Development of private healthcare market in Ukraine more rapid than that of Russia in 2011 to 2013


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The private healthcare markets in Russia and Ukraine are at the initial stage of development. Informal spending is widespread and this is partially caused by lack of proper payment mechanisms in the system. At the same time the private health insurance segment is immature. According to the latest PMR report, “Private healthcare market in Russia and Ukraine 2011. Development forecasts for 2011-2013” in the coming three years no revolutionary changes in systems are expected, however, despite this the markets will develop dynamically.

Stable growth in Russian market
The current healthcare system in Russia has been forming since the beginning of the 1990s, when the political situation required new legislation. The implementation of mandatory health insurance (MHI) in 1991 was the beginning of the development of medical services in Russia. MHI played an important role in the mending of the inefficient healthcare system but did not resolve the problem of the shortage of funds in Russian public medicine.
In 1996, the government implemented a law which allowed the provision of paid services at government and municipal medical facilities. As a result of this, public healthcare was rapidly commercialised, and this led to an unconstitutional barrier to free medical services.
“As a result the Russian private healthcare market has been growing steadily. Our estimates reveal that total private healthcare spending came to RUB 1,329bn (€33bn) in 2010, 295% more than that of 2002.”, according to Monika Stefanczyk, Head Pharmaceutical Market Analyst at PMR.

Compulsory health insurance in 2015 in Ukraine?
The Ukrainian healthcare system officially provides a comprehensive guaranteed package of healthcare services free of charge as a constitutional right. There are no systems by which healthcare is funded by compulsory health premiums and money transferred by the government from tax revenue. In practice, however, there are numerous charges for medical services. The government is attempting to define a more limited benefits package covered by the state funds. Most health funding comes from general government and local budget revenues raised through taxation, including value added tax, business income taxes and personal income tax. Out-of-pocket payments, however, account for a significant proportion of total health expenditure (the most substantial in the Central and Eastern European region).
In the early 1990s, several steps were undertaken in order to save the healthcare industry from collapse and to preserve a minimum level of social guarantees for the provision of medical assistance to the population. Some health services were excluded from the state benefit package and became paid for. Another measure intended to mobilise additional resources was the legalisation on voluntary medical insurance (in the Law on insurance of 1996), which, however, has so far accounted for a small proportion of overall funding in Ukraine. Private payments for medical services are usually informal and reflected in out-of-pocket payments for medicines, food and presents for medical staff.
After the presidential elections in January 2010, further discussion on healthcare took place, accompanied by announcements pertaining to support of the on-going reforms. The government also announced the introduction of a system of mandatory social medical insurance in 2015-2016, following the healthcare reform. However, there are still serious differences of opinion about the final MHI model, and it is likely that mandatory medical insurance will not be implemented on time.
All in all, our estimates show that total private healthcare spending came to UAH 60.5bn (€5.7bn) in 2010, 556% more than in 2002.

1 p.p. reduction in Russian share in Eastern European market expected
Russia accounts for most of the value of the private healthcare market in Russia and Ukraine (85%), but a 1 p.p. reduction in its market share is expected between 2010 and 2013. There will be an increase in the share of the Ukrainian market because of the higher rate of growth forecast for Ukrainian private healthcare – this will be as much as 50% more than that of Russia between 2011 and 2013, chiefly because of the very low current value of the former market.

This press release is based on information contained in the latest PMR report entitled Private healthcare market in Russia and Ukraine 2011. Development forecasts for 2011-2013.

For more information on the report please contact:
Marketing Department:
tel. /48/ 12 618 90 00

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