KRIB: Private Hospitals Should Not Be Included in the Public Procurement Act

Following the European Commission’s decision to bring an action against Bulgaria regarding the transposition of Directive 2014/24/EU, the Confederation of Employers and Industrialists in Bulgaria (KRIB) has issued a position regarding the claim that private healthcare facilities should be treated as bodies governed by public law and apply the Public Procurement Act.

We are publishing the full text of the document:

Our position is consistent and legally sound: private healthcare facilities do not constitute bodies governed by public law and, therefore, should not be included within the scope of the PPA—a stance confirmed by the positions of our collective member, the Bulgarian Hospital Association, as well as the Bulgarian Medical Association.

The current definition in national law is fully aligned with Article 2(1)(4) of Directive 2014/24/EU and was confirmed by the Court of Justice of the European Union (CJEU) in its Order of 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 considered a body governed by public law, it must not operate under market economy conditions. However, private healthcare facilities:

– function as commercial companies that assume full financial risk;

– generate financial results, including potential losses or profits, depending on their own activities;

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

– 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.

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, suspended procedures, and months of delay. For a hospital bearing market risk, this represents a penalty for the timely provision of treatment. For the patient, it means delayed therapy, 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 funds from the NHIF. They must finance their current activities with their own resources. The PPA requires advance planning, reserves, and time—resources that the state does not compensate for, nor does the directive provide for. Consequently, this would lead to a disruption in the accessibility of healthcare, which is a key and unique advantage of the Bulgarian healthcare system.

c) Constitutional and systemic issue – interference with free economic initiative

Obliging commercial companies to follow procedures designed for public institutions contradicts the principles of a market economy and limits their ability to provide quality services. Once this principle is adopted, it could jeopardize investment intentions in several other key sectors where the Bulgarian government has already engaged international interest and partners.

If the state insists on the need to introduce additional transparency guarantees without distorting the legal framework, this should be done through proportional mechanisms and established European-level tools such as competitive procedures, centralized tenders, and others.

These instruments ensure transparency without imposing an inapplicable and harmful regime such as the PPA.

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

Bulgaria possesses compelling legal and factual arguments to defend the position before the Court 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, most importantly, the patients.

In conclusion, any change to the PPA that ignores these arguments would harm patients and the healthcare system of Bulgaria. KRIB calls on the European Commission and Bulgarian institutions to respect this position and to maintain and build upon 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 to increase transparency and public trust in Bulgarian healthcare.