Abstract

In our presentation we shall argue that due to the new culture of austerity in public health care funding the most likely driver of medium term development in LTC provision in Poland and the Baltic states is the private sector. We shall further claim that the main impediment of growth in private LTC provision is lacking access to capital. Hence we shall argue that the most effective policy action for the development of LTC provision in the region needs to target improved access to capital for private providers of LTC and developers of LTC facilities.

We suggest the need for two types of new policies ensuring access to capital for LTC facilities. First, there is a need for an investment relevant pension fund regulation enabling investment of in the LTC industry. Secondly, there is a need for an incentive package for targeted private equity investments. In order to support our claims we have studied medium term budgetary priorities in the region where none of the countries are planning to significantly increase funding for LTC. This study justifies our claim that the most likely driver in the industry is the private sector. We have conducted in depth interviews on various aspects of private LTC provision with 25 owners and developers of LTC facilities in Poland and Latvia (additional interviews are scheduled for Lithuania and Estonia as well). Our discussions reveal perceptions of market participants about the behavior and expectations of consumers who in this market segment are average and above average net worth individuals. We have also gathered information about the attitudes of market participants on such issues as market consolidation, economies of scale, availability of qualified labor and other data to get a better grasp of the perspectives for the industry in the region. In our presentation we shall discuss our data which in general reveals great potential for growth and investment.

We believe that our data is representative of the tendencies in LTC provision in the whole of Eastern Europe. Yet without any exceptions all the market participants described problems with access to capital which as we believe is the area where the governmental policies should be applied. We suggest that governments should implement a loan insurance program to facilitate the construction of LTC facilities in the region. This measure will significantly stimulate the much needed construction of new facilities. We also believe that the access to capital markets should be encouraged. For this purpose we suggest introducing legislation for real estate investment trusts for LTC facilities. This would provide an investment vehicle for a wide range of investors, including regional pension funds.

Slides