VŠZP in years 2007 to 2010: camouflaged life beyond means

We warn against financial problems of VŠZP even from 2009

We didn’t warn against financial problems of VŠZP only in our newsletter, but also in other media. For my statement in an interview [in Slovak] for Plus 7 dní weekly, that VŠZP is “the most probable candidate for bankruptcy” and the merger of VŠZP and SZP I commented that “from a lame and crippled there will be no runner”, I was sued on October 20, 2009 by former director Zuzana Zvolenská for unauthorized intervention into good reputation of VŠZP and she wanted from HPI and me personally recover damages of 1.1 million Sk.

But as the lawyers say, in order to be the good reputation damaged, first it has to be good. In order to be the absurdity of the whole situation perfect, a few days after delivering of start of procedure against me and HPI was the management of VŠZP under the management of Zuzana Zvolenská forced to ask the government for 65 mil. € by the form of increasing the capital, so VŠZP would not go bankrupt. For the improvement of financial situation moreover VŠZP in January 2010 after the merger with SZP seized its financial property approximately in the amount of 30 to 40 mil. €.

Unreal accounting and uncovered increasing of payments to faculty hospitals.

That’s for the past. Today the card has turned, the new management sues unknown culprit for unreal accounting, because the control of financial statements for 2007 to 2009 found out unreal accounting of adjusting items. But this is only the first of big problems of VŠZP. The second is the uncovered increasing of payments to faculty hospitals in last years.

From Table 1 and Table 2 it is completely obvious, that payments of VŠZP to faculty hospitals (especially in Košice, Bratislava, Martin and Banská Bystrica) has doubled during five years, while the highest increases noticed FNsP Košice in 2010 (+49%) or FNsP Bratislava in 2008 (+48%). At the same time it is not obvious, what value added obtained the persons insured of VŠZP from these hospitals. Has the quality of health care improved? Were the patients of VŠZP more satisfied? Moreover, these abnormalities in remunerating have the faculty hospitals transferred also to other health insurance companies and deformed the scarcity of provided health care. Private insurance companies thus paid for the provided health care more, as they should pay without the effect of wasteful management of VŠZP.

In numerous of our analyses from these years we mentioned, that in Slovakia originated two-speed remuneration. While the payments to faculty hospitals grew very fast, payments to smaller hospitals grew slowly, or stagnated. Payments of VŠZP to faculty hospitals grew in years 2006 to 2010 by the average speed of 15% per year. If the VŠZP allowed only half of the speed (7,5%), then it should during these years save 78 mil. €. We remind, that VŠZP reached in 2010 according to the new management, which came in September 2010, a loss of 70 mil. €. VŠZP has in years 2007 up to the start of new management in Fall of 2010 not behaved according to rules of prudent management and its expenditures were higher than incomes. And because it should not become obvious, the previous management in years 2007 to 2009 camouflaged the accounting. One of the tasks of new management is therefore higher transparency of contractional relationships and also its substantial revision.

It is necessary to divide and privatize VŠZP

The government would probably have to save again VŠZP, which is not a good news for state budget and also not for VŠZP. Because of this reason we suggest to divide VŠZP into 3 to 4 parts and subsequent privatization of these parts in international tender. Slovakia would for its market of health insurance gain strong international players and it would not be necessary to constantly save VŠZP.

In order the competition in health insurance would be possible and the coming of investors real, it is necessary to adjust the legislation to the state “before Fico”, that means remove the prohibition of profit, enable the sale of insurance stocks, or replace the obligation to contract all facilities in so-called minimal net. At the same time it would be necessary to complete system of public health insurance by private sources – for example by the form of nominal premium. In order of the best possible structure in the market it is at the same time necessary to provide by regulation, that no subject in the market would have after privatization more than 30% share in the market.

Simultaneously, sources from this privatization (estimated in the amount from 500 mil. € to 1 000 mil. €) could be used for reconstruction of faculty hospitals in individual regions of Slovakia.

Source: VšZP, 2011

Source: Calculations of HPI on the basis of data of VŠZP, 2011