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Effects of the nursing care budget on the financial situation of hospitals

The Nursing Staff Strengthening Act was intended to improve the situation for nursing staff. The law created the legal basis to exclude nursing staff costs from the DRG flat rates per case. Read this blog post to find out whether it succeeded and what impact the law will have on hospitals.

Effects of the nursing care budget on the financial situation of hospitals

That was the plan

The Nursing Staff Strengthening Act was intended to improve the situation for nursing staff. The law created the legal basis to exclude nursing staff costs from the DRG flat rates per case. In the future, nursing staff costs should be reimbursed on an individual hospital basis and at actual costs. To this end, the self-governing body should adjust the catalog of per-case flat rates for the nursing cost shares in direct patient care in wards with beds or report these.

As seemingly clear as the legal mandate was, implementation was difficult for self-governance. First of all, an agreement had to be reached on a uniform definition of the personnel costs to be spun off. While health insurers complained about possible double funding, the German Hospital Association fears further cuts in funding.

Where does care begin and end?

A major conceptual flaw in the long-term care budget is the allocation of nursing staff costs, which is only superficially clear-cut.

Contrary to what the legislature assumes in its explanatory memorandum, care does not begin at the patient’s bedside. Care in the hospital is far more comprehensive. Against this background, it is therefore not possible to make a clear-cut classification. Ultimately, the allocation leads to high potential for conflict at the local level. As a result, the already scarce and overburdened administrative staff will be confronted with yet another wave of bureaucracy.

The flood of information from professional associations, state hospital societies and the DKG does not help against this.

Since the introduction of the nursing budget, intraclinical or interdepartmental collaboration has changed noticeably.

The introduction of the nursing care budget increases the bureaucratic effort involved in budget negotiations. Additional financial burdens arise, for example, for the testing of the care budget. In order to cope with the high level of complexity, new controlling mechanisms are required in addition to extensive training and further education measures. In the past, it has been increasingly reported that there has been a recurring backlog of negotiations as a result of staff shortages due to illness and a general lack of personnel throughout the country. Even purely administrative acts such as the corresponding signature procedure could often not be completed immediately after the hearing and were sometimes delayed for months.

On the last legs of the Hospital Care Relief Act, a new provision was included requiring hospitals to have their budgets agreed upon by July 31 of the current year beginning in 2026. The question of how to meet the high demand for auditors and negotiators among payers remains unanswered.

Despite many stumbling blocks, various hospital operators also report positive experiences in the context of budget negotiations. Thus, the negotiations were always characterized by trust and a solution-oriented approach.

These “design flaws” still need to be addressed

As a result of the outsourcing of nursing personnel costs, a large portion of personnel costs will be “margin free“. This means that no surpluses can be generated. Without surpluses, however, clinics cannot build up reserves. Particularly in times of crisis, reserves are essential in order to be able to make short-term savings to be able to compensate for unexpected price increases. Without the possibility of building up reserves, sustainable economic operation would not be possible. With the refinancing of ACTUAL costs, the cost pressure on the other components of the flat rates per case increases noticeably.

Another design flaw in the nursing budget relates to the refinancing of nursing staff costs in the amount of the collective bargaining agreements. The background to this regulation is that the payers only assume cost-effectiveness for this. In practice, this often leads to the fact that, for example, the so-called stand-in lump sums for nursing staff are not refinanced. In light of the fact that flat rates provide financial compensation for nurses while closing the staffing gap in acute care, the lack of consideration may pose a financial problem for hospitals.

Are temporary workers in the care sector the solution?

The sometimes massively higher personnel costs for temporary workers are also not properly reflected in the care budget. According to the current regulations, the maximum amount that can be included in the care budget is the collectively agreed remuneration and not the booked material costs. Not least because of higher pay and greater flexibility in working hours, more and more care workers are switching to temporary employment agencies.

But the bottom line is that no hospital likes to use temporary workers. Lack of knowledge about internal process flows increases the risk of quality losses and leads to resentment among the workforce.

However, the truth is that in some regions, nursing staff are already an absolute bottleneck and the use of temporary workers is indispensable. Hospitals are thus penalized twice.

Money for care-relieving measures – basically a good idea

In addition to the care budget, hospitals are refinanced for so-called care-relieving measures up to an upper limit of 4%. However, some hospitals report tough negotiations. In times of shortage of skilled workers, the handling of the regulation cannot be understood.

Ultimately, the restrictive approach leads to innovations and creativity being inhibited locally, which tends to be at the expense of the nursing staff.

Conclusion

Finally, it remains to be said that the care budget urgently needs to be revised in almost all dimensions. The Hospital Report 2022 comes to the same conclusion.

Accordingly, key objectives are not being achieved and the feared effects have all materialized. Hopefully, the current reform efforts will also clean up the flaws in the long-term care budget.


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