Governance in gridlock in the Russian health system; the case of Sverdlovsk oblast

Epidemiological, demographic and environmental crises, transition to a new political regime and exceptionally severe economic crises were powerful stimuli to health sector reform in Russia. The Russian Federation responded by introducing medical insurance whilst decentralising public administration. Yet despite intense contextual pressures to do so and a new policy climate, Russian hospitals found it difficult to reprofile services and reallocate their resources. A case study analysing governance structures in Sverdlovsk oblast reveals that medical insurance created incentives to reduce costs by reducing bed-days, but if hospitals did so they would lose money under the formulae through which decentralised local government still allocated around three-quarters of hospital income. If instead hospitals tried to increase budgetary income by increasing numbers of bed-days, the insurance system would penalise them. This specific form of policy mess can be called 'governance in gridlock'. The juxtaposition of two overlapping but incompatible sets of governance structures practically immobilised official hospital management systems. It is as one-sided to blame residues of the Soviet system for this gridlock as it is to blame the medical insurance system. Gridlock resulted from the interaction of the two, a problem to which all health system reform is potentially vulnerable.