Disease incidence (new diagnoses) was 33.1 m in
2010 (or 0.71 new diagnoses per capita) led by
seasonal respiratory infections. Total morbidity was
1.51 per capita led by diseases of cardiovascular
system, malignant tumors, endocrinology pathologies
Life expectancy at birth is 68.1 years (61.2 years for men and 72.8 years for women). Healthy life expectancy at birth is 59.2 (53.3 years for men and 64.5 years for women).
Around 63% of Ukrainians die from cardiovascular
diseases. The second reason, oncology, fell far behind
still garnering impressive 13%. Mortality causes
are more or less similar in all regions of Ukraine.
During the last 13 years demographic situation in Ukraine was negative. In 1991 there were 52 m Ukrainians. As of January 2011 there were 45.6 m citizens. The worst situation is in eastern (industrial) regions – Donetsk and Luhansk. Local mortality rates are 30% higher than on average in Ukraine.
Here and further state healthcare institutions are defined
as any licensed medical institutions that do not
have private entities or individuals as shareholders.
The main owner of the state healthcare institutions
are communal and municipal authorities, though
some clinics are owned directly by the government,
ministries and other national level authorities.
There are also clinics owned by large manufacturing companies. These clinics are not perceived as businesses by owners.
There were 2.84 thsd hospitals (with 446 thsd hospital beds) and 8.1 thsd outpatient institutions (with capacity of 994 thsd visits per shift) in the state healthcare system of Ukraine as of the end of 2010. The state healthcare system employs 215 thsd physicians and 476 thsd nurses. An average salary of a physician in the system is UAH 1,050-1,750 per month depending on the specialty.
As for 2011, the number of per capita visits to state
clinics was 11. Six visits were caused by actual or
suspected disease. Reasons for visits to clinics
were: disease 60%, disease prevention 35% and to
receive some kind of a document 5%. Ambulance
system served 24.7 visits per 100 of population in
2010. Average hospital stay was 14.6 days. Actual
number of visits for the dental care was 1.4 visits
per capita per year.
Main reasons for visitors’ dissatisfaction are poor quality of medical service (about 40%), poor quality of customer service and expensiveness of the services (so called “unofficial” payments).
Private healthcare market reached UAH 3.5 bn of revenues in 2009 and “unofficial” payments in the state healthcare reached about UAH 2.5 bn; total healthcare expenditures were estimated at about UAH 48 bn (5.4% of GDP). That is lower than 6.2% in Poland, 6.8% in Czech Republic and 8.3% in Hungary.
In general, the health system in Ukraine is still not
reformed. There is no re-imbursement and co-payment
in it. Despite growth of budget financing the
situation in the HC system has not improved.
Development of the middle class with its westernized demand for goods and services as well as unsatisfactory work of the state healthcare system create favorable environment for development of the private healthcare in Ukraine.
Main market forces that drive development of the
private healthcare market are demand of consumers,
demand of medical professionals and demand
of the state.
Consumers demand reliable and qualitative healthcare. They also prefer customer oriented clinics.
Medical professionals demand environment that would allow them to treat patients as necessary, would provide significantly (in times) higher salaries and would support their professional growth. Although most doctors continue to think that way, a significant portion of doctors in large cities prefers to stay with the state system today.
Main payer in the private healthcare system is individual customer, who provides 75-85% of the revenues. Respectively, 15-25% of the revenues are provided by employers intermediated by medical insurance companies and clinics’ medical packages. Average cost of primary outpatient visits in Ukraine is about USD 31 (vs. USD 150 in the US, USD 120 in the UK and USD 85 in Russia).
The majority of patients are not positioned to judge
how qualitative services they receive are. As a rule,
patients judge the quality of services by the level of
customer services, quality of premises and availability
of expensive equipment.
Better educated and relatively young members of the middle class seek one-stop services from primary examination to medical solution.
It is expected that with development of private healthcare consumer behaviour will change to rely to greater degree on clinics reputation/brand and reliability/consistency of services. That will translate into appearance and development of medical marketing/ branding as one of corporate activities and introduction of medical standards and medical quality control as main focus of medical management.
Industry specific risks and issues are long run-up
period, high fixed costs, difficulties in finding real
estate, high expectations for turnover of equipment,
possibility of introduction of medical litigation, time
needed to obtain a license, poor quality of management,
and at times underqualified physicians.
Most of clinic’s expenses are fixed costs, like rent and personnel costs. In the US, the average share of fixed costs in total expenditures of clinics is 75%. In Ukraine it exceeds 80%.
Because of specific requirements for real estate, clinics are limited in choice of premises. Market players deal with the issue in three ways: competing for existing premises to rent or acquire, constructing their own and leasing from state hospitals. The last way is quite popular and has many advantages, but involves significant risks in itself – ease to transfer the patient flow from the private clinic to another (or new) private clinic renting premises in the same hospital, dependence on decisions of multiple levels of state healthcare management and limited scaling-up capacity. Other issues related to real estate are short rental terms (typically 1 year) and expensiveness of premises.
As a rule, an average turnover of medical equipment is 5 years. Although new versions of the same equipment give only marginal improvements over older ones, Ukrainian clinics might follow suit for image reasons. With average outpatient clinic having USD 200 thsd worth of equipment and inpatient clinic USD 10 m worth of equipment, the fast turnover of equipment might put a significant financial pressure on entrepreneurs. Normally, the equipment to be replaced is sold on the secondary market. The secondary market in Ukraine is non-existent. Ways to deal with this issue are:
a) move of equipment from inpatient clinics to smaller outpatient ones within the same network, or
b) do regular ‘image’ repair/refurbishing of equipment.
Potentially, medical litigation might become a significant risk, but with absence of the respective law and absence of control over medical service quality, the risk is practically non-existent.
Although there is an oversupply of physicians seeking employment in private healthcare, it might be challenging to find those, who are fit to work in this environment. Skills lacked by the majority of applicants are: discipline, recognition of healthcare as customer service industry, continuous self-education and readiness to follow medical protocols and standards. One of the ways to deal with this issue is in-house training and coaching programs, but only large clinic chains can afford it.
A significant issue for the market is the lack of professional managers. Literally, there are no more than a dozen of managers, whose activities are fully concentrated on clinic management and who are not owners of clinics at the same time. Typical quasi-manager working in private healthcare is a yesterday physician, who combines clinic’s management with seeing patients. The ways to deal with this issue is to either bring management from abroad or try to adapt a manager from another industry.
Top-10 clinics in the market collectively have UAH 675 m revenues or 18% of the total market. The market is led by three universal clinics – Into-Sana (Odesa), Medicom and Boris (Kyiv). Lab diagnostics providers Sinevo and Dila are chain projects.
These clinics are multi-specialty clinics with significant
inpatient department. Inpatient services are defined
as medical services offered to patients on 24h basis
with patients’ overnight stay. Examples of universal
clinics are Into-Sana, Boris and Medicom. The subsegment
is led by Into-Sana (Odesa).
Typical universal clinic is located in a stand-alone multi- story building of a total area more than 5,000 m2, employs over 50 physicians and offers inpatient, outpatient, ambulance and diagnostic services. It is considered that surgical operations with intensive care and MRI diagnostics are a must for today universal clinics in Ukraine.
Average start-up expenses for the universal clinic are USD 20 m. Main challenges for the start-up period are land allocation and licensing, selection of physicians and marketing. Main challenges of the steady stage are services standardization and quality control.
Specialized clinics are similar to the universal ones, but are specialized in one medical area. Typical specializations are pediatrics and orthopedic surgery. Examples of specialized clinics are Isida, Dytyna, Lissod, Innovatsiya, Cyber-clinic (Spizhenko). This sub-segment is led by Isida (Reproduction, Maternity – Kyiv).
Territorial clinics are non-specialized medical centers
with no inpatient services. The name ‘territorial’
reflects the fact that about 2/3 of patients served
reside in the vicinity of the clinic. Examples of territorial
clinics are Eurolab (Kyiv), American Medical
Center (Kyiv), Avicenna (Kyiv), Bereginia (Kyiv) and
TAS-Clinic (Kyiv) etc.
Typical territorial clinic is located in rented premises on the first (ground) floor and occupies around 300- 500 m2 It employs 20-50 physicians on full or parttime basis. This type of clinics suffers the most from lack of professional management.
Typical territory clinic has revenues of about UAH 2.5-3.0 m. With average check of UAH 300 this translates into approximately 10,000 visits served a year or 4,000 patients (2.5 visits per case). It employs 1 FTE physician per each UAH 200 thsd in revenues. One FTE physician currently serves 0.4 visits an hour and is, respectively, utilized up to 10-15% by Western standards.
Average start-up expenses for the territorial clinic are USD 500 thsd.
They offer outpatient medical services in one or several
related medical specialties. Although they cover
larger territories than the territory of medical centers,
specialized medical centers per se remain territorial
in nature. Examples of specialized medical centers
are Uro-Pro (Urology), Bogomolets Clinic (Medical
Cosmetology and Dermatology) and Eximer (Ophthalmology). Direct comparison of the clinics in this
cluster is complicated as well, though it is believed
that the sub-segment is led by Uro-Pro (Urology).
Start-up costs for specialized clinics are the same as for territorial ones or even higher.
There is no obligatory medical insurance in Ukraine. There are proposed drafts of the laws which foresee making it an additional burden on employers; however such laws are not likely to be adopted by the Parliament at least for the next 2-3 years. Voluntary medical insurance (VMI) market is only developing in Ukraine.
Experts consider that not more then 5% of Ukrainians
are covered by VMI. Most of insurance companies
which provide VMI view it only as additional
The private insurance market of Ukraine was quite promising with annual growth of 20 – 25% in 2005- 2008. At the same time the share of medical insurance was not more then 5% in whole portfolio of Insurance Companies. VMI is not a too profitable business for insurance companies.
The most important regions for the start are: Kyiv
(the capital with the best purchasing power),
Donetsk (Donetsk + Luhansk have 7.5 m inhabitants),
Dnirpopetrovs`k (Dnirpopetrovs`k + Zaporizhzhya
have 6.5 m inhabitants), Odesa and Lviv (historical
traditions and high level of readiness to pay
for medical services).
The right combination/balance of inpatient/outpatient clinic will be 3-5 outpatient clinics per inpatient one. These outpatient clinics can be as used as suppliers for inpatient clinics. Necessary diagnostics should be available in the clinics, not crucial services including laboratory services can be outsourced.
Legal persons of any form, as well as individual entrepreneurs,
are allowed to perform medical practice
upon licensing procedure. Medical licenses are issued
by the Ministry of Healthcare of Ukraine, on indefinite
basis, upon fulfillment of all relevant requirements,
i.e. quantity of medical personal employed full-time
or part-time, qualification of the head of healthcare
institution, availability of premises in line with sanitary,
epidemiological, hygienic standards and rules,
acquiring of permit from state fire safety department,
availability of special equipment in accordance with
established norms and regulations.
In addition to acquiring of license, healthcare institutions are also subject to accreditation with the Ministry of Healthcare of Ukraine. Accreditation is documentary in nature–accreditation commission examines relevant documentation provided by institution and issues a decision on awarding the institution a certain category. The first accreditation of healthcare institution should be performed no later than in 2 years after the opening of such institution. Further accreditations should be performed at least once in every three years.
There are no special preferences provided by the legislation for the companies operating in the area of healthcare. The medical services are VAT free.