Bulgaria tries saving hospitals from bankruptcy with investment loans [Advocacy Lab Content]

Bulgarian state and municipal hospitals can now take part in a special programme of state loans to save them from bankruptcy and improve their patient services. Specialist staff at one hospital went unpaid for seven months.

The financial scheme, prepared by the Bulgarian Development Bank (BDB), provides preferential loans of up to €2.5m to cover liquidity needs and to finance investments in infrastructure and equipment.

The aim is to improve healthcare and the financial stability of healthcare institutions.

“The bank’s strategy, which is the first of its kind, envisages supporting the state in implementing public policies in strategic sectors such as health,” the Ministry of Innovation and Growth, which is the principal of the BDB, explained to Euractiv Bulgaria.

The programme involves only hospitals with more than 50% state or municipal ownership, while the funds are earmarked for investments in infrastructure and medical equipment that will raise the level of healthcare services.

“The aim is to finance municipal, state or regional (with mixed participation) hospitals. It is up to each hospital to decide whether to apply for a loan under the programme,” the health ministry told Euractiv Bulgaria.

The ministry adds that hospitals can apply for funding from the Bulgarian Development Bank, but also from European projects. They will receive support if the plans presented lead to improved healthcare in the community.

Eligible hospitals

A loan of up to EUR 2.5 million is available to all state and municipal hospitals that implement the state’s Healthcare Restructuring and Sustainable Development Plan.

The period of use of the investment financing is up to 24 months, depending on the specificity of the investment.

The state programme also provides support for indebted medical institutions. State and municipal hospitals with large debts, which are the majority in the country, can use a credit line for working capital needs and cover all or part of their loans.

“In this way, the bank will reduce the level of indebtedness in the system and encourage it to manage and control cash flows more effectively,” the Bulgarian Development Bank told Euractiv Bulgaria.

Decreasing hospital debt

The new programme could be a solution to the problems of several Bulgarian hospitals in a difficult financial situation.

The most notable case was reported in March, and it involved the Specialist Rehabilitation Hospital in Kotel, which was about to close because of debts of nearly €400,000. The hospital treated disabled children from across the country, but due to a lack of organisation and support, the staff went without salaries for seven months, the health facility’s bills were blocked, and there was no money even for electricity and water.

However, the trend seems to be improving, as Bulgarian state hospitals’ debt is decreasing.

The Ministry of Health reported that in 2023, eight out of 61 state hospitals took out loans from banks worth more than 40 million euros to repay their arrears. Overdue debts were 51.6 million euros at the end of September 2021.

Tools to help hospitals

Several instruments are available under various programmes to support state and municipal hospitals in Bulgaria.

The Ministry of Innovation and Growth provides support through the Bulgarian Development Bank and the Fund of Funds, the European programmes “Competitiveness and Innovation in Enterprises” and “Research, Innovation and Digitalisation for Smart Transformation.”.

Bulgarian hospitals also have access to nearly €273 million from the EU Regional Development Programme.

State and municipal health facilities continue to have access to grants from EU cohesion funds and financial instruments in cooperation with small and medium-sized enterprises. This is In addition support under several EU programmes can also be obtained to assist general practitioners, especially in remote and inaccessible locations, and to deploy mobile medical offices for preventive care.

[By Antonia Kotseva, Krasen Nikolov, Edited by Vasiliki Angouridi, Brian Maguire | Euractiv’s Advocacy Lab]

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