The creation of the current Hospital Center of the Algarve EPE (CHAlg) results from the provisions of Decree-Law No. 69/2013. DR No. 95, Series I of 2013-05-17.
The reading of this piece of legislation reveals the high expectations that, at the time, the tutelage had about the capacity that this public hospital unit would have to generate important gains in the region, whether of a assistance or economic-financial nature.
Now, more than two and a half years after the creation of CHAlg, it is important to verify to what extent these expectations have been translated into practice.
Let us then consider the Report and Accounts of this Hospital Center in 2014 (the only complete year of activity of CHAlg with a publicly known Report and Accounts).
Available data show that this unit is in a weak financial situation, as it reports negative equity in the order of one million euros.
To a large extent, this results from the inheritance generated by the two public hospital units that gave rise to it, that is, the Hospital de Faro EPE and the Hospital Center of the Barlavento Algarvio EPE.
In fact, CHAlg assumed the patrimonial situation of these two entities at the time of their creation, and, at the end of 2012, the Hospital de Faro had negative equity in the order of €36.2 million and Centro Hospitalar do Barlavento Algarve a comparable value of €51.3 million.
Thus, the financial situation of CHAlg in 2014 is only worse due to the provisions of Dispatch no. 14181-A/2013 of 1 November, which allowed for a direct investment by the State in this Hospital Center in the order of €69 million and made it possible an additional interest forgiveness, the amount of which is around €5.3 million.
The analysis of CHAlg's economic performance in 2014 generates a mixture of contentment and disillusionment. In fact, that year's Annual Report shows that, for the first time in the recent history of public hospitals located in the Algarve region, it is possible to achieve a result before interest, taxes, depreciation and amortization (RAJIDA or EBITDA in Anglo-Saxon designation ) positive of €2.5 million.
To put this figure in perspective, just remember that, in 2012, the last full year before the merger, combining the EBITDA figures calculated by the Hospital de Faro and the Centro Hospitalar do Barlavento Algarvio, a figure of almost €4.7 million.
The significant change in economic performance that we are now seeing is due to a slight increase in the value of operating income (1.73% compared to that recorded in the region in 2012) and a strong decrease in the value of external supplies and services (-17.9% registered in 2012).
However, unfortunately, the good news ends there. In particular, in 2014, CHAlg reports negative net results of €3.3 million, which clearly demonstrates that, globally, despite the merger that took place, the public operation in the hospital area is still not economically viable.
Let us now look at the issue of assistance, which is surely the most important for most of my fellow citizens. Using the Reports and Accounts of CHAlg, in 2014, and of the Hospital de Faro, and Centro Hospitalar do Barlavento Algarvio, in 2012, it is possible to conclude that there was a very significant loss of public hospital response capacity in the region in homologous terms.
Let's look at some examples. In 2012, there were 6.138 outpatient interventions in the Algarve, whereas in 2014 the corresponding figure was only 5.093. After accounting, there is a 17.0% drop in this important aspect of hospital activity.
The scenario is not much more encouraging when considering the interventions made in the block. In particular, in 2012, 11.157 interventions were carried out in the Algarve; in 2014 the comparable figure is only 9.051. Thus, in year-on-year terms, the response capacity in the region in public terms in this area was reduced by around 18%.
It is also worth noting the situation of the Hospital de Dia since, between 2012 and 2014, around 25% of production was lost (38.532 episodes recorded in 2012 against 28.861 in 2014). Overall, using an index based on the production of 2012, an average loss of responsiveness in 2014 is found to be around 12%.
What conclusions can be drawn from this brief analysis? First, despite some improvement in the economic outlook, per se, the creation of CHAlg is not a panacea for solving the chronic economic and financial problems of public hospital health in the Algarve.
Second, this solution does not seem to generate gains in providing care to the population. In fact, in this area, 2014 shows a clear and important loss of responsiveness in the face of the pre-merger situation, with all the consequences that naturally result from it.
In summary, it seems nice to admit that there is an urgent need to rethink the current model, but not with regard to the mission that should be undertaken by public hospitals in the Algarve, given the specificity of the region where they operate (exposure to a very relevant seasonal tourism, distance from more central hospitals and difficulty in attracting professionals, to mention just a few).
Cumulatively, we have to discuss how to finance these units. In this domain, the principle of payment for production (in quantity and quality) must always be at the center of the debate, as its application promotes efficiency and effectiveness.
However, this production/payment philosophy has to be adjusted on a case-by-case basis, in order to guarantee the viability of the units that provide care to the population.
Author Luis Coelho
Effective Member of the Order of Economists
Member of the Algarve Delegation of the Order of Economists
Assistant Professor of Finance at the Faculty of Economics, University of Algarve
Note: Article published under the protocol between the Sul Informação and the Algarve Delegation of the Order of Economists
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