Hospital privatisation has proved extraordinarily emotive in Eastern Europe.
The electorate in the Czech Republic voted for the socialist party in November, partly to put a halt to market-oriented reforms. In Hungary, attempts to privatise healthcare insurance ground to a halt in 2008 due to political resistance.
And yet, as the recession bites over the next five years, Healthcare Europa expects privatisation and functional privatisation, where a private company takes over the running of a hospital on a long lease, to spread dramatically.
Already, hospital privatisation is comparatively big business in these countries.
Hospinvest, the market leader in Hungary, expects its hospital related sales to rise from €33.7m in 2008 to €52.9m in 2009.
Agel, in the Czech Republic, had sales for 2008 of €179m (including some pharmacy activity).
EMC and Know How, the two Polish market leaders, together had sales of €40m.
Much hangs on the recession, but we know that when things get tough regions and municipalities sell hospitals and, in many of these countries, the local authorities do have this right.
And things are going to get tough; debt levels throughout much of the region are on a par with or higher than those of Thailand, Malaysia and Indonesia in 1997, all of whom then witnessed falls in nominal dollar denominated GDP of 37-40% in a year.
The EU may step in to stop some of the worst headaches, but falls of 10% in GDP are likely for Hungary, Romania and Bulgaria, and Danskebank expects falls of 3-5% for Poland, plus drops in Greece and Turkey.
It is against this backdrop that we expect hospital privatisation sales to rise from sales of circa €600m in 2008 to €2bn in 2013 in Poland, Hungary, the Czech Republic, Greece, Bulgaria and Romania.
These are conservative estimates, based mainly on municipalities selling or functionally privatising a further 120 hospitals, thus almost doubling the number.
The real rise could be much higher if national governments prove willing to legislate in favour of further privatisation. This is a distinct possibility, but the region has a long history of failing to implement market-oriented reforms.
The Healthcare Europa report: "Opportunities in Healthcare – Markets and Reform in Eastern Europe" has now been finished, and will be on sale at the end of March, price €2,500 including 3 hours of consultancy.
