Polish health care sector in 2016 – a new opening for private investors?

(L-R) Paweł Hincz and Juliusz Krzyżanowski

By Paweł Hincz, Legal Consuel, Oartner, Head of Life Sciences Practice, WKB Wierciński, Kwieciński, BAEHR and Juliusz Krzyżanowski, Co-Head of Life Sciences Practice, WKB Wierciński, Kwieciński, BAEHR 

This autumn it will be two years since branches of the Polish National Health Fund (NFZ) were going to open up the provision of health care benefits in Poland to new contractors. However, two amendments to the Health Care Benefits Act enabled branches of the NFZ to extend the term of existing contracts with benefit providers that were due to expire on December 31, 2013. These amendments allowed for the existing contracts to be prolonged initially until December 31, 2014 and finally until June 30, 2016. These extensions have caused severe problems for private investors who had expected to be able to compete to provide publicly funded health care services from the beginning of 2014 and, with that in mind, had made significant investments. We expect that any further extension of the existing contracts could be the end for some private investors. For that reason, in our view, regardless of the result of October’s general election, the ruling coalition could not afford to introduce yet another amendment to the Health Care Benefits Act allowing NFZ branches to continue to freeze the market for new players.
Investing in health care in Poland has never been simple. However, putting aside the extension of the existing contracts with benefit providers, some amendments to the Health Care Benefits Act may have a positive impact on making investment decisions. For example, prior to January 1, 2015, contracts for providing publicly funded health care benefits were generally concluded for a period of only three years. Agreements exceeding this term required the consent of the President of the NFZ. Many market participants considered that such a short period provided insufficient stability and certainty from an investment point of view. However, since January 1, 2015, agreements may generally be concluded for a period of five years without requiring consent. Moreover, contracts for inpatient services, other than hospital treatment (rehabilitation, long-term care, etc.), may be concluded for up to ten years without the consent of the NFZ president and contracts for primary care may generally be concluded for an indefinite period of time.
Despite the issues, the health care sector continues to attract interest, with increased activity of domestic and international investors being observed and a reasonable level of M&A transactions in the area. We strongly believe that the sector will not only remain attractive, but also strengthen its position among the top investment targets in the years to come. u

 

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