Swissmed will début on the WSE next year, raising funds to create Poland's largest private hospital
Market insiders welcome this as a positive step, though many doubt that the company will be able to obtain the kind of income it hopes for from health tourism. Many are also skeptical about the hospital's chances of securing a big enough contract with the cash-strapped National Health Fund (NFZ).
Much of the zł.32.5 million of the zł.50 million project, being funded by a mixture of cash and bank debt, has already been spent on construction of the hospital. The remaining zł.17.5 million to be raised by the bond issue directed at institutional investors, is earmarked to provide necessary medical equipment. The 80,000 square meter hospital is to be a state-of-the-art affair, with 60 beds, seven 'apartments', four operating theatres, conference rooms and intensive care facilities, which other private hospitals on the domestic market have not yet been able to offer. Swissmed president and minority share-holder, Roman Walasiński, expects around 30 percent of the hospital's future income to come from private clients, about 30 percent from the National Health Fund and another third from foreign - particularly Swedish - health tourists.
Yet Adam Gruszewski, partner at central Europe's largest investment fund, Enterprise Investors, questions Swissmed's hopes of gaining substantial income from health tourism. He estimates income from health tourism could represent no more than about 10 percent of the total income of such a hospital.
"The only country which has had any significant success in health tourism is Thailand," he says, "which can offer packages of vacations plus treatments like plastic surgery. But Polish hospitals don't offer these kinds of services and it is not a tourist destination."
To which Walasiński answers, "People can say what they like, but our calculations are supported by various economists, analysts and financial experts."
He predicts that, though initially income from health tourism would indeed constitute only about 10 percent of total income within three to five years it would be more like 30 percent.
Dominik Drozdowski, managing director of Larchmont Finance, the corporate finance arm of Larchmont Capital, together with Capital Partners, a company which, once a venture fund, now advises on M&A services, is advising Swissmed on their bond issue. He is also confident that health tourists from Poland's wealthier neighbors represent a fast-growing market for domestic hospitals.
"Health procedures in Sweden, for example, cost about five times as much as on the local market," he says.
The bond issue was announced in a week which saw mass demonstrations by state hospital workers against government plans to reform the national health system. Demonstrators warned that many of Poland's 700 hospitals were on the point of collapse and demanded cash from the government. The plans include proposals to convert hospitals into state-run limited liability companies. This will make it possible for hospitals which spend more money than they have to declare bankruptcy.
Poland's hospitals are currently 2 billion dollars in debt, a state of affairs which may lend support to the doubts of many in the business concerning Swissmed's ability to secure the zł.20 million subsidy it wants from the National Health Fund.
"The government's programme is not entirely clear, and even if it were, Swissmed hasn't even yet got a contract with the National Health Fund," says Gruszewski. In his view, embarking on such a venture without any secure contract for government funding is a very risky undertaking.
"All over the country there is an overcapacity of beds and hospital contracts with the National Health Fund are much too small," says Gruszewski, who himself, together with medical institute, EuroMediCare, is involved in plans to build a hospital in Wrocław, as well as two outpatient clinics which they plan later to develop into hospitals in Poznań and Opole. EuroMediCare has put all its plans on hold, due to uncertainty about whether it will get government funding. Gruszewski is skeptical about Swissmed obtaining the funds it hopes for.
Piotr Gerber, president of EuroMediCare and board member of the Polish Union for Private Hospitals, is anxious to stress his support for Swissmed's project:
"We need more private hospitals in Poland to build up the sector and also public awareness of the sector," he says. Nevertheless, he too has doubts that the hospital will get sufficient government funding.
"Twenty million złotys is a lot to ask for, considering, that this is a hospital with 60 beds," he says. On average, hospitals of 100 to 150 beds get about zł.4-8 million."
Yet Roman Walasiński stresses that ongoing contacts with government health inspectors have been very positive, and that since Swissmed is one of the very few private hospitals that fulfills all the conditions for funding set by the National Health Fund, he expects to get a big enough contract.
There is no doubt that there is a great demand for private hospitals on the domestic market, particularly in the wealthier west of Poland. But whether it makes sense to act before the government makes its decisions about funding is another matter.
"We would love to invest in private hospitals," says Gruszewski. "We've researched the sector, we know how to provide efficient services and we're ready with our money."
But until the situation clarifies as regards to state subsidies and legislation, he goes on to say, market conditions are too uncertain to make any investment.
Much of the zł.32.5 million of the zł.50 million project, being funded by a mixture of cash and bank debt, has already been spent on construction of the hospital. The remaining zł.17.5 million to be raised by the bond issue directed at institutional investors, is earmarked to provide necessary medical equipment. The 80,000 square meter hospital is to be a state-of-the-art affair, with 60 beds, seven 'apartments', four operating theatres, conference rooms and intensive care facilities, which other private hospitals on the domestic market have not yet been able to offer. Swissmed president and minority share-holder, Roman Walasiński, expects around 30 percent of the hospital's future income to come from private clients, about 30 percent from the National Health Fund and another third from foreign - particularly Swedish - health tourists.
Yet Adam Gruszewski, partner at central Europe's largest investment fund, Enterprise Investors, questions Swissmed's hopes of gaining substantial income from health tourism. He estimates income from health tourism could represent no more than about 10 percent of the total income of such a hospital.
"The only country which has had any significant success in health tourism is Thailand," he says, "which can offer packages of vacations plus treatments like plastic surgery. But Polish hospitals don't offer these kinds of services and it is not a tourist destination."
To which Walasiński answers, "People can say what they like, but our calculations are supported by various economists, analysts and financial experts."
He predicts that, though initially income from health tourism would indeed constitute only about 10 percent of total income within three to five years it would be more like 30 percent.
Dominik Drozdowski, managing director of Larchmont Finance, the corporate finance arm of Larchmont Capital, together with Capital Partners, a company which, once a venture fund, now advises on M&A services, is advising Swissmed on their bond issue. He is also confident that health tourists from Poland's wealthier neighbors represent a fast-growing market for domestic hospitals.
"Health procedures in Sweden, for example, cost about five times as much as on the local market," he says.
The bond issue was announced in a week which saw mass demonstrations by state hospital workers against government plans to reform the national health system. Demonstrators warned that many of Poland's 700 hospitals were on the point of collapse and demanded cash from the government. The plans include proposals to convert hospitals into state-run limited liability companies. This will make it possible for hospitals which spend more money than they have to declare bankruptcy.
Poland's hospitals are currently 2 billion dollars in debt, a state of affairs which may lend support to the doubts of many in the business concerning Swissmed's ability to secure the zł.20 million subsidy it wants from the National Health Fund.
"The government's programme is not entirely clear, and even if it were, Swissmed hasn't even yet got a contract with the National Health Fund," says Gruszewski. In his view, embarking on such a venture without any secure contract for government funding is a very risky undertaking.
"All over the country there is an overcapacity of beds and hospital contracts with the National Health Fund are much too small," says Gruszewski, who himself, together with medical institute, EuroMediCare, is involved in plans to build a hospital in Wrocław, as well as two outpatient clinics which they plan later to develop into hospitals in Poznań and Opole. EuroMediCare has put all its plans on hold, due to uncertainty about whether it will get government funding. Gruszewski is skeptical about Swissmed obtaining the funds it hopes for.
Piotr Gerber, president of EuroMediCare and board member of the Polish Union for Private Hospitals, is anxious to stress his support for Swissmed's project:
"We need more private hospitals in Poland to build up the sector and also public awareness of the sector," he says. Nevertheless, he too has doubts that the hospital will get sufficient government funding.
"Twenty million złotys is a lot to ask for, considering, that this is a hospital with 60 beds," he says. On average, hospitals of 100 to 150 beds get about zł.4-8 million."
Yet Roman Walasiński stresses that ongoing contacts with government health inspectors have been very positive, and that since Swissmed is one of the very few private hospitals that fulfills all the conditions for funding set by the National Health Fund, he expects to get a big enough contract.
There is no doubt that there is a great demand for private hospitals on the domestic market, particularly in the wealthier west of Poland. But whether it makes sense to act before the government makes its decisions about funding is another matter.
"We would love to invest in private hospitals," says Gruszewski. "We've researched the sector, we know how to provide efficient services and we're ready with our money."
But until the situation clarifies as regards to state subsidies and legislation, he goes on to say, market conditions are too uncertain to make any investment.
