Upon German reunification, the East German states adopted the West German health insurance system, although some special regulations applied. In particular, the official fee schedule for private health insurance established a 55% discount on the fees for all medical services provided by registered physicians for privately insured patients in East Germany. Between 1991 and 2002, this "East discount" was gradually reduced to 10% and then suddenly repealed completely in 2007. The project investigated the impact of the sudden unexpected increase in potential profits of physicians' practices on the labour markets in the health sector with a focus on rent-sharing between physicians and their employees. Using a difference-of-differences research design, we have compared the development of profits and wages in physicians' practices before and after the repeal in East and West Germany, since only East German physicians were affected by the repeal. In addition, since only fees for services for privately insured and self-pay patients were affected by the reform, we were able to look at practices with different shares of income from privately insured within East Germany before and after the reform. Using these approaches, we were able to show that the incomes of physicians in private practice in East Germany increased by about 10% relative to the West after the repeal of the East discount. Furthermore, with the help of social security data, we were able to demonstrate a persistent wage increase of 6% for workers employed in East German medical practices associated with the reform. Interestingly, these results are consistent with estimates of the rate of rent-sharing from previous literature, which has solely focused on large manufacturing firms.