Healthcare Business International

Hungary’s private provider revenues surge – yet losses mount for many

The fast growing for-profit healthcare market in Hungary is scaling new peaks. HBI hears it could be worth as much as HUF 450-500bn (in excess of €1bn), and talks to a local operator to find out more about why revenue growth is not always translating into profit.

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According to Péter Haraszti, founder and CEO of hospital, outpatient and lab focussed TritonLife Group, the revenue of the thirty largest private providers alone has reached HUF 145bn (€363m), he estimates.

Harasziti, who provided HBI tells HBI that for-profit revenue growth in the country has been staggering. Prior to the pandemic, the average annual private healthcare revenue growth was 20% to 30%, he estimates. Growth surged to 50% last year. A key reason for this rise in for-profit demand is the difficulty in seeing doctors during the pandemic, and long waiting queues for consultations hospital appointments and procedures.

Peter Karli, head of Budapest-based mergers and acquisition firm Heal Partners agrees with Haraszti’s estimates, but cautions that it is difficult to get exact numbers.

Gyula Kincses, president of the Hungarian Medical Chamber, however, is desperately concerned with the state of the nation’s NHS system and is publicly calling for the healthcare system to be restructured and regulation to be improved. Some of his recommendations have already been applied, Karli said.

Despite soaring revenues, about half of the large private healthcare providers in Budapest, Hungary’s capital, are incurring losses, Haraszit says. The sector, similar to other European providers has been suffering from fallout from Russia’s actions in Ukraine – a surge in energy and food costs, a shortage of labour and a healthcare wage surge. A weak currency against the euro and especially the US dollar hasn’t helped. Health care price increases are inevitable, Haraszti predicts. He also forecasts that there will be consolidation into larger well capitalised for-profit companies.

TritonLife, Hungary’s third largest for-profit healthcare provider by revenue after Medicover, which covers health and dental clinics, optics, labs, drugs and insurance, and Budai Egeszsegkoz Pont, (hospitals, imaging and other services), should achieve revenue of HUF16.5bn (€41.3m) this year, Harasziti predicts. This would be an increase of 43% from last year. Moreover, TritonLife plans to open four new private hospitals this year which could boost 2023 revenue by a further HUF16.5 billion.

The European Union has proposed the suspension of €7.5bn in EU funding for Viktor Orban’s authoritarian right wing nationalist government. This is about a third of the total amount of EU funds that was to be allocated to Hungary until 2027. EU parliamentarians have raised concerns about Hungary’s constitutional and electoral systems, judicial independence, possible corruption, public procurement irregularities, LGBTQ rights, as well as media, academic and religious freedoms.

Karli said that it is unclear that the proposed reduction in EU funding will hinder the State’s health spending. But there is considerable concern about politics and health developments in Hungary.

For example, women who want to have an abortion in Hungary will be forced to listen to the foetus’s heartbeat or other signs of life before an abortion, according to a new regulation. Doctors are responsible for the process, states the new rule which came into force mid September.

In the run-up to the Hungarian elections last April, the opposition prime ministerial candidate Péter Márki-Zay promised to spend an extra HUF 1,200bn (€3 bn) to reform Hungarian healthcare in line with European countries. He believes that  there should be higher salaries for health professionals and a single national insurance model.

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