Aug. 22, 2019

Secondary healthcare autonomization: how not to lose all your money in 2020

The elections, new President, Parliament and government, possible changes in the Health Ministry’s leadership – all these political perturbations make a lot of secondary healthcare administrators ask themselves whether autonomization is worth it. Perhaps, they should wait, for fear that the new government might reformat or even cancel the whole process? According to the latest data from the National Healthcare Service of Ukraine (NHSU), as a result of these doubts, there are regions with a very low percentage of institutions that have completed the autonomization process. Thus, these institutions make up 13% in Zakarpatska Oblast, 31% in Dnipropetrovsk Oblast, 36% and 35% in Lvivska and Donetska oblasts respectively, and a mere 12% in Luhansk Oblast. However, the law makes it clear that the process of autonomization is inevitable, and there’s not much time left for going through all its stages and signing an agreement with the NHSU, in order for municipal non-commercial enterprises to be able to receive state budget funds in 2020.

No one’s going to cancel autonomization

The general concept of the healthcare funding reform was not developed by the current government or Health Ministry. Back in 2014, a working group was set up for this, with the involvement of foreign experts from the World Health Organization and experts with experience in reforming healthcare systems. The concept has since been approved by several ministries and governments. In line with this concept, in 2017 the Parliament voted in favor of Law 2168-VIII On State Financial Guarantees for Public Healthcare, green-lighting the healthcare funding reform. In December of the same year, the law was signed by ex-President Poroshenko. Since 2018 the reform has been put into practice. Autonomization of healthcare institutions (which grants greater financial freedom, allowing hospitals to manage their money and resources independently) is one of the conditions of said concept. Starting next year, medical institutions of all levels will switch to the new funding model, getting funds for provided services under direct agreements with the NHSU.

The concept of medical subventions will disappear from budget legislation

As of January 1, 2020, amendments to the Budget Code of Ukraine will come into force. Expenditures on the provision of healthcare to the population must be determined in accordance with the program of medical guarantees, established by the Law of Ukraine On State Financial Guarantees for Public Healthcare. It is envisaged that only a short list of institutions will still be receiving medical subventions, to be determined by a resolution of the Cabinet of Ministers after the adoption of the 2020 budget. The amendments have already been adopted and will take effect next year. The Ministry of Health is currently working on a special register of institutions that are not subject to autonomization. These are departmental institutions of the Ministry of Internal Affairs, Ministry of Defense, etc. All other medical institutions, including those of the Academy of Medical Sciences, are subject to reorganization and must conclude cooperation agreements with the NHSU.

According to the Ministry of Health and the Ministry of Finance, the budget declaration for 2020 has already been prepared. The new Parliament’s task now is to adopt the law on the next year state budget in time, taking into account the Law of Ukraine On State Financial Guarantees for Public Healthcare and the Budget Code of Ukraine.

Reorganization takes a while

For a hospital to be able to get funding from the NHSU in 2020, it must first conclude an agreement on the provision of healthcare services to the population. For this, it’s necessary to meet the requirements set for providers of medical services by Resolution No. 391 of the Cabinet of Ministers, which makes it clear that state or municipal budgetary institutions may not be healthcare service providers. The procedure for concluding an agreement on medical servicing of the population is determined by Resolution 410 of the Cabinet of Ministers and applies to both primary and secondary healthcare. With primary healthcare, agreements for the next year had to be concluded no later than December 26 of the current year. However, the procedure itself began a month before that date (i.e. no later than November). As I’ve already mentioned, hospitals must have been converted into autonomous medical institutions before they can apply to the NHSU for an agreement on public health services. Thus, there’s only four months left to prepare for the new conditions arriving in 2020 and secure the funding.

Click the link below to download the Guidelines on Autonomization for administrators of secondary healthcare institutions for free https://ilf.space/instruktsiya.avtonomizatsiya

The autonomization process takes at least three and a half months. This is because the reorganization procedure has become more complicated, as hospitals no longer get a grace period for property valuation and debt settlement:

  • It’s necessary to go through the reorganization process and conduct valuation of the institution’s assets, which are going to be transferred to the newly formed municipal non-commercial enterprise on the basis of an appropriate document.
  • from the time of the initial decision to launch the reorganization process, creditors get at least two months to put forward their claims. They can stop the reorganization process in the register, preventing it from finishing. As practice shows, it takes up to 4-5 months on average to settle debts and resume reorganization.

I briefly clarify the nuances of autonomization for secondary healthcare institutions in the video Autonomization. Secondary level

If you fail to autonomize in time, you risk being left without funding

Secondary medical institutions that become autonomous and sign an agreement with the NHSU will be able to receive funds from the National Service and manage them as they choose, such as making business plans, deciding what equipment to buy and when to make repairs, as well as creating their own motivation system for medical workers. The hospitals that don’t make it through reorganization in time will be left without state budget funds in the coming year. These hospitals will be forced to seek out funds from other sources, such as local budgets (provided that their respective local governments actually have money to spare). If they don’t, however, these hospitals will have problems with paying salaries to their employees, paying utility bills, etc.

In short, administrators of secondary healthcare institutions must realize that reorganization is necessary and this issue must be addressed without delays if they want this process to go quickly and not result in financial losses for their hospitals in 2020.

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