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On December 30, 2006, the Federal Duma passed Federal Act No. 275 FZ On procedures of formation and consumption of the targeted capital of non for the profit organizations, which may have a great influence on the development of RUSSIAN ECONOMY IN trends and outlooks the non public non for the profit sector and its institutions in the educational sec tor in particular42.

At the end of the year the RF Government produced its Resolution of Novem ber 11, 2006, No. 671 On approval of a model concession agreement with regard to objects of education. The agreement comprises the concessionaires obliga tions on creation and/or reconstruction of the object of the concession agreement;

the concessionaires obligations on exercise of activities, as per the agreement in question; procedures of allocation of site(s) to the concessionaire; the period of validity of the concession agreement, etc. It was particularly emphasized that so far as specific objects of education are concerned, the concession agreement should be strictly consistent with the model agreement, but it may also contain provisions not regulated by the latter, but bound not to conflict with the RF law. Clearly, the hope is that the Resolution should ensure concession operations in the educational sector and help attract additional investment. Besides, it should ensure a more ef ficient use of the public or municipal property, and higher quality of educational services to the population. Meanwhile, the unanswered question is as to what kind of specific economic advantages it would grant to the business community, as well as the government and municipal administrations. It is yet more serious a question, as the Resolution merely follows a provision of Art. 10 of the Federal Act on con cession agreements and simply formally introduces into the legal filed a model concession agreement with regard to educational objects. Meanwhile, regardless of the subject of the agreement, basic terms and conditions of a concession agreement can be found in the noted Article of the said Act. Hence, an analysis of the legal form of the agreement does not allow to expose where efficiency, as well as economic benefits, lie, thus leaving the issue open for further discussions. From the economic and legal perspective, the concession agreement poses a modified and far narrow version of a rental agreement, albeit overly imperatively biased to wards protection of the state interests (as it unequivocally shifts all the risks onto the concessionaire. One has to admit that, compared with other civil law institu tions, concession in its present form does not grant potential investors with any ad ditional commercial or legal rights, nor it gives them any additional protection of their interests. Some experts believe that by some matters a rental agreement can protect potential investors better than the concession one, which is proved by a comprehensive analysis of the Federal Act on concession agreements and terms and conditions of the Model Agreement introduced by the Resolution in question.

That is why it is very likely that the concession agreement in its present form would remain insufficiently attractive to private investors.

So, the progress with concessions in the educational sector will require a fur ther development and detalization of the legislative base, thus enabling private businesses to efficiently promote their commercial interests in the part that does not conflict with those of the citizens and the state.

See a more detailed review of this and some other acts in Annex 1 of the 2006 IET annual issue.

Section Social Sphere 4.4.2. Healthcare The preceding year was distinguished with a row of remarkable events in the sphere of healthcare. First of all, it should be mentioned, that the volume of budget financing in 2006 (federal budget and social tax proceeds, addressed for medical insurance of employees), has grown by 18 per cent in real terms and exceeded the level of budget expenditures for healthcare of 1991 (see Fig. 13). This is doubt lessly a remarkable turning point, which relieves the problem of financing shortage, generated by political and economic crisis of the 1990 s, and brings forward prob lems of fair and effective utilization of available resources for medical assistance to the population.

100 84 74 68 Source: estimates made on the data of the Russian Statistical Service based on index deflators of GDP.

Fig. 13. Government expenditures for healthcare in real terms (1991 = 100 %) The first priority for the government in the preceding year was implementation of the National Project.

Priority National Project in Healthcare Institutional traps, where the healthcare system got stuck43, and reluctance of power elite to take unpopular measures even with minimum social and economic risk have led to the situation, where the only possibility to relieve the burden of ac cumulated problems was targeted financing of selected areas in healthcare. Such strategy implemented in the Priority National Project. Although the top authorities of the Ministry of Healthcare and Social Development and authorized representa tives of the RF President Administration have repeatedly pointed out, that reforms in healthcare are inevitable and the National Project is a preparatory step for further reforms to be implemented after 2007, that project actually happened to be an al ternative to institutional changes.

Russian economy in 2005. Trends and prospects. .: IET, 2006. P. 347.

RUSSIAN ECONOMY IN trends and outlooks Expenditures for the Project, covered from the RF federal budget, Federal Fund of Mandatory Medical Insurance and Social Security Fund were estimated in 2006 in the amount of RUR 97.3 bn, or 10 per cent of aggregate national expendi tures for healthcare. Development of primary medical assistance and implementa tion of high technologies in healthcare were pointed out as priority trends of the Project.

Table Expenditures for implementation of Priority National Project in healthcare sphere, RUR, bn Actually Planned for Perform Project objectives and types of expenditures invested in 2006 ance, % Funds of the RF federal budget Priority "Development of primary medical assistance Training and supplementary training of general (family) practitioners, phy 0,2 0,15 sicians and pediatricians of territorial clinics Monetary benefits to general (family) practitioners, physicians, pediatri 15,4 14,6 cians and nurses of territorial clinics Monetary benefits to personnel of medical assistance and maternity ser 5,2 4,1 vices, medical assistants and nurses of ambulance service Diagnostic equipment for municipal clinics 14,3 14,3 Vehicles for ambulance service 3,6 3,6 Immunization of population 4,5 4,5 Preventive measures against HIV, detection and treatment of infected 2,8 2,8 patients, prevention of hepatitis B and C Inspection of newly born babies to exclude galactosemia, androgenital 0,4 0,4 syndrome, mucoviscidosis Priority High technologies in medical services for population Construction of high tech medical centers 12,6 3,6 High tech medical assistance 9,9 9,8 IT support and Project management 0,6 0,6 Total expenditures from federal budget 69,5 58,5 Assets of Federal Fund of Mandatory Medical Insurance Supplementary medical examination for employees of medical system in 2,0 1,6 the age of 3555 years old Additional compensation for primary medical assistance, provided to un employed pensioners (upgrading of tariffs in the framework of territorial 6,4 4,4 programs of mandatory medical insurance by 25 per cent) Total expenditures from Federal Fund of Mandatory Medical Insurance 8,4 6,0 Expenditures from RF Social Security Fund Fees for medical assistance, provided to women by government and mu nicipal clinics for the period of maternity leave and baby birth (baby birth 10,5 9,0 certificate) Payment for supplementary medical examination and primary medical 7,0 3,9 assistance to working individuals Supplementary medical examinations of employees of harmful and(or) 1,9 1,9 dangerous industries Total expenditures from RF Social Security Fund 19,4 14,8 Gross Total 97,3 79,3 Source: RF Ministry of Healthcare and Social Development; http://www.mzsrrf.ru/main/.

Development of primary medical assistance is a key trend for raising the level of availability, quality and effectiveness of healthcare system. Medical assistance at the outpatient stage is a key indicator of the level of availability and quality of Section Social Sphere healthcare in general. Functioning of primary medical assistance provides a direct impact over the indicators of the health of population and effectiveness of health care system in general (statistical data on sick leaves, in hospital stay, applications to ambulance assistance, average time of queuing to a doctor, etc.). However, there aroused problems in the system of primary medical assistance, that required immediate solution; a delay would cause a destructive effect on the availability of this type of medical assistance to population. The low salary level has resulted in the downfall of attractiveness of doctors profession to the young generation. An average age of general practitioners was permanently growing, and the majority of them has reached pension age. As a result, shortage of personnel and low profes sional level of general practitioners of local clinics were observed. There were problems not only with the quality of medical assistance, but even with an access to the doctors.

Supplementary monetary compensations are envisaged in the framework of the National Project for the doctors, providing primary medical assistance (physi cians and pediatricians of local clinics, general practitioners) and nurses, working with them, in the amount of RUR 10,000 per month and RUR 5000 per month ac cordingly. Therefore, their salaries have grown times 2.22.8. The total expendi tures for that target have reached RUR 14.6 bn. Moreover, RUR 4.1 was addressed to personnel of medical assistance and maternity services, doctors, medical assis tants and nurses of ambulance service (RUR 5 000 per month to the doctors, RUR 3 500 per month to medical assistants and maternity nurses, RUR 2 500 to other nurses).

Extra monetary compensations to the personnel of primary medical assis tance system provided positive results in solving the problem of personnel short age. The number of doctors, engaged in primary assistance level, has grown within a year by 9.7 per cent (from 66.9 thousand to 73.4 thousand), the number of nurses by 9.3 per cent (from 74.9 thousand to 81.9 thousand). Thereby, the number of vacancies for those positions was reduced and the rate of double job holding in the sphere of primary medical assistance has reduced from 1.6 1.3.

Those changes provided positive effect on the access to primary medical assis tance.

In the course of Project development, in autumn of 2005, it was planned to make a transfer to the new form of compensations to the doctors and nurses through a system of financial incentives as of performance results, rather than by flat increase of their salaries. However, it has not been done. Extra compensations to the personnel of primary level were substantiated by the increased work load.

Monetary compensations are paid on the basis of supplement agreements to em ployment contracts, where all additional types of work are specified (supplemen tary medical examinations, prescription of medicines to patients, enjoying social benefits, immunization of population, etc). In practice, supplementary agreements were signed only formally; there was no consistency between the raised compen sation and performance results. The employees of primary level take the increased compensations for granted, rather that an incentive for better performance. Thus, RUSSIAN ECONOMY IN trends and outlooks according to the feedback, the Project measures have not provided an explicit ef fect over the quality of work of primary level personnel.

The growth of the level of compensations to employees of primary level was not accompanied by simultaneous increase of salaries of professional doctors, what lead to some social tension in medical institutions. Later on professional doc tors were granted extra compensations for medical examinations of employees of budgetary sphere and additional investigations for of employees, engaged in harm ful and(or) dangerous industries. According to the Project framework, 4 mln of pa tients in 2006 and 8 mln in 2007 were supposed to undergo supplementary medical tests. Actually regular examinations have been started only in summer 2006, and covered no more than 2.9 mln of patients. Supplementary tests were arranged for 3.8 mln employees.

There were purchased 6.8 thousand of ambulance vehicles, which allowed replacing 1/3 of ambulance car park. As per the estimates of the Ministry of Healthcare and Social Development, an average time of waiting for an ambulance was reduced from 35 to 25 minutes. Out patient clinics were equipped with 22.thousand units of diagnostic equipment for total amount of RUR 14.3 bn. A large scale upgrading of equipment made at the level of primary medical assistance; has greatly extended an access of patients to medical assistance (clinics have received 8.8 thousand ECG recorders, 4.1 thousand units of ultrasonic equipment, 3.6 thou sand of endoscopes, 3.3 thousand of X ray installations and 2.9 thousand of labo ratory equipment). However, one can expect local problems of qualified personnel deficit to handle the new equipment, problems with spare parts and expendable materials, etc.

In this regard, a standard approach of targeted financing of selected prob lematic areas to improve the situation in healthcare is implemented in the frame work of the Project. The key point of such an approach is: to solve specific prob lems by supplying required equipment to certain types of medical institutions.

However, it is not clearly specified, what measurable results are to be achieved with the help of new equipment. Nevertheless, there is no direct correlation between quantity/quality of newly purchased equipment and quality and availability of re quired medical services, provided to population. Apparently, one can not expect explicit positive results without substantiation of measures and resources ad dressed to relieve the problems of availability and quality of specific types of medi cal assistance and without designation of Project performance indicators, justifying the investment of funds.

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