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Never-Ending Saga of “Flogged Off” - Transferred Hospitals

Will the Government Hold its Ground to “Medical Revolution”?

Journalistic Survey

Part I

Nona Suvariani
Eka Kevanishvili

The implementation of general plan on hospital network development was followed by much heated controversy. Many publications were dedicated to this issue and many discussions have been held. However, the results of “large scaled” flogging off of medical facilities for the whole of Georgia hasn’t been yet realized. The purpose of our writing is to attempt to show the positions of all the range of stakeholders, as well as to predict and influence the overall situation that might follow the “big deals” made in the field of medical and the health implications. Doctors are predicting that there will be a “Medical Revolution”. This is understandable, especially since many of them will become jobless as a direct result of this massive privatization.

Health Reform - Official Version – Everything is “Just Perfect”

The construction of 100 new hospitals was planned within the frameworks of hospital sector development plan and a policy of health reform, which envisaged increasing the number of hospital beds from 5,000 to 7,800. In 2007, there were a total of 244 state hospitals in Georgia. The necessity of reforming hospital network had been acknowledged by everyone prior to the “Rose Revolution”. However, tangible steps were taken only after the “Rose Revolution”. The first part of our research is based on the information that we received at the time from Nikoloz Pruidze, Deputy Mister of Labor, Health and Social Affairs of Georgia, which was back in February of 2008. He talked about the government’s position explaining why all state hospitals of Georgia were transferred to investors and what the governmental was actually expecting from the much needed reforms in the health reform.

The necessity of the medical sector reform had been unanimously acknowledged by all high-ranking officials. On January 15th, 2006 Zurab Nogaideli, Prime-Minister stated on the session of Governmental Commission for Institutional Reform Coordination in the Sector of Healthcare and Social Security that the situation in Healthcare system was rather difficult. The session was held in the State Chancellery. “We have terrible medical infrastructure, ineffective method of funding and the regulation of system that practically does not function. The society, the government, doctors and patients are all discontent with the situation. Everyone agrees that the reform of health sector was required.”

He promised that “in three years following the implementation of the reform approximately 350 million GEL would be invested in hospital system development and that approximately 170 Million GEL would be spent on the development of ambulatory centers and on the non-hospital sector. The investments will bring renovated infrastructure, high quality service would be realized in Georgia and the most important benefit would be the improved heath condition of the population.”

Kakha Bendukidze, former State Minister on Reforms Coordination was considered to be the most interested party in the implementation of medical sector reform. He used to say at that period that the old hospitals, even in the case of their reconstruction would be useless in 20 years. With this in mind, he came up with the best solution to the problem, and it was proclaimed as one that would have both immediate and long-term results; new hospitals would be constructed in place of old one and this turnaround would be accomplished in rapid fashion. 

Nikoloz Pruidze told us at the very beginning of the interview that the construction of new hospitals was a non profitable plan and that  no money would be benefited to the state budget from such a project.

“We offer a plot to the investor. The only condition is that the investor must construct a new hospital on some other territory. The investor will then be both the owner and manager of the new hospital. In other words I give you a plot with old hospital on it as a gift. The term of our agreement is that you must construct a new hospital somewhere else in payback.  Both the old and new hospitals are yours to keep. You must first destroy the old hospital on the territory we gave you as a gift and you can build anything you wish on the plot, anything with the exception of a hospital.”

100 new hospitals must have been built in Georgia by 2010. All businesspersons that were interested could participate in the project. We already have a plan as in which districts these new hospitals would be constructed. We also know how many beds will be in the new hospitals. We also know that there would be 5 hospital clusters in Tbilisi.

Pruidze admitted that manly constructing companies expressed a keen interest in buying the hospitals and that this “was not just rumor but hard fact, and investors are to construct hospitals on the territory that we have identified. Every city including Tbilisi has its own structure and Tbilisi ones are to have two entrances. Hospitals will be constructed where they logically should be located. One hospital will be built in Avlabari, one in Ortachala, one in Dighomi and one in Sanzona and so forth and so on. The Central Hospital will serve the central districts of the city. We have strategic approach to the situation and take into account the convenience of hospital location for the needs of the population. When they say that we give the investors prestigious places they are right as we want them to have great interest in investing money and building new premises as they know there would be a return on their investment; they will build new hospitals where they are most needed.”

Nikoloz Pruidze states that those constructing companies that are interesting in buying hospitals consult with the medical sphere managers. He aslo says that not only constructing firms want to buy hospitals.

“There are pharmaceutical companies which have some interests in medical sphere and also there are medical companies that are interested to get involved purely in the medical business.”

He does not agree that the pharmaceutical companies are unreliable investors as they might have their private interests in mind over community health. “It is difficult to control the whereabouts of the companies in those countries where pharmaceutical firms are restricted from buying hospitals. In those countries a pharmaceutical company can establish a new company. This new company will then have all legal rights to purchase hospital. However, the company’s money will actually be pharmaceutical company’s money. In order to avoid this kind of machination, it was our intention to allow everyone to openly participate in the process. However, there is one condition: all newly constructed hospitals will be strictly controlled. The high degree of control will help to avoid any doubts that pharmaceutical firms will only want to use them in order to sell their drugs…”

The problem of leaving hospital staffs jobless remains a serious problem and needs to be considered. According to the official plan, the personnel of the hospitals would stay on their positions until the investor constructed the new hospitals.

Nikoloz Pruidze assured us at the time that the medical system reform would not increase the rate of unemployment of health care workers, including physicians.

“The number of hospital beds will increase in 3 thousand. Today a hospital might have 500 beds but only 50 are actually occupied. We have 8-storied hospital in Gurjaani, 11-storied in Dusheti and 4-storied in Ambrolauri. However, there are a few patients there; the sheer facts speak for themselves.

However, we lack doctors in the regions of Georgia. We have no specialists in the regions while many doctors remain without jobs in Tbilisi. When new hospitals are constructed and money is invested in hospitals the number of specialists will be immediately increased. For example, 60 % of doctors and nurses in Gori hospital come from Tbilisi. They are content with their jobs and a new hospital was established in Sachkhere. Almost 70 % of the doctors arrived from Tbilisi there. It is unacceptable to have 20,000 doctors in Tbilisi and almost none in the regions.”

According to the general plan of hospital network development if the government controls the specialization and work of the newly constructed hospitals during 7 years and the investors fulfill all demands of the government, the investors will become the full owners of their hospitals after a period of 7 years. The investor will be able to act according then according to his discretion. He can even destroy or change specialization of the hospital. This part of the deal raised much protest throughout society. No one can guarantee that the hospitals will remain hospitals after 7 years.

Even Nikoloz Pruidze can not guarantee that this will be the case as he considers that no guarantees are needed in this respect. He thinks if the government sees that there are some problems in the medical system that it will take appropriate action and take over control of the situation. However, Pruidze is convinced that no businessperson will refuse the opportunities from such a profitable business.

Some people consider that if the hospitals are governed by private investors and if these investors will become greedy monopolists, prices on drugs and medical service will increase beyond the means of most people. However, Nikoloz Pruidze does not agree with this point of view.

However, there is another opinion apart from the governmental perspective. According to this opinion, the medical system reform was conducted with problems and violations from the very beginning. Consequently questions as to how successful was the reform will then emerge. You will read how the tenders were held and who profited from taking over large property in the second part and things now done with a high degree of transparency.




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