levels. Capital investments in hospitals come from states’ budgets.
Due to the strict separation between ambulatory and hospital care sectors, German hospitals were historically limited to inpatient services. Over the past 20 years, however, hospitals have increasingly provided outpatient services. They also offer ambulatory care for rare diseases, severe progressive conditions, and highly specialized services. Despite these expansions, few structural incentives exist to promote integrated care. Hospital planning and regulation are state-level responsibilities, leading to significant differences between states. To address this, a Government Commission has proposed changes to hospital remuneration and new planning instruments to encourage outpatient services and ensure quality care.
