China - Basic Health Services Project

Report No. PID4350 Project Name China-Basic Health Services Project (@) Region East Asia and Pacific Region Sector Basic Health Project ID CNPE3566 Borrower People's Republic of China Implementing Agency Foreign Loan Office (FLO), Ministry of Health (MOH) 44 Hou Hai Bei Yun 100725 Beijing, China Tel: (86-10) 6401-5621/6303-0730 FAX: (86-10) 6303-0077 Date PID Revised December 1997 Project Appraisal Date January 1998 Project Board Date May 1998 Country and Sector Background 1. China made outstanding progress in raising the overall health status of its population during the 1960's and 1970's, as shown by reduction in infant, child and maternal mortality and increase in life expectancy. This progress was much greater than would have been predicted from the country's economic progress during that period. However there is good evidence that this progress has slowed during the last 15 years (1980-95), despite accelerating growth in GDP and personal income levels. The main contributor to this stagnation in national health status comes from the poor rural areas, associated with large disparities in health status indicators between rural and urban population groups and among different regional groupings of provinces. 2. China's early health gains were associated with improvement in basic living conditions for the rural masses and with establishment of a three-tiered health system (village, township and county level), which gave emphasis to prevention (often through community action) and to locally accessible primary health care through barefoot or rural doctors supported by the collective work unit. Declining government support of public health programs and the collapse of community financing of health services have been unintended consequences of the economic and social reforms which began at the end of the 1970's. Health services in poor rural areas have generally deteriorated in coverage, quality, efficiency, utilization and financial viability. Even in those poor counties where GDP and government revenues are increasing, government expenditure on health is not keeping pace and in many areas is declining both as a proportion of total government expenditure and on a per capita basis. Per capita health expenditure in designated poverty counties is less than half the national average, and of that 80 percent (twice the national average) is direct out of pocket  payment. The validity of the oft quoted statement that "poverty leads to ill-health and ill-health leads to poverty" is borne out by both by specific studies and by field visits in poor counties. 3. Health facilities in rural areas are planned and staffed in response to (unfunded) higher level directives and norms, with resulting duplication, competition and inefficiency. There is no mechanism for population-based planning or for allocation of resources according to health priorities. Services are provided and priced in an effort to maximize revenue for survival of individual health facilities (including support of retired staff), rather than to provide health benefits or meet client needs. Residents who cannot afford to pay do not seek health care; important public health programs are neglected. Health facilities at the three administrative levels (county, township and village) have ineffective referral and supervision relationships and in many counties are essentially in competition with each other for clients. 4. Project Objectives. The goal of the project is to assist the Government to achieve sustainable health improvement for the populations of poor rural counties. The objectives of the project are: (i) improved allocation and management of health resources; (ii) upgrading of rural health facilities; (iii) improved quality and effectiveness of health services and programs; and (iv) increased risk sharing and affordability of essential health care for the poor. 5. Project Description. The project has been prepared in two parts. Part I, the main Basic Health Services Project, will be implemented in six provinces (Qinghai, Henan, Guizhou, Gansu, Anhui and Shanxi) and the municipality of Chongqing (referred to as seven provinces), covering a population of 35 million in a total of 60-70 counties which will join the project in two groups. Part II, the Qinba Health Program (QHP), covers 13 million people in the 26 counties in Ningxia, Shaanxi and Sichuan provinces which are included in the Qinba Mountains Poverty Reduction Project (Ln. 4187- CHA/Cr. N028-CHA). 6. Part I has four components: (A) improved planning, management and health infrastructure; (B) health service improvement; (C) increased affordability of health care; and (D) project coordination and support. Each component is briefly described below. PART I, Basic Health Services (A) Improved planning, management and health infrastructure. (Al) Improved Health Sector Planning. This subcomponent supports implementation of the county health resource plan (CHRP), through funding incremental costs of the planning unit of each county health bureau, including: (i) local training and experience exchange for health planners; (ii) progress review through reports and site visits; and (iii) technical support to prepare annual workplans. (A2) Upgrading of Township Health Facilities. Based on revised service functions and standards, defined in the CHRP, this subcomponent will construct or rebuild and equip about 1,000 -2 -  township health centers (THCs) and referral level central township hospitals (CTHs) and institute arrangements for maintenance and repair. The project will fund construction costs, equipment, training and supervision. (A3) Improved Management Information System. This subcomponent will improve the collection and use of information for planning and monitoring health programs and project progress, through: (i) improvements to the current reporting system; (ii) surveys; and (iii) limited additional indicators for project monitoring. (B) Health service improvement. (B1) Improved Health Service Delivery. This subcomponent will: (i) establish effective supervision, service and referral relationships between county, township and village levels; (ii) implement standard case management for common health problems and procedures for infection control and x-ray safety; and (iii) pilot the use of essential drug lists to reduce dangerous and unnecessary prescribing. This component will be preferentially implemented in townships where CMS schemes are set up (see Cl below). The project will fund the development and introduction of policies and procedures, staff training, clinical supervision and technical support. (B2) Priority Health Interventions. The project will improve the coverage of selected cost-effective health interventions, targeting important health problems in the project areas. Priority will be given to improving maternal and child health (MCH), tuberculosis control and immunization programs, with others to be selected if these programs are already active. This subcomponent will be implemented by the county health bureau through township and village services, with project funding for baseline assessments, essential equipment, training and health education, and technical and program support. (C) Increased affordability of health care. (Cl) Cooperative Medical Insurance System (CMS). This subcomponent will help townships to establish risk sharing schemes, based on criteria and guidelines acceptable to IDA, beginning slowly and expanding according to experience. The project will fund start up costs, such as baseline analysis, scheme design, community mobilization and management development, and seed funds to promote initial participation. The county health bureau will supervise and monitor the schemes, with technical support from provincial health bureau. (C2) Poverty Relief. A poverty fund will be established in each township participating in the project, as a means to reimburse service providers in whole or part payment for essential preventive services and inpatient care for the poorest five percent of households, according to eligibility criteria acceptable to IDA. The fund will be managed at township level and supervised by the county health bureau. (D) Project coordination and support. Through this component the participating provinces and national level agencies will: (i) monitor and supervise the project; (ii) provide technical support to project implementing units; (iii) appraise proposals for the second group of counties; (iv) conduct investigations related to project progress or health problems in the project areas; and (v) analyze and disseminate the project experience. -3-  PART II, Qinba Health Program Project activities are grouped into two components at county level, covering priority interventions and the poverty fund, and one national level project management component. The objectives are consistent with those of the related sections of the main projects, with similar implementation arrangements. 7. Project Cost and Financing. The total cost is estimated at US$127.6 million, of which US$85 million will be provided by an IDA Credit. 8. Implementation Arrangements. The project will be implemented over six years, beginning early in FY99. MOH will be responsible for overall coordination and oversight of project implementation, through a Project Leading Group chaired by a Vice Minister and through a Project Expert Group. The implementing agencies will be the provincial and county governments, primarily the health bureaus. At each level of government there is a Project Leading Group, with membership of high level representatives of Health, Finance, Planning and other related bureaus, and a Project Technical Group, with experts from the health bureau and related institutions, to provide technical support and supervision. The Foreign Loan Office (FLO) will act as the secretariat of the Leading Group and as the project management office at central level. Each participating health bureau will maintain a project office, managed by a Project Director, to handle the logistics of implementation, including procurement and disbursement, preparation of workplans, monitoring and reporting, and coordination with the expert and leading groups and others as needed. 9. Part I counties will join the project in two groups. The project is being appraised on the basis of the first group of 28 counties, and an agreed procedure for preparation and appraisal of the second group. As a basis for project support, each county has drafted a five year CHRP, which will be reviewed and approved according to guidelines and procedure agreed with the Bank. The CHRP covers all rural health investment in the period, including the planned support of this project. 10. Project Sustainability. This section summarizes the sustainable project benefits, including: (i) health benefits, (ii) institutional and health program improvements; and (iii) adequacy of financial support. 11. Sustainability of health benefits. Although it is expected that health program improvements will continue after the project is completed, two groups of health benefits would endure in the individuals or communities concerned even if the programs were curtailed: (a) Gains in adult life from good health and health care in the formative years. There is increasing evidence of long-term health and productivity gains from intervention at key points in the life cycle, such as pregnancy, childbirth and early childhood. Thus, even if interventions for improved maternal and child care, and deworming of children to enhance growth and development, stopped at the end of the project, the individuals concerned would sustain - 4 -  these benefits into a more productive and healthy adulthood. (b) Interrupted transmission of infectious disease. If transmission of targeted infectious diseases can be sufficiently reduced, there will be long-term reduction in new cases. The major example in this project is tuberculosis, and the counties participating in the tuberculosis control program aim to achieve this level of impact during the project. 12. Increased institutional capacity. Institutional sustainability will be strengthened by improved planning and management, and having the county health bureaus focus on the overall development of the sector, rather than on the project in isolation. Continued commitment and capacity to sustain the main strategies and activities of the project are expected because: -- All key elements of the project are based directly on the national government's priorities in rural health, to which project provinces and counties have committed. -- The project will increase the competence and infrastructural capacity of the responsible institutions. -- The project will introduce planning mechanisms and monitoring systems, with improved information flow, to assist rational decision making. By the end of the project these mechanisms will be well established in a sustainable way. 13. Continued financial support of recurrent costs. China's public sector is among the smallest of any major country and cannot adequately fund essential government activities. IDA finance, in this environment, plays an important bridging role to a time when public finances are more firmly established. As long as the value and feasibility of the program activities are demonstrated through the project, it is expected that funds will be available for incremental recurrent costs, because: -- The government is committed to increase its allocation to essential health services, in line with the new policy. -- The increase in the recurrent budget required as a result of the project is estimated to be a manageable increment of the total health budget. -- Savings are anticipated from efficiency gains as a result of improved planning and management in the health sector. -- The project counties, although poor, are undergoing economic development which will increase the county government budget. -- As personal incomes grow, it is anticipated that family contributions to health expenditure and pre-payment or insurance schemes will also grow. -- Increased demand due to service improvements would also generate additional funding. -- For civil works, the project provides for maintenance contracts which would continue after the project is over. Lessons Learned 14. The lessons learned from previous projects are summarized - 5 -  below, and relate to: (i) the use of population based planning principles; (ii) focused support of priority health interventions; (iii) introduction of mechanisms to reduce financial barriers to services for the very poor; and (iv) experiments with rural cooperative health insurance. 15. The regional health planning approach, which identifies health priorities and coordinates resource allocation for a defined population (in contrast to independent vertical planning by health subsectors and by other sectors operating health facilities), was first demonstrated in China through the Integrated Regional Health Development Project (Cr. 2009-CHA). This approach has since been disseminated to other parts of the country, was adopted as a national health strategy in the Ninth Five Year Plan, and has been mandated as the basis for urban health finance reform. This new project adopts the same planning principles for county populations through the formulation of a county health resource plan. 16. The IEDC Project (Cr. 2317-CHA), especially the tuberculosis control component, has introduced cost effective public health interventions at village and township levels on a large scale. The Comprehensive MCH Project (Cr. 2655-CHA) also has promising experience of a package of service improvements and health education activities at these levels. The Project will build directly on this experience. Through the Comprehensive MCH Project, China has also piloted improved financial access for the very poor, using an earmarked poverty fund and a carefully designed benefits package. 17. Studies in financing and payment of rural doctors, being conducted in the Rural Health Workers Development Project (Cr. 2539- CHA), have shown that with a clear policy mandate and technical support, cooperative financing of essential services can be initiated in poor communities and grow from very basic coverage with small reimbursement on fee for service basis, to exert some influence on provider payment and behavior. 18. Environmental Aspects. The project is classified as environmental category C. 19. Benefits. The project will improve health facilities and services for an estimated 48 million people in about 90 counties of 10 poor provinces in China. All families in the project areas should receive improved basic health care, with particular benefits for those with health conditions amenable to the interventions supported by the project (primarily maternal and child care, tuberculosis control and immunization) and for very poor families eligible for medical relief. 20. Participating counties will gain the following benefits from the project: -- Improved skill and capacity of the health workforce at township and village level. -- Improved capacity and experience of county governments and especially the county health bureaus to plan, implement and monitor - 6 -  health sector investments and programs. -- Increased efficiency and effectiveness of resource use in the health sector. -- Technical and financial assistance in implementing and monitoring their rural health policy reforms. 21. The main benefit to prefectural, provincial and national level agencies will be capacity building to: (i) provide technical support to the project areas; (ii) monitor and evaluate the progress in implementation; (iii) conduct specific inquiries and research on issues arising during the project; and (iv) disseminate experience to other areas and contribute to further policy analysis and development. 22. Risks. The overall risk rating for the project is: M (Moderate). The project faces a number of potential risks to successful implementation, due to its innovative and comprehensive nature and its targeting of very poor communities: (i) efficiency gains of CHRP will be compromised by inadequate technical support, local pressures against change of hospital roles, and hasty civil works; (ii) there may be a lack of balance in implementation of components with preference for facilities improvement; (iii) people may not use the facilities and services provided, due to bypassing, dissatisfaction with quality/price, lack of market research, and inadequate attention to the growing private sector; (iv) inadequate technical support and supervision due to financial constraints; (v) counterpart funds delayed or insufficient, leading to slow implementation and disbursement; (vi) government/public contributions to CMS and poverty fund will not be sufficient; or (vii) people may be unwilling to contribute their scarce resources. Specific measures have been discussed with the government for better understanding and mitigation of these risks. Contact Point: The World Bank InfoShop 1818 H Street, N.W. Washington, D.C 20433 Telephone: (202) 458 5454 Fax: (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not necessarily be included in the final project. Processed by the World Bank InfoShop week ending January 30, 1998. - 7 -