Hospitals fall in debt trap
Güncelleme Tarihi:
by Nazlı Topçuoğlu - Referans
Oluşturulma Tarihi: Aralık 19, 2008 00:00
ISTANBUL- The number of problems Turkey’s health sector faces is rising in the midst of the global crisis. Private hospitals, which have had swift growth since 2006, are now forced to halt their investments, as a law limits the fees they can charge on top of regular services provided by public hospitals
The financial turmoil that has been biting into industries all over the world has also begun to affect Turkey’s private hospitals.
Private hospitals had already been under scrutiny due to a new social security law enacted by the Ministry of Health.
The new law approved by lawmakers from the Justice and Development Party, or AKP, assigned the cabinet as the decision maker as to how much additional money private hospitals could charge on top of the cost of health services at public hospitals. The sector, which has grown 10 percent each year since 2000, is now failing to pay loans obtained for new investments. As hospitals took out loans ranging anywhere from $10 million to $100 million for new investments, their total debt has reached $3 billion.
Fee difference
Some 30 percent fee difference for patients under the roof of the Social Security Institution, or SGK, constitutes a threat, particularly for hospitals that pursue growth strategy, said Reşat Bahat, chairman of Private Hospitals and Medical Associations Organization, or OHSAD. Out of the $3 billion figure, $1 billion should be paid urgently, said Bahat, who also said one fifth of around 400 private hospitals were about to face closure.
"Some 60 percent of private hospitals are in trouble. Some of them are unable to pay their debts. Unless an adjustment is made to service costs, many hospitals will close down," he said. "Health is quite different to other sectors. Once closed, the hospitals cannot be reopened." Bahat said agreements based on fields should be signed. Fee differences should also be raised to 100 percent in order to overcome problems in the sector, he added.
The Ministry of Health and Ministry of Labor announced in October they would sign agreements in radiation oncology, medical oncology, organ transplant, cardiovascular surgery and cardiology. "We are expecting the hospital service prices to be adjusted by the new year. Currently we are operating at a loss."
Swift growth, fee differences and the global crisis constitute the three major reasons for distress in health sector.
Start of the new system
With the health policies that were revised in 2006, private hospitals started admitting SGK patients, and then in 2007, private hospitals started to service 9 percent of all patients in Turkey, a 50 percent increase from the previous year’s 6 percent. The increase in demand for private hospitals has called for new investments. In 2006, there were 250 hospitals and some 80 percent of them were located in Istanbul. This figure rose to 308 in 2007 and to 375 in 2008.
Some hospitals have become chains and investors unrelated to the sector have become involved in health. Mesmerized by the sector’s rapid growth and further potential, nearly 120 hospitals have lined up and applied to obtain authorization for 2009. Although the sector believes problems will be overcome, a regulation released Feb. 15 announced the private hospitals’ service fee could only be 30 percent different to that of public hospitals.
Due to the crisis, people tend to make savings even in health expenditure, said Hüseyin Bozkurt, chairman of Medicana Group, who added many hospitals are facing tough times and have halted investments. The crisis increases distress in the sector, said Bozkurt.
"At present, we do not have trouble with the banks. However, we cannot predict what will happen tomorrow. Due to the crisis, people have stopped going to a hospital, unless they are in a very bad situation," he said. "Lastly, we opened the Ankara Medicana hospital. However, this project has been four years in the making. We have suspended purchasing and construction demands."
Many hospitals have had to leave investments unfinished, said Bozkurt. "The construction of some hospitals has not yet started despite the rights having been obtained," said Bozkurt.
Private hospitals had already been under scrutiny due to a new social security law enacted by the Ministry of Health.
The new law approved by lawmakers from the Justice and Development Party, or AKP, assigned the cabinet as the decision maker as to how much additional money private hospitals could charge on top of the cost of health services at public hospitals. The sector, which has grown 10 percent each year since 2000, is now failing to pay loans obtained for new investments. As hospitals took out loans ranging anywhere from $10 million to $100 million for new investments, their total debt has reached $3 billion.
Fee difference
Some 30 percent fee difference for patients under the roof of the Social Security Institution, or SGK, constitutes a threat, particularly for hospitals that pursue growth strategy, said Reşat Bahat, chairman of Private Hospitals and Medical Associations Organization, or OHSAD. Out of the $3 billion figure, $1 billion should be paid urgently, said Bahat, who also said one fifth of around 400 private hospitals were about to face closure.
"Some 60 percent of private hospitals are in trouble. Some of them are unable to pay their debts. Unless an adjustment is made to service costs, many hospitals will close down," he said. "Health is quite different to other sectors. Once closed, the hospitals cannot be reopened." Bahat said agreements based on fields should be signed. Fee differences should also be raised to 100 percent in order to overcome problems in the sector, he added.
The Ministry of Health and Ministry of Labor announced in October they would sign agreements in radiation oncology, medical oncology, organ transplant, cardiovascular surgery and cardiology. "We are expecting the hospital service prices to be adjusted by the new year. Currently we are operating at a loss."
Swift growth, fee differences and the global crisis constitute the three major reasons for distress in health sector.
Start of the new system
With the health policies that were revised in 2006, private hospitals started admitting SGK patients, and then in 2007, private hospitals started to service 9 percent of all patients in Turkey, a 50 percent increase from the previous year’s 6 percent. The increase in demand for private hospitals has called for new investments. In 2006, there were 250 hospitals and some 80 percent of them were located in Istanbul. This figure rose to 308 in 2007 and to 375 in 2008.
Some hospitals have become chains and investors unrelated to the sector have become involved in health. Mesmerized by the sector’s rapid growth and further potential, nearly 120 hospitals have lined up and applied to obtain authorization for 2009. Although the sector believes problems will be overcome, a regulation released Feb. 15 announced the private hospitals’ service fee could only be 30 percent different to that of public hospitals.
Due to the crisis, people tend to make savings even in health expenditure, said Hüseyin Bozkurt, chairman of Medicana Group, who added many hospitals are facing tough times and have halted investments. The crisis increases distress in the sector, said Bozkurt.
"At present, we do not have trouble with the banks. However, we cannot predict what will happen tomorrow. Due to the crisis, people have stopped going to a hospital, unless they are in a very bad situation," he said. "Lastly, we opened the Ankara Medicana hospital. However, this project has been four years in the making. We have suspended purchasing and construction demands."
Many hospitals have had to leave investments unfinished, said Bozkurt. "The construction of some hospitals has not yet started despite the rights having been obtained," said Bozkurt.