Resolution 520=Healthcare 2019
The year of 2019 came as the one of the heaviest times for Georgian healthcare sector.
The field had not get adapted to the recently appointed Minister, when Ekaterine Tikaradze, who has replaced the former health Minister David Sergeenko, offered the clinics engaged in universal health program to even service tariffs.
Clinics rejected the Health Ministry regulations. Despite multiple meetings with the Minister, Prime Minister and Business Ombudsman, government has made no concessions yet. Consequently, resolution N520 is considered as the scandal of the year. Finally, the parties have agreed to establish the universal health reform board.
Akaki Zoidze, the former chairman of the parliament’s health committee, told Caucasus Business Week (CBW) that the interested parties have not engaged in the process valuably and this factor has caused much misunderstanding regarding resolution N520.
“The Government sets tariffs, as a purchaser of these services, but more consultations were required when implementing so important reforms and fewer questions would arise. This is the first phase of reforms and the ultimate objective is to improve the service quality and increase efficiency of state expenses. I welcome the universal health reform board, where all interested parties, including international organizations, researchers, representatives of associations, nongovernmental organizations or private clinics, will care for valuable implementation of the reform”, Akaki Zoidze said. He also expressed suppositions that the coming reforms will be painful. At the same time, he assures that the tendencies when patients receive excessive services should be prevented.
“Excessive services are encouraged instead of encouraging high-quality medical services”, Zoidze noted and added that the process should be transparent and interested parties should be actively engaged in the process.
“Patients, the Government, doctors and clinics should get benefits”, Zoidze pointed out.
Figures in Health Sector
Health sector, like many other fields, faces difficulties with attracting foreign direct investments. The January-September 2019 recorded 11.2 million USD investments in the healthcare and social protection sector. Investments of 0.8 million USD attracted in the first quarter were withdrawn in the second quarter, in practice. Nor the year of 2018 has recorded better indicators – only 12.4 million USD foreign capital. A lesser amount was registered in 2017 – 5.9 million USD.
The sector’s ratio in GDP remains low. According to the third quarter indicators, the ratio is about 4%. The year on year growth made up 8% and exceeded 498 thousand GEL in current prices.
The sector employs more than 71 000 persons and average monthly salary does not exceed 1 107 GEL.
It is noteworthy that the Government grows funding health programs on annual bases. Over the past years, the subsidization has tripled and the figure amounted to 1.1 billion GEL in 2019. The Government emerges as one of the major customers. This factor has attracted foreign investments to the sector, however, investments grow in quantity, not in quality, Akaki Zoidze said.
High inflation rate and GEL exchange rate devaluation have affected both healthcare services and medicine prices, consumers and the universal health program. According to Geostat, the national statistics service of Georgia, prices rose by 3%, including antibiotics rose by 5% in prices, pain medications increased by 3% in value, anti-inflammatory drugs rose by 7% in price. These indicators reflect the year on year trend, while tariffs have almost doubled after the universal health program commencement.
The program for 1-GEL medications has also failed: patients are not content either and recommendations were prepared for its revision.
In the digital epoch, the sector remains stuck in paperwrok in 2019 too. This signifies, besides healing patients, doctors have to also work as clerks and prepare thousands of various documents.
Excessive number of prescribed medications, errors in diagnosis and low quality of services leave patient discontent. Therefore, the current challenges will run in 2020 too, however the resolution N520 remains a key challenge anyway.
Deals and Investments of the Year
The decision by Asian Development Bank (ADB) could be appraised as the investment of the year. ADB has invested 19.5 million GEL in bonds of Evex Hospitals, an affiliated company of Georgia Healthcare Group (GHG), which is enlisted in London Stock Exchange (LSE). Proceeds from the issuance and the company’s internal resources will refinance part of the debts. The company plans to achieve operational efficiency, improve service quality and management. Total value of the bonds is 50 million GEL.
As for the deal of 2019, Georgian Hospitals Group has purchased GPI Holding clinics. As a result, GPI Holding has withdrawn from business of clinics, while Georgian Hospitals Group has expanded its network, after it purchased a 100% stake of Geo Hospitals and became owner of 17 clinics.
The new management’s strategic development plan calls for infrastructural renewal of Geo Hospitals, its re-equipment and installation of new technologies. To this end, Georgian Hospitals Group plans to make huge investments.
GPI Holding director general Paata that the current developments in the hospital sector of Georgia and the unforeseeable environment shaped by hasty and frequently unanalyzed initiatives has made the company withdraw from the market.