Medical equipment purchases in many cases exceeded real needs. Many hospitals still have stocks of medical equipment bought in the late 1980s to be installed in early 1990s, but have yet to be installed. After 1993, the role of centralized budget financing for medical equipment began to decline because of lower federal health care expenses, increased role of regional health care budgets and introduction of the new obligatory health insurance system. Under the new obligatory health care insurance system state medical establishments receive money from funds only after the actual service has been provided, making the health care system more efficient and competitive. In parallel with the health insurance reforms, legislation has been adopted permitting private medical practice and privatization of medical equipment maintenance.
Financing is a major problem for the majority of Russian healthcare establishments.
In 1995-1997, regional governments increased their purchases of large and expensive pieces of equipment to modernize local hospitals. In 1999, with the reduction of both federal and local healthcare budgets, such purchases were drastically reduced. Some regional governments continue to buy medical equipment and devices mainly through local tenders. The competition from local manufacturers in those tenders has recently increased. Individual hospitals continue to buy smaller devices and supplies in significant quantities from local distributors who work directly with both foreign and domestic manufacturers.