- Why the contract signing is “stuck” at the Council of State.
- Bids from the sole entities for each of the seven Regional Health Authorities were opened, and the prices are significantly higher compared to previous tenders.
By Panos Katsachnias
The World Health Organization (WHO) gives a broad definition of Medical Waste as those wastes generated from activities involving human – or animal-health care in Health Care Facilities (HCFs), research laboratories, or research activities related to “health care”.
The conclusion therefore arises reasonably, that such types of waste must be handled with particular care, both in the collection process and during their transportation to facilities for sterilization and subsequently their burial or, for the categories where applicable, their incineration. Hence, we are talking about a series of specialized tasks that follow a strict protocol for the successful completion of this process.
For this reason, specialized companies dealing with the respective matter are involved in these tasks, undertaking the management of Healthcare Waste – both hazardous and non-hazardous. They serve the seven Regional Health Authorities (RHAs) of the country and all the Healthcare Units (HUs) they cover, primarily due to the volume and size, including their larger hospitals.
Therefore, as the main protagonists, the large hospitals in the country were, until recently, tasked with conducting their tenders for the management of the Healthcare Waste they produced.
After the end of the COVID-19 pandemic, the Ministry of Health decided that the tenders for the selection of the companies that would undertake the task of managing them should not be made by each hospital separately, but a central tender should be announced, which would identify the companies that would undertake the task for each of the seven RHAs. The rationale is that by aggregating, better prices per ton will be achieved, rather than for the quantities of each hospital separately, since the larger volume ensures a steady flow of waste, thus serving the scheduling of the companies that will take over its management and thus lowering costs.
Thus, in November 2022, the National Central Health Procurement Authority (NCPA), assigned a committee to study the technical specifications and the budget, to conduct a central nationwide tender for all Hazardous Waste of Health Care Units (HWHCUs). The work was completed in March 2023 and shortly before the elections, on May 10, 2023, a public tender was published for a central “framework agreement”, with a deadline of June 12, 2023 (just one month) for all the country’s hospitals (125) divided by RHA and with 4-year duration, with a budget of 145,137,175.88 euro excluding VAT.
An open tender was conducted by an entity supervised by the Ministry of Health for:
- Collection and transport of Hazardous Infectious Waste (HIW)
- Collection and transport of Mixed Hazardous Waste (MHW)
- Collection and transport of Other Hazardous Waste (OHW)
- Disposal of certified packaging of Hazardous Waste from Health Care Facilities – HWHCF (HIW, MHW, and OHW) for the packaging of solid and/or liquid waste
While the rationale is undoubtedly correct, the problems start with the increased total budget provided by the tender for all seven RHAs, thus setting a ceiling that, with a median discount of only 4.09%, all the schemes’ bids “touch”. And in the case of the seventh RHA, there is no discount at all.
The second is that the quantities of waste were calculated in the years of the pandemic outbreak (2020-2021-2022) and not in the years before the pandemic. Even if we accept that there is a forecast of a return of the COVID-19 pandemic or a new one, and even though the price is set per ton, it cannot be ruled out that in the future the contractors will be required to pay compensation from the State because smaller quantities were ultimately generated.
Something else to note in this particular tender is that the total entries per RHA were … only one partnership scheme. And this was under the distinctive title of “Association of Companies” for each RHA, so as not to reveal that behind it were the same ever-dominant companies with a dominant position in the market, just with different percentages of participation in each RHA.
By invalidating the basic argument for holding the tender centrally, the award prices are more expensive for the Hospitals than they were before.
Any notion of free competition is destroyed when shareholders of companies also participate in the share capital of others, whose involvement in the whole process is crucial.
The need for sterilization or incineration of part of the Healthcare Waste implies their transfer to the respective units. Given that there is a provision for a surcharge of 240 euros per ton for every 100 kilometers the Healthcare Unit (HU) is located away from the headquarters of the only incinerator (Ano Liosia), and with a surcharge of 80 euros per ton for every 100 kilometers the Healthcare Unit (HU) is located away from the headquarters of the Regional Health Authority (RHA) for sterilization (Tripoli, Patras, Larissa, Volos, Thessaloniki, Serres), requests for mileage compensation will certainly arise, increasing the cost.
Hazardous waste management
The management of hazardous waste from Healthcare Units (HUs) of all Regional Health Authorities (RHAs) in the country aims to prevent medical waste from ending up untreated and thus hazardous in Sanitary Waste Landfills or Sanitary Waste Burial Areas, thereby endangering Public Health and significantly degrading the Environment.
For this reason, in healthcare facilities and healthcare places such as hospitals, clinics, health centers, and treatment centers, it is of primary importance to ensure the proper sorting, management, and treatment of hazardous infectious waste and the implementation of all necessary measures to protect the health of citizens. The stream of Hazardous Waste from Health Care Facilities is sent directly to incineration, while Hazardous Waste Pure Contaminated Waste is first sterilized and then disposed of in a Sanitary Waste Landfill or a Sanitary Waste Burial Area.
With the seven Regional Health Authorities (RHAs)-as bodies of the General Government- and the hospitals included in them, having a leading role in their proper or not final management, the previous practice was fragmentation. This is because it was the hospitals themselves throughout the country that put out tenders for the management of the sanitary waste produced by each of them individually.
In a sound rationale – for this process to be handled centrally – the Ministry of Health decided to announce a tender through the National Central Health Procurement Authority (NCHPA) that concerns the entirety of the healthcare waste in the country, encompassing all seven Regional Health Authorities.
Thus, in May, the NCHPA announced the conduct of an open tender for the conclusion of a framework agreement “Healthcare Waste Management Services” for three years, with an optional extension for one year, estimated at a value of €108,852,881.91 for the three years and €36,284,293.97 for the optional year, excluding VAT. The anticipated duration specified in the tender will “seal” the entire market for approximately six (6) years, as execution contracts can be signed up until the last day of the framework agreement.
As a concept, centralizing a competitive process for the collection, transportation, and disposal of hospital waste is appropriate, as logic suggests that their cumulative volume is larger, thereby potentially leading to better-offered prices for managing this volume. This, of course, assumes the provision of conditions for free competition rather than an opportunity for companies in this specific field to create monopolistic environments.
Forecasts
As a joint declaration and process that involves all seven Regional Health Authorities, it foresees separate bids for each of them. Competitors can submit bids for one or more Regional Health Authorities, but in any case, it must encompass the entirety of services: sterilization, incineration, supply of containers, and refrigeration units in cases where required.
The base price for sterilization is set at €1,500/ton (€700 for processing and €800 for collection and transportation), with an increase of €80/ton for every 100 kilometers the Healthcare Unit is located away from the Regional Health Authority. The current management cost is significantly lower than the estimated cost in this tender. On average, the cost of managing infectious waste HIW in each Hospital, based on individual tenders issued by each hospital, ranges between €1,000/ton and €1,200/ton. Therefore, it is at least paradoxical to expect to achieve economies of scale and relieve the budgets of hospitals.
Additionally, the estimated needs of hospitals for the quantity of generated hospital waste have emerged from the period of the COVID-19 health crisis (2020-2021-2022), a time when the needs had surged by 50%. It raises the question of why the quantities from pre-pandemic times (e.g., 2017-2018-2019) were not taken into account.
Table of indicative assessment of the burden on public expenditures – NCHPA tender award
Sterilization Unit
The existence of a sterilization unit in Attica would dramatically reduce the management cost since 45% of medical waste is generated there. Excluding a company with an approved sterilization unit and operating license creates an obligation for any future contractor to transport infectious waste outside Attica to the nearest sterilization unit (in Lamia and Tripoli) and then dispose of it in the waste treatment plants (Sanitary Waste Landfills or Sanitary Waste Burial Areas) in those areas, thus violating the principle of proximity that should govern waste management. Additionally, certainly, managing hospital waste outside Attica will further burden the management cost, inevitably resulting in higher costs for the Ministry of Health – in other words, the government – compared to the past. There might be a request for compensation for the additional distance traveled, given the increased cost. Furthermore, the quantities in the tender have been calculated based on pandemic quantities of coronavirus; however, since the price has been calculated per ton, this might not pose a problem, unless there is a clause for additional compensation in case the volume of medical waste turns out to be less than anticipated. This might have been included as a provision for a new wave of the pandemic.
Thus, however, on the one hand, the management prices of hospital waste (and therefore the burden on public hospitals) will not decrease (on the contrary, they will increase), through this centralized way of supply, while there is probably a risk that there will be “laxity” in the characterization of waste as “hazardous”, since the quantities foreseen as necessary have been calculated according to other quantities.
The base price for incineration is 2,100 euros/ton (1,850 euros/ton for treatment, which is exactly the price charged by EPALTHEA S.A. and 250 euros/ton for collection and transport), with a surcharge of 240 euros/ton for every 100 kilometers that separate the Healthcare Unit from the incinerator’s headquarters in Ano Liosia.
Given the conditions of professional and financial standing set out in the tender notice (annual ad hoc turnover equal to the total budget for each RHA), it is clear that none of the companies operating alone can participate in the tender and therefore consortia will be formed. There is thus a phenomenon whereby the same companies in other RHAs participate as partnerships and in others as competitors, giving rise to signs of collusion between providers to exhaust the budget.
When the budgets have gone up and the bids are one for each RHA, then it is expected that they will exhaust them and not make any discount, or even a completely symbolic one, just so that they can claim what was there afterwards.
Table of budgeted expenditure per RHA – Award prices
1η ΥΠΕ Προϋπολογισμός: | 40.655.971,50 ευρώ | Τιμή κατακύρωσης: | 38.948.254,50 ευρώ | Έκπτωση: | 4,20% |
2η ΥΠΕ Προϋπολογισμός: | 15.065.745,75 ευρώ | Τιμή κατακύρωσης: | 14.455.786,90 ευρώ | Έκπτωση: | 4,05% |
3η ΥΠΕ Προϋπολογισμός: | 10.614.596,40 ευρώ | Τιμή κατακύρωσης: | 10.132.431,20 ευρώ | Έκπτωση: | 4,54% |
4η ΥΠΕ Προϋπολογισμός: | 13.662.624,00 ευρώ | Τιμή κατακύρωσης: | 13.036.526,00 ευρώ | Έκπτωση: | 4,58% |
5η ΥΠΕ Προϋπολογισμός: | 7.673.034,42 ευρώ | Τιμή κατακύρωσης: | 7.325.128,68 ευρώ | Έκπτωση: | 4,53% |
6η ΥΠΕ Προϋπολογισμός: | 14.858.414,04 ευρώ | Τιμή κατακύρωσης: | 14.176.221,30 ευρώ | Έκπτωση: | 4,59% |
7η ΥΠΕ Προϋπολογισμός: | 6.322.495,80 ευρώ | Τιμή κατακύρωσης: | 6.322.495,80 ευρώ | Έκπτωση: | 0,00% |
Συνολικός Προϋπολογισμός: | 108.852.881,91 ευρώ | Τιμή κατακύρωσης: | 104.396.844,38 ευρώ | Έκπτωση: | 4,09% |
This is why there is no more than one bid (except for the second RHA). However, this does not ensure free competition and the public interest. For example, in the first RHA (Attica) with an estimated amount of about 6 million kg of hospital waste, the budgeted value of the framework agreement is €13.5 million per year and experience of a similar value and beds are requested for the last three years. However, this means in practice that no second bid can be submitted, as none of the licensed companies can meet these requirements on their own.
Tender results table for the seven RHAs
In total, there was one entry per RHA. Except for the second one where POLYECO S.A. also participated, offering a discount of about 20% on the prices mentioned. A proposal that was however excluded, since as a relative newcomer ad hoc in the processing of Hazardous Infectious Waste (HIW), it could not meet the criterion of a pre-existing ad hoc 3-years’ experience in HUs, for the total number of beds and the quantities of HWHCFs. Thus, there was one bidder in each of the seven RHAs that got the job:
- The “ASSOCIATION OF COMPANIES OF THE 1st RHA”, consisting of the following companies, successfully participated in the 1st RHA and became the contractor: APOSTEIROSSI S.A. (53,5%), STERIMED S.A. (24,0%), ECOSTER S.A. (8,0%), ENVIRODENT (8,5%), VAKTRO A.E.V.E. (3,0%), ADRANOPOIISI S.A. (3,0%)
- The “ASSOCIATION OF COMPANIES of the 2nd RHA”, consisting of the following companies, successfully participated in the 2nd RHA and became the contractor: APOSTEIROSSI S.A. (45,7%), STERIMED S.A. (31,9%), ENVIRODENT (8,8%), VAKTRO A.E.V.E. (0,4%), ECOPRIME LTD. (13,2%)
- The “ASSOCIATION OF COMPANIES of the 3rd RHA”, consisting of the following companies, successfully participated in the 3rd RHA and became the contractor: APOSTEIROSSI S.A. (10,0%), STERIMED S.A. (49,8%), ECOSTER S.A. (33,1%), ENVIRODENT (2,0%), ADRANOPOIISI S.A. (5,1%)
- The “ASSOCIATION OF COMPANIES of the 4th RHA” consisting of the companies: APOSTEIROSSI S.A. (21,7 %), STERIMED S.A. (51,8 %), ECOSTER S.A. (17,9 %), ENVIRODENT (3,7 %), ADRANOPOIISI S.A. (4,9 %)
- The “ASSOCIATION OF COMPANIES OF THE 5th RHA”, consisting of the following companies, successfully participated in the 5th RHA and became the contractor: APOSTEIROSSI S.A. (3,0%), ECOSTER S.A. (90,6%), ENVIRODENT (0,3%), ADRANOPOIISI S.A. (6,1%)
- The “ASSOCIATION OF COMPANIES OF THE 6th RHA”, consisting of the following companies, successfully participated in the 6th RHA and became the contractor: APOSTEIROSSI S.A. (24,7%), STERIMED S.A. (29,0%), ECOSTER S.A. (19,4%), ENVIRODENT (22,5%), VAKTRO A.E.V.E. (4,4%)
- Only the company MEDICAL WASTE S.A. (100%), which is closely related to both APOSTEIROSSI S.A. and EPALTHEA S.A., but also APOTEFROTIRAS S.A. (Consortium HELECTOR S.A. + ARSI S.A. and the natural persons of their shareholders), participated successfully in the 7th RHA and became the contractor.
The only element that differs in a substance per RHA is the percentage of participation in the respective “Association”. As a weighted average, 85% of the activity was awarded to the dominant companies: APOSTEIROSSI S.A., STERIMED S.A., ECOSTER S.A. (and the affiliate of APOSTEIROSSI S.A., MEDICAL WASTE S.A.).
The prices offered in this particular tender procedure ended up being extremely higher than those achieved by each hospital or each RHA individually, with their tender. The argument for the framework agreement was that organizing the tender system in this way would ensure lower costs for the State because of the possibility of planning. However, when the financial bids are opened, this does not appear to be the case.
The competition could have opened up the field so that companies from abroad could also participate in it, alone or in cooperation with Greek companies. On the contrary, the management of the tender was such that this was prevented. When it asks, for example, for the 1st Regional Health Authority to have 3 years’ experience of contracts for 100% of the beds in Attica – which even in Germany there is no company with such a coverage capacity – this condition is obviously introduced to cut off candidates.
In order not to disclose who is involved, only a distinctive title is given, so it does not show which companies make up the consortium. This is not foreseen as a company can’t participate by appearing under the name of, for example, “Association for the 1st RHA”. It is a distinctive title for convenience since consortia must necessarily have at least three of the members who normally make up the consortium in their title under their name. So, unless it is by mistake, ignorance, or negligence, this practice is being implemented to conceal the fact that the same companies are behind the bids, nationwide.
Each Health Region has within its territory a unit for the sterilization of medical waste. However, the only incineration unit, the incinerator of EPALTHEA S.A., is not managed through the Special Inter-Municipal Association of Attica (SIDAA), as it is leased to the company APOTEFROTIRAS S.A. of K/X HELEKTOR S.A. + ARSIS S.A. This creates an unfairly dominant position, as it will necessarily participate in all schemes, while it is known to have a shareholder connection with some of the service providers involved in processing through sterilization and will participate with a competitive advantage over others.
The appeal of POLYECO S.A.
POLYECO S.A. appealed against the terms of the tender, claiming that they did not allow for equal treatment of interested parties. It did not appeal against any other participant in the tender. Additionally, it requested an extension of the deadline to find a partner from abroad who would have the required experience stipulated by the tender to participate. Initially, NCHPA (National Central Health Procurement Authority) rejected this, but as the company subsequently appealed to the Single Public Procurement Authority (SPPA), it was ultimately forced to grant a small extension until the date of the case’s adjudication.
On 19/6 with a well-constrained decision the SPPA decided in the first instance to reject the appeal of POLYECO S.A., thus paving the way for the award procedure to proceed. It rejected POLYECO S.A.’s claims that free competition is not allowed, considering that it is a matter to be referred to the Competition Commission. It also argued that the “difficulty” caused by the tender for the participation of other companies that could participate in the tender was not substantiated. A concerted action by the other companies is also demonstrated by their intervention in favor of the rejection of POLYECO S.A.’s application.
Finally, the NCHPA itself, before the SPPA in the preliminary appeal (GG 816/2023), argued that: “By conducting a competitive procedure at a central level, conditions of free competition are achieved and a sufficient number of candidates are given the right to participate”.
In conclusion
Through this declaration, at least an oligopoly was created, since it united until yesterday competitors, who in the previous regime had been fighting from time to time, running to the courts some others, but had never been united formally. Because when you collude, as in the case of “Associations”, that’s what you do. And so, any notion of free competition disappears.
So, good intentions for a centralized competition, but it is the result that counts in the end. If the CoE rules in favor of POLYECO S.A.’s objections, we may even end up with a repeat of the tender.
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