The Competition Council (the CC), when evaluating the revaluations of participation in the capital company prepared by public administrative bodies - the state and local governments - in 2020 and 2021, has provided opinions on the services provided by 20 public healthcare capital companies. In addition, the CC has prepared a summary with the most important conclusions on the healthcare services provided by these capital companies, the justification and necessity of their involvement in the market, as well as the possible involvement of the private sector in the provision of healthcare services to the society.
The CC, when evaluating the services provided by public administrative bodies in the healthcare sector, has acknowledged that the basic services provided by the capital companies are generally considered to be of strategic importance. This is because public administrative bodies and their capital companies have a key role to play in promoting an efficient healthcare system and access to services, for example, by creating an even territorial coverage and ensuring a full healthcare cycle in one place. However, private market participants can also provide strategically important services in certain cases. Therefore, when evaluating its service as strategically important, a public administrative body also needs to conduct market analysis, assessing the availability of services provided by private companies in the market. In the absence of supply or in a situation where the demand for a particular service is higher than the current supply, it is likely that there are grounds for acknowledging the existence of a market failure in the relevant service market.
Public administrative bodies need to assess the need for their services
The CC concluded that the overlap between the activities of private and public administrative bodies in the provision of healthcare services is completely unavoidable. This is related to the creation of the above-mentioned even territorial coverage and the implementation of the “one-stop” principle, thus providing the capital companies with a full cycle of healthcare for the inhabitants of the specific administrative territory. However, the fact that the service in question is provided by both a public administrative body and a private operator within a given administrative territory does not necessarily mean that the capital company should cease to provide the service in question. In such a situation, it would be important to assess whether the service provided by the capital company is the most effective way to achieve the objective, as well as to ensure the compliance of the capital company's activities with the neutrality of competition.
In order to promote the development of private market participants in certain administrative territories and not unduly restrict their opportunities to enter the market, public administrative bodies must carefully assess the justification for the provision of certain types of services provided by a capital company before taking a decision. In particular, the justification for the provision of services provided only as paid services that do not fall within the field of specialization of the healthcare capital company in question or which may unduly extend the company's tasks by a delegation from a public administrative body be assessed.
At the same time, public administrative bodies must be careful not to create a market failure in the event of the interruption of a particular service, thereby adversely affecting the availability of the service in question in a given administrative area. Also, in order not to negatively affect the access to the state-paid healthcare services in which the capital company operates in the conditions of market failure.
In the opinion of the CC, the activities of public administrative bodies' owned capital companies may be significant in such areas of healthcare which the private sector does not offer or offers to the public to an insufficient extent, such as inpatient services, paediatric dental services, etc. types of healthcare services for children, social and palliative care services, healthcare services that are in low demand but important for certain groups of patients.
Competitive neutrality in the healthcare sector
When operating in a market, public administrative bodies have a special responsibility to respect the neutrality of competition in order not to prevent, restrict or distort competition in the public interest. The CC invites public administrative bodies to independently and regularly assess the risks of competition neutrality in consultation with NGO’s representing undertakings, including the undertakings themselves, taking into account that the assessment of the risks of violation of competition neutrality is recognized as an essential component of the economic assessment, and by applying it, a public administrative body can identify possible risks of violation of competition neutrality and prevent violations of competition neutrality.
In order for a public administrative body to operate in the market through a capital company owned by it, it must reassess its shareholding in the capital company every five years, which also includes an assessment of the effects on competition. Furthermore, according to Article 88 of the State Administration Structure Law, a public administrative body is obliged to conduct a study of the market situation regarding the justification and usefulness of the provision of certain services, including determining the existence of a possible market failure. When performing the relevant assessment, a public administrative body is obliged to consult with the NGO’s representing merchants and then with the CC, submitting the performed assessment and receiving the opinion of the CC.