Some 40 hospitals are set to be privatised by their municipal owners, says Piotr Gerber, Chief Executive of EMC, the largest Polish hospital group.

This wave of privatisation comes despite the blocking, by President Lech Kaczynski, of the recent healthcare reform bill from premier Donald Tusk’s reformist coalition.

Gerber, whose company has already privatised five hospitals in western Poland, says that at least 40 hospitals are on the block. Gerber says: “The Ministry of Health has said it will close any hospital which fails to meet EU standards by 2012. That deadline has already been delayed twice, but it is motivating municipalities to do something.”

Privatisation of larger regional hospitals is forbidden, but municipalities can sell majority stakes in their hospitals to private operators.

In total, EMC, which is the market leader in private hospitals, now has some 800 beds in five hospitals. It is working on a private 110 bed extension in Katowice. Once privatised and refitted, the hospitals continue to do at least 80% of their work for the National Health insurer.

EMC is quoted, and Gerber says he plans to raise €2.5m this spring with a rights issue. He says yet-to-be-announced 2008 results were good, with profits higher than the €350,000 achieved in 2007. He is also keen to talk to private equity partners.

Our Analysis: These are fairly small units. But Gerber is an astute operator, who is the only man who has demonstrated that he can build a business from hospital privatisation in Poland – chiefly by only buying hospitals in rural areas where wages are low.