Illustrative stock photo (source: Sme)
Slovakia’s health care sector is being privatised on the quiet in a process overseen by the governing Smer party. This is how opposition Freedom and Solidarity (SaS) describes the increasing influence of the financial group Penta in the sector.
The party claims that while before 2006 the group controlled only one hospital, since 2006 when the Smer party first took power it has acquired control of more than 12 hospitals.
“[Robert] Fico has been lying to the nation for 10 years,” SaS chairman Richard Sulík told the press on March 13, as quoted by the SITA newswire. He referred to the prime minister’s statements about harmful privatisation or plans to ban profits in the health care sector.
Penta, however, currently controls not only hospitals via its Svet Zdravia network, but also private health insurer Dôvera, over 240 pharmacies running under the brand Dr. Max, and a network of outpatient clinics ProCare. SaS representatives call it “an enormous conflict of interest”.
According to SaS, the year 2006 was no coincidence, as it was in that year that both Smer chairman Fico and Penta co-owner Jaroslav Haščák reportedly visited an apartment on Vazovova Street in Bratislava which was mentioned in the notorious Gorilla file.
Penta, however, denies such accusations, which it sees as “a senseless attack against one of the few things in the Slovak health care sector that is positive and actually works”.
Steep increase after 2006
SaS singled out the recent takeover by Penta of the hospital in Topoľčany (Nitra Region), as a move that was okayed by the Antimonopoly Office in early March. Penta pays annual rent of €100,000 to the region, which the party regards as being out of keeping with the hospital's annual profits of more than €1 million.
“It is outright misleading and borders on lying to compare the profits of individual hospitals and rentals in a situation when our investments in hospitals are reaching tens of millions of euros,” Gabriel Tóth, spokesperson of Penta Investments, wrote in a statement provided to the media.
The group plans to invest €9.7 million into the hospital in Topoľčany over the coming years. To date, Penta has spent over €75 million on hospitals that it has acquired, said Tóth, urging SaS to direct its attention to the “enormous ineffectiveness at state-owned hospitals” instead.
Moreover, governor of the Nitra Self-Governing Region Milan Belica has objected to the SaS claims, saying they are misleading. The region does not rent the Topoľčany hospital on its own initiative, but rather following several court proceedings and subsequent distrainment.
Belica disagreed with closing the controversial agreement and has refused to sign the resolutions adopted by the regional deputies, region’s spokesperson Oľga Prekopová told TASR.
The current agreement with Svet Zdravia approved last May, however, is still more advantageous than the original one, she added.
Dušan Zachar, analyst with the economic think tank INEKO, admits that though it may seem that the total number of hospitals belonging to Svet Zdravia is big, regarding the total revenues of the facilities, they are lower than those of the state-run University Hospital Bratislava.
Involvement questioned
Penta claims that its investments in the hospitals constitute a commitment in the long run to “radically improve the function and quality of health care”, the company claimed, as reported by TASR.
Also Smer disagrees with SaS' claims, calling them outrageous.
“It’s disgusting on the part of SaS to implicate Smer with Penta’s business activities in the health care sector,” said the party’s spokesperson Ľubica Končalová, as quoted by TASR. “It is this very party (SaS) that employs Rudolf Zajac, who made it possible, surreptitiously as health minister, for Penta to enter the health care sector.”
Though Fico criticises Penta often, the decisions made by his governments have benefitted the group rather than harmed it. During the rule of his second government (2012-2016), the financial situation of the company was better than during the rule of Iveta Radičová's cabinet (2010-2012), the Sme daily reported.
Though the first Fico government banned health insurers from earning profit back in 2007, when Dôvera merged with Apollo in 2009 artificially increasing its assets in order to pay dividends to its shareholders, nothing was done to prevent it. The process could have been stopped by the Health Care Surveillance Authority (ÚDZS) whose chair is nominated by the health minister. At the time, Richard Raši of Smer held the post, while the authority was chaired by Richard Demovič, Sme wrote.
The daily also pointed to the fact that current Health Minister Tomáš Drucker worked for Penta at the time the insurers merged. He has repeatedly claimed that he knew nothing about increasing the assets.
Moreover, former health ministers in the second Fico government Zuzana Zvolenská and Viliam Čislák both had links to Penta, Sme wrote.
Private investments in health care
Meanwhile, also Peter Visolajský, chair of the Medical Trade Unions Association, expressed concerns about Penta’s dominant position in the health sector.
“Such ownership is not possible in developed countries,” Visolajský said, as quoted by Sme.
Penta, however, claims it does not have any monopoly or dominant position in the sector. Dôvera controls 27 percent of the market, with the biggest player in health insurance being the state-run insurer Všeobecná Zdravotná Poisťovňa.
Moreover, Dr. Max operates some 240 of the approximately 2,000 pharmacies in Slovakia, which represents a 10-percent share.
“Though we have the biggest private network of regional hospitals, regarding their number and size we are not a dominant provider in the sector, which is the role of the state-run and the biggest hospitals,” Penta claimed in an open letter sent to the media.
Slovakia would benefit from more private investors willing to enter the market as the proper competition may result in better quality and a more effective health sector, Zachar said.
“Currently, the state has the strongest influence on Slovak health care,” Zachar told The Slovak Spectator, adding that it is not good for the sector.
If any private subject obtained such a dominant position in the market, it would pose a threat of abusing this position and creating a monopoly. The regulators and supervisory bodies should monitor the situation and get involved if there is such a risk, he added.
“However, if there is competition and quality regulations in the market, including measurements and ratings of quality and effectiveness of provided services, vertical integration does not have to post a big risk to the society,” Zachar said, adding that instead it could result in several innovations.
Disclaimer: The Penta financial group has a 45-percent ownership share in Petit Press, a co-owner of The Slovak Spectator.
