Application of the Multiregional Health Account for Germany - A financial equalization scheme to cope with lagging investments in German hospitals

Lagging investments in German hospitals have become a serious challenge in recent decades. The responsibility for investment financing lies with the German federal states, the “Bundeslaender”, due to the dualistic financing framework applying for German hospitals. Yet, hospital investments experience a field of tension between the availability of financial resources and necessary investments. A possible solution could be a financial equalization scheme for the health economy incorporating an earmarked fund for hospital investments. The rationale for such a system is that health economies of federal states do not represent single closed systems, but depend on interregional trade flows to supply patient treatment. The respective calculations in this paper are based on our recently compiled Multiregional Health Account for Germany. The model represents a satellite account of the health economy based on national accounts. Consequently, we are able to calculate spillover effects from patient treatment in federal states by conducting input-output analysis. Based on the results, we derive a sketch of a financial equalization scheme in order to ensure needs-based hospital infrastructure in German federal states.