Post-Communist Economies

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Priorities, shortages, and rationing in the UK and

Russia national health services during 2000–2019:
initial conditions for responses to Covid-19

Christopher Mark Davis

To cite this article: Christopher Mark Davis (2020) Priorities, shortages, and rationing in the UK
and Russia national health services during 2000–2019: initial conditions for responses to Covid-19,
Post-Communist Economies, 32:8, 969-1010, DOI: 10.1080/14631377.2020.1800317

To link to this article: https://doi.org/10.1080/14631377.2020.1800317

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POST-COMMUNIST ECONOMIES
2020, VOL. 32, NO. 8, 969–1010
https://doi.org/10.1080/14631377.2020.1800317

Priorities, shortages, and rationing in the UK and Russia

national health services during 2000–2019: initial conditions
for responses to Covid-19
a,b
Christopher Mark Davis
a
National Research University – Higher School of Economics, Moscow, Russia; bResearch Laboratory of the
Economics of Health, Russian Presidential Academy of the National Economy and Public Administration,
Moscow, Russia

ABSTRACT ARTICLE HISTORY

Throughout the world in 2020 the Covid-19 pandemic caused wide- Received 14 July 2020
spread infections, realignments of medical priorities, pervasive Accepted 21 July 2020
shortages and rationing of medical care, increases in the hidden KEYWORDS
components of morbidity icebergs, and substantial mortality. It also Priorities; shortages;
caused two types of international disequilibrium: ‘excess supply’ in rationing; health
the macroeconomic sphere generated by lockdowns and ‘excess expenditures; morbidity
demand (shortage)’ in critical product markets (e.g., personal pro­ Icebergs; Covid-19
tective equipment). Although the simultaneous and global nature
of these phenomena and problems in 2020 were unusual, many of
them have been evident in national medical systems over the past
decade. The key questions addressed in this article are: (1) What are
the relationships between economic systems, government priori­
ties, shortages in health services, and compensatory policies? and
(2) How did resource constraints, priority shifts, shortages, bottle­
necks in production, and rationing during 2000–2019 influence the
initial conditions of medical systems in the UK and Russia in 2020
when confronting Covid-19 epidemics?

Introduction
Throughout the world in 2020 Covid-19 epidemics caused wide-spread viral infections,
realignments of medical priorities, pervasive shortages of medical personnel and pro­
ducts, bottlenecks in the production of medical services in hospitals, increases in the
hidden components of morbidity icebergs, rationing of medical care, and substantial
mortality. Other developments concerned the interactions between economies and
health sectors, with problems in the latter causing the simultaneous existence of two
types of international economic disequilibrium: ‘excess supply (Keynesian)’ macroeco­
nomic generated by severe lockdowns to reduce infections and ‘excess demand (short­
age)’ in critical product markets (e.g., personal protective equipment (PPE), testing kits,
medicines), which resulted in less effective anti-epidemic policies that delayed exits from
lockdowns and economic recovery.

CONTACT Christopher Mark Davis christopher.davis@wolfson.ox.ac.uk

© 2020 Informa UK Limited, trading as Taylor & Francis Group
970 C. M. DAVIS

Although the simultaneous and global nature of these problems and phenomena in
2020 were unusual, many of them have been evident in national medical systems over the
past decades. The key questions addressed in this article are: (1) What are the relation­
ships in conceptual terms between economic systems, government priorities, shortages
in health services, and policies to deal with them, such as rationing? and (2) How did
resource constraints, priority shifts, shortages, bottlenecks in production, rationing
through queuing and waiting lists, and forced substitution during 2000–2019 affect
developments in the health production processes in the UK and Russia and the initial
conditions in their health sectors in 2020 at the start of the Covid-19 pandemic?1
Section 2 reviews theories and concepts relevant to this study. It begins by defining
the health sector in institutional terms and examines its linkages with the complemen­
tary system of residential social care for the vulnerable elderly. The interconnections
between economic systems and health sectors are assessed. It is noted that over the
past several decades health has become the largest sector of the advanced industria­
lised economies (e.g., 18% of GDP in the USA in 2019) and a substantial one in former
transition and developing countries. The next set of issues concerns changes in disease
patterns and features of morbidity icebergs (reported illness above the ‘waterline’ and
hidden below it). Sub-section 2.c introduces the concept of priority, identifies twelve
indicators that can measure the priority of health services, and discusses the allocation
of resources to health.
The following section examines excess demand disequilibrium in economic and med­
ical systems. A normal condition in a national health service (NHS) subject to tight
resource constraints and with zero prices for patients is for the demand of the population
for medical care to exceed the supply of services, which causes shortages of different
types. These in turn result in production bottlenecks within medical facilities, lower the
motivation of medical personnel, and generate greater unreported illness. They also elicit
the following policy responses: realignment of treatment priorities; rationing by subsys­
tems of medical care, queuing and waiting lists; exclusions of treatments from state
guarantees; and input substitutions leading to lower quality medical care. Section 2
ends by presenting a diagram of the health production process that provides
a framework for the analysis.
Section 3 presents empirical evaluations of the health production processes during
2000–2019 in two countries that have national health services and market economies of
roughly equivalent sizes, but with dissimilar features: the UK and Russia. The country
studies examine the same issues during two sub-periods defined by economic factors:
the period of high growth during 2000–2007 and the years of austerity following the
Global Financial Crisis (GFC) (2008–2019).2 The identical structures of the analyses
include the following components: population and illness; priority of health and health
expenditure; characteristics of health sectors; performance of the NHS and health out­
comes; shortages in the NHS; and consequences of and policy responses to shortages.
Section 4 presents conclusions drawn from the comparison of the experiences of the
two national health production processes during the two sub-periods, which deter­
mined the conditions in the health sectors in the UK and Russia in early 2020 on the eve
of the Covid-19 epidemics.
Due to word limits, this article cannot provide full documentation of sources used in
the analyses, but past works of the author and a new book listed in the References contain
 POST-COMMUNIST ECONOMIES 971

hundreds of citations of relevant English and Russian language sources.3 All translations
from Russian to English have been made by the author.

Concepts and methods

Interconnections of health sectors and economies
The economic institutions of the health sector and its links with social care
In this article the health sector in an economy is defined by using socio-economic
accounting procedures that identify its primary output, the population’s health, and
specify a production boundary that encompasses seven economic institutions that pro­
duce and exchange goods and services related to health production (see Sub-section
below): households, medical system (preventive and curative), medical supply, medical
industry (production of medicines and medical equipment), biomedical R&D, medical
foreign trade, and the central health management (e.g., Ministry of Health).4 An eighth
related institution is the system of residential social care for vulnerable elderly people. It
relieves burdens on the more resource-intensive medical system by providing social
support and basic preventive and curative medical services that help to minimise hospi­
talisations and by accepting from hospitals recuperating patients. Table 1 lists the eight
institutions of the broadly defined health sector (including social care) and identifies their
inputs and main outputs. It also summarises the features of the institutions in the UK and
Russia. Supplemental information is provided in Section 3.

Interconnections between economies and health sectors

Health sectors function in different types of economic systems and are strongly influenced
by their main characteristics: decision-making structure; mechanisms for information and
coordination; property rights; and incentives (Gregory & Stuart, 2001).5 The main types are
decentralised capitalism, state capitalism, developing capitalist, command, market socia­
list, and transition.6 Economic performance (e.g., growth of GDP) is generated by the
interaction of the economic system, economic environment (e.g., the GFC recession), and
economic policies. This article examines the functioning of national health services in two
economic systems: decentralised capitalism (UK) and state capitalism (Russia).
Empirical studies of the interconnections between economic systems and health sectors
usually measure the impacts of the former on the latter. This involves evaluating how
economic arrangements and policies (e.g., privatisation) affect the functioning of health
institutions and how national economic performance influences the availability of
health finance. For example, there were many investigations of the impacts of the GFC on
health services. There is a substantial literature on the influences of health on economies,
such as the costs of illnesses of the economically active population, but it has received less
attention by non-specialists. However, the disruptions to economies caused by the Covid-19
pandemic and lockdowns have re-focused attention on these issues.

Illness, morbidity icebergs and demand for medical care

Households are made up of individuals who possess a ‘stock’ of health and engage in
health production using goods and services (e.g., medicines and exercise – positive,
 972

Table 1. Health sector economic institutions in UK and Russia during 2000–2019.

Institution Inputs Outputs UK Russia
Households Labour, IG&S, Individual health status 2018 Population 66.3 m, Households 27.6 m. Use time and 2018 Population 146.9 m, Households 57.2 m. Use time
C. M. DAVIS

Capital(H) (Healthy, Illness, Death) inputs (positive and negative) to produce outputs in and inputs (positive and negative) to produce outputs
a changing health environment. in a changing health environment.
Medical system Labour, IG&S, Medical services (preventive NHS provides medical care free of charge. Finance from NHS provides medical care free of charge. Finance from
Capital(P) and curative) state budget. Inputs and outputs shown in Table 4ab. state budget and contributions from employers. Inputs
and outputs shown in Table 8a, b.
Social care system Labour, IG&S, Care of elderly and disabled Homes: 13,000. Beds: Around 450,000. Ownership: State Homes: 2,000. Beds: Around 300,000. Ownership: State
(residential) Capital(P) people unable to live in 3%, Charity 13%, Private 84%. Inputs obtained from 65%, Charity and Private 35%. Inputs obtained from
private residences. market. state and market.
Medical supply Labour, IG&S, Wholesale and retail sales of Within the NHS DHSC controls purchase and distribution Ministry of Health agencies procure medicines and medical
network Capital(P) medical products of medicines to medical facilities and NHS Supply Chain products and distribute them to NHS facilities and state
provides them with other products (e.g., PPE). No care homes, but not private ones.
supplies to private care homes.
Medical industry Labour, IG&S, Production of pharmaceuticals Important global industry. 4th largest pharmaceutical Substantial, diversified industry. Produces primarily for
Capital(P) and medical equipment production in Europe. But limited production for UK domestic market. Not competitive globally. Low quality
market. and effectiveness of many outputs.
Biomedical R&D Labour, IG&S, Medical-related scientific Substantial R&D network: NHS, commercial and university Substantial R&D network: Academy of Medical Sciences,
Capital(P) results and technology labs and institutes. 3rd highest pharma R&D spending Ministry of Health, commercial and university labs and
in Europe. Limited UK capacity to produce tests and institutes. Mediocre record in innovation. Adquate test
vaccines. and vaccine production capacity.
Medical foreign Labour, IG&S, Export and import of Major exporter and importer of M&ME. Became highly Minor exporter but major importer of M&ME. Became
trade Capital(P) medicines and medical dependent on just-in-time supply system. dependent on foreign suppliers, but since 2014 has
equipment (M&ME) promoted import-substitution manufacturing.
Central health Labour, IG&S, Administration of the health UK DHSC nominally at top, but real policy making Strong Presidential control of government. Ministry of
management Capital(P) sector devolved to four nations. No management of regions. Health controls hierarchy from Moscow down to village
Decentralisation gave lower level NHS units autonomy. NHS units. But six subsystems of medical care exist. Joint
Substantial private sector involvement. Local control of some facilities by MoH and large enterprises
government weak in health field. and other ministries.
IG&S = Intermediate Goods and Services; M&ME = Medicines and Medical Equipment; Capital(H) = Household Capital Goods; Capital(P) = Productive Capital Goods.
Sources: The concepts related to the definition of the health sector were developed from ideas in Stone (1971) and UN (1975) SSDS by this author and presented in Davis (1979, 1988, 2001a).
Empirical assessments in columns 4 and 5 are based on Davis (1990b, ca. 2021a) and research for health projects in Russia and this article.
 POST-COMMUNIST ECONOMIES 973

alcohol – negative) and personal time in a health environment that is influenced by the
presence of viruses and preventive medical care (Bolin, 2013). The outputs of this
production process are: maintenance of health; illness; and death. Morbidity can be
measured by indicators of flows (incidence: number of new cases of illness in
a population in a time period) or stocks (prevalence: number of registered cases of illness
in the population) (Bhopal, 2012). These measures are calculated from the diseases that
that are reported to the medical system or uncovered by screening (testing).
Some illness that could be treated is not presented to the medical system for a variety
of reasons: ignorance of symptoms; fear of results; poor quality of medical care or long
waiting lists; high time (travel and queuing) and monetary (transportation) costs related
to visits to medical facilities; and price barriers posed by both official and informal fees for
medical treatment and by the costs of prescribed medicines. According to Bhopal (2012,
p. 173):

The metaphor for this phenomenon is the iceberg of disease and symptoms. Cases that have
been correctly diagnosed are the tip of the iceberg, visible and easily measured. In most
diseases, as with the iceberg, the larger amount lurks unseen, unmeasured and easily
forgotten with potentially catastrophic consequences.

Large statistical studies of morbidity icebergs were carried out in the USSR (1960–1991)
and in Russia in 2005, which showed that around 30% of all illness was unreported in cities
and 60% in rural areas (Davis, ca. 2021b).7
The total morbidity iceberg (reported + hidden illness) represents the need of the
population for medical care. However, only reported illness generates demand for med­
ical services, which changes over time in response to household health production, state
health budgets, and technological progress in medical care (i.e., supply-induced demand)
(Folland et al., 2013, Chapters 7–9). With respect to national disease patterns as measured
by reported cases, almost universal features over the past several decades have been the
increases in the shares of non-communicable illnesses (e.g., cardiovascular and cancer)
associated with ageing and the declines in infectious diseases (except for annual surges in
influenza).

State priorities, allocation of resources to health, and health expenditures

State objectives, priorities and health
Governments have numerous objectives concerning developments in society and the
economy, but also are aware that not every goal is of equal importance and that not all
can be achieved simultaneously due to resource constraints. They therefore establish
priority rankings, from high to low, of programmes and sectors (e.g., defence, health)
that express their commitments to ensure that targets are attained irrespective of
circumstances in the economy. These priorities govern initial resource allocations during
Plan/Budget Formulation and the rapidity of corrective interventions during Plan/
Budget Implementation. State priorities are important determinants of the flows of
resources into an NHS. Davis (1989) developed mathematical-statistical measurable
indicators of the priority status of medical systems related to the two periods in
economic policy making, which are listed in Table 2. Columns 3 and 4 described in
974 C. M. DAVIS

Table 2. Low and high priority status of a national health service in an economic system.
Indicators of priority
Row status of the NHS
A Health in leadership’s
objective function
(OF)
B Resource allocation
responsiveness to
problems
C Wage rates and labour
conditions
D Adequacy of financial
norms used in
budgets
E Outputs
F Budget constraints
G Supply plans
H Siphoning of supplies
I Investment plans
J Inventories of inputs
K Reserve production
capacity
L Shortage intensity
Sources: Concepts of priority and its indicators were developed by this author from numerous sources in the 1980s and
have been presented in Davis (1989, 1990a, 2001a, 2019).
Low priority High priority
Differing priority characteristics of the NHS
During plan/budget formulation
Low weight in OF. Trade-offs tolerated High weight in OF. Minimal trade-offs
between health and other between health and other objectives.
objectives.
Unresponsive. Responsive.
Relatively low wage rates and poor Relatively high wage rates and bonuses and
labour conditions. good labour conditions.
Stingy. Generous.
During plan/budget implementation
Modest targets. Minimal help Ambitious targets and strong commitment to
provided to ensure fulfilment. their fulfilment.
Relatively hard. Soft.
Tolerance of disruptions. Strong commitment to fulfilment of supply
plans.
Allocated inputs siphoned away from NHS protected from external siphoning, but it
NHS by higher priority occcurs internally between medical
organisations. activities.
Low targets and tolerance of Ambitious plans and strong commitment to
underfulfilment. fulfilment.
Low input inventories. Generous input inventories.
Minimal. Significant relative to normal outputs.
High. Low.

simple terms the likely features of these indicators for health services with Low and High
priority.
These priority indicators have been used in empirical analyses of the health sector
(Davis, 1989, 2001a), industry, and the defence sector (Davis, 1990a, 2019) in the econo­
mies of the USSR and Russia. New material is presented in Section 3 about changing
health priorities during 2000–2019 in the UK and Russia. Davis (ca. 2020) assesses priority
shifts in the two countries during their Covid-19 epidemics in 2020.

Allocation of resources to health and national health expenditures

It is important to differentiate between quantity and financial flows of resources to health
in the two different economic systems covered in this article, as well as in others (notably
the shortage economy). All economies provide medical systems with real resources in the
categories of labour, capital (e.g., buildings and machinery) and intermediate inputs (e.g.,
medicines) to support their production of preventive and curative services. In market
economies (e.g., UK) money is active, prices have meaning, and state budgets, insurance
funds and private expenditures drive the allocation of inputs to and within the NHS.
However, in the command (shortage) economy money was inactive, allocations of
resources in quantity terms were determined administratively, and the rule existed that
‘the budget follows the plan’ (Davis, 1989; Kornai, 1980, 1992). Quantity flows also proved
 POST-COMMUNIST ECONOMIES 975

to be more important in the health sector than financial ones in the Russian economy in
the 1990s due to its experiences with ‘transformational recession’ and its ‘virtual econ­
omy’ features, with wide-spread barter (Davis, 2001a; Gaddy & Ickes, 1998; Kornai, 1994).
Prices and budgets became more active in the state capitalist economy in Russia during
2000–2019. Tables 4a and 8a provide measures of health expenditure (indexes, per capita,
shares of GDP) for the UK and Russia in during 2000–2018. But Davis (ca. 2020) shows that
during the Covid-19 epidemics in both the UK and Russia, health services found that
physical acquisition and distribution of goods (e.g., PPE, testing kits, chemicals) were more
important than having almost limitless budgets (‘soft budget constraints’) because of
global excess demand and competition between countries for scarce supplies.

Shortages in health services in different economic systems

Disequilibrium and shortages in economic systems
In their study of disequilibrium macroeconomics, Cuddington et al. (1984, pp. 25–26)
summarise the past work as follows:

Two fundamentally different disequilibrium situations are analyzed. The first one is a general
excess supply, i.e., at the initial price vector there are excess supplies of both labor and goods.
In a different terminology one could say that there is unemployment (underemployment),
and a deficiency of aggregate demand for output. This situation is appropriately labelled
Keynesian unemployment. The second disequilibrium situation is characterized by general
excess demand, i.e., excess demand in both the labor market and the market for goods . . . this
situation has been called repressed inflation.

To clarify the distinction, let: D = demand; S = supply; g = goods; l = labour. Then

Keynesian Unemployment is characterised by: (Dg < Sg, Dl < Sl) and Repressed Inflation by
(Dg > Sg, Dl > Sl).
The UK experienced Keynesian Unemployment disequilibria on several occasions in the
period from 1970–2000, as did Russia during 1992–2000, which caused problems in both
the real and financial spheres of the economies and adversely affected microeconomic
processes in the health sector. This disequilibrium state existed temporarily in both
countries during the Global Financial Crisis in 2008–2010 and has returned to the global
economy due to the disruptions and lockdowns caused by the Covid-19 epidemics.
The Repressed Inflation disequilibrium state developed in the USSR in the 1930s and
became systemic, which contributed to evolution of the shortage economy (Davis &
Charemza, 1989; Kornai, 1980, 1992). In this economic system all sectors operated in
conditions of chronic shortage, which generated the consequences and policy responses
evaluated in this article.8 The effects of shortage were mitigated by the high-priority
status (e.g., defence sector) or reinforced by low priority (e.g., health sector). Although
Russia developed a state capitalist economy by 2000, over the next two decades its
economic system continued to possess administrative mechanisms and quantity pro­
cesses that were similar to those in the shortage economy.
Equilibrium can be returned in excess demand markets in a capitalist economy by
either increasing the supplies of deficit goods or raising prices. In normal circumstances
shortages are temporary because markets adjust to eliminate them (e.g., the deficits of
toilet paper in the UK shops in early 2020 caused by the panic buying of British
976 C. M. DAVIS

consumers). However, in 2020 the Covid-19 pandemic generated a world-wide surge in

demand for a range of products necessary for coping with national epidemics, notably
PPE and ventilators, in the same period that production and distribution were disrupted
everywhere, so acute shortages developed. These deficits of medical products then
undermined anti-epidemic policies and forced more extended lockdowns, thereby exert­
ing negative microeconomic feedback into the macroeconomic Keynesian Unemployment
disequilibria in most countries (Davis, ca. 2020).

Shortages in health services in different economic systems

According to Kornai (1980, p. 416), if the supply of a good or service has not reached
the population’s satiation level and the price of the product is not ‘effective’ (market-
clearing) then ‘ . . . there will necessarily be a shortage of the product . . . In the case of
free or almost free distribution the shortage is certainly more intense than it would be
in the case of an effective price.’ This condition has been observed in medical systems
in which there has been a high demand for medical services and rigidities related to
rules (e.g., no charges for medical care) that prevent equilibrium from being re-
established through price adjustments. These shortages can relate to: doctors, nurses,
and medical technicians at the national level, in the countryside, and in deprived
regions; medicines and medical equipment; and facilities (e.g., hospital beds, operating
theatres).
The frequency and prevalence of shortages vary according to the type of health
service. In the well-endowed health sector of the USA, demand, supply and prices are
influenced by market conditions and shortages and rationing are rare. However, in
national health services in market economies with government programmes of cost
containment and weak influences of market forces, notably that of the UK, shortages
have been pervasive and chronic (Aaron & Schwartz, 1984; Cooper, 1975). The existence of
persistent shortages has made it essential for UK administrators and medical staff to make
difficult choices routinely concerning trade-offs between alternative claims on resources
and to adjust the production and distribution through rationing of medical services. Table
6 summarises evidence concerning shortages in UK NHS in two sub-periods of the years
2000–2019.
In the USSR and other socialist countries the usual features of the shortage economy
(Kornai, 1980, 1992) combined with the low priority of health to ensure that there were
systemic and intense shortages in national health services (Davis, 1988, 1989, 1990b,
2001a). In brief, there was excess demand (‘suction’) in markets for outputs of medical
services, which caused quantity drives, neglect of quality, and minimal output inventories
or reserve production capabilities. Managers focused on meeting quantity targets in the
current period and neglected technological innovation because of its risks in the planned
economy (i.e. targets might not be achieved due to shortages of inputs), which resulted in
low technological levels. Bottlenecks and forced substitution developed in production.
Attempts were made to hoard inputs, but the low priority of health undermined these
efforts. Budget constraints were hard and health institutions were buyers of inputs in
sellers’ markets.
From 1989 the command economies of Eastern Europe and the USSR collapsed
and were replaced by transition economies. Almost all experienced severe ‘transfor­
mational recessions’ and cuts in real health spending in the 1990s, so shortages and
 POST-COMMUNIST ECONOMIES 977

rationing intensified in their medical systems and health outcomes deteriorated

(Davis, 2001a, 2001b; Kornai, 1994; Shishkin, 2000; Vlasov et al., 1999).
Circumstances improved in the medical systems of the EU accession countries of
East Europe from the mid-1990s, and in Russia and other Former Soviet Union
countries from the early 2000s. Developments concerning shortages in the national
health service of Russia over 2000–2019 are covered in the third section and
summarised in Table 10. An equivalent table comparing shortages in the UK and
Russia for the Covid-19 period in 2020 is presented in Davis (ca. 2020).

Consequences of and policy responses to shortages, including rationing, in

national health services
Table 3 describes in general terms three important consequences of shortages: A:
Bottlenecks in production; B: Higher stress and lower motivation of personnel; and C:
Discouragement of patients from reporting illnesses, which increases the ‘hidden’ com­
ponent of morbidity icebergs (Davis, ca. 2021b). Tables 7 and 11 in the third section
present evaluations of the significance of these consequences in the NHS of the UK and
Russia in two sub-periods during 2000–2019.
Health administrators and medical personnel often have to make policy decisions
about how to respond to shortages by changing the production of medical services or
their distribution to patients.9 The second section of Table 3 identifies and summarises
six important and routine policy responses: D: Realignment of medical priorities; E:
Rationing using sub-systems of medical care; F: Rationing using queuing; G: Rationing
using waiting lists; H: Exclusions of medical services from the State Guarantee and of
categories of patients from diagnosis and treatment; and I: Forced substitution of
recommended inputs by cheaper, inferior ones.10 These policy responses in the UK
and Russia during 2000–2019 are assessed in the third section and are summarised in
Tables 7 and 11. The same indicators are evaluated for the two countries in the Covid-
19 period in Davis (ca. 2020).

Health production process, priorities, shortages, rationing and health outcomes

Numerous models have been developed to portray and analyse health sectors and
their interactions with the economy. The approach of this author, since carrying out
research for his 1979 Ph.D. dissertation on The Economics of the Soviet Health
System, has been based on concepts related to health production, mentioned
above, and the work of his supervisor, Professor Sir Richard Stone, on linkages
between socio-demographic and economic accounts and models (Stone, 1971) and
a document primarily authored by him: UN [United Nations] (1975) Towards
a System of Social and Demographic Statistics). Davis (1979) contains
a mathematical-statistical model (linear algebra, absorbing markov chains, input-
output) of health production in the USSR (or any country) that links four sectors:
socio-demographic processes (births, illnesses, deaths); the medical system; supply
to the medical system (labour, capital, intermediate goods); and the economy.
Diagrams based on this model have evolved over time and have been used in
analyses of health issues in the USSR and Russia.
978 C. M. DAVIS

Table 3. Consequences of shortages in national health services and policy responses.

Row Description of consequences of shortages
A Deficits of specific inputs A normal phenomenon in national health services in shortage economies. It is
cause bottlenecks and less prevalent in medical systems in open market economies, but bottlenecks
inefficiencies in can occur if a financial crisis abruptly causes a cut-back in imported medicines
production. or supplies of labour or goods in countries without adequate national import-
substitution capabilities.
B Shortage-related problems Chronic shortages of inputs in production and complaints by patients affected by
cause higher stress and shortages and rationing cause higher levels of stress and lower motivation of
lower motivation of medical personnel, which leads to worse medical performance and decisions
medical personnel. to leave medical careers.
C Shortages discourage Shortages of medical staff and medicines, queues, and long waiting times
patients from reporting discourage people from reporting illnesses to the NHS. This increases the
illnesses, which become hidden components of the ‘morbidity iceberg’ and results in worse outcomes
‘hidden’. for the illnesses not reported in a timely manner.
Row Description of policy responses to shortages
D Revision of medical priorities Health administrators and doctors establish priority rankings of diseases and
patient categories from most important to least and use these rules to allocate
scarce diagnostic and treatment resources.
E Rationing according to Medical services can be rationed to ensure that the most important patients (e.g.,
category of patient (sub- infants, defence industry workers) receive care irrespective of general
systems of medical care) circumstances. In the shortage economies, closed (non-public) medical sub-
systems were established within the NHS to make certain that the most
important socialist citizens received adequate medical care.
F Rationing by physical Examples are patients waiting: in a polyclinic or GP office, or for an appointment,
queuing to visit a first-contact doctor; in a hospital A&E deparment for treatment; in an
ambulance for admission to a hospital; or on a trolley in a hospital for an
available bed. Queues impose time costs on patients and allocate medical
services to those who can afford to wait. Queues restrict the demands of
patients to manageable levels through an apparently neutral mechanism,
without requiring medical staff to take difficult decisions.
G Rationing by waiting lists Waiting lists are used to ration the access of patients to: specialised outpatient
diagnosis and treatment; admission to hospitals for diagnosis; hospital
operations and treatments following diagnosis.
H Exclusion of types of medical In conditions of shortage, medical systems often exclude diagnoses and
services from State treatments related to certain diseases/medical conditions from the list covered
Guarantee or restrictions by the State Guarantee in an NHS or by the list of reimbursable expenditures in
on treatments an insurance system. Adoption of stricter criteria concerning the definition of,
and perceived severity of, an illness qualifying for diagnosis and treatment,
especially with respect to hospitalisation.
I Substitution of inferior and Replacement of the services of more expensive medical personnel by those
less expensive inputs for provided by cheaper and lower-skilled medical staff (e.g., nurses and
the normal ones pharmacists replacing doctors). Or substitution of high-cost medicines or
diagnostics by by less expensive and less effective ones.
Sources: Concepts concerning onsequences of shortages an NHS and policy responses were developed from ideas in
Cooper (1975), Kornai (1980), Aaron and Schwartz (1984) and in Davis (1989, 1990b, 2001a).

Figure 1 in this article is the latest adaptation of this approach, which takes into
account priorities, shortages and rationing. The top section of the diagram shows how
developments in demography, health behaviours of individuals, the health environment
(now including the virus SARS-CoV-2), and preventive medical services influence house­
hold health production and thereby the generation of the morbidity iceberg.
The left-hand column depicts the influences on the medical system of the economy,
government priorities, health expenditure, social attitudes, and labour supply. The box
encompassing the NHS depicts the flows of inputs into the medical services production
process (e.g., doctors, medicines), as well as the shortages (A-I) that can exist. The
consequences of shortages in the NHS are: A. Bottlenecks in production and C. Low
 POST-COMMUNIST ECONOMIES 979

Figure 1. Health production process with illnesses, medical care, priorities, shortages, rationing, and
outcomes.

morale of medical staff. Policy responses are: D. Changes in medical priorities, H. Forced
substitutions, and E. Distribution of limited medical care through sub-systems.
The right-hand of the diagram shows the outputs of preventive and curative
medical services, as well as shortages of diagnostic and treatment services provided
to the population. Policy responses that involve patients include: E. Rationing through
sub-systems with differing standards, F. Rationing using queuing, and G. Rationing
using waiting lists.
The national health production process generates four main outcomes: (1) Remain
healthy; (2) Fall ill and recover full health; (3) Fall ill and experience invalidity; and (4) Fall ill
and experience death. Tables 4b and 8b in the third section present information about
mortality-related measures for the UK and Russia during 2000–2018.
Figure 1 provides a framework for the empirical evaluations of health production in the
UK and Russia in two sub-periods over the years 2000–2019. It also is used in Davis (ca.
2020) to organise the analyses of the Covid-19 epidemics, developments in national
health services, and health outcomes in the UK and Russia during February–June 2020.

Priorities, health production, shortages and rationing in the NHS in the UK

and Russia during 2000–2019
During 2000–2019 there were significant positive and negative developments in the
health production processes, summarised by Figure 1, in the UK and Russia that affected
 980
C. M. DAVIS

Table 4a. Health production in the UK, 2000–2018: demography, morbidity, and health expenditure.
Indicator Source Units 2000 2005 2007 2008 2009 2010 2013 2014 2015 2017 2018
Factors Influencing Demand for Medical Care
Population (mid-year) Millions 58.9 60.4 61.3 61.8 62.3 62.8 64.1 64.6 65.1 66.1 66.3
Elderly Share of Population % 60 years and older 18.5 17.3 17.1 17.2 17.3 17.5 18.5 18.8 19.1 19.4 19.7
Measles Incidence New Cases per 100,000 0.2 0.1 1.6 2.3 1.9 0.6 3.0 0.2 0.1 0.4 1.4
Viral Hepatitis Incidence New Cases per 100,000 13 15 15 15 15 14 13 11 10 9
Diabetes Mellitus Incidence New Cases per 100,000 350.6 369.9 258.1 249.1 397.3
Tuberculosis Incidence New Cases per 100,000 10.6 13.6 13.1 13.4 13.1 12.6 11.5 10.3 9.1 8.6 8.3
Malignant Neoplasms Incidence OECD New Cases per 100,000 461.6 482.2 491.6 506.5 520.2 523.4 551.2 556.8 557.5
Factors Influencing the Availability of Resources to Support the National Health Service
GDP in Real Terms OECD $ Billions 2015 PPP 2,125.9 2,443.9 2,573.1 2,565.9 2,456.9 2,504.8 2,636.2 2,704.9 2,768.6 2,875.1 2,913.7
GDP Index OECD 2000 = 100 100.0 115.0 121.0 120.7 115.6 117.8 124.0 127.2 130.2 135.2 137.1
GDP Annual Growth OECD % 3.9 3.2 2.4 -0.3 -4.2 1.9 2.1 2.6 2.4 1.9 1.3
GDP Russia/UKPer Capita OECD Ratio 0.95 1.11 1.24 1.31 1.26 1.29 1.35 1.33 1.27 1.25 1.27
Public Health Expenditure UK £ Billion Current 49.57 82.93 94.69 102.34 108.75 116.92 124.30 129.39 134.05 142.59 147.34
Public Health Expenditure UK Index 2000 = 100 £ BC 100.0 167.3 191.0 206.5 219.4 235.9 250.8 261.0 270.4 287.7 297.2
Public HE Per Capita UK £ Current 841.8 1,372.7 1,544.2 1,655.3 1,746.7 1,863.0 1,939.0 2,003.0 2,058.8 2,159.1 2,217.8
Public HE Per Capita OECD $ Current 1,237.7 1,890.4 2,110.9 2,224.5 2,328.8 2,384.9 2,836.9 2,915.2 2,939.6 3,107.1 3,138.5
Public Health Exp Share GDP OECD % 4.7 5.9 6.1 6.3 7.1 7.0 7.8 7.8 7.7 7.6 7.5
Public Health Exp Share of GDP UK % £ Current 4.6 6.0 6.1 6.5 6.9 7.5 7.2 7.2 7.2 7.1 7.1
Table 4b. Health Production in the UK, 2000-2018 (8/7/20).
Indicator Units 2000 2005 2007 2008 2009 2010 2013 2014 2015 2017 2018
Resources and Performance of the National Health Service
Doctors Number 116,427 144,780 152,184 158,597 164,607 166,250 173,976 177,352 180,444 185,692 188,783
Doctors Per 1,000 2.0 2.4 2.5 2.6 2.6 2.7 2.7 2.8 2.8 2.8 2.9
GPs (Primary Care Doctors) Number 39,908 44,199 45,362 46,850 49,437 48,641 49,875 50,595 50,169 49,824 49,569
Nurses and Midwives Number 506,537 581,718 560,044 565,550 559,411 557,747 540,205 544,080 546,220 548,498 548,500
Nurses and Midwives Per 1,000 8.6 9.0 9.1 9.2 9.0 8.9 8.4 8.4 8.4 8.3 8.3
Ratio Nurses/Midwives to Doctors Number 4.3 4.2 3.7 3.6 3.4 3.4 3.1 3.1 3.0 3.0 2.9
GP Consultations Millions 266 242 251 266 287 289 295 304 306 304 307
GP Visits Per Year Per Capita Visits 4.0 4.0 4.1 4.3 4.6 4.6 4.6 4.7 4.7 4.6 4.6
GP Average Patient List Size Number 1,779 1,587 1,574 1,558 1,503 1,542 1,544 1,599 1,653 1,699 1,721
Hospital Beds Thousands 240.1 224.9 207.8 206.0 203.3 183.8 176.8 176.3 170.0 167.6
Hospital Beds Per 1,000 4.1 3.7 3.4 3.3 3.3 2.9 2.8 2.7 2.6 2.5
Hospital Bed Occupancy % Available Beds 83 84 84 84 84 85
Length of Stay in Hospital Ave number of days 8.1 8.0 7.8 7.7 7.2 7.1 7.1 6.9
Wait Time for Treatment after Specialist Assessment % more than three months 18.5 17.2 21.8 23.2 29.5 29.8 28.4 31.9
Surgery: Coronary Artery Bypass Number 25,127 23,412 22,385 21,123 19,245 18,013 17,630 16,958 16,166 14,731 14,187
Computerised Tomography Scanners Per million population 5.4 7.5 7.5 7.3 7.6 7.9 9.3 9.5 9.5 9.7 9.8
Magnetic Resonance Imagers Per million population 5.6 5.4 5.6 5.5 6.0 6.6 7.2 7.2 7.2 7.7 8.0
Health Outcomes: Mortality-Related
Crude Death Rate Deaths per 1,000 10.3 9.7 9.4 9.4 9.0 8.9 9.0 8.8 9.3 9.2 9.3
Deaths per Year Thousands 610.6 583 574.7 579.7 559.6 561.7 576.5 570.3 602.8 607.2 616.0
Malignant Neoplasm SDR HFA Deaths per 100,000 192.0 180.7 177.9 176.0 172.5 170.4 165.8 163.8 162.0
Circulatory Mortality SDR HFA Deaths per 100,000 265.0 211.3 188.1 181.6 169.2 164.2 140.7 133.6 134.7
Maternal Mortality Deaths per 100,000 Births 7.0 5.7 7.1 6.9 8.0 5.0 6.4 6.7 4.5 6.5
Infant Mortality Deaths per 1,000 Births 5.5 5.1 4.7 4.6 4.5 4.2 3.9 3.9 3.9 3.9 3.9
Population Life Expectancy at Birth Years 77.9 79.2 79.7 79.8 80.4 80.6 81.1 81.4 81.0 81.3
Male Life Expectancy at Birth Years 75.5 76.9 77.6 77.7 78.3 78.6 79.2 79.5 79.2 79.5
© Christopher Davis, 2020. References: The statistics in Tables 4a and 4b were obtained from official UK sources, OECD and WHO databases, and UK specialist reports. Full documentation of
POST-COMMUNIST ECONOMIES

sources is provided in Davis (ca. 2021a).

981
982 C. M. DAVIS

the structures, performances and endowments of their health sectors.11 In brief, both
countries re-oriented their national health services to focus on the growing non-
communicable diseases of ageing populations, increased real expenditures on health,
introduced numerous health reforms, and improved health outcomes. However, the
health sectors functioned in different conditions in two sub-periods: medium-to-high
priority status and generous allocations of resources during 2000–2007 and lower
priority and more constrained funding over the years following the GFC (2008 to 2019)
(Tables 5 and 9). Sub-sections on the UK and Russia assess the impacts the changes in
priorities and funding had on shortages in the NHS (Tables 6 and 10) and on the
consequences of shortages and policy responses to them, such as rationing (Tables 7
and 11).

The NHS in the UK decentralised market economy: 2000–2019

Population and illness
The UK population increased in size from 58.9 million in 2000 to 66.3 million in
2018 and the share of those aged 60 years and older rose from 18.5% to 21.3%
(Table 4a). Households improved their health-related behaviours (e.g., reducing
smoking), which contributed to reductions in infectious and some non-
communicable diseases. In contrast, the incidences of other complex and lethal
non-communicable illnesses (diabetes linked to obesity, cancer, stroke, cardiovas­
cular, dementia) increased. The combination of demographic and morbidity fac­
tors generated estimated increases in real demand for NHS medical care of
around 3% per year.

Economy, priority of health and health expenditure

During 2000–2007 the UK maintained a decentralised market economy that was inte­
grated into the EU and the global economy and achieved healthy growth.12 The structure
of the economy was reflected in the following 2018 shares of GDP: industry 20%, natural
resources 1.5%, and foreign trade turnover (imports plus exports) 31%.
The Labour government (1996–2010) made a commitment in The NHS Plan 2000 to
raise the priority of health (see the indicators in Table 5). This was reflected in average
annual real growth of health spending of 6% and rising public health shares of GDP from
5.1% in 2000 to 6.7% in 2007 (Table 4b). Wages of medical personnel and capital
investment increased and the government became more responsive to problems in the
NHS. Real public health spending per capita rose substantially, but it remained lower than
the average for the leading EU countries.
However, the GFC caused a recession and contributed to the subsequent years
of slow growth. From 2010 the UK government led by the Conservative Party (in
coalition and independently) implemented austerity policies and intensified cost
containment efforts in the NHS. It lowered the priority of health in an absolute
sense, although in relative terms it retained a medium priority status because the
modest real spending on it was ‘ring-fenced’ (Table 5). During 2008–2018 UK
health spending increased by an average of 1.3% a year in real terms (0.6% on
a per capita basis). The public (NHS) health share of GDP increased to 7.5% in 2018
(Table 4b). Local government public health and social care services for the elderly
 POST-COMMUNIST ECONOMIES 983

Table 5. Priority status of the UK NHS in two periods: 2000–2007 and 2008–2019.
2000–2007 2008–2019

Indicators of the prior­ High priority Medium-low priority

Row ity status of the NHS
A Health in leadership’s
objective function
(OF)
B Resource allocation
responsiveness to
problems
C Wage rates
D Adequacy of financial
norms in budgets
E Output plans
F Budget constraints
G Supply plans
H Siphoning of supplies
I Investment plans
J Inventories of inputs
K Reserve production
capacity
L Shortage intensity
Sources: Davis (1989) presents mathematical-statistical versions of the indicators and an empirical evaluation of them for
the USSR NHS in the 1980s. Evidence for this table is from Davis (ca. 2021a) and research for health projects and this
article.
Summary of evidence concerning priority indicators
During plan/budget formulation
High weight in OF. Health was a key
programme, so preferential allocation
of resources.
Usually responsive.
Relatively high, especially for doctors.
Generous.
During plan/budget implementation
Ambitious targets. Regular interventions
to help meet them.
Relatively soft.
Generous budgets enable purchases of
necessary supplies.
High priority protects NHS from external
siphoning, but internal siphoning
according to medical priorities.
Ambitious plans and commitment to their
fulfilment.
Adequate input inventories.
Adequate.
Low.
Medium weight in OF. NHS allocations
‘ring-fenced’, but low growth of real
health ppending.
Slow and lagged responses.
Austerity policies involve wage controls
(1–2% annual growth).
Moderate.
Ambitious targets to be attained through
‘efficiency gains’.
Relatively hard.
Tight budgets restrict supplies, but
markets provide all goods.
‘Ring fencing’ protects NHS from external
siphoning, but internal siphoning
according to medical priorities.
Ambitious plans, but tolerance of delayed
fulfilment.
Low input inventories.
Limited.
Rising to high.

had much lower priorities than the NHS, which resulted in their budgets being cut
severely from 2009 onward (the real value of the central government grant to local
government was reduced by 60%) (King’s Fund & Nuffield Trust, 2016; Lawrence
et al., 2020).

Structure of the health sector

The basic structure of the UK health sector remained stable, but there were many changes
affecting specific institutions (Table 1). The medical supply system, medical industry
(pharmaceuticals and medical equipment), biomedical R&D, and medical foreign trade
remained predominantly privately owned and operated on market principles in accor­
dance with EU rules.
The national medical supply system within the NHS was complicated and frag­
mented between the four nations. Only arrangements for England and Wales can be
considered in this article. The supply of medicines to NHS units was overseen by the
Department of Health and Social Care (DHSC), NHS England and NHS Improvement
(NHSE&I) and the Medicines and Healthcare Products Regulatory Agency (MHRA) (DHSC
[Department of Health and Social Care], 2019). Procurement from external organisa­
tions and distribution within the NHS were managed by the DHSC Medicines Supply
Team. From 2018 the supply of other products, such as medical equipment and PPE,
984 C. M. DAVIS

was managed by NHS Supply Chain, a private company that was subordinate to the
DHSC (Fisher et al., 2020).
The UK had world-class private pharmaceutical and medical equipment companies
(e.g., GlaxoSmithKline). Within Europe, UK companies were the fourth largest producers of
pharmaceutical goods. However, much of UK output was for export and its range of
manufactured goods was limited due to the objectives of companies to obtain higher
profits by outsourcing production to low wage countries. As a result, UK industry pro­
duced varying, but not full, shares of the medicines, PPE and medical equipment needed
by the NHS.
The UK also was a European leader in biomedical R&D and was the third-largest
spender on R&D after Germany and Switzerland. It had numerous biomedical labora­
tories: 8 under Public Health England (PHE), 122 in other NHS organisations, and
many more in the private commercial sector and universities. PHE controlled the
testing for infectious diseases in its centralised laboratories. But the UK possessed
only moderate capabilities, compared to Germany, to produce diagnostic tests and
process their results (Lawrence et al., 2020).
The NHS maintained its founding principles (e.g., universal coverage, medical care
provided free of direct charge), but there were substantial changes in its organisation and
management. The NHS moved away from its traditional hierarchical ministerial model
that had UK government central control and state ownership of hospitals (but not of
outpatient General Practices) and state employment of most medical personnel (but not
of General Practitioners (GPs) and their staff). A 1998 reform under the Labour govern­
ment devolved control over health services to the four ‘nations’ of the UK (England,
Scotland, Wales, Northern Ireland), which resulted in divergences in policies over time.13
The Conservative-Liberal Democrat Coalition government launched decentralising health
reforms through the 2012 Health and Social Care Bill. The UK DHSC remained at the top of
the increasingly fragmented NHS, but it was left with little executive power. The 2012
reform eliminated regional Strategic Health Authorities in NHS England, which further
weakened vertical control. Hospitals already had been made into semi-autonomous
NHS Hospital Trusts or Foundation Trusts, but the new reforms gave them greater
independence. Other types of trusts were created as well, such as one for the ambulance
services. By early 2020 there were 217 trusts that employed 800,000 of the 1.2 million staff
of the NHS. The responsibility for purchasing medical services was shifted to Clinical
Commissioning Groups, led by GPs, that were established in place of Primary Care Trusts
(Lawrence et al., 2020). The responsibility for managing public health activities was given
to the newly created PHE. Community nursing and some residual public health activities
and social care were financed by under-funded local government. According to Smyth
(2019a), in 2019 the man in charge of developing the 10-year strategy for the NHS for
England offered the following evaluation:

He said that targets, competition and reliance on inspectors had all led to a disjointed system
and demoralised staff. “A series of NHS reforms have broken up the health service into
autonomous hospitals that makes driving an integrated strategy across the NHS almost
impossible . . . You could not have designed something that had at its heart more dysfunction.
It is truly remarkable.”
 POST-COMMUNIST ECONOMIES 985

Performance of the NHS and health outcomes

The increases in health expenditures over the two decades generated positive growth in
the quantities of most inputs to the NHS, as well as improvements in their quality
(Table 4b). The total number of doctors increased from 116,427 in 2000 (2.0 per 1000
population) to 188,783 (2.9) in 2018. However, in England there were strained relation­
ships between NHS administrators and medical staff in hospitals due to the conflict
started by the Secretary of State for Health and Social Care in 2015 with junior doctors
over a proposed seven-day work week and linked unpopular new contracts, which
resulted in acrimonious strikes in 2016.14 The number of nurses and midwives increased
by 12% during 2000–2008, but then declined by 3% by 2018 due to low wages and poor
working conditions. Northern Ireland had no functioning ‘national’ government for three
years prior to January 2020 due to conflicts between its sectarian (Protestant and Catholic)
local political elites, which undermined the medical system in the province and resulted in
strikes by 15,000 poorly paid and neglected nurses in late 2019.
There was significant capital investment in the NHS that raised the quality of
facilities, notably hospitals. However, the number of hospital beds continued to
decline, from 240,100 in 2000 (4.1 per 1000) to 207,800 in 2018 (3.4). There were
improvements in the inventory of modern medical equipment in the NHS. The
numbers of units per million population of Computerised Axial Tomography (CAT)
scanners increased from 5.4 to 9.8 and of Magnetic Resonance Imagers (MRI) from
5.6 to 8.0 (Table 4b).
Inputs of medicines and of medical products grew significantly in the sub-period of
2000–2007. Medical staff made increasing use of disposable PPE (visors, face masks,
gowns, gloves, foot coverings). However, inventories of PPE and other goods were kept
low to hold down costs and to take advantage of economical ‘just in time’ international
supply chains.
Most of the outputs of the UK NHS increased from 2000 to 2018: the number of GP
consultations from 266 million (4.0 consultations per capita) to 307 million (4.7); hospital
outpatient clinic attendances from 71.2 million to 86.0 million; and operations in hospitals
from 68.9 per 1000 to 81.7. However, the number of coronary artery bypass surgeries
declined from 25,127 to 14,187.
In 2018 England and Wales had 13,000 residential care and nursing homes, mostly
private, with around 460,000 beds for older people and those suffering from demen­
tia (King’s Fund & Nuffield Trust, 2016). Local government funding of places for
vulnerable people was cut back substantially after 2008. The UK government failed
to implement, as publicly promised, the recommendations of the 2011 Dilnot
Commission Report on Social Care concerning co-funding and integration of health
services and social care (House of Lords, Economic Affairs Committee, 2019). NHS
Supply Chain had no responsibility for supplying medical goods, such as PPE, to
private residential care homes.
Over 2000–2018 all UK health outcomes improved due to the factors discussed
above. Table 4b shows that there were the following achievements: the crude
death rate fell from 10.3 deaths per 1000 to 9.3; infant mortality dropped from
5.5 deaths per 1000 live births to 3.9; and male life expectancy at birth climbed
from 75.5 years to 79.5. However, between 2011 and 2018 life expectancy at birth
increased by only 0.5 years for males and 0.2 years for females, whereas the
986 C. M. DAVIS

average improvement in the past had been 3 years per decade (Raleigh, 2019).
There were growing disparities in mortality-related indicators between regions and
socio-economic groups.

Shortages in the NHS

During 2000–2007 the excess demand for medical services in the UK NHS was reduced
significantly and shortages became less pervasive (Table 6). With respect to personnel,
shortages were either frictional (e.g., temporary unfilled vacancies in cities) or related to
long-standing problems, such as low numbers of doctors and nurses in the countryside
and in certain branches of medicine.
Over the decade following the GFC, the rising demand for medical care in the UK
combined with the constrained growth of real health spending and of inputs to the NHS
to generate increasing shortages with respect to labour, facilities, medical technology,
and supplies. According to Smyth (2019b):
Staff shortages have become the most pressing problem facing the NHS, with hospital bosses
saying that even with extra cash they cannot find the doctors and nurses to spend it on.
About one in ten NHS posts is vacant and a lack of nurses is the biggest problem . . .

By 2019 the NHS had deficits of 43,000 nurses and 10,000 doctors.
In the case of doctors, there were generalised short-falls of applicants for advertised
jobs, which increased over time (Gregory, 2020). Shortages of specialists in ‘mechanical
thrombectomy’ and ‘interventional radiology’ (an NHS-wide deficit of 44%) were causing
avoidable deaths and disabilities. Due to the fact that 32% of advertised psychiatry posts
in the NHS were not being filled, the national Migration Advisory Committee added
psychiatry to the list of occupations experiencing acute shortages. The chronic shortage
of doctors in the countryside continued. With respect to shortages of GPs, Smyth (2017b)
found that ‘One in eight family doctor posts is now vacant after a six-fold rise in recent
years, a survey has suggested. Many surgeries have given up on finding enough staff . . . ’
As a result of this situation, patients experienced growing difficulties in arranging meet­
ings with GPs, with more than one in three having to wait at least a week. Campbell (2020)
provided the following quote from the Chair of the Royal College of GPs: ‘ . . . our service
has been running on empty for too long, and one of the consequences is that we now
have a severe shortage of GPs.’
The deficits of nurses and midwives were more severe than those for doctors because
their wages were low, their work conditions were stressful, the government had elimi­
nated bursaries for nursing students, and medical workers from EU countries became
more reluctant to work in the NHS following the 2016 Referendum that approved of Brexit
(Smyth, 2019b). In 2015, nurses were added to the list of shortage occupations by the
Migration Advisory Committee.
Sustained tight limits on capital investment in the NHS resulted in shortages of office
and ward space, operating theatres, intensive care units and hospital beds (Campbell,
2017; Smyth, 2019b). Campbell (2019) reported that mental illness hospitals were ‘dan­
gerously decrepit’ and ‘ . . . The trusts have been prevented from replacing out-of-date
buildings because ministers have repeatedly raided the NHS’s capital budget to help pay
for the service’s day-to-day running costs . . . ’ The drives to reduce the number of hospital
beds and to increase occupancy rates beyond the threshold of 85% contributed to
 POST-COMMUNIST ECONOMIES 987

Table 6. Shortages in the UK NHS in two periods: 2000–2007 and 2008–2019.

UK NHS 2000–2007 UK NHS 2008–2020
Row Category of shortage Summary of empirical evidence about the intensity of shortages
A Doctors: National Low provision of doctors by OECD Slight rise in low ratio of doctor provision
shortages standards, but ratio rises to 2.5 in 2007. to 2.9/1000, but shortfall of 10,000
Reduced national shortages relative to doctors relative to advertised positions.
established positions. By 2019 13% of GP posts were vacant.
B Doctors: Shortages in Adequate provision of doctors in most Continued low availability of doctors in
rural areas and areas, but some shortages in rural areas and coastal towns.
deprived regions countryside and in coastal towns.
C Doctors: Shortages of Improvements in wages and equipment Growing shortages in hospitals of some
specialists result in reductions in shortages in specialist doctors: oncology, radiology,
hospitals of specialist doctors. psychiatry.
D Middle Medical Adequate provision of MMP (9.1/1000 in Falls in provision ratios to 8.3 per 1000
Personnel (MMP): 2007). Growth of nurses due to better population and 2.9 per doctor.
National shortages wages and work conditions. Fall in ratio Worsening work conditions and real
of MMP to doctors. wages result in national shortage of
43,000 nurses by 2018.
E MMP: Shortages in Minor improvements in provision of MMP Deterioration of provision of MMP in rural
rural areas and in rural areas and deprived regions. areas and deprived regions.
deprived regions
F MMP: Shortages of Improvements, but continuing Uneven provision of MMP across
specialists inadequacies of MMP in high specialities with shortages in several
technology fields (e.g., radiography). areas. Inadequacies increase in high
technology fields.
G Shortages of Greater resources enable increases in Increased shortages of medicines and
medicines and domestic purchases and imports of other medical inputs due to tighter
medical inputs medicines and medical products. budget constraints, low inventories and
Reductions in shortages. inefficiencies in distribution.
H Shortages of medical Increased purchases of modern medical Slowdown in procurement results in
equipment equipment (CAT scanners and MRI) ageing of equipment. Increases in
improve provision in NHS, but it provision of equipment, but shortfalls
remains low relative to OECD standards relative to UK demand and OECD
and demands of patients. norms.
I Shortages of hospital Greater investment improves capacity and Inadequate investment causes greater
facilities and beds quality of NHS capital stock. Declines in obsolescence of medical facilities,
J Shortages of numbers of hospitals, beds, and GP especially in lower priority branches of
outpatient facilities practices, but efficiency improves. medicine (e.g., mental health).
Insufficiencies of facilities in rural areas.
K Shortages in Greater investment improves quality of Stagnant development of the network of
emergency care hospital A&E departments and ambulances and hospital A&E services
ambulances. Stability in capacities. results in shortfalls of supply relative to
growing demand.
Sources: The shortage indicators were developed from general ideas in Kornai (1980) and have been presented in Davis
(1989, 1990b). The summaries of empirical evidence are based on Davis (2001a, ca. 2021a) and research for health
projects and this article.

shortages, especially when there were surges of demand. A complicating factor was the
growth in hospitals of ‘bed blocking’ (5–6% of the total bed stock) by older patients, who
had completed their treatments but could not be discharged because of inadequate
social care arrangements (Lay, 2017a). This meant that hospitals could not admit the
planned numbers of new patients, including some requiring urgent treatment.
Although the provision of the UK NHS with medical capital equipment improved, it still
was well below norms of leading EU countries. For example, from 2007 to 2017 the
numbers per million of MRI machines in the UK increased from 5.2 to 7.2, whereas in
Germany the provision rose from 29.7 to 35.1.
Shortages of medicines became more intense after 2008. According to Kenber &
Smyth (2017): ‘Cancer patients and people with severe mental illness are going without
988 C. M. DAVIS

essential medicines because of shortages that have cost the NHS £180 million in six
months . . . At least 100 drugs have been affected by supply problems . . . ’ By Autumn
2019 the prospect of Brexit was disrupting supplies to the NHS and there was concern
that it would cause wide-spread deficits in 2020 (Wright, 2019). The DHSC and NHS
England established a Medicines Shortage Response Group and circulated a memo to
doctors that explained how to manage shortages (DHSC, 2019). Taylor (2019) wrote the
following about this document:

. . . The document lists 17 new drug shortages identified in the last week [November 2019]
including drugs for cancer, Parkinson’s, mental health problems and some eye conditions. It
also identifies ongoing issues with 69 types and doses of medication including antibiotics for
tuberculosis, diamorphine, various cancer drugs, heart condition drugs, hepatitis vaccines and
anti-epilepsy drugs . . . doctors said the breadth of conditions identified in the list was
unprecedented.

There also were recurrent and acute problems with more basic medical technologies and
supplies. According to Campbell (2018):

Hospitals are suffering serious shortages of vital medical equipment such as . . . syringe
drivers – which staff use to give drugs to dying patients – drip stands, infusion pumps –
which ensure patients receive correct doses of fluids and medication – oxygen cylinders, and
pressure-relieving mattresses, which help to prevent bed sores.

Consequences of and policy responses to shortages

During 2000–2007 the government realigned its priorities in favour of health, which
resulted in more generous funding and reductions in: bottlenecks, stress on medical
staff, hidden illness, discriminatory medical priorities, queuing, waiting lists, exclusions
of diagnoses and treatments from the state guarantee, and substitutions of inferior inputs
for recommended ones (Table 7). For example, from 1995 to 2007 the number of patients
waiting for elective admission to a hospital fell from 1,037,000 to 701,000 (Office of Health
Economics, 2009, p. 135).
However, over the next decade all of these phenomena worsened in the UK.
Bottlenecks in the production of medical services occurred with increasing frequency
due to unanticipated shortages of key specialist doctors, nurses, and technicians (e.g.,
radiographers) (A) (Smyth, 2019a). For example, cancer patients’ access to chemotherapy
in hospitals was being constrained because there were too few nurses to administer it.
Bottlenecks also were caused by inadequate provision of diagnostic technologies and
facilities, such as operating theatres.
Complaints by patients affected by deficits and rationing increased, which caused
higher levels of stress and lower motivation among some medical personnel (B). The
NHS Staff Survey of 2018 found that the percentage of staff in trust hospitals reporting
feeling unwell because of work-related stress rose from 27.9% to 37.0% between 2010
and 2017. Lay (2017b) found that: ‘ . . . more young doctors take time out due to
stress . . ..54% of junior doctors took a break after finishing foundation training, a rise of
30% from 2012.’
The UK population responded to shortage-related problems by not reporting all their
illnesses to the NHS (C). Gregory (2020) reported the judgement of a senior doctor that the
 POST-COMMUNIST ECONOMIES 989

Table 7. Consequences of shortages in the UK NHS and policy responses, including rationing, in two
periods: 2000–2007 and 2008–2019.
Descriptions of conse­ 2000–2007 2008–2019
Row quence or policy response Summaries of empirical evidence
Consequences of shortages
A Shortages cause This phenomenon was reduced in The tightening of resource constraints
bottlenecks in importance in the NHS due to the due to austerity and the greater
production of medical substantial allocation of additonal intensity of shortages generated
services resources and reductions in more bottlenecks in the production of
shortages. medical services in the NHS.
B Shortages increase stress The improvements in resources resulted The constraints on resources increased
and lower motivation of in reduced shortages, complaints by shortages, complaints by patients,
medical personnel patients, and levels of stress of and levels of stress of medical staff.
medical staff. Motivation of personnel Motivation of personnel declined, as
increased, as did their medical did their medical performances and
performances. commitments to the NHS.
C Shortages cause under- The reductions of shortages of medical Increased shortages of medical staff,
reporting of illnesses staff, queuing, and waiting times queuing, and waiting times
and increase hidden encouraged people to report illnesses discouraged people from reporting
components of to the NHS in a timely manner. So, the illnesses to the NHS in a timely
morbidity icebergs hidden components of the ‘morbidity manner. So, the hidden components
iceberg were reduced. of the ‘morbidity iceberg’ increased.
Policy responses to shortages
D Revision of priorities Renewed emphasis on: preventive Tighter financial constraints and
measures to improve health-related shortages force NHS to focus
haviours; uncovering hidden serious resources on infants, pregnant
illnesses (e.g., cancer) earlier; women, life-threatening illnesses.
improving technical standards of Normal illnesses given lower priority.
medical care.
E Rationing by socio-political No significant changes in structure of No major changes in structure, although
criteria (sub-systems of national medical system (civilian NHS, share of private medical care declines.
medical care) armed forces, prison, private, elite). NHS priorities restrict diagnosis and
Only minor rationing of this type in treatment due to tightening resource
the UK. constraints.
F Rationing by queuing Patients wait less in physical queues at In GP practices shift from physical
GP offices and A&E departments at queues to queues for appointments.
hospital. Development of GP queues Worsening of physical queues in A&E
by appointments. Overall reduction in departments at hospital, which
queuing due to greater resources. practice triage. Reduced achievement
of targets for treatment time.
Queuing on trolleys for beds.
G Rationing by waiting list Extra NHS resources reduce lengths of Restrictions on resources increase
waiting lists and average waiting time lengths of waiting lists and average
related to rationing to patients of waiting time related to rationing to
specialised outpatient diagnosis, patients of specialised outpatient
admission to hospital for diagnosis, diagnosis, admission to hospital for
operations and treatments following diagnosis, operations and treatments
diagnosis. following diagnosis.
H Exclusion of types of Greater availability of resources reduces Due to tightening resource constraints
medical services from the need for the NHS to adjust the NHS re-evaluates its guarantees and
the ‘state guarantee’ ‘state guarantee’ to eliminate types of eliminates many traditional medical
medical services. services due to their nature or
ineffectiveness.
I Substitution of traditional UK continues past efforts to substitute Intensified efforts to replace labour of
inputs (doctors, labour of doctors with that or nurses expensive doctors with that of
medicines) by cheaper and medical assistants. Greater use of cheaper medical staff. New efforts to
inputs generic medicines for more expensive use pharmacists and web-based
branded drugs. advice sites. Substitution of high-cost
medicines.
Sources: Davis (1989, 1990b) explains the indicators and evaluates them empirically for USSR and UK NHS in the 1980s.
Evidence for this table is from Davis (2001a, ca. 2021a) and research for health projects and this article.
990 C. M. DAVIS

longer waiting times ‘ . . . will deter some patients from seeing a GP at all, which could
mean they seek help at a much later stage when the problem is much more serious.’
Medical priorities governing treatment of patients became stricter, with greatest
emphasis placed on infants, pregnant women and adults suffering from life-threatening
diseases with good prospects for recovery (D). Campbell and McNicoll (2011) wrote the
following about the effects of the lowering of the priorities of treatments such as IVF,
speech therapy and hip and knee replacements: ‘While the cuts do not affect conditions
such as cancer, refusing treatment for other conditions meant pain or discomfort for those
affected.’ In an article by about DHSC memo concerning the growing shortages of
medicines, Taylor (2019) observed: ‘The document tells doctors that some patients will
have to be prioritised over others for some lifesaving drugs, a form of drug rationing.’
With respect to queuing (F), there were growing problems with excessive waiting for
visits to GPs (Campbell, 2020; Smyth, 2017b). Although the NHS had a target that
consultations should take place within 48 hours of a request, the share of patients
being seen by a doctor a week or more after they had requested an appointment
increased from 13% in 2012 to 20% in 2017. According to Gregory (2020):

In October [2019] 3.3m patients waited more than 21 days to see a GP. It is the highest figure
on record and up by 16% on the same month in 2018. Nearly half of the patients – 1.6m –
waited for more than a month.

There also was an intensification of queuing at hospital A&E departments (Campbell,

2017). NHS England ordered hospital trusts to not allow ambulances to queue outside
A&Es and to avoid leaving patients in corridors without monitoring them or ensuring that
they had access to critical supplies, such as oxygen. Smyth (2017a) reported that:

Two and a half million people waited too long in A&E units over the past year as hospitals
suffered their worst 12 months in more than ten years. At the end of March [2017] 363,687
people had been waiting longer than four hours, up from 153,037 in 2012–13 . . . .About 3,500
patients had to wait more than 12 hours on a trolley for a bed in 2016–17, more than three
times the figure for the year before.

The share of attendances at A&E resolved within four hours fell from 97.1% in August 2010
to 76.4% in March 2018. The performance indicator deteriorated further to 68.6% in
December 2019 due to staffing problems and high demand for medical care.
Rationing in hospitals increased, as shown by the rise in the number of patients on
waiting lists for elective (non-urgent) treatment in hospitals from 2.5 million in June 2009
to 4.2 million in November 2018, or by 66% (G) (Campbell, 2017; Smyth, 2017a). The
National Audit Office (2019) reported that the share of patients on a waiting list for
elective treatment for less than 18 weeks fell from 93% in March 2013 (the operational
standard was 92%) to 87% in November 2018. There were increases in the number of
patients waiting for more than 18 weeks from 153,000 in March 2013 to 528,000 in
November 2018 and for more than 52 weeks from 473 in 2013 to a peak of 3,500 in
July 2018. Only 44% of hospital trusts satisfied the waiting time targets in 2018. In the case
of cancer patients, 79% were treated in a hospital within 62 days of an urgent referral by
a GP in 2018 versus the national target of 85%.
During the period of austerity, the NHS decided to eliminate many traditional diag­
nostic practices and treatments with the usual justification that ‘evidence-based
 POST-COMMUNIST ECONOMIES 991

medicine’ evaluations had shown them to be ineffective (H). Campbell and McNicoll
(2011) claimed that many Primary Care Trusts were banning or imposing long waiting
times on treatments for conditions such as loss of sight, arthritis and infertility in order to
save money. In 2017 thirty health charities complained about NHS England restricting and
rationing treatments that patients with rare and complex needs, which could affect
cancer, diabetes and asthma patients. According to Greenfield (2018):
Hundreds of thousands of NHS patients will be refused operations judged futile as part of
cost-cutting measures in the health service. Procedures including injections for back pain,
surgery to help snorers and knee arthroscopies for arthritis form part of an initial list of 17
operations that will be discontinued completely or highly restricted by NHS England . . . NHS
bosses hope to stop at least 100,000 operations, saving £200m.

In the post-GFC period the NHS intensified its efforts to promote input substitutions
(I). Over the years decisions were taken to reduce physical meetings with GPs by:
devolving responsibilities for examining, ordering tests and prescribing medicine to
paramedics (‘physician associates’) in the practices; promoting telephone consulta­
tion with a GP; and formally substituting meetings with community pharmacists for
those with GPs. As in the past, efforts were made to either substitute alternatives for
medicines in short supply or to prescribe less expensive drugs (generics). Kenber and
Smyth (2017) reported that:
. . . people were being forced to change drugs because of shortages: “The impact of this
should not be underestimated . . . [People with epilepsy] may not be able to drive or work, and
experience severe anxiety or depression as a result of switching medication . . . ”

Taylor (2019) reported on advice being given to doctors by NHS authorities in autumn
2019 to deal with growing shortages of medicines by physically dividing medicinal tablets
between patients and switching patients from effective drugs to less satisfactory
alternatives.

The NHS in the Russia state capitalist economy: 2000–2019

Population and illness
The Russian population dropped from 146.3 million in 2000 to 142.7 million in 2009, but
then recovered to 146.9 million in 2018 (Table 8a). The share of those aged 60 years and
older rose from 18.3% to 21.3%. Total disease incidence increased over this period, from
73,573 new cases per 100,000 to 78,213.15 The incidences of non-communicable illnesses
grew substantially: diabetes by 18% and malignant neoplasms and cardiovascular disease
by 25%. Although the rates of many infectious diseases declined, Sokolov (2020) noted
that the number of people with serious infections fell only slightly from 4.0 million in 1990
to 3.5 million in 2018. Table 8a indicates that there were significant increases in ‘acute
intestinal infections’ and ‘acute infections of the upper respiratory tract’, which suggests
that the viral environment in Russia remained problematic.

Economy, priority of health and health expenditure

The Russian economy recovered rapidly from its 1999 Financial Crisis and a stable state
capitalist economic system was established with intensifying linkages with the global
 992

Table 8a. Health production in the Russian federation, 2000–2018: demography, morbidity, and health expenditure.
Indicator Units 2000 2003 2005 2007 2008 2009 2010 2015 2018
C. M. DAVIS

Factors influencing demand for medical care

Population (end-year) Millions 146.3 144.2 143.2 142.8 142.8 142.7 142.9 146.5 146.9
Elderly share of population % 60 and older 18.3 18.3 17.3 17.1 17.2 17.4 17.7 19.9 21.3
Total illnesses New cases/100,000 73,573 74,857 74,588 77,100 77,200 80,246 78,004 77,816 78,213
Acute intestinal infections incidence New cases/100,000 517 433 442 479 478 490 569 520 782
Viral Hepatitis New cases/100,000 163 98 93 73 71 70 66 56 47
Acute infections of the upper respiratory tract New cases/100,000 20,352 19,859 18,674 19,480 19,336 23,467 19,778 20,452 30,816
Diabetes Mellitus New cases/100,000 112 149 174 213 213 218 227 241 252
Tuberculosis New cases/100,000 95 88 84 83 85 83 77 58 44
Malignant Neoplasms New cases/100,000 310 317 331 342 346 356 362 403 426
Circulatory Illness New cases/100,000 1,718 2,060 2,290 2,617 2,663 2,651 2,614 3,117 3,258
Factors influencing the availability of resources to support the NHS
GDP in real terms (OECD) $ Billions 2015 PPP 2019 2385 2719 3191 3359 3096 3236 3526 3689
GDP index (OECD) 2000 = 100 100.0 118.1 134.7 158.1 166.4 153.3 160.3 174.6 182.7
GDP annual growth % 10.1 7.3 6.4 8.5 5.2 −7.8 4.5 −2.0 2.5
GDP Russia/UK Ratio 0.95 1.03 1.11 1.24 1.31 1.26 1.29 1.27 1.27
Public health expenditure (HE) index Real 1991 = 100 64.0 76.0 79.0 100.0 122.0 120.0 124.0 141.0 148.0
Public health expenditure (HE) index Real 2000 = 100 100.0 118.8 123.4 156.3 190.6 187.5 193.8 220.3 231.9
Public HE share of state budget % 12.4 11.0 11.7 12.1 11.1 10.3 9.7 9.6 9.7
Public HE per capita (OECD) $ Current 265 342 431 613 753 751 740 837 942
Public HE share GDP (OECD) % 3.0 3.0 2.9 2.9 3.1 3.5 3.0 3.1 3.2
Public HE Share GDP (Russia) % 3.3 3.5 3.7 4.2 3.7 4.3 3.8 3.4 3.2
Pharmacy sales index 2007 = 100 Rubles 22.0 36.9 64.7 100.0 126.7 167.0 179.8 332.1 344.7
Imports of medicines Millions $ 1,154 2,078 3,865 5,550 7,513 7,136 9,346 6,876 8,095
Imports of medicines index $ 2007 = 100 20.8 37.4 69.6 100.0 135.4 128.6 168.4 123.9 145.9
Imports of medical equipment Millions $ 481 1042 1239 3295 4419 3032 3,468 2,634 3385
Table 8b. Health production in Russia, 2000–2018: NHS performance and health outcomes.
Indicator Units 2000 2003 2005 2007 2008 2009 2010 2013 2014 2015 2018
Resources and performance of the NHS
Total Russia NHS employment Thousands 4,503 4672.0 4,453 4,644 4,666 4,638 4,631 4,523 4,496 4,496 4,404
Doctors Thousands 680 686 690 707 704 711 716 703 709 673 704
Doctors Per 1,000 population 4.7 4.8 4.9 5.0 5.0 5.0 5.0 4.9 4.9 4.6 4.8
Middle medical personnel Thousands 1,564 1,552 1,530 1,543 1,511 1,518 1,509 1,519 1,525 1,550 1,491
Middle medical personnel Per 1,000 population 10.8 10.9 10.8 10.8 10.9 10.7 10.6 10.6 10.4 10.6 10.2
MMP per doctor Number 2.3 2.3 2.2 2.2 2.1 2.1 2.1 2.2 2.1 2.3 2.1
Polyclinics Number 21,254 21,467 21,783 18,301 15,625 15,322 15,732 16,461 17,106 18,564 20,228
Outpatient doctor visits per year Total millions 1,313 1,286 1,264 1,309 1,329 1,343 1,333 1,358 1,323 1,289 1,231
Outpatient doctor visits per year Per person 9.0 8.9 8.8 9.1 9.3 9.4 9.3 9.5 9.2 9.0 8.4
Hospitals Number 10,704 10,101 9,479 6,777 6,545 6,454 6,308 5,870 5,638 5,433 5,257
Hospital beds Thousands 1,672 1,597 1,575 1,522 1,399 1,373 1,340 1,302 1,267 1,222 1,173
Hospital beds Per 1,000 population 11.6 11.1 11.1 10.7 9.9 9.7 9.4 9.1 8.7 8.3 8.0
Length of stay in hospital Bed days per patient 15.5 14.5 13.8 13.2 13.1 12.8 12.6 12.1 11.8 11.5 10.7
Operations in hospitals rate Per 1,000 population 59.4 59.3 61.5 61.4 62.6 64.5 64.9 66.2 66.7 67.5 68.3
CAT scanners Per million population 2.6 3.0 3.8 4.4 5.0 6.0 6.9 11.3 12.2 12.6 13.6
Magnetic resonance imagers Per million population 1.1 1.4 1.5 2.0 2.3 2.5 2.5 4.0 4.4 4.6 4.9
Health outcomes: Mortality-related
Crude death rate Deaths per 1,000 15.3 16.4 16.1 14.6 14.6 14.2 14.2 13.0 13.1 13.0 12.5
Deaths per year Thousands 2,225 2,366 2,304 2,080 2,076 2,011 2,029 1,872 1,878 1,909 1,829
Malignant neoplasms mortality Deaths per 100,000 193.0 185.0 198.9 201.2 201.9 204.9 203.1 201.1 199.5 202.5 200.0
Circulatory disease mortality Deaths per 100,000 797.0 867.0 905.4 833.9 835.3 801.0 806.4 698.1 653.9 635.3 583.1
Maternal mortality Deaths per 100,000 births 40.0 32.0 25.4 22.0 20.7 22.0 16.5 11.3 10.8 10.1 9.1
Infant mortality Deaths per 1,000 births 16.6 13.9 11.0 9.4 8.5 8.1 7.5 8.2 7.4 6.5 5.1
Population life expectancy at birth Years 65.3 64.6 65.7 67.7 68.1 68.8 68.9 70.8 70.9 71.4 72.9
Male life expectancy at birth Years 59.0 58.6 58.9 61.4 61.9 62.9 63.1 65.1 65.3 65.9 67.8
Sources. Statistics in Tables 8a and 8b were obtained from official Russia sources, OECD and WHO databases, and Russia specialist reports. Full documentation is provided in Davis (ca. 2021a).
POST-COMMUNIST ECONOMIES
993
994 C. M. DAVIS

Table 9. Priority status of the Russia NHS in two periods: 2000–2007 and 2008–2019.
2000–2007 2008–2019

Indicators of the prior­
Row ity status of the NHS
A Health in leadership’s
objective function
(OF)
B Resource allocation
responsiveness to
problems
C Wage rates and work
conditions
D Adequacy of financial
norms in budgets
E Output plans
F Budget constraints
G Supply plans
H Siphoning of supplies
I Investment plans
J Inventories of inputs
K Reserve production
capacity
L Shortage intensity
Sources: Davis (1989) presents mathematical-statistical versions of the indicators and an empirical evaluation of them for
the USSR NHS in the 1980s. Evidence for this table is from Davis (2001a, 2019, ca. 2021a) and research for health
projects and this article.
Medium priority (with high aspects) Low priority (with high aspects)
Summary of evidence concerning indicators
During plan/budget formulation
Somewhat high weight in OF, but Medium to low weight in OF. More frequent
acceptance of trade-offs between trade-offs between health and other
health and other objectives. objectives.
More responsive than in the 1990s. Slow and lagged responses.
Real wages increase, but remain High priority given to substantial raises of
relatively low. Work conditions wages of doctors, but not of other
improve. personnel. Work conditions deteriorate.
More generous than in the past. Stingy, especially related to capital
investment.
During plan/budget implementation
Reasonably strong commitment to Moderate commitment to fulfilment of
fulfilment of plans. plans.
Softer than in past. Harder than in pre-GFC period.
Reasonably strong commitment to Greater tolerance of under-fulfilment of
fulfilment of plans. plans.
High priority protects NHS from external NHS mostly protected from external
siphoning, but internal siphoning siphoning, but greater internal siphoning
according to medical priorities. related to medical priorities.
Ambitious plans and stronger Modest plans and only moderate
commitment to their fulfilment. commitment to their fulfilment.
Improved input inventories. Reduced input inventories.
Adequate. Limited.
Lower than in1990s. Higher than in pre-GFC period.

economy. The structure of the economy in Russia remained different from that of the UK,
as shown by this comparison of shares of GDP: industry 32% (UK 20%), natural resources
22.0% (1.5%), and foreign trade turnover 26% (31%). The GDP of Russia grew at an
average rate of 8% over the period 2000–2007.
The government raised the priority of health from low to medium (but high in some
categories) (see Table 9). It established in 2001 the Federal Goal Programme in Health for
2002–06 and in 2005 launched the generously funded five-year Priority National Projects in
Health in 2006–2010. Their goals were to improve the health of population through
enhanced prevention programmes and more efficient and effective curative medicine.
Work was carried out on a major reform programme called Conception of Health of the
Russian Federation to 2020 (Sheiman & Shishkin, 2009; VShE, 2017a).
The index of real public (state budget and the compulsory medical insurance) health
spending (2000 = 100) increased to 156 in 2007 (Table 8a), or by 5.5% per year (VShE,
2017b, p. 12). The public health share of GDP rose from 3.3% to 4.2%.
The Russian economy experienced recessions during 2009–2010 due to the GFC and
2014–2016 due to a major drop in oil prices and Western economic sanctions. After 2014
the Russian government attempted to reduce the vulnerability of the economy to
 POST-COMMUNIST ECONOMIES 995

external shocks by promoting import-substitution programmes in industry (Connolly &

Hanson, 2016).
The priority of health was reduced to from medium to low, but with some high-priority
elements (notably wages of doctors). The growth of real health spending decelerated to
an average of 3.2% a year. The index of real public health expenditure (2000 = 100.0) rose
slowly from 156 in 2007 to 232 in 2018. Due to the relative dynamics of GDP and health
expenditure, the latter’s share of GDP dropped from 4.2% in 2007 to 3.2% 2018. There
were the following decreases from 2007 to 2018: health share of total government
spending from 12.1% to 9.7%; the investment share in total health spending from
11.8% to 7.7%; and the health share of total investment in the economy from 2.6% to
1.4% (Davis, ca. 2021a).
Despite these financial problems, additional attempts were made to reform the NHS, as
outlined in the health sections of the 2012 Strategy for Russia 2020 (covering the period
2012–2020) and the 2018 Strategy for Russia 2018–2024 (Shishkin & Sheiman, 2017; VShE,
2017a, VShE, 2017b, VShE, 2018, and VShE, 2019b). For example, in 2018 the government
adopted as a high-priority objective the substantial raising of the wages of doctors.

Structure of the health sector

Health sector institutions in the 2000s retained the general characteristics determined
by Soviet inheritances and transition policies (e.g., liberalisation, privatisation) in the
previous decade, but numerous changes occurred in their operations due to develop­
ments in the economic system and its improved performance (Davis, 2001a, ca. 2021a).
Medical supply outside of the NHS completed its shift from a state institution to
a private one. There was rapid growth of wholesale and retail trade in pharmaceutical
products and medical equipment and substantial improvements in the trade infra­
structure and in the quality of goods that it distributed. Medical supply within the NHS
was controlled by state organisations within the Ministry of Health (e.g., Department of
Medicine Supplies and Medical Products Regulation). Medical foreign trade was in
private ownership and operated on market principles. But the Ministry of Health
regulated it tightly by OECD standards. Russia had a substantial and diversified medical
industry that was inherited from the USSR and capable of producing a full range of
basic pharmaceutical products and medical equipment.16 Most of its enterprises had
old capital stock and produced goods that were not competitive internationally and
were increasingly displaced by imports. Russia also had a large biomedical R&D net­
work made up of institutions controlled by the Academy of Sciences, Academy of
Medical Sciences, Ministry of Health, medical industry, and universities. On the whole,
this institution had a mediocre record in innovation by global standards. However, it
possessed the capabilities to develop diagnostic tests and vaccines and to work with
domestic industry to produce them on a large scale. Russia tried to safeguard domes­
tic biomedical R&D capabilities for national security reasons and to avoid outsourcing
research to foreign countries.
The national health service in Russia provided medical care to the population free of
direct charge. It was financed jointly by the state budget (for the economically inactive
population) and by medical insurance funds that were made up of compulsory contribu­
tions from employers. In principle, first-contact medical care was provided by medical
staff in outpatient polyclinics organised on a territorial basis. Patients either were treated
996 C. M. DAVIS

in these facilities or referred on to hospitals. However, the national health service actually
was subdivided into six subsystems that provided medical care of differing standards to
population groups (Davis, 1979, 1988, 2001a). Three of these were ‘closed’: elite, minister­
ial, and industrial enterprise. The other three were open to the public: large city, provincial
city and rural district.
The central health bureaucracy was controlled at the top by a strong Presidential
apparatus that dominated legislative bodies (e.g., State Duma) and ministries and was
able to impose strategic decisions on them. The NHS was managed by the Ministry of
Health RF through a traditional hierarchical system from the Ministry in Moscow down
to first aid stations in villages. All medical facilities in the NHS were state-owned and
medical personnel were government employees. Its facilities and personnel were spread
across 8 Federal Districts and 85 Federal Subjects (e.g., Federal Cities like Moscow,
regions).

Performance of the NHS and health outcomes

During the 2000s there were substantial improvements concerning inputs to the medical
system, but with some unevenness. Total employment in the NHS fluctuated around
4.5 million. The number of doctors rose from 680,200 in 2000 (4.7 per 1,000) to a peak of
715,800 in 2010, but then fell to 703,700 in 2018 (4.8 per 1,000). There was a decrease in
the number of MMP from 1,563,600 (10.8 per 1,000) to 1,491,400 (10.2 per 1,000). The ratio
of MMP to doctors dropped from 2.3 to 2.1, despite plans to increase it. According to
Sokolov (2020), the numbers of MMP and junior medical staff (e.g., porters) were cut in
order to fulfill a Presidential order to raise significantly the salaries of doctors in a period of
financial stringency, which created a zero sum situation.
On average, medical staff were well trained, some up to world standards, but
a tradition of low wages and bureaucratised promotions provided weak incentives to
doctors to maintain their professional knowledge over careers. This situation improved in
response to the wage increases. Russian doctors and MMP had substantial experience in
dealing with respiratory illnesses, notably influenza and pneumonia, due to their impor­
tance in the national disease pattern. But the NHS had a low provision of acute care
doctors and nurses relative to OECD countries and their work conditions usually were
difficult. According to Efimova (2020):
. . . emergency care nurses have 24-hour shifts. In other countries there is one patient per
nurse. In Russia there are three patients per nurse in the best circumstances, but usually it is
closer to six per nurse.

With respect to capital stock, the number of polyclinics declined significantly from 21,254
in 2000 to a low of 15,322 in 2009, but then rose back to 20,228 in 2018. The number of
hospitals fell from 10,704 to 5,257, while that of hospital beds declined from 1.7 million
(11.6 per 1000) to 1.2 million (8.0). But levels of provision remained high by OECD
standards.
The technical standards of most Russian medical facilities were in the average to poor
range. The share of hospitals requiring major capital repairs was reduced from 27.2% in
2000 to 16.7% in 2018. Weaknesses in the quality of facilities contributed to the existence
of less hygienic environments than those in health services in OECD countries.
Deficiencies in facilities were greater in rural areas and deprived regions.
 POST-COMMUNIST ECONOMIES 997

The supplies of medicines increased in the 2000s. The domestic medical industry made
only a modest contribution because from 2005 to 2016 there were declines in its
production of 14 out of 28 categories of medicines. To compensate for this situation,
Russia increased its imports of medicines from 1.2 USD billion in 2000 to a peak of 11.8
USD billion in 2013. Financial difficulties related to the 2014 recession resulted in Russia
cutting back imports of medicines by 42% to 6.9 USD billion in 2015. Efforts were made to
promote import-substitution in the pharmaceutical industry, which were only partially
successful. The value of imports of medicines partially recovered to 8.1 USD billion in
2018. According to Sokolov (2020), the share of imports in retail sales of pharmaceutical
products was around 80%.
Throughout 2000–2019 there was inadequate provision of disposable PPE to medical
personnel in the NHS because insufficient quantities were produced domestically or
imported. Russian medical workers adjusted to the situation and routinely re-used high-
quality imported disposable products, after sterilising them.
There were improvements in medical equipment in the NHS over the two decades. The
indicator of CAT scanners per million rose from 2.6 to 13.6 and that of MRI machines
increased from 1.1 to 4.9. However, Tokun (2016) found that the share of obsolete medical
equipment in the NHS was increasing:

The depreciation of fixed assets remains at a high level – more than 50%. As the structure of
fixed assets changes with a rising share of medical equipment, the degree of depreciation has
increased at a faster pace . . . due to the rapid obsolescence of expensive types of equipment . .
..

Sokolov (2020) claims that in 2019 46% of the capital equipment in the NHS was over 6
years old. Russia increased its imports of medical equipment from 447 USD million in 2000
to 3,385 USD million in 2018. However, from 2014 it made energetic efforts to promote
import-substitution. Russian doctors repeatedly expressed their dissatisfaction with the
low technical standards of domestically produced medical equipment.
The NHS of Russia had a mixed record with respect to outputs. From 2000 to 2018 the
total number of outpatient visits fell slightly from 1,313 million to 1,231 million, while
visits per capita per year dropped from 9.0 to 8.4. The number of operations carried out in
polyclinics remained stable around 6 million per year (41 per 1,000 population), as did
hospital admissions per 100 population (21.2 to 20.4). The utilisation of beds improved
somewhat, which was reflected in the fall in the average length of stay of a patient from
the 15.5 days to 10.7. The rate of operations carried out in hospitals rose from 59.4 per
1,000 to 68.3.
In 2018 Russia had 31 million people aged 60 years and older (Table 8a). It is estimated
that around 4 million needed substantial social support. The country had an under­
developed social care network for the elderly and those afflicted by dementia by OECD
standards because of inheritances of attitudes and institutions from Soviet times (e.g., no
social workers) and low investment. The number of state-owned homes for the elderly
and disabled adults rose from 1,132 in 2000 to 1,307 in 2018, and the number of beds in
them went up from 232,000 to 263,000 (Davis, ca. 2021a). Over this period there was
a substantial and accelerating growth in the number of private nursing homes of all types,
from an insignificant level to around 700 with 40,000 beds. Their quality ranged from
abysmally poor to comfortable. However, most of the elderly lived in their own flats or
998 C. M. DAVIS

houses and they received assistance primarily from their relatives and medical personnel
from the NHS.
There was a lag between improvements in the economy and health service and
recovery of health outcome indicators from their low values in the 1990s, but from
2004 onward there were sustained improvements (Table 8b). For example, the crude
death rate fell from 15.3 deaths per 1000 in 2000 to 12.5 in 2018 and life expectancy at
birth for the whole population climbed from 65.3 years to 72.9 years.

Shortages in the NHS

The positive growth of health spending and inputs to the NHS during 2000–2007
gradually reduced the intensity of all forms of shortages from the high levels of the
previous decade (Table 10). Although there were minimal shortages of doctors and MMP
at the national level, their distributions were uneven geographically, with inadequate
provision in the countryside and in deprived regions (e.g., MMP sometimes occupied
doctor posts in rural clinics). In the case of NHS capital stock, there still were shortages of
modern technical amenities. For example, the share of hospitals without running hot
water was reduced from 35.5% in 2000 to 30.6% in 2007.
During 2008–2019 the rising demand for medical care in Russia combined with the
constrained growth of real health spending and of inputs to the NHS to generate
increasing shortages (Table 10). Sheiman and Shevskii (2015, p. 144) identified
a number of labour-related problems:

There is a low level of personnel planning, a shortage of many categories of workers, serious
imbalances in their composition . . . In Russia, the process of specialisation continues, creating
serious structural imbalances in human resources and the unsatisfactory state of primary
medical care.

There were national shortages of doctors relative to advertised NHS positions (A). An
article in October 2019 reported (Sidorenko, 2019):

According to the Ministry of Health, polyclinics on their own have a deficit more than 25
thousand doctors . . . However, the Ministry of Labor told Izvestiya that only one thousand
relevant jobseekers are registered on the labor exchange . . .

The geographic inequalities in the distribution of doctors worsened and shortages in

backward areas intensified (Каlashnikov, 2015) (B). There were growing deficits of
doctors in specific medical specialities (C). Sheiman and Sazhina (2018, p. 137) showed
that only 13% of doctors in Russia worked in primary care, while 87% were in more
specialised fields of medicine, and they argued: ‘The process of specialisation of
medical personnel, manifested in recent decades in all Western countries, is particularly
pronounced in Russia, which has led to an acute shortage of primary care physicians.’
In 2019 there were serious short-falls in the provision of oncologists in polyclinics
(Defitsit, 2020):

“The shortage of doctors in the field of oncology in Russian polyclinics is about 2 thousand
people.” Kaprin noted that Moscow and St. Petersburg had the highest provision of oncol­
ogists; the most acute shortages of such specialists were in the Far Eastern and North
Caucasian Federal Districts.
 POST-COMMUNIST ECONOMIES 999

Table 10. Shortages in the Russia NHS in two periods: 2000–2007 and 2008–2019.
Russia NHS 2000–2007 Russia NHS 2008–2019
Row Category of shortage Summary of empirical evidence about the intensity of shortages
A Doctors: National High provision of doctors by world Continued high provision of doctors by
shortages standards (5.0/1000 in 2007). Minor world standards (4.8/1000 in 2018).
national shortages relative to Greater national shortages relative to
established positions. established positions.
B Doctors: Shortages in High provision of doctors in cities and Growth of shortages of doctors in rural
rural areas and improved circumstances in rural areas areas and backward regions due to
deprived regions and deprived regions. economic crises, poor living conditions,
and weak incentives.
C Doctors: Shortages of Improvements in wages, supplies and Improvements in wages and equipment
specialists equipment result in reductions in reduce shortages in some specialities.
shortages in specialities and in high But there were deficits of 25,000
technology fields. doctors in polyclinics and 2,000
oncologists in NHS clinics.
D Middle Medical High provision of MMP (10.8/1000 in Declines in numbers of MMP and provision
Personnel (MMP): 2007). Some national shortages relative ratio (10.2/1000 in 2018). Deteriorating
National shortages to advertised positions. Slight fall in low work conditions and continued low
ratio of MMP to doctors. wages contributed increase national
shortages relative to positions.
E MMP: Shortages in Minor improvements in provision of MMP Deterioration of provision of MMP in rural
rural areas and in rural areas and deprived regions. areas and deprived regions. Growth of
deprived regions Declines in MMP occupancy of doctor MMP occupancy of doctor positions.
positions in the countryside.
F MMP: Shortages of Improvements in supply of specialist MMP, Uneven provision of MMP across
specialists but continuing deficits in high specialities with shortages in many
technology medical fields. fields, especially those involving high
technology.
G Shortages of Three-fold increase in imports of Increased shortages of medicines due to
medicines and medicines and medical products (e.g., stagnant domestic production and 32%
medical inputs disposable items). Uneven recovery of drop of imports by 2018. Growing
domestic production of medicines. deficits of the most modern medical
Overall, a reduction in shortages. products.
H Shortages of medical Doubling of imports of medical Acceleration of obsolescence of medical
equipment equipment. Increased investment helps equipment due to low investment and
recovery of production of domestic cuts in imports. Chronic shortages of
industry. Overall, a reduction in imported spare parts and material
shortages. inputs.
I Shortages of hospital Greater investment improves capacity and Inadequate investment causes shortages
facilities and beds quality of NHS capital stock. Declines in of buildings and modern facilities,
J Shortages of numbers of hospitals, beds, and especially in rural areas and backward
outpatient facilities polyclinics improve efficiency, but regions. Minorities of hospitals and
create shortages in rural areas. polyclinics continue to have inadequate
technical standards, such as running
water and central heating.
K Shortages in Greater investment improves quality of Stagnant development of the network of
emergency care emergency hospitals, clinics and ambulances and hospital A&E services
ambulances. Stability in their capacities results in shortfalls of supply relatative
relative to patients. to growing demand.
Sources: The shortage indicators were developed from general ideas in Kornai (1980) and have been presented in Davis
(1989, 1990b). The summaries of empirical evidence are based on Davis (2001a, ca. 2021a) and research for health
projects and this article.

Shortages of middle medical personnel were mostly generated by the same factors as
those of doctors and exhibited similar patterns (D, E, F).
There was an intensification of shortages of medicines after 2009 due to the GFC and
the related deterioration of the exchange rate, and again on a more sustained basis from
2014 onwards (G). To some degree drops in imports were offset by Russian efforts to
promote import-substitution. But the NHS medical staff and its patients discovered that
1000 C. M. DAVIS

many of the domestic medicines were not as effective as the foreign ones they replaced.
Cost-containment policies contributed to shortages by setting NHS procurement prices
too low to be attractive to Russian producers of medicines (Zvezdina & Lindell, 2019).
There also were recurrent shortages in polyclinics and hospitals of basic medical products
and spare parts, especially imported ones and disposable PPE (latex gloves, aprons, paper
examination bed covers, face masks, visors).
There were mixed developments with respect to excess demand for and shortages of
medical equipment (H). The NHS had a large number of hospital beds by international
standards, but its bed occupancy rate rose to 87%, which caused temporary shortages in
hospitals during surges in demand. Russia continued to have shortages in capital equip­
ment relative to European norms. For example, the number of CAT scanners in the NHS
rose to 13.6 per million by 2018, but Germany had 35.1 per million. Inadequate invest­
ment contributed to the continuation of shortages of high-quality modern medical
facilities (I). Many polyclinics and hospitals had cramped offices and inadequate facilities
for diagnosis and treatment (e.g., ICUs), especially in rural areas and backward regions.
The share of hospitals without running hot water decreased to 16.6% by 2018, but in
OECD medical systems the share would have been zero (Gubernatorov, 2020).

Consequences of and policy responses to shortages

Due to reductions in the intensity of shortages in the NHS during 2000–2007 there were
fewer adverse consequences and less need for policy responses, such as rationing. The
situation is summarised in Table 11. Evidence in support of these judgements is provided
in Davis (ca. 2021a).
Circumstances worsened over 2008–2019, which had negative impacts on the NHS.
The greater intensity of shortages generated more bottlenecks in the production of
medical services in polyclinics and hospitals (A). For example, Sokolov (2020) made the
following observation about shortages of ICUs:

If at any time you go to any intensive care unit, maybe, with the exception of holidays, when
people leave, the intensive care unit will be completely filled. Even before the Covid-19
epidemic there was excess demand for ICU services. The usual reanimation department for us
has official room for 8–12 people. However, sometimes there were even 16 and they lay in the
corridor, like, for example, now in Italy.

Increases in shortages, queuing and waiting lists generated more complaints by patients
and higher levels of stress of medical staff, which adversely affected their motivation (B).
The greater pervasiveness of shortages discouraged people from reporting their dis­
eases to the NHS, which augmented the submerged components of the morbidity
iceberg (C).
The priorities concerning medical treatment of patients became clearer and more rigid
(D). The most important patient groups and diseases were allocated appropriate
resources, but other illnesses were relatively neglected. There were no major changes in
the arrangements for rationing of medical care through the six sub-systems, but resource
constraints tightened in industrial enterprise, provincial city, and rural district compo­
nents (E).
Substantial empirical evidence from surveys of patients and articles in newspapers and
journals demonstrated that queuing became a more prominent feature of medical care,
 POST-COMMUNIST ECONOMIES 1001

Table 11. Consequences of shortages in the Russia NHS and policy responses, including rationing, in
two periods: 2000–2007 and 2008–2019.
Descriptions of conse­ 2000–2007 2008–2019
quence or policy
Row response Summaries of empirical evidence
Consequences of shortages
A Shortages cause This phenomenon in the NHS was reduced The tightening of resource constraints
bottlenecks in in importance from Soviet times due to due to the GFC and subsequent
production of the substantial allocation of additonal economic problems and the greater
medical services resources and reductions in shortages. intensity of shortages generated more
bottlenecks in the production of
medical services in the NHS.
B Shortages increase The improvements in resources resulted in The constraints on resources increased
stress and lower reduced shortages, complaints by shortages, complaints by patients, and
motivation of patients, and levels of stress of medical levels of stress of medical staff.
medical personnel staff. Motivation of personnel increased. Motivation of personnel declined.
C Shortages cause under- The reductions of shortages of medical Increased shortages of medical staff and
reporting of illnesses staff, queuing, and waiting times equipment, queuing, and waiting
and increase hidden encouraged people to report illnesses times discouraged people from
components of to the NHS in a timely manner. So the reporting illnesses to the NHS in
morbidity icebergs hidden components of the ‘morbidity a timely manner. So the hidden
iceberg’ was reduced. components of the ‘morbidity iceberg’
increased.
Policy Responses to Shortages
D Revision of priorities Renewed emphasis on: preventive Tighter financial constraints and
measures to improve health-related shortages force NHS to focus resources
behaviours; uncovering hidden serious on infants, pregnant women, life-
illnesses (e.g., cancer) earlier; improving threatening illnesses (e.g., cancer,
technical standards of medical care. cardiovascular). Normal illnesses given
lower priority.
E Rationing by socio- Russia maintained six sub-systems of No significant changes, but conditions in
political criteria (sub- medical care: elite, ministerial, most sub-systems worsened. Priorities
systems of medical industrial, large city, provincial city, and of treatment within sub-systems
care) rural district. The initial three were became firmer.
‘closed’ and gave treatment only to
eligibile groups.
F Rationing by queuing Reduced waiting time of patients in Gradual shift from physical queues to
physical queues at polyclinics, in meet polyclinic doctor to waits for
ambulances for hospital admission, and appointments. Worsening of queuing
on trolleys in hospitals for beds. in trolleys to move to a bed in
Development of polyclinic queues by a hospital and for specialist meetings
appointments. for hopital patients. Reduced
achievement of waiting time targets.
G Rationing by waiting list Extra resources reduced lengths of waiting Restrictions on resources increased
lists and average waiting time related to lengths of waiting lists and waiting
rationing of access of patients to times related to the rationing of access
specialised outpatient diagnosis and for to outpatient diagnosis and hospital
admission to hospital for diagnosis and diagnosis and treatments.
treatments.
H Exclusion of types of Due to improved availability of resources Due to tightening resource constraints
medical services from NHS made minimal adjustments to NHS re-evaluates its guarantees and
the ‘state guarantee’ ‘State Guarantee’ to eliminate types of eliminates many traditional medical
medical services. services due to their nature and
ineffectiveness.
I Substitution of Despite reduced shortages, NHS tried to Intensified efforts to replace labour of
traditional inputs substitute labour of doctors with that or expensive doctors with that of cheaper
(doctors, medicines) nurses and medical assistants. Greater medical staff. New efforts by NHS to
by cheaper inputs substitution of generic medicines for promote web-based advice sites.
more expensive branded and imported Substitution of high-cost medicines by
drugs. cheaper alternatives.
Sources: Davis (1989, 1990b) explains the indicators and evaluates them empirically for USSR and UK NHS in the 1980s.
Evidence for this table is from Davis (2001a, ca. 2021a) and research for health projects and this article.
1002 C. M. DAVIS

especially in disadvantaged locations and in specialities afflicted by shortages (F).

According to the results of a 2016 large-scale survey of the opinions of patients concern­
ing the NHS reported in VShE (2019a, p. 33), the fourth most frequent complaint was ‘long
queues’ (33%). Although the NHS offered a State Guarantee (SG) that patients would be
seen by an outpatient doctor within 24 hours of indicating an interest, VShE (2019a, pp.
32–33) summarised the results of a recent survey:
70.6% of respondents reported that their waiting time for a local therapist or pediatrician was
more than 24 hours after they submitted a request, i.e. the deadlines set in the SG, 23%
received an appointment only after 4–7 days, and 21.8% after 10 days. In other words,
approximately 45% of the respondents received an appointment 4 or more days after
requesting one.

Russia adopted State Guarantees related to waiting lists in 2014: 14 days for a follow-up
meeting with a polyclinic specialist doctor; 14 days for hospitalisation of a cancer patient
following a recommendation by a first-contact doctor and 30 days for a normal patient;
14 days for diagnosis using traditional medical equipment (x-ray, mammogram, ultra­
sound); and 30 days for investigations using modern high-technology equipment (CAT
scan, MRI). Over subsequent years waiting times increased and often exceeded the
maximum time periods (F). The large-scale survey of patients in 2016 found that (VShE,
2019a, p. 32):
. . . the length of waiting time is the most acute problem in the health service according to
43% of Russians . . . This problem is even more significant than the low level of qualifications
of doctors or the poor provision of facilities with medical equipment . . . 43% of respondents
believe that for diagnostic tests (ultrasound, functional, X-ray, laboratory) you have to wait
more than the target of 2 weeks.

Medical personnel made similar assessments of the problem with waiting lists (VShE,
2019a, p. 33):
A survey of medical workers (3,423 doctors and 943 nurses), conducted by the same authors
in April 2016, gives equally negative assessments . . . 69.5% of doctors and 72.1% of nurses
consider that the availability of medical consultations is low and that the real period of
waiting exceeds the established norms . . . 68% of medical workers believe that the waiting
times for complex and high-technology diagnostic investigations (magnetic resonance ima­
ging (MRI), computer tomography (CT), angiography) significantly exceed the established SG
of 30 days.

In the post-GFC period of financial stringency increasing attempts were made in the NHS
to exclude diagnoses and treatments related to certain diseases and medical conditions
from the State Guarantee of free medical care, as happened in the UK (H). Among the
services that were eliminated were routine cosmetic surgery, injections for back pain,
knee arthroscopies for arthritis, and varicose vein surgery.
Another adverse development was the intensification of efforts to replace the
services of more expensive medical personnel, notably doctors who had obtained
substantial pay rises, by those provided by cheaper and lower-skilled MMP (I). Greater
efforts were made to hold down the costs of medicines by replacing expensive
imported drugs with Russian import-substitution alternatives. Over the years from
2014 there were many complaints from doctors concerning the lower quality and
effectiveness of Russian medicines. According to an article by Starkov (2020), in
 POST-COMMUNIST ECONOMIES 1003

November 2019, 142 paediatric oncologists and haematologists published an open

letter to the Ministry of Health that complained about the poor quality of available
Russian-produced drugs treat children afflicted by cancer and requested that the
imports of superior foreign medicines be resumed on an urgent basis. This request
was granted by the government in early 2020.

Comparisons and comments about the influences on the initial conditions of

the national health services of the UK and Russia in 2020 for confronting
Covid-19 epidemics
This article has analysed the changing interrelationships between economies and health
sectors in the UK and Russia, as well as the resulting phenomena of national health
production, shortages, and shortage-related consequences and policies, notably ration­
ing. This concluding comparative section summarises findings in an attempt to show how
developments over 2000–2019 in both countries created the circumstances that partially
determined the readiness of the health services in early 2020 to cope with the challenges
of the national Covid-19 epidemics.
Over past 30 years there have been decisive moves away from command or state-
dominated closed economies to market-based ones, whether they are decentralised
like UK, state capitalist like Russia, or hybrid socialist like China. Almost all economies
opened up and engaged in the processes of globalisation, which has resulted in freer
flows of labour, capital and goods. Elaborate international value chains developed, as
well as efficient ‘just-in-time’ supply chains that operated across borders. These
arrangements generated healthy growth rates during 2000–2007 and positive assess­
ments of contemporary capitalism among citizens. However, the beneficial develop­
ments associated with globalisation were accompanied by deindustrialisation and
outsourcing of production in most OECD economies. Their structures changed sub­
stantially, with declines in manufacturing and agriculture and increases in the produc­
tion of services. In consequence, advanced economies became increasingly dependent
on imports.
The UK had a decentralised market economy and experienced all of the developments
mentioned above. An additional feature that proved to be beneficial was the increasing
economic integration with the EU. Russia had a different starting point in 2000 in that it
had just emerged from the ‘transformational recession’ and ‘virtual economy’ institutional
arrangements of the 1990s. It established a state capitalist economic system, launched
many economic reforms, engaged in globalisation processes, and had high growth
through 2008.
These changes in the features of economic systems and the healthy growth of the
economies in the UK and Russia had substantial positive influences on health sectors
during 2000–2007. Households had rising incomes, adopted healthier lifestyles, and
became accustomed to purchasing the best global products, not just basic national
ones. In the UK medical supply, medical industry, biomedical R&D, and medical foreign
trade were predominantly private. The situation was broadly similar in Russia, although
some components of the health sector remained in state ownership or were tightly
controlled by the government.
1004 C. M. DAVIS

Both countries maintained national health services that provided the population with
medical care that was free of direct charge. But substantial differences existed in the
management of the NHS. In Russia state-owned medical facilities functioned in a national
hierarchy and were tightly controlled by the Ministry of Health RF. In the UK, the manage­
ment of the NHS was devolved and decentralised. Russia financed its NHS using the state
budget and compulsory medical insurance contributions from employers, whereas UK
funded it through the state budget.
During 2000–2007 both countries raised the priority of health in a period of high
economic growth (Tables 5 and 9), which resulted in substantial increases in real health
spending and of inputs to the NHS (Tables 4a,b and 8a,b). The enhanced supply relative to
demand resulted in reductions in shortages, which had been intense in Russia in the
1990s (Tables 6 and 10). The adverse consequences of shortages (bottlenecks in produc­
tion, hidden illness) were reduced and there was less need for compensatory policies,
such as rationing (Tables 7 and 11). Medical performances improved, as did almost all
health outcomes.
The GFC during 2008–2010 had both short-term and long-term negative effects. The
UK had a normal experience that involved a short recession followed by a decade of
low growth and austerity policies that restrained real increases of state budget
expenditures to around 1% per year. The GFC also raised doubts in the minds of
the population about the benefits of globalisation and close international integration,
which had facilitated the contagion of the crisis, and about the competencies of
financial and government elites. This fed into the resentments of individuals and
communities that had been adversely affected by deindustrialisation and that were
increasingly critical of stagnating living standards and increasing inequalities. These
negative attitudes, crystallised by the GFC, influenced the decision in the 2016
Referendum to approve of Brexit. This resulted in 3 years of political uncertainty,
which undermined economic performance.
Russia suffered a recession in 2009 and a recovery, but then experienced
another downturn during 2014–2015 due to the collapse in world energy prices.
The combination of falling exchange rates and Western economic sanctions
stimulated the Russian government to attempt to reduce its vulnerability to the
global economy and to promote self-sufficiency through import-substitution
programmes.
After the GFC both countries lowered the priorities of the NHS and welfare pro­
grammes (e.g., residential social care for the elderly) (Tables 5 and 9), which resulted in
low positive growth of real health spending during 2008–2019 (Tables 4a, b and 8a, b).
The austerity policies led to slower or negative growth of the main inputs to the medical
systems. Health investment was reduced, which adversely affected maintenance and
construction of medical facilities and the acquisition of capital medical equipment. In
Russia, imports of medicines and medical equipment were cut substantially on two
occasions.
Since the key factors determining demand did not change (e.g., population ageing,
growth of non-communicable diseases), excess demand for medical services and all
types of shortages increased (Tables 6 and 10). The intensification of shortages had the
usual adverse consequences (bottlenecks in production, worsening work conditions
and motivation of medical personnel, increasing the hidden component of the
 POST-COMMUNIST ECONOMIES 1005

morbidity iceberg). There was greater use in both health services of the traditional
compensatory policies: tightening of medical priorities, increased reliance on queueing
and waiting lists, exclusions of medical services, and forced substitutions (Tables 7 and
11). These factors exerted negative influences on the medical performances of the
health services. Health outcomes continued to improve in both countries, although
with a slowdown in the UK with respect to improvements in mortality rates and life
expectancy at birth.
The capabilities of and problems in the national health services during 2008–2019, and
more broadly in the health sectors, in the UK and Russia were carried over into 2020 and
established the initial conditions for the confrontations of the two countries with their
Covid-19 epidemics. The strengths and weaknesses of the health sectors, in combination
with policy decisions of governments, determined the readiness of health services to
implement effective anti-epidemic policies. The broader economic developments men­
tioned above (e.g., globalisation) appeared to have adversely affected national resilience
in the health sphere, which became an important factor as the epidemics progressed.
These issues are examined more fully in Davis (ca. 2020).

Notes
1. A related article by this author, Davis (ca. 2020), builds on the analysis to more explicitly
evaluate the readiness of the health sectors in the UK and Russia in eleven dimensions to
confront national epidemics and to assess their resilience empirically in dealing with Covid-19
during February – June 2020.
2. Although the sub-periods used in this article are roughly correct in that they are divided by
the GFC, there are lagged effects and spillovers between periods. For example, the sub-
period 2000–2007 is presented as a ‘high priority’ era, but in Russia shortages from the
1990s continued for several years into the 2000s and mortality rates rose through 2003.
With respect to the UK, the Labour government raised the priority of health in the late
1990s.
3. The author of this article has completed a book entitled: Priorities, shortages, and rationing in
the national health systems in the UK and Russia from 1970 to the Covid-19 epidemics in 2020
(Davis, ca. 2021). It contains chapters that examine the issues identified in the title during
1970–1999, as well as in the years covered in this article (2000–2019) and in the Corona virus
epidemic period in 2020. Six of the tables in this article (5–7, 9–11) summarise the findings
from the analyses in the book, which contains an exhaustive bibliography.
4. This approach to defining the health sector in terms of its activities and economic institutions
is based on ideas of Stone (1971), UN (United Nations) (1975) Towards a System of Social and
Demographic Statistics, and this author (Davis, 1979, 2001a).
5. Kornai interpreted economic systems using systems theory in Anti-Equilibrium (Kornai, 1971),
especially in ‘Chapter 4: The General Model of the Economic System’, and in Economics of
Shortage (Kornai, 1980), especially in ‘Chapter 21: Macro-interrelationships: The suction
model’. The author of this article made use of systems theory in his 1974 M.Sc. thesis on
the influence of cybernetics on Soviet economic management and in subsequent works.
6. A 1999 chapter by this author evaluated Russian industrialisation and industrial policy from
1890 to 1996 in different economic systems (e.g., Tsarist capitalist, Stalinist command) and
during transitions between them. The author also has examined the functioning of the
Soviet/Russian health and defence sectors in different economic systems (Davis, 1989, 2019).
7. Davis (ca. 2021b) describes the concept of morbidity icebergs, reviews Soviet and Russian
measures of reported and hidden illness, and summarises and evaluates the detailed
1006 C. M. DAVIS

empirical investigations carried out in the USSR and the Russian Federation using a specific,
labour-intensive methodology.
8. Many of the indicators of shortage in health services and of their consequences and policy
responses that are presented in C. Davis (1989) and in Table 3, 6, 7, 10, 11 in this article were
developed from general ideas in J. Kornai (1980) Economics of Shortage. But concepts and
measurements of priority were not covered in his 1980 book.
9. Aaron and Schwartz (1984, p. 11) write that the primary goal of their book entitled The Painful
Prescription: Rationing Hospital Care, which compares the USA and UK, is to evaluate: ‘. . .what
kinds of choices budget limits have forced on British health planners, doctors and patients
and what stresses such budget limits have generated within the political system that
imposed them.’
10. Queuing refers to: the waiting for an initial meeting with a first-contact doctor either
physically in the reception area or by an appointment; time spent waiting to consult
a specialist in a polyclinic/GP practice after an initial meeting with a first-contact doctor
either on the day or at a future time; and waiting in a hospital A&E department for treatment
of an illness. There also can be queuing in ambulances waiting to discharge patients to A&E
and in hospitals involving waiting in beds for diagnostics or treatment or physically waiting in
receptions for inpatient meetings with medical staff. Waiting lists refer to the formalised
deferral of meetings between a patient and medical outpatient specialists and hospital
doctors by placing a patient on list with the understanding that he/she will move towards
medical diagnosis and treatment as those who entered the queue earlier receive their care.
11. The dynamics of the health production processes, illustrated in Figure 1, are shown in statistical
Tables 4a,b and 8a,b, which are divided into four components: demography and morbidity;
economy and health expenditures; medical system performance; and health outcomes.
12. The prevailing ideas driving the UK government from the early 1990s through 2019 were
neoliberalism in the economic sphere and ‘liberal institutionalism’ (i.e. rules-based international
order) in the political and international relations domains. Key elements were support of
globalisation and ‘free trade’, which generated substantial benefits to the countries involved
that were largely appropriated by elites. By-products included deindustrialisation in the UK,
chronic unemployment in regions with failed industries, stagnant real incomes of ordinary
people, and the rise of employment in the non-unionised ‘gig’ (zero-hour contract) economy.
By 2019 the UK had diminished industrial capabilities compared to what it possessed in 2000.
13. The following assessment was provided by analysts at the Nuffield Foundation (Bevan et al.,
2014): ‘Following devolution [in 1998], the four countries of the UK are now on such different
policy paths that it no longer makes sense to talk of a UK National Health Service (NHS). The
devolved governments have made different choices about the level of funding devoted to
the publicly financed health system, the structure and governance of the system and the
benefits available to their residents such as free general medical prescriptions and personal
care in Scotland, but not in England.’
14. The junior doctors of 2016 provided the main pool of hospital doctors who worked on the
‘front line’ of providing care to Covid-19 patients in 2020. Most worked long hours in risky
circumstances seven days per week. The contracts that were forced upon them in 2016 by the
UK government and unsupportive NHS administrators were an irrelevance in reality, but were
a continuing source of irritation to younger doctors.
15. It is possible that the increases in reported illness were generated not only by a worsening of
the health status of the population due to ageing, but also by citizens revealing more past
cases of hidden illness due to improved provision of medical care.
16. Detailed analyses of the Soviet and Russian pharmaceutical and medical equipment
industries have been produced by this author in the past, such as a 1993 report entitled:
The Pharmaceutical Industry and Market in the USSR and Its Successor States: From Reform
to Fragmentation to Transition. There have been institutional continuities with the past in
Russia, so these earlier studies continue to have some relevance to the contemporary
period.
 POST-COMMUNIST ECONOMIES 1007

Acknowledgments
I would like to acknowledge that research for this article has been supported financially through my
part-time employment in academic health projects in Moscow and conducted both within the
framework of the Basic Research Programme of the National Research University - Higher School of
Economics (HSE) and in the Russian Presidential Academy of the National Economy and Public
Administration (RANEPA). Since 2013 my health projects in Moscow have given me opportunities to
interact with talented colleagues, to gain insights into the functioning of the Russian national health
service and government policy making, and to collect valuable research material. I also would like to
express my appreciation to two UK institutions that have provided general support of my research
on health and ageing issues: the Oxford Institute of Population Ageing at Oxford University, where
I am a Professorial Research Fellow, and The Leverhulme Trust for its award to me in 2019 of a two-
year Emeritus Fellowship. I would like to express my thanks to the following academics and analysts:
Christopher Gerry of the University of Oxford, who has been my main research partner in the health
economics field since 2010; Sergey Shishkin and Igor Sheiman of HSE, with whom I have worked
since the 1990s; and Vladimir Nazarov, Maria Kaneva, Nikolay Avxentev and Ekaterina Pazukhina of
the RANEPA health project. I am grateful for the assistance provided to me by Ekaterina Pazukhina in
gathering research material for this article.

Disclosure statement
No potential conflict of interest was reported by the author.

ORCID
Christopher Mark Davis http://orcid.org/0000-0002-2838-0418z

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