Peru - Strategic Planning for Health Sector Reform

CONFIDENTIAL Report No. 13710-PE PERU STRATEGIC PLANNING FOR HEALTH SECTOR REFORM June 28, 1995 FILE Copy Human Resources Division Country Department III Latin American and the Caribbean Region Office CURRENCY EQUIVALENTS (As of March 1995) Current Unit = Sol (S) US$1.00 = S 2.26 US$1 million = S 2.190 million US$456,621 = S 1 million FISCAL YEAR January 1 - December 31 LIST OF ACRONYMS AFP Administradoras de Fondos de Pensiones AIDS Acquired Immune Deficiency Syndrome ARI (IRA) Acute Respiratory Infections BCR Banco Central de la Reserva CELADE Centro Latino Americano de Desarrollo CNP Consejo Nacional de Poblaci6n FAO Food and Agriculture Organization FFAA/PNP Fuerzas Armadas FONCODES Fondo Nacional de Compensaci6n y Desarrollo GDP Gross Domestic Product GNP Gross National Product HIV Human Immunodeficiency Virus IDB Interamerican Development Bank INEI Instituto Nacional de Estadistica y Informatica IPSS Instituto Peruano de Seguridad Social IRA Infecciones Respiratorias Agudas ISAPRES Instituto LSMS Living Standards Measurement Survey MEF Ministry of Economy and Finance MOE Ministry of Education MOH Ministry of Health NGO Non-governmental Organization OSS Organizaciones de Servicios de Salud PAHO Panamerican Health Organization RVS Relative Value Scale STD Sexually Transmitted Diseases SUS Servicios Unicos de Salud TB Tuberculosis UDES Unidades Departamentales de Salud UNICEF United Nations Children's Emergency Fund UTES Unidades Territoriales de Salud WHO World Health Organization ZONADIS Comites Zonales de Salud PERU HEALTH SECTOR REVIEW BASIC INDICATORS GENERAL DATA LAC Peru Average Year Sources Population (in millions) 23.4 1994 1 GNP per Capita (current US$) 1200 2390 1992 1 Adult illiteracy Rate (% 15+ age group) Total 15 16 1990 1 Female 21 17 1990 Primary School Gross Enrollment Total 126 107 1990 1 Female 120 106 1990 1 Dependency Ratio 70 67 1993 2 Population below poverty line (%) Poverty 50 37 1994 6 Extreme Poverty 25 17 1994 6 VITAL INDICATORS Life Expectancy (in years) 64 68 1991 1 Crude Birth Rate (per 1,000 population) 27 26 1991 1 Crude Death Rate (per 1,000 live birth) 8 7 1991 1 Infant Mortality (per 1,000 live birth) 53 44 1991 1 Maternal Mortality Rate (per 100,000) 165 162 1988 1 POPULATION GROWTH AND PROJECTIONS Average Annual Population Growth Rate (%) 1980-91 2.2 2 1 1991-2000 1.9 1.6 1 Labor Force Growth Rate Population Age 15-64 (%) 1991-200 2.7 Population Projection (millions) Year 2000 26 1 Year 2025 36 Total Fertility Rate 3.4 3.1 1991 1 Urban 2.8 N.A. 1991 7 Rural 6.2 N.A. 1991 7 HEALTH, NUTRITION AND FAMILY PLANNING Population with Access to Health Care (%) 70 N.A 1991 2 Low Birth Weight Infants (% under 2.5 kg.) 11 11 1 Children Under 1 Year Old Immunized (%) DPT 71 71 1991 1 Measles 59 75 1991 1 GENERAL DATA LAC Peru Average Year Sources Women of Reproductive Age (15-49 years) Immunized TT (%) 12 47 1991 1 & 7 Births attended by health staff (%) 52 80 1991 1 & 7 Incidence of AIDS (per 100,000 population) 60 N.A. Incidence of Tuberculosis (per 100,000 population) 250 92 1990 1 Total Health Expenditures as % of GDP 0.3 N.A. 1992 4 Total 3.2 4 1990 1 Public 1.9 2.4 1990 1 Private 1.3 1.6 1990 1 Govt. Health Expenditure per Capita (US$) 49 105 1990 1 Doctors per 1,000 population 1.03 1.25 1992 8 Nurse-to-Doctor Ratio 0.9 0.25 1992 8 Hospital Beds per 1,000 Population 1.5 2.7 1992 8 NUTRITION Daily Calorie Supply per Capita 2037 2135 1990 3 Daily Calorie Supply as % of Requirements 87 114 1990 5 Malnutrition (% of under 5 age group) 13 N.A 1990 1 % of Children Affected by stunting (age 24-59 month) 37 26 1992 1 & 7 wasting (age 12.23 month) 2 5 1992 1 & 7 Prevalence of Breast-feeding Infants 3 months of age (%) 58 N.A. 1992 7 FAMILY PLANNING Contraceptive Prevalence Rate (%) 59 58 1992 1 & 7 Urban 66 N.A. 1992 7 Rural 41 N.A. 1992 7 Modem Methods 33 N.A. 7 Traditional Methods 26 N.A. 7 Prevalence According to Educational Status Women with higher education (%) 73 1991 7 Women with secondary education (%) 66 1991 7 Women with primary education (%) 51 1991 7 Women with no education (%) 35 1991 7 Women not using contraceptives who would like to space or limit births (%) 90 N.A. 1991 7 Sources: 1. World Development Report 1993, The World Bank 2. Social Indicators of Development 1993, The World Bank 3. Human Development Report 1993, World Health Organization 4. AID, Volume 7, Number 9, Sept. 1993, World Health Organization 5. The State of the World's children 1993, UNICEF 6. 1994 LSMS 7. Peru: Encuesta Demogrifica y de Salud Familiar 1991/1992 8. Pan American Health Organization PREFACE This report was prepared by Juliana Weissman, LA3HR (Senior Public Health Specialist). The report draws heavily on a wide assortment of reports which have been prepared by Peruvian public and private sector organizations, the Pan American Health Organization and USAID. A background paper on public and private expenditure in the Peruvian health services was prepared by Ruben Suarez. Valuable comments were received from Peer Reviewers Helen Saxenian (PHN) and Dean Jamison (LATDR) as well as from Julian Schweitzer (Division Chief, LA3HR), Maureen Lewis (LA2HR), and Philip Musgrove (PHN). Aracelly Woodall provided secretarial support in the production of the report. TABLE OF CONTENTS EXECUTIVE SUMMARY......................... i-vi PART A: HEALTH STATUS AND DISEASE BURDEN ...... 1 1. THE DEMOGRAPHIC AND EPIDEMIOLOGICAL TRANSITIONS ..... 1 A. Population Growth and Projections ................... 1 B. Population Policies .............................. 1 C . Fertility . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 2 D. Mortality ........... 3 E. Age Structure and Population Distribution .............. 5 F. Labor Force and Employment ....................... 5 G . M orbidity .................................... 5 II. FOOD AND NUTRITION ............................... 7 A. Introduction ............. 7 B. Food Production and Consumption ................... 7 C. Nutritional Status ............................... 8 D. Food and Nutrition Programs ....................... 11 PART B: THE PERUVIAN HEALTH SYSTEM ........... 13 Ill. HEALTH POLICY AND STRATEGY ..C.A.N.D. . ..T. . . . . . . . . 13 A. The Link Among Economics, Poverty, and Health in Per6 ... 15 B. The Health Policy Framework in Per6 ................. 15 C. Program of Targeted Social Expenditures .............. 17 IV. THE ORGANIZATION, PRODUCTION AND USE OF HEALTH SERVICES ...................... 21 A . Introduction .................................. 21 B. The Organization of Health Care .................... 21 C. The Production and Use of Health Services ............. 24 D. Advancing the Reform of the Health Sector ............ 27 V. HEALTH FINANCING ................................. 29 A. Introduction .........................duction. . 29 B. National Health Expenditures: Level, Composition, and Trends ................................... 29 C. Social Security System Expenditures ................. 31 D. Disparities in the Distribution of Health Expenditures ...... 32 E. Improving the Efficiency and Equity of Health Spending .... 33 ANNEXES ANNEX 1: The Demographic and Epidemiological Transitions ....... 35 ANNEX II: Health Policy and Strategy ....................... 57 ANNEX Ill: The Organization, Production, and Use of Health Services . 64 ANNEX IV: Health Financing .............................. 73 BIBLIOGRAPHY ....................................... 84 EXECUTIVE SUMMARY A. Introduction 1. This report will attempt to illustrate to policymakers the wide-ranging development impact of ill health in Perd; the consequences of population, health, and nutrition policies to date; and the future implications for improving the health and nutrition status of the Peruvian population. The following issues are reviewed: Part A - The demographic and epidemiological transition in Perf, including the consequences of past high population growth, recent declines in fertility, the current health and nutrition status of the population, and implications for future investments in the sector (Chapters I and II); Part B - The current social and economic environment, health policy development, recent policy and programming initiatives, the organization and utilization of health sector resources, and health financing (Chapters III - V). Annexes I - IV provide more detailed information on the demographic and epidemiological situation (I); health policy and strategy (II); the organization, production and use of health services (III); and health financing (IV). B. Overview 2. The poor economic growth performance of Perf in recent decades is reflected in its per capita income, high prevalence of poverty, especially in rural areas, and social indicators, which are among the worst in the Latin America and the Caribbean region. The persistence of widespread poverty is attributed to the combined effects of traditional ethnic and social class barriers and extreme disparities in the availability of economic opportunities and social services for different income groups and areas of the country. Poverty and unsatisfactory living conditions have created all the necessary circumstances for the perpetuation of chronic underdevelopment. 3. The negative spiral of social and economic development that characterized the Peruvian environment during the 1980s has been reversed since 1990. Nevertheless, 50 percent of the population were still classified as poor in 1994, that is, having an income not sufficient to purchase the equivalent of a food basket that would meet energy and protein requirements and satisfy other basic needs. A fifth of the population was living in extreme poverty, that is, unable to purchase even the equivalent of the food basket. 4. The benefits of the recent economic reforms are already apparent in Lima, where the poverty rate has declined by about 10 percent since 1991. Their more modest impact to date -ii- in the rural areas of the Sierra, where poverty has declined by only 3 percent, reflect the depth and intransigence of economic stagnation in rural PerG. Decades of uneven distribution of the benefits of development and the difficulty of expanding small-scale improvements in economic and social infrastructure and delivering services outside the cities contribute to a slower pace of recovery and reform in rural Perd. C. The Demographic and Epidemiological Transition 5. Perd is still in the early stages of the demographic and epidemiological transition; fertility has declined recently in urban areas but remains high in rural areas. The population is relatively young as a result. Life expectancy, at 63 years, is 10 percent lower in Peri than in the neighboring middle-income countries and infant and child mortality are twice as high. Only Haiti and Bolivia have a worse record of achievement in terms of raising life expectancy and lowering mortality. The high rate of population growth experienced in recent decades is more visible in the cities, which have grown twice as fast as the rural areas. The rapid urbanization of Perd stems from the combined effects of continuing high fertility among rural population groups, social unrest and civil disorder, especially in rural areas, and the attraction of higher wages and better living conditions in the cities. 6. Infant mortality exceeds 100 per 1,000 live births in some rural communities and is often associated with closely spaced pregnancies, poor nutritional status of women of reproductive age, micronutrient deficiencies of iron and iodine, and complications of pregnancy, and childbirth, many of which could be prevented by adequate prenatal care and attended deliveries. For women, pregnancy and childbirth represent major health risks. Complications of abortion, pregnancy and childbirth are among the leading causes of death for women of reproductive age and account for a significant proportion of hospital discharges. 7. Preventable communicable diseases, especially acute respiratory infections and gastrointestinal infections, are the leading causes of morbidity and mortality for all age groups, while perinatal conditions account for a major share of deaths of children under five years of age. The largest age cohorts of the Peruvian population are those entering adolescence. This indicates that during the next 15 to 20 years, the health conditions and diseases of young adults will dominate the mortality and morbidity profile, while the chronic degenerative diseases afflicting older population groups will become more important in the following decades. The inadequate coverage of reporting systems complicates efforts to define more precisely other major causes of death and disease. 8. Peruvians from all income groups share a high burden of disease: two days of work per month are lost because of inactivity precipitated by ill health, half of which is attributed to diarrheal disease. Each year, illness consumes almost a month of working days per capita. All but the highest income group report 4 to 5 days of illness per month, compared to .5 days in the United States. Over a third of low-income workers in Lima miss on average almost one day of work per month as a result of repeated episodes of gastrointestinal illness, which represents an income loss rarely compensated by sick leave and other health benefits. An additional month -111- of wages each year would raise a significant portion of the population out of poverty and generate a substantial increase in the GDP. The current level of illness and inactivity represents a major loss of productivity for the economy as a whole and translates to a per capita income that is about 3 percent lower than expected on an annual basis. 9. Access to water and sewerage systems are intimately linked to the incidence and prevalence of gastrointestinal infections. In Lima, low-income households are heavily penalized by the government's inability to provide safe water and adequate means of waste disposal. In 1991 the poor paid twenty times as much for water purchased from trucks as high-income households paid for household water connections. 10. Perd's population policies, which support lower fertility, responsible parenthood, and improvements in the status of women, are not backed up by programs that reach the entire population. The gap between supply and demand is most evident in the continuing high fertility rates in rural areas and the elevated incidence of teenage pregnancy and abortion. Implementation of the government's population policies is one of the principal elements of the unfinished social agenda. D. Food and Nutrition 11. Nutritional status is universally regarded as a primary indicator of well-being. The historic relationship between adult height and life expectancy has been observed in numerous population groups. Worldwide experience indicates that as much as 40 percent of the secular decline in mortality rates can be attributed to improvements in nutrition status, with most of the effect concentrated on infant mortality. In Perf, the poor nutritional status of the population is one of the major human resource constraints to social and economic development. The combination of domestic production, imports, and food aid is not adequate to meet the nutritional needs of the population. Uneven availability and inequitable distribution, together with poor sanitary conditions, aggravate the effects of food shortages and have resulted in one of the highest rates of infant and child malnutrition in the LAC region. 12. The Peruvian population suffers from a variety of micronutrient deficiencies including iron, Vitamin A, and iodine. Iodine deficiency is recognized as the most significant cause of mental retardation in the world. In Peni, a national survey in 1986 revealed that 34 percent of school children suffered from goiter caused by iodine deficiency. Iron deficiency anemia affects an estimated 42 percent. of pregnant women. It would be useful to take into account the nutritional status of the school population when making assessments of the educational effectiveness of the institutions, because children who are malnourished generally tend to perform poorly in school. The impact of poor nutritional status on school performance and eventually, on the training and productivity of the labor force, may have serious implications for the future economic development of Peri. 13. Food and nutrition programs in Peri are notable for their inadequate coverage, especially of low-income rural population groups, highly variable cost per beneficiary, and questionable -iv- outcomes. According to a 1991 evaluation, 74 percent of the extremely poor and 37 percent of the poor in Lima received some food assistance. Outside of Lima, 44 percent of the beneficiaries were not poor. E. Health Plicy 14. Contemporary government pronouncements of public policy in the health sector stress the standard-setting, regulatory, and policymaking roles of the government, while relatively less emphasis is placed on the role of the public sector in the delivery of services. The legitimacy of private sector involvement in the financing and provision of health services is no longer questioned, and the government is actively exploring a larger role for private providers and health insurance. Nevertheless, the continuing public sector investments in health services infrastructure and obvious lack of coordination of public and private sector investments appear contrary to the government's public policy statements in support of privatization. The 1993 Constitution addresses population, health and nutrition issues in broad terms. The state is responsible for national health policy and the establishment and enforcement of standards for health care. There is no commitment of the government to provide or finance health services, only to ensure equitable access. F. Organization and Utilization of Health Services 15. Although more than 80 percent of hospital bed capacity and outpatient infrastructure belongs to the Ministry of Health (MOH), the three major health care providers--the MOH, Instituto Peruano de Seguridad Social (IPSS), and the private sector--each account for about a third of health services produced every year. The increase in the production of doctors, primarily by private medical schools, has stimulated an expansion of the traditional service delivery catchment area for physicians in private practice beyond upper and middle-income population groups to lower income neighborhoods and new periurban settlements. The dynamics of this expansion of the private sector and the growing cooperation between the IPSS and the private sector in the provision of care to IPSS affiliates are transforming the health sector in a manner that seems guaranteed to reduce dependence on public sector providers. 16. Overall, medical consultations and hospital discharges are a third of the expected level according to WHO's global patterns of utilization. Variations in use according to place of residence and income level indicate that almost a third of the population has no effective access to the public or private health care delivery system. The recent economic crisis, the extremely low incomes of the majority of the population, and uneven distribution and quality of health facilities and manpower appear to explain much of the underutilization of health sector resources. Utilization of health services can be expected to grow as the economy recovers, incomes rise, and quality of care issues are addressed. The Program of Targeted Social Expenditures is intended to improve access to care for the lowest income groups. Implementation of the program allows the government to place greater emphasis on the financing of more cost-effective interventions, and to subsidize those interventions for the poor, thus satisfying the need for both efficiency and equity in the provision of health care. -V- 17. The consequences of the privatization of the IPSS health system for the public sector and for the overall development of the health sector in Per6 are not yet apparent. A recent government attempt to accelerate and order the process of privatization and increase the coordination between the IPSS and the private sector insurers and health care providers has been stalled by the difficulty of determining the most appropriate model for the Peruvian health insurance system. In advance of substantial reductions in poverty and improvements in overall health status that can be achieved through proven public health interventions, government subsidy of health insurance for the nonpoor would be premature. The net effect might be to drain government resources away from these efforts, thus widening the welfare gap between low- and high-income groups. G. Health Financing 18. Public sector expenditures on health have been very low in recent years, at about 1 percent of GDP. The delegation of central government funds to regional governments, the Ministry of the Presidency, and FONCODES (Fondo Nacional de Compensacion y Desarrollo) has reduced the coherence of public investments in the sector and accountability for results. Ministry of Health capacity to guide investments and operations, to establish and maintain sector priorities, and control spending in non-priority areas has been reduced by this division of effort. An in-depth review and evaluation of the results of public sector investments is complicated by the lack of comprehensive information on the value of investments, on related operating expenditures, and on the financial and technical ramifications of local and regional activities in support of the sector. 19. The government's Program of Targeted Social Expenditures is an important initiative that focuses public sector expenditures on priority preventive and essential clinical care targeted to the poor. This programs needs to be complemented by an examination of alternative modes of financing, production, and delivery of health services by either the IPSS or the private sector and the development of a strategy for the gradual withdrawal of the public sector from some service delivery functions. H. Sector Reform: Issues and Options 20. Substantial gaps in the information available on public and private sector activities in the health sector including data on costs, financing and the production and use of health services prevent the development of a good understanding of the current situation. Reliable data could provide important clues to the determinants of changes in health status and the distributive impact of health sector investments. Regular efforts to update information on health expenditures and the organization and use of health services would promote a better understanding of the relationship between changes in GDP, health spending, and health status and facilitate the development of a reasonable agenda for reform. 21. Health sector reforms which are to accomplish more than marginal changes in the health system should be conceived with a view to their implications for the sector in its entirety. -vi- Nevertheless, all aspects of the reform need not be designed in detail and executed simultaneously, as long as the general principals are delineated and the direction reforms are expected to take is established. The feasibility of successful implementation of reforms will be increased if there is general agreement on the reform's principals and overall objectives among the key actors in the sector. Resistance to reform can be diminished if the principal stakeholders are involved in and committed to the strategic planning process. 22. Given the information available about health conditions and the state of the health sector in Perf, there are a series of options for reform which might be considered. These can be grouped in four areas: public health initiatives, organization of the sector, financing, and regulation. Public Health Initiatives - government should consider concentrating most public sector investments in health on promotion and prevention and on interventions which will contribute most to overall improvements in the health status of the population. Investments in programs to control communicable diseases, improve woman's reproductive health, combat nutritional deficiencies, and reduce alcohol, tobacco and drug use are among the most important interventions. Given the large number of adolescents in the Peruvian population, programs directed at this age group should be given some priority. In addition, the provision of safe water and improvements in sanitary conditions have the potential to reduce the burden of disease. Health education has the potential to contribute to improvements in health when it focuses on the maintenance of good health through the development of healthy life styles, including good diet and exercise, the appropriate use of pharmaceuticals, the use of seat belts and other measures to prevent accidents. Surveillance systems to monitor the food security situation and the nutritional status of the population need to be designed and a plan developed to mobilize resources at the national, regional, and local levels to complement and eventually replace the resources provided through international assistance. Priorities, targeting guidelines, and eligibility requirements need to be standardized for food and nutrition programs which are based on the needs of the population. Ongoing programs should be evaluated and adjusted periodically to conform to national standards that relate to the level and duration of assistance, and to entry and exit criteria. Cost- effectiveness, quality, sustainability, and expected outcomes should be determined for all programs. Organization of the Sector - A systematic study of the results of the recent initiatives of the IPSS and the private sector in the use of contracting of services and an inventory of hospital services provided by the public sector which measures their quality, cost and -vii- efficiency could be used to inform the future direction of public and private sector investments in hospitals. Develop a strategy and timetable for the complete managerial autonomy of public sector hospitals combined with the assumption of full responsibility for the economy, efficiency and effectiveness of operations. Identify related technical assistance and training needs to ensure the adequacy of planning and implementation. These combined efforts could lead to the definition an organizational strategy that is coordinated with the decentralization process initiaL. by the central government. This strategy should redefine the respective roles of the national, regional, and local governments, and reexamine capacity-building and delegation of authority and responsibility to the regional and community levels. Financing - A profound reform of the public sector could be realized by requiring that budget allocations for care be made on the basis of outputs. The payment of costs related to outputs would force the hospitals and public health facilities to generate information on costs in order to demand reimbursement for the services they provide. This emphasis on reimbursement on the basis of services provided and identification of the services which the public sector should subsidize, rather than on the services to provide, would provide an incentive for the private sector and the IPSS to offer the same services, thus competing with the public sector. Patients would then have a choice of providers, which would challenge public and private sector providers to offer better quality services. Financial planning and control functions could be modified to facilitate the identification of service delivery costs according to program, type of procedure, level of care, patient outcome, geographic region, and socioeconomic status of the beneficiary. The results of other initiatives in the establishment of HMOs and group practices might be evaluated, as they may also provide important clues to the future direction of the private sector and the expansion of health insurance and other financing mechanisms. Regulation - Establish standards and norms, health service protocols, and monitoring and regulatory systems that are applicable to public and private sectors, that take into account epidemiological and technological changes, and that are designed to improve patient management and quality of clinical care. Undertake regular quality reviews as part of the monitoring and evaluation process. Identify public and private sector organizations, institutes, professional associations and academic institutions which have the capacity or potential to assist in the development of standards and norms, in quality review functions, and in research and testing related to the regulatory responsibilities identified by the government. PART A: HEALTH STATUS AND DISEASE BURDEN I. THE DEMOGRAPHIC AND EPIDEMIOLOGICAL TRANSITIONS A. Population Growth and Projections 1.1 The population of Perfi in mid-1994 was estimated to be 23.4 million. Between 1940 and 1990, the population of Perd grew from 6 million to over 22 million (See Annex I, Figure 1). The birth rate declined by 40 percent, and the death rate by 70 percent. The widening gap between birth and death rates during most of the intervening period caused the population growth rate to average well over 2 percent per annum (Annex I, Figure 2). The rapid decline in the birth rate that began in the 1980s, combined with a slower decline in the death rate, reduced the population growth rate to just under 2 percent by 1994. Life expectancy has increased by over twenty years since 1965, from 49 to 65 years, which is three years below the average for middle-income countries and twelve years less than the average for the industrialized countries. 1.2 The birth, death, and population growth rates are all expected to continue their steady decline through the beginning of the next century, when the demographic transition will be completed. The high fertility rates of earlier years and the large population entering their childbearing years will ensure continued growth beyond the time when replacement-level fertility has been reached. By the year 2025, the population will increase to between 36 and 40 million; the annual population growth rate at that time will be about 1 percent. Current projections indicate that the population can be expected to stabilize eventually at a level of 48 to 50 million. B. Population Policies 1.3 The factors influencing the desire for children are often indirect, and involve religious and cultural beliefs related to procreation and "normal" family size and composition, perceptions of the financial and economic cost of children, as well as feelings about the personal enjoyment of children. The number of children desired in rur- areas is often higher than in urban areas and is associated with higher fertility rates and lower .ntraceptive prevalence rates. However, the proportion of women who desire no more children is higher in rural than urban areas, and the number of children desired in rural areas, three, is only half the number actually born. The gap between desired and actual fertility is much greater for women without education, and for women in the Sierra and Selva than in the Lima metropolitan area (Annex I, Table 7). 1.4 The population policy measures that have a demonstrated influence on the demand for children include education, especially of girls; those which affect women's status, including the age at marriage; legal and financial incentives such as housing and family allowances; poverty alleviation and the targeting of social programs; and rising incomes per capita, usually related 2 to improved employment opportunities and urbanizationlindustrialization. In Peru, primary school enrollment for girls is nearly universal, and enrollment in secondary school has increased steadily. Nevertheless, secondary school enrollment declines rapidly from age 12, when 67 percent of girls are enrolled, to age 15, when only 17 percent are still in school. The legal age at marriage is 16 years for males and 14 years for females, which is not consistent with policies which encourage women to increase their participation in the education system and the labor force and delay childbearing. Housing, family allowances, and social security programs that provide greater benefits for larger families are also pronatalist and inconsistent with the government's intention to lower the population growth rate. Social policies and programs which contribute to longer intervals between generations as a result of postponing the age of first birth have the potential to slow the momentum of population growth. 1.5 The government's 1990 population policy contains specific goals for the 1991-1995 period: (i) reduce the population growth rate by 2 percent; (ii) reduce the fertility rate to 3.3 children per woman; (iii) reduce infant mortality (no explicit goal); and (iv) promote the socioeconomic and cultural participation of women to a level equal to that of men. The principles of these policies were reaffirmed at the 1994 UN Population Conference in Cairo. In addition to confirming the validity of the policies, the Peruvian delegate to the conference, the Deputy Minister of Justice, underlined the importance of poverty reduction and human rights, including the rights of the unborn. She stated that abortion, a serious public health problem, should be prevented by education and effective ^amily planning programs. She emphasized importance of marriage, the institution of the family, and responsible parenthood, and the obligation of the state to provide information, education, and the means to accomplish this. Other important elements of the Government's population agenda are improving the status of women, facilitating the return of population groups displaced by violence, and the reorienting of population flows within the country to safeguard fragile ecosystems and correct the disequilibrium in the country's population distribution. 1.6 The availability of maternal and child health care and family planning information and services is one of the key factors in the success of families to attaining their desired family size. The substantial gap between desired and actual family size in Perd, especially in rural areas and among women with little or no education, is an indication of the limitations in quality and coverage of existing family planning programs. Approximately 12 percent of the demand for services in urban areas and over 20 percent in rural areas is unsatisfied. Among women with no education, the unsatisfied demand reaches 30 percent, which translates into one additional child per woman in urban areas and more than three additional children per woman in rural areas. C. Fertility 1.7 Pert's birth rate remained high until 1978; thereafter, especially in urban areas and among educated women, fertility began to decline rapidly. The birth rate in urban areas has dropped to 23.5/1000 population, while remaining relatively high, 38.7/1000, in rural areas. The momentum of population growth and the increase in the number of couples entering 3 reproductive age will raise the absolute number of births during the next twenty five years despite substantial declines in fertility. The number of women of reproductive age is expected to increase by more than 150,000 per annum, almost 30 percent in fifteen years, from 6.2 million in 1995 to 8.5 million in 2010. Social programs which encourage young people to delay marriage and childbearing as well as reproductive health services will have to increase their capacity if reduced fertility is to be translated into further reductions in the population growth rate. 1.8 There are marked differences in fertility according to area of residence and level of educational attainment. Women in the metropolitan area of Lima have an average of 2.1 live births, compared to 3.3 in other cities and the rest of the Coast, 4.9 in the Sierra, and 5.1 in the Selva. Women in all rural areas have an average of 6.2 live births. Women with no education have a total fertility rate of 7.1, compared to 5.1 for women with primary education, 3.1 for women with secondary education, and 1.9 for women with higher education. The number of women with no education declined considerably between 1986 and 1991, from 11 to 6 percent. During the same period, the proportion of women with higher education increased from 9 to 24 percent. The ongoing urbanization of Perd and increase in women's educational attainment can be expected to contribute to further reductions in fertility. D. Mortality 1.9 There has been a substantial reduction in mortality in Peri in the past thirty years, with most of the decrease concentrated in the under five age cohort. The decline in the death rate continued through the 1980s, despite political and economic difficulties. In 1950, 16 percent of the population was under four years of age and accounted for 45 percent of all deaths. By 1990, the 12 percent of the population under the age of four accounted for 23 percent of all deaths. Slightly more than half of all deaths are registered, and about 30 percent are attended by a physician. In 1992, the crude death rate was estimated at 7.6/1000 population; of the approximately 176,000 deaths that occurred, 64,953 were registered. Analysis of the distribution of deaths by age, gender and cause is complicated by incomplete registration and a reporting bias which favors urban areas and causes which are more likely to be brought to the attention of the medical community or the police. Because deaths reported through the medical system and those reported by the police are registered separately, deaths caused by accidents and violence are not always aggregated with MOH data on the leading causes of death. 1.10 There are significant variations in mortality rates in Perd's three principal geographic areas. The death rate is more than twice as high in the Sierra as in the Lima Metropolitan area, and a third higher in the Selva and the rest of the Coast. Infant mortality, a major indicator of social well-being, is substantially higher in Perfi than in other countries of the region, and ten times higher than in the industrialized countries. Although infant mortality has declined during the past thirty years, from 122/1000 live births in 1961 to about 53/1000 in 1992, it is twice as high in rural areas and 10 to 60 percent higher than the national average in many of the Departments of the Sierra. Only 21 percent of the population lives in the rural Sierra, but 30 4 percent of infant deaths occur there. Every Department in Perd except Lima-Callao has areas where infant mortality is more than 50/1000 live births. Malnutrition is usually considered to be a major contributing factor when infant mortality exceeds 50/1000. 1.11 The leading causes of death for which a cause has been determined by health authorities include acute respiratory infections, gastrointestinal infections, other diseases of the digestive system, diseases of the circulatory system, tuberculosis, malignant tumors, nutritional deficiencies, cerebrovascular disease, and ischemic heart disease. Almost half of all deaths are attributed to other causes. Accidents and violence, including homicide, suicide, traffic accidents and terrorism are the third most commonly reported cause of death. For children under five years of age, perinatal problems are the leading cause of death, and for women of reproductive age, pregnancy-related problems including abortion are among the leading causes of death. The prominence of acute respiratory infections and gastrointestinal infections among the leading causes of death for all age groups indicates that Perd is still in the early stages of the epidemiological transition. 1.12 A high rate of maternal mortality is often a reflection of the disadvantaged position of women in a society. In Perd, it has been estimated that there is a maternal death every five hours. The decline in infant mortality, when juxtaposed with the continuing high rate of maternal deaths, suggests that infants and young children have been the principal beneficiaries of the maternal and child health programs that are intended to improve the health of mothers and their children. According to data gathered from a sample of Peruvian hospitals, the leading causes of maternal mortality are hemorrhage during pregnancy and delivery (33 percent), puerperal complications (14 percent), complications of abortion (11 percent), and toxemia (8 percent). The unusually high maternal mortality rates in the altiplano are attributed to placental retention caused by hypoxic hypertrophy. 40 percent of women hospitalized for abortion complications had two or more previous abortions, which indicates that family planning counseling and services do not routinely accompany treatment for abortion. 1.13 Many of the deaths of the rest of the adult population (men age 15-45 years and men and women over 45 years) are preventable and caused by acute respiratory infections, tuberculosis, and accidents and violence. Cancer and diseases of the digestive system are the second most frequently reported causes of death of the young adult population age 15 to 44. Cancer, heart disease, and cerebrovascular diseases are significant causes of death for the population over 45 years of age. The largest age cohorts of the Peruvian population are those entering adolescence, which indicates that during the next 15 to 20 years, the health conditions and diseases of young adults will dominate the mortality and morbidity profile, while the chronic degenerative diseases afflicting older population groups will become more important in the following decades. Efforts should begin now to educate the adolescent and young adult population about the influence on health status of diet, exercise, safe sex practices and use of alcohol, tobacco and drugs. 5 E. Age Structure and Population Distribution 1.14 The age structure of the Peruvian population is still relatively young: 38 percent of the population was under the age of 15 in 1991. The youthful population will decline to 28.7 percent by the year 2010. The population of working age people will be dominated by young adults and will increase steadily, from 60 percent in 1995 to 69 percent in 2020. The dependency ratio will decline from about 70 percent in 1990 to only 45 percent in 2020, and the population age 65 and over will increase from its current level of 3.7 percent to 6.5 percent in 2020. 1.15 There has been significant migration from rural to urban areas in Perf since 1940, when Lima contained only 9 percent of the total population of the country, and from the Sierra to the Coast and the Jungle. The annual population growth rate has averaged 2.8 percent on the Coast, 2.2 percent in the Selva, and 1.1 percent in the Sierra. In 1991, over 70 percent of Peri's population lived in urban areas, and almost a third of the population lived in the Lima Metropolitan area. During the past fifty years, Lima's population has increased at a rate almost double that of the rest of the country. The economic and political difficulties of the past decade and high fertility in rural areas have accelerated the already rapid pace of urbanization. In addition, drug trafficking has contributed to deforestation and the contamination of rivers, hastening the exodus from the affected areas. Wages are 20 percent higher in urban areas, and the availability of health and other social services in.the cities has also attracted migrants from rural areas. International emigration has been steady but has had a marginal effect on the size and distribution of the population. Remittances from workers abroad contribute approximately $800 million a year to the Peruvian economy. F. Labor Force and Employment 1.16 During the coming decades, employment may become an explosive social, political and economic issue in Pera. The momentum of the rapid population growth of the past thirty years has already generated a major expansion of the labor force. The labor force is growing by about 20 percent every five years, and will continue to do so well into the next century. Current projections indicate that the population of working age (15-64 years) people will double over the next thirty years, from about 12.6 million in 1990 to 23.6 million in 2020, amounting to an average annual increase in the potential labor force of almost 400,000 workers. G. Morbidity 1.17 Two days of work a month, 24 days in a year, are lost by rich and poor alike because of inactivity precipitated by ill health. All but the highest income group report 4 to 5 days of illness per month, compared to .5 days in the United States. This level of illness and inactivity represents a major loss of productivity for the economy as a whole and translates to a per capita income that is about 3 percent lower than expected on an annual basis. The leading causes of adult morbidity are acute respiratory and gastrointestinal infections. The health status of the 6 Peruvian population as measured by morbidity rates has deteriorated over the course of the last twenty years, despite the decline in general mortality and increase in life expectancy (the reduction in general mortality is heavily concentrated in the population under five years of age). 1.18 The cholera epidemic, which began in 1991, was the most dramatic and visible evidence of this deterioration in living conditions and overall health status: It was preceded and accompanied by an unpublicized but equally troubling increase in the incidence and prevalence of tuberculosis, malaria, and other gastrointestinal infections (Annex I, Table 16). Waterborne diseases, including gastroenteritis, bacterial dysentery, infectious hepatitis, tuberculosis, typhoid, paratyphoid, salmonellosis, shigellosis, and most recently cholera, were responsible for more deaths in 1990 than any other communicable diseases. A more detailed discussion of epidemiological trends and other specific causes of morbidity and mortality in Peri can be found in Annex I. II. FOOD AND NUTRITION A. Introduction 2.1 Nutritional status is universally regarded as a primary indicator of well-being. The historic relationship between adult height and life expectancy has been observed in numerous population groups. Worldwide experience indicates that as much as 40 percent of the secular decline in mortality rates can be attributed to improvements in nutrition status, with most of the effect concentrated on infant mortality'. Recent findings indicate that there is a relationship between poor nutritional status in utero and the later development of chronic degenerative diseases. The nutrition problems in Perfi are one of its major human resource constraints to future social and economic growth. The persistence of elevated levels of malnutrition provides visible evidence of one of the most important gaps remaining in the Government's social policies. Malnutrition in Perfi is the result of a combination of poverty, disease, ignorance of nutritional needs, and the uneven distribution of the benefits of development. Substantial investments in food and nutrition programs in Perfi in recent years have failed to eradicate or even substantially reduce malnutrition. A reassessment of the effectiveness and impact of food and nutrition policies and programs may be necessary in order to improve outcomes, control the cost of interventions, and maintain the quality of programs. B. Food Production and Consumption 2.2 The per capita daily supply of calories available in Perfi decreased by 16 percent in twenty years, from 2,355 calories in 1970 to 1,978 calories in 1990. Protein consumption also declined, from 55 grams per capita to 46 grams in 1990. Neither meets 100 percent of daily requirements, according to the U.N. Food and Agriculture Organization (FAO) recommended daily allowances. Given the unequal distribution of incomes and uneven availability of some foods, it is likely that energy and protein deficits for some segments of the population are far more serious. It is possible that for the poorest people, food intake is below the level required to work. Recent research of Europe's living conditions in the eighteenth century revealed that a significant minority of the population were beggars because their food intake levels were too low to permit any productive activity. Between 1979 and 1991, the per capita growth of food production has been negative, with an annual average of - 0.6 percent using 1979-1981 as the base years. The decline in food production has been compensated in part by cereal imports, which amounted to 1,524 metric tons in 1982 and 1,432 metric tons in 1991. Food aid increased several times during the decade, from 76 metric tons in 1982 to 371 metric tons in 1991. 2.3 During the 1970s and 1980s, the agriculture sector in Perd was subject to substantial government intervention in the production, marketing, and pricing of all major crops. The Fujimori government liberalized most agriculture policies, but a price floor mechanism for 1. World Bank, World Development Report: The Challenge of Development, 1991, p. 53. 8 important food products remains one of the major untargeted agriculture subsidies. This mechanism takes approximately $180 million a year away from consumers of corn, rice, and wheat through the imposition of a surcharge on basic foods. The price supports are highly regressive because these are among the foods that form the basic diet of the lowest income groups. The income and consumption effects of these surtaxes have not been analyzed to determine their net impact on household income and on the nutritional status of the population. In general, untargeted food price subsidies benefit the rich more than the poor because the rich consume more, even of the basic food products. The removal of food price subsidies or, the establishment of a price floor mechanism for foods that represent a major share of the food expenditures of the lowest income groupss affect the poor most because they tend to spend a larger share of their income on food. 2.4 The Living Standards Measurement Surveys of 1986, 1991 and 1994, revealed that the lowest income groups in all areas use on average 70 percent of total household expenditures for food, in contrast to 30 percent spent by the highest income group. Only the groups in the highest income quintile in urban areas spent less than 50 percent of total income on food in 1994, and their expenditures were equal to six to eight times the food expenditures of the lowest income group. The absence of data on the quantity of food purchased makes it impossible to assess the nutritional adequacy of the diet. Information on intrafamilial distribution of foods is also lacking. Although a basic food basket has been developed for Lima and the Coast and for the Sierra, it is only possible to determine whether household expenditure levels would permit this particular quantity of food to be purchased. Rice, bread, sugar and tubers are the foods most frequently purchased by the poor, while the non-poor diet appears to include more prominent expenditures on meat and chicken. In fact, it is very difficult to determine the quantities of food consumed based on expenditure data. If average prices are used, the quantity consumed by the poor will be underestimated because the poor usually purchase lower quality, lower price foods, and the quantity consumed by the rich, who are more likely to purchase higher quality, higher priced foods, will also be overestimated. Information about the frequency of food purchases would be a useful addition to future surveys, and might be used to guide practices in the publicly supported food distribution programs. C. Nutritional Status 2.5 The relationship between malnutrition and elevated risk of mortality is well documented. Mortality increases exponentially with declining weight for age, including even mild to moderate degrees of malnutrition. Experience worldwide has shown that malnutrition is a major contributing factor when infant mortality exceeds 50/1000 live births. Anthropometric measures of nutritional status appear to be better predictors of child mortality than socioeconomic indicators. A regional comparison of the nutritional status of children undertaken by UNICEF in 1992 revealed that the country has one of the highest rates of malnutrition in the Latin American region. Poor nutritional status is one of the underlying causes of the slow improvement in child mortality in recent years. The nutrition status findings of the 1991-1992 Demographic and Health Survey are similar to those of national nutrition surveys in 1972 and 9 1984. About 37 percent of children under five suffer from chronic malnutrition and 1 to 2 percent suffer from acute malnutrition. 2.6 There has been little change in the nutritional status of Peruvian children since 1984, when national surveys revealed that about 37 percent of children under five were chronically malnourished. Malnutrition rates vary considerably within Perf, from 11 percent in Lima to 29 percent in other areas of the Coast, 52 percent in the Sierra and 41 percent in the Selva. There has been a slight deterioration in the nutritional status of urban children since 1984, and a slight improvement in rural children. There is no evidence of differences in the nutritional status of boys and girls. 2.7 The nutritional status of young children is strongly influenced by the age and educational attainment of the mother, birth order and spacing of pregnancies, and breastfeeding and weaning practices. In Perf, infant feeding practices appear to play an important role in the poor nutritional status of infants and pre-school children. While 95 percent of Perdvian infants are breastfed initially, and the average period of maternal lactation is 17 months, only the infants whose mothers have no education are exclusively breastfed during the first three months of life. The average child is exclusively breastfed for only a few weeks after birth (Annex I, Table 10). The introduction of water and teas, usually administered in baby bottles, and other foods increases the risk of the infant ingesting contaminated nutrients. In some cases, the poor nutritional quality of the supplement provides empty calories when more nourishing foods are badly needed. These infant feeding practices are reflected in the nutritional status of the children, whose growth falters during the weaning period, which often begins as early as six months of age. 2.8 The proportion of malnourished Peruvian children increases significantly between six and eleven months of age. Acute malnutrition, as measured by weight for height and age, declines slightly between two and three years of age, but is far from good, even at five years. Chronic malnutrition (short stature) persists and actually worsens significantly between 6 and 59 months of age (see table 2.1). A significant proportion of Peruvian children become malnourished during the first year of life. The rates of malnutrition in Perf are higher than those found in Senegal, Egypt, Zimbabwe, and Tunisia, all of which are countries at similar levels of development with otherwise comparable maternal and child health conditions. 10 Table 2.1. Nutritional Status of Children 1 - 59 months 1991-1992 Age in Height for Age Weight for Height Weight for Age Months (% below 2 SD)2 (% below 2 SD) (% below 2 SD) 1 -5 6.3 1.4 1.7 6- 11 16.9 1.5 8.2 12-23 33.1 3.1 16.1 24-35 43.2 1.2 13.2 36-47 45.4 0.7 8.6 48-59 48.8 0.9 11.5 Source: Demographic and Health Survey, 1991/1992 2.9 Several studies of the nutrition status of school children demonstrate the longer term effects of malnutrition suffered during the first five years of life. A 1987 study of children in the first grade in public and private schools in the Lima Metropolitan area showed a range of growth retardation, as measured in height for age, of 0 - 36 percent, with a prevalence in public schools of 22 percent and a prevalence in private schools of 9 percent. A 1991 national nutrition assessment of children enrolled in the first grade revealed rates of growth retardation as measured in height for age that ranged from 18 percent in Tacna to 70 percent in Huancavelica, a national average of 46.7 percent--33 percent in urban areas and 62 percent in rural areas. There was some difference in the nutritional status of children who attended public and private schools. Overall, 50 percent of children in public schools and 45 percent in private schools were below height for age. The prevalence of malnutrition ranged from 3.8 percent to 66.7 percent in private schools and from 19.8 percent to 71.7 percent in public schools. It would be useful to take into account the nutritional status of the school population when making assessments of the educational effectiveness of the institutions, as children who are malnourished generally tend to perform poorly in school. The impact of poor nutritional status on school performance and, eventually, on the training and productivity of the labor force, may have serious implications for the future economic development of Perd. 2.10 The nutritional status of the mother has considerable influence on the nutritional status of her children. In Perd, women who live in rural areas, women with no education, and women who live in the Sierra tend to be shorter and to have smaller arm circumference measurements than women who live in Lima or in any other urban area and women who have primary 2. Children with Z- scores < 2 SD below the International Reference Population median including children < 3 SD. The same standard for preschool children has been accepted by the U.S. National Center for Health Statistics, the U.S. Centers for Disease Control, and the World Health Organization. Normally, 2.3% of children would fall below - 2 standard deviations of NCHS. 11 education or more. Reduced arm circumference has been linked to spontaneous abortion, low birth weight, and infant deaths. Women with no education are six times more likely to have short stature and three times more likely to have below average arm circumference than women with higher education. Low stature is associated with lower life expectancy for men and women. For women, complications of labor and childbirth, especially obstructed labor caused by small pelvic proportions, is a greater risk when the woman is short. 2.11 The Peruvian population suffers from a variety of micronutrient deficiencies, including iron, Vitamin A, and iodine. Iodine deficiency is recognized as the most significant cause of mental retardation in the world. In Perd, a national survey in 1986 revealed that 34 percent of school children suffered from goiter caused by iodine deficiency. Goiter is endemic in 88 percent of the communities of the Sierra. International experience has demonstrated that prevalence above 29 percent, which is considered severe, is accompanied by a 1 to 10 percent rate of cretinism. Iron and iodine deficiency both have deleterious effects on physical and mental development during infancy and childhood, and contribute to poor reproductive performance and reduced labor productivity. Iron deficiency anemia affects an estimated 42 percent of pregnant women. 2.12 Since 1940, Perd has Uad legislation requiring the iodination of commercially produced salt. However, 97 percent of the iodized salt is produced on the Coast and is more expensive than the uniodized salt produced in small mines in the Sierra, which is consumed by 40 percent of the population. Iodine deficiency is a problem for which a series of low-cost solutions are available, including industrial and community-level fortification schemes and individual supplementation. The cost of iodine supplementation through the use of oil-based injections was estimated at $2.30 in Perd in 1987. More recently, the cost per person per year was estimated at $.50. Salt and water fortification can cost as little as $. 10 per person per year. D. Food and Nutrition Programs 2.13 Compensatory feeding programs financed by the Peruvian government and international assistance reach about a third of the Peruvian population through school feeding, maternal and child health programs, community kitchens, and food for work programs. These programs are intended to protect women and children from malnutrition and promote growth, to provide school children with a nutritious meal to enhance learning ability, and to offer an income supplement for the poor and the unemployed. 2.14 In 1991, almost $150 million was spent on compensatory feeding programs, making these programs the third largest publicly supported social program after education ($245 million) and health ($180 million). Food assistance increased by 240 percent between 1980 and 1987, compared to a worldwide increase of about 40 percent during the same period. The value of the transfer of food and related services equaled one-fourth the value of total household expenditures for the extremely poor and about 10 percent for the poor. Many unresolved problems need to be addressed in order to maximize the effectiveness and impact of these programs. These relate to targeting, program content, program impact on income and nutrition, 12 coverage of the highest risk population groups, and the development of standard program monitoring, cost analysis, and evaluation mechanisms. 2.15 There were eight major food assistance programs in Perd in 1991, three of which were targeted to women and preschool children, one to school children, two to the urban poor and two to the rural poor. A 1991 evaluation of these programs concluded that their effectivenesss and nutritional impact were not apparent. The evaluation found that food assistance reaches a significant proportion of the poor and extremely poor only in Lima. In total, about 74 percent of the extremely poor and 37 percent of the poor receive some food assistance. In the rest of the country, only 4 percent of the extremely poor benefitted from food assistance. The food assistance was well targeted in Lima, where only 6.5 percent of the beneficiaries were found to be non-poor. In the rest of the country, as many as 44 percent of beneficiaries were not poor. Actual coverage was significantly lower than reported program levels. In 1994, a school breakfast program targeted to children in poor areas of the Sierra was supported by FONCODES. 2.16 The food distribution programs are implemented by a wide range of organizations, including the central and regional governments, community groups, donor agencies, and non- governmental organizations. The result is duplication, gaps in coverage, and wide variations in costs per beneficiary. Per(d does not have a national nutrition policy and there are no well- defined mechanisms for (a) defining program priorities and strategies; (b) specifying target groups and program strategies designed to reach them; (c) establishing norms and standards related to the level and duration of assistance, entry and exit criteria, unit costs, and implementation; (d) mobilizing of resources at the national, regional, and local levels; (e) monitoring and surveilling the nutritional status of the population; (f) implementing interorganizational coordination of strategies and programs; or (g) setting guidelines for program monitoring and analyzing the cost and effectiveness of the various program interventions. PART B: THE PERUVIAN HEALTH SYSTEM III. HEALTH POLICY AND STRATEGY A. The Link Among Economics, Poverty, and Health in Perd 3.1 The poor economic growth performance of Peri in recent decades is reflected in its per capita income, which has declined in real terms since 1960, a high prevalence of poverty, especially in rural areas, and social indicators which are among the worst in the Latin American and Caribbean Region. Life expectancy, at 65 years, is lower than in the neighboring middle- income countries of Chile, Ecuador and Colombia, infant and child mortality are higher, and only Haiti and Bolivia have a worse record of achievement in terms of raising life expectancy and lowering mortality (See Annex II, Table 1). Mortality for all age groups is above average for the Latin American region and diseases of the gastrointestinal and respiratory systems, many of which are preventable, are among the major causes of morbidity and mortality for all age groups. In 1994, government spending on health was expected to reach its lowest level in decades, less than one half of one percent of GDP, compared to three to five percent in most middle income countries and six percent in the LAC Region. In 1994, The Ministry of Health was spending the equivalent of US$15.00 per capita on health care, well below the average of $140 per capita spent on health in the other countries of the region. 3.2 Although the Fujimore government reversed many of the economic policies of the past, and growth has resumed, the public institutions most seriously weakened by political and economic instability still will need to be strengthened. The decentralization process initiated by the central government in the 1980s will need to move beyond deconcentration of the antiquated state bureaucratic apparatus to encompass a redefinition of the respective roles of federal, regional and local government, capacity-building and delegation of authority and responsibility to the regional and municipal levels of government. The inefficient and regressive patterns of spending in the social sectors which have persisted over many years represent an important element of the unfinished agenda of the Peruvian government. In order to increase the allocative efficiency of public expenditures on health, greater emphasis needs to be placed on investments in preventive services that produce the greatest benefits such as endemic disease control, immunizations and family planning. The public subsidy of curative services, many of which tend to be less cost-effective and less likely to reach the poor, should be selective and include cost-effectiveness as one of the criteria used to determine subsidy levels. 3.3 In the absence of social policies that favor spending for basic education and health care, economic policies associated with rapid economic growth will not generate the improvements in well-being that are considered an important element of economic and social development. A country need not be rich and financially sound to afford the type of expenditures which will contribute most to the well-being of the population. Education and health care are labor intensive and cost less in an economy where labor is abundant and cheap than in a richer country. China, Jamaica, and Sri Lanka are not rich countries but have achieved significant 14 improvements in well-being by making substantial investments in basic health and nutrition (See Annex II, Table 2). 3.4 The high incidence of poverty in Peri, which increased during the past twenty years and has only recently begun to decline, is attributed to the combined effects of the country's poor economic performance, ethnic discrimination, and extreme disparities in the availability of economic opportunities and social services for different income groups and areas of the country. In the absence of economic opportunity and adequate social services, poverty and unsatisfactory living conditions create all the necessary circumstances for the perpetuation of chronic underdevelopment. 3.5 In 1994, almost half of Peru's population was classified as poor, that is, having an income not sufficient to purchase the equivalent of a food basket which would meet energy and protein requirements and satisfy the need for other basic non-food items. A fifth of the population was living in extreme poverty, that is, unable to purchase even the equivalent of the food basket. Almost two-thirds of the rural population lives in poverty and 40 percent of the rural poor live in extreme poverty. In urban areas, the incidence of poverty was lower, less than 30 percent in 1970. In Lima, there was an increase in poverty and extreme poverty from about 28 percent and 8 percent, respectively, in 1970, to 39 percent and 10 percent, respectively, in 1991. Lima has the highest concentration of poor, 3.2 million, and the rural Sierra has the largest number of extremely poor, 1.6 million. Preliminary results of the 1994 Living Standards Measurement Survey (LSMS)l indicate that a substantive reduction in poverty has occurred in Lima, where the population living in poverty was reduced from 49 percent to 33 percent. In the Sierra, rural poverty was reduced very slightly, from 68 percent to 66 percent during the same period. 3.6 The distribution of poverty and characteristics of the poor are similar to those found in other countries of the Andean region. Poverty is concentrated in the major urban areas and in the rural Sierra; two-thirds of the population live in the urban areas, but only one-third of them are poor. One-third of the population lives in rural areas, but 70 percent of them are poor. Ethnicity and education are closely correlated with poverty; 86 percent of Aymara speakers and 62 percent of Quechua speakers are poor, compared to only 42 percent of Spanish speakers. Twenty percent of the lowest income group is illiterate, compared to only 3.6 percent of the highest income group. The income/literacy gap is more pronounced in urban than rural areas; the illiterate are four times as likely to be poor in urban areas, and only 1.5 times as likely to be poor in rural areas. Low-income families tend to have dependency ratios that are three times as high as upper income families in urban areas and more than twice as high as more affluent families in rural areas. In urban areas, 23 percent of low-income households are headed by women, compared to 13 percent of high-income families. 1. The Living Standards Measurement Survey is a collection of household expenditure data which attempts to monitor progress in raising living standards, identify the consequences for households of past and proposed government policies, and improve communications between survey statisticians, analysts, and policymakers. 15 3.7 Low-income households in Lima are heavily penalized by the government's inability to provide safe water and adequate means of waste disposal. In 1991, only 27 percent of Lima's recognized pueblos jovenes had water and sewerage connections though 60 percent of them were established before 1980. The poor paid twenty times as much for water purchased from trucks as high-income households paid for household connections; about 6 percent of average household income was spent for water in the pueblos jovenes. The annual per capita cost borne by urban households without in-house water connections was estimated at $40 per year. UNICEF estimated the per capita cost of constructing standpipes and latrines in urban and rural areas at about $30. 3.8 Income and access to water and sewerage systems are correlated, and intimately linked to the incidence and prevalence of gastrointestinal infections, which are a major cause of morbidity and mortality in Perd. Lima's pueblos jovenes have one of the highest rates of diarrhea in the world, estimated at eight episodes per person per year. Over a third of low- income workers in Lima miss on average almost one day of work per month as a result of these repeated episodes of gastrointestinal illness, which represents an income loss rarely compensated by sick leave and other health benefits. Only 7 percent of the lowest income group has access to social security, compared to 42 percent of the highest income group. 3.9 Peruvians from all income groups share a high burden of disease: two days of work per month are lost by rich and poor alike because of inactivity precipitated by all causes of ill health. Each year, illness consumes almost a month of working days per capita. While the loss is greater in financial terms among the rich, who earn more money, the poor suffer more when wages are lost because they do not have the protection of regular salaries, sick leave benefits, and savings to cushion the impact. An additional month of wages each year would raise a significant proportion of the population out of poverty and generate a substantial increase in the GDP. A recent report on social and economic developmene indicated that there is growing evidence that public investments in health, nutrition and family planning complement one another and interact with investments in education to create a powerful synergy that enables the poor to take advantage of economic opportunities, increase their incomes and productivity, and thus contribute to economic growth. B. The Health Policy Framework in Perd 3.10 The two principal themes at the forefront of the health policy debate in Perd are the nature and extent of the state's role in the financing and provision of health care and the degree of centralization and concentration of power, responsibility and resources which is most appropriate for the sector. The particular characteristics of Peruvian society, government and public administration systems have all influenced the development of the Peruvian health system. In the course of the past 150 years, Per6 has been transformed from a semi-feudal agrarian 2. Birdsall, N. et al., Inequality and Growth Reconsidered, 1994, Washington, D.C. 16 society to an urban industrialized economy, with a significant proportion of the population still living at the margins of the modem society. This section provides a brief summary of the evolution of health policy in Perd since 1990, and recent Constitutional and organizational changes that have influenced the configuration of the health system, including its implicit and explicit priorities, and the division of responsibility for the financing and provision of health care between public and private sectors. Health policy developments before 1990 are outlined in Annex II. Health Policy: 1990-Present 3.11 Health policy trends in the 1990s reflect the influence of the new economic policies. The privatization of state enterprises nationalized by previous governments and other economic policies of the Fujimori administration have legitimized the private sector's interest in the financing and provision of health care. Furthermore, there is a growing realization in government circles and among the populace that the government does not now and probably never will have the resources required to implement the ideal social welfare state envisioned during the 1970s. Public policy makers and many of the intellectual leadership of the health sector are exploring new ways to combine public and private health sector financing and provision of services. The aim is to stimulate the growth of the private sector health insurance industry including the social security system and expand the use of private sector providers in an attempt to target public sector resources to the lowest income groups and reduce the share of the population which depends entirely on the public sector for its health care. 3.12 In 1991, the Ministry of Health published a major policy statement that reoriented programs to improve community access to a well-defined set of services which respond to the needs of the population. The effort to democratize health was to stimulate a horizontal and cross cultural dialogue which would disseminate knowledge about health so that each individual would have the information to maintain good health. The role of the MOH would be redefined and greater emphasis placed on its standard-setting, regulatory and policy-making functions. 3.13 The new Constitution approved in a national referendum in October 1993, addresses population, health and nutrition issues in broad terms; Chapter II, Social and Economic Rights, declares that the State will protect the child, adolescent, mother and the aged if they are abandoned. The State will also protect the family and promote marriage, which is recognized as a fundamental and natural social institution, and promote responsible parenthood, and the right of families and individuals to make decisions related to parenthood. The Constitution further guarantees access to "adequate" information, education and means to achieve responsible parenthood. 17 C. Program of Targeted Social Expenditures 3.14 In late 1993, the Council of Ministers, in coordination with the sectoral ministries, completed a preliminary diagnosis of the unsatisfied basic needs of the population. Priorities for immediate improvements in selected basic social services were identified. These investments would be targeted to the poor in urban and rural areas. Priority was to be given to the basic preventive and curative services in the health sector and to the development of the institutional capacity required to implement programs. The "package" that had been defined by the MOH in the early 1990s was not formulated based on an analysis of the burden of disease as expressed in DALYS,1 but contains all of the major elements of the package outlined in the 1993 WDR4 which was developed on the basis of an analysis of DALYS. Monitoring and evaluation plans were designed to permit implementation to be reviewed on a monthly basis. The results from 1994 were to be used to prepare program plans and budgets for 1995. Approximately US$70 million was allocated in 1994, with the understanding that each of the sectoral ministries would also reorient some part of its own budget in support of these programs. 3.15 An interministerial committee for the social sectors, the Comitd Interministerial de Asuntos Sociales (CIAS) was organized to coordinate these efforts. The health sector was given responsibility for identifying the high risk groups that were to benefit from the supplementary feeding programs currently being implemented by PRONAA, PANFARs, and other organizations, as well as those relevant activities supported by FONCODES and the Ministry of Education. The evolution of the program is summarized in Box 3.1. 3.16 In June 1994, when the programs were initiated, the MOH immediately extended working hours in more then 1700 health centers and health posts throughout the Country. Attendance at some facilities increased by 30 percent. One of the principal limitations to the successful implementation of the priority programs was the institutional weaknesses of the public administration systems at all levels. Each ministry has developed strategies for training and program monitoring and supervision in an effort to compensate for these institutional 3. Disability-adjusted life year. A unit used for measuring both the global burden of disease and the effectiveness of health interventions, as indicated by reductions in the disease burden. It is calculated as the present value of the future years of disability-free life that are lost as a result of the premature deaths or cases of disability occurring in a particular year. 4. The 1993 World Development Report identified a package of public health measures and essential clinical services which are a top priority for every government to finance. The public health measures include immunizations, school-based health activities, family planning, nutrition, reduction of alcohol and tobacco consumption, AIDS prevention, and regulatory action, information and limited public investments to improve the household environment. The essential clinical services include pregnancy related care, family planning services, tuberculosis control, control of STDs, and care of the sick child. 5. PRONAA - Programa Nacional de Ayuda Alimentaria, PANFAR - Programa Nacional de Nutricion . Food distribution programs supported by the Ministry of Economics and Finance, the Ministry of the Presidency, and USAID. 18 weaknesses. It is too early to predict the outcome of this initiative. The MOH program appears to be well-conceived (see Box 3.2) and well-balanced between investments in infrastructure, training and supervision. The evolution of financial and administrative support systems is unclear. 3.17 The program of targeted expenditures, which is financed entirely with Peruvian government resources, can be expected to resolve some of the immediate problems related to equitable access to basic health services, but it does not respond to the need to determine the extent and limitations of government responsibility for the financing, provision and regulation of health care. It does not address the need to set priorities and distinguish between essential and discretionary care, and more and less needy patients. The inefficiencies in the provision of many health services will require profound changes in the organization of care, in the control of costs and the assessment of the quality of care and health outcomes. Innovations in the financing and provision of care which have been introduced by the private sector and the IPSS should be evaluated with a view to determining their applicability to the public sector. The competitiveness which has been stimulated by the rapid growth in the supply of health care providers and facilities in urban areas in particular may contribute to further improvements in the quality and efficiency of public and private sector health care. Health Reform: Progress and Challenges 3.18 The progress of some health reforms in Perd has been fragmented and uncoordinated. First, aimed at downsizing, MOH personnel roles have been reduced substantially, and contracting is now being used as an alternative to adding staff to the permanent payroll. However, regional offices of the MOH have expanded and the implications of this expansion need to be assessed. Second, the social security system (Instituto Peruano de Seguridad Social - IPSS) has gone through a comprehensive restructuring as a result of its move toward privatization, and is now contracting services with the private sector. Third, decentralization and innovation have begun. The social fund, Fondo Nacional de Compensacion y Desarrollo (FONCODES), has financed a number of local pharmacies (botiquines populares) that are self- supporting to some extent. This, plus the involvement of communities in the other health projects financed by FONCODES, need to be reviewed in order to identify potential future models for local control of basic health services. Finally, the MOH is attempting to concentrate more of its resources on a program designed to meet basic needs. The program of targeted social expenditures, the restructuring of the tuberculosis control program and, more recently, the malaria control program, are good examples of what the MOH can accomplish when effective management and sufficient resources are applied to a problem (see Annex I, Box 1). 3.19 The reform agenda of the future could include the following options: (a) regulation-- review and redefine the regulatory functions required in the sector and determine the role of the public and private sectors in the design and implementation of these functions; (b) financing-- evaluate the social security system experience to determine the feasibility and pace of extending health insurance to a larger proportion of the population; further expand coverage and 19 improvements in the quality of basic health care; institutionalize cost recovery initiatives; (c) organization--define the role and responsibilities of the local governments, community groups, and non-governmental organizations (NGOs); and (d) public health initiatives--develop a strategy for creating a professional public health service corps that offers career development opportunities and adequate compensation based on a comparison of public and private sector earnings review food and nutrition programs, targeting mechanisms, beneficiaries, and the nutritional and income benefits of each program with the aim of recommending adjustments designed to improve the food security of the poor and to address the nutritional deficiency disorders of the population. BOX 3.1 Program of Targeted Basic Social Expenditures September 1993 Piesidency of the Council of Ministers, in coordination with the sectoral ministries, completed a preliminary diagnosis of the unsatisfied basic needs and social deficit. November 1993 - Basic Strategy for Social Policy submitted to the interministerial coordinating committee and approved.. The priorities tor' 1994-95 included the following: - improve the quality of ongoing health, education and justice programs of a low level of complexity, especially in rural and marginal urban,areas; - improve the coordination of emergency programs with particular attention to prevention of a deterioration of the nutritional status of children under three years of age and the generation of temporary employment programs through FONCODES, PRONAA, etc. April 1994 --Resolution No 183-04,PCM approved the Budget Program for Targeted Basic Social Expenditures May, 1994 Decree- No. 38-04 PCM approved the operational plans and budgets for the targeted social programs of 82.2 million solesIfor the education sector,. 192.9 million soles for the health sector, of whichn 5 million:soles would be allocated to" the Miiistry of Health and 21. million soles to the National Health Institute for the. complementary feeding programs. Another 19.6 million soles was authorized.for the judicial system. June 1994 - Activities financed by the special budgets were initiated. .July 1994 - Initial evaluation of implementation progress to be prepared. 20 BOX 3.2 Program of Targeted Social Expenditures Basic .Health Services Package The program will deliver- a standard package of basic health servicesu Investments will be made in the following areas: Improve and maintain physical infrastructure Procure and.maintain equipment Increase the supply of basic services Procure materials required to provide basic services Train Personnel Promote individual responsibility for the maintenance of good health and healthy life styles, and community responsibility to maintain satisfactory sanitary conditions and controlthe spread of epidemic diseases. Quality Improvements in the Provision of Care Extended work hours; New operational manual focused on the needs of the individual patient; The introduction of an integrated team approach to care, rather than.the program or disease- specific.approach of the past; Development of special programs and training for rural areas including self-traiiing manuals, graphics and audiovisual materials, model health facilities for short term rotation assignments, and on-site training by specialists. Design of a new supervision model which incorporates feedback from:the individual user and * the community, and the use of traveling supervision teams which also assist with self-evaluation techniques. " The basic package of services includes basic immunizations for women of reproductive age and children; the prevention, diagnosis and treatment of communicable diseases; obstetrical care including prenatal care, attended delivery and family planning services; prevention and treatment of nutritional problems; prevention and treatment of sexually transmitted diseases; and programs of information and education related to healthy life styles IV. THE ORGANIZATION, PRODUCTION AND USE OF HEALTH SERVICES A. Introduction 4.1 This chapter provides a context for considering of the future demands on the Peruvian health system that will be imposed by the ongoing demographic, epidemiological, social, and economic transition. The history of the MOH, the Instituto Peruano de Seguridad Social (IPSS), and the private sector will be reviewed with an emphasis on the events of the last ten years. Some observations will be made with respect to the challenges these entities face as key players in the contemporary Peruvian health sector. Information in this chapter is supplemented in Annex III. B. The Organization of Health Care 4.2 Three features of the Peruvian health care delivery system that influence its ability to plan and deliver health care are the high concentration of facilities and personnel in Lima, the countrywide duplication of MOH and IPSS hospital infrastructure, and the excessively complex, multi-tiered government bureaucracy. 4.3 The MOH and the IPSS dominate the health sector in Peru. Together they provide care to more than half the population and account for about 85 percent of the hospital beds, health centers, and health posts in the country. According to the 1991 LSMS, the modem private sector serves about 20 percent of the population. The rest of the population--not covered by the public or private sectors--almost 30 percent of Peri's total population, either use traditional healers or no care at all. The growth of the public and private sector health care delivery systems has been heavily influenced by the country's social and political forces and the health policy initiatives discussed in Chapter III. 4.4 In global terms, the availability of health sector resources cannot be considered a constraint to meeting the health care needs of the Peruvian population. The number of hospital beds, 1 per 726 population, and doctors, 1 per 1,000 population, exceed international standards and would be more than adequate if equitably distributed and evenly available. The maldistribution of health sector resources is one of the principal reasons that a significant portion of the population does not have access to health services. Lima has 70 percent of all doctors, 48 percent of hospital beds, and 30 percent of the population. In 1993, there were 31,673 beds in public and private sectors. The tendency in the public sector to emphasize the production of infrastructure rather than services became marked during the 1980s, when the number of health facilities increased despite the economic crisis and the steady decline in personnel and complementary inputs such as supplies and medicines. Between 1982 and 1990, 27 new hospitals were constructed and the number of beds increased by 11 percent (3,293 beds). The 22 number of health centers and health posts also increased substantially during this period (Annex III, Table 3). Ministry of Health 4.5 The MOH was established in 1935 to address health issues related to public sanitation and the control of epidemic diseases, which were regarded at the time as important potential constraints to Peru's entry into a thriving international market. These efforts were supported by the Pan American Sanitary Bureau (now called the Panamerican Health Organization or PAHO), which was founded in 1902. The health services infrastructure, including the charity hospitals and the small number of publicly supported health centers and health posts, did not change radically during the first thirty years after the establishment of the MOH. During the 1960's the country was divided into 57 health regions, the hospitals were nationalized, and i 1986, departmental health units, which evolved into health regions in 1991, were created. 4.6 The most recent configuration of the MOH system is shown in Figure 1, Annex III. About one-third of the MOH budget is delegated directly to the regions by the Ministry of Finance, a situation that places these funds beyond the influence and control of the central MOH. About 73% of these funds are used to pay personnel. The regions have used a substantial portion of these funds to hire additional administrative personnel; the growth of the regional personnel budgets has been mentioned as a government-wide phenomenon in recent years. MOH officials at the national and local levels cite two key reasons for the limited effectiveness of the health regions: the role of politics in the appointment of many of the regional health administrators who have no accountability for the production of health care, and the high level of turnover of these officials. On the other hand, the well-conceived vertical programs which provide technical and logistic support from Lima, such as the tuberculosis control program, have been able to achieve excellent results with extensive use of and cooperation from the ministries regional staff (see Annex III, Box 1). 4.7 The resources managed by the MOH remain under the control of a highly centralized bureaucracy in Lima. The lack of involvement of the municipalities which have no health budgets, and the regions in diagnosing problems, identifying community health needs, and in planning, budgeting, implementating, and evaluating results places an even greater burden on the center. High turnover of key staff in the MOH, many of whom are the political appointees of the incumbent Minister, creates problems of continuity because the average tenure of the Minister of Health has been about one year. Under these circumstances, it is difficult to maintain the commitment of MOH staff. Peruvian Social Security Institute (IPSS) 4.8 The IPSS was founded in 1936 to provide pensions, compensation for work-related accidents and health benefits for the burgeoning urban industrial labor force of blue and white collar workers. Benefits were based on fixed contribution rates described in Chapter III. The IPSS is both financier and provider of health care to its affiliates, who numbered about 3 million 23 in 1992. The benefits are comprehensive in that they provide treatment for almost every health condition, from minor dental care and preventive services such as prenatal care and family planning to intensive medical and surgical interventions for cancer, AIDS, and heart disease. There are some nominal fees for medicine. The system also provides a subsidy to workers on medical leave, which in maternity cases extends through the lactation period. The IPSS medical program was operating at a deficit even before the general economic recession of the 1980s. Its difficulties were attributed to widespread failure to collect contributions, high administrative and personnel costs, and inefficient hospital services. 4.9 In July 1992, the monopoly of the IPSS was eliminated and workers were free to choose pension and health plans outside the current system. In preparation for this change, the IPSS strengthened its administrative capacity and made substantial investments in medical equipment and infrastructure. While the pension plan system is open and economically accessible to the majority of the affiliates, various estimates of the proportion of IPSS beneficiaries who could afford private health insurance indicate that the market would not exceed 1.5 million affiliates and their dependents, which is equivalent to about 6 percent of the Peruvian population. It is still not clear how this new health insurance system would function, and fears have been expressed that if the highest income groups leave the IPSS, the system may no longer be financially viable for the lower income affiliates. One alternative is for private sector insurance to complement a basic benefit package offered by IPSS, a situation that in fact reflects the current practice of many IPSS affiliates. Alternatives for the reform of the IPSS and private sector health insurance systems have not been subjected to thorough analyses. The Private Sector 4.10 As the output of medical schools has increased, the private practice of medicine has attracted a large number of physicians, some of whom have established group practices and clinics that provide inpatient and outpatient care and a full range of basic diagnostic services. The emphasis is on curative care. Private practice was traditionally limited to the urban middle and upper classes and most private sector health services were located in areas convenient to these population groups. More recently, there is a trend to enter the previously unserved, low- income urban areas. A small number of prepaid care plans have also been developed in an attempt to serve the lower-end market. The glut of physicians in Lima and pressure from insurance companies to control costs suggest that these and other new strategies will be tested by the private sector in the near future, and that eventually part of the traditional fee-for service arrangements still favored by physicians will be replaced by other models. 4.11 Despite these innovations, the private health insurance market in Perfi is still limited. It was so small before 1975 that the public regulators of the insurance industry reported very little on its activities. In the late 1970s and early 1980s, the industry expanded rapidly in response to several factors: the emergence of a market for group health insurance in a number of the large corporations; the limited coverage and unsatisfactory quality of the social security system health services; and the economic recession, which led to a deterioration in the quality of MOH services. The largest companies in Perd traditionally provided limited health care at 24 the work place that was usually restricted to the employee. Thus, there was a latent demand for private insurance for workers' family members. The economic crisis also stimulated the growth of the private insurance industry, because corporations preferred to provide additional benefits in lieu of wage increases. In order to control costs and reduce risks, companies developed a standard fixed fee schedule, described in Annex III, paragraph 9. The system was abandoned during the period of hyperinflation, but provides a precedent for controlling the prices and utilization of health services. 4.12 Between 1977 and 1992, health insurance increased its proportion of total insurance industry premiums from 1.86 percent to 15.55 percent. Its coverage of the population probably peaked in 1989 or 1990, when there were about 500,000 beneficiaries. Since then, the market has shrunk by almost 40 percent, to include about 300,000 individuals, of whom 90 percent live in the Lima Metropolitan area. The privatization and structural adjustment programs of the current government could reduce the private insurance market further, as the large formerly public enterprises reduce the size of their labor forces. On the other hand, economic growth is likely to stimulate an increase in the demand for private health insurance. 4.13 The IPSS response to increased competition from the private sector in recent years has been to make major investments in hospital infrastructure and equipment and to improve the quality and variety of medical interventions, with an emphasis on the more sophisticated, high technology diagnostic and surgical interventions. Open heart surgery and other complex medical procedures are being sold to affiliates and the private sector on a free-for-service. IPSS doctors now make house calls as part of the IPSS primary health care benefit program. The ability of the IPSS to maintain these services and to compete with the MOH and the private sector in the provision of high-end medical services is still unknown. 4.14 There is a strong incentive for the private insurance companies to look to the affiliates of the social security system for future business. These beneficiaries, numbering almost 7 million, many of whom are salaried employees, represent an attractive market. The IPSS is already buying services from the private sector on a minor surgery program developed to reduce the IPSS backlog of patients who were in queue for up to three months awaiting surgery. The use of private clinics permits the IPSS to dedicate its tertiary-level hospital resources to the provision of tertiary care. C. The Production and Use of Health Services Production 4.15 Important problems related to equity, quality, and efficiency in the production of health services are manifested in the low level of utilization of ambulatory care centers for routine health complaints, uneconomic hospital occupancy rates and an average length of stay which is often in excess of ten days despite the predominance of routine obstetrical care, complications of abortion, and intestinal infections among the leading causes of hospital discharge. Better use could be made of existing hospital facilities by reducing average length of stay and charging 25 modest fees to reduce excess utilization, particularly by middle-income and insured patients. Planning for hospitals, one of the most costly health sector investments, has been uncoordinated. This is one of the principal reasons for the MOH-IPSS duplication of infrastructure, especially in the Lima-Callao area, which contains more than 50 percent of all of Peruvian hospital beds. 4.16 A long history of inadequate public sector health facility maintenance was aggravated during the economic crisis by the serious decline in funds available for this purpose. Between 1985 and 1990, there was a 56 percent reduction in non-personnel expenditures in the MOH. The shortage of medicines, supplies and materials resulting from reductions of this nature usually require the patient to purchase the necessary inputs. For low-income families, this is often impossible. Worker strikes reduced the productivity of the public health system still further. In 1990, 25 percent of working time was lost to strikes. The poor condition of buildings and equipment; lack of water, electricity, and adequate means of waste disposal (even in hospitals); and inadequate staffing of MOH facilities have also contributed to low production levels. In some areas such as the slums of Lima, chronic water shortages force health facilities to rely on water stored in large oil drums. The possibility of maintaining a safe water supply under these circumstances is low to nonexistent. 4.17 While the population ratios for key health professionals have improved since 1980, the doctor/nurse ratio has worsened slightly. The preference of university students for careers in medicine, which is more prestigious than nursing, has been a longstanding problem throughout the Latin American region. It is of particular concern in a country with such a large low-income rural population that has limited access to health care. The feasibility of attracting doctors to the rural areas is low, and the production of nurses and midwives of both sexes who might be more willing to provide care outside the major urban areas, is unlikely to fill the gap. 4.18 In 1991, the MOH continued to dominate the health sector with almost 85 percent of all infrastructure, but no longer provided most of the health care. The MOH, IPSS and the private sector each accounted for almost one third of the approximately 30 million medical consultations (1.5 per capita) provided in a year. This is about one third of the average number of consultations for countries in the LAC Region (See Annex III, Table 1.). A large community of relatively small NGOs provided about 10 percent of consultations, primarily through community-based services. Medical professionals tended to combine work in the public and private sectors; in 1990, only 25 percent of doctors employed by the public sector worked there exclusively. Utilization of Health Services 4.19 The economic crisis of the 1980s generated a complex shift in the demand for health care caused by: (i) public disillusion with the services offered by the MOH and IPSS; (ii) an increase in the supply of doctors and the establishment of small private clinics in urban areas which organized their own health financing plans in the manner of health maintenance organizations; (iii) the growing market for supplemental health insurance in urban areas; and (iv) the search 26 by enterprises for additional worker benefits to compensate for an inability to raise salaries during the economic crisis. 4.20 There was a shift in health-seeking behavior during the economic crisis, with each income group defaulting to the next lowest or less expensive level of the health care delivery system in an effort to economize on health care expenditures. The data on household consumption indicate that for the poorest households, health care became an unaffordable luxury. Some families whose affiliation with the IPSS lapsed because of periods of unemployment sought care in MOH facilities. 4.21 The principal beneficiaries of public expenditures on health are not the lowest income groups in Peri. The 20 percent and 40 percent of households with the lowest incomes receive only 3 and 10 percent, respectively, of public expenditure on health services, while the highest income group receives 45 percent. There is a close correlation between income level and the extent to which each of the resources of the health sector is used. The upper and middle-income groups tend to use the private sector for medical consultations and hospital services to a much greater extent, while the lower income and rural population groups are more likely to use public health ambulatory facilities, the informal sector, or no care at all. 4.22 The uneven utilization of health services according to income level extends to the maternity services of the public health hospitals, where even minor cost recovery schemes may represent an insurmountable barrier for the poor. In 1986, a normal delivery in the principal public sector hospitals of Lima required a patient contribution equivalent to 25 percent of a minimum wage; in 1990 the contribution requirement had risen to 79 percent. Although the number of births increased by about 7 percent during the period, the number of deliveries attended in the public hospitals fell by about 10 percent. To the extent that this resulted in a large number of unattended deliveries, it contributed to a deterioration in health conditions. As families spent more of their income on basic necessities, overall expenditures on health care dropped from 3.9 percent to .5 percent of total expenditures for middle income families and from 5 percent to .1 percent for the lowest income families. Since 1990, cost. recovery in the hospitals of the Lima-Callao area have risen by 40 percent. Cost recovery in the hospitals can help to reduce the overutilization of expensive health care resources when alternative services are available at a lower cost. However, the poor must be protected from the regressive effects of a cost recovery policy that is applied evenly to all patients regardless of income level. 4.23 The shifts in the IPSS and the private sector to increased dependence on outpatient care for the provision of many diagnostic and therapeutic services reflects trends in other countries where concerted efforts to control costs are already underway (Box 4.1). Given the high cost of hospital care, experience with the performance of complex diagnostic studies and routine surgical interventions on an outpatient basis should be evaluated with a view to modernizing patient treatment protocols and reorganizing health services to reflect technological improvements and changing health care needs. Cost savings can be used to finance more care and can contribute to the investments needed to meet the health challenges of the future. 27 D. Advancing the Reform of the Health Sector 4.24 There are significant gaps in the information on health sector expenditures and the use of health services. These gaps prevent the public and private sectors from developing a good understanding of the distribution and use of health services and resources. This information, if available, could provide important clues to the determinants of changes in health status and utilization patterns, which could be used to guide planning for the sector. 4.25 If progress is to be made in the reform of the health sector, the health institutions that have been seriously weakened by the political and economic stability of the past will need to be strengthened. Public policy statements indicate that the technical ministries such as the MOH are expected to develop their capacity to set and enforce standards and norms, monitoring and regulatory systems through which standards will be maintained and the public interest protected. In the health sector, the development of health service protocols designed to improve patient management and clinical care must be added to the agenda. This does not mean that the burden for accomplishing these tasks should be borne entirely by the public sector. Universities, think tanks, professional organizations, and representatives of the major providers of health care should be involved in this process and assume some responsibility for advances. 28 Box 4.1 Hospital Functions and Organizational Profile Traditional and Prospective Traditional Prospective Community Disease Profile Community Disease Profile Infectious diseases, polio, tuberculosis, Trauma, chronic degenerative diseases - cancer, pneumonia, etc. heart disease, diabetes, cerebrovascular disease, chronic respiratory diseases, AIDS and TB All services provided on hospital campus Services provided by a dispersed network of facilities Emphasis on rest and recuperation, or custodial Services offered at hospital campus care during final stages of illness; some hostel Treatment of trauma, emergency and unscheduled care for end stages of illness provided at home. care, management of acute episodes of illness All diagnostic, surgical and therapeutic care related to chronic and infectious disease, complex provided on an inpatient basis. Social services, surgical interventions supervision of home and community care Services which will be provided by the dispersed provided independently by visiting nurses network of facilities - associations or other charitable or non- Convalescent and rehabilitative care, hostel care governmental organizations for end stage of illness, surgery, therapy, electronic monitoring, diagnostic imaging, lab testing, social services, supervision of home and community care Teaching medicine and nursing, research Teaching medicine and nursing, research Hospital Department Configuration Traditional Prospective Departments divided by age, gender, therapy, Departments divided according to the intensity of surgical or medical care required - intensive, recuperative, minimal care Personnel, beds, technology and other hardware Personnel and technology allocated according to divided by department, with some sharing the level of care required Source: Compiled from information in Goldsmith, J., "A Radical Prescription for Hospitals", Harvard Business Review, May-June, 1989. V. HEALTH FINANCING A. Introduction 5.1 The Peruvian economy experienced its worst social and economic crisis between 1987 and 1990. The gross domestic product (GDP) fell by more than 25 percent and per capita income was similar to that observed at the beginning of the 1960s, approximately US$1,200. A drastic reduction in the level of real central government revenues, which began in the early eighties, resulted in declining levels of real government expenditures. Central government revenue/GDP ratios declined from about 18 percent at the end of the 1970s to an all-time low of 8 percent in 1991. The ratio of expenditures to GDP followed a similar trend, declining from 20 percent at the end of the 1970s to 8.5 percent in 1991. In the decade from 1981 to 1991, the level of government expenditure was cut in half, and per capita central government expenditures of $US115 were less than one third their 1980 level. 5.2 These dramatic ;n Peri's economic conditions and in the living standards of the population have led : changes in the level and composition of national expenditures on health. Tis chapter and Annex IV review the effect of these changes on the financing of health care in Peri during the 1980s and early 1990s. They focus primarily on the major public sector institutions, the MOH and the IPSS, the trend in the level and composition of the national expenditures on health services, patterns of expenditure and financing of government health programs, and estimates of inequalities in health expenditures. Some observations related to the distributive impact of central government health programs conclude the chapter. B. National Health Expenditures: Level, Composition, and Trends 5.3 In the Latin American region, Perf has the lowest (less than one percent) government health expenditure/GDP ratios. Only a few countries, among them Bolivia, Ecuador, Guatemala and the Dominican Republic, spend as little or less than Perd. The low level of government expenditures on health is partially explained by the low and declining level of government expenditures as a proportion of GDP and by the decline in the proportion of the central government budget allocated to health. During the 1980s, MOH expenditure as a proportion of GDP was about one percent. It declined to 0.7 percent between 1987 and 1990, and fell still further during the economic adjustment period, to 0.4 percent in 1991 and 0.7 percent in 1992 (Annex IV, Table 1). 5.4 The health sector budget is dispersed across several government entities. The principal budget is the regular budget of the MOH, which in 1994 amounted to about 445 million soles, or about US$205 million. The 1994 budget was equal to 2.75 percent of the central government budget. Operating costs accounted for slightly over 85 percent of the budget, and investment costs for 14 percent of the total. In 1994, 83 percent of the budget 30 was from the Treasury, 9.8 percent from other Treasury funds which include bilateral assistance, and 6.7 percent is the external debt incurred by an Interamerican Bank loan. The MOH hospitals, labeled the "Integrated Health Services" received about 45 percent of the total operating budget in 1994. The central administration received 25.8 percent to finance administrative costs plus the special health programs which include the endemic disease control programs. This represented a considerable reduction from the 49.3 percent share received by the latter in 1992, and may reflect an adjustment in budget categories, or the use of other resources, such as those of FONCODES, for some of the special programs. Because the MOH budget is a traditional line item budget, it is not possible to determine the amount allocated to priority programs or to define the relationships between budgetary allocations and priority programs (See Annex IV, Table 7). 5.5 The health regions and departments received a total of US$120 million in 1994, which represents more than 35 percent of the public sector funds available for the health sector, 14 percent of the budgetary allocation to the regions, and 1.4 percent of the total federal budget. The arrangements for the execution of the regional budgets in 1994 were unclear because the new Constitution did not include any guidance on the structure or functions of the regions. Government policies related to decentralization may not be addressed until after the new administration has taken place. The central and regional budgets provide the equivalent of about US$14 per capita for health services of all kinds. The allocation, commitment and disbursement of these funds outside the traditional channel of the MOH reduces the ability of the MOH and the Ministry of Economy and Finance (MEF) to ensure that national priorities are considered or that resources are used efficiently. 5.6 The distribution of MOH expenditures between regions of the country is very uneven; the Departments which have the highest per capita budget are Moquegua (42 soles, about US$19), Tacna (38 soles), and Madre de Dios (37 soles). At the other extreme, Cajamarca (7 soles) and Piura (8 soles), have the smallest per capita budgets. The adequacy of the resources allocated by the MOH can only be assessed if other resources are also considered, such as those of the MOH special programs, the Institutes, the hospitals, FONCODES and the other programs of the Ministry of the Presidency, the activities of the social security system, the bilateral and multilateral organizations, the non-governmental organizations, and the private sector. 5.7 According to the 1994 Budget Law, the funds generated by the MOH through its cost recovery efforts are to be administered by the health services, which are responsible for reporting on a quarterly basis on their use. However, the medium-and long-term treatment of these funds should be reviewed. The larger, more complex health services which have more potential to generate fees for services should receive a declining share of funds from the Treasury. The Treasury funds should then be redirected to the health centers and health services that have less cost recovery potential, and to the poorest areas and population groups. 31 5.8 In 1993, the central government authorized a budgetary program to target social expenditures, Programa Presupuestario de Focalizaci6n del Gasto Social Bdsico, and allocated an additional US$70 million to the Ministry of Health in 1994. The program financed the rehabilitation and reequipment of more than 2,000 health posts and 600 health centers, introduced a referral system and extended working hours, improved epidemiological surveillance and delegated some administrative responsibilities to the community. The close links between "hardware" and "software" elements of the program are an unusual feature of this investment program. Implementation is supported by supervision from a multisectoral commission coordinated by the MEF and by assistance from the IMF, which has been working with the MEF to improve the information system for the management of the public investment program. The timely release of funds was critical to the success of this exercise. By the first quarter of 1995, the MEF was satisfied with implementation progress of the MOH, based on the expenditure data for the first six months of the program, which began in June 1994. C. Social Security System Expenditures 5.9 Since 1936, social security programs have been financed through payroll taxes earmarked for specific uses which are primarily health insurance, pensions, and compensation for work-related accidents. Total payroll deductions to finance health insurance and the pension plan amount to 18 percent of the monthly wage (Annex IV, Table 10). In addition, workers may be enrolled in a work-accident insurance program. Contributions to this program range from 1 percent to 12 percent of the wage. There is a floor wage to establish the minimum contribution required to enroll in the social security system and.a maximum insurable earnings ceiling defines the maximum contribution of high income workers. Both minimum and maximum contribu-ions are defined in terms of Lima's legal minimum wage. Independent workers may also enr, - in the system; contributions equal to 9 percent of wages for the pension plan and 9 per...nt for the sickness and maternity program are required. All contributions are based solely on the level of worker income; no adjustment in the contribution rate is made for the worker's marital status, family size, number of children or number of dependents covered by the health insurance program. 5.10 In 1992, legislation to privatize the IPSS pension plan was approved. This reform of the social security system introduced the principle of complementarity. A large share of social security contributions are transferred to employees who may choose to use part of their contribution for capitalization in privately managed pension funds (AFPs, Administradoras de Fondos de Pensiones), and to purchase health insurance from private health services organizations (OSS, Orgnizaciones de Servicios de Salud). These organizations will be regulated by a special superintendency. A National Provisional Directorate of AFPs was established in March of 1993 by the Ministry of Economics and Finance (MEF) to implement the collection of pension contributions and assets held by the IPSS pension program and transfer to the new intermediary institutions. The IPSS suspended the collection of pension funds and payments, however, since the new Directorate was not in place, an informal 32 agreement was worked out to allow IPSS to continue collection of worker contributions and payment of pension benefits. D. Disparities in the Distribution of Health Expenditures 5.11 There are substantial regional disparities in the allocation of health facilities and personnel which are reflected in the allocation of financial resources. There is a strong positive correlation between the average income of a department and hospital discharges, the percentage of the population covered by the social security system, and the number of consultations per capita. There was no improvement in these regional inequalities between 1981 and 1990 (Annex IV, Table 10). A health map of Perd which was prepared by the Central Bank in the 1980s ranks the Departments according to the health status of the population, sanitation, the availability of health personnel, the coverage of basic immunization programs, and accessibility to health services. The worst health status indicators were found in the eight Departments of the Sierra region: Ayacucho, Puno, Apurimac, Cajamarca, Cuzco, Huancavelica, and Huanuco, and Amazonas, which includes a large amount of territory in the Sierra. These departments also had the highest deficits of health resources and health services and the lowest immunization program coverage. 5.12 The Gini coefficient for the distribution of the population according to their access to health services and sanitation revealed that the highest level of inequality (0.51) was in the distribution of doctors. The only resource which was more evenly distributed was that of auxiliary personnel. In general, the more expensive resources such as physicians, specialists and hospital beds, tend to be more concentrated than cheaper ones. In 1990, Lima, with 30.2 percent of the population, accounted for 69.2 percent of the doctors and 48.5 percent of the hospital beds. 5.13 The 1984, 1991, and 1994 Living Standards Measurement Surveys (LSMS) provide a wealth of information which links the health status of the population, health care-seeking behavior, and household expenditures on health. There are striking differences in the reported morbidity of adults and children and in care-seeking behavior which correlate with income level. The poor report less illness than the rich, except for children, whose morbidity level is twice as high among the lowest income groups. The rich are also more likely to seek health care or purchase drugs than the poor; almost 60 percent of those who reported an illness or injury sought care, compared to only a third of the poor who reported illness (Annex IV, Table 11). The amount and share of household expenditures for health is also vastly different between rich and poor (Annex IV, Table 12). Preliminary results of the 1994 LSMS indicate that care-seeking behavior and the order of magnitude of variations in expenditures on health have changed very little since 1984. 5.14 A study of the distributive impact of IPSS expenditures on their Maternity and Sickness programs in 1992 found that the largest number of beneficiaries were in the lower 33 and middle-income groups, those in the second and third quintiles of the income distribution. While the contributions to the IPSS of these two income groups represented 18.6 percent of total contributions, they received close to 42 percent of health benefits as represented by program expenditures. However, because of the low share of medical expenditures as a share of the household expenditures of these groups, the overall distributive impact of these subsidies was minimal. 5.15 A 1990 survey of health service utilization patterns by income group and type of provider in Arequipa, Perfi's second largest city, is consistent with the findings of the LSMS and IPSS. . The survey revealed that the MOH was the largest provider of health services and that the majority of its clientele were from the low-income population. The IPSS provided services to the middle income groups, and the largest users of private care were the high- income groups. In Arequipa, about 12 percent of the population was protected by private insurance, which was complementary to the compulsory IPSS contribution. One-third of those receiving services at MOH facilities were covered by some type of medical insurance, yet no reimbursement mechanism was in place which would allow the MOH to charge for the services provided to these individuals. E. Improving the Efficiency and Equity of Health Spending 5.16 Given the level of expenditures on health-related goods and services, there is ample scope for reforms at the sectoral and institutional levels, which should focus on improving the efficiency and equity of spending on health. Several actions have the greatest potential to to improve access to care, reduce unnecessary spending, and increase productivity in the health sector. These actions include establishing priorities for public sector spending that focus on preventive and basic curative care; targeting public sector expenditures to the poor; regulating the sale and use of health insurance, prescription drugs, medicines, medical equipment and medical appliance; and improving quality of care by combining the introduction of efficiency and quality improvement measures with regular monitoring and evaluation which measures health outcomes. 5.17 It is unlikely that a significant amount of additional resources will be available for the health sector in the absence of further economic growth. Nevertheless, the considerable resources available in the private sector, when coordinated with those of the public sector including the IPSS, could be more efficiently channeled to reduce the subsidy of health care for the upper income groups, which use a significant share of the resources of the public health hospitals free of charge. One alternative would be an insurance scheme that would ensure the poor access to a minimum package of health services, with transfers to service providers made on the basis of services rendered with pre-established rates, capitation, or global budgets. The level of public subsidy of the services would be based on the socioeconomic level of the population served. ANNEXES ANNEX I: THE DEMOGRAPHIC AND EPIDEMIOLOGICAL TRANSITIONS A. Demographic Trends Figure 1: Population of Peru and Metropolitan Lima Census 1940-1961-1972 and 1991 22.5 25.0 17.7 20.0 13. 15.0 7.1 10.2 10.0 4.8 6.6 5.0 a 7 1940 1961 1972 1981 1992 O PERU W MeOPOlitan Ume Figure 2: Demographic Transition in Peru 1890-2020 Rate per Thousand 40 Crude Birth Rate 5o C----------Rate - - - -.---- 30 10 Crude Oeatt Rate 0 1890 1900 1920 1940 1960 1980 2000 2020 Year Source: Consejo Nacional de Poblaci6a 36 Figure 3 Population of Peru 1940-1981 AGE y * _1981 8o-a4 Q 1972- 75.79 16 7.74 -14 5-69 1 0-144 LZLILO J .7 . .4.3 .2 1 0 0 .1 .2 3 A J- A .7 J LO1 .1LZ •MTT ONS Source: Consejo Nacional de Población 37 Figure 4 Population of Peru 1985-2025 2Ls AGE 75-79 ------ 985U71. u L7 L L5 L4 L3 L2 LI LO Z .7 4 2J . 3 1 1 La u LZ L4 L4 U]:åLL67 MELLIONS Source: Consejo Nacional de Poblaci6n 38 Table 1: Demographic Characteristics of Peru 1960 1970 1980 1990 Birth Rate 47 41 37.6 27 (per 1000 pop) Death Rate 19 14 11 8 (per 1000 pop) Infant Mortality Rate 163 108 83 53 Annual Population Growth 2.8 2.7 2.7 1.9 Rate Life Expectancy 48 58 58 64 (in years) Total Fertility 6.8 6.0 5.2 3.8 Rate Urban Population (%) 47% 59% 65% 71% Total Population 9.9 13.5 17.0 21.9 (in millions) Source: World Bank, Consejo Nacional de Poblaci6n Table 2: Population by Age Cohort (per cent of total) Year 0-14 15-64 65 + 1940 42.0 51.5 6.4 1961 43.3 53.3 3.4 1991 37.7 58.6 3.7 2000 33.6 61.8 4.6 2010 28.7 66.3 5.0 Source: World Bank 39 Table 3: Demographic Data by Department Infant Birth Mortality Mortality Rate Rate Department Region' 1992 1992 1992 Callao C 49 22.8 4.7 Lima C 52 23.2 5.0 Ica C 56 27.8 5.9 Arequipa S/C 66 26.9 6.6 La Libertad S/C 62 29.1 6.3 Tacna C 66 24.6 6.8 Moquegua S/C 66 25.1 6.6 Tumbes C 66 28.6 6.1 Lambayeque C 66 29.9 6.7 Loreto J 77 34.2 7.4 Junin S/J 86 32.0 9.2 Madre de Dios 1 80 30.1 11.0 Cajamarca S/i 88 34.0 9.5 San Martfn J 72 36.3 6.8 Ancash S/C 78 31.1 8.6 Amazonas J/S 82 33.8 8.3 Ucayali J 77 34.4 7.3 Huanuco S/i 87 35.5 8.4 Piura C/S 87 32.2 8.8 Pasco J/S 90 35.4 9.3 Apurimac S 109 34.1 15.2 Puno S 106 31.8 12.3 Ayacucho S 107 33.8 12.6 Cuzco S 117 34.0 12.9 Huancavelica S 121 36.5 14.1 National 76 29.0 7.6 Footnote' Regions C-Coast; S= Sierra, J= Jungle Sources: INE, CELADE, MOE, CNP Instituto Cuanto, OPS 40 Table 4: Population Distribution by Natural Regions Region 1940 1961 1972 1981 Coast 28.3 39.0 46.1 50.0 Sierra 65.0 52.3 44.0 39.4 Jungle 6.7 8.7 9.9 10.6 Total 100 100 100 100 Source: CNP Table 5: Population Growth Rate of Lima 1940 - 2000 1940-60 1960-70 1970-80 1980 -90 1990 -2000 5.1 5.5 3.9 3.1 2.5 Source: Consejo Nacional de Poblaci6n. Peru Table 6: Labor Supply by age Cohort (in thousands) Age Cohort 1990 1995 2000 2010 15 - 19 2343 2560 2683 3097 20 - 24 2091 2319 2538 2863 25 -49 6453 7577 8780 11113 50 - 64 1753 2005 2324 3349 15 - 64 12640 14461 16325 20422 Source: World Bank Population Projections 41 Table 7. Desired and Actual Fertility in Peru - 1992 Characteristics Desired Family Actual Family Size Size Urban 1.7 2.8 Rural 3.0 6.2 Lima 1.5 2.1 Coast 2.2 3.3 Sierra 2.3 4.9 Selva 2.9 5.1 Women W/N Education 3.7 7.1 Women W/Secondary Education 2.0 3.1 Source: Demographic and Health Survey, 1991-92, INEI, PRISMA, Macro Int'l. Inc. 1992. 42 B. Epidemiological Trends 1.There is enormous variability in health conditions and in the health status of the Peruvian population which are determined by the combined effects of geography, environment, social and economic conditions. This translates into substantial differences in life expectancy, infant mortality, fertility, and disease incidence and prevalence. Epidemiological data should be interpreted with caution, as the population covered by the reporting districts does not always reach 100%, and may drop below 10% in remote areas of the jungle and the Sierra. In 1984, the epidemiological reporting system was estimated to reach about 76% of the total population, with 95 % covered in Lima and only 8% covered in Puno. In 1990, registration of communicable diseases was estimated at only 50%, a reflection of the deterioration of the reporting system during the economic crisis (See Table 8). The decentralization of some of the responsibility for data collection to the regions have made some data less readily available at the central level, and reporting is uneven. Since 1990, efforts have been to improve the disease reporting system. The weekly epidemiological bulletin on communicable diseases is prepared on a regplar and timely basis by the MOH, and provides current information on the major contagious diseases. To the extent that the population has access to the formal health system, the reporting of communicable diseases can now be considered reasonably complete and reliable. Table 8. Coverage of Communicable Disease Reporting System 1971 - 1990 Year National Coverage 1971 52.7 1974. 56.4 1977 66.9 1981 69.1 1984 75.4 1990 50.0 Source: ANSSA, MOH Infant Mortality 2.The steady decline in infant mortality in recent decades, from 163/1000 live births in 1960 to 52/1000 in 1992, can be attributed to the combined effects of reduced fertility, an increase in the average age at first birth, which is now 22.5 years, the interval between births which has increased to almost 30 months, and increased female literacy. In addition, the expanded 43 program on immunization reduced the death toll from childhood diseases such as measles, diphtheria, polio and whooping cough. Nevertheless, the majority of infant deaths are from preventable causes; sixty percent are from acute respiratory infections. Of the 17,000 registered deaths caused by respiratory infections, 16,000 were children under one year of age. This represents more than half of all infant deaths in a single year. Diarrheal disease and perinatal conditions also figure prominently among the causes of infant death. Every department in Peru has areas where infant mortality exceeds 100/1000 live births; the infant death rate is three times higher in Huancavelica than in Lima and Callao, and reaches 184/1000 in the poorest areas of Cuzco. Pregnant women and infants are adversely affected by hypoxia (oxygen deficiency in the tissues) in high altitudes. Hypoxia may also inhibit height and weight gain during late childhood and early adolescence. Some of the risk factors for maternal mortality are shown in Table 13. Acute Respiratory Infections 3.Acute respiratory infections (ARI) are the leading cause of morbidity and mortality for all age groups over one year, the leading communicable diseases reported, and among the ten leading causes of hospital discharge in Peru. The rate of infection reported increased from 1178 cases per 100,000 population in 1985 to 2686/100,000 in 1990, then subsided somewhat to 1581/100,000 in 1992. Approximately one third of infant deaths are attributed to acute respiratory infections, and between ten and fifteen percent of mortality of all age groups is linked to acute respiratory infections. There is a broad range of bacterial and viral infections which together are classified as acute upper and lower respiratory infections. Their diagnosis is generally based on a combination of epidemiologic, radiologic, and microbiologic data, clinical history and physical examination. While the treatment of pneumonia, which in Peru accounted for about ten percent of reported cases of ARI in Peru, would clearly reduce mortality, it is the prevention of pneumonia, particularly among young children, which will contribute most to reductions in mortality from ARI. 4.Although the overall incidence of ARI in the less developed countries is similar to that observed in the industrialized countries, the risk of mortality from pneumonia is higher in countries like Peru because of other risk factors such as nutritional and socioeconomic status, immunization coverage, and access to health care. Because ARI is often associated with the vaccine-preventable respiratory diseases, measles, diphtheria, pertussis and tuberculosis, a program to expand immunization coverage could be expected to contribute to reductions in mortality from ART. Diarrheal Diseases 5.Diseases of the gastrointestinal system are the second leading cause of morbidity and mortality for all age groups in Peru. The high prevalence rates have been confirmed in a 44 series of demographic and health surveys and household consumption surveys which include questions related to health complaints. Morbidity caused by acute diarrheal disease is significantly higher than during the early 1980s, when case rates of 320 per 100,000 population were reported. In the 1990s, over 1,000 cases per 100,000 population were reported. Lima's pueblos jovenes have one of the highest reported rates of diarrhea in the world, estimated at eight episodes per person per year. Over a third of Lima's low income workers miss the equivalent of one day a month of work per month as a consequence of repeated episodes of gastrointestinal illness. 6.Infants and small children are particularly vulnerable to the effects of diarrheal disease. Within a given 24-hour period, about ten percent of all children under five years of age will suffer from a bout of diarrhea. In a two week period, more than eighteen percent will be affected. This translates into an average of eight episodes a year for children under five. In the case of children under five years of age, there seems to have been some decline in the prevalence of diarrheal disease between 1986 and 1992 (See Table 9). Children in the Sierra are twice as likely as children in Lima to suffer from diarrhea, and the risk for children in rural areas is fifty percent higher than in urban areas. Diarrheal disease in urban areas outside of Lima is almost as high as in the rural areas, which suggests that sanitary conditions in the other major cities are not much better than in the rural areas. Table 9: Prevalence of Diarrhea Children under five years of age Age in Months 1986 1992 0-6 19 6-11 43 31 12-23 46 30 24-35 31 18 36-47 24 12 48-59 20 9 Source: Demographic and Health Surveys, 1986, 1992 Table 10. Average Duration of Breastfeeding of Children Under 3 Years of Age, 1991-1992 (in months) Status of Mother Breastfed Exclusively Breastmilk & Breastfed (%) Water (%) Urban 14.2 0.6 0.7 Rural 20.0 2.4 2.7 No Education 21.9 3.1 3.2 Primary 19.3 1.8 2.1 Secondary 14.8 0.6 0.6 Higher 10.3 0.5 0.5 Source: Demographic and Health Survey, 1992 45 The Cholera Epidemic 7.The decline of the Peruvian economy and consequent deterioration of sanitary infrastructure during the long period of economic difficulties fueled the worst cholera epidemic in Peru's history. The epidemic began in 1991, when 322,562 cases and 2909 deaths were reported. In 1992, there were 239,139 cases and 886 deaths. The epidemic was brought under control in 1993 and the incidence of cholera - the number of new cases reported - had dropped from 1436 cases/100,000 population in 1991 to 37/100,000 in 1994 (See Figure 5). Cholera is now endemic throughout Peru. As of March, 1994, over 8,000 cases had been reported for the year, half of them in the Lima-Callao area (See Table 11). While this is considerably below the number of cases reported at the height of the epidemic, it represents a major public health threat and a tremendous drain on social and economic well-being which is completely preventable. Table 11: Cholera in Peru 1992 and 1994 1992 1994' Region Cases Incidence Mortality Cases Incidence Mortality 1992 x 100,000 X 100,000 1994' - x 100,000 X 100,000 Coast 205,620 1,491.06 3.78 Sierra 17,039 249.68 4.02 Jungle 16,480 859.98 4.93 Total 239,139 1,065.2 3.95 8267 36.82 0.33 Source: Ministry of Health 8.The origins of the cholera epidemic and reasons for its rapid spread were not difficult to identify. Nationwide in 1991, 58% of the population had access to water and 42% to sewerage services, but the urban-rural disparity was wide and the quality of service very uneven; 78% of urban residents and only 24% of rural residents had piped water connections. Most of Lima's population had access to piped water and sewerage services, but only about fifty percent of those with service connections received regular service which was uneven in quality. The water authority of Lima could account for slightly more than half the water it produced because of broken and leaking pipes, wasteful use, absence of metering, and an inadequate billing system. Water rationing is used routinely even in major urban areas such as Lima-Callao; a 1989 survey revealed that 30% of the population in urban centers outside the three major cities had water service less than 10 hours a day. More than sixty percent of schools in the country lacked water and sewerage connections. An estimated two million people in Lima were and are eating meals purchased from street vendors who have no access to toilet facilities or fresh water. A survey in 1992 found that ninety percent of food and drink samples collected from street vendors were fecally contaminated. The 1. Weekly epidemiological reports are submitted by Department for operational purposes. Data are aggregated during the year at the national level, at the end of the year by geographic region. 2.January to March 12, 1994 only. 46 epidemic, which was a major setback to the early efforts of the Fujimori government to restart the economy, will abate if sanitary conditions are improved. Figure 5 Colera Epidemic in Perd Weekly Incidence Rates by Geographics Region 0 120- CD z Sorc: i100-f eat >. SELVA 20- .SIEJRRA 19 91 1992 1993 1994 EPIDEMIOLOGICAL WVEEK 91-92-93-94 Source: Ministry of Health 47 Tuberculosis 9.Tuberculosis is a major health problem in Peru. The risk of infection, which ranges from 0.5 to 1.5 percent in the rest of South America, is 2 percent for Peru. The total number of cases and the incidence and prevalence of the disease have fluctuated substantially- over the past fifty years, according to MOH reporting. These fluctuations appear artefactual rather than real, in that they reflect variations in the level of population coverage by the health system, and in the quality and completeness of diagnosis and reporting. Living conditions in Peru facilitate the spread of infection across population groups because of the combined effects of urbanization and the migration and integration of the populations of the Coast, Sierra and Jungle regions. The areas where the incidence of tuberculosis is highest in the 1990s include the Jungle and the Coastal regions of Lima, Tacna and Ica, all of which have experienced significant population growth generated primarily by migrants from other areas of the country. The mortality rate from tuberculosis has declined considerably as a result of more efficient diagnosis and treatment (See Table 12). Table 12: Mortality from Tuberculosis 1943 - 1993 Year TBC Total Rate Respiratory RATE (100,000 pop.) TB (100,000 pop.) 1943 4,593 65.3 3,705 52.7 1950 4,536 57.0 3,544 44.5 1960 3,083 30.7 2,390 23.8 1970 5,079 37.8 4,271 31.7 1980 4,644 26.9 3,905 22.6 1993 n.a. n.a. 465 n.a. Source: Ministry of Health 10.The rate of morbidity from all types of tuberculosis in 1993 was 234.4 cases per 100,000, which is more than twice as high as the rate in other South American countries. The incidence of tuberculosis in children under five years of age almost doubled between 1986 and 1994, from 16 to more than 30 cases per 100,000 population. In adults, the case notification rate rose between 1987 and 1992 from 144 to 243 cases per 100,000 for all forms of TB. Every undiagnosed and untreated person with open pulmonary tuberculosis will infect on average ten to fourteen additional persons every year that they remain untreated. Poverty, overcrowding, especially of sleeping areas, and malnutrition are factors that favor transmission, thus TB is more prevalent among the poor and the inhabitants of urban slums. The government is well aware of the public health threat represented by tuberculosis and has classified TB as a priority program. A recent evaluation of the program by the World Health Organization concluded that it is one of the most effective programs in the LAC Region (See Box 1). 48 BOX 1: TUBERCULOSIS CONTROL PROGRAM IN PERU With an overall cure rate in excess of 85%, the TB control program in Peru is an example of how limited resources can be spent efficiently to reach a well defined objective. Since the re-launching of the program in 1990, the number of sputum exams tripled, and the number of patients treated multiplied by four. The level of efficiency of the program rose from around 70% to the current 85%. This is:the minimum level recommended by WHO in order to reduce the rate of transmission. As a result of an increase in the number of laboratories which can diagnose tuberculosis, earlier and more accurate diagnosis, and systematic screening of patient contacts, the incidence of TB reported to the health system has significantly increased since the beginning of the program and is currently estimated at 234.4/100,000 pop. The key. elements- for the success of the program are: a) government and MOH identification of the problem as a priority; b) strong political and administrative support from within the MOH; c) efficient and transparent program management procedures; and d) the involvement of staff at all levels and patients in the program implementation process. The strategies used are: .-a) expansion and upgrading of the existing laboratory network; b)- introduction of an information system-which facilitate patient registration, follow-up and control of contacts; c) adoption of a short (6:months) treatmen. schedule; d) formation of multidisciplinary groups in the treatment centers in order to identify patients-at risk of defaulting and to provide social and psychological support when needed; e) secure and sufficient supplies of drugs and laboratory materials; f) decentralization of program management:and evaluation;: g) training of staff on all aspects of the program from diagnosis of the disease to management and evaluation; h) intensification of health education and information campaigns; and i) acknowledgement of the intersectoral, economic and. social aspects -of the disease.,:The latter has included activities such as the. organization of support groups which identify employment opportunities for patients and provide food support for patients and their families; awareness-raising activities at schools; and the formation of links with neighboring countries to join forces against the problem. In the near future new strategies will be developed to ensure the continuing success of the program. Operations research, the introduction of coverage and geographic indicators to the program's information system, further decentralization and adaptation of supervision and training strategies, and cooperation and coordination with other health care providers, including the IPSS and the FFAA/PNP are some of- the challenges that the MOH will face. during the next 5 years. 49 AIDS 11.AIDS (Acquired Immune Deficiency Syndrome) is the final stage of HIV (Human Immunodeficiency Virus) infection, which compromises the body's immune system. HIV is transmitted during sexual contact; through perinatal infection from the pregnant mother to the fetus; and parenterally through blood transfusion and the sharing of contaminated needles and syringes. The incubation period for the virus averages 5 - 7 years in the higher income countries and 10 years in the lower income countries. An individual may have few, if any symptoms before the onset of AIDS. Patients usually seek treatment when they begin to develop a wide range of opportunistic infections normally suppressed by the body's immune system. The average survival time for patients diagnosed with the disease is up to three years. To date, there is no vaccine and no effective treatment. In Peru, more than half of all cases are diagnosed during the terminal stages of the disease, when it is too late to prevent transmission to others. 12.In 1983, the first case of AIDS was diagnosed in Peru. Since then, a total of 2116 persons have been found HIV positive, and 50% of them have developed AIDS symptoms. In 1993, the prevalence of HIV infection among the general population was estimated at around 0.17%, which suggests that there are actually between 3,000 and 5,000 cases, many as yet undiagnosed, and between 30,000 and 40,000 carriers. The epidemiological characteristics of AIDS in Peru are similar to those observed in other countries. The majority of the cases reported to date are urban; although cases have been found in all regions, at least 65.5% of all the diagnosed HIV infections up to 1991, and 77% of the autochthonous cases occurred in Lima-Callao. Given the limited coverage of the public health system, the lengthy gestation period and the stigma attached to many of the high risk behaviors which spread the disease, denial, underreporting and difficulty in tracing contacts (primarily sexual partners and drug users) will continue to complicate the government's efforts to identify and diagnose HIV and AIDS and to design and implement programs to control the spread of the disease. 13.AIDS is primarily a sexually transmitted disease in Peru; 90% of reported cases were sexually transmitted. The sharp increase in the incidence of HIV + cases among women suggest that there has been an increase in transmission via heterosexual intercourse. In 1984, only five percent of cases were found among women; by 1993, twenty five percent of those infected were women. The majority of females infected claimed to be in monogamous relationships with their husbands the source of the infection. Homosexual transmission accounts for about 30% of AIDS cases and 15% of HIV infections whereas heterosexual transmission is implicated in 40% of AIDS cases and 60% of HIV infections. Vertical transmission (intrauterine from mother to child) is relatively infrequent, although there has been a sharp increase since 1984. Evidence of widespread transmission of HIV by blood transfusion or by intravenous needle sharing is absent in Peru, although there may be some risk of parenteral transmission in rural areas where prisoners are called upon for emergency donations of blood to accident victims without being tested for HIV or other illnesses. 50 14.Peru's social, economic and demographic indicators match the conditions in which the highest rates of sexually transmitted diseases (STDs) are found. This includes urbanization, the disruption of traditional social structures, high population mobility, a large proportion of the population composed of teenagers and young adults, high unemployment rates, and inadequate medical attention. The highest rates of sexually transmitted diseases are found in urban men and women during their most sexually active years, between the ages of fifteen and thirty five. Given that these age cohorts will dominate the demographic profile of Peru during the next twenty to thirty years, AIDS and other STDs have the potential to become a major public health problem. There is already evidence that the age of HIV infection is declining; one fourth of new infections now occur in individuals who are less than 25 years old. Given the long incubation period, this indicates that most were infected when they were between 16 and 25 years old. Young women are at high risk for AIDS because of the relative fragility and vulnerability of their reproductive tracts. The low status of women, particularly poor women, makes them more vulnerable to unprotected sexual intercourse. 15.The Peruvian Ministry of Health has developed a National AIDS and STD control program which incorporates: (i) decentralization of the program to the sub-regional level; (ii) control of sexually transmitted diseases; (iii) protection of the blood supply in order to prevent blood transmission; (iv) strengthening of the epidemiological surveillance system; (v) development of counseling services; (vi) coordination with the TB control program; (vii) expansion of the social marketing of condoms program (only 3 % of women in stable relationships use them); (viii) protection of individual rights and confidentiality of patient information; and (ix) promotion of research activities. In addition, legislation has been prepared to establish an autonomous national institute for the prevention and control of AIDS and sexually transmitted diseases. If Peru is to avoid an epidemic similar in dimension to that occurring in Africa and Asia, it must make every effort to develop a proactive program approach to raise awareness of the disease and mobilize popular support for an AIDS prevention campaign. The cost of mounting a major effort to treat the victims of an AIDS epidemic would completely overwhelm the Peruvian health system. Women's Health Issues 16.Almost one fourth of Peru's total population consists of women of reproductive age. Women's health status, which determines to a large extent their productivity and contribution to socioeconomic development, is profoundly influenced by their reproductive function and by their status in society. The extent to which women's health issues are addressed is often a reflection of women's status. Women carry a heavier burden of morbidity and disability than men because of their reproductive function; the effects extend to their children and other family members. The lives of newborn children are often at stake as a result of maternal health problems and their mismanagement. Worldwide, the ratio of infant to maternal deaths associated with complications of pregnancy and childbirth is about ten to one. Fewer than ten percent of infants born survive the death of their mother in childbirth. In Peru, as in 51 many other countries, the greatest disparity in health indicators between developing and developed countries is the maternal mortality rate. Peruvian women experience a maternal mortality rate which is three times higher than in other lower middle income countries and fifteen times higher than in the industrialized countries. Table 13. Maternal Mortality According to Risk Group 1986 Risk Group Rate/100,00 0 live births PrimaparaO 303 2 to 4 children 100 Multiparous' 700 Single 600 Married 250 Under Age 20 250 20 - 29 years 100 Over 35 years 500 Source: Peru en Numeros, 1992, CUANTO 17.Women who begin to bear children when they are very young are at higher risk because of their physical immaturity, social and economic status. Changing social values and economic pressures are encouraging girls to engage in sexual relationships at an increasingly earlier age, often prior to entering into formal marriage arrangements. Adolescent fertility is high in Peru in comparison to other Latin American countries. Adolescent childbearing adversely affects the teen mother's future prospects for education and gainful employment and contributes to the entrenchment of an intergenerational cycle of early childbearing and low socioeconomic status. Teen mothers are at higher risk of pregnancy-related complications because of their physical immaturity. The maternal mortality rate of women 15 - 19 years old in Peru is three times that of women 20 - 24 years of age. According to the 1991-92 Demographic and Health Survey, 11% of women 15 - 19 years of age were pregnant or already mothers. Adolescent fertility is influenced by the same geographic and socioeconomic variables as total fertility. In the Jungle Departments of Loreto and San Martin, 30% of women under age 20 are mothers, compared to 4% in Metropolitan Lima, 8% in all urban areas, and 25% in rural areas. In Peru, 39% of illiterate 15 - 19 year old women were or had been pregnant at the time of the survey compared to 3% of women who had completed secondary school. Women who have had some university education have 3. First pregnancy 4. Women who have had more than 4 children 52 their first child seven years later than women with no education. Adolescent contraceptive use is extremely low, even in comparison with other Latin American countries (See Figure 6.) Figure 6: Adolescent Contraceptive Use 4% - 1Z%7 10% 8% - Ever ue 4% - Z%L Source: Populadon Reference-Bureau, 1992 18.Birth spacing, with intervals of at least two years between pregnancies, are considered an essential element of protection for the health of mothers and their children. Children in developing countries who are born after a birth interval of less than two years are, on average, twice as likely to die in infancy as children born after a longer interval. In Peru there is almost a ten month difference in the spacing of pregnancies according to age, residence and educational level. The average birth interval for adolescent mothers was only seven to seventeen months; for women in Lima and women with higher education the birth interval was about 38 months, compared to 28 months for women who lived in rural areas and women with no education. 19.Although Peru has experienced a significant fertility decline in the course of the past decade, information on the factors contributing to the decline is incomplete. This is particularly true in the case of abortion, which was illegal under any circumstances until 1992. Since 1992, abortion has been legal for health reasons and to save the life of the mother, however, patient and practitioner alike are still subject to jail sentences if caught and prosecuted for performing or having an abortion for any other reason. Because of the 53 clandestine nature of most abortions, it was almost impossible to discover the number or ratio of abortions to live births. 20.The most recent estimates of abortions date from 1992 when a series of surveys and an examination of hospital records were combined to estimate levels of induced abortion in six Latin American countries. Peru was found to have one of the highest rates of abortion of the six countries, in excess of 50/1000 women of reproductive age, which amounts to between 275,000 and 300,000 abortions every year (See Table 14). In Peru at the national level, 142.7 abortions per 1000 live births was estimated. The southern Sierra, which is one of the poorest regions of Peru, had the highest estimated rate of abortion, 211.9 per 1000 live births. The average Peruvian woman would have almost two abortions during her lifetime, compared to one in the United States and .2 in the Netherlands. Induced abortion is being used as an important means of fertility control in the absence of satisfactory family planning services, as it is in Cuba and Eastern Europe, where the lifetime abortion rates range from about two in Romania and Yugoslavia to 5 - 7 in the former Soviet Union. 21.One in five women having an induced abortion is hospitalized for complications. The complication rate is estimated at 32% for women under twenty years of age compared to 15% for women 35 - 39 years of age. Forty percent of women hospitalized for complications from induced abortion had two or more previous abortions, which suggests that family planning counseling and services do not routinely accompany treatment for abortion. Half of these women remained in the hospital for two to six days. A MOH study of maternity hospitals in Lima revealed that of 100 maternal deaths, 60 occurred during an abortion, 15 before giving birth, and 25 were caused by abortion complications. Another study showed a lower rate of 25 of 100 maternal deaths resulting from abortion- related infections. Table 14: Induced Abortion in six Latin American countries Unplanned Abortion Number Per 1000 Pregnancies Country and Year Rate' Abortion Births (%) Brazil (1991) 38.1 1,443,339 444 56 Chile (1990) 45.4 138,242 546 n.a. Colombia (1989) 33.7 300,305 352 48 Dom. Rep.(1992) 43.7 58,349 387 55 Mexico (1989-91) 23.3 296,654 207 60 Peru (1989) 51.8 298,098 428 62 Source: Singh, S. and Wulf, D., International Family Planning Perspectives, March, 1994. 5. The annual number of abortions per 1,000 women aged 15 - 49 years of age. 6. The number of abortions is estimated based on biological estimates of spontaneous abortions, a weighted average proportion of all abortions that are likely to have resulted in hospitalization and a Survey of Opinions on Abortion Practice. 54 22.Because of the illegal status of abortions, many women use practitioners with questionable credentials or resort to traditional methods to induce abortion. They may fast for several days or use herbal solutions, which may cause complications. It is estimated that about 47% of women having induced abortions suffer complications and 20% are hospitalized. The deterioration of the hospital reporting system during the economic crisis has made the collection of data more difficult. The average cost of an abortion in the private sector was estimated at $200. Increased access and improved quality of family planning programs should lead to a decline in the number of abortions performed as well as a decrease in abortion-related complications and deaths. In Chile, a 1989 study of abortion and contraceptive use demonstrated a simple correlation between the increased use of contraceptives and a decrease in the number of women admitted to hospital for complications from abortion and a concurrent decline in the mortality rate from abortions. 23.The high rates of abortion and maternal mortality in Peru afford disturbing evidence of the inadequate coverage and low quality of women's health services. Despite the results of .surveys which indicate that the vast majority of Peruvian women are interested in determining the number and spacing of their children, both the public and private sectors have failed to satisfy women's reproductive health needs. The inability of many Peruvian women to obtain adequate family planning services, prenatal care, and medical attention during and after delivery contribute to the unnecessarily high rates of morbidity and mortality from preventable causes. The costs to the health system in the form of hospital and outpatient services and to the women in the form of reduced productivity at home and on the job have repercussions for the entire family. 24.Some of the problems with women's reproductive health services are clearly defined thanks to recent surveys. Although two thirds of Peruvian women express the desire to space or limit the number of children they bear, more than half do not use contraceptives. The most common contraceptive methods used in Peru are rhythm and withdrawal, which are also the least effective methods. There is a high rate of discontinuation of modem methods, with the rhythm method the most popular alternative. The high discontinuation rates may stem from the irregular availability of supplies. Fear of side effects from modem contraceptives is widespread in Peru; 50 - 60% of women believed that the pill causes birth defects and/or increases the risk of sterility. One study revealed that 50% of pill users stopped taking the pill within one year; only 3% of them stopped in order to become pregnant. Half of all pill users in Peru obtain their supplies from pharmacists, which suggests that they probably do not receive verbal or written instruction, counseling, or information about potential side effects. Peruvian women experience high failure rates when using reversible modem contraceptives - 16%, compared to 6% in Costa Rica. In 1994, 1.9 million Peruvian women have an unmet need for family planning services or improved methods to prevent pregnancy, which is defined as women 15 - 44 years of age who want no children, are sexually active, and are not using contraceptives. 55 Infant and Child Health 25.The importance of acute respiratory infections and diarrheal diseases, which are among the leading causes of morbidity and mortality for children under five years of age, was noted in Paragraphs 8 and 12. The health of Peruvian children is further compromised by the inadequacy and uneven coverage of a broad range of policies and programs intended to improve the health and nutritional status of infants and children, including, inter alia, immunizations against the major childhood diseases, control of diarrhea and upper respiratory infections, and micronutrient fortification and food supplementation programs. These shortcomings, when combined with a poor sanitary environment, elevate the health risks for young children and explain the vast majority of morbidity and mortality of children under the age of five years. Tropical Diseases 26.As a result of the inexorable decline in endemic disease control programs during the past decade, a growing proportion of the Peruvian population is at risk of contracting one or more of the tropical diseases endemic in Peru. In 1992, an estimated 7.7 million people lived in areas where malaria is endemic. Between 1980 and 1990, the rate of malaria infection per 100,000 population more than doubled, the number of houses sprayed was cut in half, and the blood examination rate decreased to one fourth the level achieved in 1971. The number of cases of Plasmodium falciparum malaria detected reached 793 in 1993, up from 65 cases reported in 1985, and the number of cases of Plasmodium Vivax reported increased from 33,655 in 1980 to 54,922 in 1993 (See Table 15). Because of the steady decline in diagnosis and reporting of tropical diseases, it is extremely difficult to determine whether incidence and prevalence are actually rising as diagnosis and reporting improve. Even the revised global strategy to control malaria, which places greater emphasis on case detection and treatment and relatively less on the use of pesticides, cannot explain the fluctuation in the level of program activity, which dates to 1960. The rising incidence of infection in the face of declining efforts in case detection indicate that the malaria control program has not received priority attention or the protection required to ensure the continuity of control programs. Table 15: Malaria in Peru, 1960 - 1993 Year Cases7 Incidence Number of Examination Rate x x 100,000 pop SlidesExamined 100 pop 1960 2,710 27 502,744 4.46 1970 4,546 34 317,522 2.15 1980 14,982 87 214,213 1.13 1991 40,086 182 109,654 .50 1993 54,922 245 123,147 .55 Source: Ministry of Health 7. Number of cases of Plasmodium Vivax 56 Figure 7 Malariometric Rates 1960-1992 API. AFT, HSR/1000 Inmhat. ABE.R/= Inhab. 100 . 10 101 100E-03a a 1,000E-05 . . . 60 as 70 7580 85 s Years - ABER API AFI HSR Source: Ministry of Health ABER - Annal Blood Examinain Rate per 100 inhabitants API - Annual parasits incidence per 100 inhabiants AFI - Annual Plasmodina Falciparum index per 1000 inhabitants HSR - Household spraying ras, per 1000 inhabitants S. Number of cases of Plasmodium Vivax Table 16. Morbidity in Peru, 1977 - 1993 (rates per 100,000 population) Disease 1977-1980 1981-1985 1985-1989 1991-1993 Gastro 320 873 1214 1466 intestinal Malaria 129 247 152 245 Tuberculosis 98 122 148 250 Source: Ministry of Health 57 ANNEX II: HEALTH POLICY AND STRATEGY Table 1. Comparative Socioeconomic Indicators in LAC - 1992 GNP per Life Expectancy Infant Mortality Rate capita (in years) (1000 live births) Peru 1200 65 52 Bolivia 680 60 82 Chile 2730 72 17 Ecuador 1070 67 45 Haiti 370 55 94 Colombia 1330 69 21 Source: World Development Report, 1994. Table 2. Wealth and Well Being - 1992 Per Capita Life Infant Mortality GNP Expectancy (per 1000 live births) (US$) (in years) China 470 69 31 Jamaica 1340 74 14 Sri Lanka 540 72 18 Peru 1200 65 52 Source: World Development Report, 1994 Table 3: National Expenditure on Health 1980, 12987, 1990 1980 1987 1990 Expenditure Composition (%) Private Sector 74.6 66.6 68.4 Public Sector 25.4 33.4 31.6 Total 100 100 100 Total National Expenditure: Intis of 1979 (billions) 111.3 130.0 84.5 US$ of 1988 (millions) 944.0 1,176.0 754.0 Per capita, in US$ of 1988 55.0 58.0 35.0 Source: R. Suarez, based on data from INEI (1992). 58 Table 4. Central Government Expenditure in Health: The Ministry of Health, 1980-1992 1980 1985 1987 1990 1991 .1992 MOH Total Expenditure: 1979 Intis (millions) 27.6 36.3 33.7 22.2 15.5 24.2 1988 US$ (millions) 234.3 289.2 301.6 195.2 133.3 209.0 Percent of GDP 0.8 0.9 0.8 0.7 0.4 0.7 MOH Per capita Expenditure: -1979 Intis 1.6 1.7 1.7 1.0 0.7 1.1 -1988 US$ 13.5 14.9 14.9 9.1 6.1 9.3 Source: From MOH official estimates, INEI (1992) and IDB (1993). See Table A.III.1. Health Policy Development, 1900 - 1990 1. Until the 1930s, the Peruvian government had not entered the realm of health policy. Policy development since then has reflected the political philosophy of the reigning leaders and the pressures generated by the growth of an organized, educated, white collar and blue collar urban labor force. The nucleus of the modem health care system consisted of a small number of university-educated physicians who attended the affluent land owners and a network of private non-profit hospitals and clinics serving the poor, which were supported by the charitable contributions of the lalided upper class and operated by a religious order or private voluntary organization. The health care delivery system, which changed very little from the colonial era to the end of the nineteenth century, reflected the social segregation of the economic and ethnic classes and rarely reached the indigenous population groups of the Sierra and Selva, where traditional medicine was practiced. Western medicine was an art as much as a science in the nineteenth century, for the diagnostic and therapeutic interventions of the twentieth century had not yet been developed. Hospitals served as long - term stay facilities, for lengthy periods of bed rest offered the only hope for recovery from the more serious health conditions including infections and contagious diseases such as influenza, pneumonia and tuberculosis. 2. At the end of the nineteenth century, there were no national level entities which addressed health issues; municipal governments were responsible for public hygiene, electricity, water and waste systems, public hospitals and public transportation, all of which were often in deplorable condition, if they existed at all. Travelers to the region during this era remarked that the almost compete absence of public or private investment in urban sanitation, water and sewerage systems made Lima one of the dirtiest cities in Latin America. The study and practice of medicine was limited to upper class men of European descent, who founded the first Medical Society in 1854. The universities offered no courses 59 in public health or health administration. Hospital administration was the responsibility of the NGO, ethnic or religious community which founded the hospital; there was no formal training or recognized profession in hospital administration. 3. The period from 1900 to 1930 saw the beginnings of the modem health and welfare system, including the organization of the professional public health service, and the promulgation of legislation to protect the Peruvian worker, to provide a safer work environment, to provide for a limited number of hours in the work day and one day off each week, to compensate workers for accidents on the job, and to protect women and children from exploitation in the labor market. It was in the interest of the capitalist state, which was already becoming more urban and more industrial, to moderate the treatment of workers in order to guarantee a reasonable level of productivity and longevity. During this period, the organized labor unions began to press for the establishment of a more paternalistic welfare state to protect the worker and his family from the abuses of employers. Thus the development of the social insurance system became an integral element of the populist political platform. In 1935, the first Ministry of Education and Health was established, and in 1936, the Social Security system was founded. Box 5-1 summarizes some of the key legislation and organizational history of the health sector. 4. From the 1930s through the 1960s, the oligarchy, which envisioned a limited role for the state in the social sectors, and the newly organized labor unions, which favored a state- supported welfare society, debated intensely the policies of the state in the financing and provision of social services. The rapid expansion of the private sector fueled an equally rapid expansion of the public sector social security system. Between 1950 and 1978, the state's investments in the social sectors grew from 8.7% to 18.8% of the public sector budget. In contrast, the private sector share of investments in the social sectors fell from over 90% in 1950 to 58% in the 1970s. 5. Until 1970, the Peruvian health system included two social security systems (for white and blue collar workers), a small Ministry of Health whose activities were primarily clinic- based and located in small cities and towns other than Lima, and the hospitals and clinics of the charitable organizations, most with religious affiliations. The social security systems were urban-based and oriented to the provision of curative hospital care. There was also a small number of hospitals and clinics in the private sector. The configuration of the health system changed radically when the Velasco Government identified health as one of the sectors to be within the domain of the state. A single unified government health service, the SUS (Sistema Unico de Salud), whose design was heavily influenced by the social democratic ideals of the European countries, was conceived. 60 BOX 1: HEALTH SECTOR ORGANIZATION AND LEGISLATION IN PERU, 1854 - 1994 1854 Establishment of the Sociedad de Medicina, the precursor to the Colegio M6dico. 1911 Law No 1378 to compensate for work-related-accidents 1918 Law No 2851 related to the protection of mothers and children Law 3010. providing an obligatory day of rest for all workers 1924 -Law 4916 related to retirement and dismissal, compensation for time m service, prior advice for dismissal, and life insurance 1920s Public credit laws allocate approximately 10% of public funds for the administration of justice, education, and welfare 1933 New Constitution in Articles 46,48 and 50 provides for social insurance 1935 Ministries of Education and Health created ' 1936 Law 8433 establishes the Social Security System 1940s Law 10624 provides for retirement benefits for workers after forty years of service 1960s Social security coverage and benefits expand and generate a 34% increase in the number of beneficiaries from 1961-66. Over one million Peruvians become members. 1970s Sistema Unico de Salud nationalizes the hospitals and many of the other major health facilities of the private. sector in an attempt to create a unified public sector health service 1977 National Health Council established to guide health sector development 1980 The white collar and blue collar social security systems merge to create a single social security institute,:the IPSS 1991 The Ministry of Health proposes the creation of a regionalized, integrated national health.system, the "Sistema Nacional-Regionalizado:e Integrado de -Salud" 1992 Law:584 approved the reorganization of the Ministry of Health 1993 New Constitution affirms the universal right to social security and the responsibility of the State to determine national health policy, norms and standards, and facilitate equitable, universal access-to health care. 6. In 1977, the government established a national health council which was to provide direction and coordination for a pluralistic national health system. In 1980, the two social security systems merged. The ensuing years of economic difficulties contributed to the deterioration of the public health system even as government invested in more infrastructure to expand population coverage. Nearly 3,000 hospital beds were transferred from the charitable organizations, the Sociedades de Beneficiencia, to the MOH. MOH personnel replaced the religious organization personnel who had previously operated the hospitals, and they became fully dependent on the Treasury. The ensuing disruptions in services and ineffectiveness of the new order caused considerable public dissatisfaction with the public health system. The number of health personnel available and the level of recurrent budgets 61 were insufficient to operate and maintain the expanded health system, and the quality of services declined. 7. Several other important changes occurred as a result of the state domination of the health sector. Medical doctors became salaried employees of the state, rather than independent practitioners with affiliations to one or another of the charity hospitals. The meager salaries of the public sector forced many physicians to combine their public health service with teaching and practice in the private sector. In 1956, only 17% of doctors were full time employees of health sector institutions; by 1988, 70% were employed by the public sector, and 70% of all doctors had more than one job. The modernization and democratization of the health system encompassed the medical schools as well, where an increasing number of students were women and men from the middle class. As the modem medicine grew, the trend to specialize escalated; in 1964, 73% of all doctors were specialists; by 1988, 44.8% were trained in the four basic specialties of surgery, obstetrics, gynecology, and internal medicine, and 55.2% were other specialists. 8. The government's efforts to democratize the health system and to expand benefits to a larger share of the population were frustrated by poor planning and management after the public sector assumed responsibility for the hospitals and other health services formerly operated by the private sector, and by the economic crisis which began to unfold in 1975. As the inability of the MOH to manage the hospitals became more apparent, the social security system, in an effort to satisfy the demands of its affiliates for better quality hospital services, built a nationwide network of hospitals and clinics, sometimes within blocks of MOH facilities. At the same time, the MOH continued to extend its service delivery network to areas which had no health infrastructure. The economic crisis made it almost impossible to equip, staff, operate and maintain the expanded health infrastructure. Social security contributions decreased as. employment opportunities and real wages shrank, and the MOH budget declined along with the rest of the government budget in the face of falling revenues. 9. In 1980, the newly elected democratic government encouraged private sector development, and a series of private clinics and hospitals were established. There were more than 5,000 hospital beds in the private sector in 1993. The motivation for the establishment of many of the private clinics, which often contain less than 50 beds, is the desire of the doctors to establish a medical practice which is independent of the bureaucracy and the technical and administrative complications of the large scale public sector facilities. The economic crisis forced many of the private facilities to improve their management and the efficiency of their operations in order to survive. This has also led to other arrangements such as fee-splitting with smaller medical centers and the establishment of ambulatory clinics, in addition to the more traditional economizing measures such as closing beds, the hiring of non-physician administrators, reductions in administrative personnel, and contracting out food services. 62 10. The primary focus of population policy in Peru has been demographic until very recently. The Peruvian government was strongly pronatalist during the 1960s and 70s when the military government was in power. Rapid population growth was viewed as a positive input to economic development, and public and private support for the provision of family planning services was discouraged. The Population Policy law of 1985 recognized the wide- ranging impact of population variables on socioeconomic development and provided a framework for the implementation of population policies and programs in an effort to reduce population growth, which was considered to be too high. The government embraced the concept of responsible parenthood and efforts have been made to inform the public of the links between demographic and development variables and to provide information and services in support of the efforts of couples to determine the number and spacing of their children, which is recognized as a fundamental right of all individuals. The high incidence of abortion and -maternal mortality rate, especially in rural and peri-urban areas, were identified as important health and social problems which the government should try to resolve. The substantial increase in the coverage of public and privately supported family planning programs and the related rise in contraceptive prevalence and decline in fertility indicate that the supply of family planning services is rising. There has been a gradual convergence of health and population policy during the 1990's, as the importance of reproductive health problems and their impact on women and children is more widely acknoledged. These services form an integral part of the government's new program of targeted social expenditures. Health Policy Development, 1990 - Present 11. According to the 1993 Constitution, the health of the community and the family are to be protected, including those individuals who are mentally or physically incapacitated. The State responsibility to combat illicit drug trafficking and regulate the use of drugs and other toxic substances is expressed in clear and unequivocal terms. The State is also responsible for the determination of national health policy. The Executive branch of the Government has the responsibility to develop standards for health, supervise their application, and to design and guide their implementation in a pluralistic and decentralized manner which facilitates equitable access to health services for the entire population. The Constitution does not commit the government to provide or finance all health services, only to ensure equitable access, which may be interpreted as an acknowledgement that the State will no longer assume full responsibility for the financing and provision of care, as it has in the past. 12. The obligation of the State to formulate policy and establish and enforce standards for health care is explicit in the new Constitution and indicates that the role of the public sector is expected to change gradually, with less emphasis in the future on service provision and more attention to regulation and the enforcement of quality standards. Given the equivocal manner in which the current government is treating decentralization, no clear direction regarding the nature and extent of decentralization is expected soon, which may retard MOH efforts to reorganize the health sector and restructure the role of the public sector. 63 13. The Constitution recognizes the universal and progressive right of all persons to social security, to improve the quality of life and to protect against unforeseen events as stipulated in the laws governing the social security system. The State further guarantees free access to social security-related health and pension benefits through public, private or mixed entities, and assumes the responsibility for their efficacious function. These provisions of the Constitution have not yet been translated into legislation or administrative orders. 14. The Peruvian government will need to update its health policies in order to address the health care needs of a population whose age, geographic location, demographic characteristics and health needs will continue to shift; find a way to cope with the extensive and perhaps uneconomic investments in health infrastructure of the heyday of its public sector-oriented past; and devise financing and service delivery mechanisms to respond to the needs and expectations of the population. The public debate related to the nature of the health system and the respective roles of public and private sectors has broadened in recent years to include research and policy analysts inside and outside the government, a growing range of health care providers, and the relatively young and dynamic private sector health insurance organizations. The quality of the dialogue and diversity of opinions is at once impressive and overwhelming, and the Peruvian government may find that, as in most countries, the resolution of its health policy issues will be incomplete, imperfect, and unending. 64 ANNEX III: THE ORGANIZATION, PRODUCTION AND USE OF HEALTH SERVICES 1. In 1957, many of the specialized health programs were organized, and the concept of health protection and promotion as an activity at the community level, supported by referral to the nearest hospital for curative care when necessary, was recognized as the principal strategy of the public health services. Many of the vertical health programs, including those to control malaria, schistosomiasis, leismaniasis, tuberculosis, leprosy, and venereal diseases, were the speciality of a limited number of health professionals whose interventions were not always considered relevant to the provision of curative care in hospitals and private practices. This interpretation of the health system as a dichotomous entity was further reinforced by the medical schools, that, in an effort to prepare doctors for work in the public health services, developed departments of preventive medicine in the medical schools. The split between preventive and curative medicine persists to this day. 2. During the 1960s, the Ministry of Health assumed a leadership role in the administration of the public health services of the country, and the two social security systems, for white collar and blue collar workers, were unified. The MOH was reorganized in order to fulfill the ministry's responsibilities which were to include the direction of the country's public health initiatives, the establishment of norms and standards for the provision of health care, technical support and coordination, especially with respect to health services in outlying areas. The country was divided into 57 health regions, called Areas de Salud, but these were soon perceived as creating a technical and administrative bottleneck between the central MOH and the communities. At the time, the infrastructure of the MOH consisted of 71 health centers, 142 medical posts, and 177 sanitary posts. 3. The initiatives of the MOH and central government to bring all of the actors in the health system under the influence of the government were countered by the efforts of the IPSS and the private sector to reinforce their autonomy, which included derailing MOH attempts to set norms and standards for the provision of health services. The World Health Organization and its Western Hemisphere regional counterpart PAHO were promoting the notion of central health planning in an effort to guide the allocation of health sector resources in the less developed countries. The scarcity of doctors and other health professionals was still acute, and it was hoped that by applying the principles of a central health planning model, the best use of these scarce resources could be achieved. 4. The move to extend the benefits of public health care to the entire population, in response to LAC region health sector goals formulated at an Alliance for Progress conference in 1972, was to be accomplished through a reorganization and expansion of the health services delivery network, and the use of appropriate technology. The 1977 Alma Ata International Conference which called for "Health for All by the Year 2000" served as a further stimulus to the expansion of the public health care delivery system. International assistance was sought to help finance the construction and equipment of a network of health facilities throughout the country. Despite these efforts, in 1983, the population coverage of 65 the MOH was estimated at only 67%. At the time, almost three million Peruvians, who represented 20% of the population; lived in communities which had no health facilities or services whatsoever. 5. Disillusionment with the regionalized health system and the new pressures to provide health care to the entire population stimulated a further reform of the MOH in 1986 when the regional health authorities were divided into Departmental Health Units, or Unidades Departamentales de Salud (UDES), each of which was responsible for the operations of a number of health centers, general and specialized hospitals, and health posts. Later on these were divided into Territorial Health Units (UTES). The new regions did not coincide with the regions of other government entities, thus complicating the task of interministerial coordination. The regionalization process consisted of putting in place at the regional and municipal levels a replica of the antiquated welfare state apparatus which existed at the center. Although the preventive public health interventions remained the central focus of public health service efforts, the deconcentration of bureaucratic activity was the main result of the decentralization process. Neither the regions nor the municipal government received sufficient backing in the form of training or technical support from the central MOH for the process to succeed. 6. Some of the important elements of the decentralization process which have been identified in the course of decentralization efforts in other countries and which must be considered in the context of the Peruvian environment include the following: - the availability of adequate economic resources at the local and national level, taking into account the need for differential levels of subsidy to poorer communities; - the organization of a transition process which permits a smooth transfer of responsibility to regional and local governments and puts in place at the national level the mechanisms for technical and administrative support, quality review, and evaluation which can be used to inform planning and coordination of future developments in the sector; - recognition of the need for the political will at all levels to support the process; - development of administrative capacity at all levels; - design and implementation of an appropriate program of technical assistance for community, regional and national entities; - mobilization of the cooperation and support of private and non-profit groups; - design of a program which will ensure consumer participation in the decentralization process; and - development of flexible certification requirements to facilitate the transition. 7. The creation of the health regions had a limited impact on the public health system because of the failure of the government to establish a real, logical organizational and administrative hierarchy for the regional health system and to develop clear guidelines for 66 their participation in the planning and implementation of preventive public health programs such as malaria and tuberculosis control and in the provision of curative health care. The hospitals stood apart from the efforts to organize primary care, and continued to work as before, as relatively autonomous entities within the public health service, albeit with no officially defined financial or administrative authority. 8. In an effort to satisfy the popular demand for health care in areas where there were no doctors or nurses, the MOH trained health personnel at the intermediate level to assume the role of health aide, and volunteer health workers were trained to provide preventive primary health care in their communities. Their training programs were later incorporated into a MOH basic health strategy. The target of the training program was the traditional midwife, but the attitudes and verticality of the programs and the heavy-handed interventions by the regional health personnel did not attract the midwives and made this program a qualified success. The program's mixed message, which combined health promotion and prevention, for which there was little or no demand, with referrals for hospital care of uneven quality confused many of the communities which were supposed to benefit from the program. The youth and inexperience of many of the new community health workers and their inability to provide curative care did not instill confidence in their clients, who went to the hospitals for care in ever-increasing numbers. 9. The private insurance companies attempted to establish standard fixed fee schedules with the private hospital sector in 1982 and formed an association for this purpose. By doing so, they hoped to be able to control and predict their own costs and thereby reduce their risks. They developed a relative value scale (RVS) based on Peruvian experience for 620 commonly reported diseases contained in the International Classification of Diseases and 153 surgical procedures also classified by WHO. The RVS provided a quantitative measurement of the relative resource intensity of inpatient and outpatient treatment for the diseases and procedures included in the RVS. A standardized fee structure was developed for physician services and medical supplies. A multiplier was used for accommodations; however its application, based on the type of amenities provided, was at the discretion of the individual private hospital. The prices of medicines, although no longer controlled by the government, were based on the pharmaceutical manufacturers' recommended prices, which were widely accepted as the maximum allowable price. 10. The fixed fee schedule, which did not apply to medicines or accommodations, provided an economic incentive to control costs because it forced the provider to keep equal to or less than the price of services. The fixed fee schedule was eventually accepted by all of the private insurance companies and providers. A medical care price index was established using the health and medical care component of the Consumer Price Index to adjust fees periodically. The system was also modified to accommodate credit arrangements with the insurance companies which further increased the efficiency of the system, and extended to include ambulatory care. The addition of outpatient care benefits resulted in a substantial increase in the demand for unnecessary care that put upward pressure on costs and 67 premiums. The system was eventually abandoned during the period of hyperinflation as a result of the subsequent disorder in the insurance market. 11. There was only one medical school in Peru until 1960, at the University of San Marcos in Lima. During the past thirty years, another fourteen medical schools have been established, five in Lima and nine in other regions. Almost one thousand doctors are entering the medical profession every year, while the production of nurses and midwives, dentists and pharmacists continues at a slower but steady pace. The health professions are clearly an attractive option for university students, but the continued production of doctors, virtually all of whom are trained as specialists, at the rate experienced during the past decade may push health care costs up and create a surplus of doctors, especially in urban areas, which represents an important waste of training and human resource capacity which will do little to improve health status. Given the preference of doctors to establish themselves in urban areas, the continued production of large numbers of doctors is unlikely to ease the shortage in rural areas even when incentives are used to draw them away from the cities. The government might do well to consider encouraging more individuals to train for professions which are in relatively short supply, such as nursing, midwifery, dentistry and pharmacology, or to encourage the expansion of medical school specialties in community medicine and family practice. Utilization of Health Services 12. Global measures of the utilization of health services can be used to illustrate the below average use of health services in Peru. PAHO indicators suggest that an average of 2 - 2.6 medical consultations per capita per year, one dental consultation, 3 - 4 emergency visits per 10 persons, and 9 - 10 hospital discharges per 100 population would be "normal" for the Peruvian population. In 1988, MOH and IPSS together produced .81 medical consultations per inhabitant, 0.15 dental consultations, 1.20 emergency visits and 2.89 hospital discharges. If it is estimated that the population covered by MOH and IPSS is only 75% of the total, these ratios improve slightly, to 1.09 medical consultations, 0.2 dental consultations, 1.61 emergency visits, and 3.87 hospital discharges (See Table 1). 68 Table 1: Utilization of Health Services in Peru, 1988 PAHO Average' Peru Actual Medical Consultation (per capita) 2 - 2.6 0.81 Dental Consultation (per capita) 1 0.15 Emergency Visit (per 10 population) 3 - 4 1.20 Hospital Discharges (per 100 9 - 10 2.89 population) Source: PAHO 13. The utilization of health services varies substantially by geographic region as well, indicating that although the global indicators of health service production are below average, the use of health care outside of the Lima area is even lower. According to the 1991 LSMS, only 13.7% of rural Sierra residents, compared to 51% of Lima residents of all income groups consulted a health care provider when ill. The urban Sierra use of health services was only slightly higher, at 20.1 %, and the urban coast outside of Lima was also very low, at 15.3%. By 1994, 64% of the inhabitants of Lima, and 27% of residents of rural sierra and selva (jungle) sought health care when ill. Among the extreme poor, forty percent in Lima and 18 percent in the rural sierra sought care when ill. Access and use appear to be closely correlated; 53% of Lima residents went to the hospital, while the population outside of Lima used hospital services at the same rate at all health services. The concentration of private sector clinics and pharmacies in urban areas probably accounts for their much higher use (53 - 58%) by residents of Lima than those who live in the Sierra (5.4 - 25%). The use of health centers and health posts is higher (38 - 58%) in the Sierra than in the urban areas of the Coast (13.8 - 34.2). 14. The utilization of health services reflects public perceptions of the "cost" of care as well as the confidence of the population in the quality of care offered. In urban and rural areas, only one person in three in the lowest income group sought medical care when ill according to the 1991 LSMS, compared to two thirds of those in the highest income group. In urban areas, care was usually sought within three days of becoming ill; in rural areas, care might not be sought for seven to ten days, a delay which could be fatal for infants, young children, or women with pregnancy-related complications. The preventive health programs for children under five years of age were used twice as much by the non-poor population as by the poor, while the use of curative care was more closely correlated with urban/rural residence than with income. All income groups in urban areas used curative services more frequently than all income groups in rural areas. 8. OECD countries average 6.1 medical consultations per capita per year, ranging from a low of I in Turkey to a high of 12 in Japan. 69 15. In theory, the public health hospitals are supposed to provide care to the entire population, and the MOH priority to provide services to the lowest income groups is as often stated as implied. The quality of the services which are being provided can also be measured by the complementary inputs of supplies and medicines which the patient may have to purchase if they are not made available by the facility. For the Ministry of Health in general and for the Lima Maternity Hospital, expenditures on complementary inputs declined by 20% and 83%, respectively, between 1986 and 1990. At the same time, pressure on the health system was increasing; the number of women with incomplete abortions admitted through the emergency services of a major MOH hospital in Lima rose by 50% and, the, number of emergencies attended increased by a third. 70 Table 2: Available Hospital Beds by Type of Hospital by Region Peru 1-,3 Type of Hospital Region Total beds Private MOH IPSS Amazonas 100 0 100 0 Ancash 308 0 283 25 Apurimac 180 0 142 38 Arequipa 1,946 273 1,210 463 Ayacucho 507 10 467 30 Cajamarca 312 24 248 40 Cuzco 954 85 687 182 Huanuco 610 88 478 44 Ica 1,148 50 740 358 Junin 1,668 195 1,067 406 Lambayeque 736 20 72 644 Lima 18,455 4,761 10,303 3,391 Loreto 81 0 0 81 Madre de Dios 109 0 85 24 Moquegua 315 115 30 170 Pasco 400 49 196 155 Piura 1,051 311 361 379 Puno 745 50 607 88 San Martin 614 60 190 364 Tacna 522 84 398 40 Trujillo 509 0 342 167 Tumbes 153 12 123 18 Ucayali 554 46 453 55 Total 31,673 6,233 18,582 7,162 Source: PAHO, 1994. Directorio de Hospitales Latinoamericano y del Caribe Table 3: MOH Infrastructure, 1978 - 1990 Year Hospitals Beds Centers Posts 1978 330 28,934 548 1,230 1982 341 30,724 714 1,721 1986 353 32,326 920 2,600 1990 368 34,017 1,020 3,171 71 Table 4: MOH Personnel in Health Centers and Health Posts, 1988 Physicians 1,349 Dentists 476 Midwives 441 Nurses 1,125 Nurse Technicians 2,724 Health Technicians 2,444 Lab Technicians 245 Nutritionists 41 Total 8,845 Source: Moreno, 1993 Table 5: Health Professionals National figures Year Nurses Doctors Dentists Obstetricians Pharmacists 1980 10,065 12,432 3,536 2,167 3,467 1981 10,877 13,542 3,803 2,187 3,574 1982 12,047 15,363 3,910 2,320 3,863 1983 13,150 16,843 4,030 2,488 4,038 1984 13,286 17,276 4,208 2,854 4,299 1985 13,951 18,103 4,533 3,114 4,541 1986 14,709 19,635 4,675 2,868 5,350 1987 15,429 20,031 4,877 3,137 5,567 1988 16,140 20,979 5,111 3,338 5,875 1989 15,796 21,856 5,331 3,437 6,113 1990 17,640 22,857 5,420 3,900 6,350 Source: Lip, Cesar, and Escobedo, Seimar. Los Profesionales de las Ciencias de la Salud. Lima, 1992. NATIONAL HEALTH SYSTEM ORGANIZATIONAL CHART -nComision Consultiva Consejo Nacional Ofic. Eje c de oli.oficina Ejecutiva de Noras de Salud Comite TcIco dePlanesyProgra nspectoria P Cord acion Nac. Ofic. Ejec. de GeneralOfcn Eeutv Control Admin.• Comite Nac, de d rspet y Financiero - Integracion Funciona VICEMINISTRO Oficina Ejecutiva de líOficina General Promoctoad Ineracion de Planificacio Prog INac-nal fIcína Eje P aciv d dir Mantenimient RacinalacIn OlloEquipamienta da Eia.ea Sedaoficina Ejecutiva de Asesoria Jurldico. SadG Ofic..de Asesor¡ Adminsitrativo AdmenistraerondeIinformaticanComunicacconesr---oJuiridica SaludOficina je uti Asescria Juri 1d`ca, OnOfic Ejecutiva EOficina de Sanitaria s os de Sa Relc. Publica fd1 Ptirrtcriton Eci detadlstOficina Ejecutiva -ode Gestion Tecnica OigienOfic. EjecutivaAcnEaecutvacEeae de EconS alde Iormatica Prenso -piidos Y Ncionade E o ficina Ejedues va -.ficinas Etutiva PEnmocin i nteaIon -¯ ieLogisica yProgramacion . Ofic Eleutiv osana rmen or Oficina Ejecutiva de de Biene Sociad---audlPt Vigilancia y Evalcio .r.d.. . .nl p aEpidmiologica Direcion General de OfC . Ejc.d Invest. DircconGeerl e edicamentos, Insumo C apac. y Desar,0llo Direccion General alud Ambiena yrgas de Sistemas d e Salud de las personas D-ireco Ejctiad Direccion Ejecutvad Di reccIo n Ejecutiva ~~SaemntBsioRegistro y Norma d. Progfr amasa de Salud Dirccin EecuivaDireccio E cuia de Direccion Ejecutiva die Srcios djeaud E-" Eclogia y Medio Amb dGetoCmrca Drc on Ejecutiva ._ Direccion Ejecutiv a del Direcc.Ejc de de orms ecnca Hilee Aim ntaiay Pe squisasa e insp. paainfrest. en rialud Coto $d a Zoorosis Direccion Ejec. de paricpatonDirecciones Subregionñalesl Institutos Cumunitarla Jde Salud de Lima y Callao Estpici atizados Organismos Publicos Descentralizados5 Instituto Nacoa EceaNcoanst.Ncoa Proteccion del enefIlcien.ciadey juntas E.Cnst. Nacional deMdcnmdiAbete Soieaesd de Sludde Sau Pub¡¡ca TrdcoaraaS¡ne de participacion Social 73 ANNEX IV: HEALTH FINANCING 1. A ministerial budget is normally the result of the translation of a plan and program into cost elements. What has been happening in Peru is the inverse; the availability of funds from the Treasury determines the level of activity and effort undertaken by the Ministry of Health. This limits the utility of plans and programs, which is the reason that they were abandoned in recent years. It is only in 1993 that an operating plan for the MOH was prepared for the first time since 1989. The preparation of a program and budget plan are no guarantee that funds will be committed; the Treasury allocates funds each month based on their availability, and as a result, at the end of the year, commitments and disbursements are well below the level programmed at the beginning of the year. The pull of existing personnel and facilities ensures that funds are allocated each year based on their allocation during the previous year, which perpetuates the inefficient and inequitable allocation of resources and makes it very difficult to initiate new programs or change the direction of resource allocations. 2. Estimates of the 1990 national expenditures on health in real terms range from 2.6 percent to 3.2 percent of GDP. National consumption expenditures for health services, according to the National Statistical Office (INEI) were estimated at I./84.5 billions (US$754 millions of 1988 dollars), which amounts to about US$35 per capita. Private expenditures accounted for more than two thirds of total national consumption of health-related goods and services. Public expenditures included central government outlays to the Ministry of Health, the health services of the Army and National Police, and expenditures on the maternal and child health programs of the IPSS. Private health expenditures refer to household consumption of health goods and services. Estimates of the overall level of national expenditure on health- related goods and services vary according to the definitions used and nature of the estimates made, however, the trends and changes in the composition of national expenditures for health during the last decade are similar. 3. The decline in MOH spending in per capita terms has been dramatic. In 1991, it reached an all time low of US$6. It recovered slightly in 1992, to US$9, nevertheless, given the magnitude of Peru's health problems, the level of public investment in health care is distressingly low. It is even more disturbing if the nature of the expenditures is taken into account, because a portion of the increase in expenditures during the early eighties was used to increase the physical infrastructure. Between 1980 and 1987, the number of MOH hospitals increased from 114 to 127 and the number of beds increased from 18,616 to 20,868. The number of MOH health centers increased by about fifty percent, and the number of MOH health posts almost doubled, to 2851. By 1990, the number of health centers had increased again, to 1020 and the number of health posts had grown to 3173. Because of the declining MOH budgets, many of the new facilities were never equipped and remain understaffed. 4. Between 1980 and 1990, private sector expenditures on health services, the largest component of overall national expenditures, decreased slightly and the overall level of expenditures on health care was reduced by 40%. The share represented by private expenditures has varied according to changes in the economy and the levels of government expenditures on 74 health services. During the 1980s, before the economic crisis, private expenditure represented 75 % of total national expenditures for health. Private expenditures declined to 67% in 1987 and increased slightly by 1990. The changes in the composition of the public-private mix of expenditures on health are consistent with the overall trends in consumption expenditures reported by the National Statistical Institute (INEI). Per capita expenditures declined from about $55 in 1980 to $35 in 1990. Household expenditures declined from 2.9% of GDP in 1985-86 to 1.7 percent in 1990 and 1.4 percent in 1991 (See Table 2). Between 1982 and 1991, the share of household expenditures on health-related goods and services increased from 48.8% to 60.8%. The MOH share remained fairly constant, but the share of the social security system (IPSS) declined sharply, from 32.7% to 21.8%. Table 1. Central Government Expenditure in Health: The Ministry of Health, 1980-1992 1980 1985 1987 1990 1991 1992 MOH Total Expenditure: 1979 Intis (millions) 27.6 36.3 33.7 22.2 15.5 24.2 1988 US$ (millions) 234.3 289.2 301.6 195.2 133.3 209.0 Percent of GDP 0.8 0.9 0.8 0.7 0.4 0.7 MOH Per capita Expenditure: -1979 Intis 1.6 1.7 1.7 1.0 0.7 1.1 -1988 US$ 13.5 14.9 14.9 9.1 6.1 9.3 Source: From MOH official estimates, INEI (1992) and IDB (1993). See Table A.III.1. 5. There are some discrepancies in the various official estimates of MOH expenditures, but the trends are similar (See Table 3). According to INEI estimates, MOH expenditures increased from 27.6 million Intis in 1980 to 33.7 million Intis in 1987 (1979 Intis). Central Bank estimates show 37.2 million Intis for 1980, 38.7 million in 1981, 30.1 million in 1982 and 36.5 million in 1985. Expenditures declined between 1987 and 1990, to 22.2 million Intis according to the INEI, and 22.7 million Intis (US$195 million) according to the Central Bank. After another precipitous decline to 15.5 million Intis in 1991, expenditures grew to 24.2 million Intis in 1992. Part of the difference in the estimates can be attributed to the different expenditure deflators used by the two institutions, although significant discrepancies remain after correcting with a common sector specific expenditure deflator, -which suggests that further work in this area is needed. 75 Table 2: National Expenditure in Health-Related Goods and Services, (as % of the GDP) Public Total National Years Private MOH JpSS Expenditures 1980 a 2.3 0.8 3.1 1985 a 2.1 1.0 2.1 1987 a' 2.0 1.0 3.1 1990 a 1.8 0.8 2.6 1990 b/ 1.9 1.3 3.2 1982 ` 2.08 0.80 1.40 4.28 1985/86 C 2.89 1.02 0.80 4.71 1990 ri 1.60 0.70 0.30 2.60 1991 C, 1.40 0.40 0.50 2.30 S From INEI (1992). National consumption expenditures in health-related goods and services, derived from national accounts estimates. bI World Bank Estimates reported in the World Development Report 1993. Private expenditure estimates are said to be derived from household income-expenditure survey. Public sector expenditure is said to include both, the MOH and IPSS expenditure in maternity and medical attention programs. * Own estimates. Private expenditure derived from corresponding household income and expenditure surveys, MOH and IPSS expenditure derived from official sources. Detailed estimation methodology forthcoming in Suarez, R. and et al (1993). 6. Resources from the Treasury have become the principal source of revenue for the Ministry of Health because of the decline in MOH revenues generated by fees for services (See Table 4) Other transfers, of which the largest component was the transfer of resources from foreign sources, also declined. In 1985, revenue from cost recovery efforts represented 8.5% of the total expenditures of the MOH health services programs, which represented about 60% of MOH expenditures. By 1989, these revenues represented only 2.9% of total expenditures for health services. Table 3: Central Government Expenditure in Health; Ministry of Health 1980-1990 (Thousand of Intis of 1979) Central Government Expenditure MOH Expenditure MOH Per Capita MOH Per Ministry of Health: by Data Sources (Millions of dollars Expenditure Capita of (1988) (Intis of 1979) Expenditure (US$ of 1988) Gross Percentage of GDP GDP in US$ INEI BCR INEI BCR INEI BCR Year Domestic INEI BCR (%) (%) (Millions of Population Product ' INEI BCR dollars of (Thousand) 1988)"* 1980 3646637 27633 37208 0.8 1.0 30921 17295 234.3 315.5 1.6 2.2 13.5 18.2 1981 3807715 32052 38663 0.8 1.0 32478 17720 273.4 329.8 1.8 2.2 15.4 18.6 1982 3815751 27179 30139 0.7 0.8 34001 18144 242.2 268.6 1.5 1.7 13.3 14.8 1983 3334220 32530 32526 1.0 1.0 29425 18568 287.1 287.0 1.8 1.8 15.5 15.5 1984 3494779 33380 35908 1.0 1.0 30742 18992 293.6 315.9 1.8 1.9 15.5 16.6 1985 3573928 33064 36319 0.9 1.0 31265 19417 289.2 317.7 1.7 1.9 14.9 16.4 1986 3904219 30999 24374 0.8 0.6 34765 19840 276.0 217.0 1.6 1.2 13.9 10.9 1987 4291000 33784 30087 0.8 0.7 38309 20261 301.6 268.6 1.7 1.5 14.9 13.3 1988 3938700 27758 25960 0.7 0.7 34849 20684 245.6 229.7 1.3 1.3 11.9 11.1 1989 3473400 28758 24701 0.8 0.7 30385 21112 251.6 216.1 1.4 1.2 11.9 10.2 1990 3322000 22298 22704 0.7 0.7 29083 21550 195.2 198.8 1.0 1.1 9.1 9.2 1991 bI 3480900 15552 15552 0.4 0.4 29839 22029 133.3 133.3 0.7 0.7 6.1 6.1 1992 " 3355588 24228 24228 0.7 0.7 28944 22519 209.0 209.0 1.1 1.1 9.3 9.3 Source: Elaborated from INEI (1992) Table 4.3, Habich, M. (1992), IDB (1992), and official BCR estimates. INEI: Instituto Nacional de Estadistica e Informatica. BCR: Banco Central de Reserva del Peru. ' Data for 1980-86 from INEI (1992), 1987-1992 BCR estimates. b' Based on estimates of real GDP growth, estimated total central gov. expenditure, and planned shares of MOH expenditures as proportion of planned total central government expenditure. d GDP in 1988 US dollars from IDB (1992). 77 Table 4: MOH Sources of Financing; Composition (Percentages) 1980 1985 1990al 1991b/ 1992b/ Treasury 89.0 85.7 97.0 97.0 97.3 Own Revenues 6.7 3.2 2.5 2.3 2.1 Other Transfers ci 4.3 11.1 0.5 0.7 0.6 Total 100 100 100 100 100 Source: Elaborated from Suarez, R. (1987), Habich, M. (1992) and MOH official estimates. ai Estimates for 1989 b/ Programmed c/ Include 4 percent of foreign resources in 1980, 6.3 in 1985, in 1985, and 0.3 percent in 1990 7. The most dramatic change in the composition of MOH expenditures has been the reduction in the wage and salary bill. Personnel costs represented 44.2% of current expenditures in 1980. They increased to 62.5% in 1984, and declined to 12.8% in 1991 and 1992. Part of wages are now paid through contractual service agreements, which is a different budget category, but the reduction in the wage bill is nevertheless impressive. Conversely, the share of the budget for supplies and materials increased substantially, from 21 % in 1980 to more than 50% in 1992. The drastic decline in the real wages of health workers, rather than reductions in the level of employment, explain the changes in the MOH wage bill. Between 1985 and 1990, the number of MOH employees actually increased, from 62,805 to 70,550. At the same time, the average expenditure per MOH worker declined from I./330 Intis to I./37 (1979 Intis) The average annual expenditure per worker was about $225 in 1990. 78 Table 5: Ministry of Health Budget, 1994 (in millions of soles) Hospitals 200.87 45% Central 115.02 25.8 Administration National Health 70.08 15.7 Institutes Basic Rural 53.48 12.0 Sanitation Maintenance 4.45 1.0 Sub-total 445.719 99.5 Regional Budgets 260.36 36.9'0 Total 706.07 100.0 Source: MUnstry of Health Table 6: National Expenditure on Health 1980, 1990 1980 1987 1990 Expenditure Composition (%) Private Sector 74.6 66.6 68.4 Public Sector 25.4 33.4 31.6 Total 100 100 100 Total National Expenditure: Intis of 1979 (billions) 111.3 130.0 84.5 US$ of 1988 (millions) 944.0 1,176.0 754.0 Per capita, in US$ of 1988 55.0 58.0 35.0 Source: R. Suarez, based on data from INEI (1992). 8. This decline in real wages and the reshuffling of personnel to different functions to compensate for the decline in real wages contributed to lower productivity and increasing inefficiency, undoubtedly because the number of workers who were forced to work at more than one job increased, and the reclassification of personnel to higher technical categories as a substitute for salary increases more than doubled the number of employees in the administrative, professional and technical levels. The number of auxiliary, administrative and technical support and blue collar workers declined substantially. In addition, a poorly designed employment reduction scheme resulted in an adverse selection of personnel, low morale, and a weakening of the MOH as an institution. 9. Numbers do not add because of rounding 10.Represents 36.9% of the total MOH budget and 14% of regional budgets. 79. Table 7: MOH Expenditure Composition 1980, 1984 and 1992 Expenditure Category 1980 1984 1992al Current Expenditures: 84.1 89.6 90.0 Wage and Salaries 44.2 62.5 12.8 Supplies and Mat. 21.1 14.9 53.3 Contract. Services 2.6 3.2 11.2 Transfers 12.4 1.3 7.6 Pensions 3.7 7.8 5.1 Capital Expenditures: 15.9 10.0 10.4 Studies & Research 0.4 0.5 0.3 Constructions 13.5 5.1 3.7 Equipment and Durab 1.2 2.3 3.9 Transfers 0.8 2.2 0.1 Total % 100.0 100.0 100.0 Expenditures by Programs: Central Administration 35.8 Specialized Health Prog. 13.5 Environmental Health 0.2 Integral Health Services 41.9 Rural Sanitation 0.2 Invest. in Physical Plant 8.4 Total: 100.0 Million of Intis (of 1979) 27.6 33.4 22.3 Source: Elaborated from Suarez, R. (1987) p. 19; MOH official budget estimates for 1992. a/ Programmed budget 9. One of the important outcomes of the Program of Targeted Expenditures is the introduction of of salary incentives for physicians who work in low income and underserved communities, especially in rural areas. These physicians receive double the salary of those who are on contract in the more desirable urban areas. , The expanded working hours of MOH facilities has required the contracting of a second group of health care providers to work a second shift which was introduced as part of the program of targeted expenditures. Evaluation of the results of these innovative efforts should help the MOH to determine the impact of these measures on the cost and utilization of health services. Social Security System Expenditures 10. In its efforts to attract more affiliates, the coverage of the medical and maternity plans was expanded in the 1970s to include the spouse and children under one year of age. The ratio of beneficiaries to affiliated members increased from 1.06 to 1.35. During the 1980s, the 80 medical plan was expanded to cover all dependent family members under 18 years of age. There was no increase in the contribution rates to offset the added cost of the expanded benefits package. To facilitate the incorporation of self-employed, domestic and informal sector workers, the affiliation requirements were relaxed. By 1985, the ratio of beneficiaries to affiliated members had increased again, to 1.9. 11. Between 1985 and 1989, despite the decline in IPSS revenues, there was a rapid expansion of employment in IPSS, primarily of clerical workers. The total number of employees increased from 28,600 in 1985 to almost 40,000 at the end of 1989. The wage bill grew from 23% to 33.5% and administrative costs jumped from 16% to 20.9% of the total. A rationalization process began in 1990 and between December, 1990 and December, 1992, the number of employees was reduced from 40,258 to 20,074. A reduction in the administrative staff, from 17,142 workers in 1987 to 3,542 in 1992, accounted for most of the decline. In 1992, personnel expenditures were 14.2% and administrative costs were down to 12.5%, which is,nevertheless, higher than in other countries in the region, where they average less than ten percent 12. By 1992, the IPSS budget was estimated at I./33.6 billion Intis ($270 million in 1979 Intis), which represented less than one percent of GDP (See Table 9). Between 1987 and 1989, the number of affiliates and beneficiaries remained relatively constant, despite the severe economic difficulties, but the level of revenues generated fell to about one third the level of previous years. By the end of 1990, revenues were only US$96.7 million. While these trends are partially explained by the reduction in employment and real wages, a preliminary analysis of the data suggests that evasion of contributions may have been an equally important factor in the decline in revenues. The relatively low penalties for delay in the payment of social security contributions, in an environment of rapid inflation, created a strong incentive for private firms and government entities to delay the payment of their workers' social security contribution 13. Expenditures for Sickness and Maternity benefits are the largest component of the IPSS program. In 1990 and 1992, they represented 49 and 50%, respectively, of overall IPSS expenditures. The social security health system operates like a health maintenance organization and represents a duplication of effort in that the Ministry of Health also runs a free health program which is financed through general taxation. 81 Table 8. Peru Financing of IPSS Programs Programs Employee Employer Total Contribution Rate as % of Salary (%) (%) (%) To October, 1991: Salaried Workers: Medical and Maternity 3 6 9 Pension Plan 3 6 9 Total Contributions a/: 6 12 18 Independent Worker: Medical and Maternity 9 - 9 Pension Plan 9 - 9 Total Contributions 18 - 18 To July 1992: Salaried Workers Total Contributions b/: 16 2 18 Independent Workers 18 2 18 Accident Insurance Plan (IPSS): (1 to 12%) a/ Employer responsibility b/ Percentage of transfer to workers' chosen medical insurance and pension plan programs. Table 9. Peru, IPSS Expenditures and Population Coverage 1980 1987 1990 1992 IPSS Expenditures: 187 178 96.7 270 Millions of 1979 Dollars Maternity and Sickness: % of Total IPPS Expend. 65.2 47.2 49 50 Affiliated Members (Mill.) 2.3 3.0 3.0 3.0 Beneficiaries (Millions) 2.7 4.4 7.0 7.0 % of Total Population 15.7 21.8 31.8 30.0 Source: Compiled from Suarez, R. (1987), official data from the Planning and Budget Unit of the IPSS, Habich (1992) and Canales-Kriljenko (1992). 82 Table 10. Regional Disparities in the Distribution of Doctors and Beds. 1981-1990 1981 1990 Population and Resources Populti.:n and Resources (% of total) (% of total) Departments Population Doctors Beds Population Doctors Beds High Income: Lima, Callao, Ica, 33.3 75.7 57.0 35.3 77.7 56.9 Tacna Poorest Amazonas, Apurimac, Ayacucho, Cajamarca, Cuzco, Huancavelica, Huanuco, Puno 27.3 3.0 9.5 25.2 2.3 9.2 Others Arequipa, Junin, Ancash, La Libertad, Lambayeque, Madre de Dios, Moquegua, Pasco, Piura, San Martin, Tumbes, Ucayali 39.4 11.3 33.5 44.5 21.0 33.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Based on data from Suarez, R. (1987), CUANTO S.A. (1991) 83 Table 11. Summary Indicators of Equity in Health, by Quintiles, 1991 Quintiles I H1 III IV V Total Characteristics Poor Rich % of people reporting illness-injury 29.3 29.3 34.5 31.1 38.1 32.0 % of people ill seeking care 32.3 48.9 53.4 60.9 58.9 50.3 Child Diarrhea ' 11.8 11.2 8.6 8.1 5.7 9.1 % of ill-injured reporting drug purchase 65.2 80.4 81.5 85.3 85.5 79.2 Type of person consulted, %: Professionalb/ 73.0 82.0 86.6 87.1 90.8 84.8 Technicalcl 23.1 15.3 12.6 11.5 9.1 13.6 Other"' 3.9 2.7 0.8 1.4 0.3 1.7 Source of Care %: Hospital 27.4 41.5 36.7 38.6 31.9 35.8 Center & Post 37.0 24.8 23.1 16.9 10.5 21.3 Clinic 9.7 19.6 26.1 28.9 44.8 27.1 Other' 25.9 14.1 14.1 15.6 12.8 15.8 Mean cost per consultation N$: (New soles) Hospital 0.82 1.07 0.80 1.32 0.80 0.99 Center 0.74 1.18 1.46 2.06 0.82 1.28 Post 0.61 0.61 0.78 0.54 1.81 0.68 Clinic 4.27 3.70 4.87 6.78 11.48 7.41 I Frequency in children under four years of age. bl Doctor, dentist, obstetrician, nurse. C/ Paramedic, health worker, pharmacist. ' Midwife, witch doctors and other. e/ Includes pharmacy, home of service providers, home of the patient, and other. Source: Elaborated from CUANTO S.A. (1992). Table 12. Income and Health Expenditures Inequalities. Share of Income Spent on Health Related Goods and Services, and Per Capita Expenditures by Deciles Decile Health Exp., % of % of Total Private Per Capita Hsld. Income Hsld. Expend. Expenditure, in US$ of 1988 I 0.55 0.34 0.69 II 1.11 1.21 2.75 III 1.25 1.83 4.13 IV 2.06 3.75 8.71 V 2.06 4.47 10.31 VI 2.43 6.21 14.21 VII 2.54 7.74 17.65 VIII 2.36 8.91 20.40 IX 3.58 18.13 41.49 X 4.46 47.40 108.65 Total and National 2.24 100.00 22.92 Average Source: Elaborated from CUANTO S.A. (1992). 84 BIBLOGRAPHY Alan Guttmacher Institute. 1994. Clandestine Abortion in Latin America. New York: Alan Guttmacher Institute. American Council for Voluntary International Action. 1989. Interaction Member Profiles, New York: Interaction. Andersen Consulting. 1993. 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