A private matter
By : Anna Kocinska
The long-term prognosis for Poland's ailing public health-care sector looks set to improve as a draft law backing the privatization of state-owned medical centers moves to the Sejm this week.
The draft law on the commercialization and privatization of public medical centers put together by the Health Ministry and approved by the Council of Ministers' Economic and Social Committees (KERM and KSRM) would allow local governments to either privatize public outpatient clinics and hospitals or turn them into companies while keeping a 50+% stake for themselves. Of Poland's 715 public hospitals, half are poorly managed and in debt, said Anna Knysok, the Health Ministry's undersecretary of state and the main backer of the proposed legislation.
"We would like to provide clear rules so that commercialization and privatization is done in a homogeneous way throughout Poland," she said. "We want to avoid situations in which local governments are accused of nepotism and corruption."
The privatization and commercialization of Poland's hospitals and 5,989 public medical centers, many of which are also in the red, may be the only way of turning them around, Knysok said.
"Generally speaking, entities that have a non-public ownership structure are better managed," she said. "At the moment, gminas, powiats and provinces, which legally founded the hospitals and clinics, have little control over them. But if a hospital gets into debt it's the local government that has to pay."
Knysok is optimistic that the proposed law would also increase transparency in some ethical gray areas, such as doctors who run their own practices in public hospitals after hours. "If a public hospital is turned into a company with a regular supervisory board, it will no longer be a place where you can run your business using public equipment," she said. And, "if a director believes he will be able to run his hospital into the red and then count on buying it because a local government will pay the debts off anyway, he is wrong," she said.
Under the proposed law, buyers are required to have enough cash to pay off a hospital's debts plus 20% of the hospital's value. There are limits, however: Hospitals whose debts exceed 20% of their value may not be privatized.
Knysok said employees of smaller medical centers might be able to lease them, but most would be privatized. "When it comes to small hospitals, local governments will be much more careful and in my opinion they might choose commercialization over privatization," Knysok said. "In the case of large hospitals, creating a company with a majority stake owned by the local government could be the ultimate change. I don't think employees would be able to lease expensive equipment or find the capital to privatize a hospital."
The privatization of Poland's public medical centers is also welcome news for foreign capital groups, Knysok said. "I know about insurance companies and groups from the United States, Germany and the Netherlands that have inquired about potential acquisitions," she said.
Companies with experience in Western medical markets may be interested in Polish health care, confirmed Artur Haze, investment manager at Oresa Ventures investment company. Listed on the Stockholm Stock Exchange, Oresa recently merged with Medicover, a private, international medical-care company. He said smaller clinics and medical centers would be more attractive to potential investors than bigger hospitals. "The hospital business is similar to the hotel business, you need a lot of capital and you prefer investing in a network because from a venture-capital point of view it might be easier to sell a network to a potential buyer," Haze said.
When asked if he thought foreign buyers would be put off by the country's debt-ridden health-care sector, he said: "On the contrary, you simply need to fully understand the debt's terms and conditions to be able to develop a feasible restructuring plan. If this is agreed between the investors and selling party, there should be good potential to work together."
According to Knysok, the proposed law has a good chance of making it through the legislative process before parliamentary elections in September. "In June and July the project might be in the Sejm, then it might be sent to the Senate in August for amendments, then back to Sejm in September," she said. "But I really don't know whether MPs will get more involved with their election campaigns (than working on bills)."
