INTERVIEW-Bulgaria looks to privatise hospitals after reform

* Health minister says hospital privatisation inevitable

* Sofia to work out selloff strategy as soon as 2010

SOFIA, Feb 4 (Reuters) - The Bulgarian government is likely to begin a privatisation programme of its state hospitals this year, once an overhaul of the indebted and inefficient sector is complete, Health Minister Bozhidar Nanev said on Thursday.

He told Reuters in an interview that investor interest would rise once the Balkan country had put in place a better funding structure for hospitals, with extra money likely to come from people paying more into both public and private health funds.

Moves by the centre-right government, elected last July, to close down 21 state-run communist-era hospitals and to raise contribution levels have triggered protests in towns across the Balkan country.

Crowds including doctors and nurses have demonstrated, saying while reforms were badly needed they feared thousands of people living in remoter areas could be left without access to hospital treatment. [ID:nLDE6100UU]

Another 130 hospitals will also be shut or converted to smaller centres, as part of the government's plan, which Nanev said would be carried out, despite public opposition.

"Privatisation is the way to go," Nanev, 47, a former surgeon said. "There must be privatisation of both hospitals and the services provided by hospitals".

Most of Bulgaria's 350 hospitals are state-owned, of which 71 were on a list of assets banned for privatisation. Nanev said this could be changed through legal amendments once the government had a clear strategy on sell-offs.

He said the reforms needed to show results so as to showcase the investment potential to investors.

Years of post-communist neglect and lack of political will for reforms have left many hospitals understaffed, heavily indebted, lacking contemporary equipment and even medicines.

Corruption in the sector is widespread and paying bribes to doctors for services due to be covered by insurances is the norm. Opinion polls show Bulgarians are the most dissatisfied with their healthcare system in of the 27-member European Union.

To secure money for the planned reforms, Sofia is considering obliging Bulgarians to pay extra private health insurance and to raise by 2 percentage points to 10 percent of gross income, payments to state health funds as of 2011. An existing voluntary scheme to contribute to private funds has failed to work.

The ministry was also working on a new methods of calculating prices of medical services to reflect the market reality, he said.

"Reforms needs money. We cannot make reforms by saving money, this must be clear," Nanev said but did not give figures.

The budget of the state health fund for hospitals fell 24 percent to 709 million levs ($503.2 million) in 2010, data showed. Hospitals' debt stood at some 350 million levs by end-November last year.

The poorest EU country cut total health spending this year by 350 million levs to 2.25 billion, or some 4.2 percent of GDP, nearly halve the proportion spent in many Western nations. (Editing by Matthew Jones)