1. Chernichovsky, D. -- Draft -- Feb.041 “ Decentralization ” of the Russian Health System - The Perilous Road From Centralism to Federalism by Dov Chernichovsky

2. Chernichovsky, D. -- Draft -- Feb.042 The Challenge Transition from a highly centralized to a decentralized functional federal system

3. Chernichovsky, D. -- Draft -- Feb.043 The General Context Goals of the Health System (from an investment perspective) : Health – technical efficiency of medical care in production of health Equity - (includes also efficiency considerations) Cost containment - technical efficiency of medical care in production of health (and allocative efficiency in consumption of care) Micro-economic efficiency – technical efficiency in the production of quality care Client satisfaction, mainly through accountability Systemic Functions --subject to devolution and decentralization: Policymaking Financing Organization and Management of Care Consumptions Provision of Care Training and medical education Research and development

4. Chernichovsky, D. -- Draft -- Feb.044 General Trends in Key Functions Horizontally “ Centralized ” combined with vertically ‘ decentralized ” approaches – fiscal federalism -- in financing for improved Health, in case of communicable diseases Equity Cost control Horizontally and vertically “ Decentralized ” approaches – development of internal markets – in provision of care for improved Production efficiency Client satisfaction Emerging organization and management of care consumption (OMCC) function for potential removal of centralized state control from how care is consumed, and for consumer empowerment Relatively centralized policy making, research and development, and training

5. Chernichovsky, D. -- Draft -- Feb.045 The Soviet Record and Legacy Health Eradication of communicable diseases Missing the ‘ epidemiological transition ’ to non-communicable diseases that eventually led to inferior health outcomes Equity Relatively wide access to care Efficiency In spite of low levels of spending, inefficient especially when quality of care is considered Client satisfaction Dismal, not a concern

6. Chernichovsky, D. -- Draft -- Feb.046 The Soviet Ineffective Government Not setting and maintaining the right priorities over time Ineffective targeting of resources Not promoting innovation A lack of responsiveness to clients

7. Chernichovsky, D. -- Draft -- Feb.047 Structural Antecedents of Soviet Failure - Centralism Horizontal amalgamation of responsibilities under the Federal Ministry of Health: Medical care; Medical industry, including pharmaceutical; and Training Issues: limited span of control Priority give to industry, not to care Medical training a vocation rather than a science Vertical Integration of all systemic functions Issues: No checks and balances No scope for internal or any market mechanisms for efficiency and responsiveness to clients

8. Chernichovsky, D. -- Draft -- Feb.048 The Antecedent of Soviet Failure – Centralism (Contin.) Rigid top-down allocation of resources and management Issues: A lack of analysis of local information for policy making No attention to local concerns and aspirations Depression of local initiatives Accountability ‘ upward ’ to authorities rather than ‘ downward ’ to clients and patients ‘ Political vacuum ’ at the top – detachment from realities

9. Chernichovsky, D. -- Draft -- Feb.049 The Risky and Unstructured Transition – Major Steps (since 1991-2) Separation of health promotion and education from Federal MOH (1991), while Medical Care responsibilities, including financing, delegated to local government 1991 (aborted) legislation tries to base financing on private insurance 1993 legislation establishes a social health insurance system with a federal and state pools

10. Chernichovsky, D. -- Draft -- Feb.0410 For The Record During the Perestroyka period, 1988-1990, the regime initiated a structured experiment with decentralization of provision.

11. Chernichovsky, D. -- Draft -- Feb.0411 Structure of System in 1996; Dysfunctional Blend of Old and New

12. Chernichovsky, D. -- Draft -- Feb.0412 Intended Structure

13. Chernichovsky, D. -- Draft -- Feb.0413 Consequences Weakening policy making and leadership Federal MOH stripped of practical powers Local ministries lack policy making capacity Undesirable decentralization of finance, with weak equalization mechanisms Failed devolution and decentralization of care provision – highly centralized local systems with little policymaking and management capacity, and limited accountability to anybody Failed development of internal markets Lopsided reform – decentralization of finance and a lack of decentralization of provision

14. Chernichovsky, D. -- Draft -- Feb.0414 Reasons A lack of leadership and resolve – weak Federal MOH Strategy of change not clear to, and ‘ owned ’ by, at least local authorities Resistance of those authorities to relinquish control over medical facilities No real plan for ‘ denationalization ’ of these facilities

15. Chernichovsky, D. -- Draft -- Feb.0415 Risks Growing regional inequalities Undermining universal access to care No mechanisms for system stabilization and long term reform through innovation Growing inefficiencies due to weak mechanisms to deal with externalities and economies of scale

16. Chernichovsky, D. -- Draft -- Feb.0416 Conclusion: Tasks to Complete Clarify the concept of ‘ functional federalism ’ Re-define the roles of different levels of government and institutions, mainly government as a non-provider of care Build policy making, regulatory, and management of mainly local government Devolve the provision of care to non-state institutions Provide financial and regulatory measures for a federal system