The Cyprus State Health Services Organisation (OKYPY) will have to operate without further state subsidy from 1 January 2027, with Health Minister Neofytos Charalambides ruling out an extension of the financial support, despite the organisation's continuing deficits.
Speaking before the House of Representatives, the minister sought to reassure MPs about OKYPY's financial sustainability, pointing to reserves of approximately €300 million which, he said, would allow the organisation to continue operating even if it recorded deficits for several more years.
The future of OKYPY and the progress of the autonomy reform of public hospitals were central to discussions on the Health Ministry's 2027 budget before the House Finance Committee. MPs from across the political spectrum raised concerns about the management and financial performance of public hospitals, with the organisation yet to achieve financial self-sufficiency.
Former Health Minister and current DISY MP Giorgos Pamboridis also questioned whether the continued employment status of civil servants within OKYPY was undermining the objectives of the reform.
Concerns over the autonomy reform
Pamboridis said a key objective of the reform had been to gradually move OKYPY away from the traditional public service employment framework.
However, he argued that current practices were working against this objective, pointing out that employees recruited by the organisation could acquire civil servant status when promoted.
“This is exactly the opposite of the philosophy of the reform,” he said.
Under the original plan, he explained, positions held by civil servants would be abolished when their occupants retired or left the service, with staffing needs instead being met through direct recruitment by OKYPY.
Pamboridis expressed disappointment over the direction of the autonomy process, highlighting the significant financial implications of maintaining the existing arrangements, including the high cost of seconded personnel. He also indicated that the issue would be examined at legislative level.
In response, Charalambides acknowledged that the practice of employees acquiring civil servant status following promotion was problematic, adding that it should be reviewed and potentially amended.
Deficits and outstanding payments
OKYPY's financial position also prompted questions from MPs about whether its targets for reducing expenditure and increasing revenue were realistic.
The organisation is working towards cutting costs by €15 million and increasing revenues by €40 million. However, concerns were raised over whether these targets could be achieved and whether the necessary measures were being implemented.
Questions were also raised about the number of patients treated at public hospitals, with one MP suggesting that patient numbers were declining. Concerns were expressed that the organisation's financial difficulties could be covered through additional payments for services of general economic interest, rather than addressing the underlying causes of its deficits.
Another issue concerned outstanding payments relating to seconded civil servants working for OKYPY.
ALMA MP Odysseas Michaelides referred to figures from the Accountant General showing unpaid remuneration for state employees working at the organisation. He questioned whether the state expected to recover €240 million from OKYPY or whether the outstanding amounts would simply continue to accumulate.
€300m in reserves and the organisation's financial future
Addressing concerns about financial sustainability, the health minister insisted that there was no risk of OKYPY becoming insolvent, citing reserves of approximately €300 million.
He said these funds would enable the organisation to continue operating for several years even if it continued to record deficits, although this was not the government's intended outcome.
The ultimate objective, he stressed, was to bring revenues and expenditure into balance.
A study is currently under way to assess OKYPY's financial needs and identify the steps required to improve its position. A joint working group is also examining measures to increase revenues and reduce spending.
The way public hospitals are reimbursed by the Health Insurance Organisation (HIO) was another key issue raised during the discussion.
Charalambides said efforts were being made to introduce a different reimbursement approach for public hospitals, which frequently treat more complex cases and older patients requiring longer hospital stays.
This can delay patient discharges and result in beds becoming available more slowly than in the private sector, creating additional pressures on public hospitals.
Discussions between OKYPY and the HIO are also continuing over reimbursement for services provided by public hospitals that are not available through private healthcare facilities.
The minister further referred to a €100 million agreement between the Health Ministry and OKYPY covering the reimbursement of services the organisation provides on behalf of the state. The agreement has been forwarded to the Law Office for review, while negotiations with the HIO over the reimbursement arrangements for public hospitals remain ongoing.
Health priorities and funding for 2027
The Health Ministry's budget for 2027 stands at €1.492 billion, an increase of €47.5 million compared with 2026.
Of the additional funding, €38 million relates to the government's contribution to the General Healthcare System (GHS), bringing the total contribution to €908 million.
One of the main priorities for 2027 is the launch of the National Ambulance Authority on 1 January, backed by a budget of €19.75 million. An additional €3 million has been earmarked for new ambulances and equipment.
The ministry is also planning a €1.5 million grant scheme aimed at attracting students to nursing programmes and helping address staffing shortages in the sector.
Other allocations include €1.13 million for the National Cancer Institute and €150,000 to support the launch of the National Centre for Clinical Documentation.
In the area of prevention, €2.72 million will be allocated to population-based early detection programmes, while €7 million has been earmarked for the Infertility Scheme.
A further €10 million will be available to cover the costs of sending patients and their escorts abroad for medical treatment.
