SUMMARY

Funded predominantly by the Health Insurance Fund (HIF) and the central budget, the Hungarian healthcare system provides general services to all Hungarian nationals. Except for such "non-essential" services as cosmetic surgery and private hospital rooms, the health insurance system guarantees free access to all necessary medical care. Partly due to this accessibility, utilization of health services in Hungary is fairly high.

Hungary's economy is still in transition, although moving rather fast toward a full-market economy. Following the pattern of West European industrialized countries, Hungary has opted to retain a predominantly publicly funded health system with an increasing degree of private services.
Privatization of health services has proceeded most rapidly in the pharmaceutical, dentistry and family physician areas. Private sector development has been faster for ambulatory and diagnostic services, and negligible for outpatient and hospital care, areas where both costs and reimbursement mechanisms have thus far remained largely within the public sector. However, new mechanisms have been established to allow private physicians to act as independent contractors to health agencies and private companies are now providing many former in-patient services through home care services. The production and distribution of health aid products has also been fully privatized.

According to a government report prepared in early 2000 for the European Union's Commission, the major tasks of the health care system for the immediate future are to improve public health, to increase efficiency of financing healthcare providers, and to eliminate regional differences in the quality of services. To address these issues the following measures are expected to be taken over the next few years. First, outpatient services will be privatized in stages. Second, the nature of HIF financing of health care services will be reviewed. Third, the system of co-payment will be extended, increasing the role of households in financing products and services. Each of these measures offers opportunity to health care service providers and related industries (i.e. insurance, hospital/physician office equipment, and home care products).


A. HEALTH CARE MARKET OVERVIEW

POPULATION FITNESS

Causes of Death

Since the early 1960's life expectancy in Hungary has declined with the current life expectancy at birth for males at 66-67 years and for females at 74 years. Compared to all industrialized countries, the mortality of Hungarians (both males and females) in all age groups is higher. The primary causes of increased morbidity and mortality are cardiovascular disease, cancers, chronic respiratory diseases, cirrhosis and suicide. According to the World Health Organization (WHO), Hungary's death rate due to cardiovascular disease is nearly the highest in the world.

Hungary's unfavorable health status can largely be attributed to socio-economic factors such as unhealthy lifestyles, overwork and related stress, and occupational and environmental hazards. The incidence of high cholesterol, high blood pressure and obesity are prevalent. The population has a traditionally permissive attitude with respect to the consumption of alcohol and tobacco products.

GOVERNMENT ROLE IN THE HEALTH CARE SECTOR

Prior to the political and economic changes in 1989/90, the government managed all aspects of the country's health care sector. The Local Government Act (1990) transferred the responsibility for the ownership, management and provision of health/social services to local governments. Major capital investments are financed by the owners (local governments in most cases) or co-financed with the Ministry of Health (MOH). All recurring expenditures are financed and administered by the HIF. The Fund is controlled through the Ministry of Finance and the MOH.

Public health responsibilities are carried out by the State Public Health Service (ANTSZ) in conjunction with local governments. ANTSZ is charged with overseeing public health and disease prevention activities, which are carried out at both national and local levels. ANTSZ stations are responsible for disease surveillance and reporting, control of communicable diseases, monitoring of environmental health, food hygiene, health education and preventive medicine. Many stations have microbiological and immunological laboratories and each provides clinical testing for local hospitals lacking their own services.

The HIF was established in 1993 and is designed to be self-sustaining, based on compulsory payroll contributions from both employers and employees and a very limited investment portfolio. However, without special support from the central budget via the Treasury, the Fund would have been unable to run the system for the last few years as actual contributions have lagged behind health expenditures.

HEALTH CARE FINANCING

The Hungarian health care system operates on the basis of dual financing. Major investments like equipment purchases and construction/maintenance are financed by the owner (in most cases the municipalities) or co-financed with the MOH from the central budget. All recurring expenditures of the daily operations, including salaries of health care professionals, are financed by the HIF on diagnosis-related groups (DRG) basis.

Hungary spends $600 per capita annually on health care compared to almost $4,000 in the United States. In terms of GDP, this translates to 6.4 percent for Hungary (about one-third of the Organization for Economic Cooperation and Development average).

The role of private medical insurance in Hungary has not yet been clearly defined. While the concept of supplemental health insurance has been accepted as a matter of policy, the structure for such insurance programs has yet to be worked out. According to a recent government assessment for the European Union (EU), the system of co-payment will be extended. The HIF will continue to provide basic insurance, which will be supplemented by voluntary health insurance. The latter has been in place for years, but has remained insignificant because of the limited coverage of co-payments. Various life and health insurance policies are available from a number of international insurance companies with operations in Hungary. Other forms of risk-bearing entities, particularly health maintenance organizations (HMOs), are currently being tested in ten centers around the country. Their number is expected to increase based on the favorable results so far.

PRIMARY CARE: FAMILY PHYSICIANS/NURSES

In 1992, the Minister of Welfare's Decree created the Family Physician Service. Previously, the system of "panel physicians" required citizens to seek medical treatment only from designated district doctors. Now individuals have the freedom to choose their own family physician. These general practitioners are the first points of contact for sick people/patients. Family doctors refer patients requiring more sophisticated interventions to hospitals, outpatient clinics and/or diagnostic centers and labs for examinations and testing.

At nearly 40 per 10,000 people, the number of physicians is relatively high. In contrast, the number of nurses is comparatively much lower than in other developed countries. Hungarian nurses are generally less trained than their counterparts in the United States, however based on recent nursing education programs, more and more skilled nurses have similar training to registered nurses (RNs). Low income levels for healthcare workers significantly impede the ability of the healthcare system to attract qualified personnel and to maintain high levels of service quality. Physicians' salaries in Hungary are approximately 50 percent higher than the average Hungarian salary (compared to the 3 to 1 ratio common to most Western European nations), which amounts to HUF 70-80,000 per month ($300-350).

In recent years, a privatization option has been offered to primary care doctors. In 2000, the Parliament passed an act intended to privatize family physician services within two years. To date, over 90 percent of family physicians operate as private entrepreneurs contracted to the local government and the HIF. The remaining 5-10 percent are salaried state employees. Family doctors are remunerated on performance-based capitation (i.e., their incomes are determined according to the number of individuals registered with them), taking into consideration the age of the patients and the doctor's level of expertise. Higher points are awarded for treating infants, young children and older people. There are over 7,000 practices in the country with an average of 1500-1600 people registered with each doctor. Family physicians have "district nurses" on staff who assist in the clinics during business hours and provide minor follow-up in-home health services (take blood pressure, provide shots, etc.).

HOSPITAL CARE

Hungary's previous health care system relied on institutional care. Emphasis was placed on the development of large hospitals (with 1,500-2,000 beds) and university clinics. That has changed along with other major health care reforms and there are currently 155 hospitals in Hungary, most owned by the local governments. The national institutes (for cardiology, oncology, pulmonology, etc.) and rehabilitation centers belong directly to the MOH and the four medical schools own five clinics. About twenty institutions belong directly to other owners/ministries (the Hungarian Army, Ministry of Interior, Hungarian Railways and church/charity organizations); however, their operational costs are covered by the HIF as well. There is only one private hospital that operates without any HIF financing. It is located just outside Budapest and has 50-60 beds.

Currently there are 38 physicians and 80 hospital beds (60 acute beds) per 10,000 people. The averages for EU countries, where per capita budgets for health care is three times higher than Hungary's, are 25 physicians and 70 beds (50 acute) per 10,000. As a result of the on-going reform in Hungary's health care the number of hospital beds has been reduced by twenty percent and will be reduced further.

Under the previous system hospital budgets were determined by bed occupancy rates. Therefore, there was no incentive to release patients on a medically timely basis. In 1993 new methods of paying health facilities were introduced. For inpatient care payment is based on the DRG system as in the United States, while a German-style "point" system is used for determining payment for outpatient care based on the relative tariff fee-for-service schedule. Accordingly, hospitals receive funding from the HIF on the basis of patient volume and types of treatment offered, regardless of the length of time of patient stays. Thus physicians are encouraged to shorten in-patient stays. This has created a growing need for outpatient and in-home health care services.

OUTPATIENT SERVICES

Outpatient clinics are affiliated with hospitals and perform one-day surgeries, while more serious cases are referred directly to hospitals.

Following the privatization of the family doctor services, the outpatient services will be privatized in stages. Doctors will be offered the opportunity of purchasing specialist consultation rooms under closely specified conditions.

HOME NURSING CARE

In 1994, the HIF started a pilot program for providing in-home nursing care to non-critical patients. Harris Health Services, from Fort Worth, Texas was one of the first organizations to successfully introduce home care services in Hungary. Harris has since developed a network of skilled home nursing providers throughout the country although the U.S. partner is no longer involved in the daily operation. Harris has recently begun a cooperative effort with the International Health Care Education Foundation, to establish an educational program for skilled nursing in home health care. Selected nurses and physiotherapists from Hungary can participate in a 12-month externship program in the United States to expand their knowledge and understanding of home health care delivery.

Since 1995 home care has become part of the HIF's budget, though it is not yet a major category. The fund allocates about 0.6 percent of the in-patient care budget for home health care services; the goal of the service providers is to reach 3 percent. There are over 350 organizations (mostly private) in the country that provide home care based on financing agreements with HIF. Home care companies are reimbursed by HIF based on visits performed.

In 1999 the 350 home care organizations performed over 700,000 visits with about 3,000 part-time nurses. Of these organizations just 8-10 operate in multiple counties and provide 1000+ visits in a month. The others operate just in one location. In Budapest there are approximately 40 home care organizations employing some 400 skilled nurses. Many of the small providers have only nurses on staff, while the larger ones also have a medical director. Home care organizations have or expect to have physio/work therapists, speech therapists and dieticians on staff in addition to skilled nurses.

A few home care organizations have started to provide temporary accommodation in nursing homes, however these homes operate on a cost-recovery basis with hardly any HIF support. These nursing homes are typically located in unused hospital structures under the management of the home care organization and headed by skilled nurses.

Home health care is provided in Hungary as part of the free healthcare system, based on diagnosis-related recommendation, i.e. "prescription" of the family physician or the specialist. In Hungary, home care is regarded mainly as replacement for in-patient care and is designed to reduce the length of the stay in the hospital. According to the current MOH regulations, doctors can prescribe up to fourteen home visits for one illness in a year without co-payment by the patient. Most home visits are made to patients on stroke related rehabilitation, patients with chronic diseases (ulcer, etc), hip replacement/fractures, etc. Certain treatment (e.g. infusion therapy) can be performed only by skilled nurses, while others can be done by less trained nurses.

EXTENDED STAY NURSING HOMES FOR THE ELDERLY

In Hungary nursing homes are considered as part of the social security system and operate under the auspice of the Ministry for Social and Family Affairs. Due to the aging population, there is a growing need for old age homes. Currently nursing homes care for approximately 60,000 persons, i.e. less than 1 percent of the population.

Nursing homes are controlled by municipalities and operate partially on central government funding (capitation payment) and on co-payment by the elderly and/or their families. Basic services, including medical treatment, are provided for a nominal fee based on the individual's monthly pension. Special needs, like private rooms, are provided for an additional charge.

As the capacity of the state-run nursing homes does not meet the requirements, privately built and managed nursing homes are being established. The owners are typically charity organizations, foundations, and private companies. These institutions provide higher quality services on cost-recovery basis with limited or no HIF support.

Some municipalities run "day-care" institutions, where the elderly spend as much time as they wish during the day for a nominal fee. They are provided with basic services, however they return home for the night. Also many municipalities have social assistants on staff who provide "visit for social care" for the needy (deliver meals, shopping, etc).

There are new initiatives by the Ministry of Social Affairs to work out the mechanism for providing social care and skilled nursing jointly for those who need both.


B. MARKET TRENDS FOR HOME CARE PRODUCTS

The Hungarian market for home care and rehabilitation products is estimated at $250-300 million for 2000. Nearly $100 million (over 30 percent) originates as financial support from the HIF, (i.e. 4-5 percent of the total health budget is devoted to subsidies on rehab/home care products). The amount earmarked for health aid support in 2000 increased by more than ten percent over the previous year's allocation. The Fund has an official list of close to 10,000 products that are eligible for financial support if certain criteria are met. The list is revised every year. For example, this year 250 new rehab products were added to the list. The criteria for a product to be added to the list of supported health aid products include a proven therapeutic effect and having over five percent market share in its product group for at least half a year. To improve the transparency of the system and to help doctors when ordering rehab goods, a catalogue of supported products is expected to be published in the near future. Product price support is either based on a lump sum payment or a sliding percentage. As part of the annual product list revision by an expert commission of the HIF, changes in price and subsidy are discussed with the manufacturer or distributor.

BEST SALES PROSPECTS

Based on interviews and industry estimates, the following rehab products are expected to have the best sales prospects in the coming years as a result of a general increases in their usage:

Anti-decubitus products
Bathroom support products
Compression products
Electrotherapy products
Geriatric products
Incontinence products
Mobility aids
Orthopedic rehab products (braces, supports)
Oxygen-therapy equipment
Physical therapy products for home use
Prosthetics
Sports medical products (knee/ankle/wrist braces, back supports, etc.)
Wheelchairs (manual and electric)
Wound care products (bandages, etc.)


C. IMPORT MARKET

Hungary's medical product market is dominated by imports. Estimates indicate that over 90 percent of the total market and 75 percent of the home care/rehab products market is covered by foreign product. Accordingly, industry specialists estimate that home care products are imported into Hungary in the amount of USD 150-200 million per year. Germany has been the sales leader for decades and as yet U.S. firms have not captured a significant market share (data on countries' market shares are not available). However this is likely to change as industry sectors in which there is a strong U.S. presence (medical disposables, prosthetics, etc.) become more competitive.

The import of medical products is fully liberalized. Medical products are marketed in Hungary mainly through local distributors. Most distributors handle several brands of the same type of products and/or several lines of medical products. However, there are small firms that represent only one or two foreign manufacturers or distributors.


D. COMPETITION

There are a great number of small local companies specialized in production and/or distribution of customs-made rehab products (prosthesis, orthopedic shoes, corset, etc). The Hungarian market for home care products is less sophisticated than in Western countries. Because of patients' co-payment, many people prefer to purchase products with higher subsidy-content, which are mainly the "simpler", Hungarian-made products.

The ready-made, higher quality rehab product market (including sport health products) is dominated by imports. The Hungarian market is receptive to U.S. products, however European competitors have a significant market share. A number of foreign companies have had a presence in Hungary for years, and have long-established working relationship with the decision-makers and the end-users. Several German, Austrian, and Italian companies work with local wholesalers and retailers throughout the country. The Hungarian rehab/home care product market is very fragmented, with only a few wholesalers and retail-networks. Most distributors operate only one or two shops, often located in a hospital or outpatient clinic.

Patient's private co-payment is significant on home health care/rehab products and drugs. Therefore, when purchasing medical goods and products, customers look for established companies with reliable after-sales service and maintenance. A permanent presence through a local firm that can contact end-users and demonstrate product samples is indispensable for successfully marketing medical goods. Participating at various scientific seminars, conferences, and advertising in local medical papers are also important tools for market penetration.

Leasing of medical equipment has little tradition in Hungary. Also, the Hungarian medical sector is not very receptive to purchasing used/refurbished medical equipment. The HIF has initiated a trial-program in two counties for leasing durable rehabilitation and home care products (like wheelchairs, inhalators, movable toilet, etc) with monthly fees set by the HIF.


E. MARKET ACCESS

TARIFF RATES

American exports to Hungary are based on most-favored-nation (MFN) status. Current MFN tariff for home care/rehab products is around three percent. All products are subject to a 25 percent Value Added Tax (VAT), which is borne by the final consumer.

REGISTRATION OF HEALTH AID PRODUCTS

The general rule governing the registration of health aid/rehab products is the following. The product must be registered with ORKI, the Hungarian Authority for Medical Devices if; (1) it is subsidized by the HIF for personal use; (2) it is used by a home care organization operating with HIF-funding; or (3) used by a hospital for in-patient care. Health aid products that are sold by retailers directly to customers do not need an ORKI-certificate; instead they require a permit issued by KERMI, the Commercial Quality Control Institute.

Hungary has become the first country in Central and Eastern Europe to introduce medical device regulations that implement the European Union's medical device directives. Decree 47/1999 EuM (EU Ministry of Health) on medical devices came into force on April 1, 2000 and imposes the EU's Medical Devices Directive (MDD). Although Hungarian regulations are now in line with those of the EU, Hungary still operates as an independent market separate from the EU. There are also some additional local regulatory requirements.

When Hungary becomes an EU member – expected by 2005 – repeated testing will become redundant. In the meantime, an agreement was signed on the Protocol on the Conformity Assessment and Mutual Acceptance of the Industrial Product (PECA) that will be in force beginning in early 2001. The agreement ensures the mutual recognition between the EU countries and Hungary of selected quality assurance methods and certificates, including ORKI's for medical devices. During this transitional period, manufacturers from the United States and other third countries (even those with mutual recognition agreements with the EU), will not be able to take advantage of the PECA and must have their CE-marked products tested and certified by ORKI or other relevant Notified Bodies.

ORKI is currently the Hungarian Authority for Medical Devices and will be the Notified Body for medical device approval in Hungary. All imported medical products need ORKI certificate prior to distribution in Hungary. From early 2001, when PECA enters into force, only non-EU products will need ORKI registration/certificate.

Demographics &
Market Reports

Source: Factbook.net

MEDICAL SHOWS and CONFERENCES

MOTESZ Medical Congress and Show Organizer
(organizer of specialized shows and scientific conferences incl. REHA for rehabilitation and health aid products)
Ms Alice Sipos, REHA Show Manager
POBox 145
1443 Budapest, Hungary
Tel: (36 1) 311 6687 Fax: (36 1) 383 7918
Web site: www.motesz.hu
E-mail: congress@motesz.hu

HUNGAROMED Exhibition
(yearly international exhibition for a broad range of medical products in October)
organized by Hungexpo : October 18-21, 2000
Ms Judit Toth, Project Director
POBox 44
1441 Budapest, Hungary
Tel: (36 1) 263 608491 Fax: (36 1) 263 608698
Web site: www.hungexpo.hu/hungaromed
E-mail: hungexpo@hungexpo.hu or hungaromed@hungexpo.hu

KEY CONTACTS

MINISTRY OF HEALTH
Arany Janos u. 6/8
1051 Budapest, Hungary
Tel: (36 1) 332 3100 Fax:(36 1) 302 0925
Ms Marta Tardy, International Relations
Mrs Maria Nemes, Director, Pharmaceuticals
Dr Lajos Forgacs, Director, Medical Technology
Mr Laszlo Raduj, Assistant Director, Medical Technology
Web site: www.nepjoleti.gov.hu

MOK Hungarian Medical Association
Dr Peter Kupcsulik, President
Dr Geza Gyenes, Executive Secretary
Balassi Balint u 15
1055 Budapest, Hungary
Tel/Fax: (36 1) 269 4391 and Tel/Fax: (36 1) 269 4392

Association of Hungarian Hospitals
Dr Ferenc Varga, President
Fogaskereku utca 4-6
1125 Budapest, Hungary
Tel/Fax: (36 1) 214 5159, 214 9715

Association of Manufacturers and Distributors of Medical Devices
Mr Tibor Feher, Director General
Fogarskereku u 4-6
1125 Budapest, Hungary
Tel/Fax: (36 1) 212 9380 Fax: (36 1) 355 1696

Hungarian Association for Home Care and Hospice
Dr Ferenc Falus, M.D. President
Tetenyi ut 12
1115 Budapest, Hungary
Tel: (36 1) 206 3342 Fax: (36 1) 206 3343
E-mail: ffalus@compuserve.com

Association of Health Aid Product Distributors
Mr Zoltan Mezei, President
Mozsar u. 14
1066 Budapest, Hungary
Tel/Fax: (36 1) 332 7782

MOTESZ Association of Medical Scientific Societies
Dr Tamas Riesz, Executive Secretary
Nador utca 36
1051 Budapest
Tel: (36 1) 311 6687 and 312 3807 Fax: (36 1) 383 7918
E-mail: motesz@elender.hu Web site: www.motesz.hu

OEP National Health Insurance Fund
Dr Zsolt Lampe, Director General
Vaci ut 73/a
1139 Budapest, Hungary
Tel: (36 1) 270 2001 Fax:(36 1) 350 8656

ANTSZ State Public Health Service
Dr Ilona Molnar, Chief Medical Officer (Surgeon General)
Gyali ut 2-6
1097 Budapest, Hungary
Tel: (36 1) 215 5313 Fax:(36 1) 215 3839, 215 4492

Hungarian Red Cross
Dr Eva Morzsanyi, Secretary General
Arany Janos utca 31
1051 Budapest, Hungary
Tel: (36 1) 331 3950 Fax: (36 1) 353 1388
Web site: www.voroskereszt.hu

National Institute for Health Protection
Dr Anna Maria Olaszy, Director General
Andrassy ut 82
1062 Budapest
Tel: (36 1) 332 7380 Fax: (36 1) 331 6112

OGYI National Institute of Pharmacy
Dr Tamas Paal, Director General
Zrinyi utca 3
1051 Budapest, Hungary
Tel: (36 1) 317 1462 and 317 1488 Fax: (36 1) 318 1167
Website: www.ogyi.hu

Testing/Approval for Medical/Dental Equipment & Device:

ORKI National Insitute for Medical Engineering
Mr Csaba Nagy, Director General
Diósarok utca 3
1125 Budapest, Hungary
Tel: (36 1) 356 1522 Fax: (36 1) 375 7253
Website: www.orki.hu

KERMI Commercial Quality Control Kft
Jozsef korut 6
1088 Budapest, Hungary
Tel: (36 1) 210 0370 Fax: (36 1) 314 3820
E-mail: kermi@mail.matav.hu

Major importers and/or distributors of home health care products:

2M Margit Med Kft
Margit korut 38
1027 Budapest, Hungary
Tel/Fax: (36 1) 212 5553

3M Hungaria Kft
Vaci ut 178
1138 Budapest, Hungary
Tel: (36 1) 270 7777 Fax: (36 1) 320 0951

ALLEGRO Kft
Ms Eva Toth, Managing Director
Szent Laszlo u 95
1135 Budapest, Hungary
Tel: (36 1) 350 2107 Fax: (36 1) 329 1854
e-mail: allegro@elender.hu

GERONTEX Kft
Ms Katalin Rajnai, Manager
Suto utca 2
1052 Budapest, Hungary
Tel/Fax: (36 1) 338 2171 Tel: (36 1) 318 4837

GYSGY Rehab Rt
Mr Tamas Soproni, Director General
Dozsa Gyorgy ut 144
1134 Budapest, Hungary
Tel: (36 1) 350 2074 Fax: (36 1) 349 7146
E-mail: rehabrt@rehabrt.hu
(Major Hungarian producer and distributor of the company's own and imported products;
represents Uriel (Israeli), Scudotex (Italy) etc)

INTERIMPORT Kft
Budafoku ut 111
1117 Budapest, Hungary
Tel: (36 1) 204 4363 Fax: (36 1) 204 4362

JOHNSON & JOHNSON Kft
Hun u. 2
1135 Budapest, Hungary
Tel: (36 1) 239 6000 Fax: (36 1) 239 6005

KORZET Kft
Ulloi ut 250
1195 Budapest, Hungary
Tel: (36 1) 357 9707 Fax: (36 1) 282 9834

MEDIRING Kft
Ms Andrea Martsekenyi, Managing Director
Murakozi u 2/D
1021 Budapest, Hungary
Tel/Fax: (36 1) 325 5753 Tel: (36 1) 325 5076

MEDISZINTECH Kft
Timot u.8
1097 Budapest, Hungary
Tel/Fax: (36 1) 281 2336; 281 2337

ORTOMED Kft
Jozsef korut 38
1085 Budapest, Hungary
Tel/Fax: (36 1) 333 5163; 333 7540

ORTOPROFIL Kft
Mr Lajos Agoston, Sales Director
Csengery u 28
1074 Budapest, Hungary
Tel/Fax: (36 1) 322 2059 Tel/Fax: (36 1) 351 2327

READY Kft
Ms Erzsebet Redigan, Managing Director
Jozsef korut 53
1085 Budapest, Hungary
Tel: (36 1) 484 0661 Fax: (36 1) 267 4890

ReCom-Trade Kft
Mr Viktor Ratz, Managing Director
Vitorla u. 3
1031 Budapest, Hungary
Tel/Fax: (36 1) 242 7627
E-mail: recomtrade@mail.datanet.hu

SALUS Kft
Mr Tamas Nemeth, Managing Director
Than Karoly utca 20
1119 Budapest, Hungary
Tel: (36 1) 204 3846 Fax: (36 1) 204 3851

SCHOLL Kft
Vaci ut 95
1139 Budapest, Hungary
Tel/Fax: (36 1) 350 8597


US Dept. of Commerce 2001