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Healthcare: private vs public
Written by: Jason Hovet
Photo by: Luminum

Private health clinics continue to sprout up, restructure, or expand. Finding clientele among large, mostly international firms is helping growth, as a number of individuals are starting to look elsewhere for what they can't get from the public system.

Petr Seidl

"CYCLICAL DEBTS in public health insurance have a lot of implications for everybody involved in healthcare," says Petr Seidl, director of the private clinic Medicover, mentioning not only patients, but providers and suppliers as well. For original pharmaceutical manufacturers (those that conduct their own research and development to produce "original" drugs), new cost-saving measures in health insurance will leave many of their prescriptions too expensive and uncovered. Unfortunately, these problems and debates are nothing new and have been discussed for years, which doesn't leave many hopeful that substantial changes are around the corner. Despite this, companies involved in private healthcare continue to grow in an ever-tougher system.
Regardless of these problems, public healthcare providers and suppliers are relatively prosperous. For private health clinics, corporate clients remain important customers. "The majority of our revenue comes from corporate contracts," Medicover's Seidl says. Medicover, one of the biggest clinics, cooperates with around 200 corporate clients, caring mostly for both middle- and upper-managers. This accounts for 90% of its patient list, and is split between both Czech and foreign individuals - although Seidl sees the proportion of expats decreasing. Medicover, part of an international group active in eastern Europe, entered the market in 2001 by acquiring První pražská zdravotní and has since been restructuring its operations. During that time, its client list more than doubled - to 13,200 in the second quarter of this year from 5,800 two years before.

Martin Holub

Multinational flavor
While Medicover has a proven track record with corporations in other markets, many Czech-operated clinics are awakening to opportunities. Medicentrum Beroun, created in 1995 after the Beroun clinic was privatized, typically serves patients covered under public health insurance but now makes a more concentrated effort for firms. "We offer health services to foreign clients, whose numbers are expanding each year," says Medicentrum director, Martin Holub. These numbers mainly involve patients from multinational firms, which are usually looking for programs tailor-made. "They (firms) are much more sophisticated," he says. One example is a growing demand for occupational health services. "These lead to a lowering of illness, as well as sick leave," Holub claims. Medicover sees opportunities here, too, and even organized a conference about occupational healthcare in 2002. It cited studies showing that CZK 30 billion are annually spent on illness benefits, whereas CZK 8 billion "was paid without need or justification."
Growing interest in occupational health, which is a focus of many multinational companies, is a good example of the positive influence of increased foreign investment. Another example is the tender process, which Seidl says is more sophisticated than a decade ago. He points out that better corporate governance is one major reason behind the improved organization. Contracts usually last one or two years, and competition for corporate clients is now getting more fierce. However, according toTáňa Tomanová, a client care manager at GHC Clinic, "clients are typically long-term." GHC, though, relies more heavily on individual clients - and health tourists (see sidebar, p. 36) - than other clinics, and also only invoices clients directly, bypassing insurance.

Jana Mikotová

Choosing their place
Most other clinics accept cash payments, as well as private and public health insurance, which gives them a higher stake in the ongoing insurance dilemma. Medicentrum's Holub says insurance claims 10 years ago were being paid within 25 days; today it now takes more than 60 days. Health insurance woes are on the mind of a lot of private health clinics today. "The real issue is that they (the nine public health insurers) are not allowed to compete," Seidl offers. Just as well, pharmaceutical companies, mainly original medicine producers, have similar complaints about healthcare funding. "This system definitely needs some reform," says Jana Mikotová, director of the International Association of Pharmaceutical Companies (MAFS).
With debt of more than CZK 14 billion in public health insurance, new Minister of Health David Rath plans to rely more heavily on generic drugs in the future. The country already is a strong user of generics - which accounted for more than 50% of volume and 33% of costs in 2004, according to Infopharm; some studies have shown that insurers already save CZK 4.5 billion by preferring generics. This worries original pharmaceutical companies, as so much of their portfolios are aimed at prescriptions. Currently, three-quarters of the market is in prescription sales. As a result, research is becoming more specialized. "New medications will be aimed at specialists," says Jiří Pešina, communication affairs manager at Roche. "Companies that conduct their own research and development of new drugs will yield the market of first-line prescription, which is where the cheaper generics will be used," he adds. Roche's sales in the Czech Republic (excluding over-the-counter [OTC] products) now total CZK 1.8 billion, a three-fold rise since 1996, and account for 5% of the market, according to the company. Roche has a specific portfolio with products mainly in oncology (cancer treatment) and transplant medicine.
Market specialization is one way of extracting decent returns on the Czech pharma market - which is valued at USD 2.2 billion, according to research by Espicom. For the largest market share, though, generic drugs factor heavily - starting with the leader Zentiva, as well as Ivax and Novartis, both of which incorporate generics in their portfolio and round out the top three in volume sales. At Zentiva, 80% of its products are prescription-driven, says Václav Rejholec, the firm's external affairs director and president of the Czech Association of Pharmaceutical Companies (ČAFF), which represents mainly generic pharmaceutical manufacturers. He tries to dispel the myth that generic drugs are cheap rip-offs, saying it takes nearly three years to bring a product to market and Zentiva employs a staff of 230 for research and development, budgeting CZK 600 million for their activities. Similarly, at Ivax, 8% of staff and 4% of the budget are dedicated to R&D, mainly in generics. Zentiva, for its part, hopes to move into original research in the future.
Still, both sides insist it's not an us-versus-them fight in pharmaceuticals, agreeing that both types of drugs need to be available. They also both argue the need for a fairer marketplace, which would certainly be aided by a more transparent pricing policy. "We are working in an area without any rules," Mikotová says. Similar to private health clinics, pharma companies want a healthcare policy focused more on what the patient needs, rather than economics. Most in private healthcare agree that more competition would be beneficial, and that preventive medicine, which might be more expensive in the short-term, should begin to have a greater impact on healthcare. "I hope the role of the patient will be much stronger," says Medicover's Seidl, "and that the patient will be the real decision-maker."