Within the rapidly-expanding area of competition law and healthcare, public hospitals and state aid may seem at first a mundane topic when contrasted with developments in connection with pharmaceutical policy and health technology. Nevertheless, the CJEU’s April 2023 Casa Regina Apostolorum judgment has reignited fundamental questions about the very applicability of EU competition policy which have implications far beyond the case’s focus on the interaction between private providers and public hospitals, and state support to the latter, in Italy.
This post considers how the Casa Regina Apostolorum case fits within wider analysis of competition reforms in healthcare, and the tensions which now emerge between this judgment and the Commission’s Evaluation of the State Subsidy Rules for Health and Social Services of General Economic Interest which reported in December 2022.
The four categories of European healthcare and competition reforms:
The expansion of private sector delivery of public healthcare services might be considered at the heart of competition reforms in healthcare systems across Europe. This closer interaction between public and private healthcare has narrowed the gap where once the two may have appeared distinct. Such developments are found across the typologies of healthcare system in Europe, even though it is considered that insurance-based systems may be more amenable to competition reforms than taxation-funded systems.
Following discussion (by Guy and by Odudu) of competition reforms in English healthcare and the applicability of EU competition law, the interaction between public and private healthcare can be framed as “four categories of European healthcare” thus:
Where once there may have existed a clear distinction between a public healthcare system (category 1) and a supplementary or complementary private healthcare market (category 4), the increasing interaction between public and private healthcare suggests a grey area which narrows this gap. Within this, category 2 represents the activity often underpinning competition law claims: a challenge by a private provider that, for example, state support favours public hospitals. Category 3 activity provides an example of arguments raised in such cases, including Casa Regina Apostolorum: that public providers charging patients for certain services contributes to evidence that an entire healthcare system has shifted away from its solidarity basis to a competition basis.
Such category 2 activity has been seen in various cases involving public hospitals across EU member states – notably the IRIS-H network in Brussels, but also in Germany, Czechia, and Estonia, as well as in Italy with Casa Regina Apostolorum. The latter is unusual for proceeding to appeal – these cases are typically handled under the Commission’s SGEI package for health and social services, which is intended to reduce the administrative burden on Member States in meeting compatibility criteria for granting support to SGEI.
The two iterations of the SGEI package to date (from 2005 and 2012) have both specified hospitals as a candidate for this kind of assessment: this would seem to suggest a degree of intuition regarding the extent to which these particular healthcare institutions are amenable to competition reforms in general and being subject to the application of the Article 107(1) TFEU prohibition on state aid in particular. Here, three specific points are worth noting.
Firstly, and most fundamentally to these assessments, the focus seems to “buffer” around the question of whether the recipient of the contested aid is an “undertaking”. A positive finding can simply lead to the conclusion of classification as SGEI, as in the aforementioned Brussels Hospitals case, thus an exception to applying the prohibition to other economic activities not so classified. A negative finding – as happened from the Commission, the General Court, and the CJEU in Casa Regina Apostolorum – means total exemption.
Secondly, the requirement for the aid to give a “selective advantage” has required clarification. Here attention is typically paid to the functions of private providers in delivering healthcare services and where and how these may differ from the functions of public providers. The distinction apparently drawn here relates to questions of continuity and viability of service provision – in other words, where a private provider could exit, a public provider may be deemed broadly either “too big”, or certainly “too politically sensitive” to fail. Such considerations feature in the Brussels Hospitals case, but gave rise to an interesting categorisation of “genuine SGEI” in the aforementioned German hospital case.
Finally, the apparent preference of patients not to travel for hospital treatment raises questions about the requirement for an effect on trade between Member States. Thus in this regard, contrasts emerge – for example between the aforementioned Brussels and Czechia hospitals cases between where a public hospital may deliver specialist services, or whether it may treat a significant or a negligible number of patients from neighbouring Member States in a border region.
Taken together, it might be considered that if this diversity of considerations relate to a seemingly self-contained category such as hospitals, then the broader specification of “SGEI…meeting needs as regards health and long-term care” by the 2012 SGEI package could well generate further questions and hurdles.
The legacy of Casa Regina Apostolorum
As noted above, the Casa Regina Apostolorum case developed across a Commission assessment in connection with the 2012 SGEI package, and two appeals to the General Court and the CJEU, both of whom upheld the Commission’s finding that the state aid prohibition did not apply. This would seem to follow a range of relevant case law, so is not an unexpected finding. Indeed the absence of an Advocate General opinion would seem to highlight the lack of a new question of law for the CJEU to consider. Aside from the CEPPB approach of further disaggregating activities, it is currently hard to see how new questions of law might be developed in light of a tendency to “compare apples and oranges” with cases on diverse healthcare (and other) topics – notably the experience of the Slovak health insurance system in Dôvera with the situation in Casa Regina Apostolorum (as noted by the appellant in the latter).
What is particularly notable also is the lack of attention paid by the courts to the relevance of Commission SGEI assessments. This is particularly striking in the case of the CJEU, whose judgment follows the Commission’s December 2022 review. In this, the Commission highlighted the lack of clarity about applying competition law and consequent legal uncertainty as a particular stumbling block. So with regard to state support to hospitals, we appear to be at something of an impasse which seems difficult to overcome. The lack of clarity regarding public hospitals is likely to pose questions about not only other healthcare institutions and practices, but also the effectiveness of the SGEI package more generally.
For now, Casa Regina Apostolorum appears a niche case with broader implications which will emerge in time from a range of perspectives, not least competition and constitutionalism.
This post is part of work being developed by Dr Mary Guy in the context of the “Public Health, Markets and Law” workshop hosted by Dr Mina Hosseini at University College Dublin in September 2023 and funded by the MSCA COMPHACRISIS project.