Effectiveness of private medical organizations in the Russian healthcare system

Baigulova Alsu Anvarovna ORCID: 0000-0001-8422-9176 PhD in Economics Alsu A. Baygulova Ph.D. in Economics Associate Professor at the Department of Economics and Entrepreneurship, Institute of Economics and Business, Ulyanovsk State University 432017, Russia, Ulyanovsk region, Ulyanovsk, ul. Lva Tolstogo, 42 alsanv@yandex.ru

Dovletov Arslan Batyrovich Arslan B. Dovletov Graduate Student of Economics Ulyanovsk State University 432017, Russia, Ulyanovsk region, Ulyanovsk, ul. Lva Tolstogo, 42 arslan163ru@yandex.ru

Healthcare occupies an important place in the socially oriented Russian state, since it covers the benefits that are socially significant for the population – medical services. The "attack" of the coronavirus and the forced mobilization of the healthcare system turned out to be the very shock that showed the true place and scale of this socially significant sphere.

Transformations in the healthcare system in Russia over the past decades, the development of mandatory and voluntary health insurance systems, public-private partnerships are inevitably accompanied by the development of market relations in healthcare. According to No. 323-FZ "On the basics of public health protection in the Russian Federation", the organization of health protection is based on the functioning and development of public and private health systems ^{[1, Article 29, paragraph 2]}. The main classification feature of the separation of these systems is the form of ownership – public or private.

Medical state (municipal) institutions are actively involved in market relations by providing paid services to the population. Private clinics are given the opportunity to provide services not only in the system of voluntary, but also compulsory medical insurance. The symbiosis of state and commercial organizations in the healthcare system carries a great positive potential. However, it is still far from perfect. The economic aspects of the activities of private medical companies, their socio-economic situation and interaction with the public health sector are relevant and require scientific research. In addition, both private and public organizations should be aware of their responsibility for the future of the field in which they work.

According to Rosstat data ^[2], in Russia in 2020 there were 5065 hospital organizations, which is 20% lower than in 2010, while 294 of them were privately owned hospital organizations, which is more than 2.5 times more than in 2010. Hospital organizations provide medical care for hospitalized patients. The number of beds in private hospitals has increased from 4.1 to 23.3 thousand in 10 years, that is, more than 5.6 times. The positive dynamics indicates the effectiveness of this type of medical services.

Rosstat data on outpatient polyclinic organizations are presented in the table.

Table

Outpatient polyclinic organizations of the Russian Federation by form of ownership

            Unlike hospital organizations, the number of polyclinics has grown over the decade as a whole. The growth index of private organizations was 2.26, which indicates the effectiveness of their work.

In 2016-2019, the volume of the medical market in Russia increased by 3.8%: from 2.09 to 2.17 billion admissions. The number of medical appointments provided increased both in the commercial sectors and in the CHI sector. The increase in the number of admissions under CHI policies was ensured by expanding the program of state guarantees. In addition, with the existing shortcomings of state medicine, paid services of clinics became more and more in demand ^[3]. Similar processes are taking place in the post-Soviet countries. For example, in Belarus, the non-state sector in the volume of medical services provided in 2017 already accounted for more than 7% ^[4].

Each of the components of the healthcare system has its advantages and disadvantages. Private clinics in Russia cannot afford expensive high-tech equipment, so complex operations are performed in state institutions. At the same time, advisory and diagnostic assistance to the population at a high level is provided by private clinics. Doctors, as a rule, combine their activities in both private and public organizations. Different approaches to the remuneration of doctors and mid-level staff, different sources of funding for laboratory tests and expensive unique equipment lead to such different results. State medical institutions (polyclinics) save on diagnostic tests, as they are limited by the medical insurance budget, while the state finances the purchase of expensive modern medical equipment from additional sources for specialized centers where patients from all over the country are treated. The disadvantages of private medicine include the insufficient social orientation of medical care, the allocation of resources to the most attractive (profitable) services, the active promotion of "overconsumption" of expensive and optional types of medical care. However, without the private sector, it is impossible to meet the differentiated needs of different groups of the population.

State regulation should be aimed at creating conditions for the development of a civilized market of medical services, at achieving a balance between insurance (free) and private medical care ^[5].

The private and public sectors compete precisely in the field of outpatient care, whereas hospitals are mostly state-owned. This is typical for many countries. It is quite difficult to compete with state organizations. Paid services in state medical institutions arose as a result of chronic underfunding of healthcare in the 1990s. It was expected that a number of medical institutions would be transformed into commercial ones, thereby forming a market for medical services. However, this did not happen, but paid medical services are firmly entrenched in the activities of state institutions. The use of state property for profit (provision of paid medical services) leads to accelerated wear of equipment, that is, to a reduction in the volume of medical services that could be provided free of charge to the population.

In public institutions, paid services often exceed the maximum allowed by law by 15% of the total volume. The problem is that the cost of services is determined not by market pricing, but by higher ministries and departments. Losses are covered by public funds. According to the participants of the private medicine market, the development of the paid medical services market is hindered by state healthcare institutions that offer paid services to customers at dumping prices. In general, this situation does not correspond to the principles of a market economy. Prices in private medical organizations are planned based on real costs, which are plus additional costs, such as: rent of premises, loan payments, depreciation, purchase of equipment, purchase of drugs and tools (reusable and disposable), staff salaries.

            Also a problem is the high threshold of entry into the industry. An entrepreneur who has opened a private clinic must have substantial monetary capital, since at the initial stage, due to the small number of patients, until the break-even point of the business is reached, he covers losses from personal funds.

The head of a private clinic cannot know the exact number of patients who will receive services next month. That is why planning the budget of paid clinics is a complex process. At the same time, they are flexible. An excellent example of this is the coronavirus pandemic, which forced paid clinics to adapt to dramatically changed circumstances: they were one of the first to conduct paid tests for Covid-19.

The main difference between the private sector of medicine in developed countries, as opposed to the Russian one, is the fact that the main share of its income consists of payments under the system of compulsory and voluntary medical insurance. In Russia, according to a study by the Higher School of Economics, a decade ago 86% of the income structure of private medical institutions consisted of direct payments from patients, and the shares of voluntary and compulsory medical insurance were represented by 9.7 and 1.3%, respectively ^[6]. In 2020, the FOMS reported an increase in the share of private medical organizations in the CHI system to 36% ^[7].

To date, due to the decline in incomes of the population, the share of VMI in the income structure of private medical institutions is decreasing, and compulsory medical insurance is increasing. It is becoming increasingly difficult for private clinics to compete for "paid" patients, and working in the CHI allows you to increase the flow of clients. Private medicine today provides only 2.2% of medical services out of 100% possible ^[8]. The most successful of them are dentistry, cosmetology, diagnostics.

Among the users of the private sector of medical care, women predominate, whose share is 63.4%. With regard to the age indicator, the largest share falls on people aged 25 to 34 years, accounting for about a third of the total population of consumers. In terms of financial security among users of private medical institutions, the category with income from 31 to 50 thousand rubles is the most widespread, also accounting for a third. About a third of users account for groups with income of 21-30 thousand rubles and 51-75 thousand rubles. It should be noted that, in comparison with the average Russians, the incomes of clients of private medical clinics are shifted upwards, that is, they are 20-40% higher. The dominant motive for applying to paid medical institutions is a higher quality of services provided than in public institutions (85%). In second place is the level of service (75%). More than half of consumers apply due to the high speed of service (57%), as well as due to the lack of opportunity to receive the necessary medical care for free (54%) ^[9].

The general trends of the paid medicine market are the expansion of the profile of services provided by private clinics, as well as the further formation and consolidation of networks of medical institutions. The non-governmental sector of medical services (goods) needs to achieve a level of functioning that is resistant to negative external influences, both predictable and unpredictable ("black swan"). This requires an appropriate legal framework, institutional reforms, the formation of an appropriate budget and tax policy, etc.

The main directions of increasing the efficiency of the public health system in Russia should be the intensive inclusion of private medical organizations in the system of compulsory medical insurance and the expansion of the scope of voluntary medical insurance.

According to Rosstat data, the dynamics of public spending on paid medical services is as follows: 2005 – 109756 million rubles, 2010 – 250474 million rubles, 2015 – 528359 million rubles, 2018 – 677686 million rubles, 2019 – 723097 million rubles, 2020 – 693791mn.rub. If we compare 2020. since 2005, we have seen an increase of 6.32 times. Even taking into account inflation, this is a significant increase. If we compare 2020 with 2019, we see a decrease of 4%, which is due to a decrease in the level of real incomes of the population as a result of the fight against the pandemic. Expenditures of the consolidated budget of the Russian Federation on healthcare in 2020 compared to 2019 increased 1.3 times and amounted to 4939.3 billion rubles. But this growth is due to the emergence of additional costs in connection with Covid-19. Also, the 9% increase in expenditures of the territorial FOMS funds is also mainly aimed at combating the pandemic. That is, for the population, the services of private clinics have become even more relevant than in pre-pandemic times.

Given the decline in the level of income of the population, the main task of private medicine is to ensure the economic accessibility of medical services to the population. Financial justice is based on the possibility for citizens to receive medical services in accordance with the need for them, regardless of the financial contribution of a citizen ^{[10, p.131]}. The FOMS system is based on this principle. Increasing inequality for certain groups of the population in access to medical care, inefficient use of available financial resources can lead to further dissatisfaction with public policy in general and healthcare in particular ^[11].

It is necessary to create such mechanisms of interaction between voluntary and compulsory medical insurance so that voluntary insurance funds cannot be spent on services included in the list within the framework of compulsory medical insurance. This will significantly increase the attractiveness of VMI in the eyes of the population and organizations that insure their employees.

The creation of a single medical card for a resident of Russia will also allow to reduce costs in the healthcare sector. This will not only eliminate duplication of tests and other diagnostic studies, but will also allow for better diagnoses based on a complete picture of a person's health for his entire life. Today, electronic patient cards are practiced in each medical organization separately. The modern development of IT technologies (cloud services) allows us to solve this problem.

Improving the quality of services and, accordingly, their attractiveness to customers contributes not only to the availability of the company's website on the Internet, but also its timely updating and improvement. Today, it is already natural to have the opportunity to choose the time of an appointment with a doctor online in an acceptable time, although not all clinics provide such an opportunity. It is also controversial whether a paid doctor's consultation is mandatory if the patient came only to receive a diagnostic procedure, for example, to check visual acuity or saturation level with a pulse oximeter, etc. Today, private clinics need to learn customer orientation. The force majeure associated with the pandemic will pass; the level of competition inherent in this industry will increase; customer requests will continue to grow: consumers want to receive the service simply, quickly and without overpayments.

A systematic approach using programmatic methods is needed. The main tool for the gradual and gradual transition to a modern, high-tech private healthcare system is the development programs of the private healthcare system at the federal, regional and municipal levels. Such programs as public-private partnership should provide for legal, administrative and financial measures, the main purpose of which is to create favorable conditions for infrastructural, technological and personnel development of private healthcare entities, significantly increase the investment attractiveness and competitiveness of private healthcare in the Russian Federation. Public-private partnership in healthcare is important because the industry requires significant investments, and the economic efficiency of most public health organizations is still low.

In general, this mechanism, implemented in the post-Soviet space, which has general trends in the development of healthcare, contributes to improving the level of public health, creating conditions for ensuring social stability in society, improving the quality of medical services provided, optimizing government spending, as well as minimizing structural imbalances in the healthcare system ^[12]. Private medical organizations should not only be a "driving force" in the process of reforming the healthcare system, but also a partner of the state in raising the standards of medical services.

With the solution of these problems, commercial medical organizations will begin to develop with greater intensity, which will benefit not only business, but also the state. The most important thing is the population, which will receive highly qualified modern medical care in a larger volume and at the lowest cost.