White Book of Reforms 2025. Chapter 14. Healthcare reforms

The Semashko system was designed in the early 20th century, aimed to defeat infectious diseases. This goal required a large number of hospital beds in order to isolate patients from healthy people to prevent the spread of infection. Since the 1960s, however, non-transmittable diseases have become a major problem. Moreover, between 1991 and 2014 Ukraine’s population declined by about 10 million. Therefore, many hospitals became underutilized. Underutilized hospitals are not only inefficient (since one still needs to pay fixed costs), they also provide inferior services since doctors there do not have enough practice. Therefore, reducing the number of hospitals in Ukraine could contribute to higher quality medical services with the same financial resources.

At the same time, Ukrainians are burdened with out-of-pocket fees of about a half of total healthcare spending (one of the highest proportions in Europe), pushing 7% of citizens into poverty. General stagnation in policy reform was attributed to insufficient political will, rampant corruption among healthcare providers, and price-fixing collusion between pharmaceutical corporations.

The major goal of healthcare reform was using Ukraine’s limited resources efficiently. Achieving this goal required several steps: switching from input-based funding of healthcare institutions to financing services according to “money follows the patient” principle; putting more emphasis on prevention which is cheaper than treatment; making drugs and medical supplies more affordable for patients. 

Pilot projects introducing family doctors as a point of entry into the healthcare system were started as early as 2010 with the support of the World Bank. The first significant change in healthcare financing was the replacement of centralized financing of schools and hospitals by educational and medical subventions in 2015 (see Chapter 2 for details). This allowed local governments some freedom in hospital management, e.g. they could increase doctors’ salaries or buy medical equipment. 

However, the most substantial changes to the healthcare system, i.e. financing of healthcare services rather than medical facilities, were made in 2017. This shift of healthcare funding model introduced some competition to the sector: if a hospital or a doctor receives money for services rather than a fixed pay, they have incentives to provide better services in order to attract patients. VoxUkraine interviews with medical facility managers showed that they mostly were able to explore the opportunities provided by the healthcare reform: they purchase new equipment to provide a wider spectrum of services, fundraise, and try to increase salaries of qualified doctors. Share of patients who provide unofficial payments to doctors considerably declined, and there is anecdotal evidence that family doctors pay more attention to their patients, for example, checking whether they take their medicines for chronic conditions. 

Healthcare reforms paid off already in 2020: COVID vaccines were effectively distributed via the primary care network. And the autonomy of healthcare facilities played a major role in their resilience in the first months of the full-scale invasion. Facility managers could make decisions on the evacuation of doctors and patients, receiving humanitarian aid etc. (under the previous system, they would be obliged to wait for directions from the Ministry of Health). 

A comprehensive healthcare reform includes several interlinked blocks:

1. payment per service with a central purchaser of healthcare services (National Healthcare Service — NHSU). This required redefining the scope of healthcare benefits for people by introducing the Program of medical guarantees (the list of healthcare services covered by the state) instead of the open-ended government commitment to “free healthcare” inherited from the Soviet system. At the primary care level doctors receive fixed payments per patient. Thus, family doctors who signed more declarations with patients could receive much higher salaries than before and were incentivised to implement their duties more responsibly. They also became the gatekeepers for the secondary care (i.e. patients don’t pay for secondary care if they were referred by a family doctor). At the secondary care level, the introduction of payment per service is much more complicated because it is hard to calculate the true cost of a service or a treated case. Ukraine started the introduction of diagnostically-related groups (DRGs) but this work was interrupted by the full-scale invasion;
2. introduction of eHealth — an electronic system that contains all the information on patients and services provided so that the NHSU could make respective payments. Private digital platforms and Diia provide interface for using the eHealth system;
3. introduction of hospital districts (optimization of hospital network). The idea is that a district covers at least 200 thousand people; a district hospital treats complicated cases and thus has more advanced equipment and better specialists, while lower-level (rayon) hospitals can be reprofiled into primary care facilities, hospices or social institutions. This reform was only partially implemented; de-facto the hospital system remains intact;
4. financial autonomy of medical institutions. They changed their status from budgetary institutions to state- or community-owned enterprises and thus obtained more opportunities to fundraise and to offer fee-paid services;
5. providing drugs to patients with chronic conditions (diabetes, asthma, cardiovascular diseases) for free or for a fraction of price so that their condition is controlled and their health does not deteriorate. This was implemented via the “Affordable Medicines” program;
6. better medical education: allowing only applicants who got at least 150 out of 200 points on external after-school testing to enter medical universities; improved post-graduate and lifetime education. Today, medical school graduates are placed in hospitals for internships based on their exam results rather than their negotiations with hospitals. Moreover, money for internships goes to hospitals rather than universities, which provides incentives for hospitals to train these new doctors well.

Overall, healthcare reform was about the introduction of positive incentives for medical staff, managers of healthcare facilities, educational institutions, and patients. Due to strong resistance from the healthcare system, not all of the planned changes were implemented; moreover, since 2019, the government rolled back some of the reforms. For example, it limited the autonomy of medical facilities by introducing minimum salaries for healthcare workers. Nevertheless, the positive effect of reforms on healthcare is evident.

Reforms in 2014-2019

Apart from the comprehensive healthcare reform discussed below, the government implemented two other important reforms in 2015. First, it reformed medical procurement (see Chapter 5). Second, it liquidated the State Service on counteracting HIV/AIDS and created instead the Public Health Center responsible for counteracting all infectious diseases, including COVID. The Center is also responsible for collecting healthcare statistics. 

Introducing output-based payments

The main principles of healthcare reform were laid out in the five-year National Health Reform Strategy for Ukraine published in 2015. The strategy described the main ideas of the reform: strengthening primary care, creation of a central purchasing agency, autonomy of healthcare facilities, and development of human capital. The reform implemented in 2017 was largely based on these ideas.

In 2016, the government deregulated a number of issues in healthcare. For example, it allowed all healthcare institutions to provide health checks for drivers (previously, only specially defined institutions could do this, and artificially restricted supply drove up prices for this service). Second, it simplified licence conditions for banks of umbilical cord blood and other human cells (e.g. abandoned the requirement that such banks should have a minimum area of 500 sq.m), which allowed many more companies to enter this market. 

Third, it simplified entry into the healthcare market, for example, allowing individual entrepreneurs to open healthcare facilities, even if those entrepreneurs don’t have a medical education (in this case they hire doctors). At the same time, the government obliged healthcare providers to use either Ukrainian or international clinical protocols approved by the Ministry of Health and in case of accidents provide emergency care for patients free of charge. Fourth, it allowed healthcare institutions to provide fee-paid remote healthcare services (this was the first step in developing telemedicine).

Fifth, the Ministry of Health ordered hospitals to develop plans to reduce the number of hospital beds from 78 to 60 per 10,000 people (the EU at that time had 52.8 beds per 10,000 people). The ministry issued this order because Parliament opposed the implementation of the full-scale healthcare reform. 

Finally, in 2017 the relevant laws were adopted with some compromises. For example, the law which allowed more autonomy for healthcare facilities (through their transformation into state- and municipal-owned enterprises) also prescribed that state-owned and communal healthcare facilities should not be closed or privatized (they can be only reprofiled, e.g. into hospices). 

The law on healthcare reform revolutionized financing of health services: it introduced the program of medical guarantees (PMG) administered by the National Healthcare Service (NHSU) created in 2018. NHSU is the central purchaser of services. It signs contracts with healthcare facilities and controls the quality of services which they provide, develops prices for PMG, and runs the electronic healthcare system eHealth that links patients with doctors and the NHSU. PMG that covers all types of healthcare services was implemented gradually: for primary care in 2017 and for other types of care from 2020 (as of 2019, over 80% of Ukrainians signed declarations with family doctors). The law also foresaw spending at least 5% of GDP on healthcare. This norm was never implemented, as well as many similar norms prescribed by other laws.

In 2019, the government reformed emergency care in order to increase the share of patients who survive. People who work in emergency brigades had to obtain at least a BA degree in paramedicine (previously they could be nurses or medical assistants without higher education), and the drivers had to pass some medical training as well. The requalification of emergency brigades should have been completed by the end of 2025, but due to the Russian invasion it will probably be completed later. However, today, emergency care at the frontlines develops very fast, often in the form of volunteer initiatives.

Better access to medicines

Since 2014, the government has made a number of steps to improve access of people to drugs. This goal is aligned with the focus on prevention because if people get drugs for their chronic conditions on time, the probability that their chronic condition becomes acute is lower, and thus total healthcare cost is lower too. Another goal of this reform was reducing corruption in drug procurement. It was primarily for this reason that the government first transferred procurement of drugs to international organizations and then to the centralized healthcare procurement agency (see Chapter 5 for details).

In 2016, the government introduced the reimbursement system for insulin: patients obtain insulin in drug stores, and then the Ministry of Health reimburses them. This reform eliminated 31,0001 fake patients (i.e. some doctors received insulin for distribution to patients and then sold it in the shadow market). That same year, Parliament simplified imports of generic drugs, and during the next few years the government simplified imports of many other drugs to Ukraine (for example, drugs licenced in the EU, US, Canada, and Japan can be imported without a Ukrainian licence — see Chapter 6).

In 2017, the government launched the “Affordable Medicines” program where it partially or fully compensated the cost of a number of drugs that treat chronic conditions such as asthma, diabetes, and hypertension (in 2018, the program included about 250 drugs). That same year the government introduced price caps for public procurement of drugs: it set the maximum markup of distributors at 10% and markup of drug stores at 15%. In 2019, these caps were canceled. 

In 2019, the “Affordable Medicines” program was transferred to the National Health Service. Electronic prescriptions issued via the eHealth system allow patients to purchase subsidized drugs in any pharmacy that signed a contract with NHSU (at the end of 2019, about a third of all pharmacies signed these contracts; at the end of 2023, the government obliged all pharmacies in hospitals to join the system, and since 2025, all the pharmacies have to join). Already in 2019, some results of the “Affordable Medicines” program were visible: there were 6% less emergency calls for asthma and 6.5% more patients with diabetes whose blood sugar levels were normal. 

In addition, the National Essential Medicines List adhering to the WHO Model List of Essential Medicines was introduced to fill periodic prescriptions and needs. Healthcare providers regularly maintain stocks of medicines on the National Essential Medicines List.

In 2019 the Ministry of Health opened a Service Center which cooperates directly with drug researchers and manufacturers to facilitate the development to availability pathway. The center provides “one-stop-shop” services to pharmaceutical companies that would like to register drugs or implement clinical research in Ukraine. 

Reforms in 2019-2024

During the last five years, the healthcare reforms introduced earlier were developed despite the difficulties that the healthcare system faced during COVID pandemics and the full-scale war. The second stage of healthcare reform started in April 2020 as planned, and in 2022 Ukraine switched from the ‘Soviet’ three-level healthcare taxonomy to a European one (i.e. primary, specialized, emergency care, rehabilitation and palliative care). 

Next we discuss organizational issues, access to drugs, and the response of the system to the new challenges, i.e. developing emergency care and rehabilitation of people who were wounded or otherwise suffered because of the war.

Organizational issues

At the end of 2019, Parliament simplified the rules for transplantation. The new law removed many bureaucratic barriers: it allowed doctors to invite other specialists to determine whether a patient’s brain is dead, and canceled transplantation licences for hospitals where organs are extracted (organ harvesting surgeons don’t need to be trained in organ transplantation either). A special transplant coordination centre to administer a unified information system for transplantation was established. The system helps match donors with recipients. In 2022, the government made transplantations free for patients and set the rules for providing donor’s consent for transplantation. 

In 2020, lawmakers sought to address an often overlooked aspect of public health: palliative care. The Ministry of Health began forming multidisciplinary teams in newly established palliative care centers incorporating social workers, legal specialists, psychologists, etc. depending on patients’ needs. Palliative care can be provided by private and public institutions, to give patients and their families a choice.

In July 2020, the Ministry of Health defined the procedure for the creation of hospital districts. However, their actual creation became possible only after the administrative reform was completed and rayons merged (see Chapter 2). The new law on hospital districts adopted in 2022 introduces three levels of hospitals: general, cluster, and super-cluster. This system corresponds to the current “rayon / city / oblast” hospitals. However, if the government wants, for example, to make larger clusters or to define hospital districts separately from oblast administrative borders, it will be able to do so. 

A negative aspect of the law on hospital districts is that it granted the government legal power to set minimum wages for medical staff — something that it did in January 2022. Introducing minimum wages can undermine one of the core principles of the reform — that better staff should get better remuneration. 

At the end of 2021, state-owned medical facilities were allowed to transform into state-owned non-profit enterprises in the same way as communal facilities were transformed into communal enterprises during 2017-2021. And at the end of 2023, the government obliged specialized hospitals to create supervisory boards that should include no less than 50% of civil society representatives. Theoretically, this should improve governance in hospitals, but actual outcomes in each case may be different.

The same law extended the coverage of the electronic healthcare system to all healthcare facilities, public or private. Additional resources were allocated to eHealth to include into it such features as monitoring of public health, biological supply management (blood components), and budgetary invoicing. From July 2024, patients can access the eHealth system and their healthcare data via their electronic cabinets in the Diia app.

Since October 2023, the National Health Service has been implementing automatic monitoring of healthcare facilities to ensure quality of services. Automatic monitoring implies data analysis and identification of risks, while actual monitoring includes inspection of documents and on-site visits. Medical facilities will be able to appeal the results of inspections. 

At the end of 2024, healthcare facilities and individual entrepreneurs were allowed to sign three-year contracts with the NHSU. 

Impact of war on healthcare

Impact of war on healthcare provision has been significant because Russia routinely bombs hospitals (e.g. the main childrens’ hospital in summer 2024) as a part of its terror tactic. Since February 2022, Russia has destroyed more than 200 medical facilities and damaged over 1600 of them, mostly in the eastern and central regions of Ukraine. Some facilities had to evacuate or merge with others.

To provide healthcare facilities with a stable stream of money, since February 25, 2022, the government abandoned pay per service and started paying facilities 1/12 of their 2021 budget per month. In summer 2022, this mode of financing remained only for hospitals near the frontlines or in temporarily occupied territories (during 2022, the government financed facilities in the occupied territories because some doctors did not evacuate in order to stay with their patients).

In 2022, the government added two new service packages to the program of medical guarantees: support for people with mental problems at the primary care level and rehabilitation at hospitals. For people who need rehabilitation, the government simplified the process for obtaining necessary equipment such as wheelchairs or crutches. It also streamlined the procedures for getting primary healthcare or drug prescriptions: since there are almost 5 million internally displaced people (IDPs) in Ukraine, Ukrainians were allowed to visit the nearest family doctor without signing a declaration with them.

In 2023-2024, the government continued to address challenges caused to Ukrainian healthcare by war. First, it authorized blood imports for transfusions and simplified administrative procedures for blood donations with the help of electronic system eBlood (previously, in July 2020, Parliament decided that blood and blood products could be exported only if there is enough blood to provide for Ukrainians). The eBlood system allows monitoring the stock of blood available for transfusion and demand for it.

Second, the government launched subsidized collection and storage of germ cells for Ukraine’s defenders and set the rules for biobanks — institutions that would collect and store samples of tissues, blood, and DNA for healthcare research and identification of defenders who were killed or missing. The government decree prescribes protection of patients’ rights and rules for access of research institutions to biological information.

Third, the government made a few steps to develop telemedicine infrastructure which should improve access of Ukrainians to healthcare services. Now, telemedicine can be used for rehabilitation services and emergency healthcare support. Emergency brigades will be able to have remote consultations to help them stabilize or treat a patient. This will be especially useful for areas close to the frontlines.

Also in 2023, the government created the structure of catastrophe healthcare to address war-induced healthcare challenges based on experiences gained since 2022. There will be six types of emergency brigades that provide help according to the needs and types of catastrophes. These brigades plan to obtain WHO certifications in order to help other countries in the future.

Several changes implemented in 2023 are related to the rehabilitation of wounded people. For example, multidisciplinary rehabilitation teams will need to include psychologists and social workers, and rehabilitation facilities will need to develop individualized rehabilitation plans for each patient. Furthermore, rehabilitation specialists who are not medical workers, such as physiotherapists, ergotherapists, prosthetists and others, as well as specialized rehabilitation facilities, will be able to obtain licences, which should help deshadow the sector. Multidisciplinary rehabilitation teams will be able to decide whether a person needs a prosthesis (previously, such decisions were made only by quite bureaucratic and rather corrupt medical-social expert commissions). In most cases, the prosthesis and subsequent service of prosthesis will be financed by the government.

In March 2024 Parliament adopted the law on the organization of healthcare provision for Ukrainian Armed Forces. According to the law, the Ministry of Defense together with the Ministry of Health will approve and enforce clinical protocols and standards of healthcare provision and medical products to align with NATO standards.

In the fall of 2024, after scandals with corruption in Medical and Social Expert Commissions (MSECs) and upon recommendations from the National Agency on Corruption Prevention (NACP) study, the government liquidated MSECs and generally shifted the paradigm of their operations. Now, instead of defining the level of disability, expert teams will evaluate the functionality of a person. This approach allows for better identification of a patient’s needs and the level of support necessary for their return to an active life. Expert teams can be formed in any of the 300 specialized hospitals, depending on the patient’s needs. Patients will have the right to record meetings with expert teams and appeal their decisions. Thanks to digitalization, the process will become faster and much more transparent: family doctors will be able to refer patients to expert teams through the electronic system, and in some cases, meetings of the expert teams can be held online.

Education of healthcare workers

Since January 1st 2024, healthcare facility managers began offering continuous professional education to healthcare workers. The main changes are related to mandatory professional development of nurses and rehabilitation professionals and introduction of the electronic system for continuous professional development.

At the same time, the government launched an experimental project to train rehabilitation specialists via dual education. The aim of the project is to prepare better qualified healthcare specialists with practical skills that enable them to join rehabilitation departments of hospitals. Practical lessons will take about 45-60% of study time. Today, four universities participate in the experiment, and if successful after two years, it will be scaled up to the entire country.

In mid-2024, the Ministry of Health started introducing medical residency. This is a stage of postgraduate medical education which follows internship, during which doctors acquire highly specialized professional competencies necessary for independent practice. The first resident doctors will graduate in 2027. This step integrates Ukrainian medical education with the European educational and healthcare space.

Access to drugs and other medical substances

At the end of 2021, Parliament streamlined state registration of medicines, vaccines, and other substances during emergency states or lockdowns. The new procedure states that in case of emergency, a medicine can be registered without a complete set of data about its effectiveness and safety if (1) there is data on successful preclinical or clinical trials implemented under supervision of relevant government agencies; (2) known benefits of the drug are higher than known risks or side effects; (3) there is no alternative treatment.

In early 2021, the government allowed managed entry agreements in the pharmaceutical market. Under this framework, the government will be able to buy expensive medications for rare or orphan diseases via confidential agreements with producers. This mechanism is used in a number of EU countries.

In April 2022, the government set conditions under which Ukrainians with complex diseases could obtain experimental drugs. Patients can be provided with non-registered drugs if at least the first phase of clinical trials for these drugs was completed in the US, European Economic Area, Australia, Canada, Japan, Israel, the UK, or Switzerland, and if there is enough evidence on benefits and risks of a drug.

In October 2022, Parliament prohibited the sale of drugs without prescriptions. The prohibition is being introduced gradually — starting with psychotropic drugs (including medical cannabis) and antibiotics. It will come into full effect in three months after martial law is lifted. Its implementation will be controlled via electronic prescriptions which are gradually replacing paper ones. That same year Parliament adopted a comprehensive law on medicines that describes the “pathway” of medicines from development labs to consumers: it aligns Ukrainian regulation of drug production, registration, and sales with EU norms. The law will come into effect 30 months after the martial law is lifted. 

In May 2024, the government changed the procedure for the inclusion of medicines into the National List of Medicines: drugs can be included on the list without additional expertise if they are on the WHO Model List of Essential Medicines and their active ingredients are registered in Ukraine and produced by at least four firms. The National List of Medicines includes drugs with proven effectiveness which the government can reimburse. This will improve access to drugs.

Prevention

In September 2022, the framework law on the public health system was adopted. This law continues the public health reform efforts and introduces regional departments of the Public Health Center created in 2015. 

In January 2022, Parliament prohibited e-cigarette advertising and ordered an increase of health warnings on tobacco packs from 50% to 65% of the pack area. These changes are in line with the national plan on the reduction of non-infectious diseases. 

In January 2023, Parliament adjusted procedures for the diagnostics and treatment of HIV/AIDS to align with international standards and WHO recommendations. The new law follows the global goal “95-95-95” (by 2030, 95% of people living with HIV should know their diagnosis, 95% of them should receive treatment, and 95% of these individuals should have an undetectable viral load).

In August 2023, Parliament adopted a law on counteracting tuberculosis in Ukraine. The law states that the NHSU should buy anti-TB medicines and distribute them among providers of healthcare services. The law also establishes a three-level system of TB-testing labs with the Central Reference Laboratory providing external quality control. The law prohibits pharmacies from selling TB drugs without prescriptions.

At the end of 2023, Parliament adopted the law on early detection of diseases. Healthcare facilities will be able to sign contracts with the NHSU for the provision of early intervention services, i.e. testing children under 4 years of age for genetic or rare diseases and early treatment. This program was introduced because treating diseases at an early age may prevent future disabilities. Medical institutions already provide neonatal screening which can identify 21 rare genetic diseases within the first 72 hours of a baby’s life. Since the launch of the expanded neonatal screening program, about 250 confirmed orphan diseases have been detected, including 24 cases of spinal muscular atrophy.

Further reforms

In the past decade, fundamental reforms, constantly spurred by international guidance and support, have modernized the Ukrainian healthcare system far past its Soviet-era roots. Once characterized by rampant corruption and unreliable care, the Ministry of Health has made concerted efforts to increase patient satisfaction, targeting end-user costs and general practitioner reliability. 

However, unresolved issues such as out-of-pocket payments and excessive hospital networks remain. The war has created additional challenges for the healthcare system — increased need for rehabilitation services, shortage of doctors, destruction of facilities — that need to be addressed. Therefore, today it is even more important to efficiently use the limited resources which Ukraine can allocate to healthcare. The strategy of healthcare reform until 2030 identifies the following priorities:

• better governance in the sphere: increasing NHSU capacity, introducing supervisory boards in medical facilities, developing professional self-governance of healthcare workers;
• reduction of out-of-pocket payments and the incidence of catastrophic healthcare expenditures;
• professional development of healthcare workers;
• participation of people and communities: to a large extent, public health depends on the environment, from clean air and water to proper organization of road traffic. Therefore, it requires the concerted efforts of the government and people.

These strategic priorities largely correspond with the recommendations provided in the book on the reconstruction of Ukraine, namely:

• clearly defining the program of medical guarantees so that both patients and healthcare provided knew what is covered and what is not;
• developing the NHSU capacity, introduction of KPIs for both the NHSU and medical facilities;
• digitalization of healthcare and development of telemedicine;
• empowering nurses: they can perform a lot of functions currently performed by doctors, especially in smaller or remote communities; 
• improved education for doctors both at medical universities and after graduation;
• introduction of individual licences for doctors and nurses so that they have more voice in facility management;
• development of a master plan of the hospital network with a clear division of functions between different types of hospitals. This should be done together with regional authorities since they are responsible for transportation networks.

In response to the war challenges, Ukraine will continue to develop rehabilitation and mental health services.