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Viewing cable 08BUCHAREST607, ROMANIAN HEALTHCARE PART 3: PRIVATE HEALTHCARE STRUGGLES

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Reference ID Created Released Classification Origin
08BUCHAREST607 2008-07-31 07:06 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bucharest
VZCZCXRO0025
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBM #0607/01 2130706
ZNR UUUUU ZZH
P 310706Z JUL 08
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 8546
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAUSA/DEPT OF HHS WASHINGTON DC PRIORITY
UNCLAS SECTION 01 OF 02 BUCHAREST 000607 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ELAB EINV PGOV SOCI AMED RO
SUBJECT:  ROMANIAN HEALTHCARE PART 3:  PRIVATE HEALTHCARE STRUGGLES 
TO ESTABLISH A BEACHHEAD 
 
REFS: A) Bucharest 601  B) Bucharest 604 
 
Sensitive but Unclassified; not for Internet distribution. 
 
SUMMARY 
 
1.  (SBU) While the public healthcare system remains the primary 
source of medical care for the majority of Romanians, it is 
under-funded, and the unpredictable quality of care has begun to 
lead some wealthier consumers towards the growing private healthcare 
sector.  Revenues from this private sector are expected to more than 
double in the next three years, and the many small players in the 
market are expected to consolidate over the next five to ten years. 
Prepaid medical service plans are growing in popularity, but they 
remain unregulated.  Private health insurance growth remains 
sluggish due to unclear legislation, the willingness of many private 
healthcare users to pay cash, and limited access to facilities that 
accept private insurance.  Nevertheless, while some clinics and 
healthcare plans may expand more rapidly than others, in general, 
the use of private insurance, pre-paid medical plans and private 
healthcare facilities is expected to continue to grow. 
 
2.  (U) This is the third in a three-part series on the Romanian 
healthcare sector.  Part 1 (reftel A) examined troubles within the 
public healthcare system, and Part 2 (reftel B) looked at the 
pharmaceutical market.    End Summary. 
 
THE GROWTH OF PRIVATE CLINICS 
 
3.  (SBU) In light of the dilapidated state of Romania's public 
healthcare system, over 30 private clinics and hospitals have sprung 
up throughout the country and many more are under construction.  The 
market for private medical services is expected to reach 350 million 
euros in 2008, and 890 million euros by 2011.  Compared to the 
public healthcare sector, the private sector remains tiny and 
heavily concentrated in Bucharest.  However, according to a July 3 
media report, this is projected to change, so that by 2011, up to 70 
percent of private healthcare revenues will be generated outside of 
the capital. 
 
4.  (SBU) The rapid growth in the private healthcare sector has 
attracted investment funds and entrepreneurs.  In a meeting with 
EconOffs on July 11, Catalin Popa, Chief Operations Officer of 
Euroclinic (a well-regarded private facility in Bucharest), 
predicted that in five to ten years the small private clinics 
cropping up all over the country will consolidate into four or five 
national brands.  Popa added that safety is the number one reason 
patients choose his hospital over a public one.  (Comment: 
transparent pricing and the absence of "gratuity payments" - more 
crudely referred to as bribes - follow closely behind as reasons to 
use a private clinic.  End Comment.)  With regard to safety, clients 
perceive that public health facilities do not maintain a sterile 
environment, making patients vulnerable to contracting infections. 
 
 
5.  (SBU) According to a study recently conducted by the Euroclinic, 
the demographic profile served by private healthcare facilities is 
60 percent female, typically between the ages of 25-40, with 
salaries of more than 1,000 euros per month.  Approximately 30 
percent of Euroclinic patients use private insurance.  The majority 
still pay cash for services, as only 4% of Romanians hold private 
health insurance policies. 
 
PRE-PAID PLANS VS. TRADITIONAL PRIVATE INSURANCE 
 
6.  (SBU) Along with private healthcare services, pre-paid medical 
service plans have entered the market.  These are a sort of 
quasi-insurance offered through private healthcare clinics and 
hospitals.  Pre-paid plans are growing more rapidly than private 
health insurance in the current market.  Essentially, private 
healthcare providers market a package of services to employers who 
are already required to pay for their employees' occupational 
medical checkups (these mandated checkups determine physical 
suitability for work).  Employers can purchase tax deductible 
pre-paid medical services plans for their employees, often for less 
than 20 euros per month.  The plans include a package of basic 
services such as unlimited general practitioner visits and lab tests 
at the company's facilities, but only very limited specialist care 
and no catastrophic care.  Such plans are ideal for private 
healthcare providers in that they typically receive payment from 
patients twice, first during the monthly pre-payment, and again when 
a patient pays out of pocket to receive specialist or catastrophic 
care at the company's private clinic.  However, while these plans 
offer great deals for employers and advantages for private 
healthcare companies, employees are often unaware of the limits of 
the care offered under the plans.  For now, such plans remain 
entirely unregulated by the Government. 
 
7.  (SBU) Meanwhile, private insurance is expanding at a much slower 
rate.  The primary reason is that although private insurance is 
 
BUCHAREST 00000607  002 OF 002 
 
 
legal, its exact role vis-a-vis the public system has not been 
distinctly defined.  For now, public and private health insurance 
schemes run in parallel.  For private health insurance providers 
this has created uncertainty, while for would-be consumers it has 
dampened their enthusiasm to enter the market.  Euroclinic's Popa 
foresees that in the next three years, the legislation will be 
clarified and private insurance will most likely be used as a 
supplement for an individual's public health insurance coverage. 
 
8.  (SBU) A second reason for slow growth is that, for current 
private healthcare users, it is still reasonably inexpensive to pay 
out-of-pocket for services.  This will begin to change, as 
healthcare costs are expected to rise faster than the rate of 
inflation.  As costs increase, private healthcare users will be 
forced to carefully evaluate alternatives, which include either 
returning to the public healthcare system or acquiring sufficient 
private insurance to cover higher costs.  Thirdly, because private 
healthcare networks are so small, many would-be clients have no 
access to an in-network clinic near home and thus no real reason to 
purchase private health insurance. 
 
COMMENT 
 
9.  (SBU) As improvements continue to lag in the public healthcare 
sector, rising incomes will encourage more and more urban Romanians 
to seek treatment in private facilities, where most clients still 
pay out of pocket.  As healthcare costs rise faster than inflation, 
however, Romanians will be forced to seek other payment 
alternatives.  For now, pre-paid plans serve as a distraction from 
comprehensive private health coverage and as a stop-gap measure 
compensating for the poor quality of the public system. 
Increasingly, demand for private insurance will rise in a market 
frustrated by poor quality care. 
 
10.  (SBU) A key competitive question for the future is whether the 
demand for better care will result in an expanded and improved 
public delivery system that fulfills its stated goal of providing 
non-discriminatory care, or whether the demand will be met by the 
market.  Efforts by the Government to decentralize public systems by 
empowering local jurisdictions to run hospitals may be a first step 
toward a more market-oriented solution in the future for Romania. 
EU attention to the problem may help as well, but for now Romania 
appears to be trying to do too much with too few resources and 
failing to provide care at the appropriate level.  While on paper 
there are no gaps in the public health insurance system, in practice 
the goal of universal coverage is not being met.  End Comment. 
 
TAUBMAN