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Nowy Szpital w Olkuszu, part of Grupa Nowy Szpital (GNS), was recently audited by the Supreme Chamber of Control (NIK). The Chamber accuses the institution of being unfavourably disposing of its property and finances. The inspection was carried out at the request of an MP and the county office in Olkusz.
NIK questions the ownership structure
The hospital in Olkusz joined Grupa Nowy Szpital in 2010. A company, in which 70% of shares were acquired by GNS Holding SA and the remaining 30% by the Olkusz county, was established. This agreement was already challenged by NIK in 2011, and was also considered unfavourable at the current control. All because, according to the Chamber, the county in Olkusz became a minority shareholder in the company, although the public property contributed to it. Additionally, the county does not have a representative on the management board of the company, so it could not have a real impact on its functioning.
Outsourcing as the main problem
The main contentious issue between the county and Grupa Nowy Szpital are the obligations undertaken by the company towards its main shareholder and entities affiliated with it in terms of capital.
According to the control of NIK, since 2011, Nowy Szpital in Olkusz has been reducing employment and outsourcing some of its tasks to external entities, mainly the Grupa Nowy Szpital Holding SA. These include the agreements of 2013 and 2015 concerning the provision of services settled on a lump-sum basis and the franchise and service provision agreement of 2018. The latter agreement was very strongly questioned by the county, which requested the repeal of the resolution of the General Meeting of Shareholders in court.
GNS did not perform cost calculations and market research?
NIK also expressed reservations about the way in which GNS outsourced non-medical services between 2011 and 2017. The amounts of these agreements were classified as business secrets and were not revealed by the company. According to the Chamber, in none of the 19 areas examined in detail did the company provide any evidence that it had carried out the cost calculation. It also failed to carry out a market investigation. Moreover, NIK accuses the company of not providing any way of documenting the provision of these services, which made it impossible to confirm that they had been provided.
In the opinion of NIK, this could have led to an unjustified overstatement of the company’s operating costs. It could also violate the rules of effective spending of public funds received under the contract with the National Health Fund (NFZ).
GNS runs most hospitals in this form
Running a hospital by a company with the participation of a private entity and a local government unit/JST (i.e. county) or the State Treasury is relatively popular in Poland. According to the PMR report, in December 2018 approximately 16% of all hospitals operated in this form. In some cases, however, the participation of a private entity was a minority one.
Grupa Nowy Szpital operates more than half of its outlets in the form of a company with a minority shareholding of territorial self-government units. These are, apart from the hospital in Olkusz, units in Swiecie, Naklo and Szubin, Kostrzyn nad Odra, Skwierzyna and Wabrzezno. EMC Instytut Medyczny, another large medical group, has a similar business model.
Nowy Szpital w Olkuszu is the largest facility in the GNS group in terms of the number of beds and one of the largest in terms of revenues. It is worth noting that NIK had no objections to the company as regards the provision of health care services.