Portugal’s national health service €435 million in the red

By Natasha Donn – Portugal Resident

Portugal’s national health service SNS has posted a loss of €435 million despite having received funds of €14Bn in 2023.

Portugal’s public finances watchdog, the Public Finance Council (CFP) has warned that the financial sustainability of the SNS is under risk and that “in recent years, SNS expenditure has systematically exceeded revenue with deficit being assumed from the outset because revenues is always lower than expenditure.”

According to the independent body monitoring compliance with budgetary rules and the sustainability of public finances, SNS expenditure totalled €14.061 billion – an increase of 6.8% on the previous year (€892.3 million).

This increase is due to growth in current expenditure of €761.8 million compared to 2022.

“Current expenditure has a predominant weight in SNS expenditure, representing 97.4% of the total and essentially concentrated in three headings: staff costs, external supplies and services and inventory purchases,” the document explains
With regard to investment, the CFP warns that it will continue to represent a small percentage of total SNS expenditure in 2023 (2.6%), reflecting the “low priority given” to this area in the SNS in recent years.

“In the period from 2014 to 2023, capital expenditure represented, on average, 1.7% of total SNS expenditure, especially in 2023, when capital expenditure was €460.2 million lower than forecast” in the State Budget for that year, said the CFP.

According to the document, this reduced capital expenditure in 2023 was partly due to “the fact that the payments (relating to digital transition in health, primary health care and hospital equipment) associated with the investment plan with PRR funding have not been made”.

The organisation chaired by Nazaré da Costa Cabral also states that the SNS recorded a €387 million decrease in debt to external suppliers, reaching €1.2 billion euros, the first reduction after three years of consecutive increases.

“This decrease was reflected both in the reduction of maturing debt and in the maturing debt of public business entities (EPE) and regional health administrations,” said the report.

However, arrears rose to €141 million – an increase of €122 million compared to 2022 – a figure that “reflects the financial deterioration of EPEs and the need for better management and more agile payment processes”.

Despite a capital injection of €1.1 billion euros in 2023, mostly to cover losses, the SNS’s structural debt “has not been significantly reduced”, the CFP continues.

The average payment period fell to 96 days, but only 26% of SNS entities managed to fulfil the legal obligation to pay within 60 days.

All of which leads on to the story highlighted by Lusa: “Health service faces sustainability ‘risks, uncertainties’

On the budgetary side, the report points to the low diversification of the SNS’s funding sources, which, in the context of growing public health spending and growing needs of an ageing population “can create significant sustainability challenges for the system”.

“The almost exclusive dependence on State budget funds to finance the SNS may limit its ability to respond to emerging crises or unforeseen needs,” the CFP considers.

In short, the council stresses the need “to improve the planning of SNS resources and strengthen mechanisms for controlling and evaluating services and teams” as well as the need to ensure “full use of funds from the PRR (Brussels’ funded plan for recovery and resilience), with the timely implementation of reforms and investments it provides for”.

Source: Portugal Resident, ECO Online, LUSA.