doi.org/10.52340/eab.2025.17.02.08

Over the past two decades, Georgia’s healthcare sector has undergone profound transformations driven by liberalization, privatization, and targeted reforms aimed at improving access to services and their quality. The article examines the sector’s current state, business models, and strategic development trends in Georgia’s healthcare industry between 2015 and 2024. It presents a comprehensive analysis grounded in a mixed-methods research approach, including quantitative data analysis, policy review, expert interviews, SWOT analysis, and comparative studies with Baltic and Scandinavian healthcare models.

Healthcare as a Business: The New Landscape
In the 21st century, healthcare in Georgia has transitioned from being solely a social service to an emerging economic sector that attracts private investment and innovation. This evolution has been shaped by public-private partnerships (PPPs), the growing influence of private providers, the adoption of international quality standards, and the increasing prominence of medical tourism. Despite notable progress, the sector continues to face challenges such as high out-of-pocket expenditures, regional disparities in access to care, inadequate digital infrastructure, and workforce shortages.

Methodology
The study employes a comprehensive five-pronged approach:
• Document Analysis – Reviews policies, legal frameworks, and reports from organizations such as WHO, World Bank, and OECD.
• Quantitative Analysis – Processes data from GeoStat, the Ministry of Health, NCDC, and private clinics using tools like Excel and SPSS.
• Comparative Analysis – Benchmarks Georgia’s healthcare model against those of Lithuania, Latvia, Estonia, Finland, and Denmark.
• Expert Interviews – Gathers valuable insights from clinic managers, health policy experts, investors, and business association members.
• SWOT Analysis – Identifies strengths, weaknesses, opportunities, and threats within Georgia’s healthcare business sector.
Georgia’s healthcare business environment has changed significantly since 2012, with the private sector now operating 85–90% of the country’s approximately 280 hospitals, which collectively provide around 18,500 beds. However, only around 50% of these beds are utilized on average, highlighting inefficiencies in resource allocation.
Key reforms include:
• 2013: Launch of the Universal Health Coverage (UHC) program, expanding the state’s role in healthcare financing.
• 2023: Introduction of mandatory quality standards and international accreditation for hospitals participating in UHC reimbursement.
• 2023: Adoption of Diagnosis-Related Group (DRG)-based funding to enhance efficiency. However, this reform has posed challenges in managing complex, high-cost cases under flat-rate reimbursement.
Three major segments dominate the healthcare revenue model:
• Hospital services (55–60% of total revenues)
• Outpatient and polyclinic services (20–25%)
• Pharmaceuticals and diagnostics (15–20%)
Leading hospital networks include Evex Hospitals (17 hospitals), Aversi Clinics (13 branches), and Geo Hospitals (nationwide clinics). As of 2021, Evex alone accounted for 16.7% of hospital revenues and 13.4% of hospitalization cases.
Financial and Operational Trends
Between 2018 and 2021, total revenues in Georgia’s healthcare sector increased from GEL 1.2 billion to GEL 1.8 billion. The COVID-19 pandemic temporarily boosted profit margins, with EBITDA rising to 25% and net profit margins reaching 17%. By 2022, health had grown to GEL 4.1 billion—a 72% increase compared to 2013. Notably, the share of household out-of-pocket payments fell from 65% in 2013 to 43% in 2022, driven by the expansion of the Universal Health Coverage (UHC) program.
However, demographic decline, youth emigration, and low birth rates continue to negatively impact service demand, while infrastructure underutilization and shortages in nursing staff constrain service provision. The nurse-to-physician ratio remains low at 1.8:1, compared to the EU average of approximately 3.5:1.
International Comparison
Georgia’s healthcare system is compared with models from the Baltic countries (Lithuania, Latvia, Estonia) and Scandinavian (Finland, Denmark). While Georgia allocates 8.2% of its GDP to healthcare – higher than the Baltic states – it underperforms in public financing, with only 44% of total spending financed publicly. Furthermore, Georgia has the highest out-of-pocket expenditure (47%) among the countries analyzed. In contrast, Denmark and Finland fund over 80% of their healthcare system through public means, maintaining much lower OOP shares (~13–14%).
Georgia’s healthcare system features a high physician density (4.5 per 1,000 people) but faces a significant shortage of nurses (7.9 per 1,000) and regional workforce imbalances. Scandinavian models, known for their effective nurse-led care and high-quality public services, offer valuable lessons for Georgia’s long-term healthcare reforms.
Strategic Opportunities for Growth
The article highlights key areas with high potential for growth in Georgia’s healthcare business:
• Primary and Ambulatory Care – Focus on expanding low-cost, high-volume services and investing in regional outreach programs, including mobile clinics.
• Medical Tourism – Capitalize on Georgia’s reputation in IVF, dental care, and plastic surgery. Promote international accreditation such as TEMOS and JCI, and develop bundle service packages tailored to foreign patients.
• Digital Health – Advance telemedicine, electronic health records, AI-driven diagnostics, and mobile applications to enhance accessibility and efficiency of care.
• Healthcare Workforce Development – Establish international-standard academies for nursing and medical management, and train healthcare staff in quality and safety practices.
• Increasing public funding and strengthening regional infrastructure - will help reduce out-of-pocket expenses and improve access to healthcare services for the population and targeted investments will promote geographical equity in service delivery.
Georgia’s healthcare business sector is at a pivotal moment – financially robust yet structurally imbalanced. To secure long-term sustainability, policymakers must prioritize key reforms: enhancing public financing, addressing workforce shortages (particularly the critical shortage of nurses), improving regional equity in service delivery, and advancing digital transformation. By leveraging insights from Baltic and Scandinavian healthcare systems, Georgia has the opportunity to refine its hybrid model and build a more efficient, accessible, and competitive sector.

Keywords: Business models, private clinics, bed capacity, medical tourism, innovation, strategy
JEL Codes: I11, I18, L32, L33, H51, O18, C83

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