German hospital sell-off poses challenge for clinical research

Wedig von Heyden, general secretary of the Wissenschaftsrat, the council that advised the German government on the sale.

A change in the law that comes into effect at the beginning of next year will allow German states, or Länder, to sell-off university hospitals.

At the same time funding from the central government in Berlin will stop, leaving states to bear the sole responsibility for maintaining R&D standards at university hospitals.

Germany’s university clinics are considered to be among the country’s finest research and teaching hospitals. Late last year the first of the country’s 33 university hospitals was sold to the private medical group Rhön-Klinikum AG. It bought Universitaetsklinikum Giessen and Marburg, one hospital with two locations, for €112 million, becoming the first private operator of a German university hospital.

In advance of the new law there is talk of further sales, with the Science Ministry in Schleswig-Holstein floating a proposal to sell stakes in the university hospitals in Kiel and Lübeck.

Revenues up

The acquisition of Giessen and Marburg expanded Rhön-Klinikum’s network of hospitals, increasing revenues by 30 per cent. It also gave it access to a pool of highly trained professionals and a pipeline of young doctors.

Research and teaching will remain in the control of the state-run university but Rhön-Klinikum had to agree to support university research as a prerequisite to buying the hospital. The R&D investment was calculated as part of the purchase price.

Since scientific personnel still remained employed by the university, the company is forced to give doctors time to conduct research, with salaries during these time slots being paid by the university.

“I can imagine that R&D will flourish in the private sector since a company necessarily has to separate the tasks of medical care versus research and education,” says Wedig von Heyden, the secretary general of the Wissenschaftsrat, (www.wissenschaftsrat.de) the science policy group that advised the German federal government on the sale.

“Federalism reform in Germany will probably mean further privatisations of university hospitals,” added von Heyden. “The responsible actors, including the Wissenschaftsrat, therefore have to provide a framework so that private initiatives will keep teaching and research at least at current standards.”

Strings attached

The conditions attached to the sale of the Giessen and Marburg hospital were based on recommendations on how to go about privatising academic medical care made by the Wissenschaftsrat. These included the recommendation that contracts should guarantee the rights of doctors to conduct research and of students to receive hands-on training.

The Wissenschaftsrat said also that the top two faculty members at the Giessen and Marburg hospital, or other hospitals that are privatised, should become members of the management board, and have voting rights.

In addition, buyers of university hospitals must make the oversight of research and teaching part of the duties of the top management.

Other recommendations outlined the rights of faculty to pursue the research topics of their choice and to have access to patients for clinical research. Giessen, for example, has ongoing research projects in areas including pathogen infection mechanisms and replication strategies, and cardiopulmonary vascular systems. Among Marburg’s projects are research into the differentiation of stem cells and the molecular makeup of lung tumors.

Binding contracts

When the deal was done all the recommendations made by the Wissenschaftsrat were accepted by the state of Hesse and Rhön Klinikum and became part of binding contracts.

That’s why the Wissenschaftsrat gave its seal of approval to the sale and recommended that Rhön Klinikum be allowed to continue using the name “university” clinic, a branding asset. The transaction is likely to serve as a model for other privatisation deals, says von Heyden.

Indeed, the state of Hesse has fielded calls from other German states interested in the deal.

“We have even produced a brochure and put information on our web site for those people interested in finding out more about the legal intricacies of the sale,” says Ulrich Adolphs, spokesman for the Hesse Ministry of Science.

“Not only are we securing two important locations in central Hesse that employ more than 10,000 people and provide excellent medical services to the population, we’re creating new perspectives for economic and scientific competitiveness on a national and international scale,” Roland Koch, the governor of Hesse, said in a statement announcing the sale.

The state government is in the process of setting up the bylaws for the “Foundation to Promote Research and Teaching at the University Hospitals in Giessen and Marburg”, which will be funded with about €100 million. Hesse agreed to establish the foundation to ensure that research remains independent and that funds from the sale of the hospital remain within the state.

Investment

As part of the contract, Rhön-Klinikum has agreed to invest €367 million in the university hospital, including €260 million in new facilities and the renovation of existing facilities. The company will invest €107 million in a new international centre for particle therapy that will focus on the treatment of tumors, and €2 million a year on research and teaching also.

With its 5 per cent holding, the state has retained the right to step in if the company does not keep up its end of the bargain – by investing as agreed, maintaining healthcare standards and promoting teaching and research.

Hesse has already asked the Wissenschaftsrat to audit healthcare and R&D at the Giessen and Marburg hospitals three years after the sale date.

Rhön-Klinikum declined to be interviewed for this article.