The State Health Services Organisation (OKYPY in Greek) was scathingly critical against the Health Insurance Organisation (HIO) and the way it reimburses services provided to GESY (General Healthcare System) beneficiaries by public hospitals. Senior OKYPY officials appeared before two parliamentary committees – Audit and Health – where they raised the issue of what they called the underpayment of public hospitals. At the same time that the state expects OKYPY to achieve financial autonomy by the end of 2026, it continues to demand that it provide all medical services to all patients, even though the cost of these services is not covered by HIO reimbursements. Meanwhile, OKYPY remains bound by the government payroll system and the long‑standing state–union agreements it inherited.
At the centre of OKYPY’s argument was the position that public hospitals operate within GESY under very different conditions than private hospitals, despite being reimbursed by the same organisation. As officials stressed, the HIO reimburses specific medical acts without taking into account the mandatory obligations of availability and universal coverage that fall exclusively on public hospitals. Unlike the private sector, public hospitals must maintain backup equipment – for example, a second CT (Computed Tomography) scanner – and staff their Emergency Departments with specialists from all fields on a 24‑hour basis.
Autonomy with conditions
Particular emphasis was given to the institutional contradiction that OKYPY says runs through the system: the demand for financial autonomy while simultaneously requiring full coverage for all cases, without corresponding funding. Public hospitals, it was stressed, cannot select which cases to accept nor limit services based on cost.
In the same vein, OKYPY’s chief executive officer Kypros Stavridis noted that autonomy cannot be evaluated in isolation from the public role and obligations of the Organisation.
Specialised cases
Reference was also made to specialised cases for which, officials said, the HIO repeatedly changes its stance regarding reimbursement. According to OKYPY’s chief financial officer, Roberto Karahanna, this issue primarily affects public hospitals, which must manage severe and complex cases without being able to adjust their operating costs accordingly.
Unlike private hospitals, public hospitals operate with an inelastic cost base, meaning they cannot alter their structures, salaries, or staffing when reimbursement conditions change. “When reimbursements change, we cannot change our cost base,” Karahanna said, noting that this asymmetry translates into ongoing financial pressure for the Organisation.
Payroll as a “burden”
Within this context, Karahanna referred to the payroll system and explained why OKYPY lacks the flexibility observed in the private sector. He said that the Organisation remains tied to the state’s pay scale and union agreements. Data shows that between 2019 and 2026, staff increased by just 354 people, while seconded civil servants decreased by 1,261, mainly due to retirements. Nevertheless, payroll costs rose by €163 million, reaching €435 million, due to increments, cost‑of‑living adjustments, and collective agreements. An additional burden comes from OKYPY covering sick leave costs from its own budget – around €45 million – unlike private hospitals, where sick leave is covered by the Social Insurance Fund.
42% of beds
Figures submitted to Parliament highlight the disproportionate burden on public hospitals. According to Karahanna, although they hold 42% of Cyprus’s hospital beds, they handle 75.4% of internal medicine cases and 74.5% of respiratory cases. These are mainly elderly patients with increased needs and lengthy hospital stays – a reality not reflected in HIO’s reimbursement model. Referring to seasonal pressure, he noted that OKYPY is obliged to keep beds operational year‑round to respond to increased demand from complex medical and respiratory cases, particularly during winter. This obligation, he added, does not disappear when reimbursements decrease, nor can it be shifted elsewhere.
Millions spent on on‑call duties
The issue of on‑call duties also came up in the discussion, with OKYPY’s management stressing that public hospitals must maintain daily, year‑round on‑call coverage with specialists from all medical fields – an obligation not imposed on private hospitals. The cost of on‑call duties alone is estimated at €16 million, while the total cost of on‑calls, additional beds, and related obligations is estimated at €50–60 million – amounts that OKYPY is seeking to recover from the HIO as part of the debate on its financial autonomy.