The financial condition of county hospitals is very poor, evident in increasing operational losses and growing debts. The situation worsened due to the reform of the remuneration system for healthcare workers, which took effect in July 2022, with no corresponding increase in the valuation of services. Since then, the financial state of these institutions has been deteriorating.
The outlook for hospitals in 2024 is bleak. The increase in salaries for medical staff poses a significant problem.
“Unfortunately, the future prospects are also troubling,” says Krzysztof Żochowski, Vice President of the All-Poland Association of Employers of County Hospitals. According to him, in 2024, another remuneration adjustment for medical staff will come into force, and without changes to the valuation rules allowing for financing the raises, county hospitals will continue to accumulate debt.
“If nothing changes, the financial situation of hospitals will further deteriorate. Instead of allocating more funds to improve patient care, we will have to allocate an increasing portion to financial costs, interest payments, and expenses for untimely deliveries. The system will simply become destabilized, and then, something no one wishes for, the necessity to limit services, close wards, or even some hospitals will arise. It will simply lead to a catastrophe,” continues Żochowski.
According to the Supreme Audit Office, as of mid-2022, there were 313 county hospitals in Poland providing healthcare services financed by the National Health Fund (NFZ). In August 2023, the Supreme Audit Office published a report on the control of their activities from 2020 to 2022. The main problem hindering the functioning of county hospitals, as highlighted by the report, is their worsening financial situation, resulting in increasing indebtedness. As of the end of June 2022, the total obligations of county hospitals exceeded PLN 7.3 billion, with due obligations reaching nearly PLN 777 million.
The Supreme Audit Office also notes that the method of financing county hospitals was changed due to the declaration of a state of epidemic in Poland, causing a temporary improvement in their financial results and only clouding the true picture. In 2021, 16 out of 22 audited hospitals achieved a positive financial result. However, after the first half of 2022, only three entities recorded a net profit, while the rest (19 facilities) incurred a net loss. The audited hospitals faced significant challenges in balancing their operations and had delays in settling payments, resulting in the need to pay interest.
A true financial downturn for county hospitals occurred in the second half of 2022, driven by both growing inflation and overall cost increases, as well as the reform of the remuneration system for healthcare workers, which came into effect on July 1, 2022. As a result of this reform, the scale of minimum wage increases ranged from 17 to 41%, depending on the employee group.
As shown by a report prepared by the Association of Polish Counties and the All-Poland Association of Employers of County Hospitals in collaboration with SGH (“Financial Situation of County Hospitals in Light of the Amendment of the Act on the Determination of the Minimum Basic Salary of Certain Employees Employed in Medical Entities”), this further worsened the financial situation of county hospitals. Out of 211 surveyed facilities, 191 reported operational losses in 2022 (compared to 172 the previous year), and 151 reported net losses (compared to 112 the previous year). Their sales revenue increased by just over PLN 1 billion, operational costs increased by PLN 1.6 billion, and liabilities increased by over PLN 2 billion year on year.
“In the wake of decisions at the parliamentary and ministerial levels – otherwise justified, regarding increasing the salaries of our employees – precise increases in valuations must follow to enable us to pay these raises. If this does not happen, our financial situation will deteriorate,” says the Vice President of the All-Poland Association of Employers of County Hospitals.
For the vast majority of county hospitals, the change in the valuation rules for services (indicated in Recommendation No. 65/2022 of the President of the Agency for Health Technology Assessment and Tariffication from July 2022) did not allow for securing funds to finance mandatory raises and cover the rising prices of goods and services due to inflation.
“In the case of facilities that provide permanent emergency duty, the cost of readiness must also be taken into account. For county hospitals, provincial hospitals, and some others, this is a significant part of the costs. We do not know when a patient will appear, to whom we will have to provide services and then bill for them. We must be ready for this all the time. And this is a huge cost – the cost of the readiness of the block, hospital emergency department, diagnostic facilities, laboratories, imaging studies, etc. This should also be taken into account in valuations,” evaluates Krzysztof Żochowski.
As emphasized, the prospects for hospitals in the coming year are “troubling,” and their financial situation will likely continue to worsen – especially since another remuneration adjustment for medical staff will come into force in July 2024.
“The new government should, first of all, fairly pay for work and make an accurate valuation of services. In fact, it should read this valuation from the market because the government is not here to determine how much a person should earn and how much everything costs. The market creates such data, and mechanisms must be introduced that will provide the government with accurate knowledge on this matter and allow aligning state policy with this market diagnosis. Without a fair valuation of services, without fair payment for good work, there will be no well-functioning healthcare system in Poland,” emphasizes the Vice President of the All-Poland Association of Employers of County Hospitals.
What will be the impact on patients? An increasing portion of funds, instead of being allocated for better patient care, will have to be dedicated to financial costs, interest payments, and the costs of untimely deliveries. The system may become destabilized, and then there may be something that no one wishes for – the need to limit services, close wards, or even some hospitals. There may be a breakdown in public institutions – warns Żochowski.
