As Labour redisorganises the NHS with vigour and ambition, governments elsewhere are grappling with similar problems. In Germany, the 'third way' Social Democrats are finding life as difficult as Dobbo is in England.

The German healthcare system is expensive and inefficient. Eight per cent of hospital activity is still paid on a per diem basis. Thus hospital managers, in an effort to generate revenue, keep bums in beds: the longer the length of stay, the greater the loot paid by the sickness funds.

As a result, lengths of stay in Germany are four or five days longer than in Britain and other relatively efficient West European systems. The new German government wishes to extend a diagnosis-related group system of payment, which currently covers about 20 per cent of hospital activity, to the rest of the system.

This, of course, will generate a surplus of beds and hospitals which will be difficult to manage.

At present the hospitals are controlled by the Lander (or provinces). Thus the purchasers (the sickness funds) have little direct impact on the hospital stock. Again the new government is proposing reform, with the transfer of the control of the hospitals to sickness funds.

In some ways this is attractive to the Lander politicians as they avoid the costs of rationalising the bloated hospital stock as DRGs are extended as a method of financing hospital care.

But their role in running hospitals was a significant part of the politicians' portfolio of influence, and the voting for this element of the reforms is likely to be close. While reform of the hospital system and payment is complex and controversial as interest groups strive to defend their pecuniary and political influence, reform of the market for doctors poses even greater difficulties.

The doctors' stock has grown steadily for decades, in part because initially the federal government had no control over university policies as a result of the constitution imposed by the Allies after the Second World War.

The doctor stock has grown rapidly to a level that is mind-blowing to the British. There is one doctor for every 290 Germans.

Of course, there is regional variation, so that in Brandenburg the ratio is one doctor to 372 people and in Hamburg it is one doctor for every 199 people. Clearly, Germany is a very dangerous place, with lots of doctors seeking patients to cut up and pop pills into.

More seriously, these people make a living because of supplier-induced demand. If you have lots of doctors, you have lots of unnecessary activity.

It was claimed at a recent conference that 40 per cent of European radiography was done in Germany and 50 per cent of it was unnecessary.

It is clear ly possible that some Germans glow in the night. The German government is anxious to control the volume of doctors and to improve their quality.

Before 1993, a doctor, once graduated, had to complete only a year of work in any specialism before being able to set up an office and work as a general practitioner. At present three years of more targeted and relevant training is required, and this may rise to five years as the government seeks to develop the GPs' gatekeeper role and give them greater power in resource allocation. In addition to increases in the length of training to improve quality, there is also a desire to create practice guidelines and protocols.

As in every country, there are major variations in clinical practice:

patients with similar characteristics receive widely varying treatments.

The Germans, like everyone else, including participants in the machinations of England's National Institute for Clinical Excellence, face the problem of a poor evidence base and biased and inadequate research funded by manufacturers anxious to market their products to doctors and consumers.

But the main workforce problem in Germany remains the large number of doctors and their capacity to induce demand for healthcare. The government is planning to freeze numbers at their present level and admit new doctors to the workforce only when others retire or die. This is a start in a long and difficult process of reducing supply.

Its downside is that young, able people who are trained in modern methods will be excluded, while dodgy, elderly practitioners are protected. The Germans, crab-like, are edging towards re-accreditation, but they have a long way to go yet.

One benefit for the English of this policy is that those trusts facing recruitment problems may be able to employ young Germans. There are already many Germans in training posts; they might now be able to hire some as consultants. Even though the salary here is relatively low, at least there are jobs for them.

Another imbalance in the German system, which sounds familiar to those in the NHS, is the overemphasis on acute care and the under-resourcing of services for the elderly, particularly those with chronic conditions. Outside the hospital, this is partly the product of the fee schedule.

There is a book of medical acts and associated fees. The scope and nature of this book influence physician behaviour and do not encourage integrated packages of care for those with chronic conditions.

It is remarkable that a nation renowned for efficiency should have such a costly and inefficient healthcare system. But the new government, with an economy struggling to emerge from recession, wants greater cost control, increased efficiency and more equity.

The Green Party minister's efforts to achieve these goals is producing many protests: 20,000 demonstrated at one June event. Good luck to her - and she will certainly need it: the German Medical Association makes the British Medical Association look like a bunch of wimps.

Alan Maynard is professor of health economics at York University.