Romania Private Healthcare Market Still Depends On Subscriptions

09.24.2013 By Bogdan Neagu

Romania’s private health insurance market is growing quickly, but service healthcare providers estimate most of their business will still come from corporate subscribers in the coming years.

“The healthcare insurance market is growing more quickly than the subscribers’ market. Private healthcare insurances rose from EUR10 million to EUR20 million last year, but, for the sake of comparison, subscriptions are worth some EUR85 million annually,” said Sergiu Negut, transformation partner, Wanted Transformation Consultancy, and former general manager of private healthcare provider Regina Maria.

Speaking Tuesday during the second day of ZF Pharma Summit ’13, Negut said the total market of medical benefits for employees will continue to grow, but private healthcare insurance will grow faster.

However, for most clients of private healthcare services, a private health insurance is unaffordable, noted Theodor Alexandrescu, president of insurance company Metropolitan Life. “We need risk dispersion to a larger number of insured customers to come up with reasonable costs.”

Alexandrescu said the company has over one million subscribers of life insurance contracts, but they see the insurance more like an investment product, while for the health insurance the cost might seem too high compared with the benefits.

However, health insurance is not deductible, unlike medical subscriptions, which is a strong barrier for the development of the market, Alexandrescu said.

The expansion of private health insurance will help the development of medical services providers, said in his turn Florin Andronescu, business developer at Centrul Medical Sanador. “Working with an insurance company is an advantage, as it leads to growing revenue,” Andronescu said.

Further, the growth of the private health insurance market will lead to more investments in medical infrastructure in both the private and the public sector, Sanador’s representative added.

Clients who buy a private health insurance usually have access to a larger range of medical service providers, up to a certain amount set in the contract, according to Andronescu.

On the other hand, subscriptions--while forcing the customer to work with a single provider--may be ideal for companies that prefer a direct link with its suppliers, said Fady Chreih, chief executive of Regina Maria.

The development of private medical services in the Eastern European country started with occupational health services, which are mandatory under Romanian law and fully deductible for employers. Providers added more and more complex services, so that the subscriptions became quasi-insurance contracts which are not regulated, said Alexandrescu.

Regina Maria’s Chreih, however, noted that few clients can afford a private health insurance, and the lack of cash is visible in the volume of work for attracting new patients. “We grew (revenue) but it was not easy. It is harder to gain new customers than in previous years, as they lack money,” said Chreih.

The lack of funds was also noted by Robert Serban, general manager of Gral Medical. “When analyzing the customers’ behavior, one can see that in the past years many came at clinics for prevention, while now they start to appear only when they are ill, the focus is shifting from prevention towards treatment.”

Mihai Marcu, president of Medlife--the largest provider of private healthcare services in Romania--came with a pessimist verdict. “There is no country where private health insurance succeeded. In good areas, they stand at 4%-5% (of the market),” Marcu concluded.