Algeria - Strengthening health system governance: Towards more effective regulatory environment for improved efficiency and quality of care

 69700 STRENGTHENING HEALTH SYSTEM GOVERNANCE: TOWARDS MORE EFFECTIVE REGULATORY ENVIRONMENT FOR IMPROVED EFFICIENCY AND QUALITY OF CARE Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 1. BACKGROUND........................................................................................................................................ 3 2. OVERVIEW OF THE HEALTH CARE SYSTEM IN ALGERIA .................................................................. 4 3. MAJOR REFORM ISSUES………………………………………………………………..……..4 4. COMPONENTS OF THE TECHNICAL ASSISTANCE PROGRAM .............................................................. 8 Component 1: Setting prices for pharmaceuticals 8 Component 2: Estimating costs for inpatient care 8 Component 3: Auditing technical quality of inpatient care 9 5. WORK PLAN, TASK TEAM AND COSTS .............................................................................................. 10 Vice-President Daniela Gressani Country Director Theodore Ahlers Chief Economist Mustapha Nabli Sector Director Michal Rutkowski Sector Manager Akiko Maeda Task Team Leader Enis Barış ii  1. BACKGROUND The health sector currently accounts for about 4.3 percent of GDP. The right of all citizens to health care is enshrined in the Constitution of the Democratic and Popular Republic of Algeria of 1989 and 1996. This has resulted in a system where healthcare services are predominantly publicly financed and delivered, albeit with limited but increasing private participation. The country continues to make considerable efforts to ensure access to health services to its population, but significant challenges remain. Since independence, health indicators have improved dramatically. However, there are major issues regarding equitable access to care, especially in southern part of the country; inherent allocative and technical inefficiencies due to a hospital-centered delivery model and poorly functioning primary health care network and dyfunctional hierarchy across levels of health care; and dissatisfaction of the population with the technical and psycho-social quality of care provided in public facilities who increasingly seek care in the burgeoning private sector and pay out of pocket. On the other hand, the Government of Algeria (GoA), trying to catch up with the time lost in 1990s, has, during the last two five-year planning cycles, considerably increased public investment in the health sector. By 2009 this will result in a very large and comprehensive health infrastructure and adequate number of human resources, putting considerable financial and fiscal pressure on the economy and state budget unless timely measures are taken to improve system governance and introduce the right mix of incentives to improve overall efficiency. This pressure will be all the more significant given the rapid demographic and epidemiologic transition so long as the State is intent on safeguarding the rather generous coverage and benefit package. To respond to these challenges, ambitious reforms are needed. Although preparatory work has been conducted since 2002 (a comprehensive bill was drafted in 2003, among others), progress has been very slow. The difficulty in carrying out the reforms can be largely explained by the low capacity of the Ministry of Health, Population and Hospital Reforms (MHPHR) in human resources and technical infrastructure such as the health management information system. There is an implicit acknowledgement of the inherent weaknesses of the current healthcare system through various reports (see for instance the latest report entitled La Santé des Algériennes et Algériens) but not necessarily explicitly through formal issuance of a White Paper on national health policy and strategy development. World Bank’s involvement in policy dialogue in the health sector is relatively recent. Upon request of the Ministry of Labor and Social Security (MTSS), the Bank conducted in April 2005 a review of the pharmaceutical sector, leading to two workshops in June and December 2005 and issuance of the final report in February 2006 with concrete recommendations (see Section 4 for details). The health sector was included in the Public Expenditure Review that was presented to the Algerian authorities in July 2006. This has updated Bank’s previous review of the sector which was carried out by in 2001 in the context of the Review of Social Expenditures, and helped formulate reform measures and propose further technical assistance that could support the preparation and implementation of the reforms. Subsequently, in a meeting with the Bank health team in April 2006, the Minister of Health asked for Bank assistance in three areas: (i) pharmaceuticals policy; (ii) provider payment mechanisms, 3 to prepare the implementation of contractual relationships between the Social Security system and hospitals; and (iii) the delegation of the management of public hospitals to the private sector. The first request constitutes a follow up to the TA provided last year, and is meant to go deeper in specific areas such as setting prices for pharmaceuticals. For the second request, the Bank has agreed to support the development of appropriate costing and quality auditing capacity in the system in preparation for the contracting arrangement. As for the last request, the Bank provided TA last fiscal year in the form of a workshop to present different approaches to private management of hospitals. In the following discussions, it was agreed that the GoA will first need to complete their legal and legislative reviews on private contract management before moving to the next implementation step. The scope of the Bank’s TA will be determined after they complete their legal and legislative reviews. This concept note describes the scope, purpose and organization of the proposed technical assistance requested by the GoA. It is organized in five sections. Section 2 and 3 set the context for the proposed program by briefly reviewing the healthcare system and describing the main reform issues the technical assistance seeks to address. Section 4 describes the three components of the program and the proposed methodology. Finally, Section 5 provides the details regarding the task team, work plan, and budget. 2. OVERVIEW OF THE HEALTH CARE SYSTEM IN ALGERIA The Algerian healthcare system has achieved impressive results in terms of health and access to health care. Geographic access to health facilities is measured at 98 percent of the population. The whole population has financial coverage for health care services, at least in the public sector. As a result, health indicators have improved dramatically. Life expectancy at birth averaged 71 years in 2004, having increased from 53.5 years in 1970. The under-five mortality rate decreased from 134 per 1,000 children in 1980 to 40 in 2004 and if it continues to decrease at the same pace, the Millennium Development Goal (MDG) on child mortality will be reached (see Figure 1). However, the maternal mortality ratio (MMR) shows no consistent improvement and is higher than in countries of comparable GDP per capita. In 2000 the MMR was at 140 per 100,000 (down from 160 per 100,000 in 1990). At present trends, Algeria is unlikely to meet the MDG Goal of ¾ reduction in 2015 (see Figure 2). Figure 1 MDG 4 Child Mortality Figure 2 MDG 5 Maternal Health Source: World Development Indicators 2006; Maternal Mortality in 2000 (WHO, UNICEF, UNFPA) 4 In the near future, the health care system will face very significant financial and fiscal challenges. At 4.3% of GDP in 2002, the overall level of expenditures devoted to health is relatively low in comparison with other countries of similar income level (Table 1). However, over the short and medium term, Algeria will face sharply higher health spending needs due to the demographic and epidemiologic transitions, the use of new medical technologies and costly new drugs (Figure 3), the probable increase of health professionals salaries in the public sector, and the ongoing revision of the 1987 rates used by the Social Security system to reimburse private medical treatment. These financial constraints will be reinforced by the fact that the Algerian healthcare system is still deeply influenced by the doctrine of free care to all, which explains why nearly all curative and preventive care possible are provided in the public sector in exchange for a very modest contribution. Finally, despite the recent increase in oil revenues, the tax and therefore revenue base in Algeria is limited due to widespread tax evasion. Table 1: Health Expenditures: International Comparison Health expenditure Health Health Health Health expenditure p.c. (in expenditure, expenditure, expenditure, GDP p.c. p.c. (in 2002 USD public private total COUNTRY (USD) USD) PPP) (%GDP) (%GDP) (%GDP) ALGERIA 1823 77 249 3.2 1.1 4.3 EGYPT 1600 59 174 2.4 3.6 6.0 IRAN 1630 104 340 2.9 3.1 6 JORDAN 1796 165 375 4.3 5 9.3 MOROCCO 1234 55 172 1.5 3.1 4.6 TUNISIA 2122 126 396 2.9 2.9 5.8 MENA REGION 1789 80 n/a 2.5 2.9 5.4 MIDDLE-INCOME COUNTRIES 1829 107 n/a 2.9 3.1 6 LOWER MIDDLE- INCOME COUNTRIES 1324 75 n/a 2.5 3.3 5.8 Source: WDI 2005 – 2002 data The healthcare system has inherent weaknesses in terms of equitable access to care, efficiency and quality of care. In a system which relies heavily on hospitals for service provision, the occupancy rates are very low (Table 2). The various levels of health care are not being used properly due to the dysfunctionality of the system hierarchy across levels of healthcare. Primary and secondary care facilities are under-utilized or bypassed as many people prefer to turn directly to university or specialized hospitals for consultations. Absence of public investment in the infrastructure in the 1990s resulted in dilapidated facilities and outdated, obsolete or broken equipments seriously affecting quality of care. In terms of equity, despite a dense and highly structured network, physical access in rural areas is hampered by lack of equipment, drugs and 5 medical staff (see figure 3). In addition, due to the low quality of technical and psycho-social care provided in the public realm, the private sector is growing fast in an unregulated fashion leading towards a two-tiered system with better quality care for those who can pay out of pocket and thus increasing inequalities in access to care. Table 2 Outpatient and inpatient utilization in publicly funded health facilities, 2003 Days of Occupancy Beds Admissions hospitalization Consultations rate (%) ALOS Secteurs sanitaires 32970 1343828 5255761 37237607 44% 3.9 EHS 5961 117988 1422469 1111688 65% 12.1 CHU 12375 429242 2757099 4120792 61% 6.4 Total 51306 1891058 9435329 42470087 50% 5.0 Source: MHPHR, Health Statistics, 2003 Figure 3 Number of Physicians/1,000 Inhabitants in the "Poorest Wilayas", 2004 1.4 1.34 1.2 1 0.8 0.6 0.4 0.2 0 Ba Ad Teb Tia Bo Lag El O Tip Na Dje Ch Me Ms Tis Ain Re t na t io rar dj B liz a ret a za lef dea ila sem lf a ess hou ued De nal ne o f la a silt at uA Av rre era r id ge j Source: MOH (Health Map), Poverty Map (2001) The current situation results from poor stewardship and poor overall governance and management of the healthcare system. First, there are severe institutional problems such as an excessive compartmentalization of system governance at the central level, lack of clarity in terms of the extent of decentralization and insufficient leadership and a professional cadre to steward the system and reduce fragmentation. This is all the more evident in the lack of a national health policy and strategy with a mid to long term vision for the sector that would define the respective roles and responsibilities of the various stakeholders in the public sector and non-governmental professional organizations. Second, there is a high degree of confusion as to how hospitals should be governed, managed and administered and which functions could be devolved for them to operate in a more autonomous and efficient manner. Finally, there does not seem to be any 6 serious attempt to estimate the future health and healthcare needs and the resource, human, physical and financial, requirements to respond to the changing needs of the population. Instead, the emphasis is placed on finding solutions at the organizational and instrumental levels, which, while certainly relevant and potentially effective, are, nonetheless unlikely to resolve the existing weaknesses unless major policy decisions are made an a consensus is build around a sound sectoral strategy. The reform issues in the next section are not, however, discussed from the perspective of a broader or systemic perspective, but rather as perceived by the current MHPHR leadership and administration. 3. MAJOR REFORM ISSUES The main focus of the proposed reforms is targeted towards: (i) the implementation of contractual relationships between the Social Security system and the MHPHR; (ii) a new status for public health institutions that will grant them more autonomy; (iii) the development of a comprehensive health information network; and (iv) the development of appropriate policies for pharmaceuticals (including pricing, generics promotion, procurement of hospital drugs, etc.). The priorities identified by the Bank are consistent with the current reform agenda of the Algerian government. The main recommendations issued by the Bank are the following:  Reinforce planning and management capacities. This would require strengthening the human resources needed for managing the system at the central level (IT technicians, statisticians, actuaries, and health economists), improving training for system managers, and developing information systems at all levels.  Improve the institutional framework. This would require reinforcing coordination among the principal ministries involved in the health sector, reorganizing the central structure of the Health Ministry to promote greater policy consistency, setting up regional health agencies and giving more autonomy to hospital managers.  Rationalize the use of the different levels of care. This would require reinforcing the primary and secondary levels, developing a “gatekeeper