China - Rural Health and Medical Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4864-CHA STAFF APPRAISAL REPORT CIHI NA RURAL HEAL''ll AND MEDIC..L EDUCATION PROJECT pril 13, 1984 Population, Health and Nutrition Departuent This document has a restricted distribution and may be used by recipients only In the performance of their offlcia; duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Yuan (Y) US$ 1.00 = Y 2.0 (September 1983) Y 1 = US$ 0.50 FISCAL YEAR January 1 - December 31 ABBREVIATIONS CNTIC - Chinese National Technical Import Corporation MCH - Maternal and Child Health MOPH - Ministry of Public Health NCPM - National Center for Preventive Medicine RCHPS - Research Center for Health Planning and Statistics SICMM - Sichuan Institute of Chinese Materia Medica UNDP - United Nations Development Program UNICEF - United Nations Children's Fund WBLO - World Bank Loan Office WHO - World Health Organization  FOR OFFICIAL USE ONLY CHINA RURAL HEALTH AND MEDICAL EDUCATION PROJECT Credit and Project Summary Borrower: People's Republic of China Amount: IDA Credit: SDR 80.2 ($85.0 million equivalent) Terms: Standard Project Description: The project would provide for civil works, furniture, equipment, technical assistance and fellowships to help: (a) improve health status in 46 counties of three provinces (Heilongjiang, Shandong and Sichuan) and cne autonomous region (Ningxia Hui); (b) enhance the quality of education, training and related research in the country's 13 core medical colleges and to increase these colleges' capacity to provide continuing education and training materials to practitioners and to faculty of the over 100 province-level medical colleges; and (c) develop two recently created national institutions -- the National Center for Preventive Medicine (NCPM) and the Research Center for Health Planning and Statistics (RCHPS) -- and support applied research at the Sichuan Institute for Chinese Materia Medica (SICMM). The main project risk is that the Ministry of Public Health (HOPH) staff may lack the necessary management skills and breadth of experience to carry through proposed changes in medical education and training and proposed creation of new institutional capabilities. This risk is reduced, however, by inclusion of substantial technical assistance and overseas training, by provision for careful selection of key project staff, and by establishment of a project monitoring and reporting system to allow prompt identification of potential problems. Since the project is the first major externally- aided activity in the sector, some degree of risk is both appropriate and acceptable. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: Local Foreign Total (US~$ MHillion) -- A. Strengthening of Rural Health 1. Construction 42.2 - 42.2 2. Equipment 2.0 25.2 27.2 3. Trainiig 5.7 5.7 4. Technical Assistance 0.5 - 0.5 5. Personnel Recruitment 4.6 - 4.6 Subtotal A 55.0 25.2 80.2 B. Strengthening of Medical Education 1. Construction 65.8 65.8 2. Equipment 33.7 26.7 60.e' 3. Training 3.8 5.1 8.9 4. Technical,Assistance 1.3 4.2 5.5 Subtotal B 104.6 T6.0 140.6 C. Strengthening Management, Evaluation and Research 1. Construction 8.6 - 8.6 2. Equipment 5.4 2.9 8.3 3. Training 0.8 2.6 3.4 4. Technical Assistance - 2.0 2.0 Subtotal C 14.8 7.5 22.3 Total Baseline Costs 174.4 68.7 243.1 Physical Contingencies 15.8 5.4 21.2 Price Contingencies 19.5 6.7 26.2 Total Project Costs a/ 209.7 80.8 290.5 Charge on Use of Foreign Capital 32.3 - 32.3 Total Financing Required 242.0 80.8 322.8 Financing Plan: IDA 4.2 80.8 85.0 Government 237.8 - 237.8 Total 242.0 80.8 322.8 Estimated Disbursements: IDA FY 1985 1986 1987 1988 1989 1990 Annual 15.5 28.5 22.5 12.5 4.5 1.5 Cumulative 15.5 44.0 66.5 79.0 83.5 85.0 Rate of Return: NA a/ Project-fiinanced goods are exempt from import duties and taxes.  - iii - CHINA RURAL HEALTH AND MEDICAL EDUCATION PROJECT Table of Contents Page No. Credit and Project Summary. . . . , . . . . . . . . . . . . i Table of Contents . . . . . . . * . . . . . . * . . * . . . iii Basic Data. . . . . . . . . . . . . . . . . . . . . . . . . vi Definitions . . . . . . . vii I. INTRODUCTION . . . . . . , I II. SECTOR STATUS ANI) ISSUES A. Population and Health Status . . . . . . . . . . . . . . I BD Health Policies, Services and Finances ... ...... 3 Health Policies. . . . . . . . . . . 3 Health Services.. ........ . . . . . . 5 ,ealth Finances. . . . . . . . . . . . . . . . . . . . 6 C. Sector Issues and Bank Objectives. . . . . . . . . . . . 7 III. THE PROJECT A. Project Concept and Main Features. . . . . . . . . . . . 8 B. Detailed Project Description . . . . . . . . . . . . . 10 Part A: Rural Health . , . . . . . . . . 10 Part B: Medical Education. . * , . . . . . . . 13 Part C: Strengthening Management, Evaluation and Research at the National Level . . . . . . 17 This report is based on the findings of an appraisal mission that visited China in September 1983. The personnel involved were: Mr. D. T. Jamison (mission leader), Mr. D. Pearce, Dr. A. Prost, Mr. G. Sinclair and Ms. C. H. Fogle (PHN), and Drs. J. X. Evans, J. Koplan, K. White and M. Young (consultants). Messrs. J. van der Gaag (DRD) and I. Porter (AEA), who assisted in project preparation, also participated in project appraisal.  - iv - Page No. IV. PROJECT COSTS AND FINANCING A. Cost Estimates . . . . . . . . . . . . . . . . . . . . . 19 B. Financing Plan . . . . . . . . . . . . . . . . . . . . . 21 C. Procurement. . . . . . . . . . . . o . . . . . . . 22 D. Disbursements. . * . . . . . . . . . . . . . . . . . . . 23 E. Accounts and Audits. . , . . . . . . . . . . . . . . . . 25 V. PROJECT ORGANIZATION, MANAGEMENT AND IMPLEMENTATION A. Project Organization . . a . . . . . . . . . . . . . . . 25 3. Project Management . . . . . . . . . . . . . . . . . . . 25 C. Technical Assistance and Overseas Fellowships. . . . . . 27 D. Implementation Schedule. . . . . . . . . . . . . . . . . 27 VI. PROJECT BENEFITS AND RISKS A. Project Benefits . . . . . . . . . . . . . . . . . . . . 27 B. Project Risks. . . . .. . . . . . . . . . . 28 VII. AGREEMENTS REACHED AND RECOMMENDATIONS . . . . . . . . . . . 28 ANNEXES 1. Project Cost and Finance by Subcomponent . . . . . . . 30 2. Documents Available in Project File. . . . . . . . . . . 32 3. Project Implementation Schedule . . . . . . . . . . . . 34 4. Medical Education: Background Data for Thirteen Medical Colleges . . . . . . . . . . . . . . . . . . . . . . . 35 5. Rural Health: Background Data for Participating Provinces and Counties . . . . . . . . . . . . . . . . . . . . 45 6. Project Cost Tables . . . . . . . . . . . . . . . . . . . 62  CHARTS 1. organization Plan of the Ministry of Public Health ?. Organization of Health and Birth Planning Services MAPS - Rural Health and Medical Education Project (IBRD 17638RI) - HeilongJiang Province (IBRD 17043) - N4ngxia Hui Autonomous Region (IBRD 17046) - Shandong Province (IBRD 17044) - Sichuan Province (IBRD 17045)  - vi - CHINA RURAL HEALTH AND MEDICAL EDUCATION PROJECT BASIC DATA Total area (million km2). . . . . . . . . . . . . . . . . . 9.6 Total population (mid-1982 in mnilLions) . . . . . . , . . . 1,008 Annual rate of natural increase (%) . . . . . . . . . . . . 1.3 Projected population for year 2000 (in millions) . . . . . . 1,198 Density per km2 (mid-1982). . . . . . . . . . . . . . . . a 103 Density per km2 of a-ricultural land (mid-1982) . . . . . . 308 Per capita GNP (1981) (in US$). . . . . . . . . . . . . . . 300 Crude birth rate (1981) . . . . . . . . . . . . . . . . . . 21 Crude death rate (1981) . . . . . . , . . . . . . . . . . . 8 Life expectancy at birth (1982) (years) . . . . . . . . . . 69 Infant mortality rate (1982). . . . . . . . . . a . * * . . 45 Child death rate (1981) . . . . . . . . . . . . . . . . . . 7 Urban population as percentage of total population (1982). . . . . . . . . . . . . . . 20.6 Adult literacy rate (1981). . . . . . . . . . . . . . . . . 69 Population per doctor of western medicine (1980). . . . . . 1,920 Population per nursing person (1980). . . . . . . . . 1,890 Nutrition (1980-1982) Calorie intake as percentage of requirements.... . . . . * . . . . . . . . . . 118% Per capita protein intake (g/day) . . . . . . . . . . . 66  - vii - DEFINITIONS Adult Literacy: The percentage of persona aged 15 and over who can read and write. Child Mortality Rate: Annual deaths of children 1-4 years per 1000 children in the same age group. Crude Birth Rate: Number of live births per year per 1000 people. Crude Death Rate: Number of deaths per year per 1000 people. Dependency Ratio: Ratio of population 14 years or under and 65 or over, to population aged 15 to 64 years, multiplied by 100. Indicates proportion that needs to be economically supported. Incidence Rate: The number of persons contracting a disease as a proportion of the population at risk, per unit of time usually expressed per 1000 persons per year. Infant Mortality Rate: Annual deaths of infants under 1 year per 1000 live births during the same year. Life Expectancy at Birth: Indicates the number of years a new-born child would live if subject to the mortality risks prevailing for the cross-section of population at time of birth. Maternal 'Mortality Rate: Number of maternal deaths per 1000 births in a given year attributable to pregnancy, childbirth or puerperal complications. Neo-Natal Mortality Rate: The number of deaths of infants under 28 days of age in a given year per 1000 live births that year.  CHINA RURAL HEALTH AND MEDICAL EDUCATION PROJECT Staff Appraisal Report r. INTRODUCTION 1.01 Since the early 1950s, China has made remarkable progress in improving the health and nutrition status of its people. The multiple factors contributing to this achievement -- which include increased and more equitable distribution of food, improved water supply and sanitation, a relatively high literacy rate and widespread advances in the overall level of education -- together with the health system's strong emphasis on prevention, community mobilization and financing, and paramedical fieldworkers (barefoot doctors) -- have influenced the thinking of health professionals throughout the developing world. Indeed, the WHO/UNICEF-sponsored Declaration of Alma Ata on Primary Health Care (1978) was partly inspired by the Chinese experience. However, China's health care system has now entered a period of transition; zxperience to date is being evaluated and the changing epidemiological profile and emerging health problems of the 1980s and beyond are beginning to be addressed. Against this background, a Bank health sector mission visited China in September/October 1982; its report, entitled "The Health Sector in China", (Report No. 4664-CHA, dated April 13, 1984) is available separately. 1.02 During the above mission the government requested IDA assistance for two major activities. In the general area of health services, the requested assistance was for upgrading rural health care services in three provinces and one autonomous region; and in the area of health manpower development, the requested assistance wa's to help enhance the quality of medical education in thirteen core medical colleges. The government also sought assistance for three small institutional development components that would strengthen national management and evaluation capacity in the health sector: the recently established National Center for Preventive Medicine; the Research Center for Health Planning and Statistics; and the Sichuan Institute for Chinese Materia Medica. After revision in light of the findings of the health sector mission, these five proposals were integrated into a single health project, which was then prepared jointly by the Ministry of Public Health (MOPH) and three multi- disciplinary IDA project preparation teams in March, April and June/July 1983. II. SECTOR STATUS AND ISSUES A. Population and Health Status 1/ 2.01 Population. China's census of June 30, 1982, recorded a population of 1008 million; this exceeds by 73 percent the total recorded in the first census, conducted in 1953. The population growth rate in the intervening 29 years was thus 1.9 percent per annum. Trends in total fertility and mortality during this period have, however, been far from 1/ All data cited in this report are drawn from Report No. 4664-CHA, "The Health Sector in China."  - 2 - steady. Birth rates were around 45 per 1000 in the mid-1950s, implying a total fertility rate of about b.5. The Great Leap Forward of 1958 was then followed by famine and demographic catastrophe: mortality rose sharply around 1960 and the birth rate pluulged, resulting in a population loss of more than I percent. FolLowing thte 1959-62 famine, the birth rate surpassed the 1950s level and then declined slowly until the end of the decade. Strong fertility limitation policies were seriously implemenited beginning in the early 1970s, and the drop in fertility since 1970 has been remarkable, with the total fertility rate declining to about 2.5 by 1980. Despite introduction of even stronger efforts to limit fertility in 1980 (the 'one-child family' policy), the total fertility rate rose to 2.8 in 1981. The population growth rate rose to about 1.3 percent per annum in 1981 from its low in the late 19708 of just over 1 percent per annum; this was partially a result of the increase in total fertility just noted and partially the result of an unusually large cohort reaching marriage age. The Government population policy is to limit population size to 1,200 million in the year 2000. This objective is expected to be achieved under current policies and is reflected in Bank population projections. 2.02 Health. Although few good data exist for the early 1950s, it is evident that health conditions in China have improved enormously and are now significantly better than in most low-income developing countries. Life expectancy at birth is estimated at 64 years in 1975-80, compared with 34 years in 3950-55; infant mortality is estimated to have been 65 per thou,and live births in 1975-80 compared with 235 in 1950-55. However, these national averages mask wide variations, with life expectancy higher in the more heavily populated and advanced northeastern provinces and coastal areas than in inland and border regions. In the mid-1970s, life expectancy in urban areas probably exceeded that in rural areas by 12-17 years and, although more recent estimates are unavailable, important rural-urban differences almost certainly persist. 2.03 Concerning overall trends in mortality and morbidity, many once important communicable diseases such as smallpox, cholera, plague and Kala Azar have been virtually eradicated; diphtheria and poliomyelitis have been almost eliminated; and the incidence of other infective and parasitic diseases has been reduced and controlled. However, continuing deficiencies in hygiene and human waste treatment are indicated by the persistence of diseases such as hepatitis and dysentery. Malaria and schistosomiasis remain problems and their continued control is a public health priority. Tuberculosis, the main cause of death in 1949, still affects nearly 1% of the population and remains a major problem. Chronic bronchitis is reported in 3.5% of the population, reflecting problems of smoking and air pollution. In more typical low-income countries, acute respiratory and digestive system diseases account for a much higher proportion of all deaths. In China, however, as in the industrialized countries, cancer and circulatory system diseases account for most deaths. Both because of increasing prevalence of dietary and behavioral patterns leading to chronic disease and because of an inevitable aging of the population, morbidity and mortality due to chronic disease can be expected to become much more frequent; by a conservative estimate, to take one example, the number of cases of hypertension can be expected to more than double between 1980 and 2010. China's transition in disease profile is still in progress, nonetheless, and health conditions in poorer parts of China probably are  now much as they were twenty years ago in the presently more advanced areas. The above trends in overall mortality and morbidity indicate an emerging epidemiological nrofile increasingly comparable to that of higher income countries, as documented in Table I1.1, which shows the percentage of deaths due to various causes. Table II. 1: PRINCIPAL CAUSE OF DEATH, URBAN AND RURAL AREAS 1980 Percent of all Deaths Disease In Urban Areas In Rural Areas Heart disease 23 26 Cerebrovascular disease (stroke) 23 17 Cancer 20 15 Acute respiratory disorders (excluding tuberculosis) 9 12 Digestive disorders 4 5 Tuberculosis 2 3 Other 19 22 B. Health Policies, Services and Finances Health Policies 2.04 China's progress in improving the health status of its people is attributable partly to the effectiveness of its health care del:very system and partly to the policies on which it is based. In this connection, the following basic elements of China's health policies during the last two decades stand out. First, more than most low-income countries, China has emphasized preventive over curative services. Major efforts were mounted after 1949 to improve environmental sanitation, vaccinate against 2/ and cure infectious diseases, and to control the vectors of the main parasitic diseases. Mass mobilization, organized through the National Patriotic Health Campaign Committee, linked to the politico-administrative system from the national to the grass-roots levels and supported by the key county-level sanitation and epidemic prevention stations, played a principal role in the effectiveness of these efforts. Second, China pioneered the development of community-financed auxiliary health workers -- subsequently known as barefoot doctors -- as a logical counterpart to the emphasis on prevention and, more importantly, as the only practicable means at hand, given the lack of financial resources, to provide basic curative services in the rural areas. Third, and consistent with the post-1949 priority given to poverty reduction, mainly through rural development and the provision of basic social services, a substantial volume of financial resources was mobilized - amounting at present to over 3% of GDP. As a result, the resources available for health care, particularly in poor 2/ China's vaccination program addresses all six diseases on the UNICEF/WHO list for the 'expanded program of immnunization' and, in addition, provides for immunization against encephalitis B. While the vaccination program has been generally succcssful, problems remain hoth with logistics in rural areas and with vaccine quality.  - 4 - areas, is significantly higher than in comparable areas of most low-income countries. Fourth, China's policies have always reached well beyond the health system itself, with improved nutrition, water supply and sanitation, education and reduced fertility being related and independently important policy goals; and, underlying this multisectora. approach, the unique political will and administrative capability of the Chinese economic system have, despite occasional setbacks, been crucial to its effectiveness. Finally, Chinese health policy appears to have combined successfully a specific emphasis on categorical (or vertical) disease prevention programs with coordinated administration and implementation through commune- and county-level service delivery bystems -- achieving thereby a functional integration of policy and practice that is normally very difficult and, in many countries, has proven impossible. 2.05 Current health policy priorities are characterized by continuity with past efforts. According to the MOPH and in line with the government's overall eightfold policy in the readjutstment of the national economy, medium-term health policy objectives are as follows: (a) to implement the existing policy of putting prevention first, specifically strengthening anti-epidemic activities and conducting patriotic health campaigns; (b) to strengthen and consolidate rural health services, specifically upgrading county-level health institutions, training barefoot doctors and implementing the cooperative health insurance system; (c) to improve traditional Chinese medicine and the integration of Chinese and western methods of health care; (d) to provide support to the family planning policy and to maternal and child health services; (e) to intensify the training of health service professionals and research in medical care and to strengthen the training of technical and administrative personnel; (f) to improve the efficiency and technical and administrative management of the health delivery system; (g) to ensure the appropriate use of pharmaceuticals and the improvement of their quality, production and distribution; and (h) to strengthen the leadership of the party in the health sector. Explicit translation of these overall national health policy goals into operational objectives is limited, at the MOPH level, to targets in the Sixth Plan (1981-85) for increases in the number of physicians and hospital beds. Hnowever, preliminary operational policies and programs for rural health service delivery and ior health manpower development have been defined and are discussed below.  - 5 - 2.06 Rural Health. The centerpiece of rural health policy is a national program, to be completed by the year 2000, to upgrade the health facilities of all the country's 2100 counties. The first phase of this program aims to have completed the upgrading of one-third of all counties by 1987; this more immediate goal is known as the 'one-third county program'. External assistance (from the UNO'P, executed by WHO) has assisted with developments in three pilot counties. 2.07 The major foci of the county upgrading programs are to strengthen the four county-level health institutions -- the general hospital, the sanitation and epidemic prevention center, the MCH center and the training center -- and to assist in strengthening selected commune health centers, These 'major commune health centers' are intended to become an intermediate level of referral between regular county health centers and county hospitals; by having them be competent to handle moderately complicated cases, access to quality health care would become much more widely distributed and accessible in rural areas than it now is. 2.08 Medical Education. In the 1980s, priority in the medical colleges will be given to consolidation rather than growth, improving the quality of education and research, rttraining staff to repair the damage of the cultural revolution, and building up teaching and research staff through postgraduate training. There are 92 faculties of western medicine in the medical colleges, and three new faculties are being established. In addition to regular enrollment, these faculties have the heavy burden of retraining the large number of doctors who graduated during the cultural revolution. An important objective of the MOPH is to reduce the emphasis on factual learning in the curriculum and to strengthen the teaching of biomedical and epidemiological concepts and their application in problem- solving. This is to be done both through the development of appropriate teaching materials and through the structure of the examination system. 2.09 In terms of higher-level manpower development, the MOPH estimates that the number of doctors (western and traditional) is currently 0.8 per 1,000 population, and that this ratio can be maintained during the 1980s without increasing medical college enrollment beyond what will result from the current level of about 30,000 new admissions each year. Meeting a target of 1 doctor per thousand population, indicated as desirable by Ministry officials, would require increasing medical college output by 12,000 per year to over 40,000, or increasing the rate of upgrading of assistant doctors, which is important particularly to complement the strategy of strengthening major commune health centers. An output of 40,000 would also be roughly consistent with the 6th Plan's target of increasing the total number of doctors by 180,000 during the Plan period. Thus some auantitative expansion of high-level manpower is envisioned, but the numbers involved are relatively limited. Detailed analysis by MOPH (to be supported in part by this project) will be initiated to review quantitative objectives for health manpower at all levels in light of the changing patterns of health needs of the population. Health Services 2.10 The core of China's health care services is its rural health system, which is organized on three levels: the county, the commune and the  brigade. At the apex are the approximately 2,100 counties, which each have a county hospital, a sanitation and epidemic prevention station, an MCH clinic, and a health personnel training center (see Chart 2). County facilities are funded by the government through the province and county health bureaus, which are responsible for the overall direction and, through the above county level units, for the technical support and supervision of all facilities and services througho'it the county. Below that are health centers at the commune level; in 1981, some 55,000 or 90% of all communes had such centers, averaging about 14 beds, which are responsible for routine curative services, preventive activities and family planning. Two thirds of these centers were established by the communn!s themselves and the operations of all are financed by a combinatioin of county and provincial subsidies (usually direct payment of health personnel salaries and benefits) and user fees (for drugs and pharmaceuticals). At the brigade level, almost all the approximately 715,000 brigades have either a health station with one or two barefoot doctors, who provides care to the ten or so production teams (averaging 200-800 people) that make up each brigade. Many brigade-level services have been financed by cooperative health insurance schemes, which are in turn funded jointly by annual prepayments of individual members and by annual appropriations from the brigades' welfare funds. However, the number of brigades having cooperative health insurance schemes has dropped significantly, from about 571,000 (85%) in 1975 to about 416,000 (58%) in 1981, owing to a weakening ol the fiscal position of brigades and communes that has resulted from emphasis on the household as the farm production unit under the 'economic responsibility system'. 2.11 Urban health care is organized in a similar way, with important differences in sources and methods of funding, and with 'lane' and 'street' health posts replacing brigade and commune level facilities in Lbe referral system. Employees of state enterprises receive free health care at their places of work or in nearby county or municipal hospitals. State enterprise (e.g. factory) health facilities, which accounted for about 25% of total health expenditures in 1981, are administratively responsible to the enterprise concerned, with minimal technical support and supervision from the provincial or county health bureau. 2.12 At the national level, the MOPX supervises health care activities of the provincial health bureaus. MOPH has broad responsibility for health policy, for preparation of an annual plan, and for coordination with related ministries and agencies, including the State Pharmaceutical Administration, which is responsible for production of pharmaceuticals and medical equipment. In addition, MOPH is directly responsible for a major hospital, for thirteen core medical colleges, for health statistics, for the National Center for Preventive Medicine, for vaccine production and for medical research. Pharmaceuticals are effectively distributed nationwide by the China National Drug Corporation, under the Pharmaceutical Administration, through 5,500 wholesale and over 50,000 retail outlets. Health Finances 2.13 China is now spending an estimated 3.3% of GDP on health services (1981), which is relatively high compared with other low-income countries. In 1981, total health expenditures were estimated at US$7.50 per capita, of  - 7 - which about $7.15 (95%) was for recurrent and $0.35 for capital expenditures. Of the $7.15 per capita recurrent expenditures, the main revenue sources were threefold: individual payment for drugs and services (32X), enterprise insurance schemes (31%), and the government (30%); the main service delivery providers were the rural collective health system (40%); the government (32%) and state enterprises (25%), with medical education and private practice accounting for the balance. The main categories of expenditure were for drugs and pharmaceuticals, 58% (of which Western medicjnes accounted for 84%), salaries for 20%, and hospital facilities for 13%. Hospitals and other service providers thus recover the bulk of their costs (i.e. the 70% not provided through the government budget). 2.14 A high proportion of total health expenditure is mediated through insurance (labor and rural collective) schemes of various kinds, with perhaps only a third of the population, almost all in rural areas, uninsured. Urban expenditure is estimated at about $16.50 per capita, more than twice thne national average and almost four times the estimated $4.50 per capita rural expenditure; more significantly, government subsidies in urban areas are estimated to be almost ten times those for rural areas, owing partly to the effect of its insurance scheme for government employees, teachers and students and partly to that of the labor insurance schemes of state enterprises. In rural areas, cooperative insurance schemes provide limited pooling of risk among production brigades and brigade teams but, since these schemes are entirely financed out of whatever local resources are available, there is no scope for redistributive subsidies from richer to poorer communities. Moreover, early evidence suggests that the economic responsibility system, which is decentralizing agricultural decision-making and incentives to the household level, has affected in some provinces the collective insurance and labor mobilization schemes that, despice their inadequacies, have hitherto financed the preventive activities, including indirectly the costs of the barefoot doctors, so crucial to China's improved public health. C. Sector Issues and Bank Objectives 2.15 The two main themes emerging from the above summary of progress to date in China's health sector, discussed in more detail in the sector report, are: first, its success in increasing overall life expectancy and in reducing morbidity from communicable diseases; and second, the emergence of an epidemiological transition in which circulatory diseases and cancer are becoming the most common causes of death. However, given the country's size and population, it is not surprising that the success in improving overall health status has been uneven: while health conditions in most urban and in some rural areas are quite satisfactory by any reasonable standard, those in many rural areas are not; and the reasons for this unevenness--the poverty and remoteness of the areas, and their inadequate economic and social infrastructure--means that improving health conditions will be neither easy nor inexpensive. In addition, the emerging pattern of chronic diseases, very much like that of the industrialized countries, typically generates demands for treatment and cure by patients and physicians alike that often involve substantial expenditures with only modest health impact. In the circumstances, China's health sector now faces two priority issues: (i) that of how to maintain the gains already  - 8 - made in large parts of the country, to extend them to presently underserved areas, and to strengthen the basic health infrastructure; and (ii) that of how to identify and implement affordable strategies for dealing with chronic diseases that combine prevention, cost-effective treatment, rehabilitation and humane care. The first of these issues concerns mainly the future development, including the financing, of the rural health care delivery system; the MOPH places high priority on this point. 2.16 The second set of issues raises a new and complicated set of problems for the MOPE. Prevention of chronic diseases is far more difficult (and costly) than is prevention of communicable disease, and the approaches developed for curative care in industrialized countries have costs that are simply unaffordable in a country at the level of income China can expect to attain in the next few decades. A high premium must therefore be placed on strengthening the capacity for the system to develop innovative strategies for handling the emerging pattern of diseases and for strengthening, at all levels, general management capability and, particularly, the capacity for evaluation of program impact against costs. Initial steps in this direction include strengthening the institutions that have key analytic roles in the health care system including, importantly, the leading medical colleges. 2.17 The objectives of Bank involvement are to assist China's MOPH in addressing these issues. This will be done through long-term strengthening of national health institutions -- e.g. the core medical colleges, and the quality of planning, monitoring and analytic capacities -- and through helping to develop and finance model efforts to improve the management and efficiency of health services and their accessibility to the population. III. THE PROJECT A. Project Concept and Main Features 3.01 Although China has made remarkable progress in reducing its population growth rate aad in improving the health and nutrition status of its people during the last three decades, much remains to be done. One obvious priority is to maintain, consolidate and extend the gains already achieved in delivering basic health care services to its over 800 million rural population; a second priority, given the gradually changing economic, social and epidemiological profile of the entire population, is to train the high-level manpower capable of developing appropriate, cost-effective strategies for the new health problems of the next two decades and beyond. In this connection, the striking of a proper balance between, on the one hand, the continued need for traditional public preventive health care services and, on the other, the growing need and demand for modern, more sophisticated treatment of the health problems of older age groups is a major challenge currently facing Chinese policy makers and managers. Finally, a third priority is to strengthen the national capability for managrment, evaluation and research relevant to improving health system efficiency. The project proposed by the government and appraised by IDA is intended as a first, modest step towards addressing these priorities; possible future projects are expected to continue this process.  3.02 Linked directly to the above three priorities selected by the government for initial IDA assistance, the project's principal operational objectives would be as follows; (a) to help improve health status in 46 counties of three provinces (Heilongjiang, Shandong and Sichuan) and one autonomous region (Ningxia Hiui); (b) to help enhance the quality of education, training and related research in the :ountry's 13 core medical colleges and to increase these co Leges' capacity to provide continuing education and training materials to practitioners and to faculty of the over 100 remaining province-level medical colleges; and (c) to help improve management anid evaluation in the health sector by strengthening two recently created national iastitutions--the National Center for Preventive Medicine (NCPM) and the Research Center for Health Planning and Statistics (RCHPS)--and to support applied research at the Sichuan Institute for Chinese Materia Medica. 3.03 The project, described in more detail in paras. 3.04 to 3.26 below, consists of three components designed to achieve the above distinct but complementary objectives,, as follows: Part A; Rural Health comprises an investment program (construction, equipment, training, technical assistance and one-time personnel recruitment costs) to upgrade the quality of health care provided at county level and below in Heilongjiang, Shandong, Sichuan and Ningxia Hui Autonomous Region; and inputs designed to strengthen the management, including the implementation and supervision capability, of the four province/region- level Health Bureaus for future county-level activities. Part B: Medical Education consists of investments (construction, equipment, overseas and in-country training, and technical assistance) directed towards enhancing the content and methodology of teaching and related research in 13 core medical colleges, including specifically continuing education programs (to serve local clinicians and health officials) and national training centers in specific subject areas at each college. Part C: Strengthening Management, Evaluation and Research at the National Level consists of support for four sets of activities: i) National Center for Preventive Medicine (NCPM) -- the provision of facilities, equipment, training and technical assistance to undertake basic and applied research in disease prevention, to provide a coordinated national capability for epidemiological surveillance, and to conduct training and public information services. ii) Research Center for Health Planning & Statistics (RCHPS) -- the provision of facilities, equipment, training and technical assistance for carrying out health policy analysis and research, and for servicing the MOPH's overall data collection and processing needs.  - 10 - iii) Sichuan Institute of Chinese Hateria Medica -- the provision of facilities, equipment, training and technical assistance to carry out specific research projects related to analyzing the safety, efficacy and production of selected herbal medicines and pharmaceuticals. iv) Project Implementation and Preparation -- the provision of equipment, training and technical assistance for the two MOPH units responsible for managing Parts A and B above (the Rural Health Division of the Bureau of Medical Administration and the Division of Advanced hedical Education of the Bureau of Science and Education); for the MOPH unit (World Bank Loan Office) responsible for coordinating Parts C, i), ii) and iii) above and for overall project implementation; and for the preparation by MOPH of future projects suitable for extern.al financing. B. Detailed IProject Description Part A: Rural Health 3.04 Despite China's major advances in improving health conditions and access to health services in rural areas, a number of important problems remain. The objective of the rural health component of this project is to assist 46 project counties in developing replicable approaches to dealing with these problems and to provide resources to implement those approaches. Although problems and priorities vary among the 46 counties, key elements of most county plans include: (a) provision of basic laboratory, diagnostic and therapeutic equipment - and the facilities to house them - at many county hospitals, epidemic prevention stations (including improving vaccination programs) and MCH stations (to improve pre- and postnatal care and family planning services); (b) development and implementation of appropriate standard procedures for laboratory and patient management (e.g. in emergency rooms) and for pharmaceutical utilization; (c) orienting strategies for disease prevention (and management) more explicitly to the emerging problems of cancer and cardiovascular disease and to continuing, important communicable diseases such as tuberculosis, hepatitis and dysentery; (d) extending access to health care to presently underserved segments of the rural population both through capacity strengthening in poorer provinces and through upgrading major commune health clinics to provide a higher standard of care in locations remote from the county town; (e) improving opportunities for and the content of training and retraining of staff at all levels to meet the changing pattern of health needs; and (f) strengthening county-level statistical and disease surveillance capacity. 3.05 Based on an analysis of the main priorities for strengthening health services delivery for the four provinces as a whole and, within each  - 11 - province, on a detailed appraisal of proposals for one selected county, the Provincial Health Bureaus each prepared an overall investvaent program (construction, equipment, training and technical assistance and personnel recruitment) and, in support of these proposed investments, an overall implemention plan for health service delivery activities to be carried out over a three-year period, 1984-86 inclusive. These overall investment programs and implementation plans were the basis of project appraisal and project cost estimates which, necessarily for a continuing program of this type and scope, are intended to be applied flexibly within agreed fiaancial limits and progranmatic activity criteria, subject to approval by the MOPH and consultation with IDA. 3.06 Against this background, the four Provincial Health Bureaus have recently appraised in detail the specific priorities and investments proposed by each of the 42 remaining project counties concerned and, at the same time, assisted the ccunty-level health authorities to develop implementation plans. Although, by definition, these implementation plans are county-specific and vary significantly from one county to another, they concentrate mainly on the main curative and preventive service activities (including chronic disease prevention on a developmental basis) for which the four key county-level health facilities are responsible, i.e. the county hospital, epidemic prevention station, MCH clinic and training center. In addition, the project will strengthen selected major commune health centers. 3.07 The three provitices and autonomous region selected for inclusion in the project are together broadly representative of the diverse economic, social, demographic and health conditions in China. Sichuan province, for example, is the most populous and one of the most diverse provinces and Ningxia Hui, by contrast, is small and predominantly minority in population; both are among the poorest provinces in China. A description of the principal socioeconomic and health characteristics of the 46 project counties, is contained at Annex 5, and Table 11I.1 provides summary statistics. Counties were selected within the provinces in order to be geographically and economically representative and on the basis of their willingness to generate resources of their own to help finance the project. 3.08 To meet its objectives the project will provide for the folloving; (a) ConstructLon. The project will support the rehabilitation, extension and upgrading of existing debilitated facilities in the county hospitals, maternal and child health centers, sanitation and ep4demic prevention stations, and training centers, and support new construction where such facilities do not exist yet. In a majority of counties, the project will support the construction of selected major commune health centers. In a few counties, it will also support the rehabilitation of selected commune health centers. Construction represents about 46% of the total cost of the rural iiealth component excluding contingencies. (b) Equipment. The constructior and renovation of the health facilities will be accompanied by the upgrading of existing diagnostic and therapeutic tools, as well as teaching aids in the training centers. The equipment will be for strengthening the following areas: laboratories, clinical diagnosis, cold chain, X-rays facilities, operating rooms, training facilities, therapeutics, and vehieles. About 30% of total project cost wilt be allocated to this category.  - 12 - Table 111.1: RURAL HALH - SNMiRY DAT O1CKEENIR PA ICIPArIING CUN'IES Province Average Item Heilongjiang Shandong Sichuan Nigdxia HuL or tota a/ Background Nuaber of cOnties: 10 15 16 5 46 (% of provincial total) (16%) (14%) (9%) (31%) 1982 population (milliors) 5.42 12.15 12.51 1.46 31.54 Value aL irilustrial plus agricultural output per capita, 1982 (yuan) 467.5 605.2 382.8 236.4 450 Health and Heatlt Status (per tbousarhi population) Death rate, 1981 5.3 6.4 6.8 6.7 6.4 Birth rate, 1981 17.1 16.4 17.0 35.1 20.9 Hospital beds 1.3 1.1 1-2. 1.1 2.0 Western doctors .26 .21 .15 .28 .52 Investient in Project b, County-level 10.6 14.3 18.4 1.8 45.1 (1.96) (1.18) (1.47) (1.23) (1.43) Provincial level 1.2 4.6 3.0 4.3 13.1 (0.22) (0.38) (0.24) (2.95) (0.42) IDA 8.5 7.9 12.4 4.0 32.8 (1.57) (0.65) (0.99) (2.74) (1.04) Total projeLt investment 20.3 26.8 33.8 10.1 91.0 (3.75) (2.14) (2.70) (6.92) (2.89) a/ Values denoting averages are national averages. b/ Per capita figires in dollars appear in parert1wes. (c) Staff Training. The project will support basic training and ira-service training, both of which will cover, in varying degrees, according to the type of staff in training: (i) management, primarily for doctors and supervisors; (ii) upgrading of professional skills, such as improved clinical practices for doctors and other health workers; and (iii) preservice training of primary health workers. About six percent of rural health component cost will be allocated to this category. (d) Technical Assistance. Trainers and consultants from the prefectural or provincial levels will be needed to provide assistance in design of training programs or in-service training of specific technical skills. About 1% of rural health component cost is allocated to this category. It is expected that 100% of these will be provided by local consultants.  - 13 - (e) Personnel Recruitment.. Additional personnel will be recruited after the expansion in the scope and quality of health services in the areas of medical staff (doctors and nurses), laboratory technicians, administrators and trainers. Five percent of rural health component expenditures is allocated to one-time costs associated with recruitment - including initial training, housing, office space and supplies - according to Chinese government regulations. 3.09 In addition to the county-level investments and supporting implementation plans and in order to assist the four Provincial Health Bureaus in coordinating, managing, supervising and monitoring the progress of county-level activities, each provincial investment nnd implementation plan includes a small province-level "management" component designed to strengthen the Bureaus' leadership functions and responsibilities (vis-a-vis the counties) in three main areas: health manpower training and retraining; heaith statistics and management information; and maintenance and repair of medical equipment. These incremental investTents are justified not only in terms of the Bureaus' direct responsibilities for overall project management and implementation but also in terms of strengthening their institutional capability as the principal intermediary between the MOPH in Beijing and the remaining counties within their administrative and technical jurisdiction. 3.10 Individual county implementation plans, prepared since appraisal and aggregated by the Provincial Health Bureaus in accordance with statistlcal and reporting formats agreed with IDA, provide a satisfactory basis for supervising the progress of project implementation in process or input terms by the tour provinces, the MOPH and, indirectly, by IDA. Procedures and parameters for monitoring and evaluating the project's results in light of objectives and ultimate impact were discussed during the post appraisal mission and will be implemented by the four Provincial Health Bureaus, in consultation with the MOPH and IDA. Part B: Medical Education 3.11 China's medical colleges have begun to recover from the massive disruptions of the cultural revolution, but in many respects the style and content of the teaching program, and the laboratory facilities required for it, remain seriously out of date. In particular, the following have beer, identified as important problems for the medical colleges to overcome: (a) Many teaching staff have no postgraduate education and their undergraduate training is now out-of-date; (b) Teaching laboratories are under-equipped and often lack any up-to-date equipment; computational facilities are weak or non-existent; and libraries need strengthening; (c) The medical content of the curriculum often fails to provide adequate treatment of subjects that have advanced rapidly in recent years (e.g. virology, epidemiology and immunology), and other relevant subjects such as management, health economics and behavioral sciences are lacking;  - 14 - (d) Teaching methods are often highly didactic with little scope for active student involvement or individual initiative and, frequently, there is an inadequate supply of teaching aids; and (e) The examination and certification systems need updating both to improve efficiency and to reflect MOPH priorities concerning curriculum content. 3.12 The project will support strengthening of the teaching programs and closely related research at the 13 "core" medical colleges that are directly administered under the MOPH. These 13 colleges include the country's six key medical colleges as well as two colleges of traditional Chinese medicine. The project's emphasis is to improve the quality and the outreach of basic teaching programs at the colleges rather than to increase the numbers of doctors graduated or the strength of research programs. 3.13 Quality improvements are to be effected in two separate ways: (a) First, by compensating for the lost years of the cultural revolution through programs of facilities expansion, equipment modernization, staff upgrading and improved teaching methods and materials; and (b) Second, by providing assistance to extend the range and content of course offerings to include recent developments from elsewhere in the world that are relevant to the Chinese health sector in coming years -- e.g., preventive strategies for chronic diseases, modern methods in epidemiology, and health management and economics. The outreach capacity of the medical colleges will be strengthened both through enhancing their capacity to provide continuing education to clinicians and health officials in the province where the college is located and to assist other medical colleges by providing advanced training for their faculty and by providing them with improved teaching materials. 3.14 These tasks will be undertaken by support of three new activities in each college. The first activity consists of five "general" program areas for upgrading in each college; the second consists of "special" program areas that will be upgraded in one or more of the participating colleges; and the third consists of developing a number of "national centers," each of which will be administered by a particular college but will potentially serve all the medical colleges in the country or a substantial geographical region. Table III.2 lists the special programs and national centers that will be administered by each college. The general program areas, which will be part of each college's program, are the following: (a) General Program Area 1 Strengthening teaching and learning resources in the college through upgrading of staff, equiping of basic teaching laboratories, strengthening of libraries, and provision of basic computational facilities.  Table M1.2: PIOGRB OF lJIE 13 PARF1CIPA11V XICAL (DLIE4ES College Special Program Ares National Centers Beijing College of T(M Clinical Pharmaolcgy, Foreign Language Audio-Visual Production, Resardi Center fo)r Training, Medical Records Medical Education Beijing Medical College Clidcal Parncology, Stomatology, Child Audio-Visual Production, Managenmnt devlopnEnt Capital Medical College of China Clinical Phmaaolcgy JnrunoI China Medical University Clinical Stcoatology, Child Develqnmnt, Foreign Resarch Center for Medical Education Larguage Trainig Guangzlu College of TUM Audio-Visual Materials Software, Design, Meaurement ard Evaluation Clinical Pharmacolgy, EquipTi-nt Hsintenanoe Hunan Medical College Equ4pl;t Maintenaic, Clinical Pharmaology, CytoWnetics For Languaga Training Norn Beth3ne Medical Univ. Clinical Stomatology, Foreigi Langae Training, eurology Audio-Visual Softwrre Shanghai First Medical College Informatim Retrieval Audio-Visal Proudcion; Infcnmation Retrieval; Reeardc Center for Medical Education; Desig2, Measuxeaent and Evaluation Shaandg Medical College Clinical Stmatology, Electron Microscopy Perinatology Sicthan Medical College Clinical Stanatoloy, Foreign language Training, Audio-Visual Production; Desigi, measuweent Equipnt Mainternai ani Evaluation Wuban Medical College Child Developent Fnwiramnntal Medicine Xan Medical College Clinical Stomology, Child Development, Foreig Mangemuet. Langage Training, Equipnt Maintenance Zhngshan Medical College Clinical Phamwolcgy, Clinical Stanatolcgy, Audio-Visual Productlon, Foreigi Language Child Developneit Training, Research Center for Medica EUcati.  - 16 - (b) General Progam Area 2 Development and teaching of preventive strategies for chronic disease. (c) General Program Area 3 Strengthening teaching of epidemiology and program evaluation (or "Design, Measurement and Evaluation"). (d) General Program Area 4 Strengthening teaching of health manage- ment and economics. (e) General Program Area 5 Provision of continuing medical educa- tion to local clinicians and health officials. General Program Area 1, which accounts for about 60% of general program areas 1-5, is principally oriented toward the task of rebuilding quality from the disruptions of the cuLtural revolution; General Program Areas 2 - 4 aim to improve quality by helping to modernize the content of the teaching program; andl General Programn Area S will help 4 of the colleges to develop their outreach role. 3.15 For each of the activities -- general and specific program areas, and national centers -- improvements will be effected through staff development (by fellowships within China and abroad); through acquiisition of laboratory equipment and, for each college, small-to-medium sized computer facilities; through renovation and construction of classroom and laboratory space; and through technical assistance fromn within China and abroad. Table III.3 summarizes each college's plans in each of these categories and indicates the total number of person-years of fellowships and technical assistance planned as well as amounts of new construction and the value of equipment acquisition. During negotiations assurances were obtained that the medical education component would be carried out in accordance with criteria acceptable to the Association. Table 111.3: 1MtESr'! PFOGRAMS OF 11* M:DICAL (DLLWS Staff Pavelopment 'iechnical Fellcwships Assistance Construction (staff-years) (cornsultant-years) (thotsands Equ4iprent From within Fran of US$- LDcal Foreign Namn of College In-country Abroad China abroad Base Costs) (thousands of U.1$) Beijing College of TCIl 212.0 12.5 1.1 1.5 2475 1831 1381 Beijing Medical College 49.7 15.3 1.0 1.1 7380 1618 1434 Capital Medical CoLlege of China 6.5 15.5 2.6 1.3 5766 113 1017 ChIna Sdical University 86.7 18.0 3.3 3.6 6017 1872 2197 Guangzhou College of 1T2