Private sector healthcare is already bouncing back strongly in Eastern Europe, particularly in Poland and Romania, but also in Croatia. Medtech suppliers tell me that they are seeing big quarter on quarter growth from private operators, at just the moment when the public sector is collapsing.

Collapsing just about describes the public sector across much of the region.  The head of one operator said: "Hungarian prices have been decimated and I do mean that literally. In Romania budgets were halved for labs and imaging."  States are also forcing operators to wait longer for the money with Romania recently passing a decree stating that bills will not be paid for six months. We are told operators are now also having to wait that long in Poland. Greece is taking even longer to pay leaving Bioatriki, the large hospital, imaging and lab group owed EUR80m on annual sales of around EUR 132m in 2009. In 2008 the Czech Republic was happy to pay private operators for work they did even if they exceeded their annual allocation.  That is no longer the case in 2009.  

Interestingly, much of the investment is coming from Greece (see Greece: The hidden investment market).

Marcin Ajewski at Poland Healthcare Consultants says that Polish private healthcare has so far weathered the storm much better than expected.  He reckons that the big subscription service providers such as Luxmed and Medicover have seen sales growth in the region of 8-12%, compared to 25-30% in 2008.  He thinks that private healthcare has risen by 18-19% this year down from 37-38% in 2008. "Yes these are lower figures, he said. "But they are still growing at a time when many forecast sales falls. Polish GDP is rising by around 1.7% a year."

He says that 4-5 operators are building new hospitals in Warsaw and that international operators are looking at the market anew.

In Romania Societe Generale Asset Management has bought a 36.25% stake in Romanian clinic and subscription operator MedLife, probably the largest private operator in Romania, for EUR 20m, some 10 times EBITDA. Meanwhile, rival CMU Unirea where 3TS is selling its stake, brings bidding to a close before Christmas.  We hear that there are three bidders left all prepared to pay 12-13x EBITDA including Mid Europa and Advent International (see Investors flock to buy Romanian healthcare groups). In October the IFC provided a EUR50m loan to Banca Transilvania to expand financing to private healthcare providers to increase access to medical care.

It is not hard to see the attraction of markets where companies can still sometimes achieve 30% growth rates.