Банкеръ Weekly

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HOSPITALS SINK IN FINANCIAL SWAMP

IMF INSISTS THAT THEY PAY OFF DELAYED DEBTS BY END-SEPTEMBEROn the contrary to what the Ministry of Healthcare predicted, debts of hospitals in Bulgaria keep growing remarkably fast. Health experts first thought the sick rate would fall during the summer months and would thus compensate the over expenditure accumulated since the beginning of the year. However, their forecast did not come true. The liabilities of the hospitals already exceed BGN120MN. The biggest part of the debt has been accumulated because of unpaid materials, medicines and electricity bills. Hospital liabilities to the biggest drugs supplier, Commercial League - National Pharmacy Centre, amount to BGN20.023MN as of August 30, 2004. BGN7.639MN of them are already executable. Since June 1, hospitals have paid BGN7.115MN to the distributor, with the biggest amount - BGN4.5MN, paid in the last week of August. In the end of May, the debts of hospitals to the supplier amounted to BGN16.5MN. It turns out that the debts speed of growth leaves behind their redemption rate. Should the trend continue by the end of the year, hospital debts will double, financial experts warn.The distributing company assured it would not stop the supplies, therefore no drugs delivery crisis is expected. There are also sufficient amounts of drugs in the national structure defining hospitals. The Pirogov urgent medical aid centre maintains reserves sufficient for two weeks ahead. The same measures have been taken by the Military Medical Academy and the rest of the centres that take care of urgent cases. However, the payment of medicines and materials is not the only problem. The main reason for the debts to accumulate is that the 2004 National Framework Agreement was not signed, financial experts in the healthcare sector explain. Since hospitals are operating in accordance with the 2003 agreement, the National Healthcare Insurance Fund (NHIF) is paying for clinical path treatment by former prices while costs are actually higher. Although prices were raised by 2.3% (the 2003 annual inflation risk) since July 1, they still cover just 60%-65% of the cost of the treatment. Due to indexation, the budget for hospital aid was raised by BGN6.255MN, but the growth appeared insufficient to compensate the increased prices of medical services.The removal of zoning is the other main reason for the large hospitals to accumulate debts. As patients were given the right to choose where to be cured, they preferred specialized university hospitals and fewer remained in municipal and district hospitals. The NHIF pays equally to municipal and specialized hospitals. In Pirogov, for example, treatment of a disease costs much more than it does in an unspecialized hospital. According to the Pirogov Director Spas Spaskov, medical activity must be precisely evaluated in order to avoid that. However, this is not an obligation of the financing source, the NHIF, but of the hospitals. In this case of planning, the fund will decide how much it can pay for treatment of a disease, and hospitals will declare the amount of health services they can guarantee for this money. If this method is applied strictly, it will help for avoiding the financial shocks in the hospital aid system, Dr. Spaskov says.However, the accumulation of debts is also provoked by the not so precise financing scheme applied by the Ministry of Healthcare. The department introduced single criteria for payment of activities in all hospitals (university, municipal, district). The ministry budget pays at average values for 17 disease classes. The methodology takes into account the type of hospital, the specificity of its activity, and the quality of the medical services. However, the new scheme cannot yet create an accurate mechanism for determining the costs for treatment in various hospitals. According to the Minister of Healthcare Slavcho Bogoev, the amount in separate cases will be made precise when an information system is introduced in the hospitals. Then, Mr. Bogoev says, the dynamics of a disease appearance and treatment will be reported and health experts will be able to plan the costs properly on the basis of the data stored. However, this will only happen in one or two years.Still, the financial problems of the hospitals must be solved no later than end-September because of the country's commitments to the International Monetary Fund. The Government has undertaken to cover all debts of hospitals by the end of the month and to impede the accumulation of further ones by the end of the year. On July 28 the Council of Ministers launched an additional amount of BGN76MN from the state budget. The payment of all debts is only possible if the NHIF budget is updated, Dr. Dimitar Dimitrov, Chairman of the Union of Healthcare Employers, says. The NHIF Director Ivan Bukarev announced that he might ask the Parliament to change the financial plan in the end of the current year. Earlier, the chances for utilization of the accumulated operating reserve will be discussed. A decision on how the budget will be updated is expected to be taken at a meeting of the NHIF Managing Board, scheduled for September 7.

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