Private healthcare market in Central and Eastern Europe

March 30, 2009 - PRLog -- At the heart of reform in the years to come will be a shift from a system nourished largely by out-of-pocket payments to a model based more on voluntary health insurance. However, but we do not expect this to happen early enough to make CEE markets more similar to western ones by 2011 . Despite this we expect the market to grow on average by 20% per annum till 2011, to €24bn.

Private healthcare to grow by 20% annually until 2011
According to the newest PMR Publications’ report “Private healthcare market in Central and Eastern Europe 2009” the private healthcare market was worth almost €14bn in 2008, a 22% year-on-year increase. This value comprises cost of rehabilitation, diagnostic tests and doctor’s appointments covered directly from patients’ pockets, subscriptions offered by medical companies together with occupational healthcare services, and health insurance offered by insurance companies.
A large portion (approximately 70%) of this was accounted for by Russia. This is because of its large population and the fact that patients are forced to bear a large portion of their expenses out-of pocket, Monika Stefanczyk, Head Pharmaceutical Analyst explained. In 2011, the total private healthcare market is expected to be worth approximately €24bn, growing on average by 20% per annum . However, this will depend largely on legal and policy developments in the region and on the extent of the financial crisis in the coming years. The region proffers substantial potential for private investments, as public funding for healthcare is still insufficient and likely even to decline in the years to come.

The private health insurance market remains negligible in most of the region, but 2009 is a crucial year for the industry, as it will see the positioning and establishment of the main players on the market. One of the main barriers to the development of this segment in the countries analysed (except for Slovakia) is lack of possibility of competition between private insurers and national health funds.

Subscription market has grown at higher levels in Russia, Romania, and Poland. This market is driven in particular by the corporate sector, with companies including medical support and subscription in the benefit packages for their employees. Strengthened cooperation is expected between medical services providers and private insurers. Romania and Russia are expected to see a process of consolidation in the industry. In Poland the consolidation process accelerated in 2007 and continued in 2008.

Emergence of private healthcare as a result of ineffectiveness of public sector
Healthcare systems in the CEE region have long suffered from acute underfunding, which has led to poor infrastructure and unmotivated staff. The main legacy of the communist period was the surplus of hospital beds: this continues to consume a large part of the healthcare budget, which is already sparse in most of these countries. This situation has led to the emergence of a secondary healthcare market in the public system, on which patients are often paying for services which, in theory, should be free-of-charge.

Over the past two decades the main trends in the healthcare systems in the region have been:
o   a shift from central budgetary control to a mandatory health insurance-based system
o   the gradual introduction of market rules and practices governing relations between healthcare providers and insurance fund payers
o   continuous underfunding of the public system, which has led to a search for complementary sources of private funding
o   increasing involvement of employers in providing health products and support for their staff
o   increasing demand from the public for a more modern and affordable system
o   increasing life expectancy to levels closer to western European countries likely to lead to significant increases in demand for health services.

With slender public funding and increasing pressure on state health budgets, the main challenge for the healthcare system lies, according to representatives of private medical firms surveyed especially for the purpose of the report, in the transition from a system where out-of-pocket payments represent a large portion of healthcare expenditure to a model based more on voluntary health insurance or various forms of prepaid healthcare.  In particular, there must be a clear separation of the basket of basic medical services covered by the mandatory fund. Tax incentives for employers for private health insurance are also likely to help the private health insurance market to develop more rapidly.

This press release is based on information contained in the latest PMR report entitled “Private healthcare market in Central and Eastern Europe. Development forecasts for 2009-2011”.
For more information on the report please contact:
tel. /48/ 12 618 90 00
e-mail: marketing@pmrcorporate.com

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PMR Publications (www.pmrpublications.com) is a division of PMR, a company providing market information, advice and services to international businesses interested in Central and Eastern European countries and other emerging markets. PMR key areas of operation include market research (through PMR Research), consultancy (through PMR Consulting) and business publications (through PMR Publications). With over 13 years of experience, highly skilled international staff and coverage of over 20 countries, PMR is one of the largest companies of its type in the region.


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