Colombia - Municipal Health Services Project

Do_mmat of The World Bank EOKt OMYCIAL USE OMNL bpmwN P-60677-CO O'F TME PRESIDMIT OF THE IDEITIONAL RANK FO 111TRCIO m DEVELOPMENT TOTE EXaCUTIV DIRECTOR ON A PROPOSED LOAN IN AN AMOMT EQlUILT TO US$50.0 MlLLION TO TME REPBIC OF COLOMBIA FOR A NUICIPAL HEALTH SERVICES PROJECT NAT 14, 1993 iz L's;:Tt Pli iJ H 1IFY Aut. Iscr ,- i- c ' ri JA i E: ~ t ;:) a:-K-s ,- rrr Ii ~I' I- >p-;1<S A,t - .ii2Sl This docomeot has a resticted dbu_tio may be used by recipiets only in the perfonmane of thefr offical dies ct ay not ote be dsdosed witbou Would BuDk authoritionl  CURRENCY EQUIVALENTS Curcy Unit Colombian Peso (Col$) Co$1.00 = US$0.0013 (Match 1993) US$1.00 = Col$750 (March 1993) FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS FIS Social Investment Fund mIS Mimicipal Health Infomatin System MOH Ministry of Health DS Deprtment Heal Sevice  FOR OMCAL USE ONLY COLOMIA MUNICIPAL HEALTH SERVICES PROJECT Ian and Project Summary Borower: The Republic of Colombia Benelciary and Exeing Agencies: Ministry of Health Social Investment Fund Loan Amount: US$50.0 million Tems: Repayment in 17 years, including a 5-year grdce period, at the Bank's standard variable interest rate. F candng Pa: US$ million Local Foreign Total IBRD 22.9 27.1 50.0 Central Government 8.7 0.0 8.7 Municipalities 24.4 0.0 24.4 Total 271 Rate of Retun: Not applicable Staff Appraisal: Report: No. 11743-CO MAp No.: IBRD No. 24769 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.  MIMORANDUM AND RECOqMENDATION OF TH PRESIDENT OF THE MRD TO TH EXECJUTIVE DIRECTORS ON A PROPOSED PROJECT TO COLOMBIA FOR A MUNICIPAL HEALTH SERVICES PROJECT 1. I submit for your approval the following memorandum on a proposed loan to Colombia for the equivalent of US$50.0 million to help fimance a Municipal Heath Services Project. The loan would be at the RBak's standard variable interest rate for a term of 17 years, including a grace period of five years. 2. Backgound. Despite the world-wide recession, Colonbia maintained an annual growth rate of 3.4 percent ihroughout the 1980s. In 1990, the Government introduced a program of economic reforms to resolve structura impediments to maiting growth, raising productivity and imrroving external competiiveness. A complementar effort is underway to develop human resources and to reduce poverty, which currently affects an esimated 40 percent of the population. Priority is given to improving the quality and coverage of basic social services. Ihe upgrading and expansion of prmay health care figures prominently in this strategy. 3. Between 1965 and 1990, Colombia experienced significant improvements in demographic and health conditions. The fertility rate dropped from 6.5 to about 2.9. Infant and maternal mortality also declined, from 80 to 27, and from 2.5 to one per 1,000 births, respectively; and, the population growth rate declined from 3.7 percent to 1.5 percent. The current life expecanq, at 69 years, compares favorably with other lower-middle income countries in Latin America. Gains in life expectny have been offset by incses l mortality attributable to violence, accidents and chronic diseases, as Colombia enters the epidemiologic transition characteized by a shift towards health problems of developed coies. Moreover, marked disparities in health status persist among income groups. Variations are evident in basic indicators, e.g., the infant mortality rates in the poorest departments (states) are nearly twice those of the wealthiest (about 40 versus 20 per 1,000); and malnutrition levels for children of mothers in the lowest income range are seven tumes higher than those for children of women in the highest income range. Higher than average fertility, infant mortality and child malnutrition rates are also closely associated with mothers lacking basic education. 4. The Health Sedor. The health sector in Colombia comprises the public health system, social seur systems (for government and private sector employees), and private services. The public health service is responsible for serving 65 percent of the population; social securit serves 18 percent, and the private sector, 17 percent. Health care in the public service is provided at three levels: local health posts, centers and hospitals; departmental hospitals; and university and specialized hospitals. Colombia is currently decentaizing opatig and fiscal responsibilities for public sector programs to the country's 33 d and 1,029 nvmicipalities. Municipalities will become responsible for providing primary health care and departments for providing higher level health services. The central Ministry of Health (MOH) and the Departental Health Services (DSs) are being reorganized to focus on providing policy, plaming and tecical guidance and support to the municipalities. 5. Health expenditures in Colombia comprised about 6 percent of GDP in 1990, with public expenditu representing 2.4 percent of GDP. Ihe public health system cumently receives half its funding from national transfers: a share of curret revenues for recurrent expenditu; and a share of revenues fiom a value-added tax for investment. Departmental revenues from selected taxes and lotteries  -2- are also allocated for health. At present, the public health system accounts for about 40 percent of public recurrent expenditure for health and social security, 60 percent. his split highlights a high degree of inequity between the two systems, with per capita expenditure for social security representing nearly six times that for the public system. To correct thbis imbalance, the 1991 Constitution mandates increasing shares of both current revenues and the value-added tax for tLe public health system during the 1990s. 6. As a result of inadequate expenditure, coupled with poor average quality and efficiency of aervices, effective coverage of the public health system is limited to just over half of the target populaion. An estmated 30 percent of the populaion, mainly rurJ and peri-urban poor, lacks access to basic health services, including primary health care at the local level. The main issues facing primary care are: (a) Jnstultuonal Constrwaints. The quality of information on health status, services and related costs and finacing at the municipal level is poor on average. This weakness forms part of a broader set of management limitations for planning and monitoring primary health services, which will likely be magnified in the early stages of decealization: municipal mayors, health authorities, and newly created municipal health boards and commitees for health facilities lack experience in service planning and monitoriag. They wil require systemac training and support to undertake these responsibilities and enhance local accountability for services provided, drawing on the MOH, DSs and available experdse (e.g., NGOs, universities) in the departmets. (b) Service Weakbn. While no formal evaluation is available, low average quality is indicated for priary health care. A complete package of basic services is not universally provided. Curative care has been emphasized over preventive, outreach and community education services, and provision of higher levels facilities over primary facilities. Ability to respond to priority health needs, notably for maten and child care and emergencies, is further limited by shortages in medical supplies and equipment. A promising program to finance and distribute essental drugs through community pharmacies has been initated by the central government and vill be epanded nationwide. Unmet needs for rehabilitation and upgrading of facilities, and in selected areas, for new or expanded facilities, also detract from the quality and coverage of primary services. High staff turnover among health professionals at the muicipal level, consisting largely of recent graduates serving a year of national service, is attributable to inadequate incentives and limited pre-vice orientation to primary health care. This urnover, and an absence of regular on-e-job training and support for all primary health personnel, increase the problems. As a result of the quality problems, and lack of effective patient referral and cost-recovery practices among service levels, primary facflities are often by-passed for higher-cost secondary and tertiay level facilities (3e-occupancy rates are 35 percent, 59 percet and 75 percent, respectively). (c) Policy and Evaluation Shortflls. Key policy measures, required to support effective development of primary health care are also lacking, in particular, mehanisms to ensure efficient prcing of public services and to enhance cost-recovery. Income-based user fees vary more widely than can be explained by income levels (from 0 to 50 percent of local hospital costs); and differential fees are not used to discourage use of higher level facilities for providing standard primary care services. Systematic quality control and facility accreditation practces, and comparability among employment systems at the three administive levels of the public health system are also reqired. Further, regular evaluation of the impact of prmary health services is needed to guide policy.  -3 - 7. Govenment Strategy. The Government's health strategy aims to improve efficiency and equity in resource use, and raise quality. To this end, it has prepared a long-term program to reorient the public health system. The focus of improvements, as embodied in a 1990 health reform law, will be primary care directed to the poor. Restructuring of social security, and improved competitiveness of public services, are complementary aims; and the Government has Initiated assessment of dternatives to the current social security system, focussed on improving equity and efficiency. The Government seeiks to enhance the responsiveness of services to local needs through the decentralization and the planned increase in shares of central govement transfers for health. Earlier legislation provided for the transfer of central govenument revenues and mnagement responsibilities fjr prmary healdh care to the muniiaities, and created new opportunities for revenue generaton for those services (mainly a municipal health lottey). A proposed law, detailing criteria for deemining central allocations to the municipalities, and procedures for the transfer of funds, is under preparation. 8. Project Objectives and Target Population. The project would represent the fis phase of a ten- 12 year Government program to strengthen the public health system. It would develop local management capaciy and provide incentives, in the form of centra govermnent grants, to support municipal provision of a basic package of primary health services. The main objectives are to: a) enhance municipal skills, in nine areas of the country, to plan and monitor primary health care sevices; (b) ;mprove the effectiveness and coverage of primary health services in those municipalities; and (c) design and execute key policy measure, and introduce evaluation, to support the development of primary health services. The project covers eight d'aments and selected pen-urban slums in Bogott. It includes 220 municipalities with a population of 9.8 million and aims to reach, in particular, some 6 million poor, representing over 60 percent of the total. The project would be complemented by an Inter-American Development Bank operation designed to strengthen resource use and management at higher level public hospitals Qoan amount, US$40 miion). 9. Project Description. (a) Institutional Development (11 percn of total costs) would: Q) introduce a municipal health information system (MHIS) comprising health personnel and facilities data, health services dat and related costs and financing data. Based on the MHIS and other municipal data, monitoring indicators, focussed on service outcomes, productivity and coverage, would be constucted and introduced, beneficiary assessments undertaken, and planning carried out; and (O) proviie related technical assistance, training and onthe-job support for about b,000 municipal ,dmmitoto health aministators and community repesentatives. This training and technical support (as well as that to be provided for health practitioners under the project) would be oodinat by the MOH and DSs, and would incorporate use of departmental training centers and experienced contractors dra,n from universit s, NGOs, and other departmental groups. (b) Service Development (80 percent of total costs) would: provide for implementationof municipal subprojects, to be co-financed by the central government * and the municitalities, to support a basic package of primary health services, focussing on preventive and curative care for maternl and child health, emergencies, and selected infectious and chronic diseases; and on communty education, outreach services and effective referral. The subprojects would support * the package by: (i) providing supplies, equipment and furniture for health institutions, and financing the reabilitation, upgrading and construction or expansion of primary bealth facilities, based on standard planning and use criteria (basic drugs would be financed under the essential drugs progam outside the subprojects); and (i) providg techmica assistance, traiing and technical support for municipal health practitione, including some 3,700 physicians and nurses, 7,000 assist nurses and 2,000 community health promoters. Technical assistance would also be provided to increase the focus on primary health in pr-sevi training for health profesionals. (c) Policy Development and Evaluation (5 percent of totl