healthcare system in romania

7/30/2019 Healthcare System in Romania

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Brief overview of the healthcare system in RomaniaOverview of the organizational structureThe healthcare sector has always been a continuous challenge for manycountries in Europe and it still is a complex and sensitive topic to be addressed inany part of the world. During the past two decades, Romania has gone through a

period of rapid and major changes in every sector, including health. The localhealthcare industry encountered the same difficulties as in all the Central andEastern Europe (CEE) healthcare systems: a low level of government financing,inadequate and obsolete equipment and facilities, management deficiencies,informal payments all the aforementioned resulting in an overall increasingdissatisfaction of population.

At present, Romanias healthcare system is still dominated by the publichealthcare system, being funded by a combination of employer and employeecontributions to the National Health Insurance Fund (NHIF) and of directallocations from the state budget. Romania has a mandatory insurance-based

financing model for healthcare, involving contributions from employers (5.2% ofthe gross wage) and employees (5.5% of the gross wage). The health insurancesystem is administrated and regulated by NHIF, a central quasi-autonomousbody.

Since 1998, when the country adopted the mandatory social health insurancesystem, the roles of the main participants in the health system have changed, therelationships between different organizations have become more complex andthe number of stakeholders has increased. The system is organized at two mainlevels: national/central and district (judet). The Ministry of Public Healthresponsibilities consist of developing national health policy, regulating the healthsector, setting organizational and functional standards, and improving publichealth. The representative bodies of the Ministry of Public Health at the districtlevel are the 42 district public health authorities (DPHAs). Also at district level, 42District Health Insurance Funds (DHIFs) are responsible for contracting servicesfrom public and private healthcare providers according to the rules set by thecentral units. Two national insurance funds have been established in 2002, onebelonging to the Ministry of Transport (CAST) and the other to the DefenceSystem, Public Order, National Security and Justice (OPSNAJ Authority). Since2002, the social insurance contributions have been collected at the national levelby a special body under the Ministry of Finance (the Fiscal AdministrationNational Agency), and DHIFs have raised contributions only from insuredpersons paying the whole contribution (such as the self-employed). The currentlegislation also assures free choice of provider for the patient.

The Ministry of Public Health has elaborated a new health law (Health ReformLaw. 95/2006) in its attempt to increase access to basic medical care, enhancethe quality of medical services and improve the health indicators. Among otherthings, the 17 titles in this law aim to continue the decentralization process, toencourage the development of the private sector and to establish clear relationsbetween the systems of health and social care.


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The private healthcare sector is in an incipient phase but growing at a high-speed. An increasing number of private clinics have been opened and have beenwell received by those in the middle and upper income segments. Private healthinsurance services are usually offered by private companies to their employees,as part of the benefits package. In theory, insurance coverage is almost

comprehensive. Exclusions comprise certain dental services and high-technologytreatments.

Health statusDemographic trends show continual population decline: the population declinedby 5% between 1992 and 2006, up to 21.6 mn. The decrease was caused byemigration, a fall in the birth rate and a rise in mortality. Health status in Romaniais quite poor compared with the other European countries. According to WorldHealth Organization (WHO) data, the average life expectancy in Romania was72.7 years in 2006 (69.2 years for men and 76.2 years for women), six yearsshorter than the European Union (EU) average (78.5 years in 2005). The mostimportant causes of death are cardiovascular diseases (62.1% of all deaths in2006) and cancer (17.6%), our country having one of the highest levels ofcardiovascular diseases in Europe.

Physical and human resourcesThe number of hospitals has remained relatively constant since 1980, when 416hospitals were registered by the Centre for Health Statistics of the Ministry of

Public Health, whilst in 2005 the total number was 433. Very few new state-owned hospitals were built after 1989, the increase in numbers resulting fromsplitting or transforming of outpatient wards into small hospitals and vice versa.Most hospitals are state-owned, with new hospitals being opened by the privateinvestors. Capital investment projects are decided at Ministry of Public Healthlevel on the basis of proposals submitted by districts, being funded throughtaxation (and paid out of the state budget) with the additional support fromexternal funded programs and donations. The government has also announced


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its support regarding public-private partnerships in the construction of newhospitals and specialized facilities such as dialysis, although no project has beencompleted so far.

Due to the underfunding of the system, it is generally accepted that the quality of

hospital buildings and equipment is either obsolete or overused. The substantialamounts invested by the Ministry of Health during the past years in purchasingnew and modern equipment are yet insufficient and unevenly distributed.Significant investments in new technologies and up-to-date medical equipmentcan be seen in the recently opened private clinics, which are becoming mainalternatives to the formerly renowned top clinics in the public sector, with longtraditions in health care.

In terms of hospital beds, Romania has a relatively high hospital beds to

population ratio, imposing extra costs on the health system. According to theNational Institute of Statistics, Romania had over 143,000 hospital beds in 2005(including short-term acute care and long-term care beds) or 6.5 beds per 1000people. The ratio for acute care is lower, as WHO data points out. In 2005 theratio for acute care was around 4.5, decreasing dramatically from 6.9 in 1999.

Nonetheless, both the ratio for all bed types (6.5) and the ratio for acute carebeds (4.5) were comparable to the average figures for the EU (5.9 for all bedtypes and 4.1 for acute care beds).

The relatively high ratio is not managed effectively as the allocation of beds is

uneven and does not match the actual incidence of diseases in differenttherapeutic areas.


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Romania has a doctor-to-patient ratio of below 2 per 1,000 inhabitants, which is

lower than European average. Shortages are most acutely felt in rural areas.Lately, since Romania has joined EU, the migration of healthcare personnel towestern countries has amplified, decreasing even more the ratio and the patientsoptions to access better-quality medical services. Because the general fundingcrisis in the healthcare system, the medical professionals situation hasdeteriorated, often receiving wages with considerable delays. Although some96% of Romanians are registered with a doctor, primary care remains poor.

Additionally, there is a shortage of pharmacists, which pushes more patients tosee hospital doctors.

Healthcare financing and expenditureAs in most countries, Romania has a mix of compulsory and voluntary elementsof finance, but the dominant contribution mechanism is the social insurance.Health funds derive primarily from the population, the most part through thirdparty payment mechanisms (social health insurance contributions and taxation)but also by out-ofpocket payments (co-payments for goods and services notcovered by the insurance scheme or direct payments to private or publicproviders for services outside of the yearly framework contract).

In 2004, the social health insurance contributed to 82.7% of the total expenditure,whereas taxes from the state budget represented 15.8%. As the state budgetholds responsibility for funding public health services, capital investments,preventive activities and some treatments under the national health programs

(e.g., for the treatment of diabetes, transplant and oncology), taxes continue tobe an important contribution mechanism to finance healthcare. Other sources ofhealth financing are out-of-pocket payments, external financing and donations. In2006, a new tax on cigarettes and alcohol called the tax on vices wasintroduced at the request of the Ministry of Public Health. Substantial funds werecollected and an important share is used by the Ministry of Public Health onstrategic health programs (health promotion and prevention) and capitalinvestment. As a result of increase in the taxes weight to the total health funding,


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in 2007, the social health insurance share in the total expenditure decreased to75% (World Health Organization data).

The share of the state budget earmarked for recurrent and capital expenditure inthe health sector is decided annually by the Parliament. The overall public health

budget (including the NHIF budget) is annually set by the government andapproved by the Parliament through the Budget State Law. In 2007, the Ministerof Health at that time announced that the state was allocating EUR 198 percapita for the health system, from only EUR 96 in 2004. For 2009, due to theimpact of global crisis on the local economy, the public health budget was set ataround 3.8% of GDP, lower than the 4% of GDP allocated in 2008.

Total healthcare expenditure is difficult to measure because of the incompleterecords of private expenditure (especially direct payments charged by privateproviders and informal payments in the public sector). Public figures on healthexpenditures include mainly those of the NHIF and Ministry of Public Health formedicines, health services, preventive services, medical equipment and capitalinvestments, whereas the level of private spending is most probablyunderestimated. The data available so far suggest that from 2000 to 2007, theshare of GDP spent on health had increased from 4.1% to 4.7%. Despite thisincrease and the limited comparability with international figures, the healthcarespending remains considerably lower than in most EU countries. For comparison,the CEE average in 2007 was approx. 6.7% of GDP. The low healthcarespending has had a negative impact on the status of the health system with adirect impact on the maintenance of the existing infrastructure, investments innew equipment and access to services, especially for low-income groups.

Annual spending on healthcare is however expected to rise gradually to about

5.4% of GDP by 2012, still remaining below the average forecasted levels in CEE(7% of GDP), but reducing the gap.


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By 2012 healthcare spending per head is forecasted to be more than 80% higheras compared to 2007, as Romania attempts to align to the EU requirements.Further growth will be fuelled by the rise of the disposable incomes, thedevelopment of the private health insurance and the increase of the medicineconsumption. Informal payments in state-owned healthcare facilities are deemed

to stimulate the development of the private medical services, as the latterrepresent a better alternative to the poor state-owned services.

The private healthcare industryMarket overviewThe Romanian private medical services market emerged in the mid 90s, as analternative to the poor condition of the public health system, long queues and theartificially created bottlenecks that were addressed through various gifts andinformal payments. Initially, local entrepreneurs opened small medical practicesin order to address the deficiencies of the public ambulatory health system.

Furthermore, the increasing demand for better quality services led to theemersion of the first outpatient clinics. The sector attracted foreign investors withoperations in Central and Eastern European markets, Medsana and Medicoverbeing among the first foreign names to enter the market.

The private clinics offer mainly three types of medical services to their clients:fee-for-service (for each consultation, investigation or laboratory test thebeneficiary pays a fee), prepaid medical services (for a monthly subscription, anindividual benefits of a certain package of services) and occupational healthservices (medical check for employees, at sign-up date and on an annual basisthereafter, paid on a fee-for-service basis or as a monthly subscription).

The prepaid medical services are usually part of the compensation packageoffered by the employer (the corporate client) to its employees as a method ofpersonnel incentive and retention. The occupational health services wereboosted by an Order issued by the Ministry of Health in 2002, which requires thepublic and private employers to provide their employees with medical checks atsign-up date and on a regular basis, whose costs are fully deductible at theemployers level. The fee for service segment, namely the services directly paidby patients, had also a steady growth pattern. Once the patients with higherincomes were familiarized with the range of services offered, there was amigration from the Standard package offered by the company they were workingat, towards subscriptions containing more complex services (Classic, Business

and Executive packages).

The next natural step which is expected is the establishment of private healthinsurance. Market players anticipate that this type of insurance will becomeinteresting in the near future, as the specific regulation in this field will bedeveloped. The expansion of the private health insurance contracts will producea new and important stream of revenues for the providers of medical services.Moreover, the further development of private hospitals is conditional on the


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boosting of this type of insurance contracts. In 2007, the emerging market ofprivate health insurance was estimated at some only EUR 9 mn and 14,000clients, being currently offered by some of the international insurance companieswhich operate on the local market.

Regarding the medical specialties offered by the private sector, one may countamongst the most developed: dentistry, laboratory investigations (especiallymedical imaging/echography), plastic/general surgery, pediatrics, dermatology,laser therapy, obstetrics-gynecology, occupational health, psychiatry.

The Romanian private medical services market accounted for some EUR 250-300 mn in 2007, deemed to reach some EUR 300-350 mn in 2008. The privatehealthcare market in Romania is quite small considering the healthcarespending of some EUR 5 bn. The outlook for the sector looks promising theprivate medical services market is estimated to grow at a CAGR of over 30% inthe next four to five years, up to EUR 1 bn.

In the overall current context, such rapid increase is turning the private medicalcare sector into one of the stars of the local economy. The high growth haslured both private equity funds and entrepreneurs more or less experienced inthis field, leading to an important volume of investments through either green-field projects or M&A transactions.

Currently, the demand for private medical services is heavily concentrated inBucharest. As Bucharest market becomes saturated, it is expected that theprivate clinics and hospitals will reach a high development throughout the countryin order to meet the overall demand for higher quality medical services. In themidterm, the share of Bucharest market should represent only one third of thetotal private healthcare market value.

Competitive landscape


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Top 10 private clinics hold around 35% of the private medical services market.The remaining market share is split between smaller clinics, individual medicalpractices and independent privately owned laboratories.

In 2008, the most of the market players have envisaged expansion outside the

Bucharest area, in cities such as Timisoara, Constanta, Brasov, Iasi, Sibiu andBacau, through either greenfield projects or partnerships with local players. Dueto the soaring growth rhythm of the market during the past 2-3 years, the smallplayers with a previous turnover of EUR 0.5 mn have became sizeable,increasing the number of potential acquisition targets.

Investments in private hospitals are tied to the development of private healthinsurance. Currently there are only nine private hospitals authorized in Romania.The largest hospitals commissioned so far in Bucharest are Euroclinic developedby Eureko Dutch group and Life Memorial Hospital developed by Medlife.Memorial Hospital is the largest private hospital in the country and is endowedwith a capacity of 120 beds, own laboratory and state of the art medicalequipments. The hospital, opened in June 2007, has four medical specialties(general surgery, medical section, obstetrics-gynecology and pediatry) and isequipped with a generous surgery unit of 1200 sqm, including five surgery roomsand Post Op-Intensive Therapy. Euroclinic started operating in June 2005,following investments worth EUR 14 mn, and was designed as a private wing ofthe Floreasca Hospital. Euroclinic, the first large private hospital in Romania, was

one of the pilot projects as part of the strategy to improve the performance of theRomanian healthcare system, with the aid of the private sector, a strategyapproved through a government decision in 2001.

Lately, many of the medical services providers have announced their intentionsto develop private hospitals. Because of the unclear legislation on private healthinsurance and in the absence of genuine private health insurance services, theprofitability of such an investment is questionable. In 2008, after careful


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consideration on the business profitability at the moment, Romar medicalservices group stated it was analyzing the possibility to deviate from its initialplan of developing a 60 beds hospital by turning the existing structure to an officebuilding.

MedlifeMedLife, leader of the private medical service market, posted a 67% rise inturnover in 2008, to EUR 21.2 mn, on a market with a general growth rateestimated at 30%. According to the company, the high growth is a result ofcompany latest developments, the two newly opened hyperclinics in Bucharestand Timisoara. The company has plans to invest EUR 5 mn in expanding themedical services area in the MedLife Memorial Hospital maternity and some ofthe existing clinics as well as opening a new clinic in Bucharest. For 2009,MedLife foresees EUR 31.5 mn worth of business, more than 40% higher ascompared to 2008.

The company was established 13 years ago, being founded as a small clinic byMihaela MarcuCristescu, a very reputable pediatrist. At the end of 2006, IFCacquired 20% of shares for a USD 5 mn consideration. Shortly after the deal withIFC, MedLife opened Life Memorial, the largest private hospital domestically, aninvestment worth more than EUR 10 mn. Presently, the Marcu family are themain shareholders of Medlife, holding some 80% stake in the company.

MedicoverMedicover, the local subsidiary of the Swedish healthcare services providerMedicover Group has posted revenues of EUR 11 mn in 2007 and forecasted a35% increase for 2008, up to around EUR 15 mn. Presently, the companyoperates 9 clinics, out of which 4 are in Bucharest. The other clinics operate in

Focsani, Cluj-Napoca, Constanta, Iasi and Timisoara. In addition to the privateclinics, Medicover holds a laboratory chain, Synevo Romania. Synevo Romaniais former Rombel, set up in 1995 and acquired by Medicover in 1997. Thecompany has expanded its local network to 11 units and has launched theconstruction works on a regional medical centre in Bucharest, a greenfieldinvestment worth EUR 10 mn planned to be completed by the end of 2009. For2008, Synevo Romania estimated more than EUR 14 mn in turnover, whichrepresents a growth rate of at least 10 % on the year.


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Medicover announced plans to start, beginning with this year, the construction ofa 100 beds hospital, which is expected to be commissioned in the second half of2011, following an investment of EUR 12-15 mn.

Medcenter

Medcenter is part of Medicarom Group of five companies providing medicalservice, import, marketing and distribution of medical products for the healthsystem. Medicarom shareholder is Selinvest Trading Ltd registered in VirginIslands. Established in 1998, Medcenter has reached a network of 35 clinics andlaboratories in 8 cities across Romania, being among the first companies in thefield to consider a countryside expansion. Medcenter has earmarked for this yearan investment budget of EUR 9 mn for two new clinics in Bucharest, an imagingcentre and two clinics in the country. Last year, Medcenter generated turnoverworth EUR 11 mn, up by 33% as compared to 2007 and having a target of EUR12.5 mn for 2009.

CMURomanian medical services supplier Unirea Medical Centre (CMU) has beenfounded in 1995 by Dr. Wargha Enayati. In early 2007, UK-based private equityfirm 3i acquired a 49% stake in the company for around EUR 15 mnconsideration. Last year, the company initiated a EUR 20 mn expansion plan. Itopened the first private pediatric clinic in Bucharest called CMU Kids, startedactivity at its new diagnosis centre, launched the most advanced imagistic centrein Bucharest and commissioned its first private maternity Regina Maria, in theNorthern part of the city. CMU has also started the expansion outside Bucharestthrough the acquisition of a 50% stake in Avamedica, Constanta and of a 49%share in the Motilor Medical Centre in Cluj-Napoca. In 2008, CMU posted aturnover of EUR 11 mn, up by 37% as compared to 2007. For 2009, the

company targets a 50% increase on the year, to EUR 16.5 mn. Furthermore, thecompany will follow on the investment program, planning to open a new imagisticcentre, new clinics outside Bucharest and a Stem Cell Bank.

RomarRomar group is controlled by the Romanian family Hagicalil, with a 60% stake. Inthe first half of 2007, the investment fund Reconstruction Capital 2 (RC2) tookover a 33% stake in the medical services group for a consideration of EUR 3 mn.Following the change in the shareholders structure, the group invested aboutEUR 2.3 mn to acquire the entire stake in Evolution Med, which owns a medicalcentre in Bucharest. In 2008, Romars turnover remained flat at EUR 7.6 mn,

falling 30% below the initial forecast. One of the main causes was the delay insigning the contracts with the Health Insurance House, which should havegenerated between 20-25% of Romars business figure. The company claims tohold about 10% of the occupational health market, with the occupational healthservices to derive over half of the company revenues. In 2009, the group expectsits turnover to grow by 30% on the year, up to EUR 10 mn, due to the last yearexpansion.


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Euromedic RomaniaThe Romanian arm of Dutch-registered healthcare services provider EuromedicInternational reported a turnover of EUR 14 mn for 2008, double if compared to2007. Euromedic Romania invested last year a total EUR 27 mn to open 2medical centres and to acquire new equipment for the existing ones. Euromedic

was responsible for introducing the first Positron emission CAT scan-computedCAT scan (PET-CT) to Romania, a EUR 5 mn investment, and is also operatingan imagistic clinic network in full development. It announced in early 2008 a planto invest some EUR 40 mn by mid-2009. The company expects its turnover torise by 35% on the year to almost EUR 20 mn in 2009. Euromedic Romania hasfour divisions: Euromedic Diagnostic, International Dialysis Centres, EuromedicLabs and Euromedic Training. The company operates 7 medical centres in thecountry. The healthcare provider has also entered the Romanian dialysis marketin 2008, by taking over Nefromed dialysis centres for some EUR 5 mn.

Euromedic International operates 170 medical centers in 15 European countries,half of which are operating on the dialysis segment. At the global level,Euromedic was taken over by Ares Life Sciences and Merrill Lynch GlobalPrivate Equity in 2008, from its former shareholders, the Warburg investmentfund and General Electric Healthcare.

SanadorSanador is a network of private clinics set up in 2001, by Florin Andronescu,founder of electronics and home appliances retailer Flanco, of the formerconsumer finance provider Credisson and of the credit broker company KiwiFinance. The network of private clinics is run by the businessmans wife, Doris

Andronescu. Sanador ended 2007 with turnover worth EUR 7 mn. The revenuesstructure is split between contracts with health insurance houses, direct

payments for health exams and corporate agreements, each accounting foraround 30% of the total. For 2008, Andronescu estimated an increase inrevenues of up EUR 13.5 mn and an EBITDA margin of 23-24%. For themoment, the company is operating only in Bucharest: two clinics, a fully-equipped medical laboratory and private medical reserves located in FloreascaEmergency Hospital. Sanador is also considering investing in a 100 beds privatehospital alongside a hotel to accommodate the patients families, with a totalinvestment of EUR 50 mn. Out of total investment, the hospital construction isestimated at EUR 20 mn and the medical devices at EUR 9 mn. The constructionwill be located near the Sanador clinic at Piata Buzesti, Bucharest.

Gral MedicalGral Medical was set up in 1996, following the split of Romar clinic networks andis owned by Serban family, which is also the founders of the company. Gral,which now runs 12 clinics and laboratories in the country, announced plans toinvest EUR 2 mn in 2009 to open 5 new clinics in the country, and expand itsnetwork to 17 units. The first unit to open outside Bucharest is the DiagnosticCentre in Cluj, which will focus on laboratory tests, medical imagery and para-clinical investigations. The company also plans to establish a new private


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hospital in Bucharest with a capacity of 100 beds, specialized in cardiology andorthopaedics, along with a maternity. According to 2008 figures, the companylogged revenues of over EUR 10 mn, 63% up against 2007, and a 20% grossmargin.

MedsanaMedsana Bucharest Medical Centre was founded in 1996 by the Athens MedicalCentre Group, with an extensive presence in Europe and US. The companyoffers health care services for both individuals through fee for service as well asmonthly subscriptions to the employees of multinational companies based inRomania. Services to corporate customers generate 50% of Medsanas annualturnover. Currently, the company has three clinics (two in Bucharest and one inPloiesti) and one IVF clinic. The estimated turnover for 2008 is of around EUR 10mn and the EBITDA is EUR 750,000. Medsana aims for a 25% increase inturnover for 2009, to EUR 12.5 mn, as well as to launch another clinic inBucharest and to expand its existing units. The company is also developing a150 beds hospital in the North of Bucharest, with an estimated initial investmentof EUR 24 mn. For the next five years Medsana envisages to expand in some ofthe major cities in the country, by opening 5 new clinics.

PolisanoPolisano group has been founded in 1993 in Sibiu by Vonica family. Total salesfor the group surpass EUR 170 mn, mostly coming from the pharmaceuticalwholesale activity. The medical services division of the Polisano group is madeup of two separate legal entities: Clinica Polisano SRL (polyclinic operator) andCentrul Medical Polisano (hospital operator). In 2007, these activities generatedcombined revenues of EUR 5.5 mn, up by 68% as compared to 2007. Themedical services division of Polisano operates a hospital, a clinic, a laboratory, a

dialysis centre and an IVF centre in Sibiu, as well as two clinics and a laboratoryin Bucharest, having plans to further develop its business by launching a networkof 5-6 fertility centres, clinics and laboratories throughout the country, expandingthe 50 beds hospital capacity and opening an imagistic centre together with acentre of interventional cardiology, near the hospital in Sibiu.

Romanian private medical services outlookThe Romanian private medical services market is estimated to continue itsdouble digit growth over the next years. In 2009, the market is seen to reachEUR 400 mn, tempering its growth pattern to 15-20% y/y, on the back of theunfavorable economic context. According to the main players in the field, the

international financial crisis could trigger the postponement of some investmentsin the private medical services industry, budget reviews, and freeze the increasein prices of services. For the moment, despite effects of the crisis becoming evermore visible in Romania, the industry does not perceive a direct impact.Moreover, some of the large players have announced significant increases inrevenues for the first month of 2009 as compared to 2008, also backed by therecent expansion and heavy investments in the previous years.


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For the second part of the year, as the economy may suffer more severelybecause of the international context, the increase in the level of corporatecontracts could face a slowdown. The raise in the unemployment rate wouldreduce contribution to the social insurance, which would also impact the value ofcontracts with the National Insurance House and could trigger delays in the

collection of receivables for the corresponding segment of services. Additionalpressure would result from the potential raise in taxes, in the interest level forloans and leasing contracts, as well as increases in medical devices prices andconsumables due to foreign exchange volatility. On the other hand, some playersforesee a decline in the staff turnover and a drop off in the financial claims,especially for the managerial positions. As the overall picture of the economyworsen, the decline in the population purchasing power is likely to affect thepatients ability to access more private medical services. Alternatively, thedeterioration of the public health services due to lower amounts of resourcesallocated to the Ministry of Health for 2009 might result in an opposite trend, thatof directing patients towards the private clinics and hospitals. Overall, in the

absence of a viable substitute, the demand for private medical services isexpected to remain strong. In this situation, the battle for market share andcustomers in the private healthcare industry is expected to tighten, especially inBucharest.

On a long run, the private medical services market remains one of the fewdomains with a promising outlook, attracting the interest of most of the financialinvestors which are looking to invest in sectors resilient to the internationalturmoil and with good prospect of growth. Furthermore, the strategic internationaloperators are expected to attempt to make their way into the Romanian market,through either acquisitions or greenfield projects, enhancing the level of foreigninvestments which are vital to sustain growth and to increase access to modernand complex healthcare services.

Romanian private healthcare industry SWOTStrengthsS

Sustained growth during the past years and good prospects for future growthS

Rigid demand due to lack of a viable substitute (poor public health services)R

Better managerial capacity as opposed to the public sector, especially for theprivate medical services providers which are controlled by foreigninvestors with superior expertise in this fieldi

The heavy investments performed in the past are now paying off

WeaknessesW

Incomplete records of private expenditure


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I

Poor private health insurance legislationP

Low deductibility quotas for cash paymentsL

Highly fragmented marketH

Insufficient medical resourcesI

Limited to specialties which can generate profit (i.e., specialties such as

oncology involving expensive treatments and high expertise cannot bedeveloped in the private sector)

OpportunitiesO

High interest from both financial and strategic investors to trigger increased FDIthrough acquisitions of local players or greenfield projectst

Development of private health insurance to trigger investments in privatehospitalsh

Lower resources allocated from the state budget for the public health servicesto direct patients toward the private sectort

Poor-quality of the public primary care services, inadequate referral andoveremphasis on hospitalbased curative services with lack of goodequipment and drugs

ThreatsT

Migration of healthcare personnel to EU countriesM

Migration of patients to more developed EU countriesMSignificant delays in collection of receivables for the contracts with the National

Insurance HouseI

The raise in medical devices prices and consumables to put additionalpressure on the medical services companies marginsp

Instability of the economic environment to lower population access to privatemedical services

healthcare system in romania

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