China - Integrated Regional Health Development Project

Document of The World Bank FOR OFFICIAL USE ONLY CJZ~~ RO DC)5._Cie Report No. 7632-CHA STAFF APPPAISAL REPORT CHINA INTEGRATED REGIONAL HEALTH DEVELOPMENT PROJECT APRIL 3, 1989 Population, Human Resources, Urban Development and Water Supply Operations Division Country Department III Asia Regional Office. This document has a restricted distribution and may be used by recipients only In the performane of their officia duties. Its contents may not otherwise be disclosed without World Bank authozation.  CURRENCY EOUIVALENTS US$1.00 - Yuan (Y) 3.71 V 1 - US$0.27 (as of April, 1989) FISCAL YEAR January 1 to December 31 ABBREVIATIONS CPHCC - Central Patriotic Health Campaign Committee EPS - Epidemic Prevention Station MCH - Maternal and Child Health MOC - Ministry of Construction MOPH - Ministry of Public Health NAEM - National Association of Emergency Medicine NCD - Non-communicable disease PHCC - Patriotic Health Campaign Committee RHC - Regional Health Commission RHCO - Regional Health Commission Office SAM - State Audit Administration WBLO - World Bank Loan Office WHO - World Health Organization  FOR OFFICIAL USE ONLY CHIN INTEGRATED REGIONAL HEALTH DEVELOPMEnT PROJECT Za1be _of Contents Credit and Project Summary .................................. ......... iii Definitions ......................................,.,,,,,,,,,,. vi Basic Data ...................,,,,,................,,,,,.,,....... vii I. THE HEALTH SECTOR... ........... 1 A. Epidemiological Transition. 1 B. The Health System ...................................... 3 C. Sectoral Issues ........................................ 7 D. Government Strategy and Role of Bank Assistance,,..,, 9 II. THE PROJECT REGIONS ........................................... 11 A. Selection of Regions .......................... 11 B. Health Status.,,,,,, 12 C. Health Infrastructure .......................... 13 D. Health Service Utilizarion,.................., ,, 13 III. THE PROJICT . ...................14...,,,,,,,,,,................ 14 A. Project Objectives ..................................... 14 B. The Components of the Project/Regional Plans.,,,,,,,. 15 IV. PROJECT COSTS AND FINANCING .. 28 A. Cost Estimates.,,,,,,,,,,,,,,,,,,,,,,,, .... .... 28 B. Financing Plan ......................................... 28 V. ORGANIZATION AND IMPLEMENTATION .. 31 A. Project Management ..................................... 31 B. Project Monitoring ..................................... 32 C. Implementation Arrangements....,,,,,,,,,,,,,,,,,,, 33 D. Procurement,...,,.,.,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.,. 34 E. Disbursements .......................................... 37 F. Accounts and Audits .................................... 39 This report is based on the findings of an appraisal mission that visited China from December 1-15, 1988. Mission members were Mr. R. Bumgarner (AS3PW-Mission leader), Dr. M. Young (Consultant), Dr. D. Banta (Consultant), Dr. J. Marks (Consultant), Ms. T. Bassler (AS3CO), and Ms. C. Choktikabukkana (AS3PW). IThis 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.  - ii - Page VI. PROJECT BENEFITS AND RISKI .. 40 A. Benefits ................................................ 40 B. Risks ................................................... 40 VII. AGREEMENTS REACHED AND RECOMMEATIONS. .41 TABLES IN TEXT 2.1 Summary Data on Project Regions and Provinces .... ...... 12 4.1 Summary Project Cost by Component ..... ................. 30 4.2 Summary Project Cost by Expenditure Category ............ 31 5.1 Procurement Arrangements ................................ 38 5.2 Estimated Schedule of Disbursements ..................... 39 ANNEXES Annex 1. Background on Project Regions .. 43 Annex 2. Policy Guidelines to Strengthen Regional Health Services .. 60 Annex 3. Project Costs .. 103 Annex 4. Financing Plan .. 111 Annex 5. Project Evaluation and Monitoring .. 113 Annex 6. Project Implementation Schedule .. 119 Annex 7. Documents Available in Project File .. 120 CHA2LTS 1. Organization of the Ministry of Public Health .. 121 2. Financing of Health Care .. 122 3. Regional Planning Process .. 123 MAPS IBRD No. 21329 - Project Provinces and Regions IBRD No. 21362 - Health Institutions in Baoji Region, Shaanxi Province IBFP No. 21363 - Health Institutions in Jinhua Region, Zhejiang Province IBRD No. 21364 - Health Institutions in Jiujiang Region, Jiangxi Province  - iii - INTEGRATED REGIONAL HEALTH DEVELOPMENT PROJECT Credit ancLfroiect Summary Borrower: People's Republic of China Beneficiaries: Zhejiang, Jiangxi and Shaanxi Provincial Governments; Jinhua, Jiujiang and Baoji Regions; and Ministry of Public Health (NOPH) Amount: SDR 39.4 million (US$52 million) Terms of Credit: Standard with 35-year repayment, including 10 years of grace Onlendinx Terms: The Government would onlend SDR 38.6 million in equal shares to the three provinces at an interest rate of 2.5%, repayable over 20 years, including a 5-year grace period. The provinces would assume the foreign exchange risk. SDR 800,000 would be made available to Proiect Objectives the Ministry of Public Health. Project Objectives and Description: The project comprises the establishment of health regions at Jinhua (Zhejiang province), Jiujiang (Jiangxi province), and Baoji (Shaanxi province) to experiment with new ways to improve capability for planning and delivery of health services by establishing policy criteria and systems for financing investments in the regions and supporting investments in the provincial capitals. The regional and provincial project components are: (a) health planning, management and reform; (u) disease prevention and surveillance; (c) health educatior.; (d) maternal and child health services; (e) emergency services; (f) hospital services; (g) rehabilitative medical services; (h) medical education and training; and (i) equ.pment management. Medical education, health education and emergency service investments at the provincial level will receive additional support beyond ti.at needed to just support the project region, in order that provincial capabilities in these key areas will be improved. A national component to strengthen the capability of MOPH to guide, assess and replicate the project and to begin to deal with issues  - iv - Benefits and Risks: The programs and investments under the project would improve the quality of health services available to an estimated 10-12 million people in the three regions and provincial capitals. Officials in the regions, provinces and MOPH would be introduced to new approaches to health planning, budgeting: and coordination to meet health needs that have been systematically identified. The project would provide experience to MOPH in formulating and usir.g policy guidelines and resource transfer, rat1.er than direct budgetary control, to influence health sector development at the regional level. Health institutions would develop capacity to design and conduct chronic disease prevention programs, improve hospital efficiency and management and develop more effective approaches to emergency medicine and rehabilitative medical services. In addition, the project would help to improve the relevance of medical education and training to priority needs for healtn care in China. The principal risk lies in the implementing agencies' capability to manage the major hanges the project concept would vring to the processes of planning and investment for health services. This risk would be minimized by carefully phased implementation and frequent monitoring and review of the regional health plans by MOPH and the Association.  Estimated Cost: Local Fgreif Thotal ------- ($ million) ----- Health Management and Reform 4.7 0.2 4.9 Disease Prevention and Surveillance 14.8 1.8 16.5 Health Education 7.5 1.0 8.6 Maternal and Child Health Services 7.4 0.5 7.9 Emergency Services 11.4 2.3 13.7 Hospital Services 22.7 6.1 28.8 Rehabilitative Medical Services 4.2 0.2 4.4 Medical Edacation and Training 20.1 2.2 22.3 Equipment Management 3.3 0.6 3.9 National Component 1.2 0.8 2.0 Total Project Costs /A /b 97.3 15.7 113.0 Financing Plan: IDA 36.3 15.7 52.0 Central Government 0.3 - 0.3 Local Governments 60.7 - 60.7 TO 97.3 15.7 113.0 Estimated Disbursements: IDA FY 90 91 92 93 94 95 -=-------------- (US$ million)-------------- Annual 11.0 12.0 13.0 7.0 5.0 4.0 Cumulative 11.0 23.0 36.0 43.0 48.0 52.0 Rate of Return: Not Applicable MM: IBRD Nos. 21329, 21362, 21363, 21364. /A Plysical and price contingencies have not been included in cost estimates. The Credit finances part of an indicative five year plan of expenditures which is subject to change through annual review. The first year budget appropriation (1989) has been appraised, but the precise annual budgets in subsequent years would be determined through annual reviews of need and achievements to date. /b Project-financed goods are exempt from import duties and taxes.  - vi - DEFINITIONS Adult Literacy: The percentage of persons aged 15 and over who can read and write. Child Mortality Rate: Annual deaths of children 1-4 years per 1,000 children in the same age group. Crude Birth Rate: Number of live births per year per 1,000 people. Crude Death Rate: Number of deaths per year per 1,000 people. Dependency Ratio: Ratio of population 14 years or under and 65 or over, to population aged 15 to 64 years, multiplied by 100. Indicates proportion that needs to be economically supported. Incidence Rate: Number of persons contracting a disease as a proportion of the population at risk, per unit of time usually expressed per 1,000 persons per year. Infant Mortality Rate: Annual deaths of infants under one year per 1,000 live births during the same year. Life Expectancy at Birth: Number of years a newborn child would live if subject to the mortality risks prevailing for the cross-section of population at time of birth. Maternal Mortality Rate: Number of maternal deaths per 1,000 births in a given year attributable to pregnancy, childbirth or puerperal complications. Prevalence Rate: Total number of all individuals who have a disease at a particular time (or during a particular period) per population at risk of having the disease.  - vii - CHIN INTEGRATED REGIQNAL HEALTH DEVELOPMENT PROMJEC Basic Data Total area (million km2) .................... 9.6 Total population (1988) (in millions) ............... 1,085 Annual ratk of natural increase (%) ............... 1.4 Proiected population for year 2000 (in millions) . .1,242 Density per km2 of agricultural land (mid-l83) . . 261 Density per km2 (1986) .110 Per capita GNP (1987) (in US$) ................. 300 Crude birth rate (1986) ..20.8 Crude death rate (1986) ..6.7 Life expectancy at birth (1986) (years) . .69 Infant mortality rate (1986) ..30 Child death rate (1983).. 2 Urban population as percentage of total population (1986) 37 Adult literacy rate (1987) () ..80 Population per doctor of western medicine (1986) . .1,753 Population per nurse (1986) ..1,593  CHIN INTEGRATED REGIONAL HEALTH DEVELOPMENT PROJ I. THE HEALTH SECTOR A. ERidemiological Transition 1.1 Childhood immunization programs, accessible primary health care, better sanitation and nutrition, and control of many irfe cious diseases have contributed to remarkable improvements in health status. Life expectancy has increased from an estimated 35 years in 1949 to 69 years in 1986, a figure closeL to the average of 76 years for industrialized countries than to the 61 years estimated for low and middle-income countries. A Bank study in 1984, The Health Sector in China (No. 4664', examined the policies and programs which have led to China's achievements. As a direct consequence of success in reducing incidence of communicable and endemic disease, China is facing disease patterns typical of more developed countries. Higher rates of chronic disease are attributable to the population's increasing exposure to risk factors such as smoking, dietary change, enviionmental and workplace hazards. In addition, longer life expectancy and success in family planning have increased the numbers atnd the proportion of adults in China's population and thus also increased the ,emand for health services among the middle-aged and elderly. Clearly, these demographic and epidemiological trends present a new challenge for health planners in China to develop affordable but effective policies for chronic disease care and prevention while addressing the remaining problems of infectious disease. Another Bank study on China's health sector is nearing completion. It takes a prospective look at China's changing epidemiological pattern and the need to realign strategic planning in health infrastructure, technology, manpower and finances. Its objectives are to improve understanding of the future disease burden arid its causes, to help define key issues facing the sector, and to evaluate options for addressing them. Work on this report has proceeded in parallel with the proposed project and much of the strategy and approach in the proposed project is a result of the conclusions emerging from this sector study. 1.2 Chronic Disease. The full impact of chronic diseases as a major health problem is just biginning to be felt in China, and the burden is likely to become much heavier. Heart disease, stroke and cancer accounted for 63 percent of total mortality in 1986 (68 percent in urban areas; 60 percent in rural areas). Injuries were the fourth leading cause of death in both areas. Together these four causes account for 72 percent of all deaths in China. Adding diseases such as diabetes, kidney disease, liver cirrhosis and psychological and neurological diseases brings the total to over 76 percent of mortality. Urban areas are affected by chronic diseases related to lifestyle, smoking and diet and these risk factors are spreading from urban to rural areas as incomes increase. Rural areas are affected more than urban populations by communicable diseases, by chronic diseases closely associated to poor primary care, poor living conditions, and the inju.y risks common to agricultural work.  1.3 The importance of chronic diseases is confirmed by estimates of years of potential years life lost annuall, due to premeure death. More than half of China's annual estimated 70 million years of premature life loss is due to chronic diseases and injury. This represents an enormous burden on society and a huge economic loss. In addition, chronic diseases and injuries now account for a large share of hospital services and health care costs, and an increasing proportion of disability. They contribute to rising health care costs and underpin an impetus for hospital expansion and purchases of sophisticated and expensive equipment for diagnosis and treatment. 1.4 Economic reforms in China since 1979 have brought rapid change in employment, income levels and lifestyle and have increased the importance of certain risk factors for chlronic disease. Growing use of motor vehicles and chemical fertilizers and pesticides have contributed to a marked rise in the incidence of injury and mortality due -o trauma and poisoning, especially among young adults. As incomes grow, there have also been changes in food consumption, including higher consumption of saturated fats and more refined, higher calorie diets, which may pose risk factors for chronic disease. In addition, environmental pollution poses severe health risks. Large-scale efforts in the early 1980's to reduce particulate emissions from heating and power plants have significantly improved air quality in major cities, but smoke pollution, both indoor and outdoor, and workplace exposure to noise, dusts and powerful toxins and carcinogens remain major problems. The rapid growth in numbers of medium and small enterprises and their relatively unregt4ated working environment hLave overwhelmed the capacity of health authorities to deal with these environmental and occupational hazards. 1.5 By far the most important risk factor for the leading chronic diseases is cigarette smoking. Prevalence of cigarette smoking among men over age 20 in China is already very high (70%), and there is likelihood that tobacco use among young peop.e and among women may sharply increase. Even with no change in smoking prevalence, China will face an enormous burden in coming decides from illness related to or caused by smoking, including lung cancer, obstructive lung disease, heart disease and stroke, and a variety of other cancers and vascular diseases. Most of these diseases are related to both dose and duration of smoking and most do not become manifest until years, decades in some cases, of smoking exposure have accrued. For some of the diseases, the risk or damage caused by smoking is irreversible even with cessation of the addiction. Thus, China's risk factor patterns, tobacco in particular, imply an enorraous and largely unavoidable increase in illness from chronic diseases in the future. The importance of an early start on prevention programs and health education is underscored by both the long incubation period before the diseases emerge and by the lack of effective treatment or cure for many of them. 1.6 Communicable Disease. China's considerable achievements in traditional public health work have meant that infectious diseases are much  - 3 - less important as a cause of death, though they remain a leading cause of morbidity. Persistent problems appear to stem from three factors: inadequatt budgetary funding fot prevention and control programs as the result of emphasis on a "fee for service" approach in recent years; poor targeting and inefficient design of prevention and control programs with over-emphasis on traditional problems now largely under control; and difficult environmental conditions unique to specific regions. For example, key vector borne diseases such as malaria, leptospirosis, and hemorrhagic fever are much higher in the rural areas where exposure to rodents and mosquitoes is more difficult to control. Inadequate sanitation and hygiene education in the countryside contribute to a higher prevalence of dysentery. Immunization rates for preventable childhood diseases tend to be lower in rural areas, and neonatal tetanus is still a notable cause of infant death. Communicable diseases can also constitute risk factors for some chronic diseases. The most important known virally transmitted risk in China is Hepatitis B, which is a serious communicable disease itself. It is easily transmitted to the baby at birth and becomes a primary risk factor for liver cancer, which occurs at high rates in most of China. Infectious and communicable diseases should continue to be targeted as priorities to further reduce morbidity, although it is important to note that key diseases are relatively few and tend to be highly specific to geographic areas and age groups. Further overall reductions in infectious disease morbidity and mortality therefore may be relatively difficult to achieve. B. The Hea.th System 1.7 Serv