A local authority may grant subsidies to its own designated hospital to offset deficits without thereby infringing the rights of competing hospital operators. This was the ruling of the Administrative Court (VG) in Frankfurt am Main, which dismissed the claim brought by a non-profit hospital operator (press release dated 17 September 2026).

In the present case, the City of Frankfurt am Main had entrusted a municipal hospital with the provision of services of general economic interest and subsequently, according to a press release, made available to it around 50 million euros for the years 2023 and 2024 to ensure its liquidity. The claimant, which also operates a designated hospital in Frankfurt, regarded this as a distortion of competition and a breach of its freedom to pursue a profession and the general principle of equality.

The 7th Chamber of the Frankfurt Administrative Court considered that, according to media reports from the oral hearing, the subsidies constituted an infringement of freedom of occupation and unequal treatment, but deemed both to be justified. The authority to subsidise the local hospital stems from the city’s duty to ensure healthcare provision and from local government budgetary law. The duty incumbent upon local authorities to ensure hospital care that meets public needs is an overriding public interest which justifies the subsidies, not least in light of the principle of diversity of providers. The payments are also in accordance with European state aid law.

Rechtsanwalt Dr Maximilian Dombert explains: „The ruling strengthens the scope for action available to local authorities. Any authority that takes its duty to ensure the provision of healthcare services seriously may, on the basis of a proper delegation of responsibility, provide substantial financial support to its own hospital without having to face accusations of distorting competition from rival providers. However, the Administrative Court has allowed the appeal on grounds of its fundamental significance, so the outcome of the proceedings remains to be seen. Nevertheless, the ruling sends an important signal to local authorities facing similar decisions.“