Privatizing health care in Georgia

Big changes are underway in Georgia's health sector. The central government is taking steps to privatize both publicly owned hospitals and health insurance. As it stands, the public health care system inherited from the Soviet era is bloated - only about 30 percent of its hospital beds are being used, and many of the 250 hospitals need renovation. An article in Transitions Online cites the Minister of Labor, Health, and Social Affairs on the current state of things:

It is absolutely impossible for [a] state like Georgia to retain...254 publicy owned hospitals...Therefore, private medical insurance and [a] private hospital network [are] something that we think is the only way out of the situation.

The Georgian government has chosen not to sell the hospitals through an auction or open bidding process. Instead:

[P]rivate companies, mostly real estate developers and pharmaceutical firms, are taking over public hospitals with a pledge that they will upgrade the facilities and provide better quality services. The bidders are not paying the government for these takeovers.

Given that privatization can be a difficult process, it would be interesting to know why the Economic Development Ministry chose this particular path for privatization. According to the Law of Georgia on State Property Privatization (available in English on the website of the Ministry of Economic Development of Georgia):

Privatization shall be carried [out] through competitive bidding, auction, lease-redemption or purchase of property through direct sale methods.

This approach doesn't seem to quite fit into any of these categories, and I wasn't able to find information on the Ministry's website specifically describing the privatization of hospitals.

In any case, the Georgian authorities hope that these measures will help reduce corruption in the health care system. According to the Transitions Online article, under-the-table payments to doctors are common, but the privatization of hospitals has boosted their salaries by a factor of 20 to 25. I wait to see how successful Georgia is, as many of the transition countries also face the need to reform their health care systems.