State wants to keep hospital control

THE GOVERNMENT has made another step towards completely halting the transformation of public hospitals into joint-stock companies, with cabinet approving a draft amendment to the law on health care providers on September 19.

THE GOVERNMENT has made another step towards completely halting the transformation of public hospitals into joint-stock companies, with cabinet approving a draft amendment to the law on health care providers on September 19.

Though the draft still needs final approval from the parliament to kill the transformation process, it has already made health insurance companies, investors and analysts nervous.

The previous government moved towards joint-stock hospitals to cut the debt of Slovak health institutions. But current Health Minister Ivan Valentovič denies that the state is a worse owner than private owners.

"I'm convinced that the state is a good manager and we will soon show it," Valentovič told the SITA newswire after the cabinet session.

The amendment would stop switching healthcare facilities to joint-stock companies as of December 30, 2007, and simultaneously guarantee that "the state would remain the owner of teaching hospitals, national specialised healthcare facilities and institutions that perform in special situations".

Some analysts claim that the transformation to joint-stock companies would not change hospitals' ownership, but only their legal form.

The Health Policy Institute (HPI) think-tank says stopping the transformation will push hospital debts up, according to a statement on its website.

"Due to their nature, joint-stock companies operate more effectively, responsibly and transparently than state-subsidised companies," the HPI's Angelika Szalayová told the public Slovak Television.

The Association of Hospitals of Slovakia would support stopping the transformation

if the state can secure control over hospitals' financial performance.

"It is important that hospitals meet their obligations to employees and to the social security provider, Sociálna Poisťovňa," association president Marián Petko told The Slovak Spectator in a previous interview.

Valentovič said the Health Ministry has set rules for hospitals managed by the ministry, and this has already been reflected in their half-year results.

But HPI predicts a tough year ahead for the hospitals. Stopping the transformation would not only cause a further increase of hospitals' debts, but it would deprive them of the chance to modernise, the HPI wrote on its website.

According to the draft state budget, the Health Ministry plans to invest less than Sk200 million (€5.9 million) into hospitals' renewal, the HPI wrote.

Thus private capital would remain the only source of money for hospital development. But only standard companies - such as joint-stock companies - can lure private-sector money, the think-tank says.

The draft revision has met with opposition from the social partners tripartite, as well as health insurance companies.

At a tripartite meeting prior to the cabinet session, employer representatives did not support the new legislation. A member of the Slovak Association of Entrepreneurs governing body, Ján Oravec, said if the transformation is halted, the hospitals would slip into a lenient budgetary environment and would be not forced to behave economically, the SITA newswire wrote.

The Health Insurance Companies Association (ZZP) said that with hospitals' increasing debt under the ministry's administration, they must be transformed into joint-stock companies.

"The estimate of the aggregate debt as of December 31, 2007 is Sk7.5 billion," ZZP executive director Eduard Kováč told The Slovak Spectator. "Moreover, Valentovič does not have a strategy for settling the debts and stabilising hospitals controlled by the ministry.

"The impacts of the new Labour Code make the bad situation [of hospitals] even worse."

He also agreed with HPI that no private investor would put money into state-subsidised companies.

Representatives of the private health insurance company Dôvera consider the plan to halt the transformation unacceptable.

Dôvera general director Patrik Mozola said trans-formation is a precondition for the recovery for the whole system.

The Doctors' Trade Union (LOZ) welcomes the govern-ment's plan to halt the transformation. LOZ boss Marian Kollár said at a press conference on September 25 that hospitals cannot profit in a market environment because they produce more than they earn.

"A bakery that bakes a pastry for one crown and sells it for 80 halers would go bankrupt," Kollár said.

Some hospitals manage to break even or earn a profit, but the trade unionists think that this is because they do not do expensive medical treatments, and send patients who need costly treatments to teaching hospitals.

Competition on the health care market increases

While it's an uncertain time for hospitals in Slovakia, investors are building new health care facilities.

In late July, the ProCare company started building a clinic in Košice - the first of a planned network of 12. The company plans to provide above-standard medical services for acceptable prices as an alternative to current outpatient health care, the SITA newswire wrote.

The Košice clinic is a greenfield project scheduled to be completed next summer. Construction of a similar facility is planned to start soon in Bratislava.

The clinics in Bratislava and Košice will have a capacity of 40,000 registered clients who will use the services of almost 70 doctors and nurses. They will also provide same-day surgery services.

ProCare will provide services for clients of all health insurance companies based on electronic paid registration.

"We are not building clinics for VIP clients, but for normal people," said ProCare general director Roman Závodský.

The first phase of the network will also build clinics in Trnava, Nitra, Žilina and Trenčín. The complete network of 12 polyclinics, to be built in larger towns across Slovakia, should be finished by the end of 2009.

The project includes two types of clinics. The bigger ones planned for Košice and Bratislava will cost Sk240 million (€7.1 million).

Smaller facilities will cost about Sk130 million to build.

The owner of ProCare and the investor of the clinic network is the private equity group Penta, whose other health care investments include the Dôvera health insurance company, the Falk emergency rescue system and others, according to the Penta website.

The J&T private equity firm has also invested into the Slovakia's health care.

According to its website, its investments include the Európska Zdravotná Poisťovňa health insurance company, the Andrej Leňo Hospital and Clinic in Humenné, the Gen. Ľ. Svoboda Hospital and Clinic in Svidník, the Železničná Nemocnica hospital in Bratislava and the Železničná Nemocnica hospital in Košice.

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