It has been quite a ride for the Turkish private hospital sector.

Between 2006 and 2008, the number of private hospitals soared from 250 to 375, thanks to a huge building programme, which has left the industry nursing a collective debt of $3 billion.

Next came the onset of the recession, coinciding with a move by the Ministry of Health to severely limit profitability in the sector. Patients can use social insurance to pay for private treatment, which they then have to top up. However, the  government limited top-ups to a 30% ceiling in July 2008 -that spelt disaster for the private sector.

Lavish A-group hospitals, offering equivalence to top US and European hospitals, were typically adding 150% plus, more modest B-group hospitals 100% and C group hospitals – described as the same as a public sector hospital - were adding 20-50%.

But hope is at hand; Filix Cevirme, General Coordinator at the Association of Private Hospitals (OHSAD), says the government is expected to up the ceiling to 70% after regional elections in March.

This would be a great relief for most B and C groups, but still would not be enough for most A-group hospitals.

The ceiling has had a big impact, says Cevirme, flooding B and C group hospitals with patients who see these prices as bargains, and leaving many A-group hospitals with 50% occupancy rates.

Cevirme says profitability, which stood at 25% before tax and interest a few years ago, has now slumped to 2-3%.

Several heavily indebted groups, who have built new A-group hospitals in the last few years, face massive financial problems and are looking for private equity. With 30 A-group hospitals in Istanbul alone, over-capacity stalks the sector.

Others say the private sector has only itself to blame. Omer Seka, an academic who has worked as a consultant and who has seen the private sector close up, says: “There has been little or no cost control. It could charge what it liked. This is a wake up call to the private sector.”

Our report, Opportunities in Eastern Europe: Markets and Reform, looks in detail at the impact of the reforms on the Turkish private sector. It also covers Poland, Romania, Greece, Hungary and the Czech republic. To find out more, contact Max Hotopf on +44 207 288 1874 or email max@healthcareeuropa.com.