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Catering scandal cuts heads of hospitals

HEADS of state-owned hospitals in Banská Bystrica, Trnava and Poprad, together with the Health Ministry’s service office head Martin Senčák, are being forced out in yet another health care sector scandal – this one concerning overpriced catering contracts signed with mutually intertwined companies.

Health Minister Viliam Čislák(Source: TASR)

HEADS of state-owned hospitals in Banská Bystrica, Trnava and Poprad, together with the Health Ministry’s service office head Martin Senčák, are being forced out in yet another health care sector scandal – this one concerning overpriced catering contracts signed with mutually intertwined companies.

The Sme daily and Transparency International Slovensko (TIS) reviewed contracts of four large state hospitals in Trenčín, Banská Bystrica, Trnava and Poprad and found that they will pay external caterers nearly €81 million including VAT over the course of 10 years. Trenčín hospital signed a contract with the company Hospital Catering Solutions (HCS) and the other three hospitals with the Dora Gastro company. The contracts show that while most hospitals obtain food for patients for less than €5 per day, in these four state hospitals the sum oscillates between €8.30 and €10.80, Sme reported on December 8.

After the meeting with Prime Minister Robert Fico, Health Minister Viliam Čislák said that he made an agreement with the heads of hospitals in Banská Bystrica Vladimír Baláž who serves also as Smer MP, Martin Tabaček from Trnava hospital and the head of Poprad hospital Jozef Tekáč that they will leave their posts. The head of Trenčín hospital Danka Kaššovicová remains on the job as it was her predecessor Ján Dubovský who signed the contract. All those hospital general managers are Smer nominees and contracts were signed during the current election term.

“Contracts were signed unlawfully because government should approve them,” Čislák said, as quoted by Sme. “Those contracts do not exist for the Health Ministry and specific persons are responsible for violating the law.”

Tekáč however disagrees with Čislák claims and refuses to leave.

Tekáč argues that the hospital in Poprad was transferred to a joint stock company, and therefore aforementioned legislation does not apply to it, according to the TASR newswire.

Čislák also agreed with Ladislav Rosocha, the head of a hospital in Košice, that he will leave due to an order of external cleaning services of the hospital’s emergency department for €28,000 per month without announcing a public competition.

“The approach of the hospital is in huge contradiction to the aims of honest economic competition and even with basic principles of public procurement,” wrote the Public Procurement Office in its report on the case, as quoted by Sme.

The Health Ministry’s service office head Senčák was criticised by opposition MPs organising ongoing protests against corruption in the healthcare sector. They pointed out that he agreed with the catering contracts and was passive in the recent scandal surrounding an overpriced CT scanner bought by the Alexander Winter Hospital in Piešťany. The scandal led to the resignation of several top representatives of the ruling Smer party and government.

TIS pointed out that Senčák is also a former employer of the Sodexo company which is HCS’s supplier in the tender. He told the public service RTVS that he left the company in April 2012 and currently has no connections with it.

 

Rigged competitions

 

Mutually intertwined companies Dora Gastro Slovakia and HCS repeatedly participated in catering tenders. Peter Bittó, the head of the board of directors of Dora Gastro, signed the contract in the Trnava Hospital. In Trenčín he had already signed a contract on behalf of Hospital Catering Solutions where he serves as general manager.

The majority share of HCS, which in 2012 did not have a single employee, is owned by Kanebo Investments, allegedly a shell company residing in an administrative building in Luxemburg along with dozens of other firms. HCS sent Slovak media a letter on December 9 claiming that it is not a shell company and is owned by German businessman Karl Heinz Hauptmann. Hauptmann, however, is also a member of the board of directors of Dora Gastro, according to Sme.

“The firms have mutual connections and the fact that they competed against themselves raises the question about whether they agreed on the approach,” Sme wrote on December 11.

In its statement, HCS denied any connection with Dora Gastro.

“Hospital Catering Solutions is a self-sustaining company which sees the firm Dora Gastro Slovakia as a concurrent company,” says the statement of HCS, as quoted by Sme.

All four hospitals used the same firm for preparing their public procurements on catering services, called Euro Dotácie, Sme wrote.

 

Paying for catering

 

Hospitals factored into the costs plans to reconstruct their kitchens and canteens, but the costs were still higher than those paid elsewhere.

For example, Trenčín hospital should pay €23 million including VAT to HCS for 10 years of catering services and reconstruction of its canteen, while expenses of the hospital in Žilina, which cooks on its own, should reach €15.5 million for the same period. Even if Žilina hospital theoretically ordered the reconstruction of its canteen for the same sum as the hospital in Trenčín, its expenses would reach just €18.5 million, Sme wrote.

Trenčín hospital, when cooking on its own, had expenses reaching €522,000 between January and September 2013. After signing a contract with an external firm, the expenses for catering increased to €980,000 between January and September 2014, according to Sme.

HCS refused the allegations that it violated the law, manipulated the public competition or made a cartel agreement, claiming that the expenses of Trenčín hospital on food before and after signing the contract were not compared correctly. The prices for outsourced catering include VAT contrary to expenses when hospitals cook on their own and include expenses on investment or service bringing food from the kitchen to a patient’s bed, according to František Mészáros, the co-owner of HCS.

“We are convinced that the expenses of [Trenčín] hospital are more or less on the same level of expenses before the canteen was acquired,” Mészáros said, as quoted by the SITA newswire, adding that with reconstruction and the introduction of a modern tablet system operating meal distribution for patients, the hospital’s expenses should further decrease.

The Faculty Hospital in Banská Bystrica will pay €10.80 for meals per patient per day, the highest sum for catering services among all observed hospitals. The price would be the highest even if the expenses on canteen reconstruction, reaching €3.7 million, were not counted. Meanwhile, debts from the hospital to the Slovak Social Insurance Company are nearly €10 million.

The management of Banská Bystrica hospital said in its statement that the canteen was in bad shape and needed reconstruction. Dora Gastro offered the lowest price for meals; therefore, the hospital signed the contract with the company on October 28, 2013 for €23.3 million without VAT.

“The price for providing [catering] service is comparable with the price for cooking on [the hospital’s] own account,” reads the Banská Bystrica hospital statement.

Dušan Zachar, the analyst of the INEKO economic think-tank, said that joining reconstructions and catering services makes comparing prices difficult. Another disadvantage of such an approach is that firms which are specialised only in construction or catering are excluded. Further, the length of the contract could result in four hospitals paying higher prices for those services than others in the future.

On the other hand, such a tender allows the winner to adapt the canteen to its own needs and make meal preparation more effective, Zachar told Sme.

Čislák has not commented on the possibility to cancel the contracts, saying that he will wait for lawyers’ statements checking them, TASR reported.

“I believe that common sense will win,” Čislák said, as quoted by TASR.

Topic: Corruption & scandals


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