Slovakia continuously failed to fulfil hospital payment obligations rules Court of Justice

Slovakia has lost a Court of Justice ruling over continuous late payments to public hospitals. The state-owned health insurance company is facing serious financial struggles as healthcare financing troubles mount.

Euractiv reported SK+MED, the Association of Medical Devices and Supply providers, had warned of state hospitals’ inability to meet their payment obligations on time, with the current amount owed estimated at €120 million.

The European Commission referred Slovakia to the Court of Justice of the European Union for not correctly applying the rules under the ‘Late Payment Directive’ and continuously failing to ensure that public health entities providing healthcare paid their commercial debts within a period set out in the Directive.

Over a year’s worth of delays

According to the EU Directive (2011/7/EU), to protect European businesses against late payments, public entities providing healthcare must pay their commercial debts within a period of a maximum of 60 calendar days.

A Slovak Supreme Audit Office report uncovered an average payment delay of 397 days.

On September 19, the Court of Justice (CJEU) ruled that Slovakia was in breach of its obligation under the Directive.

“From data concerning the average period for payment of debts on the part of public hospitals in commercial transactions, it is apparent that in 2015, 2016, 2017 and from 2018 until the point at which the present application was lodged, the Slovak Republic has continuously failed to comply with Article 4(3) and Article 4(4)(b) of the Directive,” CJEU’s main argument reads.

Slovakia was ordered to declare it has failed to fulfil its obligations and pay the costs. The country has avoided a large fine so far, but the Commission may return to court if the member state does not resolve the situation.

Ministry's reaction

Euractiv contacted the Health Ministry after the ruling. The Ministry’s communication department sent a statement from Minister Zuzana Dolinková, who has since then resigned.

"This is a long-standing, systematically unresolved issue that has persisted since 2015. The Ministry’s leadership is intensively negotiating with the Ministries of Justice and Finance to address this matter. At the next government meeting, I will submit a document that will provide a comprehensive analysis and include alternative proposals and measures to resolve the situation," the Minister said in the statement.

Financial issues go beyond late payments

Euractiv also reported that the state-owned General Health Insurance Company (VšZP) has a predicted year-end loss in tens of millions and is currently without a director after the head of VšZP, Michal Ďuriš, was fired in August after only four months in the office.

VšZP’s next steps to deal with the issue continue to be hazy. The Healthcare Surveillance Authority (ÚDZS) ordered the health insurance company to develop a recovery plan to improve VšZP’s financial outlook. VšZP surprisingly chose to appeal this decision and managed to avoid recovery measures for now.

“This means that the Authority’s decision does not take effect for the time being," ÚDZS confirmed the appeal against the recovery plan to Euractiv.

Projections improve, but at what cost

Last week, VšZP announced that based on the projections, the health insurance company had adjusted its estimated loss for 2024 to €95 million. The predicted year-end loss was €169 million at the beginning of July.

The first measure to improve VšZP’s financial situation was a hasty limitation of certain one-day procedures in outpatient clinics. The health insurance company terminated contracts with some providers and limited the monthly amount it would reimburse others.

The Association of Outpatient Providers (ZAP) sees this unexpected decision as unusual, unfair, and discriminatory.

“We also believe that this action significantly reduces the availability of healthcare and limits patients' freedom of choice. We have serious concerns that this action sets a dangerous precedent that could be established as a standard in the future against other non-state outpatient facilities as well,” ZAP added in their response.

The state insurance company claims that changes in one-day procedures are meant to make health insurance funds more efficient and should not lead to longer waiting times for its policyholders.

The VšZP’s decision was particularly controversial, coming just hours before the deadline for citizens to switch their health insurance provider for the upcoming year.

Will the Ministry step in?

The Health Ministry can allocate additional funds to VšZP to solve an immediate crisis, a measure used multiple times previously. However, it does not solve the long-term recurring issue of VšZP’s poorly managed finances.

“The Authority will not comment on the additional funding, as this falls exclusively under the purview of Ministries of Health and Finance,” ÚDZS spokeswoman Monika Beťková told Euractiv when asked about the possibility of providing a financial injection to VšZP.

When inquired the same question, the VšZP press office responded to Euractiv, "The decision is not within our competence. This matter falls under the responsibility of the Ministry of Health, as the shareholder of VšZP, and the Ministry of Finance. Ongoing negotiations between these ministries are currently taking place. VšZP will respect the outcome of these discussions."

"The Health Ministry has already stated that it will provide details and proposed solutions only after they have been clearly defined and communicated with ÚDZS. Until all measures are finalised, it is premature to comment on them further," the Health Ministry told Euractiv.

Next steps unclear

It remains a waiting game to see what additional measures the health insurance company implements to improve its financial situation.

"VšZP’s financial situation is threatened by the need for a recovery [plan], and there is a real risk that it will not have the funds to pay healthcare providers' invoices. Its policyholders face the possibility of having not shorter, but longer waiting times," MP Dr Tomáš Szalay (Freedom and Solidarity) said at last Monday’s press conference, describing the state insurance company as effectively in bankruptcy.

Given the current consolidation measures Slovakia is facing, the prospect of providing additional funding to VšZP remains a sensitive issue.

[By Filip Áč, Edited by Vasiliki Angouridi, Brian Maguire | Euractiv’s Advocacy Lab]