Vol. 4 No.5  


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Healthcare: what role can
the private sector play?

Last month members of local health authorities, business people and private healthcare operators gathered to discuss the problems facing health in Romania and the ways private and public bodies can better work together.
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Below is a summary of the event, which was held at the Crowne Plaza Hotel sponsored by Siemens, law firm Norr Stiefenhofer Lutz, with partners in Unicredit Leasing and Roche.

Marian Ghinescu, director medical division, Siemens
“We are trying to find solution to propose to those who run the healthcare to build together a better system. The private sector has succeeded in Romania and we are a partner that can help improve the system and the conditions for patients.”

Prof Joerg Menzer, attorney-at-law, Norr Stiefenhofer Lutz
“The medical and the social systems are important for a country’s stability and for attracting investment. Romania is developing later [than many other central and eastern European countries], but this has an advantage because the country can learn from other countries and develop quicker.”

Sergiu Negut, executive director, Centrul Medical Unirea (CMU)
“The healthcare industry is a little behind compared to the Romanian economy in terms of investment, development and training. One of the reasons for this situation is that the biggest payer is the state and the partnership between the private sector and the state is not very significant. Development in this area will lead to a better health service for everybody.”

Private industry booms in ten years

Countries with strong private healthcare systems include Brazil, Greece, Thailand and Turkey. These are nations with poor public healthcare systems. Private medicine therefore fills a gap in the demand for those who are able to pay.
In Romania, healthcare is ‘free at the point of access’ only in theory. There is the prevalence of corruption, with many patients forced to pay bribes for medicine, to receive attention in a hospital or even for a cleaner to wash around their hospital bed.
Despite a black market existing within the public system, in Romania 12.5 per cent of salaries go to the public heath system. This is a high rate compared to the EU average.
There is no private health insurance system which can replace or take the place of the state health insurance system.
Only a small percentage of money for private firms comes from the National Health Insurance House (CNAS), the Government body which absorbs cash from every citizen’s national insurance payments and then disburses this cash to state medical providers for their care.

Catalin Popa, general manager, Euroclinic
“What we want is to increase the number of people can benefit from our services, but we need a reform of the fiscal code and tax exemptions to achieve that.”

Dr Alexandru Balescu, executive director, Public Health Authority (ASP), Brasov
“The health system is prepaid but the common people who believe it is free of charge. You cannot modify the health system until you involve all the stakeholders. The health system cannot function by itself and the intervention of the private sector is necessary because it will take over a part of the pressure.”

Judith Deme, executive director, ASP Covasna
“The Ministry of Health and the National Health Insurance House should draw up a package with a minimum number of services that they can cover, so then the insurance companies can come up with a more attractive offer for those who want more than just that minimum level. As long as the contract [between the state and the people] is not drawn up, almost every possible service is financed to a certain level and a private insurance company has no other possibility to offer than just some improved services and nothing in addition. Because the package of services provided by the National Health Insurance House is not defined, the insurance companies cannot come with a better product for those who can afford it.”

Marian Ghinescu, Siemens
“Once this contract is drawn up, the market will develop coherently and the private sector will develop more. Private healthcare insurance could offer services at a certain level of quality.”

Joerg Menzer, Norr Stiefenhofer Lutz
“How do you think that hospitals can be developed if the amounts allotted by the National Insurance House are not enough for treatments and equipment?”

Ruxandra Scarlat, medical specialist, family medicine, Gral Medical
“When the Insurance House does not pay the whole amount for medicine, the patient has to pay the rest of the amount from his own pocket. There are complementary services through private insurance houses which could offer quality, compared to the public system. As long as the public system has the monopoly, it does not care about quality.”

Catalin Popa, Euroclinic
“However the infrastructure that can create the foundation for the development of the private insurance companies does not exist in Romania.”

Weak points in private system

The main problems in the private system include a legal framework that is not well defined. There are also many private clinics which may not offer a consistent quality service, because outside of wealthy areas, it may not prove to be a profitable exercise. Private healthcare also has to be backed up by the universal services offered by the state. Customers have huge requests of private medical providers and these companies cannot offer all the services demanded.

Greta Alexe, ASP Iasi, senior counsellor
“At St. Sipiridon, the biggest hospital in Iasi, there is equipment which is over 20 years old, and we have closed a partnership contract with a private diagnostic centre, but the private system is just at the beginning and does not offer stability.”

Mihail Marcu, general manager, MedLife
“Local authorities should not approve private healthcare institutions that do not meet a certain level of standards, especially when they are using a lot of second hand equipment.”

Catalin Popa, Euroclinic
“The health system is very complex. There are investors who want to open hospitals overnight. Opening a hospital involves very high expenses and also a very long process.”

Problem with personnel

Salaries for doctors and nurses are increasing. However Romanian medical students who learn abroad, often do not return. Traditionally, Romanian nurses have chosen to move to Italy, while doctors have gone to France. But in the first three months of 2008 the highest number of Romanian work migrants to the UK has been to the medical and health sectors. Locally, this is causing huge problems for both the private and public sectors. Around 6,000 specialist doctors and nurses leave the country every year at a rate which is not decelerating.

Dana Conea, ASP Olt
“There are too few hospitals and doctors [in Olt county] and these doctors are shared between the private and the public sector. Besides some polyclinics [general practitioner surgeries] and some ambulatory clinics, there are no private hospitals.”

Ruxandra Scarlat, Gral Medical
“The main problem that we experience outside Bucharest is the lack of qualified people. We have to bring a specialised doctor from Bucharest once a week to our clinic in Ploiesti, Prahova county. But it is very difficult to bring a good doctor to the provinces.”

Judith Deme, ASP Covasna
“If every year there are 40 to 60 graduates from a further education institution [such as a nursing college] only 20 get hired in this county. The rest go to work abroad.”

Marian Ghinescu, Siemens
“That is happening because here there are not enough incentives for them to stay. The Education Ministry should take into consideration the needs of the private sector too, which does not have enough human resources. The private system attracts from the state system. There is a lack in both areas.”

Judith Deme, ASP Covansa
“We have a small private hospital, but we do not have enough specialised personnel from nurses to doctors. They work at the state hospital and they have a part time job at the private hospital and it is very difficult for the management of this hospital to establish a permanent activity and certain quality standards because you need permanent personnel.
“To become a full doctor, a medical student, after finishing the faculty, has to stay and practice in the public hospitals for up to seven years, so he cannot take a full-time job in a private hospital but only a part-time one. Therefore the quality of services is lower because the apprentice doctor does not have enough time to commit to either job fully.”

Ruxandra Scarlat, Gral Medical
“We are collaborating with some further education institutions for personnel such as nurses and for specialised doctors. We recruit fresh doctors finishing their final residential year in a public healthcare provider. However the problem is that where there is always a high demand for specialists and the number of residents is very small.”

Healthcare: a money pit

No medical system is perfect and there is never enough money for a healthcare system in any country. But there are ways to better use existing funds to make the system more efficient or to involve the private sector in a constructive way.

Joerg Menzer, Norr Stiefenhofer Lutz
“In Germany the tendency is for hospitals to either close, downsize or merge together to become more efficient. A lot of doctors set up polyclinics together, even if they have their own separate practice. Private clinics are separate from the public system.
“Over 90 per cent of the population is insured through the national health system. In Germany everybody pays the same percentage of the salary - 13 per cent, [except for the larger bracket of high earners’ wage]. This is high compared to the European average. In Germany the supplementary insurance cost range between 200 and 500 Euro per month. If this does not change, the time will come when families will not be able to afford to pay for supplementary insurances. In the long run this will not be sustainable.”
Baris Kalyoncu, general manager, International Diagnostic Center
“The Turkish and Romanian health systems are very similar. When the state or private investors open a hospital in Turkey they face several problems such as high development costs, not enough qualified staff and patients who cannot always afford to pay for their treatment. There are around two million people with private insurances. The number will grow to five million in the future.”

Catalin Popa, Euroclinic
“In Romania, there are a lot of people who can afford to pay for a private insurance that could cost between 15 and 30 Euro per month. We are heading for the private system. I don’t know how long it will take us.
“This will all depend on the growth of Romanians’ salaries. In three to five years hospital operators will co-operate more and will try to get supplementary financing. Costs will grow. People will have to pay from their own pockets when they are hospitalised. It is clear that the future relies on the private health insurance system.”
Silviu Dan Tutoveanu, Savia Consult Impex
“12.5 per cent is an enormous amount for the health system. Romanians do not get the services they deserve for the money they pay on health insurance. The expenses are not well managed by the Health Ministry and the Insurance House. The hospitals do not have human fluids, the compressed air is produced by some devices that could be pumped into car wheels. Each hospital manager should be able to get financing from local authorities.”

Joerg Menzer, Norr Stiefenhofer Lutz
“The financing problem is present in Germany also. The management of the hospitals sometimes believe that they do not get enough money to pay the doctors and equip the hospitals. The doctors working in the public hospitals are not happy with the salaries they earn, which are much lower than those earned by doctors who have their own practice. So the insurance houses are in competition, because people cannot afford to choose another insurance company very easily, considering that they have to pay the same percentage of their salary.”

Niche futures

Where private hospitals can support the state is in offering niche services, which can be used on a consultative basis.

Sergiu Negut, CMU
“The budget of the National Insurance House is annual. The profitability of a project in the healthcare field is not as high as a project developed in other economic areas. A lot of investors prefer to focus on other types of business.
“Niche hospitals are more profitable than other hospitals. The authorities have finally introduced this year new rules for private practices. The owners have to mention exactly the type of practice and the type of qualification they have and the institution or the system through which they received this qualification.”

Joerg Menzer, Norr Stiefenhofer Lutz
“The public system cannot support universal healthcare because the investments in the area need to be very high. When a private system comes with investments on a niche, things work very well. Private-public partnerships could be useful. In Germany the costs for refurbishment and equipment of a hospital have to be covered from the Diagnostic Related Group (DRG) system. Romanians should push the Government and the politicians and make them understand that they are not willing to wait.”

Marian Ghinescu, Siemens
“We should make a club through which to help the system to develop. We should share our common experience and to convince the public system to collaborate more with us, because we all have the same goal.”

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