05 June 2023
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Health Factory. What We are Changing in the Healthcare System. Materials presented by Mr. Pavlo Kovtonyuk

On 30 November, the Cabinet of Ministers approved the Concept of Health Care Reform.

Pavlo Kovtonyuk, Deputy Minister of Health of Ukraine prepared for the Ukrayinska Pravda web resource an extensive material regarding the basic principles and provisions of the Concept.


Approval of the Concept is a political consent regarding fundamental changes in the health care system, and the answer to the question "how will the system look like in general?"

The document is written in simple language. In this one and next columns, I will tell what we are doing in even more plain language.


How is our health care system functioning? If we answer in a single sentence, it will be as follows: officials allocate funds to all medical institutions according to the standards of planned economy, which standards were developed at the time of Brezhnev.

What do you need to do in order to obtain funds from the state? To build a hospital, because, if there is a hospital, there will be funds. And the fewer patients come to the hospital, the less will be expenditures.

In that way, we induced the size of the network over dozens of years, and failed to induce the quality.

Now we are the second country in Europe by the number of hospital beds, only Belarus takes a higher position. Those beds, according to the reporting, are always occupied. So, at any time, a whole city of the size of Vinnytsia (including babies and old persons) is staying in Ukrainian hospitals.

And we spread a thin layer of funds over millions of square meters of the upbuilt infrastructure. Since the flows are allocated through local budgets, it often happens that somebody's co-father-in-law or godfather administers such flows: "The Chief Physician in this hospital is my relative, and it should be a priority for us". And, all other people just nod: "You understand it, surely..."

We are changing the core thing: financial incentives. Instead of paying hospitals for the mere fact of their existence, we are going to pay for people going there to get treatment.

Earlier, it was as follows: "there is a hospital - there are funds".

And after the "decommunisation" of our health care, it will be as follows: "there is a patient - there are funds". And in order to start up this scheme, we launch the national medical care insurance.


If you come to any hospital that has joined the programme of national medical care insurance, you will get treatment in accordance the uniform standard, along with other Ukrainian citizens, and the hospital or the ambulance station will get reimbursement subject to the uniform rules applicable to all hospitals.

It means exactly that "money follows a patient".

National insurance exists in all civilised countries. And the model selected by us is in place in many of them: Great Britain, Sweden, Italy, Thailand, Spain, Brazil, Canada, Philippines.

Our concept is supported by international partners understanding international trends. On 17 November, they even made a joint statement to support our plan.

There is no need to buy an insurance policy when the national insurance system is in place. You are insured because you are a citizen. Your passport is your "policy'.

Together with the patient and his/ her "policy", money will come directly to the medical institution from the national insurer - the state, under a direct contract.

Without any intermediaries, allocation plans, overachievements of patient capacity, without any "special" hospitals where the Chief Physician is in good relationships with the Head of Regional Health Care Department.

Are there any patients? - there is money under a direct and transparent contract.

Have all patients gone? The funds will follow them.

There is no difference whether an individual gets treatment in a private or municipal or industry-sponsored hospital - they all are equal to us.

The money will go to where the high-quality treatment is available.


We do not introduce any additional charges. We do not establish any additional funds for this purpose.

Then, where is the money from? Directly from the budget.

We all pay taxes to the budget, which taxes are assessed not only on our wages. We pay the VAT on any purchase, we pay excise duty on petrol each time when we ride a car or take a bus. These indirect taxes are even paid by the people who get envelope wages and the earning seekers sending money from abroad to their families in Ukraine.

Every year, the Verkhovna Rada (Parliament) approves the national budget and its separate part intended for the health care. It comprises a part of taxes paid by each of us. In 2017, these contributions will total 55 billion Hryvnias in aggregate.

It is understood by everyone, the larger is the amount of contributions collected by the insurer (insurance pool), the more coverage it can ensure. We will have a national pool, that is the largest possible pool.

In this connection, there will be no new monstrous fund, nobody will own those moneys. There will be no official allocating them manually. There will be the electronic system and the national insurer technical operator making payments directly from the budget and supervising the quality.

That operator is the National Health Service of Ukraine which we are creating.

The difference between the operator and a fund is like the difference between a cash keeper and a bank. The operator does not own the funds, it just counts them up.


Every year, the Cabinet of Ministers will approve the "State Guaranteed Set of Health Care Services" - the whole scope of services to be received by a patient free of charge. As sell as the list of services requiring co-payment under tariffs uniform for the whole country.

And the Verkhovna Rada (Parliament) will adopt the budget pertaining to the health care system.

The national insurance will entirely cover emergency care and primary element of the health care in financial terms. I am writing "entirely cover" in its literally meaning - including medicines, wages, test results, etc.

The secondary and tertiary care will be financed in the amount equal for all individuals and in accordance with uniform rules.

What will happen to the services not guaranteed by the state? An individual will have an extensive range of options regarding voluntary medical care insurance. This market will expand and private insurance prices will decrease.

Why is the national system called a pay-as-you-go system? Because both the contributions (taxes) and any possible supplemental payments will be made by all, irrespective of income earned by an individual. And only the amount that is actually and transparently guaranteed by the state can be used, also irrespective of income.

For socially disadvantaged individuals, there will be even no supplemental payments - they are also meant to be a part of the pay-as-you-go system and assistance to those of us who are most vulnerable.

The physician should not contemplate whether his or her patient is poor or rich. All will have identical medical care insurance. And those funds pertaining to insurance will go exactly to the institution to which an individual turns to.

And the patient should be aware that if he has obtained low-quality service under the insurance policy, he may just apply to another hospital (and the money will follow him).


The roles of all those working within the system will change.

The new role of the state will be to insure financial risks related to the treatment, supervise the quality, and handle contracts.

The role of physicians will be to cure. Not to prepare reports, not to host representatives of pharmaceutical companies, but precisely to cure.

Physicians will be able to freely select where and how to work. Someone wants to be employed and calmly work until retired. Others are ready to commence private practice, lease an office, and independently administer his patients' database. And somebody, maybe, thinks of opening a private health care facility. All formats will be equal to the national insurer.

The role of the patients will be to find a physician they trust and follow his recommendations.


Their role is extremely important - it is the communities who own almost the entire healthcare infrastructure (which may accommodate a whole city of the size of Vinnytsia).

That is an immense amount of floor space and, as usual, the use of it is equally inefficient.

A real life example from regions: some 50 years ago, a maternity department was built and it is still there. Half a century ago, probably, there was a need for it but now two babies a month are born there. This number is not just too small, it means danger both to the woman and the baby. Shall we open, instead of the maternity department, a rehabilitation centre for veterans there?

And in any case, what is to be done with the healthcare infrastructure? Shall we open municipal non-profit enterprises or, like in Poland, lease the infrastructure to the physicians?

Shall we have at the primary level large out-patient clinics or an extensive network of ambulance stations in residential neighbourhoods? Shall we lease it out at the commercial rates or look for the best physicians and lease it at UAH 1.00 per year?

The role of the communities is to find answers to all these questions. Where and how much infrastructure they need and which exactly. Because all that is their property and nobody but they themselves will decide what to do with it.

That is, the correct answer to the question "what will change?" is: almost everything.

We are moving to a new system of relations, but it is much simpler, more understandable and, what is the most important, with uniform financing rules applicable to all, which rules are linked to people.


The health care system is very extensive. It is impossible to restart it at once, but we should remember that the system is composed of living people and no one of us would be glad of the shock of ups and downs. Therefore, we are doing all things step by step rather than at a quick pace.

In September, we granted autonomy to physicians in terms of personnel planning by having revoked notorious order No. 33 of the Ministry of Health of Ukraine. It "tied" the number of personnel to the number of hospital beds. On last Wednesday, we granted financial planning independence to hospitals - health care institutions need no more to report why the costs spent for heating in November fail to be in line with the plan drawn up one year prior to it.

Many said: "Don't say that, those are fundamental things, they will be unable to determine how many cleaning women they need in the hospital if the higher authority fails to determine the number".

However, as of today's morning, the sky has not fallen to the ground. Also, there were no specific complaints either.

The major autonomy - the economic one - is still ahead, which autonomy will provide an opportunity for direct contracting health care institutions. Obtaining of autonomy by the institutions is inevitable because it is financially advantageous both to physicians and communities.

Therefore, the reform is already on its way.

And we are planning to start the payments "for a patient" from mid-2017 - at the primary level. That is the first stage.


The primary level means family physicians, therapists, paediatricians. Those are the first-contact physicians, they should know your medical history, understand your way of living.

In civilised countries, such physicians settle up to 80% (!) of medical treated cases without hospitalisation using state-of-the-art knowledge, base equipment, and the most common tests and medicines.

In your opinion, is it easy to find such a physician in Ukraine? Frankly speaking, it is not very easy. Therefore, we cannot just change the funding. The reform is directly related to the training of physicians, fully subsidised drugs (reimbursement), the process of decentralisation.

In addition, it is not one reform, but two reforms in parallel - one in cities, and the other, in rural areas. In cities, physicians will compete to get patients. In villages, the communities will compete for better physicians by providing better working conditions.

The system is indeed extensive and to change it, an integrated plan is required.


Of course, we would like that all processes are faster. But we do not make any promises until we are sure of anything. Now, we understand that we may start the first payments at the primary level after mid-year.

The secondary and tertiary care will be included in the reform one year later, whereas, in 2017, they will be getting prepared for the start of reform.

In my next article, I will explain why we all need medical circuits.

We will publish the integrated plan by the end of the year. When it is ready, we will be able to tell more how everything will be working for the benefit of an individual.

And finally, I would like to recall those who believe that "Ukraine will never have adequate health care" that a few years ago there were people who told that "Ukraine would never have adequate armed forces".



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