Jan. 4, 2018

Down to earth healthcare reform

The end of 2016 became a turning point for the healthcare reform after the government approved its funding concept. The concept revolves around the future National Healthcare Service of Ukraine (NHSU) which will purchase medical services in the amount guaranteed by the state, paying directly to clinics or doctor entrepreneurs per patient (or under the system of diagnosis-related groups (DRG) at secondary level). The process will utilize a database on patients, their doctors and treatment, allowing for instantaneous exchange of information between all parties and cutting down on paperwork.

After the reform, Ukrainian healthcare market will adhere to the doctrines of “patients equal money”, “free choice of doctors”, “accessible and comprehensive medical treatment” and “higher efficiency”. We’ll see how those precepts are going to work in the new environment.

Free VS paid healthcare

Municipal or public clinics, comprising 90% of the Ukrainian healthcare market, receive monthly financial injections from the state to provide free treatment to the population. Those funds don’t take into account the patients’ needs or what services they were actually accorded. The same is true for doctors’ salary which stays the same no matter how many patients they treat. As a result, clinics and doctors aren’t interested in working more efficiently, since they receive budget funds anyway. In actuality, those funds are used more for building maintenance rather than providing treatment. People are forced to pay for themselves or go to private hospitals where quality service and modern equipment can be found. They basically pay twice – first as taxpayers and then as patients.

There isn’t much variety in healthcare funding systems around the globe. The Bismarck system calls for obligatory health insurance with added pressure on salary (income). The money thus made is distributed by the national insurer among clinics that provided treatment to the insured person. Such is the practice in Germany, Poland or Estonia. Unfortunately, this system only works when there’s no black market and undeclared salaries around. Otherwise there remains a large number of uninsured people and considerable financial pressure from premiums. The Beveridge system on the other hand allocates a part of collected tax money to healthcare. The funds are similarly distributed among clinics based on results – services provided and cases treated. It’s the system of choice in Great Britain, Spain and other countries. With private health insurance, the government only has to provide for the vulnerable social groups, while others have to buy insurance policies and pay for themselves. It’s done in Georgia, United States, etc. Some countries combine those approaches, but one principle stays the same: it’s the actual service itself that is paid for.

Ukrainian government leans towards the Beveridge system and there’s an undeniable logic to it, considering the rampant black market in the country (over 2$ billion).

Under the new funding system, regional, district and municipal healthcare administrations will no longer be in charge of funds distribution among medical institutions. Clinics and enterprising doctors will be making money by providing treatment within the guaranteed package determined by the government. Consequently, their budget funding will depend solely on the number of patients (for primary care) and treated cases (for secondary and tertiary). This approach will make clinics compete for patients by improving the quality of their services as well minimize opportunities for corrupt practices. 

The quality of medical services under appropriate contracts will be monitored by the above-mentioned National Healthcare Service.

A new status for old clinics

The new way of procuring and spending funds by public and municipal hospitals will become reality once they change their legal status from budget-funded institutions to municipal (public) non-commercial enterprises. All clinics are expected to make the transition by 2019. 

The current legal status hinders clinics in their activities as business entities, since head physicians aren’t in full control of the funds and have no true management authority. It’s impossible to run a business under such conditions. 

Right now public and municipal clinics cannot accept payment from patients due to constitutional guarantees. Until appropriate amendments are introduced, they must use voluntary health insurance for additional funding sources.

The new healthcare funding system approved by the Cabinet of Ministers opens up new possibilities to insurance companies that sell voluntary health insurance as well as to private clinics. The reform will bring new players to the market who will be establishing their footholds by purchasing existing medical businesses or renting available premises in public and municipal clinics.

Contracts for patients

A clinic or private doctor will sign a contract with NHSU in favor of the patient. The contract will determine the rights and responsibilities of doctors and clinics. Patients will be able to demand fulfillment of proper treatment procedures, reception hours, treatment protocols and tests as set by the contract. Patients will have certain responsibilities as well, such as showing up for general medical examinations, taking prescribed medicine, listening to doctor’s orders, etc.

These procedures are meant, above all, to protect the rights of patients. In Ukraine people rarely protest when they encounter malpractice. It’s a difficult claim to prove in court since the responsibilities of doctors and patients are vaguely worded and existing treatment protocols aren’t universal. It can be hard to assess a doctor’s judgment, to decide whether he acted according to regulations or not. To help the situation, we must borrow new treatment protocols from international evidence-based healthcare which will not only improve the quality of medical services but also make the whole process more transparent.

When is the new market scheduled for launch?

Changes will come in earnest no sooner than January 2018, with 2017 dedicated to polishing the legislation. The new reform concept requires a new, more flexible and business-oriented legal environment. The changes will extend to:

  1. Budget Code of Ukraine, since under the reformed system the newly formed National Healthcare Service as a body of executive authority will handle funding of medical service providers in accordance with appropriate contracts as well as monitor their execution.
  2. Public procurement legislation: a special procedure is in the works on medical services acquisition for the population, similar to the Deposit Guarantee Fund.
  3. Basic healthcare legislation, so that budget funds are accessible not just to public and municipal clinics, but to private clinics and individual entrepreneurs as well. The first stage is due for launch in July 2017. At the moment, together with our colleagues we are working on the appropriate draft law and in February the Cabinet of Ministers should submit it to Verkhovna Rada for consideration.
  4. E-health implementation remains an important issue since the new funding system relies on swift communication between the parties involved (NHSU, primary care providers, patients and doctors). It’s not just a question of writing a program – certain normative acts must be passed first to establish the procedure for register management, among other things.  
  5. Much effort is spent on amending normative acts to lay the groundwork for the new system, ensure equal rights for all medical service providers, facilitate their business activities, etc. 

The thing to expect this year is for the law to be drafted and submitted to the Parliament. It will determine the scope of state-guaranteed healthcare and reconcile it with Article 49 of the Constitution that declares all medical treatment free of charge.