In Germany, patients are increasingly concerned that they're being talked into unnecessary medical treatment by their doctors as foreign investment groups buy up more and more practices. This applies especially to those that offer expensive extra services not covered by insurers, such as eye clinics, radiology clinics, and dentists.

A study published in May by the financial research collective Finanzwende found that private equity firms bought 174 German doctors' practices in 2022, up from 140 in 2021 and just two in 2010. And, according to research by the public broadcaster NDR, such firms now own hundreds of practices across Germany, to the extent that single chains have a monopoly in certain regions and towns. 

The issue popped up on the German government's radar last year. "I'm putting a stop to investors buying up doctors' practices with an absolute greed for profit," Social Democrat Health Minister Karl Lauterbach declared to the Bild am Sonntag newspaper in December, before promising he would introduce a bill "to stop these locusts from entering medical practices."

Money for patients

Horst Helbig, spokesperson for the German Ophthalmological Society (DOG) and director of an eye clinic in the city of Regensburg, said that investor-owned clinics were focused on making profits. "The purpose of an investment group is 100% making a profit — they want nothing else, and, at the end of the day, they are not allowed to do anything else," he said. "Of course, a single physician-owned practice also needs to make money, but its primary purpose is to provide medical care."

A 2022 study by the research institute IGES seemed to back that up, finding that investor-owned clinics took in 10.4% more fees than clinics owned by individual doctors. But some medical care associations, like the BBMV, which represents the operators of medical service centers (MVZ), dispute the conclusion that MVZs are not medically independent.*

Germany has a two-tier healthcare system funded by employees' and employers' contributions to health insurers. Health insurance is mandatory for the entire population, and insurers, which cover around 90% of the population, are not allowed to refuse anyone insurance. Around 10% of the population opt for private insurance, which often offers more cover. Altogether, the German healthcare system is worth several hundred billion euros a year.

Helbig said he had noticed a trend of the new investor-owned doctor's practices turning away publicly-insured patients to focus on those who will make a profit. "Some patients are lucrative, others cost money, and what we've noticed is that a lot of patients who can't be treated for a profit are being transferred to public hospitals," he told DW.

This is especially noticeable in eye clinics such as Helbig's, he said, where there are big price disparities among treatments, some of which are not covered by insurance. "What are well-paid are cataract operations, whereas any kind of emergency procedure is not well-paid," Helbig said. 

A risky business model

The attractions for private equity funds are obvious: Finanzwende calculated that they can expect to make up to 20% profits on their investments — but only if they buy enough practices. Finanzwende researcher Aurora Li said the business model of private equity funds depended on bundling several practices and performing risky operational restructuring on them — partly through loans — so they can sell them at a profit later.

"The focus is not on the operational profit, but on the consistent in-flow of cash," Li told DW. "So if the company can maintain a steady cash flow through pressure on doctors to sell profitable treatments, and through using less equity but more loans, then it can make the company profitable for other financial investors. And you can only create a high cash flow if you have a lot of doctors' offices."

"It is deeply concerning when patients cannot be certain that their treatment is not influenced by the profit expectation," she added. 

Health Minister Lauterbach's promised bill has yet to materialize, but some medical associations have already railed against his choice of terms like "locusts." The BBMV said government data shows there is no statistical evidence that the medical treatment in investment-fund-owned clinics is any worse.

Doctors employed in medical service centers published a letter in May angrily rejecting the implication from Lauterbach that their independence might be doubted. "As employed doctors, we carry out our profession with the same passion and commitment to the patient as our colleagues from individual practices … or in hospitals. Unfortunately, we are noticing our work being … publicly denigrated."

The profit motive

Indeed, the BBMV points out, practices owned by individual doctors are just as motivated to turn a profit. That's true up to a point, says Helbig. "There are certainly many doctors who work for a clinic owned by an investment group who don't allow themselves to be pressured," he said. "And of course, there are doctors who have a single practice for whom medical treatment is not the priority." But the pressures, he insisted, were heavier on clinics owned by investors.

Roland Stahl, spokesperson for the KBV, an association that represents the interests of German practitioners, took a conciliatory line. "Not every investor is a locust," he told DW. But it's different, he added, when investment groups buy up practices in single areas to create monopolies.

"Of course, that needs to be watched, but capital investment can be positive," he said. "Because sometimes it facilitates the procurement of capital-intensive medical equipment, like MRI scanners, for example."

Helbig too is not against the idea of bundling practices in principle, partly because single practices are under so many different economic pressures that the system is not workable in its current form. Few young doctors, he said, are prepared to find the investment and put themselves through the 60-hour weeks necessary to set up their own practice.

"It's very difficult to do it all alone anymore," Helbig explained. "It does make sense to share all that, so some change is necessary."

Edited by: Rina Goldenberg

*The IGES did admit that "higher fee volumes tend to be associated with specific specialties rather than with the operator."This caused a dispute with the BBMV, which claims that IGES' interpretation of its own data was wrong – that the type of operator has little bearing on the treatment offered. However, in response to the correction, IGES stood by its interpretation, because operators and owners are different entities, and investment groups can own various kinds of operators. 

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