Poles will spend PLN 2bn more on private healthcare this year in comparison with the period prior to the pandemic
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The outbreak of the coronavirus pandemic has significantly affected the functioning of almost all areas of the economy. Restrictions on the activities of many industries have, along with those which have halted social and economic activity and boosted uncertainty, resulted in a recession which represents the equivalent of 2.7% of GDP in real terms in 2020. PMR’s latest report (“Private healthcare market in Poland 2021”) shows that, as a result, the private healthcare market in 2020 suffered a 6.3%, or PLN 55.2bn (€12.4bn), reduction. However, it is worthy of note that PMR analysts forecast that private spending on health this year will exceed that of 2019.
Small clinics encounter most severe difficulties
On the private healthcare market, the effects of the coronavirus pandemic in 2020 were felt more extensively in the arena of paid on-site visits (FFS), as many people who did not need to undergo a medical procedure urgently abandoned visits to doctors. Of these various services, the dental subgroup, diagnostic imaging and rehabilitation encountered particular difficulty. Smaller entities, which usually have a single revenue stream, faced a greater challenge in terms of adapting to the new reality. Despite the fact that in the second half of 2020 the Polish healthcare system started to provide medical services to a greater extent than it did during the lockdown (although still with some limitations), it was not possible to compensate for the interruptions caused by the coronavirus (a backlog of operations, procedures and medical appointments) until the end of 2020, because of capacity constraints, and price increases were unable to off-set the losses in full. In addition, the system was burdened by another wave of illness in the autumn of 2020.
Increase in interest in individual policies observed
Our observations suggest that the slowdown in the 2020 rate of growth in the arena of subscriptions and insurance reflected reductions in some positions, with certain policies being cancelled automatically, and also an increase in uncertainty, which might cause some people to abandon additional spending. The deterioration in the labour market also had an adverse effect. Furthermore, in 2020 it was difficult to attract new corporate customers, who account for a significant proportion of the market in these areas.
At the same time, growth on the private healthcare market was stimulated by the substantial burden on public healthcare associated with the treatment of COVID-19 patients and the consequent increase in the difficulties involved in providing other services under contract with the National Health Service (NFZ), particularly for specialist services. For this reason, there has been increased interest in individual subscriptions and health insurance policies (more on this later in the report).
Making up for losses in 2021
This year, in the baseline scenario, because of the base effect and the expected improvement in the pandemic situation (in the second half of the year in particular, and assuming that the vaccination programme is a success), positive growth in GDP should return (3.8% year on year in 2021), and this will be maintained afterwards throughout the forecast horizon.
At the same time, we forecast a temporary, one-year, minor, increase in the unemployment rate (a delayed effect of the impact of the pandemic on the labour market and the result of government support which stopped unemployment from rising in 2020), which may, along with the restrictions still in place, and with uncertainty at a still relatively high level, result in an increased need to reduce consumption and increase savings, with health-related spending being reined in this year as a consequence.
Given these factors, along with the resumption of treatment and the accumulation of health problems, we expect growth to be revived on the private healthcare market in 2021 and market value to rise by more than 10%. In effect, the market will be worth PLN 2bn (€0.4bn) more than figure for 2019. It is worthy of note that this situation strongly results also from the fact that there was no reduction in the value of the medicines market in 2020, with growth in this area continuing in 2021.
Spending on health expected to grow despite coronavirus crisis
In subsequent years, growth on the private healthcare market will be driven mainly by household consumption, supported by the recovery of the advantageous situation on the labour market (from the perspective of employees). A gradual improvement in the economic circumstances of households, along with a recovery in consumer confidence, should boost spending, including private outlays on health.
The demographic factor (i.e., the falling number of people in the productive and pre-productive age groups, and the rising number of those in the post-productive group, representing a significant group of consumers of goods and services associated with healthcare) is also not without significance for the forecast period. Furthermore, an increase in inflation is expected in the coming years, and this will also affect the prices of medical-pharmaceutical products and health-related services and, consequently, the projected value of the market.
We estimate that the value of the overall private healthcare market will grow at a CAGR (compound annual growth rate) of 7% between 2021 and 2026. However, it should be noted that subdivisions related to the provision of services directly to patients (fee-for-service, subscriptions and insurance) will grow more rapidly than the overall market (CAGR 8.9%).
One risk factor for the forecast remains, in the form of the final implementation of the plan, assuming an increase in public spending on healthcare during the course of the forecast horizon, in accordance with the relevant proportion of GDP specified by law. Against the background of the pandemic, the questions of the scale and areas of funding of public healthcare in the future are thrown into question, if only because of the deterioration of the state budget. Given the fact that one inevitably replaces the other, the predicted increase in public healthcare spending would be expected to restrict private consumer spending.
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