Nepal - Operational issues and prioritization of resources in the health sector

Report No. 19613 Nepal Operational Issues and Prioritization of Resources in the Health Sector June 8, 2000 Health, Nutrition and Population Unit South Asia Region Document of the World Bank  ABBREVIATIONS AND ACRONYMS DALY Disability Adjusted Life Years INGO International Nongovernmental Organization NHTC National Health Training Center NGO Nongovernmental Organization NLSS Nepal Living Standards Survey NPC National Planning Commission ODA Overseas Development Authority SWC Social Welfare Council UMN United Missionaries of Nepal UNFPA United Nations Population Fund UNDP United Nations Development Programme UNICEF United Nations Children's Fund UMN United Missions to Nepal USAID United States Agency for International Development Regional Vice President Mieko Nishimizu Country Director Hans M. Rothenbuhler Sector Director Richard Lee Skolnik Team Leader Ian P. Morris Task Leader Badrud Duza  i Contents Main Findings ................................................ iv Executive Summary ................................................. v CHAPTER 1 INTRODUCTION ................................................1 The Problem of Inadequate Health Care in Nepal .................................................1 Scope and Objectives of the Study .................................................I Collaboration ................................................3 Structure of the Report .................................................4 CHAPTER 2 A PROFILE OF NEPAL .................................................5 Socioeconomic Profile ................................................5 Demographic Profile ................................................7 CHAPTER 3 EPIDEMIOLOGY AND BURDEN OF DISEASE ............................................... 10 Illness and Death ................................................ 10 Burden of Disease ................................................ 13 CHAPTER 4 HEALTH FINANCING AND EXPENDITURES ................................................ 20 Public Spending on Health Care ................................................ 20 Private Spending on Health Care ................................................ 25 CHAPTER 5 HEALTH SYSTEMS ISSUES .......................................... 29 Institutional Constraints .......................................... 29 Clients' Views of the Sector .......................................... 38 CHAPTER 6 FUTURE STRATEGIES AND OPTIONS .......................................... 40 Using Cost-Effectiveness to Prioritize Health Care Interventions ........................................ 41 Recommendations ........................................................... 45 ANNEXES Annex 1 Nepal Burden of Disease Study ................................................................. 53 Annex 2 Results of Two Specific Cost-Effectiveness Studies and Proposed Health System Financing Scenarios under Different Expenditure Scenarios ................................................ 67 Annex 3 Methodology Used for Development of a Basic Health Care Package for Nepal ............... 69 Annex 4 Nepal at a Glance ................................................................. 71 References ................................................................. 73  ii Tables Table 2-1. Fertility Statistics and Population Projections, 1991-2011 ............................................8 Table 2-2. Projected Changes in Population in Nepal, 1991-2011 ..................................................9 Table 3-1. Estimated Cause-Specific Causes of Deaths in Nepal .................................................. 11 Table 3-2. International Comparison of DALYs Lost per 1,000 People ........................................ 14 Table 3-3. DALYs Lost per 1,000 People by Age, Sex, and Cause in Nepal ................................ 14 Table 34. Current and Projected Burden of Diseases Estimates for Nepal, 1996 and 2011 ......... 15 Table 3-5. Contribution of Death and Disability to Disease Burden ............................................. 15 Table 3-6. Distribution of Disease ]3urden (DALYs Lost) by Females in Nepal (1996) and Selected Other Countries, 1993 ................................................................. 17 Table 3-7. Distribution of Disease Burden (DALYs Lost) by Males in Nepal (1996) and Selected Other Countries, 1993 ................................................................. 18 Table 4-1. Reported Public Spending on Health Care, 1991/92-96/97 ......................................... 21 Table 4-2. Reported Public Health Care Spending by Source, 1991/92-1995/96 ......................... 21 Table 4-3. Reported Public Social Sector Spending, 1991/92-1996/97 ......................................... 22 Table 4-4. Underreporting of External Assistance to the Health Sector, 1991/92-1995/96 ........... 22 Table 4-5. Public Spending on Health Care Adjusted for Underreporting, 1993/94-1995/96 ..... 23 Table 4-6. Trends in Budget Allocation Shares by Major Components, 1991/92-1997/98 .......... 24 Table 4-7. Reported Health Care Budget Allocations and Expenditures, 1984/85-1996/97 ......... 25 Table 4-8. Public and Private Expenditure on Health by Financing Sources, 1995/96 ................. 26 Table 6-1. Desirable Allocation of Iivestment in Health Care, by Funding Source ...................... 42 Table 6-2. Priority Health Care Interventions Identified by Key Stakeholders ............................. 43 Table 6-3. Contribution of Top Five Interventions to Burden of Disease ...................................... 43 Table 6-4. Cost-Effectiveness of Safe Motherhood and Child Survival Package .......................... 44 Table 6-5. Cost of Providing Essential Safe Motherhood and Child Survival Package ................ 45 Table 6-6. Suggested Phasing of Short-, Intermediate-, and Long-Term Interventions ................ 48 Figures Figure 3-1. Causes of Death among Nepalese Males, by Age Group ............................................ 11 Figure 3-2. Causes of Death among Nepalese Females, by Age Group ........................................ 11 Figure 3-3. Distribution of DALYs Lost by Age and Gender ........................................................ 16 Boxes Box 6.1. What Kind of Interventions Are Most Cost Effective? Providing Disposable Delivery Kits Versus Creating an Intensive Coronary Care Unit ... ............................ 41  iii ACKNOWLEDGMENTS This report was prepared by Badrud Duza (Task Leader and Senior Population Specialist), with major contributions from G.N.V. Ramana (Public Health Specialist) and Tirtha Rana (Health Sector Specialist). Ian P. Morris (Senior Human Resource Specialist and Health, Nutrition and Population, Team Leader for Nepal) provided significant inputs in the finalization of the report. Substantive contributions were made by R.S.S. Sarma (Consultant, Demography), currently with the United Nations Population Fund, Myanmar, in demographic analysis; Ramesh Durvasula (Consullant, Epidemiology), of the Administrative Staff College of India, Hyderabad, India, in epidemiological, health expenditure, and technical efficiency analysis; and A.M. Moshtaqi Chowdhury (Consultant, NGOs and Stakeholder Analysis) of the Bangladesh Rural Advancement Committee, in the design and analysis of field research. Prof. Iswor Shreshtha and Ms. Munu Thapa, formerly on the faculty of the Institute of Medicine, Tribhuban University, Kathmandu, conducted several field studies on epidemiological patterns and the cost of health service delivery, with assistance from the Project Implementation Unit, Nepal Population and Family Health Project. Elfreda Vincent provided administrative support, and Jennifer Feliciano typed the final manuscript. Doris Knoles supervised the production of the final document. The Kathmandu field office of the German Agency for Technical Cooperation (GTZ) supported several background studies on NGOs, the private sector, and beneficiary assessment in health care delivery. The World Healt]h Organization (WHO) Country Office and GTZ contributed significantly to a stimulating dialogue on the formulation of the sector work that took place in cooperation with the team developing the government's Second Long-Term Health Plan. United Missions of Nepal made it possible, among other things, to estimate the burden of disease by opening up a rare store of data from their field hospitals and outreach programs in rural Nepal. Peer reviewers included Dean Jamison and Ok Pannenborg. The design of the study benefited from the initial guidance and involvement of Heinz Vergin (former Department Director for India, and Nepal), the late Jose Louis Bobadilla, Xavier Coll, Akiko Maeda, Tony Measham, Tawhid Nawaz and Helen Saxenian. Tawhid Nawaz also made detailed comments on the final draft. The report is endorsed by Richard Skolnik, Sector Director, Health, Population and Nutrition, South Asia Region, and Hans Rothenbuhler, Country Director for Nepal. The collaboration of the Planning Division of the Ministry of Heath and a number of other agencies within the government is gratefully acknowledged. Key policymakers and national and international experts attended a series of workshops held in Kathmandu in 1996 and 1997 organized by the Ministry of Health in conjunction with the Bank team, GTZ, and the WHO. In finalizing this report, the sector team benefited from valuable comments received during the Ministry of Health-World Bank workshops for discussion of the report held in Kathmandu and Dharan, Nepal, in July 1999.  iv MAIN FINDINGS This report asks three strategic questions: What are the main health problems (burden of disease) in Nepal? Does the allocation of resources correspond to those problems? What are the main problems affecting the health delivery system? The key findings of the report, all of which are consistent with the priorities of Nepal's Second Long-Term Health Plan, include the following: * Nepal's burden of disease will remain dominated by infectious diseases and maternal, perinatal, and nutrition-related disorders during the next decade. * Interventions outside the health sector-particularly efforts aimed at improving water, sanitation, and public hygiene-would have a strong influence on the burden of disease. * Current public sector allocations are low and poorly allocated. Between 1991 and 1996, primary health care expenditures fell from 77 to 57 percent of total health care spending. Quality-enhancing nonsalary recurrent budget allocations are woefully inadequate, and resources will remain constrained for years to come. * Many of the core problems are not associated with money but with weaknesses in institutions, governance, and the political will needed to undertake serious reform. ! The private and NGO sectors are active and should be able to do more in the future, particularly with enhanced public sector financing and a willingness on the part of both the government and nongovernment sectors to develop collaborative partnerships. Business as usual will not produce results in time to sustain active and increased donor support for the health sector. T]he efficiency and use of current resources must thus be increased. To do so, the report concludes that the government needs to focus on the burden of disease and its root causes. The government should immediately create a core package of essential health care services, take firm action to reallocate resources in support of that package, and improve its capacity to deliver health services, including through the active encouragement of partnerships with the private and NGO sectors. To move forward the government should create a strategic framework for the future development of the health sector. Without such a framework, progress acceptable to Nepal and the donor community will probably not be possible. This report proposes a series of reforms to be phased over the next 5-10 and 15 years.  v EXECUTIVE SUMMARY OBJECTIVES OF TIE STUDY 1. This study represents the first comprehensive analysis of health care delivery in Nepal. It achieves three important objectives. First, it identifies critical institutional and financial needs and gaps in Nepal's health care delivery system. Second, it suggests a policy framework for prioritizing and phasing in investments in health care. Third, it explores mechanisms for implementing feasible and desirable interventions that are efficient, cost-effective, sustainable and accessible. All of the report's recommendations reflect an understanding of the tight constraints facing policymakers in Nepal. 2. The study fills major gaps in our knowledge of Nepal's health sector. It expands our understanding of the current and prospective causes of sickness and death, the actual level of external assistance in the sector and the level of additional resources needed to meet basic needs, and the critical institutional and human resource constraints within health services. It also proposes a framework for prioritizing and phasing in investments in basic heath care services based on the key concepts of burden of disease and cost- effectiveness. 3. The study was conducted in conjunction with the government's formulation of the Second Long-Term Health Plan. Extensive consultations were made with national policymakers, medical professionals, the donor community, and other stakeholders. Research findings were also disseminated to all concerned agencies and to experts in the field for feedback. In the process, a broad-based understanding of the underlying issues and the need for action emerged. MAJOR FINDINGS OF THE STUDY 4. Nepal is one of the poorest countries in the world. Annual per capita income is just US$210 a year, and spending on health care by the public sector is a mere US$3.10 a person (including donor funding). Inadequate financial resources and the lack of institutional capacity coupled with debilitating poverty, massive illiteracy, persistently high fertility, and unabated population growth have prevented the health status from improving. Large projected increases in the population will place enormous pressure on already strained resources. 5. Rapid population growth rates continue to seriously constrain Nepal's development prospects and aggravate environmental fragility. Population growth, fertility, and infant mortality rates remain very high in Nepal, and life expectancy remains low. Even if population growth were to fall below its current level of 2.7 percent a year, the population could double in 35 years to more than 46 million, putting enormous pressure on already strained health care and related services. Over the next  vi two decades alone, Nepal's population is projected to increase by about 60 percent. This rate of population increase poses a major development problem. In the health sector, it will mean that a corresponding increase in health care services will be necessary just to sustain the current level of inadequate services. 6. Demand for reproductive health services is projected to grow even faster than the population, as the number of women of reproductive age increases by 71 percent. At the same time, the projected increase in the elderly population will increase demand for treatment of degenerative and noncommunicable diseases, especially in urban areas, where the number of elderly people is projected to rise more than threefold. Regional disparities in health indicators and health care are large. 7. Relative to people in other parts of the country, residents of rural and remote areas in Nepal have lower life expectancy and suffer more from chronic and acute illness. Life expectancy in the Kathmandu district, for example, is 74.4 years-much higher than the 55.0-year life expectancy of the average Nepalese. In contrast, life expectancy in the remote mountain district of Mugu in the Mid-Western region is just 37.4 years. 8. Almost all of the NGOs operating in the health sector in Nepal and most of the country's private providers are concentrated in the three relatively better-off regions of the country. As a result, the impoverished populations of the underserved areas depend heavily on public sector facilities, which are most deficient in those very areas. These regional disparities are among the worst in the world. Policyniakers must deal with the "unfiished agenda" of dealing with infectious and related illnesses. 9. Infectious diseases, maternal and perinatal ailments, and nutritional deficiencies are the major causes of sickness and death in Nepal, accounting for 50 percent of all deaths. The problem is particularly severe among children under 5, among whom intestinal infectious diseases, other bacterial diseases, pneumonia, and perinatal factors account for 80 percent of all deaths. 10. Burden of disease analysis confirms the need to focus on these pretransition disorders. Group I disorders, which include infectious diseases, maternal and perinatal ailments, and nutritional deficiencies, represent 69 percent of the disease burden in Nepal. The potential threat of HIA/AIDS further exacerbates the challenge in this area and demands priority attention. Degenerative and noncommunicable (Group II) diseases account for 23 percent of the country's disease burden, with injuries and accidents (Group III) accounting for 9 percent. Projections indicate that even by the year 2011, Group I diseases could still account for 61 percent of Nepal's disease burden. 11. More than half of the disease burden in Nepal (51 percent) is borne by children under five. Death and illness among 15- to 44-year-olds account for nearly a quarter of disability adjusted life years (DALYs) lost. That burden is borne disproportionately by women.  vii Special attention should be devoted to improving the health status of children and to targeting disadvantaged areas and the poor. 12. Top priority needs to be given to reducing the burden of disease caused by Group I diseases. These problems must be fully addressed in the immediate future. Interventions should focus on reducing childhood illness and promoting child survival by vaccinating all children and treating nutritional and related conditions. Interventions should also seek to increase cure rates for tuberculosis around the country, to prevent HIV/AIDS, and to manage sexually transmitted diseases. Targeted interventions should be aimed at disadvantaged areas and the poor. Health sector interventions also need to be fully integrated with efforts toward improving education, particularly of girls; safe drinking water; sanitation; and public hygiene. These interventions, outside the direct control of the Ministry of Health, would have a strong impact on the burclen of disease. Appropriately targeted, these interventions would also more than proportionately benefit the poor and directly assist in the reduction of illness they currently bear. Public spending on health care should focus on primary care. 13. Estimated public per capita spending on health care in Nepal is just US$3.10 a year. Even after adjusting that figure to reflect underreporting of external funding, spending remains at about one-fourth the level needed to provide a package of essential health services in a developing country. Policymakers thus face the dual tasks of trying to increase the level of resources and to better allocate the resources that are available. 14. Bank and other studies have shown that investing in primary health care is more effective than investing in specialized care. Allocative efficiency would thus suggest that primary heath care receive the bulk of health care sector financing in Nepal. Surprisingly, such allocations have declined in recent years, faliling from 77 to 57 percent of total sector spending between 1991 and 1996. External assistance to primary health care has also fallen. This trend must be reversed if the unfinishied agenda of controlling communicable diseases and improving maternal and child health services is to be completed. Institutional weaknesses and ineffective program management are at the root of poor service delivery. 15. Nepal's institutional capacity for strategic planning, policy development, resource mobilization, and coordination of external donors and national stakeholders is extremely limited. Skills in planning, management, health economics, and financial analysis are lacking. Responsibilities within the Ministry of Health and the Department of Health Services are poorly delineated. The Ministry of Finance lacks an effective mechanism for monitoring and coordinating domestic and external resources that flow into the health sector. Programs are inadequately integrated, resulting in duplication of effort and inefficient implementation. Planning, budgeting, operations, and monitoring functions remain overly centralized. Both quality and quantity of outreach services are diminished  viii by lack of drugs, supplies, and qualified health care providers and the problem of staff absenteeism, especially in remote areas. 16. The poor absorptive capacity of the Ministry of Health has inhibited both donor and government agencies from investing in the sector. During the past 12 years, as much as 20-40 percent of the already low development budget of the Ministry of Health has remained unutilized. Between 1989 and 1991, less than two-thirds of the allocated external resources were releasecl, and only about 60 percent of the original allocation could be used. The private sector and NGOs remain unregulated, and their activities are not integrated with those of the public sector. 17. The care provided by the private sector and NGOs is of uneven and often very poor quality. Lack of regulation means that many providers are unqualified or underqualified. New mechanismrs must be put in place to improve the performance and accountability of the public sector. Planning and management of services should be decentralized. Special incentives should be offered for public sector providers as well as providers from private sector and NGOs to operate in underserved areas. Local communities should be involved in monitoring public health programs. Substantial effort should made to improve the quality of care throughout Nepal. POLICY RECOMMENDATIONS 18. Several recommendations emerge from this study: Increase political commitment. * Health needs to be seen as a key national development priority. It should be backed by much stronger political commitment than in the past and by substantially scaled- up efforts and commitment to improve the country's health status. Focus on Group I diseases. * Infectious diseases, maternal and perinatal ailments, and nutritional deficiencies- which together account for 50 percent of all deaths, 80 percent of deaths of children under the age of 5, and 69 percent of the total burden of disease in Nepal-should become the major focus of the public health effort. Prevention of these diseases as well as the emerging threat of HIVI/AIDS will require comprehensive national programs of vaccination, treatment, surveillance, health education, and environmental improvement. Given the externalities associated with these efforts and the public good nature of most of these interventions, a strong public finance case can be made for using public resources. A substantial portion of public health care resources should be earmarked for cost-effective interventions aimed at reducing the major burdens of diseases. These resources should target the poorest segments of the population and people who live in underserved areas. In addition to public health  ix interventions under the direct control of the Ministry of Health, interventions aimed at improving water, sanitation, and public hygiene would reduce the underlying causes of a significant share of the disease burden. Support for elementary education, particularly for girls, has repeatedly been shown internationally to help ensure healthier mothers, children, and improved hygiene behaviors. Develop institutional capacity. * Top priority should be given to enhancing institutional capacity to strategically plan, coordinate, and implement core public health interventions at the appropriate administrative levels. An initial step would be to create a strategic framework based on addressing the key burden of disease problems. * Every effort should be made to use existing resources efficiently and effectively. Health care workers and facilities must be better utilized. The problems of absenteeism, staff shortages, and lack of equipment and supplies, particularly in rural and remote areas, must be remedied. Develop better health care systems. * New strategies for delivering public and curative health services include the development of public-private partnerships, appropriately subsidized by the public purse, and the inclusion of communities in the management and financing of services. Both of these opportunities should be vigorously pursued.