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- The principal activity of the medical institution may not be ade quately measured by volume (performance based) indicators;

- It is more important to secure the possibility for providing a neces sary medical assistance than optimize the loading of its capacities.

The following institutions meet these requirements: sanitary and epidemiological centres, infection and psychiatric hospitals, T.B. and drug rehabilitation centres, and AIDS centres.

It appears necessary to transform other institutions that provide medical services into AOs or PANOs. Transformation of a medical insti tution into either new organizational form necessitates meeting the fol lowing conditions:

- The institution is not in the monopoly position;

- Capacities of institutions of a given profile need to be optimized;

and - There exists a managerial potential for its independent economic performance.

The transformation of medical institutions into AO or PANO may be made either in the compulsory (on its founder's initiative) order, or in the voluntary (on its staff's initiative) order, which implies two respective scenarios of such a transformation that is, the radical and evolution ary ones.

In the event of the latter, i.e. under the voluntary order of the trans formation of medical institutions into other organizational and legal forms, one should not expect that most of them would be keen to im mediately modify their legal status. This can be attributed primarily to their conservatism, traditional orientation to the stable, estimate based funding and equally traditional for Russia mistrust in reforms. It will be just a very few institutions that enjoy considerable volumes of incomes generated by paid medical services and which, accordingly, are not happy with the treasury system of budget execution and accrual of their extra budgetary incomes to budget revenues, that will be keen to change their organizational and legal forms. It can be assumed that the most prosperous institutions will transform themselves into PANO, as this particular form ensures the greatest degree of economic freedom.

In the event of the radical scenario, i.e. the compulsory order of transformation of a medical institution into AO or PANO, but provided the employment of the noted transformation criteria, a. 56% of public health care institutions will retain their current organizational and legal form, while another 33% will be transformed into AOs, while the remain ing 11% into PANO s.

The last group can be formed by the majority of institutions of the disinfection profile, those dealing with evaluation, certification and standardizing, and a. 20% of institutions that ensure operations of the RF Ministry for Health Care and Social Development, its Services and Agencies. While as many as a. 40% of therapeutic and preventive care, and research institutions can be transformed into AOs, the rest of them would continue to be public institutions, as well as the bulk of education institutions and those that ensure operations of the RF Ministry for Health Care and Social Development, its Services and Agencies (see Table 26 for more details) Table Distribution of Federal Health Care Organizations by Organizational and Legal Forms (the Radical Scenario of Transformation), as % The proportion The propor- The proporType of organization of institutions tion of PAI tion of PANO Institution of disnfection profile 19 19 Institution that deals with evaluation, certification, 29 0 standardizing Research organization 56 38 Therapeutic and preventive care institutions 58 41 Including:

Medical centres 63 37 Sanatorium and resort institutions 60 38 Rehabilitation centres 56 44 Institutions ensuring operations of the RF Ministry for Health Care and Social Development, its Services 80 0 and Agencies Education institutions 67 28 On average 56 33 Source: computed on the basis of data of the Federal Agency for Health Care and Social Development and the Federal Service for Supervision in the Area of Health Care and So cial Development.

However, it should be understood that in the event of the radical scenario, i.e. the transformation of an institution into AO or PANO in the compulsory order, administrative levers may appear inefficient. Thus, according to the IISP research116, heads of the health care sector con fess that its restructuring faces political and social barriers that can hardly be overcome by administrative means.

A compromise option of transformation of public (municipal) institu tions is also possible. First they are in compulsory manner divided into those that will retain their current organizational and legal form, those that will be in a mandatory order transformed into AOs and those that may be transformed into this particular organizational and legal form. In a few years a part of the institutions earlier transformed into AOs may be voluntarily transformed into PANOs.

In the latter case the following institutions can be voluntarily trans formed into AOs: urban hospitals located in the cities with two or more similar hospitals; specialized hospitals located in the regions that have other hospitals that provide analogous kind of assistance; clinics under research centres, if there are other hospitals that provide analogous kind of assistance in the zone of their operations; diagnostic centres, providing there are other organizations that deliver analogous kinds of diagnostic services in the zone of their operations; urban polyclinics, if there are two and more ones in the city.

In all likelihood, the following institutions should be transformed into the AO form in a compulsory manner: central district hospitals; mater nity houses; nursery facilities, and those that provide dentist's assis tance to children. As concerns institutions that provide dentist services to adults, they should be either compulsory transformed into AOs, or straight to PANOs, or privatized.

According to the Procedures of organization of the work on optimi zation of the budget network set by the Government Commission for Administrative Reform, federal public institutions that do not meet con ditions of their maintenance in the federal property or transfer to an other level of public property are subject to privatization. In addition to the proposed conditions, whose definitions are given according to the Besplatnoye zdravookhranenie: realnost i perspektivy. WP1/2002/07. nezavismy insti tut sotsialnoy politiki. M.: OOO "Probel 2000", 2002. T.V. Bogatova, E.G. Potapchik, V. A.

Chernets, A.E. Chirikova, L.S. Shilova, S. V. Shishkin (ed.).

negative principle (failure to meet conditions of keeping an institution in public property), there may be suggested the following criteria of trans formation of public (municipal) health care institutions into commercial organizations, i.e. their privatization:

They are suggested to be privatized if:

- Their activity is non core (there are no legal and other constraints imposed on their operations, i.e. they can be performed by an or ganization of any organizational and legal form);

- Their operations practically are not funded from the budget.

4.1.4. Conclusions One of the causes underlying the gap between public guarantees of medical assistance and their financial provision is an inefficient alloca tion of resources in the system of therapeutic and preventive care insti tutions, which requires its radical restructuring. The restructuring should be carried out along two avenues: through optimization of the budget network and introduction of new organizational and legal forms for health care institutions.

Optimization of the budget network suggests primarily the reas signment to the regional and local levels of a part of federal health care institutions, except for those that deliver highly specialized medical as sistance to consumers from all the regions of the country.

4.2. Education 4.2.1. Main objectives and priority avenues for reforming the educational system The 2001 Concept for modernization of Russian education until specified main objectives of development of education in Russia as fol lows: enhancing its quality, availability and efficiency. These objectives undoubtedly retain their importance, but they should be specified, as far as the current state of development of the Russian Federation is concerned. The nations economic rise put to the forefront the mission of shaping a system of continuous education that creates mechanisms of employers' integration in developing the educational policy, quality standards of vocational education and allows a more comprehensive account of rapidly changing needs of the labour market. Given this con text, the provision of availability of education gains yet another dimen sion: namely, shaping conditions for the youths territorial, social and academic mobility. The continuity of education and increasing the youths mobility should warrant the maintenance of the uniformity of the educational space in Russia and, at the same time, integration of the national education into the global educational community and fulfill ment of Russias international obligations in the educational area.

A critical element of the nations socio economic development, Rus sias education system should turn into a sphere attractive to and open for investment. Its investment attractiveness should be secured by effi cient operations, transparency of financial flows therein, community participation in management of education, an independent assessment of the quality of education at all levels of the educational system. Com munity investment in education will be determined primarily by effi ciency of the budget funding in the area. Without introducing new finan cial mechanisms it will be impossible to ensure an inflow of complemen tary extra budgetary funds in the sector. The main condition of the community investment in education should become increasing its cadre capacity. That can become possible only when wages in the sector are competitive with those in other sectors. The investment attractiveness of education will directly depend on the innovation nature of develop ment of the educational sphere, consolidation of research, education and practical operations, and integration of the national educational system into the countrys innovation system.

The innovation nature of education currently forms a critical vehicle in its competition with other social institutions for influencing the young.

Nowadays, mass media and communications, mass culture and adver tising turn into vigorous producers of behavioural patterns and models for the youngsters and teenagers. Under new conditions, both the con tents and forms, and technologies of education are critical to create the youths positive orientation to education, and development of new channels and methods of education becomes a pressing need.

Today, there emerges the global market for education. It is highly competitive, as education is increasingly becoming a method of promo tion of a nation on the globalizing labour market and the international market for cutting edge technologies. It is gradually turning into a lead ing element of geopolitics and nations economic strategies of conquering new markets.

Russias accession WTO and the Bologna Process makes the coun try a participant in the competition race. The demographic decline characteristic of both Russia and Western Europe will relatively shortly entail a cut throat competition on the international and national levels for university students, and critical instruments in that will become effi ciency of management of the educational process, quality of the post secondary education, flexibility of educational programs, and an oppor tunity for a student to enrol in international continuous education net works and increase his (her) competitiveness on the labour market.

The rise in the mass higher education likewise forms a global trend.

In Russia, this particular process takes an accelerated pace. While worldwide it is explained primarily by the tendency of the transition from the industrial economy to the knowledge based economy, in Russia the tendency is complemented by the factor of the young generation lack ing broad institutional opportunities for professional self realization.

Because of the nascent infrastructure of the market for education and the underdeveloped system of continuous education in Russia, the process of a drastic rise of the mass character of higher education has become associated with the rise of various forms of pseudo education.

That challenges the nation to modify the structure of its higher educa tion and develop fundamentally new approaches to shaping its sub stance and evaluating its quality.

At the present stage of modernization of the national education the priority avenues for the government policy in the area should become:

Developing a system of the continuous vocational training that will allow to enable the education system to meet rapidly changing needs of individual, the society and economy, and possibilities for equalization of the access to a quality education at all the levels of the educational sys tem. The mission of shaping a system of continuous vocational training necessitates:

- Creation of conditions for the rise in the number of agents that pro vide educational services in the area of vocational training and per sonnel training;

- Creation of conditions for the outspreading of public and profes sional mechanisms of attesting and accrediting educational pro grams;

- Creation of conditions for the increase of the role of public institu tions in the education management area;

- Formation of a nationwide system of evaluation of quality of educa tion;

- Creation of conditions that ensure the students educational mo bility.

Enhancing quality of the vocational training by means of:

- Transition to the two level postsecondary education;

- Restructuring the primary and secondary vocational training sys tem;

- Creation of conditions of the innovative development of the voca tional training system, consolidation of education, research and practical operations.

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