1. Introduction The actuality of the study presented in this article is linked to the announcement of the European vec- tor of Ukraine’s development and the initiation of a series of reforms in public administration. “Strategy for sustainable development «Ukraine – 2020» an- nounced in 2014 by Petro Poroshenko, the President of Ukraine, as one among the most important goals defines the reform of management system, and the power decentralisation implementation. This de- termines new administration mechanisms in the healthcare sector at the local level. Poland during its walk towards European Union implemented a num- ber of reforms in the healthcare sector. It seems to be feasible to learn them and apply in Ukraine. The existing health care system in Ukraine is character- ised by outdated methods of delivering primary healthcare (PHC) at the level of villages, and some- times cities. This is explained by its artificial fragmen- tarity and atomism. As a result there is a substantial time delay in making diagnosіs and providing rel- evant medical treatment for patients. Oftentimes people have to pay visits to six different doctors. This significantly increases the cost of medical assistance both for private households and local communities in general (Попова, 2015). This way of proposing specialised medical ser- vices in PHC facilities was implemented in Ukraine in the middle of 20th century by building outpa- tient policlinics. In the total allocated budget of such an establishment traditionally about 41% are Journal of Geography, Politics and Society 2016, 6(1), 5–9 DOI 10.4467/24512249JG.16.001.5250 FIScal conSolIdatIon For GrantInG health ServIceS In a decentralIzed Power In UkraIne Maryna Bilynska (1), Evgen Kuliginskiy (2) (1) Public Health Administration Chair, National Academy for Public Administration under the President of Ukraine, Ezhena Pottier 20, 03057 Kyiv, Ukraine, e-mail: bilynska@ukr.net (corresponding autor) (2) Public Health Administration Chair, National Academy for Public Administration under the President of Ukraine, Ezhena Pottier 20, 03057 Kyiv, Ukraine, e-mail: kulginskiy@gmail.com citation Bilynska M., Kuliginskiy E., 2016, Fiscal consolidation for granting health services in a decentralized power in Ukraine, Journal of Geography, Politics and Society, 6(1), 5–9. abstract The aim of the study is to find the optimal model of consolidating financial resources combined communities to ensure ef- fective provision of health care in Ukraine. The proposals on the formation of community expenditures for various kinds of medical care. Investigated and analyzed the positive experience of Poland reforming the health sector under decentralization of power that should be used in Ukraine. key words decentralization of power, healthcare, Ukraine. 6 Maryna Bilynska, Evgen Kuliginskiy non-formal payments of citizens. In the majority of such institutions the access of public to information on tariffs for medical services is not available. Com- munity-owned facilities are often used for render- ing services on a private basis when payments out of patients’ pocket do not reach communal budgets (the so-called crawling privatisation) (Ведернікова, 2014). It should be taken into consideration that today’s medical staff of specialized medical care oftentimes resist to any infrastructural changes in favour of pre- ventive PHC based on family medicine practice. Current underdeveloped state of Ukraine’s healthcare system is explained by low responsibility of citizens for their own health, by reduced require- ments to quality standards and accessibility of med- ical assistance, family doctors often lack motivation to do timely preventive medical checks and provide effective treatment to patients. In fact a citizen non- controllably “matures” to the state of being ill with sometimes neglected and deadly dangerous diseas- es requiring urgent specialized or highly qualified medical treatment. Premature mortality rate is one of the highest in Europe, first of all it concerns men in working age, and it is possible to prevent it by ren- dering medical assistance. Accessibility of specialised healthcare to a pa- tient bypassing a family doctor (urgent cases exclud- ing) makes it financially dominant above preventive and PHC. Ukraine’s legislation demonstrates obvious pref- erences to specialised healthcare based on ‘custom- ary law’ without taking into consideration ‘equitablе law’. In conditions of noticeable aging of popula- tion there is a modern form of providing physical and financial accessibility to quality PHC in devel- oped countries, in Poland in particular, and this is a qualified family doctor. This practice enabled in these countries within a space of 30 years to reduce to some extent the premature mortality and disabil- ity of population thanks to timely diagnostics and quality treatment of patients by private family doc- tors first of all. 2. decentralisation processes and their effect on healthcare system Today power decentralisation processes are under- way in Ukraine; they are mainly focused on strength- ening of financial independence and accountability of local communes. We made an analysis and proposed a forecast on the number of village communes, we calculated their needs in PMC after the reform of local self-gov- ernment has been implemented (table 1.). Ukraine has got some success stories of health- care system reformation, and it would be appropri- ate to use this experience. One of such examples is the city of Komsomolsk in Poltavska oblast which during 15 years has been a venue for PHC model development. Several pilot projects concerning the family medicine model have been implemented in this city. After adoption of several national laws and orders of the Cabinet of ministers in 2015 a portion of taxes from businesses’ and individuals’ income tax will likely stay in the city budget of Komsomolsk and it will make up 62.7% of total revenues. While tax on the individuals’ revenues will make up 29.6%, local taxes will make up 14% of the total budged revenues. State budget share in the city budget structure will make up 37.3% in a form of transferred subvention. At the same time in monthly deductions from sala- ries and corporate taxes the share of contributions aimed for healthcare system will not be specified. Tab. 1. Estimated number of village communes and their needs in PMC after self-governance reform in Ukraine No. Before reform After reform Evolution of communes 1. 2015 – 11.5 thousand of city and village councils Each village council accounts for 3 village-type settlements, 47 km² of territory; in Ukraine 28% of villagers live 3 to 10 km distant from their village council. One village council accounts for 1.4 thou- sand permanent population; average population per village makes up 520 people. 2017 – 1.5 thousand communes; 9 thousand people in a commune; average number of settlements in a commune makes up 16; territory = 400 km²; max distance to admin- istrative centre is 20 km; population of one village is 520 people. Health care provision in villages 2. Three paramedics at three feldsher-midwife stations, or a family doctor and a nurse - rarely; car is rarely available. As per criteria of family doctors availability in rural areas (1.2 thousand) a commune with 9 thousand people needs 7-8 family doctors, 14–16 nurses and 7 nurse assistants. Source: Own studies based on: Ведернікова, 2014. Fiscal consolidation for granting health services in a decentralized power in Ukraine 7 As the experience of Poland showed to give real rights to local communities and rayons to form their own budgets the effective tools were implemented to ensure their filling up. So, a share from the nation- al budget makes up 25% from individuals and 15% from businesses. 100% of proceeds from tax on land, real estate, death-duties and agricultural activities stay in local budgets (Kutzin, 2001). The base of revenues of poviats and cities made equal to poviats consists of local contributions form sales, parking services and other paid services. A share of state budget in the total budget of local governance only makes up 0.4%. EU contributions make up 9%. The exceeding limit of budget income per capita is 15%. To level voivodeships’ capacities applied are subsidy and grant mechanisms, as well as money of environment protection fund, International invest- ments bank, grants for education, credit lines, bonds are involved. During 17 year Poland participated in the Eu- ropean programme of creating special economic zones. Today they are 14 effective. Before 2020 there is an existing limit on their space, it should not be more than 20 ha each. Enterprises enjoy tax holidays on profit and real estate. Сompensations for invested costs in the amount of 55% for small and 45% for medium busi- nesses are stipulated. During 15 year period the amounts invested annually in economic zones made up more than 1 Bn Euro and 15 thousand jobs were created (Lekhan et al., 2007). After joining the EU Poland received in 2004– 2006 3 Bln Euro annually to solve the mentioned issues of which 30% were allocated to regions to spend at their own discretion. During the period of 2007–2013 years 37 Bln Euro was spent (about 9 Bln annually). For the next 7 years 2014–2020 more 2 Bln euro were envisaged. Of this amount 25% are allo- cated to the regions. These actions provided that Poland increased its GDP per capita by 19% (growth from 49% in 2004 to 68% in 2013). This enabled to create appropriate or- ganisational and financial conditions for developing modern health care system. 1. System risks during reform implementation in Poland should be listed as follows: 2. The government tried to load self-governance with “uncomfortable” powers or to snatch powers and money from local communes. So in this case it is necessary to have clear legal and administra- tive tools for powers realisation. This concerns the refusal of central government to amend laws in its favour. Delegation of powers and budget formation to poviats and implementation of relationships: strong gmins and poviat, poviat and strong city, poviat and powiat’s territory. Formation of poviat councils is feasible by delegating deputies of gmin councils. 3. new health care system – re-boot Let’s consider a possible strategic action plan of Ukrainian authorities and civil society to create a new health care system. The essence of administrative-territorial reform in Ukraine should concern the formation of institu- tional mechanisms enabling effective functioning of social services especially at the level of village and city communes. Therefore the first steps in creation of new health care system, which will be based on modern socially oriented mechanisms viable in the market environ- ment must be the following: • to ensure adoption of new legislation facilitat- ing demonopolisation, economy legalisation, respect to property rights in social infrastructure, especially healthcare and its functional and fi- nancial structuring according to types of medical services; • from political point of view – to facilitate creation of policy susceptible to health care system needs by newly elected local government bodies who should provide adequate conditions for priority funding of preventive and PHC based on family medicine practice; • real separation of local budgets from the state budget, transfer rights to communes for real cre- ation and filling of their budgets and their spend- ing including for the health care sector; • transfer property rights for land, buildings, medi- cal equipment to local communes, including the health care sector; • Transparency of medical services purchasing schemes; • To ensure real independence of village councils chairmen; We propose to distinguish the following conditions of the development of new health care system in Ukraine: 1. Political will of the state leaders and local-level authorities in justification and modernisation of the country, region, rayon and local communes, their capacity to overcome the resistance to changes. 2. Active involvement of experts community in de- veloping strategies for changes implementation. 8 Maryna Bilynska, Evgen Kuliginskiy 3. Support to citizens, first of all to young people below 35. 4. Support to progressive medical community, first of all to young people with statesmanship vision. 5. Professional independent media. 6. Development of professional competencies in modern public management. From the point of view of ensuring citizens with health care the administrative-territorial and local governance reform should stipulate the creation of: At a commune level: • In villages – outpatient clinics of family medi- cine to render PHC, urgent, palliative and hos- pice medical assistance. At the same time money transfers should be ensured for patients sent by PHC facilities to institutions of specialized medi- cal services. First of all it concerns children, dis- abled people, pregnant women and lonely peo- ple. • In cities – deployment of PHC centres based on family medicine practice, growth of specialised medical assistance. In regions: • Integration of institutions of specialised medical assistance based on the patients’ needs and bud- get capacities. In oblast centres: • Financing patients’ needs from communes and rayons and other regions to provide highly quali- fied medical assistance. 4. Summary Based on the described above we can outline the following tasks in the area of creating and consoli- dating financial funds for rendering healthcare ser- vices in Ukraine. Village and city communes should be able to fi- nance outpatient clinics of family medicine, urgent, palliative and hospice medical assistance or to del- egate these functions to rayon level. Within a com- mune the evaluation of inhabitants needs in consul- tative, diagnostic and other specialised assistance should be carried out (hospitals). In fact this is a jus- tified financial resource at the rayon level. The con- trol over these funds spending should be performed by deputies of village, town and city councils. Based on Poland’s experience deputies of local communes should be delegated to rayon councils to control the effective spending of monetary funds, first of all in health care sector. It means secondary level health- care should be provided by rayon healthcare depart- ments under the control of the rayon council deputy delegated by a commune. Under these conditions the second level healthcare structure will clearly correspond to realistic healthcare needs of village, city, rayon communes with regard to their financial capacities. Also a 3-fold increase in expenditures for preven- tive, PHC, palliative and hospice, urgent and rehabili- tation assistance should be stipulated. Expenditures for secondary health care should be reduced respec- tively, first of all for outdated hospital infrastructure. This will enable to partially legalise communes’ re- sources intended for secondary health care funding. For communes of the cities it will be funds locali- sation for rendering all types of the abovementioned medical services when they will get respectively from 10% up to 35% of the total funding. In the cities it is feasible to form a general pool consisting of au- tonomous modules per each type of health care. In villages this approach will concern financing preven- tive, PHC, urgent, palliative and hospice assistance at their own cost, or this function will be transferred to the rayon level. There is a controversial discussion on the issue how to finance emergency medical assistance and this requires addition study. Communes should be able to calculate their real needs in such type of ser- vice and to control/delegate their financial resources to a rayon or oblast level. Financial resources of communes (basic level) should be consolidated around a family doctor and family nurse working in outpatient clinics of family medicine or PHC centres. At the regional level re- sponsibility for the specialised health care should be laid on a hospital. During transition stage from existing to new administrative-territorial and local self-government system it is feasible to consolidate PHC and SHC ser- vices purchasing at the level of rayon healthcare de- partments. This coincides to some extent with ERB WHO recommendations about consolidation of PHC and SHC purchasing. Taking into consideration the experience of Po- land the creation of modern rayon and oblast self- governance levels should become the next step in the management system decentralisation (at least in several years). As this will have a cardinal impact on health care, education, and housing and commu- nal services sector, road and communications sector management, it is necessary to prepare and adopt a number of legislative acts. Fiscal consolidation for granting health services in a decentralized power in Ukraine 9 references Kutzin J., 2001. A descriptive framework for country-level analysis of health care financing arrangements, Health Policy, 56(3), 171–204. Lekhan V, Rudiy V, Shishkin S., 2007, The Ukrainian health fi­ nancing system and options for reform, series: Health Fi- nancing Policy Paper, 2007/1, WHO Regional Office for Europe, Copenhagen, http://www.euro.who.int/__data/ assets/pdf_file/0007/97423/E90754.pdf [19.10.2015]. 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