Doctor at large
By : Anna Kocińska
When Dr. Piotr Olędzki set up Przychodnia Rodzinna Family Clinic in January 1999, it coincided with the launch of sweeping reforms to change the face of Polands communist-era health-care system.
At the time, many health-care visionaries such as Olędzki saw the reforms as a chance finally to compete with public medical institutions for health-care contributions deducted from the taxes of working Poles. The aim of the new system was to offer patients better services and more choice of treatment facilities than available under the old, state-subsidized system.
When interviewed by the Business Journal in January 1999, Olędzki characterized the reform as a time of action for health-care providers. People who dont make themselves busy will simply vegetate, he said.
Back then, Przychodnia Rodzinna, a provider of basic health-care services, signed a contract with the Mazowiecka Patients Fund, one of 16 regional funds set up around the country. The idea was for the funds to cover the medical bills of their member patients by contracting directly with hospitals and clinics. Patients, meanwhile, were to register with a health-care institution in their region, with the funds paying the contracted medical centers an annual allowance for every patient they registered. The Mazowiecka fund, for example, paid zł. 80 per patient in 1999. Backers of the reform hoped that medical centers such as Przychodnia would be able to manage their costs effectively and attract as many patients as possible.
But while some health-care providers struggled to find their footing under the new system, Przychodnia was able to achieve its aims - and more. A month into the reform, the clinic had already registered 42,000 patients. A solid beginning, but Olędzki knew that to benefit from the economies of scale he needed to open more medical centers, and not only in Warsaw.
Today Olędzki has seven Medycyna Rodzinna (MR), or Family Medicine clinics, in Warsaw, Szczecin and Katowice. With more than 100,000 patients registered and the first two centers breaking even, he plans to establish more. We are going to open three more centers in Szczecin, one in Tychy and two in Kraków by the end of this year, he said.
But to expand on this scale would not have been possible without some robust financial backing. This is where Enterprise Investors (EI) stepped in. EI, which manages several venture capital funds, has plowed $3.5 million into the medical center chain since 2000. When we were opening our second center it was already clear that we wouldnt be able to afford to open more than one center a year if we only count on ourselves, Olędzki said. We chose the cheapest tiles and carpets but the cost of the center still hit zł. 700 per square meter.
After a cash injection from EI, MR now has the funds to open several centers a year, including zł. 1,300 per square meter for renovations and equipment. In return, however, Olędzki had to give up control of the company and is now a well-paid managing director, responsible for the chains daily operations and strategy. I can have my ambitions to impact the company more (than I do), but its not possible without $10 million in a bank account, he said.
EI owns 90% of MR while seven other shareholders have stakes of 0.5-2% each, Olędzki said. EI, which specializes in long-term investments, has up to $10 million to spend on the health-care chain, according to Michał Rusiecki, a partner at EI responsible for investments in the health-care and energy sectors. Through this investment we want to build a nationwide chain of medical centers providing basic health care, he said. Basic health care was, according to us, one of the very first sectors in the medical-services market that was ready for investment. Despite a negative picture depicted in the media, Patients Funds are not that poorly managed and if one offers good quality medical services, one can exist within this system.
On the revenue side, the majority of MRs earnings are generated through contracts with the Patients Funds. We target patients insured in the public system, Olędzki said. Seventy to 90% of revenue made by individual centers comes from contracts with (the funds).
The funds may not always be MRs dominate source of income though. We believe in the development of private health insurance, which could be an addition to public insurance, he said. Its a chance for companies like MR (to have contracts both with insurers and Patients Funds).
Germanys Allianz already offers corporate private health insurance in Poland, but according to Michał Soczyński, vice president of Warsaw-based Centrum Medyczne B.K.Euromed, a private medical center, the sector is still in its infancy. Its a product for people who want additional health insurance, he said. Patients insured with Allianz have been coming to us for six months or so, but the numbers are still not impressive.
According to Olędzki, private health insurance might be yet another way of supporting Polish medical services, which have been under invested for decades. There is not enough money in the public health-care system, but we wont get more considering the problems with state finances so another form of further privatization (of the health-care system) is a must. Thus, additional money will flow into the medical services market.
