CC BY
18JURIDICAL SCIENCES
PROBLEMS OF INVESTING IN MEDICINE
Shpinev Iu.
PhD in Law, Senior Researcher in the Sector of Business and Corporate Law, Institute of State and Law of the Russian Academy of Sciences,
Moscow, Russian Federation
Abstract
The article deals with the issues of financing of domestic health care. In the context of historical development, the way of formation and development of public health in Russia is shown. Based on statistical data, it is established that the situation with the financing of health care does not meet all its needs, and the annual co st of medicine per person is twice less than in the least developed European countries. A comparative analysis of the ways of financing health care in European countries is carried out, as a result of which the positive and negative aspects are highlighted in the budget model of health care, inherent in England and Sweden, and the insurance model used in most other European countries. Separately, the features of financing Russian medicine, which is expressed in the multi-channel budget-insurance model, are considered. The disadvantages of this type of financing are noted. Data on the lack of investments in healthcare, as well as the reasons for this, are presented. Investment risks in the healthcare sector are highlighted.
Keywords: investment, medicine, healthcare, budget model, insurance model, CHI, capital.
The most important indicator of any industry, in terms of both economic efficiency and social significance, is its investment attractiveness. And if the indicators of the development of medicine, access to the health care system and life expectancy are the main indicators of the social well-being of society, then the developed investment sphere indicates the economic well-being of the state. If such an important industry as healthcare is experiencing significant economic difficulties and a lack of investors, then there are certain problems that are related both to the general problems of the country's economy and to the issues of legal regulation of the industry, which prevent it from ensuring its investment attractiveness and the inflow of capital necessary for its existence and development.
To solve the accumulated problems in the health sector, a national project with the same name was approved, for the implementation of which 1.367 trillion was allocated. rubles'. Despite the impressive amount, he will not be able to solve all the problems of the industry. Currently, the financing of health care in our country is carried out mainly at the expense of the state and differs significantly from the financial models of other countries, since it uses a budget-insurance financing mechanism, while other developed countries use a single method of financing: either budget or insurance. This peculiarity of domestic healthcare, together with other problems of legal regulation, deprives the most important industry of any investment attractiveness, and Russian medicine of the finances so necessary for innovative development.
Before the revolution of 1917, there was no public health system in Russia as such, except for a small number of scattered medical institutions in factories, military units and prisons, and medical services were most often provided by private doctors. However, after the formation of the zemstvo self-government, the institute of zemstvo doctors was introduced, which by 1910 numbered about 3,100. In the future, paramedic stations and hospitals began to appear [7].
Since 1928, the People's Commissar of Health N. A. Semashko has voiced the basic principles of domestic health care:
- centralization of the healthcare system;
- general availability of medical care for the entire population;
- elimination of social diseases;
- increased care for motherhood and childhood.
The following tasks were identified as priority
tasks::
- providing the entire population with public and free medical care;
- control of air, water and soil pollution;
- organization of sanitary control;
- creation of a public catering system;
- development of high-quality medical education.
It should be noted that these tasks were not just
slogans. Within five years, the cost of health care increased 4 times compared to 1913, and by the beginning of the Great Patriotic War, the number of doctors increased 6 times [9].
But over time, the allocation of funds for medicine relative to the share of GDP began to decline and amounted to 6 % in 1970, 5 % in 1985 and 4.6% in 1990. Government spending in the field of medicine during the perestroika period was $ 130 per person per year, while in Sweden this amount was $ 2,121, in Ger-many-1,420, in the United States-1,230 [16]. It should be noted that the gap from the European countries on this criterion remains even now. Thus, in 2018, per-per-son spending on healthcare per year was almost twice as low as in the least developed countries of Europe [21].
Thus, in the Soviet Union, a huge positive experience was accumulated in the creation and development of the state system, the distinctive features of which were the development of mass prevention and the prevention of epidemics and infections. However, the entire system of managing the country's economy was
cumbersome and cumbersome, and therefore inefficient. Innovative development of the country as a whole, and health care in particular, was not carried out.
The development of healthcare in foreign countries is one of the main components of social policy. There are three main models of health care based on organizational and financial characteristics. These are health care systems based on voluntary health insurance (hereinafter referred to as VHI), compulsory health insurance (hereinafter referred to as MHI) and budget financing.
The budget model of health care works in England, Italy, Denmark and Sweden. This system is characterized by the general provision of medical care to the population, the management and control of the health system by the state and its financing at the expense of the state budget. In most of these countries, the health system is financed directly from the budget, without passing cash flows through any funds, and all health issues are entrusted to the ministries of health, or similar structures. As positive aspects of the budget system of health care financing, we can note:
- low costs for the administrative apparatus, which leads to relative efficiency;
- the ability to contain the increase in spending with the help of macroeconomic levers;
- the main task is to preserve affordable medicine for all;
- reducing social inequalities in access to health
care;
- positive experience in solving the tasks assigned to health care for a long time;
- most medical services are provided free of charge (with the exception of dental care).
It is impossible not to note the shortcomings inherent in the budget model of health care financing, which can include:
- political negative consequences associated with constant criticism from the population on the one hand and health care providers on the other;
- decrease in the quality of medical services with an increase in costs due to monopoly;
- difficulties in patient control;
- lack of medical services, due to the monopolization of the industry;
- long waiting lists for certain types of free medical
care;
- doctors working simultaneously in a public and private health care institution abuse the long waiting time for services and impose services in the private sector, much faster, but at the expense of the patient;
- the inequality of medical care between developed large megacities and remote regions [11].
The health insurance model operates in countries such as Germany, France, Belgium and many others. This model is also characterized by the general provision of medical care to the population (since compulsory health insurance is mandatory for most citizens), joint participation of the state, employees and employers in the financing of insurance funds, control over insurance medical organizations by the state and policy-holders, close interaction between the state and policy-holders on the amount of tariffs and the quality of
medical services. This model of health care, which emerged in the early twentieth century as a response to the sharp increase in the cost of medical care by private clinics, is based on the principles of solidarity to provide medical care through insurance funds, which are managed on an equal basis by employers and employees. State participation in the financing of such funds is kept to a minimum and is usually limited to assistance in the provision of medical services to low-income segments of the population. As advantages in relation to the budget system of health care in this method, we can distinguish:
- patient focus;
- more targeted and targeted nature of medical
care;
- the dependence of receiving medical care on the payment of a fee leads to the acquisition by the patient of the status of the buyer of the service, which also has a positive effect on the quality of the services provided;
- independence from the political environment;
- the ability to choose a doctor and medical institution, as well as an insurance fund;
- stable cash flow from employees and businesses
The disadvantages of the insurance model should
be noted:
- higher cost of treatment, since when the cost of treatment increases, it is easier for the fund to decide on an increase in the contribution than for the government to raise taxes;
- limited opportunities for public health and sanitation;
- disinterest in the organization of preventive medical care;
- difficulties in managing medical institutions;
- dependence on the demographic situation [1, 119-122].
It should be noted that the general positive qualities inherent in the models described above:
- they are both profitable, since medical care is paid in them with a margin, above the cost price;
- both represent a national system, as they represent the only source of general medical care for the majority of the population;
- both of them are socially oriented, since they guarantee the provision of assistance to every citizen;
- both are solidary, since all members of society and the state participate in their financing.
Currently, the peculiarity of the domestic health care system is the multi-channel nature of its financing. Thus, budgets of all levels, extra-budgetary funds of the MHI and personal funds of citizens participate in its financing [3]. Unlike most European countries, where the development of health care based on insurance premiums was caused by the need to reduce the financial burden due to the increase in prices in private medicine, at the time of the transition from the budget system that existed in the USSR to the new funding structure, there was no private medicine in our country, and the level of income of the population was clearly insufficient for the effective functioning of the health system based on CHI.
The effectiveness of the current mixed system of financing in Russia is questioned by scientists and specialists [17, 27], including due to chronic underfunding [18, 38]. Regulatory regulation of public relations is often situational and chaotic [14, 6].
The appearance of new financial and credit nonprofit structures - the federal fund of compulsory health insurance and territorial funds of compulsory health insurance-has become a feature of the national health care system. Meanwhile, there is no direct connection between these funds and medical organizations, since payment for medical services is carried out through an intermediary - an insurance medical organization.
In accordance with the current legislation, medical insurance organizations operating in the MHI system are required to engage in this activity on a non-commercial basis [4], but unlike Western countries, which prohibit simultaneous participation in MHI and VHI, Russian companies have this opportunity by creating a subsidiary company to participate in MHI. This situation has led to the fact that in Russia there are many private medical institutions operating in the CHI market, which is not typical for European countries. In contrast to the classical insurance activity, in which the insurance fund is formed and managed by an insurance organization, insurance funds are created in the form of separate structures - federal and territorial MHI funds. However, such a structure contradicts the principle of autonomy of the insurance organization, violating its financial stability.
In the scientific literature, it is also noted that the existing structure of health care financing hinders the implementation of proper control over the expenditure of funds [10, 66].
Thus, the disadvantages of the domestic system of multi-channel financing can be noted:
- chronic underfunding of the health care system, associated with low salaries (CHI) and insufficient budget funding;
- financial instability of insurance funds;
- lack of control over budget spending;
- the possibility of abuse by the heads of medical institutions;
- the use by insurance organizations for their own purposes of the profit from the investment of the finances of the MHI;
- difficulties in calculating between insurance organizations and CHI funds when citizens receive medical services.
According to a number of authors, the main problem of public health is the lack of regulatory support, which consists, in particular, in the absence of a definition of the concept of "public health", the solution of which will make up for the lack of finances, ensure proper methodological support and the influx of personnel [2]. Let us not agree.
More reasonable is the position of the authors, who point to the inconsistency of the health organization with global trends and successful practices.
Thus, according to V. V. Grishin and A.V. Rogozin, the Russian financing model is a conglomerate of various financing practices of other states: departmental medicine was transferred from the medicine
of the USSR, corporate voluntary health insurance was borrowed from the experience of the United States, and from the experience of Canada - the involvement of federal subjects in the field of healthcare financing [6, 34].
This is largely due to the peculiarity of the development of the domestic legal system, which is associated with the inclusion of not only international legal and foreign norms, but also entire institutions [13, 167].
The most important shortcomings of the system of financing of domestic health care, its conceptual shortcomings are represented by
- lack of social solidarity, since the direct consumers of medical services themselves do not directly participate in their payment;
- multi-channel financing, which makes it difficult to control and account for cash flows;
- the non-productive nature of the medical services provided.
As described above, the Russian healthcare system, based on the budget-insurance model, has certain shortcomings, but its main drawback is chronic under-funding [8]. The lack of necessary funds ultimately caused the deterioration of the material and technical base. In the current situation, the issue of additional investments in the industry becomes more than relevant, especially investments in fixed assets [12].
Despite the fact that in absolute terms, the volume of investments in fixed assets is constantly increasing, the share of the total investment in Russia is gradually decreasing. In 2005, it was 2.6%, in 2010 - 2.1%, and in 2018 - 1.4% of all investments in the Russian economy. It should be noted that among all attracted funds in fixed assets, attracted funds predominate, the share of which in 2018 was 86. 7%. The share of public funds, among all attracted, is also the largest and in 2018 amounted to 66.5%, among which the main part falls on the budgets of the constituent entities of the Russian Federation [15].
Based on these data, it can be concluded that the renewal of the main health funds is very slow. Thus, it will not be possible to modernize healthcare without serious and long-term investors. At the same time, investors are extremely reluctant to invest their capital in domestic healthcare, and there is an explanation for this.
Healthcare is a very specific industry for investment, with a number of distinctive features. Thus, a number of authors single out violations in the distribution of budget funds, an imbalance between planned indicators and real costs, and the lack of a proper financial management process as such features [20].
A.V. Tikhomirov considers the lack of a mechanism for capital reproduction to be the main drawback hindering the arrival of investments in the healthcare sector [19, 146].
The main investment risks in the healthcare sector include the following:
- the imperfection of the health care financing system as a whole;
- the costly, unproductive nature of public medicine, since all services are calculated and reimbursed without taking into account the added value, which in itself makes it impossible to attract private investors;
- unhealthy competition between public and private medicine, especially if we take into account the fact that public health authorities are authorized to control, including private clinics;
- long payback periods for large investment projects.
Thus, the development of private medicine is carried out in most cases with the involvement of their own funds. Examples of large successful investment projects in private medicine in our country can be counted on the fingers.
The situation is more successful with attracting private investors to the public health sector, primarily due to the use of various mechanisms of public private partnership [5]. However, in the process of public private partnership in the field of healthcare, there are also many issues that need to be addressed, but this is already a topic for a separate study.
Another significant problem in attracting investment in domestic healthcare is the lack of funding for advanced investment technologies in medicine, primarily related to the development of artificial intelligence for the industry.
The most important task facing the industry is to increase investment activity, which can only be solved by creating favorable conditions for private investors, since taking into account the systematic economic crises and political pressure, public funds for medicine are clearly not enough.
The main areas of activity aimed at improving the investment climate in healthcare are:
- fundamental changes in the system of financing of domestic health care, including in terms of reformatting the provision of services from costly to productive;
- further development and improvement of public private partnership mechanisms;
- ensuring the free development of private medicine and protecting the rights of investors in this area.
But it is necessary to solve the issues of creating favorable conditions for attracting investment in the healthcare sector, as noted above, by changing the system of financing domestic medicine itself.
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