Hospital debt down by 2.1% in Q4 2009

2010-02-24

The total debt of public healthcare entities (including long-term debt) stood at just under PLN 9.4bn (€2.4bn) at the end of December 2009, according to latest data released by the Health Ministry. This represents a decline of 2.1% compared with three months earlier and of 6.2% on the year before, and is the lowest figure in almost five years.
At the same time, preliminary data on debt legally due show the figure down by 4.6% over the three months to the end of December 2009, to less than PLN 2.3bn (€576m). On a year-on-year basis enforceable debt fell by 4.3%. However, the latter figure masks considerable differences between voivodships. In some regions the value of enforceable debt increased dramatically in the year to the end of December 2009. For example, in Opolskie voivodship it soared by 166.1% y-o-y and in Slaskie by 148.2% y-o-y. Hospitals in Mazowieckie and Slaskie have the highest amount of debt (both total and enforceable).
According to some experts, the decline need not reflect any substantial improvement in the underlying financial performance of public hospitals. For example, as more hospitals are transformed into commercial companies, their debt is assumed by local authorities, leading to a fall in the debt figures collected by the Health Ministry.




Both facts – the decrease of the total debt level by the end of 2009 and the significant decline in legally due debts are positive but unfortunately do not represent any real improvement of the financial situation of Polish public hospitals.
Several key factors have to be taken into the consideration before we can really estimate to what extent the decline in debt has been due to better management and/or better National Health Fund (NFZ) financing:
- hospitals are more and more frequently using financial products offered by companies like Magellan, Electus etc. to protect themselves against debts legally due
- debts are transferred to local authorities in the process of liquidation and/or transformation into a non-public company and therefore these amounts disappear from the hospital side but reappear at the local-government side
- hospitals are beneficiaries of a growing number of EU projects, donations etc.
Unfortunately the coming years will most probably bring a real-terms decrease of financing by the main payer (NFZ), which has already used most of its reserves last year and additionally could be affected by a decrease of revenues due to the global economic situation as well as by increased public demand caused by demographic trends, new technologies and drugs etc.

Andrzej M. Fal, Head of the Department of Public Health, Medical Academy Wroclaw
Dorota M. Fal, Insurance Market Expert