Private Health care market Russia

Finpro ry, 2009

Christine Grumbach Olga Makeeva Dmitry Makolkin

Demographic Situation
Russias population is shrinking
European part of Russian Federation Life expectancy 66 years (born 2007), Source: WHO

Born

Died

Population increase/loss due to natural causes -219,8 -840,0 -958,5 -943,3 -935,3 -888,5 -792,9 -846,5 -687,1 -470,3

1992 1995 2000 2001 2002 2003 2004 2005 2006 2007

1587,6 1363,8 1266,8 1311,6 1397,0 1477,3 1502,5 1457,4 1479,6 1610,1

1807,4 2203,8 2225,3 2254,9 2332,3 2365,8 2295,4 2303,9 2166,7 2080,4

Annual increase / loss of population due to natural causes per 1000 persons

Source: Laboratory for Territorial Development of Moscow University, data sourced From Federal State Statistics Service and U.S. Census Bureau.

Demographic Situation
According to statistics, the life expectancy for a Russian male is 58,8 years, while Russian women live on average 72,1 years. For comparison, European men live on average 75 years, and womens average life is about 80,9 years. The major factors contributing to the lower life expectancy in Russia are:
Russians are less educated about health risks and how to prevent them; Russian physicians are neither trained nor motivated to promote a healthy life style Chronic stress Environmental pollution Widespread alcohol and drug abuse, smoking High mortality due to car and other accidents LOW STANDARDS OF LIVING AND PROBLEMS WITH HEALTHCARE IN RURAL REGIONS

Russians die younger than Westerners of worlds most common illnesses: the average age of people dying of cardiovascular diseases is 67,6 years (78,6 in Europe), of cancer 63,6 years (73,8 in Europe). Europeans believe that good health is the result of their own efforts on control and prevention of diseases, while most Russians, according to a survey recently conducted in Russia, believe that good or bad health is determined by nature and it is difficult to do anything about it. For Russians, healthcare is stressful, and many Russians get nervous just thinking about visiting a doctor.
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Personal income in Russia, 2009

Income per capita in March 2009. Source: Rosstat (Federal Statistics Service of Russia)
Moscow
St.Petersburg

1 EURO = 43 RUR

Income per capita, EUR

129 266 267 384 385 650 651 1105

Personal income in Moscow, 2008

Very poor 1,1 million and 10% of population with average income from 6,2 to 9,9 thousand rubbles per capita per month. Average income: 8400 RUR = 195 / month Poor 6,6 million and 60% of Moscows population with income from 9,9 to 33,1 thousand roubles per capita monthly. Average income: 18900 RUR = 440 /month. Middle class 2,2 million or 20% of Moscows inhabitants with income from 33,1 to 70,8 RUR/month per capita. Average income: 46800 RUR = 1088 /month. Rich ! 1,1 million or 10% of population. Incomes of this group vary significantly from 70800 to 107 000 000 roubles (the most well!to!do persons are high level state authorities, general managers of national and transnational corporations, Russian oligarchs and other property owners. Average income: 236 000 RUR = 5488 / month

10% are rich people with 52,3% of all income

60 % of population - poor - get 25,1 % of all income 10% most poor get 1,9 % of all income 20% are considered to be middle class with 20,7% of all income

The structure of income in Moscow, 2008, by income decile groups.

Personal income in Saint Petersburg, 2008

Very poor 457,6 thousand or 10% of population with an income from 4,6 to 6,7 thousand RUR/person monthly. Average income: 5900 RUR = 137 / month. Poor the largest category that include 2,7 million of city population 45,6 or 60% of officially registered population. Income in this group varies from 6,7 to 19,8 thousand roubles/person per month = 138 636 EUR Middle class 915,2 thousand and 20% of population, income from 19,8 to 40,4 RUR / person/month. Average income: 27400 RUR = 637 / month. Rich ! 457,6 thousand or 10% of SPB population. Under this category they put those whose incomes exceed 40,4 thousand RUR per capita monthly. Average income: 88200 RUR = 2051 / month

10% of population are rich with 40,1% of incomes

60 % poor 32,3 % of incomes

10% are poorest with 2,7 of incomes

20% middle class 24,9% incomes

Structure of incomes in Saint Petersburg in 2008, by income decile groups.

General Market Overview

Key healthcare statistics data
Information World Healthcare organization , 2006 (latest available data) > Population in thousands, total Population annual growth rate % Total expenditure on health as percentage of gross domestic product Finland 5 334,4 (Tilastokeskus, 2009) 0,3 7,6 Russia

143211 - 0,5 5,3

General government expenditure on health as percentage of total expenditure on health

78,5

63,2

General government expenditure on health as percentage of total government expenditure

12,1

10,8

Per capita government expenditure on health at average exchange rate , US $ Per capita total expenditure on health at average exchange rate , US $ Private expenditure on health as percentage of total expenditure on health Private prepaid plans as percentage of private expenditure on health Out-of pocket expenditure as percentage of private expenditure on health

2350 2994 21,5 9,9 79,9

233 369 36,8 10,2 81,5

General Market Overview

Key healthcare statistics data
Information World Healthcare organization , 2006 (latest available data) > Life expectancy at birth, both sex Healthy life expectancy Life expectancy at birth, men Life expectancy at birth, women Years of life lost to communicable diseases % (2002) Years of life lost to injuries % (2002) Years of life lost to non-communicable diseases % (2002) Per capita recorded alcohol consumption (litres of pure alcohol) Finland Russia

79 71 75,3 82,5 5 20 76 9,5

66 58 59,7 (58 in 2008!) 73,1 8 28 64 15

Prevalence of tobacco use, both sexes, adults

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General Market Overview

Key healthcare statistics data
Finland, 2006 Information from the Statistic Committee of RF > 1995 2000 2001 2002 2003 2004 2005 2006 2007 WHO Total number of physician (thousands) Number of physician per 10 000 inhabitants 654 680 678 682 686 688 690 702 707 17,357 33

44,4 46,8 46,9 47,4 48,0 48,4 48,8 49,4 49,8

Number of supplemental medical (nursing) staff (thousands) Number of supplemental medical (nursing) staff per 10 000 inhabitants

1629 1564 1544 1557 1552 1546 1530 1545 1542

46,93

111

108

107

108

109

109

108

109

109

89

Number of hospitals (thousands)* Number of hospital beds (thousands) Number of hospital beds per 10 000 inhabitants Number of outpatient healthcare clinics (thousands)

12,1 10,7 10,6 10,3 10,1

9,8

9,5

7,5

6,8

0,16 36,2 68,8 0,27 0,037 0,98

1851 1672 1653 1620 1597 1601 1575 1554 1522 126 115 114 113 112 113 111 109 107

21,1 21,3 21,3 21,4 21,5 22,1 21,8 18,8 18,3

Number of children outpatient healthcare clinics and maternity 15,6 16,0 15,9 15,3 15,3 15,2 15,0 13,5 11,5 welfare centres (thousands) Number of hospital beds for pregnant and women in childbirth (thousands) 105 91 88 86 85 84 82 82 82

General Market Overview

Since 1917 and till late 1980s private medicine in Russia (USSR) existed illegally or half! legally, and the black healthcare market flourished. Experienced and well!known physicians, having rather low official incomes, were somehow very well!to!do people. Even the Soviet state sometimes gave up its social principles ! for example, in Leningrad there was established a self!financed cosmetology clinic that was extremely popular. As far back as in 1980s Russians used to say: They (doctors) treat us for free but cure at a good price (= one can get treatment for free, but if he wants to recover, he must pay) In the early 90s, due to political and economic changes in the country, private healthcare came out of the shadow. Naturally, the first sectors that began to develop at a high speed were those less developed within the public healthcare: dentistry, cosmetology, sexual pathology, urology and gynaecology, laser eye surgery. Nowadays those sectors are preoccupied with private clinics. For example, up to 80% of Russians use private dentistry. In other sectors e.g. in complex diagnostics, emergency surgery and hi!tech medicine the public clinics remain the main actors. Private healthcare centres are mostly out!patient clinics. 99% of in!patient hospitals are public.

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General Market Overview

In Soviet time public healthcare was fully financed by the state. Starting from the early 1970s, there has began a step! by!step decrease in financing of healthcare services and organizations. By the late 1980s the healthcare budget was decreased 40 %, while in European countries the state financing of healthcare was continuously growing. At that time most of the in!patient and out!patient clinics were out a repair and medical equipment was worn!out and outdated. Low salaries of medical staff provoked growth of hidden payments for medical services. Thus in 90s, when Russias government started to reform public healthcare system, most of the facilities were dilapidated and quality of services was very poor.

A satiric poster of the Perestroika time. The sign on the locked door of a clinic says: Time is the best healer.

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General Market Overview

Russian healthcare system is represented by three types of health care institutions: private clinics, municipal clinics and federal clinics. Article 41 of the Constitution of the Russian Federation guarantees free of charge healthcare services for all Russian citizens. However: There is no free healthcare in Russia, the system is based on insurance principles. In practice Russian patients have to pay a lot both to get access to some services or medicines and to get treatment in time. Only 5% of GDP is assigned for healthcare (OECD average 8.9% in 2007) Low quality of healthcare services, lack of modern equipment and physicians along with a widespread of patient abuse, neglect and blackmail are common to public sector. As a result, it is difficult to get a proper treatment under the governmental compulsory medical insurance (OMS) program.

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General Market Overview

In accordance with a survey conducted by the TASS!Ural Centre for Business Analyses, Russian citizens usually have to pay even for staying in a public in!patient clinic. Thus 47,5% of people living in Yekaterinburg think it to be one of the main problems of the existing healthcare system. According to an investigation conducted by Russian Public Opinion Foundation in 2008, 42 % of Russians were to pay for healthcare services during the previous year. 34 % paid for treatment in public sector and only 11 % for private healthcare services. Among those who made official payments (not to the doctors pocket) 43 % were people graduated from high schools, 44% of them had rather high income and lived in megalopolises. In October 2008 the Discovery Research Group conducted a research to estimate the market size. Expert evaluations vary significantly from 320 billion to 460 billion RUR. Most of the experts do not believe that this market will be strongly stagnated by financial crises

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General Market Overview

The share of private clinics in Russia is not higher than 5!10% of all clinics (for comparison, in Israel the share of a private sector is 12%, in EU!countries ! 15%, in USA ! 20%). However, this market has been growing about 12% annually during the last time. Experts evaluate the legal private healthcare market at $7,6 billion; $1,7 billion come from insurance companies (supplementary medical insurance policies), the other $5,9 billion come mainly directly from clients. It has been estimated that by 2012 the market will grow up to $12,7 billion.
How would you prefer to act when you are sick?
4% 2%
Consult a public doctor Consult a private doctor

33 %

51 %

Rely on self-treatment Do nothing

8%

Rely on alternative medicine

Popularity and penetration of private healthcare services can be illustrated by the results of a public opinion survey, conducted in Russia: in case of illness Russians still prefer to go to a public clinic (51%). The share of those who would prefer to consult a private doctor is only 8%. In practice, the percentage of private sectors patients is higher, but this statistics illustrates the attitude. Every third Russian is practicing self! treatment, especially in case of common illnesses and injuries. There are also people 14 who prefer to do nothing or rely on non!traditional medicine.

General Market Overview

When speaking about commercial healthcare in Russia, one should take into consideration that both private clinics and public clinics are nowadays providing commercial healthcare services; as for the payments, they may come directly from patients, via insurance companies and in a form of hidden payments. Payments are considered to be hidden if money is given by patients directly to the doctor; this type of payments is however more typical for a public sector. The market of supplementary or voluntary medical insurance (DMS , as it is called in Russia) is growing very quickly. The size of this market has increased from 11 billion RUR in 2000 up to billion RUR in 2008. DMS policy is usually purchased by an employer. The share of individual medical insurance remains very low ! only about 5%. Direct payments for commercial services are also growing at a hard speed. The amount of cash payments increased from 48 billion RUR in 2000 to 283 billion RUR in 2008. In 2010 the volume of the direct (mainly cash) payments will grow up to 366 billion RUR.

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General Market Overview

The amount of shadow payments has also grown from 25 billion RUR in 2000 up to 107 billion RUR in 2008. It has been estimated that in 2010 the shadow market size will increase up to 129 billion RUR (3 billion ) . Before the crises most experts believed that this market will grow continuously during the next years 25!30% a year. Nowadays expert evaluations are not so optimistic due to financial crisis. According to RBC Group, the volume of private healthcare sector has grown from 2,2 billion USD in 2002 to approximately 8 billion USD in 2008, while the turnover of hidden payments has reached 15 billion USD. From 30 % (on average in Russia) to 70% (in Saint Petersburg) of all physicians are working at the same time for public and private sector. State financing of healthcare sector has also increased significantly, from 205 billion RUR in 2000 to 1000 billion RUR (23 billion ) in 2008 (in five times!). Nowadays approximately 1/3 of the healthcare budget of Russian Federation comes from social taxes and insurance payments collected directly from the employers, while 2/3 are contributed by federal and regional budgets. Money is also directed to the public sector via National Health Care Project initiated by the Russian government in 2005.

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General Market Overview

The largest segment of the private healthcare market in Russia is dentistry, which enjoys a market share of approximately 60%. The second place is taken by gynecology and urology (20%), the third place is for diagnostic services (10%). Also cosmetology and aesthetic surgery have been actively growing during the last several years. Their market share is nowadays estimated at 6%. Manual therapy, neurology and ophthalmology are also among rapidly developing private healthcare sectors. 70% of all companies working in the private healthcare market are specialized single!purpose clinics. Multidisciplinary clinics are not so common and most of them are located in cities with a population over one million, especially in Moscow, Saint Petersburg and Novosibirsk. 30% of low!income, 50% of middle!income and 74% of high!income citizens of Moscow and Saint Petersburg use commercial healthcare services, as well as 60% of families with children. However, there is no separate statistics for the private sector (as it was mentioned above, public sector can also provide commercial services). In average the price for visiting a doctor in a private clinic is 600!800 RUR (14 19). An average price for a treatment including laboratory analyses, diagnostics and medicine is starts from 5000 (116 ), but the maximum cost is certainly unlimited and can sometimes reach hundreds of thousands.
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Financing
Subsidies & donations

Sources of financing

Federal budget

Public healthcare insurance (OMS) funds

Regional budgets

Social insurance funds

Citizens and employers payments

Special programs National projects Hospitalization

Payers

Ministry of Healthcare and Social Development

Federal OMS foundation

Regional and municipal healthcare authorities

Maternity certificates

Supplemental medical insurance (OMS)

Personal and corporative budgets

Regional OMS foundations

Insurance agents
Public insurance companies

Payments for unemployed population

Private insurance companies

Distribution of financial support Providers of healthcare services

Governmental support, quotas for high-tech treatment

Payments for services provided

Governmental support, quotas for high-tech treatment

Private sector

Federal healthcare clinics and institutions

Regional healthcare clinics

Municipal healthcare clinics

Private sector

Patients

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General Market Overview

Patients

Sources of financing
Federal and municipal budgets
63,2 % of total expenditure on health

Treatment
Public healthcare ! up to 95% market share Private healthcare institutions ! 5 % market share Occupational healthcare ! under 0,5%

Social Health Insurance 100% of

population

Private health insurance obtained by employer

20% of working population

Private health insurance obtained by patients

% of Moscow and Saint Petersburg population

! 2! 5

Private financing
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General Market Overview

Moscow and St. Petersburg Healthcare Market

According to experts, Moscow accumulates up to 80% of the countrys financial resources. Average salary and income per capita are higher in Moscow than in Saint Petersburg. There are a lot of specialized clinics, departmental clinics, hospitals and medical research institutions in Moscow and all of them provide commercial healthcare services. Thats why the private sector is not so well!developed in Moscow as in Saint Petersburg. There are less private medical centres in Moscow than in St. Petersburg. More than 85% of Moscows citizens use commercial healthcare services, but the share of private clinics in unknown. 13 private clinics of Saint Petersburg enjoy the 70% market share of local private healthcare market. According to The Yellow pages, the number of clinics providing commercial healthcare services is 1391 in Saint Petersburg and 1927 in Moscow.

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General Market Overview

Moscow and St. Petersburg Healthcare Market
! According to a market research conducted by RBK and OMI research companies in 2007, Saint Petersburg takes the leading position in Russia for its healthcare expenses. The research insists that the penetration of commercial healthcare services in St. Petersburg market almost reached 100% by the end of 2007, as only one respondent (0,2% of all respondents) actually managed to pay nothing for healthcare services in 2007(in other large cities the share of such respondents is 5,5% (on average)). ! 17,6% of the respondents living in the Northern capital spent on healthcare services more than 20 000 RUR (465 ) during 2007 (12,3% in other large cities, 15% in Moscow). ! Up to 80% of the customers of private clinics in Moscow and St. Petersburg are paying directly to the clinics; about 20% of the customers have got DMS!policies and their treatment is paid by their insurance companies. 90% of these customers are those who have got their policies from employers as an extra bonus.

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General Market Overview

The most important factors hampering development of private healthcare sector are: the
low purchasing capacity of the majority of population. public sector clinics provide commercial healthcare services on dumping prices (as they do not need to return investments and have other financial sources). incomes from social insurance are distributed only within the public sector (though there are no any restrictions in Russian Doctor Vodka Russian legislation and private clinics can be integrated This new brand illustrates a common into this financial chain). Russian conviction that vodka is the best medicine for many health conditions individual healthcare insurance policies are expensive and insurance companies are not ready to develop this market segment ! they think it to be too risky. market entry for health service provider is rather expensive ROI in hi!tech market segments is only 810%. Before the recession it was a commonplace in Russia that an investment project should pay back in max. 3 years. Complicated legislation and tight control over the private sector Customers got used to get healthcare services free of charge as it is declared by Russian Constitution.
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General Market Overview

Internal problems hampering the development of private healthcare sector:
low competition > low quality; wages of private physicians depend directly on the amount of services sold to a patient > overdiagnosis, unnecessary treatment > patients loyalty is very low; According to the experts, this is a is a pervasive problem not only in Russian but also in international healthcare clinics (= clinics with foreign investments), such as Ava! Peter and Scandinavia, and fundamental ethical principles of health care are violated everywhere; insufficient competence of local managers; weak primary healthcare infrastructure; lack of qualified personnel. lack of self!regulated medical organizations and associations

These problems bring challenges but also opportunities >

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Cooperation options
Shortages of healthcare service offering = opportunities for Finnish healthcare organizations
According to the founder of the Association of Saint Petersburg clinics and the executing director of Integrated Healthcare non!commercial partnership, Mr. Anyfriev, there are still annoying shortages in healthcare offering that can be probably covered by foreign suppliers, e.g.: Organization of family medical centres (therapist) Organization of independent expert centres (second opinion, rating of the competence and the appointments of local doctors, examining the quality of treatment, information about possibilities, etc.) Organization of medical tourism (assistance companies) Medical insurance, including those giving a possibility of treatment abroad. Organization of diversified medical centres, willing to follow ethical norms and world standards. Training programs for clinics managers. According to Mr. Anofriev, the public sector as well as city authorities can also be interested in such a cooperation and Finnish experience could be an important factor for further development of private healthcare services.
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General key messages

According to experts, the main reason for the development of private healthcare market is insufficient quality of services and lack of financing in public sector. There is a partly recognized need to allocate private money for healthcare services but only a small part of the population can afford to buy it on a comparable quality/price level than in European countries The main provider also for privately financed healthcare services on a larger scale is today the public sector Only few subsectors offer enough business volume for private service providers, most of them in the out!patient services: dentistry, gynecology/urology and diagnostic services, cosmetology, sexual pathology & laser eye surgery Strong regional differences

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PRIVATE MONEY IS BEING FUNNELED TO RUSSIAN HEALTHCARE BUT PRIVATE HEALTHCARE INFRASTRUCTURE IS STILL UNDEVELOPED.

PRIVATE HEALTHCARE SECTOR CANNOT BE TREATED AS A SEPARATE TARGET GROUP FOR FINNISH PROVIDERS

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Business opportunity matrix for Finnish companies

high Private Sector Public Sector
Hospital Equip.

Medical Devices

Dental
Health!IT

Hospital Market
Diagn. Devices

Market attractiveness low

Diagn. Centers

Reha! bilitation Care homes Occup Health Health Tourism

Independent Living

Growth dynamic of the sector

high

FOREIGN HEALTHCARE SERVICE PROVIDERS IN RUSSIAN MARKET

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Ava!Peter (Saint Petersburg)

The Russian!Finnish clinic AVA!PETER has been providing treatments of male and female infertility based on assisted reproductive techniques (ART) in Saint Petersburg since 1996. AVA!PETER is a part of the AVA international network of clinics. AVA!PETER annually provides its data to the National Register of ART Results in Russia. The clinic is used by the department of female reproductive health of the Medical Academy of Postgraduate Studies (MAPS) as its training base. The clinic has a united and inspired team of obstetricians! gynecologists, embryologists, geneticists, andrologists, and biologists. Many AVA!PETER specialists were trained or worked in leading clinics in England, Germany, Belgium, and Finland. Being frequent participants of international exhibitions and conferences, they ensure fast implementation and active use of recent developments and findings in their medical practice.
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Skandinavia (Saint Petersburg)

The private RussianFinnish clinic Scandinavia was opened in the beginning of 2004. Among its founders ! the owners of the Scandinavian AVA clinics system (one of such clinics ! AVA!PETER ! has being functioning in St.Petersburg since the middle 90s). The main distinctive feature of the clinic is that it represents all medical services in complex from diagnostics to hi!tech surgery operations. Doctors for both adults and children, family doctors and specialists. Diagnostics within the shortest time with the help of the latest ultrasound, endoscopic and X!ray equipment as well as laboratory investigations. Low!traumatic surgery: three operating rooms with a high level of sterility make it possible to perform laparoscopic and ophthalmologic operations as well as operations on the joints, backbone and thyroid gland. Complex dental health service for adults and children. Modern maternity department

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MEDEM (Saint Petersburg)

The MEDEM International Clinic & Hospital is a multidisciplinary medical facility providing a full range of health care services. It serves people in the St. Petersburg community, including foreigners living in the city, and tourists. The clinic was founded in 1999 and until 2004 was known as an International Clinic. Today it expanded considerably the scale of its medical activities and works in a new 7,500 sq. meter building in the historical center of St. Petersburg. All the departments are equipped with the most modern equipment and offer over 2,000 healthcare services in 77 licensed areas of medicine. MEDEM International Clinic & Hospital provides consultation and treatment in all major disciplines including Emergency Care, Surgery, Family Medicine, Internal Medicine, Pediatrics, Obstetrics and Gynecology, Urology, Cardiology, Orthopedics, Psychology, Dentistry and other. The personnel numbers over 300 skilled professionals.

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Euromedika (Moscow)
The Russian!German Healthcare Center Euromedica is one of the oldest private clinics in Moscow. It was established in 1992 and one of the founders was a professor of Hamburg University Rolf Peter Spielmann. Euromedica is known for its comfortable atmosphere and individual approach. The first visit to a doctor last not less than an hour (for comparison: in other clinics they reserve 15!20 minutes for a patient). Euromedica is specialized in dental and gynaecological services.

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French Dental Clinic, Moscow

Established in 2004 Qualified specialists from France with excellent background and recommendations. The staff speaks several foreign languages, which makes communication between doctors and patients free and easy. Comfortable location, exquisite interior, nice French music, delicious coffee, comfortable waiting rooms create peaceful and cosy atmosphere. Fully equipped laboratory

Dr. Francois Najjar Chief dentist and founder of the first French Dental Clinic in Russia

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Foreign players in the market: other service providers

International Center For Reproductive Health, Saint Petersburg http://www.mcrm.ru American Medical Clinic, a multidisciplinary medical center, St. Petersburg http://www.amclinic.ru German Dental Care, Moscow http://www.gdcare.ru Finnish dentistry center Kiitos", Moscow http://www.kiitos.ru Italian Medical Centre BENESSERE. Ltd, Moscow www.benessere.ru American Medical Center, Moscow www.amcenter.ru Swiss Medical Center SWISSMED, a multidisciplinary clinic, Moscow http://www.swissmed.ru Elysee, French Cosmetology Clinic, Moscow http://www.elyseecenter.ru French!Russian Center Clinique Matignon, cosmetology clinic, Moscow http://www.matignon.ru Russian!American Center for Family Medicine (multidisciplinary), Moscow

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Summary foreign players

There are only few foreign providers of healthcare services in the Russian market; These facilities are located mostly in Saint Petersburg and Moscow; Most of these clinics have Russian management and Russian doctors; All these clinics are fully equipped and do not purchase a lot; " At the moment these companies cannot be treated as a separate target group for Finnish providers of equipment and technology " Entering the Russian market means providing services & goods to Russian clients who have Russian mentality and speak very often only Russian language
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Healthcare Equipment General Information

36

Legal requirements for imported MDs

Producers of medical equipment which is to be imported to Russia must obtain: Registration certificate of the Federal service for supervision in the sphere of health care and Social Development (Roszdravnadzor) of the Ministry of Healthcare and social development of the Russian Federation; GOST R certificate of conformity, provided by an officially registered certification body; Hygiene certificate, officially known as the Sanitary!Epidemiological Conclusion, provided by Russian Agency for Health and Consumer Rights (Rospotrebnadzor). Under the Russian legislation, all product, technologies, equipment etc. intended for healthcare purposes can be used in Russian Federation only in if they are registered at the Ministry of Healthcare of Russia. The procedure of state registration of medical products and equipment of foreign origin is approved by the Order No 237 of the Ministry of Healthcare of RF from 29.06.2000. According to the Decision of Russian Government No. 1013 dated 13.08.97, all tools, instruments, medical devices, products made from rubber, textiles, glass, polymers and other materials and intended for healthcare purposes; crutches, otophones, wheelchairs and medicines are subject to obligatory certification. According to Russian legislation, a certificate of conformity can be issued only to a manufacturer. Certification is very important issue and sometimes a serious obstacle for a small company trying to enter the Russian market. In case of traditional import a Finnish company needs a Russian partner to supply its products to Russian clients.

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Market potential Medical Devices

2006 (mill. US$) Local Production Import Export Market volume 700 1930 86 2455

2007 (mill. US$) 800 3823 139 4484

Changes 2006/2007 in % 14 98 62 76

Source: Market report, Germany trade and Invest, Russia 2008

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Import of specific MDs

in Mil. US$; Source: Russian custom Name / HS!Code Electro diagnostic /9018.11!20 Imaging / 9022 Sterilizer / 8419.20 Wheel chairs / 8713 Dental instruments /9018.41!49 Syringes, needles, catheter / 9018.31!39 Opthalmology devices / 9018.50 Other medical devices/ 9018.90 Therap. devices, respirator etc./9019, 9020 Medical furniture etc. / 9042 Orthopaedic devices, prosthesis etc. / 9021 Total 2006 415,39 500,07 30,37 10,78 67,26 103,32 28,95 431,28 161,53 35,64 145,30 1.929,89 2007 700,19 876,19 608,36 18,41 110,65 148,30 47,68 738,13 264,00 63,61 247,62 3.823.14 1. half!year 2008 216,59 205,51 21,58 10,04 58,91 80,26 24,43 322,16 102,30 29,90 168,04 1.239,72

New business opportunities

National project Health will provide in 2009 ca. 5 bio. US$, mainly for medical devices (14 cardio surgery centres, clinics for traumatology and neurosurgery) 95 hospitals will get reanimation techniques 13 blood donation centres will be modernized 24 prenatal centres are planned 50 hospitals receive diagnostic tools for CVD

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Imports of medical equipment

Roszdravnadzor Ministry of Healthcare

Russian importers Russian wholesaler

Own or outsourced logistics

Foreign producer

Representative sales offices of foreign producers

Regional office

Regional office Regional office Regional office

End user

End user

End user End user End user End user

Diagnostic devices

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Diagnostic devices
Diagnostics is one of the most dynamically developing sectors of private healthcare in Russia, and the share of diagnostic equipment in medical equipment sales is the largest. Diagnostic equipment is currently purchased also by public healthcare institutions within the framework of Healthcare National Project The main factors that influence decision!making of Russian clients are: quick recoupment and cost!efficiency: approved methods and technologies; Russian certificates technical and sales support in Russian language (communication, negotiations, manuals, trainings, service, maintenance)

Diagnostic equipment was supplied to public in-patient clinics in 2006 as follows: x-ray - 3 247 units; ultrasonic - 4 115 units; laboratory - 2 899 units; endoscopic - 3 606 units; electrocardiographic - 8 of 785 units. To buy 22 652 units of diagnostic equipment the government has allocated 14.3 billion rubles (0. 33 bill. ) from federal budget.

The Russian medical device market is growing and the demand for imported devices is high. One of the key factors for foreign companies for succeeding in Russian markets is finding a reliable partner and distributor.

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Diagnostic devices
Private healthcare centers are currently equipped with all necessary equipment for basic diagnostic and laboratory tests, so this market segment will obviously develop through the implementation of new diagnostic technologies and replacements of out!of!dated devices The most demanded is the equipment for diagnostic visualization: x!ray equipment ! from portable photofluorography units to complex diagnostic x!ray equipment; tomography equipment; Russian clients still prefer traditional RCT (Roentgen computed tomography) and MRI (Magnetic tomography) equipment; ultrasound scanners, which are the most common and popular type of visualization equipment; cartographic equipment (portable cardiographs, cardio analyzers etc.) is used only in cartography, but one must be taken into account that 15% of Russians who are older than 40 have ischemic heart disease and that about 55% of Russians die from cardiovascular diseases. Other equipment, e.g. different types of disease and patient monitoring systems, EEG machines, reographs etc.

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Diagnostic devices
Magnetic resonance imaging (MRI)* There are about 130 MRIs in Russia, and this figure is 6 times lower than necessary (for comparison: 4000 units in the United States, 4500 in Japan). Russians produce only low magnetic field named MRIs Ellipse and Diamag, both developed and manufactured by NPF AZ from Moscow. The share of MRIs in all import devices and equipment is more than 5%. Foreign equipment imported to Russia: MRI "SEGNA INFINITY" from "Ge Medical Systems" (U.S.), MAGNETOM CONCERTO and MAGNETOM SYMPHONY from "Siemens AG" (Germany), "HISPEED X / I" from "Ge Yokogawa Medical Systems, Ltd" (Japan), etc. Ultrasonic diagnostic apparatus The Russian market of ultrasonic equipment is occupied by imported products (about 90%). The share of ultrasound scanners is about 24% of all imported equipment. The most popular devices are ultrasound scanners "S!2000, diagnostic ultrasound system "LOGIQ", medical ultrasound scanners SSD!1100, SA!6000, "ACUSON ASPEN" with monitors and sensors, digital ultrasound system for diagnostics of cardiovascular diseases and parenchymatous organs diseases, ultrasonic diagnostic apparatus "SUNLIGHT OMNISENSE 7000", sensors for ultrasound scanners, etc. The most popular manufacturers of these products are: "Siemens Medical Solutions USA, Inc" (USA), "Siemens" (Germany), "Wipro Ge Medical Systems SA" (India), "Esaote S.P.A." (Italy), "Aloka Co., Ltd" (Japan), etc.
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* Here and below data taken from the study conducted by Remedium research group

Diagnostic devices
Equipment for radionuclide diagnosis There are 4 PET (positron emission tomograph) centres in Russia, but only one of them, located in the Scientific & Research centre of Institute of Radiology and Nuclear Medicine (St. Petersburg) is partially equipped with domestic equipment. There are more than 200 radioisotope diagnostics laboratories in Russia, equipped with 210 gamma cameras and gamma tomographs, more than 80% ten or more years old, thus requiring upgrading or complete replacement. The shares of planar gamma cameras and SPECTs are 75% and 25% respectively. The share of alpha, beta or gamma radiation equipment for medical, surgical or veterinary use is about 2% of the whole volume of imported medical equipment. Imported products: portable solid gamma cameras DIGIRAD 2020tc, integrated gamma cameras "MILLENIUM" for radiotherapy, radio!surgical systems "NOVALIS", dental x!ray machines "INTRA OS 70" with remote control, gamma radiation detectors NEO2000, "TERAGAM K ! 01 " cobalt radiotherapy machines, etc. Producers: "Neoprobe Corporation" (USA), "Elgems Ltd" (Israel), "Blue X Imaging SRL" (Italy), "General Electric Medical Systems" (France), etc.

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Diagnostic devices
Roentgenologic diagnostics Russians produce digital X!ray systems of different types and they are widely in use in Russia. Nowadays there is a trend to replace traditional X!ray rooms (designed for three operators) by X!ray cabinets with remote control and multi!positional tables with digital receivers. Russian manufacturers produce basic equipment for roentgenology and fluorography, including digital equipment, as well as all types of X!ray protection equipment, so there is no need to buy it from aboard. As for more complicated and specialized X!ray equipment, such as angiographic units, orthopantomographs, bone densitometers, roentgen!urological devices etc., they are not produced by domestic manufacturers and Russian healthcare organizations have to import them.

Digital radiographic unit ProGraf !7000 produced by CJSC Rentgenprom, the largest manufacturer of roentgenologic medical equipment in Russia.

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Diagnostic devices
Roentgenologic diagnostics The total share of alpha, beta, gamma or X!ray devices for roentgenologic diagnostics in Russias total imports of medical equipment is about 20!21%. Within this group the largest market share of 61% belongs to X!rays equipment. Russia imports: portable X!ray diagnostic units "SIREMOBIL ISO!C and "APELEM", X!ray diagnostic set "AXIOM. ICONOS for surgery, portable digital X!ray machines, portable X!ray machine for surgery "OPESCOPE", mammographic X!ray machines "PLANMED SOPHIE" for therapeutic purposes, "MODULARIS URO PLUS" systems for shock!wave lithotripsy and endourological procedures, angiographic diagnostic unit "MULTISTAR", angiographic system "ADVANTX LCV PLUS", etc. Importers: "Ge Medical Systems SA" (France), "Villa Sistemi Medicali S.P.A." (Italy), "Applicazione Tecnologie Speciali SRL" (Italy), "Trophy Radiologie" (France), "Siemens AG" (Germany), etc. The share of computer tomographs is 30% of total import volume ("SOMATOM EMOTION" from Germany CT "HISpeed X / i" from Japan and "LIGHT SPEED" from the United States) .

48

Diagnostic devices
Equipment for functional diagnostics As for the functional diagnostics , the largest share belongs to electrocardiographic equipment it is about 62,5%, then come blood pressure measuring devices with 25,5% market share, electronic encephalogram equipment ! 7,4%, reographic equipment ! 1.8%, devices lungs diagnostics ! 0.8%, myographic equipment ! 0,4% and other equipment 1,6%. The share of single!channel ECG machines is about 35% of all electrocardiographs sold in Russia. This market segment is dominated by domestic manufactures who provide an excellent price and quality ratio. Three!channel ECG enjoy 60% share of the total amount. Nowadays the share of domestic three!channel ECG:s is only 50%, but there is a steady upward trend that local clients are buying domestic devices. The share of 12!channel and computer electrocardiographs is only 5%. However, there are no manufactures of 12!channel ECG machines in Russia.

49

Diagnostic devices
Equipment for functional diagnostics Only one company in Russia, Aksion Holding from Izhevsk, produces single!channel electrocardiographs. All other domestic companies produce 3!channel machines, and some of them also manufacture computer electrocardiographs. Of cause, some electrostimulating devices are not produced in Russia, e.g. some types of implantable artificial pacemakers and electro!neuro!stimulators, catheter ablation systems; equipment for physiological heart examinations, therapeutic electrostimulators, which are used widely in private healthcare clinics, cosmetology and plastic surgery. The most popular electrostimulating equipment in Russia is domestic equipment with an average operational lifetime of 10!15 years. The share of modern and multifunctional ES!devices is not more than 8%.

ECG machine EK1T-1/3-07 Aksion by Aksion Holding , Izhevsk, Russia

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Diagnostic devices in laboratories

Clinical Diagnostic Equipment Nowadays there are more then 2000 methods of laboratory diagnostics of blood and other biological materials. 10 years ago Russia produced neither equipment nor instruments for clinical and diagnostic laboratories (CDL), and all the facilities, technologies and materials were imported from aboard. During the last 10 years there have new Russian companies that produce modern diagnostic equipment, auxiliary equipment, reagents for CDL etc.

Hematology analyzer Gemoalt

Nowadays Russian producers provide ex. technique for hematologic laboratory tests: determination of haemoglobin concentration, microscope analysis of blood cells, identification & scanning, analysis of blood cell images and cell classification. A big problem for Russian healthcare system is a lack of (domestic) low!cost blood analyzers. Quite a big demand for these devices is partially met by imports. However, a Russian company Altonika launched a new semiautomatic haematology analyzer Gemoalt AGP! 01 / 5 in 2005 and it is becoming more and more popular. Russian industry meets 100% the local demand for scarifies that are produced by 8 Russian companies. Instruments for blood sampling like Mikrovet, Monovet, Vakuteyner etc. are not produced by domestic industry.
51

Diagnostic devices in laboratories

Clinical Diagnostic Equipment Russian manufactures produce equipment for different types of biochemical diagnostics, such as manual and semi!automatic photometers, electrophoretic analyzers, glucose analyzers, electrolyte composition analyzers etc.. Company "ELTA" from Moscow produce personal pocket glucose analyzers, which can be compared to best world samples. Modern and high effective autoanalyzers, as well as biochemical analyzers of acid!alkaline blood composition are not produced in Russia. Immune!enzyme analysis is the most popular method for diagnosing of AIDS, HBV and other infections. Local manufacturers have paid special attention to the development and manufacturing of this equipment. Nowadays all necessary equipment for immune!enzyme analysis can be purchased from the domestic enterprises: NPF Sollyuks , CJSC Pikon, Sapfire, Uniplan and some others. Russian do not yet produce any devices for automatic blood hemostasis analysis. Domestic manufacturers (NPF Liteh, NPF DNK!tekhnologia) fully meet the demand for equipment needed for polymerase chain reaction analysis.

52

Diagnostic devices in laboratories

Clinical Diagnostic Equipment The share of equipment and instruments for physical and chemical clinic analyses is more than 9% of total imports of medical equipment. The range of products within this group is rather wide, but the biggest share belongs to the laboratory equipment: refractometers, spectrometers, devices for viscosity and warm tests, pH meters, chromatographs, electrophoresis equipment etc. Russia also buys imported equipment for clinical diagnostics such as individual One Touch Basic Plus glucose!meters, OPTIMA 2000DV spectrometers, TBF! 2"5 biochemical spectrophotometers, photometers for the glucose, total protein, cholesterol, bilirubin, etc. tests, GB"3 / A medical photometric bilirubinometers, biochemical and physiothermic spectrometers etc. Among the importers are "Hoch and "BNH Corporation" from USA, "Bertochi from Italy, Robert Reli GmbH from Germany, Tanita from Japan and others.

53

Summary Diagnostics
Diagnostics is one of the most dynamically developing sector of healthcare market. Private infrastructure in diagnostics is relatively well developed . Russian market is very sensitive for price & service terms. Basic and standard equipment is produced by Russian manufacturers; they are valued by the clients because of a low price, but the quality is rather low High!tech sector is still dominated by imports. Finnish suppliers are not visible in all diagnostic sectors in Russia. There are business opportunities for high!tech components and contract research @ development providers from Finland. There are business opportunities for joint ventures. Electro diagnostic and imaging devices obtain the biggest share in the structure on import of medical devices.

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Dental Sector

55

Dental sector
Private dentistry is the most developed sector of Russian private healthcare market. Private dental clinics can be found not only in Moscow and St. Petersburg, but also in the depths of the country. At the moment there are more than 1500 officially registered dental clinics in Moscow, and about 800 in St. Petersburg. The supply currently meets the demand, so one cannot expect a rapid growth of the number of clinics in both metropolitan cities in the nearest future. The market has already gone beyond the stage of extensive growth and technical revolution in Russian dentistry has already taken place. We can say that this market has entered its saturation stage, profitability is decreasing and keeping a client happy and loyal becomes a difficult job. The greatest progress is nowadays shown by aesthetic restoration ! the most profitable sector of therapeutic stomatology.
56

Dental sector
Private dental clinics are nearly 100% equipped with imported equipment, instruments and consumables. According to expert estimations, the market share of foreign suppliers is nowadays about 90%. The leading suppliers of filling materials to Russia are coming from Germany, Switzerland and USA. The leading suppliers of dental equipment are Germany, Italy and Japan. Chinese and Korean manufacturers are increasingly active in launching their products to the Russian market. Finnish brands (Fimet, Planmeca) are well known in Russia, but do not occupy leading positions. According to recent statistics, one of the most important factors that influence the decision! making in this market segment is high quality of after!sale services and maintenance (along with a price and a wide range of products) Time of delivery is also a very important factor. Both traditional solutions and advanced technologies are represented in the market and competition is increasing constantly.

57

Dental sector
The main trends in private dentistry development in 2010 ! 2012 are: supply will exceed solvent demand consolidation of private dentistry will continue private will have to enlarge the range of services provided aesthetic dentistry and implantation will be most profitable and fast!developing sectors profitability will go down due to high personnel costs (the share of a dentists fee in service price is nowadays up to 50%), decrease of workload (up to 50!60%) and rising spending for materials and tools more intense competition will make it necessary to invest into long!term customers loyalty The experts believe that private dental care services will remain in demand despite the recession. Until now there has been no significant change in sales. However, the crisis may influence the structure of services provided and increase the share of emergency dental services and dental prosthetics. Pessimistic forecasts suggest the decline of 2!5% in 2010! 1012.

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Summary Dental Sector

Mainly private service providers Imported devices dominate the market Stable but in some sectors already saturated market (increasing price sensitivity; competition pressure, over capacities) Profitability is decreasing High competition makes it necessary to invest into long!term customer loyalty Aesthetic restoration is growing Therapeutic stomatology is the most profitable business Germany is the leading supplier There is a constant need for instruments and consumable materials Chinese and Korean manufacturers are increasingly active in the market.

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Informatization of Health Care in Russia

60

Informatization of Health Care*

The level of informatization in Russian healthcare organizations still remains low. The development is restrained both by insufficient financing and poor understanding of new opportunities for optimization and quality improvement offered by these technologies. Most IT!products implemented in Russian healthcare organizations are bookkeeping & personnel department systems and special programs for collection of statistic information that do not directly refer to health care. However, it is possible to say that local clinics have passed the first stage of informatization of business processes. There are a lot of factors that influence on decision!making of healthcare organizations managers when choosing an IT system, and it is quite hard to rank these factors unambiguously by significance. Nevertheless, the experts believe that one of the most important factors is being well informed about the results of introduction of IT systems in healthcare sector. Russian doctors, with the exception of those few, who read professional periodical press in English, do not get adequate information about the results of the introduction of IT systems, since there are still not enough of such examples in Russia.
*In the opinion of all experts interviewed within the frameworks of this research, the problem of informatization of healthcare cannot be examined only in the segment of private clinics and hospitals, as it is closely connected with inadequate legislation, and this is a problem for the whole Russian healthcare system. However, if we take into consideration only financial aspects, it is quite possible that a public clinic, which is also providing commercial services, can have an extra income comparable with that of a middle/size private clinic. At the same time, unlike private clinics, public hospitals and other healthcare organizations are not so much concerned with measuring return on investment.

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Informatization of Health Care

Russian president Dmitry Medvedev noted in his speech at the opening of the first session of The Council for development of information society in Russia on 12th February 2009 that we must introduce electronic medical records into healthcare practice, as it has been already noticed before, and also implemented to some extend. One of the most important reasons that hampers progress in informatization of healthcare sector is a complete absence of any legislation, which regulates electronic medical documents. Electronic documents do not have any legal significance ! so paper documentation, regulated by law (the Order of the Ministry of Healthcare of USSR, approved in early 1980s), is still required by the authorities. This leads to a contradiction: on the one hand, it has been publicly declared at all levels that electronic documentation should be implemented; on the other hand the existing legislation does not allow it. As a result, no medical organization (neither private nor public) can implement modern IT systems without violating the existing law.

CRM-Soft software interface

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Informatization of Health Care

According to the Concept of Russian Public Healthcare System's Development till 2020, information technologies are seen as a very important fact of this development and given high priority. At the moment the number of different applications (medical information systems or MIS) in the Russian market is over 300, and practically all of them are developed by Russian companies. However, many components used in locally developed IT!based solutions are of a foreign origin; At the same time information exchange standards are not fixed, implementation of MIS is carried out unsystematically and different applications are not compatible with each other.

When selecting MIS, healthcare institutions usually choose either minimal price or the solution developed especially for the certain healthcare sector (according to the information available for them). References are also very important. Experts believe that availability of information on different MIS is a very important factor for decision making, especially when it is necessary to prove advantage of a system in question to hospital administration/owners, funding organizations, inspecting bodies and others.

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Informatization of Health Care

The psychological barrier that prevents healthcare specialists from using high technologies is a common place all over the world, but most European countries have already passed this stage before. Thus according to the result of a survey conducted in 2007 only 30% of Western Europe physicians were ready to use Internet technologies in their everyday practice. Implementation of IT technologies into healthcare practice may require additional motivation. For example in the Netherlands physicians receive extra fees for participation in telemedicine projects. Unfortunately in Russia such motivation is still impossible. In 2008 CNews Analytics research agency conducted a survey, which main purpose was to describe the situation in informatization of medical institutions in Moscow. More than 30 major Moscow clinics that provide both commercial and public services participated in the survey. Among them were e.g. Filatov Municipal Clinical Hospital # "5, the Bauman City Clinical Hospital # 29, the Botkin Municipal Clinical Hospital, the Bakulev Research Center for Cardiovascular Surgery, etc..

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Self!assessment by Russian IT specialists

More than half (56%) of all respondents evaluate the overall level of informatization in their clinics/healthcare institutions as average. 37% consider it to be high, and only 7% think it to be low. High self!appraisal is more typical for private and departmental clinics, as well as for large public healthcare centres. While leading Moscow clinics and healthcare centres (e.g. The Railway Clinic, the Bakulev Centre for Cardiovascular Surgery, the I.M. Sechenov Medical Academy, Healthcare Centre of the Presidential Executive Office and others) develop telemedicine projects, implement electronic records and begin to use RFID!tags, most of the common, middle!size clinics still associate informatization with nothing but construction of local computer networks.

Informatization of healthcare organizations as evaluated by their managers

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IT budget allocation
For 50% of respondents it was difficult to answer the question about IT budgets. 40% of respondents confirmed that there is such an item in their budgets, while 10% said that there is not. Average expenditure on information technologies, including implementation, support and upgrades, comprises from 1% to 9.8% of a clinics budget. These funds are usually allocated for purchase of consumables, office software and internet payments. Approximately 34% of respondents reported that information technology spending in their healthcare institutions has increased during the last 3 years. 30% believe that it remained on the same level, and 3% of respondents however felt a decline in IT spending. In general 33% of respondents had difficulties with answering this question.
Do you have a special item in your clinics budget for IT costs?
10 % No Yes 40 % Cannot answer

50 %

IT spending during the last 3 years

3% Increased 34 % 33 % Remained the same 30 % Deceased Cannot

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IT usage in health units

The research has also provided information on informatization of different activities of Russian clinics. Nearly all respondents have reported that they are using software for accounting and personnel records (97%). Then, almost everyone uses some software to interact with insurance companies (90%). The vast majority also uses IT to collect and process statistic data (87%). A large number of medical institutions (73%) have indicated that they are using specialized software in laboratory diagnostics. Information & support systems for doctors are implemented in every fourth interviewed clinic in Moscow. Electronic records are implemented (or being implemented) only in 15% of healthcare organizations.
Informatization of different activities of a clinic

Electronic records

15 %

Information & support

25 %

Laboratory diagnostics

73 %

Statictics collection

87 %

Interaction with insurance companies

90 %

Personnel records

97 %

Accounting

97 %

0 % 20 %40 %60 %80 % 100 % 120 %

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IT demands in different health units

When asked about the most important aspects of informatization of healthcare process, the respondents gave discrepant answers that varied from we do not need anything, we can treat people even in an open air and it's all the same what will be done to we are looking forward to implementing information technologies, especially electronic records, and we would like to automate as much activities as possible but do not have enough money. Approximately 63% of participants support the implementation of electronic personal records. Approximately 27% would like to purchase information & support systems for doctors. At the same time, about 13% of the respondents reported that they do not need any additional software or IT systems.
The demand in automatization of different medical areas
Laboratory diagnostics Interraction with insurance companies Statistics data collection 3%

7%

10 %

Personnel records

13 %

Accounting

13 %

Don't need anythig

13 %

Information&puppost

27 %

Electronic records 0%

63 % 20 % 40 % 60 % 80 %

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IT purchasing criteria
The issue of price When selecting a software supplier, most of the health care organizations take into consideration costs of IT solutions and services (37%). Suppliers experience with implementation of similar IT! projects in health care sector is also very important factor (27%). The other factors that influence the decision making are: maintenance & support (27%) integration simplicity, efficiency, and integration into existing IT infrastructure (20%) usability (7%). In addition, 20% of respondents reported that they did not search for suppliers by themselves but implemented solutions recommended by authorities or colleagues.
Criteria of choosing an IT!solutions supplier

Usability Can be integrated into existing systems Simply and easy to implements Recommended by authorities Price for support

7%

20 %

20 %

20 %

27 %

Experience

27 %

Price 0% 10 % 20 % 30 %

37 % 40 %

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Impact of financial crisis

At the end of the interview the participants of the survey were asked to predict how the financial crisis in Russia would affect purchases of hi! tech equipment and modern software in healthcare sector. Half of the respondents could not answer this question, 23% believed that the supply of IT products would diminish, 17% expected that their IT spending would remain the same, and 7% expected an increase.
Financial crisis influence on the delivery IT spending

23 %

IT spending will increase New IT purchases not budgeted at all IT spending will stay on the same level Cannot answer

50 % 7% 3% 17 %

IT spending will decrease

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Informatization of Health Care

According to the information provided by the Association for e!health Development (ARMIT), which updates the database of software providers on an annual basis, there are about 290 companies in the Russian market providing IT solutions (Medical Information Systems or MIS) for healthcare sector. Among them 83% are commercial enterprises, 14% ! public (state owned) organizations , and 3% are so called non!profit entities (partnerships, associations, foundations, etc.). Most of the above mentioned providers (68%) are located in Moscow and Moscow region, 11% ! in St Petersburg and 21% ! in other regions of Russia. About half of the MIS developers also offer software for warehouses and other logistics solutions (52.8%), solutions for data collection & storage, information & support systems, which consist basic legal and medical information , and so called application software ( 52.0%), as well as software for monitoring diseases (51.2%). 22% of the local companies provide specialized software for certain sectors, e.g. develop laboratory information systems (LIS) or special solutions for emergency medical care, conflict and catastrophe medicine, software to analyze data and to support decision! making etc.

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Informatization of Health Care

Solutions for emergency medical care are provided by 16% of software developers. 14,4% are ready to create homepages for healthcare organizations, 8.8% provide specialized solutions to gain access to medical data using mobile devices. 73.6% of MIS developers offer solutions for business processes automation in healthcare institutions. These solutions include reception software, software to collect information on healthcare services provided, reporting, etc.. 70.4% provide solutions that also include workflow modules like personal electronic records, recordkeeping for laboratory diagnostics, medication management, etc. 64,8% provide software for budgeting, financial consolidation, strategic planning, forecasting analysis and reporting to insurance companies; 59.2% ! provide systems for in!patient clinics inc. planning, data registering, medication and equipment management, working load management etc..

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Informatization of Health Care

Telehealth or e!health services based on the telephone consultations are not developed in Russia. However, there are many Internet sites and forums where one can get medical consultation from local physicians for free. In most cases, the patient is finally invited to visit a doctor and undergo some medical tests. Thus, these forums promote services of certain doctors and clinics; however, in some simple cases patients can get doctors advice without visiting a clinic. Besides that, there are many Russian websites related to alternative medicine (including oriental medicine), folk medicine, homeopathy, herbal medicine. Publication of such information is not prohibited or anyhow regulated by legislation. Many patients and their families use the Internet to get a so called second opinion on diagnoses and prescriptions, in case they distrust a doctor. This option is especially popular with people living in the depths of the country, where they do not have any other opportunities to get expert advice.

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Summary Health IT
IT penetration: mainly patient administration systems; Sub systems in use are not integrated; Fragmented IT offering (> 300 solutions/providers) dominated by local IT companies, sector still growing; Lack of legal framework hinders electronic documentation; Lack of standardization of the different SW components; Selective market; Price is the most important factor for about 40 % of clients; Telehealth is not developed at all; Many attractive merger and acquisition candidates for foreign supplier Clinics have a right to select and buy IT solutions and components without an approval from the authorities.

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