To help inform a conference organised by the Germany Ministry of Health (BMG) and the OECD on ‘Managing Hospital Volumes’ on the 11th April 2013, the OECD Secretariat produced this paper giving an international perspective on Germany’s situation and the current policy debate. It provides a number of observations about the structure and financing of hospitals in Germany. It begins by arguing that Germany has a more open-ended approach to the financing of hospital services and weaker controls over the hospital budget than in many other OECD countries. In large part this reflects that DRGs in Germany are almost strictly used for pricing, whereas other countries use DRGs as one of many tools they have to influence hospital budgets. This is compounded by a situation where State governments do not have an incentive to rationalise hospital capacity where this may be desirable. Finally, the paper argues that the vast array of quality information available in Germany ought to be used to better direct financing.