From Demigods in White to Normal Employees: Employment Relations and New Incentive Structures in German Hospitals

Abstract

This chapter further assesses the impact of New Public Management-style incentive structure reforms on employment relations in German hospitals. The author shows that while medical doctors once boasted a large degree of autonomy and flexibility within the workplace, reforms enacted in the past decade have considerably altered contracts by introducing pay-for-performance, bonus, and penalty schemes tied to state-defined targets and care objectives. As the number of private hospitals has risen and intensified competitive pressures within the health sector, physicians have increasingly found themselves in the position of agents responding to the requests of administrative principals charged with monitoring their performance and measuring it against state goals. While seemingly achieving the state’s intent of reigning in doctors’ discretionary power, these reforms have nevertheless engendered unintended consequences by promoting unethical behaviour in the pursuit of pay and performance targets, and by contributing to a dramatic increase in locum doctors, who retain wider professional freedom and can demand higher pay for temporary contracting services, thus casting doubt upon the potential cost savings associated with heightened managerial governance.