The Board of the National Bank of Ukraine has decided to keep its key policy rate at 6% per annum.
The NBU expects inflation, which increased to 3.8% in November, into the target corridor of 5% +/- 1 pp at the end of the year and further growth in consumer prices in the following months, the central bank said on its website on Thursday.
According to the NBU estimates, the quarantine restrictions announced by the government for January 2021 will not have much influence on economic activity, consumer demand, and thus on inflation.
At the same time, balanced monetary and fiscal policies will not only contribute to the resumption of economic growth, but also will maintain inflation at moderate levels.
“Cooperation with the IMF remains fundamental for the recovery of Ukraine’s economy. Financing provided by the IMF and other international partners is crucial for the planned budgetary spending. Without this support, the fiscal impulse required to revive the economy will be much smaller, and the recovery will take longer,” the message reads.
Ukraine’s fulfillment of its obligations under agreements with international lenders will unblock next tranches of official financing. This will reduce interest rates on state borrowing on the domestic and foreign markets.
The NBU added that a rise in coronavirus cases and the imposition of stricter quarantine measures to overcome the pandemic remain the key risks to macrofinancial stability. This could result in gloomier consumer sentiment and subdued domestic demand, which would depress economic activity and restrain inflation.
It is indicated that if a negative pandemic scenario is implemented, which will restrain consumer demand and slow down economic growth in general, the National Bank will be able to provide the economy with an additional monetary impulse.
“Conversely, the materialization of the adverse scenario will restrain consumer demand, slowing overall economic growth. Under such conditions, inflationary pressures will be weaker, enabling the NBU to give the economy additional monetary impetus for growth,” the release says.
A summary of the discussion by Monetary Policy Committee members that preceded the approval of this decision will be published on 21 December 2020. The next monetary policy meeting of the NBU Board will be held on 21 January 2021, according to the confirmed and published schedule, the regulator reminds.
National bank of Ukraine’s official rates as of 11/12/20
Source: National Bank of Ukraine
PJSC Trunk Gas Pipelines of Ukraine made the first payment to JSC Ukrtransgaz in the amount of UAH 3.85 billion for corporate rights in the authorized capital of Gas Transmission System Operator of Ukraine LLC (GTSOU), the press service of Ukrtransgaz reported.
The company clarified that the payment was made as part of the fulfillment of contractual obligations assumed by the parties as part of the process of separating natural gas transportation from Naftogaz (unbundling).
The financial report of Naftogaz noted that the sale and purchase agreement for a stake in GTSOU provides for the group to receive an initial financial contribution of UAH 3.871 billion and regular variable payments over 15 years based on a dynamic price calculated according to a formula agreed by the parties. Accounts receivable were recognized at the date of sale of GTSOU according to the value of UAH 81.306 billion. In addition, on January 1, 2020, Ukrtransgaz sold its own gas to GTSOU, which is necessary for the operation of the system, for UAH 4.53 billion.
In January-September 2020, GTSOU received a net profit of UAH 20.277 billion, net income – UAH 44.827 billion.
Ukraine International Airlines (UIA) plans to gradually restore the original route network from March 28, 2021.
According to the airline, the launch of dozens of flights will allow to resume air communication between the regions of Ukraine and numerous European countries through the air hub at Boryspil International Airport.
At the beginning of 2021 summer navigation, the airline’s domestic flights will operate in the directions of Kherson, Lviv, Kharkiv, Odesa, Dnipro, Ivano-Frankivsk and Zaporizhia.
UIA plans to operate international flights on 43 routes, including from Kyiv to Amsterdam, London, Paris, Nice, Brussels, Dubai, Helsinki, Copenhagen, Stockholm, Vilnius, New York, Toronto, Rome, Milan, Larnaca, Athens, Delhi, Cairo, Dusseldorf, Munich, Berlin, Zurich, Geneva, Tbilisi, Baku, Yerevan and Istanbul, as well as to Warsaw, Prague, Budapest, Vienna, Chisinau and Barcelona.
Municipal nonprofit organizations (NPO), which most Ukrainian healthcare facilities have become, are trying to develop the healthcare business – which is an absolutely new challenge for them. Being an enterprise means generating profit, controlling and minimizing costs, retaining and developing personnel, soliciting and retaining customers. It is not easy, but possible. How? Some possible activities of municipal hospitals in this regard will be described hereafter.
1. Change organizational setup
In general, the organizational setup of municipal NPOs is not appropriate for doing business. In the years since state-owned enterprises, hospitals have continued to unreasonably retain an excessive number of hospital housekeeping personnel. And this entails funds for the maintenance of unnecessary premises, salaries, etc. There is a room for improvement within such an organization. Downsizing and layoff are painful but vital processes.
An example. The staff of the hospital includes a caretaker, several plumbers, locksmiths, house-painters, welders and others. However, there is also a municipal enterprise nearby that provides the public utilities for the district and includes all these specialties in its staff. It is more cost-effective to procure the relevant services from a specialized municipal enterprise or from private contractors, namely, business entities. The CEO of a municipal NPO knows the specifics of the operations, understands the needs, so the CEO should choose what suits the best for the hospital.
2. Introduce paid services
The list of paid services should be approved by the order of the hospital. In this case, draw up the list on the basis of the Ukrainian Cabinet of Ministers decree No. 1138 “On the Approval of the List of Paid Services Provided by State-Owned and Public Healthcare Facilities and Higher Medical Educational Establishments” dated September 17, 1996.
The goal of the business is to generate income, so provide as much as possible paid services that are beneficial to the enterprise.
Providing services means to bear the cost. The profitability primarily depends on the flow of patients (customers). And the organization of such a flow is already a marketing issue. Yes, that is marketing: advertising and promoting such services in all possible and effective ways to the target audience.
Since, the target audience may be the relevant community, and for some medicinal services it may be, actually, the entire population of Ukraine or not only Ukraine, therefore, it is necessary to develop an appropriate marketing strategy. How? The field for creativity is large.
For instance, the hospital employs a physician to whom people travel for consultation from afar. Why not use this fact in the advertising campaign? The text should be short and strong as well as easy for reading. There are also related non-medical paid services, in particular, improved nutrition, wards, etc. This is a resource for generating additional income for the enterprise as well.
3. Collaborate with insurance companies
The service requires payments. In fact, the patient has to pay for everything that is not paid by the government. There are no other sources of financing for the activities of hospital. Yes, there is also financial assistance from the community within the regional programs, but this is just assistance, and not a permanent source of funding that can be counted on from year to year.
Cooperation with insurance companies shall become an additional source of funding. However, the healthcare facility must provide such a level of service so that it would be interesting for insurance companies to cooperate and attract customers.
As a rule, insurance companies work on the basis of their own, carefully and well-developed contracts. In order to balance the interests of the parties, it is worth to involve a professional lawyer when negotiating such a contract.
The CEO also is entitled to initiate the operation of a non-profit health insurance fund. There are successful examples when community members understand that for cheap constant contributions in case of illness, the patient receives a bonus, namely high-quality medical and related services. Tens of thousands of people become participants in such health insurance funds. And it provides additional ongoing funding for hospitals.
The health insurance funds are created in the form of charitable organizations that do not have the goal of making a profit. Their activities are regulated by the Law of Ukraine “On Charitable Activities and Charitable Organizations.” There are enough examples of statutory documents and descriptions of the activities of such organizations on the Internet.
4. Pool resources
The legislation does not prohibit the municipal NPO from interacting in various forms and pooling its own resources in order to use them effectively. Consolidation is not a panacea, but one of the tools for optimizing all processes: it helps not to duplicate business functions.
Several municipal NPOs operate on the basis of the property of the national healthcare facility. In this case, it is efficient to consolidate resources. You have at least three alternative options for such consolidation at your disposal: to create a municipal economic association of several enterprises or to lease the integral property complex of another enterprise, or to create a joint municipal enterprise. As a result of these steps, you optimize administrative functions, reduce staff, consolidate property and financial resources, expand the list and quality of services, and others.
5. Optimize production functions
This refers to everything, except medical services: laundry, cleaning, food, transport, heating, and others. Instead of keeping old premises to be heated and refurbished and old equipment, procure relevant services from third-party vendors.
For instance, drivers and vehicles owned by the municipal NPO. If we are not talking about the use of fleet vehicles 24/7 and not about specialized vehicles, then it is most probably not profitable to keep fleet vehicles (fuel, repairs, storage) and pay for the work of drivers. It could be more interesting to pay for a taxi service or reimburse physicians for expenses if medical workers had to urgently arrive at the workplace outside of working hours.
Laundry and boiler room. It is worth considering whether it is more profitable to draw up contracts for washing and connecting to city heating networks.
6. Expand service packages under contract with NHSU
Is it expedient and cost-effective for facilities to work on separate service packages? This issue needs to be reviewed separately. There are no overall answers, since make an assessment separately for each facility, taking into account the current situation with personnel, equipment, the needs of the population, competition, and others. Analyze, according to which packages your facility could make an agreement. Think if these services would be in demand.
7. Modernize remuneration system
There is a systematic shortage of medical personnel in many regions of Ukraine. It is the task of every CEO to create such working conditions so that new personnel come to the hospital and the old ones develop and remain. In this case, the issue of labour remuneration comes first.
Usually, the salary of municipal NPOs’ employees is calculated on the basis of the Ukrainian Cabinet of Ministers’ decree No. 1298 “On Remuneration of Employees on the Basis of the Unified Rate Schedule and Coefficients for the Remuneration of Employees of Facilities, Establishments and Organizations of Certain Branches of the Budgetary Sphere” dated August 30, 2002 and the Order No.308/519 of the Ministry of Social Policy and the Ministry of Health “On Streamlining the Conditions of Remuneration of Employees of Healthcare Facilities and Social Protection Institutions” dated October 5, 2005.
The status of a municipal enterprise dictates other principles of remuneration, based on a collective agreement. It is regulated by Ukraine’s Law No.3356-XII “On Collective Contracts and Agreements” dated July 1, 1993.
Modernize the remuneration system in municipal enterprises. Increase salaries by streamlining all processes. At the same time, you have the right to use the tariff system familiar to the industry or any other approaches.
8. Find and launch investment projects
Now investment projects in the medicine sector are more attractive for Ukrainian and foreign investors than it was before. The amount of funds that the government allocates for healthcare is increasing every year and the market is becoming liberal. The field for investments is wide – from the modernization of equipment to the construction of new hospital buildings, the latest medical services, and others.
The investor could enter into a concession agreement for the hospital or its department with the local authorities. As part of the concession agreement, the investor negotiates with the local authorities on a certain guaranteed level of profit (financing), and also implements the business model that has already proven its efficiency in other countries.
He/she invests in refurbishment or modernization, and arranges all processes. For the next 49 years, the investor runs the relevant business and gradually returns his/her investment. The sources of profit are the services bought by:
• Government under agreements with the National Health Service of Ukraine (NHSU);
• Financing of targeted aid programs of communities (districts or cities);
• Patients (out-of-pocket).
Investors are looking for the projects that are attractive for investments within the public-private partnerships, in particular, under concession agreements or joint activities with municipal hospitals. This is an additional source of funds to reorganize the facility into a profitable enterprise.
Oleksii Bezhevets
MBA, Partner at Legal Alliance Company
The Antimonopoly Committee of Ukraine (AMCU) has granted permission to Vesco Limited (Limassol, Cyprus), which unites the clay mining business of the investment company UMG Investments of SCM Group, to purchase more than 50% of the shares of PJSC Chasiv Yar Refractory Plant (Chasiv Yar Donetsk region).
“The AMCU has granted permission for the stated actions and imposed obligations, which stipulate the implementation of concentration in the markets of aluminosilicate refractories and refractory clay of Ukraine,” the agency said in a press release.
The committee recalls that these obligations were offered by Vesco Limited itself last fall for a period of five years and consist, in particular, of selling to third-party buyers, if there is a demand from them, of at least 50% of the annual sales volume of the plant’s goods at market prices.
Another obligation is not to allow limiting the volume of supplies of refractory clay without economically justified reasons to third-party buyers who intend to purchase them for the needs of their own production in Ukraine.
In addition, Vesco will have within two years, in the absence of alternative sources of supply of refractory clays mined in Ukraine in volumes that fully meet the needs of Ukrainian consumers, to ensure the sale of refractory clays in favor of such companies in volumes from 20% of the total annual sales of concentration participants, if there is demand, at market prices.
