Autonomization of Healthcare Establishments as a Part of Medical Reform

Natalia Spivak, Associate at Legal Alliance Company

Lawyer & Law

The reform of the medical industry, initiated by the Ministry of Health of Ukraine, provides for a set of measures aimed at transforming the post-Soviet system into a pro-European model. Thus, the ideology enshrined in the Law of Ukraine "On State Financial Guarantees for Medical Care of the Population" is based on payment to providers of medical services on the basis of their performance. To introduce a contractual model of their relationship with the budgetary funds manager, it is necessary that state and municipal healthcare institutions have a sufficient level of managerial and financial autonomy. It is expected to achieve this by reorganizing such healthcare institutions into state and municipal non-profit enterprises.

The Ministry of Health of Ukraine determines the autonomy of the primary healthcare as the main task of the medical reform for the first half of 2018, because in the near future they will need to enter into contracts with the National Health Service of Ukraine in order to receive direct financing from the state budget for the provided medical services. Although the reorganization is the right of healthcare institutions, and not their responsibility, it is established that the change in the main type of activity of a state and municipal healthcare institution due to a change in its legal form is prohibited. In addition, privatization in this process is not allowed.

With this goal, the working group at the Ministry of Health of Ukraine developed Methodological Recommendations on the reorganization of healthcare institutions from budgetary institutions into municipal non-profit enterprises based on the mechanisms of reorganization of primary care institutions. The methodical recommendations are intended to assist local authorities, heads of local health management authorities and healthcare institutions, as well as deputies of local councils responsible for preparing and making decisions on changing the economic and legal status of monicipal healthcare institutions.

According to the Methodological Recommendations, the benefits of reorganization of a healthcare institution from a budgetary institution to a public non-profit enterprise include, in particular, the following: head of a healthcare institution receives much greater freedom in the disposal of assets, finances and the formation of personnel policy, the determination of the internal structure of the institution; the enterprise can independently establish any forms of remuneration for workers permitted by law; financing is based not on an item-by-item cost estimate, but on its own financial plan; the right of a healthcare institution (enterprise) to form associations of enterprises with other healthcare institutions, which also act in the status of the enterprise, with the purpose of redistributing functions between them and general optimization of the use of material, human and financial resources; the enterprise can employ sole practitioners-doctors having licens for medical practice using civil contracts.

The basic of for the autonomization of healthcare institutions were laid down in the Law of Ukraine "On Amending Certain Legislative Acts of Ukraine Regarding the Improvement of Legislation on the Activities of Healthcare Institutions" adopted in April 2017. In order to reduce the financial costs of reorganization of healthcare institutions and minimizing the risk of blocking the reorganization process by existing creditors, the mentioned law provides for temporary (by the end of 2018) simplified procedures. In particular, the creditors of the healthcare institutions, which are being reorganized, do not have the right to demand that the institutions perform unsecured obligations, termination or early performance of the obligation or providing security for the fulfillment of the obligation. The consent of the creditor to replace the debtor in the obligation in this case is not required. In addition, there will be no compulsory property valuation envisaged by the current legislation. Funds not used by healthcare institutions can be used later to finance the activities of such state or municipal healthcare institutions, including for updating the material and technical base.

The Methodical Recommendations provide an algorithm of actions to reorganize healthcare institutions, which begins with the adoption of an appropriate decision. So, the decision on the reorganization of healthcare institutions functioning as municipal budget institutions, accepts the advice of the territorial communities of villages, towns, cities, regions that own the property of the corresponding healthcare institution in accordance with its regulations. At the same time, the relevant council decides on the appointment of a commission on reorganization of the healthcare institution (may be entrusted to the management body (head) of the relevant budget institution) and to establish the procedure and deadline for the creditors to file their claims (from two to six months).

Upon completion of the reorganization procedure, a council should approve the transfer act, make a decision to dissolve the budgetary institution and establish a municipal institution, and establish amount of the authorized capital. In accordance with Article 78 of the Commercial Code of Ukraine, a municipal non-profit enterprise holds property based on the operational management right. Regarding approval of the charter, the Recommendations contain an example that can be taken as a basis. After state registration, the rights to the property subject to state registration, including real estate, including to use a land plot, must be re-registered in the name of the commercial enterprise.

The Methodological Recommendations explain in detail what the full and abbreviated name of the reorganized enterprise should be, the procedure for the formation of the authorized capital, the specifics of the formation of the staffing table and wages. In particular, attention is drawn to what activities should be laid down in the charter (medical practice with the description of the level of medical care and its type, carrying all other types of medical activities provided by law, if necessary – engagement in activities related to dispensing, use, acquisition, storage, transportation and disposal of narcotic drugs, psychotropic substances and precursors, provision of paid medical services to the population, provision of any services to other healthcare institutions and any legal entities, sole traders and individuals).

Attention should also be paid to labor relations at the reorganization of healthcare institutions. The head of the institution should continue to perform his duties if the parties do not agree on early termination, or unless he is dismissed on the grounds determined by the contract. New appointments are made in compliance with Article 16 of the Fundamentals of Health Legislation, according to which managers are appointed to the post by the authorized executive body of the management of the owner of an healthcare institution on a competitive basis (lasting up to 30 calendar days) by concluding a contract with them for a period of three to five years. The procedure for the competition is determined by Resolution of the Cabinet of Ministers No. 1094 as of December 27^th, 2017. It should also be taken into account that unified qualification requirements for healthcare institutions managers are established in Issue 78 "Public Health" of the Directory of Qualification Characteristics of Workers' Professions. Concerning other workers of the healthcare institutions, the legislation establishes that their dismissal is allowed only if it is impossible to transfer an employee with his consent to another job.

An important aspect is obtainment by the reorganized healthcare institution of all the necessary documents to carry its statutory activities. In accordance with Article 15 of the Law of Ukraine "On Licensing of Economic Activities", a municipal enterprise must receive a new license for medical practice within three months after state registration (no simplified procedure is provided). At the same time, accreditation of a healthcare institution can be carried out on a voluntary basis. The Methodological Recommendations draw attention to the fact that the abscense of an accreditation certificate may limit a healthcare institution carrying certain activities, for example, conducting medical examinations of certain categories of workers. This certificate must be obtained again.

Public participation in healthcare will be ensured through the establishment of supervisory and trusteeship councils at healthcare institutions. The former are compulsorily established at secondary and tertiary levels institutions, and they consider issues, in particular, on observance of rights and ensuring the safety of patients, compliance with the legislation when providing medical services to the population, financial and economic activities of the healthcare institution. Supervisory councils can provide reasoned proposals to the leaders of the relevant healthcare institutions on taking measures to eliminate the detected violations. The procedure for the formation of the supervisory board of a healthcare institution and the standard regulation on it have been developed with the legal support of Legal Alliance Company and approved by Resolution of the Cabinet of Ministers No. 1077 as of December 27^th, 2017.

As noted, the need to make a collective agreement, which establishes the forms and systems of labor remuneration, labor standards, quotations, conditions for the introduction and the amount of surcharges, allowances, bonuses, rewards and other incentive, compensation and guarantee payments is top necessity for a municipal non-rpfit enterprise. The decision of the head of a healthcare institution should be based on the personal interest of the doctor in his performance (for example, the number of patients who chose a family doctor). At the same time, the current legislation of Ukraine does not set limits on the maximum amount of wages in a healthcare institution-enterprise.

Special attention should be paid to the financing of a reorganized healthcare institution, in particular, under contracts for medical servicing of the population for the relevant budget period, financing from the appropriate budget using a program-targeted method (under a budget program, for example, for the procurement of medical equipment, medicines), and by obtaining financial support from the local budget for various purposes. The methodology for calculating the cost of medical services and a list of paid medical services are approved by the Cabinet of Ministers. In accordance with Article 2(3) of the Law of Ukraine "On Public Procurement", the conclusion of contracts with the National Health Service does not require a preliminary tender. Additional sources of funding healthcare institutions may be any contributions by individuals and legal entities, in particular insurance companies, employers, charitable organizations, patients for the provision of services (chambers of improved service, etc.) that are not prohibited by law.

The Methodical Recommendations will be useful including when resolving the following issues: how to close / open accounts with the bodies of the State Treasury Service of Ukraine; what to do with the balances on the accounts; taxation of the enterprise; whether it is possible to reduce the staff of healthcare institution employees; what powers the head of a communal non-profit enterprise will have regarding the disposal of property, including real estate; whether it is necessary to re-conclude contracts and the like.