Largest Czech health insurer VZP runs out of cash

Depletion of reserves and growing expenses cast doubt on state-owned VZP’s ability to finance Czech doctors’ promised salary rises

Politics & Policy|Society
Tom Jones | 11.10.2011
Doctors meeting during the ‘Thank You, We're Leaving’ campaign, which saw many doctors hand in their notice. The dispute was resolved in March when the government partly agreed to the doctors‘ wage demands

The Largest Czech health insurer, state-controlled General Health Insurance (VZP), says it is spending all income as soon as it is received and its reserves would not cover even two days of operation: as a result, the insurer says it may make late payments to doctors’ surgeries and hospitals for patient treatment — and pledges to raise doctors salaries may have to be abandoned.   

Kč 4 billion is needed to finance a wage rise for doctors agreed earlier in the year following the ‘Thank You, We’re Leaving’ (Děkujeme, odcházíme) campaign but VZP, which is the insurer for some 6.2 million Czechs, has run out of money jeopardizing the promised pay rise: VZP’s accounts for the first six months of the year show that the insurer’s cash reserves, which have been dwindling for long time, are practically exhausted, the daily Hospodářské noviny (HN) reported Tuesday.

“All finances collected are immediately spent on paying invoices issued by medical facilities,” VZP spokesman Jiří Rod told HN.

The VZP reportedly pays out around Kč 500,000 a day, while typically only a little over Kč 1 billion remains on the insurers account at any given time in the month, meaning its reserves are enough to cover the firm’s obligations for just 1.2 days.

With the center-right Czech coalition government, and first and foremost the Finance Ministry, determined to keep budget spending under control and the growing realization that draft 2012 budget revenue forecasts are most probably too high, it is unlikely that extra funds from the state coffers will be allocated to shore up VZP’s finances.

“We will negotiate, but there probably won’t be the will to provide extra funds. On the other hands expenses will rise which is something we didn’t take into account when signing the memorandum on the pay rise for doctors,” Health Minister Leoš Heger (TOP 09) told HN.

It is highly likely that doctors unions would call industrial action if doctors don’t receive the promised pay rises. “We are following with extreme concern the shift in position in the announcements by the health ministry regarding the obligations arising from the memorandum [on wage rises],” Czech Doctors’ Union (LOK) head Martin Engel said, adding that if the government fails to ensure the delivery of the wage rise for doctors it would “carry responsibility for a critical situation in the whole healthcare system.”

The VZP’s budget forecast for 2011 counts with spending of Kč 137.3 billion. Typically, hospitals and general practitioners rely on the VZP for roughly 60 percent of their finances. 

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