Healthcare Europa talks to Reneta Indjova, former prime minister of Bulgaria and now Financial Director at Tokuda Hospital, Sofia, about healthcare in Tokuda, and in Bulgaria overall.

Opened in 2007, Tokuda is a private €200 million, 1,000 bed hospital on the outskirts of Sofia, owned by the Japanese Tokushukai Medical Corporation, which owns and operates over 280 medical facilities, and is the world’s largest private healthcare company. The hospital is its only investment to date in Europe.

HCE: Tokuda is an extraordinary investment isn’t it? I’d guess it was by far the largest private hospital opened in the former Communist bloc countries to date.

RI: Yes, it is unique, and what makes it particularly extraordinary is the ambition to combine multi-structural medical services and a lot of high technology in a private entity foundation. The hospital is multi-disciplinary, with 32 specialties. We do a lot of very complex surgery here – 1,200 cardiac operations a year, for instance.

Nearly two thirds of our work is carried out for the state-owned National Health Insurance Fund, with the rest done privately. Most private hospitals in the country are much smaller - 20-40 beds - and tend to have a single specialisation.

HCE: We have found that there is already a surprisingly large private sector in Bulgaria, with the state-owned National Health Insurance Fund contracting out much of its work to the private sector, and individuals using their NHIF contributions towards the cost of private healthcare. I understand that new reforms are proposed, which could see the wholesale privatisation of the municipal hospitals and could deprive the National Health Insurance Fund of its monopoly as a compulsory insurer - when do you expect those reforms to come in?

RI: Don’t get too excited about the private sector – I wouldn’t say that the present government is very friendly towards it. But I think these reforms will come within a year. Elections this summer are likely to see the current leftist coalition replaced with a more conservative government.

So I am, let’s say, 70% confident that these reforms will come in the next year. But that is only thanks to pressure from the European Union. The electorate doesn’t like the idea of privatisation, but increasingly there is a realisation that there is no choice. I’d expect the new government to introduce them within a few months of taking office.

HCE: As by far the largest private sector hospital in Bulgaria, I suppose you have a unique relationship with the government.

RI: I wouldn’t say that! (Laughs) Some two thirds of our work is carried out for the NHIF and we had a big argument with them last year. We managed to get the rates of pay for most processes increased by 10% - we were able to demonstrate that the prices simply didn’t cover the costs. But it was a tough battle and, despite all contractual obligations, the NHIF withheld all payments for six months.

We also had a fight about whether patients could decide to come to our hospital from anywhere in the country. That right, that choice, is enshrined in the constitution, but the government didn’t want to honour it. We won that fight too, and now we are looking at upgrading the existing DRG system so as to make it more relevant to contemporary prices.

HCE: How transparent is the system? Does the private sector get paid the same rate for each procedure as the public sector? And are all private hospitals paid the same rate for the same procedure.

RI: Yes and yes. But it is not very transparent. The bureaucrats decide who gets paid when. So some private operators will get paid and others will be told they have exceeded the sources and that there is nothing left in the fund.

HCE: What impact do you think the reforms will have on the private sector in Bulgaria?

RI: Well, they should free it up a lot. It means that we will face more competition, but that is OK – we are happy to compete on quality.

HCE: So what, overall, is the state of the private and public healthcare sectors in Bulgaria today?

RI: Very poor. There are 390 hospitals in the country, and maybe 74 are private. The public ones are very run down and need replacing. There are too many of them - we have a lot of overcapacity. Much money has been spent very badly on them, wasted really.

The private hospitals are small and specialist. Many are little more than hotels. Actually, I think there are too many private hospitals. There is a real risk of over-saturation. People have opened hospitals who lack medical knowledge.

HCE: So what is Tokuda’s strategy going forwards?

RI: We want to continue to work with the state, as well as privately. We plan to develop specialisations such as mini invasive surgery. We are also pushing different programs for children and parents – Bulgaria really needs this.

We see a big opportunity in healthcare tourism, where we can offer state of the art equipment – everything was installed in 2006. We reckon our prices for top quality treatment are half, or less than half, compared to Western Europe, so this will be the big push in 2009 and 2010.

To do all this we need to join European hospital networks, and to win accreditation. We are already doing this, and have a cooperation with Addenbrookes Hospital in Cambridge, England. We also try to work closely with the public sector here in Bulgaria, and seek to share our expertise.

HCE: After, what, three years, I am guessing you are still not profitable?

RI: No. The plan is to achieve payback after 16 years, but I think we will do that faster. We grew operations and patient numbers over 50% last year, and expect the same in 2009.