Abstract
The place of hospitals in health systems is undergoing rapid change worldwide due to the high cost of hospital care and the changing health needs of the population. The Covid-19 pandemic has recently drawn public attention towards hospital capacity and has added new urgency to discussions on the future role of hospitals. In this context, recent experience in Germany provides valuable information for health systems seeking to manage hospital capacity. Despite reform efforts to reduce hospital capacity, Germany has the highest rates of intensive care beds among high-income countries and the highest overall hospital capacity in Europe. The capacity of the German hospital system can be explained in large part by the high number of elderly in-patients. This, in turn, is driven by (1) a fragmented ambulatory care system; (2) physicians admitting and maintaining elderly patients in hospital at a high rate; (3) a hospital market adding incentives to admit patients; and (4) a political commitment to egalitarian access and universal care. Additionally, recent policies to reduce hospital capacity have had limited impact because hospitals have not responded to financial incentives in the expected manner. Countries looking to learn from Germany’s hospital capacity must therefore consider systemic features, political commitments, and unintended policy consequences.