Expect a big wave of functional privatisations in Hungary, says Professor Peter Gaal, at Semmelweiss Universiy in Budapest.
Others are slightly more cautious. Bertalan Jaszkuti, at Deloitte, points out that the opposition Fidesz party is ahead in the polls for the election in 2010, and is opposed to such moves.
Gaal says some 15 local authority-owned hospitals have already been passed into private management, mainly on 25 to 50 year leases. He expects this to mushroom over the next few years, as cash-strapped local authorities recognise that they can no longer finance these facilities: “The Hungarian health budget was cut by 5% in nominal and circa 7-8% in real terms for 2009, and this follows earlier cuts. Local authorities increasingly understand that they cannot afford to run healthcare facilities.”
But it is far from clear that such functional privatisations can be made to pay. Hospinvest, by far the largest player in the functional privatisation game, has just changed its chief executive, shortly after taking over Eger county hospital in January 2009.
The company, which is backed by the European Bank for Reconstruction and Development, says it needs new blood for its next phase of expansion.
Hospinvest’s strategy has been to seek control of all the hospitals in Eger county. It appears to be offering quite generous terms - for Eger County Hospital it offered Ft 100 million for operation rights, and pledged to invest Ft 6 billion in development.
It also guaranteed public service employee benefits for hospital staff, and plans no lay-offs over the next two years. Functional privatisation has proved hugely controversial in Hungary, with Hospinvest having to win referenda of employees before being allowed to proceed.
Other reforms in Hungary came to a grinding halt in the summer of 2008, when the electorate rejected a measure which would have led to small, out of pocket payments to see doctors. The ruling Socialist government then killed long-standing plans to move to privatised social healthcare insurance and to replace the current monolithic structure with a model based on the Netherlands.
