TURKISH government agrees to increase ceiling to up to 75%
publication date: Apr 22, 2009
After intensive talks with the private sector, the Turkish Ministry of Health has agreed to increase the amount that private hospitals can charge patients above what the state pays from 30% to a range of 30-75%, depending on the quality of the hospital. But is that enough?
Details have yet to be worked out according to Filiz Cervirme of OSHAD, the Turkish Private Hospital Association, but the agreement is likely to mean that the top grade (A and B) hospitals can charge a premium of up to 75% to patients on top of what the state pays for treatment in a private hospital. The Ministry of Health introduced rules limiting the premium to 30% from July 2008 onwards. This had a devastating impact on many hospital groups (see Acibadem results).
The rise is unlikely to be enough to satisfy the premier A group hospital chains which typically charged patients 3-5 times as much as the state paid them for treatment. Whilst Memorial, Acibadem and Florence Nightingale have signed so-called partial contracts for complex operations such as transplants and cardiology, they have been privately grousing that these are also priced at a level which excludes profitability.
But the rise may be good news for the lower cost B and C group hospitals who could, in any case, survive on a 30% premium.
Our Analysis: The vulnerability of private sector healthcare profits is graphically illustrated by this case. The 30% premium introduced in July was a real vote winner and the government has waited until after the crucial March elections to push the prices up. The results from Acibadem demonstrate just how vulnerable Turkish chains are to this pressure. The future lies with cost cutting, better management and, probably, hospitals with rather less elaborate infrastructure who can manage from a lower cost base.
