West Europe’s for-profit hospitals ramp up as financial protections phased out
For-profit hospitals across West Europe are ramping up activity as governmental financial protections are slowly phased out, but it’s taking much longer than in outpatient facilities and varies wildly from country to country. Why? HBI looks at the situation in Germany, France, Switzerland, the UK and Ireland.
From July 1, German hospitals are no longer getting a flat fee of €560 per empty-bed-day but instead receive €360-760 based on the number of beds, AVLOS and case-mix. Dr Andre Schmidt, CEO of Median, said the change will re-incentivise hospitals to commence surgeries again and clear COVID-19-related backlogs of work.
Elmar Willebrand, formerly CEO of Asklepios who now runs smaller outfit Accumeda Group, tells HBI: “The money was not enough to cover all costs for some hospitals but for others, it was too much. There’s also some question over where the €400m spent on installing new ICUs for COVID has gone, which they are currently investigating.
“Acute hospitals in Germany have recovered to 60-70% of their occupancy levels compared to last year and at the current pace should recover to 100% by January 2021, though this obviously doesn’t account for the effects of a second wave. In the case of a big second wave, I anticipate a return to normality by mid-2021 after which there’ll be a boost of around 25% in demand to catch up on postponed activity.”
He expects that some of the lag, compared with the outpatient sector, is down to doctors being reluctant to refer patients to hospital unless absolutely necessary, as well as patients’ own worries about entering hospitals.
In neighbouring France, a revenue guarantee for acute hospitals amounting to 85% of last year’s amount by Assurance Maladie has been extended to the whole of 2020, a for-profit hospital source tells HBI. They add that private doctors’ earnings are more closely linked to activity and hospitals will fear losing out on the ‘easy’ patients (younger, fewer co-morbidities) to competitors if they sit on the sidelines too long. So they shouldn’t be disincentivised to resume activity, though he adds that France is at a similar level of pre-COVID activity as Germany.
It’s a very different picture for a Swiss operator. Rodolphe Eurin, CEO of Geneva’s largest for-profit operator Hopital La Tour, tells HBI: “We’ve seen a really good recovery so far. For June and July, we’re expecting to be 5-10% above the same period last year and about the same as January and February. Full-year is still a bit of an unknown. There’s a big gap in our numbers from March to June even with the jump in June. I don’t think it will be fully compensated for in 2020, which isn’t a surprise. I expect a slowdown later as some of the care team will need a break.”
The CEO of Aevis Victoria, which owns the second-largest national private hospital Swiss Medical Network, also expects that the March and April drop will not be compensated for in 2020. Eurin adds it is still unclear to what extent the canton of Geneva will compensate hospitals for postponed activity in the lockdown months of March and April. He points out that the health authority in neighbouring Vaud will not do more than pay for services provided. Geneva, which had a more centralised pandemic response and obliged hospitals to reduce elective activity, should be more generous, he adds.
Although La Tour is one site, with a higher focus on private pay and elective treatments than the wider German and French markets, we think the comparative lack of financial protections may help spur a more proactive resumption of non-urgent hospital activity.
Private hospital operators in the UK have for the past few months been an extension of the NHS through a block-buying deal on a no-profit basis. While utilisation has been low, they have been taking on some urgent cancer treatments from nearly NHS hospitals, and have had to seek approval to do any private pay work.
The deal looks to have been extended to mid-August as a new, longer-term deal to clear elective backlogs is hashed out, two sources tell HBI. The second, a middle manager for a private hospital, says that the floodgates opened 10-12 days with a raft of outsourcing lists of surgeries from NHS England. “The next three months are going to be three times busier than a typical summer for us.”
HBI has contacted NHS England and the Independent Healthcare Providers Network, who negotiated the block-buying deal, for clarification on the extension but have not received a response. Both our sources agree that a longer-term deal will be on a hospital-by-hospital basis and not all-encompassing as the initial 14-week agreement was.
The Irish Health Service Executive (HSE) chose not to extend its deal with private hospitals past July 1, since which they are back operating privately, HBI can reveal. Capacity was largely unused as COVID-19 numbers never reached that of its West European peers, although the HSE is negotiating a deal to get access to capacity going forward. Private hospitals have been accused of profiteering from the deal, while some of them have accused the HSE of not paying up as agreed. The deal was worth around €115m a month as reported nationally and confirmed by an HBI source.
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