PMR report: Private hospitals with a chance of profit in 2021?
Ten post jest także dostępny w języku: polski
PMR’s survey carried out among all types of hospitals shows that despite the influx of patients at times of increased incidence of COVID-19, overall all types of hospitals have reduced the scope of their activities at times of epidemic. So what is the outlook for their financial situation for 2021?
Loss of public hospitals deepens
In general, most respondents to the PMR survey conducted in the autumn among managers of public and non-public hospitals in Poland estimated that they would make a loss in 2020. It is worthy of note that, despite a relatively positive assessment of the financial situation, public and transformed hospitals were more likely than their private counterparts to expect losses. Public hospitals in Poland are in a very poor financial situation – in percentage terms, most have made a net loss for many years, and even the need to carry out procedures during a pandemic will not help many of them to avoid a negative financial result. The cost management policy is also more problematic at these units, which, given the current system rules, is still not flexibly adapted to the economic situation. The analysis of the financial results of public hospitals carried out by PMR shows that the average loss made by such establishments in recent years (2016-2019) has been rising from year to year. The situation was similar in the case of transformed hospitals operating as companies with State Treasury or local government units. Only privately-owned hospitals recorded net profits.
Furthermore, despite the worsening external conditions, the average net profit in the private sector grew from PLN 0.9m (€0.2m) to PLN 2.1m (€0.5m) during the period in question. Interestingly, however, this was more because of good management than revenue growth, which, was, during the period in question, the lowest of all forms of hospital unit ownership analysed (25% in 2019). It is also clear that in the absence of a positive result in the private sector, an entity in question sooner or later disappears from the market or finds itself with a new owner, whereas in the public sector it could continue for many years. We recently wrote more about the situation of inpatient treatment in Poland here.
Hospitals with more work but also with new problems
With regard to the projected financial situation in the coming year, we noted a deterioration in mood among the hospitals, with only 3% expecting improvement. Interestingly, at the time of the survey, in addition to the poor financial results, the size of the proposed contract, the substantial number of illnesses (the so-called “second wave”) and uncertainty pertaining to the direction of the pandemic also constituted causes for concern. The study was also carried out before the announcement of apparent success in the development of a vaccine for COVID-19. Public hospitals forecast deterioration (50%) least frequently of all hospital categories. It therefore seems that these feel more stable than others in the current situation.
However, our estimates suggest that the possibility of securing some of the revenue will not lead to an improvement in the net financial result in 2020. There are also doubts that a positive financial result will be achieved at public hospitals in 2021, whereas private hospitals, despite the stagnation on the market, may be able to make a net profit, and thus invest in the development of new procedures, albeit in a niche range because of the scale of operations and external barriers.