Ecuador - Population, health and nutrition sector review

Report No. 6078-EC Ecuador Populationl, Health and Nutrition Sector Review July 16,1986 Popuiation, Health and Nutrition Department FOR OFFICIAL USE ONLY 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.  CURREY EQUIVALENTS Currency Unit = Sucre (S/) i US Dollar ($) SI 79 (1984) = S/ 95 (1985) = S/ 110 (June 1986) WEIGHTS AND MEASURES Metric System MAIN ACRONYTS AND TlEIiS USED IN THE REPORT See Next Page FISCAL YEAR January 1 - December 31  FOR OFFICIaL W ONLY Main Acronyms and Terms Used in the Revort AFEMu - Asociacion Icuatoriana de Facultades de Nedicina (Ecuadorean Association of Medical Schools) APBOFR - Asociacion Pro-Bienestar de la Familia Ecuatoriana (Association for the Welfare of the Ecuadorean Family) CRAS - Centro de Estudios y Asesoria en Salud (Center for Studies and Consulting in Health) CELADE - Centro Latinoamericano de Demografia (Latin American Demographic Center) CEMOPLAP - Centro Medico de Orientacion y Planificacion Familiar (Medical Center for Family Planning) CEPAL - Comision Economica para America Latina y el Caribe (Economic Commission for Latin America and the Caribbean) CEPAR - Centro de Estudios de Poblacion y Paternidad Responsable (Center for the Study of Population and Responsible Parenthood) CONACYT - Consejo Nacional de Ciencia y Tecnologia (National Council on Science and Technology) CONADE - Consejo Nacional de Desarrollo (National Development Council) CONEC - Consejo Nacional de Hatatisticas y Censos (National Council of Statistics and Census) CPS - Contraceptive Prevalence Survey FPIA - Family Planning International Assistance IDB - Inter-American Development Bank IEC - Information, Education and Communication IEOS - Instituto Ecuatoriano de Obras Sanitarias (Ecuadorean Institute of Sanitary Works) IESS - Instituto Ecuatoriano de Seguridad Social (Ecuadorean Social Security Institute) IESS/MS - Medical-Social Directorate of IESS IESS/SSC - Segu o Sc -ial Campesino of IESS (Rure1 S-ial Security Directorate of IESS) IIFN - Instituto de Investigaciones Facultad de Ciencias Medicas (Medical Sciences School Research Institute) Thi doanent has a retridtdindbution ad may be used by ripets only in th pefoance of tei ofi duatIs, acontets may no oterwis be diclosed witht Word Bank autdhratl  INEC - Instituto Nacional de Estatisticas y Censos (National Institute of Statistics and Census) ININS - Instituto Nacional de Investigaciones Nutricionales y Medico Sociales (Institute of Nutrition Research and Social Medicine) IPPF - tnternational Planned Parenthood Federation JBG - Junta de Beneficencia de Guayaquil (Gusyaquil Welfare Board) MCH - Maternal and Child Health MOE - Ministry of Education MOF - Ministry of Finance MOPH - Ministry of Public Health NGO - Non Governmental Organizations NRC - Consejo Nscional de Salud (National Health Council) OECD - Organization for Economic Cooperation and DevelopusAt PAAMI - Progream de Asistencia Alimentaria Materno Infantil (Maternal and Infant Food Supplement Program) PABD - Pan-American Health Organization PNC - Prinary Health Care PRDMI - Programa de Reduccion de la Mortalidad Infantil (Infant Mortality Reduction Program) SN34 - Servicio Nacional de Erradicacion de la Malaria (National Service for Malaria Eradication) SOLCA - Sociedad de Lucha contra el Cancer (Cancer Institute) UNDP - United Nations Development Program UNFPA - United Nations Fund for Population Activities UNICEF - United Nations International Children Emergency Fund USAID - United States Agency for International Development WFP - World Food Program WFS - World Fertility Survey  ECUADOR Population, Health and Nutrition Sector Review Table of Contents Page No. Executive Summary ........... . . ....... i - ix I. Intrduood..............i....... 1 A. Objectives and Structure of the Ecuador Health Sector Review 1.. ............ 1 B. Sources and Quality of Data....... ............... 1 C. Socio-econamic Overview of Ecuador..................... 1 II. Population, Health and Nutrition Status and Government Policieso ls...... . . .. . ...... 3 A. Population Status. ..................... . ... . ...... . 3 B. Population Policies. ......................... 6 C. Health Status ........ .................... 7 D. Health Policieso l i c ia......... .... 9 B. Nutrition ....... ................ ......... 10 F. Nutrition Policies.................. 13 G. Summary of Population, Health and Nutrition Status and Goverment Policies ...... 13 III. Health Sector Resources and Their Utilization ..............13 A. Population Resources and their Utilization.... 14 B. Health Care Resources and their Utilization .16 C. Hospital Beds ... . . *. ......... . ....... 22 D. Ambulatory Care . ...... ......... .24 E. Human Resources . . ..... .......24 F. Pharmaceuticals ......... . ........ .............28 G. Research ...... ......... ........... .29 H. Summary of Health Sector !*sources and Their Utilization .. ........................... . 30 IV. Financing of Services ....... . ..30 A. Sector Expenditures ........................ ..... ..30 B. Sector Financing ...... ......... ..........36 This report was prepared with the contributions of W. De Geyndt, W. MbGreevey, S. McLees, J. Pillet, and L. Vassiliou (PHND3); B. Schreiber (PPDPS); and H. Feirman (Consultant).  Pate No. V. Institutional Cepacity of the PHN Sector ................... 39 A. Organizational Analysis .................... .. .......... 39 B. Management Audit ............. ................. 41 VI. Suinary of Sector Issues .... .. ................... ..... 47 VII. Sector Development Strategy ........................ . .. .. .51 A. Extension of Primary Health Care Services .............. 52 D. Fertility Regulation .. ............................. 54 C. Review and Consolidation of Sector Investments ......... 55 B. Sector Studies . ................................. 56 I&RD MNp No. 18179 _nnex 1: Orgmaizational Charts 1. Ministry of Public Health 2. IESS Health Services 3. IESS - Seguro Campesino  Tables Included in the Text - Pae No. Table 1.1 Projected Total and School-Aged Population According to Different Fertility Assumptions, 1985 and 200o ........ 5 Table 1.2 Projected Levels of Agricultural Production/ CoDsumption According to Different Fertility Assumptions, 1980 and 2000. .... Oe....... ... ........ 6 Table 3.1 Health Facilities and Bligible Population by Provider Organization ........ ............. 18 Table 3.2 Measures of Hospital Utilixation by Delivery Organization ........ ..... ..23 Table 3.3 Health Mnpoer Distribution ..........................25 Table 4.1 Evolution of Total Realth gxpenditure .................31 Table 4.2 Health Care 8xpenditures and Population Coverage by Provider.................................. 31 Table 4.3 Sources of Health Care Resour 2......................32 Table 4.4 Ministry of Public Health and Total Government Budgets ............... 33 Table 4.5 Expected Disbursement of Ixternal Grunts nS Credits ........... .............. 37  Executive Sumrv 1. During Ecuador's petroleum boom (1972-82) per capita product grew by more than seven percent per annum but it grew much more slowly during the next three years. In 1983 it stood at US $ 1,420 (WOR). Tbhe dramatic fall in oil prices in early 1986 will cause a severe lose of income and require major efforts to overcome foreign exchange constraints. The earlier rapid growth had permitted expansion of public sector aelivery of population, health and nutrition service. The country developed a national network of health care facilities, increased the output of medical graduates and nure .iuxiliaries, established a Ministry of Public Health, crested a program to reach disadvantaged farm workers as pert of its Social Security aystem, and legislated compulsory one-year rural service for medical, dental and nursing school graduates. More importantly, it registered a decrease in infant, child and adult mortality, in birth rates, and it increased life expectancy. Fertility rates started their decline as the use of contraceptives increased. Unfortunately, health conditions have worsened during the recent economic recession and rural, indigenous and low-income populations have been particularly hard hit. The February 1986 drop in oil prices will necessitate a review of public investment and does not augur well for a quick reversal of the deteriorating trends. PooDulation. Health and Nutrition Status 2. Ecuador's population grew at the rate of 3.0% per annum between 1974 and 1982. As of 1985, the average annual growth rate is estisated at 2.8 . The birth rate has dropped only slightly over the past two decades from 46 to 37 births per 1,000 population and general mortality has been cut by nearly half over the same time period reaching 8 per 1,000 in 1982. The 1982 reported contraceptive prevalence rate of 40S is clearly overstated in light of the high birth rate. The total fertility rate was 5.2 births per womnm in 1982, well above the TFR rate of 4.8 for lower-middle income countries and of 3.9 for Latin America. Population growth is expected to continua at the rate of 2.8S per annum until 1990 and drop to 2.5% by 2000, ranking Ecuador smong the world's high-growth countries through the end of this century. The total population is estimated at 9.4 million for 1985 and projecte&' to reach roughly 14 million by 2000. A high level of fertility has serious consequences in terms of health status, number of schools and bousing units to be built, new jobs to be created end additIonal food to be produced. 3. Life expectancy at birth is estimated to have increased by 16 years over the past three decades, from 47 years (1950-65) to 63 years (1980-85). Infant mortality is high at 76 deaths per thousand live births and reaches 200 deaths in poor rural areas. About four out of ten deaths in the country occur among children under five years of age. Ecuador's maternal mortality rate of 190 per 100,000 live births is more than double the meen rate for South America. Average mortality rates msk the wide variations among urban, peri-urban and rural areas and aMong ethnic groups. Primary causes of death and disease in infants and children are poor environmental  ii - conditions, infectious and cnunicable diseas, low imunization rates and malnutrition. The current extent and severity oZ malnutrition is not knhs but is believed to be widespred. The contry's high infant and child mortality rates and high birth rate reflect the lack of acces to basic health services, and to uafe water and sanitary wate disposal Wich i severely linited for about one third of the 9.4 sillion Icuedoreans. Giovernmt Policies 4. Ecuador is in the process of developing an explicit and comprehensive population policy to regulate the high population growth rate. Its Constitution acknowledges the right of the parents to have the number of children they can support and educate. Child spacing is already includsY in MOPH maternal and child health programs and represents current pepulation policy. As for nutrition, there is no explicit policy nor any inter-sectoral body responsible for articulating one. 5. The health policy set by the Ministry of Public Health for the period 1985-88 assigns priority to: (a) expand health service coverage to the rural and pert-urban population; (b) improve the efficiency of the health system through regionalixation of services and decentralization of administrative authority; (c) provide safe drinking water and waste disposal syste_ to oat of the population; and (d) finish the physical infrastructure development plaos throu the expeasion, remodeling and construction of hospitals, health centers and health posts. The last two policies are investment-intensive and their implementation as propose is doubtful during the current economic adjustment period. Sector Resources and Their Utilizataon 6. Ponulation. The public sector accounts for about 40* of the family planning services delivered, the private sector for 50*, and private voluntary organizations provide the remaining 10%. Services provided in the private sector are about evenly split between pharmacies and physicians. The contraceptive prevalence rate for all methods allegedly rose from 34t in 1979 to 40% in 1982. The validity of this rate is not born out by the official birth rate statistic, and the CPR is overstated because it combiues modern and natural contraceptive methods. Of all married women who were not practicing contraception in 1982, 65* indicated a desire for family planning. These women are albost entirely from the poorest and the rural part of the Bcuadorean population. They have no access to the urban-based private sector and are the responsibility of the public sector which is only moderately active in the promotion of safe contraceptive practices. 7. Health. The two most important providers in term of available capacity, national mandate, budget and population coverage are NOPH and IESS. MOPH is theoretically responsible for providing preventive services to the total population and curative services to about 75X of the popvlation but it reaches only about half of its assigned target population. IESS through its medical social services program (RPfS/M) covers 8.S* of tie population, ar4 through its progrm for fasm workers ( S/SSC) reaches an  - iii - additinal 4.5*. HISSMS only covers the worker and does not protect the spoqe and children of the inured. IIISSCS enrolls camunitles and covers the wole fmily. The National Health Council should coordinate, integrate and evaluate all health activities in Ecuador but it Wa been an ineftective wchaim minly because of its advisory status. 8. The ratio of all houpital be per 1,000 population was an acceptable 1.8 in 1983 but 60* of the hospital beds are concentrated in the tbree mFjor cities. The nuber of hospital discharges per 1,000 population in 1984 was a low 36 for MO and an acceptable 69 for ISS. Hospital occupancy rates were an acceptable 71* for short-stay MODPB bopitals, 5f for MOPE hospital/health centers, and 85* for 1388 hospitals. These national averages hide the gross inequity in the distribution and utilization of services. Both NOPE and I38 have ambitious expanien plans underway which haeve been stalled by the economic crisis. The investmt cost of the planned hospital program i8 estimated at US$ 250 nillion over the next five yeas and would require a 10* increae in the aual recurrent cost budgets of MOPE and IESS, Health care providers do not coordinate their ivestmnt program which results in a duplicatiom of facilities and exces capacity in som cities. The number of beds proposed in the exasion plae are not needed, and it is not realistic to expect a substantial increse in public oector budgets for capital and for operating funds. Priority should be given to primary health care and more efficient utilization of existing infrastructure. 9. Urban facilities of all providers tend to be well utilized. NOPH hospitals, health centers and health posts in rural areas are underutilized reflecting low demand for services by the intended target population. Lack of demand is caused by a number of factors. Rural facilities are staffed by recent medical, dental and nursing graduates serving one year of compulsory service, and by nursing auxiliaries with limited training. The annually changing professional staff receives inadequate orientation and supervision, is paid little, and shows low motivation for the temporary assignments. Trasportation difficulties, especially in the rainy season, discourteous treatment by the staff, and shortages of supplies and drugs discourage patients from utilizing the services offered in the centers. Staff does not engage in counity outreach activities by taking the services to the client. The hispanic staff - mostly from urban areas - is not culturally acceptable to the indigenous population which prefers using traditional healers. 8xtension of primary bealth care activities mst be accmpanied by an improvement in the quality of services provided. 10. Ecuador has a very favorable ratio of one physician per 920 population but 70* of private and public sector physicians practice in the two most urbanized provinces. Dentists, graduate nurses and midwives are in short supply and are concentrated in the three largest cities. Auxiliary nurse are the backbone of the service delivery system and are generally efficient in hospital settings but lack adequate training in public health. health promoters are few and their training and use have not been actively encouraged. Main humn resource iswues are the potential oversupply and the  - it - quality of training of physicians, the maldistribution of all types of professial staff, and the lack of indigenous comauity halth workers. Fi_ancing Health Care. 11. Total public and private expenditures on health were estimated at US$35 per capita in 1934. This represented a modest 3.4* of GDP, a ratio which has remined substantially unchaged during the p8at decades and which is lower than in moat Latin Merican countries. Houehold expenditures accounted for one third, MPH for 29* end IBS8 for 23* of health expenditures. Only about 37* of health care financing comw from the national budget to finace services provided by MEM and the Ministry of Defene. The second highest financing source are out-of-pocket expense by the pWulation (33X) followed by contributions to the medical services of the social security system (22*). 12. In constant terms, the MOPH budget decreased by 3* between 1980 and 1984, and its share in the total governmt budget dropped to 6.4* in 1984 from 6.8* in 1980 and 7.2* in 1982. The 3.4X of salaries which is legally allocated to finance the medical services of IESS does not cover the cost of providing these services. External financial mistamce amounts to lees than 2* of sectoral resources but plays an important role because it is coDcentrated on priority programs and technical assistance. 13. Health expenditures in Ecuador are from one third to one half below regional standards or corresponding ratio for countries at comparable levels of per capita income. Yet, in view of the country's current economic adjustment phase, it would be unrealistic to expect a significant and rapid increase in sectoral resources over the coming years. Otber avenues of financing must be explored and aggressively pursued. First, better use should be made of what is already there, i.e., existing facilities and staff can be used more efficiently, duplication of services eliminated, waste and pilferage controlled, employer contributions to 1188 timely collected, and drugs prescribed more judiciously. Second, investments in buildin" and equipment, especially tertiary care facilities, should be severely curtailed in favor of sharing of services by all providers. Third, the bulk of bealth expenditures are ordered by the physician and are spent in the hospital. Savings can be realized on hospital care through reduced lengths of stay and by controlling the use of resources by physicians. Lastly, introduction and/or strengthening by all providers of cost sharing by the user of curative bospital-based services. Thus, the health care system itself should be able to generate additional financial resources through better management, increased efficiency, and a reorientation of its priorities. Institutional Canacity of the PHN Sector 14. A number of structural deficiencies limit sector and institutional developosat. The ost important ones are: (a) the advisory nature of the National Bealth Council limits its effectiveness in sector-wide priority setting and resource allocation decisions; (b) lack of professionl plaming and control expertise at the level of the National Development Council  v (CONADR) mininises its potential to provide seotor guidance and coordination; (c) failure by MMPE to strengthen provincial levels and to delegate authority to operating units; (d) need to strengthen the regionalization of IRSS/MS service delivery; and (e) the preoence within IRSS at the ame organizational level of two directorates both responsible for health activities. 15. A managemet audit of the sector reveals the following weaknesse": (a) independent investment planning by the major providers and policy decisions driven by budgets and political factors; (b) overlapping service aream and client populations, especially between MOPH and IESS/SSC; (c) logistics systems failing to provide drugs, spare parts and maintenance services regularly; (d) the uncertainty about its annual budget does not allow MOPE to use the budget as a planning and control tool; (e) no link between the investment budget and the recurrent cost budget; (f) shortage of trained managers at the top and middle levels of the sector; (g) instability and discontinuity in sector and institution leadership; and (h) the sector does not exercise effective management control and does not have an adequate information system to support planning and control actions. Sector Issues 16. The health sector in Ecuador faces six major issues. (1) Limited access to basic health services, to family planning services and to nutrition services: about one third of the population has limited or no access to basic bealth care; demand for family plenning services is not satisfied resulting in unwanted fertility and unnecesarily high infant and maternal mortality levels; and malnutrition is apparently widespread. (2) No well designed population program: the interrelationship between high levels of fertility and the country's socioeconomic development requires an explicitly designed population program which coordinates and integrates the activities of the many providers and establishes demographic goals. (3) A stalled hospital building program: the petroleum bo. and the generous borrowings of the 1970. led to the start of ambitious hospital expansion programs which are now slowed down for lack of capital. Not all the planned new beds are needed and plans must be coordinated to eliminate duplication. (4) Health care financing: Ecuador spent only US$ 36 per capita or 3.4* of its GDP on health in 1984, MOP's share of the national budget is only 6.4* and only slightly more than one third of all health expenditures are financed from public revenues. These ratios are significantly lower than those in other middle income countries. Yet, in spite of limited financial resources, about 80 to 90* of expenses are incurred for curative, hospital-based care leaving very little for primary health care. (5) Structural deficiencies: the lack of stable long term policies and implementation strategies, the inability to coordinate and/or integrate the actions of the main health care providers, and the lack of a national  - vi - outhority to set priorities end allocate scarce resources preclude the cost-effective developmet of the sector. (6) _t-nugemt weaknesses: the lack of profesioal _mers and the application of reasonable m t practices reduce the capacity of the institutions to execute policies and program. This shortcoming is evidenced by a general lack of planning and control systems, weak logistical support systm, an absence of cost accounting and timely reporting of relevant information, and a decre#aed ability to implement funded progrm. Sector Develoummnt Strategy 17. The rapid expansion of the health system in the 1970'a, the economic recession in the first balf of this decade, and the analysis of sector issue suggest that a development strategy should focus on (a) improving equity in access to care; (b) increasing efficiency of service delivery; and (c) mssuring quality of care. 18. Three major actions are recaendsd to imple ent the development strategy: (a) extension of primary health care services, especially in rural and peri-urban areas; (b) increase the activities in fertility regulation; and (c) the review and consolidation of sector investments in bospitals. DIplementation of these action rIca" Iiendations can start i_ediately. The first action is of an ongoing nature, but the major part of the impl ementation can be achieved within a five year period. The second action is also of an ongoing nature and implementation of some of the recxmendations can be carried out imediately. The third action can be completed in less than a year, and its results would form the basis of an affordable long term invest ent program. Hxtemion of Prinary gealth Care Services 19. The extension of basic health services to the rural and peri-urban poor would reqpuire curtailing the proposed US$ 250 million hospital construction program. An intervention to narrow and/or to eliminate the gaps in access to primary health services must include the following activities: - increase operating expenditures available for PHC through a omll increase in total public sector expenditures for health, introduce alternatives for financing curative services, and rationalize the use of levels of services impeding the use of tertiary care facilities for primary care services; - strengthen the implementation capability of MOM to cover a higher percentage of its assigned populatio; and use the untae potential and the fast growth of IRSS/SSC to provide family planning, health and nutrition services in rural areas; - determine the financial feasibility of expanding the beneficiaries  - vii - of ISS/MS to include household members and offer family-based preventive and curative services; mue the results of the nutrition survey to forsulate nutrition policy and to design specific rA targeted interventions to reduce mlnutrition; and - provide a mechanim to coordinate the actions of NPN0, IBSS, Social Welfare and the Ministry if Education in PRC, and obtain agreement frm donor agencies to use 'bis coordinating mechanim. The foregoing activities should form the basis for a comrehenive PUG strategy to reach total population coverage by 1996 with minimum but adequate and affordable population, health and nutrition activities. This PFM strategy would improve equity by increasing access to services, and efficiency by better utilization of existing resources. 20. A cost-effective increase in the coverage and quality of PFC will require five major changes in the way care is delivered: - policy and procedural guidelines must push the PRC system to became more dynamic and interactive, with the physician and the auxiliary nurse aggressively reaching out and working with the community to solve health problems. Cultural and language barriers make it even more imperative for PlC to reach out and be comunity oriented, and therefore the training and use of indigenous health workers, either auxiliary nurses or promoters, must be accelerated; - more functions should be delegated to paramedical personnel so that they can treat unuoiplicated cases of comon disease end fewer patients would be referred or go directly to more costly higher levels of care; - the almost complete reliance on inexperienced and often unmotivated medical school graduates fulfilling a one year rural service requirseant should be decreased in favor of more full-time rural general praectitioners. A more permanent rural medical staff would provide continuity of care, decrease the flw of referrals and self referrals to specialized hospitals and better supervise medical school graduates and paramedical staff; - the provision of family planning servicess should be cast in a broader demographic context and it should include a social marketing effort which would provide guidelines on the preferred choice of contraceptive techniques and services, the appropriate pricing strategy, the ost effective delivery system and public information progrm; - hmelth education deserves increased emphasis in an effort to mintain health, prevent disease and ensure early treatment. Educational messages must be a coordinated activity by all providers.  - viii - 21. Bxtension of priary headth services represets the logical snd most cost-effective way of increasing equity by making care more accesible. It stresses efficiency by giving priority to prevention and first-level, 1w technology treatment, and provides an entry point to the health care system. Allocating additional resources at the primary care level provides a greater impact on the bealth of the population than an equivalent allocation to specialized medical care. Increase the Activities in Fertility RPeulation 22. Ecuador should design a population progrm which deals with mortality, fertility, migration and population distribution. It should integrmte and encourage currently ongoing activities in fertility regulation. Such an action program would include the following components: - assign the population unit within CONADR the responsibility for the design of a population program; - strengthen MOPM to coordinate, regulate and supervise the activities of the public sector (MOPH, lESS), the private nonprofit organizations (APROFE, CIMOPLAF), and the for profit private sector (physician and pharmacies); - extend primary health care services as recemended earlier in order to increase contraceptive practice through a combination of actions: Mi) an expansion of IBSS/M benefits to all household mebers would allow the provision of family based care and would make family planning ( services available through IESS hospitals end dispensaies; (ii) the projected expansion of the rural IRSS/SSC program to reach 10% of the population by 1998 would provide family planning services to this presently underserved rural population; (iii) MOPE covers only half of its assigned population and a strengthening of its service delivery capability in rural and peri-urban areas would increase the provision of family planning through expanded MRH programs; (iv) the re ommended community outreach activities and the training and use of indigenous health workers would provide the unserved dispersed rural population with family planning; end (v) support of MO actions through integrated plaming, contracting for service provision, especiaily in peri-urban areas, and sharing of operational data for evaluation purposes; and - design a set of studies to (i) test and recomend the most appropriate IBC activities; (it) monitor the coverage extension of service delivery by all providers; (iii) provide public resources to private delivery system; (iv) regulate pricing of contraceptive supplies in the private sector; and (v) evaluate the fertility reduction impact. 22. CONADR has postulated three total fertility rate (TFR) hypotheses for the year 2,000, viz., 3.6, 4.0, and 4.3. Under the first hypothesis  - ix - (TFR=3.6), Ecuador's birth rate would need to decline to 28.7 births per 1,000 population which would result in a population of 13.7 million. The second (TFm=4.0) and the third (TFR-4.3) hypotheses would, respectively, correspond to birth rates of 30.9 and 32.6 births per 1,000 and would give a total population of 14 sillion or 14.3 million. To achieve these population size targets, the contraceptive prevalence rates under the three hypotheses would need to be 48*, 52* or 57% accepting the overestimated 1982 CPR of 40S as a basis. The amount by which the 1992 CPR is overestimated would reduce the target rates correspondingly. Implementation of the action program rec<xmended in the previous paragraph could achieve a TFR of 3.6 or a total population size of 13.7 in the year 2,000. Review and Consolidation of Sector Investments 23. Planned capital expenditures over the next five years are estimated at US$ 250 million and would require a 10 increase in the annual operating budget of MOPH and IBSS. Many existing beds lack the staff required to be fully operational. Provision of the necessary staff end supporting services for existing beds deserves priority over new bed construction. The planned increase in hospital beds should be reviewed critically especially in light of its impact on the increase in annual recurrent cost. Increases in expenditures should give priority to using the existing infrastructure more efficiently and to finance the extension of primary health care. 24. Given the size of the planned investment, the recurrent cost implications, and the many providers making independent decisions, Ecuador should draw up and iuplmnt a national sector-wide capital expenditures plan, set standards, and evaluate and decide upon investments for facilities and high cost medical equipment based on health needs. It could assign this task to an existing structure such as the National Health Council although its past and short record shows structural and functional weaknesses. If the decision is made to use the Council as a vehicle then it should be reformed and its operational capacity strengthened. This could be done by a change in the Presidential decree which created it. A national investment plan would define the number of new beds needed to keep up with population growth, replace obsolete beds, and correct regional imbalances. A capital resources allocation process must link investment planning with financing of operating costs. 25. While the recommendations in the previous paragraphs are being carried out, the following interim decisions should be made: (a) no new projects should be started; (b) an accurate inventory of all started investment projects should be made indicating original real total cost, real sunk cost, timing and real cost estimate for completion; and (c) the inventory should be reviewed and projects identified: (i) for which capital and operating funds would be available; (ii) which are technically justified; (iii) which can be staffed, supplied and maintained; and (iv) which are in areas where other facilities cannot meet the dmand or do not exist.  Sector Studies 26. There is a need for additional alysis and policy definition to prepare for specifsic, targeted d -cost effective oetor development actions in five areas: health care financirf, health serview utilization, phmaceuticals, _npmmr training, and plant and equipmsnt saintenance. The five study topi would support the health sector developmnt goals of access, efficiency and quality.  1. Introduction A. ObJecti_e and Structure of t _e I _r Poualatio. esalth and Nutrition 8ector 1bvike 1.01 A literature review showed that a compreheive analysis of the Ecuadorean halth sector is not available and that the interrelationships betwee health, population and nutrition have not bee studied in the IcuAorean context. The Governmt's interest In ank mistance to the health sctor provides the opportunity for a cmrehns ive sector review. The objectives of the review are to: (a) provide an analytic dscription of the sector; (b) define the mjor sctor issues; ad (c) forilate a potential ector developamt strategy. 1.02 The report first reviews the population, health and nutrition status of the Rcuadorean population and the national policies which gide sector development. It then describes the physical, human and financial resources available to the sector and analyzes the utilization of the resources. One chapter reviews the institutional capacity of the health sector to orgaize and vanage its resources. Six major sector issue are defined deductively and a sector development strategy is suggested consisting of three r nd actions. D. Sources and Quality of Data 1.03 The National Council of Statistics and Census (CONDO) and its technical arm, the National Institute of Statistics and Ceasus (DM10) are responsible for coordinating all public data collection and tabulation and are the maJor source of information on population and vital statintics. DN3C has conducted four population census"e in 1960, 1962, 1074. and 1992. The next census is planned for 1990. A World Fertility Survey (MN) _s conducted in 1979 and a Contraceptive Prevalence Survey (CPS) in 1982. Vital registration is coordinated by INEC, but several other agencies belp collect data. Informotion on birth, and deaths is provided through form completed in Civil Registration and MOPM facilities and underreporting is cm. In genral, incomplete coverage, inaccuracies in data olilection, and slow data processing hmper the entire systm of vital registration. This affects availability, validity, and reliability of data and is, in part, responsible for a substantial delay in relearing statistical reports. C. Socio-sconcmic Overview of Ecuador 1.04 Population. Ecuador is one of the smallest countries in South America with a surface area of 270,670 k1e and population estimated at  -2- approximately 9.4 million in 1985. About half of the population is rural and can be grouped into three broad geographic areas, according to ethnic origin, type of economic activity and ecological conditions. The northeastern group, mostly comprised of indian-metizo populations, have good health and nutrition status. Residents of the Sierra and high inter-Andean valleys endure the worst health and nutritional conditions. The coastal area of latifundia and agroindustry, with low lends and a tropical climate, shows great diversity in economic status of landowners, small farmers, and agricultural workers. Tropical diseases are prevalent in the coastal area. 1.05 Economic Situation. Ecuador's GNP per capita of US$1,420 (1983) is slightly more than the average $1,310 for middle-income countries. The annual growth rate of GDP was 7.7*; since 1983 it has grown at only 1.8% yearly. External public debt has burgeoned from US$217 million in 1970 to US$6,239 million in 1983, or from 13.2% to 63* of GDP. This compares to an average for all middle-income countries of 34.2% of external public debt as proportion of GNP in 1983. 1.06 Ecuador's economic situation is affected by the price of oil because oil is the major source of exports and public receipts. The dramatic fall in oil prices in February 1986 will subject the economy to a severe loss of income and will require major efforts to overcome foreign exchange constraints. The drop in oil prices wil also necessitate a critical review and adjustment of the public sector investment program. 1.07 Water Suvnly. Water supply and sewage system are operated by mnnicipalities and quality of service is generally poor but varies widely. Only 60* of urban households, or less then 30X of the population, have access to safe water through house connections. The remaining 40* of the urban population and 21% of the rural population are supplied with water through public standpipes. Most of the drinking water provided by the different systems is not chlorinated. Finally, 798 of the rural population, i.e., 36* of the total population, depends on water supplies from uncontrolled sources such as rainfall collectors, wells, streams, and ponds. 1.08 Waste Disnosal. Public sewers for waste water and excreta serve only 28% of the population; 16% of the population have latrines or septic tanks, and 56% have no installations at all. Solid waste collection systems operate in urban centers, but waste is not treated before disposal. 1.09 Hbusing. In 1983, there were 1,920,000 households with an average of 4.7 persons per household. According to a 1974 survey, 60S of the population was living in inadequate housing, i.e., 39* in houses or apartments, 33S in one-room houses of precarious construction, and 28X in huts or temporary shelters. The proliferation of makeshift housing may not be as severe in Ecuador as in neighboring countries such as Peru and Colombia, because housing htS been upgraded in Quito and Cuenca. Guayaquil, on the other hand, still houses 800,000 people in several slum areas.  -3- II. Population. Health and Nutrition Status and Government Policies 2.01 This chapter reviews the population, health and nutrition status of the Ecuadoreans and contrasts it with the policies and existing or intended program of the Government. fharoeconic effects of high fertility are highlighted. The mortality and morbidity profiles of the country are presented and evaluated. Finally, the type and extent of malnutrition and the major nutritional problem are examined. A. Ponulation Status 2.02 Population Size and Spatial Distribution. The 1985 population is estimated to be 9.4 million. Between 174 and 1982 the average annual growth rate was 3.0%, slightly inferior to the peak rate of 3.2% reached in the 1960s. In 1985, the average annual growth rate is estimated at 2.8t. Population growth is expected to continue at a rate of 2.8% per annu until 1990 and drop to 2.5X by 2000, ranking Ecuador among the world's high-growth countries through the end of this century, when the population is anticipated to be approximately 14 million. 2.03 Today the population is almost equally divided between the Andean highlands, site of the capital city Quito, and the Pacific coastal lowlands, the most important agricultural region and the locale for Guayaquil, the largest city. The Andes divide the country into three ecological zones: the eastern plains and Amazon basin, the Andean highlands, and the Pacific coastal lowlands. In the 1960s, population growth, combined with substantial population movement, resulted in changes in the regional distribution of the population. Fifty-eight percent of the population lived in the Sierra in 1950; that share declined to 47S at the time of the 1982 census. In 1950, 28.5S of the total population resided in urban areas and in 1982 it was 49g. Two cities (Guayaquil and Quito) have over one million people and four others (Cuenca, Machala, Portoviejo, and Ambato) have over 100,000 inhabitants. Fertility 2.04 The crude birth rate for 1982 is estimated at 37 per 1,000 population, a small reduction from 46 per 1,000 population in 1962. Only Bolivia among South American countries has a higher birth rate. The total fertility rate (TFR) decreased more than 25% over the last two decades, from 6.9 births per woman (1960-65) to 5.0 (1980-85). Variations an great as 3.5 children per woman can be noted among different socioeconomic groups. Ecuador's TFR is above the average of 4.6 births per woman for all middle-income countries in 1983. Despite fertility declines, however, population momentum, or the tendency for growth to continue rapidly long after fertility begins to fall, remains high. CONADB projections assume that TFR will remain over 4 births per woman until the end of this century.  -4- 2.05 Life expectancy ts estimted to have increased by 16 years over the pat 30 yer, from 47 yer for 1950-55 to 63 years for 1980-85. The crude death rate has bee cut by nearly half over the lest two decad", reaching 8 per 1,000 in 1982. Also during the 1962-3 period, infant mortality wa reduced by 44% to 76 death per 1,000 live births. Age 8tructure 2.06 The age structure of the population is youthful but adually aging as a feunction of fertility decline. In 1962, 45* of the population w under 15 years, ad 3.2% wa 66 years or older. Two decades later, the proportion of the population aged 15 or younger had dropped to 41.6*, and the proportion aged 65 or more had risen to 4.0*. These trends, along with declining mortality, suggest an increaing need for health and social service intended for older people. Such trends in age structure yield ratios of the economically dependent to economically active population, 94 per 100 in 1974,- and 84 per 100 in 1982. The population of working age constitutes over half of the total, i.e., 54* or roughly 4.3 million in 1982. Csequ""Igene of Po nlation Growth. 2.07 CONADO and INIC have prepared alternate sets of projections for the year 1980-2000, which vary only according to fertility asumptions. 'luree sets of projections are discussed which hypothesize high fertility (asuming a TmR of 4.3 in the year 2000), expected fertility (anticipating a drop in the TFB to 4 by 2000) and low fertility (assuning a TFR of 3.6 in 2000). The impact of migration is assumed to remain negligible, i.e., net migration equals zero, and life expectancy is assumed to increase gradually to 66 years by 2000. The total population projected for 2000 accoiding to the high, expected, and low fertility scenarios are 14.2 million, 13.9 million, and 13.6 million, respectively. 2.08 Projected population growth has the following implications for the development of various sectors: 1hgo: Estimates of the school-age population for 1985 are 1.4 sillion in primary school (age* 6-11) and 1.3 million in secondary school (age 12-17). Table 1.1 bows that by 2000, between 2.2 million and 1.9 million children will be in the priaary-school age group, and 1.8 to 1.5 million children in the secondary-school age group.  Table 1. I: Projected Total ad School-ADulatios ordi to Different Fortility sus tion. 19n ad 2000 Ponulation Rsti-te/Proiection (Willios EIIRILITYIf wlI Po_ulation Groun (TM34.05* (7R4.3) (ZM134.0) (TR1=3.6) Total 9.4 14.2 13.9 13.6 Priary School (6-11 yra) 1.4 2.2 2.1 1.9 Secondary Sdool (12-17 yrs) 1.3 1.8 1.8 1.5 *Hstimated T1R for 1980-8! period. SOURCE: CONADI/IIBC, 1984. Associated increaes in the nuaer of teachers and schnols must be anticipated. Expenses for primary nd secondary shools ca be expected to rise to approximately US$103.3 million (expected hypothesis) in 2000 from US$61.0 million in 1980. 2.09 Urban growth will contnime to placo strains on housing, employment creation, and agricultural production. Hoju*ng: Currently. 51% of the total population resides in urban areas. Within a decade, this proportion is expected to increase to S*, or in absolute numbers, frow 4.8 to 8.1 million. To such urban growth, over 300,000 housing units will be in Guayaquil and over 215,000 in Quito by 2000, in addition to the houing that wa available as Of 1980. Eulovlt: al of the total working-age populatio is e eonomiclly active. In order to maintain an econmic participation rate of only 50* for the total population, an average of 124,000 additional jobs would need to be created every year. Agricultural Production and go_sLvMti: Table 1.2 compares expected increaes in consumption and productior of cereals md potatoes by 2000, with 1980 levels. These projectios correspond to the three fertility bypotheses. For potatoes and cereals, it is umd that per capita consumption increase at 1* over 1880 levels and prodction increase by 3t annually, the average aumal rate of increae over the 1975-0 period. In projecting the d_mad for imported wheat in 2000, it is assumed that national production will incree by 2* anually, through new scientific advances which are already proving succesaful. Consumption is assumed to increase at a higher manual rate of 2.8 , the average amual rate of increase from 1970 to 1980.  Table 1.2. Projected Levels of lAricultural P cti*n/ConauCon gtion According to Different FertilitY ssumptis. 1980 and 2000 IJR7LS OF PRD)WBTIONfO0NSUIPTION/INPORTATI0N (thos_ands of ton) 2000, FERTILITY IYPOSIS 1980 HIGH OICTID 10W CGSMODITY (TFR=5.0)* (TFR=4.3) (TFR=4.0) (TFR=3.6) Cereals (oats, barley. and corn) Production 678 1,111 1,111 1,111 Consumption 869 1,537 1,510 1,484 Deficit 190 426 400 373 Potatoes Production 323 584 584 584 Consumption 323 701 689 677 Deficit - 117 105 93 Wheat Importation 190 592 586 580 *stimate for 1980-85 period. SOURCE: CEPAR, 1985. B. Population Policies 2.10 The 1978 Constitution supports responsible parenthood and appropriate education for the welfare of the fmily. Government agrees with the health rationale for child spacing and includes family planning in maternal and child health programs. However, MCR programs do not cover a substantial part of the population and, consequently, family planning services are not readily available to any women in union who would like to have them. According to CPS results, of all women in union and not practicing contraception at the time of the survey in 1982, 65% reported a desire for family plaming services. 2.11 The Government which took office in August 1984 bas co isioned studies to explore policies addressing different components of change, i.e., fertility, mortality, and migration. CON DB has established a population unit within the human resources division to analyze population data and to make tim for population policies within the broad context of socioeconomic development objectives. COIAD3, in cooperation with INBC, CELADE, and UNFPA, has Just completed an extensive "Socio-demographic Diagnostic Study of Bcuador, 1950-82"; a synthesis of this documet is to be prepared analyzing possible demographic consequences of specific policies and programs with suggestions for further research. The purpose of this diagnostic study is to explore methodologies for incorporating demographic  -7- variables into national development plans. Additional studies underway include population projections drawing on newly-available census and survey data, and a review of private sector prograss for family planning services. C. Health Status 2.12 Overall healtha status in Ecuador ranks among the lowest in South America and compwres unfavorably to countries of similar per capita incoae. Poor health conditions and high fertility rates are obstacles to the socioeconomic development of the country. Bealth conditions may have worsened since 1979, mainly due to the deteriorating economic situation. Assessuent of health status in Bcuador requires careful interpretation of mean rates of mortality, morbidity, end fertility, because nowhere in Latin America do local ethnic and socioeconomic groups vary as much. There is considerable controversy over mortality indicators. Mortality 2.13 Infant Mortality. The relatively high infant ortality rate (DIR) of 76 per 1,000 live births is partly due to the limited coverage of public health programs. Estimates of infant mortality vary widely. MOPH officials believe that the most recent official rate of 64 for 1981 reflect. underregistration, especially in rural areas. Cross-sectional studies conducted in urban areas showed DMR variations from 5 to 108 per 1,000 live births, according to socioeconomic status. Results of recent studies and sample surveys in small rural communities indicate IMRs ranging frou 90 to 200 deaths per 1,000 live birtbs. Diarrhea and acute respiratory infection account for roughly one-third of the infant deaths, followed by neonatal causes. 2.14 Child Mortality. Child mortality was estimated at 12 per 1,000 children aged 1-4 years in 1979, and by 1984, this rate had decreaed to 9 per 1,000 as a result of imunization campaigns and control of diarrheal diseases. Nevertheless, the current estimate of child mortality is more than ten time higher then in developed countries. Child mortality could be further reduced by improving nutrition, expanding program of iunization, oral rehydration therapy, and controlling acute respiratory infections. 2.15 Adult Mortality. Acute comunicable diseases and tropical diseases are no longer significant causes of death for adults. Motor vehicle accidents, coronary heart disease, cerebrovascular disease, cancer and tuberculosis are the official causes of adult mortality, a pattern similar to that of industrialised countries. The available statistics on causes of death, however, should be taken only as general indicators. Only 30* of all deaths are medically certified of which almsst half are classified as symptom or ill-defined causes.  -8- 2.16 Maternal Mortalitv. Icuador's maternal mortality rate (MMR) of 190 per 100,000 live births is among the worst in Latin hmsrioa; it is more than double the mean rate for South America and 20 times the MMR of the United States indicating a need for better child spacing. Maternal mortality rates are especially high among the 15-20 and 40-44 year age groups. Urban women have access to health services and receive protessional prenatal and obstetrical care, while in most rural areas pregnancies are not monitored, and deliveries are left to traditional midwives. In 1983, about 42% of pregnancies were not monitored and about 56S of deliveries were unattended or attended by untrained midwives. 2.17 A ten-year retrospective study behed on INC data showed that hospital admissions for abortion doubled between 1969 and 1979. The ratio of abortions to live births bas increased fro 1:22 to 1:13, or from 3.8% to 6.6%. Data suggest that a high proportion of abortions are induced, indicating inadequate contraceptive practices. Data collected for different geographic regions attest to higher abortion rates in urban areas (e.g., 105 abortions per 1,000 live births in Pichincha in 1976, and 100 per 1,000 in Guayas in 1974) than in rural areas, where rates varied from 16 to 27 per 1,000 live births. Morbidity 2.18 TroRical Diseases. MWat tropical disease, once highly prevalent, have been controlled by active program in the sixties and seventies (yaws, yellow fever, plague). However, increasing population density in the coastal and jungle areas where the ecology is favorable to spreading of vector borne diseases, requires costly surveillance and control measures. Schistosomiasis is unknown in Scuador. 2.19 Three tropical diseases are presently a matter for concern. Quiescent foci of Cha_As disease have been traced in 18 provinces, although with low prevalence, and so far, no clear evidence of cardiac or visceral lesions has been discovered. This potentially highly damging disease is under surveillanca since housing and climatic conditions are propitious to further spreading. Small hypoendemic foci of oncho_ercjesjs (river blindness) are expanding and becoming hyperendamic; ocular complications and blindness have been identified, and the disease poses a definite threat in well defined areas of the coast. Cutaneous leishmuiasis is also expanding as the sand fly vector breeds in deforestation areas of the coast and jungle. 2.20 By far the most serious tropical disease problem is malaria. Until 1980, the National Service for Malaria Eradication (SNEX) controlled the disease through active DDT spraying and screening programs. In 1982, insufficient control, and managerial and logistical weakneoses were compounded by floodings, by resistance of primary vectors to DDT, and by increasing resistance of the parasite to chloroquine. A critical situation has developed: the number of cases rose tenfold, from 8,000 ceses in 1980 to 80,000 in 1984, and infested areas expanded fourfold. More importantly, the  -9- mignt Falciparum breed, is taking over from the more benign Vivax. MOPH recently intensified control mesures with substantial support from USAID by combining houe spraying, fogging, larval control, reduction of breeding sites, biological control of mosquito and chemotherapy. 2.21 Infectious and Co_nicable Diseases. Dis mes such as diphtheria, whooping cough, tetanus end polio wre on the decline, even though vaccination program cover only 40* of the target groups with complete isunization. MOss vaccination campaigns are currently being organized and may result in higher vaccination rates. 2.22 Among the adult population, poverty-related diseases such as tuberculosis, asociated with malnutrition and crowding, or gsatric cancer, amociated with poor conservation of food, are highly prevalent. So are hepatitis, ealmonellosis, typhoid, amebiasis, and other water borne diseases. High incidence of teeniasis (tapeworm), trichinosis, and socariesis (roundworm) and persistence of plague are indicators of poor control of environmental conditions. Finally, the incidence of rabies, which has always been high in Ecuador, has increased in recent years. 2.23 General Morbidity. Coion diseases among the adult population reflect the pathology profile of a middle-income country. Chronic diseases such as bypertension, coronary and cerebrovascular diseases, mental disorders, alcoholism and occupational diseases are added to infectious and parasitic diseases. Incapacitating defects such as orthopedics, sensory (eye, ear) deficiencies, and dental deterioration, are not corrected and result in a high level of residual incapacity which affects the quality of human resources. In addition, an important back-log of corrective care is building up for the future. D. Health Policies 2.24 NOPH sets policy and includes programmatic goals in development plans. For the period 1985-88, the highest priority is to improve the health status of the population, especially among socioeconomic groups with per capita incomes below the national average, through expansion of health service coverage in rural and peri-urban area. A second priority is to implement the pbysical infrastructure development plans through the expanion, remodeling and construction of hospitals, health centers, and health post. The third priority is to improve the quality of the environmnt, especially by providing safe drinking water and waste disposal systm to most of the population. Fourth, efficiency of the health system would be improved through technical plaming at the central and local levels, regionalization of services and decentralization of administrative authority, better utilization of huao, financial, and material resources, and improved coordination, both within the health sector and among other sectors.  -10- 2.25 Strategies identified by the MOPH to improve the health status of the population, include: (i} improve maternal health (including fertility regulation and detection of cervico-uterine cancer) and the health of infants and children under age 15; (ii) control i3 unopreventible diseases through an expanded imunization program, directed especially at infants, and at combatting tetanus among pregnant women and the newborn; (iii) improve nutritional status, particularly among mothers and infants;- (iv) improve dental health, especially among preschool and school-aged children; (v) reduce diarrheal diseases, particularly as a cause of death among young children; (vi) reduce the incidence of communicable diseases, especially malaria and Chagas disease, through intensified curative and prntventive programs; and (vii) make efforts to address the metal health needs of the population. S. Nutrition 2.26 Malnutrition is widespread but its extent and severity are not knom. A corehnive, nationwide study is presently underway and is the joint responsibility of CONADE and MOPH with support from the kovernment, USAID, PAWD and private sources. The objective of the study is to measure the extent of malnutrition, identify and quantify the causes and contributing factors in the mosaic of local conditions in order to arrive at a precise diagnosis to provide the necessary information for sound planning. A total budget of US$748,000 has been secured from the different contributors. The primary sample consists of 8,892 children from 6,840 families in 270 geographic clusters. The final design of the study has been completed; preparation and training of staff is in progress; field work will take place in early 1986, and results are expected to be tabulated by the end of 1986. Nutrition Status 2.27 The 1984 assessment by MOPH and CONADE, is based on old data complemented by partial studies carried out more recently. The only nationwide food and nutrition survey was carried out in 1969 by the National  -11- Nutrition Institute with support from the US State Department. Three mjor problems were identified: severe protein caloric malnutrition, goiter and anemias.-- 2.28 Protein Caloric Malnutrition. Following up on their 1959 study, the Nutrition Institute monitored preschool children in 1965 and 1968 and found that 40* suffered from some degree of malnutrition. Two million Ecuadoreans, predominantly pregnant or lactating women and preschool children, were estimated to be undernourished in 1973. Fragmentary data obtained from small saWple surveys confirm the existence of severe malnutrition. However, a precise asseasment of overall prevalence, causes or type (acute, chronic or combined) of malnutrition could not be made because of the diversity of ecology, ethnic, and social environments. 2.29 Goiter. Ecuador is one of the countries of the world ost affected by endemic goiter. The high incidence of iodine deficiency, especially in ountain areas, in combination with protein and vitamin deficiencies and consumption of goitrogenic foods could explain such high prevalence. Chronic thyroid deficiency produces retardation in physical and neurological growth, cretinism, deaf mutes, and slight to moderate la deficiency. In 1968 the G0O made iodization of salt compulsory; iodized salt has alleviated the most severe consequences of iodine deficiency but has not reduced its prevalence which remains high, especially in the northern and central highlands. A 1983 MOPH study of school children in areas above 1,500 meters still showed a prevalence of 35.6X. 2.30 Anemias. Anemia is the tenth most frequent cause of death in the total population. The 1959 Nutritional Survey found that 40* of the population under 15 years of age suffered from anemia. This general indicator has been followed-up in recent years by several sample studies in different geographic areas which showed prevalences of 50 asong school children, 24* among pregnant women, and 20% among women in reproductive ages. These findings underline a serious situation, but they do not provide information on the multiple possible causes of anemia. Food Production 2.31 Over the past decade overall food production has grown at a slower pace than consumption. The availability of staple foods, e.g., legumes, tubers, wheat and corn has decreased in real terms, while availability of vegetable oil, seat and fish has increased. Land dedicated to the production of food crops has decreased, and land allotted to cattle raising and agroindustrial products has expanded. Food imports have increased, but there is still a deficit in the food basket. Food Conspution 2.32 In addition to a variety of small studies, a nationwide Household Budget Survey was conducted of 13,592 households in urban (1976) and rural areas (1978-79). The survey provided basic information on broad differences  -12- in urtan-rural and highland-coastal consuaption patterns. More recent date collected in 1980, measured an average daily per capita conOmwption of 1,765 calories and 44 grams of proteins, thereby suggesting a 24* caloric dWficit and 29* protein deficit. tovernment Nutrition Prorems 2.33 In 1979, with support from OBCD and WFP, NOPH launched the Maternal and Infant Food Supplement Program (PAAMI), a food supplaentation program for pregnant and lactating women and children under five. The program provides a protein-caloric rich mix of powdered silk and ereals (Leche-Avena), rice and soya. The program has been implmeanted in all provinces, but coverage is still low. In 1983, only 18.5t of pregoant win and 24.2* of nursing *others, and 23.6S of children under 5 received food supplements. The program has serious limitations. Bstablished as a vertical program, it is not integrated with MCR care; intercurrent pathology-not related to nutrition-was thought to be unimportant and food to be a solution. In fact, experience has shown that intercurrent disease affect the benefits of additional food. The program does not provide nutrition education. The results of the progrm are presently being evaluated. 2.34 The Ministry of Bducation and CORADR have developed a school snack program. Primary school teachers are provided with rae products and cash to purchase food locally and to prepare mid-orning nacks. The program reached 100,000 children in 1984. The coverage of the program and its impact on physical development are being evaluated. ME plow also to evaluate the impact on mental development, absenteeism, drop-out rates, and performance. 2.35 In aupport of these two program, CONADR is carrying out two research projects: (a) a study On food for children, with support from IDB, an the production, storage, distribution and preparation of milk derivatives, soya cookies, dried fruits and other nutrients readily acceptable by children, and (b) the development of a Nutrition Surveillance Module as a basis for a nationwide monitoring system based on weight and height of school children as an indicator of the socioecoomic status of comunities. Non Governmental Nutrition Proeroa 2.36 The World Food Program (NIP) supports the government's maternal and child feeding program, and estimates that it reaches half a million beneficiaries. mIP has organized a school breakfast program which serves about 50,000 school children. USAID participates in the PAAM} program through the provision of soya flour, and it finances part of the ongoing nationwide nutrition survey. The Catholic Relief Service is active in 14 provinces and its food program reach about 11,000 children up to the age of 12 (Child Food), about 13,000 children aged 6 to 12 (School Food) and about 2,500 adults and their dependents (Food for Work). The Medical Assistance  -13- Program helps in the production of food for flojd victims in the Los Rios province, and the Norwegian Lutheran Mission of South Anerica operates a food delivery program for flood victim. Finally, the Plan Internacional Ecuador has financed consultants in nutrition to prepare the Guayaquil Plan in primary health care. F. Nutrition Policies 2.37 There is no official nutrition policy. Nutrition matters fall under the jurisdiction of the NDPN or the Ministry of Agriculture. A nutrition institute exists within the Ministry of Labor and Social Welfare which has organized program to deal with endemic goiter through salt iodization. The results of the nationwide nutrition study currently underway should be used to formulate a nutrition policy, and to design specific and targeted interventions to reduce widespread malnutrition Q. su...ry of Population. Health and Nutrition Status and Goverrment Policies 2.38 Ecuador's population of 9.4 million grows at a high 2.8k per year and is expected to double by 2010. Its high level of fertility slows social and econmic development because of its impact on health status, number of schools and housing units to be built, new Jobs to be created and additional food to be produced. Yet, the country has no explicit population policy with demographic goals. Health status is generally poor. The infant mortality rate is a high 76 deaths per 1,000 live birtDs; four out of ten deaths occur among children under five years of age; and maternal mortality is double the rate for South America. Malnutrition is believed to be widespread. The Government's health policy correctly emphasizes expansion of basic health services to the rural and peri-urban poor and improvement of environmental health conditions. This officially stated policy does not appear to be implemented aggresively and scarce resources are mainly directed to urban, curative, hospital-based care. III. Health Sector Resources and Their Utilization 3.01 The health.sector uses physical, humn and financial resources to carry out its policies and program designed to improve the population, health and nutrition status examined earlier. This chapter inventories the physical and humNa resources available and analyzes how they are utilized. (Financial resources are treated separately in Chapter IV.) The structure and responsibility of the main providers of services, physical infrastructure, manpower availability by type, and drug consumption are presented and evaluated.  -14- A. Po_ulation Resources and their Utilization 3.02 Family planning services are available in the private sector from physicians and pharmacies to those who are able to purchase them. MOPS provides services in cities and a few rural areas to those who cannot afford to purcbase from the private sector. Of all married women who were not practicing contraception in 1982, 65* indicated a desire for family planning. These women are aluost entirely from the poorest and rural part of Ecuador. Public services need to augment those in the private sector. Results of the 1982 Contraceptive Prevalence Survey (C-PS) indicate that 40% of the women of child bearing age are practicing contraception. This figure seems overstated and is not supported by the official birth rate statistic of 37. Public Sector Services 3.03 The public sector accounts for about 40* of the family planning services delivered, the private sector for 50S, and private voluntary organizations provide the remaining 10*. In the public sector, family planning services are provided through MOPS, IRSS, and the Ministry of Defense. In recent years the Government has been spending about US$6.3 million annually on population and family programs, which translates into 75 cents per capita and US$15 per contraceptive user. The World Development Report (1984) provides comparative data for 40 countries including Ecuador. Costs per user are far above those of Colombia (US$4) but comparable to those of Mexico. The 003 receives assistance from UNFPA and USAID for population program. 3.04 NOPE and 3SS Family Planning Services. MOPH is an important source of maternal and child health services, and considers its maternal and child health progrm as the Priority Program of the Ministry. The program receive assistance from UNICRF and support from UNFPA and WHO/PAWD in the provinces of Gusyas and Chimborazo. The priority accorded to women of childbearing age in health services offers an appropriate program base within which MOPH can offer family planning services. However, as of 1982, MOPM was providing services to only 36S of all women then practicing family plaming. IBSS/MS played only a secondary role, providing 3.5* of services delivered. An expansion of I3SS/Mi services to cover dependents would make this organization a strong delivery mechaniso for family planning services. I3SS/SSC has been involved in some family planning activities through an agreement with USAID and their actions could be strengthened. 3.05 MOPH should play a more prominent role in meeting the unmet need for family planning services. The principal mechanism would be to extend its services in conjunction with further expansion of the important maternal and child health program. Pilot operations in two provinces with support of UNICEF and UNFPA provide a good basis for doing so. ISS, which can afford to be less seseitive than MOPH to the political aspects of family planning, could be more active in fertility reduction.  -15- 3.06 Ministry of Defense Services. The Armed Forces (FFAA) has 36 clinics where family planning services are provided, including provision of contraceptives and detection of cervico-uterine cancer. The average cost per patient at a FFAA clinic is about US$2. The FFAA currently receives financial support from USAID and The Pathfinder Fund. Private Nonnrofit orLanizations 3.07 Private and voluntary organizations have worked chiefly in cities. Their effectiveness has been somewhat eclipsed in recent years by the succees of the private for-profit sector and MOPH. The PVOs may have an important future role to play by extending services in low-income peri-urban areas. Two private.voluntary organizations provide subsidized services: the Asociacion Pro-Bienestar de la Fauilia Ecuatorians (APROFE) and the Centro Medico de Orientacion y Planificacion Familiar (C6MOPLAF). Together, these organizations accounted for 9% of services delivered in 1982. A third organization, the Centro de Istudios de Poblaecion y Paternidad Responsable (CEPAR) prepares and distributes publications on population and family planning and organizes training sessions for physicians and legislators. 3.08 APRDFL. IPPF funds most of APROFE's activities, including nine clinics in (*uayaquil, Quito, Cuenca and other cities, and caomunity-base projects iu seven provinces. Through a grant from the Association for Voluntary Sterilization, APROFE performs voluntary female sterilizations, with as many as 4,000 a year in the Guayaquil area alone. Two additional clinics are being planned for the Guayaquil area. In 1984 APROFE reported 45,300 new acceptors and high continuation rates, with an average of 57X of women continuing to practice contraception after 12 months and 40* after 24 months. USAID funds an APROFE resident representative in Quito. 3.09 CMOPLAF. CEMOPLAF began operations in 1975 under a grant from Family Planning International Assistance (FPIA). The association provides family planning services through its clinics and community progrms in major cities. It expected to serve 11,000 new and 8,750 continuing users in 1984. Forty-eight percent of current project expenses are covered by charging nominal fees for services. CENOPLAF also performs educational activities and provides consultations to other organizations when requested. Pharmacies and Physicians 3.10 Pharmacies accounted for roughly 27X of services delivered in 1982, and private physicians for 25S. Thus, the for-profit sector accounts for slightly more than half of all family planning services used by gcuadoreans. Little information exists about full-cost private sector family planning services. Before the 1982 fertility survey results were available, most observers thought the contribution of the private sector mas much smaller and attributed more importance to private nonprofit organizations. The fertility survey asked married women of reproductive age (who reported that they were not using contraceptives at the time of the survey) where they would get contraceptives, if they decided to use them.  -16- Over half responded that they would go to a pr_macy, 31% mntioned MOPE, and 86 metioned APDFI. These findings imphaize the likely continued importance of private sector sourcs of family planning services. B. mealth Care lResourcs and their Utilizatim Institutional Providers 3.11 Health care services in the Mublie sector are delivered by the following governmental entities: the Ministry of Public Health (MOPH), the Ecuadorean Social Security Institute (ISS), the Armed Forces Health Service (FF&A), the Ministry of the Interior, the National Institute of the Child and the Family (I?WA), and the Ministry of Social Welfare through its network of creches and its national progrm for the aged. The two most important providers in terms of available capacity, national mandate, budget and population coverage are MOPE and IBM; the former is theoretically responsible for about 75% of the population, and the latter serves 8.5% of the population through its regular medical progrm and an additional 4.5% through its rural progranm or a total of 13% of the population. 3.12 The private sector can be divided into nonprofit and proprietary. The former includes the Charity Board of Guyaquil (JBG), the National Red Cross, the Cancer Association (SOLCA), the Child Protection Society and a variety of denominational institutions. The urban-based roprietary sector consists of private hospitals and physician offices. Trenanational companies provide medical care to their employees and a number of cooperatives and insurance companies offer actuarially based protection against certain health risks. Traditional medicine is part of the socio-cultural structure and plays an important role in the alleviation of pain and suffering. The Ministry of Public Health 3.13 The legislature established MOPE in 1967, and five years later administrative decisions organized it in its present form (Organizational Chart in Annex). In 1972, the Institute of Sanitary Works (IR8S) was created as part of MOPE with responsibilities for the construction and equipping of health facilities, and water supply systems, and for the preparation of water, sewage and storm drainage projects. The first National Health Plan drafted in 1973 included a diagnosis of the health status, a definition of levels of care, and the formulation of coverage goals. It served as the basis for the first Five-Year Health Plan (1974-77) which was not funded. The second Five-Year Plan (1980-84) defined health programs by level of care and by type of institution without the participation of the implementing local or regional levels. 3.14 MOPH Service Delivery Structure. Service delivery follows the traditional pyramidal structure with five levels of increasing complexity.  -17- The two least complex levels are the health post and the health center responsible for preventive, prowtive and curative amulatory care to populatiom of 1,500 and 5,000 inhabitants, respectively. The next three levels provide inpatient and outpatient bealth car services, viz, the hospital/health center with 15-25 beds, the base hospital, usually located in the capital city of the province, and the specialized hospitals in the wmjor cities. The latter is the apex of the structure and also undertakes teaching and resewrch activities. According to health planning concepts, patients should be treated at the lowest level of complexity as required by their health needs and referred by health professionals to higher levels. As in ost countries, the Ecuadorean population does not follow the blueprint and patients-enter the system at all five levels according to tiheir perceived needs, availability of transport, geographic proximity, gad ability to pay for travel and lost time. Referrals among levels are not documented but are believed to be minimal. 3.15 Environmental Health. The Inatitute for Sanitary Works (IN06) within the MOPH structure is responsible for planning, coordination and supervision of water and sewerage works. However, insufficient coordination with CONADE and provincial or municipal authorities has limited IBOS' planning and coordinating role. I106 is supposed to prepare, construct and supervise water system at the request of municipalities. In practice, however, it is involved in only a smell fraction of water systems, and municipalities mume responsability for planning and construction of their own systems. D306 is also responsible for the planning and supervision of construction and maintenance of MOPE health facilities. Sere again, IBOS' record is not favorable, and its inefficiency has resulted in building delays and lack of saintenance. The Social Security Institute 3.16 Mbdical Soeial Services Progran (tSS/MS). Created in 1936, it provides hospital and outpatient medical care to public sector and private sector employees (Organizational Chart in Annex). The total population covered is only 8.5w and ranks Ecuador in 16th place among latin American countries. Most sagricultural wage earners, temporary workers, and the unemployed are legally excluded from MESS coverage. The self-employed may join voluntarily. The spouse and children of the insured are not protected, and maternity benefits are only provided to insured females. The latter's children up to the age of one receive medical care, excluding pharmaceuticals. The insured is covered against practically all social risks and social security has consistently generated a surplus. However, there are still significant and m0stly unjustified differences in contribution and benefits among several groups of insured. A decision was made in 1985 to divide the country into eight operating regions to decentralize administration and to speed up decision making.  -18- Table 3.1: Health Facilities and EliLible Population DY Provider Organization, Ecuador, 1983 Eigible #osital Beds Heath Caters P o lati4zx 2 of Naber of 2 Per 1.000 Ementerg Ordnizatim (t000) Pftaticn Hspitals Qpcmn Xaber Z pilaticn !tnimzt of Public Health QOn" 6n714.2 75.0 12 63.7 8,2 52.5 1.2 869 (c) Social saecuity (MS) 1,163.8 13.0 16 86.0 1.589 10.0 1.4 361 (d) (larty BOBd Of Qisaqul (JB) WA WA 4 84.4 2,323 14.7 WA - Wmistry of Defense (WEAA) 223.8 2.5 12 - 750 4.7 3.3 - Oter Gov't(a) - - 2 86 0.5 - Private Setor 860.5 9.5 202 (b) - 2,789 17.6 3.3 - 5L* 8,952.3 10D.0 362 77.7 15.822 10D.0 1.8 1,230 (a) Tndude an Interior Mistiy Hopital (50 beds) and a Hrdcipio opital (36 beds). (b) Incudes SCCA (2 hospitas with 70 beds). Mild Protection Society (tce 167-bed ospital). and ed hospitals (199 with 2.552 beds). (c) 53 u*b health cunters, 170 ude ard 631 rural helth dtsters, aurd 15 diseriaie (234 health pst are ebied). (d) Inuxdes 49 1E0 M and 312 1MfS5CdispC usries. 3.17 IESS/MS Service Delivery Structure. Outpatient care is delivered in 49 dispensaries of three types (A,B.and C) which differ in degree of complexity. types of services offered, population served. and number and qualifications of staff. Dispensary C is the most specialized elinic and is located in provincial capitals. Hospital care is provided in 16 local. provincial or regional hospitals, and only the three regional hospitals have more than 100 beds. The 13 other hospitals have 50 beds or less and duplicate in most instances similar size MOPH hospitals in the same cities. Patients enter the system at any level. which results in congestion and overcrowding at the two sophisticated regional hospitals and at C Dispensaries and underutilization of the lower levels of the system. Patients are IESS beneficiaries and get time off to receive medical care and, therefore, they tend to seek care at the highest levels of complexity. 3.18 Social Security for Farm Workers (Seguro Social Campesino. or IESS/SSC). IESS/SSC started as a pilot project in 1968 but was legally created in 1981 as a vertical program within IESS when Congress mandated T"SS to provide services to marginal groups (Organizational Chart in Nex). Of the total population, 4.52 are protected by this program or , .Z of the rural population. Benefits received are more limited than for the IESS/MS beneficiary, but the spouse and dependents of the insured are eligible for services, and enrollment is community-based. IESS/SSC has its  -19- own budget with contributions fixed by law and the number of insured has quadrupled in the period 1981-84. The program enrolls organized rural counmities, provides medical care through a network of 312 dispensaries and offers limited income maintenance benefits. Presently it is organized into four geographic regions, and it will expand to eight regions in 1986 to parallel the IESS/M regional structure. IESS/SSC does not report to the I8SS medical director. 3.19 IESS/SSC Delivery Structure. SSC maintains 312 dispensaries which are staffed by an auxiliary nurse and a visiting physician. The design of dispensaries is standard with 96 m2 of space. Patients requiring referral for diagnostic tests and treatment are sent to IESS hospitals. Under a recently signed agreement between the MOPH and IESS, SSC affiliates way receive services at MOHP facilities on a referral basis. This would now allow MOPH to bill for services which they are often already providing free of charge. The National Institute for the Child and the Family (INNFA) 3.20 Organizationally, it is under the Office of the President of the Republic and the country's First Lady is chairperson of the Board. Its budget is part of the President's Office budget, and it receives assistance from international donors for specific activities. Program sponsored include orphanages, community welfare centers, free drugs for children, generic drugs in popular pharmacies, and arts and crafts centers for mothers. A recent addition is the P1$MI program which is a national effort to reduce infant mortality. The program is patterned after UNICEF's GOBI approach which emphasizes four activities: growth monitoring, oral rehydration, breastfeeding,and immNnizations. UNICEF and USAID make financial contributions to the operation of the program. The Charity Board of Guayaquil (JBG) 3.21 The Charity Board of Guayaquil (JBG) was created in 1887 as a philanthropic institution to provide education and medical care to the needy. Sixty percent of its budget is derived from lottery income. It is a quasi-public institution maintaining a degree of autonomy in the acquisition, use and disposition of its resources. Most of the users of its services, provided through four hospitals, live in Guayaquil, but patients come from other nearby provinces for some specialized care. The JBG has an agreement with BESS for the provision of open heart surgery and with Universities for the use of its facilities for teaching purposes. A large part of the MOPH target population in Gusyaquil is served by JBG. The Armed Forces Health Service (FFAM) 3.22 The Armed Forces Health Service (FFAA) provides comprehensive health care to the members of the military forces, to their spouses, children and dependent parents, which accounts for about 2.5S of the population. It operates 12 hospitals with a total of 750 beds and an undisclosed number of dispensaries. Its newest and largest hospital in Quito is a high technology facility.  -20- The Cancer Society (SOLCA) 3.23 The Cancer Society (SOLCA) is a national, nonprofit organization to fight cancer. It is governed by a national Board of 42 mers and manged by an executive cittee which supervises about 300 paid staff. Three-quarters of its income derives from a 0.25* tax on all bank transactions. Services provided include cancer education and screening, and treatment in its two hospitals with a total of 70 beds. Its programs are mainly treatment oriented, and too little effort is spent on prevention. The DroDrietrA rivate setor 3.24 The proprietwry private sector is governed by the lavs of supply and domand. The goverument has very little authority over the bebhvior of the private hospitals and the individual practitioners. It authorizes the "permit" for the construction of private bospitals, and there is no system for accrediting these institutions or the physicians working in them. The Law of the Medical Federation and the Medical Ethics Code govern the structure, the norm and standards of the medical profession and protect medical practice as a profession. Traditional Medicine 3.25 In Ecuador, traditional healers are as diverse as the ethnic cultures that created them. The practice of traditional medicine (indigenous medicine, non-formal health care, popular medicine) varies from purely religious or magic interventions to use of therapeutic agents, (plant, animal and mineral products) and the mwipulation of codes and symbols to alter disease states. It is part of century-old cultural patterns and is deeply rooted in the soial structure of the rural and periurban conunities. The imsdiate ftiily constitutes the first level of care. If a medical problem cannot be resolved at that level, the patient will be referred to the scientific medicine sector or to the second level of traditional medicine made up by neighbors, relatives, the storekeeper, or the local pharmaciet. The third level conist. of the curandero (medicine an) and the pgrtera (traditional midwifde `krica l attre the c gderos T l8 sed on experience anam owlerge1 tney a r according to their practices: generalists, spiritualists, specialists in herbal medicine or snake bites, etc. It is difficult to estimate the coverge provided by the non-forml sector. Anthropological surveys show that the sector ma account for as many es 60* of first patient contacts in the country and that in saw regions there is one csade for every 70 inhabitants, thereby making it an important provider of health services. The role of healers, their relationship to the comunity, and mode of payment vary widely. There is also large variation in the willingness of bealers to collaborate with the modern health system. Traditionel xedicine as a form of primary care has attracted the interest of researchers and public health officials interested in the linkage between the modern and traditional system. Experience in other countries with a sizeable traditional medicine system has shown the health and economic benefits from coordirating or integrating the two system.  -21- The National Health Council 3.26 The process aimed at linking the components of the health sector and of building a national health systm., as stipulated in the National Development Plan, is the responsibility of the National Health Council established in 1980. The Council's functions may be summarized as follows: (a) to provide the Minister of Health with advice on national health policy; (b) to participate in the formulation, execution and evaluation of the health plan; (c) to prepare studies that will enable decisions on the organization and operation of the national health system. The Council is composed of representatives of 11 institutions that make up the sector, and has an Executive Secretary. Its budget is provided in equal parts by MOPH and IESS. 3.27 The National Health Council is not effective: its chairman, the Minister of Public Health, has the authority to call the metings and to set the agenda, but frequent changes in minister, shifts in national priorities as perceived by each now inister and flexible policy implsemntation strategies deprive the Council of effective health sector leadership. In the first year of the current administration, the Council has met twice to discuss procedural matters. There is growing awareness by the Ministries of Finance, Planning, Social Welfare, and Public Realth of the need to coordinate investments in hospital infrastructure and other capital expenditures. However, th.re is no independent formal structure with authority to achieve that purpose. National Develoamnt Council (CWIADE) 3.28 To achieve the health goals contained in the National Development Plan, the Plan emphasizes the linkage of the health sector to other sectors. The National Development Council (CONADE) is the lead agency for economic and social planning, for the general coordination of the various sectors and institutions and, for the coordination of the use of resources. The Chairman of the Council is the Vice President of the Republic. CONADE's coordinating role in the health sector is severely handicapped by its lack of professional staff required to meld the individual components into an integrated health plan and by its lack of financial control over IESS which is funded by wage contributions. C. Hospital Beds 3.29 Current Infrastructe. In 1983 MOPH operated 8,285 beds in 126 hocspitals which represents 52. 5 of acuador's total bed complement (Table 3.1). The MOPH has an overall bed-to-population ratio of 1.2 beds per 1,000 population with a range from 2.0 in Pichincha province to 0.6 in Guayas province. It must be noted that the MOPE figures refer to existing beds of which only 88% are operational. IU$S operates 16 hospitals with a total of 1,589 beds or a ratio of 1.4 beds per 1,000 insured. About three-quarters of the IBSS beds are located in Quito, Guayquil and Cuenca. The Guayaquil Charity Board has 2,323 beda or 14.7. distributed in four facilities: a  -22- general acute hospital (756 beds), a pediatric hospital (230 beds), a maternity hospital (250 beds), and a psychiatric institution (1,087 beds). The Arited Forces have 750 beds or 4.7* of the total bed complement, and other governmental units control 86 beds. The public sector owns and manages two-thirds of the country's hospital infrastructure. The investor-owned private sector operates 199 hospitals with a total of 2,852 beds, and the average size of a private hospital is 13 beds which compares to 66 beds for a NOPH hospital and 99 for IESS. The ratio of all beds in 1983 -- short stay and long stay or chronic - was an acceptable 1.8 beds per 1,000 population. 3.30 Future Expansion. Both MOPH and IESS have major expension plans underway which have been delayed by the economic crisis. NOPH 1984 construction plans for new facilities and for expansion and remodeling of existing facilities amounted to US$9.3 million. MOPR has 36 hospital construction projects of different sizes in various stages of execution, ranging from the blueprint stage to 80* completion. Sunk cost is estimated at US$28 million and about US$38 million is required to complete the works (1984 prices). The Minister has stopped construction of new buildings, and only construction for remodeling and reequipment of existing facilities is presently authorized. Over the next five years, IESS plans to increase its bed complement by 3,285. Approximately 3,000 beds would be beds in new facilities and 286 would be expansion beds. A rough cost estimate of this proposed investment is approximately US$200 million. Some of the 16 projected hospitals are in the planning stage, others are under construction, and two are completed and awaiting equipsent. Execution of its construction plans would raise the I8SS bed/insured ratio to a very high 4.1 per 1,000 (using 1984 number of insured as a denominator) and the national bed/population ratio to 2.1. Io addition, some bhspitals are being planned or built in conmmunities with unused MOPH bospital capacity. The current Director General has proposed to reduce the number of new beds from 3,285 to 1,900, and also indicated willingness to purchase beds from MOPH in lieu of new construction. HosDital Utilization 3.31 MOPH reported 36 hospital discharges per 1,000 population in 1984. This is a very low figure and indicates large unmet needs for hospital care. Patients stay in the hospital 5.5 days on the average, which is an acceptable figure. The occupancy rate in short-stay hospitals is 71*, and 58% in hospital/health centers. Given the small size of MOPE facilities and their location these rates are in the normal range. Table 3.2 presents various measures of hospital utilization by provider. 3.32 IESS MS had 69 discharges per 1,000 insured in 1984; each patient stayed an average of 9.1 days, and its 16 hospitals had an average 85% occupancy rate. IISS/SSC, which does not have inpatient facilities, referred about 5,500 patients to IKSS/IS for hospital treatment in 1984. TESS statistics reflect below-average hospital admissions and above-average lengths of stay, which result in a higher number of patient days and a higher occupancy rate. A reduction in the average length of stay would decrease the occupancy rate and allow more admissions. However, rising  -23- hospital admission rates would continue to exert pressure on the three regional hospitals which already have occupancy rates of 90*. Table 3.2: Measures of Hospital Utilization by Provider, 1984 Staffed Average Short-Stay Length Beds Diaschares % of Stay Organization No. % No. X Occupancy (days) Ministry of Public Health (MOPH) 5,941 67.8 251,148 70.7 '33.7 6.5 Social Security 1,589 18.1 54,271 15.3 85.0 9.1 (lESS) Charity Board of Gueyaquil (JBG) 1.236 14.1 49.850 14.0 84.5 U.9 TOTAL 8,766* 100.0 355,269* 100.0 77.7 7.3 $ Does not include FFAA, SOWCA, and private hospitals. SOUBCE: MOPE 3.33 JBG, Guayaquil Charity Board, accounts for 14% of short-stay public hospital beds. In 1984, its general acute, pediatric and obstetric hospitals had occupancy rates of 77*, 87S and 96B, respectively, and average lengths of stay of 16, 17 and 3 days, respectively. The high occupancy rates in the general acute and the pediatric hospital reflect very long patient stays. A greater number of patients could be admitted to these two hospitals through more efficient management procedures. The saternity hospital has an excessively high occupancy rate with a reasonable average length of stay, indicating a shortage of obstetric/gynecologic beds. D. Agbulatory Care 3.34 Availability. MOPH provides ambulatory health care services in the emergency and outpatient departments of its 126 hospitals and through its network of 63 urban health centers, 170 urban and 163 rural health subcenters and 234 health posts. Emergency room and outpatient departmeots of the 16 IESS/MS hospitals, and 49 dispensaries provide ambulatory care to their insured population. IKSS/SSC provides service through 312 dispensaries. Private practice physi Atis and traditional medicine practitioners provide probably the largest share of the ambulatory care services.  -24- 3.35 Utilization. The 1983 MOPM date show 0.8 physician contacts per person per year for its service population. This low figure can be partly explained by the limited coverage and the low quality service provided by MOPM in addition to use of traditional healers by the Indian population. IRSS/MS reported 3.6 physician visits per beneficiary in 1984 which to an acceptable average for the type of clientele served. Information on services provided by private sector physicians is not available, but the volume of services must be considerable. AlJost half of the physicians are in private practice, and moat public sector physicians see private patients. Information on the traditional medicine sector is also fragmentary. It is generally accepted that the non-formal sector is an important source of health care which may account for half of the consultations for disease. Thus, the officially reported ambulatory care statistics by MOPH and IESS only represent a msmll part of all outpatient care provided in Ecuador. 3.36 Utilization of Dental Services. Available dental services are in high demand. Services are not equipped or staffed adequately to perform time consuming preventive applications, obturations or restorative treatments and routinely resort to extractions resulting in extensive dental loss. The supply of dental services is inadequate, and those services that are offered do not provide services that improve the dental status of the population. S. Human Resources Availability 3.37 Physicians. Ecuador had about 10,300 physicians in 1985, or one medical doctor for 920 people, a ratio slightly above the corresponding ratios of neighboring countries and countries in the same income group. Medical underemployment and unemployment are now occurring in urban areas. The annual increase of physicians cannot be absorbed by the major public health care providers-MOPH and IESS-for budgetary reasons, or by the private sector for 'Lsck of fee-ping clients. As a result, medical manpower in the cities is abundant, inexpensive, and health services have developed physician-intensive staffing patterns. 3.38 A policy of unrestricted entry into Ecuador's medical schools, eombined with more medical schools, has greatly increased the number of physicians in the last decade. Ecuador now has seven medical schools. The number of amual graduates of medical schools increased from 600 in 1972 to 1,000 in 1975 and has remained stable at around 1,300 since 1981. The rapid increases in enrollment may affect the quality of medical education negatively. 3.39 About 70S of private and public sector physicians practice in the. two most urbanized provinces, Pichincha (Quito) and Guayas (Guayaquil), where 42% of the population resides. The urban concentration of physicimo  -25- is the sne in MOPM and IBSS and in the private sector. The similarity in concentration can be partly explained by the fact that many professionals work for the private and the public ectors simultaneously. At the uae tim, positions for general practitioners, pediatricians and obstetricians renin unfilled in some provincial and many local hospitals. The distribution of health *enpowor among the three major providers is presented in Table 3.3. Table 3.3: Health NMwMver Distribution, 1984 IBSS MOPS JBG Per 1,000 Per 1,000 Personnel Type No. Pop. Served No. Pop. Served No. (b) Physiciasn 1,036 1.3 1,799 0.3 Dentists 151 0.2 233 0.0 - Other professionals 163 0.0 - besident Physiciasn 315 0.4 1,274 (c) 0.2 - Otbr residents - - 781 0.1 - Interns 173 0.2 1,200 0.2 - Nurses 529 0.7 670 0.1 - Midwives - 110 0.0 - Technicians 474 0.6 1,765 0.3 - Auxiliary Nurses 1,333 1.7 4,468 0.6 - Auxiliary Techniciam - 1,367 0.2 - Ancillary Personnel 1,756 2.2 3,667 0.5 - Admin. Personnel 640 0.8 1.977 0.3 - ?OTAL 6,858 8.7 19,264 2.8 3,255(a) (a) JBG has 268 physicians, sany of whom are employed part-tim; 326 nursing auxiliaries; 30 social workers; and a core staff of 120 professionals at central level. The total estimate of JBG health manpower for 1984 is 3,255. (b) Ixcluding the rural health program (IHSS/SSC). (c) Compulsory rural medical program 3.40 Dentists. The current ratio of one dentist per 3,300 persons is too low to meet the dental needs of the population; and most dentists practice in urban ares. For example, the city of Cuenca has one dentist for 1,900 people, but in the rural part of the province (Azusy), there is only ome dentist for 8,500 people. 3.41 Nuce. From 1972 to 1980, the annual output of graduate nurses increased only from 232 to 300. The nursing career is comparatively unattractive, and there is an acute shortage of graduate nurses, with a ratio of one nurse per 6.6 physicima. Ideally there should be more nurses then physician. Midwives are also in short supply and only 817 were active in 1984. The low annual output of 70 new midwives is likely to continue the shortage.  -26- 3.42 Auxiliary Nurses. Auxiliary nurses are the backbone of the service delivery system and there was one auxiliary nurse per 750 people in 1984. Many of them work in health centers, health posts and IESS - dispensaries. MOPH has developed an active training program for auxiliary nurses to compensate for the shortage of graduate nurses. More than 4,000 auxiliaries have been trained, and approximately 2,000 are presently working for MOPH. 3.43 Nursing personnel, graduate or auxiliary, are generally efficient in hospital settings but have little training in public health and counity work. About 10% of the graduate nurses complete one additional year of study to obtain a master's degree and specialize in management, intensive care or other clinical specialties, and nursing eduvation. 3.44 Medical technologists. Medical technologisto are also in short supply. Like graduate nurses, they are trained for three years at university level after completing secondary education. Approximately 280 graduate each year in radiology, laboratory, rehabilitation, and speech therapy. Demand for their skills is still limited. Providers do not perceive the need for their skills, they use lower cost personnel, or their tasks are performed by nurses and physicians. 3.45 Health Promoters. The training of commmmity health workers known as "promoters" was initiated 25 years ago, but received its main support six years ago with the emphasis on primary health care. Nonetheless, MOPR had only 313 promoters in 1983. A limited number of health promoters have also been trained by religious missions, e.g., 145 by the Evangelical Mission. It is estimated that approximately 150 promoters are employed by NG08 in rural areas. The promoters report to the connmunity through municipal authorities and are paid US$30-40 monthly. The MOPH is presently experimenting with utilization of promoters in peri-urban areas. Generally, the training and use of health promoters is not aggressively pursued. 3.46 Training Programs. Health care providers (MOPH, IBSS, and JBG) conduct training programs for their staff. In 1976, NOPH established a Directorate of Human Resources which was replaced in 1981 by a Training Institute responsible for plamning, coordination, and supervision of all training and continuing education activities in MOPH. Physicians, dentists, and graduate nurses are required to do a rural service and MOPE has the opportunity to complement the training provided by the University. Therefore, MOPE could influence manpower training. After an active period, budgetary restrictions have limited the Institute's activities which now offers ad-hoc courses and supervises the orientation of rural residents and the training of nursing auxiliaries. The Institute did not have the expected impact on the sector's manpower training and utilization. IESS and JBG conduct programs for continuing medical and nursing education. HuMan Resources Utilization 3.47 Most physicians share their time between public and private practice. Of the 8,500 physicians practicing in 1982, 41X were principally  -27- ewployed in the public sector and 44$ in the private sector. The remining 15% were fulfilling their one-year rural service obligation. 3.48 MOPH has a limited permanent medical staff and compensates for understaffing by using temporary manpower (recent graduates in rural service, medical interns and residents). There is one permanent staff physician for every 1.4 temporary physicians. Pernanent staff usually consists of managers, surgeons, obstetricians and other hospital-based specialists located in urban areas. This system has the advantages of providing inexpensive staffing of rural facilities, medical practice training, and potential settlement of new graduates in rural areas. There are serious drawbacks: low motivation for temporary assignments, low pay, inadequate orientation and supervision, and shortage of equipment, trensportation, and drugs. MOPH is aware of these limitations but has not shifted resources to make improvements. Ecuador's rural system is more dependent on temporary personnel than any other country in Latin America. Extension of MOPE coverage and improvement of the quality of care munt take account of this situation. 3.49 IESS relies on a balanced and relatively well-paid peranment career staff which identifies with the institution. IESS/MS' permanent staff consists of 1,675 professionals (physicians, dentists, bacteriologists), 529 nurses, 474 technicians, and a broad base of 3,089 auxiliary nurses and ancillary personnel. 3.50 I8SS/SSC has a core staff of 120 professional and administrative people at the central level. IESS/SSC has eight supervision team at the regional level, each consisting of one physician and two nurse supervisors. It employ 30 social workers and 326 auxiliary nurses at the field level. It also signs part-time contracts with local physicians for the equivalent of approximately 60 full-time slots. Presently, 136 physicians are under contract with SSC. This system proves to be flexible and allows for control of quality of care. 3.51 JBG's manpower policy is derived from its philanthropic origins and its private non-profit status. A core of 268 physicians have staff appointments; about 1,000 physicians "ad honorem" offer their services free of charge and enjoy some scientific and professional privileges through their association with JBG. F. Pharmaceuticals 3.52 Production. One hundred and seven pharmaceutical laboratories are registered in the country. Local laboratories import ingredients and compound simple drugs; more complex drugs are imported in bulk and are packaged locally according to MOPH regulations. In 1984 there were 1,876 brand products registered in the country, under some 3,200 forms. Health care providers procure their drugs through the regular market or through special procurement agreements with the laboratories. Production of vaccines is the responsibility of MOPH's Biological Institute Izquieta Perez  -28- in Guayaquil which covers the need. in OPT, DOG and part of the cnine antirabies vaccine. All other vaccines, such as polio, measles, rabies vaccines and antitoxins are imported. 3.53 Pricing. Drug prices are controlled by NOPM but are quite high at the retail level. A coparisn was made of official prices with prices ia UNICEF catalogue and with generic drugs supplied by a comercial wholesale distributor in the U.S.A., to which a 52 markup wa added to cover importing and distribution costs. For 16 basic drugs, local retail price ranged frce 8 (Lidocaine) or 9 (Aspirin) to 212 (Piperazine) times the cost of direct procurement. This suggests the need for more effective public intervention in the procure ent of essential drugs. and for more aggressive price control. 3.54 Distribution. There are 1,865 commercial drug expenders registered in 1985: 1,727 pharmacies in urban areas and only 138 small retail pharmacies in rural areas. The distribution of phar ceuticals is relatively simple. Pharmaceutical laboratories supply the retail pharmacies directly thus avoiding costly intermediaries and wholesalers. NOFI's Directorate of Sanitary Control supervises pharmacies and enforces agreed upon retail prices. The Government supplements the conercial network in both urban and rural areas with "Popular Drug Stores" selling generics under a project described in para. 3.59. 3.65 CoBa jtion. Following a universal trend, consumption of pharsaceuticals has drsamtically increased in Ecuador since 1960. The increase in consumption is stimulated by active ommercial advertising for self-prescribed over-the-counter drugs, e.g., aspirin, pain killers, syrup., decongestants, etc. and for the questionably consumption of self-prescribed health aids, e.g.. vitamins, fortifiers, and infant formulas. A pharmaceutical industry source reports sales of US$116 million in 1983 through private vendors or US$13 per capita. 3.56 Medicines are free for hospitalized patients in NOPE, DBSS, and JBG facilities. Drugs preswribed for abulatory MDPH patients must be purchased comercially. In 1986, the -average prescription cost U8S7.00 in the public sector and US$12.00 in the private sector, well beYond the purchase capacity of workers earning a US$85 minimum mothly wage. Drugs for special program, such as tuberculosis control, leprosy, leishmaniasis, are free, but MOPE's clinics regularly run out of stock. 3.57 Drug expenditures in the Public sector. HOPH's drug expenditures have increased steadily over the last five year to reacb US$2.8 million iL 1984 and a budgeted US$3.4 million for 1985. Using NMO's tbeoretical coverage of 75* of the population, its per capita drug expenditure for 1985 would be US$0.47. Bowever, considering MOPE's realistic coverage of 3Bt of the population, the actual per capita expenditure would be $US1.18. I35's expenditures on drus amounted to US$7.9 million in 1984 and were budgeted at US$11.9 million for 1985. The allocation for drugs per insured would be US$9.60 or 8 times the per capita expenditures of MNPH.  -29-. 3.58 GoVernrent's DroJects in oharmaceuticls. The GOB is preparing a large-scale project publicized as "Free Drugs for Children Under Five", also known as "MBGRANK S" which, together with the PRMI program, constitutes the two-pronged Presidential strategy to improve the health status of children. Approximately US$15.0 million, to be obtained from new taxes on cigarettes and beer, have been earmarked for NUGAdMI 5. US$2.4 million would be invested in installing and equipping 300 drug stores all over the country, and US$9.8 million would provide an initial stock of drugs. The annual recurrent costs of the progrm are expected to be US$3.6 million for personnel and maintenance and US$8.0 million for drugs. Annual recurrent cost would be US$5.90 per child under 5 years of age. It is not clear what impact this program would have on infant and child health, considering that (a) other service progrm such as iunizxation and MCM offer free drugs; (b) providers such as MOPH and I3SS provide free inpatient drugs; and (c) Popular Drug Stores offer drugs at reduced prices. 3.59 As a component of MBGRAMN 5, MOPH may formulate a drug formulary and promote the use of generic drugs in all MOPH facilities. Bach type of facility would be provided with a small drug outlet or Popular Drug Store. Dispensaries would have 11 drugs under 20 forms at reduced prices, sub-centers would have 23, sad health centers would sell 32. Finally, hospitals would provide free medicines for inpatients (a benefit already established by law but seldom available in practice) and would have 109 drugs under 194 form for outpatients at reduced prices. If properly implemented and supervised, this component may increase the availability of drugs. S. Research 3.60 Research in the population, health and nutrition sectors is modestly funded, but research activities have increased over the last ten years. Research activities play an importsnt coordinating role and constitute an instrument of integration in en otherwise fragsented sector. A 1984 study on health research, coordinated by the National Council on Science and Technology (CONACYT) and carried out by AFRNB, CRAS, and IIFM reviewed the characteristics of research projects and over 200 individual researchers in the areas of biomedical research, sociomedical research and research in medical education. Ten major groups or institutes are dedicated full time to research activities, eight in the public sector and two in the private sector. Socio-medical research, in particular, has carried out interesting analyses on itportant aspects of population, health and nutrition programs. H. Summary o. Health Sector Resources and Thir Utilization 3.61 The private sector provides about 60% of family planning services but serves mainly the urban population and those able to pay. The resources of the public sector (MOPH and ISS) are not utilized efficiently to meet  -30- the expressed end unmet demand for contraception, especially in rural areas. The two most important providers of health services are MOPH and IESS. NOPH is responsible for service provision to 75% of the population but reaches only half of that. IBSS serves only 13% of the population mainly because it does not cover the spouse and the children of the insured. MOPH has a satisfactory infrastructure of health facilities. The hospitals, health centers and health posts in rural areas are underutilized for a lack of qualified staff, supplies and drugs, absence of outreach activities, and competition from traditional medicine. Its urban facilities show better utilization. Ecuador has a potential oversupply of physicins and a shortage of dentists, graduate nurses and health promoters. Human and physical resources are poorly distributed geographically, and are underutilized in rural areas. IV. Financing of Services 4.01 Financial resources available for implementing sector policies and programs are analyzed in this chapter. The level of expenditures over time and their sources, the share of each major service provider, the investment and operating expenditures of the Ministry of Public Health are reviewed and evaluated. An analysis of external financial assistance and an examination of future sector financing conclude the analysis of Bcuador's financing of services. A. Sector RxDenditures 4.02 Health Care Bxoenditures. Total public and private expenditures on health were estimated at S/25.3 billion in 1984, i.e., approxiustely US$320 million or US$36 per capita. This represented a modest 3.4* of GDP, a ratio which has remained substantially unchanged during the past decade. In the late 19709, the most recent date for which comparable information is available, 16 Latin American countries expended an average of 2.5X of GDP for medical care through ministries of health and social security systems by comparison with 2X of GDP for Ecuador. A 1981 IMW staff study reports that only six of 96 countries reviewed spent a lower share of GOP on health, social security and welfare. Thus, Bcuador has been spending consistently less for health care than other countries of comparable per capita income. 4.03 In constant prices, total annual health expenditures increased by only 9* between 1976 and 1984, but annual changes were very irregular: in four of the eight years, there was a decrease, and in 1979 expenditures increased 41X (Table 4.1). The expenditures include household outlays, which represent about a third of the total, as well as public outlays. Table 4.2 below shows the distribution of total health expenditures by provider and by target population. Expenditures between the two main providers of public health services are unbalanced. MOPH, which is legally responsible for the basic health needs of about 75* of the population, spends approximately 29* of the total, while IESS, whose beneficiaries  -31- constitute only 13% of the population, absorbs about 23% of total health expenditures. Table 4.1: Evolution of Total Health Expenditure (Sucres Million. 1976 - 1984) Yearly % Current Constant Prices Change Change Year Prices (1975 = 100) Constant With 1976 1976 5,403 4,786 100 1977 6,165 4,646 -2.9 97 1978 7,354 5,135 10.5 107 1979 12,013 7,224 40.7 151 -1980 13,180 6,633 -8.2 139 1981 16,083 7,079 6.7 148 1982 19,817 7,422 4.8 155 1983 23,023 6,141 -17.2 128 1984 25,277 5,227 -14.9 109 SOURCE: PABO/Quito, 1985 Tahle 4.2. Health Care Expenditures and PopulatiOn Covejrae by Provider. Ecuador. 1984. Expenditure % X of Pop. Provider (million sucres) Expenditure Covered MOPH 7,287 29 75 Social Security Inst. 5,760 23 13 Medical-Social Program 5,286 21 9 Campesino Program 547 2 4 Armed Forces 2,300 9 2.3 Guayaquil Charity Board (JOG) 1,328 5 (1) Private Sector 8.602 34 9.5 TOTAL 25,277 100 100 (1) JOG's target population included in MOPH percentage. JBG serves mainly urban Guayaquil and provides only hospital-based care. SOURCES: MOPH, IESS, JBG and mission estimates. Sources of Health Care Funds 4.04 Only about 37% of health care financing comes from the national budget to finance services provided by MOPH and the Ministry of Defense. A comparably figure is 42% for the US, 75* for Canada and 84X for the U.K.-  -32- The second highest financing source is out-of-pocket expenses by the population (33%) followed by contributions to the medical services of the social security system (22%). Table 4.3 below summarizes the sources of health care resources. Table 4 3: Sources of Health-Care Resources, 1984 Sources Billion Sucres % Govt Budget MOPH 7.3 28.2 Armed Forces 2.3 8.8 External Loans and Grants 0.5 2.0 Sales of Services 0.1 0.4 IESS Salary Tax 5.8 22.4 Lottery, JBG 1.3 5.0 Household expenses 8.6 33.2 TOTAL 25.9 100.0 SOURCE: CONADE, MSP, IRSS, and mission estimates. Expenditures by Provider Institutions Ministry of Public Health (MOPEj 4.05 The official MOPH budget incorporates direct allocations for central administration, provincial administration and provincial health services. It further includes funds for several non-ministry entities involved with health-related activities. In 1984, funds under direct operational control of MOPH comprised 75X of total. Of the balance, 15% (including three-quarters of the capital budget) was allocated to the Ecuadorean Institute of Sanitary Works (IOS), which is formally part of MOPH and is responsible for the construction, equipping and maintenance of- health care facilities, and of water supply and waste disposal systems. The remaining 10% was allocated to the national institutes for malaria control, hygiene, and cancer, and to the Charity Board of Guayaquil. 4.06 The MOPH budget more than doubled in current terms between 1980 and 1984, reaching the level of S/7,287 million or US$92 million (Table 4.4). In constant terms, it decreased by 6% from 1983 to 1984 even though the government budget increased by 6%. The share for MOPH in the. total government budget dropped to 6.4% in 1984 from a high of 7.2X in 1982. 4.07 MOPH Recurrent Expenses. Operating expenditures absorbed about 82* of the MOPH budget in 1984 and amounted to 2% less than the 1980 level in constant terms. About 77% of recurrent cost pays for health services at the provincial level and 14% is used for subsidizing the operating cost of decentralized institutes (mainly the National Malaria Eradication Service and the National Hygiene Institute) and the Charity Board of Gusyaquil, leaving 9* for activities directly managed by the central level. This  -33- percentage distribution has remained quite stable over the last five years. Salaries represent about 90% of recurrent expenditure. Table 4.4: Ministry of Public Health, and Total Government Budgets, 1980-1985 (Sucres Millions) Total Government Budget MOPH Budget MOPH/ Current Constant Si Current Constant SI Government Year S/ (1980 = 100) Si (1980 = 100) (*) 1980 45,300 100 3,071 100 6.8 1981 60,281 116 4,182 119 6.9 1982 66,603 107 4,706 114 7.2 1983 83,752 97 5,978 103 7.1 1984 114,157 * 103 7,287 97 6.4 * Provisional estimates SOURCE: PABD/Quito, 1985, and mission estimates. 4.08 An analysis of the distribution of 1983 MOPH funds allocated to provincial health authorities, and a comparison with the population distribution shows a relatively equitable - albeit low - appropriation of funds to provinces. The presence of specialized hospitals in the major cities, which attract patients from other provinces, affects this distribution in three provinces, as would be expected. Pichincha (Quito) received 22.2S of the budget and had 16.9% of the population. The situation reverses in Guayas (Guayaquil) because of the presence of the Guayaquil Charity Board and its three acute care hospitals. The third discrepancy is Azusy which has the third largest city (Cuenca) and receives a higher share of the budget then its percentage of the population. In other provinces, percent population and percent MOPH health expenditures correlate quite closely. 4.09 MOPE Investment Rxpenses. The percent of the MOPH budget for investments in health facilities and water and waste disposal system declined from a high of 25.5% in 1981 to 18% in 1984 as a result of the recent economic recession. The construction and equipping of the country's major teaching hospital in Quito, the Eugenio Espejc, Hospital, is currently absorbing an important and inequitable share of MOPH capital resources at the expense of investments at the primary care level. Lcuadorean Social Security Institute (IESS) 4.10 _ESS. The IESS is financed through wage contributions from workers and employers, plus state contributions and investment yields. Contributions to health-maternity benefits represent approximately 3.4X of the wage bill; total joint contributions to the social security system, including the pension fund, show wide variations ranging from 1X for farm workers to 30X for public teachers; on the average, they amount to about 20* of salaries, and there are no ceilings on individual contributions. The combined insured/employer wage contribution average of 20* is the sixth  - 34 - highest in Latin America, but the country ranks sixteenth in total population coverage. The five countries with higher contribution percentages have universal coverage (or are close to it), more mature pension programs, and older populations with higher life expectancies. The beneficiaries of the rural Campesino program (INSS/SSC) contribute 1% of the mininum wage, and IESS/MS insured and all employers also contribute 1% of the payroll to IESS/SSC making it in effect a program largely financed by urban wage taxes. Worker and employer payments go directly to IESS. They are not reviewed or subjected to increase or diminution by authority of any ministry or dependency of the executive branch of G00. IESS, therefore, has a stable and secure source of revenue through the power to tax wages. 4.11 IRSSIMS is estimated to cost more than the 3.4* of salaries which is legally allocated to its financing. Health-maternity benefits are limitel (they do not cover dependents), albeit very generous by any standard: the insured enjoys unusual benefits such as dental prothesis, part of the cost of contact lenses, and in some instances, the cost of travel and treatment abroad. The extension of health-maternity coverage to the family of the insured has been the subject of proposed legislation since 1944, but so far it has not been implemented. Financial implications of an extension of services should be carefully analyzed before deciding to do so. In 1984, IESS/SSC costed an estimated S/1,334 or US$17 per insured annually, versus S/6,653 or US$84 per insured for IESS/MS affiliates. It should be noted that IESS/SSC benefits are much more limited than the regular TESS/MS benefits. 4.12 IESS payments for pensions exceed contributions and even the actuarially determined retirement benefits and if this trend continues, a deficit should occur before the end of the decade. The state is obligated to contribute 40% of the cost of pensions. Although there are no studies of the impact of social security on income distribution in Ecuador, it appears that such impact is regressive. IESS also offers beneficiaries signature loans at interest rates as low as 4% depending on salary levels. Many such signatories are in default and will be required to repay at the higher rate of 15S. Even this level constitutes a negative real rate of interest of about 7*. The insured enjoys other exceptional benefits such as three extra monthly pension payments and benefits adjusted above inflation. The overall age of retirement is the fourth lowest in the region and some of the countries with lower retirement age have significantly shorter life expectancy than Ecuador. 4.13 Inequalities in benefit and entitlement conditions are sizeable and the most influential groups enjoy the best; for example, communication workers can retire with 10 years less of work (at any age) than those insured in the general system; teachers received 25X more than the average pension; and military pensions are 56% over the general pension. Inefficiencies in operating the system cause administrative expenditures to be a high percentage of current expenditures. The number of employees per 1,000 insured has steadily climbed to 13.9, and is one of the highest in the region. IESS has the largest computer facility in the country, at a very high cost, however those facilities are underutilized.  - 35 - 4.14 IESS surpluses have often helped offset deficits of public enterprises or the central government; in 1979, its current revenue surplus equalled 2% of O3P. By 1983, however, current contributions were barely adequate to fund the current level of medical expenditure, and its actuarial, deficit (i.e., the excess of the present value of future obligations over expected future revenues) had reached alarming levels. Moreover, since 1981, the practice of financing hospital construction and new equipment by borrowing from the pension fund has further undermined the soundness of the system, although in principle IESS is expected to maintain separate accounts for health care and pension funds. 4.15 IESS has successfully secured government suppo,t by using its surplus for purposes consistent with government policy; it invests in government bonds and securities at below market returns and has recently agreed to finance a considerable share of the government's important housing program. The State systematically delays its contributions to IESS (in particular for obligations incurred by the Military and Police), and eventually pays with devalued currency and with negative interest rates. In the 1970., the State failed two years in a row to pay its contributions, and then paid only part of them; by the end of 1983, the cumulative outstanding debt to IESS was estimated at US$500 million. As in the past, the institution has been very cooperative in renegotiating government's obligations. 4.16 Evasion of contributions to IESS by private employers is also significant. This behavior has been encouraged in recent years by high inflation rates which caused maximum interest rates paid for overdue contributions to be consistently below market rates. Stricter collection measures have been enforced in recent years. For example, in 1982-84, almost 12,000 trials were held and S/4.4 billion were collected in fines and arrears. Charity Board of Guavapuil (JBG) 4.17 Health expenditures by JOG amounted to S/1.3 billion in 1984 (US$17 million). They represented about 5% of total health outlays, a ratio which has remained unchanged since the mid-1970s. Overall, health expenditure of the JBG increased in constant terms between 1976 and 1983, but the trend has been very irregular. The MOPH allocation for the JBG (S/166 million in 1984) covers only 13% of JBG's expenses; 60% of its budget is financed by proceeds from the national lottery and the balance comes from revenues generated by rents or sales of their properties and real estate. Three quarters of JBG's outlays are absorbed by its health program, and the remainder is spent on other social charitable programs. Some parts of the country criticize JBG for using nationally collected funds (via the national lottery) almost exclusively for local services in Guayaquil.  - 36 - Armed Forces 4.18 In 1984, Armed Forces expenditure on health reached S/2.3 billion, or US$29 million; they have represented, on the average, about 34 of total health outlays to cover an estimated 2.5% of the population. The Armed Forces use their own medical facilities but purchase certain specialized services from IESS. Household Health Expenditures 4.19 A 1975 survey showed that, in urban areas, households spent on the average 3.8* of their incomes for health services; the survey also showed a high income elasticity for this expenditure. More recent surveys in peri-urban areas of Quito and Guayaquil confirmed these data and the fact that, at the lower income levels, health care remains largely financially inaccessible. Private health expenditures have averaged approximately 33* of total health expenditures since 1976. In 1984, private expenditures wer estimated at US$109 million (34* of total), or about US$12 per capita. B. Sector Financing 4.20 External Financial Assistance. Although external support aounted in 1984 to less than 2% of sectoral resources, it plays an important role, because it is concentrated in priority programs ard technical assistance. Actual levels of external support are difficult to estimate, as it is largely channelled through intersectoral, multi-year programs; moreover, although most support is channelled tbrough MOPR, private organizations are particularly active in the population field. During the 1979-83 period, assistance to the health sector exceeded US$22.1 million, with a share of more than 60* from UN Agencies, 34% from bilateral sources (mainly USAID), and about 6% from other sources. In 1982, UNDP counted 51 projects with a value of approximately US$17 million in the population, health and nutritioD area. 4.21 In 1982, on-going external assistance totaled US$8.1 million, including US$1.1 million for population activities. Multilateral assistano represented US$3.7 million (US$0.2 million for population) of which 35* cmam from PAH0/WHO, the World Food Program (38X), UNFPA (19* for health and 6* for population), and UNICEF (3%). Bilateral assistance in the health sector amounted to US$3.4 million and came mainly from USAID (85%) and Canada (approximately 15%), with a marginal contribution from France. In the population field, USAID was the only bilateral source of support with US$ 0.9 million. Table 4.5 presents the expected disbursement of external grants and credits for the period 1984-86.  - 37 - Table 4.5: Expected Disbursement of External Grants and Credits, 1984-86 (US$ Thousands) SOURCE OF FINANCING 1984 1985 1986 USAID, Total 5,157 6,155 7,518 Population and Family Planning 1,617 1,675 1,438 Health Policy Analyses, Inst. Dev. 277 190 200 Int. Rural Health Deliv. Systems 3,273 1,700 2,000 Malaria Control 0 2,560 2,170 Operational Policy Grants 0 30 200 Inter American Development Bank n.d. 5,850 n.d. UNFPA, MCH Rural Health Program 0 500 500 UNICEF, MCH Rural Health Program 550 550 550 First Wisconsin Bank, Supplier Credit 11,400 Spanish Bank Consortium 4,500 German Bank Consortium 4,400 Supplier Credit to SOLCA Cancer Institute 1,400 Italian Bank Consortium 1,700 Totals, as programed 5,707 36,45