Last week Germany’s “traffic light” coalition government collapsed. This means (soon to be former) Health Minister Karl Lauterbach’s once-much-feared MVZ reform will not go through at all, as it was yet to be passed by either of the houses of Germany’s legislature. 

An election is expected in February, with Chancellor Scholz due to hold a confidence vote that will be procedural, on December 16th, formally ending the government.

On the face of it this would appear to be a stroke of good luck for private investors and operators in Germany’s healthcare sector: in its original form, the MVZ reform proposed placing restrictions on private investment into MVZs (outpatient facilities) that would have been so stringent that it would have effectively barred new acquisitions by private investors. And this was indeed precisely the intention of the reform.

Despite Karl Lauterbach’s passionately-held desire to ban “locust investors” from buying new MVZ clinics, the original proposal ended up being watered-down, purportedly due to pressure from his Free Democrat Party coalition partners.

Investors were relieved to discover earlier this year that the reform had had its major proposed restrictions removed, most notably the requirement for a geographic and/or specialism link between the hospital that investors are required to own in order to buy outpatient facilities and the outpatient facilities they buy.

But now that the German government has collapsed, the reform has been killed off completely. 

You might expect that private investors and operators in Germany would be even more relieved by this, as surely no new restrictions at all is preferable to watered-down new restrictions, especially if there is still some uncertainty surrounding the precise final form the watered-down restrictions will take.

But a major operator we spoke to this week suggested an alternative: the reform being dropped completely actually might make it more likely that a future government picks the policy up again, perhaps proposing a new version of the reform that is as restrictive or even more restrictive than what Karl Lauterbach wanted to implement.

This concern may well be justified. The fears surrounding private sector and private investor involvement in healthcare do indeed run deep, as well as wide. The operator we spoke to said that those who have worked in the sector for a long time see such policy proposals recurring over and over.

A single regulatory restriction being dropped or watered-down may well be cause for relief amongst those investing in the sector. But until the public’s hearts and minds are won over to the notion of private sector or private equity involvement in health systems being legitimate, private investors and operators will be in a position of having won the battle but being far from winning the war.