The privatization of formerly public hospitals and the introduction of flat-rate payments have intensified competition among German hospitals. Many German hospitals are struggling with losses in their profit and loss statements. To reduce these losses, cost-cutting and rationalization measures are being proposed and implemented. As a result, the number of employees in this sector decreased by over 50,000 in recent years, from 1998 to 2006, down to around 1,072,000, and the average length of hospital stay fell from 10.1 days in 1998 to 8.6 days in 2005. Supply-side measures are insufficient in the long term if the importance of patients in the market for medical services is not taken into account. A hospital can distinguish itself from others in the competition through a strong patient orientation and perform better in the competitive landscape.