HEALTH care is one of the most troubled sectors in Slovakia. On one hand, hospitals and medical employees are pointing out undignified conditions of work and the urgent need for money in the health care sector; on the other, patients criticise weaker healthcare services.
Despite the almost no-exit situation, strong Slovak financial groups announced several years ago that they were interested in accessing the healthcare sector and looking for new business opportunities there. Currently, both Penta and J&T Finance Group have strong portfolios of medical institutions.
A part of the Slovak political scene as well as medical centres themselves have expressed concerns about further penetration by the financial groups into health care.
Their main objection is that the interest of the financial groups is mainly quick profit. The critics also sometimes consider their business activities as a conflict of interests, since the financial groups are the buyers and sellers of the services at the same time - the groups are involved in ambulance services, health insurance companies, medical service facilities, and pharmacies.
Penta Investments
According to Penta Investments, analysis of the healthcare sector showed that the level and quality of services in Slovakia is lagging behind. Patients miss the human and professional approach of medical personnel and their willingness to adjust products and services to patients' needs. The majority of healthcare centres and facilities are in bad financial straits.
"The current unfavourable situation in health care strengthened our decision to actively participate in the healthcare provider market" Eduard Maták, investment director of Penta Investments told The Slovak Spectator.
He added that Penta considers its accession on the healthcare market as strategic, complex, and synergic. Penta considers health care as a branch with large potential. "People's interest in their health is growing and prevention will find a larger place in the responsible approach of people towards their health."
Maták is convinced of the importance of continued healthcare reform. It increases effectiveness and allocates the needed resources. At the same time it creates competition and puts the patient in the first place.
"However, it [reform] is only just beginning and will need improvements. We are for unbiased and fair control mechanisms in the healthcare market and for creating competition on the market. Joint stock companies [transformation of state hospitals into joint stock companies is one of the reform's principles] create transparent room for the control of resources, clarify the relationship between owners and management, and act in the interest of patients," Maták said.
Although Penta Investments took part in several tenders for health care centres it did not succeed in buying one. However, Penta decided to invest several hundreds of millions into construction of new medical facilities that will provide high-quality services and products. It will also continue to take part in tenders for the sale and rent of existing healthcare facilities.
Currently, Penta manages Institute of Tuberculosis and Respiration Diseases in Kvetnica and ZSNP Zdravotnícke služby (Healthcare services), SME daily wrote.
The group succeeded in the tender for operation of laboratories in the Kramáre hospital through Synlab company. It also operates laboratory services in Ružomberok and Stará Ľubovňa.
Penta acquired through Slovenská záchranná licences for operation of 73 ambulance stations.
The group owns health insurance companies Dôvera and Sideria. Both provide health insurance for more than 70,000 clients.
The company is also trying to acquire pharmacies.
J&T Finance Group
J&T Financial Group also considers its access into the health care as crucial investments. "We are not entering the healthcare sector with the aim to reach high profits in a short time," said Ivan Jakabovič, vice-chairman of the board of directors of J&T Finance Group.
He thinks the field of health care will always be interesting because there are large financial flows and "this area has been exceptionally stable, because, unfortunately, people always have been and always will be sick and it is necessary to treat them".
He continued: "However, this area is currently in crisis. The enacted legislation enabled private capital to access the health care sector, and as we have experience in the restructuring and revitalisation of companies in crisis we consider this area to be a strategic challenge for our group."
According to Jakabovič the group wants to focus on each stage of health care - insurance, medical examination, and treatment, including quality medicine up to rehabilitation.
"On the other hand, we must provide physicians and other medical workers with dignified conditions for their work. The whole system should work as effectively as possible," Jakabovič said.
J&T acquired a licence for operating European Insurance Company (EIC) in August 2005. After building its infrastructure, J&T is currently preparing contracts of EIC with physicians and medical facilities. According to J&T estimates, EIC should be economically independent once it reaches 50,000 clients. The goal of the company is to reach about 100,000 clients.
J&T Financial Group acquired managerial control of Železničná nemocnica (Railway hospital) in Bratislava and Železničná nemocnica in Košice. The group wants to invest Sk30 million (€800 000) and Sk20 million in the hospitals respectively, mainly into new equipment.
In the tender for ambulance services, J&T, became owner of ambulance service stations in Karlova Ves, Dúbravka (both in Bratislava), and in Šamorín. The Bratislava stations should start operating in June and Komárno station in July.
The group also entered into microbiological laboratories of HPL company. The laboratories will be in one central location and will expand to offer laboratory test result consultations to medical workers.
Spas and hotels of Hviezdoslav, Helios and Solisko in Štrbské Pleso for treatment of respiratory diseases are also in J&T's portfolio. Currently, Hviezdoslav is undergoing reconstruction for Sk1billion and Solisko for Sk500 million. As the health insurance companies limit their payments for stays in spas, J&T wants to focus mainly on private clientele and self-paying clients in Štrbské Pleso.
Time will tell
Economist Martin Chren from FA Hayek Foundation told the daily SME that the focus of the financial groups on health care is natural. The reason is that there are already fewer opportunities in so-called fast-turnout businesses and the financial groups are searching for other business opportunities.
He added that many financial sharks have a shadowy past, because some deals were not very transparent. Business in health care can help regularize their status. Additionally, "health care provides them with a business in which they can use their experience," Chren said.
