With the growth of medical tourism in Germany, the need for numerous supplementary service providers has arisen. One major area is covered by medical travel facilitators. These have been and continue to be the focus of rather negative headlines. The vast majority of scandals concerning the treatment of international patients in Germany involve medical travel facilitators.
For simplicity's sake I will not discuss §§ 299a and 299b StGB (the laws concerning corruption in healthcare in the German Criminal Code) at this point. In general, this document is not intended as legal advice or product of such. It is only intended to draw attention to relevant problems.
This is applicable to companies based in Germany and abroad, as the hospitals in Germany have to adhere to the laws and regulations mentioned. Being based in a different jurisdiction does not shield you from the obstacles, but rather raises the bar for working with German hospitals.
Status quo
Up to 250,000 foreign patients are treated in German hospitals and medical institutions every year - it is estimated that 40-45% of the patients treated are so-called "medical tourists". People who have traveled primarily for treatment. The majority of medical tourists come from the immediate neighbouring European countries, followed by the GCC and CIS.
Medical tourism to Germany in its present form has existed for a long time. The former Libyan head of state Muammar Gaddafi had himself examined as early as 1978 in the German Clinic for Diagnostics (Deutsche Klinik für Diagnostik - DKD) in Wiesbaden. The typology of medical tourists allows various conclusions about the motivation to travel abroad. There are various occasions to travel to another country for examination or treatment purposes. In contrast to other destinations, Germany fulfils the complete range of incentives, from lower prices and health promoting spa facilities to the highest level of competence in the case of complicated procedures. Medical tourism can be considered an accolade towards the German health system. With annual sales of up to € 1,2 billion, this mark of quality is well paid for. This turnover only describes the services generated by clinics and doctors. It does not include turnover for the regular tourist industry, hotels, gastronomy, cities, and retail. For the German health care system, revenue from foreign patients is extremely attractive. On the one hand, these revenues do not fall within the planned budgeting, which means that these funds can be used more flexibly, and on the other hand, foreign cases are often billed outside the stringent remuneration model of DRG (Diagnosis Related Groups) and GOÄ (German Medical Fee Index).
Many potential compliance violations are associated with the treatment of foreign patients.
In most cases, medical tourism towards Germany is handled by agencies, so-called patient facilitators. These agencies acquire patients abroad, refer them to the German hospital, and receive a commission based on the total turnover that the hospital generates from the treatment of the patient. This approach was and still is established, but repeatedly leads to negative headlines. The most recent examples are events at the municipal hospital in Stuttgart, which has led to several arrests and also represents a political scandal. Since the judgement of the LG Kiel (the district court of the city Kiel) dated October 28th, 2011, percentage-based remunerations should not be practiced anymore. If one follows media reports attentively, some hospitals continue to pay commissions for the referral of patients.
The Kiel decision
Despite the well-known problems, the Kiel decision came as a shock to the industry. First of all, nobody assumed that the judiciary had any interest in the industry of medical tourism. This is also one of the reasons why the model of percentage-based remuneration has been continued to this day.
Another reason for the disruption caused is that the model of percentage-based remuneration, although not free of errors or room for improvement, is a very good system for remunerating the services of treatment facilitators. The court ruled the referral contract to be immoral and unlawful. However, the constellation on which the ruling is based does not correspond to general business practices. The plaintiff, who acted as a facilitator was himself a medical doctor, and therefore, according to the court, the patients he referred invested a special kind of trust in him. The extent to which he violated this trust is not clear. There are no known cases of medical malpractice resulting from his work.
Much more worrying in the Kiel case, however, is the present collusion. The plaintiff set up an account, co-signed by the hospital's international department heads’ wife under a joint company. He then transferred the payments from the clinic to the joint account, which were then shared between the plaintiff and the head of the international department. In return, the head of the international department declared all patients, even if not referred by the plaintiff as having been referred by him, to increase the clinic's commission payments to the plaintiff and by extension to his wife and him. This behavior is unacceptable and is correctly summed up as unethical and lacking good faith.
Despite these various particularities, the court considered the whole system of referral-based remuneration to be immoral and unlawful, and thus it is every hospital's, doctor's, and facilitator's duty to abide by this ruling.
However, the payment of referral fees to a medical facilitator [10] does not constitute unwanted commercialisation of the medical profession. Foreign patients do not have barrier-free access to the German health system. In 2013, 80% of hospitals relied on the services of patient mediators to "acquire" foreign patients. Today, hospitals often have international departments. These departments are usually only responsible for scheduling examinations and have no standard operating procedures adapted to the circumstances or experience in dealing with the different cultures and the challenges that come with them. They often do not have qualified translators either. This opens up liability risks for hospitals due to incorrect translations or the incorrect use of medication.
The case on which the Kiel judgment is based is, as can easily be seen, accompanied by several questionable business practices, and yet the percentage-based remuneration system is made the pawn of the mismanagement at hand.
“Just draft new contracts”
Does this complicated issue come with such simple of a solution? Unfortunately, it does not. In addition to the immorality of the contracts - which is a mere civil matter - the fact that agreements for the referral of foreign patients can fall within the scope of §§ 299a and 299b StGB (German Criminal Code) tightens the legal framework operators can work under.
Of course, there are contractual constellations that allow the continuation of the collaboration while at the same time reducing legal risks. However, these turn out to be uneconomical to and extent, that both parties (clinic and agency) will rather waive the cooperation. Usually, they are drafted with a sole focus towards the legal side, but not with a detailed orientation for the specific business field and individual circumstances. I have already seen many clinics using the same contract for cooperation with 20 agencies (in Germany and abroad), without regard to the individual working methods of the respective partners.
To create sustainable, safe, and feasible partnerships in the field of medical tourism, these collaborations have to be structured by combining legal and business expertise, specific to the field of medical tourism.
I will share my opinions (and that of legal experts in the field) on the criminal law side of medical tourism practice in Germany in a future piece.
I hope you enjoyed the read and have gained better understanding of the German Medical Tourism industry.
Until then
Christian Fadi El-Khouri