BHA: Applying the Public Procurement Act to Private Hospitals Would Lead to Numerous Problems

The Public Procurement Act is incompatible and would lead to a series of systemic and practical problems, the Bulgarian Hospital Association (BHA) claims in an open letter. The letter is addressed to the Confederation of Employers and Industrialists in Bulgaria (KRIB), the European Parliament, the European Commission, and the Members of Parliament.

We are publishing the BHA’s position statement without editorial intervention:

In connection with the European Commission’s decision to bring an action against Bulgaria regarding the transposition of Directive 2014/24/EU, we consider it necessary to state our position regarding the claim that private healthcare facilities should be treated as bodies governed by public law and should apply the Public Procurement Act.

Our position is consistent and legally justified: private healthcare facilities do not constitute bodies governed by public law and, therefore, should not be included in the scope of the PPA. The current definition in the national law is fully compliant with Art. 2, para. 1, item 4 of Directive 2014/24/EU and was confirmed by the Court of Justice of the European Union (CJEU) in an Order dated September 26, 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 systems.

According to the established case law of the CJEU, for an entity to be a body governed by public law, it must not operate under market economy conditions. Private healthcare facilities, however:

– function as commercial companies that assume full financial risk;

– generate a profit or loss depending on their own activities;

– receive funds from the NHIF as payment for services rendered, rather than as a form of budget support;

– have multiple sources of income, rather than a single public resource.

This characteristic is also recognized by national courts. In Decision No. 5915/2022, the Supreme Administrative Court held that private hospitals are not supported by the state but provide services on a commercial basis; therefore, their activity is market-based and does not bear the hallmarks of meeting needs in the general interest that do not have an industrial or commercial character.

Why the PPA is incompatible and harmful for private healthcare facilities:

Applying the PPA to private hospitals would lead to a number of practical and systemic problems incompatible with their nature as market operators:

a) Delays and blockages in the supply of medications and medical devices

Public procurement inevitably leads to appeals, suspension of procedures, and months of delay. For a hospital that bears market risk, this represents a penalty for the timely provision of treatment. For the patient, it means delayed therapy, a lack of medical devices, and potentially dangerous clinical consequences.

b) Disproportionate burdens on entities that do not receive budget funding

Private healthcare facilities do not receive advance payments from the NHIF. They must finance their ongoing activities with their own funds. The PPA requires advance planning, reserves, and time—resources that the state does not compensate for and the directive does not provide for.

c) Constitutional and systemic problem—interference with free economic initiative

Obliging commercial companies to follow procedures designed for public institutions contradicts the principles of a market economy and leads to a limitation of their ability to provide a quality service.

If the state insists on the need to introduce additional guarantees for transparency without distorting the legal framework, this should be done through proportional mechanisms, such as:

centralized tenders by the MoH for medical devices (a proven mechanism for medicines);

a requirement for at least three comparable offers, publicly disclosed.

These tools ensure transparency without imposing an inapplicable and harmful regime like the PPA.

In view of the above, we consider that the violation alleged by the Commission is unfounded and does not necessitate a change in national legislation.

Bulgaria has compelling legal and factual arguments to defend before the Court the position that private healthcare facilities do not fall into the category of bodies governed by public law. This is in the interest of the state, the system, and, above all, the patients.