Concerns that public hospitals will struggle to reduce their deficit by half in 2014, a target set by the Ministry of Health, have been expressed by the president of the Portuguese Association of Hospital Administrators (APAH), Marta Temido.
This is in spite of the government’s implementation of measures announced last November to inject €425 million worth of funding into 19 hospital companies to effectively convert debt into capital by writing off crippling interest rates to the tune of €25 million per year.
The move will help those hospitals, classified as EPE (Entidades Públicas Empresariais) or public business entities, avoid technical bankruptcy.
Last September, health minister Paulo Macedo revealed that one-third of those entities were in that situation.
The boost in capital “aims to improve the liquidity of hospitals, regularise debt, and is part of the measures to re-organise hospitals as a means to ensuring the sustainability of the National Health Service”, announced a report published by the Ministry of Health.
The injection of around €425 million into these hospital companies – a figure that will be further boosted by the receipt of credit notes from the pharmaceutical industry made possible as a result of an agreement with APIFARMA, the Portuguese Pharmaceutical Industry Association – will contribute towards the effort of balancing hospital accounts, again sustaining the future of the NHS, it stressed.
The APAH president, however, was more preoccupied with the question of how hospitals will cope with meeting deficit reduction targets, given the still fraught economic climate.
Speaking to the Lusa news agency, Temido said that it would be “a difficult goal to meet”, at least without implementing a restructuring programme.
She noted that the health ministry’s objective “is not new or unknown” as rules governing last year’s contracts were already pointing in that direction. But she believed the methods were akin to placing hospitals within the context of the business sector.
On top of a loss of revenue will be the 3.5% cut in funding expected this year, she pointed out. “The concern therefore is not the willingness to reduce the deficit but the context in which hospitals will have to try and meet that goal.”
According to the Jornal de Negócios business newspaper, the Ministry of Health has imposed the deficit reduction under new contract rules. The aim is to “reduce losses by half in 2014 and achieve positive EBITDA (earnings before interest, taxes, depreciation and amortisation) in 2015, thus ending the accumulation of new debt.
Of the 39 health institutions across Portugal, only eight avoided posting a loss in 2013.
These statistics underline the difficult task in meeting the health ministry’s targets which are “unrealistic, hard to achieve, and may even lead to accountability by hospital boards of directors,” Temido insisted.
The APAH president also stressed that the objectives issued by the Ministry of Health have been made within the framework of restructuring, which is not yet known in detail.
“Only within the context of reorganisation is it possible to achieve these goals,” she emphasised, adding that if the position remained unchanged nothing would happen.
For its part, the government, via the online Portal da Saúde, used Paulo Macedo’s visit last week to the Centro Hospitalar de Setúbal as an example of how its financial rescue package will work.
The hospital will receive a capital increase of €73 million and as a result, a “reduction of €5 million in interest”. This will allow the hospital “to reach a balance in terms of net profit … something not seen over the last 10 years”.
The hospital-company standing to benefit most from the plan is the Centro Hospitalar de Lisboa Central, which encompasses the São José, Santa Maria, Santa Marta and Curry Cabral hospitals, as well as the Alfredo da Costa maternity hospital. It will receive €76 million and an interest waiver of €4.57 million.
After Setúbal, the third biggest beneficiary is the Centro Hospitalar do Algarve, which includes Faro and Portimão hospitals. This facility will receive €69.4 million and equates to a waiver in interest of €5.3 million.
Despite her doubts surrounding the feasibility of the government’s scheme, Marta Temido nevertheless welcomed the intention to proceed with the doctors’ mobility initiative that allows medics to travel up to 60km on call-outs between public hospitals in order to assure “profitability of human resources”.
“I could not agree more,” she told Jornal de Negócios. “It is a measure that responds to the needs of citizens.
“Rules governing mobility have been enjoyed by many other professional groups, so should also apply to doctors,” she underlined.
Hospital accounts
According to figures published in Portal Base, the Centro Hospitalar do Algarve drew up 47 contracts and spent €5 million in 2013, almost all of it on the acquisition of medication.
The most expensive medicine purchase was for the supply of the anti-inflammatory drug Etanercept, used in the treatment of rheumatoid arthritis, ankylosing spondilytis and psoriasis, where €876,000 was paid to Pfizer Laboratories, reports ‘i’ newspaper.
Between July and December of this year, the hospital also spent nearly €29,000 contracting general surgery doctors, €8,500 on a knee prosthesis and €831 on unspecified equipment.
