Pharmaceutics-and-hospitals-free Insurance
13 June, 2013
Pharmaceutics-and-hospitals-free Insurance

To release the insurance sector of monopolies and interest conflicts, Georgian government plans to ban running pharmaceutical and hospital assets by the insurance companies. However, the dissecting process of deeply entangled Georgian insurance sector, encumbered by non-profile assets must be implemented very carefully, hand-in-hand with the healthcare system reforms lest lead the already affected Georgian insurance to bankruptcy.


The Authorities don’t disclose details of this initiative as of yet inasmuch as they have just started working over the issue but
promise to adopt changes gradually, Davit Sergeenko, Minister of Labor, Social and Health Care, said past week. So as not to deal an irreversible blow to the insurance business that is already in trouble in fact. Once the stably growing sector has faced losses for the second consecutive years of 2011-2012 due to the large portion of health-insurance making around 70% in Georgian total insurance portfolio and involvement in hospital sector construction/management taking around GEL 200 million of investments still pending for paying-back.
The power shift challenged the sector furthermore: new authorities literally took over the overall health insurance system in its hand through the State Insurance Fund that started operation in this past February by offering the minimal health-insurance packages to the entire Georgian population and plans to provide by basic packages since this July. And now a sharp cut-out of the hospital assets from the insurance sector may send companies simply bankrupt, sector pundits worry. According to Giorgi Gigolashvili, Head of Georgian Insurance Institute, as well as Levan Kalandadze, an economic analyst, the demonopolization initiative is a positive step by all means and pharmaceutics can be dissected from the insurance painlessly but the hospitals aspect requires delicacy. Gigolashvili accentuates the new authorities should take into account that hospitals development was swathed on insurance sector by ex-power or the state and it needs the grace period now to get rid of difficulties. He believes the initiative should be implemented only in parallel to the entire health system reforms to be successful. Otherwise insurance sector that will lose the state health-insurance product completely soon will not survive immediate cut-off of hospitals. The insurance sector’s problem has been rankling since 2010 when insurance sector took over the state health-care insurance beneficiaries for much below the market price and developed the state-of-the-art hospital network throughout the country under the crack-down of the ex-powers. To offset the loss the ex-powers vested winner companies with the construction and operation rights of hospitals in regions plus granted by exclusive insurance provider positions in their hospitals adjacent districts that deprived clients of the choice and made insurance companies monopolists in both insurance and medical service provider market. Plus some pharmaceutical market leaders switched in the game by founding an insurance company and developing a clinic network across the country thus manipulating with the entire health-related chain.
“The premise that at the vicious circle of managing insurance, pharmaceutics and hospitals concurrently, is to be destroyed, is a breakthrough,” Gigolashvili said in the interview to Georgian journal. “But insurance companies need to keep hospitals where they invested millions for much longer time, perhaps for 2 years to get their investments paid back. And then there should be given some preferences to help companies get rid of troublesome hospital assets smoothly. Otherwise they will not survive and this will affect the state budget for all the privately insured people will be put under the state charge.”

 

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