Money lost a patient: what is happening in the second stage of health care reform

After April 1, a series of debates over whether a health care reform had worked for secondary health care facilities as expected arose across Ukraine.   

The parties discussed the “money follows the patient” principle generalizing the conversation to the dilemma of “it cannot be canceled/remained” without going into detail.

The secondary care reform almost has not been analyzed based on documents by which it was launched.

We are talking about the Law of Ukraine “On State Financial Guarantees of Medical Care of the Population” of 2018, the Resolution No.410 “On Contracts on Medical Care of the Population under the Health Guarantee Program” and the Resolution No.411 “Some Issues of the Electronic Health Care System” of April 25, 2018, as well as the Resolution No.65 “Some Issues of Implementation of the Program of State-Guaranteed Medical Services in 2020” of February 5, 2020.

Let’s try to understand what principles of medical reform are laid down in the law and how they are implemented today based on the Resolution No.65 mentioned above.


The Law on Financial Guarantees defines, in particular, the basic principles of funding for medical services that have been tagged as the “money follows the patient” concept.

While hospitals received funds per the number of patients ‘assigned’ to them at the place of registration and the number of doctors ‘assigned’ to beds, the new rule says that the money should follow a patient who is free to choose a place to live and receive services.

To do this, the cost of each medical service, whether it concerns visiting a neuropathologist, removing a mole or a bypass surgery, should be estimated at a specific amount at a rate and a certain coefficient depending on different conditions.

Along with the “money follows the patient” principle, the law defines some more principles for the provision of medical services.

In particular, this involves guaranteeing the free provision of a clearly defined list of services in a certain amount, stimulating competition of hospitals for patients through improving the quality of services, and providing patients with freedom of choice, as well as ensuring the control over the quality of such services.

The law stipulates that “money follows the patient” in the form of five tariff types established based on fee-for-service rates:

  • global rates: medical facilities receive a fixed amount for a certain number of services for a certain period;
  • capitation rates: a fixed amount for each patient;
  • rates for treated cases;
  • rates for medical services;
  • rates based on the results of the implementation of contracts for the provision of health services by medical facilities.

In such a way, “money follows the patient” is a comprehensive mechanism, the implementation of which should include a guaranteed set of services, free choice of doctor, and a clear set of quality services paid for by the state.

The Law on Financial Guarantees stipulates that tariffs for medical services for patients are determined by the Ministry of Health and approved by a resolution of the Cabinet of Ministers.

Logically, determining the cost of certain services requires having the following data: the number of patients, what services they use, and how often they visit a doctor.

It was planned to launch an eHealth system aimed at providing medical statistics for necessary calculations to collect such data.

The same law provided that the secondary health care reform would be launched on January 1, 2020.

It was planned to gather information, calculate tariffs for medical services, consult with the medical community, inform chief physicians and local authorities that own municipal medical facilities about the tariff schedule for services, allow these institutions to prepare, become autonomic and sign contracts with the National Health Service of Ukraine during the period before the reform.

The tariff schedule and specification (requirements for) of services should be made public by the fall of 2019 when local authorities usually allocate the budgets, to avoid a lack of funding for certain health care facilities, which will not be able to provide appropriate quality services and will not receive payments from the state budget for many reasons (lack of specialists, equipment).

This was done so that local authorities could decide what they need to do to deliver services to patients in their locality:

  • purchase the necessary equipment (and then the medical facility will be able to provide a larger and more expensive range of services),
  • hire or train additional specialists (so that they can maintain specific equipment or provide a service that the hospital has not previously provided),
  • make a decision on the facility’s integration or its closure, if appropriate (having three patients per month, lack of specialists and equipment that will provide quality specifications services).

However, it did not happen as expected.

In July, Ukraine held parliamentary elections, on August 29, 2019, a new parliament appointed a new Minister (Zoryana Skaletskaya), in December the Verkhovna Rada approved a law postponing the launch of the secondary care reform to April 1, 2020, on March 4, 2020, Ilya Yemets became Minister of Health, and on March 30, Maksym Stepanov was appointed Minister of Health.

At the same time, the preparation for the launch of the second stage of medical reform also looked like a sprint.

While the first draft requirements for medical services were published on the website of the National Health Service of Ukraine on July 18, 2019, the final document on the specifications and conditions of procurement of medical services was published only on January 21, 2020, and tariffs for medical services – on January 29, 2020, two months before the launch of reform.

These tariffs were approved in the form of a government resolution even later (on February 5), and February 10 was the start date for receiving proposals from medical facilities on conducing contracts with the National Health Service of Ukraine.

Understandably, it was almost impossible to quickly process a huge array of proposals from medical facilities, so the term for consideration of proposals was extended to March 10.

The eHealth system was also not fully launched in 2019. Data on the number and specificity of medical services to calculate their cost were collected in several pilot facilities and cities, where approaches to the secondary care reform were tested in 2019, during discussions with doctors and experts, as well as based on the so-called Form No.20, which is the reports of these hospitals for 2018.


Tariffs for secondary care services were approved and made public on February 5, 2020, when the Cabinet of Ministers adopted the Resolution on “Some Issues of Implementation of the Program of State-Guaranteed Medical Services in 2020”, and final requirements for medical facilities to provide various services were published.

Hospitals and local authorities have finally found out what funds they can rely on, given the requirements for equipment and staff, less than two months before the start of these changes.

The chief physicians had to submit a request for medical services to conclude a contract with the National Health Service of Ukraine less than a month after the publication of tariffs.

The Resolution stipulated that the tariff schedule could be changed, taking into account the reporting of hospitals for 2019 (it was expected to appear only in early March).

However, as of February, tariffs have remained unchanged.

This Resolution describes the rights of the National Health Service of Ukraine that concludes and can change contracts at its discretion under applicable rules, the rights of medical facilities providing their services, as well as the tariffs of 27 packages of medical services.

Let’s focus on how they are calculated.

As for the primary health care, everything remained as it was: family doctors are paid for a signed declaration, and the “money follows the patient” principle provided by law is observed.

Emergency care is paid at a global rate (for the readiness of emergency centers to provide a certain number of services over a certain period) based on the capitation rate (for each patient) and patient registration data.

That is if you are registered in the Volyn region, but live in Kyiv, the money to call an ambulance for you remains in Volyn.

However, the data of the Ministry of Social Affairs on internally displaced persons and general data on internal migration are considered to balance the number of patients in different regions.

Thus, the basic principle of “money follows the patient” does not work in the case of emergency medical care.

Additionally, given that the amount of funding for ambulance stations depends solely on the population, instead of the quality of service (fast access to patients, the availability of sufficient transport and quality of life-saving equipment, qualifications of medical staff), it is doubtful as to the implementation of other basic principles of the reform, such as the quality of service provided and control over its provision.

The in-patient care tariff is calculated in a quite difficult, but interesting way.

It consists of a global rate (readiness to provide a certain number of services), calculated by the number of services in 2018, the rate for the treated case in 2020 at a certain ratio, and some coefficients.

In April, May, and June, in-patient hospitals will receive 100% of the money for each case of care provided in 2018.

July and August will be transition months when the ratio of the global rate to the treated case rate changes proportionately.

From September, the ratio of the global rate to the treated case rate will be 60% to 40%.

What does this mean in practice?

Suppose that 100 surgeries that cost 1,000 hryvnias each in 2020 were performed in your hospital in 2018.

In such a way, in April, May, and June, you will receive 100% of the cost of these surgeries (1,000 hryvnias) for each surgery submitted in the application for the conclusion of the contract.

From September, the surgery cost will be calculated according to the following formula: the number of surgeries planned for that month according to the information for 2018 (for example, 30 surgeries) * 60% * UAH 1,000 + the number of treated cases (for example, 50 surgeries) * 40% * UAH 1,000 = UAH 38,000.

Thus, the National Health Service of Ukraine will pay UAH 38,000 / 50 surgeries = UAA 760 to the hospital.

If the hospital performs the planned amount of surgeries (according to the information for 2018, there were 100 surgeries), all surgeries will cost 100 * 60% * 1,000 + 100 * 40% + 1,000 = UAH 100,000.

One surgery will cost UAH 100,000/100 surgeries = UAH 1,000.

Now pay attention: if the hospital performs all 100 surgeries (according to reporting in 2018) as of October, and, for example, another 50 patients additionally seek medical help, the cost of all surgeries will be as follows: 100 surgeries * 60% * UAH 1,000 + 150 surgeries * 40% * UAH 1,000 = UAH 120,000.

That is, one surgery will cost UAH 120,000 / 150 surgeries = UAH 800.

If +100 patients instead of +50 patients not provided for by reporting for 2018 seek for medical help, the cost of all surgeries will be as follows: 100 surgeries * 60% * UAH 1,000 + 200 surgeries * 40% * UAH 1,000 = UAH 140,000.

One surgery: UAH 140,000 / 200 surgeries = UAH 700.

In such a way, despite the needs of patients, it is unprofitable for hospitals to perform more surgeries than they performed in 2018 because the hospital will receive only 40% of the tariff for each surgery.

That is, hospitals should abandon patients and perform exactly as many surgeries as they performed in 2018.

Of course, hospitals have the opportunity to submit draft contract changes to the National Health Service of Ukraine, but it is not known whether it will accept them and take it into account for the surgeries already performed.

Attention should be paid to the so-called balance coefficient applied to the formula for calculating the cost of services in the hospital, along with the coefficient for round-the-clock work and the diagnosis complexity coefficient.

It lowers the rate for in-patient medical services depending on the funds for medical services allocated in the budget. That is, the tariff can be halved.

Given all this, the “money follows the patient” principle is partially implemented only when the formula for calculating the treated case instead of historical data for 2018 is used.

Additionally, the formula ‘kills’ the competition of hospitals for patients, because it is not profitable for them to treat more patients than in 2018.

As for priority services such as medical care for cerebral stroke and myocardial infarction patients, childbirth, and neonatal care, the “money follows the patient” principle is implemented.

However, even here there are questions about the quality of service, and here’s why.

Competent physicians explained that acute cerebral stroke is of two types: ischemic and hemorrhagic.

In the case of hemorrhagic stroke, it is enough to make a diagnosis, and further, if surgical treatment is not needed, it is enough to simply monitor a patient.

In the case of ischemic stroke, there are two common approaches to treatment.

The patient gets medication that, roughly speaking, ‘dissolve’ a thrombus inside a blood vessel (thrombolysis).

But the best method is the method of thromboextraction implying removing the thrombus with special forceps using an angiograph unless otherwise contraindicated.

That is, there are three medical methods of stroke care, which are very different and have different requirements for equipment: one case requires medication and CT, while there should be forceps worth about 50-80 thousand hryvnias in case of bulk purchases, an angiograph and a specialist who can perform thromboextraction for another case.

The tariff for stroke treatment is UAH 19,000 per case. In such a way, the hospital is faced with a choice: either to treat by using a thrombolysis method, which is cheaper than the tariff and less demanding in terms of staff and equipment, or to use a more reliable and efficient method of thromboextraction, which is much more costly and requires expensive equipment.

In this case, the quality of vital services may be affected by the choice of method.

The childbirth tariff is UAH 8,000. However, the service specification does not allow us to understand what exactly it includes.

Is it possible to agree on childbirth with a specific doctor for UAH 8,000 offered by the state, or does this tariff cover only childbirth with the standby medical team?

If a woman wants to give birth with a specific doctor, does she have the right to officially pay extra for it, given that the law on financial guarantees does not provide for co-financing of medical services?

In practice, such uncertainty creates favorable conditions for informal payments to physicians that female patients accepted wanting to receive a quality service from a pre-selected doctor.

In general, the specification of services does not clearly determine whether they include certain medical consumables (what kind of a small bandage if required, whether any bedclothes are included, etc.), in what way a particular surgery will be performed (consider a cerebral stroke), how many stents are needed to provide quality medical care during a heart attack (stents are purchased centrally, but patients may not know whether there are any stents in the hospital, and a physician may illegally demand to ‘pay’ for a stent).

The abstract specification of medical services contributes to corruption, which should be eliminated by implementing secondary care reform.

The out-patient clinic services (visit to a specialist such as neurologists, ENT-specialists, etc.), out-patient surgeries (mole removal), and diagnostics to them (cardiogram, ultrasonography) are calculated at the global rate based on data on visits to out-patient clinics in 2018.

That is, the clinic will receive as much money as the cost of the number of services it provided in 2018 multiplied by the service tariff in 2020 (which is 49 hryvnias). Here, of course, the “money follows the patient” principle is not applied.

In the case of priority diagnostics (colonoscopy, gastro-duodenoscopy, bronchoscopy) subject to a set of certain requirements (equipment, specialists), the tariff is calculated for the service, ie, the money follows the patient. But only when medical facilities have certain equipment with certain characteristics.

Suppose a municipal out-patient clinic has equipment for gastroscopy, but this gastroscope does not have video recording. In this case, the clinic will receive 49 hryvnias for gastroscopy.

If it had other equipment with video recording, it would have received 749.52 hryvnias.

In such a way, by updating the equipment, medical facilities can get 15 times more money for one service. But the clinic owners (local authorities) should find the funds for this.

Hemodialysis, chemotherapy, and oncology treatment services are calculated at the global rate for 2018.

As we already know, this means that hospitals receive money for a fixed number of services based on the reports of these hospitals for 2018, ie the “money follows the patient” principle again does not work.

If there is a new patient who requires hemodialysis on average three times a month in 2020, it will not be profitable to treat such a patient for hospitals with a certain number of patients served since 2018, as they are unlikely to receive money for this patient.

Additionally, in this case, the principles of free choice of medical facility and competition for patients are violated: patients will be sent to the health care facility where they were treated before or will be denied medical services.

The “money follows the patient” principle is also not observed in psychiatric medical care, as the global rate for readiness to provide services based on reporting for 2018 is applied here.

There is another approach when it comes to HIV treatment, drug addiction, palliative care, and medical rehabilitation, as the capitation rate is applied, but it is formed based on hospital data for 2018.

So, is it possible to change the hospital or get patient care services, other than the amount established for 2018?

In total, 16 of 27 health care packages do not comply with the basic principle of “money follows the patient”.


As we already know, the law on state financial guarantees established an important principle of free choice of doctor. Let’s find out whether it is implemented in practice following the resolution.

A patient should have a family doctor’s referral to receive a secondary care service (such as a gastroscopy).

Such a referral should include a specific service without indicating the hospital to obtain it, as the choice should be free.

But, how will a patient know where to go for service?

Currently, the eHealth system does not work with e-referrals, so patients with doctor’s referrals should start looking for a health care facility providing secondary care services on the website of the National Health Service that pays hospitals for their services.

Theoretically, the section “For citizens” should contain a clear algorithm that would show how to understand what package includes a service indicated in the doctor’s referral, where to find a medical facility contracted to provide the service package in your city or region and how to arrange to obtain the necessary service. In reality, it contains just a map of primary health care facilities.

Maybe, the necessary information can be found in some website sections, but patients need to understand where to find it and how to read it. The patients have not yet been given instructions on how to do this.

If patients had been able to find a map of medical facilities contracted for specialized health care on the National Health Service website, it is still not clear how to find out which services are in which package, as well as whether the hospital provides this service.

For example, if a patient requires a planned cholecystectomy (gallbladder removal), do all hospitals contracted for the surgical package provide this service?

After all, there may be ENT surgery facilities, ophthalmology centers, and any other specialized health care facilities.

Thus, patients do not understand where to ‘bring’ the money that follows them. Accordingly, they will either ask for advice from a primary health care doctor who gave a referral or go to the hospital they have known for a long time.

Such a hospital may not have a contract for the service the patient needs or may have a contract, but may ask the patient to pay extra for the service due to its abstract specification.

Additionally, despite the patient’s right to freely choose a doctor enshrined in the law on medical guarantees, in practice, patients requiring secondary care services can theoretically choose a hospital, but not a doctor.

And only the appointment desk personnel may allow them to see a particular doctor subject to the medical facility’s goodwill.

Indirectly, this means that a doctor’s salary does not depend on the number of patients, but it depends on a chief physician’s decision and a collective contract.

Summing up, the progress of the secondary care reform launched in 2020 can be described something like this:

  • money does not always follow the patient and sometimes remains attached to medical reports of 2018;
  • patients do not know how to receive services;
  • free choice of doctor is questionable;
  • both patients and hospitals do not know exactly what is included in the service paid for by the state and what can be officially extra paid (the range of services is guaranteed, but not defined);
  • a doctor’s salary may not depend on the number of patients.

Thus, it should be recognized that the proper principles, such as “money follows the patient”, “free choice of doctor” and “quality service and control over its provision”, necessary for the health care system are not always provided by the Resolution No.65.

Therefore, changes are needed to implement the reform planned by law.

Source: Ukrainska Pravda