Optimization of medical services financing produced by health institutions

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Khabarovsk State Academy of Economics and Law

Optimization of medical services financing produced by health institutions

Korobkova Oksana Konstantinovna

- Doctor (Kandidat) of the Economic Sciences,

Associate Professor of the Accountancy

and Control Department

The article is devoted to the situation of medical services financing from 1991 to 2007, in comparison the Russian Federation, Western European countries and the U.S.. Problems in this branch financing and directions of the optimization of medical services financing are also given in this article.

Key words: health-care system, a medical service, a compulsory medical insurance, financing, funding

Closing years of the 80s and opening years of the 90-s, XX century saw an evident fact, that unsatisfactory work of the Russian health-care system was not the only consequence of the insufficient financing, it was also caused by inefficient management in providing and paying medical aid.

Financing was made according to specific expense norms (budgetary funding) connected not with the final indicator of the social importance (completed case of the patient treatment), but with the volume indicators (number of beds in the hospital, visits per a day in the ambulatory and clinic). This financing model enabled an extensive development of the branch - spreading of the health-care institutions network, number of beds, growth of the personnel provision rate and others.

In the world practice, four main sources of the health-care funding are determined: common taxation funds, fees for the compulsory medical insurance, the ones for the voluntary medical insurance, the patients' cash. Today, in the conditions of the extremely limited financial possibilities of both the RF subjects and people, the federal budget remains the only source. In the conditions of the market economics, we can pick out budgetary, insurance and private systems of the health-care financing (table 1).

Table 1

Models of health-care financing

Activities on raising fees for the compulsory medical insurance covering those who don't work are ineffective.

Illegitimate payments amount to 3 - 4 billion rubles per a year at least, that doesn't correspond to so called “gratitude” of 1 - 2 thousand rubles a month (per a doctor operating in big cities). Chargeable medical aid is possible only for 15 - 20 percent the population, whose income amounts to at least $500 U.S. per a family member. So, share of the funds raised from the chargeable medical services is insignificant also.

The governmental finance volume is generated according to the remanent principle. Funding of the annual Governmental Program guaranteeing provision people with free medical aid is about two times smaller than the health-care needs. This Program doesn't adapt the financing norm per capita to the minimum size of wages and share of the GDP.

The Governmental Guarantee Program is based on the minimum norm per capita, which doesn't takes into account low level of salary, financial deficit, lack of medicine, low maintenance of the clinical and preventative institutions.

The RF Government has introduced a set of bills directed to balance the governmental guarantees and financial provision of medical aid. However, the reform is suggested to be held at the expense of inner resources, without funding from outside. The countries having reformed their health care managed to decrease only pace of its expense. In general, such reforms require the finance increase. For all that, additional funds and their concentration according to the domestic health care development priorities are indispensable.

On 16.04.2008, the elected RF President Dmitriy Medvedev held the Kremlin-based meeting on the health care and social insurance issues. He called for shortening the difference in medical provision between regions. “There is one situation in the medical aid provision in Moscow and St. Petersburg, and quite another - in some remote regions”, he said. Dmitriy Medvedev called for optimizing expenses going for medical system maintenance. “As for allocations, we should think of optimizing expenses going to medicine maintenance on the one part, and where we should refer main forces, spend funds, and involve private investments in the health-care on the other part,” Medvedev said.

If the health organizations financed by the federal budget take an active part in the regional target health programs, this activity is backed by RF subjects' budgets and extra-budget funds (table 2).

According to the world health organization experts, for the health-care system to function properly and effectively its financing is to amount to 6 - 8 percent of the GDP. Analyses of the health care expenses gives rise to note, that the domestic health system has got permanent deficit of funding from 2,7 to 3,7 percent of the GDP for some decades (data of 1991 - 2007) [2].

In 2005 - 2007, governmental health funding amounted to in 2005 - 5,2 percent of GDP, in 2006 - 5,4 percent, in 2007 - 5,9 percent. The governmental funding the system of the RF (the Khabarovskiy krai) health care amounts to 8 percent of the federal budget, funds of the Federation subjects' budgets - about 50 percent, funds of the compulsory medical insurance - 42 percent.

Table 2

Expenses for the RF health care, % of GDP

In 1995 - 2006, health care expenses in the Western European countries amount from 5,8% (Luxemburg - 5,8 - 6,45 of GDP) to 10,7% (Switzerland - 10,0 - 10,6% of GDP, and Germany - 10,6 - 10,7% of GDP), and in the U.S. - about 14% (13,0 - 14,0% of GDP). Absolute quantity of GDP in Russia is 20 times smaller, than in the countries of the U.C. and U.S.

Per a head of population, health care expenses amount to nearly $120 in Russia, that is 40 times lower than in the U.S., 20-30 times lower than in the Western Europe, almost 10 times lower than in the Czech Republic, 3 times lower than in the Baltic states (Estonia, Latvia, Lithuania).

At the period of 2000 - 2007, financing the RF health care by all sources increased 3,1 times.

The governmental funding remains the basic source (61,9%), including means from the federal budget - 14%, regional - 13,0%, municipal - 13,2%, and governmental extra-budgetary funds (CMI, FSI, PF) - 21,7%.

Consolidated budgets of the RF subjects remain the main source for health care financing. Their share is constantly decreasing. In 2002, it amounted to 51,2% of all governmental funds, in 2007 - 44,9%.

Thereunto, fees for CMI going from people who don't work amounted to 89,8 billion rubles, expenses of the RF subjects' consolidated budgets amounted to 288 billion rubles. Share of the federal budget in the health care financing increased from 9,5% in 2003 to 24,6% in 2007.

Despite positive growth of the consolidated volume financing the RF health care, its share reduced from 6,0% of GDP in 2002 to 5,9% - in 2007, including 1,8% of GDP - at the expense of home economics. Volume of people's expenses grew practically 3 times, and amounted to 388,1 billion rubles or 34,4% of the total health-care financing volume.

In 2007, the Governmental Guarantee Program was financed by all levels budgets (61,2%) and means of the CMI (38,8%). Estimated cost of the Governmental Guarantee Program with the federal budget expenses taken into account amounted to 752,8 billion rubles in 2007.

Having analyzed combined expenses for health care funded by the governmental and private sources across the RF and Far Eastern Federal okrug in 2007, we can mark, that the governmental financing amounts to 687 121,2 million rubles (the Far Eastern FO - 44 570,0 million rubles). Thereunto, the consolidated budgets of the RF subjects amount to 301 118,0 million rubles (the Far Eastern FO - 22 783,3 million rubles). Expenses of private funds across the RF amount to 401 833,1 million rubles (the Far Eastern FO - 18 402,4 million rubles).

Per a head of population, we can introduce total annual financing the health-care system in 2005 as the following: governmental authorities allocate 3,2 thousand rubles per a head of population; governmental foundations - 1,4 thousand rubles; other organizations - 280 rubles, and people pay additional 2,5 thousand rubles per a head on average annually.

In 2007, actual financing the RF health care from all sources increased at 26,8%, and amounted 1429,0 billion rubles (5,9% of GDP). Structure and specific gravity of all finance sources didn't change in principle. Volume of people's expenses grew at 24,0%, and or 33,7% of total volume of the health-care financing [3].

In 2007, annual funding the health-care system per a head of population by the governmental authorities amounted to 4,3 thousand rubles, governmental foundations allocated 2,0 thousand rubles, other organizations - 315 rubles, and people paid additional 3,4 thousand rubles per a head on average annually.

According to the Khabarovskiy krai government decree #86-pr dated 25.07.2005 “On fulfillment of the Khabarovskiy krai Governor Decree #6 dated 09.01.2002 “On the main directions of the Khabarovsliy krai health-care development for 2002 - 2005” and measures on the further development of the krai health-care for 2006 - 2010”, health-care expenses had greatly grown from 9,6% in 2001 to 13,4% in 2004 within the structure of the consolidated krai budget expenses. As the analyses shows, specific gravity of the consolidated budget in the structure of health-care expenses amounts to 58%, the compulsory medical insurance funds amount to 42% (table 3) [1].

So, in the structure consolidated budgetary expenses, there is a substantial growth of health-care expenses. In 2004, the specific gravity amounted to 23,2%. Funds of the consolidated budget prevail in this structure. At the period of 2001 - 2007, health-care expenses from all sources came to be 3,1 times higher on average. At the same period, actual indicators health-care financing within the Governmental Guarantee Program increased 3,0 times bigger per a head. Also there are significant structural disproportions in spending health-care funds. About 64% of all health-care expenses go to the inpatient facility aid [1].

So, we can pick out the following main problems of the health-care financing:

1. Insufficient financing of the branch within 2,7 - 6,0% of GDP for several decades. In this connection, there is a low maintenance basis at the majority of institutions, low salary of medical workers, deficit of financing medications, food, major repairs, equipment, etc.

2. The Governmental Program guaranteeing provision people with free medical aid doesn't cover financial needs of both the branch and people.

3. Activity on raising fees for the compulsory medical insurance covering people who don't work can't increase fund raising significantly.

4. 0,8% of all regional compulsory medical insurance foundations are often removed to the federal foundation for purpose of the partial covering deficit of unsubsidized regions, instead of address extra-financing both unsubsidized and subsidized subjects from the federal budget.

5. Absence of budget consolidation on all levels, medical institutions' financing from different sources, absence of the common financing criteria don't enable to manage with financial flows on the conditions of insufficient funding.

6. Within the existing centralized system, providing clinical and preventative institutions with medications and other medical items is accompanied by permanent deficit and outrages of supplies.

The main directions of the health-care financing optimization seem to be the following:

· Improvement of authorities, responsibilities and financing division in the health care.

· Admittance for all suppliers of medical services and goods, different properties' forms including departmental and corporative health care, which meet the state requirements, to providing services, including fulfillment of the Governmental Guarantee Program at equal terms on the tender basis.

· Tariff formation to provide aid according to the medical-economic standards, taking into account level of the health institution and regional peculiarities.

· Adoption of common mechanism on financing programs of the governmental medical aid guarantees within the national projects.

· Financing health-care corporative programs at the expense of the private business funds.

· Elaboration and introduction of the motivation system for subjects of the medical services, goods and pharmaceutical production to solve the primary health care problems.

· Reduction of differences among social groups in consuming medical aid.

· Realizing measures directed to legalization shadow payments in the health care.

· Price formation control including import goods payments.

· Preservation of different property forms of the health services and goods suppliers, providing people with their right to voluntary choice, refusal from co-investing private institutions, observing the ban on privatization of health institutions.

medical financing optimization

Literature and the sources

1. The Khabarovskiy krai government decree #86-pr dated 25.07.2005 “On fulfillment of the Khabarovskiy krai Governor Decree #6 dated 09.01.2002 “On the main directions of the Khabarovsliy krai health-care development for 2002 - 2005” and measures on the further development of the krai health-care for 2006 - 2010”.

2. Health-care economy / Edited by A.V. Reshetnikov. - 2^nd edition altered and supplemented. - M., GEOOTAR - MED, 2004. - P. 272.

3. Reikhart, D. V. System of compulsory medical insurance: actual questions and prospects of the development // Economy of Health Care. - 2008. - № 10. - P. 21 - 29.

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