Commission Decision (EU) 2016/2327
of 5 July 2016
on State aid SA.19864 — 2014/C (ex 2009/NN54) implemented by Belgium — Public financing of Brussels public IRIS hospitals
(notified under document C(2016) 4051)
(Only the French and Dutch texts are authentic)
(Text with EEA relevance)
THE EUROPEAN COMMISSION,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,
Whereas:
By letter dated 1 October 2014, the Commission informed Belgium that it had decided to initiate the procedure laid down in Article 108(2) of the TFEU in respect of the public financing measures in favour of the Brussels public IRIS hospitals.
By letter of 22 October 2014, the Belgian authorities requested an extension of the deadline to submit their comments on the opening decision, which was accepted by the Commission by letter of 23 October 2014. A further extension of the deadline was requested by email of 1 December 2014, which was accepted by the Commission by letter of 2 December 2014. By letter of 16 December 2014, the Kingdom of Belgium submitted its observations on the opening decision.
The Commission received comments from interested parties (see Section 5) on 15 December 2014, 5 January 2015 and 9 January 2015. By letters of 13 and 20 February 2015, the Commission forwarded these comments to Belgium, which was given the opportunity to react. Belgium's comments were received by letter dated 13 March 2015, registered on 17 March 2015.
On this basis the Commission has reassessed the case and interpreted certain elements differently in comparison to the assessment in the annulled Commission's 2009 decision.
The IRIS-H operate in a complex legislative and regulatory environment which is shaped by various public authorities. A comprehensive assessment of the compliance with State aid rules of the public financing from which they benefit requires at the outset a brief description of the legislative and regulatory framework as it applies to the IRIS-H. This description encompasses an introduction to the Loi CPAS (on the basis of which the IRIS-H were created), a brief account of the creation of the IRIS-H, a survey of the legislative and other documents regulating the operations of the IRIS-H, a short overview of the main activities of the IRIS-H, as well as an enumeration of the various applicable financing mechanisms.
‘Everyone has the right to lead a life in keeping with human dignity. To that end, the laws, the decree or rule referred to in Article 134 guarantee economic, social and cultural rights, taking account of the relevant obligations, and determine the conditions for their exercise. Those rights include, inter alia:
[…]
2othe right to social security, healthcare and social, medical and legal aid.’
‘Everyone has the right to social aid. The purpose of such aid is to enable everyone to lead a life in keeping with human dignity. CPAS shall be set up to provide such aid in accordance with the conditions laid down in this Law.’
‘It shall provide not only palliative and curative assistance but also preventive assistance. It shall encourage social participation by users. The assistance may be material, social, medical, medico-social or psychological.’
either itself, directly, or
‘where necessary and if appropriate under an existing scheme’ (see also recital 19), through institutions or services which it creates (on the basis of Articles 60(6), 79, 118 Loi CPAS), in which case the CPAS setting up such an institution or service also necessarily determines its purpose; any of its social obligations, which the CPAS delegates to the institution or service, is then exercised in accordance with that purpose, or
through institutions or services with which it collaborates (Article 61 Loi CPAS), in which case the respective institutions or services will have been created:
either by the CPAS itself (see previous indent), or
by a third party which will also have decided the purpose of its institution.
In the latter two cases, the CPAS will delegate (part of) its social aid obligation solely in so far as this is consistent with the purpose of the collaborating institution. On the one hand, if the institution is set up by the CPAS, it will control this purpose. In the case of an entirely third-party institution, on the other hand, the collaboration will be limited by the purpose of this institution.
The legal obligation on the CPAS to provide social aid, whether material, social, medical, medico-social or psychological, is the same no matter whether it provides the aid directly or through institutions that it creates or with which it collaborates. Article 57 of the Loi CPAS imposes the obligation to provide such aid on the CPAS (alone) in all cases. Any forms of delegation are arrangements for the exercise of this obligation and do not exempt the CPAS from its responsibility to ensure that its obligation is — and continues to be — fulfilled.
‘Where necessary and if appropriate under an existing scheme, the CPAS shall set up, develop and manage social, curative and preventive establishments and services.
The need to create or develop an establishment or service must be based on documentation including an evaluation of the needs of the municipality and/or region and of similar establishments or services already in existence, a description of their operation, an accurate assessment of the cost price and expenditure involved and, if possible, information allowing a comparison with similar establishments or services.
The creation or development of establishments or services that will potentially receive either investment or operating subsidies can only be decided on the basis of documentation showing that the conditions laid down in the organic law or regulations on the granting of such subsidies will be satisfied.
Notwithstanding the authorisation to be obtained from other public authorities, as soon as the decision to create or develop an establishment or service might entail a contribution from or addition to the municipal budget, it shall require the approval of the municipal council.’
General: aid is to be provided irrespective of the ideological, philosophical or religious beliefs of the beneficiary (Article 59 of the Loi CPAS) and the person's possible lack of means. The CPAS has the specific purpose of providing aid in view of the person's state of poverty. On this basis, each CPAS has the obligation to provide aid to all, and if it sets up an institution or service to fulfil its task the latter will necessarily have the same obligation.
Not subject to time limits: the aid is to be provided for as long as the social need exists. The CPAS is therefore obliged to ensure the continuity of the aid and hence of the institution or service that provides it.
On the basis of the principle of municipal autonomy, each CPAS in its respective municipality takes an autonomous decision, whilst complying with the Loi CPAS, as to the most appropriate means of fulfilling its obligation to provide social aid (including medical aid). The constitutional choice to organise social aid at the municipal level is also driven by the wish and need to establish a social aid policy that is as close as possible to the population. When a CPAS decides to set up a curative healthcare institution in order to cater for the healthcare needs of the local population, the institution thus created is regulated both by the Loi CPAS and the federal regulatory framework for hospitals (see recital 32 for this framework), which applies to all hospitals regardless of their status (public or private) and ensures a common organisational system for the whole country. Unlike private hospitals, the primary purpose of hospitals established by a CPAS, such as the IRIS-H, is however always to contribute to the provision of social aid. The exact nature of the social aid obligations that apply to the IRIS-H (see also Section 7.3.4.1) is specified in the bylaws of the IRIS-H and the IRIS strategic plans in line with the requirements of the Loi CPAS (in particular in its Articles 120 and 135 quinquies).
Finally, on the basis of Article 106 of the Loi CPAS, municipalities are required to cover the deficit of their CPAS when the latter does not have sufficient resources to cover the expenditures connected to the provision of its social aid obligation.
As explained above (see recital 15), the social aid provided by the CPAS includes medical and medico-social assistance, and can be both of preventive and curative nature. Such assistance may be provided either (i) directly by the CPAS, or, (ii) through a third party (such as a private hospital) in accordance with their statutory autonomy, or, (iii) particularly if the CPAS wishes to control the means of achieving those objectives, by creating an institution or service to perform part of its mission (which will then be defined in the bylaws of that institution or service and in the case of the IRIS-H also in the IRIS strategic plans (see recitals 16 and 21). To achieve their mission in the field of medical assistance, the CPAS have set up and continue to (co-)manage hospitals in several Belgian cities and municipalities.
‘This restructuring agreement must satisfy the following conditions:
- 1.
to provide guarantees of the maintenance of, on the one hand, the specific character of public hospitals, inter alia, by the choice of legal structures and coordination ensuring predominance of the public sector in the management bodies and decision-making procedures, and, on the other hand, a local basis, through greater representation of directly elected members in the composition of the management bodies20
‘Whereas the financial deficit shown by the public hospitals in the territory of the Brussels Capital Region has in fact reached worrying proportions;
Despite several restructuring plans, the financial equilibrium of those institutions is extremely precarious and is accordingly burdening the municipal budgets with a structural debt;
Whereas it is necessary in those circumstances to encourage the establishment of mechanisms for coordination and cooperation between municipalities and the CPAS and associations set up in accordance with Chapter XII of the [Loi CPAS] with responsibility for public hospitals in the territory of the Brussels Capital Region;
Whereas such coordination and cooperation mechanisms can ensure the continuity of public hospitals, by encouraging synergies in equipment and infrastructure and their management and development resources and help to offset the deficit in municipal budgets;
Whereas this agreement in no way alters the rules for hospital financing, but is designed solely to offset the structural deficit affecting the CPAS and municipalities21
The CPAS relinquishing the direct management of their public hospital(s) to newly created legal persons (so-called ‘Chapter XII associations’) which the CPAS established (jointly with the respective municipality or municipalities, the association representing the hospitals' doctors and, where relevant, the universities Université Libre de Bruxelles and/or the Vrije Universiteit Brussel).
In doing so, the CPAS departed from their original choice of managing their own hospitals themselves as they did in the past. As allowed by Articles 60(6) and 118 of the Loi CPAS (see recital 19), the CPAS chose to set up an association through which they can provide medical and medico-social assistance to the community.
As a result, the existing Brussels public hospitals were liquidated and their activities were transferred to eight local hospital associations established on the basis of Chapter XII of the Loi CPAS. In this way, the IRIS-H obtained legal and financial independence24 on 1 January 1996. The following eight hospital associations were created: the CHU Brugmann — HUDERF, the CH Brien, the CHU Saint-Pierre (CHU-SP), the CH Etterbeek-Ixelles, the CH Baron Lambert, the CH Bracops, the CH Molière, and the Institut Bordet (IB).These eight hospitals were then further regrouped, while retaining all hospital sites, into the current five IRIS-H as follows. The CHU Brugmann (CHU-B) and Queen Fabiola Children's University Hospital (HUDERF) were split into two separate legal entities on 1 January 1997. On 1 July 1999, the CHU Brugmann and the CH Brien became one entity named CHU Brugmann. On that same date, the CH Etterbeek-Ixelles, the CH Baron Lambert, the CH Bracops, the CH Molière merged into the Iris South Hospitals (ISH). Unless indicated otherwise, where the decision at hand refers to the ‘IRIS-H’ this concerns these current five local public hospital associations25.- Creating an umbrella structure called IRIS (on the basis of Chapter XII bis of the Loi CPAS) to coordinate and supervise the hospital activities of each of the Chapter XII associations26. The main objective of the IRIS umbrella is to reach a sustainable financial equilibrium for the hospital activities performed by the IRIS-H. The main tasks of IRIS are to coordinate the activities of the IRIS-H, determining the strategic plan for the IRIS network, improving the quality of the services offered, and monitoring the budget of the network.
Chapter XII bis of the Loi CPAS determines, among others, the rules with respect to control and administrative oversight that apply to the local hospital associations. More specifically, the IRIS umbrella organisation is required to draw up a strategic plan which is binding on the local Chapter XII associations. On the basis of this plan, each local hospital association has to draw up management and financial plans and submit these to IRIS for approval (see Article 135 quinquies Loi CPAS). The local hospital associations are also required to ask the permission of IRIS before taking certain major decisions (see Article 135 sexies) and are monitored by IRIS on a quarterly basis (see Article 135 octies). IRIS also appoints a representative in each local hospital association who attends the meetings of the decision-making bodies of these associations and who can veto decisions that are not in line with those of IRIS itself (see Article 135 novies).
‘In the case of hospitals managed by a CPAS and the doctors working in those hospitals, the provisions of this Coordinated Law supplement the Loi CPAS.’
In addition, the IRIS-H are also subject to the rules laid down in the bylaws of the local hospital associations, specifying among others the purpose of the IRIS-H as well as the rights and obligations of members of the association (see also recital 29).
Finally, the local hospital associations operate under the oversight of the IRIS umbrella organisation, restricting their ability to autonomously take certain financial and management decisions (see also recital 30). Significantly, the IRIS umbrella organisation adopts multi-annual strategic plans which are binding for the local hospital associations as determined by Article 135 quinquies Loi CPAS.
In conclusion, the regulatory framework in which the IRIS-H operate is made up of the Loi CPAS, the LCH, the bylaws of the local hospital associations, and the binding strategic plans adopted by the IRIS umbrella organisation.
The primary activity of the IRIS-H is the provision of hospital services to patients in the Brussels Capital Region. The IRIS-H together employ nearly 10 000 staff, provide over 1 million consultations per year, and constitute Belgium's largest emergency service. The IRIS-H offer comprehensive medical services across all major medical fields, with two of them specialising in particular disciplines (in particular Queen Fabiola Children's University Hospital specialises in paediatrics, while the Institut Bordet specialises in oncology).
In addition to medical services, the IRIS-H also engage in a series of related social activities. In particular, social workers employed by the IRIS-H assist disadvantaged patients and their families in solving and managing financial, administrative, interpersonal and social difficulties.
The five IRIS-H currently provide their medical and related social services across a network of eleven sites in Brussels. These sites are spread over six municipalities (i.e. Anderlecht, la Ville de Bruxelles, Etterbeek, Forest, Ixelles, and Schaerbeek).
Finally, the IRIS-H also have a number of ancillary activities (e.g. ambulance transport of patients between hospitals; a nursery for the children of staff members; nursing and elderly homes; nursing schools; research; assisted living; and psychiatric care institutions; a little shop for patients and visitors; renting of TVs to patients, renting of rooms to third parties; a canteen and parking facilities). These ancillary activities represent only a very limited percentage of the IRIS-H's total activities, as reflected by their small share (i.e. on average less than 2 %) of the IRIS-H's total revenues.
- the pension scheme that applies to statutory employees43 (i.e. civil servants) which is more generous than the one applying to private sector employees and for which the IRIS-H have to contribute an estimated amount of EUR […] million per year,
- the costs related to long-term illnesses of statutory employees44 that have to be borne by the IRIS-H (instead of by the social security system) for an estimated yearly amount of EUR […] million,
- pay scale increases imposed on the IRIS-H by the Brussels Capital Region45 which sets the pay scales for employees of the municipalities, the CPAS and the IRIS-H and which only pays for 60 % of these increases leaving an annual cost of approx. EUR […] million for the IRIS-H, and
- the mandatory contributions by the IRIS-H to the cost of the IRIS umbrella organisation46 for an estimated annual cost of EUR […] million.
These residual costs have to be borne by the IRIS-H and are not covered by other public financing sources (such as for instance the BMF, see recital 46(a)).
‘Without prejudice to Article 109 [LCH], the result of the financial year shall be allocated between partners holding at least one fifth of the votes in the General Assembly by decision of the General Assembly48
On this basis, the municipalities and the CPAS are required to fully absorb any deficit incurred by the IRIS-H as reported in their financial accounts. In addition, according to Article 106 of the Loi CPAS, the municipalities have to cover any deficit generated by their CPAS (see recital 22). In consequence, the municipalities (directly and via their funding obligation towards their respective CPAS) ultimately ensure the continuity of the IRIS-H by fully covering any deficit these hospitals may generate.
The extent to which the municipalities and the CPAS have to intervene to cover any deficit generated by the IRIS-H on the basis of Article 46 of their respective bylaws naturally depends on the degree to which the IRIS-H can cover their costs from other financing sources.
- (a)The first financing source is the budget des moyens financiers (hereinafter ‘BMF’)50, which is established by the Federal Minister responsible for public health, and only takes into account healthcare activities that are covered by the social security. The BMF is determined for each hospital within the boundaries of the global Federal State budget. The available Federal budget is allocated among all hospitals and may not necessarily cover all of their eligible costs. Since 2002, the BMF for each hospital is mainly determined on the basis of the number of days of treatment provided by each hospital during the previous year. This specific amount is then paid out to each of the hospitals in two different ways. In particular, about 85 % (the fixed part) of this amount is being paid to the hospitals on a monthly basis, while the remaining 15 % (the variable part) is paid on the basis of the actual admissions and days of treatment in the hospital during the year. At the end of each year, the BMF is recalculated on the basis of the actual figures for the year and depending on the outcome the hospital either receives or has to repay an amount. The BMF is regulated in more detail by the Royal Decree of 25 April 2002 which defines the conditions and rules for setting the BMF granted to hospitals. In particular, the Royal Decree determines how the BMF is set, which type of costs are accepted for coverage by State funding and what criteria apply in this regard51. It is important to point out that the BMF is not set up to cover the actual costs incurred by each hospital but is instead mainly arranged as flat rate financing based on their average actual historical costs. As a result, the BMF may be insufficient in case of significant cost increases, or other evolutions in the organisation and cost structure of a hospital.
- (b)The second source of financing are the social security payments, i.e. made by the Institut National d'Assurance Maladie-Invalidité (hereinafter ‘INAMI’), to the hospitals for the treatments they offered to their patients. This financing is based on the Loi Assurance Maladie-Invalidité 52, respectively its consolidated version laid down in the Law of 14 July 199453, which sets up the Belgian social security system with regard to sickness and invalidity and specifies the medical services and medication that are eligible for compensation by the social security. The hospitals directly charge part of the doctor's fees and the cost of the patients' medication to the INAMI. These payments however do not cover the full costs that the hospitals incur when providing their healthcare activities. As a result, hospitals that have insufficient other sources of revenues risk becoming loss-making.
- (c)
A third source of financing are payments made directly by the patient or by their private health insurers to the hospitals. These payments are necessary because the social security does not cover 100 % of doctors' fees nor of medication and other medical supplies (e.g. implants). In addition, if patients choose to have a single room, then supplements can be charged on top of the normal hospitalisation price and on top of the normal doctor's fee (i.e. more than the standard rates that apply per treatment). Finally, patients may also be charged for the use of additional services (e.g. rent for a TV, use of the hospital parking, etc.).
All payments made by patients or third parties to compensate hospital doctors for their treatment of hospitalised patients, have to be collected centrally by the hospital54. The hospitals and their doctors conclude agreements that determine the percentages of the fees that the hospitals can keep to cover their collection costs and other costs that are not financed by the BMF55. Similarly as for the normal doctors' fees, part of the abovementioned supplements can also be retained by the hospital to cover part of its costs (again conditional on an agreement between the hospital and its doctors). Part of the doctors' fees are hence not a payment going to the doctors but instead are used to cover the operating costs of the hospitals. - (d)The fourth source of financing is specifically meant to cover investment costs incurred by the hospitals. The investments of hospitals are mainly covered by the State (the Federal government and the Regions each pay a part) and the remaining part is paid from the hospitals' own resources combined with bank loans. The State financing is aimed at the costs of building or renovating a hospital or hospital ward and the costs of the first acquisition of equipment and medical devices56. Investment subsidies are capped (e.g. a fixed amount per square metre or per unit).
- (e)The fifth general source of public financing is related to investments and concerns damages payments for studies, the development of building projects, but also costs resulting from the closure or non-usage of a hospital or hospital ward57. In practice, this type of financing is not very commonly awarded.
While the complainants do not put into doubt the competence of the Brussels Capital Region towards these municipalities they consider that what they qualify as regional financing of the IRIS-H goes beyond what is envisaged by the deficit cover as specified by Article 109 of the LCH (see also recital 47). The complainants argue that the IRIS-H benefited significantly from regional financing awarded to the municipalities in which they are located and that this financing cannot be justified on the basis of the provisions of the LCH. The complainants did not refer to the deficit cover obligation in Article 46 of the bylaws of the IRIS-H.
Finally, the complainants referred to approximately EUR 100 million being awarded via the FRBRTC in the context of the restructuring of the Brussels public hospitals which led to the creation of the IRIS-H (see also Section 2.2). The complainants allege that this operation would have resulted in overcompensation of the IRIS-H.
‘[T]he criterion linked to the economic efficiency of an undertaking in supplying the SGEI is unconnected with the assessment of the compatibility of State aid in the light of Article 86(2) EC [now: Article 106(2) TFEU], and the choice made by the national authorities relating to the economic efficiency of the public operator cannot therefore be criticised in that regard114
‘The [complainant] has presented a body of consistent evidence showing the existence of serious doubts as to the compatibility of the measures under examination in the light of the criteria relating to the applicability of Article 86(2) EC [now: Article 106(2) TFEU] concerning, first, the existence of a clearly defined mandate relating to the hospital and social public service missions specific to the IRIS hospitals, second, the existence of previously established compensation parameters and, third, the existence of procedures for avoiding overcompensation in the funding of the public service missions […]115
- (a)
Obligation to offer medical assistance to all patients in all circumstances: the IRIS-H cannot refuse to treat patients that are not able to pay and/or are uninsured, even if they do not require urgent medical care. Private hospitals allegedly are only obliged to treat all patients that need urgent medical care, but would not have such an obligation in non-urgent situations.
- (b)
Obligation to offer a full range of hospital services at multiple sites: The municipalities and the CPAS have made the deliberate choice to maintain multiple hospital sites that offer a full range of treatments in order to ensure accessibility for patients. The alternative option of regrouping the beds and accompanying services at fewer locations and hence to save costs was deliberately dismissed. This choice is especially relevant for disadvantaged patients and their families, since the IRIS hospitals are mainly located close to or in neighbourhoods with a large disadvantaged population.
- (c)
Obligation to provide social services to patients and their families: social workers assist the disadvantaged patients and their families in solving and managing financial, administrative, interpersonal and social difficulties. In addition, the social workers draw up prior social reports to facilitate a financial intervention by the CPAS. While all public and private hospitals are required to employ social workers for certain hospital services (such as geriatrics and psychiatry), the Belgian authorities claim that the IRIS hospitals have a specific additional obligation which results in much larger social services and higher costs than are compensated pursuant to the LCH.
the exact definition of the alleged additional missions of the IRIS-H and on what documents the entrustments of these alleged additional missions are based (see recitals 87-89 of the opening decision),
the legal basis for the compensation of the deficits of the IRIS-H (to which the costs of each of the alleged additional missions contribute) (see recital 91) of the opening decision),
whether there are (sufficient) measures in place to avoid overcompensation of the alleged additional missions, in particular via the deficit compensation mechanism in combination with the repayable advances (if any), and whether the IRIS-H are under a legal obligation to repay any advances they may have received in order to avoid overcompensation (see recital 95 of the opening decision),
in the event that the payments of the special subsidies of up to EUR 10 million annually (see above recital 50) are to be considered as a transaction separate from the compensation of deficits of the IRIS-H, whether there are sufficient measures in place to ensure that the compensation does not exceed what is necessary to cover the costs occasioned by the performance of public service obligations (see recital 96 of the opening decision),
whether no overcompensation was in fact granted to the IRIS-H since they started operating as independent legal structures (see recital 97 of the opening decision),
any further concrete, specific and detailed argumentation and documentation whether, why and to what extent the public financing measures for the IRIS-H fall under the 2012 SGEI Decision or the 2012 SGEI Framework (see recital 98 of the opening decision) respectively the 2005 SGEI Decision (see recital 100 of the opening decision) and whether, why and to what extent all the compatibility criteria laid down therein would be fulfilled.
whether or not any FRBRTC funds, respectively the special subsidies (see above recital 50), were directly transferred to the IRIS-H or whether the FRBRTC and the special subsidies are merely financing mechanisms between the Brussels Capital Region and the Brussels municipalities (see recital 17 of the opening decision),
the exact nature of the requirement of Article 60(6) of the Loi CPAS (see above recital 19), the possibilities for a public hospital to close down, and the difference with the hospital programming mechanism (see recital 26 of the opening decision),
whether or not the additional social services carried out by the IRIS-H are economic or non-economic in nature (see recital 48 of the opening decision),
whether or not the passing on of the special subsidies (from the Brussels Capital Region to the municipalities) by the municipalities to the IRIS-H can be considered as a transaction separate from the deficit coverage mechanism (see recital 92 of the opening decision) and, if so, what is the applicable legal basis that sets out its precise modalities,
whether or not there is a mechanism of advance payments, on what legal basis and how such payments are made (if any) and whether or not they are considered as an aid measure separate from the deficit coverage mechanism, and to clarify whether such advances (if any) were funded via the FRBRTC (see recital 93 of the opening decision),
further clarification on the concept of pérennité (i.e. the continuity and viability of public hospitals, see also below recital 91), its legal basis (in particular at the level of IRIS and the IRIS-H), its implications and how pérennité justifies the deficit compensation mechanisms that benefit these hospitals (see recitals 102-103 of the opening decision),
whether there are any reasons other than those explicitly mentioned in the opening decision (i.e. the existence of additional SGEI missions and the pérennité of the public hospitals) that may justify the additional financing for the IRIS-H (see recital 103 of the opening decision).
The Commission received comments from four interested parties (i.e. CBI, ABISP, Zorgnet Vlaanderen and UNCPSY), as summarised below:
In response to the opening decision, CBI, the complainant, notes that in their view that decision does not contain any new element, arguments or explanations to establish the existence of a specific mission entrusted to the IRIS-H or concerning the compensation mechanisms for this claimed mission or the controls which would be put in place in this respect. The complainants therefore mainly refer to the arguments that were developed in their prior submissions.
The CBI confirms its position that: (1) the IRIS-H are not entrusted with specific SGEI in addition to those incumbent upon all Belgian hospitals (public and private); and (2) even if the Commission would conclude that such additional missions exist they are not defined sufficiently clearly to meet the requirements of Union law in this respect. The CBI also points out that in the proposed policy program by the new Brussels government (published in July 2014) mention is made of ‘rewording the Ordonnance of 13 February 2003 to specify the missions of general interest which justify specific subsidies to municipalities’. The complainants consider this to be an indication that no such missions currently exist but would be defined in the future.
With respect to the requirements of Article 60(6) of the Loi CPAS, CBI considers that these add nothing to the LCH in terms of definition of any additional or specific SGEI that would only apply to public hospitals such as the IRIS-H. The complainants also argue that the additional social mission only appears to consist of a higher volume of social services than that provided by other hospitals and which they refer to as a ‘basic social mission (common to public and private hospitals)’. CBI is of the opinion that this is insufficient to consider that the IRIS-H have an additional social mission. Furthermore, with regard to the question whether these services are economic in nature they argue that the fact that these services are provided free of charge does not make them non-economic. Finally, CBI considers that the additional social services are inseparable from a broader healthcare service which is itself indubitably economic in nature as this has never been put into doubt.
As regards the ‘multi-site mission’, CBI considers that it is still not explained what the obligation to offer complete ‘multi-site’ hospital care activities comprises, nor to what extent this obligation imposes additional burdens on the IRIS-H. As regards the additional social mission, CBI is of the opinion that Article 57 of the Loi CPAS does not create additional obligations with respect to the IRIS-H and, in any case, does not define them in an intelligible manner (no more than the strategic IRIS plans or the ‘domicile de secours’ conventions).
With regard to the question of a clear definition of the compensation parameters CBI points out that, according to the Belgian authorities, the IRIS-H perform a specific mission distinct from that of private hospitals and that specific mission is not defined in the LCH but has another legal basis. According to CBI, it is clearly excluded that the LCH can establish the compensation parameters with respect to one or more public service mission(s) for which the LCH does not provide. In addition, CBI notes that there is no correspondence between the claimed legal bases for the specific missions in question and the compensation mechanisms. The complainants observe that it seems that no distinction is made between deficits resulting on the one hand from the costs of the claimed specific missions and on the other hand those resulting from the costs of the basic mission. Finally, CBI makes reference to a series of opinions by the Belgian Inspectorate of Finance which concluded that it was impossible to monitor the use of the special subsidies awarded on the basis of the Ordonnance of 13 February 2003 because that Ordonnance did not specify the tasks of communal interest for which these subsidies were granted.
CBI also repeats its previous assertions that there are no measures to avoid overcompensation. They add that in the absence of a precise definition of the specific missions performed by the IRIS-H, it is impossible to say what activities should be subject to compensation or not. In CBI's view, it is consequently impossible to verify the existence of a monitoring mechanism to avoid overcompensations.
Finally, CBI points out that while the pérennité of the public hospitals is cited in the cooperation agreement of 19 May 1994, this document does not define such a mission and does not constitute an entrustment. In particular, according to CBI this agreement would in no way indicate that a municipality or a city must have a public hospital on its territory and would also not lay down any rule for hospital service programming in Belgium requiring the operation of a service in a public hospital.
Zorgnet Vlaanderen represents over 500 Flemish care providers (such as general hospitals, psychiatric care institutions, and nursing homes). In its observations on the opening decision, Zorgnet Vlaanderen emphasises that all Belgian hospitals, whether they are public or private, fulfil the same public service obligations in the framework of the LCH. In addition, Zorgnet Vlaanderen points out that the LCH does not set out any conditions regarding the legal form (i.e. public or private) to be recognised as a hospital. Furthermore, Zorgnet Vlaanderen observes that the definition of the public service obligations of the hospitals does not refer to a regional specificity. Finally, Zorgnet Vlaanderen claims that hospitals in Flanders and in the Brussels Capital Region do not perform a different social task.
The Union Nationale des Cliniques Psychiatriques Privées (UNCPSY) is the federation of private psychiatric clinics in France. In its comments on the opening decision, UNCPSY argues that for the check of whether the public funding does not exceed the net costs of the public service, this net cost cannot be without a limit and cannot ignore whether or not the service provider is well managed. In this context, UNCPSY is of the opinion that the Commission should compare public and private hospitals to determine whether or not the aid is proportionate within the meaning of Article 106(2) TFEU.
In this context, the Commission observes that UNCPSY's comments run counter to the GC's conclusion in paragraph 300 of its judgment of 7 November 2012 (T-137/10) that economic efficiency of an undertaking in supplying the SGEI is not a criterion for the assessment under Article 106(2) TFEU of the State aid compatibility of the public funding which this undertaking receives (see in this respect recital 63).
With respect to the obligations that allegedly only apply to the IRIS-H (see recitals 87 to 89 of the opening decision), the Belgian authorities argue that these obligations are the direct consequence of the fact that the IRIS-H have been set up to contribute to the provision of social aid by the CPAS (see also Section 2.2). The Belgian authorities consider that these obligations derive from the Loi CPAS, pursuant to which the IRIS-H were created, and are entrusted by means of the bylaws of the IRIS-H and the IRIS strategic plans. The Belgian authorities also refer to these documents for the exact definition of these obligations. For reasons of brevity and in order to avoid repetition, the Commission will only cite the relevant quotations in its assessment (see Section 7.3.4.1).
In its opening decision (see recital 48), the Commission expressed doubts with respect to the economic or non-economic nature of the additional social services carried out by the IRIS-H. In their reply to the opening decision, the Belgian authorities consider that these social services are non-economic activities. In essence, they argue that the social aid in the form of material, social, medical, medico-social and psychological assistance provided by the Brussels CPAS is not part of a competitive market and that this remains the case even if part of the social aid (i.e. the additional social services) is performed by the IRIS-H on the basis of an entrustment.
With respect to the legal basis for the compensation of the deficits (see recital 91 of the opening decision), the Belgian authorities consider that the obligation for the municipalities to cover the deficit of their public hospitals is laid down in Article 46 of the IRIS-H bylaws and also in Article 109 of the LCH. They explain that Article 109 LCH lays down a general principle that applies to all Belgian public hospitals and that determines the minimum that municipalities have to do (since it only requires them to cover part of the deficit, see also recital 47). The Belgian authorities also note that Article 46 of the IRIS-H bylaws is a specific obligation that applies only to the six municipalities that established the IRIS-H and who chose to go beyond the minimum of Article 109 LCH by covering the entire accounting deficit of the IRIS-H.
In recital 92 of its opening decision, the Commission asked whether or not the passing on of the special subsidies (which the Brussels Capital Region grants to the municipalities) by the municipalities to the IRIS-H can be considered as a separate transaction from the deficit coverage mechanism. In their reply, the Belgian authorities argue that the Brussels municipalities only use the special subsidies to (partially) fulfil their obligation to cover the deficits of the IRIS-H. As will be explained in more detail below (see Section 7.3.5), the deficit compensation is paid out in several steps, among which the transfer of the special subsidies from the municipality to the IRIS-H, but all these payments are made on the same basis, namely the municipal obligation to cover the deficit.
The Commission also asked for clarification regarding an alleged mechanism of advance payments (if any), its legal basis and operation, the difference with the deficit coverage mechanism, and the role of the FRBRTC in its funding (see recital 93 of the opening decision). The Belgian authorities consider that there is no mechanism for advances in place. More specifically, they explain that the obligation to cover the deficit of the IRIS-H comes into effect as soon as the deficit occurs. Indeed, according to the Belgian authorities Article 46 of the IRIS-H bylaws refers to the accounting deficit which is laid down in the hospitals' financial statements no later than six months after the end of the financial year. In contrast, the calculation of the Article 109 LCH deficit by the Federal Public Service for Public Health takes much longer (up to 10 years). However, the Belgian authorities argue that since the Article 109 LCH deficit is merely a part of the accounting deficit which is covered immediately under Article 46 of the IRIS-H bylaws, the IRIS-H are not paid any advances that might be classified as aid distinct from the deficit cover mechanism. Finally, the Belgian authorities repeat that the FRBRTC has provided financing to the municipalities which helped them to fulfil their deficit cover obligation which as explained above does not constitute a mechanism of advance payments.
With regard to the measures to avoid overcompensation and the absence of overcompensation in fact (see recitals 95-97 of the opening decision), the Belgian authorities provide the following arguments. They first explain that the decisions to compensate the deficit are annual and are taken at a time when the estimated deficit for the respective year is known so that there is no risk of overcompensation. They add that the Belgian legal framework (among others the Law of 14 November 1983 and the Loi CPAS) allows the municipalities to ensure that the IRIS-H use the State aid correctly and to recover this aid in the event of non-compliance or overcompensation. In addition, to show the absence of overcompensation the Belgian authorities refer to several tables submitted to the Commission which contain the deficits and municipal interventions for each of the five IRIS-H over the period 1996-2014 (see also Section 7.3.5 for these figures).
As requested, in their reply the Belgian authorities also provide further clarification on the concept of pérennité (see recitals 102-103 of the opening decision). According to them, the obligation to ensure the continuity (or pérennité) of the IRIS-H is based directly on the Loi CPAS. As has been explained above (see Section 2.1), each CPAS can set up establishments to provide social aid, including medical and medico-social assistance, if they can demonstrate that this is necessary to fulfil a genuine need in line with Article 60(6) Loi CPAS. They explain that historically, six of the nineteen CPAS in the Brussels Capital Region established hospitals (without separate legal personality) that they managed themselves until the end of 1995 in order to provide social aid. According to them, the restructuring of these public hospitals which led to the creation of the public IRIS-H that became legally independent of the CPAS on 1 January 1996 (see also Section 2.2) did not alter the obligation on the CPAS to provide social aid whether directly themselves or via the IRIS-H. In this context, the Belgian authorities point out that the primary objective of the restructuring and the creation of the IRIS network and the IRIS-H was to ensure the continuity of public hospital services in the Brussels Capital Region (see also recital 27). Hence, they note that to ensure the continuity of the IRIS-H and hence guarantee that the social needs of the population are fulfilled, the municipalities and the CPAS are required to absorb any hospital deficit on the basis of Article 46 of the IRIS-H bylaws. Furthermore, the Belgian authorities conclude that as long as the genuine need exists, in line with the jurisprudence of the Council of State (see recital 83), the public authorities cannot close the IRIS-H nor transfer them to a private owner.
Finally, in recital 103 of the opening decision, the Commission asked whether there are other reasons that may justify the additional financing for the IRIS-H. In this respect, the Belgian authorities note that the aim of the IRIS-H is not merely to establish ‘viable’ hospital services, missions and programmes, as Belgian private hospitals could do. Instead, according to the Belgian authorities, the IRIS-H have to guarantee the widest possible range of healthcare, specifically in order to ensure access for everyone, including the poorest members of society, to whatever treatment their pathology requires, even if that goes well beyond the norms of hospital planning and approval applicable to all hospitals, by and under the LCH. In this context, the Belgian authorities also make reference to paragraph 162 of the General Court judgment of 7 November 2012 which states: ‘compensation for public hospital deficits may be necessary for health and social reasons in order to ensure the continuity and viability of the hospital system’. The Belgian authorities also point out that the status of a public hospital entails certain costs that are not fully compensated by the federal financing measures. They note that these costs include among others: the payment of language bonuses to bilingual staff, higher pension and sickness expenses for statutory employees (civil servants), and pay scale increases imposed (but only partially paid) by the Brussels Capital Region.
The complaint made reference to an aid measure of approximately EUR 100 million in the context of the restructuring operation that led to the creation of the IRIS-H (see Section 2.2). However, as explained in Section 3.1 of the opening decision, the Commission only took action with respect to the restructuring aid after the limitation period for the recovery of this aid had expired. Therefore, this aid measure was not included in the scope of the formal investigation carried out by the Commission and will hence not be addressed further in this decision.
Apart from the measure covered by the limitation period, the complaint formally targeted (i) the funds distributed by the FRBRTC to the municipalities in charge of the IRIS-H and (ii) the special subsidies (of up to EUR 10 million per year) granted to these municipalities by the Brussels Capital Region on the basis of the Ordonnance of 13 February 2003.
These two types of funds are however awarded only to the municipalities in charge of the IRIS-H and not to the IRIS-H themselves. They are in reality only financing flows between the Brussels Capital Region and the six Brussels municipalities in charge of the IRIS-H and therefore do not constitute State aid to the IRIS-H.
Nevertheless, on the basis of the information received in reply to its opening decision and as explained below (see recital 230) the financial transfers from the FRBRTC and the Brussels Capital Region to the municipalities in charge of the IRIS-H are necessary since these municipalities have insufficient own resources to fulfil the municipal deficit compensation obligation towards the IRIS-H. It is in this context that both the FRBRTC and the Brussels Capital Region have required the Brussels municipalities to almost immediately upon receipt of these transfers make the FRBRTC funds and the special subsidies available to the IRIS-H. Regardless of this pass-on obligation, it is only the respective municipalities that have the obligation to compensate the deficits of the IRIS-H and these hospitals have no right to any compensation from the Brussels Capital Region or the FRBRTC. Likewise, the IRIS-H have been entrusted with certain obligations by the municipalities only and not by the Brussels Capital Region (see Section 7.3.4.1). Therefore, it is only the deficit compensation payments from the municipalities to the IRIS-H, whether financed on the basis of the municipalities' own resources or from funds provided to the municipalities by the Brussels Capital Region, that can be qualified as State aid within the meaning of Article 107(1) TFEU.
- (a)
the measure must give a selective economic advantage to an undertaking;
- (b)
the measure must be financed through State resources;
- (c)
the measure must distort or threaten to distort competition;
- (d)
the measure must have the potential to affect trade between Member States.
In the present case, the main activities of the IRIS-H are hospital activities consisting of the provision of healthcare services. These hospital activities carried out by the IRIS-H are also provided by other types of bodies or entities, in particular clinics, private hospitals and other specialised centres, including the private hospitals of the complainants. Therefore, these hospital activities carried out by the IRIS-H against remuneration and in a competitive environment must be regarded as economic in nature.
Accordingly, as far as the provision of healthcare services is concerned, the IRIS-H have to be considered to constitute undertakings in the sense of Article 107(1) TFEU.
As explained in recital 38 above, the IRIS-H offer a series of social services to their socially disadvantaged patients and their families. These include, according to patients' needs, assistance of psycho-social, socio-administrative or socio-material character. The specific nature of these social services requires that operators eligible to exercise them have specific resources such as specially trained staff.
In the Commission's opening decision, clarification was sought on whether or not the additional social activities allegedly performed by the IRIS-H amounted to an economic activity. In their response to the Commission's opening decision, the Belgian authorities maintain that the social activities are non-economic, as they do not form part of a competitive market. The complainants however argue that the social activities cannot be separated from the hospital activities which are economic in nature. While the Commission has carefully considered the Belgian authorities' arguments, it cannot exclude that the provision of the additional social activities amounts to an economic activity. Furthermore, as will be explained below (see recital 165), the Commission considers that the additional social activities can in reality not be separated from the hospital activities which are economic in nature.
In order to proceed with the assessment, the remainder of this decision therefore assumes ex hypothesi that the provision of the additional social services is indeed economic in nature.
As outlined in recital 41 above, the IRIS-H are also engaged in a series of ancillary activities. The Commission notes that some of these activities would, when assessed in isolation from the main activities of the IRIS-H, appear to be non-economic in nature (e.g. research activities), while others appear on first sight to constitute economic activities (e.g. canteen or shop for patients and visitors). It can be argued, however, that due to their close connection to the main (economic) activities of the IRIS-H, all of the mentioned ancillary activities must be treated as constituting economic activities as well.
In order to proceed with the assessment, the remainder of this decision therefore assumes ex hypothesi that the ancillary activities are indeed economic in nature.
In the present case, it has to be noted that the various public financing systems (as described in Section 2.5.1) covering the general hospital and additional activities, among which is also the deficit compensation, allowed the IRIS-H to benefit from a package of measures designed to reduce the burdens normally borne by the providers of such activities. Therefore, subject to the examination under the principles of the Altmark judgment made in the following recitals, the deficit compensation mechanism that forms the subject of this decision can be considered to grant the IRIS-H an economic advantage they would not have obtained under normal market conditions, i.e. without State intervention.
The Commission notes that the public financing of the IRIS-H would not grant any advantage to them in as far as it merely amounted to compensation for services provided by the IRIS-H on the basis of public service obligation(s) entrusted to them, to the extent that this complied with the conditions set out in the Altmark case law.
- (a)
the recipient undertaking must actually be required to discharge public service obligations and those obligations must be clearly defined;
- (b)
the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner;
- (c)
the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant revenues and a reasonable profit for discharging those obligations;
- (d)
in case an undertaking entrusted to carry out public service obligations is not chosen pursuant to a public procurement procedure, which allows for selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well-run and adequately equipped, would have incurred in discharging those obligations.
For the present purposes, the Commission has decided first to analyse the fourth Altmark criterion (i.e. whether the selection of an undertaking providing an SGEI was based on a public tender procedure or, alternatively, whether the SGEI compensation granted is based on the analysis of the costs of a typical, well-run undertaking). The Commission notes that the IRIS-H have not been selected via public procurement procedures for the public service obligation(s) with which they are entrusted according to the Belgian authorities. It can thus be concluded that the first part of the criterion in question is met in the present case.
Concerning the second part of the criterion under assessment, the Commission first notes that the Belgian authorities have not argued that the IRIS-H qualify as efficient undertakings in this sense. The Commission secondly observes that the information provided by both the Belgian authorities and the complainants is not sufficient to establish that the systems of compensation for the public service obligation(s) possibly entrusted to the IRIS-H comply with the criterion of the efficient operator within the meaning of the fourth Altmark condition. There is no indication that the compensation awarded is based on an analysis of the costs of a typical undertaking with the characteristics required by the relevant case law of the Union courts. There is also no sufficient evidence demonstrating that the IRIS-H can themselves be considered to constitute typical undertakings that are well-run and sufficiently equipped. In determining the compensation awarded, no considerations of sound management or the adequacy of equipment appear to have been taken into account. Finally, it must be noted that a compensation mechanism covering the IRIS-H's deficit resulting from the performance of SGEI and ancillary activities, which does not take account of the efficiency with which these hospitals are run, cannot fulfil the fourth Altmark criterion.
Consequently, the Commission considers that the fourth criterion of the Altmark judgment is not complied with in this case. As the conditions set out in the Altmark judgment are cumulative, failure to comply with any one of the four conditions necessarily leads to the conclusion that the deficit compensation mechanism under review in this decision grants an economic advantage in the sense of Article 107(1) TFEU.
To fall within the scope of Article 107(1) TFEU, a State measure must favour ‘certain undertakings or the production of certain goods’. Hence, only those measures favouring undertakings which grant an advantage in a selective way fall under the notion of aid.
The Commission notes that the compensation mechanism set up to cover the deficits of public hospitals in Brussels (see recital 44), but not of private ones, must be regarded as being selective in nature as it excludes private hospitals and any other healthcare providers, and operators belonging to other sectors of activity.
In the present case, the deficit compensations that the IRIS-H receive from their respective municipalities for the performance of SGEI and ancillary activities, stem from public resources and are imputable to the State.
Public support to undertakings only amounts to State aid in the sense of Article 107(1) TFEU if it ‘distorts or threatens to distort competition’ and only insofar as it ‘affects trade between Member States’.
Considering that a certain amount of competition exists between public hospitals, private hospitals, and other healthcare establishments, public financing granted to certain health establishments (including the IRIS-H) to finance the hospital activities they carry out, is liable to distort competition. The same applies to the additional social activities of the IRIS-H.
Following the principles recalled above, the Commission notes that the effect on trade can be established by reference to a variety of factors, chiefly the ‘customer’ side (relating to the area to which goods and services are supplied and the area from where customers are attracted) and the ‘provider’ side (concerning the question whether a measure creates obstacles to cross-border investment and establishment of actually or potentially competing providers). In order to find that a measure affects trade between Member States, it is enough to establish an effect on trade with respect to at least one of these factors.
As regards the measures' effect on the ‘customer’ side, the Commission observes that the sector of healthcare in general and in-patient healthcare provided by hospitals in particular is subject to intra-EU trade. The Commission notes that the cross-border mobility of patients is increasing. It is, of course, true that healthcare remains a competence of the Member States and the mobility of patients is being governed by strict provisions regulating interventions by national social security systems. Indeed, in practice, in-patient treatment is generally provided near the place of residence of the patient in a cultural environment familiar to him and which enables him to establish relationships of trust with the treating physicians. The cross-border movement of patients occurs especially in border regions or to obtain highly specialised treatment for specific conditions.
- (a)
The IRIS-H include highly-specialised hospitals with an international reputation. Queen Fabiola Children's University Hospital and Institut Bordet, which specialise respectively in paediatrics and cancer treatment, as well as the university hospitals CHU Saint-Pierre and CHU Brugmann, offer a wide array of highly-specialised treatments and boast an international reputation. The international reputation may render these hospitals attractive for international patients, including from other Member States, regardless of the fact that the IRIS-H's mission is to provide social healthcare to the local community in Brussels (see Section 7.3.4.1).
- (b)
The IRIS-H in Brussels are located in relative proximity to large cities in France, the Netherlands, and Germany. For example, the cities of Aachen, Lille, Eindhoven and Rotterdam are all located less than 150 km away. In addition, Brussels is directly connected to the major European cities of Paris, London, Amsterdam and Cologne by high-speed train lines, with traveling time of two hours or less. Finally, Brussels hosts an international airport with connections to all major European and international centres. The location and connectedness of Brussels means that the IRIS-H can easily be reached by international patients attracted by these hospitals, especially those residing close to the Belgian border or in one of the towns connected by high-speed rail.
- (c)
The Brussels Capital Region in general and the IRIS-H are multilingual. French and Dutch are the official languages and the IRIS-H are obliged to offer services in both, rendering them attractive in particular for French and Dutch citizens. In addition, English is widely spoken in the Brussels Capital Region, facilitating access by patients from a large variety of backgrounds.
- (d)The Brussels Capital Region is home to a large number of citizens from other Member States. In fact, of the 321 European cities included in Eurostat's ‘Urban Audit’, Brussels had the second-highest rate of non-citizen residents (33,8 % in 2012) and the second-highest rate of non-citizen resident from other EU Member States (20,3 % in 2012)170. Residents from other EU Member States regularly have a choice regarding where to obtain medical services, typically either in their home country or country of residence.
As far as the additional social activities of the IRIS hospitals are concerned, the Commission observes that to the extent that it cannot be excluded that the provision of these activities amounts to an economic activity, and taking into account how closely they are related to the general hospital activities of the IRIS-H, the reasoning developed above may hold true in this respect as well. However, in light of the considerations set out below (see Section 7.3), the Commission is satisfied that even if the public financing of the additional social services affected trade between Member States, State financing benefiting this activity would constitute State aid compatible with the internal market. For reasons of procedural economy, it is therefore not necessary to finally conclude on whether the public financing of the additional social activities affects trade between Member States.
The same considerations apply to the IRIS-H's ancillary activities (see recitals 41, 116 and 117). Assessed in isolation, the Commission considers that there would be room to argue that the public financing (if any) of most of the IRIS-H's ancillary activities (e.g., a nursery for the children of staff members, renting of rooms, a little shop for patients and visitors, the canteen and parking facilities, renting TVs to patients) would have no effect on trade between Member States. However, the close connection between the IRIS-H's ancillary and main activities may be taken to suggest that also the public financing (if any) of these ancillary activities affects trade between Member States. In any event, since State financing benefiting the ancillary activities would constitute State aid compatible with the internal market (see Section 7.3), the Commission does not consider it necessary to finally decide on this point.
In order to proceed with the assessment, the remainder of this decision therefore assumes ex hypothesi that the public financing of the additional social activities and the ancillary activities are liable to affect trade between Member States.
Having thus found that the measures under investigation in the present case are liable to affect trade between Member States in at least one respect (the ‘customer’ side), the Commission does not consider it necessary to assess whether they are also liable to affect trade between Member States as regards cross-border investments and the right to establishment (see recital 138).
On the basis of the foregoing considerations, the Commission considers that with respect to the measures under investigation in this case, the cumulative State aid criteria are fulfilled and these measures thus constitute State aid within the meaning of Article 107(1) TFEU.
Since the deficit compensation that applies to the IRIS-H amounts to State aid in the sense of Article 107(1) TFEU, its compatibility with the internal market needs to be assessed. The grounds on which a State aid measure can or must be declared compatible with the internal market are listed in Articles 106(2), 107(2), and 107(3) TFEU.
‘undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in the Treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Union.’
‘any aid put into effect before the entry into force of this Decision [i.e. before 31 January 2012] that was not compatible with the internal market nor exempted from the notification requirement in accordance with Decision 2005/842/EC but fulfils the conditions laid down in this Decision shall be compatible with the internal market and exempted from the requirement of prior notification.’
As regards the 2012 SGEI Framework, paragraphs 68 and 69 of that Framework specify that the Commission will apply the principles set out in that Framework to all notified aid projects, whether the notification took place before or after the start of application of that Framework on 31 January 2012, as well as to all unlawful aid on which it takes a decision after 31 January 2012, even if that aid was granted before 31 January 2012.
In consequence, the rules on the application of the 2012 SGEI Decision and the 2012 SGEI Framework as described above mean that the public financing of the IRIS-H as from 1996 onward can be assessed pursuant to the 2012 SGEI package. If the deficit compensation mechanism complies with the conditions of either the 2012 SGEI Decision or the 2012 SGEI Framework, it is compatible with the internal market for the whole period since 1996.
Finally, attention must be drawn to the transitional provision contained in Article 10(a) of the 2012 SGEI Decision, according to which any aid scheme put into effect before the entry into force of that Decision (i.e. before 31 January 2012) that was compatible with the internal market and exempted from the notification requirement in accordance with the 2005 SGEI Decision shall continue to be compatible with the internal market and exempted from the notification requirement for a further period of two years (i.e. until 30 January 2014 included). This means that aid which was granted under such a scheme in the period between the entry into force of the 2005 SGEI Decision on 19 December 2005 and the entry into force of the 2012 SGEI Decision on 31 January 2012 will be considered compatible with the internal market but only from the date on which it was granted until 30 January 2014 included. In any event, for aid granted in the time from 31 January 2012 onwards, the transitional provision of Article 10(a) of the 2012 SGEI Decision is not applicable and the compatibility assessment has to be made pursuant to the 2012 SGEI Decision.
In consequence, the Commission first assesses whether the public financing falling within the scope of this decision granted to the IRIS-H from 1996 onward complies with the conditions set out in the 2012 SGEI Decision. Only to the extent that this is not the case will the Commission assess that same financing pursuant to the 2005 SGEI Decision (for aid that was granted between 19 December 2005 and 31 January 2012) and the 2012 SGEI Framework.
The Commission is satisfied that all economic activities of the IRIS-H that benefit from public funding (i.e. the range of hospital and social tasks performed by these hospitals) either qualify as genuine services of general economic interest, as argued by the Belgian authorities, or as activities purely ancillary thereto. In particular, all medical and social services at issue in this case exhibit special characteristics as compared with those of other economic activities, i.e. primarily their importance for the medical and social well-being of society. Accordingly, the Belgian authorities have not made a manifest error in defining these services as SGEI.
As regards the ancillary activities detailed in recital 41, the Commission notes that an activity can be considered ancillary to an SGEI where it is directly related to and necessary for the provision of that SGEI, or intrinsically linked thereto. The latter is the case where the activities in question consume the same inputs as that SGEI, e.g. material, equipment, labour, fixed capital. Ancillary activities must also remain limited in scope. The Commission considers that all of the activities outlined in recital 41 above qualify as ancillary to the IRIS-H main SGEI activity. Indeed, the activities considered ancillary are (1) all directly related to and necessary for the provision of the IRIS-H SGEI activity, as they constitute activities that a modern hospital can be expected to perform in addition to the provision of medical and social services; and/or are (2) intrinsically linked thereto as they make use of the hospitals' infrastructures (i.e. its buildings and terrains). Based on the limited share of the ancillary activities in the IRIS-H's overall revenues (on average less than 2 %), the Commission is also satisfied that all ancillary activities remain very limited in scope.
The Commission further considers that the public SGEI financing granted to the IRIS-H falls within the material scope of the 2012 SGEI Decision, as set out in Article 2 thereof. According to Article 2(1)(b) and (c) of the 2012 SGEI Decision, this Decision applies to State aid in the form of SGEI compensation granted to hospitals providing medical care (including the pursuit of directly related ancillary activities such as, but not limited to, research) and undertakings providing SGEI meeting social needs as regards, inter alia, health and social inclusion of vulnerable groups. As the publically financed SGEI and ancillary activities carried out by the IRIS-H all can be covered by these categories of activities, the Commission finds that the deficit compensation mechanism under investigation in the case at hand falls within the material scope of the 2012 SGEI Decision. Accordingly, the costs arising from the totality of the IRIS-H's activities (SGEI and ancillary activities) are eligible to be covered by compensation granted pursuant to the 2012 SGEI Decision.
- the content and duration of the public service obligations179,
- the undertaking entrusted with these obligations and, where applicable, the territory concerned180,
- the nature of any exclusive or special rights assigned to the undertaking181,
- a description of the compensation mechanism and the parameters for calculating, monitoring and reviewing the compensation182,
- arrangements in place for avoiding and recovering any overcompensation183.
However, the Commission notes that the principle of non-discrimination is not mentioned as a compatibility criterion in the 2012 SGEI Decision. Nevertheless, the Commission will assess whether or not the public IRIS-H and the private Brussels hospitals are in a legally and factually comparable or different situation. In this context, when describing the content of the public service obligations that are entrusted to the IRIS-H, the Commission will indicate whether or not a comparable obligation has been entrusted to the private Brussels hospitals.
As has been explained above (see Section 2.3), the IRIS-H are subject to a regulatory framework which consists of the Loi CPAS (on which basis the IRIS-H were created), the LCH, the bylaws of the local hospital associations, and the strategic plans adopted by the IRIS umbrella organisation. Since the public authorities (i.e. the municipalities and CPAS) have majority control on the Chapter XII Loi CPAS local associations and the IRIS umbrella organisation, both the bylaws and strategic plans are binding on the IRIS-H and hence qualify to be valid entrustment acts, the content of which will be specified below (see recitals 164, 170 et seq.). In this context, it is also worthwhile to point out that the public authorities can directly monitor the day-to-day operation of the IRIS-H and provide further instructions where necessary.
Beyond the basic hospital mission that is entrusted to all Belgian public and private hospitals the Commission's decision of 28 October 2009 (see above Section 4.1), the General Court's annulment judgment of 7 November 2012 (see above Section 4.2), and the Commission's opening decision of 1 October 2014 (see above Section 4.3), made reference to three additional (or specific) SGEI, in essence relating to (1) universal care; (2) the obligation to provide care at multiple hospital sites; and (3) additional social services, that were only and exclusively entrusted to the IRIS-H. This however does not have to mean that the basic hospital mission and the additional SGEI are necessarily to be assessed in isolation from each other. In this respect, it was mentioned in recital 23 of the opening decision that the Belgian authorities argued that the basic hospital mission is part of, or complementary to, a larger SGEI, namely the obligation to provide social aid as required by the Loi CPAS.
As explained in recitals 165-167, the Commission has come to the conclusion that the additional obligations of the IRIS-H are to be considered together with their basic hospital mission as de facto constituting one social healthcare SGEI. While the basic hospital mission has been defined above (see recital 164) the exact content of each of the additional SGEI obligations is defined in the remainder of this section. Furthermore, it is also pointed out how these additional SGEI obligations are linked with each other and how they contribute to the social healthcare SGEI.
According to the Belgian authorities, the IRIS-H have the obligation to treat all patients, even if they are not able to pay and/or are uninsured, in all circumstances including situations where patients do not require urgent medical care. The complainants put into doubt that such an obligation applies to the IRIS-H and claim that the Brussels private hospitals cannot refuse patients and in fact treat a large number of ‘social patients’. To support their claims, the complainants argue that the LCH entrusts all hospitals with the same hospital mission and, as stated in paragraph 150 of the annulment judgment of 7 November 2012, also refer to the general principle of non-discrimination which would prohibit them from selecting patients according to their ideological, philosophical or religious beliefs or their situation of poverty. According to them, public and private hospitals have the same obligation to treat patients in both emergency and ‘post-emergency’ circumstances.
From the above, the Commission concludes that it is appropriate to distinguish between emergency and non-emergency situations. In emergency situations, public and private hospitals are equally subject to the general obligation (based on the Belgian Criminal Code) to treat patients in a situation of medical emergency. However, there is no legal basis which obliges or entrusts the private hospitals to treat patients also in non-emergency situations and regardless of their ability to pay. Indeed, neither the LCH nor the Criminal Code contain such an obligation and the non-discrimination principle can also not be considered as entrusting such an obligation. Finally, the obligation to provide urgent medical aid to undocumented migrants applies to the CPAS, not to the hospitals that deliver such care.
‘(1)Without prejudice to the competences of the IRIS umbrella association and the competences of IRIS-Achats [procurement branch] and of any other bodies that the umbrella association might set up pursuant to Article 135 undecies of the Organic Law of 8 July 1976 on Public Social Assistance Centres and in accordance with the laws and regulations, the association shall have the most extensive powers in the exercise of its hospital mission.It shall exercise that mission with a view, firstly, to providing quality medical care at optimum cost for everyone, irrespective of their income, insurability, origins and philosophical beliefs, and, secondly, to establishing a sustainable financial equilibrium for the association201
‘In order to fulfil its social task at any moment, the public hospitals of the IRIS network will offer a range of services guaranteeing to everyone the best quality care at generally acceptable financial conditions for all and will be accessible to all patients, regardless of their income, their insurability, their origins and their ideological convictions202
‘The primary objective of the IRIS plan is to maintain a reinforced public hospital network in Brussels that is accessible to all patients, regardless of their income, their insurability, their origins and their ideological and philosophical convictions203
‘access for all patients, without distinction as to their origins, income, philosophical and ideological convictions, their situation of insurability 204
‘Public hospitals [i.e. the IRIS-H] have the basic aim of providing a social medicine; it requires them to meet the requirements of social missions, and this even if this function is not recognised in the legislative and regulatory framework governing the hospital sector.
The role of the public hospitals is to admit and treat all patients irrespective of their origins, circumstances, cultures, beliefs and pathologies. Hence, since they are public, our hospitals must adhere to the principles of universality, equality, continuity and change.
- 1.
The universality principle requires that all patients be admitted, whoever they may be. The hospital must therefore provide treatment at the highest possible level in order to be able to meet the needs of all.
- 2.
The equality principle, a constitutional right, requires that everyone be admitted without any discrimination. […]205
‘The public services are to be defined on the basis of three fundamental principles, universality, equality and continuity. On the basis of those three principles and their public hospital status, hospitals in the IRIS network:
will accept all patients, whoever they may be,
will treat all patients without discrimination,
On the basis of the foregoing, the Commission concludes that the IRIS-H are obliged to treat all patients, in all circumstances (i.e. both in emergency and non-emergency situations), even if they cannot or foreseeably will not be able to pay for their treatment and/or are uninsured. This obligation is laid down and entrusted to the IRIS-H in the above cited bylaws of the IRIS-H and the IRIS strategic plans which are binding on the IRIS-H and which are founded on the obligation in the Loi CPAS to provide social aid (an obligation which is delegated by the CPAS to the IRIS-H by means of these bylaws and strategic plans).
The Commission also notes that the above conclusion, namely that the IRIS-H are obliged to treat all patients in all circumstances (i.e. both in emergency and non-emergency situations) and regardless of patients' ability to pay, while the private hospitals are only obliged to treat all patients in emergency situations (i.e. when care is needed immediately for a life-threatening condition), is furthermore reflected in the different profiles of the patients treated by the IRIS-H and the private hospitals in the Brussels Capital Region and their respective pricing policies.
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|---|
CHU Saint-Pierre* | 1st | 1st | 1st | 1st | 1st | 1st | 1st |
CHU Brugmann* | 2nd | 2nd | 2nd | 2nd | 2nd | 2nd | 2nd |
Hôpitaux IRIS Sud* | 5th | 3rd | 3rd | 3rd | 3rd | 3rd | 3rd |
HUDERF* | 62nd | 4th | 4th | 6th | No figures | 5th | No figures |
Institut Bordet* | 23rd | 16th | 31st | 34th | No figures | 18th | 35th |
Clin. Ste Anne St Remi+ | 52nd | 42nd | 52nd | 62nd | 40th | 32nd | 28th |
Clinique Saint Jean+ | 25th | 21st | 44th | 59th | 39th | 27th | No figures |
Cliniques de l'Europe+ | 64th | 24th | 90th | 93rd | 61st | 63rd | 62nd |
CHIR Edith Cavell+ | 110th | 103rd | 108th | 105th | No figures | 105th | 103rd |
Clinique Univ. Erasme+ | 49th | 41st | 48th | 58th | 51st | 41st | 36th |
Clinique Univ. St Luc+ | 93rd | 67th | 95th | 94th | 76th | No figures | No figures |
UZ Brussel+ | 80th | 74th | 91st | 97th | 78th | No figures | No figures |
- First and foremost, the publication's definition of ‘social patients’219 only concerns persons who are insured by the Belgian social security220 and hence does not include those patients who cannot pay and are not covered by the social security. It is however the latter group that benefits most from the universal care obligation and that represents the largest financial burden for the IRIS-H (see also recitals 187-188). Based on the broad definition used in the publication, almost 20 % (respectively about 26 %) of the admissions in private (respectively public) hospitals in Brussels would have concerned ‘social patients’, and private hospitals would have treated almost 66 % of the total number of these patients in 2001.
- Second, even the ‘precarious patients’221, which the publication defines as a subgroup of the ‘social patients’, are covered by the social security and there is no reason to assume that they cannot pay their own contribution. However, it could be argued that such ‘precarious patients’ may have a higher likelihood of not being able to pay the own contribution to the hospital. The publication shows that public hospitals treat about 48 % of ‘precarious patients’, compared to 52 % being treated by private Brussels hospitals. However, proportionally, the public hospitals treat many more of such patients than would be expected based on their market share (in terms of beds and number of admissions). Indeed, ‘precarious patients’ would make up 9,5 % of the admissions in public hospitals compared to only 4,1 % in private hospitals.
Third, in any case, the observation that in 2001 Brussels private hospitals would have treated 52 % (respectively 66 %) of ‘precarious’ (respectively ‘social’) patients cannot change the conclusion that only the IRIS-H have a universal care obligation. Indeed, in the absence of any legal obligation for private hospitals to treat all patients regardless of their ability to pay and their insurance status, any possible decision of private hospitals to provide care to ‘precarious’ or ‘social’ patients in non-emergency situations would be purely voluntary and could thus be reversed at any moment. Furthermore, the most vulnerable group of patients, i.e. those who are not covered by the social security or any other insurance, are not included in the publication's statistics. This also explains the apparent divergence between the publication's figures for 2001 and the Federal Public Service for Public Health's ranking (see recital 185) for the period 2007-2013. While this Public Service's ranking takes into account the proportion of patients who are not covered by the social security, the publication's statistics only include patients with social security cover.
For all of the above reasons, the Commission considers that the publication of the Mutualités Chrétiennes with statistics for the year 2001 cannot be taken as evidence that the IRIS-H would not have a universal care obligation or that the Brussels private hospitals would have a comparable obligation.
Finally, it is important to put into context the funding provided under Section B8 of the BMF which is awarded to hospitals with a weak socioeconomic patient profile. This limited Federal financing is meant to compensate some of the costs related to ‘social patients’ (e.g. due to the fact that on average such patients stay longer in the hospital than other patients) but is not compensation for a universal care obligation. The Section B8 financing does not compensate the actual costs incurred by hospitals for the treatment of social patients (e.g. the non-paid invoices by social patients, the need to have additional social workers). Instead, a fixed budget (i.e. approx. EUR 25 million per year for Belgium as a whole) is allocated on the basis of the ranking of the hospitals' socioeconomic patient profile (see recital 185). Since the top three positions in this ranking are occupied by the IRIS-H these hospitals also receive a larger proportion of the Section B8 financing in comparison to lower-ranked hospitals (such as the Brussels private hospitals). The reason why both public and private hospitals are in principle eligible for this financing is that even in the absence of a universal care obligation like the one entrusted to the IRIS-H, hospitals can freely choose to treat social patients. They may do so because not all social patients are unable to pay or are uninsured. In fact, for social patients that are covered by the social security often lower tariffs apply and the INAMI pays a larger share which reduces the financial risk for the hospital. It is also the case that not every CPAS in Belgium has chosen to establish their own hospital. Therefore, in order to fulfil their social aid obligation, the CPAS can rely on private hospitals. In such situations, a private hospital would naturally treat a number of social patients and could also be eligible for the Section B8 financing foreseen by the BMF. However, in the Brussels Capital Region the CPAS can rely on the public IRIS-H which explains why the ranking in recital 185 shows that the average socioeconomic profile of the Brussels private hospitals' patients is significantly better than that of the IRIS-H. For all these reasons, the Section B8 BMF funding cannot be interpreted as an indication of the existence of a universal care obligation for all Belgian hospitals.
Based on the above, the Commission concludes that the universal care obligation only applies to the IRIS-H, is clearly entrusted and defined by the IRIS-H bylaws and the IRIS strategic plans in line with the requirements of the Loi CPAS (see recitals 29-30), and is also reflected in the ranking of the hospitals' socioeconomic patient profile (see recital 185). This obligation ensures that poor people in the Brussels Capital Region receive adequate medical treatment even if they cannot pay including in non-emergency situations. In this way, the IRIS-H provide social healthcare fulfilling the needs of the local population. As explained in the previous recital, only part of the burden of this obligation is covered directly (e.g. via reimbursement of treatment costs by the CPAS). The remaining burden is therefore covered via the deficit compensation at issue in this decision.
The Belgian authorities consider that the IRIS-H also have the specific obligation to offer a full range of basic hospital services at multiple sites in the Brussels Capital Region. According to the complainants it is however not clear what the obligation to offer complete ‘multi-site’ basic hospital care activities comprises, nor to what extent this obligation imposes additional burdens on the IRIS-H. The complainants however do not claim that the Brussels private hospitals have such an obligation.
With regard to the IRIS-H, the municipalities and CPAS prioritised the maintenance of local care provision over the concentration of hospital beds. They specifically chose to offer a full range of basic treatments on all sites which due to the necessary duplication of infrastructure, equipment and activities led to higher costs. It is on that basis that in the 1995 Brussels hospital restructuring the CPAS and the municipalities deliberately chose to retain the existing multi-site local hospital services offering a full range of treatments, given the needs of the population. They found that the local medico-social need prompting the initial creation of the public hospitals had not ceased to exist. In this context, it must be noted that most of the IRIS-H sites are located in the poorest municipalities of the Brussels Capital Region (see also recital 202). The public authorities hence willingly renounced efficiency gains, to the detriment of their purely financial interest, and chose to keep all existing hospital sites even though they knew that the federal hospital financing measures would not cover all the costs (e.g. due to duplication of infrastructure and operating costs, see also recital 203). This choice is reflected in the IRIS strategic plans and therefore obliges the IRIS-H to maintain all hospital sites so that patients can receive all basic treatments as close as possible to their homes.
[…]
‘Maintaining the core activity on the different sites. Patients, especially elderly patients, can hence continue to receive hospital care at a reasonable distance from their home 233
‘Iris adopts the principle of a patient-centred organisation, enclosed in a public network of institutions working together between them in order to ensure the provision of proximity and specialised care 236
‘Taking into account the geographical distribution of the IRIS sites, their impact on the general population coverage, sometimes in social destitution, the first developed objective is to ensure at each site quality proximity medicine that is effective and accessible.
The IRIS hospitals — apart from the Institut Bordet and the Queen Fabiola Children's University Hospital (HUDERF)237 which are mono-specialised reference hospitals — have as their primary vocation to offer proximity medicine responding to a local demand by patients living in neighbouring municipalities 238
‘That series of constraints, necessitating restructuring, must be addressed in the wider context of our strategic objectives, which may be stated as follows:
the IRIS public hospitals network must be a key element in the future of the Brussels healthcare system,
our hospitals must adapt to changes in the needs of the Brussels population,
the network must be restructured for and around patients,
the modernisation of the network must be based on a new momentum for the hospital community generally and the medical community in particular.’
‘In that context, the restructuring must guarantee:
the continuation of medical and treatment activities at each hospital site, consistent with our mission to provide local medical services,
the pursuit of financial equilibrium aims,
harmonious development of the network in order to balance the general and specific interests of each entity,
greater coordination and collaboration between entities in the network,
accessibility of the network and maintenance of its public character,
The multiple sites obligation can also be considered as a burden for the IRIS-H as it requires them to duplicate certain infrastructure and brings higher operating costs. These costs relate mainly to the need to provide each site with services such as an emergency service, a sterilisation service, a monitoring and security service and its own administration. In fact, the BMF financing (see recital 46(a)) is granted for only one such service for each hospital, irrespective of the number of its sites. The operating costs related to the various areas (maintenance, heating, cleaning, etc.) are added to those additional infrastructure and equipment costs. Based on a study made by the IRIS umbrella organisation in 2009, the costs of the multi-site obligation that were not covered by the BMF financing were estimated at EUR […] million for 2008 and EUR […] million for 2009 for the five IRIS-H together.
The Commission concludes that on the basis of the IRIS strategic plans the IRIS-H are entrusted with the clear obligation to (1) maintain all their hospital sites in order to meet the medico-social needs of the respective local populations; and (2) to provide a full range of basic care activities on all these sites. In particular, the IRIS strategic plan lays down the types of activities that are considered as basic care respectively specialised care and indicates for each of the IRIS-H sites what types of care have to be offered. Furthermore, the provisions in the IRIS-H bylaws and the Loi CPAS ensure that the IRIS-H are fully aware of and managed in the light of the medico-social needs of the local population. In addition, the multiple sites obligation goes beyond the requirements of the LCH and the programming mechanisms as the latter does not take into account the social needs of a particular population and the specific social conditions in a geographical area. Private hospitals hence neither are obliged to operate on several sites nor are they required to provide a full range of basic care on each site (in case they choose to have multiple sites). Finally, as explained in the previous recital, the multi-site obligation generates significant costs for the IRIS-H that are not covered by the BMF and hence contribute to the deficit of the IRIS-H.
‘Comprehensive care of patients: The patient cannot be reduced to the medical condition for which he requires care. Certain categories of patients in particular require comprehensive care, covering not only purely medical aspects, but also psychosocial and environmental aspects: this concerns geriatric patients, paediatric patients, terminally ill patients, psychiatric patients, socially disadvantaged patients etc.251
‘The [IRIS] hospitals must have social services whose main role is to contribute to the welfare of patients, the medical quality and the optimal functioning of the institution. The social service is a colleague of the hospital's manager and partner of all the departments of the hospital. It is responsible for the humanisation of the conditions of a patient's stay in the hospital. It has to take care of social difficulties of patients ideally before but also during the stay and when leaving the hospital. It is the privileged link between the hospital and the patient, his family and his environment. To do this, it must:
have the time and professional capacity to assess the needs of the patient with himself, his family and entourage and with the healthcare teams and to develop with him appropriate responses,
have access to files regarding the admission and the patient's health which may contain social data which can contribute to the quality of care,
be kept informed in due time of the date of transfer or exit to implement appropriate arrangements,
give an opinion on patients with complex profiles and diseases,
establish, with the financial services, the legal arrangements, given that the limits of its intervention are determined by the professional ethics of patient-centred relationship in all its aspects,
coordinate with the CPAS,
have knowledge of the existing health and social networks,
propose improvements of the functioning of the hospital,
have an infrastructure that guarantees confidentiality of exchanges and data.
The mission of social medicine which is the vocation of the public hospitals implies that they fulfil a coordination role among the healthcare stakeholders, that they participate in the health and social networks or even create such networks, and they are directly involved in the creation of IRIS ancillary services necessary to meet the needs of the population (hotel de soins, hotel des familles, palliative care at home, care for drug addicts, homeless, domestic care services, etc.). They will carry out the accreditation of bodies with whom they will cooperate252
‘The reception should be considered differently according to whether the patient arrives via the emergencies, a consultation or through admissions; the reception must, in any event, ensure discretion and comfort for patients, and to help to allay the patient's concerns and those of his family. The social services of our hospitals play a crucial role in this respect 253
‘Social services are essential in public hospitals to support both in- and out-patients. These involve assisting patients and their families in resolving and managing administrative, financial, relationship and social problems related to the disease, the hospital stay and treatment, as well as the new prognosis and circumstances.
The social service:
accompanies patients in their autonomy and independence,
will make sure to incorporate in the overall care the patient's norms, values, and culture, it therefore revolves around administrative assistance, psychosocial support, a role with respect to information, prevention, awareness, collaboration and coordination. The social services will therefore act at different levels according to whether patients need socio-material psycho-social, or socio-administrative support,
requires the technical and interpersonal skills, at the same time conceptual and technical, and also personal and relational qualities.
[…]
In conclusion, social services have multiple responsibilities:
organising the patient's hospital admission and making the best possible arrangements for their discharge to an appropriate place,
helping the patient to obtain social security cover enabling them to meet their medical costs.
In this respect, the social service and social workers pursue the same objectives and interests as the hospital and their specific activity has an impact on reducing hospital stays and on the recovery of costs incurred by the hospital 254
‘The social service establishes an electronic file which can follow the patients throughout the [IRIS] network. It also carries out the investigation into the financial means [of the patients], it completes the codes ‘V’ of the RCM255 and other records required by the regulations. This [social] file will as soon as possible be linked to the medical file and the central IT systems. The registration of the social file must provide a scoreboard of the social missions of the public [IRIS] hospitals256
The staff of the IRIS-H social services departments have received specific training and follow a professional code of ethics taking account of their role as liaison between different services within the hospital (including doctors, nurses, billing and admission) or outside (such as social security cover, home care and support, linguistic and cultural aspects).
On the basis of the foregoing, the Commission concludes that unlike the Brussels private hospitals, the IRIS-H have the obligation to operate elaborate social services departments who help patients and their families in resolving and managing administrative, financial, relationship and social problems. This obligation is defined in and entrusted to the IRIS-H by the IRIS strategic plans. The existence of this extensive social services obligation is reflected by the large number of social workers employed by the IRIS-H going far beyond what is applicable to other Belgian hospitals. The tasks of the IRIS-H's social services departments include taking care of the aforementioned difficulties of patients not only during their stay but also when leaving the hospital, helping the patients to obtain social security cover enabling them to meet their medical costs, preparing social inquiries and exchanging information with the other hospital departments and also with the CPAS. This obligation and its burden are closely linked to the other obligations that constitute the social healthcare SGEI (see recital 167). Indeed, it is because the IRIS-H have the obligation to treat all patients in all circumstances and regardless of their ability to pay that there is a greater demand for social workers. It is precisely poor patients and their families who need additional social services and for whom a social inquiry has to be prepared. Furthermore, it is also because the IRIS-H have the obligation to maintain multiple sites that the number of social workers is higher than what can be reasonably expected (i.e. one social worker for every 2 000 admissions, see recital 213).
The Commission concludes that the IRIS-H are performing a social healthcare SGEI which on top of their basic hospital mission in addition includes their obligation (1) to treat all patients in all circumstances (including non-emergency situations), regardless of patients' ability to pay; (2) to offer a full range of basic hospital services on multiple sites; and (3) to complement the medical care with extensive support by their elaborate social services departments. This combination of obligations ensures that the specific social needs of the Brussels population with regard to hospital services are fulfilled and guarantees the accessibility to high quality hospital care for all and in particular for the poorest. No such additional obligations apply to the Brussels private hospitals who are only entrusted with the basic hospital mission defined by the LCH. The social healthcare SGEI is therefore only provided by the IRIS-H as only they are entrusted with more stringent and far reaching obligations on top of the minimum requirements (i.e. the basic hospital mission) that apply to all hospitals in Belgium under the LCH. The performance of this social healthcare SGEI entails significant costs for the IRIS-H that are not or only partially covered by the financing sources common to both public and private hospitals, and as a result lead to the deficits reported by the IRIS-H. In order to ensure the continuity of their public hospitals, the respective Brussels CPAS and municipalities therefore compensate the deficits of the IRIS-H as described in Sections 7.3.4.4 and 7.3.5.
Each individual IRIS-H has its own bylaws which specify their objective and the IRIS strategic plans apply to each of the five IRIS-H. In addition, like all Belgian hospitals, the IRIS-H have received an individual authorisation which they need in order to be eligible for the other types of public financing (such as the BMF). These entrustment acts do not specify a territory for the performance of their SGEI.
The IRIS-H are not entrusted with any exclusive or special rights.
‘Without prejudice to Article 109 [LCH], the result of the financial year shall be allocated between partners holding at least one fifth of the votes in the General Assembly by decision of the General Assembly.’
- This deficit compensation is without prejudice to the mechanism foreseen by Article 109 LCH (now Article 125 of the LCH in the version of the Law of 10 July 2008) which requires that municipalities cover the deficit of their public hospital with the exclusion of certain activities261. However, as will be explained below (see recital 235), the Article 109 deficit compensation has no real impact in this case since upon reception, the IRIS-H immediately fully repay these amounts to the municipality.
The result to be covered is that which is reported in the hospital accounts (i.e. it concerns the accounting deficit of the hospital as a whole and hence also includes the result of the ancillary activities of the IRIS-H, see also recital 41). Unlike Article 109 LCH, Article 46 of the IRIS-H bylaws does not exclude certain activities from the deficit. However, it is also clear that the compensation cannot go beyond the accounting deficit as the compensation is limited to the result of the financial year.
- Only partners that have at least one fifth of the votes in the General Assembly are required to contribute to cover the deficit. In practice, this means that only the municipalities and the CPAS have to contribute262.
On the basis of the fact that the IRIS-H only perform SGEI and ancillary activities, Article 46 of the bylaws of each IRIS-H establishes a clear compensation mechanism by indicating that the result of the financial year (without any exceptions) has to be covered. This result is determined on the basis of a clear set of accounting principles that apply equally to both public and private Belgian hospitals. Furthermore, each hospital is required (on the basis of Articles 80-85 LCH) to appoint an independent auditor who checks their accounts and results (see recital 49).
‘The CPAS can rely upon the cooperation with persons, facilities or services, which, established either by public authorities or by private initiative, will be able to use the means to achieve the various solutions that present themselves, while respecting the free choice of the person concerned.
The CPAS can bear the potential costs of this cooperation when these are not covered by the implementation of another law, regulation, agreement or a judicial decision.’
Finally, as explained above (see recitals 22 and 44) municipalities are required to cover the deficit of their CPAS. As a result, it is the municipality that has the ultimate responsibility to cover the entire deficit of its public hospital.
As will be explained below, the deficit compensation mechanism operates in such a way that the risk of overcompensation at all occurring is already very limited in the first place (see recital 247). In addition, the Law of 14 November 1983 (see recitals 248-250) and the Loi CPAS (see recitals 251-252) provide the municipalities with the necessary legal means to control for overcompensation and to recover overcompensation, if any.
In practice, the timing of the payments by the municipalities to the IRIS-H has always depended on the available funds in the municipal treasuries. Since there usually was insufficient money available, the municipalities tended to postpone the payment of the hospital deficit. In theory, they could keep postponing until the moment when the Federal Public Service for Public Health determined the Article 109 LCH deficit since this would then force the municipalities to pay (part) of the hospitals' deficits. However, there was a long delay (of up to 10 years) between the moment when the accounting deficit was known and when the Article 109 LCH deficit was calculated. This meant that between 1996 and 2002, the IRIS-H accumulated enormous deficits (i.e. more than EUR 50 million). To cover this gap in their financing, the IRIS-H were forced to take up bank loans, the costs of which further increased their deficits.
The deficits incurred by the IRIS-H in the accounting years 1996 until 2002 were only compensated by the municipalities from 2002 onwards using the financing they had received from the FRBRTC. The compensation of the deficits for this period was only concluded in 2008. For the compensation of the deficits incurred since 2003, the municipalities have no longer relied on the FRBRTC financing.
(EUR) | ||||||
Year | CHU St. Pierre | CHU Brugmann | ISH | HUDERF | Institut Bordet | Total |
|---|---|---|---|---|---|---|
2003 | 1 620 000 | 1 770 000 | 3 765 000 | 820 000 | 2 025 000 | 10 000 000 |
2004 | 1 541 775 | 1 457 000 | 3 765 000 | 781 981 | 1 321 316 | 8 867 072 |
2005 | 2 132 928 | 3 657 000 | 3 765 000 | 778 000 | 800 000 | 11 132 928 |
2006 | — | 3 657 000 | 3 765 000 | 778 000 | 1 800 000 | 10 000 000 |
2007 | 278 330 | 4 125 610 | 3 765 000 | 622 529 | 1 208 531 | 10 000 000 |
2008 | 308 367 | 3 999 767 | 3 765 000 | 871 350 | 1 055 516 | 10 000 000 |
2009 | 490 002 | 3 231 504 | 3 765 000 | 1 246 998 | 1 266 496 | 10 000 000 |
2010 | 565 440 | 3 644 432 | 3 388 500 | 1 401 628 | — | 9 000 000 |
2011 | 654 580 | 3 206 932 | 3 576 750 | 1 220 232 | 841 506 | 9 500 000 |
2012 | 1 091 761 | 3 380 656 | 3 765 000 | 945 316 | 817 267 | 10 000 000 |
2013 | 1 826 753 | 2 500 348 | 3 765 000 | 635 966 | 1 271 933 | 10 000 000 |
2014 | 1 390 000 | 2 847 000 | 3 765 000 | 618 000 | 1 380 000 | 10 000 000 |
Total | 11 899 936 | 37 477 249 | 44 615 250 | 10 720 000 | 13 787 565 | 118 500 000 |
Accounting-wise, the part of the special subsidy has in some years been directly accounted for in the hospital's result (hence lowering the remaining deficit) while in other years the amount was accounted as a compensation of the deficit (i.e. in the attribution of the result). In addition, there has been an accounting delay in 2004 for the CHU Saint-Pierre so that its part of the special subsidy was only recorded in the accounts of the next year. This explains why the total amount of special subsidy for the five IRIS-H in 2004 is only EUR 8 867 072 while in 2005 it is EUR 11 132 928, the two summing up to EUR 20 million (or EUR 10 million per year as was the intention). Despite these differences in accounting treatment, the principle behind these payments has always been to give a quick (and usually partial) compensation of the deficit without resulting in overcompensation (see the remainder of this section).
(EUR) | |||
CHU Saint-Pierre | Accounting deficit | Payments by municipality | Open Balance |
|---|---|---|---|
1996 | – 5 737 856 | 0 | – 5 737 856 |
1997 | – 6 754 920 | 0 | – 12 492 776 |
1998 | – 3 696 235 | 0 | – 16 189 011 |
1999 | – 752 234 | 0 | – 16 941 245 |
2000 | – 1 072 993 | 0 | – 18 014 238 |
2001 | – 1 416 937 | 0 | – 19 431 174 |
2002 | – 2 914 245 | 3 368 351 | – 18 977 068 |
2003 | – 2 629 012 | 4 925 162 | – 16 680 918 |
2004 | – 1 541 775 | 11 571 300 | – 6 651 393 |
2005 | – 2 248 399 | 1 000 000 | – 7 899 792 |
2006 | 98 114 | 2 886 635 | – 4 915 043 |
2007 | – 774 755 | 2 217 900 | – 3 471 897 |
2008 | – 1 054 119 | 2 356 333 | – 2 169 683 |
2009 | – 1 000 933 | 490 002 | – 2 680 614 |
2010 | – 1 576 429 | 565 440 | – 3 691 602 |
2011 | – 949 668 | 654 580 | – 3 986 690 |
2012 | – 1 079 200 | 1 091 761 | – 3 974 129 |
2013 | – 1 880 205 | 1 826 753 | – 4 027 580 |
2014 | – 1 441 778 | 1 900 931 | – 3 568 427 |
Total | – 38 423 575 | 34 855 148 | – 3 568 427 |
(EUR) | |||
CHU Brugmann | Accounting deficit | Payments by municipality | Open Balance |
|---|---|---|---|
1996 | N/A | N/A | N/A |
1997 | N/A | N/A | N/A |
1998 | N/A | N/A | N/A |
1999 | – 508 171 | 0 | – 508 171 |
2000 | – 3 755 229 | 0 | – 4 263 399 |
2001 | – 5 440 039 | 0 | – 9 703 438 |
2002 | – 1 976 934 | 0 | – 11 680 371 |
2003 | – 1 697 238 | 1 770 000 | – 11 607 609 |
2004 | – 1 442 292 | 1 457 000 | – 11 592 901 |
2005 | – 7 413 186 | 4 404 420 | – 14 601 667 |
2006 | – 14 180 725 | 10 893 584 | – 17 888 808 |
2007 | – 6 954 466 | 10 151 330 | – 14 691 944 |
2008 | – 6 308 290 | 6 699 647 | – 14 300 587 |
2009 | – 6 228 859 | 3 231 504 | – 17 297 942 |
2010 | – 5 011 208 | 3 644 432 | – 18 664 719 |
2011 | – 2 982 442 | 3 224 315 | – 18 422 846 |
2012 | – 2 945 806 | 16 219 985 | – 5 148 666 |
2013 | – 2 799 788 | 7 090 156 | – 858 298 |
2014 | – 2 923 714 | 2 847 000 | – 935 012 |
Total | – 72 568 385 | 71 633 373 | – 935 012 |
(EUR) | |||
HUDERF | Accounting deficit | Payments by municipality | Open Balance |
|---|---|---|---|
1996 | – 1 505 830 | 0 | – 1 505 830 |
1997 | – 1 026 881 | 0 | – 2 532 711 |
1998 | – 245 113 | 0 | – 2 777 825 |
1999 | 1 642 | 0 | – 2 776 183 |
2000 | – 484 951 | 0 | – 3 261 134 |
2001 | – 1 218 954 | 0 | – 4 480 088 |
2002 | – 479 490 | 883 192 | – 4 076 386 |
2003 | – 1 117 778 | 1 583 539 | – 3 610 625 |
2004 | – 781 981 | 1 863 863 | – 2 528 742 |
2005 | – 1 279 230 | 778 000 | – 3 029 973 |
2006 | – 2 494 074 | 1 605 532 | – 3 918 515 |
2007 | – 2 687 621 | 1 688 424 | – 4 917 712 |
2008 | – 2 314 050 | 1 208 667 | – 6 023 095 |
2009 | – 1 868 670 | 1 246 998 | – 6 644 767 |
2010 | – 1 823 049 | 1 401 628 | – 7 066 187 |
2011 | – 1 620 663 | 1 220 232 | – 7 466 618 |
2012 | – 945 316 | 5 525 711 | – 2 886 223 |
2013 | – 528 779 | 635 966 | – 2 779 036 |
2014 | – 618 000 | 2 682 372 | – 714 664 |
Total | – 23 038 788 | 22 324 124 | – 714 664 |
(EUR) | |||
Institut Bordet | Accounting deficit | Payments by municipality | Open Balance |
|---|---|---|---|
1996 | 752 505 | 0 | 752 505 |
1997 | 170 241 | 0 | 922 745 |
1998 | 41 349 | 0 | 964 094 |
1999 | 44 371 | 0 | 1 008 465 |
2000 | 5 439 | 0 | 1 013 904 |
2001 | 154 518 | 0 | 1 168 423 |
2002 | – 4 929 106 | 0 | – 3 760 683 |
2003 | – 4 916 506 | 2 025 000 | – 6 652 189 |
2004 | – 2 001 995 | 1 321 316 | – 7 332 868 |
2005 | – 771 467 | 800 000 | – 7 304 335 |
2006 | – 1 817 630 | 1 800 000 | – 7 321 966 |
2007 | – 1 874 162 | 2 673 741 | – 6 522 386 |
2008 | – 1 624 347 | 4 519 412 | – 3 627 322 |
2009 | – 688 005 | 1 266 496 | – 3 048 830 |
2010 | – 655 634 | 0 | – 3 704 465 |
2011 | – 838 644 | 841 506 | – 3 701 602 |
2012 | – 833 460 | 4 465 110 | – 69 952 |
2013 | – 2 551 468 | 1 271 933 | – 1 349 487 |
2014 | – 1 943 857 | 2 023 112 | – 1 270 232 |
Total | – 24 277 858 | 23 007 626 | – 1 270 232 |
(EUR) | |||
ISH | Accounting deficit | Payments by municipality | Open Balance |
|---|---|---|---|
1996 | N/A | N/A | N/A |
1997 | N/A | N/A | N/A |
1998 | N/A | N/A | N/A |
1999 | – 1 248 404 | 0 | – 1 248 404 |
2000 | – 7 220 971 | 0 | – 8 469 375 |
2001 | – 14 782 680 | 0 | – 23 252 055 |
2002 | – 12 978 574 | 416 079 | – 35 814 550 |
2003 | – 7 990 196 | 6 018 822 | – 37 785 924 |
2004 | – 5 941 987 | 13 425 604 | – 30 302 307 |
2005 | – 4 440 896 | 3 765 000 | – 30 978 203 |
2006 | – 5 022 247 | 12 622 542 | – 23 377 907 |
2007 | – 3 882 170 | 10 885 280 | – 16 374 797 |
2008 | – 3 779 570 | 10 885 190 | – 9 269 178 |
2009 | – 3 774 545 | 3 765 000 | – 9 278 722 |
2010 | – 3 387 655 | 3 388 500 | – 9 277 877 |
2011 | – 3 572 694 | 3 576 750 | – 9 273 821 |
2012 | – 3 767 190 | 3 765 000 | – 9 276 011 |
2013 | – 3 761 761 | 3 765 000 | – 9 272 772 |
2014 | – 3 760 497 | 3 765 000 | – 9 268 269 |
Total | – 89 312 036 | 80 043 767 | – 9 268 269 |
(EUR) | |||||
CHU St. Pierre | CHU Brugmann | ISH | HUDERF | Institut Bordet | |
|---|---|---|---|---|---|
1996 | 560 322,61 | 0 | 2 727 844,19 | 0 | 0 |
1997 | 0 | 0 | 3 051 321,12 | 0 | 0 |
1998 | 0 | 0 | 553 331 | 0 | 0 |
1999 | 0 | 781 686,52 | 345 176,04 | 0 | 0 |
2000 | 1 019 647,97 | 0 | 0 | 0 | 2 483 585,21 |
2001 | 0 | 2 511 189,37 | 126 193,12 | 263 390,41 | 4 681 594,58 |
2002 | 0 | 0 | 0 | 0 | 0 |
2003 | 0 | 0 | 3 658 304,97 | 0 | 1 699 065,2 |
2004 | 0 | 0 | 0 | 0 | 705 798,98 |
2005 | 0 | 0 | 0 | 0 | 0 |
2006 | 0 | 5 727 775,67 | 0 | 384 527,59 | 0 |
The Commission has examined whether the deficit compensation payments by the municipalities for a particular year (using financing from the FRBRTC, the special subsidies from the Brussels Capital Region, and their own means) exceeded the accounting deficit of that year. In this context, the Commission recalls that the IRIS-H only receive compensation for deficits incurred in the performance of SGEI and some limited ancillary activities. The below Tables 9 to 13 show the relevant figures for each IRIS-H. It is however important to keep in mind that these tables do not reflect at what point in time the municipality compensated (part of) the deficit. Indeed, it is Tables 3 to 7 above (see recital 234) which show in which years the municipalities made deficit compensation payments to the IRIS-H. Tables 9 to 13 on the contrary indicate how much the municipalities paid (usually in several instalments) to the IRIS-H to compensate the deficit of a particular year without taking into account when these payments were actually made. While Tables 9 to 13 have been constructed to be able to assess whether there was any overcompensation for that year in isolation, in practice none of the IRIS-H ever benefited from actual overcompensation as explained below (see recital 238).
(EUR) | ||||||
CHU St. Pierre | Accounting deficit | Financed via FRBRTC or Region special subsidy283 | Additional municipal contributions | Total compensation awarded | Over (+) or Under (–) compensation for the year | Aggregate Over (+) or Under (–) compensation |
|---|---|---|---|---|---|---|
1996 | – 5 737 856 | 5 738 735 | 0 | 5 738 735 | 879 | 879 |
1997 | – 6 754 920 | 6 855 099 | 0 | 6 855 099 | 100 179 | 101 058 |
1998 | – 3 696 235 | 3 696 092 | 0 | 3 696 092 | – 143 | 100 915 |
1999 | – 752 234 | 751 117 | 0 | 751 117 | – 1 117 | 99 798 |
2000 | – 1 072 993 | 1 072 993 | 0 | 1 072 993 | 0 | 99 798 |
2001 | – 1 416 937 | 1 416 000 | 0 | 1 416 000 | – 937 | 98 862 |
2002 | – 2 914 245 | 2 914 245 | 0 | 2 914 245 | 0 | 98 862 |
2003 | – 2 629 012 | 1 620 000 | 0 | 1 620 000 | – 1 009 012 | – 910 150 |
2004 | – 1 541 775 | 1 541 775 | 0 | 1 541 775 | 0 | – 910 150 |
2005 | – 2 248 399 | 2 132 928 | 0 | 2 132 928 | – 115 471 | – 1 025 621 |
2006 | 98 114 | 0 | 0 | 0 | 0 | – 1 025 621 |
2007 | – 774 755 | 278 330 | 0 | 278 330 | – 496 425 | – 1 522 045 |
2008 | – 1 054 119 | 308 367 | 0 | 308 367 | – 745 752 | – 2 267 797 |
2009 | – 1 000 933 | 490 002 | 510 931 | 1 000 933 | 0 | – 2 267 797 |
2010 | – 1 576 429 | 565 440 | 0 | 565 440 | – 1 010 989 | – 3 278 785 |
2011 | – 949 668 | 654 580 | 0 | 654 580 | – 295 088 | – 3 573 873 |
2012 | – 1 079 200 | 1 091 761 | 0 | 1 091 761 | 12 561 | – 3 561 312 |
2013 | – 1 880 205 | 1 826 753 | 0 | 1 826 753 | – 53 452 | – 3 614 763 |
2014 | – 1 441 778 | 1 390 000 | 0 | 1 390 000 | – 51 778 | – 3 666 541 |
– 38 423 575 | 34 344 217 | 510 931 | 34 855 148 | – 3 666 541 | ||
(EUR) | ||||||
ISH | Accounting deficit | Financed via FRBRTC or Region special subsidy | Additional municipal contributions | Total compensation awarded | Over (+) or Under (–) compensation for the year | Aggregate Over (+) or Under (–) compensation |
|---|---|---|---|---|---|---|
1999 | – 1 248 404 | 446 209 | 0 | 446 209 | – 802 195 | – 98 571284 |
2000 | – 7 220 971 | 7 221 056 | 0 | 7 221 056 | 85 | – 98 486 |
2001 | – 14 782 680 | 14 782 680 | 0 | 14 782 680 | 0 | – 98 486 |
2002 | – 12 978 574 | 12 978 572 | 0 | 12 978 572 | – 2 | – 98 488 |
2003 | – 7 990 196 | 3 765 000 | 0 | 3 765 000 | – 4 225 196 | – 4 323 684 |
2004 | – 5 941 987 | 3 765 000 | 0 | 3 765 000 | – 2 176 987 | – 6 500 671 |
2005 | – 4 440 896 | 3 765 000 | 0 | 3 765 000 | – 675 896 | – 7 176 566 |
2006 | – 5 022 247 | 3 765 000 | 0 | 3 765 000 | – 1 257 247 | – 8 433 813 |
2007 | – 3 882 170 | 3 765 000 | 0 | 3 765 000 | – 117 170 | – 8 550 983 |
2008 | – 3 779 570 | 3 765 000 | 0 | 3 765 000 | – 14 570 | – 8 565 553 |
2009 | – 3 774 545 | 3 765 000 | 0 | 3 765 000 | – 9 545 | – 8 575 098 |
2010 | – 3 387 655 | 3 388 500 | 0 | 3 388 500 | 845 | – 8 574 253 |
2011 | – 3 572 694 | 3 576 750 | 0 | 3 576 750 | 4 056 | – 8 570 197 |
2012 | – 3 767 190 | 3 765 000 | 0 | 3 765 000 | – 2 190 | – 8 572 387 |
2013 | – 3 761 761 | 3 765 000 | 0 | 3 765 000 | 3 239 | – 8 569 148 |
2014 | – 3 760 497 | 3 765 000 | 0 | 3 765 000 | 4 503 | – 8 564 645 |
– 89 312 036 | 80 043 767 | 0 | 80 043 767 | – 9 268 269 | ||
(EUR) | ||||||
HUDERF | Accounting deficit | Financed via FRBRTC or Region special subsidy | Additional municipal contributions | Total compensation awarded | Over (+) or Under (–) compensation for the year | Aggregate Over (+) or Under (–) compensation |
|---|---|---|---|---|---|---|
1996 | – 1 505 830 | 1 504 714 | 0 | 1 504 714 | – 1 116 | – 1 116 |
1997 | – 1 026 881 | 1 026 279 | 0 | 1 026 279 | – 602 | – 1 718 |
1998 | – 245 113 | 245 415 | 0 | 245 415 | 302 | – 1 417 |
1999 | 1 642 | 0 | 0 | 0 | 0 | – 1 417 |
2000 | – 484 951 | 484 949 | 0 | 484 949 | – 2 | – 1 419 |
2001 | – 1 218 954 | 1 218 000 | 0 | 1 218 000 | – 954 | – 2 373 |
2002 | – 479 490 | 480 000 | 0 | 480 000 | 510 | – 1 863 |
2003 | – 1 117 778 | 820 000 | 297 778 | 1 117 778 | 0 | – 1 862 |
2004 | – 781 981 | 781 981 | 0 | 781 981 | 0 | – 1 862 |
2005 | – 1 279 230 | 778 000 | 501 230 | 1 279 230 | 0 | – 1 863 |
2006 | – 2 494 074 | 778 000 | 1 716 074 | 2 494 074 | 0 | – 1 863 |
2007 | – 2 687 621 | 622 529 | 2 065 313 | 2 687 842 | 221 | – 1 642 |
2008 | – 2 314 050 | 871 350 | 1 442 700 | 2 314 050 | 0 | – 1 642 |
2009 | – 1 868 670 | 1 246 998 | 621 672 | 1 868 670 | 0 | – 1 642 |
2010 | – 1 823 049 | 1 401 628 | 0 | 1 401 628 | – 421 421 | – 423 062 |
2011 | – 1 620 663 | 1 220 232 | 0 | 1 220 232 | – 400 431 | – 823 493 |
2012 | – 945 316 | 945 316 | 0 | 945 316 | 0 | – 823 493 |
2013 | – 528 779 | 635 966 | 0 | 635 966 | 107 187 | – 716 306 |
2014 | – 618 000 | 618 000 | 0 | 618 000 | 0 | – 716 306 |
– 23 038 788 | 15 679 357 | 6 644 767 | 22 324 124 | – 716 306 | ||
(EUR) | ||||||
Institut Bordet | Accounting deficit | Financed via FRBRTC or Region special subsidy | Additional municipal contributions | Total compensation awarded | Over (+) or Under (–) compensation for the year | Aggregate Over (+) or Under (–) compensation |
|---|---|---|---|---|---|---|
1996 | 752 505 | 0 | 0 | 0 | 0 | 0 |
1997 | 170 241 | 0 | 0 | 0 | 0 | 0 |
1998 | 41 349 | 0 | 0 | 0 | 0 | 0 |
1999 | 44 371 | 0 | 0 | 0 | 0 | 0 |
2000 | 5 439 | 0 | 0 | 0 | 0 | 0 |
2001 | 154 518 | 0 | 0 | 0 | 0 | 0 |
2002 | – 4 929 105 | 4 929 106 | 0 | 4 929 106 | 1 | 1 |
2003 | – 4 916 506 | 2 025 000 | 2 891 506 | 4 916 506 | 0 | 1 |
2004 | – 2 001 995 | 1 321 316 | 680 679 | 2 001 995 | 0 | 1 |
2005 | – 771 467 | 800 000 | 0 | 800 000 | 28 533 | 28 534 |
2006 | – 1 817 630 | 1 800 000 | 17 630 | 1 817 630 | 0 | 28 533 |
2007 | – 1 874 162 | 1 208 531 | 665 631 | 1 874 162 | 0 | 28 533 |
2008 | – 1 624 347 | 1 055 516 | 35 509 | 1 091 025 | – 533 322 | – 504 789 |
2009 | – 688 005 | 1 266 496 | 0 | 1 266 496 | 578 491 | 73 702 |
2010 | – 655 634 | 0 | 0 | 0 | – 655 634 | – 581 932 |
2011 | – 838 644 | 841 506 | 0 | 841 506 | 2 862 | – 579 070 |
2012 | – 833 460 | 817 267 | 0 | 817 267 | – 16 193 | – 595 263 |
2013 | – 2 551 468 | 1 271 933 | 0 | 1 271 933 | – 1 279 535 | – 1 874 798 |
2014 | – 1 943 857 | 1 380 000 | 0 | 1 380 000 | – 563 857 | – 2 438 654 |
– 24 277 858 | 18 716 671 | 4 290 955 | 23 007 626 | – 2 438 654 | ||
(EUR) | ||||||
CHU Brugmann | Accounting deficit | Financed via FRBRTC or Region special subsidy | Additional municipal contributions | Total compensation awarded | Over (+) or Under (–) compensation for the year | Aggregate Over (+) or Under (–) compensation |
|---|---|---|---|---|---|---|
1999 | – 508 171 | 600 000 | 0 | 600 000 | 91 829 | 91 829 |
2000 | – 3 755 229 | 3 755 587 | 0 | 3 755 587 | 358 | 92 188 |
2001 | – 5 440 039 | 5 440 000 | 0 | 5 440 000 | – 39 | 92 149 |
2002 | – 1 976 934 | 1 976 933 | 0 | 1 976 933 | – 1 | 92 149 |
2003 | – 1 697 238 | 1 770 000 | 0 | 1 770 000 | 72 762 | 164 911 |
2004 | – 1 442 292 | 1 457 000 | 0 | 1 457 000 | 14 708 | 179 619 |
2005 | – 7 413 186 | 3 657 000 | 3 756 186 | 7 413 186 | 0 | 179 619 |
2006 | – 14 180 725 | 3 657 000 | 10 523 725 | 14 180 725 | 0 | 179 619 |
2007 | – 6 954 466 | 4 125 610 | 2 828 856 | 6 954 466 | 0 | 179 619 |
2008 | – 6 308 290 | 3 999 767 | 2 505 046 | 6 504 813 | 196 523 | 376 142 |
2009 | – 6 228 859 | 3 231 504 | 2 600 612 | 5 832 116 | – 396 743 | – 20 601 |
2010 | – 5 011 208 | 3 644 432 | 169 179 | 3 813 611 | – 1 197 597 | – 1 218 198 |
2011 | – 2 982 442 | 3 206 932 | 0 | 3 206 932 | 224 490 | – 993 708 |
2012 | – 2 945 806 | 3 380 656 | 0 | 3 380 656 | 434 850 | – 558 858 |
2013 | – 2 799 788 | 2 500 348 | 0 | 2 500 348 | – 299 440 | – 858 298 |
2014 | – 2 923 714 | 2 847 000 | 0 | 2 847 000 | – 76 714 | – 935 011 |
– 72 568 384 | 49 249 769 | 22 383 604 | 71 633 373 | – 935 011 | ||
Finally, the limited profits reported by some of the IRIS-H (i.e. by CHU Saint-Pierre in 2006, HUDERF in 1999 and Institut Bordet between 1996 and 2001) cannot be considered as an indication of overcompensation. Indeed, on the basis of the existing separation of accounts (see recital 226) in these IRIS-H, the Commission concludes that these profits, in all but one case are driven by the profits of the ancillary activities (see recitals 41, 116 and 117) performed by these IRIS-H. The SGEI activities of Institut Bordet made a limited profit in 1996 amounting to about 1 % of the hospital's total revenues for that year. The Commission considers that in any event such a limited profit would be reasonable and would hence not give rise to overcompensation. Furthermore, as explained above (see recital 234), all profits (whether stemming from SGEI or ancillary activities) are retained and used to offset future (or unpaid past) deficits hence lowering the contribution by the municipalities.
On the basis of the foregoing, the Commission concludes that due to the delay in payments of the deficit compensation, the fact that at any given moment in the period 1996-2014 the respective municipalities owed each of the IRIS-H significant amounts of unpaid deficit compensation and the fact that each of the IRIS-H were overall in a state of undercompensation in aggregate terms, in practice no overcompensation of any of the IRIS-H occurred.
First and foremost, it must be noted that with regard to the deficit cover at issue in this decision, the nature of this compensation mechanism as such already strongly reduces the risk of overcompensation and is hence a measure that helps to avoid overcompensation. Indeed, the municipalities can cover no more than the actual deficit incurred by the IRIS-H as a result of their provision of services of general economic interest and the limited ancillary activities. The compensation hence only covers the residual net costs (see recital 226) incurred in the provision of these SGEI and ancillary activities and does not even include a reasonable profit. All payments are made ex post, i.e. after the deficits have been incurred (see to this extent the tables in recital 234). The payments are made in instalments (as illustrated by the tables in recital 234) which ensures that the municipalities can withhold a payment if there is any indication of a risk of overcompensation. The municipalities also check the amount of aggregated unpaid deficits before they make a payment to the IRIS-H. As explained above (see recital 235), the municipalities and IRIS-H also agreed to immediately repay the Article 109 LCH deficit compensation thereby avoiding any double coverage of the same deficit. There is hence only a limited and theoretical residual risk of technical overcompensation when the compensation is analysed on the basis of looking at each year in isolation (see recitals 237-238). However, in practice none of the IRIS-H has in aggregate terms ever benefited from any actual overcompensation since at each moment in the period 1996-2014 the municipalities owed the IRIS-H large sums of unpaid deficit compensation (as confirmed by the tables in recital 234).
‘This law shall apply to any subsidy granted by:
- 1o
provinces, municipalities, establishments of provincial or municipal interest with legal personality, conurbations, federations of municipalities, cultural committees, associations of provinces and associations of municipalities;
- 2o
legal or natural persons directly or indirectly subsidised by one of the providers referred to in 1o.’
Article 2 of this Law also defines its very general scope, stating:
‘Subsidy means […] any contribution, advantage or aid, irrespective of the form or description, including advances of recoverable funds granted without interest, awarded in order to promote activities of general interest […]’
It is clear from the above articles that the deficit compensation awarded by the Brussels municipalities to the IRIS-H for the performance of SGEI and ancillary activities is in scope of this Law.
‘All [subsidy] providers have the right to have on site checks carried out on the use of the subsidy provided.’
Article 7 provides for the obligations of repayment and recovery of the subsidy. That Article reads:
‘Without prejudice to the resolutive provisions to which the subsidy is subject, the beneficiary shall be required to repay it in the following circumstances:
- 1o
when it does not use the subsidy for the purposes for which it was granted;
- 2o
when it does not provide one of the justifications referred to in Articles 4 and 5;
- 3o
when it refuses to allow the check referred to in Article 6.
However, in the case in 1o, 2o, the beneficiary shall only be required to repay the part of the subsidy that was not justified.
Legal persons under public law who have the power to impose direct taxation shall be authorised to order the recovery of repayable subsidies. The order shall be made by the accountant responsible for recovery. It shall be made enforceable by the administrative authority empowered to enforce the list of direct provisions of the relevant legal person under public law.’
Hence that Law enables the municipalities to ensure that the subsidies are granted in accordance with the necessary conditions and also to check on the use and recovery of sums not required. Thus payment of the deficit compensation by the municipalities is subject to very strict rules. Through their acceptance by the hospitals concerned, these entail a right to inspection by an independent authority, which may ensure that the subsidy has actually been allocated to the use for which it was granted. Otherwise the hospital is required to repay it immediately which guarantees the recovery of any overcompensation to the IRIS-H.
‘A decision may only be taken to set up or develop establishments or services eligible for investment or operating subsidies on the basis of documentation showing that the conditions laid down by the organic laws or regulations for the grant of such subsidies will be fulfilled.’
Hence if a CPAS sets up a public hospital, evidence must be provided that the rules for the award of the financing will be observed.
- ‘1o
the general and specific strategic plan for hospital activity and the decisions taken pursuant to that plan;
- 2o
the specific plan and the financial plan adopted by the local association on the basis of the guidelines set by the umbrella association and any amendments and updates to those plans;
- 3o
the annual budget adopted by the local association on the basis of the guidelines set by the umbrella association.
In the event of non-compliance, the umbrella association shall take any measures it considers appropriate to end the non-compliance and shall notify them to the local association concerned for implementation within a period which it shall determine.
If the local association concerned fails to implement the measures within the stipulated period, the umbrella association may immediately instruct the auditor referred to in Article 135 novies to replace the local association body in default.’
It is apparent from the above provisions that both the Loi CPAS and the Law of 14 November 1983 enable the Brussels municipalities to ensure that subsidies paid to the IRIS-H are used correctly and do not lead to overcompensation. The joint application of those provisions facilitates controlling for overcompensation and provides for the recovery of overcompensation. Furthermore, in the event of non-compliance, a power of substitution is conferred on a third party, in order to ensure fulfilment of these obligations, particularly in regard to the budget, imposed on the IRIS-H. The municipalities, CPAS and the IRIS umbrella organisation hence have far-reaching control powers even if there is virtually no risk of overcompensation under the deficit compensation mechanism at issue in this decision.
In addition, where the operating accounts of the public hospital show a deficit, the municipal executive(s) may under Articles 111(2) and 126 Loi CPAS suspend implementation of ‘any decision of the CPAS that is detrimental to the municipal interests and in particular the financial interests of the municipality.’
Finally, it is worth emphasizing that the granting authorities (i.e. the municipalities and the CPAS) of the aid measure at hand directly control the beneficiaries. In particular, these authorities have the majority of votes in the Administrative Councils of the IRIS-H which, among others, appoints the director general of their respective hospitals. In the unlikely situation where an IRIS-H would hypothetically refuse to repay overcompensation, the public authorities could easily replace the director general to rectify this situation. Furthermore, as required by the bylaws of each IRIS-H, the Administrative Council meets at least eight times per year which allows the granting authorities to closely monitor the financial situation of the IRIS-H (among others via the quarterly reports which cover this subject as required by the bylaws).
On the basis of the above, the Commission concludes that there are sufficient arrangements to avoid, detect and recover overcompensation while the risk of actual overcompensation seems very limited given the nature of the aid measure at hand.
Article 2(2) of the 2012 SGEI Decision foresees that the Decision only applies to entrustments the duration of which does not exceed 10 years, unless a longer period can be justified by reference to the entrusted undertaking's need to amortise significant investments over a longer period in accordance with generally accepted accounting principles.
The Commission therefore considers that the requirement under Article 2(2) of the 2012 SGEI Decision to limit the duration of the entrustment act and to justify this duration is fulfilled.
Finally, the 2012 SGEI Decision requires Member States to publish certain information. More specifically, for compensation above EUR 15 million granted to an undertaking which also has activities outside the scope of the service of general economic interest, Article 7 of the 2012 SGEI Decision requires Member States to publish on the internet or by other appropriate means the entrustment act (or a summary which includes the elements listed in Article 4 of the 2012 SGEI Decision) and the amounts of aid granted to the entrusted undertaking on a yearly basis.
The transparency requirement of the 2012 SGEI Decision applies to ‘compensation above EUR 15 million granted to an undertaking which also has activities outside the scope of the service of general economic interest’. As can be observed in Tables 9-13, the amount of municipal deficit compensation granted per individual IRIS-H does not exceed the EUR 15 million threshold in any year. Therefore, the Commission considers that the transparency requirement under Article 7 of the 2012 SGEI Decision is not applicable in this case.
On the basis of the above, the Commission concludes that the compensation of the deficits of the Brussels public IRIS hospitals by the Brussels municipalities since 1996, which forms the subject matter of this decision, complies with the requirements of the 2012 SGEI Decision and is therefore compatible with the internal market pursuant to Article 106(2) TFEU.
It follows from the foregoing conclusion and the explanations given above under recitals 148-152 that the Commission does not need to assess whether the compensation of the deficits of the Brussels public IRIS hospitals by the Brussels municipalities is also compatible with the internal market pursuant to the 2005 SGEI Decision (for aid that was granted between 19 December 2005 and 31 January 2012) or the 2012 SGEI Framework.
As explained above (see recital 159), in its annulment judgment of 7 November 2012, the GC made reference to the principle of equal treatment. In this context, the Commission recalls that the principle of non-discrimination/equal treatment is not mentioned as a compatibility criterion in the 2012 SGEI Decision. Nevertheless, for the case at hand, the Commission concludes that in any event this principle is complied with since the public IRIS-H and the private Brussels hospitals are in a legally and factually different situation due to the fact that the SGEI mission of the public IRIS-H is wider in scope than that of the private hospitals and hence is more costly to perform (as explained above, see Section 7.3.4.1). For the sake of completeness, the Commission notes that the IRIS-H are subject to a number of constraints and also additional costs (see recitals 42-43) in the performance of the SGEI entrusted to them.
Since the IRIS-H and private hospitals in Brussels are in different/not comparable situations, the compensation of the deficits of the IRIS-H cannot be regarded as a breach of the principle of equal treatment.
On the basis of the foregoing assessment, the Commission has decided that the State aid at issue in this case is compatible with the internal market based on Article 106(2) of the TFEU,
HAS ADOPTED THIS DECISION:
Article 1
The State aid in the form of compensation of the deficits of the Brussels public IRIS hospitals by the Brussels municipalities since 1996 is compatible with the internal market on the basis of Article 106(2) of the Treaty on the Functioning of the European Union.
Article 2
This Decision is addressed to the Kingdom of Belgium.
Done at Brussels, 5 July 2016.
For the Commission
Margrethe Vestager
Member of the Commission