One of the ways to improve measures aimed at population health protection may be the development of insurance medicine in our country. This is a system of curative and preventive measures realized through insurance payments made by citizens and on the basis of target payments by employers, employees and state grants. The international experience of insurance medicine indicates that the existing principle of grouping diseases according to the basic diagnosis no longer provides the effective use of resources and not precisely enough assess to the outcomes of hospital performance. The search of ways to solve this problem led to the necessity of using the method of assessing financial and economic activities of curative and preventive institutions on the basis of diagnosis related groups of diseases (DRG) which unite the cases of similar diseases having approximately the same technology of examination and treatment of patients and consequently the same cost of treatment. This system originated in the USA and is widely used in many countries of Western Europe. With the help of DRG system health institutions can acquire more full information on the results of treatment, costs of treatment and prospects for development. The introduction of DRG system permits to improve the financial and economic performance of institutions and to collaborate with organizations realizing health insurance programmes.