Most Read from Bloomberg
German Health Minister Karl Lauterbach plans to present a law in the first quarter of next year to stop what he called “locust” investors buying up medical practices.
Lauterbach, a member of Chancellor Olaf Scholz’s Social Democratic Party, said the legislation will aim to impede an “absolute greed for profit” among some private investors who acquire medical centers housing various specialist practices.
“I do not consider double-digit profits to be justifiable,” he said Sunday in an interview with Bild newspaper. “If you get a return of 10% or more, that is hardly possible with serious medicine.”
Private-equity firms that invest in medical practices can help drive innovation and provide stable funding, according to the American Medical Association, a lobby group for physicians and students. However, expectations for a quick return can also clash with a practice’s long-term sustainability and physicians’ ethical demands, the group said in August.
“The notion here is that the private equity firms buy the practices and then their investors expect them to get their money back in roughly five to seven years at a 20% to 30% profit,” AMA member Francis J. Crosson said at the association’s 2022 annual meeting.
“That’s not a situation which leads to an expectation of long-term relationships and with investments in making the practices better — it’s quite the opposite,” he added.
Lauterbach told Bild that medical practices in Germany should “belong to those who actually work there” and denounced the “absurd profit concept in the health care system.”
He said his law will also put an end to celebrity doctors lending their name to dozens of practices. Young doctors working there engage in “hamster-wheel medicine with useless treatments of poor quality” in order to achieve “absurd profit targets,” he added.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.