Health care reforms in Russia: The example of St Petersburg

Pergamon 0277-9536(94)00137-5

Soc. Sci. Med. Vol. 40. No. 6, pp. 755 765, 1995 Copyright ~" 1995 Elsevier Science Ltd

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HEALTH CARE R E F O R M S IN RUSSIA: THE EXAMPLE OF ST P E T E R S B U R G

SARAH CURTIS, l* NATASHA PETUKHOVA 2 and ANN TAKET 3

t Department of Geography, Health Research Group, Queen Mary and Westfield College, Mile End Road, London El 4NS, England. -'Laboratory for Regional Diagnostics, University of Economics and Finance, St Petersburg, Russia and 3Department of Epidemiology and Medical Statistics, London Hospital Medical

College, London, England.

Abstract--This paper describes the changes being introduced into the Russian health care system, particularly the introduction of a compulsory social health insurance system which is paralleled by encouragement of independent health insurance. An example of the implementation of these changes is provided by the early developments in St Petersburg. The effects of the likely changes on health care providers and users are discussed. It is argued that in the light of these reforms, as well as change in other countries, a revision is necessary in the perspectives adopted by geographers of health care to compare national health systems.

Key words--Russia, health care, reform

INTRODUCTION

This paper discusses recent developments in Russia's health care system and uses the example of current health care reforms in St Petersburg to illustrate the most recent changes. It is argued that the model conventionally used to characterize the health system in Soviet Russia and to compare it with other countries is rapidly becoming outdated and that a new perspective on the Russian health care system is required. The paper also outlines some interesting areas for research as the health care reforms in Russia begin to take effect and highlights the parallels in reforms in the Russian and British health service systems, which point to the potential value of comparative research in this area.

THE POLITICAL ECONOMY AND THE HEALTH CARE SYSTEM

As background to the recent changes, we first consider the system as it had developed under the Soviet regime by the 1980s. A number of western commentators have tried to summarize the key elements of Soviet health care at this time and they identified a system which was distinctive in a number of ways.

The ideal model of" Soviet health care

The features (identified by authors such as Joseph and Phillips [I] and Field [2]) which may be thought of as characteristics of an ' ideal ' model of Soviet health care are that it is typified by a high level of

*Address for correrspondence.

public ownership and public funding of health care and a high degree of central planning. The service was intended to provide access for all members of Soviet society to a comprehensive health service which would be relatively homogeneous in terms of quality and quantity, regardless of area of residence.

The ideal model of Soviet health care therefore involved a centrally planned system for provision of health care as a public good. There was emphasis on geographically homogeneous provision based on simple norms of provision in relation to total size of population. Because of this there had been a general trend towards growing homogeneity of health provision between the republics of the ex-U.S.S.R, in the decades up to the 1960s [3].

A strongly hierarchical system of organisation and referral was also evident, and was reflected in a geographical system of organisation featuring Re- publics, Oblasts, Rayon and Uchastok, each with health facilities serving specified areas at each geographical scale. The initial point of access to the service was through polyclinics for provision of uni- versal primary health care, from which patients could be referred on to secondary and tertiary care. There was no recognised system for all patients to exercise free choice of doctor or polyclinic, instead the population was allocated to clinics and doctors on the basis of their area of residence.

Payment was indirect, that is most care was officially free to the user at the point of consumption and all citizens had access to the state health care system regardless of ability to pay. The system operated on the basis of public ownership of facilities and state employment of staff, with very limited official private practice for doctors. The organisation of

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756 SARAH CURTIS eta/.

health care therefore allowed only a relatively weak status and influence for medical professionals, whose status was that of employee.

The reality of Soviet health care in the pre-perestroika period

Several authors, including Ryan [4] Davies [5], Manning [6] and Joseph and Phillips [1] have also identified negative aspects of Soviet health care. The "welfare productivity" model espoused during the Breshnev era (1964-84) stressed increase in quantity of provision, but there were doubts about the quality of care. Although in earlier years, considerable re- duction was achieved in regional inequalities in health resource distribution, during the 1970s and 1980s, geographical levels of provision had showed persist- ent residual variation in levels of provision between republics. For example, the ratio of general prac- titioners to population increased on average in the ex-U.S.S.R, by 60% and hospital beds by 20% in the period 1970-89, but Fig. 1 also shows the disparities

remaining between republics which were not reduced and may even have increased in some cases. Cromley and Craumer [7] commented on the failure of the Soviet system to maximize the degree of equality in provision to the full extent possible. The most poorly provided republics also often had relatively poor health status, as reflected by mortality data [8-10].

The operation of the "residual principle" for state funding of health care, by which health and health care productivity was given lower priority than other sectors such as industry and defence, led to chronic shortages in the health care sector and spending was tightly controlled to around 2.4% of GDP. Rationing was operated by means of queuing. Treatment pro- cesses were slow with relatively long inpatient stays. The welfare model which was applied stressed the health of economically productive members of society more than that of less productive vulnerable groups, such as elderly people, pregnant women and children [6]. Telyukov [l 1] reports on the poor performance of the Soviet health system, documenting problems of

160 1 a) Doctors per 10000 population 1401 11970

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Fig. 1. Relative distributions of doctors and hospital beds by republic.

Health care reforms in Russia 757

lack of basic facilities such as hot water, shortages of medical supplies, lack of para-medical support staff, low standard of professional skills, and lack of development of primary care. He also reports the results of opinion surveys which showed the public to be dissatisfied with poor access to health care, poor quality of services and lack of pharmaceutical supplies.

A number of mechanisms existed by which patients in a position of relative wealth or privilege managed to circumvent the problems and inefficiencies of the health care system and gain access to care which was more responsive to their needs. A very pervasive informal health care sector developed with widespread tipping by patients to health professionals to ensure a reasonable standard and promptness of care. Parallel systems of health care also developed alongside the basic state system, which were also funded by state resources even though they were only available to some members of society. These included occupational health schemes for certain categories of workers and a system of better quality care in special facilities reserved for the elite minority of society.

There seemed to be a comparatively ' top heavy' personnel structure with a higher doctor to nurse ratio than in other parts of Europe. There was also some evidence for high rates of referral up through the health care system for tests and specialist treatment, which may reflect weak development of primary health care. The weak influence of the medical profession had a negative aspect in that the state health service seemed to depend on an undervalued and underpaid, largely female, labour force of doctors with low morale.

The impression is therefore of a service which had become quite inequitable in practice in terms of access to care and the quality of services received. It was rather rigid and unresponsive to patients' individual needs, focused on intermediate measures of service output rather than health outcomes. What evidence we have relating to health outcomes seems to suggest that they were poor. There is debate over the reliability of Soviet mortality data for the period and it is difficult to establish with certainty what the mortality trends in fact were. However, several commentators [8, 12-14] suggest that during the 1970s mortality of middle class men showed a stagnating and probably worsening trend. This seems likely to be due at least in part to conditions affecting the population during the 1970s although the health of this cohort of men may also have been undermined by conditions in earlier decades.

Changes since perestroika

Since 1984, much of this structure has been subject to change or at least debate. In particular, the 'residual' position of health care investment has been questioned. There are probably many reasons for this, but it may be partly associated with the debate reported by Manning [6] reflected in documents such

as the "Novosibirsk Manifesto" which suggested that social divisions in Soviet society were becoming associated with divisions of interest. This was close to recognising the existence in Soviet society of social classes and it was increasingly being argued that social policy was a key element for maintenance of solidarity which could no longer be treated as a residual area. The analysis by Virganskaya and Dimitriev [15] of problems of medico-demographic development in the former Soviet Union demon- strates clearly the recognition of unequal health status among various social groups and the conse- quent necessity of differential health system responses. Another response has been a demand for increased spending on health care, including a two- fold increase in health care investment called for in the twelfth 5 yr plan, and a 30-35% increase to be introduced in doctors salaries.

The centrally planned, homogeneous system based on a rather rigid hierarchy of specialisms has also apparently been eroded in several ways. Even before the breakup of the Soviet Union into independent states, a Deputy Minister for Health was calling for differentiated approaches to child health care in different republics [16]. The analysis by Virganskaya and Dimitriev referred to above [15], presents evidence of varying mortality patterns among the former republics of the Soviet Union, which clearly indicate the need for differing responses.

The members of the Commonwealth of Indepen- dent States (C.I.S.) should now be viewed as independent entities each with responsibility for their own health care and a variable initial endowment of health care infrastructure. Countries are therefore having to adjust to providing comprehensive health care in much smaller systems than in the former U.S.S.R. Health problems which might be tackled with the combined resources of the Soviet Union will be more difficult to deal with within smaller states. (For example, Belarus is anticipating having to cope with the future health impact of the Chernobyl incident which continues to consume 20-40% of the national budget.)

The All Union Congress of Doctors resolved that departmentally organised medicine should be abol- ished in favour of a more unified health care system based on provision of care to geographically defined populations [16]. This suggests recognition of the excessive specialisation and complexity of the pre- reform health care system. (Although the implementation of this policy was being delayed.)

More emphasis seems to have been placed on protecting the health of more vulnerable populations, including children and mothers, and also the growing number of people whose incomes are not keeping pace with galloping inflation and are falling into real poverty. New activities have also been directed recently toward illness prevention/health promotion. One of the most widely reported examples was an anti-alcohol campaign. The model of health pro-

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758 SARAH CURTIS e t al.

motion used, which seemed to be largely based on prohibition measures, may seem less than adequate in the light of health promotion philosophies currently favoured in Western countries. Nevertheless, it reflects a growing concern in the former Soviet Union with health outcomes rather than service productivity measures. (See. for example, the discussion in Virgan- skaya and Dimitriev [15] and Treml [17] of the mortality effects attributable to alcohol consumption). Some commentators suggest that a slight im- provement in adult male mortality in the mid-1980s may have resulted from the campaign against alco- holism [8, 12, 13]. Some of the problems of developing health promotion in the changing health system in Russia are discussed below.

Increasingly, health care authorities in the C.I.S. have been looking to models from other countries which might help to solve some of the problems identified above. Great enthusiasm for the introduction of free market systems is apparent. Some general agreement between the C.I.S. states has been articu- lated concerning common principles for health care reform, including the following objectives:

- - t o increase the volume of health care paid for privately;

- - t o develop systems of health insurance; - - t o create a medical services market.

Telyukov [11] describes changes to the Soviet health system proposed to bring about these changes. Legis- lation to enable these changes was passed in 1991 and has been implemented from the beginning of 1993. The introduction of changes is to proceed in stages, rather than by implementation throughout the country at once. Experiments have already been carried out locally in several places, including St. Petersburg, Russia, as described below.

The geography of health care will certainly un- dergo major changes in the C.I.S. over the next few years. It seems likely that the divergence between and within Republics in the level and type of provision will become more marked with the development of a new mixed economy of health care. Whether this can be achieved effectively in the midst of the prevailing economic and political disruption is more question- able. This paper concentrates on the situation in Russia, and in particular on evidence from St Peters- burg, in order to analyse the types of change which are taking place. St Petersburg has traditionally been particularly open to western influence, so that the changes observed there are almost certainly not typical of the whole country. Nevertheless, they may be indicative of the types of change which will in future begin to affect the country more widely.

It should also be borne in mind that St Petersburg is a relatively privileged part of Russia and that the condition of health care observed there may not be indicative of the state of the health service throughout Russia. Furthermore, the information discussed here is derived from interviews with a limited number of

informants, all of whom were health care professionals or administrators. The information which they gave us is likely to reflect only a limited range of points of view; in particular, the views of the consumer are not represented. At the same time, these informants were selected as the people most likely to have detailed knowledge of the plans for reform of health care, of the extent of implementation thus far and of the initial effects.

INTRODUCING A HEALTH INSURANCE MARKET TO ST PETERSBURG

The new developments in health care in Russia described above feature a move towards a mixed economy of welfare model in an attempt to tap the resources of the independent sector for health care. This is associated with a move away from a centrally determined state budget as the means of organising health care finance and a shift towards an insurance based system. The social insurance scheme being developed in Russia will cover basic health care for all citizens and is referred to as compulsory health insurance.

The contents of the basic programme of medical care to be provided through compulsory health insurance is to be common across Russia and set by Ministry of Health. Territories must ensure at least this level of provision. The services to be provided (as listed in the primary legislation) include: primary health care; services for acute non-chronic illness; care during pregnancy and birth; diagnostics (some types only); dental care for children; specific specialised dental care for everyone. More detailed norms for different types of care are to be agreed between the local government administrations and the insurance companies.

The legislation to pave the way for these changes is unclear in several respects, and has already under- gone a number of amendments since it was enacted in 1991. Thus the new form which the health system will take is still uncertain. There is also a lot of scope for local initiatives and interpretation and there is evidence of growing decentralisation of control over the health care system. St Petersburg is said by experts from the city to be in the vanguard of change and the developments seen there now are to some extent experimental.

The implementation of health care reform locally depends on the executive authorities of local government (located in the Mayor's office) and the authorities of representative power (the Petrosoviet), as well as various professional bodies and agencies. In St Petersburg a programme for reform of health protection has been developed by the Health Com- mittee of the Mayor's Office in the city and agreed between various relevant committees at the Mayor's office and the Petrosoviet. Since January 1993, a coordinating council, comprising representatives from the Mayor 's office, the Petrosoviet, the medical


Sources of finance

Brokers

Providers

Individuals Enterprises Local Government Central Government

I \ .u.]~ ~ 1(2, ~ Compulsory Health Health Care Fund I \ \ Insurance Fund I • 0', ,L !

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Private polyclinics State self-financing '~ State polyclinics and private doctors polyclinics and hospitals

Flows of finance Compulsory sector

Non-compulsory sector: (~ out of pocket payments by individuals

(~ 'voluntary' insurance payments by enterprises for their staff

Fig. 2. P roposa l for a reformed heal th care system.

associations, trades unions and medical insurance agencies has been working on a plan for reform.

A key aspect of the changes to health care is the creation of a new system of finance based on compulsory and voluntary insurance. The system is inspired by health insurance systems operating in western European countries such as the Netherlands and France. Already some people in Russia are making independent arrangements to supplement state health care with non-compulsory or voluntary insurance. By involving private sector insurance companies in gen- erating and administering compulsory as well as voluntary health care funding, the Russian health care reformers are clearly hoping to tap further independent resources for health care.

These Russian reforms are based on a different model to the 'internal market' recently introduced into the National Health Service in Britain. Neverthe- less there may be some parallels in terms of the effort to involve the independent sector to a greater degree in both countries. Certainly in both systems there is an emphasis in policy terms on viewing separately the two functions of purchasing and providing health care, which in both countries are becoming organisa- tionally more distinct. Below, this paper considers how these two functions are currently developing in St Petersburg and considers these in the light of changes experienced in Britain. Figure 2 summarizes proposals for the new structure being put forward by

policy makers in St Petersburg. This proposal is discussed in the following sections

THE NEW ARRANGEMENTS FOR PURCHASING HEALTH CARE

With respect to arrangements for purchasing health care, two major changes are taking place. One aspect of change is the diversification of sources of funding and the introduction of an insurance based model to replace the allocation of state budgets for local health provision. This comprises compulsory health insurance which will cover the whole population.

The second important aspect is the introduction of measures which seem intended to produce competition between both purchasers and providers in the reformed health care system.

New methods o f financing health care

The old health care system was financed by a 'budget' system of resources allocated to each region for the provision of health care to the population. The new scheme will produce two funds intended to contribute towards health care costs in St Petersburg. The Health Insurance Fund will finance the compulsory health insurance scheme, while the Health Care Fund will finance specific health care programmes such as provision for people with AIDS, children's

760 SARAH CURTIS et al.

cardiology and campaigns against certain diseases, such as mental illness, dermatological illness, infec- tious diseases, including tuberculosis. The Health Care Fund will also be used for capital development such as purchase of expensive medical equipment and repair of medical buildings.

Under the new arrangements a major new source of finance for the Health Insurance Fund will be employer contributions by private and public business enterprises (initially this is set at 3.6% of salary costs). A proportion of the employer's contributions collected locally are contributed to a central fund and used to achieve territorial redistribution of employers' contributions (which will vary between districts depending on the strength of the local economy). The geographical allocation of these central funds is in principle to be determined by standard criteria, but in practice may depend on lobbying by particular districts. Local government will also contribute to the health insurance fund, to cover the cost of the population which is not working.

Funds from the Central state budget and the local government budget will contribute to the health care fund. However, it is not expected that the proportion of the state budget allocated to health care will increase much above its historical level of 2% of GDP, so that presumably, over time, this source will become a less significant proportion of the total.

The Commission for Medicine and Public Health in St Petersburg decides how much of the local budget will be to spent on compulsory health insurance and health care programmes for the population of the city. Their resource requirements will have to be balanced against those of other Commis- sions in the local administration which are also making competing demands on public funds to provide welfare benefits for groups such as those in poverty and the growing number of unemployed people in the city.

At the more local level, additional public funds may be available in the form of Rayon funds. These may benefit from special contributions by local enterprises.

The brokers: the role of health insurance agencies

The Health Insurance Fund will be transferred to the agencies registered to organise compulsory health service cover. These will organise the funding of health care to be provided in hospitals and polyclinics licensed to provide 'compulsory' health care. The system of financing is expected to take the form of block contracts for provision, rather than operating on a fee for service basis.

At present in St Petersburg it is planned that there will be one municipal agency and 3-5 private companies, selected from the total (probably 40-60 insurance companies) operating in the city. The selected companies are considered to be the best qualified and specialised in health insurance.

The involvement of private insurance companies will introduce an element of free market functioning and purchaser competition into the health insurance system. This is expected to be beneficial to the system, although the reasoning here may be more ideological than rational, since it is not altogether clear why the intermediary role of these agencies is necessary. It is difficult to see why the state public health administration, which has hitherto allocated budgets to health care providers, could not continue to use its expertise to spend the Fund for Health Insurance to purchase services directly (in rather the same way that District Health Authorities in Britain now commission health services for their local district populations). British experience of purchaser competition between district health Authorities and fund holding GP practices has some drawbacks, since it has resulted in inequality in the availability of National Health care for patients living in the same area, arising from the differing arrangements made by competing local purchasers. A similar problem might arise in St Petersburg.

It seems likely that there may be some draw-backs to the involvement of private sector insurance agencies. Some providers in St Petersburg expressed fears that the administrative costs for their private insurance companies would be disproportionately high. (Perhaps in response to this, some providers have negotiated direct arrangements with firms for the provision of 'private' health services to the firm's employees, thus eliminating the insurance ~middle- man'). The insurance companies may be permitted to use some of the compulsory insurance funds for the administrative and 'start up' costs of the operation (for example, costs of technical equipment, recruiting and training personnel). A state polyclinic Director whom we visited suggested that the insurance company might retain compulsory insurance funds in other ways. For example, if polyclinics are able to make efficiency savings on the contract fees paid to them, then part of the saving was refundable to the insurance agency. The perennial question with respect to private sector insurance is always whether the profit motive may interfere with concern for patient welfare, and clearly some of the health care providers are suspicious that this may be a problem in the reformed system. Certainly significant amounts of the Health Insurance Fund are likely to be used for development of the insurance companies rather than being spent directly on patient care.

There is also the possibility of risk of failure among these private companies, which have only quite short and limited experience of operating health care insurance. The insurance company which we visited had been operating as a company for 4 years and had been providing policies for private health insurance for just 2 years. It should be acknowledged that this company is clearly having some success at present in the private health insurance business, with a growing number of private health insurance policies, now


totalling around 20,000 people. Those covered at present are usually young, wealthy people, frequently working in firms with a large profit margin which often allows the firm to pay for health insurance for their employees. Thus the insurance company has experience of a limited number and type of health care users.

The experience of such companies to date may not prepare them fully for administration of health care for a much larger number of people in much more diverse circumstances. The management of budgets for health care of aggregated populations is based on rather different information than that used to calcu- late individual health care premiums. It calls for information on health status and likely demand for health care at a general, rather than an individual level, and experience in Britain has shown that health care commissioning in an internal market has presented a major challenge for purchasers because relevant information for local health needs assess- ment has not been readily available [18, 19]. Problems of health-related information availability have been reported in the former Soviet Union. (See for example the details supplied in a number of papers presented to a conference on 'Demographic trends, aging and noncommunicable disease problems' held in Moscow in October 1990 where a major focus was on data sources [20-22, 15].) The insurance companies in St Petersburg may be faced with similar information problems for the administration of compulsory insurance.

One possible rationale for the use of private companies might be that they may compete with each other to purchase efficiently in the sense of negotiat- ing competitive rates for service provision. Perhaps a more important reason for involving private sector insurance companies is to encourage the growth of a larger independent health insurance market. Since the compulsory health care insurance is unlikely to be fully comprehensive in terms of the type of cover it provides, people will probably want to take out supplementary insurance. They may chose to do so with the company which also administers their compulsory insurance cover. Certainly the Director of health insurance at the company we visited was anticipating this. The arrangement may therefore have the hidden agenda of encouraging much more individual responsibility for protection against health care costs.

It is therefore interesting to consider the type of private insurance cover which the company was offering. We have already noted that typical clients are wealthy employees. An interesting additional feature of the current private health insurance business, as reported by this company, was that those taking out policies on their own initiative were typically in poor health. Apparently the idea of protecting oneself against unforeseen risks is still not common amongst the population. The main advantages of the insurance policies being offered to private clients

appeared to be a guarantee of high quality of service without having to queue for treatment. Three types of policy were available to cover ambulatory care (that is polyclinic services), polyclinic and hospital services or fully comprehensive cover including rehabilitative care. The policies are agreed without medical examin- ations on the basis of medical questionnaires which are based on those used by insurance companies in western Europe. There are no checks made with the client's doctor but subsequent use of health care is apparently checked against the questionnaire data for inconsistencies. Those found to have supplied false information may have their policies terminated. The lack of medical cheeks seems surprising in view of the reportedly poorer than average state of health of those taking out these policies. However, the lack of precise risk information may be offset by high premiums. The most basic annual premium, without additional premiums to reflect special risks, is more than the average monthly wage in St Petersburg.

THE PROVIDERS

The providers of health care include hospitals, outpatient clinics and polyclinics. These must be approved by an independent Licensing and Accredi- tation Committee which is a public agency, but managerially independent from the Commission for Medicine and Public Health. Providers who need to improve standards are only registered for 3 months at a time. Others have been given 1 or 3 year licences. Some hospitals are below the required standards and are likely to close. The costs of accreditation are covered by the licence fees.

Two key types of health care providers are hospitals for inpatient care and the polyclinics providing ambulatory care. These health care providers are now undergoing a process of adjustment to the new system of health care funding which has been introduced in St Petersburg.

Hospitals

Hospitals are regulated by the state and subject to the accreditation procedures described above. The hospitals have agreements with polyclinics to provide care to patients referred on for inpatient treatment. The hospitals have experience of accounting procedures because they already have to bill polyclinics for the care they provide, and it is not expected that these will change significantly as a result of the reforms. Hospitals often make agreements to supply elective hospital services to patients from consortia of polyclinics within a Rayon. Emergency admissions are currently coordinated city wide. Presumably similar agreements will be reached with insurance companies administering compulsory health insurance.

The changes in health care do seem to hold out some opportunities for income generation and private practice in those hospitals which were previously devoted solely to state funded care. Since there are


staff shortages, and low wages make recruitment difficult, there may be some incentive to explore these avenues in the health care market. Some hospitals are, for example, beginning to develop private care facilities. One hospital had just converted a state ward which normally held 4 beds into a private room for a patient with private medical insurance.

Polyclinics

A distinctive feature of the Russian health care system is the polyclinic. Polyclinics provide ambulatory care and are responsible for comprehensive primary and secondary health care for the population of geographically defined areas (generally part of a local district, or Rayon). In some cases, groups of polyclinics form consortia to provide services for a larger area within a Rayon.

The present budgeting system was introduced two years ago. Polyclinics received standard capitation fees from the Rayon administration for the population they serve (additional weighting is given for elderly populations). The fee covered the anticipated cost of both ambulatory and hospital care. Planned hospital admissions were usually send to particular hospitals with which the polyclinic had agreements, but these contracts did not control patient flows rigidly. Recently there have been reported budgeting difficulties because resources are being paid to polyclinics in small instalments which results in cash flow difficulties and may mean that doctors' fortnightly wage bills cannot be met. Although the polyclinics themselves may have sufficient supplies of medicines, it was reported that patients have difficulty in afford- ing the rising cost of prescribed medicines provided by pharmacies, which is not fully subsidised by the state.

Under the new system of funding, the polyclinics will receive funding via the insurance agencies to provide ambulatory care, but will no longer recieve an element for the cost of hospital care. This may be important for their financial viability since at present clinics are able to retain any underspend from the budget allocated to them for hospital care. There seems to be an incentive to avoid hospitalisation if possible, either by providing alternative day hospital treatment, or by delaying admission (in which case patients often are admitted with illnesses in a rather advanced state). The fees which the polyclinics may charge will continue to be regulated by the state. New computerised accounting systems are being introduced and staff are being trained to use these.

The style of provision of primary care may change as the reforms begin to take effect. One suggestion is that there may eventually be a move towards a general practice model to replace polyclinics.

Self-financing polyclinics

Even before the current reforms of the health care system, some patients had the option of paying for services provided in an alternative type of polyclinic

which is described as 'self-financing'. These clinics only existed in larger towns and their numbers are comparatively small. Two such clinics are already operating in St Petersburg (excluding 10 others which are for specific services such as dentistry). In spite of their small number they were important in the old system for providing an element of patient choice, even though this involved some additional payment. Originally these clinics were subject to a large degree of state control. Doctors' wages were fixed at levels only a little above those in state polyclinics and any profit from the operation was paid back to the state, with some reimbursed in the form of state subsidies.

Since 1991 the status of these clinics has changed considerably and they have taken on the complexion of independent health care providers. They are still regulated by state authorities (and are subject to the state certification procedures) and they have some indirect state subsidies (for example rent conces- sions). However, they are largely self-financing and they are taxed as businesses, with the exception of exemption from service tax. These clinics are allowed to fix their own prices. Their prices are geared to the market, so that those services for which the clinic has a good reputation and are in great demand will be relatively highly priced, while other services may be more moderately priced to encourage clients to use them.

In one such clinic in St Petersburg, it was estimated that about 30% of patients are paid for by their companies, about 10% through private insurance and 60% pay directly out of their own pocket. This polyclinic has agreements with 4 different insurance companies to provide care for policy holders. Increas- ingly, their prices exceed what can be afforded by ordinary Russians and their clientele has fallen by 10%. Nevertheless, as it is increasingly serving the growing minority of rich people in St Petersburg, this clinic is thriving.

These polyclinics can provide comprehensive ambulatory care including minor surgery and therapy and it also has agreements with local hospitals to provide inpatient care. They encourage doctors from prestigious institutions to set up part time practices at the clinics and the doctors may retain a portion of the fees charged for their services by the clinic. Not only does the clinic attract good quality doctors, but it also has more independence in choice of suppliers than the state polyclinics, so that it is relatively well equipped.

This type of clinic seems likely to benefit from the health care reforms since they are already strongly geared to the forces of the market for health care, they are used to dealing with insurance companies, and they are well placed to respond to the anticipated growth in voluntary medical insurance. It is less clear whether they might be commissioned by insurance companies to provide compulsory health care funded by the state system. This model may well represent the most successful model for polyclinics in the future.


DISCUSSION

Within Russia, health care reforms seem to have been decided upon on the basis of ideas imported from other countries without any real attempt to pre-test their applicability. Experience from Britain, where reform has also been introduced universally without prior experimentation suggests that unex- pected problems are almost certain to be thrown up in the implementation process which will have to be addressed on an ad hoc basis as they arise. This may cause difficulties and disruption to the health system during the period of change which could have been avoided with better developmental planning.

Telyukov [11] points out that foreign critics should respect Russian decisions made in the context of the Russian situation and should be cautious in their criticisms based on western assumptions and experience. However, a number of issues seem likely to arise from the reforms described above. These are rather speculative at this stage because of uncertainty over the exact form which the changes will take. Some of them suggest topics which would deserve research and evaluation as the changes begin to take place.

A first impression is that the degree of central direction of the reforms is quite weak and that the introduction of health reforms will depend to a large degree on local initiative and interpretation of the new legislation. The time-table for implementation of the reforms is flexible and change is likely to progress at a variable pace across the country, with quite a protracted and confused period of transition. This will contribute to growing local variation in the level and type of health care provision, which is likely to become much more evident in the Russian health system in the future.

A further factor likely to increase geographical inequalities in health care will be the resources available locally for health care provision. Although this has always been a feature of the system to some degree, the effect seems likely to become more pro- nounced in future. The factors which will determine local resources for health care will include the strength of the local economy and the importance attached to health care by local politicians. The number, size and wealth of local enterprises will have an important effect on the amount of money which can be raised locally, either in taxes on employers or in company donations to public funds for health care. The size of local funds for health and welfare will also depend on income generated through schemes to privatise local enterprises. Although there are plans to try to balance out the differences in the resource base arising from the varying strength of local econ- omies by means of mechanisms for central redistribution of funds for health care, it seems unlikely that these will fully compensate for the inequalities which will result. Furthermore, local political decisions will affect, for example, the amount of public funds allocated to the provision of compulsory health in-

surance for the non-working population. At present, although the non-working population will have compulsory health insurance under the proposed scheme, the system does not apparently involve any ring fencing of funds for health insurance of the non-em- ployed and the amount allocated for this purpose may depend on competing demands for other forms of health and social welfare benefits.

It seems likely that, at least in the longer term, the local population will be expected to take more responsibility for their health care costs, through supplementary private insurance schemes. As with all systems which depend on willingness and ability to pay this is likely to lead to a two-tier health care system with more comprehensive and better quality cover for those with private insurance. This can be seen already in St Petersburg to a limited extent. For example, the self-financing polyclinic which we visited reported that already, in the time since the reforms commenced implementation, an increasing proportion of their patients are drawn from the wealth- iest people in the population and that less wealthy people were finding it more difficult to meet the cost of the care outside the regular state system.

It could be argued that there was already a significant degree of real inequality in access to care in Russia, associated with social position and that Russian people are well used to the idea of paying out of pocket for a reasonable quality of health care (see above). However, the level of appreciation of insurance schemes and propensity to insure against risk seems to be rather weak in the general population, so that large scale participation in voluntary insurance would probably require a major change in public knowledge and attitudes. Furthermore, since rapid inflation has dramatically eroded the real income of even middle class people in Russia in recent years [23, 24] there will be considerable difficulties in afford- ing additional insurance except for the very rich or employees of very profitable companies. One is forced to ask whether the dismantling of the old well established and comprehensive system, which at least ensured a reasonable degree of equality of access to all necessary health care for all Russians, will be justified by the results of reform.

The reforms are also likely to result in changes in the nature and the distribution of health care provision. The certification procedures have placed new pressures on some clinics and hospitals to improve their standards and some may not be able to continue to operate in the longer term unless these improve- ments can be achieved. The activities of insurance companies in purchasing health care under the compulsory insurance scheme, as well as care for privately insured patients, are likely to lead to growing competition between clinics and hospitals in the resulting health care 'market' . Some may not survive this process. Others might be successful in forming cartels to maintain prices for health care at 'artificially' high levels. There is also a question over the future of the


traditional polyclinic type of ambulatory care facility. While self-financing polyclinics would seem to have potential to thrive in the new system, this is less true for state-run polyclinics. The role of the state in regulating health care standards and prices for health care, as well as the role of the insurance companies, should be important for the development of the reformed system, but it is not clear that it will be possible in practice 'manage' the health care market very effectively.

The success of the reforms will depend to a large extent on the ability of the commissioning agencies (including private insurance firms) to provide a cost- effective brokerage service in commissioning health care on behalf of the local population. These agencies will be required to establish a commissioning system very rapidly with rather limited prior experience of operating health insurance, especially for the type of patient most likely to require services (e.g. poor, elderly people). Most social insurance systems in Western countries suffer from high administrative costs and there is clearly concern about the scheme being introduced will prove costly to run, especially if a profit margin also must be built into the system for the insurance companies. It might have been easier to exercise some control over these overhead costs if purchasing of compulsory health care had been retained as a state function.

A further question relates to the development of health promotion in the Russian health system. It was noted above that recent health trends in Russia have been poor and in the 1980s, health outcomes which might be modified through promotion and prevention programmes were poor in Eastern European countries like Russia compared with the situation in western Europe [25-27]. Health care professionals appear to be quite pessimistic about the potential for health promotion among Russian people. They suggest that, as a result of typically prevailing attitudes about health, people will only take action to protect their health once they have become ill. Certainly it must be very difficult to pursue healthy lifestyles in view of the poor state of the economy and widespread poverty affecting the population today. The health system in Russia still seems to give the patient a very subordinate role to medical professionals, which may discourage people from taking responsibility for their own health. It was also suggested that health promotion messages dissemi- nated by the government have tended to be mis- trusted or ignored by ordinary people because of suspicion of political influence over the media. Anec- dotally, we noticed that certain health professionals seemed to be unaware of (or to have a different interpretation of) some aspects of health promotion such as the effects of diet on cholesterol levels or the protection against HIV (and sexually transmitted diseases more generally) offered by barrier contra- ceptive methods. It therefore seems possible that s o m e of the information given to the public concern-

ing health promotion might be incomplete or mis- leading.

Recent reforms of the health care system in Russia are taking place against a background of international debate over the desirability and effects of introducing elements of market competition into the financing and organisation of health care. The recent OECD study of health care reform in seven western European countries [28] noted that there seem to be signs of convergence on a public contract model of health care finance, involving compulsory insurance, and with separation of responsibility for purchasing and providing care. This is argued to have the potential for combining macroeconomic and micro- economic efficiency [29]. The recent reforms in Russia and Britain can be viewed as moving health care organisation closer to the American model. At the same time, Glaser [30] has eloquently argued from a review of the American evidence that "The U.S. itself has paid a heavy price for turning over health financing policy to the devotees of mieroeconomics and free markets, and today its serious problems in health are unsolved." As Russia and Britain move towards a greater element of market competition, the U.S.A. seeks to manage its health care market more effectively.

As a result of these trends, the geography of health care will need to revise the models it has traditionally used to contrast health systems in countries such as Britain, Russia and the U.S.A. The differences which geographers such as Joseph and Phillips [1] were able to distinguish so clearly in the last decade will no longer be as apparent in the future and we will need to adopt new perspectives in order to understand international differences in health care.

Acknowledgements--The authors wish to acknowledge the support of the British Council and the Nultield Foundation for the research reported in this paper. We are also grateful for the helpful comments on an earlier draft of this paper from two anonymous referees.

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Health care reforms in Russia: The example of St Petersburg

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