Feb. 27, 2019

2 directors: who will be running hospitals now

The medical reform is radically changing the approach to hospital management, transforming budgetary institutions into municipal enterprises. Another important change is that now it will be directors or a team of them, not administrators, running these enterprises, and not necessarily ones with medical education. Let us clarify why this is necessary and how to introduce these changes in practice.

Why a director is more efficient than an administrator

Right now most of Ukrainian clinics are run by administrators - people with medical education and work experience. They earned their positions by doing their jobs well. However, this does not necessarily mean that they are good managers. Sure, there are training courses on hospital management, but they are all using the old paradigm when you were forced to get by with limited powers and resources, mostly obeying orders from above.

Due to the reform, hospitals will no longer receive funding from the budget and will start getting their own funds instead, to use as they see fit, being responsible for hospital property, staff, development, efficiency, etc. After the reform, hospitals should no longer blindly follow the orders of officials, waiting for money handouts. 

To learn more on this, see this webinar: Who clinic administrators are going to be in 2019

Of course, providing medical services remains the main task of any healthcare institution. The way funding works, the higher the quality of these services and the more patients they will be able to attract, the greater the profits they will be making. In other words, Ukrainian hospitals will be companies first and institutions second, and this requires a professional approach to management as well as time to implement it. After all, before this, hospital administrators were forced to supervise treatments, operations and management issues simultaneously. As practice shows, the administrators that abandoned medical practice and declarations after reorganization were able to implement changes in their institutions faster and more efficiently, having 60% of signed declarations as early as the autumn of 2018.

It has been a long-standing practice in other countries for hospitals to be run by a team. A team like that usually consists of an administrative director - a manager with legal or economic education, a medical director who is responsible for medical issues, and a care director who supervises services (comfortable stay of patients in the hospital). Teams like that can already be used by Ukrainian hospitals - the regulatory framework allows it at least.

How to legally formalize the work of a team of directors correctly

In October 2018, the Ministry of Healthcare amended the Handbook of Worker Qualifications, removing the position of chief doctor (hospital administrator). It was replaced by two new ones: director general and medical director.

If the owner (local council) wants a hospital to be run according to the new rules, it is important to consider the following factors:

1. The aforementioned Order contains a clause that until the expiration of the employment contract signed earlier with the administrator as hospital head, he will continue running the hospital. Thus, the enterprise will be able to hire a director general and a medical director only after the mentioned employment contract expires or the administrator is fired.

2. You should specify in the charter what the enterprise’s executive body is going to be - a one-person one (sole director) or a board (consisting of general, medical, financial directors, service director, etc.)

3. If it’s sole director, everything is as before. The owner must announce a contest, form a contest committee, determine its composition, the contest’s procedure and the requirements for candidates, and hold the contest. All of this is regulated by the Procedure for Contests for the Position of a Head of State and Municipal Healthcare Institutions. The requirements for candidates are determined in accordance with the amended Issue 78 of the Handbook of Worker Qualifications. After the contest, the committee announces the winner and submits a proposal to the city mayor (head of the united territorial community, head of the district/regional council) to appoint him to the position of hospital head and sign a contract with him.

See this link to learn from ILF lawyers how to make a contract with the hospital manager beneficial for both parties https://ilf.space/chiefdoctor.contract

In this case, the medical director is appointed as a regular employee. The law does not regulate the procedure for contests for the position of medical director. This means that he can be appointed by the director general. If necessary, the charter can contain a provision that candidates for this position must be approved by the owner.

The director’s powers are determined by the charter, and the medical director’s - by the job description and the powers delegated by the director general. Those can also be specified in the charter.

4. If a collegial executive body is to be created, the charter should have provisions for:

  • exclusive powers of said body and its decision-making procedure;
  • director general’s powers;
  • powers of the medical director and other directors, separately;
  • the procedure for appointing members of the executive body (except for the director general, who is appointed based on contest results).

This management model is suitable for large medical institutions. A board should preferably contain an odd number of members, to avoid problems when voting on issues.

As for the enterprises that are unable to keep large administrative staff, it is better to use the sole director model.