Georgia - Health Project

Document of The World Bank Report No. 15069-GE STAFF APPRAISAL REPORT GEORGIA HEALTH PROJECT APRIL 2, 1996 Municipal and Social Services Division Country Department IV Europe and Central Asia Region CURRENCY EQUIVALENTS (as of February 27, 1996) Currency Unit = Lari US$1 = 1.26 Laris WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AIDS Acquired Immune Deficiency Syndrome ALOS Average Length of Stay ARI Acute Respiratory Infections BBP Basic Benefits Package BCG Bacille Calmette-Guerin (vaccine) CCE Center for Continuing Education CDC Centers for Disease Prevention and Control CEE Central and Eastern Europe CVD Cardio-Vascular Disease CLA Committee of Licensing and Accreditation CMTE Committee of Medical Technologies and Equipment DPT Diphtheria, Pertussis and Tetanus DRA Drug Regulatory Agency DRG Diagnostic-Related Group ECG Electro Cardiogram EPI Expanded Program for Immunization or Extended Program for Immunization EU European Union FAP Feldsher Ambulatory Practice GDP Gross Domestic Product GMP Good Manufacturing Practice GoG Government of Georgia HFA Health For All HIV Human Immuno-deficiency Virus IMF International Monetary Fund IMR Infant Mortality Rate FSU Former Soviet Union MCH Maternal and Child Health MIS Management Information System MoH Ministry of Health MMR Maternal Mortality Ratio NHMC National Health Management Center NGO Non-Governmental Organization NIS Newly Independent States OECD Organization of Economic Cooperation and Development PHC Primary Health Care PHRD Policy and Human Resources Development Fund QA Quality Assurance RHA Regional Health Administration SAQA State Agency of Quality Assurance SDO Statement of Development Objectives SDR Standardized Death Rate STD Sexually Transmitted Disease TA Technical Assistance TB Tuberculosis TOR Terms of Reference UNICEF United Nations Children's Fund USAID United States Agency for International Development WHO/EURO World Health Organization, European Region GEORGIA - FISCAL YEAR January I - December 31 iii STAFF APPRAISAL REPORT GEORGIA Health Project CONTENTS CREDIT AND PROJECT SUMMARY .......... ................. vi 1. THE HEALTH SECTOR ....................................... 1 A. Socio-economic Content .......................... .......... 1 B. Health Sector Organization and Financing .................... 2 C. Key Sector Issues .....................................4 D. Government Reform Strategy ........................ 10 E. Role of Other Donors and NGOs ............ .............. 11 F. Lessons Learned from Past Operations .................... 12 G. Rationale for Bank Involvement ............ .............. 12 II. TH E PROJECT .................................................................... 13 A . Project O bjectives ............................................................ 13 B. Project Description .......................................................... 13 C . Environm ental Aspects ...................................................... 19 D . Participatory Approach...................................................... 19 E . C ost E stim ates ................................................................... 20 F. Project Financing Arrangements .......................................... 21 G . Procurem ent .................................................................. 21 H . D isbursem ent .................................................................... 25 I. Accounting and Auditing .................................................... 26 m. PROJECT IMPLEMENTATION ........................ 27 A. Organization and Management ...................... 27 B. Project Planning, Monitoring and Evaluation ............... 28 C. World Bank Supervision Strategy .......................... 29 IV. BENEFITS AND RISKS .................................. 30 A . B enefits ......................................................................... 30 B . R isk ............................................................................ 3 1 V. AGREEMENTS AND RECOMMENDATION TO BE REACHED ...... 33 - iv - ANNEXES A. Statement of Development Objectives B. Health Status: Key Issues and Health Determinants C. Detailed Component Descriptions C. 1. Health Promotion and Disease Prevention C.2. Healthy Children and Safe Motherhood C.3. Realignment of the Ministry of Health: Quality Assurance, Monitoring, and Regulation C.4. Rehabilitation and Maintenance of Health Facilities and Equipment C.5. Human Resources C.6. Health Care Financing D. Economic Analysis E. Project Implementation Plan MAP IBRD No. 27511 LIST OF TABLES Table 1.1 Projected Annual Revenues and Expenditures for the State Health Fund, 1996 Table 2.1 Estimated Project Cost Summary Table 2.2 Summary Financing Plan Table 2.3 Summary Proposed Procurement Arrangements Table 2.4 Estimated Credit Disbursement Schedule Table 2.5 Disbursement Categories Table 3.1 Project Implementation Arrangements This report is based on the findings of four preparation missions and an appraisal mission which visited Georgia in the last 11 months. Antonio Campos (Task Manager and mission leader, October 94 - November 95) and Laura Rose (Task Manager, December 95 - present) were assisted by several teams including consultants and Bank Staff with expertise in areas related to the project components, including: Howard Barnum (HDD), Christiana Atabansi, Ivy Cheng, Antonio Lim, Alexander Marc, Toomas Palu (EC4MS) and consultants Adelino Bento, Marilyn Booth, Al Brann, Carlos Costa, Olivier de Messieres, Joana Godinho, Miguel Gouveia, John Hastings, Ahti Kallikorm, Hans Korb, Luis Machado, Carl Moore, Milton Orris, Joao Pereira, Lembit Rago, Matti Rajala, Francisco Ramos, Fernando S. Santos, Richard Saltman, Artur Vaz, and Joao Wemans. Department Director : Basil Kavalsky, Division Chief: James Q. Harrison (October 94 - July 95) and Thomas Blinkhorn (July 95 - present), Peer Reviewers: Jo Martins (EAlHR), Bruno Laporte and Mary Young (HDD). GEORGIA BASIC DATA SHEETI INDICATOR YEAR Economic Data GNP per capita US$363 1994 Inflation rate 12-15% 1995 Population and Demography Area 69,700km' Total population 5,429,500 1994 Age distribution 1991 0-14 24.5% 15-64 65.9% 65+ 9.5% Dependency ratio 51.6% Percent urban 56.0 1993 Percent refugees 4.7 1994 Population growth rate -0.3% 1993 Fertility Crude birth rate (per 1,000 population) 11.8 1993 Total fertility rate (births per woman) 2.21 1990 Contraceptive prevalence (% women 1549) 2-25% 1994 Abortion ratio (per live-birth) 0.7-0.8 1993 Health Health status: average life expectancy at birth Overall 72.9 1992 Males 68.9 1992 Females 76.5 1992 Mortality Crude death rate (per 1,000 population) 8.6 1992 Infant mortality rate (per 1,000 live births)2 21.4 1993 Child mortality rate (under 5 years of age) 18.1 1992 Maternal mortality rate (per 100,000 births) 39.0 1990-93 Service capacity Physicians per 10,000 population 51.4 1992 Nurses per 10,000 population 103.9 1992 Hospital beds per 1,000 population 9.8 1992 Immunization coverage DPT 24.4% 1993 Measles 36.3% 1993 Polio 38.5% 1993 TB 11.7% 1993 Finance Health expenditures per capita (public, US$) 0.81 1994 3.68 1995 (est) Government Health expenditures as % of GDP 0.3% 1994 0.7% 1995 (est) Government health expenditures as % of budget 1.3% 1994 6.0% 1995 (est) 1/ Sources: WHO, World Bank, Georgia Health Project Preparation Technical Notes number I and 2. and IMF 2/ Estinated by WHO (correcting for definition of live births) based on officially reported rates.  - VI - GEORGIA Health Project Credit and Project Summary Borrower: Georgia Implementing Agency: Ministry of Health (MoH) Beneficiaries: Population at large, Ministry of Health Poverty Category: Program of targeted interventions. The project creates t he conditions necessary to provide a universal package of preventive public health services and essential clinical care in a financially sustainable manner. Additional support will be targeted to those Georgians who lack the income or assets to pay for services beyond the basic package. Amount: SDR 9.7 million (US$14 million equivalent) Terms: Standard IDA terms. Payable in 35 years, including 10 years of grace. Commitment Fee: 0.50% on undisbursed credit balances, beginning 60 days after signing, less any waiver. Financing Plan: See para. 2.23. Net Present Value: See paras 4.2-4.4 and Annex D Map: IBRD No. 27511 Project ID Number: GE-PA-8414  STAFF APPRAISAL REPORT GEORGIA Health Project I. THE HEALTH SECTOR A. Socio-economic Context 1.1. Georgia has a population of 5.4 million people in a geographical area of 70,000 square kilometers, bounded by the Black Sea, Russia, Azerbaijan, Armenia and Turkey. At the time of its independence, April 9, 1991, Georgia appeared to be a relatively well-off republic with fairly good growth potential. Since independence, however, Georgia has suffered from intense civil conflict. A large influx of refugees to the capital city (about 270,000) has worsened the economic plight of the country. In recent years, the Georgian economy has greatly been affected by the disruption in payments and trade within the FSU, by large trade shocks, and by output declines in Russia and elsewhere in the region. These factors have been further aggravated by the effects of weak financial policies after independence; a sharp economic decline and lowered standard of living are the result. 1.2. The Government has made progress towards restoring political stability and law and order. Since early 1994, it has focused on rebuilding the economy and has expressed a commitment to restoring macroeconomic stability while fostering the resumption of growth. To this end, a comprehensive program of macroeconomic stabilization and structural reforms has been implemented with the assistance of the IMF and the World Bank. Macroeconomic stabilization has made important advances: monthly inflation rates in April and May, 1995 were below 1 %, and the exchange rate remained stable throughout the year. In September, 1995, a new currency, the Georgian Lari, was introduced. The exchange rate with the US dollar has remained stable. Privatization of small-scale enterprises has accelerated since the second half of 1994. In 1995, the Government reduced by 35% the number of positions in the budgetary sector. The Government has begun to make radical reforms in the administration and financing of activities which previously were fully publicly financed. It has made reforms not only in the public administration and civil service sectors, but also in social services. The Government intends to pursue steady implementation of health sector reform and to initiate education sector reforms as well. 1.3. The health status of the Georgian people is poor relative to the rest of Europe, and is deteriorating rapidly. In 1990, life expectancy was 68.1 for men and 75.7 for women, compared to 71 for men and 78 for women in Western Europe. The infant mortality rate (IMR) declined more than 50% in the past thirty years, but remained twice as high as that in Western European countries. One third of infant deaths occur in the first three days of life and, thus, could be prevented through better perinatal and neonatal care. The maternal mortality rate (MMR) is estimated to be more than four times higher than in Western European countries. Adult male mortality has become an increasing public health problem. Deaths due to cardio-vascular diseases have been higher than in Western Europe, contributing to lower life expectancy, especially among men. -2- 1.4. During the last five years, health conditions have further deteriorated. The IMR has risen 13%, reaching an estimated 21.4 (adjusted WHO definition) in 1993. Outbreaks of measles and diphtheria occurred in 1994 and tuberculosis is on the rise among children and adults. The MMR has increased and is expected to increase further, due to an increase in home deliveries. Deaths due to cardio-vascular diseases seem to have increased 35% over the last five years and the overall age-adjusted mortality rate has risen by 18%. These trends suggest that average life expectancy has very likely fallen since 1992, but reliable data are not available. 1.5. The former health system did, however, have positive features. A strong network of hospitals and polyclinics was available and coverage was universal. Significant steps in controlling infectious diseases such as tuberculosis had been made. Indeed, the system may have been particularly adept at tackling health problems resulting from poverty and the environment. However, there is little doubt that the former system was characterized by severe imbalances and inefficiencies which need to be changed. 1.6. The Government is committed to reforming the health sector. Legislation passed in June 1995 and implemented that August produced important changes: (a) improvement of preventive public health services, a reduced role for State financing of clinical services, and a focus on strategic planning, monitoring and policy adjustment by the Ministry of Health; (b) a separation of provision from financing, effected by setting up a State Health Fund and regional agencies financed by government and municipal contributions and a wage based social security tax; (c) self- management of hospitals, with all staff paid by income generated solely by the institutions; (d) allocation of funds to municipalities on the basis of population size rather than on the basis of norms related to the supply of health services; and (e) the legitimization of previously illegal direct payments from users to providers, enabling the privatization of hospitals, polyclinics, dental clinics, as well as the import and distribution of pharmaceuticals, under effective and efficient government regulation. B. Health Sector Organization and Financing 1.7. The structure of health services is under transformation. Under the model inherited from the former Soviet Union, the organization, management and finance of health services were centrally coordinated through the Ministry of Health and services were delivered through a hierarchical referral system of more than 400 hospitals and 1,400 polyclinics and ambulatories. Nearly all of the country's approximately 25,000 physicians and 50,000 nurses were employees of the Ministry of Health. Under the reforms, however, many responsibilities will be decentralized to newly created health regions, institutions will be privatized and health sector staff removed from the Government payroll. 1.8. Decree 400, issued by the Head of State in December 1994 and later ratified by Parliament, lays the foundation of the health sector reforms. It establishes 12 health regions and creates two new regional institutions: regional hospitals, which will provide tertiary level in-patient care; and regional health funds (RHF), which will be responsible for ensuring that adequate services are delivered in the regions and processing and auditing requests for insurance payments from providers. A Cabinet of Minister's decree (June 1995) later ruled that all non-tertiary health care institutions would become administratively and financially autonomous from the State Budget. -3- 1.9. Privatization of health facilities is being administered by the Ministry of State Property Management. The regional hospitals will remain publicly owned. All other institutions are grouped into three categories: those required to maintain existing services levels for 10 years; those required to remain as health providers but with no specific service requirements; and those to be used however the new owner desires. Those required to maintain existing service levels will be offered first to an association of personnel working inside the institution, and only subsequently, if the personnel are unwilling (or unable) to buy the institution, will it be put up for auction. The first phase of privatization has begun, and targets more than 700 dental clinics and pharmacies. This will be followed by 500 polyclinics in early 1996 and a number of small hospitals in mid-1996. The Government's targets for privatization are included in the Statement of Development Objectives (Annex A, para 20). Facilities which are not purchased would be liquidated by July, 1998. 1.10. As part of the reforms introduced in early 1995, approximately 120,000 employees of the health sector have been gradually removed from the Government payroll between August and December, 1995. Those that remain in public facilities are paid directly by the now managerially independent hospitals and clinics. 1.11. Under the former system, health care services were primarily financed from the government budget. Localities were allocated funds using a formula based on the number of hospital beds and physicians. A limited number of facilities were financed and partly controlled by state enterprises and through parallel systems provided by other Ministries such as Railways and Defense. With the collapse of the economy, government revenues decreased sharply between 1991 to 1994 and the private sector has become the major source of revenue for the health sector. In place of the former system of public services, an unregulated amalgam of public and private services arose. While most services continued to be provided in public facilities, patients paid for all aspects of treatment, including drugs, supplies, and provider fees. Consequently, between 1990 and 1993 the average number of outpatient visits per person per year fell from 10 to 5. In the absence of an adequate household expenditure survey, it is not possible to give a credible estimate of the total value of private expenditures. The amount may, however, total as much as 75 percent of total sector expenditures. 1.12. The government's policy response to increase revenues for the sector has been to introduce a mandatory payroll tax for health with 3 percent employer contribution and 1 percent employee contribution. Aware of the adverse effects on labor and production costs, the government has kept the payroll tax for health low compared to other countries and has agreed to reduce the payroll taxes for other programs by 10 percentage point. In addition to the revenue from the payroll tax, central budget allocations for health as well as revenues from, privatization, licensing fees, and interest income will go to the newly created State Health Fund (SHF). The SHF will act as a financial intermediary and reimburse both public and private health care providers for a basic package of preventive and essential clinical health care services included in the State Health Program. The SHF will be administratively independent from the Ministry of Health and governed by a Board which includes the Minister of Finance and the Minister of Health. A law passed in February, 1996 gave responsibility for managing the assets of the Fund to the Treasury. In addition, municipalities are obligated to provide a package of services under the Municipal Health Program. With these additional sources of revenues, public sector health spending is projected to reach 6.0% of total public sector expenditure in 1995 and 8.0% in 1996. Health care services not included in the State Health Program or the Municipal Health Program will be paid for out-of- pocket by consumers. (Annex C.6 provides a detailed description of the State Health Fund and the health care financing reform) -4- C. Key Sector Issues 1.13. The health care system has already started a dynamic transition from centralized to decentralized administration and financing, diversifying between public and private providers in a new competitive environment. As it continues to reform the health care system, the Government will need to address the following issues: (a) a deterioration in the health status of the population; (b) inefficient use of inadequate health service inputs; (c) poor quality of health care services; (d) inadequate access and coverage of health services; and (e) a collapse of government revenues. Deteriorating Health Status 1.14. Deteriorating maternal and child health. During the last five years, the health of women and children has deteriorated. The IMR has risen 13%, reaching an official rate of 21.4 (adjusted WHO definition) in 1993. Two-fifths of infant deaths occurred in the first seven days after birth. Out of these, 80% occurred in the first three days, suggesting the need for improved perinatal and neonatal care. Experts estimate that 57% of child deaths from diarrheal diseases could be avoided through better management of medical supplies and health services. The maternal mortality rate (MMR) was estimated to be 39 per 100,000 births from 1990-93, and is expected to increase due to a recent rise in unsupervised home deliveries. The number of abortions in 1994 was estimated to be between 40,000 - 45,000, almost equaling the number of live births (51,000). 1.15. Increase in communicable diseases. The country's deteriorating socio-economic conditions, sizable displaced population, and collapsing health delivery system along with an increase in drug-resistant strains of microbes, have contributed to a marked increase in communicable diseases. Immunization of children almost completely ceased in 1992 leading to: (i) almost 300 cases and 42 deaths from diphtheria since October 1993; (ii) a 3.5 fold increase in the incidence of measles in 1993; and (iii) an increase in the incidence of pertussis. Acute respiratory infections (ARI) now account for 43% of child mortality under 1 year of age. Increasing rates of drug abuse amongst young adults has lead to an increase in the incidence of Hepatitis-B in the 15-35 year age group. Recent trends also show a sharp increase in tuberculosis (TB) morbidity and mortality. The TB mortality rate is now 90% higher than any country in Western Europe. TB- associated meningitis, an indicator of the lack of early detection and effective treatment of tuberculosis, has increased from 10 cases in 1990 to 32 cases in 1993. The incidence of sexually transmitted diseases has also increased over the last three years. The incidence of syphilis, for example, increased 100% between 1993 and 1994. By January 1, 1995, 18 HIV-positive individuals were registered. 1.16. The hidden pattern of non-communicable diseases. Adult male mortality has become an increasing health problem. Although cancer rates are about 25% lower than and respiratory disease almost equal to the EU average, deaths due to cardio-vascular diseases (CVD) are higher than in Western Europe. Cardio-vascular diseases accounted for 72% of total mortality in 1993. Over the last five years, deaths due to cardio-vascular diseases seem to have increased by 35%, and the overall age-adjusted mortality has risen by 18%, suggesting a continuing decline in the average life expectancy. Likely contributors to the apparent increase in cardio-vascular mortality are: the socio-economic crisis, the deterioration of health services, a lack of drugs, and less rigorous death registration practices. Furthermore, high rates of smoking and alcohol consumption are significant factors of morbidity and mortality (at least 50 percent of males over the age of 18 smoke) and partly explain the sharp increase in lung cancer for men and breast cancer for women. The health determinants and health status of the Georgian population are described in more detail in Annex B. -5- Inefficiency 1.17. Like all countries of the Former Soviet Union, the health system in Georgia has been insensitive to the principles of both allocative and technical efficiency. Allocatively, Georgia has over-invested in curative health services at the expense of health promotion and prevention. Most of the resources have gone to hospitals which are overstaffed with specialized physicians. In addition to poor allocative decisions, the system has been plagued by technical inefficiency. The chronic under-financing of recurrent expenditures for drugs, fuel, and maintenance reduce productivity. Inefficiencies are further exacerbated by the excess supply of hospital beds and obsolete technology, generating low occupancy rates and long average length of stay. Perhaps most importantly, the system has been greatly constrained by a lack of management skills. 1.18. Allocative efficiency. The system is biased toward in-patient care, with a poorly developed capacity for public health programs. The health protection service, known as the Sanitary-Epidemiological (San-Epid) Service, is a strictly vertical organization oriented towards control of communicable diseases. Health professionals lack training in modem public health programs such as non-communicable disease prevention, immunization, respiratory and infectious diseases management, family planning, prenatal and neonatal care and emergency obstetrics. Comprehensive and intersectoral strategies for health promotion do not exist. 1.19. Deterioration of facilities and equipment. Over half of the health care facilities were built before 1940. New facilities were readily financed to replace those that were deteriorating rather than maintaining the latter. In 1988, for example, 115 facilities were under construction, most of which remain unfinished today. Groundwater level changes have led to noticeable damage in buildings, including stability problems and cracks in structural components, walls and floors. Low quality materials and the absence of routine maintenance are responsible for falling ceilings, damaged walls, floors, and doors, and open window frames. In many buildings, roofs need immediate repair to avoid permanent damage caused by leaks. The 1987 earthquake further contributed to the damage of health care facilities as have the recent civil wars, which not only damaged health care infrastructure, but also left many homeless refugees seeking shelter inside health facilities. 1.20. The existing medical equipment, mostly from Former Soviet Union and Eastern European countries, is outmoded and does not comply with modern safety standards, resulting in significant inefficiencies. Few spare parts and frequent power surges have led to a high proportion of non-functioning equipment, accompanied by a shortage of disposable items for diagnostic equipment (chemical reagents, X-ray films, and ECG paper). Inadequate disinfection and sterilization of medical and surgical materials is endemic. Ineffective boilers and dry heat sterilizers are still used in surgical and intensive care procedures, inhibiting infection control. Annex C.4 provides more background on the health care infrastructure and medical equipment in Georgia. 1.21. Misuse of health human resources. Georgia has more than 120,000 persons working in the health sector. The density of physicians is one of the highest in the world: 1 physician per 197 inhabitants, compared to an OECD average of 1:435. The large number of doctors is the result of Georgia's traditional esteem of medicine as a career and former Soviet Union policy emphasizing the number of physicians as a measure of achievement in the health sector. The number of nurses is also high relative to OECD countries, but they are poorly trained, unlicensed, and have low professional status and pay. Undertrained, underutilized and inadequately managed doctors and nurses greatly inhibit the efficiency and effectiveness of the Georgian health care system. -6- 1.22. During the Soviet period, one graduate and one post-graduate medical school provided all medical training in Georgia. After the break-up of the FSU, due to the increasing number of candidates and the refusal of other republics to admit foreign medical students, the Ministry of Education (MoE) granted authorization to 28 new private medical schools. There is no accreditation procedure for these schools, no quality standard for teaching, no career track for faculty, no reliable register for trainers and trainees, and no licensing or certification procedure for graduates. The total number of medical students in all schools is now around 2,500, about 10 times the requirement of the country. Similar problems are found in the post-graduate medical education system. There are no criteria for selection of persons to receive resident training, no standards to judge the quality of the training programs, and no process for certification of specialists once they have completed training. The educational process does not provide the knowledge and skills necessary to carry out competency-based and evidence-based care comparable to international standards. 1.23. The medical training system is characterized by early specialization and little focus on modern primary care, such as family practice and public health. Furthermore, concepts of modern public health are rarely covered. For example, the diagnosis, treatment, and prevention of sexually transmitted diseases (STDs) are unfamiliar to most health professionals. STDs are still managed in an outmoded separate delivery system of dermatological and venereal disease clinics. Education in contraceptive technology is also rare. As a result, family planning information and contraceptive methods for spacing pregnancies are not given in the immediate postpartum period. Abortion remains the dominant mode of family planning. Annex C.5 provides more background on health human resources. 1.24. Pharmaceuticals. The old system of state purchase and distribution of pharmaceuticals and supplies has collapsed. Currently, an estimated 75% of pharmaceuticals is distributed through an unregulated private market. Humanitarian organizations import the rest. Pharmacies have spontaneously emerged both inside hospitals and other health facilities, as well as outside, in street kiosks. While the privatization of the pharmaceutical sector is a desirable direction toward which to move, without an adequate administrative and regulatory framework, the risk of overpriced drugs of inferior quality is high. Neither public nor private sector personnel have sufficient experience in pharmaceutical procurement and management. In addition, an adequate infrastructure for distribution and retail does not exist. Poor Quality 1.25. On all dimensions of quality of care -- structure, process, and outcome - Georgia has seen a marked decline. The physical structures and equipment are deteriorating. Hospital stocks are depleted and the quality of care received by patients is a function of their ability to obtain pharmaceuticals and medical supplies outside the hospital or clinic. In addition to the deficiencies in the physical infrastructure, medical professionals are poorly trained and their practices unregulated. Furthermore, the excess supply of physicians raises questions about whether the workload of physicians is sufficient to maintain their skills. In one major hospital, for example, the week's surgery schedule had only four operations for the staff of six surgeons. The increase in the number of private medical schools over the last three years raises additional concerns about the qualification of medical graduates. While outcome measures of quality are scarce in Georgia, the data which are available suggest that the decline in the structural variables described above are contributing to poorer health outcomes. The hospital mortality rate increased from 1.1% of all patients treated in 1990 to 1.9% in 1993. -7- 1.26. Quality assurance in the former Soviet model of health care consisted of annual performance reviews, monitoring of patient complaints, and on-going monitoring of activities by hospital administrators. No formal accreditation process existed. Requirements for facilities were guided by norms and monitored by the Sanitary-Epidemiological Stations. These norms, oriented towards quantity rather than quality, were never consistently enforced. Adverse events, when reported, triggered punishment from authorities. Recent indicators suggest that even this limited level of quality assurance in Georgia is deteriorating. For example, under the former Soviet system, nearly all hospital mortalities were autopsied. A recent study found that the autopsy rate had dropped, ranging from 13% to 48% depending on the hospital. A decline in patient complaints over the last few years is likely to reflect a perception of unresponsiveness of the prior system rather than an increase in satisfaction. 1.27. The Ministry of Health has yet to identify quality assurance as a priority in its health care reform policy and a responsibility of the Government. Instead, it expects that a more competitive market will lead to improvements in quality as facilities of poorer quality will not survive. However, because patients are often unable to assess the quality of services, a Governmental role remains. Without a quality assurance system, human lives and the health of the population may be in considerable jeopardy. Annex C.3 provides more description on health care quality. Inadequate Coverage and Access 1.28. Historically, coverage of health care services has been quite high in Georgia. Although there were regional differences in the availability of medical services, access was adequate. The country's financial crisis, however, has greatly limited the availability of affordable, adequate quality health services. A 1994 national household survey found that 27% of the poor were unable to afford medical care. Physical access has been limited by a dramatic reduction in the availability of functioning ambulances and helicopters, necessary for serving mountainous areas in winter. These physical and financial limitations to access may explain the decline in utilization rates for hospitalization and outpatient visits over the last three years. Sustainable Health Care Financing 1.29. While Georgia was part of the Soviet Union, the health sector was under-funded, receiving from 2.8 to 4.1% of GDP. The situation grew worse with the collapse of the economy. In 1994, public expenditures on health fell to 0.3% of GDP and 1.3% of public sector expenditures. Annual public expenditures on health averaged less than US$1 per person in 1994, less than 10% of 1990 expenditure levels in real terms. The fall in real expenditures was accompanied by a shift in the line item composition of expenditures. The rising costs of heating oil and other hard currency supplies crowded out spending on wages and maintenance in an increasingly limited budget. In 1990, wages and supplements were 52% of total expenditures. By 1993, they had fallen to 39% and in 1994 to 32% of the totals. Current real wages in health are equivalent only to a few loaves of bread per month. 1.30. Health care was primarily financed from the government budget although private payments to physicians have been an accepted, if illegal and undocumented, practice for many years. Over the last three years, however, revenue sources for the health sector have changed dramatically. The private sector has become the major source of revenues, providing possibly as much as 75% of the total sector from 1991 to 1994. Public provision of services essentially ceased. In 1995, however, with the introduction of a new health reform program and an increased -8- central budget allocation to health, public expenditures increased. Per capita expenditures are expected to almost reach US$4 in 1995 and US$9 in 1996. As a percent of total public spending, health expenditures increased from 1.3% in 1994 to 6.0% in 1995 and are projected to increase further to 8.0% in 1996. The Government intends to concentrate available funds on those services which are public goods and the most cost-effective. This "basic package" of public health and essential clinical services includes immunization, prevention of socially dangerous diseases, maternal and child health services (including prenatal care and deliveries), treatment of tuberculous, inpatient psychiatric care, and provision of drugs for terminally ill patients. Consumers will pay out-of-pocket for services not included in the basic package, with exemptions for the poorest. While no private insurance exists today in Georgia, the Governments long term strategy is to develop compulsory insurance through SHF and allow voluntary insurance schemes regulated by the State, to cover services not covered by the SHF. While this increase in public spending is a signal of stronger government commitment to the health sector, it is considerably less than the US$22 per capita the 1993 World Development Report estimated is necessary to offer a package of public health and essential clinical services in a middle-income country. 1.31. Key issues the government faces with the new health care financing reforms are: (i) assuring the financial sustainability of the State Health Fund; (ii) developing an efficient provider reimbursement system; and (iii) guaranteeing affordable health services for the poorest. (These issues are discussed in greater detail in Annex C.6) 1.32. Financial sustainability of the State Health Fund. Currently, government projections for expenditures for the State Health Fund are 42.6 million lari for 1996, exceeding revenue projections by approximately 11 million lari. (Table 1.1) In addition to the concerns about the sustainability of central budget financing (approximately 50% of the Fund), the ability of the Government to collect the tax revenues earmarked for the Fund (approximately 20% of the Fund) and the projected degree of privatization (which is an unsustainable source of financing in any case), a further consideration is the projected volume of services and unit costs. The Government estimates of expenditures are based on current utilization patterns and do not consider latent demand that is suppressed by unaffordability or poor quality of services. If the Government is unable to control utilization, the cost of the basic package will exceed projections and add to the projected deficit. 1.33. In the short run, the most likely sources to fill the financing gap of the Fund are: i) international donors and humanitarian agencies, who currently provide more than 7.5 million lari of vaccines and medical supplies per year and have pledged an additional 10.9 million lari for 1996 to continue their support to Georgia within the framework of the new reforms and ii) additional revenues from privatization, assuming the Government's estimates are approximately one-third of what they expect. The additional assistance from donors and humanitarian agencies would cover the projected 11 million lari financing gap of the SHF. In addition, the following factors will be essential in order to achieve a balance of projected revenues and expenditures for the Fund: i) strengthened collection of tax revenues; ii) continued support from the central budget; and iii) implementation of a monitoring and control system. The Government has already introduced a new control system and technical assistance provided under other World Bank financed projects should strengthen tax collection. -9- Table 1.1: Projected Annual Revenues and Expenditures for the State Health Fund, 1996 (Millions of Lari) Revenues for 1996 Expenditures for 1996 Origin Estimated Programs Total/Year Income State Budget 16.9 Disease Prevention and Health Promotion programs 6.6 Payroll Tax 3 % 3.0 Curative Programs 22.3 Payroll Tax I % 1.0 Insulin Program 5.4 Tax on Hazardous Products 1.9 Administrative, Science Support and Education 8.3 Privatization 1.0 Licensing and Accreditation 0.3 Subtotal 24.1 Grants and Subsidies 7.5 TOTAL 31.6* TOTAL 4.6 * Financing gap will be filled by donors and humanitarian agencies (see para 1.33) 1.34. Provider payment system. The reimbursement system designed by the MoH for the basic package combines two methods: capitation for some public health activities and a case based system for hospitals. For public health services covered by the basic package, such as immunization and maternal and child health services, providers will be paid an age-adjusted capitation fee ranging from US$1 to US$2 per capita. In the case-based methodology for hospitals, several diagnostic categories, which the Georgians refer to as "nosological" categories, were defined under the basic package, and for each one a standard level of health services was defined and priced. Hospitals are reimbursed by the State Health Fund for all patients who are admitted with diagnosis covered by the basic package. The unit prices include the quantity of medical consultations and tests for diagnostic purposes, the 'required' drugs and treatment medical acts and also the number of inpatient days for each category. 1.35. The reimbursement system for hospitalization, as currently designed, is clearly too complicated and administratively costly. To create and monitor a case-based reimbursement system, a significant amount of reliable information on costs and health services production is needed which is currently not available in Georgia. Furthermore, the possible perverse effects of such a reimbursement system are well described in the literature, including a strong incentive to increase artificially the utilization of more sophisticated resources, causing an increase in health care costs (exactly opposite to the intentions of the reimbursement system) and possible iatrogenic effects on patients. Difficulties in containing costs will only add to the difficulties Government faces in financing the very narrow scope of services included in the basic package. As a minimum, the Georgians should cap total expenditures for hospitalization under the basic package and lower the price paid per nosological category if volume rises faster than expected. 1.36. Affordability of services for the poor. With two thirds of the population under the poverty line and approximately 800,000 in the most vulnerable groups (including more than 270,000 refugees), the Government is exploring ways to ensure that the very poor will have access to the essential health services which are not included in the basic benefits package. The two issues which remain unresolved are: (1) how to identify the poorest in an economy where a large part of the activity is informal and poverty is a widespread yet new social phenomena and (2) how to finance a subsidized program to support access to basic health services by the poor when public financial - 10 - resources are extremely scarce and institutional capabilities are very weak. By the end of 1996, with technical assistance provided under the Structural Adjustment Credit (SAC) and additional analytical work completed as part of the poverty assessment, a new program for social assistance will be established. 1.37. In the short-term, the Government first chose to address the needs of the poor by designating Tbilisi City Hospital #9 and several other specialty hospitals in Tbilisi to serve the needs of these groups. A total of 275 beds were designated to treat the most vulnerable groups free of charge: single unemployed mothers with three or more children, single pensioners with pensions below US$2 per month and single invalids. Other institutions, like the Veteran's Hospital, were financed by the State to continue providing care to their clients. Beginning in February, 1996, the Government revised its program by providing vouchers to the same target groups and allowing them to select their own provider. D. Government Reform Strategy 1.38. The objective of Georgian health policy is to improve the health of the entire population. The Government clearly recognizes both the need for reform and the opportunities for radical change presented by the current situation. Since 1992, the Government has progressively articulated, approved by legislative action or regulation and begun to implement a comprehensive reform which is described in detail in its Statement of Development Objectives (Annex A). The reforms will: a) concentrate scarce public resources on a basic package of public health (immunization, healthy children and safe motherhood, prevention of socially dangerous diseases, epidemiological surveillance, and health promotion) and essential clinical services (deliveries, treatment of children under the age of 14, treatment of TB, inpatient psychiatric care, provision of drugs for terminally ill patients, and emergency services). The scope of the package would be expanded as the economy improves. Services outside of the package, such as outpatient visits and non-emergency surgery, would be provided on a fee-for-service basis, with exemptions made for the most vulnerable groups; b) reduce the size and improve the quality of health sector personnel by: (i) removing physicians and other personnel from the government payroll, allowing competition to rationalize the number in the sector; (ii) limiting entry to medical schools; and (iii) instituting a licensing exam for currently practicing as well as recently graduated physicians. c) reduce the number and improve the quality and efficiency of health care facilities by: (i) privatizing most facilities and granting management autonomy to those that remain in the public sector; creating a mixed, potentially competitive public/private market for patient services; (ii) reimbursing facilities for services delivered rather than by the number of beds and other norms; (iii) accrediting and licensing all health facilities; and (iv) introducing preventive maintenance of facilities and equipment, and upgrading service quality and management; d) separate provision of health care services from their financing. Health services will be provided mostly by the private sector, with a limited number of facilities in the public - ll- sector. A new agency, the State Health Fund, was established in August 1995 and serves as a financial intermediary, receiving funds from the central budget and a 4% payroll tax (3% paid by employers and 1 % by employees) and reimbursing providers for services included in the basic package. Municipalities are required to cover health care services for emergency cases such as heart attacks, appendicitis, etc. In the short- term, municipalities are also required to provide subsidies to facilities in their jurisdiction to offset the costs of their utilities. e) limit the Ministry of Health's role to one of formulating policy, strategic planning, monitoring and regulation, and quality assurance; f) develop human resources to support the reform in areas such as modem public health, family practice, health services administration, and management. E. Role of Other Donors and NGOs 1.39 The project was prepared with the financial assistance and cooperation of several donors including: (a) the Government of Japan, which provided US$615,500 for project preparation from the Policy and Human Resources Development Fund (PHRD); (b) UNICEF, which is developing a comprehensive maternal and child health program for 12 mountainous districts and has agreed to fit its program into the framework of the project and provide equipment, supplies, pharmaceuticals, and training for obstetric and pediatric services in feldsher ambulatory practices (FAPs) and rural ambulatory clinics. UNICEF also supported a household survey on health care expenditures and utilization which was recently completed; (c) the World Health Organization's European Office (WHO/EURO), which provided technical assistance on health reform, reorganization of the pharmaceutical regulatory agency, reorganization of the public health services and modernization of the health information system; (d) the Europan Community Humanitarian Office (EU-ECHO), with whom a complementary policy was articulated for emergency power supply and winterization of health facilities included in the rehabilitation component; and (e) USAID, through the American International Health Alliance Hospital partnership project implemented by Emory University, which supported project development in the areas of maternal and child health, health care financing and human resources development. During project preparation, many international and local NGOs were also consulted. Several donors have shown interest in providing additional financing for the project. The Government of Austria is financing technical assistance for the planning and programming of rehabilitation facilities and for equipment maintenance planning. The Dutch Government and the French Government have expressed a strong interest in cofinancing the project. Regular contact has been established with the German Embassy, the European Union Delegation and EU-TACI in Tbilisi. The Government disseminated a list of required technical assistance with terms of reference during a donors' conference in Tbilisi in September 1995 and continues to actively pursue active donor involvement in the project and the health reform effort more generally. - 12 - F. Lessons Learned from Past Operations 1.40. The World Bank's experience in Georgia dates only from FY94. An Institution Building IDA Credit of US$10.1 million equivalent was approved on July 5, 1994. A Municipal Infrastructure Rehabilitation Credit of US$18 million equivalent was approved on November 8, 1994. A Rehabilitation Credit of US$75 million equivalent was approved on March 30, 1995. This is the first credit operation for the health sector. Valuable lessons have been drawn from similar Bank projects in other countries -- particularly in Eastern Europe, Central Asia and Estonia -- as well as from the experience of other donors. The most frequently encountered problems that would be relevant to this operation include slow start-up of sector reforms, insufficient financial commitment to the health sector, political instability and frequent changes in ministerial high-level staff, inadequate institutional base of the health sector, initial weak project implementation capacity, and resistance to accept external technical assistance. Project preparation and design addressed these issues as follows: (i) the health sector is one of the leaders in reforming the economy: beginning in December 1994, strategic pieces of health reform legislation have been prepared, approved by parliament and the Head of State, and implemented; (ii) the Appraisal Mission confirmed an increase of public funding for health for 1995, raising average per capita expenditure from less than US$1 to almost US$4 between 1994 and 1995; (iii) an experienced and committed team remained mostly unchanged in the MoH after the November 6, 1995 elections; (iv) starting in early 1995, the MoH began a reorganization which included the creation of the State and Regional Health Funds, the Department of Public Health (with regional branches), the National Health Care Management Center, the Department of Pharmaceuticals and Pharmacy Industry, and the State Agency for Quality Assurance and reform of the existing Sanitary-Epidemiological, Medical Care and Maternal-and-Child Care Departments; (v) a PPF for US$500,000 was signed on August 25, 1995, allowing for a strong government role in project preparation and implementation by establishing a Project Coordination Unit inside the MoH before pre-appraisal and providing training in Bank procedures; finally, (vi) the Government has been very amenable to foreign technical assistance during project preparation and plans to use US$1.8 million of the Credit in order to continue to finance foreign technical assistance. G. Rationale for Bank Involvement 1.41. This project is consistent with the limited country assistance strategy, as discussed by the Board of Directors during presentation of the Rehabilitation Credit in March, 1995. Specifically, the strategy in Georgia is to help reverse the economic declines of the past few years and to assist the transition to a market economy. With a particular focus on promoting private sector development and redefining the role and improving the efficiency of the public sector, IDA is supporting economy-wide and sector-specific reforms and investments to promote economic growth in the productive sectors and to rehabilitate and build new capacity in critical infrastructure sectors. The Association will also assist in strengthening public management and developing human resources and institutional capacities throughout the economy. Strengthening the social safety net and targeting scarce public resources to the provision of public goods and to fight against poverty are the major strategic objectives in the social sectors. The project fully complies with this strategy. - 13 - II. THE PROJECT A. Project Objectives 2.1. The proposed project would support the health sector reform efforts the Government has initiated and would aim to improve the health of the Georgian population. The project's specific objectives are to: a) reorient the health system towards cost-effective public health interventions like preventive and primary health care, assuring, in particular, better quality care for women and children, and focusing the MoH's activities on regulation of public and private providers; b) rehabilitate selected facilities and equipment that were down-sized and dedicated to cost-effective provision of maternal, perinatal, and pediatric care; c) develop human resources to support health reform, through continuing education for public health doctors, family practitioners, nurses, health administrators, and other personnel; and d) support the development of an independent health fund with regional branches, in order to finance a package of basic clinical services in a cost-effective and equitable manner. B. Project Description 2.2. Each component of the proposed Project is defined around a core policy agenda, described in detail in the Government's Statement of Development Objectives issued by the Ministry of Health and the Ministry of Finance (SDO/Annex A). In the short-term, the project will focus on ending the deterioration of basic preventive and maternal and child care services and on separating financing from the provision of health care. In the medium-term, the project will: (a) reorient the MoH from direct management to regulatory, planning and quality assurance functions, (b) improve health promotion programs, (c) demonstrate how to rehabilitate selected health facilities, and (d) educate health managers. In the long-term, if the economy improves and reform is sustained, a second health project will be designed to consolidate health promotion activities and to rehabilitate and improve quality in a larger number of institutions. At negotiations, the Government provided assurances that it would implement the reforms in the Statement of Development Objectives (SDO) as agreed upon with the Association and review with the Association annually all actions with respect to the SDO. [para 5.2(a)] Component 1.0: Health System Reorientation (US$4.0 million, or 24% of total base cost) 2.3. This component aims to reorient the present health system through (a) the modernization of primary health care at the central, regional and local levels, and the development of vertical health promotion and disease prevention and community-based programs; (b) the improvement of reproductive, perinatal and pediatric care services; and (c) the realignment of the - 14 - MoH to planning, monitoring, regulatory and quality assurance functions, including the reorganization of a pharmaceutical regulatory agency. The component's three sub-components are described below. Component 1.1: Modernization of Public Health Services, Health Promotion and Disease Prevention (US$1.6 million, or 10% of total base costs) 2.4. Core policy Agenda. The Government has initiated radical reforms to concentrate scarce public resources on preventive public health and health promotion services, and to decentralize health system administration. A Department of Public Health (DPH) was created in the Ministry of Health. The DPH is responsible for analysis and management of the epidemiological situation and the coordination of measures for disease prevention, reduction of disability and early mortality, and health promotion. The Department will have a regional branch in each of the twelve newly designated health regions, responsible for implementing public health activities in each region, collecting health statistics, and health planning. In order to ensure sufficient allocation for health promotion activities and encourage innovative community initiatives, the Government has established a Health Promotion Program within the Department of Public Health. 2.5. Activities. The sub-component will support the institutional development of the Department of Public Health (DPH) in the MoH and the health regions, including development of a health information system. The project will also support the Health Promotion Program (HPP) which would receive financing from the State Health Fund and from the Project and would finance health promotion and prevention programs at the national, regional and local level. At the national level, the HPP would finance six high priority programs to address the causes of more than 80% of the avoidable deaths in Georgia: (i) reduction of tobacco consumption, (ii) cardiovascular disease prevention, (iii) traffic and occupational injury control, and (iv) family planning, (v) AIDS and STDs; and (vi) substance abuse. Several of these programs will also address alcohol consumption, an important risk factor in Georgia. The HPP will also create a competitive funding system to support community-based health promotion initiatives. The sub-component will finance 11 person- months of foreign technical assistance, 2 long-term fellowships, 5 short-term visits, local training programs, community-based and mass-media health promotion programs, audio-visual equipment and materials, computers, software, vehicles, office equipment and furniture. At negotiations, the Government provided assurances that the Borrower would (a) allocate at least one percent of the income of the State Health Fund to the Health Promotion Programs [para 5.2(b)]; and (b) select the health promotion programs on competitive basis. [para 5.2 (c)] Component 1.2: Healthy Children and Safe Motherhood (US$1.2 million, or 7% of total base costs) 2.6. Core policy agenda. Two-fifths of infant deaths still occur in the first seven days after birth, with 80% of these occurring within the first three days. These figures demonstrate a critical need to improve maternal, perinatal and neonatal care. The Government is committed to restoring essential services for women and children and to improving quality to European levels. The immunization system was restored after breakdown of resources in 1992. The new basic package guarantees free prenatal care, deliveries and care for children under one year of age. The municipal package includes coverage for children until age 15. - 15 - 2.7. Activities. The sub-component aims to reduce infant and maternal mortality by 30% nationwide, and to reduce infant, perinatal and maternal mortality by 50% in Tbilisi and Kutaisi. Publicly-funded cost-effective intervention and better training of health professionals are expected to increase use of contraceptives, decrease abortions and improve the quality of perinatal care. These activities will be combined with significant downsizing of appropriate health facilities. Activities geared toward the health of women and infants will also be carried out in other project components: Health System Reorientation, Rehabilitation and Maintenance of Health Facilities, and Development of Health Human Resources. The sub-component objectives will be reached through the following activities: (a) reinforcement of the MoH's institutional capacity to develop health policies, health promotion activities and services for women and infants; (b) development of a national policy for care of women and infants, which includes: a minimum benefits package, protocols of care, rules for licensing of staff and health services, guidelines for privatizing and reorganizing services, and the establishment of a perinatal mortality surveillance system; (c) organization of quality perinatal care in downsized and rehabilitated sites in Kutaisi, Tbilisi, and Tsageri, in order to demonstrate how perinatal services may be improved; (d) development of pilot referral systems in Tbilisi and Kutaisi; (e) development of training programs in maternal and child health, obstetrics and pediatrics; and (f) creation of a national Task Force for Child and Maternal Survival, which will build national commitment, increase funding, and develop public awareness of child and maternal survival issues. The sub-component will finance 9 person-months of foreign and 137 person months of local technical assistance, 1 long-term fellowship, 5 short-term visits, local training programs, educational materials and equipment, medical equipment, computers, software, ambulances and other vehicles, and office equipment and furniture to assist in the modernization of maternal and child care and family planning. Before negotiations, the Government provided satisfactory evidence to the Association that it had: (a) reached formal agreement with the Kutaisi Municipality for merging maternity and pediatric services in the Kutaisi Pediatric Hospital, which will be partially rehabilitated under the project [para 5.1(a)]; and (b) appointed a Kutaisi-based coordinator, acceptable to the Association, to oversee project activities in Kutaisi and Tsager! [para 5.1(b)]. As a condition of presentation to the Board, the Government has provided evidence to the Association that it has issued regulations creating residency programs in obstetrics and gynecology and pediatrics. [para 5.3(a)] Component 1.3: Realignment of the Ministry of Health (US$1.2 million or 7% of total base costs) 2.8. Core policy agenda. Under the reform legislation enacted in August 1995, a clear separation of the sources of finance, the management of finance, and the provision of services was mandated. This separation is an important aspect of ongoing reforms in many countries. In Georgia, separation is a key factor contributing to the development of a competitive environment, where public and private financiers and providers will work under incentives for greater efficiency. The natural consequence of this separation is the focusing of the Ministry of Health's role in strategic planning, monitoring, quality assurance and policy adjustment. Self-management capacity conferred to hospitals will progressively reduce the number of doctors. Doctor's registration and licensing will be pre-conditions for individual contractual arrangements with hospitals. A new pharmaceutical law was approved and regulation of this law is under preparation, opening the way for the privatization of import, distribution and retail sales of pharmaceutical products. 2.9. Activities. The sub-component aims to generate monitoring, regulatory and quality assurance capacity for the MoH, through the design and implementation of measures to reduce the excess supply of doctors and down-size hospitals, and accreditation and licensing procedures to ensure that providers, institutions, pharmaceutical products and related products meet adequate - 16 - quality standards. The sub-component will: (a) license health professionals and create a data base of registered doctors and nurses; (b) register, license and inspect health care facilities to create a data base of physical resources and ensure quality standards; (c) support health care institutions willing to develop internal quality assurance programs; and (d) reorganize the administrative structure of the Department of Pharmaceuticals and Pharmacy Agency, where four major activities will be performed: registration of products, quality assurance, inspection and information. The sub- component will finance 8 person-months of foreign and 81 person-months of local technical assistance, 6 short-term visits, local training programs, educational materials and equipment, medical and laboratory equipment, computers, software, vehicles, and office equipment and furniture to assist in the new monitoring, regulatory and quality assurance functions of the MoH. As a condition of project presentation to the Board, the Government has provided to the Association evidence that: (a) rules on licensing of health professionals were approved and enacted [para 5.3(b)]; and (b) rules on the accreditation of medical and nursing training institutions were approved and enacted. [para 5.3(c)] Component 2.0: Rehabilitation and Maintenance of Health Facilities and Equipment (US$9.7 million, or 59% of total base cost) 2.10. Core policy agenda. During project preparation, an assessment was made of the need for and cost of rehabilitating health facilities. On the basis of this assessment, it was clear that the cost of a comprehensive rehabilitation program was prohibitively high. The Government's strategy is to target scarce resources to institutions more inclined to reduce their size and use their existing resources more efficiently by adopting energy efficiency and other cost saving measures. The following Government initiatives are expected to enhance efficiency in health institutions: (a) the separation between financiers and providers will reimburse hospitals and polyclinics on the basis of services provided rather then the number of beds, thereby creating incentives to reduce excessive and inefficient services by closing or merging health units; (b) the health sector privatization program will reduce the quantity of the public and private sector facilities and staff; and (c) decentralization of management will make institutions more accountable to their staff and their communities. In addition, the facilities that are rehabilitated will serve as centers of clinical excellence where residency programs in gynecology, obstetrics, neonatology, pediatrics, and hospital administration will be based. 2.11. Activities. The component will: (a) partially rehabilitate two unfinished blocks in Tbilisi City Hospital #2 where the Tbilisi Perinatal Center will be based and general surgery, cardiology and pediatric services will be provided and residency training in maternal and child care will be offered; (b) merge Kutaisi Maternity and Pediatric Hospital into a single building, to be partially rehabilitated, as a demonstration of scaling-down and rationalizing facilities and modernizing hospital management; (c) partially rehabilitate and equip the maternal and perinatal services in the Tsageri District Hospital to demonstrate how to provide the pyramid of integrated primary and secondary perinatal care in a rural and mountainous area with poor access to health services; (d) build capacity of the MoH's Building Technical Department (BTD) to set standards for the programming, design, and rehabilitation and construction of health facilities and build capacity of the MoH's Committee of Medical Technologies and Equipment (CMTE) to identify the needs, conduct technology assessment of, and procure medical equipment; and (e) provide training for hospital programmers, architects, biomedical engineers, maintenance specialists and hospital staff on facilities design, construction and equipment maintenance, in cooperation with the Center for Continuing Education (CCE) and the Faculty of Medical Engineering of Tbilisi Technical University. The component would provide 51.5 person-months of foreign and 90 person-months of - 17 - local technical assistance, 4 short-term visits, civil works, furniture, office and medical equipment, vehicles, computers, software and testing instruments. At negotiations, the Government provided assurances that the municipality of Kutaisi would merge the Maternity Hospital into the Pediatric Hospital by January 1, 1998. [para 5.2(d)] Component 3.0: Development of Health Human Resources (US$0.9 million, or 6% of total base cost) 2.12. Core policy agenda. The development of health human resources in areas of key importance to support the reform will be a crucial element in the policy agenda and in this project. Training and continuing education is needed in the formerly neglected areas of public health, family practice, health services administration, health insurance and financial management. A National Health Management Center (NHMC) was established in March 1995 with a mandate to coordinate and regulate public and private medical and nursing education, create a system of licensing and accreditation for professionals and training institutions, develop post-graduate medical and nursing curricula, create standards for specialization, and develop health sciences research. New legislation on medical education was drafted, creating an accreditation system for schools and limiting first year entrants; new residency programs were created according to European Union guidelines; and teams of experts were appointed to review medical specialties curricula. The NCHM was also instrumental in the first steps to create professional societies of Public Health and of General Practice. A Center for Continuing Education will be created inside the NCHM with four major areas of educational activities: Health Care Management, Family Practice, Public Health and Nursing. 2.13. Activities. The component aims to fill the existing gap in modern knowledge and skills among health care professionals in Georgia. The component will: (a) strengthen the capacity of the National Health Management Center to create a system for accrediting medical schools, develop a modern curriculum for post-graduate physician and nursing education, support the development of professional associations, and develop health services research to support the MoH in policy making; and (b) support the creation of the Center for Continuing Education (CCE) within the National Health Management Center to provide part-time professional education for newly emerging health care occupations such as health care management, family practice, and public health, provide on-site and at-distance continuous training programs for all health professionals, establish a program of "training the trainers", and create a desk-top publishing unit. The component would finance 6 person-months of foreign and 32 person-months of local technical assistance, 2 long-term fellowships, 18 short-term visits, local training programs, civil works, books and journals, audio-visual equipment and teaching materials, computers, software, vehicles, office equipment and furniture. As a condition of credit effectiveness, the Government will provide to the Association evidence that it has issued regulations setting a ceiling, acceptable to the Association, on new entrants in medical schools, effective for the academic year 1996-97 and thereafter. [para 5.4(a)] - 18 - Component 4.0: Modernization of the Health Financing System (US$1. 1million, or 7% of total base cost) 2.14. Core policy agenda. Faced with a complete collapse of government revenues for health and with the task of modernizing a very inefficient system, the Government has adopted a radical reform of the health finance system. Public expenditures will be concentrated on provision of a basic package of preventive and essential clinical health care services. Services not included in the basic package, such as outpatient visits and non-acute hospitalization, will be financed through out-of-pocket expenditures. For the poorest, either specific institutions will be set aside, or exemptions will be accepted. Simultaneously, dental clinics, polyclinics, pharmacies and several hospitals are in the process of being privatized. The self-management of those remaining in the public sector will be increased. This policy agenda is quite advanced both in legislative and implementation terms: (a) the separation between provision and financing of health services became effective on August 10, 1995, with the creation of the State Health Fund; (b) self-management capacity was conferred to hospitals, and was operational on December 31, 1995, when all staff were to be paid by income solely generated by the institutions, thereby reducing dependence on government budget; (c) rules for allocating funds to municipalities were changed from physical norms to a per capita allocation; (d) the announcement and list of the first phase of the privatization has already been published with 714 institutions targeted for privatization before the middle of 1996; and (e) the Government has already taken action to set aside beds to treat the most vulnerable groups and a quota system for every hospital to provide care for patients unable to pay for health service is also planned. 2.15. Activities. The component will support the development of the State Health Fund (SHF), with thirteen regional branches (Regional Health Funds), responsible for financing the provision of a basic package of preventive and curative services, by: (a) developing a management information system (MIS) and capacity in financial accounting and planning in the State Health Fund ; (b) developing an accounting and financial management system to be used in the Regional Health Funds; (c) developing a provider/health fund interface; and (d) organizing training in health financing and management in cooperation with the CCE. The component will also support regular collection of data on utilization and expenditures of health services not included in the basic package in order to monitor private expenditures on health and the accessibility and affordability of services for the poor. These activities will provide the necessary information and infrastructure for the Government to: (i) monitor the financial sustainability of the health reforms at the central and municipal level; (ii) develop mechanisms to control administrative costs; (iii) develop an optional community-rated health insurance model in the future. The component will finance 9 person- months of foreign and 49.5 person-months of local technical assistance, I long-term fellowship, 2 short-term visits, local training programs, computers, software, office equipment and furniture. Before negotiations, the Government presented to the Association evidence that it has completed a study of the financial accounts of the State Health Fund including a comparison of the cost and utilization of services before and after implementation of the reforms in August, 1995. [para 5.1(c)] At negotiations, the Government provided assurances that it shall take all necessary measures to ensure the viability of the State Health Fund without reducing the scope of services included in the basic benefits package and shall monitor and provide to the Association quarterly financial statements of the SHF. [para 5.2(e)] - 19 - Component 5.0: Project Administration (US$0.8 million, or 5% of total base cost) 2.16. The component aims to strengthen project administration and coordination by establishing and staffing a Project Coordination Unit (PCU) within the Ministry of Health. The PCU is responsible for overall management and financial management of the project. It would also strengthen the MoH's capacity to coordinate other donor assistance in the health sector. 2.17. Consultants will provide expert support to the PCU as follows: (a) ensuring that funds (credits, grants, parallel financing and local counterpart funds), resources (human, physical and information), and management support are made available to the project when required through appropriate budgeting and planning; (b) managing special accounts established for the project; (c) processing and expediting credit/grant fund withdrawal applications and draw-downs; (d) consolidating and preparing progress and evaluation reports, financial records, statements of expenditure, and audits; (e) coordinating implementation of various activities to ensure that project objectives are met, and that the required actions are executed in an efficient and timely manner in accordance with the planned project processing and implementation schedule; and (f) procuring consulting services, goods and civil works for the project. Such support will help to standardize processes and aim to achieve economies of scale through bulk procurement. By the end of the project, the functions of this unit would have been institutionalized in the MoH. For the PCU, the project would provide 27 person-months of foreign and 336 person-months of local technical assistance, 7 short-term visits, computers and software, and office equipment and materials. C. Environmental Aspects 2.18. The project is expected to have a positive impact on the environment through energy efficiency measures that are part of the overall program to improve hospital efficiency. Medical waste disposal systems in hospitals and polyclinics were assessed during project preparation and under the project standards and norms will be developed for the rehabilitation of health facilities. Improvements in public health will also have a positive impact on the environment. The project has been designated in Environmental Category C. D. Participatory Approach 2.19. The preparation of the project has been carried out in partnership with the Ministry of Health and its designated project component working groups. In Kutaisi, preparation was done in close collaboration with the office of the Mayor. Close contact was maintained with the Health Protection Parliamentary Commission. Local non-governmental organizations were consulted during project preparation, including the Georgian Medical Association, the Georgian Planned Parenthood Federation, Wellstart of Georgia, Women of Georgia for Peace, and the organizers of the Georgian Public Health Association. The community-based health promotion sub-component (under Component A) is designed to elicit participation from grass-root organizations interested in promoting healthy life-style and preventing non-communicable diseases among adults. - 20 - E. Cost Estimates 2.20 The total cost of the Project is estimated at about Lari 25.2 million or US$19.7 million equivalent, including contingencies. The total base cost is estimated at US$16.5 million. Physical contingencies are estimated at US$1.6 million and price contingencies at US$1.7 million. Total contingencies represent 19% of the total base cost. The foreign exchange component is estimated at US$11.3 million, including contingencies, or about 58% of total project cost. Project costs were estimated at September 1995 price levels and include physical contingencies of 10% for civil works, 5% for equipment and vehicles, 15% for office equipment and furniture and 5% for other expenditure accounts. Table 2.1 provides an estimate of the overall project costs. 3 Table 2.1: Estimated Project Cost Summary % % Total Components (US$ '000) Foreign Base Local Foreign Total Exchange Costs A. Health System Reorientation Modernization of Public Health Services, 575.1 1,048.3 1,623.0 65 10 Health Promotion and Disease Healthy Children and Safe Motherhood 547.8 618.3 1,166.1 53 7 Realignment of MoH 515.1 681.9 1,197.0 57 7 Subtotal Health System Reorientation 1,638.0 2,348.5 3,986.5 59 24 B. Rehabilitation and Maintenance of 3,677.3 5,999.0 9,676.3 62 59 Health Facilities and Equipment C. Development of Health Human Resources 374.2 549.3 923.5 59 6 D. Modernizing the Health Financing System 374.5 734.3 1,108.8 66 7 E. Project Administration 317.3 454.8 772.2 59 5 Total BASELINE COSTS* 6,381.4 10,085.9 16,467.2 61 100 Physical Contingencies 659.0 894.4 1,553.4 58 9 Price Contingencies 1,295.9 367.3 1,663.2 22 10 Total PROJECT COSTS* 8,336.3 11,347.6 19,683.8 58 120 * Figures may not add perfectly due to rounding 2.21. The total project cost includes civil works, equipment, medical equipment and instruments, vehicles, technical assistance, training and fellowships, office furniture and incremental recurrent cost incurred during project implementation. The break-down of costs by components and expenditure accounts is included in Annex E. 2.22. The estimated project costs include US$1.6 million to cover incremental operating costs directly attributable to the project during the four year period. These consist of operational and maintenance expenditures for equipment, vehicles and buildings, and the salaries of component coordinators. There are no other incremental salaries included in the project costs since it is assumed that all new positions will be filled by reassigned MoH staff. These incremental recurrent costs are expected to be within sustainable limits since measures are being instituted in the health sector to reduce recurrent costs, improve efficiency and increase collection of user charges. 3 / Project costs include taxes & duties . - 21 - F. Project Financing Arrangements 2.23. The proposed IDA credit of US$14.0 million will finance about 71% of total project costs, comprising 96% of total foreign exchange costs and 37% of local costs. Government will finance about US$5.3 million of total project cost, including taxes and duties of about US$2.5 million. An additional US$400,000 is expected from foreign donors for technical assistance. Table 2.2 shows the financing plan. At negotiations, the Government provided assurances that it would open a local contribution account in its National Bank and replenish that account quarterly so as to maintain a balance equal to US$400,000 [para 5.2(f)]. As a condition of credit effectiveness, the Government would provide to the Association satisfactory evidence that it has opened the Local Contribution Account in its National Bank and has deposited an amount equal to US$400,000 into such account. [para 5.4(b)] Table 2.2: Summary Financing Plan USS(million) Financing Plan LOSal Eoreign TQal Government 5.3 0.0 5.3 IDA 3.1 10.9 14.0 Donors 0.0 0.4 0.4 Total 8.4 11.3 19.7 G. Procurement 2.24. The procurement of all items funded from the IDA Credit would be governed by World Bank Procurement Guidelines of January 1995 and would make use of the Bank's standard bidding documents. Procurement arrangements are summarized in Table 2.3 and details of the procurement plan are located in Annex E. The General Procurement Notice was issued on January 31, 1996. PCU members attended a Bank organized procurement seminar in Kiev in January, 1996 and a project launch workshop will be held in July, 1996. Country Procurement Assessment Report: as in other transition economies, Georgia has not yet developed a legislative framework for competitive public procurement. However, the country has made progress and demonstrated its capabilities in procurement under the IDA-financed Municipal Infrastructure Rehabilitation Project. A country procurement strategy is currently under preparation. 2.25. Responsibility for Procurement. All procurement will be carried out by the PCU in the MoH which will be assisted by foreign procurement consultants financed under the project during the first two years of project implementation. 2.26. The civil works (US$8.3 million) included under the project consist of: (a) partial rehabilitation of Tbilisi City Hospital #2; (b) refurbishment of Kutaisi Pediatric Hospital and Maternity Hospital (merged into a single building); (c) refurbishment of the Tsageri District Hospital; (d) rehabilitation of the Center for Continuing Education (CCE) in the Ministry of Health; and (e) minor renovation of six different office sites in Tbilisi. These construction activities will be undertaken during project years 1, 2 and 3. Civil works contracts costing more than US$500,000 will be contracted out using International Competitive Bidding (ICB) procedures, while contracts costing less than that amount will be procured through National Competitive Bidding (NCB) procedures using the Bank's sample documents for NCB. Two civil works - 22 - contracts for the larger hospitals are estimated to total about US$7.3 million, will be procured through ICB. The contract for the district hospital and the CCE are to be procured through NCB. Rehabilitation of six separate office sites will be procured under local procedures and funded by counterpart contribution. For contracts for works to be awarded on the basis of ICB, a margin of 7.5% will be granted to domestic contractors, in accordance with the World Bank Procurement Guidelines (Appendix 2, para 7). 2.27. The goods (US$5.6 million) to be financed under the project include office equipment, medical and laboratory equipment, office furniture, vehicles including ambulances, computer hardware and software and training materials, including audio-visual equipment. To the extent possible, these items would be grouped into several procurement packages. For five packages of US$300,000 and above, procurement will be through ICB (US$3.5 million). Three packages estimated to cost less than US$300,000 but more than US$50,000 will be procured through international shopping (IS) (US$0.4 million) with at least three quotations from two different countries. One package for specialized medical and laboratory equipment, where there are limited suppliers, will be procured by limited international bidding (LIB) (US$1.5 million). Furniture and other smaller items, packaged into four contracts of less than US$50,000 each, will be procured through National Shopping (NS) (US$0.2 million) with at least three quotations from local suppliers. Preference for domestic bidders shall apply to goods manufactured in Georgia in accordance with the World Bank Procurement Guidelines (paras 2.54-2.55). 2.28. Consultants for technical assistance and training (US$4.0 million) will be selected in accordance with the "Guidelines for the Use of Consultants by the World Bank Borrowers and by the World Bank as Executing Agency" (August 1981). TA would be provided in the following main areas of specialization: architectural and engineering services, benefits package, health promotion, quality assurance, maternal and child care organization, privatization, modern health administration, health economics and health finance. In addition, TA would be required for project management, project accounting, procurement and information technology in the first two years of the project. TA and training would total 121.5 staff months of foreign technical assistance and 725.5 months of local technical assistance. In-country training of doctors, nurses and health administrators would be provided by the Center for Continuing Education or foreign consultants. Technical assistance will be grouped in four different packages for building design and supervision, project management, health care and training. In addition, activities under the Health Promotion Programs (US$1 million) will be procured in accordance with World Bank Guidelines for consultant services. It is proposed that consulting services (TA and training) will be met by single or multiple firms that have the requisite staff that meet project needs. Other activities that would be financed by the Bank credit would include fellowships, short-term visits and health promotion programs. All these contracts will be with firms and training institutions on the basis of short- listing, to avoid burdening the PCU with too many contracts. Local consultants will be hired on an individual basis following a competitive selection process. 2.29. All other project items in the category incremental operating costs purchased under the project would be procured using the normal GoG procedures. 2.30. All civil works and bidding packages for equipment and materials estimated to cost US$300,000 or more would be subject to prior Bank review. In addition, there will be a prior Bank review process for the first package procured through IS. Terms of reference for consulting contracts would be subject to prior review by the Bank, regardless of value. In addition the Bank will also review short lists, letters of invitation, and consultant contracts higher than US$100,000 - 23 - for firms and US$50,000 for individuals. Selected review of awarded contracts below the threshold would also be carried out during project implementation. 2.31. Procurement information would be collected and recorded as follows: (a) prompt report of contract award information by the borrower; and (b) comprehensive quarterly reports to the Bank by the Borrower indicating: (i) revised cost estimates for individual contracts; (ii) revised timing of procurement actions, including advertising, bidding, contract award, and completion time for individual contracts; and (iii) compliance with aggregate limits on specific methods of procurement. -24- Table 2.3 Summary of Proposed Procurement Arrangements (US$ million equivalent) Procurement Method Total Project Element ICB NCB Other N.I.F. Cost A. Works Tbilisi City Hospital fl 5.3 - - - 5.3 (4.3) (4.3) Kutaisi Maternity and Pediatric Hospital 2.0 2.0 (1.6) (1.6) Tsageri District Hospital - 0.3 - - 0.3 (0.2) (0.2) Center for Continuing Education - 0.4 - 0.4 (0.3) (0.3) Office Rehabilitation - - - 0.3 0.3 B. Goods Office Equipment, Materials and Furniture 0.6 - 0.6' - 1.2 (0.4) (0.4) (0.8) Computer Hardware and Software 0.8 - - - 0.8 (0.6) (0.6) Med/Lab Equipment 1.4 - I.5 - 2.9 (1.0) (1.1) (2.1) C. Vehicles 0.7 - - - 0.7 (0.4) (0.4) D. Conuultancdes Architectural Design & Supervision - - 0.2 - 0.2 (0.2) (0.2) Technical Assistance - - 2.8 - 2.8 (2.5) (2.5) Training - - 0.1 - 0.1 (0.0), (0.0) Fellowship and Study Tours - - 0.5 - 0.5 (0.4) (0.4) E. Miscellaneous Refinancing PPF - - 0.5f - 0.5 (0.5) (0.5) Recurrent Cost - - - 1.6 1.6 Total 10.8 0.7 6.3 1.9 19.7 (8.3) (0.5) (5.2) (0.0) (14.0) Note: Figures in parenthesis are the respective amounts to be financed by the IDA credit Figures may not add perfectly due to rounding. N.I.F. - Non-IDA Financed 'Includes LIB, NS, IS, CPP bOffice equipment and furniture to be procured through NS ($0.2 million); telecommunications and teaching equipment to be procured through IS ($0.4 million). eSpecialized medical equipment procured through LIB dFollowing "Guidelines for the Use of Consultants by the World Bank Borrowers and by the World Bank as Executing Agency"; all contracts are grouped together by nature. 'IDA financing equals US$0.04 million fPPF used for architectural design and supervision (0.4 million) and office equipment and furniture (US$0.1 million) - 25 - H. Disbursement 2.32. The proposed project is expected to be disbursed over a period of four years, starting in July 1996. The closing date of the credit will be twelve months after completion, or June 30, 2001. Disbursement projection from the IDA credit over a four-year period is presented in Table 2.4. Disbursement against specific categories is noted in Table 2.5. The Government received a Project Preparation Facility (PPF) in the amount of US$500,000 to allow for setting up the PCU and contracting for the architectural design for Tbilisi City Hospital #2 and the Kutaisi Maternity and Pediatric Hospital. Table 2.4 Estimated Credit Disbursement Schedule Amount (US$ Million) Cumulative Disbursement IDA Absolute Cumulative as % of Total Profile in Georgia' 1996" 0.5 0.5 4 1997 1.4 1.9 13 1998 5.2 7.1 51 1999 5.1 12.2 87 2000 1.8 14.0 100 This is the first human resource investment credit to Georgia and the standard disbursement profile for human resource sector projects is not available. 2 PPF Table 2.5 Disbursement Categories Category Amount US$ % of Expenditures (million) to be Financed by IDA Civil Works 6.0 80% Equipment, Supplies and 3.5 100% of foreign expenditures, 100% of local Vehicles expenditures (ex-factory cost), and 80% of local expenditures for other items procured locally Technical Assistance 2.0' 100% Refund of PPF 0.5 Unallocated 2.0 TOTAL 14.0 Includes consultant services, fellowships, and study tours. - 26 - 2.33. Disbursement will be the responsibility of the Ministry of Health. The PCU will be responsible for preparing and maintaining all documentation. Disbursement training will be organized for the PCU staff. 2.34. To facilitate project implementation, the Borrower would establish a Special Account in one of the major commercial banks on terms and conditions satisfactory to the Association to cover the Association's share of expenditures. (See Schedule 5 of the Credit Agreement) The Authorized Allocation would be US$500,000, representing about four months of average expenditures made through the Special Account. During the early stage of the project, the initial allocation to the Special Account would be limited to US$250,000. However, when the aggregate disbursements under the Credit have reached the level of SDR 2,000,000, the initial allocation may be increased up to the Authorized Allocation of US$500,000 by submitting the relevant Application for withdrawal. Applications for replenishment of the Special Account would be submitted monthly or when one-third of the amount has been withdrawn, whichever occurs earlier. Documentation requirements for replenishment would follow the standard Bank procedure as described in Disbursement Handbook, Chapter 6. Monthly bank statements of the Special Account which have been reconciled by the Borrower would accompany all replenishment requests. 2.35. Disbursements for civil works and goods contracts valued at more than US$300,000 will be made against full documentation. Similarly, disbursements for contracts to consultancy firms valued at more than US$100,000 and for individual consultants valued at more than US$50,000 will also be against full documentation. Disbursement for contracts for civil works, goods and consultancy services valued below these thresholds may be made on the basis of Statements of Expenditures (SOE). Supporting documentation for SOEs would be retained by the implementing agency for at least two years after disbursement. Direct payment applications would be accepted for minimum amounts of US$30,000 and applications for special commitments for minimum amounts of 20% of the current authorized allocation to the Special Account. I. Accounting and Auditing 2.36. Project accounts and the Special Account will be audited in accordance with "Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank." The Project Coordination Unit will maintain a consolidated account of all expenditures under the project. The Borrower will provide the Association within six months of the end of each fiscal year an audit report. The project accounts would be audited annually by independent auditors satisfactory to the Association in accordance with appropriate auditing principles, with terms of reference approved by the Association. The audit reports should include a separate opinion on the adequacy of SOEs and on the Special Account. - 27 - IH. PROJECT IMPLEMENTATION A. Organization and Management 3.1. Project Implementation Responsibilities. Primary responsibility for project implementation would be assumed by the Departments and Agencies of the Ministry of Health responsible for each of the project components, as shown in Table 3.1 (See organizational chart of the MoH in Annex E). These agencies, while unfamiliar with World Bank procedures, have been actively involved in project preparation. Many have already begun to initiate activities under their components. Each of the components and sub-components will have at least one component coordinator who manages the activities in his or her component. A Project Coordination Unit (PCU), located in the Ministry of Health, will be responsible for the overall management of the project and will be staffed by local and foreign consultants with expertise in planning, administration, accounting, procurement and disbursement. Detailed Terms of Reference for the PCU are included in the Project's Implementation Plan (Annex E, page 3). Technical assistance needed for project implementation is included in the project cost estimates of each component. At negotiations, the Government provided assurances that the Borrower would: (a) employ throughout the project implementation period seven component coordinators whose experience and qualifications are acceptable to the Association; [para 5.2(g)] and (b) maintain throughout the project implementation period a Project Coordination Unit (PCU) with functions and responsibilities acceptable to the Association and employ, at all times, individuals for the positions of director of the PCU, procurement officer (two positions), financial officer, planning and monitoring officer and administrative assistant, whose experience and qualifications are acceptable to the Association. [para 5.2(h)] Table 3.1 Project Implementation Arrangements Project Component/Sub-Component Implementing Department/Agency 1.0 Health System Reorientation 1.1 Modernization of Public Health Services, Department of Public Health and Atlanta/Tbilisi Health Promotion, and Disease Partnership Prevention 1.2 Healthy Children and Safe Motherhood Department of Maternal and Child Health 1.3 Realignment of the Ministry of Health State Agency for Quality Assurance Department of Pharmacy & Pharmaceutical Industry National Health Management Center 2.0 Rehabilitation and Maintenance of Health Facilities Building Technical Department and Equipment Committee of Medical Techniques and Technology 3.0 Development of Human Resources National Health Management Center Center for Continuing Education 4.0 Modernization of the Health Care Financing Medical Insurance Department System State Health Fund 5.0 Project Administration Project Coordination Unit - 28 - 3.2. Implementation Schedule. The proposed project would be implemented over a four year period, with an additional twelve months for the payment of financial obligations committed prior to the project completion date and full withdrawal of Credit proceeds. The project is expected to be completed by June 30, 2000 and the Credit closed on June 30, 2001. The PCU would submit an Implementation Completion Report (ICR) to the Association within six months of the closing date. B. Project Planning, Monitoring and Evaluation 3.3. A Project Implementation Plan has been developed including institutional and individual implementation responsibilities, a timetable for implementation, and monitoring indicators and policy-related benchmarks (Annex E). Two sets of indicators have been defined: process indicators (or input and output indicators) to measure progress in project implementation and impact indicators (or outcome and impact indicators) to evaluate improvements in the health system and in the health status of the population. The most important process indicators (most to be measured annually) include: (i) the number and value of awards granted by the Health Promotion Fund; (ii) the number of health care institutions licensed; (iii) the number of health professionals licensed; (iv) the percentage of pregnant women completing four prenatal visits and having a full risk assessment; (v) the number of people trained in public health, family practice, nursing, and management by the Center for Continuing Education; and (vi) the number of health facilities that are privatized. The most important impact indicators, also to be measured annually, include: (i) the prevalence of smoking; (ii) the incidence and mortality rate from circulatory diseases; (iii) the incidence and mortality rate from traffic accident related injuries; (iv) the knowledge, attitudes, and practices of all health personnel working in maternal and child health; (v) perinatal and infant mortality rate; and (vi) total health expenditures by sources and expenditure category. The project will also promote the use of monitoring indicators throughout the country by requiring recipients of the health promotion grants to document the impact of their respective projects. In addition, key policy benchmarks have been identified in the Government's Statement of Development Objectives and these will be reviewed annually by the Association and the Government as part of project monitoring. Responsibility for project monitoring will fall principally to the PC I1, which would monitor project tasks as defined in the project implementation plan as well as key indicators to assess project progress and impact in relation to specific objectives. 3.4. Semi-annual progress reports would be prepared for each of the components by the responsible implementing Agencies or Departments and would be consolidated by the PCU into a semi-annual report on project activities which would be submitted to the World Bank. A proposed outline for the Progress Reports is included in Annex E. A mid-term review, to be undertaken by project personnel, World Bank staff, and a team of independent observers, would be undertaken after year two of the project to ensure that the direction and contents of the project continue to respond to stated objectives. In order to closely monitor project implementation, five supervision missions are planned prior to the mid-term review (see para 3.5). At negotiations, the Government provided assurances that: (a) the Borrower would prepare and furnish to the Association written semi-annual progress reports on all project activities in accordance with performance indicators satisfactory to the Association; [para 5.2(i)] and (b) conduct a mid-term review of the project no later than September 30, 1998, indicating the project's progress from inception and proposing additional measures as necessary to ensure achievement of the project objectives. [para 5.2(j)] - 29 - C. World Bank Supervision Strategy 3.5. In addition to the review of procurement actions, audits and semi-annual reports on project progress, the Association will conduct regular supervision missions. It is also likely that other donors such as UNICEF, WHO, and USAID, with whom the Association has collaborated closely during preparation, will participate in these supervision missions. Given that Georgia is a new borrower and the project has several implementing departments and agencies, the project is estimated to require 26 staff weeks of supervision per year, with more intense supervision in the first two years of project implementation. A proposed Supervision Plan is included in Annex E (page 5). One mission would be timed at mid-year, to review implementation accomplishments and plan for the next year's activities. Sufficient time should be allowed between this annual review and the preparation of the Government budget, in order to ensure that project costs and Government counterpart funds are included in the national budget. - 30 - IV. BENEFITS AND RISKS A. Benefits 4.1. Although it is difficult to quantify the monetary and non-monetary benefits of the proposed project, the benefits can be grouped into: (a) real per capita increases in health expenditures; (b) reductions in the burden of disease; and (c) efficiency and equity gains in the allocation and use of resources. The project's support of key institutional health reforms, training of health personnel, scaling down of facilities and down-sizing staff in hospitals and polyclinics, and major changes in health service financing would, in the short-term, increase efficiency in the delivery of health services and contain costs. In the medium-term, the emphasis on healthy children and safe motherhood, added to the improved quality of health personnel and clinical treatments, would lower infant and maternal mortality and morbidity, reducing the economic burden of disease. In the long- term, preventive measures and promotion of healthy lifestyles, will curb avoidable adult mortality due to causes related to tobacco and alcohol consumption, unhealthy diets and injuries, further reducing the economic burden of disease. Quantitative analysis of benefits 4.2. Using the approach recommended by the World Bank's 1993 World Development Report, Investing in Health, an analysis of three of the health promotion programs to be included in the proposed project (smoking, cardio-vascular disease, and traffic prevention) as well as the maternal and child health activities in Kutaisi was carried out as part of project preparation. The study had the following objectives: (a) to estimate the burden of disease in Georgia, studying its distribution by nosologies, age, and gender; (b) to measure the burden of disease associated in particular with the main preventable health problems and diseases that could be reduced by the prevention programs; (c) to estimate the present health care costs associated with those health problems and diseases; (d) to estimate potential health gains achievable through the interventions; and (e) to analyze the cost- effectiveness of the three preventive programs and the Kutaisi MCH program proposed under the project. Detail of the study are included in Annex D and summarized below. 4.3. The results of the "burden of disease" analysis, using the disability adjusted life year (DALYs) methodology, show that the two groups where the most DALYs are lost due to premature deaths are infants (population under one year of age) and individuals aged 60 to 64 years. These results are consistent with the project's strong emphasis on maternal and child health and disease prevention. Looking across diseases, the study found that cerebro-vascular disorders and ischemic diseases are the most important health problems in Georgia, followed by accidents for men and breast cancer for women. The prevention programs proposed under the project could save nearly 200,000 DALYs by the year 2005. This is almost half of the burden of the diseases targeted under the prevention programs. Each DALY saved will cost, on average, US$2.83. For each dollar spent on the three prevention programs, US$63 could be saved in treatment and indirect costs. Total, discounted savings in direct and indirect costs over nine years would be US$35.5 million. Over three- quarters of the savings would come from the cardio-vascular disease prevention program. 4.4. The MCH program in Kutaisi, which includes higher investment costs (refurbishment and equipping the Kutaisi Maternal and Pediatric Hospital) and benefits which are harder to quantify, would save an estimated 16,489 DALYs at an average cost of US$138 for each DALY. The total cost of refurbishing and equipping the 60 bed perinatal center in Kutaisi, - 31 - US$2.3 million, is less than the estimated US$5.9 million it would cost to build a new center. Although a cost-effectiveness analysis of the rehabilitation and maintenance of Tbilisi City Hospital #2 was not included in the study, least cost analysis confirmed that refurbishing and equipping the facility as proposed under the project would cost US$5.7 million compared to US$10.9 to construct a new 126 bed hospital with the same function. Qualitative analysis. 4.1. While the analysis above demonstrates that the net present value of some of the project's health promotion programs exceeds total project costs, in fact, most of the project's benefits are unquantifiable. The project's activities will produce the following benefits: a) separating provision from financing of health services through an independent Health Fund will create conditions for the privatization of hospitals, polyclinics, dental clinics, as well as for pharmaceutical imports and distribution, under effective and efficient government regulation; b) improving preventive public health and maternal and child care services, and focusing the Ministry of Health on strategic planning, monitoring and policy adjustment will modernize and strengthen public management; c) reducing the State's financing role to a basic package of curative medical services and targeting the poorest through exemptions from health care costs, will improve efficiency in the health sector spending , and will free resources for the reinforcement of the social safety net; d) developing self-management capacity in hospitals and paying staff according to services provided by income solely generated by the institutions will improve efficiency and develop institutional capacities through the public sector and the economy at large; e) rehabilitating health facilities selected for their specific role in the project, according to modern programming and architectural standards to improve service effectiveness, safety, quality and energy efficiency, will generate positive examples of down-sized remodeling of critically needed and badly maintained social infrastructures; f) developing health human resources through continuing education and training will develop participation, will enlarge the circle of reform-minded stakeholders and will create conditions for the future multiplication of the reform results. B. Risks 4.6. The Government faces substantial financial, political, and institutional risks in implementing both its ambitious health care reform program as well as the project. A more detailed discussion of these risks is included in Annex D. The main risks include: (a) the financial sustainability of the health care reform; (b) the ability of the Government to contribute its part of project costs; (c) the Government's commitment to continuing with the health care reforms; (d) the difficulties involved in transforming a curative health system into one more focused on disease - 32 - prevention and health promotion; (e) the complexities attached to restructuring institutions and strengthening the management of the hospitals and the health insurance funds; and (f) the lack of experience of the Government in implementing Bank financed projects. Many of these risks are common to any health reform process. Meeting the challenge is essential for both the transition to a market economy and the modernization of a badly functioning health care system. These risks have been addressed as follows: a) In order to ensure continued Government financial commitment to the health sector, both the Health Project and the Structural Adjustment Credit (SAC) have included minimum spending levels on health as a condition of lending. The SAC specifies that at least 7% of public spending must go to health and that this amount should rise as revenues increase. The Government has provided assurances that it would not reduce the scope of service included in the basic benefits package and would provide to the Association quarterly financial statements of the fund. b) The MoH reform record for 1995 is an outstanding one: (i) creation of a basic package of services, (ii) purchaser-provider split with the implementation of the State Health Fund, (iii) self-management capacity conferred to hospitals reducing dependence on government budget, and (iv) change in the municipal health funding rules from physical norms to a per capita allocation, among other decisions. This effort is worthy of continuation and support. c) A new focus on adult health and on modem health promotion strategies to prevent the high economic and social burden of avoidable deaths and disability is an essential step to reach health levels similar to those in Western European countries. d) The lack of administrative, accountant and managerial experience inherited by the health administration from former Soviet times is a handicap that needs to be overcome in any case. Doing that simultaneously with a decisive health reform will generate synergy to the whole process. e) The creation of a PCU by pre-appraisal is improving project ownership and familiarity with Bank procedures and will allow for a quick start-up. Moreover, design includes features to attenuate risks, such as ensuring continued technical guidance and training for strengthening organizations and management practices, a detailed midterm review by the end of the second year of the project, and such matters as procurement, disburse ments, accounting and auditing. - 33 - V. AGREEMENTS AND RECOMMENDATION 5.1. Prior to negotiations, the Government took the following actions: a) reached formal agreement with the Kutaisi Municipality for merging maternity and pediatric services in the Kutaisi Pediatric Hospital, which will be partially rehabilitated under the project (para 2.7(a)); b) appointed a coordinator, acceptable to the Association, to oversee project activities in Kutaisi and Tsageri (para 2.7(b)); c) completed a study of the financial accounts of the State Health Fund including a comparison of the cost and utilization of services before and after implementation of the reforms in August, 1995 (para 2.15). 5.2. The following agreements were reached during negotiations: a) the MoH will implement the reforms in the Statement of Development Objectives (SDO) as agreed upon with the Association and review with the association annually all actions with respect to the SDO (para 2.2); b) at least one percent of the income of the State Health Fund will be allocated to the health promotion programs (para 2.5 (a)); c) the health promotion programs will be selected on competitive basis (para 2.5 (b)); d) kutaisi Maternity Hospital will be merged into the Pediatric Hospital by January 1, 1998 (para 2.11); e) the MoH will ensure the viability of the State Health Fund (SHF) without reducing the scope of services included in the basic benefits package and shall monitor and provide to the association quarterly financial statements of the SHF (para 2.15); f) the Government of Georgia will open a local contribution account in its National Bank and replenish that account quarterly so as to maintain a balance equal to US$400,000 (para 2.23); g) the MoH will employ throughout the project implementation period seven component coordinators whose experience and qualifications are acceptable to the Association (para 3.1(a)); - 34 - h) the MoH will maintain throughout the project implementation period a Project Coordination Unit (PCU) with functions and responsibilities acceptable to the Association, and employ, at all times, individuals for the positions of director of the PCU, procurement officer (2 positions), financial officer, planning and monitoring officer and administrative assistant, whose experience and qualifications are acceptable to the Association (para 3.1(b)); i) written semi-annual progress reports on all project activities will be prepared and furnished to the Association in accordance with performance indicators satisfactory to the Association (para 3.4(a)); and j) a mid-term review of the project will be conducted no later than September 30, 1998, indicating the project's progress from inception and proposing additional measures as necessary to ensure achievement of the project objectives (para 3.4(b)). 5.3. Before project presentation to the Board, the Government provided to the Association evidence that: a) regulations creating residency programs in obstetrics and gynecology and pediatrics had been issued (para 2.7); b) rules on licensing of health professionals were approved and enacted (para 2.9(a)); and c) rules on the accreditation of medical and nursing training institutions were approved and enacted (para 2.9(b)). 5.4. As a condition of credit effectiveness, the Government would provide to the Association satisfactory evidence that: a) issuance of regulation setting a ceiling, acceptable to the Association, on new entrants in medical schools, effective for the academic year 1996-97 and thereafter (para 2.13); and b) opening of a local contribution account in its National Bank and has deposited an amount equal to US$400,000 into such account (para 2.23). 5.5. Subject to the above, the project is suitable for a Bank credit of SDR 9.7 million (US$14 million equivalent) at standard IDA terms, payable in 35 years, including 10 years of grace. Annex A Page 1 of 10 The Republic of Georgia STATEMENT OF DEVELOPMENT OBJECTIVES The World Bank supported Georgia Health Project Annex A Page 2 of 10 STATEMENT OF DEVELOPMENT OBJECTIVES Introduction This document states the health policy of the Government of Georgia. It lists the strategic objectives in the health sector, indicating the legislation already passed to support these objectives. Each of the strategic objectives is analyzed: the major initiatives currently underway are identified, the planned activities are indicated and benchmarks for policy action are listed and scheduled. Strategic Objectives 1. The central objective of the Georgian health policy is to improve the health of the entire population through the design and implementation of a primary care-based system which emphasizes health promotion, disease prevention, and health protection. Health policy should move beyond curative medical services if it is to meet the full needs of the citizenry. Health and health care services also ought to be viewed as an investment in the creation of human capital, through the production of specific services in a transitional economic environment. 2. Consistent with the Health For All strategy devised by the World Health Organization European Regional Office, Georgia is in a process of reconstructing a curative delivery system severely damaged by intense civil conflict that greatly affected the Georgian economy and the health sector. To rebuild the economy and restore macroeconomic stability and foster the resumption of growth, our Government has been implementing a comprehensive program of macroeconomic stabilization and structural reforms with the assistance of the IMF and the World Bank. The Government commitment encompasses the reform of the health sector, and legislation has been passed and is under implementation with the following strategic objectives: (a) concentrate scarce public resources in better preventive public health and healtit promotion services, and decentralize the health system administration; (b) restore the capacity of essential services for children and women and improve their performance and quality to attain European levels; (c) limit the Ministry of Health's role in prevision and instead, refocus it on strategic planning, monitoring, quality assurance and policy adjustment; (d) scale down facilities and staff, introduce preventive maintenance of facilities and equipment, and upgrade service quality and management; (e) develop health human resources on areas of key importance to support the reform such as modem public health, family practice, health services administration and financial management; (f) privatize dental clinics, polyclinics, pharmacies and several hospitals and increase the selfmanagement of those remaining in the public sector; Annex A Page 3 of 10 (g) guarantee a core set of curative medical services for the whole population (basic package of care), and finance the non-basic package of services through co-payments, exempting the poorest; (h) change the previous financing system to one based on Government funding for the public health service, an independent payroll-based health fund for the basic package, municipal funding for emergency acute care and individual payments for the remaining services. Recent Legislation 3. An important set of new health sector legislation is composed of the following pieces: (a) The Decree 400, issued by the Head of State on December 23, 1994 and later ratified by the Parliament, contains the first statement of the health reform. The Georgian health sector will change from a centrally directed system, financed almost entirely from government revenues, into a decentralized system with a basic program financed by a pay-roll tax, selected specific earmarked taxes and government and municipal subsides. The remaining curative services will be financed through the private sector. There will be a clear separation between the sources of finance, the management of finance and the provision of services. This is intended to create a competitive environment with incentives for greater efficiency in service provision. Hospitals and other providers have been given great latitude in staffing and the administration of services. The role of the national Ministry of Health is being greatly reduced to strategic planning, monitoring and policy adjustment, including licensing and accreditation, quality assurance and provider regulation. The management of the health service delivery will be decentralized and 12 regional health authorities will be created to administer the transaction of the health fund, and to carry out the responsibilities of the regulatory agency at the local level. (b) Seven Cabinet of Ministers' decrees on the implementation of the health reform were issued on June 30, 1995: * Decree number 390 on the composition and implementation of State Medical Programs, including five supplements: (i) public health programs financed by the State: immunization, healthy children and safe motherhood, prevention of communicable diseases, inpatient treatment and health promotion; (ii) budget plan of the State Health Fund for 1995; (iii) basic municipal package of care; (iv) organization of regional municipal health administrations; and (v) organization and functions of the regional (municipal) Health Funds. * Decree number 399 on the role of the MoH in the reorganization of the health care system. * Decree number 389 on the reorganization of the Sanitary Epidemiological Department in the MoH. Later, the Department of Public Health was created taking the public health functions out of the former SanEpid Department. * Decree number 392 on the privatization of health care facilities. Institutions will become private through purchasing them by staff and not privatized will be auctioned. The institutions are grouped into three categories: (a) institutions that will remain with the same curative profile during next 10 years and will have to carry out state orders; (b) institutions that will maintain Annex A Page 4 of 10 their health service profile for not less then a ten-year period; and (c) institutions to be privatized without any limitation.. * Decree number 388 on the future development of the pharmaceutical sector. The decree created a compulsory licensing system for importing, distributing and selling pharmaceuticals, a registration and quality assurance mechanism for all pharmaceutical products, and an inspection system for all pharmaceutical related activities. * Decree number 391 on the financing of the State Health Fund, including a supplement describing the rules for the collection of the payroll tax of 3% from employers and 1% from employees, which is one of the most important sources of financing for the basic package of care. * Decree number 398 on the payment of a special fee to the State Health Fund for the production and distribution of health damaging products (tobacco, asbestos, alcohol, among others). (c) Decree number 269 issue by the Head of State on July 5, 1995, establishes additional activities to improve the health care system under a market economy. This decree has the following major innovations: * By August 1995 all health care institutions will became administratively and financially autonomous from the State budget. Debts of former public institutions as identified on August 10, 1995, will be covered by the Ministry of Finance. All existing institutions need to be reregistered at MoH. This registration is valid till January 1997, after which they will have to follow common legislation. Those who are not registered are not allowed to provide care. * The basic package of care, to be supported by the State (through the municipal budget and the State Health Fund) will include: care of pregnant women and children under one year of age, all kinds of delivery, emergency care for children 1-15 years, care for war veterans and population under the poverty line, prevention of communicable diseases, including AIDS and STDs, critical and urgent care, inpatient and out-patient care for tuberculosis and mental health problems, insulin for insulin-dependent patients, pain relieving drugs for terminal oncological patients, and free care for the victims of disasters and epidemics. * The Ministry of Labor and Social Protection will establish criteria for the definition of the poverty line and will identify those citizens under that line, by place of residence. The Ministry of Health will identify those health care institutions that will provide free health care to the poor after providing appropriate certificates. * The Ministry of Health will guaranty the quality of medical care through the licensing and accreditation procedures of staff and facilities, quality control, registration and licensing of drugs and medical supplies: medicines, food, fuel and other commodities provided through humanitarian aid will be monetized, in agreement with donors; and included in the state medical program. Persons or institutions without a corresponding license are not allowed to sell drugs or medical supplies. * The Ministry of Health will prepare a 2-3 year program to aid the recovery and further development of the Georgian medical science. Annex A Page 5 of 10 * The Ministry of Health will prepare legislation and regulation for the transition of the present system into a health insurance model and will introduce legislation on the restructuring of its own departments in accordance with the health reform needs. (d) The Decree # 351 issued by the Head of the State, on September 13, 1995, with two decisions: (a) creation of medical personnel State Social Insurance Company; (b) creation of a municipal obligation to pay 90% of the cast of health care services utilities in their areas. Analysis by Objective (a) Modernization of Public Health Services, Health Promotion and Disease Prevention. 4. Major Initiatives Currently Underway. By Decree of the MoH, the Department of Public Health was created in the Ministry of Health and is responsible for the analysis and management of the epidemiological situation and to organize, coordinate and implement public health measures for the prevention of diseases, the reduction of disability and premature mortality, and the promotion of healthy life-styles. The Department will have a regional branch in each one of the future health regions, and has the authority to supervise the health information system, guarantee the epidemiological surveillance, organize state, regional and municipal programs for health promotion and disease prevention, and ensure international cooperation in these areas. The Department inherits the epidemiological surveillance function (stations) of the former SanEpid Service, now called the Department of Sanitary Supervision and Sanitary Norms. Another important activity is the design of vertical programs for Smoking Cessation, Cardio-Vascular Diseases Control, Prevention of Accidents and Occupational Injuries and Family Planning. 5. Planned Activities: (a) the implementation of the vertical programs; (b) the design, creation and management of a Fund for Health Promotion Activities to provide grants to community-based initiatives on a competitive basis; (c) the integration of part of-the former SanEpid staff in the new Department and the modernization of their mission and work plan; (c) health services planning according to needs and utilization for the whole country; (d) capacity development for epidemiological and economic analysis; and (e) the preparation of an annual report of the health of the nation. 6. Benchmarks of Policy Action: (a) first set of contracts with NGO's and independent institutions (schools, enterprises) to act as health promoters, to be signed by January 1997; (b) health protection legislation on tobacco, traffic regulations and food stuff labeling passed and implemented by July 1997; (c) the first report on the Health of the Nation, to be published by July, 1998; (d) evaluation of the impact of the first two years of the health promotion programs by July, 1999. (b) Healthy Children' and Safe Motherhood 7. Major Initiatives Currently Underway. Thanks to UNICEF and other international organizations the immunization system was restored after a severe breakdown of resources that totally interrupted immunization during 1992. To prevent the increase in home deliveries Annex A Page 6 of 10 generated by the inability of users to pay for hospital delivery, with its damaging effects in the perinatal, neonatal and maternal mortality, the recently implemented basic package of care includes prenatal care, deliveries and care for children under one year of age in the list of services to be provided free to all women and children. With the support of international organizations a "Well-Start" Breast-Feeding Program is under implementation. Rooming-in is now practiced in major maternity's and training modules in newbom resuscitation, thermal control, diarrheal diseases (DDR), acute respiratory infections (ARI), breastfeeding and pediatric neurology have been prepared and are being disseminated. An Interministerial Commission for the Protection of Women and Children was created. 8. Planned Activities: (a) inclusion of family planning in the basic package of care; (b) development of protocols and training modules in perinatal care for obstetricians, pediatricians, family planners, neonatal care specialists, family practitioners, nurses and midwives; (c) development of a residency program in Tbiligi in Obstetrics and Pediatrics; (d) implementation of an integrated perinatal care program in Kutaisi, merging the Maternity with the Pediatric Hospital, developing pre-natal care in outreach facilities and modernizing communications and transportation in the referral system; (e) creation of a task-force for Child Survival, under the Commission for Protection of Women and Children. 9. Benchmarks of Policy Action: (a) enlarging the basic package to family planning, by March- 1996; (b) official adoption of protocols of care and guidelines for women's and children's service organization by March, 1997; (c) starting the Tbilisi residency program in Obstetrics and Gynecology by September, 1997; (d) reducing matemal mortality by 50% by July 2000; (e) reducing infant and perinatal mortality by 50% in Tbilisi and Kutaisi by July 2000; (f) reducing infant and perinatal mortality by 30 % in the entire country, by July 2000. (c) Realignment of the Ministry of Health 10. Major Initiatives Currently Underway. A pharmaceutical law was approved (Decree of Cabinet of Ministers number 388). Regulation of this law is under discussion dnd will be published soon. The first round of registration of providers for the purpose of future accreditation was mostly completed in September, 1995 except those in far peripheries and under different ministries. In the licensing of health professionals, the first expert panels were set up for the definition of standards for medical practice and medical specialties' examination. 11. Planned Activities: (a) reorganization of the administrative structure of the Pharmaceutical Department and of the Pharmaceutical Agency, where four major activities will be performed: registration of products, quality assurance, inspection and information; (b)licensing and accreditation of enterprises involved in designing and repairing of medical equipment and items, implementation period - June, 1996; (c) licensing of medical equipment in- service staff, implementation period - October, 1996; (d) developing of data base and State Register for medical equipment and items, implementation period - May, 1997; (e) developing of strategic planning system for upgrading of medical technologies in Health care, implementation period - March, 1996; (f) developing of competitive bidding system for procurement guidelines for federal and municipal medical programs, implementation period - March, 1996; (g) improvement of the capacity of the Laboratory for Quality Control; (h) performing extended registration of health care facilities with site visits and inspections and building-up a data basis on physical health resources; (i) licensing providers to perform clinical activities and creation of Annex A Page 7 of 10 a data basis with registered doctors and nurses; (j) preparation and approval of standards for generalists and GP's practice and other specialists; (k) support to health care institutions willing to develop internal quality assurance programs. 12. Benchmarks of Policy Action: (a) Publication of an executive order of the MoH on the structure of the Pharmaceutical Department by March, 1996; (b) licensing of 90% of pharmaceutical storehouses and retailers by July, 1997; (c) publication of the first Georgian Pharmacopoeia by July, 1998; (d) first license issued to a physician by July, 1996; (e) Parliamentary approval of the Law on Medical Education, including limits to new entrants and rules for the accreditation of medical faculties and staff by March, 1996; (f) creation of the Division for Medical and Nursing Licensing, in the National Center for Health Management (NCHM) by April, 1996; (g) publication of a conceptual paper on the licensing of health professionals by NCHM staff by July 1996; (h) licensing of 50% of Georgian physicians by October, 1998. (d) Downsizing Health Facilities 13. Major Initiatives Currently Underway: With the support of the World Bank Municipal Infrastructures Rehabilitation Project (MIRP) and the European Community Humanitarian Organization (ECHO), a start has been made in the winterization of several hospital facilities. The rayonal hospital in Chiatura could be a good example of Bank's seed money to start an operation that will be co-financed by the local municipality. However, this effort needs to be combined with the down-sizing of the public sector health facilities. The following initiatives will contribute to the downsizing: (a) the health sector privatization program, started in September 1995, will dramatically reduce the quantity of the public sector facilities and staff; (b) the bed needs quick assessment, prepared by the World Bank for the Georgia Health Project, provides a rough indication of the excessive number of beds, and serves as a guide for down- sizing; (c) the separation between financiers and providers, initiated on August 10, 1995, pays hospitals and polyclinics on the basis of services provided rather then supply norms. This creates incentives to reduce excessive and inefficient services by closing or merging; (d) the enormous amount of needed rehabilitation and the preliminary cost-assessment performed by'the World Bank call attention to the high cost of rehabilitation and to the need to target scarce resources to those institutions that are reducing their dimension, merging themselves and adopting energy and other input efficiency measles. 14. Planned Activities: (a) the merging of Kutaisi Maternity and Pediatric Hospital into a single building, to be partially rehabilitated by the World Bank Project, will serve as a demonstration of scaling-down and rationalizing facilities and modernizing hospital management; (b) a similar experience will be performed in Tbilisi, in a location to be designated, where a joint residency program for maternal and pediatric care will take place; (c) the preparation of standards for the reprogramming, rehabilitation and maintenance of health facilities, under a possible second World Bank project. 15. Benchmarks of Policy Action: (a) the number of active and stated hospital beds will be reduced by 15% by December 1996 and by 25% by December 1997; (b) the rehabilitation and equipment modernization of Kutaisi Pediatric Hospital, including the Kutaisi Maternity will be completed by July 2000, according to a schedule prepared through the Georgia Health Project; (n) The revised bed needs assessment for the whole country and the publication of new Annex A Page 8 of 10 programming and construction norms for health facilities will be done by the July 1998, in useful time to prepare of a second Georgia health project. (e) Human Resources Development 16. Major Initiatives Currently Underway. The National Center for Health Management (NCHM) was established in March 1995 with a mandate to coordinate medical and nursing education, create a system of licensing and accreditation for professionals and training institutions, develop post-graduate medical and nursing curricula, create standards for specialization, and develop health sciences research. The Center has spent most of the year performing institutional development tasks. Five new heads of department have been recently appointed, and the following has been accomplished: new legislation on medical education was drafted creating an accreditation system for schools and limiting first year entrants; new residency programs were created for three needed specialties, Pneumology, Radiology and Psychiatry, following European Union (EU) guidelines; and teams of experts were appointed to review curricula in sixty medical specialties. The NCHM was also instrumental in the first steps to create an association of Public Health and an association of General Practitioners. The association of Family Doctors has been established recently. The decision was made to locate the Center for Continuing Education (CCE) in the NCHM and a functional program was prepared around four major areas of training: Health Care Management, Family Practice, Public Health and Nursing. A coordinator and a team of experts will be appointed for each area. 17. Planned Activities: (a) the panels of experts will prepare curricula and licensing procedures for all medical specialties, by October 1996; (b) legislation on accreditation of medical and nursing training institutions, licensing and accreditation and limits to new entrants in schools will be presented to the new Parliament; (c) residency programs will be prepared for all medical and nursing specialties; (d) heads and technical experts teams will be appointed for each one of the four continuing education areas; (e) the design of the refurbishment of the CCE facilities and the procurement of civil works and equipment will be prepared; (f) a work program for the first two years of the CCE's activity will be prepared. 18. Benchmarks of Policy Action: (a) the NCHM will be full operational by January 1997; (b) an architectural brief for the refurbishment of the CCE will be ready by March 1996, to be followed by procurement of civil works and goods, in order to have rehabilitation finished by December 1996; (c) the first training course in hospital administration will start by January 1997, the first training activities in Public Health and General Practice and the first post-graduate training course in Nursing will start by April 1997; (e) the evaluation. of the first two years of activity of the NCHM will take place by December 1999. (f) Privatization and Self-Management 19. Major Initiatives Currently Underway. The privatization of health care institutions will be performed by the ministry in charge of privatization. It will take 7% of the gross income, one per cent will be the estimated preparation cost and the State Health Fund will collect 92% of the income generated. The first phase of privatization will target 714 institutions (Group A: dental clinics and pharmacies). The announcement and the list of institutions to be privatized has been already published. Auctions will start by October 1995, after allowing 20 days for staff Annex A Page 9 of 10 applications. The second group of 500 institutions (Group B: polyclinics) will be announced by November, 1995. The privatization of the third group of institutions (Group C: small hospitals) will be announced by April-March, 1996. 20. Benchmarks of Policy Action. (a) 50/a of the institutions listed under Group A will become private by July, 1996, and 80% by July 1997; (b) 40% of institutions listed under Group B will become private by October 1996 and 70% by October 1997; (c) 25% of institutions listed under Group C will become private by December 1996 and 50% by December 1997; (d) institutions unable to get bids for privatization will be liquidated by July, 1998. (g) Basic Package and Targeting the Poor 21. Major Initiatives Currently Underway. The basic package has been implemented since August 10, 1995. Simultaneously, the municipal basic package was launched, financed by a municipal contribution proportional to the number of inhabitants, to cover acute care activities. The implementation started in the three major cities and corresponding regions of Tbilisi, Kutaisi and Batumi, and will cover all the twelve health regions before December, 1996. Tbilisi Medical Academy Clinic and several specialty hospitals in Tbilisi have set aside a total of 275 beds to treat the most vulnerable groups: single unemployed mothers with three or more children; single pensioners with monthly pensions below 6 Lari and single invalids. Other institutions, like the Veterans Hospitals are financed by the State to continue providing care to their clients. Besides, together with Ministry of Social Welfare, criteria for identification of vulnerable groups has been improved and all these people will receive special certifications and get free medical care in any medical institution. 22. Planned Activities: (a) a revision of the basic package is expected to be performed at the end of the first six months of implementation; (b) to avoid the stigma effect, the Government is planning a quota system for eve hospital to provide care for patients unable to pay for their health bills outside the basic package of care; (c) improved means testing with a World Bank supported household income survey planned for 1996. 23. Benchmarks of Policy Action: (a) a revision of the basic package occurs by February 1996, and annual revisions take place in August 1996 and August 1997; (b) a second willingness- to-pay survey, replicating the one prepared by UNICEF in August-September, 1995 is initiated in September, 1998, to provide information on poverty evolution and its implications on health. (h) Modernization of the Health Financing System 24. Major Initiatives Currently Underway. The State Health Fund was created and installed in August 1995. It has been collecting financial resources from the State Budget and payroll taxes, taxes on harmful products and will collect income from privatization in the coming future. In September, 1995, it will begin to pay for hospital invoices presented through the banking system. It has been decided in prospect to transform the State Health Fund into State Medical Insurance Company. 25. Planned Activities: (a) for monitoring the financial sustainability of the. Fund, baseline information on health service expenditure needs to be collected for August 1995 and compared Annex A Page 10 of 10 with corresponding data from six and twelve months later; (b) creation of a basic financial information system on the Health Fund; (c) statistical assessment of the provider's invoicing pattern, to detect potential provider's induced demand and fraud; (d) the creation of providers' accounting system for the generation of true costs per diagnosis, and the design of a management information system to be completed under the Georgia Health Project; (e) installation of the regional health branches. 26. Benchmarks of Policy Action: (a) a basic and computerized financial information system will be designed and in place in the State Health Fund by October 31, 1996; (b) the first statistical assessment of payments profile, done by the State Health Fund, will be performed by April 1996, to be repeated by August, 1996 and August, 1997; (c) by the end of 1996 the State Health Fund will be transformed into State Medical Insurance Company; (d) Regional Health Funds will be operational in the regions of Tbilisi, Rustavi and Batumi by January, 1996, and in the remaining health regions by the end of 1996; (e) a hospital accounting plan, implemented on a pilot basis in one region, will provide the first real costs of care by March, 1997, in three additional regions by March, 1998, and in all the health regions by March 2000; (f) the initial health financing information system for the Fund will be enlarged and transformed into a management information system, to become operational in the Tbilisi Region by March, 1999. Avtandil Jorbhadze David Jakobi , Minister of Health Minister of F ~~Y6, ANNEX B Page 1 of 13 HEALTH STATUS: KEY ISSUES AND HEALTH DETERMINANTS A. Demography 1. The population of Georgia is currently about 5.4 million with an average density of 73 persons per km2. Fifty-six percent of the population is urbanized and one third of the poulation lives in the four largest cities: Tbilisi (1,300,000), Kutaisi (230,000), Batumi (200,000) and Rustavi (180,000). Georgia is a heterogenous society, comprising ethinic Georgians (70% of the population in 1989); Armenians (8%), Russians (6%) and Azeris (6%). Recent civil wars left almost 5% of the population as refugees (270,000). 2. The population had been relatively unstable over the last decade. The civil wars and declining socio-economic status have resulted in emigration and a dramatic fall in fertility (from 89,000 births in 1989 to 64,000 in 1993) which, when accompanied by increasing mortality, have contributed to an overall decline in population since 1991. Although the Soviet Union had undergone the demographic transition, in Georgia the elderly (65 and older) made up only 9.6 percent of the population while children (under 16) were 24.5 percent. B. Health Status 3. Information on recent trends on health status is difficult to obtain. The statistics are neither reliable nor consistent. This is characterized by contradicting information about the same indicator obtained from different sources, and low levels and unrealistic decline in several health status indicators. For example, very low cancer mortality figures compared to other countries are a likely indication of registration and/or reporting problems. The same applies to accidents and poisonings. Information gaps make it difficult to evaluate the deterioration or improvement of health status, to plan and evaluate public health programs, estimate the costs of basic benefits package, etc. The following are likely to be the causes of unreliable and inconsistent information: (a) social and economic disruptions; (b) duplication of data collection and data processing; and (c) information was not used for decision-making. 4. From the available information, the health status of Georgia's people appeared to compare well with the rest of the countries of the FSU. There were significant improvements between 1950 and 1970. Infant mortality was greatly reduced, and preventable communicable diseases were rare. However, since mid 1970s, like elsewhere in the FSU, the health status stagnated and started to deteriorate in late 1980s. This dynamic is partly due to emerging economic difficulties, but also a result of failing to recognize new health problems, in particular deteriorating adult health. Socio- economic disruption and civil war associated with the disruption of the Soviet Union have only sped up the deterioration of health status. Old problems of communicable diseases have re-emerged, and combine now with new health challenges, aggravated by the society's complete inability to respond. 5. Life expetany at birth in 1990 was 76.1 years for women and 68.7 years for men. For both sexes, life expectancy was higher (except for Lithuania in the case of women) than in any other FSU republic. There are no data available on the recent dynamics in life expectancy. The recent rise in overall mortality and comparative data about recent trends in other FSU countries make it reasonable to ANNEX B Page 2 of 13 assume declining life expectancy in Georgia.' Main causes of death are cardio-vascular diseases, neoplasms, and deaths from external causes (Tables 1-4, Figure 1). 6. The following are the key issues related to health status which Georgia faces today: (i) a deterioration of maternal and child health; (ii) recent re-emergence and increase of communicable diseases such as tuberculosos, AIDS, and STDs; and (iii) a hidden pattern of non-communicable diseases including high and rising cardio-vascular mortality, neoplasms, and accidents and poisonings. Deteriorating maternal and child health. 7. Infant mortality is more than twice as high in Georgia than in high income countries. In 1994, the official figure was 17.8/1,000 live births. Adjusting this figure for the WHO definition of IMR, the estimate would be 21.4/1,000. Given the problems with the credibility of information, this figure can still be an underestimate. IMR improved remarkably over the last 20 years (38 percent), but remains still more than two times higher than higher income countries. The WHO target for IMR for Europe is 20/1,000. IMR showed a net increase of 13 percent during the last three years. (Table 5). 8. In 1992, the main causes of infant mortality were perinatal conditions (5.6/1,000 live births, 38 percent of infant deaths), respiratory diseases (2.8, 19 percent of infant deaths), and infectious diseases (1.8, 12 percent of infant deaths). Twenty-seven percent of infant deaths were classified under 'other and ill-defined' causes, suggesting poor diagnosis and registration practices, as well as that the main causes of death may be even more important than stated. Two-fifths of infant deaths occurred in the first seven days after birth, and from these, 80 percent occurred in the first three days. These statistics clearly indicate inadequate health services for the perinatal period (Tables 6 and 7). 9. IMR is higher in towns than in villages. Gori, Batumi and Caducei had an IMR respectively of 56, 35, and 24 in the period from 1991 to 1993. Reducing the rates in Gori and Caducei to the national average would reduce IMR at the national level by one-sixth. 10. Incidence of acute respiratory infections (ARI) and diarrheal diseases is very high, according to MoH data. Incidence of diseases that are a target of the Expanded Program on Immunization (EPI) (Table 4) have been increasing lately. Outbreaks of measles (180 cases) and diphtheria (+100) occured in Adjaria in 1994. There are cases of diphtheria all over the country and across all age groups, suggesting long-term breaks in immunization coverage. 11. In 1991, only 30 percent of newborns were breastfed until the sixth week of life, 22 percent at 3 months, and 3 percent at six months. There is malnutrition among under-five children, as well as micro- nutrient deficiencies. 12. Maternal mortality was 39 per 100,000 live-births in the period from 1990 to 1993 (Table 8). This indicator is 2.5 times higher than the WHO/EURO target (15/100,000 births), and 4 to 20 times higher than in high-income countries. As the absolute number of deaths is small (an average of 31 cases per year in the period 1990-93), it is difficult to interpret annual variations and to predict future ratios. However, maternal mortality is expected to further increase as a result of the rise in home 1 In Russia, male life expectancy declined from 63.5 years in 1991 to 62.0 years in 1992 attributed mainly to the increase in mortality among adult male population; the dynamics of female mortality have been less dramatic but many age-specific death rates rose by more than 50% during the same period. ANNEX B Page 3 of 13 deliveries (representing almost 10 percent of all deliveries in 1992, and probably more in 1993 and 1994), and the diminishing capacity of health services to deal with delivery complications. 13. The main causes of maternal death are hemorrhage (33 percent of all maternal deaths), infection (15 percent), and pulmonary embolism (12.5 percent). Abortion and its complications accounted for about 10 percent of maternal deaths in the period 1990-93, yet of the 22 deaths that occurred in 1993, none was due to this cause. The two major causes indicate again poor quality of health services. 14. The abortion ratio to live births varies with the source reporting, from 0.4 to 0.7 (for reference, in the UK it is 0.2), but both the Ministry of Health and the Zhordania Institute of Human Reproduction report declines in the number of abortions in the period from 1990 to 1994 (Table 9). Abortion by vacuum-aspiration (VA) and modern contraception are available in Tbilisi, at the Institute of Human Reproduction, but abortion by dilatation and curettage (D&C) is still four times more common in the country than abortion by VA. Illegal abortion (performed outside the health services) is reported to be unavailable. An abortion costs between 20,000 and 50,000 rubles (approximately US$7-17), while the insertion of an IUD costs 30,000 rubles (US$10). Replacement of D&C by VA may not constitute a problem, as soon as equipment is available. However, replacement of abortion by free, modern methods of contraception may face the opposition of physicians now charging fees for abortions. 15. Contraception prevalence also varies with the source reporting, from 8 to 35 percent in the country, and from 25 to 55 percent in Tbilisi. Furthermore, according to UNICEF (1994), there is a rise in fertility among 15-19 years-old, as well as a rise in extra-marital births (from nil in 1975 to almost a fifth of all births in 1990), suggesting a need for family planning promotion among younger groups. In private pharmacies, a box of oral contraceptives costs US $0.35 (1 month) to $1.70 (3 months), and one condom costs between 2 and 4 cents. Increase in Communicable Diseases 16. Vaccine preventable diseases. Since October 1993, 292 cases of diphtheria with 42 deaths have been registered. Both children and adults have been affected. Only sporadic cases of diphtheria have occurred in the 1980s. Since 1990s, the incidence of pertussis has increased to 5.02/100,000. The incidence of meases in 1993 was 3.5 times higher than in 1992. The outbreak of epidemics can be attributed to deterioration of immunization coverage. Tuberculosis is also an increasing problem (see para 18). Lack of vaccines, distribution problems, and the appropriate choice of vaccine type have contributed to the inadequate immunization coverage. See tables 10 and11. 17. Acute respiratory infections (ARI) contribute 43% of child mortality rates under 1 year old. Diarrhoeal diseases are another main contributor to children's morbidity and mortality. Due to poor diagnostic capacity, about 33% of cases remain unsolved. It is estimated that 57% of mortality from diarrhoeal diseases could be avoided by timely and adequate medical attention. 18. Tuberculosis (TB). Recent trends show a sharp increase in the incidence and prevalence of TB. The incidence was 42.6/100,000 in 1993, going up from 28.3/100,000 in 1990 (Table 12). Prevalence was 246.3/100,00 in 1993 compared to 140.7/100,000 in 1990. The mortality rate of 5.3/100,000 is considerably higher than that in West-European countries where in 1990, the highest rate of 2.8/100,000 was in Portugal.2 The existing Georgian rate is likely to be underestimated, as home 2 Source: Tubercle and Lung Disease (1994) 75, 400-416. ANNEX B Page 4 of 13 deaths may not have been reported and properly registered. Incidence of TB-associated meningitis, an indicator of the quality of early detection and effective treatment of tuberculosis, has increased from 10 cases in 1990 to 32 cases in 1993. Worsening socio-economic conditions, internal migration and the low standard of living conditions of displaced population (family TB), drug-resistant strains, and the collapse of the formal health care delivery system are cited as principal causes of the worsening TB situation. Immunization coverage of children that used to be in the range of 95-98% dropped to 78% in 1991, 0% in 1992, and 80% in 1993. The Mantoux test for early detection (formerly routine practice in the FSU) is no longer performed because of its high cost. 19. WHO is supporting Georgia in the control of the TB problem. Georgia has adopted a 5-point policy program proposed by the WHO consisting of the following components: (1) Government's commitment to national TB program; (2) passive case detection; (3) standardized definitions of TB cases for treatment options; (4) system of regular drug-supply; and, (5) standardized recording and registration procedures. 20. Sexually-transmitted diseases (STDs). Incidence of sexually-transmitted diseases (STDs) has been increasing lately, with Georgia having the highest incidence of syphilis (13.4 per 100,000 population in 1992) among the republics of the former Soviet Union. It is estimated that the incidence of syphilis in 1994 was 1,800 cases, an increase of 100% from 1993. The incidence of other STDs (gonorrhea, chlamydiosis, mycoplasmosis) show an increasing trend over the past 3 years. Worsening socio-economic conditions have created an increase in skin diseases (scabies and mycoses). 21. AIDS. By January 1, 1995, 18 HIV-positive individuals were registered. AIDS has been diagnosed in 4 cases, 2 of whom have died from AIDS-related diseases.3 22. Other. During one week in November-December 1994, there was an outbreak of 100 cases of botulism. The source was imported smoked fish from Armenia. This outbreak reflects relaxed regulation for food markets. An increase has been observed in the incidence of Hepatitis-B in the population age group 15-35 years old. This increase is being attributed to increase in drug-abuse. An estimated 200,000- 250,000 people use drugs. A survey performed by the national AIDS center estimates that 72% of intravenous drug users occasionally/regularly use non-sterilized needles.4 Hidden Pattern of Non-Communicable Diseases 23. Cardio-vascular mortality is considerably higher than in developed Western countries but less than in other FSU republics (see table 4). Cardio-vascular diseases (CVD) accounted for 72% of total mortality in 1993, represented by an age-adjusted mortality rate of 730 per 100,000 population. Cardio- vascular mortality is up from 65% of total mortality, or 544.2/100,000 in 1990. The MoH has questioned the reliability of official figures citing the problems associated with reporting (validity of death certificates). Nevertheless, the trend correlates very well with similar dynamics in Russia where cardio- vascular mortality increased from 617.4 to 768.9 per 100,000 between 1990 and 1993. Socio-economic crisis, deterioration of health services, lack of drugs and related high out-of-pocket costs are likely contributors to the recent increase in this mortality rate, in particular affecting the system's ability to cope with chronic cardio-vascular diseases and responses to acute illness episodes. 3 Source: National AIDS Prevention and Control Programme 4 Source: National AIDS Prevention and Control Programme ANNEXB Page 5 of 13 24. Neoplasms. The official statistics appear to be unreliable and inconsistent, reflecting declining official cancer mortality rates. Lung cancer for men and breast cancer for women have sharply increased during the last two decades. Smoking and high concentration of carcinogenic agents in many mills and factories in Georgia are likely factors in oncogenesis.5 A perceived problem related to female reproductive system cancers in Georgia can be attributed to insufficient secondary prevention (lack of screening, early detection, and effective primary treatment). See tables 13 and 14, Figure 3. 25. Accidents and Poisonings. The official mortality data from accidents and poisonings are likely to be underestimated. Given the traffic patterns and the lack of enforcement of safety standard procedures, the resulting mortality and disability have to be close to the magnitude of other FSU countries (Table 11). Reporting and registration problems may contribute to the underestimation for two reasons: (i) mortality from traumatism is registered according to anatomical location, not by cause; and (ii) there is no link between the Ministry of Interior's register of traffic accidents and the MoH information on related morbidity and hospital and clinic admissions. 26. Psychiatric Morbidity. Incidence and prevalence of psycho-somatic diseases have been stable: in 1993, there were 15,208 cases of schizophrenia and 8,632 cases of endogenous psychotic conditions. New problems in psychiatric morbidity are post-traumatic stress syndrome and neurotic disturbances, prompted by the worsening socio-economic situation and wars. The exact figures are not known because professional attention is being offered anonymously, because of cultural reasons and considerable internal migration of population. C. Health Determinants 27. Preker and Feachem6 suggest that the health gap between Central and Eastern European countries and Western countries may be partly due to lifestyle risk factors, and partly to differences in wealth and associated socio-economic factors, environmental pollution and occupational risks, and deficiencies in the preventive and curative health care services. The mortality gap between Georgia and high-income countries may steeply increase in the near future, due to aggravation of all mentioned factors. 28. Socio-economic status. GNP per capita decreased 48 percent from 1991 to 1992, with 85 percent of families living under the Georgian poverty line in 1993, according to the Socio-Economical Infornation Committee. In 1993, the average monthly salary was US$ 0.66. There is evidence, today, that many poor people do not have access to health services. High out-of-pocket costs of health services and drugs discourage people from using health services. The 270,000 thousand refugees are a particularly disadvantaged social group. Almost three-quarters of the displaced population have no income. Families suffer from stress, poor living conditions in temporary housing, and organic diseases like family tuberculosis and parasites are common. Access barriers to health services (informal fees) have deferred many from seeking medical attention for their health problems. 29. Extended family plays an important part in Georgian society, and has proved to be one of the coping mechanisms with harsh-socio economic realities. This is one of the reasons why symptoms of 5 Source: National Cancer Control Programme. Oncology Research Institute. 6 Source: A.S. Preker and R. Feachem, "Searching for the Silver Bullet: Market Mechanisms in the Health Sector in Central and Eastern Europe," presented during the Conference on Health Care Reform Strategies in Central Europe, Prague, November 10-12, 1993. ANNEX B Page 6 of 13 social febrility like alcoholism, juvenile crime, divorce, suicide and self-inflicted injury have occurred in much lesser scale than elsewhere in the FSU countries during recent socio-economic decline. 30. Environment. There is little information on environmental impact on health in Georgia. The country suffered from some fall-out of the Chernobyl disaster, and this has been blamed for significant increases in the incidence of pregnancy anemia, diseases of the endocrine system, diabetes mellitus, blood diseases and malignant tumors. No evidence has been produced to substantiate these claims. Tbilisi has a serious nitrogen dioxide, sulfur anhydride, lead and cadmium air-pollution. The collapse of public services has resulted in uncollected garbage and compromised water and sewage systems which pose a potential health hazard for the population. 31. In the past, drinking water was widely accessible. In 1990, 6 percent of water samples failed to meet chemical standards, and 16 percent failed biological standards. Since then, the situation has worsened, mainly because of poor maintenance and lack of electricity to operate pumps. Western Georgia appears to be the most affected region. Reduced access to continuous and safe water has been partly responsible for increased incidence of water born diseases, including diarrhea, dysentery, hepatitis A, and other infections associated with lack of hygiene, such as scabies. 32. Nutrition. The diet during the FSU era was rich in sugars and starches. About one-third of population was reported to be overweight. Since 1991, a decline in quality and quantity of Georgian diet has been observed. Consumption of bread, potatoes and oil has remained almost constant in absolute terms, whereas consumption of animal protein and dairy products has declined sharply. In 1993, daily consumption of total and especially animal proteins was below recommended standards (57 g of total protein compared to 88 g standard, and 9 g of animal protein compared to a standard of 46 g). 33. Micro-nutrients. About 1.5 million people live in mountainous areas suffering from endemic iodine deficiency. No complete data exist on the incidence of iron deficiency disorders. Small-scale studies by the State Medical University suggest that up to 60 percent of children in endemic areas have pathological conditions of various degrees. Economic hardships do not allow the import of iodized salt from Armenia nor iodine tablets from Russia. 34. Lifestyle choices. There are no recent data about cigarette consumption, but it is assumed that this practice is highly prevalent among men (60-80 percent), and increasing among women. In the 1960s, 78.5% males and 7.5% females smoked; in the 1980s the respective figures were 68-72% for males and 8-16% for females.7. Georgians are smoking United States brands, that are aggressively marketed both in urban and rural areas. It is also assumed that drug addiction is increasing, specially among young people. 35. Health system. The ability of the health care system to respond to the country's worsening health situation has been seriously compromised. The access to health services is not universal, but depends on the ability to pay informal fees for medical services, drugs and other essential supplies. Lack of resources and inadequate management practices have resulted in deteriorated buildings and non-functioning equipment. Standards for professional expertise are lacking, and patients' perception of the quality of care received is low. The health care system has been oriented towards curative care, infrastructure and professional expertise for cost-effective primary care interventions is lacking. More detailed analysis of the health care system is presented in another annex. 7 Source: Oncology Research Institute and Institute of Cardiology data. ANNEX B Page 7 of 13 D. Conclusions 36. There appears no room for the health system to contribute significantly to the improvement of the health status of the Georgian population. This should be done by ensuring access to basic health services for all social groups, reorienting the system towards cost-effective primary care interventions, increasing efficiency of the system through proper incentives and improved management practices, and ensuring standard quality for health care provision in Georgia. 37. In order to design, implement and evaluate interventions intended for the improvement of health status in Georgia, several actions need to be taken. There is a need to consolidate and improve data collection, processing and utilization functions; capacity to control non-communicable disease needs to be enhanced allowing better understanding of morbidity and mortality patterns and link them to risk factors. This would provide adequate estimates of the burden of disease in society, and help to design effective health promotion programs. 38. The recently-established National Health Management Center (NHMC) has an important objective to consolidate and improve the national health information system. This effort is intended to coordinate the activities of the following institutes: Institute of Informatics, Institute of Medical Information and National Medical Library, Department of Statistics in the MoH, and the Sanitary-Epidemiology System. TABLES AND FIGURES Table 1: Life Expectancy in Georgia Life Expectancy 1980 1985 1990 1991 1992 Total -- -- -- 73.0 72.9 Males 67.0 67.4 68.4 69.0 68.9 Females 74.8 75.1 76.1 77.0 76.5 Gender gap 7.8 7.7 7.4 8.0 7.6 Souk=: Ministry of Health, WDR 1993 and 1994, WHO 1994 Table 2: Main Causes of Death: Age Adjusted Mortality Rates per 100,000 population Cause of death 1980 1985 1990 1992 1993" CVD 540.3 566.3 544.2 676.3 730 Neoplasms 91.5 97.9 100.0 97.3 90 Respiratory diseases 74.7 62.1 43.0 28.5 30 Accidents/poisonings 57.9 48.2 55.6 63.6 70 Digestive diseases 37.1 34.8 31.1 31.7 40 Infectious diseases 17.5 23.1 19.7 19.6 20 Other 38.3 52.2 47.9 45.9 30 Total 857.3 884.6 841.5 962.8 1010 Saurc MoH, 1994; State Bureau of Statistics, 1995 a Rounded figures were presented by the State Bureau of Statistics ANNEX B Page 8 of 13 Table 3: Main Causes of Death: 1980-1992 (percent) Cause of death 1980 1985 1990 1992 1993 CVD 63.02 64.02 64.68 70.24 72.28 Neoplasms 10.67 11.07 11.88 10.11 8.91 Respiratory diseases 8.71 7.02 5.11 2.96 2.97 External causes 6.75 5.45 6.61 6.60 6.93 Gastro-intestinal diseases 4.33 3.93 3.70 3.29 3.96 Infectious diseases 2.04 2.61 2.34 2.04 1.98 Other 4.47 5.90 5.69 4.77 2.97 Source MoH, 1994 Table 4: Main Causes of Death: age adjusted mortality rates per 100,000 population, international Comparisons b Cause of death Georgia Russia Estonia Germany USA Japan CVD 676.3 768.9 752.5 544.2 378.3 245.6 Neoplasms c 97.3 206.9 218.1 244.7 228.3 189.4 Respiratory diseases 28.5 74.5 30.2 58.7 40.6 68.8 Accidents/poisonings 63.6 227.9 152.2 51.6 60.9 45.5 Digestive diseases 31.7 38.3 28.0 27.8 13.6 16.7 Infectious diseases 19.6 17.3 8.9 8.5 12.4 10.0 Other 45.9 276.2 112.2 bGeorgia, Estonia 1992; Russia 1993; Germany 1990; USA 1989; Japan 1991 Georgia cancer mortality data differ from those in Table 13, both sets of information were provided by the MoH St c: The World Bank Table 5: Infant Mortality (per 1,000 live births) IMR 1970 1980 1990 1991 1992 1993 Official 25.3 25.4 15.8 13.8 12.6 17.8 Corrected* na na 19.0 16.6 15.2 21.4 Corrected IMR estimated according to WHO definition of live-birth by UNICEF, 1994 Source7 Georgian Statistical office and Ministry of Health ANNEX B Page 9 of 13 Table 6: Infant Mortality By Cause (per 1,000 live births): 1960-1992 Cause 1960 1970 1980 1990 1991 1992 Respiratory diseases-total 11.5 11.5 10.1 4.5 3.0 2.8 pneumonia 9.3 9.9 9.0 3.5 2.0 1.8 acute respiratory infection 2.2 1.6 1.1 1.0 1.0 1.0 Perinatal conditions 5.0 5.2 4.5 6.8 6.5 5.6 Infectious and parasitic-total 4.5 3.3 3.7 2.0 2.0 1.8 intestinal infection 4.2 2.9 2.6 1.0 1.1 0.8 sepsis 0.3 0.4 1.1 1.0 0.9 1.0 Trauma and poisoning 1.2 0.8 1.2 0.4 0.6 0.6 Other and ill-defined 13.1 3.8 2.6 1.4 3.4 4.0 TOTAL 35.3 24.6 22.1 15.1 15.5 14.8 Source: "Children and Women in Georgia: A Situation Analysis." UNICEF, 1994 Table 7: Perinatal Mortality (per 1,000 births) a Perinatal 1970 1980 1990 1991 1992 1993 Mortality Official 10.0 13.0 14.2 13.7 13.9 na Corrected b na 16.0 25.9 18.8 17.5 na perinatal mortality accounts for death during the first 7 days of life b corrected estimate to WHO definition of live-birth Sources: Georgian Statistical Office and.Ministry of Health Table 8: Maternal Mortality (per 100,000 births) Maternal 1980 1990 1991 1992 1993 1990/93 Mortality Ratio 47.0 41.0 33.0 47.0 34.0 39.0 Cases 41 38 30 34 22 31 Soura Ministry of Health and UNICEF, 1994 ANNEX B Page 10 of 13 Table 9: Abortion (ratio to live births and absolute numbers) Abortion 1970 1980 1990 1991 1992 1993 Ratio 0.55 0.99 0.66 0.66 0.70 0.70 Number 49,614 88,563 61,258 59,384 50,748 45,131 % Mini- -- -- na 20 25 23 abortion Source: Ministry of Health and UNICEF, 1994 Table 10: Immunization Coverage at One-year of Age (percent) Immunization 1990 1991 1992 BCG 82.5 65.0 60.0 DPT 65.4 45.0 40.0 Measles 72.5 65.0 60.0 OPV 83.5 45.0 40.0 Source: Ministry of Health ANNEX B Page 11 of 13 Table 11: EPI Target Diseases: Number of Cases Reported 1959/61 - 1989/91 Disease 1959/61 1969/71 1979/81 1989/91 Polio 80 5 18 37 Diphtheria 1,549 6 2 21 Pertussis 5,244 832 396 1,045 Tetanus na na na 3 Measles 16,057 8,617 2,572 873 TB na na na 9,200 S Ministry of Health, WHO, and Republican Institute of Tuberculosis, in UNICEF, 1994 Table 12: Active Tuberculosis in Georgia per 100,000 population. 1990-1993 Indicator 1990 1991 1992 1993 Incidence 28.3 28.2 54.8 42.6 Prevalence 140.7 140.8 194.5 246.3 Mortality 4.9 5 5.1 5.6 TB meningitis 10 10 28 32 Surce: National Institute of Pulmonology, 1995 Table 13: Cancer Mortality per 100,000 population: 1970-1993 Location\Year 1970 1980 1990 1993 Number of cases 4,950 5,324 6,990 3,637 Per 100, Total 105.6 105.6 129.1 70.5 Oesophagus 2.4 1.6 1.2 0.4 Stomach 15.7 11.0 11.3 4.9 Bronchi, lung 11.3 14.8 16.6 9.6 Breast 11.7 14.8 20.4 11.8 Cervix 8.2 6.3 6.2 3.8 Lymph and blood 5.8 4.6 8.7 4.7 Sour: MoH, 1995. ANNEX B Page 12 of 13 Table 14: Cancer Mortality, Percent Distribution of Main Sites for Males and Females: 1975 -1990 Crude death rates per 100,000 1975 1990 1975 1990 Malles Females lung 20.8 30.6 breast 25.0 38.4 stomach 15.8 14.8 cervix 12.4 11.9 blood 7.1 11.0 skin 12.3 12.9 skin 10.2 10.7 stomach 10.5 5.8 larynx 5.4 10.0 ovaries 4.3 7.6 Source: Tbilisi Oncology Research Center, 1995 Figure 1 Main causes of death 1980-1993. Source: Ministry of Health, 1994, State Bureau of Statistics, 1995. 1000.0- Other 800.0 . * kifectious diseases 8 Digestive diseases 600.0 3 Accidents/poisonings 400.0 o Respiratory diseases o Neoplasmn 200.0 ECVD 0.0 , 1980 1985 1990 1992 1993 Year ANNEX B Page 13 of 13 Figure 2 Mortality breakdown (percent) 1992. Infectious Gastro-intestinal diseases Other diseases (3%) (2%) (5%) Ext. causes (7%) - Res piratory diseases (3 Neoplasms (10%) CVD 70% Figure 3 Cancer mortality: 1970-1993. 25.0 140.0 0 20.0 120.0 0 Oesophagus 100.0 -x Stomach 015.0 x .0 Bronchi, lung 0.0x _ x 60.0 E Breast 10.0S U ~ +Cervb( i- - 1 (3 Total (sec.Y-axis) 0.0 =--Y 0.0-- 1970 1980 1990 1993 Year Annex C.1 Page 1 of 6 HEALTH PROMOTION AND DISEASE PREVENTION' A. Objectives 1. Worsening adult health is a major factor in the decline of the health status of the population of Georgia. Current trends in lifestyles and changes in social and physical environment will contribute to the increase of health problems and deaths markedly by the year 2000 if vigorous measures in promoting and protecting health are not applied. More than 430,000 disability adjusted life years (DALYs) are lost per year to ischemic heart disease, lung cancer, chronic obstructive pulmonary disease, cerebro-vascular disorders, and traffic accidents. 2. There is an urgent need to establish health promotion and disease prevention programs. Community-based inter-sectoral and vertical program activities to reduce health risks and to create availability of healthy choices and environment are called for. Special attention should be paid to school and youth programs. Estimated savings from the planned health promotion and disease prevention programs are nearly 200,000 DALYs at the cost of US$ 2.83 per DALY saved.2 3. The health promotion and disease prevention sub-component seeks to: (1) establish sustainable conditions for health promotion in Georgia, this will include policy development and creation of appropriate structures for administration, funding, program activities, research and evaluation; and (2) launch immediately programs in priority areas including reduction of tobacco consumption, cardiovascular disease prevention, traffic and occupational injury prevention, reduction of alcohol consumption and family planning. B. Supportive policies for health promotion 4. Long term and sustainable commitment. The Government of Georgia shares with its citizens the responsibility to promote and protect health and recognizes that the major benefits from health promotion will come from longer-term investments. Legislation is called for in many areas such as environmental control, food policy, and production and sales of harmful goods. In order to promote inter-sectoral coordination, a National Health Council should be formed, with representatives from all relevant ministries. In order to ensure sufficient allocation for health promotion activities and encourage innovative community initiatives, a Health Promotion Program (HPP) has been established. Government funding for the HPP will be mandatory and independent from political changes. Resources should be allocated on a rational basis to programs that address issues of greatest public health importance using strategies based on evidence. 5. Recognition of the social, economic and environmental determinants of health. The Government of Georgia recognizes the impact of access to education, inequality of income, deficiencies in housing and dangers in the physical environment on health. National health goals and objectives will be analyzed and documented. A comprehensive health promotion strategy will be developed and adopted 1 The sub-component draws on the work of Dr. Matti Rajala, consultant, and his Georgian counterparts Drs. Ramaz Urushadze and Archil Kobaladze. 2 See Annex D for more details on the Burden of Disease and Cost-Effectiveness Analysis, by Costa and Gouveia. Annex C.1 Page 2 of 6 involving actions directed not only to individuals, but also to the social and economic conditions that enable people to make health choices. This work will be coordinated by the MoH's Department of Public Health, and then discussed and approved by the National Health Council. Wide participation of all relevant sectors will be used to create, publish and disseminate A National Health Strategy document. The impact of different public policies on health should be systematically assessed and made explicit (e.g. taxation, housing, transportation). Analytical tools, such as an health impact assessment, will be developed. 6. The role of the Regional Health Departments is crucial in the development and coordination of health promotion activities. As the Government becomes increasingly decentralized, Districts may provide the best opportunity to develop and demonstrate practical models of health promotion. Considering the limited availability of resources and expertise, a step-wise model should be applied. Pilot projects in a number of regions and districts should be launched. Partnership with non- governmental organizations in policy development, program development and delivery will also be encouraged. C. Sub-Component Description Department of Public Health 7. A Department of Public Health (DPH) has been established at the Ministry of Health. The Department has responsibility for monitoring and analyzing the health status of the population (both communicable and non-communicable diseases), managing the epidemiological surveillance and rapid response systems, advising the Government on public health policy issues, coordinating inter-sectoral health programs through the National Health Council, coordinating regional public health offices, and coordinating and analyzing the impact of health promotion and disease prevention programs. A Division for Health Promotion and Disease Prevention (DHPDP) has been established in the new Department of Public Health to provide leadership for health promotion and disease prevention in Georgia. The DPH will also oversee the Center for Health Information and Statistics, Center for Disease Control, and a number of other research institutes. 8. The DPH will have the following functions and responsibilities. a. Comprehensive analysis of needs and resources. MoH, advised by DPH will prepare a national overview of health issues. The DHPDP analyzes the range of possible health promotion strategies, and assesses resources available in order to shape health promotion policies and develop priorities for action. b. National monitoring of health behaviour. For sound policy-making and assessment of health gains, systematic monitoring of health behaviour should be started. Planning and implementation will be DHPDP's responsibility. c. Policy analysis and development. DHPDP/DPH advises MoH to develop and propose new policies within the health system, and assess the health-impact of policies, and propose modifications when needed. d. Alliance building for health. DHPDP supports the development of partnerships for health strengthening policy development and health promotion action at all levels. A national multi-sectoral committee will be established to coordinate and Annex C.1 Page 3 of 6 support health development. Special attention should be paid to youth and schools. e. Program support to serve regional and local activities. DHPDP will support regions, districts, community groups and practitioners either by the direct provision of financial (e.g. grants) and technical (e.g., information and consultations) resources, and by co-ordinating decentralized program implementation. f. Research and evaluation. Collection of information on the effectiveness of various health programs and strategies is essential to review work programs as well as making this information available. DHPDP will implement an ongoing evaluation of the program activities and will support research in this field. g. Human resources development. DPH and DHPDP will support education and training, and ensure access to information on best practice. They will also encourage rapid dissemination of practical experience. h. International relations. To ensure the exchange of knowledge and experience active international collaboration is needed. Georgia will participate in the work of WHO's European Committee for Health Promotion Development. DHPDP will assume national membership in the International Union for Health Promotion and Education. 9. Trained professionals at the national, regional and local levels are required to plan and implement health promotion programs. Foreign technical assistance in behavioral, political and social sciences and health economics will help to develop multi-disciplinary technical expertise in the DPH, where the first priority for training will be given. In the second phase, aided by the Center for Continuing Education, graduate, post-graduate and in-service training will be provided to professionals at the regional and local levels. Universities and health professional associations will also have a crucial role to play in health promotion. 10. Access to reliable epidemiological and health services data is required to monitor the health of the population and assess the progress of the various health promotion activities. In collaboration with the WHO, the project will support the creation of a health information system. The system will regularly monitor health status, health-related behaviours, and social and economic determinants of health, and issue annual reports to the MoH and the public. Priority Disease Prevention And Health Promotion Programs 11. In order to promote inter-sectoral collaboration and local initiatives in health promotion, a Health Promotion Program (HPP) has been established in Georgia as part of the Project. The Program will be financed by a mandatory allocation from the State Health Fund (1 % of annual income from the government budget, payroll tax, and tax on hazardous products) as well as by proceeds from the IDA credit. 12. Programs in cardio-vascular disease prevention, anti-smoking, injury prevention, and family planning will start immediately under the project. These program have the potential to save 200,000 DALYs by the year 2005. They are implementable, will produce measurable results, and will Annex C.I Page 4 of 6 provide health promotion with a high profile. Given the scarcity of resources, the programs will target areas with the potential for the greatest impact, such as schools. 13. Cardiovascular disease prevention. Cardiovascular disease (CVD) mortality is considerably higher than in Western Europe and North America, but lower than in other FSU republics. CVD mortality is by far the most important cause of death. Although the reliability of the available data is questionable, the trend is similar to Russia where CVD mortality increased from 617 to 769 per 100,000 between 1990 to 1993. In Georgia, CVD represented 72% of total mortality in 1993. Deterioration of the curative services may have contributed to the increase. In the long run, however, preventive measures will provide the only sustainable solution to the problem. Between 1996 and 1999, the project's health promotion and disease prevention programs target a 2% yearly reduction in incidence and mortality rates from ichaemic heart disease and 3% yearly reduction in incidence and mortality rated from cerebro-vascular diseases. 14. Smoking, high blood cholesterol, high blood pressure and excess body weight are the main risk-factors for high mortality and morbidity from circulatory diseases. These will be the areas for the public health intervention under the project. 15. National strategy for tobacco control. Tobacco smoking is the main risk factor for cardio-vascular disease. In Georgia, more than 50% of men smoke and rates amongst both men and women are increasing. As the markets in the industrialized western countries are shrinking, the trans- national tobacco companies have started to exploit FSU and CEE markets, further increasing the possibility someone will smoke. An effective tobacco control strategy will have the following components: (i) legislation restricting advertising and promotion of tobacco products, restricting sales to youngsters, and requiring warnings about the health effects of tobacco; (ii) economic policies which include progressive significant increases in sales tax on tobacco; (iii) "Smoke free" public policies, starting with the MoH, which emphasize that the right for smoke-free air is stronger than the right to smoke; (iv) health education in schools, targeting people before they start smoking; and (v) counselling and support for smokers who wish to stop. The project's target for the anti-smoking program is a 15% decrease in smoking prevalence by 1999. 16. Healthy nutrition. The Government needs to develop a national food policy which is consistent with acceptable nutritional concepts and ensures the nutritional quality of food. Such a policy should be developed by a multi-sectoral committee, comprising all Ministries whose policies affect production, distribution, and food consumption such as Agriculture, Education, and Health. Animal production policies should be assessed in order to ensure that existing incentives do not promote an excess of saturated fats. High priority should be given to the production and availability of foods which are low in fat, sugar, and salt. This may call for new legislation bearing on agriculture and food, to ensure that it is compatible with the prevention of CVD. The MoH and Ministry of Education should ensure that, as part of nutrition and health education for teachers and students, attention is paid to the prevention of diet related chronic diseases. In the future, the DPH should start a campaign to promote a healthy Georgian diet and monitor the nutritional intake of the population. 17. Promoting physical activity. Lack of physical activity is a major determinant of CVD and other chronic conditions such as osteoarthritis, osteoporosis, and obesity. Even moderately intense physical activities, such as walking and dancing, can be valuable in helping to reduce the risk of CVD and in preventing muscle wasting, which is the most common cause of disability in the elderly. DPH should start an awareness building campaign among health professionals as well as among the general public about the benefits of physical activity in its widest sense as a part of daily life. Children should be Annex C.1 Page 5 of 6 encouraged in schools and during their leisure-time to enjoy a wide range of sports, games and other activities which they can continue after they have left school. 18. Multiple risk factor prevention activities. The risk factors for CVD are synergistic, with each extra risk factor multiplying the risk in a given individual. Structural, socio-economic, and psycho- social factors determine the opportunities people have for choosing a healthy lifestyle. Schools provide an important and effective arena for comprehensive health promotion efforts. Georgia should consider joining the WHO Healthy Schools project to link healthy nutrition, non-smoking and physical activity in the school. Health promotion activities in the workplace should be increased and improved by collaborating with the employers and employees to develop a workplace good-practice initiative. This should address work patterns, environment, and management culture as well as smoking, nutrition, and physical activity. The Government should also encourage its municipalities to join the WHO Healthy Cities initiative, which forges 'healthy alliances' between different agencies inside and outside the health sector. 19. Traffic and occupational injury prevention. Reliable data on injury epidemiology are scarce. It is estimated that traffic accidents cause approximately 2,000 deaths and 2,000-3,000 permanent disabilities per year. Occupational accidents contribute an additional 15,000 injuries each year. Given the lack of enforcement of traffic regulations and safety procedures as well as data from other FSU countries, these numbers very likely understate the magnitude of the problem. 20. To reduce mortality and injuries caused by accidents, cooperation between the police, schools, occupational safety and labour organizations should be developed. The existing traffic safety regulations should be reviewed in collaboration with the law-enforcement organizations in order to develop measures that are feasible and realistic for decreasing accidents leading to death and disability. In this context, the use of seat-belts, speed limits, drunk driving, and traffic arrangements may be relevant issues. Occupational safety regulations should also be reviewed and due actions taken. Under the project, a 5% annual reduction is targeted in traffic accidents between 1996 and 1999. 21. Family planning. Contraceptive prevalence rates in Georgia are low, ranging from 2% to 25%, depending upon the source. Among women practicing birth control in 1992, 32% used pills, 18% IUDs, 19% condoms, 12% spermicides, and 15% "traditional methods". Elective abortion remains the primary means of birth control and the number of elective abortions is reportedly increasing due to shortages of pills, IUD's and condoms. At the same time, the risks associated with abortions are increasing as the situation in hospitals and clinics deteriorates. 22. Given the scarcity of resources and need to demonstrate an impact, the project will fund a national family planning campaign targeting high school and college students. Sex education in Georgian schools has been limited. Basic knowledge on sexuality, contraceptives and family planning needs to be included in the school curricula. Culturally sensitive educational materials - books, leaflets, posters, videos, and radio and TV programs -- will be developed and disseminated. Means to improve the availability of modern and safe birth control methods at affordable price will also be given priority. Under the Healthy Children and Safe Motherhood sub-component, training in family planning will be incorporated into the medical school curricula and family planning counselling will be made an integral part of primary care. A project target of a 30% reduction in the number of abortions and STDs in high school and college students has been set. The impact will be evaluated based on the base case established by the DPH. Annex C.1 Page 6 of 6 23. National strategy for alcohol control. A national strategy for alcohol control needs to be developed, paying attention to the cultural, social and economic factors related to drinking. The Georgians are reluctant to run a separate vertical alcohol control program. However, they have introduced a special tax on alcohol designed in part to reduce consumption. Legislation to control production, import, wholesale, and distribution should also be developed. Alcohol as a risk factor will be addressed in the cardio-vascular disease and traffic accident prevention program. Annex C.2 Page 1 of 4 HEALTHY CHILDREN AND SAFE MOTHERHOOD A. Introduction 1. In the 1990s, fertility dramatically decreased in Georgia, while infant and maternal mortality have been rapidly increasing. The Georgia Health Project is designed to reduce infant and maternal mortality in the whole country, bringing the death rates to values closer to the WHO targets for the European region: fewer than 15 infant deaths per live births and 15 maternal deaths per 100,000 live births. 2. The total number of births decreased from 89,000 in 1989 to approximately 64,000 in 1993. The crude birth rate dropped from 19.2 in 1970 to 17.0 in 1990, and 11.8 in 1993. This drop is occurring despite a stable abortion ratio (0.6-0.7 abortion per live birth), and a contraceptive prevalence rate that may be as low as 2%, or as high as 25%, according to different sources. 3. The infant mortality rate declined between 1960 and 1990 from 35.3 to 15.1 infant deaths per 1,000 live birth, but in 1993, the estimated IMR had risen by 13 percent, reaching 21.4 infant deaths/1,000 live births. However, in specialized reports, the IMR is estimated to be between 30-50 infant deaths/1,000 live births. Forty percent of all infant deaths occur in the first seven days after birth and an estimated four-fifths of these occur in the first three days of life. 4. The maternal mortality rate for the period 1990-1993 was approximately 39 deaths per 100,000 births. The major causes of maternal mortality are hemorrhage (38%), causes related to obstetric management (29%), abortion (14%), sepsis (9%), toxemia (3%), and other causes (7%). Both age of the mother and her parity are associated with a higher relative risk for maternal death. Women over 30 years of age account for 48% of the deaths. Three-fourths of maternal deaths occur among multiparous women, with 34% occurring among women with greater than five pregnancies. B. Objectives 5. The project will carry out a set of integrated actions intended to reduce perinatal and maternal deaths in a situation of scarce resources. The sub-component Healthy Children and Safe Motherhood specifically aims to decrease infant and maternal mortality by 30% countrywide, and to decrease infant, perinatal and maternal mortality by 50% in Tbilisi and Kutaisi in the four years duration of the Project. Project activities in this area are expected to ensure public funding for some of the most cost-effective health interventions, to increase contraceptive coverage and decrease abortion, and to improve the quality of perinatal care. Activities with an impact on women's and infants' health will be carried out in the other components of the project, including Health System Reorientation, Rehabilitation and Maintenance of Health Facilities, and Development of Health Human Resources. Annex C.2 Page 2 of 4 C. Sub-component Description 6. The sub-component objectives will be achieved through the following activities: (a) reinforcement of the MoH's institutional capacity to develop health policies, health promotion activities and services for women and infants; (b) development of a national policy for care of women and infants, which includes: a minimum benefits package, protocols of care, rules for licensing of staff and health services, guidelines for privatizing and reorganizing services, and the establishment of a perinatal mortality surveillance system; (c) organization of quality perinatal care in downsized and rehabilitated sites in Kutaisi, Tbilisi, and Tsageri, in order to demonstrate how perinatal services may be improved; (d) development of pilot referral systems in Tbilisi and Kutaisi; (e) development of training programs in maternal and child health, obstetrics and pediatrics; and (f) creation of a national Task Force for Child and Maternal Survival, which will build national commitment, increase funding, and develop public awareness of child and maternal survival issues. Build capacity of the Department of Maternal and Child Health 7. The project aims to reinforce the MoH's capacity to develop health policies, health promotion activities and services for women and infants. The MoH's Department of Maternal and Child Health (DMCH) is planning and will implement the sub-component activities. Under this activity: (i) the DMCH office will be rehabilitated, and provided with furniture and supplies; (ii) the staff will be reinforced with three specialists; and (iii) three specialists will make short study tours to similar Departments and Programs of Maternal and Child Health in Western countries. Develop modern protocols of care and guidelines for health services 8. Sustainable basic package of health benefits. The project will ensure that the basic package will cover in a sustainable way some of the most cost-effective health interventions, such as immunizations, management of the sick child (newborn infants sick at birth, ARI, and DDR), family planning, prenatal care (including care for high-risk women), and delivery care (including deliveries with complications). The services which are currently included in the package have been selected according to their impact on safe childbirth and survival of children under one year of age, given the revenue projections for the State Health Fund. In the current version of the package, care of the sick child under one year, four prenatal care visits, and normal deliveries are free of charge. The MoH plans to include family planning in the basic package by March 1996. Under the Project, the DMCH, assisted by foreign consultants (health economist, obstetrician, and pediatrician-neonatologist) will review the basic package annually, and will make recommendations to the Minister of Health and the State Health Fund. 9. Modern protocols of care and guidelines for health services. The existing protocols of care and guidelines for the delivery of women's and children's services are out-of-date, generating considerable variation in practices. Modem protocols of care and guidelines will be development under this sub-component to be disseminated and implemented across the country. Priority will be given to developing protocols for interventions covered by the basic package, with a focus on risk assessment, referral to an appropriate level of care, resuscitation and care of the newborn infant, and management of the sick child. These protocols and guidelines will provide the basis for developing training modules for health professionals and curricula for residency programs in Obstetrics, Gynecology and Pediatrics, with a focus on Neonatology. These protocols and guidelines will also be incorporated into the basic education medical, nursing and midwifery curricula, so that new health Annex C.2 Page 3 of 4 professionals will be trained in their application and use. In the first year of the Project, the DMCH will: (i) select national experts to draft protocols and guidelines from panels jointly developed with the National Health Management Center, and foreign experts; (ii) organize meetings for discussion and development of the guidelines; and (iii) publish the guidelines, disseminating them through six meetings in different regions of the country. 10. Reproductive and perinatal health data for decision-making. This activity includes: (i) the design and implementation of a National Reproductive Health Survey that will provide information about fertility, general health and risk factors, use of contraception, abortion, and sexual experience of young adults; and (ii) design and implementation of a Perinatal Mortality Surveillance System that will provide information about perinatal and maternal mortality. The DMCH has requested foreign technical assistance to implement this activity. This assistance could be provided by the U.S. Center for Disease Control (CDC), which has an ongoing, USAID-funded, epidemiological surveillance project with the MOH. Improve Perinatal Care in Tbilisi, Kutaisi, and Tsageri 11. The Project will establish Regional Perinatal Centers in Tbilisi and Kutaisi with the purpose of: (i) reducing infant, perinatal and maternal mortality rates by 50% in both regions; (ii) demonstrating how perinatal services can be reorganized and improved in the whole country; and (iii) organizing suitable sites for the development of training activities. The Perinatal Centers in Tbilisi and Kutaisi will provide integrated primary and secondary care, as well as serve as the highest referral level for the Eastern and the Western part of Georgia, taking care of most complicated deliveries in each area. Residency programs in Obstetrics, Gynecology and Pediatrics (focusing on Neonatology) will be located in these Perinatal Centers. The rehabilitated perinatal services will receive modern essential equipment and will implement protocols of care and guidelines developed by the Project. In cooperation with UNICEF, the project will also support an outreach program in the Tsageri District. 12. Tbilisi Perinatal Center. This sub-component will reorganize and improve delivery of perinatal care in Tbilisi, creating the Perinatal Center within Tbilisi City Hospital #2, which will be rehabilitated under the project. The Tbilisi Perinatal Center will: (i) provide integrated modern prenatal, delivery and postpartum care to both low and high-risk pregnant women; (ii) serve as the highest referral level in Eastern Georgia in a new, integrated model of providing primary and secondary maternal and child healths services; and (iii) become the main location for residency programs in Obstetrics and Gynecology, Pediatrics and Neonatology. 13. Kutaisi Perinatal Center. The Kutaisi Perinatal Center will be located in the Kutaisi Maternity and Pediatric Hospital, which will be created when the existing Regional Maternity is merged with the Children's Hospital. This new facility, which will result in a significant downsizing of space and beds, will be partly refurbished under the project. Under the Healthy Children and Safe Motherhood sub-component, reproductive, perinatal and pediatric services will be reorganized and improved. The Kutaisi Perinatal Center will: (i) provide integrated modern prenatal, delivery and postpartum care to both low and high-risk pregnant women; (ii) serve as the highest referral level in Western Georgia in a new, integrated model of providing primary and secondary maternal and child healths services; and (iii) serve as a second location for residency programs in Obstetrics and Pediatrics. Rehabilitation will give priority to: (i) improving prenatal care facilities, (women's consultation center or other existing prenatal outpatient services), delivery, and postpartum services; (ii), improving sterilization in the surgical theater and labor and delivery rooms; and (iii) installing neonatal resuscitation equipment. Annex C.2 Page 4 of 4 14. Tsageri Outreach Program. The Tsageri Outreach Program is a joint-venture of the World Bank, UNICEF and the Republic of Georgia. Coupled with the organization of the Kutaisi Perinatal Center, and the development of a pilot referral system with improved communication and modern ambulances, the Tsageri Outreach Program aims to demonstrate how to provide the pyramid of integrated primary and secondary perinatal care in a targeted rural, mountainous area with very poor access to secondary health services. The Project will: (i) rehabilitate and provide modern equipment and supplies to the Tsageri District Hospital (referral level 1); and (ii) in cooperation with UNICEF, provide selected FAPs and ambulatories with essential modem equipment and supplies and training. Develop Referral Systems in Tbilisi and Kutaisi 15. The Project will develop pilot referral systems (radio communication and ambulance transportation) for Tbilisi and Kutaisi. The DMCH will be responsible for designing and setting up the referral system, and for selecting public or private organizations (emergency services or firemen associations) to run each region's system. In Tbilisi, communication equipment will be placed at the Perinatal Center, maternity houses and departments of obstetrics, and at the Children's Hospital and pediatric departments admitting newborn infants. In Kutaisi, communication equipment will be placed in the Perinatal Center, and in district hospitals. Two ambulances will be allocated to each region, one of them specifically equipped to transport newborns. Train Health Professionals 16. The DMCH has already developed training modules in neonatal resuscitation, thermal control, diarrheal diseases (DDR), acute respiratory infections (ARI), and breastfeeding. In cooperation with the National Health Management Center and the Center for Continuing Education, the sub-component will support the development of other training modules for health professionals and residency programs in Obstetrics, Gynecology, and Pediatrics, focusing on Neonatology. Priority will be given to train physicians (obstetricians, newborn care pediatricians and general practitioners), nurses and nurse-midwives working in the services to be rehabilitated. Training will include family planning, immunization and management of the sick child. Create Task Force for Maternal and Child Survival 17. The project will support the creation and activities of a national Task Force for Child and Maternal Survival (TFCMS), which would build national commitment, raise funds and public awareness about child and maternal survival issues. This Task Force will be under the supervision of the Inter-ministerial Commission for Protection of Women and Children Annex C.3 Page 1 of 5 REALIGNMENT OF THE MINISTRY OF HEALTH: QUALITY ASSURANCE, MONITORING AND REGULATION A. Objective 1. The objective of this sub-component is to strengthen the capacity of the Ministry of Health to monitor, regulate and assure the quality of health care services. The sub-component will: (a) license health professionals and create a data base of registered doctors and nurses; (b) register, license and inspect health care facilities to create a data base of physical resources and ensure quality standards; (c) support health care institutions willing to develop internal quality assurance programs; (d) reorganize the administrative structure of the Department of Pharmaceuticals and Pharmaceutical Industry, and support a quasi-governmental Agency for Drug Regulation and Quality Control which will have the responbility for registering, assuring the quality, inspecting, and providing information on pharmaceutical products. These activities will help to reduce the excess supply of doctors and hospital beds and ensure that providers, institutions, pharmaceuticals and related products meet adequate quality standards. B. Quality of Care 2. Georgia is in a state of economic crisis. The health care system is not capable of responding to the declining health status of the population because of a lack of resources, regulation and management. Consequently, the quality of health services is deteriorating rapidly. Quality of_inputs -- pharmaceutical and medical supplies, buildings and technology, human resources, and financial resources -- is poor and declining. Data on the procss and outcomes of health care are scarce, but preliminary findings point to problems in the appropriateness of care, which affect both the costs and the outcomes of medical interventions. 3. Input variables are often most important in low income countries. In middle income countries, which already have the required inputs, process variables become a priority. Georgia falls somewhere between these two categories: surplus inputs need to be optimized and their quality improved and processes need to be changed before better outcomes will be achieved. For countries with scarce resources, improving quality becomes especially critical in order to maximize health benefits with the given amount of resources. 4. Deteriorating Health Facilities. Georgia has an extensive network of poorly maintained health care facilities: 338 hospitals and 1,252 outpatient facilities in 1992. More than half of the facilities are over 50 years old. According to the Government's own estimates, 122 hospitals need significant repairs and renovations. Public resource allocation for maintenance and capital investment accounted for only 1.7% of public health care expenditures in 1992 and has continued to decline. 5. Poor diagnostic and therapeutic capabilities. Most of the diagnostic and therapeutic equipment is of Soviet or Eastern-European origin. It is poorly maintained and technologically out-of- date. In the past, public sector institutions had no incentives to maintain equipment because the central level decided when and how much equipment to buy. A visit to one of the three intensive coronary care Annex C.3 Page 2 of 5 units in Tbilisi (Municipal Hospital #1) revealed that 8 patients with acute heart conditions had to share a single functioning monitor. The unit was short of medicines and disposables, and unable to offer modern treatments such as thrombolytic therapy and central haemodynamics monitoring. Diagnostic capacity was impaired by a lack of paper for the electrocardiograph and batteries for the Holter monitoring device. Ambulatories providing primary health care at the local level also lack diagnostic and therapeutic capacity. 6. Quality of health professionals. Quality of health professionals in Georgia is poor for several reasons. First, an excess supply of physicians relative to other health professionals has downgraded the activities performed by doctors. Excess supply also results in a lower than optimal workload, important for maintaining adequate skill levels. Second, there are no training or practice standards. A diploma from a medical school does not guarantee a standard quality for health professionals. Professional organizations are weak, and do not exercise self-regulation. Relicensing of existing health professionals, and introducing standards for new graduates, is necessary to ensure the minimum standard of professional expertise in Georgia. Finally, low salaries and few opportunities for professional advancement contribute to low staff morale. 7. Pharmaceuticals. The pharmaceutical sector is largely uncontrolled and unregulated by the Government. Administrative structures have been created for quality control and inspection, but are inefficient due to a lack of legislation, improper infrastructure, poor financing and management. Private kiosks selling pharmaceuticals are appearing everywhere. Between 1991and 1994, 1,500 licenses were issued and it is estimated that another 500 kiosks operate without licenses, not meeting standards of storage sale. Such an uncontrolled pharmaceutical market poses great health risks to the population. 8. Access to pharmaceuticals deteriorated after the collapse of the Soviet pharmaceuticals market and the Georgian economy. Although it is estimated that 90% of essential pharmaceuticals are available in the country, their distribution is uneven, quality is poor, and they are unaffordable for many. Limited raw materials and packaging have reduced the production of ex-tempore pharmaceuticals. Ready made pharmaceuticals are available but the choice is poor. One international NGO, UMCOR, estimates that 50% of the population cannot afford to pay for pharmaceuticals. Donations of pharmaceuticals have been vital for Georgia, and international assistance has been able to avoid the worst of the crisis. During forthcoming years, however, NGOs plan to gradually phase out their activities. There, it is critical to reform the pharmaceutical sector into a well-regulated, affordable and financially sustainable system. Process variables 9. Process variables which affect the quality of care include the organization and management of services, accessibility and continuity of care, and the appropriateness of care. In Georgia, a centralized health system is less responsive to local needs. Poor management has limited the ability of the Government and health insitutions to monitor and influence the quality of care, efficiently procure and distribute drugs, and adequately define standards for services and inputs. Current utilization of hospital services by the population is considerably lower now than three years ago. Annual outpatient visits have declined from 10.4 per capita in 1990 to 5.3 in 1993. Although current outpatient utilization indicators do not compare badly with international data, it is unknown whether the decrease in utilization represents unmet need. There is little evidence on the appropriateness of medical interventions in Georgia. No cost- effectiveness or small area variations studies exist. Standardization of medical procedures and guidelines Annex C.3 Page 3 of 5 for appropriate distribution of medical technologies are lacking. Options for intervention often lie out of reach of medical professionals. C. Government Strategy 10. The changes in organization and financing of the health system included in the Government's health care reform strategy will lead to improvements in the quality of care. Reduction of excess capacity should make the system more efficient; decentralization should make the system more responsive to local needs; introduction of a competitive market should increase the importance of quality to health care providers. The Government is also taking specific steps to improve the quality of the health services' inputs by establishing standards for health care providers and health professionals and regulating the pharmaceutical sector. But, limited progress and even possible decline in quality could occur if regulation of private health care market fails, clear accountability is missing and management skills are lacking. 11. Establishing standards for health care providers. As part of the Government's health care reform, a State Agency of Quality Assurance for Health Care Providers has been established. This Agency will be responsible for registering and licensing health care facilities, based on standards for physicial infrastructure, equipment and staffing. Government legislation will ensure that no health care facility operates without a license. A likely consequence of mandatory licensing will be the closure or redesign of many institutions. In order to ease the financial hardship of closing facilities, the Government may consider making funds available for the adaptation of hospitals to other purposes, such as refugee centers or long-term facilities for chronic patients. Eventually, the Government plans to develop accreditation standards and procedures. An accreditation agency would be established and accreditation required for reimbursements by the State Health Fund. 12. Ensuring standards for health professionals. The National Health Management Center has been assigned the responsibilities of drafting a Medical Education Law, defining training requirements for health professionals (both undergraduate and postgraduate), defining standards for an approved (and reduced) list of specialities, and relicensing currently practicing health professionals (physicians and middle level health personnel). To ensure the sustainability of these activities, the Government plans to eventually pass the monitoring and standard setting functions to professional organizations. 13. Regulating the pharmaceutical sector. The Government is in the process of drafting a National Drug Law and plans to restructure the administration of the pharmaceutical sector by assuming a regulatory role and consolidating technical functions of the various committees and agencies into one single agency. This model has been used in most of the EU countries, as well as in some CEE and FSU countries. D. Project Description 14. The project will help the Ministry of Health: (i) draft legislation setting up effective and transparent regulation of the health care sector; (ii) define processes required for developing and implementing standards and protocols for health care institutions and various categories of health Annex C.3 Page 4 of 5 personnel; (iii) design and implement organizational arrangements for the licensing of health facilities and health personnel; (iv) establishing an Agency for Drug Registration and Quality Control for regulating the pharmaceutical sector; and (v) initiate a supportive quality assurance system in a few hospitals, with full involvement of clinical and managerial staff. Tbilisi City Hospital #2 and the Kutaisi Maternity and Pediatric Hospital, which will be rehabilitated under the Bank project, would be included as pilot sites. The subcomponent will be implemented by four institutions: the State Agency for Quality Assurance of Health Care Providers (SAQA), the National Health Management Center (NHMC), the Department of Pharmaceuticals and Pharmacy Agency, and the National Agency of Drugs Registration and Quality Control (NADRQC). State Agency of Quality Assurance for Health Care Providers (SAQA) 15. The State Agency of Quality Assurance for Health Care Providers (SAQA) will have the following functions: (i) developing, monitoring and enforcing standards for health care providers; (ii) performing accreditation and licensing of health care providers; (iii) monitoring the quality of the basic package; (iv) establishing and maintaining a register of health care providers of Georgia; and (v) supporting quality assurance initiatives at all levels of the health care system. 16. The project will finance minor rehabilitation for the SAQA, local and foreign technical assistance, long- and short-term training, computer hardware and software, office equipment, a vehicle for site visits and inspection, and office equipment. Technical assistance will help the MoH to identify the loci of responsibility, data to be collected, delineate scope of care, identify indicators, establish thresholds for evaluation, determine needs, collect and organize data, identify threshold breakers, take appropriate actions, assess the relationship between improvement of quality and reducing waste, assess the budget implications of QA, and, finally, evaluate the tradeoff between marginal investment costs and benefits. The project will support pilot studies of quality assurance in selected hospitals which could assist in developing national programs and serve as models for other instituions. The National Health Management Centre (NHMC) 17. The National Health Management Center will have the following functions: (i) provide leadership and coordination for developing standards for certifying health professionals, including general licensing of all graduates and specialist credentials; and (ii) establish and maintain a register of health professionals. Human resources planning will define the needs of the country, taking into account the distribution of resources across rural and urban areas. Definitions and functional descriptions of different specialities will be developed and standards for professional education and performance set. Licensing requirements will be defined and medical practitioners will be required to obtain the licence in order to be allowed to practice. Setting up s computerized register of practising physicians with their qualifications will be done parallel with the licensing. 18. The project will provide local and foreign technical assistance for licensing procedures, computer hardware and software for the registration of health professionals, and office equipment and training materials. Technical assistance would help the Center to define the requirements for the continuing education of health professioAals, develop licensing rules for health professionals, and support creation of a system of self-regulation by the medical profession. Annex C.3 Page 5 of 5 The Department of Pharmacy and Pharmaceutical Industry and The National Agency for Drug Registration and Quality Control (NADRQC): 19. The newly created Department of Pharmaceuticals and Pharmaceutical Industry will reorganise the functions of the Pharmacopoeia Committee, the Pharmacology Committee, the Quality Control Agency, the Information Agency, and the Inspection Agency. Under the project, the Department will: (i) develop a National Drug Policy concept; (ii) draft legislation to regulate the pharmaceutical industry; (iii) coordinate and supervise ongoing projects and activities; (iv) monitor the implementation of the National Drug Policy; and (v) advise the National Agency for Drug Regulation and Quality Control on overall priorities. 20. The National Agency for Drug Registration and Quality Control will have the following responsibilities: (i) implementation of the Drug Law and subsequent rules and guidelines; (ii) registration of medicines, registration and analysis of sales, and information dissemination (including the publishing of a National Formulary); (iii) quality control of pharmaceuticals; (iv) inspection of manufacturers, wholesalers and pharmacies, following Good Manufacturing Practice guidelines; approval of labels for locally produced pharmaceuticals; (v) control of narcotic drugs according to international conventions; (vi) issuance or advise to the Government about import and export certificates; and (vii) issuance of licenses for organizations in the pharmaceutical sector, setting standards and licensing sector personnel. 21. The component will provide local and foreign technical assistance, short term visits, computer hardware and software, office equipment, laboratory equipment for the quality control laboratory, and vehicles for The Department of Pharmacy and Pharmaceutical Industry and The National Agency for Drug Registration and Quality Control. Technical assistance will aid in preparing laws regulating the registration of pharmaceutical products, medical supplies and clinical trials. TA will also develop procedures for drug registration, including the introduction of a pharmaceuticals' classification system and the publication of a National Drug Formulary. Annex C. Page 1 of 6 REHABILITATION AND MAINTENANCE OF HEALTH FACILITIES AND EQUIPMENT A. Objective 1. The poor condition of health facilities and equipment in Georgia is an obstacle to the reform of the health system and improved delivery of medical care. The old system was plagued by a lack of experience in functional programming, architectural design, sound construction and preventive maintenance. These problems, combined with the 1987 earthquake and recent civil wars, have led to a deterioration of health facilities which is both inefficient and unsafe. Furthermore, a centralized administration and the lack of a reliable communication system have undermined the ability of the government to respond to deterioration of health services. This deterioration of the health care environment is most likely one of the reasons the health status of the population has worsened. The health services are less able to deal with complications; polyclinics have a diminished consulting capacity and hospitals show lower occupancy rates than before. Essentially, the delivery of services has collapsed. 2. This component would support the rehabilitation and maintenance of health facilities in Georgia by refurbishing three facilities in Tbilisi, Kutaisi, and Tsageri which will serve as centers of clinical excellence for the provision of perinatal health services; building capacity in the MoH's Building Technical Department (BTD) to set standards for the programming, design, and rehabilitation and construction of health facilities; building capacity of the Committee of Medical Technologies and Equipment (CMTE) to identify the needs, conduct technology assessment of, and procure medical equipment; and providing training for hospital programmers, architects, biomedical engineers, maintenance specialists and hospital staff on facilities design, construction, and equipment maintenance. B. Background 3. Decades of centralization have left users without a sense of control and ownership of the systems that should be serving them. The distance between the users and authorities has eliminated, at all levels, any incentives to administer and protect user-friendly, functional, cost-effective, and sustainable health facilities. Further obstacles include lack of experience in: (i) establishing building standards; (ii) programming spatial functions; (iii) designing architectural spaces in a cost-effective manner; (iv) planning and managing complex medical equipment; (v) practicing competitive procurement procedures that will result in the acquisition of economical, quality civil works and goods; and (iv) organizing, managing and financing effective maintenance systems to protect occupants, buildings and equipment. 4. Design. Health facilities are located in large, underutilized buildings planned under the standards of the former Soviet Union. The Eastern pattern of concentrating facilities in "large complexes" can also be found in Tbilisi and other large Georgian cities. Over-dimensioned areas of hospital departments mean additional costs for heating, lighting, maintenance, cleaning, and safety. Furthermore, poor use of space leads to increased circulation time for patients and staff. 5. Building Maintenance. About half of the facilities were built before 1940 with no further maintenance. Damages in building structures are the results of stability problems caused by Annex CA Page 2 of 6 earthquakes, ground water, mediocre material, and poor construction techniques: cracks can frequently be seen in structural components, walls and floors. Heavy deterioration of buildings and infrastructure is evident. Deteriorating building materials commonly seen include: leaky roofs, hanging gutters, broken drains, plaster falling from the ceilings, floor material peeling off, non-insulated windows, and broken sash and glass. The building systems are often unsafe or non-operational: blocked sanitary facilities, cracked heating pipes, exposed wiring, and fluorescent tubes destroyed by fluctuating current. 6. Equipment and supplies. The average age of essential medical equipment such as X-ray machines, laboratory and physiotherapeutic equipment, endoscopes, ventilators, intensive-care monitors, and surgical equipment is 8 to 15 years. The equipment no longer complies with modem technological and safety requirements. Sterilization in some surgical and intensive care units is done using boilers and dry hot sterilizers. Stocks of health care supplies are insufficient and shortages of spare parts, reagents, X- ray films, and ECG paper impair the functioning of 70% to 80% of the equipment. Oftentimes, patients must provide their own linen, food, drugs, medical supplies and transportation. Humanitarian aid, however, has contributed to acquisition of some modern equipment. C. Description of the Rehabilitation and Maintenance Component 7. The component's main activities include: (i) the rehabilitation of health facilities; (ii) the procurement of critically needed medical equipment; and (iii) the strengthening and modernization of tools and standards adopted by the Ministry of Health central units for future facility and equipment planning. Rehabilitation of Health Facilities and Medical Equipment 8. During project preparation, an assessment was made of the need for and cost of rehabilitating health facilities. On the basis of this assessment, it was clear that the cost of a comprehensive rehabilitation program was prohibitively high. Three facilities were chosen for rehabilitation under the project: Tbilisi City Hospital #2, Kutaisi Pediatric Hospital (which would be merged with the existing Maternity Hospital to become the Kutaisi Maternity and Pediatric Hospital), and the Tsageri District Hospital. These facilities were chosen from a priority list drawn up by the Government during project preparation based on: 1) the technical feasibility of rehabilitating the facilities; 2) their willingness to improve efficiency by reducing their size, improving management, introducing energy saving measures and other cost saving measures; and 3) their linkages to other components of the projects, particularly activities in maternal and child health. The current situation of each of these facilities is described below. Tbilisi City Hospital #2 9. General Overview. The current campus consists of two existing buildings and two unfinished buildings. The main building was constructed around 1942. It is a four-story structure which contains administration, surgery-recovery, and 120 beds. The second functioning building is a five story structure built in 1977 and contains most diagnostic departments, 180 beds, the emergency room, and an outpatient dental clinic. The condition of these two buildings can be described as badly deteriorated and unsafe. An analysis of the MEP/Life systems in these two facilities is available. However, project Annex CA Page 3 of 6 activities will concentrate on the two unfinished towers and the other two buildings would eventually close. The new facility will be a general hospital, housing the Tbilisi Perinatal Center and also offering surgery and cardiology and a set of other complementary services such as radiology, intensive care, emergency department, and diagnostic 10. Building Condition. The codes under which the two unfinished buildings were designed are the same as the building constructed in 1977. Most of the structure and foundation are finished with the exception of some internal staircases. The roof and windows need to be replaced. Water and sewerage systems have must be modified and sanitary devices installed. The quality of construction is poor and MEP/Life systems mirror those of the 1977 building. 11. Electrical Systems. The electrical distribution system is relatively simplistic and appears to have limited capacity. A great deal of wiring is installed in plastic conduit that is buried in the mortar topping placed on top of precase panel floor assemblies. Much of this conduit is broken and will be useless in the event rewiring is necessary. All switchboards have been vandalized and the electrical power station is not finished. Lifts have been installed but either need extensive repair or replacement. 12. Mechnical Systems. Only heating tubes and heaters have been installed, and about 30% of the heaters are missing. The boiler house is unfinished and there is no laundry or kitchen equipment. 13. Medical Equipment. The hospital has received some medical equipment from Emory University Hospital such as beds, radiological devices, laboratory devices, etc... Much of this equipment remains in boxes, awaiting completion of the facility. An assessment of this equipment has been made and a supplementary list drawn up. This list would be finalized once the architectural brief is complete. Kutaisi Maternity Hospital 1 14. General Overview. This 395 bed maternity hospital serves as the primary referral center for Western Georgia. Nonetheless, occupancy rates are low, generally around 50 percent. The hospital is located near two other health facilities in Kutaisi: the Pediatric hospital and the outpatient polyclinic. The maternity hospital has a main building with five floors for the emergency, reanimation, outpatient department, functional diagnostic, obstetric and gynecological departments, delivery rooms and newborns, radiology, laboratory and operating rooms. The kitchen, laundry, boiler house, generator, power station and oxygen station are in separate buildings. The maternity hospital has no incinerator. 15. Building Condition. The walls, ceilings and floors need repair. The roof and water and sewerage systems must be replaced. The hospital has two underground water reservoirs with 250 cubic meter capacity each and a 15KW pump (in need of maintenance). Fire equipment must be changed. The functions of this facility will be merged with the existing Kutaisi Pediatric Hospital and the Maternity Hospital closed and the equipment consolidated. These two facilities are situated at less then two hundred meters from each other, but they have completely autonomous support buildings and equipment (boiler houses, laundries, kitchens, transformer stations and diesel generators), which is clearly not cost effective. Annex CA Page 4 of 6 16. Electrical Systems. The electric power supply conditions are similar to the Pediatric Hospital but there is a well maintained 100 kW emergency generator that could function well with minor repairs. The transformer station high voltage equipment must be replaced. The low voltage switchboard most likely would also need to be replaced, although the main and floor switchboards are in reasonable condition. According to local information, fifty percent of the distribution cables and fixtures must be replaced. Lighting was designed to be 90% fluorescent but is presently incandescent due to a lack of tubes and ballast. Five out of 7 lifts are working - better than in any other sampled facility. Fire detectors are installed but out of order. 17. Mechanical Systems. The boiler house has 4 installed units that are in reasonable condition, but have not converted from gas to fuel oil. Each unit is smaller than those in the Pediatric Hospital, but may be sufficient for both facilities (without reserve boiler) if their building "envelope" is of good quality. Piping, valves and pumps must be repaired. There is also an incinerator but it is out of order. The main building ventilation is not working and must be repaired. The kitchen is poorly equipped and laundry has only one badly working machine. Central storage of oxygen was not finished. 18. Medical Equipment. Very little medical equipment is reliable in this maternity hospital, including the incubators. A large amount of equipment would be necessary to adequately equip all of the hospital's department. Sixty percent of the medical equipment is maintained by in- house staff, 35% by outside services and 5% not at all. Kutaisi Pediatric Hospital 19. General Overview. The Kutaisi Pediatric Hospital, with 360 beds, serves approximately 900,000 people in the Kutaisi cachement area. It is considered the second children's' hospital in Georgia and is the primary referral center for Western Georgia. The hospital consists of two health care buildings connected to one another. The main building of six floors includes the emergency, outpatient department, reanimation, laboratory, neurology, radiology and functional diagnostic, therapy, traumatology and orthopedic and general surgery. In the second building, two stories high, are the neonatology and newborns departments. The building is too large for its current functions, but sufficient to assume both its current functions as well as those of the Maternity Hospital. 20. Building Condition. The structures are in good general condition but in the main building the stairs must be repaired. It is necessary to repair walls, ceilings and floors, mainly in the 2nd, 3rd, 5th and 6th floors. The roof needs to be repaired. Water and sewerage networks are to be replaced or upgraded and all bathrooms repaired. The hospital has an underground water reservoir of 500 cubic meter with a pumping system (needing maintenance). 21. Electrical Systems. In 1994, the hospital estimates that it was without electrical power supply for 50 days. The frequency drops at times to 41-42 Hz and voltage to lower than 150 V. The 30 kW emergency generator is out of order. The main switchboard is in poor condition, but the floor ones are in regular condition although with severe limitations. According Annex CA Page 5 of 6 to local information, fifty percent of distribution network and fixtures must be replaced. Internal lighting has the usual problems, and the external lighting has been stolen or vandalized. Of the four lifts, two are still in working condition. The two lifts that were connecting the main building with the kitchen are not working due to heavy infiltration problems in the tunnel between both buildings. There are no fire detectors. 22. Mechanical Systems. This hospital has one boiler house with four units burning gas: two for steam and two for hot water. All of these need significant repairs as well as the water treatment equipment, which needs to be replaced, piping, valves, pumps, etc. Considering the estimated heating power needed for the Children's and Maternity Hospitals, the installed boilers are apparently oversized, but this must be confirmed. The kitchen has equipment that is out of order and in the laundry, only one centrifuge machine is still working. There is no central storage of liquid oxygen. 23. Medical Equipment. In this hospital, there was more reliable and repairable medical equipment than was found on average in other similar facilities. However, there is a lack of essential devices for reanimation and surgery as well as for infant ventilation and intensive care. Radiology and functional diagnostic should also be replaced. Tsageri District Hospital 24. The Tsageri District Hospital was built in 1925. A new block was under construction in 1989, but construction has stopped. The general condition of the building is poor, especially the roof, floors, and water and sewerage systems. Rehabilitation under the project will focus on only Block B, where maternal and pediatric services are offered as well as ensuring an external water and sewerage system for the entire facility. The project will also provide essential equipment for the maternity and pediatric services. 25. An architectural brief will be prepared for each facility to be rehabilitated. The Brief would contain: (i) the as-built construction drawings which describe the facilities to be rehabilitated; (ii) site data, soil surveys and seismic studies, if required; (iii) functional programs, with areas in the metric system; (iv) a strategy for phasing rehabilitation of facilities in use; (v) a preliminary furniture list; (vi) guidelines for proposed safety, security and quality; (vii) a maintenance strategy and manuals; (viii) cost estimates for rehabilitation and furniture; (ix) an implementation schedule; and (x) the technical specifications (including space and service requirements) for the medical equipment. A team of four short-term specialists will be recruited to assist the BTD in preparing the architectural briefs, namely, a building standards specialist, a health facilities programmer, a maintenance specialist, and a medical equipment specialist. Terms of Reference for the architectural services have been prepared. 26. The project will finance medical equipment and furniture for the three facilities to be rehabilitated. The architectural briefs will include the agreed preliminary medical equipment list. A consultant medical equipment specialist will be hired to prepare detailed technical specifications for the medical equipment. The briefs will include criteria, prototypes, and the preliminary list of furniture to guide the architect in design, costing and specification of furniture. Annex CA Page 6 of 6 Capacity Building and Training 27. Responsibility for implementing this component of the project falls to two component coordinator, one who is the director of the BTD and the other who is the director of the CMTE. They will be assisted by a component coordinator based in Kutaisi who will oversee project activities in both Kutaisi and Tsageri. The component coordinators will be assisted by staff of the BTD and CMTE, staff at the three facilities, and foreign and local consultants. The refurbishment activities planned for the three facilities will include the development of standards which can be used nationwide and strengthen the MoH capacity to plan future rehabilitation and construction and procurement and maintenance of medical equipment. 28. In addition, the component will support training of designated staff by offering a Health Facilities Training Workshop which will be based in the Center for Continuing Education. Volunteer artisans in the building trades will be recruited to enhance the skills of local building artisans on a short- term basis. A coordinator will organize this small task force. Local professionals, who may contribute to the improvement of the health care environment, will be registered and may be invited to work with the specialists on a part-time basis on work and training programs designed to support and continue the impact of the specialists. A coordinator will be recruited to mobilize this part-time local consultants and organize their work. Annex C. 5 Page 1 of 4 HUMAN RESOURCES A. Introduction 1. Georgia has more than 120,000 persons working in the health sector. The density of physicians is one of the highest in the world: I physician per 197 inhabitants. There are approximately 30,000 practicing physicians compared to an estimated need of 10,000-12,000. The large number of doctors is the result of Georgia's traditional esteem of medicine as a career and former Soviet Union policy emphasizing the number of physicians as a measure of achievement in the health sector. The number of nurses is also high relative to OECD countries (70,000 nurses compared to a need of 40,000), but they are poorly trained, unlicensed and have low professional status and pay. The nursing education system was oriented towards basic sciences, preparing nurses to act as physician-assistants. Undertrained, underutilized and inadequately managed doctors and nurses greatly inhibit the efficiency and effectiveness of the Georgian health care system. 2. During the Soviet period, one graduate and one post-graduate medical school provided all medical training in Georgia. After the break-up of the FSU, due to the increasing number of candidates and the refusal of other republics to admit foreign medical students, the Ministry of Education (MoE) granted authorization to 28 new private medical schools. There is no accreditation procedure for these schools, no quality standard for teaching, no career track for faculty, no reliable register for trainers and trainees, and no licensing or certification procedure for graduates. The total number of medical students in all schools is now around 2,500, about 10 times the requirement of the country. Similar problems are found in the post-graduate medical education system. There are no criteria for selection of persons to receive resident training, no standards to judge the quality of the training programs, and no process for certification of specialists once they have completed training. 3. The educational system does not provide the knowledge and skills necessary to carry out competency-based and evidence-based care comparable to international standards. The fragmentation of the medical system is evident. In medical schools, separate faculties exist for paediatrics, sanitation and hygiene and military medicine. Few of the various health care institutions or agencies serving special populations collaborate with each other, which creates an inefficient system. Several key educational components are absent: a. There are no medical personnel qualified as general practitioners. Professionals who serve in this area lack proper training. As a result, many areas of care, and especially maternal and child health care, are inadequately served. Both the continuity of primary care and the ability to provide comprehensive care are seriously impeded. b. Public health is narrowly defined to mean infectious diseases control. Simple enforcement of hygienic norms does not address health promotion. Disease prevention programs are needed as non-communicable and life-style related diseases contribute increasingly to the burden of disease in the society. c. The administration and management of the health care system are hampered by insufficient management skills. These are essential in the changing financial and regulatory environment arising from an increased autonomy of providers, performance- based financing schemes and the introduction of health insurance. Annex C. 5 Page 2 of 4 B. Government Strategy National Health Management Center 4. In March 1995, the Government established the National Health Management Center (NHMC) to regulate public and private medical education, license health care professionals and develop curricula for post-graduate medical training. In addition, the NHMC is to establish a health services research program in order to support the policy-making ability of the Ministry of Health. The NHMC has drafted legislation on health education and assembled expert panels to develop standards and programs for specialty training which draw on the guidelines of the European Union. The NHMC has also been instrumental in starting professional societies for public health and family medicine practitioners. Center for Continuing Education 5. According to the plans of the Ministry of Health, a Center for Continuing Education (CCE) for health and allied professionals will be created inside the NHMC. The goals of the CCE are: (i) to establish a complete program of courses, workshops and seminars to improve the practice of all health care professionals in the Republic of Georgia; and (ii) to establish a cost-effective and efficient means to deliver these new skill areas to practitioners throughout the Republic of Georgia. 6. Proposed activities for the CCE are the following: a. To assist in the provision of professional training for the newly emerging health care occupations in Georgia, in particular: health care administration and management, nursing management, family practice medicine, health promotion and community public health programs. b. To provide continuing education for all health care professionals practicing in Georgia in order to enhance the knowledge base and capabilities of practitioners at all levels of the system, and especially for nurses, midwives, physicians in community clinics, and managers. c. To establish and maintain an ongoing program of training trainers in all fields and enhancing medical faculty members in their teaching areas. d. To improve access to these education programs throughout Georgia through: (i) developing remote-areas courses; (ii) developing the capability to deliver programs in all 11 major centers (Tbilisi, Poti, and the nine regional centers); (iii) becoming a resource center for the education of h NHMC health personnel, including an information center for research and Fellowship grants, study abroad programs and a library of current publications; and (iv) publishing current health sciences and practice information, student and teacher course materials, monographs, professional association and study materials and health promotion information Annex C. 5 Page 3 of 4 7. The CCE could become an applied research operation to investigate the educational needs of health professionals, improve the methods used in epidemiological or other research projects which relate to education, and to assist in carrying out other research as requested. 8. The Center will have few staff members and instead will contract out curriculum development and training to Georgian universities and practitioners, as well as international specialists. The permanent administrative staff will consist of: (i) an administrative director, who will have a strong understanding of continuing education programming and the education of health services personnel at various levels across disciplines; a program coordinator for each of the following four areas: family practice education, nursing education, public health education, and health management education. These managers will identify necessary programs, develop program curricula, course marketing and delivery on site in Tbilisi and elsewhere; (iii) a desk top publishing unit manager who will become an expert in desk top publishing technology and the publishing process; and (iv) support staff, including a receptionist/word processor, and an assistant for each of the positions described above. 9. The CCE will cooperate with other health care assistance programs, such as the proposed Health Promotion Fund, the USAID-supported Atlanta/Tbilisi Hospital Partnership Project and the Association of University Programs in Health Administration. C. Component Description 10. The Human Resources component will assist the Government in implementing the above strategy by: (a) strengthening the capacity of the National Health Management Center to create a system for accrediting medical schools, develop a modern curriculum for post-graduate physician and nursing education, support the development of professional associations, and develop health services research to support the MoH in policy making; and (b) supporting the creation of the Center for Continuing Education (CCE) to provide part-time professional education for newly emerging health care occupations such as health care management, family practice, and public health, provide on-site and at-distance continuous training programs for all health professionals, establish a program of "training the trainers", and create a desk-top publishing unit. As these programs become increasingly active and self-sustaining, the need for outside financing will decrease. 11. National Health Management Center. The component will provide foreign technical assistance in accreditation and curriculum design to help the National Health Management Center carry out its designated functions. 12. Center for Continuing Education. The project will refurbish and equip 1350m2 in the NHMC building, where the CCE will be located. The CCE will have a 200-seat auditorium, equipped seminar rooms with a capacity of 25 students each, a computer classroom, and a resource center to include print, audio and video materials and equipment for lending, a desk top publishing unit, a cafeteria, and offices for administrative staff. The NHMC building will also accommodate a resource center to be developed by the USAID-supported Atlanta/Tbilisi partnership providing access to the Internet and other medical educational resources. These three centers will complement each other, ensuring an efficient use of resources. Annex C. 5 Page 4 of 4 13. The following technical assistance (foreign and local) will be included as part of the project: (i) curriculum development specialists, who will prepare training program materials. If possible, these specialists should also act as the pilot teachers of the courses, to ensure that the materials they have designed are suitable; (ii) teachers for courses offered at the Center. These teachers should be well-regarded specialists trained in adult education; (iii) a continuing education management spccialist to assist in the planning and implementation of Center operations. This person will assist in program design and development to promote various approaches for adult education; and (iv) program and curriculum design specialists in each of the Center's four areas of concentration. 14. The project will also finance the purchase of educational equipment such as slide projectors, overhead projectors, audio and video equipment and tables and chairs necessary to equip the auditorium and the seminar rooms, computers for classroom training as well as administrative purposes, communications and Desk Top Publishing equipment, and a van for transporting staff and equipment for outreach activities. Annex C-6 Page 1 of 11 MODERNIZATION OF THE HEALTH FINANCING SYSTEM A. Background 1. The Georgian health care financing reforms are being launched amidst general economic decline, worsening levels of health status, collapse of sector organization and finance, long term deterioration of health facilities, and long-standing inefficiencies and inequities in medical provision. 2. As in all formerly Soviet countries, there is a tendency to ignore positive features of the former health system. The system was universal and general. A strong network of hospitals and polyclinics was available. Significant steps in controlling infectious diseases such as tuberculosis had been made. Indeed the system may have been particularly adept at tackling health problems due to poverty. Nevertheless, there is little doubt that the former system was characterized by severe imbalances and inefficiencies. For example: a) The method of resource allocation exacerbated regional and inter-household inequalities in service provision. Resources were allocated on the basis of capacity number of beds and number of doctors and past levels of activity and political influence, rather than on the basis of patient need, efficiency or other suitable criteria. b) Line budgeting favored the employment of staff over expenditure on material items (e.g. drugs, medical supplies, food and fuel, etc.). c) Management capacity needed for efficient finance and provision of health care was severely limited. d) First-contact facilities were frequently staffed by poorly qualified or inexperienced staff with little financial motivation to treat patients effectively and efficiently. e) Poorly planned investment and training programmes resulted in an accumulation of acute care facilities that have left Georgia with a doctor/population ratio that is among t he highest in the world. Occupancy rates are well below 40 percent and the surplus of personnel is around 60 percent of current staffing. 3. A key feature of the system inherited from the Soviet period is illegal or under-the-table gratuity payments. These payments are deeply ingrained in the country's culture and have only a tenuous relationship to levels of activity or quality of care. By their very nature, no reliable figures are available on the extent of such payments. Anecdotal evidence suggests that they are obtained by staff at all levels of the health service although the main payments are likely to go to hospital doctors. 4. Though under-the-table payments are unquantifiable, there is broad agreement that they are a major distortion to the health care delivery process. For example, it is likely that specialists in psychiatric care receive little extra income. In contrast, surgical specialists, particularly gynecologists providing a quick and plainly beneficial service, can increase income substantially. Some gratuity money is given to encourage good quality care but money is also given by patients who fear not being treated at all. Despite the possibility of some type of price discrimination in determining the size of Annex C.6 Page 2 of 11 gratuity payments, it is likely that access to effective treatment is hindered by doctors who give priority to those able to pay or who keep patients waiting in hospital for operations. 5. Over the last three years the MoH has developed a reform program aimed at guaranteeing an acceptable and affordable level of services to the population and correcting structural deficiencies of the health service that existed before the collapse of the Soviet Union and the subsequent civil war. These reforms will greatly change the way in which services are organized and financed, and have the potential of arresting the current imbalances and inefficiencies. B. Health Expenditures: Levels, Trends and Composition' 6. While Georgia was part of the Soviet Union, the health sector was underfunded, receiving from 2.8 to 4.1 percent of GDP. With the current collapse of the economy the situation has become worse. Since 1992, the real value of public expenditures on health has fallen dramatically. While the exact fall in real expenditures is difficult to estimate due to a very high rate of inflation, using IMF price indices, the real value of public expenditures on health in 1993 were estimated to be less than 15 percent of the value for 1990 and in 1994 less than 10 percent of the 1990 value. In 1994, public expenditures on health fell to 0.3 percent of GDP and 1.3 percent of public sector expenditures. In 1994, annual public expenditures on health averaged less than US$1 per person. Table 1: Public Sector Health Expenditures, 1990 - 1994 1990 1991 1992 1993 1994 Nominal health Expenditures* 0.45 0.78 3.57 70 4300 Real Expenditures (% of 1990) 100 103 30 11 8 Real Per Capita Expenditures (1994 USD) 9.62 10.10 2.98 1.12 0.81 Health as % of GDP 3.5% 4.1% 2.8% 0.4% 0.3% Health as % of Total Public Expenditures 9.5% 13.2% 5.4% 1.2% 1.3% *In billions of coupons (1995= thousands of lari). Rubles 1990-92 converted into coupons at 1:1. 7. Even before the recent reduction in the budget, chronic under funding interacted with low staff motivation and commodity shortages to contribute to a low quality of health services. Although the real value of recurrent public expenditures on health increased in both absolute and per capita terms until 1992, the total remained modest as a percent of GNP (about 3.5 percent in 1990) in comparison with the lowest performing OECD countries (Greece 5.3%, Portugal 6.4%). Capital expenditures, primarily on hospitals, also increased throughout the first part of the 1980s, driving the need for increased recurrent expenditures. In spite of the steady increase in recurrent public expenditures on health throughout the 1980s, low wages in the health sector and low expenditures on supplies contributed to the overall low level of expenditures on health. I This section is based on analysis done for the Georgia Public Expenditure Review. Annex C.6 Page 3 of 11 C. Collapse of Government Revenues 8. Under the structure of health financing that Georgia inherited from the Soviet system, health care was primarily financed from the government budget. Localities were allocated funds using a formula based on the number of hospital beds and physicians. Parallel agencies, such as the Railways and the Interior Ministry, were also provided funds from the central budget for their own health activities. 9. A small amount of revenue also came from official charges for some drugs and a limited set of health care services and goods such as eye glasses and hearing aids. The amount of revenue collected in Georgia from these payments is not known, however, based on information from Russia, Kyrghyzstan and Estonia, it is estimated that these private sources were equal to 15 percent of the total state expenditures on health. In addition for many years it has been an accepted, but illegal and undocumented practice to make informal private payments to physicians for services. Presently, no data are available for estimating these informal payments. 10. The structure of revenue sources for the health sector has changed dramatically over the last three years. With the collapse of government revenues from 1991 to 1994, the private sector has become the major source of revenues. In the absence of an adequate household expenditure survey, however, it is not possible to give a credible estimate of the total value of private expenditures. The amount may, however, total as much as 75 percent of total sector expenditures. 11. The government's policy response to increase revenues for the sector has been to introduce a State Health Program which is financed from a mandatory payroll tax for health with 3 percent employer contribution and 1 percent employee contribution. This will be supplemented by revenues from privatization, licensing fees, and interest income as well as a sizable allocation from general government revenues in order to cover costs to administration, public health services, services for the poor, and services for veterans. 12. In addition to the State Health Program, which is administered by the State Health Fund, municipalities are obligated to provide a package of services under the Municipal Program. For the period from August 10 - December 31, the government mandated that municipalities spend a minimum of 1.3 lari (US$1) per inhabitant for this program. The minimum annual spending level for municipalities for 1996 has been set at 2.2 laris per person. Many municipalities, such as Tbilisi, Kutaisi, and Rustavi, are spending two to three times the minimum amount. A recent government decree (September 13, 1995) further obligates municipalities to pay for 90 percent of the utility expenses of health facilities located in their jurisdiction. This subsidy will be phased out over time. 13. The introduction of the State Health Fund along with the mandated expenditure levels at the municipal level will increase total resources going to the health sector. For example, projected monthly expenditures for December 1995 are 3.5 million laris compared to average monthly expenditures of 1.2 million lari for the first half of the year. With these additional sources of revenues, public sector health spending is projected to reach US$3.68 per person in 1995. In 1996, spending should reach US$9 per person per year and around 8% of public spending. The assumptions used in estimating health expenditures for 1995 are described in the Box below. Annex C.6 Page 4 of 11 Estimation of Public Sector Health Spending, 1995 Total public sector health spending is estimated to be 25.6 million lari, or 20 million dollars in 1995 (assuming an average exchange rate of 1.28 for the year). This is equal to approximately 6.0 percent of all public sector expenditures for the year. The following assumptions were used to reach this estimation: * actual public sector health expenditures for January - May 1995 were 5.887 million lari (central = 1.812 million, local = 3.325 million, other = 0.750). (Source/MOF) * projections for June are based on monthly average for January-May (1.177 million lari per month) * from July through September, central and other expenditures are estimated at 1.883 million lari per month, based on IMF data which include extra budgetary support to the Ministry of Health. * from October through December, central government spending is based on reported expenditures of the State Health Fund (5.213 million lari or 1.741 lari per month) * from July through August 10th, local government expenditures are assumed to continue at the monthly rate estimated from January through June (0.665 million lari per month) * from August 10th through December 31, local expenditures are assumed to equal 1.3 lari (US$1) per person which is the minimum level of expenditures for the municipal package mandated by the reforms. Total local expenditures during this time would therefore equal 7.058 million lari (1.3 lari * 5,429,500 population) Note that this may underestimate total local expenditures because: i) some municipalities have chosen to provide more services and ii) a September 13th decree holds municipalities responsible for paying 90 percent of utility costs of facilities located in their jurisdiction. On the other hand, we do not know if all municipalities complied with the decree. * total public expenditures are estimated to be 427.8 million lari for 1995 based on estimates of the IMF. 14. The new policy reforms, however, introduce a number of practical issues that must be overcome if the reforms are to be successful. An essential first step is to develop an appropriate regulatory framework and provider payment procedures with appropriate incentives. The institutional framework needs to be revised under a decentralized structure, and local capacity in accounting and management needs to be greatly strengthened. D. Key Issues Financial Sustainability of the Health Care Reform 15. The State Health Fund has been fully functional since January 1996, when revenues from the tax on hazardous products and privatization became available in addition to continued allocations from the state budget and revenue from the "3+1" payroll tax. The Ministry of Health projects that the Fund will collect approximately 24.1 million lari in revenue in 1996. As seen in the table below, the principal source of revenues will be the central budget, which is expected to contribute 16.9 million laris. Annex C.6 Page 5 of 11 16. Payroll and sin taxes will contribute another quarter of the projected revenues. The government made the following assumptions on tax compliance when estimating tax revenues: i) payroll tax -- assumed to be the same rate (approximately 35 percent) as currently achieved by the social security tax and ii) excise taxes -- assumed to be 20 percent of potential revenue given current use. 17. Projections from privatization, which account for less than 5 percent of total revenues, assume that the government will proceed with its planned program of privatization of health facilities for 1996. The government feels that its estimates of revenues from privatization are very conservative, and may underestimated actual revenues by half. On the other hand, with no prior experience of privatizing health facilities in Georgia and given the poor state of most health facilities, these figures may be optimistic. 18. Currently, government projections for expenditures for the State Health Programs are 42.6 million lari for 1996, exceeding revenue projections by approximately 18.5 million lari. In addition to the concerns about the sustainability of central budget financing and the ability of the government to collect the tax revenues earmarked for the Fund, a further consideration is the projected volume of services and unit costs. The government estimates of expenditures are based on current utilization patterns and do not consider latent demand that is suppressed by unaffordability or poor quality of services. If, as is predicted by the experience with case based reimbursement elsewhere, the volume of services increases, the cost of the basic package will exceed projections and add to the projected deficit. 19. In the short run, the most likely sources to fill the financing gap of the Fund are: i) international donors, who currently provide more than 8 million lari of vaccines and medical supplies and are committed to continue their support to Georgia within the framework of the new reforms; and ii) additional revenues from privatization, assuming the Government's estimates are approximately one third of what they expect. In addition, the following factors will be essential in order to achieve a balance of projected revenues and expenditures for the Fund: i) strengthened collection of revenues; ii) continued support from the central budget; and iii) implementation of a monitoring and control system. 20. In addition to ensuring the financial sustainability of the State Health Fund, the government also has an obligation to ensure that municipalities contribute to the municipal program at the rate required (see para 13). The municipal program is responsible for covering emergency services and reimburses providers using the same nosological classification system as the State Health Fund. If municipal expenditures continue at the same rate mandated for 1996, they would total approximately 12 million lari in 1996, or approximately 20 percent of all public sector spending on health. Annex C.6 Page 6 of 11 Projected Annual Revenues and Expenditures for the State Health Fund, 1996 (Lari 000's) Revenues for 1996 Expenditures for 1996 Origin Estimated Programs TotaVYear Income State Budget 16.9 Disease Prevention and Health Promotion Programs 6.6 Payroll Tax 3 % 3.0 Curative Programs 22.3 Payroll Tax I % 1.0 Insulin Program 5.4 Tax on Hazardous Products 1.9 Administrative, Science Support and Education 8.3 Privatization 1.0 Licensing and Accreditation 0.3 Subtotal 24.1 Grants and Subsidies 7.5 TOTAL 31.6* TOTAL 42.6 * Financing gap will be filled by donors and humanitarian agencies The Basic Package and Priority Setting 21. The "basic package" refers to a minimum program of preventive and essential clinical health care to be financed by the government. The government used what appears to be a rational explicit methodology for arriving at the "basic package." This is based on six criteria: epidemiological significance, social significance, life-threatening conditions, need for emergency care, effectiveness of medical intervention and cost of treatment. The package which the government has devised for 1995, considering the expected revenues of the State Health Fund, includes the following services and activities: Disease prevention: immunization, prevention of socially dangerous diseases, safe motherhood and healthy children, epidemiological surveillance, and health promotion. Curative services: inpatient treatment for deliveries, all infants under the age of 1, treatment of tuberculosis, inpatient psychiatric care, and provision of drugs for terminally ill patients. 22. The items included in the curative services suggest that criteria other than those explicitly cited above were used to determine what could be covered. This package has undergone continuous delays, but a July 5, 1995 order of the Head of State clearly sets out what is covered in the package. Additionally, the order specifies that municipalities must finance a third component of the basic package -- "emergency care" as well as health services for children age 1-14. Precisely what constitutes "emergency care" is as yet unclear although it does appear that there is some, albeit weak, coordination between the central government and municipalities in defining responsibilities. Additionally, the MoH is currently defining minimum "standards" for the Municipalities' programs. 23. The government's budgetary constraints mean that only part of total health spending will be financed out of the State Health Fund and included in the basic package. The remaining services, including all ambulatory curative services, would be paid out-of-pocket by consumers. This, of course, raises equity issues which are discussed further below. Annex C.6 Page 7 of 11 Provider payment methodology 24. The provider payment system is a key issue to the success of a health reform process in any country. Different methods generate incentives that influence decisively how providers produce health services. Depending on the nature of those incentives and on the context they are applied, payment mechanisms may induce, or not, movement toward improved efficiency, equity, consumer satisfaction and health status. 25. The reimbursement system designed by the MoH for the basic package combines essentially two methods: a case based system for hospitals and capitation for some public health activities. In the case-based methodology for hospitals, several nosological categories were defined under the 'basic package', and for each one a standard level of health services was defined and priced. Hospitals will be reimbursed by the State Health Fund for all patients who are admitted with diagnosis covered by the basic package. The unit prices include the quantity of medical consultations and tests for diagnosis purposes, the 'required' drugs and treatment medical acts and also the number of inpatient days for each category. One concern is the paucity of available information. This kind of payment methodology requires a significant amount of reliable information on costs and health services production, which does not seem to be available. This information system is indispensable to build the model and also to monitor its operation. 26. The reimbursement system for hospitalization designed by the MoH team is clearly too complicated, administratively costly, and provides perverse incentives to providers and consumers. The possible perverse effects of such a reimbursement methodology are quite well known and described extensively in the literature. One particularly telling example from Georgia is the case of child deliveries where the price of a normal delivery has been set at US$61, while for a Cesarean the price is US$ 300, and for a Cesarean with ICU the price is US$1200. These prices, paying almost twenty times more for a delivery which includes a stay of the mother in an ICU relative to a 'normal' delivery has some negative impacts: (i) it is a strong incentive to increase artificially the utilization of more sophisticated resources, causing an increase of health care costs (exactly the opposite to the intentions of the reimbursement system), thereby reducing efficiency; and (ii) it may cause some iatrogenic effects on the patients. 27. For public health services covered by the basic package, such as immunization and some maternal and child health services, providers will be paid an age-adjusted capitation fee ranging from US$1 to US$2 per capita. The details of how this system will be implemented, however, remain unclear 28. The most important source of revenue for health care provision will continue to be direct payments from patients The co-existence of these reimbursement systems raises an important issue, because the official one intends to be an incentive to efficiency, standardizing all the diagnosis and treatment procedures; the direct payments are an open-ended system with incentives to providers to increase sector expenditures. There is a clear issue of adverse consequences for patients. This problem with cost containment will add to the economic difficulties that the GoG has to finance even the very narrow basic package to be covered by the state health program. Annex C.6 Page 8 of 11 Coverage and Access 29. Historically, coverage of health services has been quite high in Georgia. Although there were regional differences in the availability of medical services, coverage and access were adequate. The country's financial crisis, however, has greatly limited the availability of affordable, adequate quality health facilities. Helicopters which once served the mountainous regions in winter no longer function. Ambulance services have dropped dramatically, further limiting the physical access for many people. Furthermore, there is evidence that many poor people cannot afford to pay the amounts currently required for medicine, drugs, and food in addition to the payments they must make to physicians and nurses. A 1994 national household survey found that 27 percent of the poor were unable to afford medical care. These physical and financial limitations to access may explain the decline in utilization rates for hospitalization and outpatient visits over the last three years. As an example, in 1994 around 10 percent of pregnant women gave birth at home because they could not afford the costs for a normal delivery. 30. With two thirds of the population under the poverty line and approximately 800,000 in the most vulnerable groups (including more than 270,000 displaced people), the Government is exploring ways to ensure that the very poor will have access to the essential health services which are not included in the basic benefits package. The two issues which remain unresolved are: (1) how to identify the poorest in an economy where a large part of the activity is informal and poverty is a widespread yet new social phenomena and (2) how to finance a subsidized program to support access to basic health services by the poor when public financial resources are extremely scarce and institutional capabilities are very weak. In the short-term, the Government chose to address the needs of the poor by designating Hospital Number 9 and several specialty hospitals to serve the needs of the poor. A total of 275 beds were designated to treat the most vulnerable groups in Tbilisi: single unemployed mothers with three or more children, single pensioners with pensions below US$2 and single invalids. Other institutions, like the Veteran's Hospital, are financed by the State to continue providing care to their clients. The Government has since refined the system by providing vouchers to the groups identified above and allowing them free choice of provider. Improved means testing with a World Bank supported household income survey planned for 1996 and a second household demand and expenditure survey, replicating the one prepared by UNICEF in August-September 1995, is planned for September 1998, to provide information on poverty evolution and its implications on health. In the future, the government may wish to improve the horizontal equity of its health system by encouraging risk adjustments other than age in its capitation payments to providers and to improve vertical equity by looking at sources of revenue that are more progressive. E. The Health Financing Component 31. The health financing component has three major objectives: (1) assure that scarce resources are used in a cost-effective manner to improve the health of the Georgian population; (2) assure the equitable distribution of financing both in the collection and allocation of public funds, with special emphasis on the position of socially vulnerable groups and the balance of individual and collective responsibility for health; and (3) assure sustainable financing of the health sector in order to meet population needs. The project proposes to meet these objectives through the following activities: Annex C.6 Page 9 of 11 Development of the State Health Fund System 32. The objectives are to increase the technical efficiency of financing by introducing improved accounting and revenue collection methods, as well as to strengthen allocative efficiency through the introduction of provider contracting and payment methods, and the introduction of a management information system. This activity will be implemented by the State Health Fund. Specific activities include: 33. Management information system (MIS): A centrally defined MIS will be an essential tool to drive the reform successfully. Information on resources, utilization and outcomes must be standardized and routinely collected, worked out and distributed to all the key actors. The MIS will be designed from the central level, on a normative way, defining the general routines. Also, an analytical and critical function will be performed, monitoring all the economic issues of the health system, with special focus on the provider payment mechanisms and on the provider competition. A methodology to fix prices will be developed in order to legitimize the direct payments from the patients. The objectives of MIS include improved management capacities, regulation of resources flow, maintenance, technology management, quality assessment and cost effectiveness studies. The project will: (i) define the needs of routine information from the providers (financial, production and resources), from the Regional Health Funds and from other central departments; (ii) define the routine tasks on management information: circulation, time limits, responsibilities, methodologies of data aggregation and processing, and information users; (iii) develop methods for the assessment of the provider payment system and its impact on the supply and production of health care and access of patients; and (iv) develop methods for the evaluation of the provider competition in terms of the impact on technical and allocative efficiency. 34. Develop capacity in financial procedures and accounting: Technical assistance will be provided in financial management to revise basic operational procedures of the SHF. It will review the existing budget and provide advice on the planning process for future budgets. Assistance is also required in the management of fund reserves, since the present expectations are very imprecise. This consultancy will help the Fund to improve the management at a national and regional level. Technical assistance will also be provided in accounting methods development and in designing the training curricula in accounting and auditing systems. In the first year the support will concentrate on training staff in concepts like double entry book-keeping, accrual accounting and depreciation of assets. In the second year the focus will be in auditing systems and developing curriculum for further training actions. 35. Develop planning capacity: The sustainability of the health reform depends a lot on the self-financing capacity of the SHF. It is vital to anticipate revenues and expenditures. In present, it lacks any expertise in actuarial planning. Technical assistance will be provided to conduct an initial actuarial analysis and assess the available information to calculate risk factors for the development of models that enable the SHF to forecast expected expenditures both at national and regional level. Technical assistance will also be required to use the results of the actuarial analysis and combine it with present data on health care demand, assumptions about revenue collection (for which, specific methodologies should be developed) and patterns of service delivery. The resultant models will permit the SHF to measure the expected impact on revenue and expenditures under different scenarios. 36. Economic evaluation of health care technologies and programs: The SHF must be able to assess the efficiency of the financing and provision of health care. This information is indispensable Annex C.6 Page 10 of 11 to decision makers who must define the basic package, assess the desirability of introducing sophisticated new equipment, and make other vital decisions. Technical assistance will be provided to help to identify the local staff, to define the routine collection of data, to develop methodologies of economic assessment and to advise how to distribute the results of the studies. Development of Regional Health Funds 37. Regional Health Funds (RHF) will be in place during 1995. The RHF will administer the budgeting, monitoring and data collection of the system at the local level. The project will provide technical assistance to develop its capacities, with special focus on the management issues. According to the responsibilities defined by the MIS sub-component, local courses must be carried out in the phase of implementation. Also support in computers and software shall be provided. Specific activities include: 38. RHF accounting system: Under the new payment methodology, it is important that hospitals and health Funds employ a uniform system of accounting and data management to allow smooth exchange of information and reimbursement between them. The lack of an uniform system hampers efficient management and the analysis of health care costs and the revision of the price list. The system of cost accounting, budgeting, service monitoring and evaluation should be strengthened. Technical assistance shall be required to develop accounting procedures to be used by RHF in accordance with the principals defined inside the MIS. Implementation of one accounting, budgeting and financial management integrated system would occur in a first stage in one selected region. The project would support: (i) a book-keeping system adapted to health care services, (ii) a cost accounting system, (iii) a budgeting system, and (iv) hard and software for the above systems. 39. RHF financial management system: Assistance will be provided to develop training programs in financial management and actuarial models. A course developer will work with local staff to start a first programme and annual courses for SHF staff. About 50 training places will be available, on a basis of four per RHF. As soon as each RHF have trained people, in management and in computer support, computers and software will be available, funded by the project. Procurement, configuring, testing and installation of computers will be in place to implement the MIS and the accounting system. Development of provider / Health Fund interface 40. Providers Accounting System. In most hospitals and other type of providers, there is an important lack of systems for management and accounting procedures. Technical assistance shall be required to develop accounting procedures to be used by providers in accordance with the principals defined inside the MIS. Implementation of one accounting, budgeting and local provider financial management integrated system would occur in a first stage in the provider institutions selected for rehabilitation and management development. The project will support: (i) a bookkeeping system adapted to health care services; (ii) a cost accounting system; (iii) a budgeting system; and (iv) hard and software or the above systems (for the selected institutions). 41. Health financing and management training program. The project will support the development and operation of a management training programme that will provide training to RHF and providers in health services management, financial operations and contract development. Technical assistance will be provided to support the development of teaching skills and the elaboration of course curricula. Annex C.6 Page 11 of 11 42. Provider financial management. In most cases there is an important lack of systems for financial management and accounting procedures. An health financing specialist will help to develop a financing management policy and accounting procedures to be used by providers. The specialist will help to identify suitable technical assistance in curriculum development to work with local course developers to prepare a training programme in financial management for providers and RHF managers. Training will be provided for 200 people from provider units. A limited number of computers and software will be available for providers. Procurement, configuring, testing and installation of computers will begin soon after the project start so that adequate facilities are available for providers to implement the system recommended by other sub-component projects - MIS and accounting. Following initial training, the project will help with installation and follow-up user support of the provider financial management system through local specialists. Annex D Page 1 of 17 ECONOMIC ANALYSIS A. Introduction 1. The proposed project is multifaceted. It addresses not only major macro policy issues in the health sector such as health care financing, regulating health care providers, and changing public/private roles, but also supports targeted interventions in maternal and child health and health promotion in order to address the diseases which cause the greatest burden in Georgia. The following economic analysis provides the rationale for why this project at this time, and describes the potential impact of both the proposed project and the Government's health sector reform strategy. The analysis follows the framework recommended by the World Bank's Human Development Department (HDD) , addressing the following issues: 1) linkages to economic and sector work (section B); 2) analysis of alternatives (section C); 3) assessment of financial and fiscal impact, public and private affordability, and cost recovery (section D); 4) analysis of cost-effectiveness, cost utility, and cost benefit (section E); 5) sensitivity and risk analysis (section F); 6) analysis of institutional capacity (section G); 7) analysis of poverty alleviation impact (section H); 8) analysis of environmental impact (section I); 9) performance criteria for monitoring and evaluation (section J); and 10) overall coherence and completeness of analysis (section K). B. Linkages to Economic and Sector Work Strategy for World Bank Assistance 2. The objectives of the World Bank's assistance strategy to Georgia are: to help reverse the sharp economic decline of the past few years, to assist the transition to a market economy and alleviate the poverty which has emerged in Georgia in recent years. With a particular focus on promoting private sector development and improving the efficiency of the public sector ... through its lending program, the Bank will support economy-wide and sector-specific reforms that promote economic growth as well as investments to rehabilitate and build new capacity in critical infrastructure sectors. The Bank will also assist in strengthening public management, developing human resource and institutional capacities and strengthening the social safety net. 3. Given Georgia's difficult fiscal situation, much of the World Bank's assista nce will concentrate on improving the cost-effectiveness of government programs and on redirecting public sector involvement in the economy. Strengthening the social safety net and targeting scarce public resources to the provision of public goods and to fight against poverty are the major strategic objectives in the social sectors. Plans to reform the health sector to improve service delivery to the poor and to privatize the system where possible would not only reduce obligations on the state budget and improve resource allocation efficiency, but would also help to strengthen Georgia's social safety net. I See "Economic Analysis in the Population, Health and Nutrition Sectors: A Conceptual Framework for Task Managers" by Alexander Preker (HDD), January 2, 1996. This framework is based on an upcoming book on Economic Analysis by Pedro Belli, the World Bank, 1996. Annex D Page 2 of 17 4. The proposed health project fully complies with and supports the World Bank's assistance strategy in Georgia by attempting to: a) improve the efficiency of the health care system; b) create conditions for privatizing health facilities; c) reduce the government's financial role to providing a basic package of public health and essential clinical services so as to free resources for targeting the poorest and reinforcing the social safety net; d) improve health services for the poor by standardizing the quality of services and offering a package of public health and essential clinical services free of charge; and e) in the longer term, improve the economic productivity of labor by reducing the burden of disease, especially among adult males. Economic and Sector Work (ESW) 5. To gain a more in-depth understanding of the constraints and possibilities of the Georgian economy, detailed economic and sector work has been completed. In health, most of the ESW was carried out as part of project preparation. The objectives of the ESW, done in close collaboration with Georgian colleagues, were to assess the current situation in the health sector, assist the Government in designing a feasible reform for the sector, and identify and assess various alternatives for a World Bank financed health project. Two series of technical notes were prepared (January 1995 and June 1995) covering topics such as: health status, maternal and child health, hospital efficiency, health facilities and medical equipment, health financing reform, poverty issues in the health reform, and accreditation, licensing, and quality assurance of health providers. Analysis done on the health sector as part of the upcoming Public Expenditure Review (PER) also provided invaluable information on health financing and health expenditures. This ESW was important in determining what the sectoral priorities were and how best to meet the Government and Bank's objectives of improving the efficiency of the sector, reducing the burden of disease, and alleviating poverty. The collaborative work allowed the World Bank to help the Government develop and refine a health sector reform strategy. The components of the project developed naturally from the priorities which were identified and the ensuing policy reforms adopted by the Government. Adequacy of Policy Framework 6. The Government is committed to a health sector reform which increases public spending on health, ensures coverage of essential health services to the entire population, improves quality of health care services, and increases efficiency of the system. Universal coverage and broad risk pooling were positive features of the old system. However, with the total collapse of the economy and civil unrest, public provision of services essentially stopped. Utilization rates dropped, indicating reduced access. The risk pooling which characterized the old system was eliminated as patients were forced to make illegal payments to doctors and nurses for health care services. The Government's response to this crisis has been radical. It has changed the organization and financing of health services by separating the provision and financing of health care, introduced new sources of financing for the sector, and concentrated public spending on a package of public health and essential clinical services. 7. While these policy changes mirror many of the reforms taking place in other middle income countries, it should be noted that the objectives of risk pooling and broad access are somewhat compromised. First, although the reforms broaden the financial base of the sector beyond general revenues by introducing new payroll and excise taxes, the existing low rates of tax collection and large quantity of services that will be paid out of pocket mean that risk pooling is not universal. However, risk pooling under the reforms will be broader than has been present in the totally unregulated system of the last four years. Similarly, access to services will not be guaranteed as was the case during the Annex D Page 3 of 17 Soviet era, but the reforms, by guaranteeing a package of public health and essential clinical services, should ensure broader access than has been present since independence. 8. Restoration of economic growth should improve both risk pooling and coverage. In that case, presumably the tax base would expand and the scope of the basic package would increase, reducing the need for out-of-pocket payments by patients. 9. One risk of the health financing reform is cost escalation. The old system was controlled by the central government. Under the new system, health care providers will be reimbursed for services provided on the basis of a diagnostic related group (DRG) type fee schedule. The difficulties in controlling costs in such a system are well documented in the United States and other Western European countries, and even more difficult to control in a country like Georgia with little existing infrastructure to closely monitor provider behavior. Some steps have been taken to control costs such as capitating public health services and establishing a reference price list for services not included in the basic package. Perhaps as a reaction to the former system, however, the Georgians have been very reluctant to adopt other payment methods in order to better contain costs. The project will attempt to strengthen the Government's capacity to control health expenditures by closely monitoring the State Health Fund (a credit covenant) and supporting the development of practice guidelines and training programs to improve the quality and appropriateness of care provided. 10. The reforms, as described above, are fully consistent with the Government's public sector investment strategy. The project has been designed to support the Government's health sector strategy and is consistent with both the Government's health sector investment strategy as well as more broadly its public sector investment strategy. C. Analysis of Alternatives 11. The project's objectives -- to reduce the burden of disease, to improve the efficiency of the sector, and to improve coverage and access -- complement both the World Bank's assistance strategy for Georgia (see para 2) as well as the Government's economic reform strategy. Alternatives in project design were assessed against their contribution to meeting these objectives. Factors which influenced the choice of alternatives included a project budget constraint (IDA funding of only US$12 million at the time of appraisal and limited Government contribution), the relative cost-effectiveness of the alternatives, and political will and implementation capacity. Alternatives to Reduce the Burden of Disease 12. The overall objective for the Government with regard to health is to improve the health status of the population. The known determinants of health are socio-economic conditions, individual life-styles, the health care system and the environment. Consequently, interventions which promote economic growth will also have a positive impact on health status. Georgia is undertaking economic reform with the assistance of the IMF and the World Bank and positive growth is expected to begin in 1996. However, improvements in living standards will be gradual and a return to 1993 levels of consumption is not expected until the turn of the century. Improvements in health status attributable to economic growth will lag even further. Improvements in the environment are not expected to greatly improve health status in Georgia. A recent study found that less than one percent of the burden of disease in Former Soviet republics is caused by inadequate water or sewerage systems. The project, Annex D Page 4 of 17 therefore, emphasizes improving the health care system and changing the life-styles of individuals in order to reduce the burden of disease. 13. A burden of disease analysis was undertaken as part of project preparation. The results of the analysis, using the disability adjusted life year (DALYs) methodology, show that the two groups where the most DALYs are lost due to premature deaths are infants (population under one year of age) and individuals aged 60 to 64 years. Fifty percent of infant deaths occur in the perinatal period. Looking across diseases, the study found that cerebro-vascular disorders and ischemic diseases are the most important health problems in Georgia, followed by accidents for men and breast cancer for women. On the basis of this study as well as what was learned from economic and sector work, the project was designed with two very specific targets: a) reduce perinatal mortality and permanent disabilities by improving the quality of maternal and child health services and b) reduce adult mortality and morbidity by preventing circulatory diseases and accidents by improving public information and prevention programs. 14. Project activities which are intended to improve the quality of maternal and child health services include: a) strengthening the MoH's institutional capacity to develop health policies, health promotion activities and services for women and infants including development of protocols of care, rules for licensing staff and facilities, guidelines for privatizing and reorganizing services, and a perinatal mortality surveillance system; b) developing training programs in maternal and child health, obstetrics and pediatrics; c) creating a national Task Force for Child and Maternal Survival, which will build national commitment, increase funding, and develop public awareness of child and maternal survival issues; d) creating regional Perinatal Centers in Tbilisi and Kutaisi with a referral system to treat all high risk pregnancies and newborns with complications and demonstrate to residents and other hospitals how perinatal services may be improved; and e) refurbishing and equipping of maternal and child health services in the Tsageri District Hospital to demonstrate how to improve services in remote areas; and 15. The project aims to reduce perinatal mortality by improving the quality of existing maternal and child health services. This was determined to be both more effective and less expensive than introducing new services. Refurbishment of the two Perinatal Centers in Tbilisi and Kutaisi is the most expensive input in the project. The Ministry of Health first identified 16 facilities nationwide as potential candidates. An assessment was made of each of these facilities and the two facilities chosen on the basis of their geographical location, projected cost of refurbishment, political commitment of the mayors, willingness of the hospital directors to undertake reforms, and the preferences of the Ministry of Health. The Tbilisi facility will also offer cardiac services and serve as the center for a secondary cardiac care prevention program, which is discussed below. 16. To address the problems of adult health, the project invests in smoking reduction, cardio-vascular diseases prevention and injury control programs. The cost-effectiveness of health promotion and disease prevention is well known and substantiated in a cost-effectiveness analysis which was completed as part of project preparation (see paras 39-40). Given the lag in achieving measurable improvements in health status for some programs such as circulatory diseases, the project will also support a secondary prevention program which is intended to educate the public on the symptoms of heart attacks and strokes in order to encourage them to seek timely treatment and also educate health professionals on the best treatment. In order to improve the likelihood of success of these prevention programs, the project will establish a health promotion fund which will provide grants to communities, NGOs, and governmental agencies on a competitive basis. Alternatives which were rejected included administering the programs through the existing San-Epid system or distributing Annex D Page 5 of 17 monies to communities strictly on a per-capita basis. The project will also have a positive impact on adult health by training health professionals in modem public health practice and family medicine. Alternatives to Improve Efficiency and Quality 17. Economic and sector work revealed that one of the major problems Georgia faces is an excess supply of both doctors and hospitals. Furthermore, the quality of health services is poor because health professionals are poorly trained and the health infrastructure is in a poor state of repair and often inadequately equipped. In order to improve the efficiency of the sector, the project will reduce the size and improve the quality of health sector personnel by: (a) removing physicians and other personnel from the government payroll, allowing competition to rationalize the number in the sector; (b) instituting a licensing exam for currently practicing as well as recently graduated physicians; (c) creating a Center for Continuing Education to provide training in public health, family medicine, nursing, and administration to existing health personnel; and (d) limiting the entry to medical schools. These actions were chosen over other alternatives because they would rationalize the supply of doctors in a transparent way and allow the best quality doctors to continue to practice while providing training for others in critical areas. There was debate as to whether it was necessary to regulate the entry to medical schools or allow the market to control supply. However, with more than 28 medical schools opening since 1992, the Government requested the Bank's support in taking such drastic measures. Whether to base the Center for Continuing Education within one of the existing medical faculties was also considered and ultimately rejected because it was felt that it would be difficult to change the existing establishment, including the attitudes of the faculty and easier to have a free-standing entity which could hire guest faculty on the basis of their qualifications. 18. The project will reduce the number and improve the quality and efficiency of health care facilities by: (a) privatizing most facilities and granting management autonomy to those that remain in the public sector, creating a mixed, potentially competitive public/private market for patient services; (b) reimbursing facilities for services delivered rather than by the number of beds and other norms; (c) licensing and accrediting all health facilities; (d) introducing preventive maintenance of facilities and equipment, and upgrading service quality and management; and (e) refurbishing three existing facilities where perinatal services will be offered and as a demonstration of how to improve efficiency within existing facilities. This approach is based on the belief that before undertaking major physical refurbishment of the existing health care infrastructure, the number of facilities must be reduced and incentive systems developed to improve the internal efficiency of the institutions. The health facilities will be refurbished under the project, including the Kutaisi Pediatric and Maternity Hospitals, which agreed to merge, will be a powerful demonstration of how to better efficiency as well as provide integrated maternal and child health services. If more money were available from IDA, the project would have financed additional refurbishment once rationalization of the sector had occurred. 19. The project will improve the allocative efficiency of health services in Georgia by supporting the Government's state health program which shifts scarce public resources from primarily curative care to a basic package of public health (immunization, healthy children and safe motherhood, prevention of socially dangerous diseases, epidemiological surveillance, and health promotion) and essential clinical services (deliveries, treatment of children under the age of 14, treatment of TB, inpatient psychiatric care, provision of drugs for terminally ill patients, and emergency services). The remaining services are provided fee-for-service, with exemptions made for the most vulnerable groups. The items included in the basic package were selected using six criteria: epidemiological significance, social significance, life-threatening conditions, need for emergency care, effectiveness of medical intervention, and cost of treatment. Support will be provided under the project to evaluate and expand the contents of this basic package. Annex D Page 6 of 17 Alternatives to Improve Coverage and Access 20. Between 1990 and 1994, public finance for health services collapsed in Georgia. The system only survived because of surreptitious payments from patients to doctors and nurses. With deliveries costing as much as $150 and cesarean sections between $300 and $400, it is not surprising that utilization rates fell by fifty percent. The alternative the Government has chosen to improve coverage is guaranteeing access to a basic package of public health and essential clinical services described above. The Government did consider charging those who could afford to pay co-payments for clinical services included in the basic package in order to be able to expand services for the poor. However, this idea was rejected for now because of the difficulties in means testing. Ultimately, universal coverage and access will only be achievable when the economy improves. Public/Private Justification 21. The government's strategy is to privatize most of the delivery of health services, eventually retaining only regional hospitals in the public domain and converting the Ministry of Health's role to one primarily of regulation. Until facilities are privatized, they will be managerially independent in an attempt to improve their internal efficiency. Privatization of dental clinics and pharmacies has already begun and is proceeding well. These are the types of services, however, for which the private sector is most likely to want and be able to deliver. It is less certain that the Government will succeed in privatizing a sufficient number of hospitals to ensure adequate geographical coverage for the population. This mix of public and private facilities will need to be monitored in order to ensure that socially optimal amounts of care are provided. 22. On the financing side, market failures dictate a larger role for the public sector. While the Government is shifting more responsibility of financing to a payroll tax, it will continue to allocate funds from general revenues to health care to cover the costs of services which are public goods or have large externalities. These include public health services with transmission externalities such as prevention of communicable diseases, as well as services which can prevent disabilities, which place a large economic burden on society. Maternal and child health services, for example, can prevent disabilities associated with low birth weight and delivery complications. D. Financial Assessment Financial and Fiscal Impact 23. While Georgia was part of the Soviet Union, the health sector received from 2.8 to 4.1 % of GDP. The situation grew worse with the collapse of the economy. In 1994, public expenditures on health fell to 0.3% of GDP and 1.3% of public sector expenditures. Annual public expenditures on health averaged less than US$1 per person in 1994, less than 10% of 1990 expenditure levels in real terms. The fall in real expenditures was accompanied by a shift in the line item composition of expenditures. The rising costs of heating oil and other hard currency supplies crowded out spending on wages and maintenance in an increasingly limited budget. In 1990, wages and supplements were 52% of total public sector health expenditures. By 1993, they had fallen to 39% and in 1994 to 32% of the totals. Annex D Page 7 of 17 24. The Government is aware that restoring health expenditures to past levels would be impossible and undesirable, and is undertaking reforms (privatization and introduction of user charges) to transfer to the private sector responsibility for the provision and financing of health services. But with the current decline in income, this could lead to an irreversible deterioration of the human and physical stock of the country, jeopardizing the potential for growth. At current levels of public expenditure, it is also likely that the poor will have limited access to basic social services. The macro economic prospects are such that even with timely implementation of reforms, Georgia's economy will not reach the 1993 levels of per-capita consumption (already depressed relative to 1990) before the end of the century. 25. The government's policy response to increase revenues for the sector has been to introduce a mandatory payroll tax for health with 3 percent employer contribution and 1 percent employee contribution. Central budget allocations for health as well as revenues from the payroll tax, privatization, licensing fees, and interest income will go to the newly created State Health Fund (SHF). The SHF will act as a financial intermediary and reimburse both public and private health care providers for a basic package of preventive and essential clinical health care services included in the State Health Program. In addition municipalities are obligated to provide a package of services under the Municipal Health Program. With these additional sources of revenues, public sector health spending is projected to reach US$3.68 per capita in 1995 and US$9 in 1996. Using World Bank/IMF macro-economic projections as well as reasonable assumptions about the health sector, public sector spending on health should reach US$20 (1995 $) per capita by the year 2000 or 2.6% of GDP. Health care services not included in the State Health Program or the Municipal Health Program will be paid for out-of-pocket by consumers. 26. The current level of payroll taxes are quite high in Georgia: 45% combined contribution rate for social security, unemployment insurance, and health insurance. Tax collection, however, remains extremely low, increasing only from 3 percent of GDP in 1994 to 3.5 % in the first half of 1995. There are a small number of contributors and low reported wages in the formal sector. The World Bank has been sufficiently concerned with the adverse effects on labor and production costs that a condition of the Structural Adjustment Credit (SAC) is to reduce the contribution rate to Employment Fund by 2 percentage points and reduce the contribution rate to the United Fund for Social Security and Social Insurance by 8 percentage points. Given the plans to reduce total tax burden, the 4% payroll tax for health is believed to be manageable. The Government has kept the rate low compared to other countries such as Hungary (14%) and Croatia (20%) by relying on other sources of finance for health. The "3+1" payroll tax accounts for approximately 25% of the revenues of the State Health Fund. 27. Even with additional sources of financing, however, government revenues will remain insufficient to finance critical public expenditures without increased efficiency and reallocation of public spending. One key issue to address is the inefficiency of the low wages in the budgetary sector. The budgetary sector in Georgia is marked by two distinct traits: overemployment combined with a scarcity of key skills and extremely low pay. Low wages, a result of budgetary constraints, can cause government workers to spend much of their time looking for additional sources of income and makes it difficult to attract or retain skilled workers. This not only lowers efficiency, but also jeopardizes the Government's ability to perform basic functions. Aware of these issues, the Government initiated a policy of labor retrenchment, reducing the number of positions in the budgetary sector about 40 percent between January and December 1995. Nearly two-thirds (120,000) of these positions were in the health sector. As part of the health sector reform, employees of the health sector were gradually removed from the government payroll. Those that remain employed are paid directly by the hospitals and clinics that have become managerially independent firms. Annex D Page 8 of 17 Public and Private Affordability 28. Affordability of the reforms /Government perspective: The Government's reform program is designed in such a way to be "affordable" given the country's current economic crisis. Minimum allocations for health are being included in the SAC and health spending has been discussed by the IMF and COD. Public sector financing for the sector is projected to increase, but still remain at an affordable 2 to 3% of GDP over the next decade. There are nonetheless, concerns about the sustainability of central budget financing (approximately 50% of the Fund) and the ability of the Government to collect the tax revenues earmarked for the Fund (25% from payroll taxes and 10% from excise taxes). Furthermore, government projections show State Health Fund expenditures exceeding revenues by approximately 11 million lari in 1996. These Government estimates of expenditures are based on current utilization patterns and do not consider latent demand that is suppressed by unaffordability or poor quality of services. If the Government is unable to control utilization, the cost of the basic package will exceed projections and add to the projected deficit. The project will address these issues by requiring quarterly statements from the Fund and providing technical assistance during the project, particularly for developing the MIS necessary to monitor the system as well as for revising the provider payment method if necessary. 29. Affordability of the reforms/private perspective: The affordability of health care services for the population has been a major concern of both the World Bank and the Government. A national survey found that 27% of the population could not afford essential health services. The total collapse of the public system has left patients responsible for paying for all health care. And the care is not cheap. The average price of a delivery is US$150, compared to an average per capita income of US$363 in 1995. The project, by supporting a basic package of essential and public health services will make health services available free of charge. It will also increase household incomes by decreasing the burden of disease for disability and death. 30. With two thirds of the population under the Government's defined poverty line and approximately 800,000 in the most vulnerable groups (including more than 270,000 displaced people), the Government is exploring ways to ensure that the very poor will have access to the essential health services which are not included in the basic benefits package. The two issues which remain unresolved are: (1) how to identify the poorest in an economy where a large part of the activity is informal and poverty is a widespread yet new social phenomena and (2) how to finance a subsidized program to support access to basic health services by the poor when public financial resources are extremely scarce and institutional capabilities are very weak. 31. Initially, the Government has chose to address the problem by designating Hospital #9 and several specialty hospitals to serve the needs of the poor. A total of 275 beds were designated to treat the most vulnerable groups free of charge: single unemployed mothers with three or more children, single pensioners with pensions below US$2 and single invalids. Other institutions, like the Veteran's Hospital, were financed by the State to continue providing care to their clients. In February 1996, the Government revised the system by providing vouchers to the targeted groups and allowing them to use any health facility of their choice. In order to monitor the affordability of health services under the reform, the project includes a study of utilization to monitor private expenditures and financial barriers to access. 32. Affordability of the project: The tentative project financing plan includes US$7.7 million in Government contribution. This amount includes all applicable taxes and duties, estimated to Annex D Page 9 of 17 be about US$2.5 million. The total government contribution, net of taxes, represents about 2% of total public sector spending on health during the project implementation period. The estimated project costs include US$1.6 million to cover incremental operating cost including operational and maintenance expenditure for equipment, vehicles and buildings. The only incremental salaries included in the project costs are those of component coordinators since it is assumed that all new positions will be filled by reassigned MoH staff. These project costs are expected to be within sustainable limits since measures are being instituted in the health sector to reduce recurrent costs, improve efficiency and increase collection of user charges. Cost Recovery 33. Georgia went through an exercise of costing more than 6,000 disease classifications, including the costs of personnel, drugs and supplies, hospital overhead, and profit. The services which are included in the basic package are provided free of charge to patients and reimbursed to providers on the basis of the established prices. Services not included in the basic package are paid for by user charges, at prices set by hospitals. However, the reference prices have been made available to all hospitals and those patients who are eligible for an expanded set of services (the poor and veterans) are reimbursed on the basis of this list. E. Burden of Disease Study and Cost-Effectiveness Analysis of Health Interventions 34. As part of project preparation, a study was undertaken to analyze the cost-effectiveness of several proposed programs in disease prevention and maternal and child care to be included in the project: reduction of tobacco consumption; cardio-vascular disease prevention, and traffic injury control. The project will finance perinatal centers in both Tbilisi and Kutaisi, but only Kutaisi was included in this analysis because at the time of the study the site for the Tbilisi center had not been selected and cost estimates were unavailable. The study had the following specific objectives: (a) to estimate the burden of disease in Georgia, studying its distribution by nosologies, age, and gender; (b) to estimate present health care costs associated with the health problems targeted under the project; (c) to estimate potential health gains achievable through the interventions; and (d) to analyze the cost- effectiveness of the three prevention programs and the Kutaisi MCH program. Annex D Page 10 of 17 Methodology2 35. The 1993 World Development Report recommends estimating the burden of disease by calculating the number of Disability Adjusted Life Years -- DALYs -- lost because of death and illness. DALYs combine into a single measure the number of years of life lost due to premature death and years of life lived with a disability. Unfortunately, morbidity data in Georgia are unreliable, therefore, the global burden of disease analysis was completed using data only on mortality. However, in order to estimate more accurately the burden of diseases targeted in the project's disease prevention program, morbidity data from Estonia were combined with Georgia's data to produce estimates of "disability" DALYs for the following diseases: ischemic heart disease, lung cancer, chronic obstructive pulmonary disease (COPD), cerebro-vascular disease, and traffic accidents. The study uses 1990 mortality data as the baseline because these data were determined to be the most reliable. 36. To estimate the cost-effectiveness of the proposed programs, the study compares what would happen if the programs were not implemented with the expected cost and benefits as described in the project's Staff Appraisal Report. The cost estimates took into account: a) direct costs of diagnosis, treatment, follow-up and other health care services; b) quantifiable indirect costs (losses in production); and c) costs of implementing the program. A discount rate of 3% was applied to all costs as well as to all DALYs saved.' Burden of Disease 37. The two age groups where the number of life years lost due to premature death is greatest are infants under the age of one and adults aged 60 to 64. In 1990, for example, 1,557 potential life years were lost (using standard life expectancies) because of partially avoidable infant deaths. These results clearly justify the existence of a strong MCH component in the Georgia Health Project. Further analysis of the DALYs lost by cause (Table 1) suggests that the project's emphasis on preventing smoking, cardio-vascular disease, and traffic accidents is well targeted. The main health problems of Georgia, in terms of years of life lost to premature death, are ischemic disease, stroke, and atherosclerosis. Other important causes of death are accidents and trauma, particularly for men, and breast cancer for women. In the middle of this short list of main causes of death is cirrhosis and other diseases of the liver, most likely related to alcohol consumption. 38. Table 1 only considers the life years lost due to premature death, which underestimates the importance of some diseases which are not major contributors to death, but do result in significant losses due to disability. In order to more accurately assess the cost-effectiveness of possible interventions, the study estimated disability DALYs for five conditions: ischemic heart I Data used in this analysis came from a variety of sources, including the Government of Georgia, the World Health Organization, the World Bank, and other international and local publications. Local experts were also consulted. Nearly all of the sources note the dearth of reliable statistics in Georgia, due in part to the old Soviet system that demanded "politically acceptable" health indicators as well as Georgia's recent periods of civil war, unrest, and economic decline. In order to avert some of the problems with the data, the study used 1990 data on mortality and drew from the experiences of other former Soviet Republics, principally Estonia, to estimate morbidity and program effectiveness. I Sensitivity analyses were done using 5% and 8% discount rates and revealed no significant changes in the results of this study. ' Unlike other countries, Georgian statistics classify atherosclerosis as a cause of death rather than as a risk factor. If all deaths recorded under ICD 9 number 440 were classified as cerebro-vascular deaths, the contribution of stroke and other CVDs to premature mortality would increase and clearly be the major problem to be dealt with by the Public Health authorities. Annex D Page 11 of 17 disease, lung cancer, chronic obstructive pulmonary disease (COPD), cerebro-vascular disorders and traffic accidents. As shown in Table 2, these health problems and diseases represent in Georgia a total burden of 432,000 DALYs lost -- 211,000 due to premature death and 220,000 due to disability. The distribution across death and disability DALYs is not symmetric. As expected, COPDs have a much higher disability burden than death burden. On the other hand, traffic accidents and ischemic heart disease have a greater impact on DALYs lost due to premature death than to disability. Cerebro-vascular disorders remain the most significant health problem in Georgia, accounting for almost one third of all DALYs lost in this group. Table 1: DALYs lost to premature death by cause and sex, 1990 Males Females Total Tuberculosis 6,140 2.6 1,051 0.7 7,191 1.8 Septicemia 2,52471.1 2,255 1.4 4,779 1.2 Stomach Cancer 4,869 2.1 3,199 2.0 8,068 2.1 Lung Cancer 11,426 4.9 2,192 1.4 13,617 3.5 Breast Cancer 156 0.1 8,065 5.1 8,222 2.1 Diabetes 3,363 1.4 3,364 2.1 6,727 1.7 Ischemic Disease 49,074 20.9 36,274 22.7 85,348 21.7 Atherosclerosis 25,567 10.9 25,878 16.2 51,445 13.1 Other Circulatory Disease 4,070 1.7 2,633 1.7 6,703 1.7 Stroke 37,827 16.1 44,491 27.9 82,318 20.9 Pneumonia 9,131 3.9 6,942 4.4 16,073 4.1 COPDs 3,172 1.4 2,446 1.5 5,618 1.4 Cirrhosis & other Liver 11,213 4.8 3,964 2.5 15,177 3.6 Renal Diseases 2,964 1.3 2,378 1.5 5,342 1.4 Vehicle Accidents 20,237 8.6 4,854 3.0 25,090 6.4 Traumas' 20,092 8.6 4,567 2.9 24,659 6.3 Other Accidents6 22,575 9.6 4,931 3.1 27,505 7.0 Total 234,400 159,484 393,884 Table 2: DALYs for five conditions, 1990 Cerebro-Vascular disorders 64,728 63,286 128,014 Ischemic Heart Disease 85,348 29,750 115,098 COPD 5,618 104,537 110,155 Traffic Accidents 42,681 13,199 55,880 Lung Cance 13,618 10,041 23,658 Total 211,991 220,814 432,805 Internal trauma of unspecified or ill defined organs. 6 Includes, among others, the impact of falling objects, machine caused accidents, firearm accidents, accidents with explosives, electrical accidents, and radiation exposure. Annex D Page 12 of 17 Cost-Effectiveness Analysis 39. Although it is difficult to forecast and to quantify the expected health outcomes of the programs proposed under the Georgia health project, this study draws upon the considerable amount of existing cost-effectiveness literature as well as Estonian experience to make assumptions about program outcomes. These assumption are summarized in Table 3. Using these assumptions, nearly 200,000 discounted DALYs could be saved by the prevention programs by 2005; nearly 30,000 from smoking prevention programs, 117,000 from cardio-vascular diseases, and 52,000 from traffic accidents. Table 3: Expected Program Outcomes Program Expected Program Outcome Smoking prevention 15% decrease in total smoking prevalence'. Ischemic Heart Disease 2% yearly reduction in incidence and mortality rates from 1996 prevention to 1999 and maintenance afterwards. Traffic Accident prevention 5% yearly reduction in total accidents from 1996 to 1999 and maintenance afterwards. Cerebro-vascular 3% yearly reduction in incidence and mortality rates from 1996 Disorders Prevention to 1999 and maintenance afterwards. 40. Table 4 lists the DALYs saved as well as the discounted implementation costs for each program (as provided in the Health Project Staff Appraisal Report, projecting out until 2005). On average, it will cost US$2.83 (discounted) to save one discounted DALY with the disease prevention programs. The ischemic and cerebro-vascular disease prevention program is the most cost-effective, while the smoking prevention is the least effective. While the impact of the Kutaisi MCH component will be large, the costs per DALY saved is significantly higher than the prevention programs. This is due, in part, to the investment in construction and equipment of this component. Obvious benefits such as demonstrating how to rationalize facilities, raising the standards of care in not only the maternity and pediatric wards but also in other departments, and improving hospital management, are likely to generate substantial savings which are difficult to quantify and not included in the analysis. ' Outcomes for the disease prevention programs are limited to the target population between the ages of 15 and 64. The outcome from a 15% reduction in total smoking prevalence was estimated as follows: reductions in mortality and morbidity will affect mostly men and will start only in year 2001 for a program initiated in 1996. Initially there will be reduction of roughly 2.5% for COPD and lung cancer and of about 1% for ischemic heart disease. The yearly reductions will increase up to 2004, when we estimate they will reach 9% for COPDs and lung cancer and 4.5% for ischemic heart disease. For women, the most significant figure is an expected 1% reduction in lung cancer by 2004. Annex D Page 13 of 17 Table 4: Cost per DALY saved (US$), 1996-2005 Program DALYs Saved Program Cost (US$) Cost per DALY saved (Discounted) (Discounted) Tobacco 29,593 173,000 5.83 Ischemic and Cerebro-vascul 116,844 231,000 1.98 disorder Traffic Accidents 52,471 159,000 3.02 Sub-Total Prevention 198,908 562,000 2.83 Kutaisi MCH 16,498 2,278,000 138.00 Cost-benefit analysis 41. In addition to a cost-effectiveness analysis, a cost-benefit analysis of the program was also completed as part of the study. In contrast to the cost-effectiveness analysis, where the outcomes of the program were measured in DALYs saved, the cost-benefit analysis places a monetary value on the benefits of the program by estimating the amount saved in treatment costs as well as days of work gained. These benefits are also discounted at a rate of 3%. The study estimated the marginal savings of the prevention program by comparing the direct and indirect costs with and without the programs. Direct costs include the total costs of treatment, using the Government's estimates of average costs by nosological category for 1995. Estimates of the indirect costs of lost production were based on assumptions of work lost, employment rates by age and sex, and average salaries. The total amount of money expected to be saved is US$35.5 million. Table 5 compares, by program, the total costs of the prevention programs with the baseline option of doing nothing. Most of the savings (78% or US$27.6 million) will come in preventing ischemic and cerebro-vascular diseases. While the other two programs, smoking prevention and accident prevention, will save less (approximately US$1.6 and US$6.3 million respectively), there is a clearer rationale for public intervention. Table 5: Total cost savings (benefits) of intervention alternatives (US $1,000) Program Total Cost Total Cost "Benefits" Baseline with Program Smoking 109,253 100,775 8,478 Ischemic and Cerebro-Vascular 260,861 234,201 2,660 diseases Traffic Accidents 37,018 36,637 381 Total 407,132 371,613 35,519 42. Table 6 illustrates the ratio of the "benefits" of each program, as defined above, with the costs of each program which were presented in Table 4. The ischemic and cerebro-vascular disease prevention program has the most favorable benefit-cost ratio. For each dollar spent on this program, US$115 would be saved. Even the program with the lowest benefit-cost ratio, smoking prevention, would yield almost US$15 in benefits for each dollar spent. For the entire package of disease prevention activities proposed under the project, it can be expected that for each US dollar Annex D Page 14 of 17 spent it will be possible to avoid US$63 in total costs (treatment plus indirect costs). Because of the difficulties in estimating the monetary benefits of the Kutaisi MCH program, it was excluded from this analysis. Table 6: Benefit: Cost Ratio of Disease Prevention Programs Tobacco 14.7 CVDs 115.5 Traffic Accidents 39.8 Total 63.2 43. Taking into account all these issues, the main conclusions of the study are: i) the three prevention programs included in the Georgia Health Project are related to major adult health problems of the Georgian population, which caused in 1990 an estimated loss of 432,805 DALYs; ii) assuming the effectiveness and the expected outcomes of the proposed prevention programs, there is a potential to save 198,908 DALYs by the year 2005 at an average cost of US$2.83 for each DALY saved; ii) for each US dollar spent on prevention under the project, US$63 can be saved in treatment and indirect costs. These figures show that the programs have a high level of cost-effectiveness. In addition, the Kutaisi maternal and child health component of the project targets one of the groups contributing the most years of life lost to society due to premature death --infants. The component could save 16,489 years of life at an average cost of US$138 per life saved. F. Risk Analysis 44. The Government faces substantial financial, political and institutional risks in implementing both its ambitious health care reform program as well as the project. A full risk assessment was not done as part of project preparation. However, to the extent possible, risks were quantified as part of sensitivity analyses of the project's benefits. For example, sensitivity analyses included as part of the cost-effectiveness study found that changing the discount rate or expected program outcomes did not substantially change the study's conclusions. The project has also taken steps to address the most obvious risks associated with institutional capacity in the MoH to implement the project by setting up a strong PCU. Financial Risks 45. Given the collapse of the economy and the potential for high cost inflation in health spending, one of the major risks the Government faces is the financial sustainability of the health care reform. In projecting the fiscal impact of the reforms, simulations placed the range of per capita expenditures on health between US$8.34 and US$11.40 (8.6% and 11.3% of public sector spending) in 1996 and between US$20.64 and US$32.09 (8.6% and 13.5% of public sector spending) in the year 2000. In order to ensure continued Government commitment to the health sector even under a pessimistic macroeconomic scenario both the Health Project and the Structural Adjustment Credit have included minimum spending levels on health as conditions of lending. The Structural Adjustment Credit specifies that at least 7% of public spending must go to health and that this amount should rise as revenues increase. Under the health project, the Government has been asked to provide assurances Annex D Page 15 of 17 that it would ensure the viability of the State Health Fund without reducing the scope of services included in the basic benefits package and monitor and provide to the World Bank quarterly financial statements of the Fund. 46. Another financial risk the project faces is the ability of the Government to contribute its part of project costs. Although the amount is felt to be reasonable given the size of the health budget (see para 32), the experience of the Municipal Infrastructure Project suggests that the Government may have difficulty meeting its obligations. In order to mitigate this risk, a condition of credit effectiveness will be that the Government open a counterpart contribution account and deposit US$400,000 into this account and continue to replenish this account quarterly. The Ministry of Finance has already written a letter to the World Bank pledging the necessary quarterly contributions. Political Risks 47. In the recent past, Georgia has been plagued by political instability, highlighted by civil wars and the assassination attempt on Mr. Shevardnadze. In July 1995, however, the Parliament approved a new constitution, paving the way for presidential and parliamentary elections. In November, Mr. Shevardnadze was elected president with a large majority. Since the elections, he has succeeded in purging the mafia and it is expected that the new Government will be fully committed to the economic reforms. The Minister of Health, who is widely perceived to be one of the most reform minded members of the Government, will remain in his position along with most of his higher level staff. While the situation in Abkhazia has stabilized, a growing concern is the war in Chechnya and possibility it will spread to Georgia and other countries in the Caucasus region. 48. Another political risk is that the Government will encounter resistance to the reforms from important stakeholders such as doctors, hospitals, and medical schools. Much of the project emphasizes changing the behavior of providers, including what they practice (from highly specialized, curative medicine to primary health care), how they practice (from low quality, unregulated medicine to care guided by clinical practice standards), and the incentives they face (from salaried positions to one where earnings are based on productivity). There will be identifiable winners and losers in the reforms; a necessity if Georgia is to reduce the excess supply. The Government has tried to minimize this risk by providing good unemployment benefits for doctors and providing retraining for those who wish to change their specialty or leave the profession. Providers have had and will continue to have an important role in the preparation and implementation of the project, including areas such as developing licensing criteria, practice standards, and educational curricula. G. Institutional Capacity 49. Weak institutional capacity within the Government and the Ministry of Health remains a major risk, inspite of the recent political and legislative advances. The major issues are the management and administration capacity of the Ministry of Health, including its various departments and agencies such as the State Health Fund. To mitigate this risk, component coordinators were identified in each of the project's implementing agencies very early on in project preparation (October 1994). They will have primary responsibility for implementing the activities under their components. Much technical assistance and training was provided during project preparation and will continue during the project. The supervision plan for the project includes more than the average number of staff weeks. A more thorough institutional analysis, covering not only the Ministry but also health care providers, will be done as part of preparation for a second health project. Annex D Page 16 of 17 H. Performance Criteria for Monitoring and Evaluation 50. Two sets of monitoring and evaluation indicators have been defined and are included in the Project's Implementation Plan: process indicators (or input and output indicators) to measure progress in project implementation and impact indicators (or outcome and impact indicators) to evaluate improvements in the health system and in the health status of the population. The most important process indicators (most to be measured annually) are described in Table 7. The project will also promote the use of monitoring indicators throughout the country by requiring recipients of the health promotion grants to document the impact of their respective projects. Finally, key policy benchmarks have been identified in the Government's Statement of Development Objectives and these will be reviewed annually by the Association and the Government. Table 7: Project Monitoring Indicators * numbradvleoawrsgatdbth * prevalence of smoking HealhPooinFn *number and percentage of health care * incidence and mortality rate from circulatory institutions licensed diseases * number and percentage of health professionals * incidence and mortality rate from traffic licensed accidents * percentage of pregnant women completing 4 * knowledge, attitudes, and practices (KAP) of prenatal visits and having a full risk assessment health personnel working in maternal and child health * number of people trained in public health, * perinatal and infant mortality rates (for the family practice, nursing, and management by country as well as for Tbilisi, Kutaisi, and the Center for Continuing Education Tsageri which have higher targets) * number of health facilities privatized * total health expenditures by source and _______________________________ expenditure category I. Analysis of Poverty Alleviation 51. The collapse of pubic financing for health care has left many Georgians without access to affordable health care. The Government's decision to reform the health sector is instrumental to the broader public sector reform, to the development of a sustainable social safety network, and an example of efficient use of scarce resources to fight against poverty. The project has a direct poverty reduction objective by creating conditions for the financially sustainable provision of a basic package of public health and essential clinical services. While most patients will still be required to pay for Annex D Page 17 of 17 some services, the total financial burden should decrease. This is because while health care was nominally free, under the table payments have long been common in Georgia. For services not included in the basic package, the Government has been working on ways of better targeting for the poor. Action has already been taken in hospitals to set aside beds to treat the most vulnerable groups. The Government is also planning a quota system for every hospital to provide care for patients unable to pay for health services not included in the basic package of care. 52. By the end of 1996, with technical assistance provided under the SAC, a new backup program for social assistance will be established. This program is intended to address the problems of those who are needy but do not qualify for benefits under any existing program and can demonstrate that their resources are very limited. The test for eligibility under the new program will take into account the presence in the family of at least one person in vulnerable circumstances as well as the family's income and assets. Families will have to periodically demonstrate that they continue to meet the conditions for eligibility. The eligibility limits for this program will be set so that now more than a small proportion of the Georgian population -- 3 percent -- qualifies for assistance. These people will also be eligible for free care under the State Health Fund. The Government would also like to institute co-payments for the basic package for those who can pay once a reliable means testing system is in place, further freeing resources for the poor. J. Assessment of Environmental Impact 53. The project is expected to have a positive impact on the environment through energy efficiency measures that are part of the overall program to improve hospital efficiency. Medical waste disposal systems in hospitals and polyclinics were assessed during project preparation and under the project standards and norms will be developed for the rehabilitation of health facilities. It has been designated in Environmental Category C. K. Overall Coherence and Completeness of Analysis 54. The project is designed to support the Georgian health care reform program which is amongst the most progressive of all the former Soviet republics. In developing the reform, the Government has had to make tradeoffs in meeting conflicting objectives. For example, the new payroll tax for health raises additional revenue for the sector, but also will affect the competitiveness of industry and possibility of tax evasion. The new system will do less well at risk pooling and ensuring universal access than the former Soviet system, but will improve quality and ensure coverage of the most essential public health and clinical services. Most people will have to pay for health services not included in the basic package, but these payments will be legitimate and rationally priced rather than the illegal and unregulated system of gratuities which existed before. Government spending on health remains low, but it is higher than before and affordable, given the current economic situation. In the end, in the opinion of the project preparation team, the benefits of both the reform as well as the project outweigh the possible negative consequences and risks. The project will monitor closely the financial sustainability of the reforms and their effects on the poor and make special efforts to strengthen the capacity of the Ministry of Health to proceed with implementation. Annex E page 1 of 33 I. IMPLEMENTATION ARRANGEMENTS A. Project Implementation Responsibilities Primary responsibility for project implementation would be assumed by the Departments and Agencies of the Ministry of Health responsible for each of the project components, as shown in the Table below. Each of the components and sub-components will have at least one component coordinator who manages the activities in his or her component. A Project Coordination Unit (PCU), located in the Ministry of Health, will be responsible for the overall management of the project and will be staffed by local consultants with expertise in planning, administration, accounting, procurement and disbursement Project Implementation Arrangements Project Component/Sub-Component Implementing Department/Agency 1.0 Health System Reorientation 1. 1 Modernization of Public Health Department of Public Health and Atlanta/Tbilisi Services, Health Promotion, and Disease Partnership Prevention 1.2 Healthy Children and Safe Department of Maternal and Child Health Motherhood 1.3 Realignment of the Ministry of Health State Agency for Quality Assurance Department of Pharmacy & Pharmaceutical Industry National Health Management Center 2.0 Rehabilitation and Maintenance of Health Building Technical Department Facilities and Equipment Committee of Medical Techniques and Technology 3.0 Development of Human Resources National Health Management Center Center for Continuing Education 4.0 Modernization of the Health Care Financing Medical Insurance Department System State Health Fund 5.0 Project Administration Project Coordination Unit Annex E page 2 of 33 Organizational Chart of the Georgia Ministry of Heath Notes solid line indicates a structural entity of the Ministry of Health; dotted line indicates entities which are under administrative control of the Ministry but managerially and financially semi- autonomous AnnexE page 3 of 33 B. Terms of Reference for Project Coordination Unit Overview These Terms of Reference set out the tasks and services to be provided by the Project Coordination Unit (PCU) of the Georgia Health Project. The PCU will provide overall coordination of the Project, in cooperation with the component coordinators who are responsible for managing the implementation of activities in each component. The PCU will be located within the Ministry of Health. Responsibilities of the PCU Implementation of the Project Administration Component: * Procure works and goods * Procure services * Support component coordinators in the arrangements for in-country training, overseas fellowships and study tours * Maintain project accounts * Administer payments * Prepare and submit applications for disbursement * Maintain and assist component coordinators to maintain project and component accounts and records * Update project costs Coordinate and Manage Project Implementation Activities: * Develop, clarify, and disseminate procedures and guidelines consistent with Government and Bank requirements, regulations and guidelines, covering: administration, procurement, disbursement, accounting and record keeping, planning, evaluation, and reporting; * Based on plans made by component coordinators, prepare and update detailed overall project implementation plan covering: implementation schedule, budget, financing plan, procurement of civil works, packaging and procurement of goods, foreign and local technical assistance, training and fellowships, disbursements estimates and other project activities; and * Prepare, periodically update and distribute lists of names and contact address and numbers of: PCU staff, component coordinators, key contact persons at the MoF, donor representatives, World Bank Task Manager and Disbursement Officer. Project Supervision, Monitoring, Evaluation and Reporting: * Conduct supervision and monitoring activities at component and sub-component levels, including: conduct critical path analysis; monitor resource utilization; review progress; resolve bottlenecks and issues; ensure accuracy, quality and consistency; and disseminate best practices; * Coordinate and facilitate supervision requirements of the Government and external agencies. In particular, act as counterpart to World Bank supervision missions and mid- term review. Annex page 4 of 33 * Ensure compliance with agreements in the Credit Agreement and the Staff Appraisal Report. Coordinate with other Agencies and Donors Staffing Requirements The PCU will be staffed with local consultants with expertise in planning, administration, accounting, procurement and disbursement. The PCU will consist of: * Director * Planning and Monitoring Officer * Financial Officer * Procurement Officer/Civil Works and Goods * Procurement Officer/Technical Assistance and Training * Administrative Assistant Annex E page 5 of 33 C. PROPOSED PROJECT SUPERVISION PLAN Proposed Expected Skill Staff Input Date Activities Requirements (SW) Proiect Launch Workshop Task Manager; Architect; June Review Project Implementation Plan, Project Organization, Procurement & Disbursement 1996 Procurement, Financial Management & Reporting specialists; Operation Officer 10 Requirements including Project Monitoring. Supervision Mission Task Manager; Architect; Health October Review of Project Progress: procurement, program activities, Sector & Procurement Specialists; 10 1996 and civil works. Operation Officer February Supervision Mission Task Manager; Architect; Health 1997 Review of Project Progress: procurement, financial Sector & Public Health Specialists; 10 management, program activities, and civil works Operation Officer June Supervision Mission Task Manager; Architect; Health 1997 Review of Project Progress: procurement, financial Sector Specialist; Operation management, program activities, and civil works Officer October Supervision Mission Task Manager; Architect; Public 1997 Review of Project Progress: procurement, financial Health Specialist; Operation 8 management, program activities, and civil works Officer Supervision Mission Task Manager; Architect; Health February Review of Project Progress: procurement, financial Financing, MCH, Public Health, 1998 management, program activities, training, and civil works and and Education Specialists; 14 Plans for the Mid-term Review Operation Officer Mid-Term Review/Supervision Mission Task Manager; Health Financing, June Review of Project Progress: procurement, financial Public Health, Education, & 1998 management, program activities, training, and civil works Facilities Rehabilitation 14 including health indicators Specialists; Architect; Operation Officer Supervision Mission Task Manager; Health Financing, December Review of Project Progress: procurement, financial Public Health, Education & 12 1998 management, program activities, training, and civil works Facilities Rehabilitation Specialists; Architect Supervision Mission Task Manager; Medical June Review of Project Progress: procurement, financial Equipment, Health Financing, 10 1999 management, program activities, training & civil works Public Health Specialists; Architect Supervision Mission , Task Manager; Medical 10 December Review of Project Progress: procurement, financial Equipment, Health Financing, 1999 management, program activities, training, and civil works Public Health Specialists; Architect Supervision Mission Task Manager; Medical June Final Review of Project Progress: financial management, Equipment and Public Health 2000 program activities, and civil works including the preparation of Specialists 10 Implementation Completion Report Annex E page 6 of 33 II. IMPLEMENTATION PLAN A. Implentation Schedules The implementation schedules presented on the following pages summarize the critical activities of the proposed Project by component. A detailed implementation schedule is available in the project files GEORGIA HEALTH PROJECT Component 1.1 Heath System Reorientation 1995 1996 1997 1998 1999 ID Taski Nne Duration Start Finish Q0 43 44 01 Q2 03 04 01 Q2 Q3 04 QI Q2 03 I I Nominute Direclor of Dept. of PH (DPH) Od 6/19/95 6/19/95 2 2 Organization of DPH, Renovation of office 64.8w 10/2195 12/26/96 3 3 Draft Health Related Legislation 80w 6/19/95 12/27/96 4 4 Create National Heath Council Od 3/1/96 3/1/96 5 5 Develop National Health Stralegy (While Paper) 297d 3/4/96 4/22/97 6 6 Establish Health Information System 120w 5/31/95 9116/97 7 7 Heath Promotion Fund (HPF) 31w 7/1/96 2/3/97 8 7.1 Pass legisistion Od 711196 711/96 71 9 7.2 Design Fund 26.4w 71/96 12/31/96 10 7.3 Fund operational Od 111/97 111/97 I_ 11 7.4 Award first grants Od 2/3/97 2/3/97 12 8 Health Promotion Division 195w 10/5195 711/99 13 8.1 Appoint Task Manager for Vertical Programs Od 5/1/96 5/1/96 14 8.2 Establish procedures 16w 51/96 8/20/96 15 8.3 Conduct baseline studies 64.8w 10/5/95 12/31/96 16 8.4 Award grants Od 2/3/97 2/3/97 17 8.5 Initiate Programs 112w 9/2/96 10/23/98 22 8.6 Report on impact of programs Od 7/11/99 7/1/99 71 23 9 Foreign Technical Assistance 78.6w 9/2/96 3/4/98 35 10 Education and Training 195.2w 12/1/95 8/27/99 O For more information on Component 1.1, please refer to Annex C 1. GEORGIA HEALTH PROJECT Component 1.2 Healthy Children and Safe Motherhood 1996 1997 1998 1999 2000 ID Task Name Duratio Start Finish 01 Q2 Q3 04 O1 Q2 Q3 Q4 01 Q2 Q3 Q4 Q1 Q2 03 Q41Q1 02 Q3 1 1 Soled staff, establish office 4w 7/31/96 8/27/96 2 2 Basic Package (yearly reviews and recommendations) 543d 9/2/96 9/30/98 3 3 Develop guidelines for perinatal care 48w 5/2897 4128/98 4 4 Conduct 6 Seminars on perinatal care 78w 4/29/98 10/26/99 5 5 National Health Survey 58w 1/1/97 2/10/98 6 5 1 Prepare National Health Survey 10w 1/1197 3/11/97 7 5.2 Field work survey 12w 3/12/97 6/3/97 8 5.3 Prepare report 12w 6/4/97 8/26/97 9 5.4 Disseminate results in two seminars 24w 8/27/97 2/10/98 10 6 Perinatal Surveillance System 96w 1/1/97 11/3/98 11 6 1 Define institutional framework 24w 1/1/97 6/17/97 12 6.2 Define maternal infant passport 24w 6/18/97 12/2/97 13 6.3 Develop indicators 24w 1213/97 5/19/98 14 6 4 Conduct distinct PHCSS surveys 24w 5/20/98 11/3/98 16 7 Organization of Delivery of Services in Tblisi & Kutaisi Perinatal Centers 185w 8/14/96 2/29/00 16 7.1 Select and train staff, equipment 57w 8/14/96 9/16/97 17 7.2 Adopt protocols of care and guidelines 24w 9/17/97 3/3/98 18 7.3 Integrate services (PHC. level 1) 40w 3/4/98 12/8/98 19 7.4 Evaluate services (1st) 12w 9/16/98 12/8/98 20 7.5 Evaluate services (2 nd) 12w 12/8/99 2/29/00 21 8 Pilot Referral System 183.2w 7/1/96 1/3/00 1 22 8.1 Design referral system 24w 7/1/96 12/13/96 For more information on Component 1.2, refer to Annex C.1. GEORGIA HEALTH PROJECT Component 1.2 Healthy Children and Safe Motheriood 1996 1997 1998 1999 2000 ID Task Name Duratio Start Finish Qi1Q21Q31Q4Q1Q2lQ3lQ41QIQ2lQ3lQ4lQ1 Q2lQ3jQ4 C1102 03 23 8.2 Acquire Ambulances and communication equipment 24w 12/16/96 5/30/97 24 8.3 Start operations Od 9/1/98 9/1/98 25 8.4 Review system in 1998,2000 70w 911/98 1/3100 26 9 Training Module and Residency 210w 8/28/96 9/5/00 27 9.1 Create HC&SM office at NHMC 60d 8/28/96 111/19196 28 9.2 Develop training modules 210w 5/28/96 9/5/00 29 9.2.1 Select faculty aw 8/28/96 10/22/96 30 9.2.2 Develop training modules 52w 10/23/96 10121/97 31 9.2.3 Inilate modules 150w 1022197 9/5/00 32 9.3 Develop Residency: Obstetrics & Pediatrics 170w 828/96 11/30199 33 9.3.1 Select clinical sites 10w 8/28/96 11/5/96 34 9.3.2 Seled faculty 24w 11/6/96 4/22/97 35 9.3.3 Develop curriculum 24w 4/23/97 10/7/97 36 9.3.4 Initiate residency program 112w 10/8/97 11/30/99 37 10 Task Force for Child and Maternal Survival (TFCMS) 238w 5/24/96 12/14100 38 10.1 Nominate task force 12w 5/24/96 8/15/96 39 10.2 Plan activities 24w 8/16196 11/30/97 40 10.2.1 Organize funds 12w 8/16/96 11/7/96 41 10.2.2 Promote women and children health 12w 11/8/96 li30/97 42 10.3 Implement activities 202w 1/31/97 12/14/00 For more information on Component 1.2, refer to Annex C.1. GEORGIA HEALTH PROJECT Component 1.3 Realignment of Ministry of Health (MoK) I1996 1 1997 18 '1999 10 Task Name Duration Start Finish Q3Q 1 Q2 Q3 Q4 Q1 02 Q3 Q4 Q1 Q2 03 04 Q1 Q2 Q3 1 1 Establish, renovate, and equip 3 offices I 10d 5/1/96 10/1/96 2 2 Organize Study Tours 164w 1/1196 3/12/99 8 3 State Agency of Quality Assurance (SAQA) 210.6w 8/11/95 8/12/99 9 3.1 First round of registration of providers 25w 8/1/95 1/22/96 10 3.2 Extended registration 24w 1/23/96 7/8/96 11 3.3 Licensing 64w 7/9/96 9/30/97 16 3.4 Conduct iW-country training 188w 1/19196 8/12/99 21 3.5 Send candidates for foreign training 52ew 7/31/96 7/30/97 22 3.6 Conduct workshop "Licensing of Health Care Org." 2w 913/96 9/17/96 g 23. 3.7 Four studies on quality of care 138w 10/1/96 5/25/99 , 29 3.8 Conduct pilot for QA in select hospitals 12aw 1/1/98 3/26/98 30 3.9 Provide TA for QA in select hospitals 8ew 1/1/98 2/26/98 31 3.10 Conduct 2nd pilot for QA in select hospitals 12ew 12/3/98 2/25/99 32 4 National Health Management Center (NHMC) 196.6w 1012/95 7/7199 33 4.1 Develop concept for licensing 12ew 10/2/95 12/25/95 34 4.2 Present implementation plan Od 12/25/95 12/25195 12/25 35 4.3 Develop standards for licensing 16ew 1/22/ 5/13/96 36 4.4 Develop a register of health professionals 12ew 4/15/96 7/8/96 37 4.5 Prepare training materials 24w 5/13196 10/25/96 38 4 6 Conduct licensing 783d 718/96 7/7/99 '0 39 5 PHARMACEUTICAL SECTOR 99.4w 8/4/95 6/30/97 40 5.1 Department of Pharmaceuticals 36w 8/22/95 4/30/96 For more information on Component 1.3, refer to Annex C.3. GEORGIA HEALTH PROJECT Component 1.3 Realignment of Ministry of Health (MoH) 5 1996 1997 1998 1999 .ID Task Name Duration Start Finish 03 04 01 02 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 41 5.1.1 Prepare draft legislation 36ew 8/22/95 4/30/96 42 5.2 Agency for Drug Registration and Quality Control 99.4w 8/4/95 6/30/97 43 5.2.1 Licensing Pharma Organization 485d 8/4/95 6/12/97 44 5 2.2 95% of operating pharmacies lkensed Od 6/12/97 6/12/97 611 2, 45 5.2.3 Registration of drugs 36w 7/1/96 3/10/97 46 5.2.3.1 Define procedures 24ew 711/96 12/16/96 47 5.2.3.2 Create register 12ew 12/16/96 3/10/97 48 5.2.4 Publish National Drug Formulary Od 6/30/97 6/30/97 6130 49 5.2.5 Quality Assurance Laboratory 52.2w 711/96 6/30/97 50 5.2.5.1 Procure & install equipment, conduct training 52.2w 7/1/96 6/30/97 00 For more information on Component 1.3, refer to Annex C.3. GEORGIA HEALTH PROJECT Component 2 Rehabilitation of Health Facilities 1996 1997 1998 1999 ID Task Name Duration Start Q1 2 0 3 04 Q1 Q2 03 04 01 02 03 04 01 02 Q3 04 01 1 1 Health Facilities Tbit & Kutlis 206.2w 1// 2 1.1 Architectural Brief 0.2w 1/19196 3 1.2 Selection of Archtect 67d 37/96 4 1.3 Architectural Design 190 6/106 5 1.4 Procurement of Civil Works & Goods 218d 3397 6 1.5 CMI Works 365ed il/98 7 1.6 Guarantee Period 36e 1/1/99 8 1.7 Medical Equipnent (ME) 106.2w 3/3/97 9 1.7.1 Conduct Workshop on ME programming & specifications 10d 3/3/97 10 1.7.2 Develop Program for med. equipm. & surgical Instrument 30d 3/17/97 11 1.7.3 Prepare Procurement Documents with MES 60d 4/28/97 12 1.7.4 Conduct Workshop on ME procurement Sd 7/21/97 13 1.7.5 Install Medical Equipment 60ed 1/1199 14 1.7.6 Conduct Workshop on ME maintenance 5d 7/28/97 15 1.7.7 Test Equipment 2w 3/2/99 16 1.7.8 Develop Maintenance Guidelines for ME 30d 8/4/97 17 2 Tsageri Outreach 112.6w 3/1/96 18 2.1 Prepare Architectural Design 66d 3/1/96 19 2.2 Civil Works for Rayon Hospital 240ed 6/3/96 20 2.3 Install Medical Equipment 30ed 1/2/97 21 2.4 Conduct Staff Training 60ed 228/97 22 2.5 Guarantee Period 365ed 4/29/97 For more Information on Compoment 2, refer to Annex C.4. GEORGIA HEALTH PROJECT Component 2 Rehabilitation of Health Facilities 1996 1971998 1999 ID Task Name Duration Start 01 02 Q3 Q0O Q2 Q304I1020304Q1 203041 23 3 Radio Communication 77w 4/1/96 24 3.1 Conduct Studies 80ed 411196 25 3.2 Prepare Specifications 30ed 6/20/96 26 3.3 Install Equipment 30ed 7122196 27 3.4 Conduct Staff Training 30ed 8/21/9 28 3.5 Monitor Equipment (guarantee period) 365ed 9/20/96 0, For more information on Compoment 2, refer to Annex C.4. GEORGIA HEALTH PROJECT Conponent 3 Development of Heath Human Resources 1961997 1998 1 ID Task Name Duratio Start Finish 04 01 02 03 04 01 Q2 03 04 102 1 1 Develop Concept for Center for Continuing Education (CCE) Sew 12/1/95 1/2696 2 2 Develop Family Medcie Concept 8ew 12/11/95 12696 3 3 Develop Pubic Health Service Concept Sew 12/29195 223196 4 4 Develop Role & Function of Midlevel Staff for Future Health System Sew 1/1/96 2126/96 5 5 Develop Business Plan with PRionities for CCE 4w 2/26/96 3/2296 6 6 Select Staff for CCE 4w 32596 4/19/96 7 7 Select Foreign Consultants 6.2w 22696 4/8/96 8 8 Foreign Consultants Start Work 8ew 4/996 6/4/96 9 9 Training for Local Spectalists 14w 6&4/9 9g/96 15 10 Rehabilitation of CCE 32w 4/1/96 11/8a9 16 10. 1 Prepare Drall Specifications 2w 4/1/96 4/12/9 17 10.2 Prepare Reabilitation Specifications 4w 4/15/9 5/10W9 18 10.3 Mobiiz for CW 3w 5/13f96 St31/96 19 10.4 Rehabilitate CCE 20w 63/ 10/18V6 20 10.5 Instal Equipment 3w 10/21/96 11/89 21 10.6 CCE Fuly Operational Od 11/8/96 11/8/9 22 11 Establish Regional CCE 16ew 91109 12/31/96 23 12 Start Training Od 12/31/96 12f31/96 12f31 24 13 Design Distance Training Process Management System 16ew 9/10/96 12/31/96 25 14 Develop Regional Training Information Support System 12ew 91096 123/96 26 15 Conduct Study Tours & Felowships for Local Specialists 365ed 4/22/96 4/2297 27 16 Start Training Program for Medical Staff 730ed 4/22/97 4/22/99 For more information on Component 3, refer to Annex C.S. GEORGIA HEALTH PROJECT Component 3 Development of Health Human Resources 1996 1997 1998 ID Task Name Duratio Start Finish 04 01 02 Q3 04 Qi Q2 03 043 Q4 01 Q2 28 17 Accreditation of Medical Schools 60.2w 12/1/95 1/24/97 29 17. 1 Prepare Agreement on Medical Education 4w 12/1/95 12/28/95 30 17.2 Finalize Agreement with MoH on Medical Education 2w 12/29195 1/11/96 31 17.3 Formation of Committee 60.2w 12/1/95 1/24?97 32 17.3.1 Select Committee Members 3w 12/1/95 12121195 33 17.3.2 Develop TOR for Accreditation Criteria 8w 1222/95 2/15/96 34 17.3.3 Start Committee fbr Accreditation Activity 8w 12/22/96 2/15/96 36 17.3.4 Distribute Accreditation Criteria 12w 2W26/96 5/17/96 36 17.3.5 Accreditation Process 12w 5/20/96 8/9/96 37 17.3.6 Award Final Accreditation to Schools Od 8/9/96 8/9/96 38 17.3.7 Close of Non-accrediled Schools .24w 8/12/96 1/24/97 39 8 Program Revision 33.6w 12/1/95 7123/96 40 18.1 Select TA for Curriculum Development 2w 12/1/95 12/14/95 41 18.2 Develop Curriculum 27.6w 12/15/95 6/25/96 42 18.3 Finalize Agreement with MoH & Medical Schools 4w 6/26/96 7/23/96 Q For more information on Comp,onent 3. refer to Annex C.5. GEORGIA HEALTH PROJECT Component 4 Modernizing Health Financing System 1995 1996 1997 1998 ID Task Name Duration Start Finish Q2 Q3 Q4 01 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03 Q4 1 1 Rehabilitate State Health Fund (SHF) Office 42w 12/1/95 9/19/96 2 1.1 Design Floor Plan for Health Fund 8w 12/1/95 1/25/96 3 1.2 Procurement of Civil Works 21w 3/1/96 7/25/96 4 1.3 Rehabilitate Offices 8w 7/26/96 9/19/96 5 2 Develop Health Fund System 40w 5/15/95 2/16/96 6 2.1 Introduce Management Information System (MIS) 4w 5/15/95 6/9/95 7 2.2 Develop Capacity in Financial Procedures 8w 6/12/95 8/4/95 8 2.3 Introduce RHF Accounting System 8w 8/7/95 9/29/95 9 2.4 Install RHF Financial Management System 20w 10/2/95 2/16/96 I10 3 Develop Providers/H-ealth Funds Interface 18w 2/2296 6/26/96 11 3.1 Introduce Providers Accounting System 6w 2/22/96 4/3/96 12 3.2 Conduct Financing & Management Training Program 12w 4/4/96 6/26/96 13 4 Institutional Support for the State Health Fund 14w 6127/96 10/2/96 14 4.1 Economic Evaluation of Health Care Technologies & Programs 6w 6/27/96 8/7/96 15 4.2 Strengthen Health Tax Revenue Collection 8w 8/8/96 10/2/96 16 4.3 Develop Planning Capacity 6w 8/8/96 9/18/96 17 4.4 Improve Access to Health Care for Disadvantage Groups 6w 8/8/96 9/18/96 CD For more information on Component 4, refer to Annex C.6. Annex E page 17 of 33 B. Planned Procurement Packages and Schedules Amount Milestone Dates Procurement Packages ($ miRion)' Method2 Tender Awarding Delivery Completion WORKS 1. Tbilisi Facility 5.3 ICB 5/97 7/98 8/98 7/99 2. Kutaisi Maternity 2.0 ICB 5/97 7/98 8/98 7/99 3. Rayonal Hospital 0.3 NCB 7/96 11/96 2/97 5/97 4. CCE' 0.4 NCB 7/96 11/96 12/96 4/97 EQUIPMENT 1. Office Equipment Xerox and Publishing 0.6 ICB 7/96 1/97 2/97 3/97 Telecommunication 2.0 IS 7/96 1/97 2/97 5/97 equipment Teaching Material and 0.10 IS 7/97 1/97 2/97 2/97 Audio-visual equipmt. 0.10 IS 4/97 10/97 10/97 10/97 Furniture: three packages each for US$50,000 0.2' NS 7/96 8/96 11/96 11/96 Small Office equipment, 3 0.2 NS 4/96 8/96 10/96 12/96 packages each US$40,000 2. Computer Hard- and Software First Package 0.5 ICB 7/96 1/97 1/97 5/97 Second Package 0.3 ICB 4/97 10/97 11/97 3/98 3. Medical Testing and Lab. Equipment First Package 1.4 ICB 7/96 10/97 5/98 5/98 Second Package 1.5 LIB 3/97 6/98 10/98 11/98 VEHICLES Ambulances/Vans/4WDs 0.7 ICB 7/96 7/98 5/99 5/99 TECHNICAL ASSISTANCE Architectural Design & 0.6 SL 10/95 2/96 9/99 Supervision TA - Management 0.8 SL 6/00 TA - Health Care 1.0 SL 6/00 Training, Fellowship, Study 0.6 SL 6/00 Tours Health Promotion Programs 1.0 CPP 6/00 / Including physical and price contingencies 2 / ICB - International Competitive Bidding NBC - National Competitive Bidding DC - Direct Contracting LIB - Limited International Bidding SL - Selection from short-listed firms or individuals, competitively selected. NS - National Shopping IS - International Shopping CPP - Community Participation in Procurement '/ CCE - Center for Continuing Education / Includes US$ 0.05 million from PPF s / Includes US$ 0.05 million from PPF 6 / includes US$ 0.4 million from PPF Annex E page 18 of 33 III. DETAILED COSTS GEORGIA Georgia Health Project Expenditure Accounts by Components (US$ 000) Health System Reorientation Modernization of Public Health Rehabilitation Services, and Health Healthy Maintenance of Development Modernizing Promotion Children Health of Health the Health Physical and Disease and Safe Realignment Facilities Human Financing Project Contingencies Prevention Motherhood of MoH and Equipment Resources System Administration Total % Amount 1. Investment Costs A. CMI Works 99.0 18.0 49.2 6,202.0 320.4 64.8 20.0 6,773.4 10.0 675.3 B. Office Equipment 242.1 55.8 120.0 66.4 215.4 719.4 15.1 1,434.1 14.8 212.5 C. MedicallLab Equipment - - 361.5 2,197.2 - - - 2,558.6 5.7 146.0 D. Equipment 65.0 158.6 - - 5.3 46.3 - 275.2 10.0 27.5 E. Vehicles 32.4 437.9 50.7 32.4 32.4 - - 585.9 10.0 58.6 F. Technical Assistance Foreign TA 165.0 135.0 93.8 658.8 112.5 135.0 405.0 1,705.0 6.2 105.9 Local TA - 81.4 91.2 53.5 50.7 27.6 165.0 469.3 5.0 23.5 Subtotal Technical Assistance 165.0 216.4 185.0 712.2 163.2 162.6 570.0 2,174.3 5.9 129.3 G. Training and Fellowship 179.0 71.0 51.8 22.3 140.0 43.0 36.0 543.1 7.0 38.3 H. Health Promotion Programs 800.0 - - - - - - 800.0 10.0 80.0 Total investment Costs 1,582.5 957.7 818.1 9,232.5 876.8 1,036.0 641.1 15,144.7 9.0 1,367.5 II. Recurrent Costs A. incremental Salaries 14.4 14.4 5.6 14.4 10.0 7.2 - 66.0 15.0 9.9 B. Operating end Maintenance 26.5 194.0 113.2 429.4 36.7 65.6 131.1 996.4 15.0 149.5 Total Recurrent Costs 40.9 208.4 118.8 443.8 46.7 72.8 131.1 1,062.4 15.0 159.4 Total BASELINE COSTS 1,623.4 1,166.1 936.9 9,676.3 923.5 1,108.8 772.2 16,207.1 9.4 1,526.9 Physical Contingencies 176.5 115.5 93.8 846.6 93.3 149.1 52.2 1,526.9 - - Price Contingencies 173.3 104.8 90.3 1,060.2 62.4 61.0 86.3 1,638.2 9.3 153.1 Total PROJECT COSTS 1,973.2 1,386.4 1,120.9 11,583.0 1,079.2 1,318.9 910.6 19,372.3 8.7 1,680.0 Taxes 101.1 275.6 192.9 1,447.2 139.6 238.0 63.4 2,457.8 8.4 207.1 Foreign Exchange 1,203.5 689.5 599.3 6,731.1 616.0 851.1 489.1 11,179.6 8.1 909.5 . W UI1 GEORGIA Georgia Health Project Project Components by Year (US$ '000) Base Cost Totals Including Contingencies COMPONENT 967 9798 98/99 99100 Total 96/97 97/98 9899 9900 Total A. Health System Reorientation Moda rzabon of Public Health Services, Health Promotion and Disease 510.6 565.7 308.6 238.6 1,623.4 581.9 678.3 394.6 318.5 1973.2 Healt Children and Safe Motherhood 584.3 355.1 129.6 97.2 1,166.1 658.4 421.3 176.4 130.3 1386.4 Realignment of MoH 327.8 674.0 112.9 82.3 1,197.0 3765 778.5 152.4 125.1 1432.5 Subtotal Health System Reorentation 1.422.7 1.594.8 551.0 418.0 3.986.5 1616.8 1878.1 723.4 573.8 4792.1 B. Rehabilitation and Maintenance of Health Facilities and Equipment 729.8 6,045.4 2,147.7 753.4 9,676.3 785.0 7075.1 2718.0 1005.0 11583.0 C. Development of Health Human Resources 578.1 272.6 42.2 30.7 923.5 653.0 3277 54.9 43.6 1079.2 D. Modemizing the Health Financing System 649.9 282.2 155.8 21.0 1,108.8 752.9 334.7 197.8 33.6 1318.9 E. Pject Administration 364.1 237.4 87.4 83.4 772.2 399.6 272.9 118.4 119.8 910.6 Total BASELINE COSTS 3,744.6 8,432.3 2,984.0 1,306.3 16,467.2 Physical ConWMgnx:es 369.5 754.1 301.1 128.7 1,553.4 Price C"&tQngnde 93.1 702.0 527.3 340.7 1,663.2 Total PROJECT COSTS 4,207.2 9,888.4 3,812.5 1,775.8 19,683.8 4207.2 9888.4 3812.5 1775.8 19683.8 Taxes 650.7 1.348.1 380.1 130.3 2,509.2 Foreign ExhwW 2,777.8 6,022.5 1,838.5 708.8 11,347.6 OQ 0 GEORGIA Georgia Health Project Expenditure Accounts by Years (USS '000) Base Cost Totals Including Contingencies Foreign Exchange 96197 97/98 98/99 9900 Total 96/97 97198 98/99 99100 Total % Amount 1. Investment Costs A. Civil Works 571.4 3,982.7 1,786.5 432.8 6,773.4 647.2 4794.4 2255.0 567.5 8264.1 57.7 3,908.1 B. Office Equipment 847.8 447.2 138.6 0.5 1,434.1 990.1 539.1 171.3 0.7 1701.2 68.0 975.8 C. MedicallLab Equipment 21.2 2,207.0 198.3 132.2 2,558.6 22.4 2409.6 220.4 150.6 2803.0 75.6 1,935.4 D. Equipment 61.3 162.5 41.4 10.0 275.2 68.7 186.3 50.3 12.4 317.7 72.8 200.4 E. Vehicles 553.5 32.4 - 585.9 615.4 36.8 0.0 0.0 652.2 60.1 351.9 F. Technical Assistance Foreign TA 1,013.8 525.2 75.9 90.0 1,705.0 1083.9 579.1 85.6 102.5 1851.1 100.0 1,705.0 Local TA 144.7 151.2 93.5 79.9 469.3 163.5 191.7 128.8 116.7 600.8 0.5 2.2 Subtotal Technical Assistance 1,158.5 676.5 169.4 169.9 2,174.3 1247.5 770.8 214.4 219.3 2451.9 78.5 1,707.2 G. Training and Fellowship 101.6 278.6 113.5 49.4 543.1 111.3 324.9 144.9 66.0 647.2 62.2 337.9 H. Health Promotion Programs 200.0 200.0 200.0 200.0 800.0 227.2 240.8 252.5 262.3 982.7 65.0 520.0 Total Investment Costs 3,515.3 7,986.9 2,647.8 994.8 15,144.7 3929.7 9302.6 3308.8 1278.8 17819.9 65.6 9,936.7 II. Recurrent Costs A. Incremental Salaries 16.5 16.5 16.5 16.5 66.0 20.4 23.0 24.9 26.4 94.7 - - B. Operating and Maintenance 141.1 283.2 295.0 277.0 996.4 174.6 394.4 445.4 443.2 1457.6 - - Total Recurrent Costs 157.6 299.8 311.6 293.6 1,062.4 195.1 417.3 470.3 469.6 1552.3 - - Total BASELINE COSTS 3,672.9 8,286.6 2,959.3 1,288.3 16,207.1 61.3 9,936.7 Physical Contingencies 361.2 740.0 298.9 126.9 1,526.9 57.6 880.1 Price Contingencies 90.8 693.3 520.9 333.2 1,638.2 22.1 362.8 Total PROJECT COSTS 4,124.8 9.719.9 3,779.1 1,748.4 19,372.3 4124.8 9719.9 3779.1 1748.4 19372.3 57.7 11,179.6 Taxes 632.9 1,319.3 377.7 127.9 2,457.8 - . Foreign Exchange 2,734.6 5,906.9 1,830.3 707.8 11,179.6 0 ou --ý " - T~- 11F 1 IF U1 1 7t1 r p r paf"P t llrpr H 1- 21 'TU 3 9f 2 l .*] .... . 1 . 0 p. or~~~~ R7~ r~ri :; p ;~" t i"Tr liii tqR q o . " fOR0RoFp ý - !S p 1 t 1 2 t 2 tT !12r1 lim - qq H co 11..............i 8 "::-- till]l se~~~ då fd Ca,s j 111 jj i 1. v IL 1. . . * . .M... .. p9 p p ..- . .t .- .-- - - - . p p- . . . . . . X4 N4-. i;; 0 g r, 9. * .3.. - -4~ 8 d1444.44k4e2 4 4.u 4: !ttz:~0 ~öj Annex E page 24 of 33 GEORGIA Georg4i HG~ Proji Table 1 3. Realgnmet of Miley of HUMEh DUM%ild Cosia (UM 1) Quani~s e Cost T618 I Untt 9/97 07/18 8/1* Kw 00to Total 18/97 M7/98 0M 0 mm 180 Total 1@87 17M 1EN . Ineelnt Coct A. CkI W~dle (ght) M^2 350 - - 350 41 0 - - 41.0 55.8 - - - 55.9 *. Office Equipment and Fku . Olca FumfturSe no 18 3 - - 21 141 2.3 - 10.4 20.2 3.0 - - 23.8 TlephoneSyste no 24 3 - - 27 5.0 07 0.3 1.7 1.1 - - 9.8 Fex no 4 3 - - 7 31 2.3 - 8.5 4.B 3.8 - 6.0 Copyachine no 4 - - 4 210 - - 21.9 35.0 - - - 33.0 Compumer(Inc. css cca 15 3 - IB 352 70 - 422 53.9 11.0 - - 05.0 Sugoal Office Equpent sn Fun~ur 798 12.4 - - 02.3 121.0 10.0 - - 141.2 C. Labrtoy Equipment Specic EquipmenI Amoun 3008 - 3098 - 35109 - - 351.0 Laboratory Frndur Amount. 310 - 310 - 352 - - 35.2 Nosary Reagans for lt Yar Amoun1 - 20.7 - 207 - 234 - - 23.4 Suotblal Laboretory Equipmnt- 361.5 - - 301 5 - 410.3 - - 410.3 0. VohcCe Va -sar no 2 - - - 2 31 3 . 31 3 573 - - 57.3 E. T.chnical Aaktanc 1. Forwign TA Licnsing Mn Acrdual.on Sp.. pers mo 1 1 - - 2 11.7 11 7 - - 23.4 12.4 12.7 - - 25.1 Quasly Assurrce Spec. pers mo 05 1 05 . 2 5. 11 7 5.8 - 234 6.2 12.7 0.5 - 25.4 Uenrg for NCHM Spec. pers n - 1 1 - 2 - 1l7 11.7 - 234 - 12.7 13.0 - 25.7 Licensngof Ph.am.colicals Sp.c persn - 05 - - 05 - 59 - - 5n - 0.3 - - 0.3 uckky Control of Phrc pors ro - 1 05 - 15 - 117 5.9 - 17.0 - 12.7 6.8 - 19.2 SubNotl Forein TA 17.0 527 23.4 - 93.8 18.0 57.1 2.1 - 101.8 2. Lccal TA Conmilermortlter) persmor 22 20 20 18 81 77 7.0 7.0 0 7 25 11.8 12.0 12.. 490 3 Medical Studies porso 1 2 3 3 9 3. 7.8 11.7 117 35.2 5.8 13.1 21.3 22.0 62.9 Sumall Techn~ca AsIsanos 202 17T 42.2 184 157.4 3 2.0 0. 35.5 13.7 F. Tr~ining Ft prp porsyr - 1 - - 1 - 273 - - 27.3 - 30.0 - - 30.6 Oudy Toure pors mo 1 2 1 1 5 3 1 0.3 3.1 31 1s.0 3.4 7.0 3.a 3.8 17.0 Wortanop Is - 10 1. 1. 4.7 - 1.0 2.0 2.1 0.1 In-onby~Tnrwng days 50 50 25 25 150 1 4 14 0.7 0.7 4.1 1.5 1.7 0.1 1.0 5.2 TreffgiMa~td~ 5 5.5 - 5.5 - se - - 6.9 Subta Triing 4.5 42.0 54 54 57.2 4.9 48.1 6.6 6.9 CW.5 Total Inetmenit Coete 18.8 483.0 476 23 740 I 275.7 1150.0 8.4 42.4 044.8 a. ecurent Cosi. 0. Opeaos end Ma~ienancs Operetion&n M~ennce Amount 85 12.5 125 12.5 48.1 10.0 17.4 189 20.0 M.1 Vehle Mart-ena Amouno 3 1 3.1 3.1 3.1 12 3.8 4.4 4.7 5.0 17.0 Compumr M~ricnnne Aouxl 18 2.1 21 21 8.1 2.2 2.8 3.2 3.4 11.7 LtoraoryEquip.Matenance Amounl - I5s 155 155 48.5 - 216 23.4 248 Nf.7 Sutola Operatoraend Meenance 135 33.2 3,3.2 332 1132 16.7 46.3 502 3.2 18.3 B. Incrmsnisl Saleries Com~ponetC*orator prsyr 1 1 1 1 4 1.4 1.4 14 14 5.0 17 2.0 2.1 2.2 4.1 ToWa Recurrert CCi 14.9 34. 4 -34.0 118.8 1.4 -4T U TW 2 55.4 174.3 Total 2T 518.1 822 58.4 5115.1 7Ti 1110. \a 1 person hal~ Annex E page 25 of 33 Gorgie Hee PrepSe Tab~e2 ~F~R F5y Rel6. (Uu 00O) QuannS. Mae Geet Toal0s edudg ConSaleM. U 019 8648? 87488 "M US Tol~ 86487 f7f T8&M 700.4 974 86 M 65 Ta L ble,e~ Ca. A. CkvA wo~k 2 T C7Iy p ^2 r2 .8000 3.MD - 88D - 2.8960 1,207 - 3.847 3.8214 1.70@8 - 3302 2K~8l . P. 8ri ^2 - 3.000 1840 1,840 6.8&0 - 8300 3864 3M 4 1.4020 - 8484 5463 8676 1.M3 2 3 TagrlOtadc8Rgo M^2 800 - o00 240 0 2400 3236 - - 3238 I C 3.5580 1.606 1 3m4 5.5375 - 4.7944 2.2550 875 7,616 TbtI CylHehll 2~ - 1.7847 - - 1,7847 - 1.O3 4 - - 1.4 K~talPsrlhSrve no - - 30 20 50 - - 280 1000 2500 - - 220 4 15086 3710 Ts~ger Reymnl-Ho.p8el b . 367 - - 387 - 430 - 430 Mdal EquØTesIn b 4 4 - - 8 160 160 - - 320 224 229 - 453 4u4iotal Me: 0n men40truents 1 8404 2800 110 2 11 4 224 1.999 3 2204 1506 .2..M2 c. om. Furr aF d Eqwpmen OflI~Fun~ur88 d 3 3 - - 0 30 30 - - 6.0 43 46 - - 00 Td~phn.Stem no - - - 6 18 - - - 1 38 - - - 25 Fa m 2 - - - 2 20 - - - 20 3' - - 31 CopyMadh.. M. 2 - - 2 240 - - . 240 217 - - - 217 C-mpu~ar no 4 - - - 4 120 - - - 120 164 - - - 184 Wr mAuri 9 A6 - - - 2 232 - - 232 8- ~88 Offiæ Fmur and EqupnM 526 30 - - 735 46 - - 78.2 van.8 0 1 · · - I 200 - - 200 360 - - - 380 L Technild As8istan88 I. F.reig TÅ Heh F~y Pow pers 1 1 - - 2 150 150 - - 300 150 182 - - 321 B.kwd,nø002d8ris Spe pers 0O 0 • - 2 78 75 - - 150 79 81 - 161 Med~ckWEuism Ipp - 1 - 1 2 - 150 - 150 300 - 182 171 33.3 M.d.d.lÉEumM8nL8pe pr n - 1 - 1 2 - 150 - 150 300 - 182 - 171 333 C«euwnAnect Amount 0538 - - - 5638 "G 7 - . - 0867 sula Foreg TÅ 7i 526 - 300 6" 8 6105 08 34.2 7016 2. Lad TA Con.Sr prno- 30 16 8 - 84 136 68 41 - 243 201 113 74 - 388 ConantTeam pr-mo 10 10 6 8 36 46 4 3.8 3 8 162 87 76 6 o6 278 &Ub~,tal .~S TÅ 10 i 3 7 3 40.5 206 189 138 9 o 6 ta. TechAl ~ As50 630 77 33 80.3 374 758 13. 411 7862 68eyT-u pr 1 2 1 - 4 40 0 0 43 88 4.7 - 17 9 Tr b~gM86ÉI no 3 3 3 - 8 21 2 21 - 6.3 23 .s 26 - 7.4 S Tr^ig 101 61 - 223 6 114 73 - 2.3 TS klm.~ Ca~h m ,473.2 1-,7 $,l441.0 775 T 8.866.T 2.4964 75.2 10,917.3 . ~ ~,S Co-b A. Oral ad Manna.. MEd 6.q.mn M-n.nn. ArnIunt 2 1 129.8 1404 1474 4180 24 2 86 2120 2359 836.2 V0hile Maintenance Ar^-Mnt 2.0 .0 10 10 80 20 28 30 32 11.8 C~mpde Mah88eneo8 Ameent 08G 06 0 08 24 07 08 0 10 54 8~50e Op n end Mnnce 132.5 143 0 1 429 4 14 21:: 240.0 U41 corpon. coornlvr.tb persyr 2 2 2 2 8 36 3 38 36 144 4 00 04 6.8 207 T ,. eueCt3 1361 1468 136 443 el 19 221 4 24T8 MS & Tta T .0 1.80 *l673 6,84 & 7i. 7.075 1 2.718.0 1.0050 1.U3. 0 T,h d2r:ga6ng etc 8.2 p.rnet hashme [til 1-. . 1.. .. ............ . . . . . . . . . . . . . . . ~ja.g u r- m~ j j -4il. k. bol i. lii . . 0.uj -41 .10 .110 .10 . . . . .... .0- -iI -m- . 00 0 å-...... b i0 .. .0... .. ... 0.... . .0 . . l. . . . .0 .0000.... . .00... .0... .h . . . .0 k, Ib b i,bi. i .I -JZj 9 ISý jiii jjjj ej ~OQ -.~~~~~~Jl -.8..~.--- -. ~4 r ps l~ -2 ~ 1 ~ r~r p~iqq fl" r dfl1~ 1 1 & fl fl.-,. '.1 a 1z~ T 0 - .4 0~0--- 0-. * tacÄta 00C5<>0 *0 fl 0 .4 . -. -.~-.- *OtJ 1 * ::~~.:::~ ~ (CO d jO Uj<4<.1C401>001. Oj 000 *]0* 0 ~ coX Ja ~J.4 .404 ojo 0101.0. .00000 ajooc *1* 'iV il *IeIoo. 010 CÄ Lic~ . . qsjo.X Si. Öl ,~. 0 <l .1. fl rn 4' 1 J1± t ~ J0-.CÄ (00 0 01.-look. 01 fljaeOcooK.a..a... Ofl-d hD NU 1 Iv : *4 , . 1t>0d *1* ' fl SI * mamma - r-~~ 1 r 00 fl 01~~4Ca 0-101.... S0000 -. -. 4 jfl.å XI ~I~fl0 ~U ~ ojec- 01' * GEORGIA Georgia Health Project Components by Financiers (US$ Million) Local IDA Donors The Government Total For. (Excl. Duties & Amount % Amount % Amount % Amount % Exch. Taxes) Taxes A. Health System Reorientation Modernization of Public Health Services, Health Promotion and Disease Prevention 1.3 65.9 0.1 2.7 0.6 31.4 2.0 10.2 1.3 0.6 0.1 Healthy Chldren and Safe Motherhood 0.9 64.9 0.0 3.1 0.4 32.0 1.4 7.2 0.9 0.4 0.3 Realignment of MoH 0.8 71.4 0.0 2.6 0.3 26.0 1.1 5.8 0.8 0.3 0.2 Subtotal Health System Reorientation 3.0 67.0 0.1 2.8 1.4 30.3 4.5 23.1 3.0 1.4 0.6 B. Rehabilitation and Maintenance of Health Facilities and Equipment 8.5 73.4 0.2 1.7 2.9 24.9 11.6 59.8 8.5 2.9 1.4 C. Development of Health Human Resources 0.8 74.1 0.0 3.3 0.2 22.5 1.1 5.6 0.8 0.2 0.1 D. Modernizing the Health Financing System 0.9 67.2 - - 0.4 32.8 1.3 6.8 0.9 0.4 0.2 E. Project Administration 0.8 87.8 - - 0.1 12.2 0.9 4.7 0.8 0.1 0.1 Total Disbursement 14.0 72.2 0.4 1.9 5.0 25.9 19.4 100.0 14.0 5.0 2.5 O Anex E page 30 of 33 "EOMA G*ori Health PrOt Disbursement Accounts by Financiers (US$ MIlion) Local IDA Donors The Government Total For. (Excl. Duties & Amount % Amount % munt % Amount % Exch. Taxes) Taxes Civil Works 6.7 81.1 - 1.6 18.9 8.3 42.7 6.7 1.6 0.9 Equipment and Supplies 3.5 72.4 - 1.3 27.6 4.8 24.9 3.5 1.3 1.1 Vehicles 0.4 61.7 - 0.3 38.3 0.7 3.4 0.4 0.3 0.3 Technical Assistance la 2.1 81.8 0.4 11.7 0.1 4.3 2.6 13.4 2.1 0.1 0.1 Health Promotion Programs 0.8 81.4 - - 0.2 18.6 1.0 5.1 0.8 0.2 - PPF 0.5 100.0 - - - 0.5 2.6 0.5 - Recurrent Costs - - - - 1.6 100.0 1.6 8.0 - 1.6 0.0 Total 14.0 72.4 04 IT -5.0 25.8 19.4 100.0 14.0 5.0 2.5 %a Includes Consultant Services. Training, Fellowship and Study Tours Annex page 31 of 33 IV. MONITORING, EVALUATION, AND REPORTING The selection of monitoring indicators should be guided by the following principles: 1) keeping the indicators simple and measurable and 2) linking the indicators to decision making. The choice of indicators is an ongoing process and the indicators below may be modified during project implementation. Strengthening the capacity of the Government to collect and analyze health data is included in the project. The project's Health Promotion Fund will also strengthen local capacity to monitor health activities by requiring grant recipients to demonstrate measurable outcomes of their projects. Two sets of indicators have been defined: process indicators (or input and output indicators) to measure progress in project implementation and impact indicators (or outcome and impact indicators) to evaluate improvements in the health system and the health status of the population. Most project inputs will be monitored as part of the Project's Implementation Schedule which was prepared in Microsoft Project. Key policy benchmarks included in the Statement of Development Objectives will also be monitored and reviewed annually by the World Bank and the Government. Annex E page 32 of 33 Pess kt.s. Iac.t .ndicato Component 1: Reorientation of the Health Care System Component 1.1: Modernization of Public Health Services. Health Promotion and Disease Prevention * Number and value of awards granted by Health * prevalence of smoking (target: 15% by 1999) Promotion Fund * incidence and mortality rate from ishaemic heart * Report "Health of the Nation" published by 07/01/1998 disease (target: 2% annually) * incidence and mortality rate from stroke (target: 3% annually) * incidence and mortality rate from traffic accident related injuries (target: 5% annually) * STD rates (target: 30% among target group high school and college students) * impact of community health promotion programs in the final report (see benchmarks) Component 1.2 Healthy Children and Safe Motherhood * % of women of fertile age using family planning services * % of low birth weight newborns * % of pregnant women completing 4 prenatal visits and * % of infants breastfed after delivery, in 3 and 6 having full risk adjustment (target 90% by 1999) months (target 100%, 50%, 25% respectively by 1999) * number of MSCH training modules for health * % of cesarean sections professionals * abortion ratio (target 0.4 by 1999) infant mortality rate (target 30% decrease by 1999) * perinatal mortality rate (target 50% decrease by 1999) * maternal mortality ratio (per birth) 13 Realignment of the Ministry of Health * number and percentage of health care institutions licensed * number and percentage of physicians licensed * number of studies for selected tracer health care quality indicators conducted * number and percentage of pharmaceutical retailers licensed Component 2: Rehabilitation of Health Facilities * percentage of works completed * percentage of goods procured Component 3: Development of Health Human Resources * number of enrollees to medical and nursing training * percentage of hospital administrators trained at CCE schools * number of certified family practitioners in practice * number of courses held and number of trainees in 0 family practice 0 nursing 0 public health 0 health administration and management Component 4: Modernization of Health Financing System * percentage of health institutions privatized: * total health expenditures by source and expenditure 0 in group A category 0 in group B 0 in group C Annex E page 33 of 33 B. Progress Reporting Throughout the execution of the Project, semi-annual reports shall be sent to the World Bank from the project coordination unit. The following outline is proposed: (i) an executive summary; (ii) two pages of text describing progress, status, and problems encountered with the project component; (iii) updated implementation schedules, based on those presented in this annex and revised to highlight any differences between actual and anticipated project execution; (iv) fully completed monitoring indicator tables; and (v) financial statements. These elements of the reports are described in more detail below. (i) Executive Summary: A brief summary of the principal information contained in the report. The summary should emphasize, for the six month period in question, significant project developments, major problems encountered, corrective measures taken to overcome any implementation difficulties, and unusual events. An opinion should be given as to the overall progress and effectiveness of the implementation of the project components. (ii) Project Status: The document shall report on the progress of the component's implementation. Reference shall be made to the updated implementation schedules and any differences shall be explained in the text. Problems encountered in project execution shall be discussed and solutions proposed. Any other unusual events shall be presented. Staffing difficulties, both within the implementing agency and/or project coordination unit itself as well as those related to consultants and contractors involved in the Project, should be reported. This section should include information on any changes in project management arrangements and summaries on the performance of engineering and other consultants retained under the Project. A written synopsis shall be presented of the work carried out in the preceding six months and that to be undertaken in the coming six months. (iii) Implementation Schedules: The implementation schedules presented in this annex for the major components of the Project will be made available to the respective component coordinators and implementing agencies as software. In this way the execution of all the components and subcomponents will be effectively tracked and compared with the initial program. Graphic print outs of the schedules should be appended to the semi-annual progress reports. (iv) Monitoring Indicator Tables: The tables given above, which document changes in the monitoring indicators, shall be reproduced for each report and incorporated as appendices. (v) Project Financial Statements: Statements summarizing project accounts should be the appendix to the semi-annual progress report.    IBRD 2751 GEORGIA HEALTH PROJECT . MINISTRY OF HEALTH RIVERS R STATE HEALTH FUND - MAIN ROADS U 5 SIA N FEDERATION CENTER FOR CONTINUING EUCATION - RAILROADS O TiLusi CITY HOSPITAL .2 --- DISTRICT BOUNDARIES [RAYONS) . KUTAISI MATERNITY AND PEDIATRIC HOSPITAL -- - AUTONOMOUS OBLAST |AO) BOUNDARIES Gb TSAGERI DISTRICT HOSPITAL - AUTONOMOUS REPUBLIC (ASSRI BOUNDARIES o SELECTED CITIES INTERNATIONAL BOUNDARIES o AUTONOMOUS OBLAST [AO) CENTER 0 AUTONOMOUS REPUBLIC ASSR) CENTERS K-P NATIONAL CAPITAL 0 IS 10 5 oo w tcsIIQIIAS Od..d--r- IU- o- L. RUSSIASSIA FEDERATION GE A TU K YrI- TURK EY The boundone. celers deon nor*ons nd any o se .nlor-..a ARMENIA ... any Agm .* I deTh.A,Idor rokrG***,o, . AZ ERBAlIJAN s/ s I EAgL . 3 5A GOR2 O ARAR RE IA SLLCRPOPIA   IMAGING Report No: 15069 GE Type: SAR