The year 2026 is increasingly seen as a milestone for the financial autonomy of Cyprus’s public hospitals. Yet as the transitional period approaches its end, the debate appears to be shifting. The question is no longer only whether autonomy will be achieved, but whether the discussion itself is based on the right premises.
Data presented in recent weeks before the House health committee during the discussion of the State Health Services Organisation (Okypy) budget reveal a reality that may not have been fully addressed until now. Public hospitals operate under conditions and obligations that are not directly comparable with those of the private sector.
The issue has taken on added significance ahead of the budget’s examination by the House plenary session on Thursday. For some observers, the budget currently before MPs is not simply a record of revenues and expenditures. It also raises broader questions about whether autonomy should indeed be the ultimate objective for public hospitals.
The budget picture
Okypy’s 2026 budget projects revenues exceeding €1.2 billion, with the majority coming from reimbursements by the Health Insurance Organisation (HIO) under the national health system, GeSY.
Total expenditures are also expected to exceed €1.2 billion, including around €435 million in staff salaries, highlighting the heavy cost structure associated with operating a large public healthcare organisation.
Within this framework, the increasingly pressing question is not whether autonomy is progressing, but whether the model supporting it can realistically serve the role public hospitals are expected to fulfil within GeSY.
An institutional contradiction
The main concern emerging more clearly now is not whether public hospitals require modernisation, improved management or better cost control. Those needs are widely acknowledged.
The more fundamental issue is that public and private healthcare providers operate under the same funding framework while carrying very different obligations.
Okypy itself raised this institutional contradiction before parliament. On the one hand, public hospitals are expected to achieve financial autonomy by the end of 2026. On the other, they are required to continue providing the full range of services to all patients, regardless of cost and often without corresponding reimbursement.
This means public hospitals cannot operate in the same way as private facilities. They cannot select the cases they accept. They cannot discontinue services because they are financially unprofitable. They cannot turn away patients because beds are unavailable. Nor can they withdraw from geographical areas or medical fields that generate limited revenue.
Instead, public hospitals must maintain fully staffed accident and emergency departments around the clock, provide backup equipment, ensure year-round bed availability and manage complex or severe medical cases.
The public role
This is where the weakness of the current debate becomes evident. Autonomy is often presented as a technical or financial target, when in reality it raises a deeper political question: how to fund the public role within a system that primarily reimburses medical procedures rather than the broader obligations of readiness, universal coverage and availability.
Okypy told parliamentary committees that public hospitals operate with a largely inflexible cost structure. When reimbursement rates change, the organisation cannot easily adjust operating costs, restructure services or modify staffing levels.
The challenge therefore is not simply that costs are high. It is that these costs stem from public service obligations that cannot be suspended simply because reimbursement levels are insufficient.
Data presented during parliamentary discussions illustrate this imbalance. Public hospitals account for around 42 percent of the system’s hospital beds, yet they handle approximately 75.4 percent of internal medicine cases and 74.5 percent of pulmonology cases. These patients are typically older, have more complex needs and often require longer hospital stays.
Cost distortions
The public debate around autonomy might be different if public hospitals operated under conditions comparable to those of private institutions. The data presented before the health committee suggest this is not the case.
Okypy stated that it is required to maintain doctors of all specialties on call 365 days a year, an obligation that does not apply in the same way to the private sector.
The cost of on-call staffing alone was estimated at around €16 million. When combined with the cost of additional beds and related obligations, the organisation estimates that €50–60 million in expenses are not adequately reimbursed.
At the same time, Okypy argued that the way hospitals are categorised by the Health Insurance Organisation can lead to public hospitals being placed in lower reimbursement categories, even when they offer a broader range of services, if they do not meet a specific set of predefined criteria.
In other words, a hospital may provide more services overall yet receive lower revenue because it does not fit precisely within the system’s formula.
Salary pressures
Another key issue raised before parliament concerns the limited flexibility public hospitals have in managing staff and payroll costs.
According to figures presented during the discussions, salary expenses increased by around €163 million between 2019 and 2026, reaching €435 million, even though staffing levels rose by only 354 employees.
The increase is attributed to salary increments, cost-of-living adjustments, collective agreements and broader obligations stemming from the public sector pay system and state–union agreements inherited by the organisation.
Unlike private employers, Okypy cannot bypass these commitments.
In addition, the organisation must cover the cost of sick leave from its own resources, estimated at €40–45 million, whereas in the private sector the equivalent cost is covered by the Social Insurance Fund.
When a public hospital must compete in the same environment as private facilities but with significantly heavier salary and operational burdens, the issue is not only whether it can remain competitive. It is also whether the system’s conditions are fundamentally equitable.
The real question
For this reason, the debate surrounding 2026 cannot be limited to whether the autonomy target can be achieved in accounting terms.
The real question is whether the state is insisting on this objective without first determining how the public role of hospitals should be valued within GeSY.
If public hospitals are expected to keep their doors open to everyone, handle unprofitable cases, maintain services across the country and function as the system’s final safety net, their financial evaluation cannot be conducted as if they were simply service providers operating under equal commercial conditions.
Seen from this perspective, the debate on autonomy appears somewhat reversed. The target was set first, and only afterwards did it become clear that the structural conditions required to make it fair and sustainable may still be missing.