"Medycyna Rodzinna" prepares to take the floor
By Hilary Davies
"There is really almost no competition," says Małgorzata Kowalska, head of the Polish National Health Fund's largest client, which is preparing to introduce private health insurance onto the Polish market. Medycyna Rodzinna, 98 percent owned by Enterprise Investors, is co-operating with insurance company PZU to offer health insurance packages directed at small companies and ordinary individuals, in a market where a similar offer simply doesn't exist.
Created by a group of doctors in 1999, Medycyna Rodzinna has at present 200,000 clients registered at their 14 clinics, which constitute the only chain of clinics among the partners of the National Health Fund. But in advance of expected reforms in the health service, the company is planning to dramatically expand its business.
"We don't know exactly what shape the reforms will take, as discussions are ongoing as we speak," says Kowalska, "but it's clear that even though there seems to be no money in the national health system, in fact there's quite a lot of money being paid into it, under the table." She adds that, "There is intense debate at the moment about how to bring the money being paid into the medical system out of this grey area and into the legal framework. One way of doing this will probably be to create some kind of health insurance. And this will have to develop via co-operation with insurance companies."
The expected reforms represent an opportunity that Medycyna Rodzinna fully intends to grab. For nearly a year, the chain has been running a pilot health insurance scheme together with state-owned insurer, PZU, while at the same preparing for an expected nationwide expansion. With the help of their owner, Enterprise Investors, which has so far invested about $10 million (E8.6 million) in the chain, they have recently opened two more clinics in Warsaw, and plan another six in residential areas over the next two years. On top of their present clinics in eight major towns and cities, they are looking for sites in Poznań, Wrocław and Bydgoszcz. There have been management changes too, in preparation for the big push. Kowalska herself, formerly creator of the Polish division of Makro Cash and Carry, has been brought in specifically because of her experience in running big companies.
"Once the exact nature of the reforms is decided, things could develop very quickly," says Kowalska. "And when they do, we want to be the biggest provider of health services among the partners of the National Health Fund. We'll continue to offer our present services, on a larger scale. But we'll also be offering various health insurance packages to firms and individuals."
According to Kowalska, the real beauty of the plan is that there is no real competition. To suggestions by experts in the field that Medycyna Rodzinna's plans represent a big risk in a fluid and fickle market like health services, Kowalska answers that Medycyna Rodzinna's offer will be quite unique. "We are the only chain of clinics within the sphere of the National Health Fund. At present, none of the other first-contact clinics have enough resources to offer anything comparable, and since it costs at least zł.800,000 to open a single clinic of any standard, most of them won't be able to any time soon."
Meanwhile, potential competition from the existing private health insurers is not much of a threat because they have an entirely different target group. They target big corporations and wealthy individuals, while Medycyna Rodzinna is going for the average Pole.
"Big companies like Medicover, Luxmed, or the Damian centre are directed towards only about three percent of the population," says Kowalska. "And the prices are very high. Whereas we will be offering various packages to ordinary people and small companies at half or even less than half the price, which we're able to do partly because of our state funds and partly because of careful planning of costs."
One element in both the cost-cutting plan and also the target group strategy is the fact that, unlike the big corporate health clinics which are located in city business centers, Medycyna Rodzinna goes for sites in more residential locations, which are, as Kowalska says, "Both cheaper and also nearer our client's homes, which is where a medical clinic ought to be."
It's an amibitous plan. Right now the company, whose turnover for the last financial year was zł.30 million, is only just breaking even. Yet Kowalska, who is confident that this year will begin to see profits, says there are already plans to go on the Warsaw Stock Exchange in the near future.
"We aren't making any profit right now, because we've made a lot of investments," says Kowalska, "But once we're making five or six million a year, then we'll be in a position to raise more capital and invest in further expansion."
