The abolition of the Commercial Code has opened a window of opportunity to rethink the operating principles of state and municipal non-profit organizations. So far, however, these changes have remained largely formal. This opportunity should be used to effect a substantive reset in how public services are organized.
Experts of the Ukrainian Healthcare Center (UHC), with the support of the Government of the Kingdom of the Netherlands, have developed the concept of a non-profit company (NC), a special organizational and legal form for public service providers working in the public interest in the fields of healthcare, education, culture, and social care.
What do we propose?
We propose introducing the non-profit company as a universal solution for public service providers. This form would make it possible to:
- Advance a public mission: orient activities toward the public good rather than profit maximization.
- Shift to corporate governance: establish a clear division of roles and responsibilities among the founder, the board of directors, and executive management.
- Ensure financial autonomy: allow organizations to generate income from multiple sources, provided that all surplus is fully reinvested in the institution's development.
Why does this matter for the healthcare system?
Our analysis shows that the current organizational forms available in Ukraine for state, municipal, and private public service providers have substantial limitations. For example, they continue to operate under the traditional "owner-manager" governance model, in which the owner holds the decisive role and retains significant influence over management decisions. In practice, this influence is often exercised without sufficient time, motivation, expertise, or institutional capacity to ensure high-quality strategic governance of complex organizations.
This governance model carries serious risks. Decision-making is often politicized, effective checks and balances are largely absent, and management attention shifts away from achieving public outcomes toward the technical administration of assets and processes. Even in healthcare, where providers have gained greater operational flexibility, managers remain dependent on the owner’s decisions in all key matters.
By contrast, the introduction of the NC model would make it possible to:
- Create a level playing field: the NC is a clear, understandable form for both the state and international partners.
- Change the logic of governance: move away from vertical, politicized subordination toward self-governance and strategic accountability.
- Ensure institutional resilience: professional governance would reduce dependence on the decisions of individual owners or public officials.
The NC will enable the advancement of the gains from autonomization while removing the structural constraints that currently hinder the development of institutions. This approach is relevant not only to healthcare but also to education, culture, and social care, creating a shared foundation for their development.
How would the corporate governance model of the NC work?
A key element of the NC concept is the shift from the "owner-manager" model to one in which the board of directors plays a central role.
Governance structure:
- Division of powers: the board of directors is responsible for strategy, while the executive team, such as the CEO and CFO, manages day-to-day operations.
- Board composition: a combination of executive directors, independent experts, and representatives of key stakeholders, including the community and the founder.
- Control and transparency: mandatory internal and external audits, risk management, and compliance mechanisms.
This would create an effective system of checks and balances, protect institutions from political influence, and strengthen their long-term sustainability.
The next step should be to develop a concrete legislative solution and transitional models for existing service providers.
We are convinced that the non-profit company is a pathway toward building a modern, transparent, and effective system of public service provision in Ukraine.
The document was developed by the Ukrainian Healthcare Center (UHC) with the support of the Government of the Kingdom of the Netherlands within the framework of the project “Expanding the Role of Private Providers in the Delivery of Primary and Specialized Care.”