Morocco - Health Financing Management Project

Report No. PID5413 Project Name Morocco-Health Financing and Management Project (@+) Region Middle East and North Africa Sector Basic Health Project ID MAPA5525 Borrower Kingdom of Morocco Implementing Agency Ministry of Public Health Contact Mr. M. Laaziri, Director of Planning and Financial Resources Dr. Essolbi, Director of Hospital and Ambulatory Care 335, avenue Mohamed V B.P. 812 Mechanar, Rabat, Morocco Tel: 212.7.76.16.75 Fax: 212.7.76.94.80 Date initial PID prepared December 1994 Date this update prepared December 18, 1997 Projected Appraisal Date November 10, 1997 Projected Board Date May 1998 Background 1. Over the past decade, Morocco's significant achievements in economic stabilization and modernization contributed to improvements in living conditions. In the health sector, however, physical access, quality of services, and health education, need further development. Both fertility and infant mortality remain high in the poorest rural areas, where most pregnant women do not seek prenatal care nor deliver with medical assistance. Disparities in the effectiveness and quality of services exist between regions and between urban and rural areas, in part because of a bias towards large public hospitals which primarily serve the urban population and which absorb a high share of public spending. Although some public health programs such as immunization and family planning have been relatively successful (despite a heavy reliance on external funding), a long-term solution to overall sector problems can only be achieved through development and implementation of a comprehensive health sector reform program, including public resources being targeted to those most in need, i.e. the poor and rural population. Government Strategy 2. As part of the government's effort to develop a Strategy for Social Development, the Ministry of Health (MOH) has centered its strategy around two main themes: (i) strengthening and expanding  preventive and basic curative programs, with a priority for rural areas, women and children; and (ii) implementing structural reforms to improve the efficiency of the overall sector and to ensure the sustainability of health programs. Specific action plans and prospective resource allocation patterns to achieve these objectives are being developed and important initiatives have been taken in the following areas: (i) priority recruitment of physicians for rural health centers; (ii) redeployment of redundant personnel to facilities needing specialized staff; and (iii) reorganization of the MOH in an attempt to better cope with the challenges ahead. Structural reforms under preparation include: (i) establishment of a mandatory health insurance system to cover a package of essential services and would initially be targeted to the salaried population (civil servants and formal private sector employees); (ii) creation of a "Solidarity Fund" to match health insurance mechanisms for indigent populations; and (iii) management reforms, initially in hospitals, to provide public facilities with greater autonomy and more effective management procedures. 3. Such a broad agenda can be addressed only in the medium to long term and through the implementation of well targeted actions. Because health financing and health management reforms are key instruments for the overall reorganization of the health care system, the Government has identified them as priority areas for action. The Government has requested the Bank to support its agenda through the proposed Health Financing and Management Project. Project Objectives and Description 4. The project's overall objectives would be to support Government efforts to: (i) address major hospital efficiency issues while improving service quality; (ii) introduce new health financing mechanisms capable of increasing the level of resources available and promoting equity; and (c) strengthen institutional capacity for policy formulation and decision making. The proposed project would include the following components: (a) Strengthening Hospital Management and Improving Quality. The project would support the development and implementation of: (i) a Management Information System that would provide the necessary information needed to determine unit costs and fee schedules to adjust to new financing mechanisms and to implement uniform financial management and performance evaluation procedures; (iii) a new legal and organizational framework for hospitals, based on the Services Etatiques Geres de Maniere Autonome (SEGMA)'s (See 1/) experience, that would reinforce management and financial autonomy and promote performance oriented procedures; (iii) a medium-term strategic plan for hospital development, to rationalize future investments; (iv) a program of in-country and overseas training for managerial staff in all areas related to the new management procedures, as well as information and orientation workshops for both managerial and technical staff; (v) introduction of management tools; (vi) significant improvements in the quality of services need to be achieved in order to make the above-mentioned reforms implementable. The project would therefore support: (1) the definition of technical - 2-  procedures, supervision and quality control mechanisms; (2) improvement in the physical setting through the replacement of priority medical equipment, physical rehabilitation of priority facilities and provision of furniture for patient accommodation. Particular emphasis will be given to improving facility and equipment maintenance capacities through development and implementation of specific management tools and staff training. For the largest facilities, the project will also support the preparation of architectural master-plans that will guide physical rehabilitation; and (3) improvement in medical staff effectiveness and productivity, through technical assistance and training aimed at rationalizing the definition and distribution of tasks, and improving quality management. Criteria for targeting physical investments to the areas most in need, as well as the development of project performance indicators have been agreed upon during project preparation. (b) Improving Health Sector Financing. This component focuses on revenue raising and coverage. The project will support: (i) the development and gradual implementation of a mandatory health insurance system through technical assistance and required hardware and software. The Government has appointed a task force to oversee finalization of a new law and decrees in this area. This task force includes key representatives from the social security agencies and private sector employers as well as from unions. Technical assistance was contracted during project preparation to work with all actors involved in this process. A consulting firm has been appointed by the social security fund (Caisse nationale de securite sociale - CNSS) to analyze several aspects of the proposed health insurance law. (ii) analytic studies needed to finalize a proposal for financing health services for indigent patients. Preliminary work on this has been done by the MOH. (iii) pilot testing of mechanisms to cover medical indigents; and (iv) review and implementation of a new fee schedule to better reflect the costs of services provided at the hospital level. (c) Strengthening Health Policy and Decision Making. The project would support: (i) the development of National Health accounts to improve effective policy formulation; (ii) consensus building on public and private responsibility for financing and delivery of health care; and (iii) finalization of studies on the burden of diseases and cost effectiveness of various interventions; and (iv) the implementation of the Government sector strategy with emphasis on the regionalization law. Project Cost and Financing 5. Total project cost is currently estimated at US$126 million, of which about US$60 million would be financed by the Bank, and US$24 million by the European Commission in parallel financing. Project Implementation 6. Past Bank experience has highlighted the need to set-up a strong and dependable implementation unit. Implementation -3 -  arrangements have been defined during appraisal. Rationale for Bank Involvement 7. The Bank has been active in the sector through the Health Development project (Loan 2572-MOR of US$28.4 million) which closed in December 1993, and through the Health Sector Investment Project (Loan 3171-MOR of US$ 104 million), which became effective in September 1990. The Bank is also supporting the development of a coherent social policy framework which will ensure that all Moroccans are given the opportunity to build their basic human capital. In the health sector, this will entail strengthening preventive and low level curative services, in particular in rural areas. This will be addressed through the Social Priorities Project under preparation and subsequent similar operations, while the definition of longer term health policies should be initiated through the Maghreb Health Priorities Study. The proposed Health Management and Financing project would complement these approaches by concentrating on management (in particular at the hospital level) and financing reforms. The Bank's experience in lending for institutional restructuring, developing management tools and training, and introducing health information and financing systems offers a substantial advantage over other external agencies active in the health sector. Project Benefits 8. The project will address several critical and long-term issues confronting the Moroccan health sector. Major progress is expected in: (i) hospital management, through greater autonomy, personnel training and better financial management which will enhance internal efficiency and contain costs; (ii) equity of health financing through increases in health insurance coverage and the development of other financing mechanisms; and (iii) the quality of health care in public hospitals benefiting the segment of the population served by the project. Environmental Aspects 9. The proposed project was reviewed under the procedures specified in the Bank's Operational Directives and was determined to be in Category B. No Environmental Assessment (EA) will be conducted for this project. 1/ Already an attempt was made through the transforming of some hospitals into Services Etatiques Geres de Maniere Autonome (SEGMA), a legal statute that provides public entities with increased autonomy to manage financial resources. Contact Point The InfoShop The World Bank - 4-  1818 H Street, N.W. Washington, D.C. 20433. Tel: 202.458.5454 Fax: 202.522.1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the InfoShop week ending January 23, 1998. - 5 -  Annex ENVIRONMENTAL ASPECTS The project would support Government efforts to address major hospital efficiency issues, improve quality of care at the hospital level, mobilize additional resources for the sector and strengthen institutional capacity for policy formulation and decision-making. The project does not have any negative impact on the environment. It will rehabilitate approximately 15 hospitals (out of 100 in the country). No major expansion is anticipated and no new construction of hospitals will take place under the project. Under the project, the basic functions of these hospitals will remain the same; the physical rehabilitation plans will put particular emphasis on medical waste disposal and hospital staff will benefit from adequate training in waste management. The project was upgraded from category C to B to comply with new Bank's environmental guidelines and not because of any change in the project's design. - 6-