Moldova - Health Reform Project

Report No. PID8802 Project Name Moldova-Health Reform (@+) Region Europe and Central Asia Region Sector Basic Health; Targeted Health Project ID P051174 Borrower(s) Republic Of Moldova Implementing Agency Address Ministry Of Health Address: 1 Vasile Alecsandri Str. Ministry of Health, Rm 519 Chisinau, Moldova Contact Person: Victor Vovolei Tel: (373 2) 72-95-71 Email: volovei@vicmar.mldnet.com Environment Category B Date PID Prepared December 15, 1999 Projected Appraisal Date May 2, 2000 Projected Board Date August 3, 2000 1. Country and Sector Background Main Sector Issues Poor health status. Moldova's health status has markedly declined since 1990. Life expectancy has decreased , while mortality rates (by diseases of the digestive track, stroke, cardiovascular diseases) and incidence of infectious diseases (hepatitis, tuberculosis, sexually-transmitted infections) have increased. Insufficient resources. The economic crisis that Moldova is facing has had a marked impact on the availability of resources for the health sector and has exacerbated the inefficiencies in the health system. The already weak macroeconomic situation of the country was exacerbated by the world financial crisis. Since 1990, GDP declined about 60%, which led the Government to require a drastic reduction in public expenditures. Excessive health services capacity. Moldova has the most extensive network of health facilities and health staff in Europe, including Western Europe and countries of the former Soviet Union. In spite of the very low level of resources, Moldova inherited and attempted to maintain an excessive infrastructure that is unique even compared to NIS countries. Health resources spent on utilities and arrears. Of the US$10 dollars/capita that the public sector spends on health, more than half is spent on the utilities bill. The very low level of public expenditures, coupled with the enormous and unnecessary infrastructure, results in a situation where most resources are spent on utilities (electricity, heating), arrears and some salaries. Furthermore, there is no money available for emergency care, essential preventive care such as immunizations, essential curative services such as those provided by general practitioners, and essential pharmaceuticals such as insulin or antituberculous drugs. Poor quality of care. The health system offers poor quality services because of limited resources and out-dated practices. In the Former Soviet Union, emphasis was placed on specialized and hospital care, while essential services such as public health  services, emergency care, primary health care and general practice were neglected. Modern protocols of care for such problems as tuberculosis, sexually-transmitted diseases, AIDS, hypertension, diabetes, and mental diseases are not in use. Even if those protocols were in use, in most cases pharmaceuticals would be missing or would be too expensive for patients to be able to afford them. The Government Strategy Health Sector Strategy. The need to drastically cut up 359 of the health budget in 1999 has increased the sense of urgency to implement structural changes in the health system, and presents an important window of opportunity to carry out health sector reforms in Moldova. To obtain essential resources, the Government of Moldova has been discussing and agreeing with the Bank and other partners (UNICEF, EU-TACIS, WHO, SIDA/Sweden) on a comprehensive health sector reform strategy aiming at obtaining better health outcomes for each dollar invested in the system. The proposed Health Sector Reform Project would implement the agreed strategy, in close coordination with the Public Sector Reforms Credit. The health sector reform strategy lies on five basic pillars: (i) strengthening the primary health care network so that it can meet most of the population's health needs and improve the quality of services provided; (ii) restructuring the provider network to reduce over-capacity and redirect resources from curative tertiary level care towards essential health care provided at the primary level; (iii) official participation of the private sector in health care financing through normalization of user charges; (iv) improving intra-sectoral resource allocation to better align the allocation of health care resources to the health needs of the population; and(v) implementing organizational reforms to separate the purchasing and provider functions. 2. Objectives The proposed Health Sector Reform Project (HSRP) aims to improve the health status of the Moldovan population, and increase the quality and efficiency of the public health sector. The specific project objectives are the following: (i) Guarantee universal access to a minimum package of health services (ii) Modernize emergency services and primary health care (iii) Reduce excess capacity in the health sector (iv) Strengthen health sector institutional capacity 3. Rationale for Bank's Involvement The Republic of Moldova would benefit from the financial and technical assistance that the Bank can provide in reforming the health care system, as follows: (i) The proposed loan would provide financial support to the Government to reform the health care system, addressing the key issues of deteriorating health status and financial collapse of the system; (ii) The Bank has more experience than any other international or bilateral organization in assisting governments in preparing and implementing health sector reforms; (iii) The Bank is the only organization with the capacity to assist the Government with the implementation of a nation wide project, focusing on the most important sector issues; (iv) The Bank has carried out a significant amount of analytic research in the areas of health reform and hospital corporatization. These studies allow the Bank to make recommendations on different strategies for health sector reform; (v) The Bank has significan experience in: - project management; - provision of technical assistance to project preparation, implementation and supervision; - assistance in the competitive selection of firms and individuals from the public, private and NGO sectors; - assistance in management of competitive funds, especially in the social sector. (vi) -2 -  The Credit Agreement, as an international legal agreement, would increase political commitment for health sector reform; and (vii) The Bank is in a privileged position to assist the coordination of all internal and external stakeholders 4. Description Project activities are grouped into the following components:I. Health Policy Development. This component would finance the development of health reform strategy, key policies and respective legislation, including on: (i) health care financing (sources and resource allocation); (ii) basic package of health care services; (iii) user charges; and (iv) staff downsizing. The component would finance local and foreign training in health policy, study tours, and local and foreign technical assistance. II. Health Investment Fund (HIF). The primary aim of the Fund would be to improve the quality and efficiency of health care services at all levels of the system. The proposed Fund would create a competitive mechanism to allocate resources among the Municipality of Chisinau, Judet Health Authorities and Republican hospitals. The Fund would finance proposals that include development of emergency care services; development of primary health care based on general practitioners (physicians and nurses); and investments on upgrading cost-effective secondary care, especially in regional hospitals. The Fund would make the closure and consolidation of facilities a precondition for investments. Technical assistance would be provided by local and foreign consultants to assist the beneficiaries with the preparation and presentation of proposals to the Fund. Investments would be made in small civil works for rehabilitation of health services; information systems; medical equipment and supplies; pharmaceuticals; and ambulances. III. Institutional Strengthening of the Ministry of Health and the Judet Health Authorities. This component would focus on strengthening institutional capacities at the central level of the MOH and the Judet level governments. In the MOH, this component would strengthen key functions: planning, regulating, financing and purchasing of services, evaluating, technical assistance, and internal management. On the Judet level, the component would strengthen institutional capacities to act as purchasers and managers of the regional health care system. The component would also develop a communication strategy, and would develop capacities in the MOH and Judets to enable them to market health sector reforms. The component would provide information systems for management, local and foreign technical assistance, and minor civil works and office furniture.IV. Management and Technical Training Program. This component would finance training programs critical to the implementation of the reform program: (i) General Practice Program. Training of physicians, nurses and other staff associated with the provision of the basic package of health care. The component would train existing GPs and retrain specialists to become primary care physicians; and it would train nurses to provide care at the primary and secondary health care level. It would also retrain hospital specialists in key, cost-effective areas such as emergency care, and surgery.(ii) Management Program. Training of managers at Central, Judet and health care facility levels. The component would train health services managers and administrators, and would provide them with the necessary business skills to run an autonomous hospitals. It would also train health staff to facilitate their smooth transition and reintegration in other sectors. This training would focus on strengthening practical skills (e.g. IT knowledge) that can be widely - 3-  used. V. Project Management and Evaluation. A small unit would be financed to provide project management, coordination and monitoring of the health sector reform program, and to manage the project. This component would finance local and foreign technical assistance in project management, procurement, and financial management. The component would also finance project evaluation, including baseline studies and mid-term and final evaluations. 5. Financing Total ( US$m) Government IBRD IDA Total Project Cost 6. Implementation Executing Agency. The executing agency of this Project would be the Ministry of Health (MoH), and Project management activities would be carried out by the Project Coordination Unit (PCU) that has been already established. The MoH would be responsible for overall project implementation and administration, and would coordinate the implementation of all project activities carried out by private firms, local and international consultants, Universities and non-governmental organizations (NGOs) accredited by the MoH. A Project Steering Committee integrating representatives from the Parliament Health Committee, Ministries of Finance and Economy, UNICEF, TACIS and Bank, has been assisting the MoH to prepare the project. 7. Sustainability The economic and financial analysis will evaluate the sustainability of the project by estimating the recurrent costs of the restructured system and ensuring that the sector's resource flows will include adequate financing. The development of new financing and organizational arrangements, during the execution of the project, will develop a sustainable framework for the implementation of health reform in Moldova. 8. Lessons learned from past operations in the country/sector Lessons learned from ECA countries. Limited resources and excess capacity is a general feature of the health sector in all former socialist countries. In the case of Moldova, however, this is even more pronounced. In addition, all ECA countries have health sector systems heavily focused on specialized and in-patient care. Therefore, restructuring and downsizing are on the agenda of all these transition economies. The following lessons can be learned from the ECA experience: (i) Restructuring and downsizing are extremely politicized processes; (ii) Information and education of the general public and other stakeholders are key elements of a successful reform strategy; (iii) Health sector restructuring must be conducted from the top, centrally; (iv) Institutional capacity building is of crucial importance; (v) The existence of illegal, under-the-table payments, constitutes an obstacle to reform; (vi) Emergency services and primary health care are underdeveloped in ECA countries. 9. Program of Targeted Intervention (PTI) Y - 4 -  10. Environment Aspects (including any public consultation) Issues 11. Contact Point: Task Manager Joana Godinho The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: (202) 458-1988 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. Processed by the InfoShop week ending March 24, 2000. - 5-  Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID) . If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. -6-