EXCLUSIVE-Greece aims to pay off hospital debt by year-end
Fri Oct 22, 2010 3:34pm GMT
* Wants to clear all debts to suppliers up to Sept 2010
* Aims to pay 1.2 bln euros of 2010 debt by year-end
* Also 5.5 bln eur of earlier debt, mostly with bonds
(Adds quotes, background)
By Renee Maltezou
ATHENS, Oct 22 (Reuters) - Greece will pay by year-end all hospital debts accumulated with medical suppliers from 2005 up to last month, and keep closer tabs on such costs in 2011, a senior health ministry official told Reuters on Friday.
Hospital bills were behind much of the retrospective widening of the 2009 budget deficit that plunged Greece into a debt crisis. International lenders that later stepped in with a 110 billion euro ($153 billion) bailout also cited medical debt as an area of concern in respect of this year's deficit-cutting efforts. "Our aim is to start on a different basis in 2011," the Health Ministry's General Secretary, Nikos Polyzos, said in an interview. "It's a tough task but I believe we will make it."
Polyzos, who ranks fourth in the department behind the minister and the minister's two deputies, said debts from 2005, 2006 and the first half of 2007 had almost been paid off this year, at a cost of 1.5 billion euros.
"What is important is that it was all in cash," he said. "Now we are dealing with the difficult task of paying the rest of 2007 and the 2008 and 2009 obligations."
That amounts to some 5.5 billion euros, of which 5.35 billion euros will be paid in bonds and about 150 million in cash, he added.
UNDER PRESSURE
The debt-choked country is under pressure from the EU and the IMF to implement painful cuts and push ahead with structural reforms in exchange for help to exit a debt crisis that has shaken the euro zone.
Public health spending and soaring debts to medical suppliers have burned holes in state finances for many years.
This year's payment of arrears to hospitals has been budgeted for and will not further burden this year's deficit, seen at 7.8 percent of GDP, but concerns remain whether targets will be met.
The government said in June it would settle hospitals debts to health suppliers from 2007 to 2009 in interest-free one-year, two-year and three-year bonds, hoping to end a long-standing dispute which led to medical shortages.
Greece also plans to pay 1.2 billion euros for debt accumulated this year up to September, Polyzos said, without specifying if this would be in cash or in bonds. He said 400 million euros of 2010 debt has already been cleared.
Analysts say this will be a tough task, as the debtors are social security funds that are themselves facing financial difficulties.
AN EYE ON COSTS
Greece spends 25 billion euros per year -- roughly 10 percent of GDP -- on healthcare, half of which goes to the private sector.
Keeping medical supply costs in check is a priority for 2011, Polyzos said, adding that hospitals' operating costs had already been cut to 2.6 billion euros this year from 3 billion euros in 2009.
But government undertakings to international lenders to fully computerise financial services by December at the country's 130 state hospitals -- long considered tarnished by corruption -- would not be met.
"It will be a great success if we fully computerise 100 hospitals by the end of Q1," he said.
Money has fallen through the cracks in Greece's state hospital sector for many years.
Patients often have to pay hundreds of euros in what are effectively bribes -- the so-called "fakelaki", or little envelopes -- to secure fair treatment, and a lack of credible accounting facilitates profiteering through the overpricing of medical supplies.
State healthcare centres, which offer the next grade of care down from hospitals, had about 18 million visits in 2009. Polyzos, a former hospital manager, said he expected a 10 percent rise this year, as patients turn to cheaper options in the aftermath of the country's worst recession in decades.
"It seems that people can't afford private healthcare or 'fakelaki' anymore," he said.
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