The Russian Healthcare System

1. The Russian Healthcare System Lecture 9 Tracey Lynn Koehlmoos, PhD, MHA HSCI 609 Comparative International Health Systems

2. The Russian Federation

3. Russia…facts • Largest country in the world. • However, most of the land lacks the proper climate and soil to be used in agriculture • Capital: Moscow • Government type: Federation • 48 oblasts, 21 republics, 9 autonomous okrugs, 7 krays, 2 federal cities, & 1 autonomous oblast

4. Political-Historical Impact on Health • Since the end of the Soviet Union and the birth of the Russian Federation (1991)—health status of the Russian population has dramatically declined. • Federal spending on health—a staple of the Soviet system—has continued to decline to bare minimal levels

5. Updated Russian Health Measures • Population: 142,893,540 (2006) • Infant Mortality: 15.13 per 1,000 • Life Expectancy: 60.4m / 74.1 f • Largest gender gap in the world! • Population >65: 14.4% • Population below the poverty line: 17.8% • Health Expenditures as part of GDP: 6.2% (2002) (but, this number dropped as low as 3% in the years prior to 2006!) • Per Capita Health Expenditure: $150 US

6. Burden of Disease • 60% of men have hypertension • Leading mortality and morbidity causes: • CVD causes 56% of deaths (2003) • alcohol-related injury and poisoning • Russia has sky-rocketing HIV/AIDS infection rates • Multi-resistant strains of tuberculosis are growing

7. 2006 Major Reform • Since the fall of the Soviet Union, there has been no major health care reform • Until 2006! • $3.2 billion in spending increase on health care as part of national priority projects. • The funds, mostly drawn from Russias oil revenues, are expected to cover: • Salary increases for doctors and nurses, • Purchase of new equipment for clinics, and • Construction of eight high-tech medical centers in Russia’s vast, outlying regions.

8. More Russian Healthcare Reform • Controversial major shift in emphasis on quality of treatment, rather than Soviet-style obsession with quantity • The plan will eliminate tens of thousands of specialists - the idea being to encourage more doctors to become general practitioners or front-line, first responders • Russian media say that about 300,000 doctors and health care workers (about half the nation's total) could be laid off, and scores of hospitals shut down in the next few years

9. Reform feedback… • Conflict between GPs and Specialist physicians (Specialists say GPs should classify and send them to a specialist) • Concerns from leadership and staff in the current healthcare system: • How is it possible that a national health care project is managed not by the health ministry, but by the presidential administration? • Is it really about quality or is it about cost?

10. Organization of the System • Ministry of Health • Semaschko Institute on the Organization of Health Care (particularly powerful for planning under Soviet system) • Now: Territorial Medical Organizations conduct planning for majority of the oblasts. • Rapid decentralization decreased quality of care, increased cost, and (because of costs) reduced access. • Rapid opening to undeveloped market forces by unprepared administrators has led to poor results.

11. Financing the Healthcare System • 55% from Federal and Local Healthcare Funds • 30% Employee payroll taxes: .2% for federal funds and 3.4% for territorial funds • The rest: optional purchase of supplemental insurance & out of pocket

12. How the System Works • A psuedo-Bismarkian model • Employees must purchase health insurance • MHIF (Mandatory Health Insurance Funds) • Oblasts and Territorial governments contribute to cover the health insurance of the unemployed—taken from general funds paid by workers

13. Trouble with the new system • By rapidly decentralizing, the Ministry of Health lost touch with the oblasts and with the introduction of the territorial insurance schemes • Lack of MoH legislation to encourage market growth and control relations between payers and providers • Operational problems and fraud have led to incomplete implementation of the plan in all of the territories/oblasts • Coverage continues—sort of

14. More trouble… • Confusion rages: budget and insurance funding to organizations • General distrust of releasing funds to the insurers with no control over the quality or provision of future care • Lack of incentive for insurers to provide care in sparsely populated regions • 1/3 of regions have no insurance companies • General failure to produce market competition (in larger cities there is division rather than competition)

15. More trouble with the new system • Lack of portability: there are no transferability contracts between the oblasts, local funds will not pay for care in other regions • Lack of funding to federal research institutions/hospitals—the cut in federal funds and the lack of transferability (hence, referrals) to large research hospitals has led to the closure of many formerly prestigious institutions

16. How health care is received • 30% of population receive primary care through work related clinics and hospitals • Special health services exist for the following employment based groups: police, railroad, university, high-level government officials • Polyclinics—staple of Russian healthcare system

17. Polyclinic • Basic site of health services delivery • Formerly considered successful by the sheer volume of patients SEEN • Provider attitude: receive and refer! 30% of initial contacts lead to a referral New system tries to emphasize primary care…we will have to wait for the results

18. Sources of Healthcare Expenditures (2002) • 55.8% Public Health Expenditures • 41% from Social Security • 0.2% from External Sources • 44.2% Private Health Expenditures • What are “External Sources?” • Not NGO’s, which are supposed to be classified as private source funding, but very hard to differentiate • Grants and loans for medical care and goods channeled through the Ministry of Health

19. Where does the Russian healthcare ruble go? • Expenditures—typical year (1998 data) • 49% Inpatient care • 16% Outpatient care • 8% Preventative care • 22% Pharmaceuticals • 5% Public Investment

20. Provider Payment • Physicians: Private or Public, most are still salaried employees of a polyclinic or hospital • Hospitals: Retrospective fee-for-service • The Black Market: The healthcare sector absorbs the largest proportion of bribes in Russia (about $600 million in 2000) • This is unreported healthcare spending • A long standing tradition, an expectation of care • Higher in rural areas

21. Compared to US • American v. Russia—fundamental differences • US: Private sector provides most healthcare services with public sector as a safety net for the poor. • US: Powerful and diverse private insurance industry. • Opposite trends: Russian government attempts to offer more autonomy to health care providers and users; US, autonomy has been limited by the long term grasp of managed care.

22. Compared to US • US health insurance experience can prove useful to Russian reformers. • US example of excessive consumption and skyrocketing costs of health care suggests that controlling utilization and costs is a crucial prerequisite for a sustainable health insurance scheme. Failed US efforts to introduce compulsory health care coverage can also serve as an important lesson to Russian politicians who propose obligatory national health insurance.

23. More Comparisons to US • Russian healthcare transitional problems are not unique: • Public health sector reliance in other countries have led to shortages, misallocation of resources, declining quality • Resulting in reduced health status of the population

24. More Comparisons to US • Russia healthcare reform should look at local situation and at successful efforts abroad • Warning signs: ill-designed benefit package, hasty decentralization, and over-reliance on the private sector (Rozenfeld for RAND) • Source: http://www.rand.org/pubs/conf_proceedings/CF124/CF124.chap5.html#fn0 accessed 12 May 2006

25. Summary • The Russian Federation’s healthcare system has been in a constant state of flux • Russian health status has dramatically declined • Rapid decentralization without legislation and competition has lead to market failure and poor health outcomes. • 2006 healthcare reforms—will they work? When will we know? Will throwing money at the problem solve it? • Source: Tragakes, E and Leggof, S. Healthcare Systems in Transition: Russian Federation. Copenhagen, European Observatory, 2003: 5(3)