Turkey: Healthcare Services License Regulation: Entry to the Private Healthcare Sector Now Through Public Auction

The Healthcare Services License Regulation published in the Official Gazette on November 11, 2025, has fundamentally changed the rules of the game for investors looking to invest in Turkey's private healthcare sector. Investors who wish to open a hospital or healthcare facility must now purchase a "license" through public auctions organized by the Ministry of Health before applying for an operating permit. While this new system increases barriers to entry in the sector, it also promises a planned investment environment.

The Basic Logic of the License System

The Ministry of Health has taken action to address the uncontrolled growth and unbalanced distribution that has plagued the private healthcare sector for years. Previously, any investor who found a suitable building and met the necessary conditions could obtain an operating permit. This situation led to an overconcentration of private hospitals in major cities and a shortage of healthcare facilities in rural areas.

In the new system, the Ministry has introduced a pre-authorization mechanism called "license" to plan healthcare services. A license simply states: "I have purchased the right to open a healthcare facility of this capacity (e.g., a 50-bed hospital) in this region." However, this right alone does not allow you to open a hospital. After obtaining the license, you must complete the standard permit procedure—prepare the physical premises and obtain final approval from the Ministry.

This two-stage system provides the Ministry with strong control over sectoral planning, while introducing new risks and costs for investors. On one hand, capacity planning aims to enhance healthcare tourism and service quality, while on the other, it seeks to enable investors to make decisions in a predictable environment.

Planning and Auction Process

According to the regulation, the Ministry of Health will announce annually which provinces can host healthcare facilities, what types, and what capacities. These planning announcements will detail not only locations but also bed numbers, specialties, special units (intensive care, operating rooms, etc.), and medical equipment capacities.

After the announcement, the public auction process for relevant licenses will begin. Auctions will be announced at least 10 business days in advance, giving investors time to prepare applications. During this process, investors will receive a detailed document package called the "auction document". This document explains application conditions, required documents, how the auction will be conducted, and evaluation criteria.

The auction process will be managed by a 7-member commission. The commission will include members from the General Directorate of Health Services, the General Directorate of Public Hospitals, the General Directorate of Legal Services, and the Strategy Development Presidency. This multi-stakeholder structure aims to ensure the process is transparent and objective.

Public Auction Models and Pricing

One of the regulation's most interesting aspects is its allowance for different auction models. The Ministry can select the most appropriate model for each license. The first model is the classic auction system: The Ministry determines an estimated price, and investors bid above this amount. The highest bidder wins. This model is particularly suitable for regions with high demand.

The second model is a phased elimination system. For example, in a 3-round auction, a certain number of investors are eliminated in each round, and only the highest bidders proceed to the next round. This model is designed to identify serious and committed investors.

The third model is a hybrid approach: Investors first submit their offers in sealed envelopes. After the highest sealed bid is determined, an open auction is conducted with the condition that bids cannot fall below this amount. This system creates a floor price in the first round and continues competition thereafter.

Perhaps the most noteworthy is the fourth model: Multi-criteria evaluation. In this model, not only price but other factors are considered. The investor's experience, quality of investment plan, employment creation potential, technological infrastructure, and social responsibility projects are scored. The investor with the highest total score according to the weights specified in the document wins the license.

Another important element in pricing is regional differentiation. The Ministry can reduce license fees in underdeveloped regions using the "development index" or "institutional index." For example, a license that costs 50 million TL in Istanbul could be offered for 10 million TL in Eastern Anatolia. This system aims to encourage balanced distribution of healthcare services nationwide.

Application Conditions and Disqualification Cases

The regulation sets clear criteria for who can apply for auctions. Both Turkish citizens and companies established in Turkey can apply. Foreign investors can also participate by establishing a company in Turkey. However, in some cases, there is no right to apply.

The first disqualification case relates to criminal records. Those convicted of premeditated murder, theft, fraud, forgery, embezzlement, and similar crimes cannot participate in auctions. Additionally, those dismissed from public service are disqualified. Importantly, this disqualification applies not only to the applicant but to all company shareholders. Even a shareholder with 1% stake being disqualified leads to rejection of the entire application.

The second disqualification case concerns financial status. Individuals and companies that are bankrupt, have declared concordat, are in liquidation, or under court administration cannot apply. This regulation aims to ensure that financially strong investors enter the sector.

There are severe sanctions for persons or companies that apply despite disqualification rules. Their guarantees are recorded as revenue to the general budget, meaning they cannot recover them. Additionally, criminal complaints are filed with the Chief Public Prosecutor's Office against those who use false documents or tamper with auction proceedings.

Guarantee System and Financial Securities

To participate in public auctions, investors must deposit a guarantee demonstrating their seriousness. The guarantee-amount varies between 10% and 30% of the estimated price determined by the Ministry. This rate is determined based on the nature of the license and expected competition level.

The guarantee can be deposited as cash, or provided as a bank letter of guarantee, treasury bond, or government bond. Guarantees of those who do not win the auction are returned at the end of the process. However, those who win the auction but do not pay the license fee or violate rules forfeit their guarantee to the state.

The investor who wins the auction must pay the entire license fee within 10 business days after the decision is communicated. This period is quite short and constitutes a definitive forfeiture period. If payment is not made, the license right is cancelled, and the guarantee is not returned. Therefore, it is critical that investors finalize their financing sources before entering the auction.

An interesting provision is that cash guarantees can be offset against the license fee. For example, an investor who deposits 5 million TL in cash guarantee and wins the license with a bid of 30 million TL is obligated to pay the remaining 25 million TL. This encourages investors to prefer cash guarantees.

Two-Stage System: License and Permit

Perhaps the most critical point of the regulation is that the license alone is not sufficient. The license only grants the "right" to open a healthcare facility of a certain capacity. To exercise this right, you must obtain a permit in the second stage.

The permit process includes the standard private healthcare facility opening procedure: zoning permit, building permit, fire safety report, Ministry of Health technical inspection, adequate personnel roster, and registration of medical devices. At this stage, the physical premises must be ready and meet all standards.

The Ministry determines a deadline when granting the license. If the permit cannot be obtained within this period, the license is cancelled, and the paid fee is not refunded. This regulation creates significant risk for investors. Because after paying the license fee, there is quite limited time to find land, prepare the project, construct, and obtain the permit.

This risk increases especially when bureaucracy moves slowly or unexpected problems arise. For example, zoning plan changes, neighbour objections, construction delays, or personnel recruitment problems can extend the permit process. Therefore, investors need to complete all preliminary preparations and anticipate potential obstacles before applying for a license.

Transfer Prohibition and Changes in Partnership Structure

The regulation clearly stipulates that licenses cannot be transferred or consolidated. This aims to prevent profiteering through speculation in the sector. The person or company that obtains the license is obligated to see the project through to completion.

However, this prohibition remains silent on the transfer of company shares. In theory, it may be possible to sell the shares of a company that has obtained a license. But whether this would be considered an indirect transfer is unclear. Particularly transactions that lead to a change of control (e.g., transfer of more than 51% shares) may be blocked by the Ministry or the new investor may be required to meet eligibility criteria.

This uncertainty is particularly important for foreign investors or financial institutions. Normally, in a healthcare facility investment, sale or merger is envisioned as an exit strategy. However, the transfer prohibition complicates these strategies. Investors need to approach the project with a long-term perspective and not plan for short-term exits.

Cancellation of License and Consequences

There are several situations where a license can be cancelled. First, failure to obtain a permit within the specified period. Second, failure to resume operations within a certain period if the permit is suspended. Third, complete cancellation of the permit.

In case of cancellation, the license fee paid is not refunded. This represents a significant financial risk for investors. For example, an investor who purchases a license for 30 million TL but cannot obtain a permit loses this money entirely. Therefore, minimizing risks in the permit process is of vital importance.

The regulation grants the General Director authority to cancel the auction at any stage. However, this cancellation must be justified and not arbitrary. In case of cancellation, if done before the auction time, guarantees are returned. After the auction is completed and the license fee is paid, the buyer cannot request cancellation. This reflects the principle of acquired rights.

Incentive-Based Licenses

The regulation grants the Ministry authority to issue "incentive-based licenses" in certain regions or healthcare areas. For these licenses, the Ministry can freely determine the starting price. The price can be symbolic or even zero.

Incentive-based licenses can be issued in underdeveloped regions or in specialty areas where there is need (e.g., oncology, child psychiatry, rehabilitation). This system aims to direct private healthcare investments to strategic areas.

For investors, this is a significant opportunity. By entering a region with low or zero license fees, they can establish a position in a market with little competition. In the long term, as population and economic development occur in that region, the value of the investment can increase. However, operational challenges in underdeveloped regions (personnel recruitment, patient volume, payment capacity) should also be considered.

Considerations for Foreign Investors

The regulation does not distinguish between foreign and domestic investors. However, foreign investors must establish a company in Turkey and comply with relevant legislation. If there are specific restrictions on foreign capital in the Private Hospitals Regulation, these will apply.

From an international investment law perspective, bilateral investment treaties to which Turkey is a party are important. These treaties provide foreign investors with fair treatment, prohibition of discrimination, and protection against expropriation. Arbitrary practices or discrimination in the license system may be considered a violation of these treaties and subject to international arbitration.

Additionally, if the license is recognized as an "investment," provisions of the European Convention on Human Rights regarding property rights may come into play. Unlawful cancellation of the license or confiscation without refund of the paid fee may constitute a violation of rights.

Sectoral Impact and Expectations

The new license system will significantly increase entry costs to the private healthcare sector in the short term. The license fee represents an additional item to already high investment costs. This situation may make it difficult for small and medium-sized investors to enter the sector.

However, in the long term, the system may have positive effects. Planned capacity increase can contribute to improved service quality by preventing over-concentration of healthcare facilities. Consideration of regional balances can also create advantages for healthcare tourism. Thanks to incentive licenses, new facilities can be opened in previously neglected regions.

In terms of investor profile, consolidation in the sector can be expected. Due to high entry costs, large companies with strong financial structures or foreign investors may come to the fore. Partnership or consortium models may become more attractive for small investors.

While the public auction system provides transparency in market value formation, it can also lead to speculative increases in prices. Especially in attractive locations where intense competition occurs, license fees can rise above rational levels. It is important for investors to avoid emotional decisions in auctions and maintain financial discipline.

Conclusion

The Healthcare Services License Regulation marks the beginning of a new era in the Turkish healthcare sector. While the system provides the state with powerful tools for healthcare planning, it offers investors a predictable but more costly environment.

Key principles for those who want to succeed are comprehensive preparation, financial discipline, advance planning of the permit process, and evaluation of regional opportunities. Since there is no return after the license fee is paid, each step needs careful evaluation.

The regulation also brings some uncertainties in implementation. Particularly the scope of the transfer prohibition, effects of changes in partnership structure, and details of incentive criteria will become clearer with secondary regulations and practices. It is important for investors to work with experienced legal advisors to manage these uncertainties.

The healthcare sector continues to be one of the areas with high growth potential in Turkey. Although the new system raises barriers to entry, it offers significant opportunities with the right strategies. Especially incentives in underdeveloped regions and multi-criteria evaluation models provide advantages to investors who value not only financial strength but also quality and experience.

Author: Gürkan Erdebil
Author: Zeynep Kafa