The Confederation of Employers and Industrialists in Bulgaria has issued an official position regarding the European Commission's decision to file a lawsuit against Bulgaria regarding the transposition of Directive 2014/24/EU.
According to the Confederation, the application of the Public Procurement Act (PPA) in private hospitals will endanger patients and the healthcare system.
The Confederation of Employers and Industrialists in Bulgaria /CPIB/ presents to you our position regarding the claim that private medical institutions should be treated as public law organizations and apply the Public Procurement Act.
Our position is consistent and legally justified: private medical institutions do not constitute public law organizations, therefore they should not be included in the scope of the PPA – confirmed by the positions of our collective member Bulgarian Hospital Association and Bulgarian Medical Union. The current definition in the national law is fully consistent with Art. 2, par. 1, item 4 of Directive 2014/24/EU and was confirmed by the Court of Justice of the European Union (CJEU) with a Decision of 26.09.2024 in case C-550/23. The Court clearly emphasized the right of Member States to adapt their legislation according to the specifics of their healthcare system.
According to the long-standing practice of the CJEU, in order for an entity to be a public law organization, it must not operate in a market economy. However, private medical institutions:
– operate as commercial companies that assume full financial risk;
– form a financial result, respectively potential loss or profit depending on their own activities;
– receive funds from the NHIF as compensation for services rendered, and not as a form of budgetary support;
– have multiple sources of income, and not a single public resource.
This characteristic has also been recognized by national courts. In Decision No. 5915/2022, the Supreme Administrative Court accepted that private hospitals are not supported by the state, but provide services on a commercial basis, therefore their activity is market and does not bear the hallmarks of needs of general interest without an industrial or commercial nature.
The application of the Public Procurement Act to private hospitals would lead to a number of practical and systemic problems incompatible with their nature as market operators:
a) Delay and blocking of the supply of medicines and medical devices
Public procurement inevitably gives rise to appeals, suspension of procedures and months of delay. For a hospital that bears a market risk, this means a penalty for the timely provision of treatment. For the patient – this means delayed therapy, lack of devices and potentially dangerous clinical consequences.
b) Disproportionate burdens on entities that do not receive budget funding
Private medical institutions do not receive advance funds from the NHIF. They must finance their current activities with their own funds. The PPA requires advance planning, reserves and time - resources that neither the state compensates for nor the directive provides for. Accordingly, this would lead to a violation of the accessibility of healthcare, which is a key and unique advantage of the Bulgarian healthcare system.
c) Constitutional and systemic problem - interference with free economic initiative
Obligation of commercial companies to follow procedures intended for public institutions contradicts the principles of the market economy and leads to a limitation of their ability to provide quality service. Once this principle is adopted, it could put at risk investment intentions in a number of other key sectors in which the Bulgarian government has already engaged international interest and partners.
If the state insists on the need to introduce additional guarantees of transparency, without distorting the legal framework, this should be done through proportionate mechanisms and mechanisms established at European level such as competitive procedures, centralized tenders, etc.
These instruments ensure transparency without imposing an unenforceable and harmful regime such as the Public Procurement Act.
In view of the above, we consider that the alleged infringement by the Commission is unfounded and does not require a change in national legislation.
Bulgaria has convincing legal and factual arguments to defend before the Court the position that private medical institutions do not fall into the category of public law organizations. This is in the interest of the state, the system and, above all, - of the patients.
In conclusion, any change to the Public Health Act that ignores these arguments would harm patients and the Bulgarian healthcare system. KRIB calls on the European Commission and the Bulgarian institutions to respect this position and to maintain and build on the current system, which guarantees quality and accessible healthcare through complementary public and private systems. We are ready for dialogue and cooperation in the interest of all stakeholders with the aim of increasing transparency and public trust in Bulgarian healthcare.