The outbreak of the coronavirus pandemic has significantly affected the functioning of almost all sectors of the economy. Restrictions on the activities of many industries, the introduction of restrictions on social and economic activity and increased uncertainty have resulted in a recession reaching 2.7% of GDP in real terms in 2020. As a result, according to PMR’s latest report (“Private healthcare market in Poland 2021”), the private healthcare market in 2020 recorded a decline of 6.3%, which translated into a value of PLN 55.2bn (€12.4bn). However, it is worth noting that this year, private spending on health will exceed that incurred in 2019, PMR analysts forecast.
Small clinics were the most affected
In the private healthcare market, the coronavirus pandemic situation in 2020 has affected the paid visits segment the most, as people who did not need to urgently undergo a medical procedure, dropped their visits to doctors to a significant extent. Of these types of benefits, dental services, diagnostic imaging, and rehabilitation were most affected by the pandemic. Smaller entities in particular, which tend to have a single revenue stream, have found it harder to adapt to the new reality. Although in the second half of 2020 the Polish health care system began to provide medical services on a wider scale than during the lockdown (although still with some limitations), making up for the downtime caused by the coronavirus (backlogged surgeries, procedures and medical appointments) was not possible until the end of 2020, due to capacity constraints, and price increases were not able to fully compensate for this gap. Additionally, the system was burdened by another wave of illness in the fall of 2020.
Increased interest in individual insurance policies
According to our observations, the slowdown in the dynamics in 2020 in the context of subscriptions and insurance is the result of the reduction of some positions, which could automatically cancel some policies, and the increase in uncertainty, which could cause some people to abandon additional spending. The deterioration of the labor market also had a negative impact. Moreover, in 2020, it was difficult to attract new corporate clients, which account for a significant portion of the market in these segments.
At the same time, the factor that stimulated the private healthcare market to grow was the huge burden on public healthcare for treating patients with COVID-19 and the consequent greater difficulty in providing other services under contract with the National Health Service, especially for specialist services. For this reason, there has been an increase in interest in individual subscriptions and health insurance policies (more on this later in the report).
Recovery of losses in 2021
Already this year, in the baseline scenario, as a result of base effect as well as due to the assumed improvement in the pandemic situation (especially in the second half of the year and assuming the success of the vaccination programme), GDP will return to a positive growth path (3.8% y/y in 2021), which will be maintained throughout the forecast horizon. At the same time, we forecast a temporary, one-year and small increase in the unemployment rate (a delayed effect of the pandemic’s impact on the labor market and the result of government support that kept unemployment from rising in 2020), which, together with restrictions still in place and uncertainty still relatively high, may result in an increased need to reduce consumption and increase savings, and consequently reduce health-related spending this year.
As a result of these factors, as well as the return of patients to treatment and the accumulation of health problems, we expect the private healthcare market to return to growth in 2021 and increase its value by as much as over 10%. This will be as much as PLN 2bn more than in 2019. It is worth noting that this situation is strongly influenced by the lack of value decline in the drug market in 2020 and the continuation of value growth of this segment in 2021.
Despite coronavirus crisis, health spending will rise steadily
In the following years, the growth of the private health care market will be driven mainly by household consumption, supported by the recovery of the labour market situation (from the employees’ perspective). A gradual improvement in the economic situation of households and a recovery in consumer confidence should translate into increased spending, including private outlays on health.
The demographic factor, i.e. the decreasing number of people of working and pre-working age and the increasing number of people of post-working age, which are a significant group of consumers of goods and services related to health care, is also not without significance in the forecast period. Moreover, elevated inflation is anticipated in the coming years, which will also affect the prices of medical and pharmaceutical products and health-related services, resulting in the projected market value.
We assume that the total private healthcare market value will grow at a CAGR of 7% from 2021 to 2026. However, it should be noted that segments related to providing services directly to patients (FFS, subscriptions, insurance) will grow faster than the overall market (CAGR of 8.9%).
A risk factor for the forecast remains the final realization of the plan assuming an increase in public expenditures on health care throughout the forecast horizon, according to their share in GDP specified in the law. In the context of the coronavirus pandemic, the question of the scale and areas of financing of public health care in the future is put into question, if only due to the deterioration of the state budget. Given its substitutionary nature, the assumed increase in public health care spending should be a rate-limiting factor for private consumer spending.
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