Cambodia - Health Sector Support Project

Report No. PID10581 Project Name CAMBODIA-Health Sector Support (@) Project Region East Asia and Pacific Region Sector Health (75%); Sub-national government administration (13%); Central government administration (12%) Project ID P070542 Borrower(s) KINGDOM OF CAMBODIA Implementing Agency Address MINISTRY OF HEALTH Address: 151 - 153 Kampuchea Krom, Phnom Penh Contact Person: Dr. Char Meng Chuor Tel: 855 23 880 406 Fax: 855 23 880 407 Email: mengchuor.pcu@bigpond.com.kh Environment Category B Date PID Prepared October 7, 2002 Auth Appr/Negs Date October 2, 2002 Bank Approval Date December 19, 2002 1. Country and Sector Background Background. Cambodia is still struggling to overcome decades of war, genocide and social disruption, and remains one of the poorest countries in Southeast Asia (with one of the highest proportions of population living below the poverty line). Cambodia's economic and social indicators are more similar to those of most South Asian countries than to those of other Southeast Asian countries (except those of Lao PDR). Only 65% of Cambodian adults are literate (compared to 94? in neighboring Vietnam and 95% in the Philippines). Women in Cambodia face particular disadvantages, particularly in education, where female secondary school enrollment is only 59% of male enrollment in Cambodia, compared to 93% in Vietnam and 102% in the Philippines. Except for Lao PDR, Cambodia has the highest percentage of children in the labor force. Further, as indicated in the Box B.1 below, based on its current situation and its projected MDGs, Cambodia has been assessed as "not being on track" to reach these goals by 2015. Box B.1: Cambodia's MDGs (1, 4, 5 and 6) for 2015Reduce extreme poverty from 36% to 20% (MDG-l);Reduce the proportion of under-weight children under five years of age from 50 to 26% (MDG-l);Reduce infant mortality from 95 to 32 deaths per 1,000 live births, and under-five mortality from 125 to 41 deaths per live birth (MDG-4);Reduce the ratio of Maternal Mortality from 437 to 250 deaths per 100,000 live births (MDG-5);Achieve a reduction in HIV infection rates among the 15 to 49 years of age from 2.8 to 2.1% (MDG-6).Health Sector Issues Financing and Financial Resources Utilization Issues. Expenditures for health care in Cambodia account for 12-13% of GDP, the highest share among Asian developing countries. Nonetheless, in spite of this high proportion of GDP spent on health, public sector support for health care is low and access to and use of basic health services is inequitable. Health  expenditures financed from the Government budget are less than 5t of total annual expenditures or $2.90 per capita. External funding from donors and NGOs is two to three times higher than the Government share, and out-of-pocket household expenditures account for 82-84w of total health expenditures, one of the highest household shares in the world. Recent studies found that: (a) private providers deliver twice as many services as public providers; (b) both public and private providers offer low quality services; and (c) neither type of provider effectively reaches the poor population. With regard to the MOH budget, expenditures on primary health care are very low (2.7w of total MOH expenditures) and have not increased during recent years; expenditures on hospitals, although relatively more important (6.5w of total), have also remained very modest; but, expenditures for health administration and training (88w of total) are substantial. This disproportionate budget can be explained by health staff very low salaries. As a result of this budget situation there was no significant improvement in performance or in equity of access to services in the public sector. This situation is further worsened by problems with geographical distribution of financial and other resources, financial management and procurement. Capacity Problems. Over the past decade, the Government has made significant progress in reestablishing the health services destroyed by the Khmer Rouge regime. Initial emphasis on the reconstruction and rehabilitation of public health facilities has been complemented recently by increased attention to health service delivery (in both the public and private sectors) and to health sector reform, particularly in the areas of human resource development and sustainable financing. Despite such progress, the public health system remains far from operating optimally. MOH is not yet sufficiently able to: (a) establish a cohesive enabling environment linking policy, legislation, and regulation with sector activity planning; (b) work effectively with the 24 provinces and 73 operational districts of the country to plan and program health service interventions; (c) allocate and deploy resources efficiently to health care providers at different levels; and (d) monitor and evaluate the performance of the health service delivery system. Among the challenges facing MOH are: (a) adoption and subsequent enforcement of the legal and regulatory instruments for sector reform; (b) definition of roles and responsibilities for health services administration and health care delivery at national, provincial, and district levels; and (c) effective improvement of key sector-wide functions, particularly in the areas of: (i) accessibility to health facilities, quality of care and utilization of services; (ii) human resources development (including manpower planning); (iii) decentralized financial management; (iv) procurement (including various possibilities for contracting in and contracting out services); and (v) evaluation of sector performance. Quality, Affordability and Utilization of Services. Despite the population's poor overall health status great needs, public health services are under-utilized (e.g., the bed occupancy rates in public hospitals and the average number of consultations delivered in outpatient facilities are lower than in neighboring countries). In addition, household survey data indicate that service utilization is inequitable, and access and affordability of services for the poor remain critical. Distortions in the geographical distribution of health personnel and facilities contribute to the problem of access to services while the precarious quality of health care services contributes to service underutilization. In addition, the persistence of under-the-counter payments (albeit reduced in the last years by the establishment of user - 2 -  fees), the inadequacy of risk pooling arrangements, and the scarcity of health facilities in the poorest geographical areas result in a much lower use of services by the poor. One of the major challenges of the current sector reform is to raise the quality of services and increase service utilization while simultaneously maintaining or improving the affordability of the minimum (MPA) and complementary (CPA) packages of services. There is also a need to better inform the consumer on the existing services and raise the demand for public services. Also, it is essential to improve user satisfaction regarding the services provided by both private and public sectors. Problems with Drug Quality and Utilization. While drug availability has improved since the introduction of the Cambodia National Drug Policy in 1995, key problems remain as follows: (a) MOH's capacity to adequately purchase pharmaceuticals remains limited; (b) problems with drug management and distribution persist; and (c) funding from the public budget is insufficient to cope with price and drug consumption increases. Further, the ability to control for drug quality is modest and the enforcement of drug regulations is plagued by logistical and personnel problems. About 2000 illegal pharmacies, spread all over the country, do not comply with the Food and Drug Department (FDD) regulations and provide drugs of poor quality. As a result, public health facilities as well as private pharmacies do not provide adequate access to quality and affordable essential drugs, which affects in particular the poor living in the remote areas of the country. In addition, drugs are rarely prescribed in compliance with standard treatment guidelines. While drugs are theoretically free for the indigent seeking care in the public sector, drug quality is poor (according to health providers) and many essential drugs are not available for long periods of time. Burden of Communicable Diseases and Emergency of HIV/AIDS Epidemic. Because Cambodia is at the beginning of its demographic and health transition, the burden of communicable diseases as well as pregnancy-related conditions is still very important. As indicated in Table B.3 below, the risk of death is high for infants, children, and pregnant women: in 1997 the Infant Mortality Rate (IMR) was still around 95; the Under Five Child Mortality Rate was approximately 115 per 1,000 live births; and the Maternal Mortality Rate (MMR) was estimated at 900 per 100,000 live births. It is worth mentioning that in recent years progress has been made in all these indicators: IMR was estimated at 65.4 in 2001; Under Five Mortality Rate at about 130 per 1000 in 2000; and MMR at 473 per 100.000 live births. In spite of these improvements, the health status of the Cambodian population remains critical and compares poorly with most of the other countries in the region. Also, Cambodia has high fertility rates (Total Fertility Rate is 5.0), Contraceptive Prevalence Rate (modern contraceptive methods) has not reached 20%, and the Population Growth is still at around 2.5%. Table 1: Health Indicators in Cambodia and Selected Southeast Asian Countries in 1997HIV/AIDS Prevalence (-)Maternal Mortality Rate(per 100,000 live births)Under 5 Mortality Rate(per 1,000 live births)Children Under 5 with Moderate and Severe Stunting(-)Low Birth Weight(-)Cambodia 2.40 (a)900 115 (b) 53.0 (c) (96)18IndonesiaO.053906042.0 (95)llLao PDRO.0466012247.0 (94)18PhilippinesO.062104132.7 (93)llVietnam 0.221054047.0 (94)17Sources: World Bank (1999). (a) 1.8 in 2001; (b) Ministry of Health (1999) for a ten-year period (1993-1998); and (c) 44.6% in the year 2000. Diseases for which cost effective interventions are available (that is, which could be avoided if resources were available and appropriately used) affect the health status of the population in Cambodia to an -3 -  overwhelming extent; among these, communicable diseases remain the main causes of morbidity and mortality. According to the recently conducted Joint Health Sector Review, three quarters of the burden of all diseases could be eliminated. Child mortality, for example, could be reduced by up to 23? by providing vitamin A supplementation, an easily implementable and cost-effective strategy. Similarly, important improvements in child health status could be derived from a more effective immunization program. As in other developing countries there is limited access to safe water and appropriate sanitation, and acute respiratory infections, water borne diseases, diarrhea, and Neonatal tetanus are among the main public health problems. Other important public health problems are tuberculosis, malaria, dengue and STIs/HIV/AIDS epidemic. Tuberculosis (TB) is still one of the most important infectious diseases in Cambodia. The TB (all forms) incidence rate is estimated at 540 new cases per 100,000 inhabitants and the smear-positive pulmonary tuberculosis incidence rate at 241/100,000. Among the issues contributing to this situation are the poverty of the population, the lack of access to health facilities in some remote geographical areas, the inadequate level of performance of public health facilities, and the emergence of multi-drug resistant TB strains. In response to this high level of the TB epidemic, the MOH has strengthened the capacity of the National Center for Tuberculosis Control, has adopted and implemented a very efficient strategy (i.e., the DOTS or the Directly Observed Treatment Short course strategy), has improved the delivery of TB control activities by integrating them into the health service delivery system, and has adopted the National Health Policies and Strategies for TB control for the Kingdom of Cambodia for the period 2001-2005. As a result of these efforts, the TB cure rate has improved dramatically (more than 85% of the new detected cases are successfully treated and become sputum negative). Malaria is still highly prevalent in some areas of the country (in the central region the malaria transmission is moderate, while in the northeast and northwest regions malaria transmission is very high). Although recent indicators seem to suggest that the epidemic might have started to decline due to the implementation of the impregnated bed nets and impregnated hammock-nets policy, the malaria epidemic remains an important public health concern in Cambodia. Climatic conditions, the high level of poverty and population mobility, the weaknesses of the public infrastructure (roads, communications and health services in particular in the remote areas) and the development of drug resistance contribute to the complexity of the malaria epidemic. The malaria control program is integrated in the provincial and district health services (the staff of all provinces and of those districts affected by malaria include malaria supervisors) and executed at the commune level by the network of public health facilities. The importance of the epidemic is documented by the fact that malaria remains the first cause of hospitalization (14% of all hospital admissions and 23% of all hospital deaths are due to malaria) and the third cause of attendance of public outpatient services (the very many consultations for malaria which occur in private sector are not recorded). The malaria case fatality rate (1.1% for the entire country) is higher than in the neighboring countries. To some extent, malaria program activities are relevant for curbing dengue hemorrhagic fever which is another important epidemic disease. Dengue (a viral diseases which is also transmitted through a mosquito vector) increasingly affects the children living in urban areas and has started to spread to other population groups and new geographical areas. The dengue control activities aim at: (a) protecting the population at risk (limiting - 4 -  contact with and development of the vector); (b) early detection and appropriate treatment of cases; and (c) improving health provider skills. In contrast with the malaria and TB programs in which the donor community has provided substantial support, the dengue control program has received less support and has a larger financial gap. The HIV/AIDS epidemic, resulting primarily from heterosexual transmission of the HIV virus, is another major challenge. HIV prevalence in Cambodia is the highest in Asia, and the number of reported AIDS cases has increased sharply in recent years. However, it is worth mentioning that from 1997 to 2000 the number of people living with HIV/AIDS (PLWHA) (estimated on the basis of available HIV and behavioral surveillance data) has declined, from 210,000 in 1997 to 170,000 in the year 2000. This was measured with similar techniques and occurred, very likely, as a result of the activities to increase awareness and improve sexual behavior, and of the concomitant death of AIDS cases. Notwithstanding this decline, the epidemic remains high (at about 3.7T in the population 15-49 years in 1999), and HIV/AIDS control activities maintain their importance. With the participation of many external and internal partners, the MOH (through its National Center for HIV/AIDS, Dermatology and STI) has developed a "Policy for HIV/AIDS prevention and care in the health sector in Cambodia", and a Strategic Plan for 2001-2005. The priorities of the HIV/AIDS policy are: (i) the reduction of transmission through activities in groups at high risk aimed at decreasing STIs and promoting "100w condom use"; (ii) the provision to the general population of IEC, counselling and testing services; and (iii) the strengthening the health delivery system. Other important areas of action are: the provision of STI services using both public and private providers, blood safety, mother to child transmission, AIDS care (treatment of opportunistic infections, guidance on AIDS case management, guidance for health providers to avoid stigmatization of PLHHA, expansion of home-based AIDS care programs, HIV counselling and testing, and epidemiological surveillance and research. Nutrition Problems. Another important underlying factor of the high morbidity and mortality rates in Cambodia is the poor nutritional status of children under 5 years of age and women. Cambodia has the highest rates of under-nutrition in children under 5 years of age in the region: 44.6w of children under five are stunted (low height for age) and 45t of children are underweight (low weight for age). Rates of micronutrient malnutrition also are high. Sixty-three percent of 6-59 months old children are anemic (hemoglobin < 11 g/dL) with high rates of severe anemia (hemoglobin < 7g/dL) in the 0-11 month age group. In Cambodia, 6.9w of 0-11 month old children are severely anemic (it is considered a public health problem when the prevalence of severe anemia is greater than 2W). Also, 58t of 15-49 year old women are anemic with high levels (> 2W) of severe anemia in pregnant women. Iodine deficiency disorders are endemic in some areas of Cambodia. The latest survey, in several provinces, found goiter in 12t of school children and in two out of three women. Eight percent of women have night-blindness, a manifestation of severe vitamin A deficiency. The consequences of malnutrition in Cambodia are significant. It is estimated that in 49t of childhood deaths under-nutrition is an underlying cause of death, i.e., 49t of children would not die from a childhood illness if they were well-nourished. High Maternal Mortality and Other Reproductive Health Problems. Although declining, maternal mortality is still very high (437/100,000 live births) due to inadequacies of the health care system, poverty, and high fertility rates. About half of pregnant women are not seen by a trained professional for ante-natal care (33.8w in rural - 5-  and 62.39 in urban areas). Similarly, many deliveries are not assisted by a qualified health provider (surveys show that only 14-19% of women with life-threatening obstetrical complications reach a hospital and when they do it is generally late). Moreover obstetric care is expensive and this affects the access of poor women (who also have the highest fertility rates). Other important aggravating factors are the low utilization of contraceptive methods, the frequency of unsafe abortion and the poor level of obstetrical care of most public health facilities (because of deficiencies of the physical infrastructure, obsolete equipment, lack of drugs and blood, unsatisfactory skills and lack of motivation of doctors and midwifes).Government Strategy Since 1996 the MOH has pursued a comprehensive reform of the health sector aiming "to promote people's health, enabling them to participate in the development of the socioeconomic sector and reduce the poverty in Cambodia." The reform is based on the fundamental principles of equity in accessibility to quality basic health services and protection of the poor. Its principal strategies include: (a) promoting women and children's health; (b) reducing the incidence of communicable diseases; (c) improving access to quality health care for all categories of the population; (d) upgrading health staff skills; (e) extending and strengthening private sector participation; and (f) reforming the health financing system by adopting more equitable budget allocation principles and developing cost recovery. The MOH has initiated a sector-wide management reform (called SWIM) to improve sector performance through: (a) the formulation of a sector strategic plan and annual operational plans; and (b) the enhancement of health sector management capacity. In August 2002, at the end of a comprehensive strategic planning exercise (assisted by DFID and in consultation with all main stakeholders) that reviewed and updated the sector strategies, the Health Sector Strategic Plan was adopted. SWIM will also help strengthen donor coordination at national and provincial levels and, more generally, it will foster decentralization and improve stakeholder participation in the decision making process for the health sector. The proposed WB-HSSP would address the remaining sector reform issues as currently expressed by the GOKC, namely that the MOH must: (a) strengthen the sector management, planning and financial management capacity in order to achieve efficiency gains; and (b) demonstrate, ultimately, tangible and sustainable improvements in health status. To this end, the MOH is committed to: (i) implementing a coherent sector policy and strategy in a collaborative and transparent manner (thus maximizing the impact of combined donor, government and community resources); (ii) improving MOH capacity to lead and manage health services and resources, including on donor-funded activities; and (iii) adapting more flexible funding arrangements and sharper prioritization in budget allocation to ensure sufficient financing for essential activities. The National Health Strategic Plan 2003-2007 presents the key sectoral priorities and provides the overall framework for implementing the SWIM; these priorities include: (1) increased accessibility to quality health services, based on (2) the MPA (at Health center level) and (3) CPA (at first referral level); (4) health provider behavioral change to respond to the client's need; (5) quality improvement; (6) human resources development; (7) health financing; and (8) institutional development. The introduction of medium-term plans and annual sector review exercises combined with an improved annual planning process at all levels will guide implementation and provide details for monitor program progress and performance. -6-  2. Objectives The objective of this project is to contribute to the improvement of the health status of the population by: (a) increasing the accessibility and the quality of health services; and (b) supporting the Royal Government of Cambodia (RGC)'s health sector reform process and strengthening the sector's capacity to manage resources efficiently. The project's specific objectives are to: (i) develop affordable quality health services with emphasis on primary health care and first referral services in rural areas; (ii) increase the utilization of health services by the poor; (iii) mitigate the effects of infectious disease epidemics and of malnutrition; and (iv) improve the health sector's capacity and performance. 3. Rationale for Bank's Involvement The value added by the Bank is the focus on health care financing, provider payment issues, risk and cost sharing and, more generally, efficiency gains, health sector reform and protection of the poor. Since the proposed project will also be, to a great extent, a follow-up project to the current Disease Control and Health Development Project, IDA financing to the sector will further support the country's: (i) priority programs in areas such as Malaria, TB, Dengue and HIV/AIDS; and (ii) internal contracting mechanisms through the Health Management Agreements (HMAs). Lastly, the Bank commitments to (a) poverty alleviation, translated already in the project's emphasis on accessibility and affordability of services for the under-served population groups, and (b) macro-economic development, will contribute to improved equity and sustainability in the sector. 4. Description The proposed WB-HSSP design responds to: (a) Borrower's explicit demand to use the IDA credit to launch and implement the Health Sector Strategic Plan for 2003-2007 using a sector-wide management approach (SWIM) and (b) Bank's and other donors' concern with the complexity of such an approach for which the sector does not posses the entire required capacity. Consequently the WB-HSSP includes: (i) the commitment to strengthening sector capacity (to which ADB and DFID but also WHO, GTZ and all other partners will also contribute through their financing and programs); and (ii) the agreement that while activities have been identified and costed for the entire duration of the project, starting with the third year of the HSSP (and using the Annual Review and Operational Planning process adopted by the Borrower to operationalize the Health Sector Strategic Plan), adjustments or new allocations will be made depending upon the needs of the sector and the level of available funding in each respective year. Further, both to examine progress in the achievement of development objectives and to help HSSP adapt, in management terms, to an annual review and planning process, the HSSP mid-term review is scheduled to take place at the end of the second HSSP year of implementation. The project aims at improving the health status of the population by providing support for: (a) reforming Cambodia's health sector; (b) strengthening the sector's capacity to manage resources efficiently; and (c) improving the performance and the quality of health services. In particular, the project will focus on equity in the utilization of health services by the poor, by improving the accessibility and affordability of health services and by increasing the demand for such services amongst under-served groups. Utilization rates of various income groups will be monitored - 7 -  during project implementation and changes in health outcomes evaluated. While supporting the sector-wide feature of the GOKC program for the health sector, the WB-HSSP will also focus on specific priority areas, including: (a) Longer term activities requiring a sustained, coordinated approach, e.g., infrastructure development, equipment and maintenance, pharmaceuticals (essential drugs) and human resource development; (b) Proven cost-effective interventions, relevant to the situation in Cambodia and to which the Bank and its partners are committed, specifically: (i) poverty alleviation (development of quality affordable services for the poor and of different arrangements to protect the use of services by the poor, women and children); and (ii) reduction of major public health problems (such as: infectious diseases in general, and TB, malaria, dengue, and HIV/AIDS in particular, and malnutrition); and (c) Capacity building and health sector reform, especially by addressing issues in areas such as health financing, planning and financial management, and by supporting other activities conducive to allocative efficiency and other efficiency gains, including the decentralization process, generalization of Health Management Agreements (HMAs) to ensure accountability of health providers, donor coordination, and the strengthening of provincial and Operational Districts' (OD) health administrations.Components:(1) Improved Delivery of Health Services (for the benefit of the poor and rural population). Under this component the project will provide support to increase:(1.1) Accessibility and quality of health services. The first objective of this sub-component is the continued development of primary health care facilities and first referral and provincial hospitals, by financing civil works (rehabilitation and new constructions), equipment, and maintenance. A health infrastructure development plan will be developed with HSSP financial support and Bank assistance will focus on rural and remote provinces. This plan will ensure that: (i) investments in infrastructure take into account Cambodia's potential to cope with the recurrent expenditures entailed by such investments; and (ii) the siting of health facilities to be constructed or rehabilitated under HSSP is decided on sound criteria (such as accessibility, utilization rates, health needs, and proximity to private facilities). Other issues such as equipment needs and maintenance services will also be supported, inter alia, by establishing maintenance workshops in districts, and by providing training and technical assistance. The project will also help reduce, through this and other components, some of the current problems with the availability of health providers (very important in rural areas and remote provinces), skill and motivation.The project will support activities to improve the quality of services by providing financial resources to carry out the training of the minimum and complementary packages of activities (MPA and CPA) and particularly, in collaboration with WHO, of the MPA Module 3 (Child Health/IMCI). Other project components will also support MPA/CPA training e.g., Nutrition, Infectious disease control. The project will also help the MOH to establish a Quality Improvement/Quality Standards unit and to finance the activities of this unit after its inception. In collaboration with GTZ, the project will support QA activities in the three districts of the Kampong Thum province. This will include training, supervision, development of quality indicators and of materials to support the health providers in the delivery of curative and preventive care. HSSP will also provide program support for the establishment of (i) performance-based reward systems and of contracts with health providers, (ii) arrangements to increase user participation in decision making and to assess user satisfaction, and (iii) equity funds to - 8 -  pay for the services delivered to the poor population (the equity funds will be based on the same model as the one adopted in the Sub-component 1.2 and supported financially from it). Lastly, funding will be provided to help solve current problems with drug quality, utilization and availability throughout the health services. Project supported activities related to drugs will ensure that the goal of providing affordable and good quality drugs to the entire population, and of preserving or enhancing the affordability of drugs for the poor, will be reached. These activities will include (i) upgrading the National Drug Quality control laboratory to meet international standards, (ii) carrying out of a feasibility study on cost recovery of drugs and drug revolving funds (DRF), (iii) supplying drug kits to health centers, and first & secondary referral hospitals to meet the needs of the Minimum Package (MPA) and the Complementary Package of Activities (CPA), (iv) strengthening of the capacity of the Food and Drug Department, and (v) carrying out a feasibility study on the establishment of a central drug procurement unit. Other HSSP supported activities (e.g., the expansion of health facilities, the improvement in sector financing and efficiency, the strengthening of MOH capacity and the support to programs addressing main public health problems) will also contribute to the improvement of the drug situation.(1.2) Affordability of health care services. Under this sub-component, the credit will finance alternative means to increase the accessibility and improve the affordability of health services for the poor and under-served populations. These include modifications of the recent, innovative donor-supported pilot programs which have been able to mitigate existing deficiencies in management capacity and funding by strengthening local management capacity and increasing sustainable local funding. In addition to activities specifically focused on helping poor individuals and households to afford health services, it should also be noted that the project will also benefit the poor through: (i) development of primary health care (preventive and curative) services; (ii) financing of health facilities in the rural areas of the country; (iii) strengthening of infectious diseases control programs; (iv) development of nutrition activities; and (v) improvement of procurement and distribution of essential drugs. Such strategies are particularly beneficial to the poor who are frequently living in the remote areas of the country and more often affected by infectious diseases and malnutrition, and who cannot afford to purchase drugs from private pharmacies.Given the credit's emphasis on poor and under-served groups, it will be crucial to monitor access to and affordability of health services for these groups over the life of the project. The project design uses the information provided by initial beneficiary assessment to target the under-served population groups, while the final project evaluation will include a similar assessment. (2) Improved Programs Addressing Public Health Priorities.(2.1) Infectious diseases control programs. The TB, Malaria, Dengue and STI/HIV/AIDS programs will receive support from the project. These interventions are important from an epidemiological standpoint in Cambodia and are consistent with the World Bank Strategy for Health, Nutrition and Population in the East Asia and Pacific Region due to their high cost effectiveness ratios and contribution to equity. Because of their importance, the infectious disease control activities will be mainly financed through IDA grants: US$2.2 million for malaria; US$2.7 million for TB; US$0.9 for dengue and US$2.0 million for STIs/HIV/AIDS. The implementation of Dengue control activities will be entrusted to WHO.Malaria: The project will support the further development -9-  of: (a) impregnated bed-nets and hammock-nets program; (b) activities to cope with the emerging problem of parasite drug resistance; (c) case detection (laboratory equipment and training); (d) case management (with emphasis on early treatment of complicated malaria cases, malaria in children and in pregnant women); (e) supervision and improved surveillance; and (f) IEC activities with focus on minority groups and other under-served populations to increase their demand for services. The project will also (i) support the procurement of environmentally safe insecticides to be used for the impregnated bed-nets and hammock-nets program and for indoor spraying (to reduce mosquito transmission and containing malaria outbreaks) and (ii) provide overall support to the malaria program, both at central and provincial and district levels (training, technical assistance, minor civil works, laboratory and other equipment). Dengue: In collaboration with the National Dengue Program and WHO, the project will contribute to this program that aims at strengthening: (i) early diagnosis and appropriate clinical management; and (ii) vector control, in synergy with the malaria program where appropriate. Dengue control activities financed from HSSP will be executed by WHO. The activities that will be financed from the credit will focus on the provision of logistic support for larvicide distribution and training, and the phasing in of more sustainable control strategies (such as impregnated jar lids). Tuberculosis: The project will support the implementation of the TB program's Strategic Plan in its entirety and will focus on: (i) integrating TB activities at health center and district hospital level including the implementation of the Directly Observed Treatment (DOTS) and its further devolution to communities; (ii) increasing the TB case detection rate and reducing the defaulting rate; (iii) improving the laboratory capacity and strengthening supervision and management activities at district and province level and (iv) developing IEC and other activities promoting behavioral change to increase the detection rate and, in particular, the use of services by under-served populations such as minority groups and the poor in general. HSSP will finance supervision, training, technical assistance, minor civil works, laboratory equipment. Additionally, the HSSP will finance activities in collaboration with the HIV/AIDS program aiming at controlling the spread of TB in AIDS patients and providing better care to the TB/HIV positive patients.STIs/HIV/AIDS: The project will support the procurement of STI drugs and the implementation in the field of the "100t condom use" strategy that targets specifically sex workers and other high risk groups and effectively decreases STIs and HIV transmission. (2.2) Nutrition activities. Because of the alarmingly high rates of both under-nutrition and micronutrient malnutrition in Cambodia and the consequent effect that malnutrition has on morbidity, mortality, educability and productivity, the HSS project will finance an essential package of preventive and curative nutrition activities inducive of behavior changes. The nutrition activities selected to receive financial support from the HSSP have been shown to be the most cost-effective in reducing the developmental and productive problems associated with malnutrition. This essential package includes the following: 1) exclusive breast-feeding for infants 0-6 months; 2) timely and adequate complementary foods for children from 6 months to 2 years of age with continued breast-feeding until 2 years of age and promotion of an adequate diet for women of reproductive age, particularly pregnant women; 3) appropriate care of sick and malnourished children; 4) provision of iron-folate supplements for women and children; 5) provision of vitamin A for women and children; and 6) availability of - 10 -  iodized salt for all members of the household. (3) Strengthened Institutional Capacity. Under this component, the project will provide appropriate support to ongoing efforts at central, provincial, and district levels to strengthen key health sector functions, including: (a) oversight of the policy, legislative and regulatory framework for health service administration; (b) sector planning and program coordination of health care delivery; and (c) management of sector resources (human, financial, and material including infrastructure, drugs, etc.). An additional function, monitoring and evaluation of sector performance and health status, will be financed jointly by ADB and DFID.(a) Oversight of the policy, legislative and regulatory framework. The project will support: (i) local legal consulting services to help the ministry formulate a legislative program and to draft appropriate legislation; and (ii) translation services and dissemination of information through the production of materials and the organization of workshops for health personnel, local authorities, and public opinion leaders.(b) Sector planning and program coordination. In addition to sector reforms, the Project will: (i) strengthen MOH's capacity for analyzing health sector financing; (ii) develop the planning roles and capabilities at central and decentralized levels; and (iii) reinforce the coordination and monitoring of plan implementation. Specifically, the Project will use the proposed medium-term expenditure framework (MTEF) exercise as the basis for improving health sector financial analysis, introducing a medium-term planning process, and strengthening annual planning guidelines and procedures. The Project will also support the progressive decentralization of the planning process and the integration of planning and budgeting activities.The project will contribute to the organization of annual sector reviews, which will be carried out by an independent organization, with oversight from a suitable institution within MOH (e.g., NIPH, CoCom, Directorate General for Inspection, etc.) responsible for contracting and managing the reviews, disseminating the findings, and incorporating them into MOH policy-making and planning processes. (c) Management of sector resources. The Project will assist MOH to solve the present problems with human resources in regard to: (i) manpower planning and management, and (ii) improvement of skills and performance. Based on the Health Workforce Development Plan (1996-2005), the recommendations of the biennial workforce development plan reviews (of 1999 and 2001), the National Policies and Strategies for Human Resources for Health (1999-2003), and the proposed reforms of the National Program of Administrative Reform (NPAR), the Project will support measures to: (a) strengthen manpower planning and personnel management at all levels; and (b) improve the knowledge and skills of health service providers and administrators.In addition to strengthening human resource development, the project would also focus on strengthening financial resource management and procurement capabilities. With respect to financial management, the project will finance: (i) the recruitment and training of financial management staff at central, provincial, and district levels; (ii) the development and implementation of systems acceptable to both the Government and IDA along with a policy and procedures manual; and (iii) the creation of a strong internal audit function within MOH. With respect to procurement, the project will finance: (a) additional staff and training on Bank procurement policy and procedures; and (b) the recruitment of an international procurement advisor and four national procurement consultants to supplement MOH capacity. Additional training for provincial health departments will also be provided if they are to be - 11 -  given responsibility for procuring small contracts for civil works, drugs, other goods and services. (d) Monitoring and evaluation. The project (through ADB and DFID financing) would support efforts to improve M&E analytical capabilities and expand its investigative range to include: (i) systematic comparison of the outcomes of the various on-going pilots and experiments (HMAs, contracting in and out, boosting, etc.); (ii) surveillance of health service delivery outside the public sector to provide a comprehensive view of sector-wide change; and (iii) use of the information to improve health sector governance, in particular at the local level (by increasing information to health center management committees, feedback committees, and NGOs. 1. Improved Delivery of Health Services (for the Benefit of the Poor and Rural Population) 1.1 Accessibility and Quality of Health Services 1.2 Affordability of Health Services 2. Improved Programs Addressing Public Health Priorities 2.1 Infectious Diseases Control Programs 2.1.1 Malaria 2.1.2 Tuberculosis 2.1.3 Dengue 2.2 Nutrition 3. Strengthened Institutional Capacity 5. Financing Total ( US$m) BORROWER $3.00 IBRD IDA $17.20 UK: BRITISH DEPARTMENT FOR INTERNATIONAL DEVELOPMENT (DFID) $1.84 IDA GRANT FOR POOREST COUNTRY $7.80 IDA GRANT FOR HIV/AIDS $2.00 Total Project Cost $31.84 6. Implementation Project Implementation. The project implementation period is expected to start January 1, 2003 and last for a period of five years. Use of a Project Coordinating Unit (PCU) is not envisaged by the Borrower; instead, MOH capacity will be strengthened both before credit effectiveness and during implementation to enable MOH to become the implementing agency and to operate without a PCU. To carry out the preparation work in a coherent and coordinated manner, the MOH appointed a project director, a project coordinator and a project preparation team comprising the heads of the programs to be supported from the credit. For implementation, the government will establish a Steering Committee comprising representatives from the Ministry of Health, the Ministry of Economy and Finance, and other key ministries as needed. The Steering Committee will be responsible for the overall project direction. The Planning Department in the Ministry of Health will have the responsibility for coordinating the project activities. Also, at Pre-Appraisal, the procurement, financial management, planning and donor coordination capacity were assessed and plans to strengthen MOH capacities in these areas were developed. Annual Planning and Budgeting. The early strengthening of the planning and donor coordination capacity is a must as the project will finance activities identified at the preparation phase (using as a reference the sector's Policy and Strategic Plan, the Health Coverage Plan, and other policy - 12 -  documents and programs), but will reassess their relevance on an annual basis (using the Annual Review and Planning Process). Within the context of this annual process, identification and financing of the HSSP activities may be modified, provided that the proposed activities are consistent with and contribute to the project's development objectives. The case of TB and Malaria activities to be financed from the IDA credit illustrates best the flexibility and adjustment features built into the WB-HSSP design: an amount of US$4.9 million was provisionally earmarked to support the activities of these two programs. Each year, a decision will be made regarding the WB-HSSP financial support to these programs taking into account the needs of the programs and the financial gap determined at the end of the previous year. If the Government receives the anticipated grant funding for these programs, the unused part of the US$4.9 million provisional allocation for TB and Malaria will supplement the funding of WB-HSSP Component 1. A plan to improve capacity in all the above mentioned four areas (i.e., procurement, financial management, planning, and donor coordination capacity) was discussed and agreed upon with MOH at Appraisal. This plan takes into account the existing capacity and future needs, and will schedule the most important steps necessary for the strengthening of MOH before credit negotiations. Further steps will be included in the project's component on capacity building and health sector reform, and also cross referenced in the DCA as legal covenants. Contracting in and out activities with NGOs, community groups, decentralized health administrations, public providers, and the private sector is envisaged. Very specialized activities, such as those pertaining to Dengue control, will be executed by relevant UN technical agencies (e.g., WHO in the case of Dengue) or in close collaboration with partners already operating in the respective technical area (such as GTZ in regard to quality assurance). Monitoring and Supervision. The PIP provides the basis for project implementation, monitoring, and supervision. The project's implementation progress will be monitored through the following reports: (a) Annual Review of the health sector; (b) detailed budget and expenditure reports; (c) quarterly project management reports; (d) Health Management Agreements (HMAs; see a detailed discussion below); (e) annual questionnaire surveys and beneficiary assessments; (f) final evaluation survey; and (g) final evaluation report. These reports will contain essential data on the implementation of the project components and sub-components, and additional analysis and information will be gathered through field supervision visits. The HMAs will set out implementation targets against which project performance will be monitored. Achievement of project objectives will also be assessed through a Mid-term Evaluation, to be carried out by March 31, 2005, and through a final evaluation survey produced by the Borrower at the end of the project. A Final Evaluation Survey will be completed by October 31, 2007, and a Final Project Evaluation Report will be completed by December 31, 2007. Given the inherent complexity of the operation, the limited local capacity, the large share of technical assistance in the operation, the need to collaborate intensively with other donors, and as recommended by the Bank's Quality Enhancement Review Panel, intensive Bank supervision will be required. Joint project supervision by ADB, DFID and the World Bank has been agreed (see Annex 15 for the proposed detailed schedule and budget for project supervision). Health Management Agreements. In order to clearly define the expectations and responsibilities of both the MOH and the provincial authorities under the Project, HMAs will be entered into for each of the twelve provinces supported by the Project (see Annex - 13 -  11). The HMAs have been piloted and audited under the WB Cambodia Disease Control and Health Development Project from 1998 to 2002. The overall assessment is that HMAs: (a) empowered provinces and districts; (b) increased providers' accountability; (c) improved planning process; (d) improved monitoring and evaluation; (e) enhanced quality of service delivery; and (f) should be generalized to the entire country. The aim of instituting such agreements is to improve the relationship between the MOH and the provincial health authorities to one of mutual responsibility and accountability, with a single overall purpose of improving performance of public sector health services. The HMAs will provide a framework for planning and managing the health programs covered by the Project. They will govern the provision of inputs by MOH to the provinces in return for provincial agreement to attain annual targets in disease control and other areas. Commitments made by the MOH and the Provincial Health Authorities will be clearly specified in terms of annual health objectives, inputs, and processes with quantifiable and monitorable targets set. These annual plans will be defined and agreed in the context of 5-year goals and outcome/impact indicators. The HMAs will have no legal status; rather they will be used as a planning and management tool. However, they will be monitored and evaluated and action will be taken in response to performance. From the detailed performance indicators contained in the HMAs, a group of more broadly indicative measures have been selected as Project Performance Indicators (see Project Implementation Plan). Ideally this type of agreement will also be made between the provinces and the districts, but most districts are still managerially too weak to undertake this type of agreement in the early stages of the Project. As district health office capacities improve with the activities carried out under Component 3, they could enter into sub-agreements with the provinces. Financial Management. (See Annex 6 for detailed description). The IDA and DFID funds will flow to the project through a Special Account to be established with the National Bank of Cambodia. The Special Account will be managed by the MOH. In order to facilitate funds flow to the provinces, second generation special accounts (SGSA) will be established in the twelve operating provinces and four national programs with limits to be agreed at the time of opening the accounts. These accounts will be with a commercial bank acceptable to IDA. The replenishment of the SGSAs will be based on statement of expenditures and supporting documentation submitted by provincial/national program accountants. This system currently works well under the DCHDP's "90-day" advance accounts.Project financial management will be carried out by the Department of Budget and Finance of MOH. MOH will establish a separate project financial management unit (FMU) within the Department of Budget. An experienced and qualified accountant acceptable to IDA will be appointed as head of the FMU. The head of FMU will report to the Head of the Budget and Finance Department. In order to carry out the functions of the FMU effectively, it is proposed that the FMU head be supported by three assistants. One assistant will be responsible for planning, budgeting and monthly financial management reporting. A second assistant will be responsible for control of SA and SGSA and payment processing; and a third assistant for accounting and maintenance of the computerized ledger system. In addition, at least two staff should be appointed for internal audit of provinces and national programs. Additional supporting accounting staff will be appointed based on the work load. The accounting organization at the Provincial level shall mirror the FMU structure, with a provincial project financial officer to be designated in each province and assisted - 14 -  by three accountants each responsible for planning and monitoring, accounting and cashiering. These staff may be identified from among current staff provided they meet with strict qualification and experience criteria. These staff need not be full-time and the allocation of time will depend on the transaction volume. The provincial project finance officer should be the head of the provincial accounting bureau who will have overall responsibility for accounting at the provincial level. A bookkeeper/cashier will be appointed at each district for project related accounting activities. Participating National Program Offices should also identify at least three staff each for accounting duties. Procurement and Disbursement. (See Annex 6 for detailed description). The MOH Budget and Finance Department will be responsible for project procurement and financial management. At the central level, the national programs and project activities will be implemented by respective national agencies which include: National Tuberculosis Center, National Malaria Center, National Center for HIV/AIDS, Dermatology and STD Control, and Maternal and Child Health Center. At the provincial and district levels, the Technical and Account and Finance bureaus will manage the project activities. This decentralized structure for project implementation and centralized management of procurement and disbursement is in line with the design of the project which emphasizes capacity building of the Ministry of Health and other government agencies at different levels to carry out sector reforms. It is the government's decision not to set up a separate or independent project implementation unit and the decision has strong support from the Bank. DFID Financing. The United Kingdom's Department for International Development (DFID) has agreed to provide to the GOKC a grant of about US$22 million equivalent, to co-finance the HSSP, as follows: (i) US$1.84 million for WB-HSSP; (ii) US$10.4 million equivalent for ADB-HSSP; and (iii) US$9.76 million equivalent, to be allocated on an annual basis. DFID has played a very active role during project development and will also be fully involved during project implementation. Coordination with ADB, other donors and technical agencies. As mentioned in Section B.1 above, the HSSP has been defined and financed in a coordinated manner with the Asian Development Bank. As a result, the ADB and WB financed parts of the project reflect a very high degree of consistency and mutual reinforcement. During HSSP implementation, HSSP activities will be monitored and supervised in close collaboration with ADB. Other GOKC partners, such as WHO, UNICEF, GTZ, JICA, AUSAID, CIDA, EC, SIDA, USAID and the "umbrella" NGO MEDICAM, have also been consulted during project preparation. As mentioned, the contribution of each donor and the HSSP contribution to the overall health sector program will be discussed yearly during the Annual Review and Operational Planning exercises. 7. Sustainability Sustainability is an important project risk given: (a) the low level of public sector resources; and (b) the unpredictability of public sector support for the health sector which could threaten the continuation of project achievements after the end of the project. Until macroeconomic development takes off strongly, the success of health sector reform and program implementation will continue to depend upon donor inputs. It is, therefore, important that both the government and donors recognize the long term commitment that is required to support funding of the expanded health sector program before commencing the project. A failure to develop adequate management capacity could also jeopardize continuation of the - 15 -  programs supported by the HSSP. Therefore, the HSSP contains substantial provisions for strengthening Cambodian management capacity. Careful monitoring of the growth of management capacity will be required during the HSSP's execution. Some additional project features contributing to sustainability include:development and harnessing of the private sector to address priority public health problems and improve sector management; reforms in the public health sector to improve performance, thereby increasing the public sector's credibility to donors;efficiency gains to generate resources, and quality improvements expected to increase facility utilization rates;expansion of cost-recovery to channeling more of household expenditures to public facilities; andimprovement of provider payment in exchange for better services. 8. Lessons learned from past operations in the country/sector The MOH's current efforts to develop a SWIM approach show a willingness to implement a transparent program and refocus health sector reform strategy on issues such as improving the performance of the public health sector and providing services to the poor. At the same time, the experience with the current Bank-financed project has shown that MOH capacity remains weak in some areas (e.g., procurement, financial management, and planning, for which MOH is facing problems with personnel availability and motivation). Consequently, the proposed HSSP will strengthen MOH capacity and support the decentralization process, while providing financial assistance to achieve very specific objectives central to the reform process (especially to improve efficiency, protect the affordability of services and promote equity). Another lesson learned from Bank and other donor operations is that in Cambodia, as much or more than in any other country of the region, decisions tend to be made less on the basis of objective criteria than on political considerations. Consequently, the Bank concluded that it should support the development of a policy and planning process based on the broad participation of key stakeholders, including provincial and district authorities as well as civil society representatives. In addition, clear criteria will be developed and used to allocate the budget, and select the sites for health facility works (extension, rehabilitation and new construction), equipment, and staffing. These criteria will be used in decision making, and the adequacy of planning proposals will be openly discussed with donors and other stake holders (See also WB-HSSP legal covenants). The current project has also shown that while the PCU has functioned adequately, this has not always contributed to the strengthening of the MOH capacity. Consequently, the proposed HSSP intends to make use of MOH's own capacity (after substantial strengthening) and to encourage the personnel of the current Disease Control and Health Development Project to compete for the MOH posts which will soon be created. 9. Environment Aspects (including any public consultation) Issues The possible environmental impact of the project relates to size and location of infrastructure; type, quantities and mode of use of insecticides; and type of potential waste management. 10. Contact Point: Task Manager Vincent Turbat - 16 -  The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 202 473 6449 Fax: 202 522 3394 11. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending October 11, 2002. - 17 -