Health systems in transition : Uzbekistan

49
Table 3.3
Health financing: division by level of government
National government 
Local governments 
(
viloyat
, 
tuman
 or city) 
All medical schools 
Institutes of advanced medical education
National specialty and research centres 
(such as for cardiology, urology or surgery)
National-level hospitals
Republican emergency centre
Medical professional colleges 
Hospitals
Primary care units
Feldsher
-obstetrical units
Ambulance services
Sanitary-epidemiological system
Blood transfusion centres 
Regional emergency centres and 
tuman
 emergency care 
departments under central 
tuman
 hospitals
Source
: Kuchkarov & Haydarov, 2004.
Health financing in the public sector involves two main elements: (a) how 
government health budgets are formed and (b) the allocation process to providers. 
Local governments at the 
viloyat
 level are responsible for the financing of 
health facilities that provide the guaranteed package of services in the 
viloyat
 
(including specialized outpatient and inpatient clinics, and primary care units). 
Local governments at the 
tuman
 or city level are tasked with the financing 
of state-guaranteed services for the population in their respective territories 
(including outpatient services and specialized inpatient services at 
tuman
 or 
city hospitals).
Health care providers in the public sector annually set their prospective 
budgets for the next year, based on inputs, norms and past expenditures. These 
budgets are then pooled by the respective 
tuman
 or city health authorities and 
submitted to the governments at 
tuman
 or city level. After approval by the 
tuman
 or city governments, the health budgets of all territorial units are pooled 
by the 
viloyat
 governments to establish regional government budgets. 
Viloyat
 health budgets are calculated on the basis of the health budgets 
proposed by the territorial units and health care providers that are directly 
accountable to and financed from the 
viloyat
 governments. Once the proposed 
viloyat
 health budget has been approved by the 
viloyat
 governments, they are 
pooled at the national level by the Ministry of Health. These pooled 
viloyat 
health budget proposals are then merged with the budget proposals of health care 
providers that are directly accountable to and financed through the Ministry of 
Health. The merged budget is submitted to the national government (the Cabinet 
of Ministers and the Presidential Administration) and the Parliament for 

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Health systems in transition
  
Uzbekistan
50
approval and, once approved, becomes the national health budget. The new 
Budget Code of Uzbekistan that passed into law in 2013 provides the framework 
for how state budgets are formed, spent and monitored.
The financing of health care providers in the public sector follows the 
prospective budgets drawn up in the previous year. As finances are derived 
from different levels of government, shortfalls in the respective government 
budgets might affect health financing in the respective administrative units. 
Significant shortages in health funding will be generally made up for by 
subsidies from higher government levels. 
The Soviet model of allocating state funds to public organizations 
was characterized by a detailed and strict budgeting process, with almost 
no flexibility to shift funds between different budget lines. In 1999, a 
governmental decree introduced major changes to the budgeting of public 
organizations (Cabinet of Ministers, 1999b). These changes aimed to improve 
the efficiency and effectiveness of budgetary allocations through increased 
organizational independence in management and decision-making. The new 
mechanism introduced a single budget line, with four subcategories. The 
first two subcategories are related to the funds earmarked for salaries and 
related expenses. The third subcategory includes funds earmarked for capital 
investment, which are allocated in line with the annual state investment 
programme. The final subcategory is named “other expenses” and covers 
a wide range of possible allocations. Funds allocated as “other expenses”, 
however, have to be prioritized according to organizational needs, such as food, 
medications and maintenance (including gas and electricity). In addition, the 
purchase of “luxurious” goods and services, such as motor vehicles or imported 
office furniture, from these funds requires the prior approval of the Ministry 
of Finance (Cabinet of Ministers, 1999b). 
The governmental decree also expanded the permitted sources of revenue for 
publicly funded organizations. Public entities are now allowed to produce and 
sell products or services, to let out unused space and other organizational assets, 
and to receive and use funds from sponsors. Half of the revenues received from 
rental income remains with the organization, while the other half is channelled 
to local government accounts. 
In order to facilitate oversight of how state funds are used under the new 
arrangements, public organizations that receive state funding are required 
to have two separate accounts: one solely for state funds and the other, 
so-called “development and incentives accounts”, for other sources of revenues. 

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Development accounts draw on revenues from rent, the sale of products or 
services, unused state funds from the previous year, and contributions 
from sponsors. Up to 25% of funds in development accounts can be used to 
supplement employee salaries or benefits. All funds from sponsors are used to 
strengthen the infrastructure, if no other stipulations were made by the sponsor 
(Cabinet of Ministers, 2007b). However, health care providers in the public 
sector that operate on the basis of “self-financing” face few restrictions and 
little oversight on expenditures.