Last updated: May 22, 2011 10:05 pm

Greece fails to pay medical bills

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The Greek government has fallen sharply behind on payments to healthcare companies only months after restructuring its €5.4bn ($7.6bn) debt to suppliers, raising doubts about patient safety while revealing the looming cash-flow crisis faced by the state.

The pharmaceutical industry says only 30 per cent of €1.2bn in payments owed by public hospitals since the start of last year have been made. Of debt due from the start of 2011, just 1 per cent has so far been paid.

The cash crunch in the health sector adds to the urgency of measures planned by the Greek government to raise revenue through a pledge to sell €50bn of state-controlled assets. Fears are mounting in eurozone capitals, however, that the socialist leadership of George Papandreou, prime minister, is not committed to the painful measures necessary to meet revenue targets.

“The situation has become dramatic,” the Hellenic Association of Pharmaceutical Companies said in a letter to the ministry of health, warning that it was “only a matter of time before drug shortages on the market begin to occur”.

The concerns are shared by other medical suppliers, many of which have tightened payment terms and some of which are themselves struggling to continue operating.

“There is still a big backlog of payments due from last year, and we have received almost nothing for 2011,” said Pavlos Arnaoutis, secretary-general of Sep, an association of medical suppliers.

Greek banks have stopped accepting bonds held by small healthcare companies as loan collateral, Mr Arnaoutis said. “Since last year these companies have seen payment terms tighten from six months to 60 days. Many are struggling to survive.”

Roche has made staffing cuts in Greece and started to operate on a cash-on-delivery basis. Becton Dickinson and Covidien, US medical device suppliers, have shut down their Greek operations and transferred them to local distributors.

Many companies that received zero-coupon government bonds last December in lieu of past debts have sold them off at substantial discounts. The bonds, issued to cover unpaid debt for 2007-09, are trading informally at a 35-40 per cent discount, reflecting increasing concern that Greece may have to restructure its sovereign debt.

The situation has raised fears of shortages of life-saving medicines, while some products, such as disposable surgical items, are already in such short supply that elective surgery is being postponed.

Stella Markakis, a retired teacher awaiting a hip replacement, said: “My consultant sent me to colleagues at three different hospitals to try to arrange the operation but I haven’t managed to get a place on the list for surgery.”

Nikos Polyzos, a senior health ministry official, said delays occurred because payment systems were being reorganised to comply with tighter regulations on controlling public spending.

“The process is being accelerated and we are sure that pending payments will be completed by the end of June,” Mr Polyzos said.

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