Romar: Lack of private insurance could change our plans

Medical Services / Ioana David
Private medical services group Romar, 40% of which is held by investment fund RC2, could drop plans to open a 60-bed private hospital. The building, which has already been completed, could instead be turned into offices.
“The private hospital project, which we have finished, but not equipped, could be turned into an office building in the wake of rather unclear legislation concerning private health insurance. Without clarity regarding these insurance services, investments in private hospitals are quite risky and unprofitable,” Liliana Hagicalil, Romar’s medical general manager, told ZF. The Hagicalil family indirectly controls 60% of the group’s shares.
Romar is one of the top-ten players in the private medical services industry, and has budgeted turnover worth 10 million euros for this year. In the first 5 months of the year, the company posted turnover worth 5 million euros, a level similar to the amount registered during the same time last year.
So far, investments in the project have amounted to 2.8 million euros, and, if completed, the level of investments will total 7-8 million euros.
Romar officials have also had offers to continue the project with strategic partners, but a final decision will be made in the coming period.
“Private insurance services are not clearly regulated, so it is hard to ensure a sufficient flow of patients in order to make sure the hospital is profitable. We have drafted several business plans, but they all led us to the same conclusion – that it is a risky project, given the unclear legislation. We don’t know yet what packages we can offer, or exactly how deductible they can be,” said Hagicalil, who added that in order to become profitable, a hospital must have an at least 70-80% occupancy rate.
Originally, the 60-bed hospital was designed for one-day surgical procedures.
Since the beginning of this year, Romar has invested 4.2 million euros in setting up clinics, in equipment and in working capital, whilst another 3.5 million euros will be invested in similar projects by the end of the year.