WHEN DOES A HOSPITAL RECEIVE STATE AID?

THE PRIVATE INVESTOR AND PRIVATE CREDITOR TEST IN MANAGEMENT PRACTICE

Abstract

Motivation: The Polish healthcare system has long faced financial challenges, prompting public entities to support hospitals through recapitalization, debt forgiveness, or guarantees. However, under EU law, state aid is generally prohibited if it distorts competition. The private investor test and private creditor test assess whether public entities act as rational market operators. Conducting these tests for hospitals presents legal and managerial challenges.

Aim: This article examines the practical difficulties in developing private investor and private creditor tests in hospital financing. It focuses on methodological challenges, considering both legal and economic aspects, with emphasis on assessing the rationality of public financial decisions. The article uses a case study on the regulations in question based on the authors' practical experience. The content of The Private Investor and Private Creditor Test in Management Practice is discussed, taking into account possible difficulties from the perspective of medical entities

Results: The article provides a structured approach to evaluating public support for hospitals against market criteria, ensuring compliance with state aid regulations. It highlights key challenges such as the lack of market benchmarks, complex hospital financing, and the need for an integrated legal-economic perspective. The findings offer practical insights for policymakers, hospital managers, and financial experts, enhancing financial decision-making and regulatory compliance.