Active debt to SK+MED suppliers reached a record EUR 183 million, the situation is unsustainable

Bratislava 15 June 2017 – State hospitals owe at the end of the first quarter of 2017 almost EUR 183 million to the suppliers of medical devices and special medical material united under the Slovak association of healthcare suppliers (SK+MED), which is EUR 22 million more than a year ago.

By March 31, 2017, the amount of debt reached a record value of EUR 183 million, of which more than EUR 158 million represents debt overdue. Year-on-year there is a 13,7% increase in total debt, and the indebtedness of hospitals is rising steadily.

The deteriorating balance of payments by the state and public healthcare in the medical device segment in Slovakia further increases interest on late payments and contractual penalties of almost EUR 23 million.

Alarming is also the average turnover time of receivables, reaching 750 days. Some hospitals have their obligations to pay out debts more than four years overdue, where more than EUR 85 million of the total amount of debt is over 360 days overdue.

This negative situation is becoming untenable for suppliers, especially in relation to fulfilling of their own statutory obligations, such as payment of VAT and income tax, salary payments to employees, payments to health insurance companies, payments to social insurance, and, last but not least, fulfilling of obligations towards trading partners. Neither the tax authorities nor the social insurance company accept any payment delays on the part of suppliers.

„The insolvency of hospitals is unbearable and jeopardizes the operation of suppliers of medical devices and special medical material in Slovakia, and consequently also the availability of the latest medical technologies and high-quality, modern therapy for all, unfortunately to the detriment of the most valuable – patient health“, underlined Patrícia Kubicová, Executive Director of SK+MED.

Such payment discipline on the part of the State vis-à-vis suppliers implies non-compliance with the fundamental principles and rules of commercial law transposed by the Directive of the European Parliament and of the Council on combating late payment in commercial transactions.

On the contrary, suppliers from the healthcare sector are constantly required to accept the (lowering) prices from the Ministry of Health of the Slovak Republic and health insurance companies.

The expectation that suppliers will endlessly accept price cuts and finance, long-term, healthcare institutions is unacceptable and financially unbearable. As the payment morale of healthcare institutions is currently deteriorating considerably and the pace of debt growth is increasing, it is crucial that the Ministry of Health of the Slovak Republic, in cooperation with the Ministry of Finance of the Slovak Republic, urgently solve the necessity of settling the amount of all outstanding debt after maturity. The concept of state debt relief conditioned by any discounts is unacceptable to suppliers and is still legally arguable without further information. In this respect, we again call on the Slovak Ministry of Health to allow the representatives of SK+MED to participate in the preparation of the concept for debt relief or, respectively, be able to comment on the prepared concept at this stage so that our comments can be taken into account. 

Patrícia Kubicová: „If major systematic changes in the operation and financing of the entire Slovak hospital sector are not introduced, the situation of a weakened and unbalanced legislative and business environment will become chronic. We believe this ‘same old song’ will soon become an issue of the past, and that healthcare suppliers will finally be able to trade in a normal business environment. “ 

Critical situation of the Slovak healthcare sector is also international. This situation is dealt with by the European Commission and at the same time by SK+MED in cooperation with MedTech Europe, the European healthcare association of medical technology suppliers.

 

The Slovak Association of Suppliers of Medical Devices (SK+MED) is an association that currently represents the interests of 30 suppliers of medical devices active in Slovakia. It is full member of MedTech Europe, international healthcare organization with registered office in Brussel that covers national associations of suppliers and producers of medical devices and technology from Europe.