Design of the Economic Mechanism of Sustainable Development of

the Socio-economic System of the Region

Evgenii V. Gradoboev

and Irina Yu. Solskaya

Irkutsk State Medical Academy of Postgraduate Education – Branch Campus of the Federal State Budgetary Educational

Institution of Further Professional Education «Russian Medical Academy of Continuing Professional Education»,

Yubileiny, 100, Irkutsk, Russia

Irkutsk State Transport University, Chernishevsky Str. 15, Irkutsk, Russia

Keywords: Socio-Economic System; Stability of the Regional System; Economic Mechanism; Health Financing.

Abstract: The significance of the influence of exogenous factors on the stability of the state of the socio-economic

system (SES) necessitates the development of a methodological framework for regulating regional systems.

One of the most important criteria for assessing the sustainability of SES is the state of human capital, which

presupposes, first of all, the sufficiency of medical services in accordance with the necessary dynamics of

natural reproduction of labour resources. The results of the research presented in the article summarize the

author's ideas in the possibility of modelling the choice of an economic mechanism for financing the regional

health care subsystem that provides the required level of sustainability based on the adequacy of financing of

medical services. The basic theory of formalization of the problem of the design of the economic mechanism

was the mathematical theory of games. The model for choosing the economic mechanism of the regional

health care subsystem is formulated in terms of the design problem for economic mechanism.

1 INTRODUCTION

Studies of theoretical provisions that determine the

content of economic mechanisms (Burkov et al.,

2008) revealed the ambiguity of ideas about the

current economic mechanism for managing the

territorial health care system, as a condition and factor

of a stable state of the socio-economic system (SES)

of the region. S.A. Livshits emphasizes that an

effective economic financing mechanism is “an

important task facing health care in modern socio-

economic conditions, and providing health care with

the necessary economic resources is a complex

problem that can be solved within the framework of

economic regulation ”(Livshits, 2003).

The main problem of the effectiveness of such

mechanisms is, from our point of view, discrepancies

in the formation of the model itself, namely, the

existence of different approaches to the definition of

the concept of "economic mechanism". In most

studies, as a basic approach to the content and

structure of the economic mechanism, the view of A.

https:orcid.org/0000-0002-6069-1515

https:orcid.org/0000-0002-2294-0920

Kulman (Kulman, 1993) is taken. Akindinova N.V. et

al. (Akindinova, 2018) note the identification at the

international level of a positive relationship in the

long term between the level of health care spending

and key indicators of national health (infant mortality,

life expectancy), first of all, a direct relationship was

established between the level of funding for the

industry and mortality. Considering that many factors

influence life expectancy, this indicator, as shown in

the studies of M.A. Rizvanova, most sensitively

reacts to the growth of health care costs in less

developed countries (Rizvanova, 2006).

2 RESEARCH METHODOLOGY

From the standpoint of theoretical studies, stability is

considered as a fundamental property of the system,

considering stability as a fundamental property of

systems, allows us to assess the priority of stability

factors from the position of the structure of the

system.

Gradoboev, E. and Solskaya, I.

Design of the Economic Mechanism of Sustainable Development of the Socio-Economic System of the Region.

DOI: 10.5220/0010593405270532

In Proceedings of the International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 527-532

ISBN: 978-989-758-519-7

527

Thus, the study of the sustainability of the

development of the socio-economic system (SES) of

the region implies that in its structure it is possible to

distinguish subsystems that affect the state of

sustainability, namely: society, material and technical

complex and natural resources, while it is assumed

that the sustainability of development should be

characteristic of each of them. The special place of

society is not only because the ability of residents of

the territory to maintain life well-being and social

stability is the goal of the development of the system,

but also because society is a decisive element in the

development of productive forces.

Assessing the sustainability of the socio-

economic development of the region as opposed to its

crisis state, it is necessary to pay attention to two

circumstances:

 the ability to function as a self-developing

system is the most important functional

characteristic of the region (Gutman, 2002);

 in the list of indicators of sustainable

development of the territory, which determine

the main forms of security - social, economic,

environmental, a special place is occupied by

health care as a subsystem playing a leading

role in maintaining the state of society.

For many years, health care in the studies of

Soviet and Russian scientists was defined as a branch

of the non-production sphere, which is characterized

by the spending of budgetary funds, without

participation in the formation of the national product.

A preliminary assessment of the results of the

implementation of specific economic mechanisms

that ensure the solution of urgent problems of

preserving the health of the population showed the

nature of their impact on the state of sustainability of

the SES in the region.

Leading experts in the field of healthcare have

repeatedly considered the need for a more dynamic

change in the financing system (Panurin and Khan,

2017; Martynova, 2019; Pyatakovich et al., 2004;

Rizvanova, 2006). The formulated requirements for

the content of measures to improve the effectiveness

of health care financing also include the need to

change the funding mechanism, taking into account

the strategic goal of increasing the level of motivation

of participants.

The measures presented to address the challenge

of changing the funding mechanism in accordance

with the recommendations should include:

 strengthening the reasonableness of the

allocation of funds allocated to health care;

 greater transparency in the use of financial

resources;

 development of competition between medical

organizations in the compulsory health

insurance fund (CIHF) system (where

possible);

 widespread introduction of new ways to pay for

medical care in the CIHF.

At the same time, an analysis of the practice of

financing the health care system in the region, carried

out on the example of the Irkutsk region, showed that

financing of health care is carried out at different

levels of management with the implementation of

signs of several economic mechanisms. However, the

main, from the point of view of implementation

efficiency, is the approach to the design of the

economic mechanism as a tool for managing facilities

(Kulman, 1993), which is implemented within the

framework of the State Program “Healthcare

Development” (State program «Development of

health care», 2017). Such a mechanism assumes:

1. Coordination of resources, providing an

effective solution to the problems of managing the

economic system. In almost every health care system,

there is inevitably a combination of public and private

funding, however, the issue of forming an economic

mechanism is mainly in the competence of the state,

regardless of the share of public funding. In the

proposed model, one-channel financing is considered

as the basic situation established in connection with

the existing regulatory instruments (Martynova,

2019).

2. The state reacts to changes in the values of

criterion indicators characterizing the state of

sustainability of the regional socio-economic system

through monitoring key indicators of national health

(Martynova, 2019). The achievement of the objective

function is assessed by numerical criteria, based on

reports. In accordance with the state program

"Development of health care", target indicators and

indicators have been established, the value of which

characterizes the level of sustainability of SES:

 “satisfaction of the population with the quality

of medical care, percentage”;

 “mortality of the population of working age

(per 100 thousand of the population of the

corresponding age)”;

 “mortality from neoplasms (including

malignant ones) (per 100 thousand

population)”;

 “life expectancy at birth, years”;

 “mortality from diseases of the circulatory

system (per 100 thousand population)”.

3. The control subsystem determines the rules

for the functioning of the SES.

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528

3 RESULTS OF THE STUDY

The presence of a system of administrative

management of health care in the Russian Federation,

which sets formal rules for the functioning of the

system, as well as a strict dependence on the

reliability, relevance and quality of incoming

information about the state and changes in control

objects, which have their own goals, the rules of

functioning determine the possibility of using the

mathematical apparatus of game theory (Neumann J.

Von, 1970; Dixit, 2020) to formalize the task of

choosing (design) economic mechanisms (Kulman,

1993, McCollell, 2016).

The key component of the analysis of economic

mechanisms, in particular, and including games with

asymmetric (incomplete) information in general, is

the incentive compatibility condition introduced into

scientific circulation by Hurwitz (Hurwicz, 1960).

This condition is nothing more than a formal

interpretation of the assumption about the rationality

of the behavior of economic agents: everyone chooses

what he considers best for himself, namely, a strategy

is chosen, while everything that concerns the

alignment of interests within the framework of the

strategies chosen by agents is determined by the

conditions games.

The structure of game dynamics can be

summarized by two elements:

 Participant design: Forward game theory can

be used to optimize the decision of each

participant to choose an individual strategy in

order to obtain maximum individual utility.

 Mechanism design: "inverse" game theory

focuses on designing a game for a group of

stakeholders, acting according to a chosen

strategy. Auctions are a classic example of

mechanism design.

We are interested in inverse game theory

formulated from the point of view of artificial

intelligence (AI) under the following constraints:

 the task of formalizing the game is not to

optimize the strategy of each participant in the

game, but to design the game around the

behavior of rational participants (main

example: auctions).

 multi-agent AI system - in our case, the number

of agents is quite large, moreover, depending

on the specific socio-economic system

(specific region) and the moment of the

formation of the game situation, the number of

agents is different.

The most general definition, which can be applied

to any interaction between economic actors, considers

such interaction as a strategic game and calls the form

of the game itself a mechanism.

A game is a description of how players (agents)

can act, and what any set of their actions (strategies)

will lead to. For example, if the formulation of the

mechanism design problem is aimed at choosing an

economic mechanism for financing health care, then

from the point of view of the reverse game theory, the

choice of the strategy of each medical organization

(MO) is determined by the following features:

 a plurality of sources for the formation of

monetary resources for the purchase of medical

care by patients;

 a wide variety of financing systems and

models: in addition to private financing, where

the source of funds is direct payments by

patients for their care and contributions from

citizens and employers (in favor of their

employees), it can be voluntary health

insurance carried out by private insurers;

 there is a system of state financing of health

care; it includes a system of compulsory

(social) health insurance and a system of

budgetary financing.

A more rigorous formulation proposed by

Hurwitz (Hurwicz, 1960) defines the economic

mechanism as the interaction between subjects

(agents) and the center.

Then the design of economic mechanisms

(mechanism design) is a constructive approach that

allows you to create such a mechanism of interaction

in which the egoistic actions of each of the agents in

the sum will lead to a solution that is optimal from the

point of view of the overall objective function

formulated by the center.

State bodies (SB) exert an indirect influence on

a medical organization (MO) through the territorial

compulsory health insurance fund (TCIHF) and

medical insurance organizations (MIO). Thus, in

accordance with the current legislation of the Russian

Federation, the dynamics of the strategies of the main

stakeholders is determined according to the results of

the interaction of the SB, MO, MIO and the patient

(On Compulsory Medical Insurance in the Russian

Federation, 2010; On the Fundamentals of Health

Protection of Citizens in the Russian Federation,

2011) (Figure 1).

Design of the Economic Mechanism of Sustainable Development of the Socio-Economic System of the Region

529

Figure 1: Scheme of information interaction of the main

stakeholders in the CHI system at the regional level

(Compiled on the basis of Vostropyatova and Levkevich,

2014).

The essence of the strategy game is the

dependence of the appropriate choice of actions of

each participant on the expectations of what the other

will do. Game theory is traditionally divided into two

branches: non-cooperative and cooperative.

Cooperative game theory deals with situations where

there are institutions that enter into agreements

between players obliging them to implement the

terms of the agreement. In such a game, the central

issue becomes the question of agreeing on the best

joint course of action (a set of individual strategies)

of all players (stackholders), in which the best can

have different values, for example, acceptable to all

players and coalitions of players, or ensuring that

some desired properties of the entire set of

participants in the game, including the institution

itself, which initiates the agreement.

General problem statement:

The payoff of each of the agents - medical

organizations (MOk) - depends on the volume of the

produced public good Uk, which for a period of time

T is determined by the quasilinear function of social

choice:

Uk = f (Bk, T, F

)

Here, the quasilinear of the choice function is due

to the fact that the total number of medical services

Вк provided by MOk during the time period T is

calculated as an algebraic sum:

Вk = ∑ H

kij

+ Qк,

Where:

∑ H

kij

- the volume of medical services provided

by the MOk and paid from a single determining

source in accordance with the invoices;

Qk is the volume of medical services provided

by the MOk and paid for from all other sources;

tni - type MOi (t1 - private medical organization;

t2 - budgetary medical organization)

is the total amount of financing of the

Ministry of Défense; F

is determined by the

normative amount of funding from a single

centralized source (currently:

TCIHF

) F

minus the

fines imposed on the MO.

G (S1, S2 - Sn-1, Sn) - the result of the

implementation of the control functions of the civil

defence, determined on the basis of the MO strategies

(for example, control of the volume, timing, quality

and conditions of medical care), which forms the

amount of fines.

MOi provide medical care (to patients) in

accordance with the chosen strategy Si ⸦ {S1, S2, ...

Sn}.

The content of the economic mechanism: the

economic mechanism (EM) consists of (Figure 2):

- sets of strategies {S k} for each of the agents of

the MO;

- G (S1 - Sn-1, Sn) - the function of outcomes,

which determines the outcome of the game situation,

provided by the economic mechanism for the input

profile of strategies;

- values of fines (assigned by the state).

Figure 2: Formalized representation of the game situation.

In these keys, a version of a static game with

complete information (McCollell, 2016) is

considered in relation to determining the required

amount of funding for the territorial health care

system, assuming that agents (players) make

decisions simultaneously and their decisions are not

subject to revision.

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

530

4 THE DISCUSSION OF THE

RESULTS

The state of sustainable development of SES in the

region presupposes the presence of a definite outcome

of the game. As a result of the game, the Pareto SES

equilibrium is established.

The economic mechanism that ensures

equilibrium is a condition for the sustainability of the

development of the socio-economic system, since it

provides the necessary level of public good Uk.

Equilibrium state: an economic mechanism that

for a set of strategies (S1, S2 - Sn-1, Sn) and the

normative level of financing the provision of medical

services to the population Fk n ensures the

equilibrium of the socio-economic system (Neck,

1983), diagnosed on the basis of the criterion of the

produced public good Uk (Gorbunov, 2019). The

“life expectancy at birth” is used as a criterion

indicator.

Imbalance: the total funding Fk is less than the

value of the minimum admissible level of funding

MOk required to ensure the lower limit of the

criterion indicator Uk; This situation does not allow,

without attracting additional funding sources, the

provision of the socially necessary volume of public

goods - the provision of medical services.

5 CONCLUSIONS

A preliminary assessment of the possibility of

designing specific economic mechanisms that ensure

the solution of urgent problems of preserving the

health of the population, showed the presence of a

stable interaction between health financing and the

level of sustainable development of the SES in the

region. The issues of health care efficiency as a

condition for sustainable development were

considered, first of all, from the standpoint of

assessing the dynamics of indicators of the national

accounting system.

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