Eastern Europe A Health Care Market Worth Looking At

ROMANIA’S PRIVATE HEALTH CARE A NEW FRONTIER

 

By Melvin J. Howard

 

 

The Romanian healthcare system is in a transition period, the Government taking determined measures for the rehabilitation, restructuring and privatisation of a part of the healthcare services. The public health expenditure in Romania is relatively low, about 2% of GDP or about US$ 46 per capita (out of which ca US$ 20 per capita is spent on pharmaceuticals).

 

There are 414 hospitals, with a few private ones as an exception. There are about 600 polyclinics, 80% of them public. The number of private polyclinics has continuously increased during recent years. The total number of hospital beds was 164,500, equal to about 7.3 per thousand inhabitants. However, the number of hospital beds gives only a limited indication of the quality of healthcare provided. Most of the public hospitals are struggling with financing their day-by-day operations under the constraints of an insufficient and frequently delayed budget; in most cases very little has been actually done for facilities and equipment modernisation, except for few cases where international grants or loans have been received. The rehabilitation of the public hospitals involves a huge financial effort, which will be supported partly by international financing institutions, among which World Bank has had the prominent role so far.

 

Due to the existing demand for a quality alternative to the public healthcare system, the private system started to develop; I strongly believe there is an emerging affluent class that affords and looks for high quality – high cost healthcare. On top of this local affluent class in towns like Bucharest there is a significant expatriate community, many of whom can afford and welcome private hospital care.

 

 

             The most visible private healthcare initiatives are outlined below:

Medicover – set up by Oresa Ventures in 1995 (similar to operations owned in Poland, Hungary, Estonia), has reached a turnover of Euro 5.2 million in 2001 (a 42% increase compared to the previous year). The company has over 10,000 patients on a subscription basis and its laboratories conducted 2.3 million tests in 2001. It has healthcare units in six Romanian cities. Target clientele: affluent physical persons, entrepreneurs, staff of multinationals, etc.

 

Medsana Medical Center – owned by Greek investors, made US$1.4 million in net revenues in 2001. Is planning to invest in building a private hospital.

 

Unirea Medical Center – has two clinics in Bucharest and a network of partnerships in 17 towns.

 

Biomedica – besides outpatient clinic has rented six hospital rooms from the public system in order to be able to provide more complete services to its patients.

 

Doris Medical Center – a private clinic with a special focus on social security/ labour healthcare planning to extend but delaying the decision due to its inability to raise ca US$ 5 million.

 

Interamerican, a Greek insurance company is expected to start the building a private hospital, a project estimated at US$ 13 million.

 

        On top of these, there are also numerous dental clinics. I should note that all these private healthcare centres are still dependent on public hospitals for providing more complex surgery; a high quality/high price hospital is for sure the missing link in this top tier healthcare system. As a general rule, such private healthcare operations have developed in urban areas exclusively, occupying first the most lucrative market niches (diagnosis, dental care, beauty centres, cosmetic surgery) and to a lesser extent the “acute” healthcare, such as hospitals.

 

        Private medical services have gained impetus during the last years, the market being estimated at a few tens of millions of dollars. The development of private medical insurance will contribute significantly to the development of this sector.

        The 2001-2004 Romania’s Government Privatization Strategy (annexed), opens a whole new prospective to the health care business development opportunities in Romania. This program came just along other existing privatization programs of Eastern Europeans’ Governments. You will find this situation in Croatia, Bulgaria, Slovakia, Ukraine, Hungary and Czech Republic.

        As of now the Privatization Strategy allows the private sector to:

 

1.    Invest in new facilities.

2.    Invest in public hospitals and take over their management, totally or partially without the sale of the assets,

3.    Enter into management and administration contracts with public owed hospitals.

 

        At this moment, the Romanian Government intends to go full speed ahead with private initiatives to see what would be the best method and best suitable way for private capital participation in the health care sector.