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Debt is not good for doctors’ health

Debt is not good for doctors' health

Despite a significant increase (17%) in spending on private healthcare last year, its current value has not yet made up for the decline in the first year of the coronavirus pandemic. This will only be possible at the end of 2022, but the pace of further growth of this market will be slower. The pandemic period didn’t help the private clinics and doctors’ offices they found Reflection in the National Debt Register database. Although at the beginning of this year the backlog of doctors began to decline, it rose in the second quarter. At the moment, it is worth 162 million PLN.

Private healthcare includes clinics and doctors’ offices, as well as rehabilitation and physical therapy laboratories, and practice nurses and midwives. This sector recorded the largest arrears in August 2021, when the total debt of the industry exceeded 208.7 million PLN. The average debt of the doctor’s office at that time was 73.4 thousand. zloty. However, the largest number of debtors from this sector was recorded in the KRD in June 2020 – 3,037.

Expensive medical visits

According to the forecasts of the research firm PMR, the price increase in the private healthcare sector in 2022 will be approximately 14%. This will increase the face value of this market and – experts estimate – will lead to the popularity of medical subscriptions and private health insurance. Growth is favored by, among other things, demography, i.e. an aging population, as well as the need for diagnostic tests and other visits that patients postpone, especially in the initial period of the pandemic.

On the other hand, the hindrance to development is the limited purchasing power of the Poles, which is affected by inflation and rising loan costs. This will – according to the PMR report – influence the decisions of patients who may reduce some of the private visits paid out of their own pocket. And inflation itself, which causes increased operating costs and a shortage of medical staff, will act as an impediment to the dynamic development of this market.

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The most indebted dentists and professionals

Less than 4 years ago, at the end of 2018, unpaid private medical care liabilities amounted to PLN 99.4 million. Since then, it has increased by more than 60% to this day. On average, there were 42.6 thousand people. The Polish zloty is overdue, and it currently stands at 60.3 thousand. zloty. There were also fewer debtors themselves at that time – 2329. Now – 2687.

Doctors’ offices face the biggest financial problems. These institutions have approximately 55 million PLN in arrears. Dentists who have to return 37 million PLN, and internists, for whom 32.8 million PLN are debited, are also in a difficult situation. Physical therapists have approximately 12 million PLN, and nurses and midwives 5.5 million PLN. In turn, private ambulance stations – 5 million PLN.

On the other hand, PMR analyzes show that patients using locally paid private medical services have experienced an increase in market rates. The average amount spent during their dental visits increased by 62%. and rehabilitation by 59 percent. The average price of an internist’s advice increased slightly less, by 44%. Dentistry and rehabilitation are the areas where the average amount Poles spent on a single visit increased in 2021.

JDG-i with the accumulation of millions

When it comes to the number of debtors and the value of liabilities owed, sole proprietorship prevails.

Until 1989, JDGs had arrears of 125.3 million PLN. So you can see that the smallest entities are struggling with the biggest financial problems. Private clinics must invest in modern equipment to be competitive with medical networks. This means taking out loans and leasing, which puts a heavy burden on their budget. This is reflected in our database. The creditors of the private medical services industry are mainly banks, leasing and factoring companies. Doctors, rehabilitation specialists, physiotherapists and midwives owe them a total of PLN 71 million. – Says Adam Aki, Chairman of the Board of Directors of the National Debt Registry, Bureau of Economic Information.

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Followed by debt collection companies and securitization funds, which received the debts of the original creditors, from the financial sector (69 million PLN) in line to recover funds from the private health services. Clinics and offices were also late in making payments for phone, Internet and TV (4.9 million PLN). The remaining amount of debt is distributed among other creditors, such as state and local administration, insurance companies, or electric and heating companies. On the other hand, 2.2 million PLN is owed to the pharmaceutical industry.

Private outpatient clinics and surgeries of Mazowieckie county have the largest arrears – 37.8 million PLN. Next is Silesia with approximately PLN 18.4 million in unpaid liabilities, followed by Wielkopolska with PLN 17.6 million.

Branches in Świętokrzyskie county are the least burdened – 2.7 million PLN.

The debt registry belongs to a company with a general medical practice from the province of Greater Poland, which has more than 2 million PLN in debt. It has accumulated 110 unpaid liabilities, mainly to the factoring company (1.5 million PLN) and the printing and publishing company (523 thousand PLN).

Private medical centers themselves are also creditors – they have 14.1 million PLN to recover. Of these, 3.5 million PLN are from consumers and 10.5 million PLN are from other enterprises.

The private medical sector in Poland often and willingly uses popular banking products, because thanks to this, it can count on preferential financing terms. The problem arises when the entrepreneur, in this case a doctor working in his doctor’s office, has very low “bank creditworthiness”. Then the bank may refuse to fund it. Another obstacle is the excessive indebtedness of entrepreneurs. When the debt-to-income ratio is very high, and everything becomes more expensive, it becomes difficult to afford such a loan for many years or a long-term lease. Factoring may be one of the alternatives to lease and credit, which does not oblige the entrepreneur to hold a contract for many years, because it is a one-time cost. In turn, the remedy for low creditworthiness of the bank may be to distribute the purchases of the company in installments, in the case of the purchase of medical equipment or office equipment. These options are worth considering, especially today, when rising interest rates and rising inflation make it difficult for entrepreneurs to do business and limit their access to finance. – notice Emmanuel Nowak, NFG Factoring Expert.

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