The following extract from the Reimbursement Institute, written in German and translated into English using Google Translate, explains the 1972 Hospital Financing Act.
The Hospital Financing Act (KHG) regulates the economic security of hospitals in Germany. The aim of this law is to provide the population with needs-based care at socially acceptable care rates. The safeguarding of non-profit and private hospitals must be guaranteed. In this sense, economic security refers to the assumption of investment costs by way of public funding, as well as the receipt of performance-related proceeds from care rates, remuneration for pre- and post-inpatient treatment and outpatient surgery. This form of financing is called the dual financing model. With the money from public funding (tax money) and care rates (health insurance contributions), the hospital undertakes to operate economically and independently and thus to contribute to the goal of contribution stability set out in the health reform of 2000. The law was passed on July 1, 1972, in Bonn.