Hospital Study 2025: Transformation through investment

By Peter Magunia

The latest edition of Roland Berger's Hospital Study reveals that, following some already challenging years, the financial situation facing German hospitals deteriorated in 2024 to a new low. Three out of four hospitals report ending the year in the red. Besides this general downward trend, the market is showing signs of increasing polarization. The share of hospitals just breaking even is shrinking; instead, hospitals are either operating profitably or finding themselves in increasingly dire financial straits. This trend is particularly evident in the public hospital subgroup: 89% of public hospitals are operating at a loss, while only 9% are generating a profit.

It is also interesting to note that, for the first time since 2020, more than half of hospitals hit their net profit targets. This is eight percentage points higher than in 2023. The development is indicative of increasingly conservative financial planning. Hospitals' target achievement levels paint a clear picture, too: Private hospitals once again performed best, with 83% of them achieving their forecast business results. The same can be said for around two-thirds of public hospitals, while only about half of non-profit hospitals met their financial targets.

Majority expect long-term improvement in the situation

While many hospitals expect their financial situation to deteriorate further in the near term, some expect the status quo to improve long term. By 2030, 51% of hospitals anticipate an improvement in their net profits, while 38% forecast a better liquidity situation. Possible explanations include the so-called transformation fund alongside other federal government plans to provide support, such as the EUR 4 billion that has been announced to cover the immediate costs of transformation.

Hospitals are planning medium-term investments of roughly €130 billion. Ninety-six percent of facilities intend to invest in construction projects such as new buildings or renovations. The primary goal of these initiatives is to increase the operational efficiency of hospitals - by complying with structural requirements, for example - and to make structural adjustments, such as preparing for the ongoing shift toward outpatient care and greater specialization.

Financing the plans is seen as problematic

Funding is a key obstacle to putting hospitals' ambitious plans into practice. Currently, only half of the necessary capital is covered by public funding. With application processes being so complex, public funding is also considerably more difficult to get hold of. Consequently, the remaining financing requirements will increasingly have to be met with equity and debt capital – an additional burden for hospitals. Added to this is the widespread view that the available funding pots are just not big enough.

The study authors believe hospitals that are in a good position strategically and financially and are able to make a compelling case for their transformation plans will be the ones that end up with good access to public funding and debt capital. The key for hospitals is to systematically review their structures and processes and develop them in a targeted way. That includes optimizing the provision of medical services, consistently exploiting any IT and digitalization potential that exists, and strengthening cooperation within hospital networks.

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