FINDINGS of our new East European report
publication date: Apr 8, 2009
The sharp recession in Eastern Europe means that swathes of public sector healthcare in Hungary, Poland, Romania and Bulgaria will be privatised over the next five years, according to Opportunities in Healthcare - Markets & Reform, a new report from Healthcare Europa. But the slump has had an immediate and damaging impact on healthcare tourism in Hungary and Poland. Meanwhile, Turkey’s private hospital sector faces a severe crisis.
These are the findings of a new report, Healthcare Opportunities in Eastern Europe – Markets and Reform, from research group Healthcare Europa.
Report author Max Hotopf said: “For years, public sector reform in much of Eastern Europe has been stymied by a combination of often corrupt public sector management, an unstable political establishment and a lack of fiscal responsibility. Reform initiatives have withered in most Accession countries. ”
He predicts that this is about to change with municipalities and regional authorities taking the lead. “Government spending is about to be slashed dramatically in many countries and this means that local authorities will no longer be able to subsidise inefficient hospitals. Many will be forced to either privatise completely, or to extend long management leases to private contractors.”
Much of this movement will happen without central government legislation, as regional bodies already have the power to privatise if they wish to in Poland, Hungary, Romania and Bulgaria.
Planned central government reforms will further broaden the market. These are likely to include the privatisation of social insurance in Bulgaria, creating a new €1 billion market.
Healthcare Europa also predicts that outsourcing of laboratory services and imaging diagnostics will increase. “As well as privatisation, we will see commercialisation, where hospitals are turned into limited companies. Whilst still owned by the regional authority, these will be run professionally within stricter spending limits. Commercialised hospitals are much more likely to outsource wherever and whenever it makes financial sense to do so.”
The last six weeks have seen over 30 Polish authorities apply to commercialise their hospitals.
Meanwhile, certain sectors will be relatively immune to the recession. One of these is fees-for-service where the patient pays cash for a particular intervention. “Where this is non-discretionary, we don’t expect any falls. As public services deteriorate, so more individuals will go private and there remains strong, pent-up demand.”
Declining local currencies will tend to help this sector to grow. “Last year we estimate that 72,000 Romanians left the country for medical care. As the RON depreciates against the euro, so more individuals will opt to stay in-country.”
Other sectors will, however, be harder hit. Subscription healthcare, paid for by employers, will be damaged by rising unemployment and by employers cutting back their costs.
The report also looks at Greece, where the large private healthcare groups will be hurt by the downturn, and Turkey, where many private hospitals have high debts and have been forced to lower their charges by the social insurer.
As well as analysing the current landscape, the report also looks at potential reforms on a country-by-country basis, at market sizes and names and profiles all the main players in private healthcare.
The 250 page report is available now from Healthcare Europa on 0207 288 1874 or max@healthcareeuropa.com.
