Dispatch from Perm: hands off our healthcare!


Reforms to public health systems are always dictated by the need to cut costs. Russia is no exception, but the results are proving catastrophic. Access to state treatment is ever more limited and often unaffordable private health services are the only way of getting better or staying alive. Roman Yushkov and Vasily Moseyev consider the situation in Perm region and wonder if this is not part of a cunning freemarket plot.

Roman Yushkov and Vassily Moseyev
24 April 2012

Lina had the misfortune to fall ill at the height of Perm’s health reforms. She felt unwell on Saturday. The next day she had sharp pains in her stomach, so her sister, Sofia, called an ambulance, and she was taken to hospital. Doctors examined her and felt her stomach. She complained constantly of pain and begged them not to touch. They could not find anything and told her there was 'no need for hospitalisation’. Sofia took her sister home. Lina could no longer get up. On Monday, the doctor came to see her. She examined her, but did not take any blood tests.  She said, ‘You’ll have to look after her yourself: we don’t accept chronic cases at the hospital’. She wrote a prescription for pain-killers and various injections. By Friday, Lina was in a semi-conscious state, not eating, only constantly asking for a drink. Sofia called an ambulance. It turned out that Lina had appendicitis. It was too late: her appendix had ruptured. The operation did no good, and Lina died.

Medical demand must be limited

There are many stories like this, some even more frightening, some less so. What is happening to Russia’s health system and to health care in Perm in particular? The best answer we could find was in an article by the governor of Perm region, Oleg Chirkunov, entitled: ‘Health care: a competitive model’. The article was published at the beginning of the reforms, in the summer of 2008, in the respectable Moscow-based newspaper ‘Vedomosti’. The logic went as follows. The amount of money allocated to medicine from the country’s budget is constant, that is, it hardly changes. The variables are therefore ‘the volume and quality of services’. 

Logically, the next step should be to ask whether the country’s health budget should not be increased. For years, Russia has allocated 3.2-3.5% of GDP to health care. In the G7 countries that figure is 7.1-7.9% and these countries have much bigger budgets than Russia.  What is more, in terms of expenditure on healthcare, Russia has been significantly overtaken by Moldova, Bulgaria, Hungary, and Estonia.  Even Belarus, which our government talks about with condescension, spends 4.2% of its GDP on healthcare. 


Oleg Chirkunov, governor of Perm region, meets with Vladimir Putin. Some believe he prioritises his reputationin the Kremlin over the people he governs. Photo: www.kremlin.ru

The governor would not think to raise the problem of the sector’s finances at government level, however. He has said several times that ‘Perm region must become a test case’. Here is one of the Chirkunov’s key policy statements from the article: ‘We must adopt the West’s competitive model, which ensures the efficient use of budget resources, and retain our own system’s way of limiting demand and expenditure.’ 

The governor of Perm is a Kremlin favourite and defender of modern Russia’s free economic reforms. Times are starting to get tough for agriculture, education, the arts - and the health sector, but the governor can afford to let this happen because he is outside the democratic process. Essentially, all he needs to worry about is his image in Moscow, since the position of governor is no longer an elected post in Russia, and governors are appointed by the president. Nothing can stop this brave experimenter. He imposes his reforms from ‘on high’, without regard for the results or public opinion. The new freemarket framework is more important than human health and human lives. In this he is very like the Bolsheviks, who also sincerely wanted to build a brighter future by issuing directives.

'For years, Russia has allocated 3.2-3.5% of GDP to health care. In the G7 countries that figure is 7.1-7.9% and these countries have much bigger budgets than Russia.'

Of course society cannot stand still. The authors of this article, however, argue that the basis for change should be the interests of the local population and the country as a whole, not the desire to please someone in the Kremlin, or senior bureaucrats on the so-called ‘Reforms Committee’. Russians shudder when they hear the word ‘reform’: they have had twenty years of chaos and disruption caused by badly thought out policies.

Sign up, don’t fall ill, go quietly

So just what is the ‘competitive model’ for our health care? It is a model created with one clear aim in mind: to limit access. It stems from the governor’s belief that since there is a shortage of funds, the market system should include a mechanism for limiting ‘unwarranted demand for services’. First things first, however.

Key to Perm’s healthcare model is the system of fundholding. This is how a representative of the Perm Regional Foundation for Compulsory Medical Insurance, Irina Kosyakova, explained it to us: ‘In our region the polyclinics have held the purse strings in our region since 2008 – they are the fundholders. The financial resources they receive are allocated according to the number of people registered for compulsory medical insurance. Polyclinics are in competition: the greater their number of registered patients, the higher the level of funding they receive. The polyclinics pay for patients to be treated in hospital and by external specialist consultants, who for one reason or another do not see patients at a given medical establishment. The system of fundholding is a way of making money. Medical establishments analyse their income and expenditure: they are learning to manage their affairs in the new economic conditions, without devaluing the terms “doctor” and “medical assistance”.’

'No patients – no funds. So we have a situation where a polyclinic’s finances depend on a silly list of names, rather than on the work it does.'

Head doctor in Perm

For another point of view, we decided to ask the opinion of someone who lives and breathes the system - the head doctor in one of Perm’s polyclinics. We will not risk naming him – he could quite easily lose his job for saying too much. ‘To start with, we had to organise the whole of the local population to sign up to each polyclinic: this was compulsory and the timeframe was very short. The more people you sign up, we were told, the better off you will be. No patients – no funds. So we have a situation where a polyclinic’s finances depend on a silly list of names, rather than on the work it does.


Perm hosts one of the best modern art galleries in Russia (photo: Usama) and trams in the city boast wi-fi (photo: www.duma.perm.ru). However, as can be seen from its healthcare system, the desire of local authorities to be at the forefront of reforms and modernisation does not always bring good results.

In general, the system of signing patients up works like this: if there are lots of them it’s good, but it’s even better if they don’t come to the polyclinic, because that’s more cost effective! Of course, it’s even less cost-effective if the clinic has to send them to hospital. But people continue to be ill despite the wishes of officials and the state of our health care remains as it was, in dire financial straits. Peeling walls, ripped sheets, the cheapest medicines, and food which would make a healthy person ill...The health system in our region would prefer that an ill person did not bother anyone and just quietly died.’ 

Look after the finances!

Let us take a closer look at what is happening. The polyclinics now manage their finances: they pay the specialists, the laboratories, patients’ hospital stays and operations. After the cost of treatment has been covered, they can spend any remaining money on new equipment, material incentives for doctors, and other needs. They are extremely interested in ‘signing up’ as many patients as possible; they are not in the least bit interested in treating them. Patients are not referred for hospital beds until a doctor sees that there is real threat to their lives. If he wants to see it, that is: he will get a significant top-up to his salary if he economises. Usually a doctor’s greatest fear is of making a wrong decision and causing a patient to deteriorate, or even die (this has to be proved!). Now, he fears displeasing the management by hospitalising a patient unnecessarily. As they proudly told us at the Foundation for Compulsory Medical Insurance, some doctors are getting a handsome 70,000 roubles a month [£1500] each under the new system! If only the next Sofia did not have to cry over a sister who has died because the doctor refused to send her to hospital. 

General practitioners have a special role to play in this system. Without a referral from them, a patient cannot see a specialist, go to hospital, or have tests done. It is primarily these doctors who feature in all the reform literature. They receive a relatively high salary for the locality: 15-16,000 roubles per month [£320-£330]. They are the key players in the fundholding system, acting as the main ‘filters’ to limit the medical services provided to the population. The head doctors in the polyclinics ask them to economise in relation to each local area. As a result, one of the authors of this article was recently only able to see a specialist a month after he had urgent need to. But other doctors are unlikely to envy GPs. It is not easy to have to listen constantly to patients and recognise obvious problems, knowing how long and hard their path to real help will be...

'Usually a doctor’s greatest fear is of making a wrong decision and causing a patient to deteriorate, or even die (this has to be proved!). Now, he fears displeasing the management by hospitalising a patient unnecessarily.'

In these circumstances, people with compulsory medical insurance are forced to go to private polyclinics. Paying with their hard-earned money, and often a lot of it. Life is more precious than savings. Many of the patients we questioned about the quality of their medical care told us that it was only thanks to private treatment that they were still alive. One had had an inner ear infection, another a kidney infection. They had shown all the signs of needing an urgent diagnosis and, most likely, hospital treatment If a patient is relying simply on help from the local doctor, then he will either become an invalid or will simply not have much time left in this world.

Where did this come from?

The reformers of our health system assure us that they borrowed the ‘particular model’ for fundholding from the United Kingdom. It is true that in 1997, England introduced a system of GP fundholding, that is, of funding primary health care groups according to local population figures. These groups also paid for patients to be treated in hospitals or by specialists. But in Britain it is categorically forbidden to pay staff with monies resulting from economies, so the two systems are entirely different. Medical staff there have no financial incentive to limit patient access to specialists or hospitals. Each of Her Majesty’s subjects has access to any doctor within 48 hours. As far as we know, no one is planning to destroy the system of state healthcare which, although complicated, is one of the best in the world. 

In Russia, fundholding began in the 1980s during perestroika. It was introduced over a period of several years in the Leningrad, Kemerovo and Samara regions. Leningrad was the first to reject it, because of a sudden unexplained increase in the death rate. Kemerovo followed suit  for the same reason. Only the Samara region continued with the system until 2005, when it was changed. Nevertheless, in 2006 it occurred to one of the reformers in Moscow to forcibly revive the system of fundholding, in spite of the results of the previous experiments. The decision was taken to change the financial and organisational structures in 19 of the country’s regions. At the forefront was Perm region, one of the few in Russia to become a huge testing ground for health care experiments.

Closing down facilities


Reduction of health care infrastructure is happeningall over Russia with patients often lying on beds waiting  for treatment in corridors. Photo: krasnoturinsk.info

Limiting the population’s access to specialists, complicated diagnostic procedures and hospital treatment is only part of today’s health care experiment in Russia. Parallel with this, the physical infrastructure of health care at both the state and the municipal level is being destroyed. Between 2008 and 2009, the period of greatest activity in relation to health reforms, 20 hospitals in Perm region were closed, and the process is ongoing. The number of hospital beds has been reduced by 4,122. Over the same period, the number of polyclinics has been reduced by 34; 42 village first aid and obstetric stations in the region, and 200 beds for pregnant women and women in labour, have been closed down.

To be fair, today’s reforms continue a process started all over Russia even earlier – initially without any theoretical basis. Over the last 15 years, the number of polyclinics, hospitals, village first aid and obstetric stations in Perm region has halved, but when the new reforms were announced, the destruction of the health care infrastructure started to snowball. 

'Over the last 15 years, the number of polyclinics, hospitals, village first aid and obstetric stations in Perm region has halved, but when the new reforms were announced, the destruction of the health care infrastructure started to snowball.'

Apart from anything else, we are facing a serious staffing crisis. Our doctors are getting old, and in five years there will be no one to treat people. Medical graduates disappear to private polyclinics or leave medicine altogether, for business, for example. The average medical professional – nurses and health assistants – earn about 4-5,000 roubles per month. Try living on that! Specialist doctors, whose salaries are miserable compared with those of local doctors, work in several places at once. Patients have great difficulty in seeing them.

Orders to eliminate?

Those who are experimenting with the population’s health wanted to find a way of using budgetary funds more efficiently. The result is a market system dreamed up far away from the realities of local Russian life, which is proving detrimental to the health of the population.  It is telling that, as we know from the gossip columns, the architects of Russia’s reforms, health and others, go abroad for medical treatment. That is where their wives and lovers give birth. 

More than 750,000 pensioners live in Perm region. The vast majority of them are poor.  Almost the same number of non-pensioners in the region live below the ‘poverty line’. This means that 1.5 million people, the overwhelming majority, cannot afford to pay for treatment. With the vast reduction in the number of medical establishments, this is becoming a large-scale tragedy. And it is happening before our very eyes. 

The Ministry of Health and Social Development commission has published figures showing that:

  • the number of ambulance call-outs in the Perm region has increased dramatically – by about 10,000 a year;
  • the number of patients who have died on their way to hospital has risen just as sharply - by hundreds of cases;
  • 62.6% of ambulance crews are staffed with medical personnel; 
  • in the Perm region, which is at the forefront of Russia’s health reforms, the mortality rate for those of working age is 17% higher than on average throughout Russia;
  • the number of those who leave work because they are disabled is 14% higher than the national average. 

In our view, this is all the result of bureaucrats trying to transfer to healthcare to a ‘market-based system’. But could it also be an experiment by freemarket economists to destroy a redundant and unproductive section of Russia’s population? Terrible as it may seem, many in Perm are beginning to think that it might be.

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