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Business Warsaw Journal - Article Last updated: 7th Mar 2003, 8:41 Banking & Finance Business Gov't & Politics IT & Telecom Law & Order Real Estate Other News Lifestyle This week's WBJ Enter keyword(s): Advanced Search Editorial Government Eye Brussels Eye Investor Eye Tax Eye Audit Eye Legal Eye Guest Column Off Beat This week's columns Movie Guide Restaurant Guide Going Out Calendar Conference Calendar Internet Marketplace Newsletters Archives Advanced Search Early Warning System WBJ Events Export-Import Center Registration WBJ Subscribe AM Subscribe WBJ Store Affiliates Do Business With Us LOG IN FAQ About Us Feedback Advertise Staff List WBJ HomeGov't & PoliticsHealth fund hit by new wrangles 7th Mar 2003, 22:39 Gov't & Politics 3rd Mar 2003 Health fund hit by new wrangles by Karol Chlipalski Karol Chlipalski sees no cash transfusion for state hospitals The president may have signed into law the creation of the new National Health Fund, but uncertainty over the future of the financing of the public health sector continues to rage. To add to the difficulties, political infighting is breaking out over the choice of the person to head the new all-powerful fund and manage its 7.17 million (zł. 30 billion) budget. This represents almost one-fifth of the national budget. Meanwhile, the country s hospitals are heavily in debt, and the banks are reluctant to help out. Plans for a potential rescue by the private sector have so far come to nothing. An initiative joining Credit Suisse First Boston and financial institutions Greenhouse and LC Corp in a consortium to buy up hospital debt and recycle it failed to make progress. The reason given was political impasse and the lack of a favourable climate to get the deal going. The consortium could not work because of the instability in the regulations and too much risk, said one insider close to the proposed deal. Once it is up and running, the National Health Fund will, like the 17 regional funds it replaces, sign contracts with the country s hospitals, in return for which they provide the population at large with medical treatment. Thus, it will be responsible for providing the hospitals with most of their income. But the hospitals insist that what they are getting is not enough. Sympathy for their plight comes from Aleksandra Gielewska, editor of the monthly medical journal Służba Zdrowia. She said: You run a hospital with the money you get from the health funds. The hospitals insist they have no choice, other than to go into debt, if they are to provide their patients with proper medical care. And making investments is out of the question, unless funding can be obtained elsewhere. Adam Kruszewski, investment director at Enterprise Investors, a venture capital fund with a particular interest in the health sector, takes a different view. He says the main problem is with the inefficient management of the hospitals. They are simply wasting money, he said. Sixty percent of hospitals budgets are spent on personnel. This could be cut dramatically. Kruszewski went on to explain that the whole system is inefficient. On average, a patient spends nine or 10 days in hospital in Poland. In the US, it is five days. One reason is that the in US there is a proper post-operation rehabilitation system. Another aspect of the inefficiency is the imbalance in the ranks of medical professionals. There is a prevalence of doctors and nurses to take care of the young, and not enough to care for the elderly. There is also a regional imbalance. There s a need for restructuring, Gielewska said. There s no need for four doctors to attend to a patient at his bedside. It would be better for two of them to go into the countryside to heal people. She explained that the necessary restructuring had been started, but had not been organised properly, and as a consequence, the money had run out. Whatever the truth of the matter, the fact is that the vast majority of the country s hospitals owe money, and plenty of it. Partly to blame is a decision taken by the government in 1997 to write-off the entire debt of the country s hospitals. This encouraged a sense that it was all right to run up debts, since sooner or later the slate would be wiped clean again. However, there has been no such amnesty subsequently, and former health minister Mariusz Łapiński only made matters worse cannot when he his said that a network of public hospitals would be created, made up of those institutions that achieved the highest standard of performance. Hospital managers interpreted this as an invitation to lavish funds on equipment, with little or no thought given to how it would be paid for. Łapiński was also criticised for saying, immediately after appointment as minister, that he intended to transform the health sector with a series of radical policy initiatives. According to one health industry insider, hospital managers were unsure what changes he envisaged, so they opted to bring forward their investment plans, even if this meant borrowing the money needed. Łapiński s really shook the health service, the insider said. As a result, by the middle of last year the health ministry estimated that hospitals were facing calls for the immediate repayment of more than 1.7 billion (zł. 7 billion). With and penalty charges, the sum is growing rapidly. The vast majority of this debt has been accumulated either through non-payment for drugs and equipment or through the failure to honour tax and social security obligations. The debt and the associated financing of it is now so crippling that the hospitals have to act. Some of them see debt restructuring as the solution, and to this end individual hospitals are entering into negotiations with the banks. Next Page words interest Poland AM Warsaw Business Journal Weekly Headlines Regional Roundup We are set to meet with Minister Cytrycki ... so that in the not-too-distant future the treasury will prepare a strategy of how to manage TPSA shares in a way that does not hurt the company. - Marek J zefiak, chief executive of TPSA Project Management Companies Early Warning System BBJ | PBJ | WBJ | CEEBIZ | BOL | CEEProperty | Warsaw Insider 2002 New World Publishing Kft and New World Publishing, Inc. All rights reserved. Republication or re-dissemination of the contents of this screen are expressly prohibited without the prior written consent of New World Publishing.

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