About UAH 150 billion circulates in the shadow in Ukraine’s medical field – ex-head of National Health Service

In Ukraine, the shadow turnover in medicine is now almost the same as all the money currently allocated to health care.

Oleh Petrenko, ex-head of the National Health Service of Ukraine, told ZN.UA.

"According to the latest estimates of the World Bank and the Organization for Economic Cooperation in 2018, the situation is poor. The amount of money in Ukraine that circulates from non-public sources takes almost half. According to various estimates, it's about 49%. That is, the shadow segment is almost as big as all the funds that are now allocated for health care. This, if we consider it hypothetically, with all the expenditures related to departmental institutions, the National Academy of Medical Science, is about UAH 180-190 billion. Of these, the medical guarantees program is UAH 123 billion," Petrenko said.

That is, according to him, about UAH 150 billion is circulating in the shadow.

Of these, about UAH 80-85 billion are the retail turnover of medicines, i.e. the pharmacy part. And almost half, about UAH 70 billion is informal payments.

"And imagine that the share of legal ones (those that are paid within private institutions that operate legally, are licensed and have created investments, or those that are paid at rates in current non-profit enterprises) is 5.5-7 billion, i.e. 10% of informal payments. 90% circulate in the system in the shadow, allowing it to work with the result we see," the ex-head of the NHSU added.

Petrenko explained that this system of 50 or 70 billion shadow hryvnias had direct beneficiaries at every level: national, regional, hospital, department… And, according to him, everyone understands that this allows the system to survive. At the same time, it's completely unfair, because it allows those who already have help to receive it at the expense of this money.

"And those who don't have, respectively, may be lagging in the right to receive assistance. Some say that there's some internal redistribution. But it only happens by human will in the middle of the system. That is, if a person is good, the doctor or department head creates stock for the very poor, but it's not a systematic work and there's a problem here," Petrenko added.

At the same time, according to him, the National Health Service and contracts, in general, have started to streamline it a bit ("there are no studies yet, they are being prepared, and I have already seen the design of several"), the number of cases of direct corruption has decreased. Petrenko stated that doctors still take gifts, but don't demand bribes in advance. They're hoping for them after. And this, according to the ex-head of the National Health Service, encourages them to do their job better, based on the fact that people from their own pockets compensate them for part of their work, which, in their opinion, cannot be compensated by the state and tariffs.

When asked whether the increase in the minimum wage for medical workers promised by the president would change the situation, Petrenko said he would start with the basics. In particular, because now there's a big problem with the distribution of powers of government branches, and the lack of understanding of some branches that it's not their area of ​​competence to influence such things.

He noted that the president shouldn't influence the formation of salaries in autonomous non-profit enterprises, which are 95% owned by local authorities.

"I don't want to comment on the legal component. The president can issue a decree that he recommends finding an approach (actually, it sounds this way). This is such an authoritative approach, relatively speaking, a wish. I welcome such a wish of the president. But it can not be equal. We can't just raise everyone's wages, raising wages as part of the reform we once designed must be directly linked to increasing productivity, that is, our goal in terms of optimization, cost-effectiveness, is to bring those who work harder and better to earn more.

Any elements that apply to just about everyone, to raise salaries of doctors, physicians, nurses, without correlating this with the number of public goods produced (amount of work and increased productivity), are unacceptable. They lead to populist steps that cement or make the situation worse. Raising the middle level on the one hand kills the motivation of the best on the other. And these best who'll leave the state because they don't see in the rules of the game opportunities to earn honest work," Petrenko said.

According to him, if there's a strict order within the calculation of tariffs to increase the share of the wage fund just for some rating, which was done by the previous three ministers, then, according to the lowest estimates, it will lead to additional expenditures of UAH 40 billion.

The ex-head of the NHSU once again noted that strategic procurement couldn't work separately from two other important things.

One of them is to ensure the modernization of the institution, i.e. the investment component, which allows the use of long-term financial instruments. Petrenko added that now there were ideas to make "big construction of hospitals."

According to the ex-head of the National Health Service, he recently heard about wanting to create facade hospitals, besides admission departments, like children's, adult's in each region. Peterenko said that he would welcome it, but if it's again removed from Prozzoro and aimed at the usual mechanism of implementation and development of budget funds, then nothing good will come of it.