10:10 15.03.2021

Author VALERY ZUKIN

What is an additional payment for healthcare services and why is it inevitable in Ukraine?

12 min read
What is an additional payment for healthcare services and why is it inevitable in Ukraine?

Valery Zukin, Vice President of the Ukrainian Association of Reproductive Medicine, Member of the Board of the Association of Private Medical Institutions of Ukraine

 

For a long time, I have been trying to understand the essence of the healthcare reform being carried out in Ukraine. And I often catch myself thinking that I simply do not understand certain things. I still do not understand why patients cannot pay in addition from their own pockets or using voluntary medical insurance (VMI) to reach the real cost of medical service which is clearly higher than the tariffs of the National Health Service of Ukraine (NHSU).

   In all fairness, it would be necessary to mention the positive aspects of the recent and quite radical healthcare reform:

1. The principles of financing public medical institutions have been radically changed.

2. FOR THE FIRST TIME, private medical institutions also receive state funding. This is a breakthrough!

3. Financing of medical institutions depends on the number of medical services provided.

Naturally, there is not a single phenomenon in life which does not have certain disadvantages, even in the presence of some super advantages. Every medal has the reverse side.

What is “the reverse side” of the healthcare reform?

  1. Unfortunately, as was expected, there is not enough money due to the economic state of Ukraine. However, for complacency, let’s admit that no country in the world has a healthcare system which is fully satisfied with its own funding. Money is never too much. This is extremely important for medicine!
  2. Money is received only for the “disease”; therefore, an extremely important area of modern medicine — prevention — has ended up without funding. The following situation arises when it is beneficial for medical institutions to have more sick citizens in Ukraine. What a sad conclusion!
  3. Not all diseases are covered. Nobody knows how to treat those diseases which were not included in the NHSU list.

The list of advantages and disadvantages of the healthcare reform can be continued. However, I want to join neither the numerous unconstructive critics nor the smaller group of ardent supporters. Life experience suggests that the truth lies somewhere in between. So where is the golden mean? And if we expand this seemingly understandable term, then where is the golden ratio over which architects, artists and even modern designers have racked their brains for centuries? If you carefully read the article about the golden ratio, you will see that the truth is calculated in a more difficult way than just using the “Sharikov” principle which is to “take everything and divide” from the ingenious Bulgakov’s “Heart of a Dog”.

 And when I try to explain the essence of additional payments to the quite progressive people I know, I understand that no one understands this problem. Although, from my point of view, it is a key element of the healthcare reform.

Who pays, to whom and for what?

Let’s try to draw a schematic of the healthcare system financing

 

Form of ownership of a medical institution

Public

Private

 

Payment source

The state

Option 1 Public ownership + the state pays

Option 2 Private ownership + the state pays

Citizens

Option 3 Public ownership + citizens pay

 

Option 4 Private ownership + citizens pay

 

All various forms of healthcare financing existing in the world can be ultimately summarized by these 4 options or their combination. In fact, everything is very simple.

Option 1. Public ownership + the state pays is well known to us since Soviet times and does not require any special comments. The state owns the hospitals and equipment and receives funding from the same state for salaries of employees, medicines, utility bills and a bunch of other needs of the medical institution.

Option 4. Private ownership + citizens pay is also well known to us. The investor invests in a building and equipment, creates a medical institution. And then citizens pay for medical services from their pockets or through insurance companies (Voluntary Medical Insurance [VMI] system). At the same time, the medical institution also pays taxes to the state so that there is money to finance Option 1. Let’s be frank to each other. Taxes are paid by the citizens since the cost of medical services in private medical institutions also includes a certain “tax component”.

Option 2 Private ownership + the state pays appeared with the beginning of the healthcare reform. The investor invests in or uses an existing medical institution. But he receives funding from the state for the services provided to citizens. I will repeat once again, this option is one of the greatest achievements of the healthcare reform. I know for sure that medical institutions created specifically for the implementation of this option began to appear. By the way, according to the latest data, these institutions have currently big problems. Services should be provided on a regular basis, but the regularity of the NHSU payments is far from perfect. This is like a death for a medical institution which has an overwhelming number of financial flows from the NHSU contract. Let’s hope they will cope with it...

Option 3 Public ownership + citizens pay in Ukraine is absolutely excluded at the legislative level. I will remind Article 49 of the Constitution of Ukraine, as I often come across the fact that the highest-ranked Ukrainian officials do not really remember it.

“Article 49. The state and communal health protection institutions shall render medical care free of charge; the existing network of such institutions shall not be reduced. The State shall promote the development of medical institutions under all forms of ownership ...”

In order to avoid misunderstandings and prevent any payments in public hospitals, there is even the Decision of the Constitutional Court of Ukraine, which in far 2002 banned any initiatives in this delicate area. Was the problem solved?  Of course not. Citizens’ money in state medicine has become a part of “shadow” economy. But this is another issue. And the healthcare reform has changed little. The state strictly forbids the state hospitals to take money from citizens but does not notice the size of the “shadow sector” in the healthcare system.

Co-payment and additional payment — why do we need them?

Any discussion without clear definition of terms is useless. It is obvious. You can argue for hours and then find out that opponents bring different meanings to the same words.  

So, co-payment is a fixed payment for certain types of medical services or the provision of medicines. For example, a doctor’s appointment costs 100 hryvnias. If a patient needs to pay 5 hryvnias, he will ask for help only if he/she really needs it. Obviously, there will be more visits which are completely free of charge than with co-payments. This is a kind of element of restraining medical services due to unregulated needs. I would like to remind you of the basic and forgotten principle of the communist society: “To each according to his needs, from each according to his ability”. History teaches us that nothing good came of communist principles. However, our not untalented reformers are stubbornly holding to them. Well, the moment will inevitably come when you find out their erroneousness. For the sake of truth, the issue of co-payment for the Ukrainian realities has not become relevant, taking into account the scarcity of the packages provided. Therefore, the issue of co-payment is not yet the most urgent one.

Additional payment is the coverage of the difference between the fixed tariffs and the actual cost of medical services. It exists in all countries of the world, except for Ukraine. Remember the already mentioned Article 49 of the Constitution of Ukraine. The additional payment in the public sector just cannot be legal in Ukraine. Therefore, the place of this additional payment is only in the “shadow” sector where it successfully thrives.

If the role of co-payment is to restrain the roaring demand for medical services (remember “all inclusive” in Turkish hotels at the beginning of the tourist boom “Russo Turisto” in the early 2000s), then the additional payment should bring harmony between the state’s capabilities and the real cost of medical services. The fact that the NHSU tariffs were calculated on the basis of the state’s modest capabilities but not the real need raises no doubts in anyone, except for the NHSU leaders themselves. Moreover, they agree with this fact during the “not for the record”conversations.

I would prefer not to say the numbers, but my theses look unconvincing without them.

 

undefined

 

Even a cursory glance at this diagram clearly demonstrates that countries which are more economically developed than Ukraine cannot refuse the participation of their citizens in financing the healthcare system through “direct” payments (private out-of-pocket) or the VMI system (private insurance). I wonder what the economically unsupported social guarantees are called. Populism, I guess.

To be fair, the issues of co-payments and additional payments have already begun to be discussed by people involved in the healthcare reform.

Thus, Oksana Movchan, one of the NHSU leaders, discusses in her interview the need to implement co-payment, and speaks of the complexity and ambiguity of this decision. The only question is: who and when will decide to cross the Rubicon?

Oleksandr Kvitashvili, the former Minister of Health of Ukraine, discusses the same topic.  His reasoning is more specific: “When the state pays 10 % of the service cost, the additional payment loses its meaning — citizens will not pay the remaining 90 %”. And it’s hard to argue with him.

The exit is usually in the same place as the entrance

Through simple logical reasoning, we come to the following logical conclusions:

1. We will have to implement co-payment and additional payment for medical services. And the principle “it’s better late than never” is more relevant here than ever. There is only one alternative — to make certain of the ineffectiveness of communist principles, namely “to each according to his needs ...”. We well know from recent history how the collapse of the communist idea ends.

2. We will have to start with private medical institutions, since there is no need to amend the Constitution of Ukraine. We just need to change one clause in the NHSU agreement. This is just a paperwork. The main thing is the presence of political will.

3. The public resistance will be minimal. The main thing is explanatory work and the gradual transfer of the “shadow” sector to the legal one. The people are already accustomed to paying in public hospitals. And if they have to pay officially, it will be perceived positively.

What will the additional payment bring?

  1. The most important possible achievement is the increase in the availability of medical services for patients. And the availability will be greater, if the tariff corresponds to the real cost of medical service. The issue of the real cost of medical service causes long-term discussions incomprehensible to me. After almost 30 years of work in private healthcare system, of which more than 20 years as the Head of quite large medical institutions, the issue of cost calculation has become so trivial for me that I see no problems in it. Direct costs are calculated; profitability is added; and the end result is adjusted by competitor prices. That’s all! If it is necessary to set the price below the cost of production, taking into account the competitor prices, then this service should be declined. The implementation of additional payment does not make fundamental changes. It only provides greater availability, depending on the proposed tariff.
  2.  Competition is becoming more transparent and will undoubtedly intensify. The patient wins again. And if public hospitals are allowed to play the “competitive game”, the effect can be simply amazing!
  3. Some part of the guaranteed financial flows in the private healthcare system makes investments more attractive. Fund-raising for medicine is another global issue. The impression is that this direction is obviously not a priority for the state. But this is an enormous reserve to improve the entire healthcare system in Ukraine. And the possibility of additional payments is a powerful lever for the inflow of investments in medicine. In the end, it is beneficial for the state to turn from a huge investor into a huge customer of medical services and concentrate its efforts on quality control of medical care.
  4. The system of additional payments can have a positive effect on the development of the voluntary medical insurance market, which is extremely poor now and has not yet significantly influenced the development of medical care in Ukraine.
  5. The system of additional payments can affect the creation in the private sector of new areas which the state urgently needs, for example, newborn screening for metabolic disorders, screening of pregnant women, early diagnosis of cancer, etc.

Instead of a resume

I am often asked why Leleka Maternity Hospital has not yet concluded an agreement with the NHSU? Here is a screenshot of my chat with a modern and extremely progressive young man.

  • Скажите, пожалуйста, а Лелека с НСЗУ заключили контракт?
  • Could you tell me if Leleka has concluded the agreement with the NHSU?
  • С праздниками и Вас! Нет, с НСЗУ контракта нет. На их условиях это невозможно.
  • Happy holidays! No. We have not signed the agreement with the NHSU. It is impossible on their terms.
  • вот блин, у меня подруга у вас хочет рожать, уже записалась, но хочет хотя бы как-то компенсировать за счёт нсзу.
  • Ugh! A friend of mine wants to give birth at your hospital. She has already arranged everything. But she’d like to get a little compensation from the NHSU.

 

An acquaintance of his asked me later why she cannot get her social guarantees in the place where she sees fit. I could not answer her. She gave birth at Leleka, everything is fine. But her question remained unanswered... Will we soon find the answer?

 

Завантаження...
AD
AD
AD
Завантаження...
AD