Investing in Health Institutions in Transition Countries

Former communist countries quickly rejected the centrally planned economy approach; moreover, they failed to fully appreciate the need for such elements as coordination and integration of activities, which are indispensable in the health care sector. On the other hand, institutions of central, and occasionally also regional administration were not modernized and severely under-funded (relics of the previous era), thus hindering their ability to meet the new challenges. An overriding problem related to the functioning of the sector that emerged in the majority of transition countries consists in continued privatization of health care financing, with simultaneous conservation of extended rights to free services. In view of low funding in the sector and dynamically growing costs (mostly drugs), conservation of rights is a cause of serious problems in the sector: it contributes to increasing financial imbalances in the sector, has adverse impact on the morale of medical professionals, and impedes better governance in the sector. This implies that reforms cannot be implemented without investing in adequate institutions, personnel qualifications, information systems, and analytical instruments that combine medical and financial data, and additionally require greater programming and forecasting capacity. Restrictions caused by managing inefficiencies in the system of free utilization of health services in poor countries may lead to significant limitations in access to health care.

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