China - Rural Health Workers Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 11404-CHA STAFF APPRAISAL REPORT CHINA RURAL HEALTH WORKERS DEVELOPMENT PROJECT JULY 12, 1993 Environment, Human Resources and Urban Development Operations Division Country Department II (China and Mongolia) East Asia and Pacific Regional Office 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.  CURRENCY EQUIVALENTS (as of February 28, 1993) Currency Name - Renminbi (RMB) Currency Unit - Yuan (Y) US$1.00 - Y5.74 SDR1.00 - US$1.38774 WEIGHTS AND MEASURES 1 square meter (m2) - 1.2 square yards 1 kilometer (km) - 0.62 miles ABBREVIATIONS AND ACRONYMS BOPH - Provincial Bureau of Public Health CMT - Community-Based Medical Training CNTIC - China National Technical Import and Export Company DOE - Department of Education of the MOPH DOMA - Department of Medical Administration of the MOPH ESC - Equipment Selection Committee FLO - Foreign Loan Office of the MOPH GIS - Government Insurance System HMP - Health Manpower Planning ICB - International Competitive Bidding IFB - Invitation for Bid IPA - Inter-provincial Activities ITC - International Tendering Company LCB - Local Competitive Bidding LIS - Labor Insurance System MCH - Maternal and Child Health MOF - Ministry of Finance MOPH - Ministry of Public Health PCR - Project Completion Report PIO - Project Implementation Office PMARs - Governments of Provinces, Municipalities and Autonomous Regions RHWD - Rural Health Workers Development Project RDA - Recommended Daily Allowance SAA - State Audit Administration SEdC - State Education Commission SPC - State Planning Commission TCM - Traditional Chinese Medicine TFR - Total Fertility Rate FISCAL YEAR January 1 to December 31  FOR OMCIUL USE ONLY CHIN RURAL HEALTH WORKERS DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: People's Republic of China. Beneficiaries: Six Provinces (Anhui, Fujian, Guizhou, Henan, Hebei, Shanxl) and the Ministry of Public Health Credit Amount: SDR 79.3 million (US$110 million equivalent) Terms of Credits Standard, with 35 years maturity Proiect Description: The goal of the project is to improve the quality of rural health manpower, thereby contributing to better quality health services and an improved health status of the rural poor in the six provinces. The project has three province-specific components and one central component. The Health Workers Plannina component will strengthen the planning capability at the national, provincial and local levels. This component will define the tasks to be done to solve health problems snd will identify the demand, the requirements and the utilization for all health worker categories. The Health Workers Training component will retrain large numbers of minimally trained rural health workers, train additional workers for underserved areas, and strengthen the training capability at the provincial, prefectural and county levels. Technical assistance would be provided for developing and implementing community oriented curricula, new teaching and learning methods, teacher training in pedagogy, integration of theory and practice, and evaluation of changes and innovations. The Rural Health Services Management component will improve the working conditions of rural health workers, develop alternative means for mobilizing financial resources to support rural health care delivery, for organizing and managing rural health services, and for compensating and stimulating rural health workers to emphasize preventive care; and provide support systems for supervising these workers effectively. A small Central Component will augment the institutional capacity of the Ministry of Public Health (MOPH) for coordinating and supporting project implementation activities. It will strengthen MOPH's capability to carry out its national mandate in planning and policy formulation, provide technical assistance to the project provinces, and evaluate project activities in order to disseminate the experience gained to the rest of the country. I 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.  - ii - Proiect Benefits: At the end of project implementation, rural health care delivery in the project provinces will have been strengthened, end alternative means for mobilizing local financial resources and for compensating rural health workers will have been developed. Village clinics in the project area will be staffed by a trained village doctor and most villages will have two village doctors, one of whom will be female. Health personnel at the township level will be able to solve a broader range of health problems. Health care facilities at the township level will be repaired and equipped with appropriate medical technology. County and prefecture schools for training and retraining health workers will have been rehabilitated and expanded, and will have adopted a practice-oriented curriculum reflecting community health needs. The project's emphasis on the poor and its attention to maternal and child health problems will have reduced maternal mortality ratios in project areas. Project outcomes would also be relevant to the prefectures of the project provinces not included in the project and would be disseminated to other provinces in the country. Proiect Risks: The project would change the way rural health workers are trained. Reforming established training patterns involves important conceptual and attitudinal changes on the part of provincial authorities, school administrators, teachers and managers, which are difficult to accomplish and difficult to measure. Training new students offers different incentives to schools than retraining existing personnel. Onlending of credit proceeds by the Borrower to the beneficiary provinces at higher interest rates and a shorter maturity may selectively induce some provinces to invest in counties that are more able to repay the loan thereby potentially decreasing the intended full participation of the poorest counties. Implementing the study results on alternative ways of mobilizing local funds and paying providers would need Government support for adoption on a large scale. However, the Government is keenly aware of the need for change in rural health care delivery and strongly supports the project's goals and objectives. Careful project planning, supervision, and monitoring as well as government assurances, would help alleviate these risks.  - iii - Eotimated C,ot: Local Foreign Total -------- (US$ Million) ------- Manpower Planning 2.1 1.7 3.8 Manpower Training 106.3 17.5 123.8 Manpower Management 19.1 4.9 24.0 Project Management 2.2 1.1 3.3 Central Component 0.3 0.6 0.9 Total Base Cost 130.0 25.8 155.8 Physical Contingencils 4.5 1.0 5.5 Price Contingencies 21.7 3.0 24.7 Total Proiect Coetz 156.2 29.8 186.0 Financina Plant Provinces 3.9 0.4 4.3 Prefecturea 14.1 2.3 16.4 Counties 49.1 6.1 55.2 Central Government 0.1 0.0 0.1 IDA 89.0 21.0 110.0 Total 156.2 298186 O Diabursementa: IDA L 1994 1995 1996 1997 1998 1999 2000 ----------------- (US$ Million)- Annual 16.2 22.1 28.1 21.5 14.3 5.7 2.1 Cumulativc 16.2 38.3 66.4 87.9 102.2 107.9 110.0 Rate of Returns Not applicable Mbo IBRD No. 24460 I/ Project-financed goods are exempted from duties and taxes.  I  - iv - CHINA RURAL HEALTH WORKERS DEVELOPMENT PROJECT Table of Contents CREDIT AID PROJECT SUMMARY . . . . . . . . . . . . . . . . . . . . . . I. SECTORAL CONTE . . . . . . . . . . . 1 . . . . . . . . . . . . A. Population, Health and Nutrition Statue . . . . . . . . . . 1 B. The Health Care System . . . . . . . . a 2 C. Health Financing and Expenditures . . . . . . . . . . . . . 4 D. Rural Health Manpower ....... 6 B. RHWD Issues . . . . . . . . . . . . . . . . . . . . . . . . 10 II. GOVERNMENT POLICIES AND THE BANK'S ROLE IN ED . . . . . . . . . 11 A. Government Health Policies o . . . . . . . . . . . . . . . 11 B. Experience with Previous Bank Operations . . . . . . . . 12 C. Bank's Role and Contribution . . . . . . . . . . . . . . . 13 11.THE T P R Q I I Z C T ... .... .... 14 A. Origin of thnoft hProjct. ............ 14 B. Project Objectives and Area . . . . . . . . . . . . . . . . 14 C. Project Description . . . . . . . . . . . . . . . . . . . . 17 IV. PROJECT COSTS AND FINNINCING................ 28 A. Costs 28 B. Financing . . . . . . . . . . . . . . . . . . . . . . . . . 29 V. PROJECT MANAGEMENT AND IMPLEMENTATION . . . . . . . . . . . . . . 31 A. Organization and Management . . . . . . . . . . . . . 31 B. Procurement . . . & . . . . . . . . . . . . . . . . . 32 Co Disbursements . . . . . . . . . . . . . . . . . . . . . . . 34 D. Account and Audtlt . . . . . . . . . . . . . . . .o . . . 35 E. Project Monitoring and Evaluation . . . . . . . . o . . . . 35 The report is based on the findings of an appraisal mission which visited China in October 1992. Appraisal team members included Mr. W. Do Geyndt (Task Manager and Senior Public Health Specialist), Ms. Xiyan Zhao (Human Resourcos Economist), Mr. A. Andonyadis (Architect) and consultants W. Hsiao, J. Johnston., P. Moore and S. Sung. Consultants K. Cox, T. Hall and V. Wong participated in earlier missions. Peer reviewers were Mmes. R. Martinez (Educator), M. Young (Public Health Physician) and D. Vaillancourt (PHN Specialist). The Division Chief is Mr. Zafer Ecevit. The Department Director is Mr. Shahid Javed Burki.  v- P. EnvironmentlAsetalspet.........36 G. Impact on Wonen . . . . . . . . . . . . . . . . . . . . . . 37 VI. PROJECT BENEFITS AND RISKS . . . . . . . . ........... 37 A. Benefits . . . . . . . . . . . . . . . * . . . . . 37 D. Risks . 0. ........ ........................... ... . 37 VII. AGREEMENTS REACHED AND RECOMMENDATION . . . . . . . . . . . . . . 38 TABLES 1.1 Estimated Health Expenditure Share by Sectors . . . . . . . 5 1.2 Village Health Workers, 1970-86 . . . . . . . . . . . . . . 7 1.3 Length of Training of a Sample of Village Doctors . . . . . 8 3.1 Basic Information on Project Provinco . . . . . . . . . 16 3.2 Project Area Statistics . . . . . . . . . . . . . . . . . . 17 4.1 Project Cost Su-unry by Expenditure . . . . . . . . 28 4.2 Sumiary Account by Project Component . . . . . . . . . . . 29 4.3 Project Financing Plan . . . . . . . . . . . . . . . . . . 30 5.1 Procurement Arrangements . . . . . . . . . . . . . . . . 34 1. Project Area Statistics . . . . . . . . . . . . . . . . . . 40 2. Guiding Principles, Objectives and Activities for Manpower Planning . . . . . . . . . . . . . . . 41 3. Oversea Training Progra am. o .. l.. . ... .. 47 4. Manpower Training Program . . . . . . . . . . . . . . . . . 51 5. Guiding Principles, Objectives and Activities for Manpower Training . . . . . . .. . .. . . 55 6. Civil Works Plan ...... .. . . . . . . . ... . 59 7. Equipment Selection Committ-e . . . . . . . . . . . . . . . 61 8. Technical Assistance Program . . . . . . . . . . . . . . . 64 9. Guiding Principles, Objectives and Activities for Manpower Management . . . . . . . . . . . . . . . 66 10. Study Design for Financing Rural Health Services . . . . . 70 11. Central Componont .e. ..... . . . . . .. . . . . . . . . 77 12. Interprovincial Activities . . . . . . . . . . . .. . . . 85 13. Project Related Training . . . . . . . . . . . . . . . . . 88 14. Project Cost Tables . . . . . . . . . . . . . . . . . . . . 89 15. Project Counterpart Funds . . . . . . . . . . . . . . . . . 92 16. HOPH Administrative Procedures for Civil Works . . . . . . 93 17. Projoct Organization and Sample Implementation Office . . . 95 18. Disbursment Schedule . . . . . . . . .*. . . . . . . .. 97 19. Performance Plan . . . . . . . ...... . . .. 98 20. Project Supervision Plan . . . . . . . . . . . . . . . . . 101 21. Selected Documents in the Project File . . . . . . . . . 103 MAP IBRD No. 24460  - vi - DEFINITIONS Adult Literacy Rate The percentage of persons aged 15 and over who can read end write. Crude Birth Rate Number of live births per year per 1,000 people. Crude Death Rate Number of deaths per year per 1,000 people. Dependency Ratio Population 14 years or under and 65 years or older as a percentage of the population aged 15 to 64 years. Incidence Rate Number of persona contracting a disease as a proportion of the population at risk, per unit of time, usually expressed per 1,000 or per 100,000 persons per year. Infant Mortality Rate Annual deaths of infants less than 1 year old per 1,000 live births during the same year. Life Expectancy The number of years a new born child would live if subject to the age-specific mortality rates prevailing at time of birth. Maternal Mortality Rate Number of maternal deaths per 1,000 births in a given year attributable to pregnancy, childbirth or puerperal complications. Rate of Natural Difference between crude birth and crude death rates; Increase usually expressed as a percentage Total Fertility Rate The average number of children a women will have if she experiences a given set (i.e., those then prevailing among women of those agas) of age specific fertility rates throughout her life time.   CHI RURAL HEALTH WORKERS DEVELOPMENT PROJECT STAFF APPRAISAL REPORT I. SECTORAL CONTEXT A. Population, Health and Nutrition Status 1.1 Demographic Status. According to the 1990 census, the population in China is 1.13 billion, of which 74 percent are classified as rural. China's demographic transition reached a stable stage during the 19809. Crude birth and death rates remained at about 21 and 6 per thousand, respectively, throughout the 1980s, stabilizing the annual rate of natural increase at about 1.5 percent. 1.2 In spite of the remarkable results from family planning programs, controlling population growth remains a major concern. Additional population increase is expected in the 1990. as a result of the large cohorts born in the 1960s that are now entering their reproductive years. The total fertility rate (TFR) has been held to about 2.5 in the 1980s, but further sustained reduction in fertility will be very difficult without substantial progress in socioeconomic development and sustained success in the family planning programs. 1.3 The total dependency ratio will remain relatively stable at around 50 percent into the early 21st century. Nonetheles, the age structure will change significantly. The proportion of the population over 65 will rise steadily, as a result of fertility and mortality declines. The total "medically vulnerable" population (those below age 5 and over age 50) will increase from 381 to 601 of the working age population by the year 2025. These structural changes will raise the demand for medical care. 1.4 Health Sttu. Starting from a relatively low stage of economic development, China has successfully improved the health status of its people during the past four decades. Infant mortality in China was over 200 deaths per thousand live births before 1949. The national average is now estimated at about 30 deaths per thousand live births. Child mortality has been falling consistently since the mid-1970s. Childhood immunization, family planning, improved nutrition, better sanitation and housing, and accessible primary health care all contributed to these remarkable mortality reductions. Life expectancy of 70 years compares favorably with middle and high income developing countries and with many developed countries. 1.5 The health transition (the change in disease pattern from primarily communicable and infectious diseases to a preponderance of chronic and non- communicable diseases) is clearly under way in China, partly because of the aging of the population. Heart disease, chronic obstructive lung disease, stroke, cancer, injuries and suicide were the leading causes of mortality in the 1980s, together accounting for 721 of all deaths. These chronic diseases also account for the majority of hospital admissions and health care expenditure. However, the health transition is uneven and varies by gender and residence. People in remote and poor regions are more likely to be affected by infectious diseases than urban people. The probability of rural men dying from infectious diseasse is double that of urban men; rural women are four times as likely to die from  -2- infectious diseases as urban women. Thus China has to face the challenge, of dealing with the emerging prevalence of chronic noncommunicable diseases at the same time as it continues to fight infectious and parasitic disaases. In the proces. it must also reduce geographic and gender inequalities. 1.6 Nutrition St-tus. Improved nutrition has been an important contributor to the gains in life expectancy and the decline in mortality. Average food consumption in China compares well with other developing countries. The results from the Nationwide Nutrition Survey in 1982 indicated that the average energy intake per capita vas 2085 calories (102S of the recommended daily allowance or RDA) and 67 grams of protein (922 of RDA). Acute malnutrition has been largely eliminated and the Chinese diet is on average not deficient. However, malnutrition still exists, particularly in poorer rural areas. About 8-102 of the population have an energy intake lower than the RDA. B. The Health Care System 1.7 Administrative Structure. China's health care system consists of a number of subsectors, among which the subsector administered by the Ministry of Public Health (MOPH) is the largest. Other subsectors are the direct responsibility of their corresponding government units and provide health services to their constituencies (military, public security, industry, education). These subsectors are not included in this brief description. 1.8 China's national health care system is an integral part of the country's administrative structure. The State Council of the People's Republic of China is the apex of the executive arm of government and controls the central level Ministries and the 30 governments of provinces, municipalities and autonomous regions (PMARs). Below the province are three levels of government, namely, the prefecture/city government, the county government and the township government. Township governments were previously the administrative offices of the people's communes. 1.9 On average, there are 8 prefectures/cities in each province or autonomous region. The average population of a PHAR is 35 million people ranging from 1.9 million (Tibet) to 108 million (Sichuan). There are 2,137 counties in China or an average of 71 for each PMAR and 10 for each prefecture/city, and each county has about 25 townships. The average population per county is 0.4 million (ranging from 10,000 people to one million). A township averages 16,000 people and has an average of 14 villages. The villages are the primary units of residence under the township government and range in size from 100 to over 3,000 people. 1.10 Before the administrative system reform in the early 1980s, the village was called a production brigade and consisted of several production teams. Each production team served as an agricultural business accounting unit. After paying agricultural tax to the government, the production team retained some of its revenue in a Public Welfare Fund for education and health care expenses and for old age support. 1.11 The health care system closely parallels China's administrative structure. Except for township governments, each level of government has a department of public health vith a dual authority structure: for administrative matters it is responsible to the government at its own level and for technical  -3- matters it is responsible to the department of public health of the next higher administrative level. Departments of public health at each level manage and supervise hospitals, health centers and specialized health care institutions, following national guidelines and norms promulgated by the central level MOPH. 1.12 The Rural Health Care Slstem Before 1979. Before 1979, the primary health care system in rural China was a "three-tier system" based on the production team, the brigade, and the commune. Health care was provided by: (i) part-time health workers at the production team level; (ii) the cooperative health station at the brigade level, consisting of 1 to 5 "barefoot doctors" (para 1.22) and serving on average 200-300 households; and (iii) the commune clinic/hospital, staffed by middle level practitioners providing a broader range of services based on Western and Chinese medicine. This health care system was financed with contributions from the public welfare fund and from members of the cooperative health care system. The central government financed vaccines, contraceptives and the training of all health personnel. 1.13 The policy of "Put Priority of Health Care in Rural Areas" of the mid- 1960s guided the rapid development in rural areas of the cooperative health care system with "barefoot doctors" and brigade health stations. In the 1970s the cooperative health care system covered 95 percent of all villages in China, and helped provide primary health care to the rural population. 1.14 The Rural Health Care System After 1979. The implementation of the new economic responsibility system in rural areas, initiated in 1979, shifted the community-based production system back to a family-based one. The privatization of the production and distribution systems stimulated productivity and total output. However, the changes in the economy also affected the health sector as the system of collectives collapsed and the financial viability of the public welfare fund was jeopardized. Other sources to pay for health care had to be found. 1.15 The health care system experienced a dramatic change in the aftermath of the economic reform. Responsibility for the commune clinic/hospital (now called the township health center/hospital) shifted from the county department of public health to the township government. The township government is now responsible for the administration and the financial support of the township health centers/township hospitals. Another important change is the separation of preventive services from treatment services at the township level. The township health centers used to provide both preventive services and curative services. After the reform, a large number of township health centers were divided into curative township hospitals and preventive township health centers. 1.16 The most profound change in rural health service delivery system occurred at the village level. Before 1979, the village health stations were run under a cooperative health care system. The barefoot doctors were paid by work points, which was a system of recording work contributions in the collective economy. The villagers who joined the cooperative health care system received free medical care in the brigade-level health station and also could be reimbursed for a proportion of their medical expenses if they were referred to and treated at a higher level. The introduction of the new economic reform weakened the financial viability of the cooperative system. The brigade is no longer a production or distribution unit. Funds previously available for social welfare, including old age support, schooling and medical care, have been sharply reduced. The coverage by the cooperative health system declined substantially  -4- in most areas; in some places, it completely collapsed. Additionally, incre-aea in rural income and alternative job opportunities raiaed the opportunity coat for the barefoot doctors and caused many to leave medical practice. The number of barefoot doctors decreased from 1.76 million in 1977 to about 1.2 million in 1989. 1.17 Health services delivery at the village and township levels haa undergone a process of commercialization as the financial risk has shifted from the public payor to the private payor. Fee-for-service has become the dominant method of paying for health services. MOPH data for 1988 indicate that only 6 percent of villages and 9 percent of the rural population are still covered under cooperative fund arrangements. Over 80 percent of villages operate on a fee-for- service payment basis. The doctor in about 45 percent of the villages is a private practitioner; 36 percent of the villages have a clinic run by the village committee where the patients pay for services received. Only 10 percent of rural doctors received part of their medical income directly from the villages. Six percent of villages had no clinic and depended for health services on the township health centers. C. Health Financing and Expenditure 1.18 The Bank's 1990 sector report "China: Long-Term Issues and Options in the Health Transition' (No. 7965-CHA) reviewed China's health financing and health expenditures. Important trends identified in the 1980. were: (i) per capita health spending rose; (ii) the relative shares of public subsidies and of health insurance payments declined; (iii) user fees increased in both absolute and relative terms; (iv) total health expenditures grew rapidly, mainly as a result of increases in hospital costs; and (v) drug consumption absorbed a higher share of total health expenditures. The impact of these changes on the quality of, and the access to, health services and on the health status of the population is not as yet clear. 1.19 The Health Financine System. The main sources of health financing in China are government budgets, health insurance and user fees. The largest source is the health insurance system, covering about 12 percent of the total population largely concentrated in urban area. There are three types of health insurance: (i) the Government Insurance System (GIS) covers about 24 million civil servants (2S of total population); (ii) the Labor Insurance System (LIS) covers all workers of state-owned enterprises (about 75 million people, or 7 percent of the total population) and in addition pays half of the medical expenses of their dependents; and (iii) a variety of collectively-owned enterprises insure their employees, covering a maximum of about 35 million workers. Recently developed rural enterprises also provide certain health coverage to their employees. Table 1.1 presents total estimated health expenditures by source for the period 1970- 87. Noteworthy is the dramatic increase in the share of user fees and the corresponding drop in the shares of government budget and health insurance.  -5- Table 1.1 Estimated Health Exnenditure Share BY Source 1970 1980 1985 Government Health Budget 28S 30% 27% 191 Health Insurance 53% 501 42S 411 User Fees 142 14% 26S 36% Other sectors 51 6% 5S 4% Total 100S 100% 100% 100% Total Expenditure* 4,670 12,105 23,011 30,322 * Estimated expenditure based on 1980 constant prices, in million RMB Source: 'China: Long-Term Issues and Options in the Health Transition", (Report No. 7965-CHA, 1990). 1.20 Rural-Urban Differentials. Significant rural-urban differentials in access to quality health care and in health status remain, notwithstanding the fact that priority of rural health care has been a long-standing health policy in China. The rural-urban gap has widened rather than narrowed during the past ten years. At the township level the number of hospital beds decreased by 6.8Z and the number of physicians by 10.8%. In contrast, the number of beds and physicians in county hospitals and above increased by 29.6% and 49.0%, respectively. Also the share of public health expenditures on township hospitals is declining, while the proportion of the government budget spent on higher level hospitals is increasing. A dramatic difference between rural and urban areas is evidenced by the annual per capita health expenditure in the late 1980. of government employees (145 yuan) and of insured workers (151 yuan) while the average for rural people was only 34 yuan. 1.21 Health Financing in Rural China. In general, no government insurance is available in rural China. Health services are mainly provided on a fee-for- service basis. According to a rural health services survey in 1985, the foe-for- service payment mode covered 81 percent of rural residents, collective health care sources accounted for 10 percent, labor insurance for 4 percent, public welfare funds for 3 percent and others about 3 percent. Access to primary health care has become an equity issue. Economically more advanced areas are able to finance their local health services and more well-to-do farmers can "buy" better medical services. Poor villages, on the other hand, cannot support their clinics and poor villagers have difficulty paying their medical expenses. Results from a rural health services survey (1985) indicated that, under the fee-for-service system, about 20 percent of farmers could not obtain medical care when they were sick and the same percentage of patients who needed inpatient care could not be admitted to a hospital for financial reasons. With the continuous increase in medical care cost, illness has become one of the leading causes of poverty in rural areas.  -6- D. Rural Health Maniower 1.22 The Transition from Barefoot Doctor to Village Doctor2. Rural health manpower expanded rapidly in the late 1960. with the introduction of the "barefoot doctor" program. Barefoot doctors (a term first used in 1968 and discontinued officially in 1985) were part-time health workers at the village level responsible for: (i) the operation of the brigade health stations; (ii) treatment of coon diseases and injuries; (iii) promotion of health campaigns and health programs; (iv) disease surveillance and prevention, including immunization and health education; (v) provision of maternal and child health care (MCH) and family planning services; and (vi) cultivating, collecting and processing medical herbs. The barefoot doctors were an important force in rural primary health care. Their number increased to about 1.56 million in 1975 or about 2.5 doctors per 1,000 rural residents. In the late 1970s, national health policy emphasized improving the quality of health services and upgrading the clinical skills of lower-level health personnel. Barefoot doctors could become village doctors by passing a basic examination. Those who did not pass were classified as village health aides. The total number of village doctors in 1988 was about 731,700 or only 60X of the number of barefoot doctors in 1980. Some barefoot doctors changed occupation and some practiced medicine at the township level. Overall, the number of rural health workers actually decreased during the 1980s (Table 1.2). 1.23 Recruitment and Trainint of Rural Health ManDowor. The training of assistant doctors and village doctors differs greatly from that of post-secondary school level medical doctors even though all carry the title "doctor'. Assistant doctors, MCH doctors, midwives, nurses and public health workers are junior high school graduates (nine years of general education) with satisfactory scores on provincial level examinations. Villagers to be trained as village doctors were selected by the villages. Often the retiring village doctor would pass his or her "business" on to a younger family member. Criteria for recruiting village health workers were based on the community's judgment of the quality of the person, which emphasized his/her performance, and potential as a responsible member of the community as well as political status. Usually, if there is only one village doctor, it is a male, but if there are two or more doctors, at least one must be female in order to give more prominence to MCH services. The data from a national survey on village doctors in 1990 suggest that almost 80 percent of village doctors were male between the ages of 30 to 50. The majority of them had only 6-9 years of general schooling. Younger village doctors tended to have higher levels of education. . See also the Bank's 1990 sector report "China: Long-term Issues and Options in the Health Transition," Chapter 8: Health Manpower.  -7- Table 1.2 Village Health Workers 1970-86 (in thousands) 1970 1975 1980 1986 No. of villages 651 675 703 738 (formerly called 'brigades') Villages with a health station Number 499 571 484 648 Percent 76.6 84.6 68.8 87.8 Barefoot doctors 1,218 1,559 1,463 NA Village doctors NA NA NA 695 Village health aides NA NA NA 585 Brigade health aides 3,561 3,282 2,357 NA Rural midwives NA 615 635 508 NA: Not Applicable Source: Ministry of Public Health 1.24 Professional training in secondary medical schools is subject to provincial and national norms. It is highly structured and the performance of schools is judged by the ranking of scores obtained by their graduates on province-wide examinations. Pressure to perform well on these standardized tests inhibits innovation and diverts teaching from more meaningful educational objectives. Medical training for village doctors, on the other hand, is short, informal and by and large unstructured. The pre-service training that most village doctors received is less than one year in duration. Initial training usually takes place in the central township hospital or township health center with a duration of 3 to 6 months. In 1974, a formal one-year course was introduced to train village doctors in an attempt to upgrade their clinical skills, but it has not been widely adopted. Rural hoalth workers also receive continuing education, of which there are four typess In-service Training at the village health station through supervision from experienced health workers at the station and/or periodic visits from township level professionals; Grou2 MeOtings held every month at the township hospital to discuss special issues and needs; Special Training Courses offered in the hospitals/health centers at township or county levels, or at county health schools, for specific local health needs; Retrainint Courses offered at the township or county levels mainly for skills upgrading. The length of the total training varies depending on individual needs, and on available financial support to pay for tuition and to replace income foregone during training. More than half of the village doctors have received less than one year of technical training (i. . , combining proservice and inservice training (Table 1.3)).  -8- Table 1. 3 Length of Training of a Sample of Village Doctors Duration of Training Number of Percentage (in months) Village Doctors < 7 25,954 29.2 7 - 12 23,644 26.6 13 - 24 21,882 24.6 25+ 17,446 19.6 Total 88,926 100 Sources Do Ceyndt, Zhao and Liu, 1992. "From Barefoot Doctor to Village Doctor in Rural China", World Bank Technical Paper No. 187. 1.25 Training Institution. China train, health personnel at three levels. At the highest level are medical universities offering a 5-6 year program plus postgraduate training. At the middle level (still post-secondary) are 3-year medical colleges training doctors in both western and Chinese medicine. At the lower level are secondary medical schools training assistant doctors, traditional Chinese medicine (TCH) doctors, midwives, MCH doctors, nurses and medical technicians for the county and township levels, and county health schools mainly training doctors and labor attendants for the village level. Enrolment in post- secondary institutions has increased in recent years. At present, all graduates from health training schools above the county level are employed by the government except those who voluntarily leave for other jobs and sectors. This pattern may change if economic reforms increase the demand by the private sector for graduates with medical training. Most schools have all or part of their students as boarders, which allows students from more distant areas to attend and thus increases equity of access. 1.26 Most secondary medical schools offer three-year training programs and the large majority of their students graduate as assistant doctors and nurses. In recent years fewer midwives have been trained but more MCH doctors. Secondary medical schools are under the authority of provincial and prefectural governments. To be admitted, students must have completed three years of lower secondary school and must pass an entrance examination. Graduates must pass provincial qualifying xaminations and their diplomas are recognized nationally. Upon graduation they are assigned to a job by the prefectural public health bureau. The bulk of the assistant doctors are assigned to township hospitals and health centers; nurses, midwives and public health workers predominantly go to county level facilities. Training is free for most students and the school receives an annual per capita allocation of Y1,200 to Y1,400 from the prefecture. Knrollment is at times curtailed for budgetary reasons. Some paying students are also accepted, providing an additional source of revenue to the school. 1.27 County health schools are under the supervision of the county health bureau and train rural health workers for the villages. The length of training varies widely among and within prefectures, ranging from one to three years. Schools are self-financed through student fees but may receive a small annual allocation from the county budget for capital expenses and teacher salaries.  -9- Students are primary school graduates from diverse backgrounds and some have health work experience. No entrance examination is required. Graduates are not guaranteed a job but those previously employed in the health field often return to their post in the village. Upon graduation students receive a certificate recognized in the county only. Length of training is often a function of the availability of funds, i.e., students' willingness to pay tuition for more than one year of training and to forego income and the county government'a willingness and capability to subsidize the training process. The proposed project will strengthen training at secondary medical schools and at county health schools. 1.28 Teachina Faculty. The academic background of the teaching faculty is very diverse, with a few having been trained at a three-year medical college and many at the secondary medical school level. Faculty at secondary edical schools tend to have tertiary level training while faculty at county health schools are more likely to be graduates from secondary medical schools. Doctors from prefectural and county hospitals are part-time faculty and teach a course in their specialty. Teachers are not trained to teach as such and their teaching methods are typically lecture-style. Most of the full-time faculty have limited clinical practice and many have not worked clinically at the township or village levels (this is more often the case for county school faculty than for secondary medical school faculty). With a few exceptions, the faculty's knowledge and personal experience of community needs and priorities are limited. Teaching and practice are not integrated, as schools have limited practice settings. The most frequently used practice settings are the county and prefectural/city hospitals where the clinical problems to be solved are not an accurate reflection of the prevalent pathology in townships and villages. 1.29 Retention of Rural Health ManDower. Assistant doctors at the township level are part of the civil servant stream and are paid a salary. A light workload and a generous assignment of staff at that level do not require full- time presence and most assistant doctors havo other occupations, usually farming, to supplement their low salaries. The commercialization of the sector during the 1980. and the reduction in the percentage of the payroll paid by the county government (typically now only 60 percent) have encouraged township level providers to generate more revenue from user fees for outpatient visits, daily room charges and diagnostic tests, but mainly from the sale of drugs. Revenue is used to offset the reduced salary subsidy and in some cases to pay an incentive bonus. Thus, staff are devising Ways to increase their income to a competitive level. Another major cause of staff dissatisfaction (and a frequent reason for leaving the township and moving to county seats) is the lack of suitable housing and the poor professional working conditions (insufficient equipment, structurally deficient buildings). 1.30 Village doctors are not civil servants but are in effect private entrepreneurs. Most of them work part-time on health care and about forty percent of their income come from farming. Only 19 percent of village doctors devote full time to their medical practice. Health manpower at this level has been quite stable until recently. Under the collective economy, village doctors (barefoot doctors at that time) were paid work points and their pay was equal to or better than other villagers. After the economic reform, however, the village doctor's pay is no longer guaranteed or competitive. The village doctors charge a smll fee for a visit but their earnings mainly depend on profit made from selling the medicines they proscribe. The results of a national survey reveal that 77 percent of the village doctors' income from health care comes from provision of curative services and only 13 percent from the provision of  - 10 - preventive activities, with the remaining 10 percent coming from subsidies for performing family planning services and immunizations. The sanctioning of private practice has increased the mobility of the health labor force, and village doctors now also have alternative job opportunities and may leave the health sector. Rural areas with higher income earning potential in non-health sectors have special difficulty retaining their health workers. 1.31 Performance of Rural Health ManDower. Health personnel at the township and village levels generally do not have post-secondary medical training. The majority of township hospital doctors have graduated from secondary medical schools. Village doctors have usually received short training courses from county health schools and very few have completed a three year training program. On other hand, many village doctors have extensive practical work experience: more than 80 percent of village doctors have worked in the health field for over ten years and 40 percent for more than 20 years (the older ones started their careers as barefoot doctors). 1.32 Clinical training of rural health workers tends to be unduly theoretical, and not community-based or oriented towards problem-solving. More than half of village doctors have less than one year of formal training (Table 1.3). Training curricula for rural health workers are simplified adaptations of the curriculum taught in tertiary level medical schools and therefore retain the strong emphasis on curative medicine. About two thirds of courses taught are basic sciences, TCM courses take about one quarter and non-medical courses make up the balance. Deficiencies in clinical training are evident in clinical practice. Rural doctors are responsible for providing basic health care to the majority of the rural population, and curative services represent the bulk of their work. In poorer and more remote areas up to 90 percent of work done by village doctors is curative. Doctors have the authority to prescribe a variety of drugs without the benefit of a proper clinical diagnosis. Some of the drugs are potent and outright dangerous when applied improperly. In general there are too many medically unnecessary intravenous infusions (e.g. amino acids, 10% glucose), too many injections (e.g. vitamins, fortifiers, antibiotics) and excessive and inappropriate use of antibiotics. Health authorities are correctly concerned about antibiotic resistance in the rural population. These poor clinical practices are related to inadequate clinical training, absence of clinical supervision and a perverse system of financial incentives. E. Rural Health ManDower Development Issues 1.33 China is experiencing a rapid health transition concurrently with a dramatic reform in its economic system. The existing health care system is not well-equipped to cope with such rapid structural changes. Problems are exacerbated in rural areas. The increase in the prevalence of chronic diseases partly due to an aging population and partly to a shift in epidemiological risk requires the introduction and dissemination of new technologies and practices in health services delivery. Moreover, existing health service providers, particularly at the township and village levels, lack the necessary clinical skills to cope with such changes. New technology requires upgrading personnel skills to improve quality and efficacy of health services. Key issues in the present rural health care system in China are: (i) how to upgrade clinical skills to improve quality of services; and (ii) how to improve the working conditions of rural health workers and provide them with adequate payment for services rendered, in order to stabilize health personnel and make them more productive.  - 11 - 1.34 Quality of Health Services. As disposable income increases, people are willing to pay more for health care and vill no longer accept low quality services. The quality of health services provided by rural health workers has become an important concern as the demand for medical care increases. Patients are tending to bypass lower level health clinics and go directly to township or county hospitals. The income effect on the demand for health services requires a parallel improvement in quality of health services at the township and village levels mainly by upgrading the clinical skills of rural health workers. 1.35 Quality of health care services is closely related to the quality of training and supervision of health personnel and the quality of teacher training, as well as the availability and appropriate pedagogic use of teaching methods and materials. Providing rural health workers with the needed clinical skills and supervising their performance are essential for improving the quality of rural health care. 1.36 Remuneration System. Appropriate financial incentives can help to balance the geographic and skill distribution of the health labor force. Well- trained doctors often do not want to stay in rural areas, partly because of poor working and living conditions, but also because of low payment. The disintegration of the rural cooperative health system and the implementation of cost recovery schemes have made payment of village doctors unstable. Curative services are the main source of income for township hospitals and health centers and for village clinics. Selling drugs is the most effective way for health providers to generate revenue. The current system of health financing pushes the rural health care providers to pursue income generating activities (i.e., curative services) rather than preventive activities which are economically less attractive. The excessive and often medically inappropriate prescription of drugs is now being observed in the practice of village doctors and township hospitals. II_ GOVERNMENT POLICIES AND THE BANK'S ROLE IN RURAL HEALTH WORKERS DEVELOPMENT A. Government Health Policies 2.1 The Eighth Five-year Health Plan for 1991-95 emphasizes reducing the rural-urban gap in access to health care services. It argues that the provision of quality rural health services is hampered by a lack of skilled health workers, a shortage of health manpower in the poorest areas and inadequate medical supplies, equipment and facilities. The Eighth Five-year Health Plan sets development strategies for the 1990s, among which, preventive care and rural health care are the most important issues addressed. In order to reach the goal of "Health for All by the Year 2000", the Government intends to increase investment in the health sector and strengthen primary health care in rural areas. Concrete goals are to increase the number of health workers per thousand population from 0.6 to 0.8 and the number of hospital beds per thousand from 1.6 to 2. Priority in health manpower development is to train health professionals for rural health care. Village doctors are the primary health care providers and would receive various kinds of formal training during the 1990s. 2.2 The negative impact of the new economic responsibility system on the provision and financing of rural health services (paras 1.14-1.17, 1.21) was not originally anticipated. Government concern about the unintended consequences of the demise of the cooperative health care system and the rise of a private  - 12 - entrepreneurial fee-for-service system became evident during the mid-eighties. Towards the end of the decade several national and regional meetings and symposia examined and discussed the problems of organizing and financing rural health services. Research results from rural health evaluation studies vere also disseminated. As a result of this information flow and reflecting its traditional comitment to the rural population, the Government has made rural health a national priority. The Government's request for IDA assistance is an expression of its concern. Central and provincial authorities have expressed their strong support for the proposed project. B. Past Exierience with Previous Bank Group Operstions 2.3 The Bank's work with health sector authorities began when China resumed its membership in 1980. The Bank's health sector dialogue with the government has been pursued through health sector reports (1984, 1989) and through four projects financed by IDA. The Rural Health and Medical Education Project (Credit 1472-CiA) started in 1984 and was completed at the end of 19911 the Rural Health and Preventive Medicine Project (Credit 1713/Loan 2723-CiA) started in 1986 and is largely complete (except for a vaccine production component, which will run until 1995). The Integrated Regional Health Development Project (Credit 2009-CHA) initiated activities in early 1990 and is progressing satisfactorily. A fourth project "Infectious and Endemic Disease Control" (Credit 2317-CHA) was signed in 1991 and implementation has started smoothly. 2.4 Credits 1472 and 1713 financed some rural manpower training, including upgrading the plant and equipment of county health schools. Training was mainly in-service and designed to improve management, introduce staff to the newly purchased technology, and improve equipment maintenance. 2.5 The medical education component of Credit 1472 introduced a new emphasis in the core medical universities on continuing education for rural manpower in the areas of management, preventive medicine, and social medicine. Public Health Bureaus were encouraged to set up community bases for study and research. 2.6 Rural training centers were improved or constructed in all project counties in five provinces under Credit 1713. This approach was probably appropriate at the time. Present thinking, however, is to consider larger catchment areas than a single county, with some division of responsibility for different professional disciplines between county schools. Under the ame credit, provincial training schools were also upgraded and provided with modern equipment. The content of training courses was strengthened in primary care and clinical areas, and in equipment maintenance. However, the project's objectives did not include any fundamental review of health manpower planning or fundamental changes in curriculum development. These were left for subsequent projects. 2.7 The proposed project would continue the health sector dialogue, while building on many of the project activities and sector study findings of the last ten years. A number of lessons have been learned from the implementation of the projects financed by IDA thus far. They include the need to: (i) provide the health sector better trained personnel; (ii) decentralize some operations such as training down to the prefecture and county levels; (iii) strengthen the capability at the central level to monitor and evaluate project performance; and  - 13 - (iv) ensure sustainability by carefully planning recurrent and other financial costs. These lessons are of particular relevance because the proposed project would be implemented in six provinces that have not benefitted from previous Bank Group support for health improvement. Precautions have therefore been taken in the design of the proposed project by: (i) using the prefecture and not the county as the planning unit for county schools, with sharing of training services among counties; (ii) stressing inservice training over proservice training; (iii) incorporating a clearly defined central component to monitor and evaluate project performance, and to extract lessons for use in future programs; (iv) ensuring inclusion of technical assistance for key activities; and (v) carefully planning tho financing of recurrent costs. C. The Bank's Role and Contribution 2.8 The Bank shares the Government's concern with, and its emphasis on, the organization, delivery and financing of rural health services, which serve three quartors of China's population. The availability of qualified manpower in adequate numbers is a necessary condition for the provision of affordable quality care. Project proparation has already allowed IDA to contribute substantially to identification and propagation of the main issues in rural health manpower training end gains have already been realized. Provincial Bureaus of Public Health and their respective preparation teams, as woll as the central level MOPH Department of Education, now fully embrace the need to change the manpower planning and training process. They are already promoting the conceptual model of manpower planning based on community needs rather than on fixed ratios as in the past, of training manpower using modern teaching methods integrating theory and practice and distinguishing teaching from learning, and finally of recruiting, retaining and managing the planned and trained manpower. The concepts of task analysis and job descriptions have entered the lexicon of the Government's preparation teams, as well as competency-based assessment of performance and clinical supervision. 2.9 Rationale for IDA Involvement. The proposed project builds on the Bank's earlier operations in the health sector. It meshes woll with both IDA's sector study findings and the Government's health sector development strategies. The shortage of public funds for upgrading the quality of rural health personnel became more apparent in the process of decentralization, particularly in poor areas. Using its previous experienco with the health sector, the Bank is in a position to holp the Government in its efforts to adjust its rural health system. The project design stresses community-based health care and emphasizes disease prevention in training programs partially basod on the Bank Group's experience in other countries. The project would develop a methodology that could be replicated in other counties within the project provinces and in other provinces in China. 2.10 As in previous health projects, there is a strong anti-poverty focus of the project which gives it priority for IDA's attention. Criteria for selecting prefecturos in participating provinces target those with infant and maternal mortality rates and illiteracy rates above provincial averages and those below the provincial average on per capita income. Project preparation has provided the Bank Group and the Government an opportunity to address some of the issues closely associated with poverty themes of the 1990 World Development Report and the Bank's recent report on poverty in China (China: Strategies for Reducing Poverty in the 1990's, Report No. 11245, October 1992).  - 14 - III. THE PROJECT A. Orliin of the Proiect 3.1 The Rural Health Workers Development Project (RHWD) identification mission (June 1990) examined the rationale and feasibility of IDA's involvement in rural health manpower development and defined the context and scope of the proposed project. Preparation missions were preceded and accompanied by UNDP- financed Technical Assistance teams of foreign and local consultants in November/December 1990 and in June 1991, and worked closely with MOPH and the project provinces in developing detailed project proposals. The project was appraised in October 1992. B. Proiect Obiectives and Areas 3.2 Proiect Obiectives. The goal of the proposed project is to improve the quality of rural health manpower, thereby contributing to better quality health services and an improved health status of the rural population in the project area. To achieve this goal the project vould: (i) strengthen manpower planning capability in six project provinces and at the national level; (ii) train and retrain better qualified medical teachers, rural health workers and managers by reorienting the training process through curriculum reform, introducing a wider variety of teaching and learning methods and more supervised practicums, and emphasizing training in the practical skills needed in rural settings; (iii) strengthen management and clinical supervision of health service institutions in rural areas; (iv) improve inter-institutional coordination and develop integrated provincial training networks with defined roles for each level of training institutions; and (v) upgrade the physical conditions of training institutions at the prefecture and county levels and of service delivery institutions at the township and village levels. Proiect Areas 3.3 Selection Criteria for Provinces. The MOPH and the Bank agreed on a set of criteria for selecting project provinces. They included: (i) evidence of provincial commitment to change policies, to organize interdepartmental project leading groups, and to achieve project objectives; (ii) a per capita income level below the national average; (iii) high prevalence of communicable and endemic diseases, and a large number of counties in remote and medically underserved areas; (iv) evidence of having planned or initiated educational policy reform; and (v) ability and willingness to provide counterpart funds and willingness to repay the loan. Based on the above criteria, Anhui, Fujian, Guizhou, Hebei, Henan and Shanxi provinces were selected by the Chinese Government to participate in the project. 3.4 Selection Critsria for Prefectures. The criteria for selecting prefectures within tho six provinces participating in the project were: (a) Health policy statements by the Prefecture Executive or by the prefectural assembly, expressing a commitment to solving the rural health manpower problem;  - 15 - (b) Evidence of actions taken by the prefectural governments to improve rural health services, such as rotation of urban medical staff to rural areas, or assignment of medical school graduates to rural areas; (c) Existence of an organizational framework and a managerial process to promote and improve rural health care services; (d) At least two thirds of the prefectures selected in each province should be in the lowest quartile of the province's per capita GNP range and one third could be in the next higher quartile; (e) Selected prefectures must have a secondary medical school capable of receiving assistance from higher level institutions and providing support to the lower level county health schools. In cases where there is more than one prefectural level school the best one should be chosen. Likewise, not all county health schools within a prefecture should be selected but only the ones that have most potential for developing into quality teaching institutions; (f) The infant and maternal mortality rates should be higher than the provincial average; and (g) The percentage of rural health manpower without formal training should be higher than the provincial average. 3.5 Based on the above criteria, each project province selected five to seven prefectures to be included in the project. All counties in the selected prefectures would be included in the project area and would benefit from the project in one way or another, but only some of them would directly receive hardware investment funds. The project would invest in training schools in prefectures and counties and in service institutions in townships and villages that are clearly below acceptable provincial standards. 3.6 Basic Information on Proiect Provinces. The six selected provinces are relatively poor compared to the national average. Table 3.1 provides basic demographic and socioeconomic information on the project provinces. There are significant variations in socioeconomic development among the six provinces. Guizhou stands out as the poorest with fewer natural resources and poorer health conditions. 3.7 A total of 36 prefectures with 374 counties are included in the project. There are 7,659 townships and 126,978 villages in the project counties with 159 million people (about 55X of the total population of the six provinces). Table 3.2 shows the share of the population and the number of administrative units in each province that would be included in the project. Annex 1 provides additional information by province on training facilities and health services delivery units that are part of the project.  - 16 - Table 3.1 llic Iufori tiou on Project Proyiuce.* Anhui** NJ Lan guishon 80bel Honan Shanxi CHINA Main CharactoristLcs Population (million) 57 29 32 59 86 29 1112 Total Area (1000 3(2) 137 121 176 188 166 156 9600 S Mountainous 55 75 87 35 27 80 42 Population Density (/3(2) 403 233 181 313 493 177 116 S Rural 86 61 83 83 66 78 s0 Socl economic Indicators CUP per Capita (Yuan) 1,089 1,384 749 1,333 1,034 1,261 1,420 Health Up. as I of Cov. 4.0 3.7 4.6 4.3 4.1 3.9 2.5 lip. Adult Llteracy Rate 65 84 72 75 72 82 84 (age 15+) B lh/D emraphLc sadic ators Crude Blrth Rate 25 23 23 20 22 22 21 Crude Death Rate 6 6 7 5 6 6 6 Total FortilLty Rate 2.5 2.5 2.3 2.2 2.9 2.2 2.5 LLfe Expectancy 71 71 65 71 69 69 70 Infant MortalLty Rate 42 35 86 37 62 60 30 (per 1,000 live blrth) Maternal Mortality Rate 104 66 238 68 151 220 95 (per 100,000 live bLrth) Incidence Rate of 389 257 1197 211 320 148 338 InfectLous Dlsoeoae (per 100,000 Population) * 1989 data ** 1990 datt Sources: Provincial Project Proposals and China Health Statistical Digest, 1990  - 17 - Table 3.2 Project Area Statistics Population Prefecture. Counties Townships Village* (million) Anhui Province 56.6 16 72 3182 30749 Project 28.1 5 41 1799 16589 Fujian rovince 28.9 9 64 967 14814 Project 13.1 5 41 559 8109 Guizhou Pravince 31.8 9 86 1664 25794 Project 22.1 6 65 1100 18910 Hlebei Province 59 18 143 3640 50626 Project 32 7 91 2085 30530 Henan Province 85.5 17 117 2127 47801 Project 45.8 7 62 1130 28735 Province 28.8 12 118 1910 32272 Project 18.2 6 74 986 24105 TOTAL Province 290.6 81 600 13490 202056 Project 159.3 36 374 7659 126978 C. Proiect Descrinptio 3.8 During project preparation, the six provinces have carefully planned the activities to be carried out during project implementation. Objective* and activities were defined, responsibilities for execution assigned, end timing and resource allocation decided. Project management computer software (Time Line) was used by all project provinces to document specific project plans in terms of what is to be done, when, how, by whom, and what resources are needed. It describes the project in terms of activities, timing, resources and costs. Proposed project activities are presented in Gantt Charts (produced by Time Line). Provinces will use the project management software to implement and monitor project execution. The major proposed activities and resource allocations are su-arized below for the three provincial components and the central component. HEALTH MANPOWER PLANNING (Base Cost US$3.8 million) 3.9 Obiectives and Activities. The design of the health manpower planning component was guided by a set of agreed on principles, objectives and activities (Annex 2). It would achieve six objectives, with each objective supported by specific activities: (a) Develop a health planning capacity in the Drovinces by organizing and staffing health manpower planning units at provincial, prefectural and county levels and by establishing the necessary mechanisms for coordinating planning and for common activities shared by all six provincesl  - 18 - (b) Train the Dlannina staff by: (i) organizing inter-provincial training workshops for provincial and selected sub-provincial planners; (ii) holding training workshops in the provinces for provincial and sub- provincial planners; and (iii) training selected planners locally and sending some overseas for university-based academic degree programs or agency-based study tours; (c) ImDrove the glannint data base by standardizing and upgrading the quality and relevance of the data collected; (d) Im=lement he-lth maniower Dlannint by: (i) conducting or updating a 'situation analysis" of health manpower and health system needs and priorities; (ii) carrying out a small annual study or survey on a priority topic; (iii) updating and improving the accuracy of provincial demand estimates and supply projections; (iv) updating manpower staffing and productivity standards; and (v) carrying out a one year provincial manpower study and preparing a provincial manpower plan; (e) Establish a gualitative basis for manpower Dlanning by carrying out a job analysis study as a basis for writing job descriptions and by obtaining information and input from the local community; and (f) Monitor and evaluate the manpower plannint function by holding annual meetings to review planning priorities, problems, methods and to exchange results, and preparing an annual report on the health manpower situation and accomplishments. Inputs 3.10 Trainina Health Manpower Planners. About 725 health manpower planners would be trained during the project period. Of these, about 8Z would receive overseas training (Annex 3). Annual working conferences would be organized for about 85 participants (Annx 4). The total number of health manpower planners to be trained is equivalent to an effort of 2,636 person/months of local training and 135 person/months of foreign training. Activities organized and implemented on an inter-provincial basis include seminars and workshops to improve data bases and projections, overseas study tours, and annual conferences for a total of 433 person/months. 3.11 Office EauiDment for the provincial and prefectural planning offices will be provided and shared with the project implementation offices at those levels. 3.12 Technical Assistance would be provided by local academic centers and by foreign experts: about 390 person/months of local and 45 person/months of overseas technical assistance for seminars and workshops. Annex 8 provides additional detail on resources required for successful implementation of this component. 3.13 Research Studies supporting the health manpower planning component are, inter jlia, a job analysis and workload study, improving the planning data base and conducting a situation analysis, improving manpower staffing and productivity standards, and annual surveys on priority topics to be selected.  - 19 - HEALTH MANPOWER TRAINING (Base Cost US$123.8 million) 3.14 Obiectives and Activities. Five objectives are underpinned by a met of agreed on guiding principles and by specific activities associated with each objective as detailed below and explained in greater detail in Annex 5 (a) Establish Provincial Trainina Networks and Plans. Within each province, a provincial training network coordinating and linking training institutions at the provincial, prefectural and county levels and a provincial training plan for the project area would be established as the cornerstone of subsequent decisions on investment in prefecture and county level schools and on the allocation of responsibilities and resources within the project's geographic area. The training network and the training plan would: (i) assess the current strengths and limits of existing prefectural and county training institutions and document their resources and productivity; (ii) establish clinical practice sites as a training resource to be shared by several training institutions; (iii) articulate different levels of training programs to obtain cost savings and increase qualityl and (iv) establish a teacher development and evaluation capability. (b) Train Teachers and Administrators for Health Trainina Schools: (i) the skills of teachers in instructional design and educational measurement would be enhanced in short-term workshops; (ii) national and international study tours would be organized for leaders of academic training programs; (iii) each project province would establish a capability to conduct research on improved teacher performance, materials development, evaluation of teaching methods and student performance, end inservice training for the existing teachers; and (iv) teachers would receive training in new teaching methods corresponding to the new curriculum. (c) Improve the Skills of the Existing Health Workers: (i) an analysis of current duties and training needs of existing workers would be conducted in coordination with the job and task analysis described under the health manpower planning component; (ii) inservice training, correspondence instruction, and supervised clinical practice sessions would be designed, conducted and evaluated to target specific skills to be improved, and training modules would address the most severe and most prevalent performance problemsl and (iii) educational performance standards would be established analogous to job performance standards to assess readiness for clinical practice. (d) Revise Preservice Education and Train New Health Workers: (i) the content of the work that the future health workers will be expected to do and the levels of proficiency they will be expected to have would be identified as a basis for selecting the knowledge, skills and behaviors to be included in the preservice course of instruction; (ii) existing curricula would be reviewed to determine needed revisions; (iii) new materials and approaches to instruction which emphasize expanded clinic-based training and learning-by-doing would be developed; new health workers would be trained using the new curricula, materials and instructional approaches.  - 20 - (e) Uvmrsde Infr-structure of Trgininx Institutions: The project would upgrade the physical infrastructure of secondary medical schools and of county health schools. Detoriorated, undersized and unsafe buildings for classrooms, laboratories, dining halls and student dormitories would be repaired, or replaced if needed. Now construction would meet the requirements of expanding enrollment, new teaching and learning approaches, and curriculum reform. Provincial training centers serving the project area would be repaired, secondary medical schools and county health schools would be expanded or rehabilitated, and "practice bases" with classrooms and accommodations for faculty and students at the county and central tovnship levels would be established adjacent to or integrated with county and central township hospitals. Inputs 3.15 Curriculum Development. The project would support the revision of primary health care education curricula. The current curriculum puts much more mphasis on theory than on clinical practice. Curriculum reform would be based on the job descriptions and the knowledge and skills required by the village and township health staff. The new curriculum would emphasize comunity health problms, diagnosis and treatment of common diseases and preventive activities. The task of revising and adapting the curriculum to the epidemiology of the community would be done more efficiently and at less cost on an inter-provincial basis. Teaching materials and texts will require revision, pilot testing and evaluation. 3.16 Teaching Reform. The project would also support changes in teaching methods. The aim is to increase teachers' teaching skills. Lecture style teaching would shift to increasing group discussion, laboratory instruction and demonstration, and practice-based learning. The current examination and certification system would be evaluated and improved. 3.17 Trainina Teachers and School Administrators. The project would enhance the quality of existing faculty through in-service training for teachers of secondary medical schools and of county health schools. The project would provide 44,613 person/months of inservice training for teachers of secondary medical schools and county health schools. Training methodology would be experience-based and use mainly workshops as a vehicle. A more detailed training plan is provided in Annex 4. About 90 school administrators of secondary medical schools and of county health schools would receive ine-rvice training and also participate in national or international study tours (15 per province) to improve their management skills and increase the efficiency and effectiveness of the schools. 3.18 Training Health Workers is the central element of the training component. It aims to improve the quality of rural health manpower through inservice training and to increase the number of health workers through increasing enrollment. Of these two training modes, in-service training would receive more mphasis. 3.19 Inservice trainina will include short-term (loes than three months), intermediate (from three to six months) and long-term (more than seven months) courses. The project would provide 1119570 person/months of short-term training, 535,480 person/months of intermediate training, and 1,464,797 person/months of  - 21 - long-term inservice training. About 402 of township level health workero, 45Z of village doctors and 152 of other village health workers (village aid*e, birth attendants) would receive such training. 3.20 Preoservice trainina will include courseo of less than one year, one to two years, or three years in duration. The project would provide about 73,190 person/months of short-term preservice training to village doctors and other village health worker., about 279,178 person/months of one to two years training and about 594,892 person/months of three year training. Preservice training for township level health workers would be an additional 551,140 person/months (Anne 4). 3.21 Cateaories of Health Workers. The following categories of township level health workers for the township level would receive training under the project: assistant doctors, nurses, assistant pharmacists, public health assistant doctors, laboratory assistants, HCH assistant doctors and midwives, and others (Anne 4). About 360,000 workers would receive inservice training and about 60,000 would have preoservice training over the life of the project. 3.22 At the villait lv2l, the project would train and retrain village doctors, village health aides and birth attendants. Training plans for each category of health personnel would be made based on existing staff and the projection of future needs. The content of training would be designed according to job descriptions and functional analyses of township and village health staff. 3.23 Civil Worko The project will finance the expansion of six provincial training centers/medical colleges, 36 secondary medical schools at the prefecture level, and 146 county health schools. The project will also finance the construction of training bases at about 500 county and township health facilitile to accommodate the trainees during their practical training. A total of about 428,757 square meters of building area will be constructed at the 189 training institutions either as extension of existing buildings or additional buildings. Also about 109,565 square meters of existing buildings will be rehabilitated. Depending on the functional requirements of the individual institutions, priority will be given to the construction of teaching facilities and of student dormitories and related accommodations. The facilities to be constructed for the practical training will consist mainly of teaching space and housing for students and faculty. It is eotimated that about 84,161 square meters of building will be constructed for that purpose. Annex 6 presents details of civil works requirements by province, by type of investment and by level of training institution. 3.24 juipment. The project would procure basic teaching and learning equipment and educational materials for secondary medical schools, for county health schools and for provincial training centers. The suggested equipment has been provisionally categorized into five areas (office and audio-visual, teaching aids, clinical, preclinical and special subjects). The final equipment list would be based on the provincial training plan, the new curriculum to be developed, the type and number of manpower to be trained, and the instructional methods to be adopted. It would be prepared during the first year of the project. That list will then be submitted for approval to an Equipment Selection Committae (ESC). The KSC would therefore be organized at the and of the first year of project implementation and its composition, terms of reference, equipment selection criteria and selection procedures are set forth in Anne 7. During negotiations, agreement was reached with the Government on the composition and  - 22 - terms of reference of the Equipment Selection Committee to be established by June 30, 1994, on the selection criteria and procedures to be used and applied. 3.25 Investment in equipment for training institutions would be about US$13.2 million or 8.8% of total project investment cost. 3.26 Technical Assistance would be provided for the development of job descriptions, the establishment of the training networks, curriculum development and the provision of training. A total of 810 person/months of local and 80 person/months of foreign technical assistance has been scheduled for this purpose (Anne 8). MANAGING RURAL HEALTH SERVICES (Base Cost: US$24 million) 3.27 Oblectives and Activities: A set of guiding principles underlie the four objectives, and the activities with their associated resource allocations have been defined (Annex 9). A description of each objective and its supporting activities follows. (a) Develoo He-lth Services Management and Supervision Systems: Efficient and effective management of health services requires training managerial and supervisory staff and supporting them with information, tools and procedures which strongthen their knowledge of the work content and the standards of performance. Work procedures would be reevaluated and revised to support the work and the workers. Appraisal and feedback systems would be developed that concentrate on improving the process and showing staff how to do their work more accurately and efficiently. (b) Provide Retular On-the-Job Trainina: The project would develop a systm to monitor the standard of primary health care at the township and village levels. Regular auditing will be conducted to: (i) reinforce messages instilled through formal teaching sessions in order to ascertain that clinical skills are maintained; (ii) assess the effect of training on the standard of practice; and (iii) improve the quality of care through feedback from the auditing. The auditing system will also provide the framework for the supervision both of trainees and of those receiving in-service training at the clinic/hospital level. Standard protocols for managing major clinical conditions, standard approaches to patient care procedures (e.g., aseptic techniques), and standards for the physical environment and performance of the health care institutions will be developed for the different levels of care under the guidance of the "clinical audit panall consisting of teachers, clinicians and managers. "Rapid evaluation" manuals will be used at formal or unannounced supervisory visits. Clinical audit or peer review meetings will be held regularly at township hospitals with involvement of staff from the village up to the county/prefecture level to discuss problems with logistics, diagnosis and treatment which may have led to "avoidable" morbidities and mortalities. (c) Develop Financina. Compensation and Incentive Systems: The project would design an experiment to study alternatives for: (i) mobilizing  - 23 - financial resources to support rural health care delivery; (ii) organizing and managing rural health services; and (iii) paying the rural doctor. New approaches to organizing and financing rural health services and alternative payment and incentive schemes for rural health yorkers would be developed. Baseline data would be collected, reviewing current sources of financing, expenditure patterns, ability and willingness to pay, utilization rates, compensation and incentive systems. The study would assess the strengths and weaknesses of current financing and payment methods. Based on this information, different organizing, financing and payment models would be designed and implemented to meet the needs of rural communities at different levels of socioeconomic development. The project would select a number of townships as experimental sites and an equal number as control sites in four project provinces and conduct the experiment for three years. (See Annex 10 for detailed study design.) Using these experiments that will be tested operationally, the provinces will develop affordable models of organizing and financing rural health care and of paying rural health workers. These models would be developed for townships with different levels of socioeconomic development. The results, including policy implications, would be discussed with the Bank. An action program would be developed and presented to provincial and national policy makers for possible adoption. The provinces would be assisted at the national level by MOPH's Department of Medical Administration to carry out the experiments. Technical assistance would be provided by local academic institutions and by overseas consultants for training in study design, data collection, data analysis, and design of sustainable models for national adoption. (d) Uotrade Infrastructure of Health Services Facilities. The project would rehabilitate selected existing central township hospitals and township health centers. No new facilities would be constructed. About 1,302 townships would benefit (17S of the total number of townships in the project area and 101 of the total number of townships in the project provinces) from rehabilitation of existing constructions. The project would also improve the equipment of 460 central township hospitals, 842 township health centers and 8,210 village health stations. Inputs 3.28 Trainina Health Service Managers gnd Supervisors. About 10,885 person/months of inservice training will be provided to health service managers in basic management and personnel practices. About 1,285 person/months of training in methods of clinical supervision will be provided. 3.29 On-the-Job Trainina. The project would finance the development of protocols and manuals and the organization of workshops for teaching clinical audits. It would finance transportation costs for subsequent evaluation activities but the township hospitals would be expectod to allocate funds to cover the continuation of such practice beyond the period of the project. 3.30 Financint. ComDensation and Incentive Systems. Staff inputs would include a director of the evaluative studies, technical staff (statisticians,  - 24 - economists), field survey supervisors at the prefectural, county and township levels, computer programmers, data input staff and clerks. Other resources required are training vorkshops, equipment, materials, supplies, travel and study tours, and technical assistance. 3.31 Civil Wora. The project will finance upgrading and repairing about 989 central township hospitals and township health centers or 17S of those estimated as needing repair in the project provinces and 28Z of those needing repair and located in the project area. About 80,790 square meters of building area will be rehabilitated. It is estimated that an additional 4,743 township facilities in the six provinces require repair and these would be upgraded under a national program as part of the country's effort to reach the goals of "Health for All by the Year 2000". 3.32 5juivmnt. The project would procure medical equipment to improve about 460 central township hospitals, about 840 township health centers and about 8,210 village health stations. Agreement has been reached on standard lists of equipment for each of the first two types of institutions and these lists are in the project file. Each township facility would select equipment from the standard list that is appropriate for its situation and functional needs. The maximum amount for any single township health center would be about US$8,800 and for a central township hospital about US$20,000. For village health stations, equipment would be procured in standard packages costing about US$220 each. About 8,210 village health stations would receive the standard package (71 of the villagea in the project ar-a). The total investment in equipment for health services facilities is US$14.1 million (9.41 of total project investment cost). 3.33 Technic-l Assistance would be provided to help redefine the system of supervision and to assist in finalizing the manuals for supervision and clinical auditing. A total of 317 person/months of local and 70 person/months of foreign technical assistance is scheduled (Anne 8). CENTRAL COMPONENT (Base Cost: US$0.9 million) 3.34 Obiectives and Activities. The central component would augment the institutional capacity of HOPH and especially of three MOPH departments: the Department of Education (DOE), the Department of Medical Administration (DONA) and the the Foreign Loan Office for coordinating and supporting project implementation activities and disseminating project results. HOPH, mainly through the DOE, would strengthen its capability to carry out its national mandate in manpower planning and manpower policy formulation. It would provide technical assistance to the project provinces and evaluate the activities in order to disseminate the experience gained to the rest of the country. MOPH, through the DOHA, would support, monitor and assist in the execution of the component dealing with organizing and financing rural health services and compensation systems for rural health workers. LO would coordinate all logistical aspects of project implementation and assure liaison with the Association on general matters 3.35 The Deiartment of Education in MOPH would: (i) strengthen its capacity in health manpower planning (HMP) and in the use of community-based medical education; (ii) develop a national capacity to conduct research and training in HMP through support and utilization of a center of excellence; (iii) coordinate and help with the organization of interprovincial activities in the aroas of job description, curriculum design, development of educational materials, and  - 25 - evaluation methods and target.; (iv) determine national qualificationa in community-based medical education; (v) coordinate the development of appropriate teaching material. for rural health workers; and (vi) develop coordinating mechanisms among the line departments in NOPH. 3.36 The DeDartment of Medical Administration in NOPH would receive technical assistance to enable it to lead and support the following project activities: (i) evaluate the current approaches in financing and organizing rural health services and paying rural health workers; (ii) design the associated experiments, including selecting experimental and control sites; (iii) implement the experiments; (iv) monitor and evaluate the experimentation; undertake the final assessment of the experiment; and (v) further develop models of financing and payment and assist in the general adoption of these models (see also A 10). 3.37 The Foreign Loan Office in NOPH would monitor project implementation in order to make sure that: (i) the agreed on targets are not changed; (ii) the agreed on activities are efficiently and effectively implemented and modifications are fully justified; (iii) the procurement of civil works and equipment and of services takes place according to agreed procedures and on schedule; and (iv) counterpart funds are timely available. 3 38 Inuts. The Devartment of Education of MOPH would need the following resources to carry out its supportive and policy formulation roles: overseas training and study tours (US$194,077) equipment (US$33, 101), national workshops, travel to project provinces, materials, supplies and publication expenses (US$178,014), local technical assistance (US$11,240) and foreign technical assistance (US$105,000). Total expenditures would be about US$521,430. 3.39 The Department of Medical Administration in MOPH would require equipment (US$10,450), local technical assistance (US$21,446), foreign technical assistance (US$104,530), overseas training (US$24,007), research study (69,425) and a total budget of about US$229,858 (Aneg 11). 3.40 The Foreian Loan Office of MOPH would need local training (US$17,056) overseas training (US$9,826), local technical assistance (US$20,906) and equipment (US$5,226). INTERPROVINCIAL ACTIVITIES (Costs included above) 3.41 Obiectives and Activities. Nineteen project activities are organized on an interprovincial basis for the purposes of: (i) cost sharing; (ii) standardization; and (iii) efficiency and effectiveness. Activities which require large amounts of technical assistance, training and study tours would be planned in such a manner that all provinces can share costs. Comion approaches and materials would result in methods and techniques which can be easily replicated across the project provinces and ultimately to the rest of the nation. 3.42 Responsibility for each of the 19 interprovincial activitios (IPA) has been assigned and accepted by a single province or an entity such as a medical university or MOPH. Each activity is shown in the overall plan as it is relatod to the components of the project, l.e., manpower planning, training or  - 26 - management. Details of each interprovincial activity are contained in the project implementation schedules for each province (Annex 12). Two of the nineteen activities deal with project-related training for project management staff and with preparing the final project evaluation and the project completion report. 3.43 Manvower Plannina IPAs. Four activities are planned. All activities involve training either in short-term (3-5 weeks) in-country workshops or overseas training of one month duration. All are aimed at improving the capacity to undertake health manpower planning at the provincial level. Improving and standardizing the data bases for planning are continuing collaborative activities which will require coordination with MOPH. 3.44 Manpower Trainine IPAs. Nine activities are scheduled. The first activity involves a collaborative effort to develop job descriptions for health workers at the township and village levels. This activity has already started after project appraisal because it constrains many subsequent activities, e.g. development of provincial training plans, preparation for civil works design. Workshops on teaching reform, materials development, materials evaluation/improvement, and training program evaluation would be spread across the early phases of project implementation. The duration of each activity is usually 3-5 weeks. 3.45 Rural Health Services Management IPAs. Four activities are scheduled. Three management training activities involving 10,885 person/months are planned. Overseas visits of one month duration are planned for 48 health services managers. The annual meetings of provincial project staffs are included as an activity within this component. These meetings would involve the leaders of each component for the purpose of exchanging experiences, coordinating collaborative efforts and planning follow up activity. 3.46 Schedulina of Interirovincial Activities. Fourteen activities are scheduled for the first year. For example, the IPA to develop Job Descriptions will begin with a workshop organized with overseas experts. The follow up activity will be a two part interprovincial workshop scheduled for two weeks each. Each workshop would involve 10 persons from each province and at least two persons from MOPH. 3.47 A workshop would be held at Shanghai Medical College on health manpower planning (8-10 participants from each province) for one month. Workshops on managerial training and materials development would also be scheduled for the first year. The focus of these Program Manager training workshops would be on procedures required by the Government and IDA during project implementation, e.g., record keeping, financial accounting, managerial accounting, reporting, inventory, procurement, etc. Hebei Province will host the seminar/workshop on training reform. It will involve 55 persons for one month. These IPAs will occur in the first half of the first year of project implementation and the remaining activities would be scheduled subsequently. InDuts 3.48 Approximately 1,250 persons from the six provinces and 25 from the central government would participate in the interprovincial activities for a total of 1,097 person/months of training and development activities. Thirty-six  - 27 - person/months of foreign end 180 of local technical assistance would be assigned and shared equally among the six provinces and the central component (Annex 12). Some 6,810 person/month. of overseas training and study tours are planned. The cost of these inputs (US$4 million) is included in the respective project components. PROJECT RELATED TRAINING 3.49 To ensure that appropriate management skills are developed in the provincial Project Implementation Units, 63 person/months of training organized by NOPH's Foreign Loan Office would be given during the first year of project implementation. There would be a series of three two-week training sessions attended by seven people from each province. At the completion of each session, provincial representatives would conduct a two-week course for staff from project offices at the prefectural level or below and for other relevant officials, providing another 546 person/months of training. In addition, 84 months of long- term overseas training would be provided (Annex 13).  CHINA * 4 4* Rurai Heslth Workels 0ewlopsnt tr 0 Su mry Accounts Cost Su awry* . (Millions) I ale 0 --- -- -- -- --- -- -- -- -- - --- - - - - - - - - - - - % foreign ga *0 Local Foreign Total Local Foreigpn Total Exchange Coa0N~ .. .. .. .. .. .. .. .. .. -. -- - -- - - -- - -- - - -- -- - - -- - -- - - I. INVESTMENT COSTS A. Civil Wwrks '~0 1. Professioali Fees 18.3 0.0 18.3 3.2 0.0 3.2 0.0 2.00 2. Constructions 162.7 16.6 179.3 28.5 2.8 31.2 9.3 20.0 ' Sub-Total 181.0 16.6 197.6 31.6 2.8 36.6 8.6 22.1 C 1. Trwanport/Install Fees 3.1 0.0 3.1 0.5 0.0 0.5 0.0 0.3 co4 2. Equipment Cost 1264.9 31.2 156.1 21.9 5.3 27.2 20.0 17.6 N Sub-Total 127.9 31.2 159.1 22.5 5.3 27.7 19.6 17.8 C. Vehicles 2.7 11.6 14.1 0.5 2.0 2.5 80.7 1.6 D. furniture 21.1 0.0 21.1 3.7 0.0 3.7 0.0 2.4 a. E. Troining 6- . ' ft 1. Training Foreign 0.0 16.6 16.6 0.0 2.9 2.9 100.0 1.9 tr1 jAo r 2. Training Local 367.5 60.3 387.8 60.8 6.8 67.6 10.6 63.3 0. 0 5m-Total 367.5 56.9 604.5 60.8 9.7 70.5 14.1 45.2 34 0 F. studies I Research ~27.9 12.5 60.3 6.9 2.1 7.0 30.9 6.5 n,0 - 0 F. StAde Freign c 0.s13o130. .t3710. . G. technical Assistance ~0rt 2. TA Local 5.8 0.7 6.6 1.0 0.1 1.1 10.6 0.7 Sib-Total 5.8 ~~~~~~~~~22.0 27.7 1.0 3.8 4.8 79.2 3.1 rt Z Total INVESTMENT COSTS 713.9 150.5 86.4. 125.0 25.6 150.6 17.6 96.6CA r It. RECURENT COSTS ~O0 0 A. Mailntenane til 1. Maintenance of Building 3.9 0.0 3.9 0.7 0.0 0.7 0.0 0.6 F. rt 2. Naintencanc of Equipollnt 5.0 1.1 6.1 0.9 0.2 1.1 17.8 0.7 Nt 3. Maintenance of Vehicles 1.1 0.3 1.4 0.2 0.0 0.2 20.7 0.2 le- 93a a Sub-Total 10.0 1.4 11.6 1.7 0.2 2.0 12.1 1.3 "a, B. Operating Cost 18.9 0.2 19.1 3.3 0.0 3.3 1.1 2.1 l.a. --- -- -- --- -- -- --- -- -- - --- -- -- --- -- -- -- -- -- -- --- -- -- -- Total KOE*RIENT COSTS 28.9 1.6 30.5 5.0 0.3 5.3 5.2 3.4 0 0 Totat BASELINE COSTS 742.8 152.1 896.9 130.1 25.9 155.9 16.6 100.0 St ~ Physical Contingencies 25.8 5.6 31.6 6.5 1.0 5.5 17.9 3.5 0 0S Price Contingencies 128.0 13.7 141.8 21.7 3.0 26.7 12.3 15.8 a* a Total PROJECTS COSTS 896.6 171.5 1068.1 156.2 29.9 186.1 16.1 119.61 ... .. .. . .. ... .. .. .. .... ... ... ... ... .....=u u m s a a a ------------------------------------------------- vasScaled by 1000000.0 3/8/1995 8:09  - 29 - Tabl- 4.2 Project Cost Summary by Component RMB Y Million US$ Million S S ---------------- ---------------- Foroein A*" Local Foreign Total Local Foreie Total Manpower Planning 11.8 10.0 21.8 2.1 1.7 3.8 45.8 2.4 Manpower Training 607.3 103.6 710.9 106.3 17.5 123.8 14.6 79.5 Manpower Management 109.2 29.0 138.2 19.1 4.9 24.0 21.0 15.4 Project Management 12.6 6.2 18.8 2.2 1.1 3.3 33.0 2.1 Central Component 1.9 3.4 5.3 0.3 0.6 0.9 64.5 0.6 Total Base Cost 742.8 152.2 895.0 130.0 25.8 155.8 16.6 100.0 Phy. Contingencies 25.8 5.6 31.4 4.5 1.0 5.5 17.9 3.5 Price. Contingencies 128.0 13.7 141.7 21.7 3.0 24.7 12.3 15.8 Total Project Cost 896.6 171.5 1068.1 156.2 29.8 186.0 16.1 119.3 4.2 Cost Estimates. Costs are based on October 1992 prices for similar procurement in recent contracts. Civil works unit costs, based on recent similar contracts, range from Y 265 per ma to Y 600 per m or about US$50 to US$110 per in,, depending on the locality. Unit costs for rehabilitating existing buildings range from Y 150 per m2 to Y 300 per m2, or US$30 to US$55 per nin, depending on the extent of rehabilitation and locality. The cost of professional fees for the surveys, designs and supervision of construction is estimated at ten percent of the cost of construction. Equipment costs are based on the unit costs of similar itme procured recently under competitivo bidding procedures. Local technical assistance was estimated at Y 4,000 per person-month and foreign consultants at US$10,000 per person-month including transportation cost, per diem and accommodation expenditure. Training costs would range from Y 100 to Y 1,200 per trainee-month for domestic training and US$2,045 to US$4,900 per trainee-month overseas depending on the length of training. Recurrent costs were based on past provincial budgetary estimates. Physical contingencies were estimated at 42 of base cost, while price contingencies, 16S of baso cost, were based on an inflation rate of 61 for local currency and 3.72 for foreign costs. B. Financing 4.3 The proposed credit of US$110 million equivalent would finance about 59S of the total project cost, including about US$30 million in foreign exchange. The local governments, mainly prefecture and county governments, would finance about 411 of the total project cost. MOPE would finance a small part of the central component cost (about US$0.1 million). The Financing Plan is shown in Table 4.3.  - 30 - Table 4.3 Financing Plan (US$ Million) Local Foreign Total Percent Provinces 3.9 0.4 4.3 2.3 Prefectures 14.1 2.3 16.4 8.8 Counti-o 49.1 6.1 55.2 29.6 Central Government 0.1 0.0 0.1 0.1 IDA 89.0 21.0 110.0 59.2 Total 156.2 29.8 186.0 100.0 4.4 The Government would on-lend the proposed credit in foreign and/or local currency to the project province, repayable over 15 years, including a six year grace period. Project provinces would have a choice whether to borrow from the Government in SDR or in RMB. The interest rate for onl-nding would be a dual ratet 1.5 percent for foreign currency and 3 percent for local currency. Project province, would bear the foreign exchange risk where applicable. At negotiations, assurances were obtained that the Borrower will make the proceed. of the Credit available to the project provinces on the above terms and conditions acceptable to the Association, and that the Borrower will ensure that the provinces make the credit proceeds available to prefectural and/or county government, on terms and conditions acceptable to the Association which shall be tho same terma and conditions as it receives or on more concessional terms if warranted by the poverty level of the county or prefecture concerned. Assurances were also obtained that the provinces will make credit proceeds available to project townships and village, without obligation of repayment by such townships and villagos. 4.5 Recurrent Expenditures. The recurrent costs for maintenance of civil works, equipment and vehicles and operation and maintenance (O&M) are estimated at about Y30.5 million spread over six years until projcot completion. 4.6 Counterpart Funds. The proposed IDA Credit would finance approximately 59 percent of total project cost. At negotiations, assurances were obtained that the participating provinces would be able to acquire from their respective annual budgets, at least the relevant annual amount as shown in Annex 15 as counterpart funds for the proposed project to carry out the project, and that provinces would provide the counterpart funds for local governments in the poorest areas in case the contributions of these less developed areas should prove insufficient. A Project Agreement, with terms and conditions satisfactory to the Association, would be signed between the Association and the six provinces participating in the project. 4.7 Financing of Central Component. MOPH activities to be carried out by its Department of Education and its Department of Medical Administration would be financed by MOF (about US$751,288). The credit share of this amount would be a grant by MOF to MOPH and the balance would be a supplemental budget allocation.  - 31 - V. PROJECT MANAGEMENT AND IMPLEMENTATION A. Organization and Management 5.1 Organization and Management. Project management at the central level would be led by the Ministry of Public Health (MOPH). MOPH, through its Foreign Loan Office (FLO), has well-established systems for managing development projects. The Department of Education (DOE) and the Department of Medical Administration (DOMA) are two line departments of MOPH that would be involved in project management at the central level as defined in Annex 11. The managerial capacity of these two departments would be strengthened under the project to coordinate substantive and technical project activities and to support dissemination and replication of project findings. During negotiations, assurances were obtained that these responsibilities would be assigned to a full- time project manager in DOE and a full-time coordinator in DOMA both employed until project completion. FLO would coordinate all logistical aspects of project implementation and assure liaison with the Association on general matters, while the participating provinces would communicate with the Association on detailed matters. MOF would be responsible for managing the Special Account. The Civil Works Design Experts Group of MOPH will review the conceptual design proposals for major civil works prior to preparation of preliminary working drawings and bid documents and will monitor the civil works program (Annex 16). 5.2 In each participating province, a leading group has been established for supervising the management of the project. The leading group is headed by a provincial Vice-Governor, with the deputy provincial Secretary-General and director of the provincial Health Bureau as two deputy group leaders. The group members include deputy chiefs of provincial Planning Commissions, provincial Finance Bureaus, and provincial Personnel or Labor Offices and the chief of provincial Education Commissions. The functions of the leading group are to coordinate between government bodies and to decide on major project matters. 5.3 The project provinces have each established a Project Implementation Office (PIO) under the Bureau of Public Health at provincial level. During negotiations, assurances were obtained that each project province would maintain, until project completion, its PIO with facilities, functions and staffing satisfactory to the Association. The PIOs are in charge of routine management of project implementation. The organization and staffing of the PIOs, as shown in Annex 17, is satisfactory. For civil works, the provincial Public Health Bureau is responsible for selecting the design unit to conduct surveys, designs and supervision of construction at the prefectural level and above. The county Public Health Office, under the guidance of the provincial Public Health Bureau, is responsible for organizing the design and supervision of civil works at the county level and below. 5.4 The Project Division in FLO and, more directly, the planners and educators in the PIOs of the six participating provinces would be responsible for all project component activities including technical assistance, in conjunction with staff at prefecture, county, township and village levels. 5.5 Status of Prolect PreRaration. All existing training schools have been identified. The majority of the secondary medical schools at the prefectural level have been surveyed and conceptual designs of the facilities to be constructed under the project have been prepared. Preliminary equipment lists including specifications for Phase I procurement have been prepared, reviewed and  - 32 - found to be satisfactory. Phase I procurement for about US$10 million could therefore be announced soon after Credit signing as the General Procurement Notice would be announced after negotiations. Manpower planning, training and supervision activities have also been listed in detail, including plans for the use of consultants, local and foreign, and local and overseas fellowships. Early start-up activities would be initiated under retroactive financing (see para 5.18). The proposed project is therefore ready to be implemented immediately upon Development Credit Agreement signing. B. Procureent 5.6 Items to be procured and financed partly or wholly with credit proceeds include civil works, equipment, medical instruments, technical assistance and training. Civil works includes new construction and rehabilitation. Most of the construction will be simple in style and in rural settings. Locations would be scattered in about 36 prefectures in six provinces. All civil works procurement at county level and below would follow the local procedures of selection of the lowest evaluated bidder among the invited two to three local contractors and community organized groups. Force account procedures may be used for the construction and repair of township level facilities for contracts estimated to cost less than US$25,000 up to an aggregate amount not exceeding US$1.5 million. The average cost of civil works at a county school is about US$100,000 and of a practice base is about US$20,000. The total estimated cost of civil works at these levels represents about 60% of the total project's civil works cost. All civil works procurement at prefectural level and above would follow local competitive bidding (LCB) procedures acceptable to the Association. IDA review prior to contract award and signing would be limited only to those contracts (about 42 institutions) estimated to cost more than US$300,000 each (about Y 1.6 million equivalent). The rest would be subject to random sample review by supervision missions. Construction supervision will be organized by the construction engineering units of the provincial Health Bureaus. Standard bid documents prepared for China will be used for LCB. 5.7 nuiRnj t financed from the IDA credit proceeds for this project would be largely medical and teaching items, mostly of small unit costs but in large quantities. About 50 percent of teaching equipment and medical instruments, including computers for project management offices would be acquired through international competitive bidding (ICB) following IDA's Procurement Guidelines. Contracts estimated to cost between US$25,000 and US$300,000 equivalent, in aggregate not exceeding US$11.7 million, may be procured through LCB procedures acceptable to the Association. Goods estimated to cost less than US$25,000 per contract, and in aggregate not exceeding US$5.0 million, may be procured directly through local shopping procedures under contracts awarded on the basis of comparison of price quotations obtained from at least three eligible foreign or local suppliers. International suppliers may compete in these procedures. Contracts for proprietary items and items required for the purposes of achieving equipment standardization, subject to the approval of the association on a case- by-case basis, may be awarded after direct negotiations with suppliers, in accordance with procedures acceptable to the Association. Under ICB, local manufacturers would be eligible for a margin of preference in bid evaluation of 15 percent or the prevailing rate of customs duty, whichever is lower. 5.8 Teaching equipment would be procured in three phases spread over four years. The first phase would cover about 25% of the teaching equipment to cover  - 33 - items unlikely to be modified due to curriculum improvments and changes in training strategy. The second phase (602) would be for item identifisd during project preparation but reviewed during project implementation, whsn the training needs have boen more clearly and more specifically defined. The final phase (152) would include unforeseen items end some for specific training purposes and would be purchased around the fourth or fifth year of project implementation. Equipment for administrative purposes and equipment for health sorvices facilities would be includod in Phase I procurement. 5.9 Equipment lists have been prepared by the six participating provinces and reviewed by MOPB end the Association. Major items with high unit costs have been reviewed end are satisfactory in terms of items proposed and skeleton specifications. Items with small unit costs and sometimes in large quantities are too numerous for detailed review. For Phase I procurement, both the item proposed end the technical specifications have been reviewed end found to bo satisfactory. These are therefore ready to be included in the bidding document for the first Invitation For Bid (IPB) without prior IDA review. An Equipment Selection Committee (ESC) would be established to review and approve equipment proposed for procurement under the second end third phases. The proposed ESC is satisfactory from the points of view of: (i) organization; (ii) members in the review com ittoes; (iii) qualifications of the members; end (iv) authority for deleting, substituting, modifying suggested specifications and returning to originating unit for second thoughts end changes. During implementation, further ESC end IDA review on items to be included would be needed for second end third phase procurement. 5.10 Equipment would be grouped, to the extent possible, to form packages in excess of US$300,000 for each contract. Proposals from six provinces would be forwarded to FLO for bulk purchase by the International Tendering Company (ITC) of China National Technical Import and Export Company (CUTIC) which has experience with ICB procedures using the Association's Procurement Guidelines. The provinces may each proceed with some procurement under LCB procedures acceptable to IDA and use other procurement procedures including local shopping (para 5.7). For contracts exceeding US$300,000 each, prior IDA review of bid evaluation reports and no objection would be required before contracts could be awarded and signed. For other contracts, random sample review of bid evaluation reports and contracts would be carried out by supervision missions. 5.11 Consultant contracts estimated to cost l-es than US$100,000 equivalent each may be procured - in accordance with principles and procedures satisfactory to the Association on the basis of the Consultant Guidelines published by the Bank in August 1981 - without prior review except for the terms of reference for such contracts, the employment of individuals and single source selection of firms. Contracts of US$100,000 equivalent or more will require prior Association review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts.  - 34 - Table 5.1 Pro-z'ritranamta (Vs$ million) Project Ilrmants lS1EMMLtSMA Total Ica LC Q tk-f Kmr Civil Worka 18.1 22.2 40.3 (4.5) (5.5) (10.0) Zqu2l _t 15.5 11.7 5.0 32.2 (12.6) (8.8) (3.8) (25.2) Vehicles 2.9 2.9 (0.0) (0.0) Wurilture 4.3 4.3 (0.0) (0.0) Training 36.5 56.5 (61.4) (61.4) Te-chical Assistance 5.4 5.4 (5.4) (5.4) Rsae-rch 3.0 3.0 (a. 0) (S. 0) Maintenonce Cost 2.5 2.5 (0.0) (0.0) Operational Cost 3.9 3.9 (0.0) (0.0) TOTAL 15.5 29.3 127.1 13.6 136.0 (12.6) (13.3) (34.1) (0.0) (110.0) Note: Figures in parentheses arm the respectiv am_mts financed by InA. NIF: Not IDA financed a. other m_tbods include direct purchaes and local shopping. 5. 12 Prior IDA review of technical specification vould also be required before inviting bids for equipment contracts estimated to cost in excess of US$300,000. 5.13 On technical assistan