Saule K. Iskendirova, PhD in Economics, associate professor,

Gulmira A. Rakhimova, PhD in Economics

Kokshetau State University named after Sh. Ualikhanov, Kazakhstan

DEVELOPMENT OF HEALTH RESORT INSTITUTIONS OF KAZAKHSTAN: THE FINANCIAL ASPECTS

The operation of any sector or industry assumes provision of its resources, including human resources, facilities and financing.

The problem of financing the social sector of the country today features not only the growing demand in significant financial resources, but realistic opportunities of the state to finance the most critical social areas.

Until now, limited financial resources impeded the improvement of budget financing for the healthcare system. To resolve this issue more favorable preconditions start to develop at the present time.

Within the continued commercialization of the social sector, the growth of paid medical services and narrowing of healthcare for workers, health resorts represent a significant addition to medical network in diagnosis and treatment. Therefore, providing affordable health resort services and their expansion gain national importance.

The transition to a market economy resulted in privatization of the majority of health resort institutions and refusal from the state budget financing. In contrast to the Western countries the Soviet government’s budget financing of health resorts was reasoned by providing complimentary medical care.

The Western European resorts, as noted by E.G. Mogilevich back in 1930, differ on their objectives and organizations from the Soviet resorts. The basis for operations and development of the European resorts is formed by the principles attributable to any capitalistic enterprise. An indirect or direct profit is the main incentive for their development.

By the beginning of “perestroika” (rebuilding), resort operations in Kazakhstan introduced new progressive forms of resort therapies and increased their level of comfort. But the economic collapse of the end of 80ies negatively affected the development of resort and spa sector: service quality deteriorated, nutrition level decreased, and prices for resort vouchers rose. Sanatoriums left without the state financing could not shift to self-financing. The communal expenses became rackingly high, which resulted in higher ticket prices. Decrease of population income led to the lack of possibility to pay for resort vacations.

The sector of health resorts went into decline. Rich people preferred vacations abroad or in elite resorts of the former General administration of the Ministry of Health, which possessed a certain level of comfort and variety of health services. These institutions were held “afloat” with their “new Russian” clients and better developed facilities with the state budget.

Former labor unions’ health resorts, unable to adapt to a market economy, opted for "washout" low-cost medical services necessary for competent medical process, and their replacement with expensive fashionable services to increase prices. In these circumstances resorts facilities have largely lost their social significance. Losing to elite health resorts in the comfort, they started facing challenges in ensuring occupancy. Unprofitable resorts were closed, while others, in the process of reforms, were transformed into joint stock companies of open and closed ownership (OJSC and CJSC), as well as limited liability partnerships (LLP). The number of resort institutions increased by 14% in the period from 2004 to 2010 mainly due to the increase of non-government institutions (Table 1).

A joint-stock company or a corporation is an enterprise or institution (organization), acting as a legal entity based on issue of shares to raise funds of their owners to carry out its activities, to produce and sell various goods and services on the markets [1, p.14].

Facilities financed through the state budget continue operations together with health resorts organized in new legal forms. At the present time they mainly include anti-phthisic resorts. The majority of authors consider it practical to maintain children’s and anti-tuberculosis resorts in forms of budget institutions. A.T. Bykov in his research analyzes advantages of a state-owned health resort in comparison with other forms of ownership [2].

Using an example of one resort similar to a health resort, A.T. Bykov gives evidence of competitiveness of this state-owned resort institution in the market of health resort services. Not only it has government procurement contract for tickets - 70 % (which guarantees sales by the above organization), but also the possibility for own sales of tickets – 30% at their regional auctions and fairs. Besides, partial state subsidies and investment of non-budgetary funds make discounts possible for ticket prices sold by the health resort itself. The author emphasizes that a state-owned legal form of a business does not impede attracting outside investment.

Other authors consider recreation as a cost-effective way of providing health resort services, as vacations at resorts not only serve medical purposes, but also offer entertainment programs rich with various animation cycles, which can raise the vital tone of vacationers, satisfy their spiritual and emotional needs. They also predict conversion of many resorts into recreational facilities.

Table 1 – Health resorts and recreation facilities in the Republic of Kazakhstan in 2004 – 2010

Title	Years
	2004	2005	2006	2007	2008	2009	2010
1. State-owned, total including:	50	50	52	53	53	50	53
- resorts, retreat centers with treatment, health and preventative resorts	47	47	48	50	50	48	50
- rest homes and centers, retreat centers	3	3	4	3	3	2	3
2. Non-state, including:	56	52	67	64	67	67	68
- resorts, retreat centers with treatment, health and preventative resorts	46	43	51	55	56	57	61
- rest homes and centers, retreat centers	10	9	16	9	11	10	7
Total	106	102	119	117	120	117	121
Annotation: Calculated and compiled by authors based on data of the Statistics Agency of the Republic of Kazakhstan;

At the present time the interest for animation activities at resorts not only have not decreased, but also obtained high importance. Choosing a vacation spot people consider not only medical factors, but also sports and animation services, which are provided at a resort. This makes modern resorts pay more attention to leisure activities for vacationers in addition to enhancement of medical facilities.

Analysis of data in Table 2 shows that the number of people who used health resort services for treatment is higher in the regions including Akmolinskaya, Aktobe, Atyrau, Karaganda, South-Kazakhstan as well as the city of Almaty.

Consequently, changes in recreational needs of the population and its demands of quality vacations at resorts must lead to transformation of health resort sector into a resort and recreation system (RRS), with the main purpose of improving people’s health, the quality and duration of life.

Table 2 – Number of people who used health resort treatment

In thousands $

Regions	Years							2010/ 1992
	1992	1993	2006	2007	2008	2009	2010
1. Akmolinskaya	х	х	х	4.66	15.67	14.7	30.9	6.6*
2. Aktobe	2.9	2.5	4.46	3.65	2.73	3.5	4.6	1.6
3. Almatinskaya	30	13.7	1.01	3.86	6.06	22.2	25.9	0.9
4. Atyrau	3.8	3.9	2.81	3.70	5.96	9.4	8.5	2.2
5. East Kazakhstan	7.9	8.4	3.43	2.2	3.11	4.9	7.7	1.0
6. Zhambyl	10.4	10.4	2.67	2.85	1.50	7.3	11.2	1.1
7. Zhezkazgan	3.6	4.2	х	х	х	х		х
8. West Kazakhstan	5.3	6.1	1.45	1.83	1.81	1.6	2.2	0.4
9. Karaganda	14.4	14.6	15.6	38.28	43.95	19.1	27.0	1.9
10.Kzyl-Orda	5.6	6.7	0.404	1.48	1.93	6.1	12.0	2.1
11. Kostanai	24.8	19	3.70	4.07	4.37	2.3	9.2	0.4
12. Pavlodar	10.2	11.4	3.86	4.44	4.97	5.2	6.2	0.6
13. North Kazakhstan	1.3	1.3	7.84	2.16	1.98	1.0	0.6	0.5
14. South Kazakhstan	20	24.8	3.35	5.08	16.23	16.6	44.1	2.2
15. Almaty city	21.1	20	11.04	11.52	11.01	17.1	67.0	3.2
Annotation – Calculated and compiled by authors based on data of the Statistics Agency of the Republic of Kazakhstan

As we know from the recreation sciences, RRS is a form of recreation system, which originated as a result of interaction of three super systems: society, nature and industrial production. It has long been a part of social and economic lives. Now it is connected with an increasingly insisting manifestation of the economic aspect of resorts operations, compared to the Soviet period, when the social area was dominant. Production of any goods, services, or benefits requires labor costs. Therefore, health resort services must be financed by the difference between their prices and costs taking into account deductions to the state budget from revenues, the source of financing their services. Sources of funding can be grouped depending on the level of state involvement in their development [3].

The state budget funds provide for maintenance of healthcare organizations, which help improve the health of population in the CIS countries. However, within the last decade most of the CIS states have had higher mortality rates and socially preconditioned morbidity of population with a sharp decrease in childbirth.

The main causes of death were diseases of the circulatory system, respiratory system and malignant neoplasms.

There is a growing incidence of respiratory, infectious and parasitic diseases, especially tuberculosis.  The epidemiological situation with regard to infections caused by human immunodeficiency virus (HIV-AIDS) has been exacerbated.

The state also plays control and coordination roles. And funding is represented by sources of mandatory contributions by all business entities accumulated by the state in special extra-budgetary funds.

At present, public funding for health resort therapies throughout the Republic of Kazakhstan applies only to veterans of the Great Patriotic War (GPW), invalids and international soldiers of the GPW. The numbers of people, who receive health resort therapies, increase year by year (Table 3).

Health resort services consist of two elements: dominant and recessive. The dominant element is represented by initial set of services including those that are essential for organizing health resort treatment, specifically: accommodation, meals, as well as specific services determining distinction of a given trip, treatment and leisure. The cost of services of dominant part includes the price of a trip ticket.

The recessive part of health resort services includes supplemental set of optional paid services associated with health resort treatment or vacation. For instance, it may include hairdressing services, billiards, lawyers available for additional payment.

The ratio of dominant and recessive parts of recreation services in the world practice is 40:60, and 80:20 in Russia. Many of the health resorts in the Republic of Kazakhstan have an average ratio of 93:7 [4, 5].

Consequently, a major portion of revenues received is generated from health resort treatment service, while additional services represent a small portion of that. It is important to achieve two sources of revenue from paid services – recessive elements, and providing optional services, unrelated directly to health resort treatment of a patient. These could be rent of unoccupied spaces, sales of materials and waste and others.

During the period of reforms in the Kazakhstan’s economy the nature and sources of financing, specific forms and methods of attracting investments and their technologies have changed drastically. The experience shows that only health resorts providing high quality treatment can survive within the market economy, whereas profitability of health resorts depends on the culture of services. [6, 7]

Table 3 – Dynamics of health resort services for separate categories of citizens

in thousands of people

	Years							Growth/ Decline
	2004	2005	2006	2007	2008	2009	2010
GPW veterans	2.9	2.6	3.2	3.8	4.2	5.0	5.1	1.8
GPW invalids	1.8	1.5	1.7	1.8	1.8	2.0	2.2	1.2
International soldiers	0.3	0.4	0.4	0.5	0.6	0.7	0.8	2.7
Annotation – Calculated and compiled by authors based on data of the Statistics Agency of the Republic of Kazakhstan

The termination of centralized capital investments into the development of spa and resort sector in the economy of Kazakhstan was not compensated by the increased inflow of investments provided by market mechanisms.

Price increases for energy resources, food and industrial goods, transport tariffs caused increased cost of vouchers to health resort facilities.

New social and economic conditions provide higher economic and organizational freedom to resorts, putting them, however, in more stringent existing conditions. These conditions are characterized by:

a) Termination of various types of donations, subsidies, subventions, health resort facilities shift to self-financing and self-sufficiency.

b) Introduction of independent sales of vouchers into practice.

Our country has high expectations in regard to establishment of the tourist cluster. Connecting in a cluster of all entities in tourist industry and health resorts into one unified system may lead to higher competitiveness and quality of services to tourists.

At the first glance, health resorts and tourism sectors in the republic of Kazakhstan develop dynamically, providing revenues to these institutions and revenues to the state budget. The problem is that, on one hand, the Healthcare Ministry is in charge of resorts business, and on the other hand, according to the Law on tourism, Kazakhstan resorts are considered facilities of the tourism industry, while people arriving for health resort therapies are considered tourists.

Consequently, the resort business is necessary both for the healthcare system and the tourist business as complementary. This has caused fragmentation of mechanisms for managing these sectors, which are so significant for Kazakhstan.

References:

1 A.Nurseit, A.Temirbekova, R.Nurseitova. Theory of market economy: entrepreneurial aspect. Almaty: “BIS” PF, 2000. p. 272.

2 A.T.Bykov. Strategi for developing resort tourism complex in transition period: Saint Petersburg, 1998.

3 E.G.Reshetnikova. Service sector: planning, issues, outlook. Saratov, 1998. – p. 92.

4 Zh.M. Dyusembekova. Quality management of HR on marketing principles: dissertation. – Almaty, 2001. p. 11.

5 V.Yu.Ogvozdin. Quality Management. Fundamentals of theory and practice: textbook. – М., 1999. - P. 112.

6 N.A.Varkan, Ya.S.Yadgarov. Quality of services and culture of services to population. М.: Consumer goods and food industries, 1984.- p. 80.

7 Ye.N.Nikiforova. Management aspects of HRI development in the Republic of Kazakhstan: dissertation – Almaty, 2002.