Corruption in health sector in Serbia by xumiaomaio


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    Corruption in health sector in Serbia


              Center for Antiwar Action

                       Belgrade, June 2005

General framework of report

This framework is based on various sources, including official data on corruption, information
publish by the press, public opinion researches and assessments previously made by same author
on various forms of corruption in Serbia.

This report also consists references to opinions and statements in FIDH Report of International
fact finding mission on health care rights “Serbia: discrimination and corruption, the flaws
in the health care system” from April 2005, and OBJECTIONS of Serbian Ministry of
health on FIDH report (May 2005).

Corruption in Serbia in general

        “The problem of corruption in societies making a transition from authoritarian regimes is
bigger and more difficult, as new demands dictate numerous tasks that have to be achieved
whilst the funds and means for their realisation are still undeveloped or insufficient.”1Serbia is
one such a state, where devastating consequences of Slobodan Milosevic regime and
international sanctions during last decade of the XX century are including also wide-spreading of
corruption in all spheres of society, disorientation in regards to moral basis of society, capturing
of the state by private or group interests and strengthening of crime organized by or linked with
those in power.
        The fight against corruption was only one of urgent needs and priorities, identified by
both democratic – oriented governments (DOS government 2001 – 2004, and DSS, G 17 plus,
SPO and NS government since 2004) and reforms mainly took place in the sphere of building the
legislative framework (prevention) and occasionally in public awareness rising (where civil
society organizations and media did much more than government itself). “Despite the fact that
certain important anti-corruption legislation has been passed, the fight against corruption did not
achieve the desired results during the past three years. A small number of corruption cases was
 Draft national anti-corruption strategy of Serbia, December 2004, Background. Translated by Council of Europe
office in Belgrade.

prosecuted, which is disproportionate with the number of such instances publicly suspected and
           More successful fight against corruption is an important thing to be dealt with also in the
context of European integration processes. As mentioned in recently adopted Feasibility report
for Serbia and Montenegro “International surveys indicate that Serbia and Montenegro suffers
from a high level of corruption. The fight against organised crime and corruption therefore
represent key challenges for Serbia and Montenegro3” and “…no comprehensive action had been
taken yet to investigate financial crime, and Serbia and Montenegro’s commitment to fight
corruption has remained largely rhetorical. Comprehensive strategies are still lacking, as well as
efficient institutions to implement them.”4
            The actual level of both petty and grand corruption in Serbia however remains largely
unknown. Due to the nature of this type of crime, where the most of illicit business is performed
between only two parties, both breaching the law, there is a very small incentive to report
corruption. Therefore, the actual data on number of reported or prosecuted cases are providing
inevitably view on only small scope of overall corruption in the country. In such circumstances,
other instruments to measure level of corruption are frequently used, including public opinion
pools, analyses of information published in the media, researches of targeted groups of people
(e.g. investors asked to give bribe, firms involved in tendering process) and various legal and
sector assessments.
           Neither of results gathered through use of above mentioned instruments might be taken as
definite. For example, public opinion pools are often showing high level of perception that
corruption is high in certain sectors of society, but the figures are significantly lower where
citizens are declaring whether they personally had experience with corruption; media are often
carrying information presented directly or indirectly by political opponents, containing mutual
accusations of them, but doing very little to investigate cases appropriately and present the
complete and relevant data; legal and sector analyses are presenting most vulnerable points, but
without hard data to which extent the chance to develop corruptive behaviour has been used.
  Report on the preparedness of Serbia and Montenegro to negotiate a Stabilisation and Association Agreement with
the European Union, Brussels, 12.04.2005, page 7.
    Ibidem, pages 43 – 44.

         There is also no common understanding about what corruption is. There is no such a
definition in current legislation5, but criminal law of Serbia recognizes several dozens of
offences that might be related to corruption. However, not all of the corruptive behaviours are
covered by current legislation.

         Health sector in Serbia and points vulnerable to corruption

         About health sector in Serbia

         Health sector in Serbia and responsibility for its functioning are divided among several
actors. There are both public sector health service, and private medicine practice (limited to
selected areas). Within the public sector, the Ministry of health competence includes, among
other, inspection of the quality of health service, designing the reforms in health service,
appointment of management in most of health sector institutions in Serbia and budget financing
of part of health sector institutions needs (e.g. buildings). Management of smaller number of
institutions is appointed by the Government of Serbia directly. The most of funds for providing
health services is coming from Mandatory health insurance fund, an organization controlled
indirectly by the Government of Serbia. Beside that, the whole area of military service health
insurance and military service health sector institutions is out of control of Serbian government
and Ministry of health. Although number of those insured on this way does not make large share
of overall population, this area is interesting because military service institutions includes the
most prominent VMA hospital in Belgrade.

          The definition used in draft national anti-corruption strategy is the following: Corruption is a relationship
based on abuse of authority in the public or private sector with the aim to acquire gain for oneself or another.

           About types of corruption in health sector

           Public procurements

           The area that involves use of great amount of public funds, and therefore potentially is
vulnerable on corruption are procurements (e.g. of drugs, medical and other equipment) in health
sector. The opportunities for this type of corruption to occur are more or less of same kind as in
public procurements in other sectors. After new law’s on public procurements adoption (July
2002) possibilities to make a corrupt deal are partially cut down. Namely, this law introduced an
open tender procedure as a role for all procurements above certain limit and rules what has to be
done in cases of smaller procurement and when some urgent procurement might take place. This
law does not apply for institutions of State union Serbia and Montenegro (including SandM army
           However, the significant weaknesses of this law’s implementation are still in place,
which enables corruption to occur, such are: insufficient control mechanisms in the field of
planning of procurements and preparation of terms of reference; insufficient control mechanisms
in the field of “urgent” procurements, where direct negotiations may apply instead of tender;
insufficient mechanisms to prevent collusion between bidders; insufficient control mechanisms
in the area of post-award contract amending and execution of contracts. The actual level of
corruption in health – care public procurements and its very mechanisms are still only matter of
speculations and not investigations and trials.
           The famous case, known to Serbian public and often linked with possible corruption was
initiated by removal of director of VMA (Military academy of medicine), Dr. Zoran Stankovic,
in April 2005. Dr Stankovic became famous6 because of his public statements against
“pharmacomaphia”, several times between 2002 and 2005. He spoke about pressure of suppliers
to buy drugs even if there were quite enough stocks of it, criticized procurements of the goods
with low quality etc. In the summer of 2004 he explained the modus operandi of corruption in
procurements in health sector: formal obedience with Public procurement law provisions during
the tender procedure, selection of bidder that offered the lowest price and later increasing of

    Beside his expertise and previous work.

prices through procurement of “additional” works, goods or services. He also stated about threats
for his life and announced that he prepared 20 letters, identifying potential killers in the case of
assassination. There is no publicly known data that any investigation followed serious allegations
of Dr. Stankovic.7 One of the issues discussed because of this removal was alleged intention to
privatize VMA, later denied by Minister of defence, Mr. Prvoslav Davinic.
        Beside this, there were also recently allegations in the press that Mandatory health
insurance fund performed some illicit or uneconomic procurements, but those claims were
strongly opposed by Fund representatives.

        State regulatory role

        The other potential threat for corruption is in domain of state regulatory role. Such area
includes certain level of discretionary power when issuing of licences for private clinics to work,
when drugs are selected to be covered from health care funds, when approval is given to use new
types of medical treatment in practice etc. Occasionally, this area also becomes the matter of
speculation or discussions on corruption. However, particularly when those discussions are
initiated by drug producers or drug importers, it is hard to distinguish whether public or only
particular private interest is a matter of concern.8

        Status of private medicine practice

        The work of private sector doctors is still to large amount out of reach of regular
legislative mechanisms. Situation within the profession also suffers from lack of internal
mechanisms to fight against all types of misbehaviour. Moreover, there are number of doctors
working for both public and private sector. Since 1990-is, there were various initiatives coming
from private sector to establish the chamber of medical doctors, which would have mandatory
membership and also some public proxies. The main concern of private sector related to the
drafts of this law came from allegedly overridden role of the foreseen government structures in

               See                for               example,            “Dnevnik”,       28.05.2005,

such a Chamber.9 Similar arguments are in place more recently after the government proposed
the Law on chamber of medical workers, now claiming that is inappropriate to have “civil
servants” (public sector doctors) and “entrepreneurs” (private sector doctors) in same
association, and that such body would inevitably be in favour of public sector doctors’
        The other issue where opinions are totally opposite between government and private
sector (or at least some of its representatives) is the issue of Mandatory health insurance fund
money distribution. While the government advocates basically for principal that only those
private sector actors providing deficient services in certain area might conclude agreements with
the Fund (to cover expenditures of medical cure of insured patients), the private sector is in
favour of formula “money should always follow the patient”, i.e. that patient, within the defined
scope of guaranteed services to be covered by the Fund, might decide absolutely free where to
ask for the service (and the price of that service should be paid by the Fund within the limit).
Whatever is better, the application of any of these principals includes also risk of corruption
which has to be treated properly.
        As mentioned in the FIDH April 2005 report, the private sector “has never been properly
regulated or supervised”. Furthermore, even after introducing of the VAT (January 2005),
private sector doctors are largely out of the system of “fiscal cash registers”, which provides
opportunity for certain types of tax evasion and money laundering. On the other side, the
nowadays inspections of private sector work, performed by the Ministry in charge, even if
legally based, are sometimes seen by government opponents as a method of pressure coming
against those private sector doctors opposing government measures.
        Some of private sector clinics are hiring also experts from public sector on permanent or
temporary basis. Such a way of engagement raise very serious conflict of interest questions to be
which will be separately discussed.

  See also, National integrity system – Serbia and Federal Republic of Yugoslavia, TI Serbia and EMINS, Belgrade,
   More on

        The use of donations

        Use of foreign donations in health sector is another area occasionally suspected for
corruption and lack of transparency. Such allegations were raised recently within the broader
campaign of one private sector doctors’ organization against reforms proposed by the Ministry of
health.11The Ministry in charge is denying that any of around 21 million euro coming as donation
from EU to Serbian health care sector, has been stolen by people working there.12 The possible
cause of suspicions are the facts that within EU projects the great amount of money is not
directly distributed to the beneficiary country but spent on consultancy services, performed by
companies coming from the Union. The following obstacle to examine those cases might be also
the lack of transparent procedures and/or available information about projects on donor side13,
which is important because donor institutions and their contractors are administrating directly
certain projects.

        Lack of resources, additional payments and waiting lists in public sector

        The specific form of corruption derives from introducing of various additional payments
in some public health – care institutions. Some medical institutions are organizing providing of
their services under privileged conditions (for example, to provide some service prior than it
would be done in regular procedure) for those who pay additional amount for such services. Such
practice is criticized to be illegal or to be “legalization” of bribe (although paid to the institution
and not directly to the doctor).14Although this method could be, if properly regulated, good to
decrease incentives for bribe – giving, particularly when the interest for certain service is greater
than available resources, in nowadays circumstances it is still rather controversial because of lack

   More on
   “Politika”, 12.05.2005.,
   More on
   The author experienced himself in 2002 situation when he was extorted to pay in order to have regularly
scheduled surgery intervention (after more than a month from examination). Official explanation was that payment
is needed “because this service is not any more covered by insurance”, but he was anyway given to sign document
declaring “that payment is made in order to have intervention prior regular schedule”.

of money – flaw transparency, and certainly should be subjected to the audit from the “good
governance” point of view.
        Waiting lists are particularly sensitive area, providing lot of incentives for corruption to
occur. The reason for having those lists is primarily lack of available capacities to provide health
care to all those need it. Such a lack of capacities might come from permanent lack of funds (to
buy new equipment, to repair the equipment, to employ additional staff etc.), but also from bad
management of available resources or even hidden sabotage in order to force patients to use
similar equipment in private sector clinics.
        The Ministry of health announced for this and following year new measures to deal with
problem of “waiting lists”, including more use of information technology and criteria to form the
list, having in mind priorities in providing health care. The main idea is to increase transparency,
provide patient with possibility to have access to the list, and to use capacities of all public sector
institutions in Republic more effectively.

        Direct payments and other methods of petty corruption

        Petty corruption in health sector is matter of most discussions and includes a number of
illegal payments directly to medical doctors and others in public sector to provide some services.
Such cases are occasionally also matter of criminal investigations and convictions15. Public
opinion pools might also be relevant to certain extent when examine the level of this type of
corruption. The “gratitude” payments should be to certain extent distinguished from this type of
corruption. Medical doctors and nurses in certain areas of the country or medical professions are
in position to receive smaller gifts from satisfied patients, even if not previously asked nor
expected. However, this phenomenon, with strong root in culture, might corrupt otherwise honest
workers and confuse patients in order to think that such gifts are mandatory to make.
        Direct payment is not only, and most probably, not even the most often mechanism of
petty corruption functioning. The heritage of all previous systems is greatest role of
“connections” in Serbian society. It means, that money would be rarely directly asked from the

  Some data are available in the summary of round tables “Open on corruption – three years after”, published by
FES, Belgrade, 2004 and on anti-corruption portal of Beta news agency “Clean hands”.

patients, but the interested patient sometimes has to find “intermediary”, whether insider in
medical institution or some other person with influence in society to “settle things” with those
who will provide service to the patient. In such a situation, the amount of money that some
individual possesses is of secondary importance in getting appropriate service, but the “amount”
of influence in society, represented in patient’s own capability to do something in return or in
patient’s family and friendship connections in society comes to the top.
          Payment for greater medical care in public sector might also be indirect. In such a
situation, the patient is visiting the doctor in private clinic he works in, paying for examinations,
consultancies etc, but also, indirectly for greater care of same doctor, when needed in public
sector clinic where doctor also works. Such situations are particularly often where private sector
clinic could provide only part of the service to the patient (e.g. because of lack of equipment),
but the same doctor could manage to provide “his” patient under privileged condition in public
clinic, where he or his companion also works. That phenomenon could be also counted as a
misuse of public resources.
          One of the causes for all types of petty corruption are very poor salaries in public health
sector; others are lack of sufficient control mechanisms, and lack of willingness to report and
testify about such cases, because of specific position of the patients forced or expected to give

          Conflict of interests

          Specific types of corruption are deriving from conflict of interest, where public sector
doctors are also working for private clinics, whether as consultants or part-time. Those doctors
are in position to use their public posts in order to direct patients to private clinics for “additional
examinations” (whether needed or not) or to provide service faster, but in private sector clinics.
The similar mechanism occurs when public sector doctors are recommending patients to visit
also their friends in private sector. The regulation in the field does not provide firm prevention of
those types of conflict of interest. The similar might be said for drafts of new legislation
discussed these days. Namely, the provisions of new law on health – care, allows doctors to work
under contract for more than one employer, whether in public or in private sector, within the

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general limit of maximum over working hours, defined in Labour law. Beside potential damages
in direct abuses, this opportunity might effect also in weaker quality of service (which might, but
doesn’t have to occur when if someone is working over hours).
         It should be mentioned that the new law would regulate more properly than now such
engagements and therefore represents improvement in the field; on the other hand, it does not
provide itself mechanisms to prevent damages coming from such conflict of interests situations.
It is more matter of fact than very legislation how such situations would be managed in the
future, and it is hard to predict what effects would be. With further development of monitoring
and reporting mechanisms, this problem might be solved to certain extent. The most possible
reason to keep this model however is the presumption that public sector qualified doctors would
(if not have opportunity to engage in private sector too) leave the service16, while on the other
hand, the possibility to have competitive salaries of the public sector employees is still not

         Measures to fight corruption in health care sector

         The government announced in February 2002 measures to improve quality of health
sector in its document “Health policy of Serbia”. Among other measures and within broader
reforms (also including those in field of anti-corruption) the new institution “protector of patient
rights” has been established in many of health care institutions in public sector. The idea was to
provide patients with opportunity to complain in case they consider the service provided
inappropriate, or their rights harmed otherwise. The protector must be a lawyer, employed in this
health care institution. The authority of those protectors is similar to ombudsperson’s (checking
of facts, providing patient with access to relevant documentation, issuing of recommendations,
initiation of other legal remedies etc). The institution proofed good in some medical institutions,
but in general the effects of those measures are not explored enough to have general conclusion.
One of possible obstructions for greater confidence in protectors is the fact that they are
employees of institutions they are working in, and therefore dependant from their directors.

  See also reports in the press from round table on corruption in health sector, held on May 20 th 2005 in Belgrade
Palace hotel (statements of Minister Milosavljevic),

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However the impressions about functioning of protectors are not comprehensive enough.
Although Ministry of health collects data on work of this institution, and evaluates it, the
comprehensive findings were not recently presented. It was announced by the Minister in charge,
that the post of protectors will be fostered through new legislation.
           The Minister of Health, Mr. Tomica Milosavljevic announced in April 2004 new
measures for monitoring the quality of work in health sector, that would go align with new
system laws in the field. Those measures would provide for guaranteed deadline for providing of
healthcare services and similar measures to improve those services. If implemented, those
reforms would provide for curbing of one of generators of corruption, i.e. extorting of bribes
from those wanted to get services or to get it earlier.
           In the domain of repression, Ministry is performing inspection control (under request
directly sent to the Ministry or through patients’ protector). Allegations of citizens on corruption
are extremely rare, and Ministry submitted charges against three person because of corruption in
2004 and 3 in 2005, after inspection conducted.17
           The Fund recently introduced greater visibility of the procurements and budget spending
of that institution (on the web – site of the Fund, According to the
statements of the Fund’s authorities, new policy already resulted in certain savings of Fund’s
money (compared with prices paid in previous period for the same type of goods). Beside that,
the Fund organized internal financial control in accordance with Budget system law and relevant
by-laws. The work of those services has been also subject of Ministry of finance audit, but no
further data are available about that.
           Within the reform of criminal law, in late 2001, the set of new criminal offences has been
introduced. Among them, there is a criminal offence Corruption in Health Services:

                                              Corruption in Health Services
                                                         Article 255е

(1) Any health care worker in a health care institution established by the Republic of Serbia who
sets a condition for rendering medical service or uses his/her position in a medical institution to

     Vecernje novosti, 21.05.2005,

                                                - 12 -
provide private medical services and by doing so acquires benefit for him/her self or another
shall be punished with one to five years imprisonment.
(2) If by commission of the offence contrary to paragraph 1 of this Article material gain
exceeding two hundred thousand dinars is acquired, the perpetrator shall be punished with one
to ten years imprisonment.
(3) If by commission of the offence contrary to paragraph 1 of this Article material gain
exceeding six hundred thousand dinars is acquired, the perpetrator shall be punished with
minimum three years imprisonment.
(4) The punishment stipulated in paragraphs 1, 2 and 3 of this Article shall also be pronounced
against a health care employee in a health care institution established by the Republic of Serbia
who in respect of rendering medical service acquires any benefit for him/herself or another.

       The following table presents the number of cases related to this offence (only year 2002
and 2003 are relevant). The main reason for low level of indictments and convictions is
inappropriate wording of the article, making harder to prepare a good case than to use other
provisions (“receiving of bribe” or “abuse of office”).

                      8                                                          Complaints
                      6                                                          Indictments
                                         - 13 -
                             2000      2001         2002       2003
Studies of corruption in the sector

           Valuable information about corruption in health sector are available from extracts of
discussion during round tables on this topic, organized in 2001 and 2004 (published by Friedrich
Ebert Stiftung office in Serbia, Open on corruption – three years after). Those include discussion
of minister in charge, experts for corruption issues, medical doctors, representatives of labour
unions etc. There are also several public opinion pools, exploring perception of level of
corruption in various sectors in Serbia.
           Relevant is pool “Corruption in new circumstances”, by Centre for policy studies and
Argument, from April 2002, where the respond of interviewed on question whether they were
asked by doctors to give bribe during last year was 29 percent (the highest amount comparing to
all professions. Up to 70 percent of interviewed considered the level of corruption high among
doctors (the highest was for customers, 79 percent). In more recent pool made by Medium
Gallup18, using GCB methodology, the presence of corruption in health sector was percepted as
very high (4 on the 0-5 scale). Medium Gallup also presented comparative data on perception of
corruption in various profession dated latest for spring 2004. According to these data, the level of
corruption in health sector is comparatively high (53 percent had recently some business with
health – care institutions and 12 of them were exposed to the pressure that is percepted as linked
with corruption).
           According to the results of one research on local level, performed by an Ngo “Lingua”
from city of Kraljevo, 28,1 % percent of interviewed pointed on health sector as most corrupted
one. 19, 2 % of people said that they faced with corruption in that sector.19 At the same time,
municipal public prosecutor of that city received only one compliant on corruption in that sector!
           All those data, comparing with comprehensive research of Institute for social sciences
from year 2000 are showing that the level of corruption in health sector (or perception of
corruption) left on similar position as it is was before democratic changes. Average value
corruption in health sector get then was 4, 06 (on 0-5 scale), and it was third highest, after

     December 2004.

                                                - 14 -
custom service (4, 29) and top politicians (4, 23). As a profession, medical doctors were
considered as one most corrupted by 16 percent of interviewed people.20
           However, one should have in mind that health sector is the one where most of the citizens
have contacts with, and therefore, the comparison with sectors where citizens are less oriented to,
had not to be taken as absolutely relevant.
           The picture is somehow different in the pool organized by Ministry of health, that
involved 29000 users of medical institutions services. According to these data, only 0,5 of
interviewed people complained on corruption (that they had to bribe some doctor) while most of
the problems identified were related to long waiting to get the service, attitude of the medical
staff etc. In general, according to this data, 80 percent of patients were satisfied with service. 21


           The current level of corruption is hard to estimate. Due to some indicators, and
particularly public opinion pools, it is higher than in most of other sectors within the society.
           The existing mechanisms to fight corruption in the society and in the sector are still not
effective enough, while some of measures announced will have positive effects.
           The corruption in health sector is a serious problem that effects in weaker quality of
health care provided to those not involved in corrupt business, or in imposing of additional
payments or crating social obligations to those involved. In extreme cases, but rather exceptional
cases, corruption might lead close to denial of access to health – care.
           The state institutions have to include more effective mechanisms for fight against
corruption within their own reform policies, and to develop action plans, in accordance with anti-
corruption strategy, particularly having in mind need to properly regulate conflict of interests,
enable full access to public information and provides for effective financial and competence
control and monitoring.

     Vreme broj 484, 15. April 2000.

                                               - 15 -
       Other mechanisms to fight against corruption on national and local level should foster the
system in health sector, too. Among them, most important are establishment of Supreme Audit
Institution and increasing of court efficiency.
       There is an urgent need to further explore various aspects of corruption in health – care
sector, in order to identify more precisely weak points, causes and consequences of corruption in
the sector and to formulate clear policies to fight against through broader campaign of state
authorities and civil society.

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