Madrid court orders stay on privatization of management of regional hospitals

The Madrid High Court has frozen the privatization of the management of six hospitals in the region following a suit filed by the opposition Socialist Party.

The regional government, which is controlled by the conservative Popular Party, last week awarded the management of the hospitals in question as of September to three private healthcare management groups: Hima-San Pablo, Bupa Sanitas and Ribera Salud. The hospitals serve 1.6 million people at an annual cost of 750 million euros. The local administration argued that the privatization would reap annual savings of 169 million euros.

Spain’s regions have been obliged to slash spending on health and education as part of the government’s draconian austerity drive to rein in the budget deficit.

The Socialists’ suit centered on last-minute corrections made by the local health department to the terms of the privatization, which reduced by 90 percent the initial amount the firms awarded the management contracts had to advance in the form of guarantees.

The Court ruled that there were sufficient grounds to examine the circumstances under which the contracts were assigned, particularly as regards the amount of guarantees required. In its ruling, it said the initial guarantees required could have acted to limit competition for the contracts up for grabs.