Uganda - District Health Services Pilot and Demonstration Project

Document of The World Bank Report No. 13515-UG STAFF APPRAISAL REPORT REPUBLIC OF UGANDA DISTRICT HEALTH SERVICES PILOT AND DEMONSTRATION PROJECT DECEMBER 28, 1994 Eastern Africa Department Population and Human Resources Operations Division  (CURR ENCY EQUIVALENTS Currency lUnit Uganda Shilling (Ush) uS$ I 0( tish 94( 0 l Ush UIS$ 0 1 cO SDRI lISS] 45')24 WEIGHiTS AND MEASURES NMetric System GOVERNMENT FISCAL YEAR July I - June 30 ABBREVIATIONS AND ACRONYMS ACP AIDS Control Program AIDS Acquired Immiune )eficiency Syndrome CBO Community Based Organizations CHA P C(ommunitv Health and AllIS Plroject ('CIW (omimunity Health Worker CSRP Civil Sen ice Reform Program D -NNi)A Danish International Development Agencv lDES [District fxecuti\e Secretary lDi IF IIistrict If ealth ''eam 1,PI Expanded lProgram for Immuitization FHff' first If ealtili Project (I t 11G'(io\ernntent of Uganda (iI / IDeutsche (jesellschafl fur 'I'echnishce Zusammenarbeit IIPI) lealth P'lanining Departmnent I [IV Hluman Inm-nuno-lDeficiencv Virus IC13 International Conmpetitive B3idding IIA International l)evelopment Association IEC Informiation, E'ducation and Communications KfW Kreditanstalt fur Wiederaufbau NlCH Mlaternal and Child fHealth MOFEP Ministry of Finance and FconotMic Planning NIOH NMinistry of'llealth N01 Mlinistrv ot' Information M(lG Ministry of'l ocal (joyernment MPS Ministry of Public Service NGO Non Cjovernmental Organization NNMS National Medical Stores NRC National Resistance Council OlDA Overseas t)evelopment Administration ( K) O)l') Outpatient I)epartment PHC Primarv I fealth ('are PCU lProject Coordination U'nit PS Plermanent Secretary RC Resistance Committee SID[A Swedish International I)evelopment Authoritv SI'l) Sexualls I'ransmitted Dliseases S'lTI Sexuall 'T'ransmitted Infections TI'3A I raditional 13irth Attendent I' R 'I t; l:ertilitv Rate 'IIYHP l'hree Year I lealth Plan llDf IS U'ganda Dleimographic and IH ealth Survey UNl)P United Nations Development Plrogram I NCEf U'nited Nations Childien's Fund U.SAID United States Agency for International Development WI I) WVorld flealtil Organization This report is based on the findings of an appraisal mission in Nlay 1994 comprising Messrs /Mmes V Jagciish (Nfission l.eader), 13 lIlelbling. P Sachdeva, B Jones, D Dunlop, Y Scium. S lube, K Gill, II Nannyonjo ofthe World 3ank, A Steel, Consultant, B Wilke and R, SchiuoiaclIer of KfW NI McNeil, P T'honipson and H Ifagan of'ODA, A I.agerstedt of SlDIA, and S Postma of DANIDA I'he peer reviewer is H Saxenian and the lead advisor is B1 Nlc(ireeve Nlr J Nlaas and Nlr F Colaco are the Dlivision Chief and D)epartment I)irector. respectively for the operation  TABLE OF CONTENTS BASIC DATA : CREDIT AND PROJECT SUMMARY I. THE HEALTH SECTOR 1 A. HEALTH STATUS ................................................ I B. THE HEALTH CARE SYSTEM .............................. ..................I C. HEALTH EXPENDITURES AND FINANCING ......................................3 D. HEALTH PLANS AND POLICIES ............................................ .....3 E. IDA INVOLVEMENT IN THE HEALTH SECTOR ................5-- ..............5 F. ROLE OF OTHER MAJOR DONORS ................................................. 6 G. LESSONS FROM OTHER BANK HEALTH PROJECTS ......................... 7 II. THE PROJECT 9 A. PROJECT OBJECTIVES ..................................... . ..........9 B. PROJECT COMPONENTS ................................................ 9 C. PROJECT DESCRIPTION ................................................ 10 D. PROJECT ORGANIZATION AND MANAGEMENT ......- ...................... 22 E. MONITORING AND EVALUATION ............................................. ... 23 III. COSTS, FINANCING, PROCUREMENT AND DISBURSEMENTS 28 A. COSTS & FINANCING OF ESSENTIAL HEALTH SERVICES .............. 28 B. COSTS OF THE DISTRICT HEALTH SERVICES PROJECT ........ ......... 29 C. PROCUREM 1ENT ................................................ 33 D. DISBURSEMENT & SPECIAL ACCOUNTS ............................................ 36 E . A U D IT IN G ................................................ 37 IV. BENEFITS AND RISKS 39 V. ASSURANCES AND RECOMMENDATION 42  TABLES Table 3.1 Financing the Essential Health Service Package in Three Pilot and Ten Demonstration Districts in Uganda During a Five Year Plan DI ISP Project Period Beginning in FY1995 .......... ............. 29 Table 3.2 Component Project Cost Summary ..... ........................................... 30 Table 3.3 Expenditure Accounts Project Cost Summary .. ......................... 31 Table 3.4 Financing Plan .... ....... ..................... ........... 33 Table 3.5 Procurement Arrangements ................. .......................... 35 Table 3.6 Allocation and Disbursement ofthe IDA Credit ............................. 36 ANNEXES Annex I Project Costs Table 44 Annex 2 Costing Methodology 45 Annex 3 Letter of Sector Policy and Action Plan 52 Annex 4 The Essential Health Package of Uganda . . 64 Annex 5 Organization and Management of Government Health Services .. 70 Annex 6 Summary of Burden of Disease for Uganda ............................... ...... 77 Annex 7 Health Expenditures and Financing ..78 Annex 8 Supervision Strategy ... . 84 Annex 9 Operational Plan 87 Annex 10 Procurement Plan ........................ ......... 88 Annex 11 Project Organization and Management .................................... 91 Annex 12 Estimated IDA Disbursement Schedule ...... .................................. 92 Annex 13 Technical Assistance Provided by the Project Contractual Services .................................... 94 Annex 14 Guidelines for NGO Participation ...................... .............. 95 Annex 15 Documents available in Project File .................................... 100 MAP IBRD No. 25052R  i BASIC DATA Country Data Per Capita GDP $180 Total Population 17.5m Population Growth Rate 2.8 Population, Health and Nutrition Indicators Infant Mortality Rate (WDR94) 122 Maternal Mortality Rate 550 Crude Death Rate 22 Crude Birth Rate 50 Total Fertility Rate 7.1 Life Expectancy at Birth 47 Malnutrition of under 5 years 45% Population per physician 24,700 Population per Nurse 8,900 Births attended by health staff 39% Public Expenditures on Health MOH share of total Government Budget 10.9%b MOH share of GDP 2.0%   ii CREDIT AND PROJECT SUMMARY Borrower: Republic of Uganda Implementing Agencies: Ministry of Health (MOH), Non Government Organizations (NGOs); and Community Based Organizations (CBOs) Beneficiaries: Gradually increasing to about 4 million people in approximately 10 districts with approximately 2 million of them women Poverty: Program of targeted interventions. Credit Amount: SDR 30.9 million (US$ 45.0 million equivalent) Terms: Standard, with 40 year maturity Financing Plan: See Chapter 3, Table 3.4 Net Present Value: Not applicable. Map: IBRD No. 25052R   I. THE HEALTH SECTOR A. HEALTH STATUS 1.1 The health status of Uganda's 17.5 million people is poor. Life expectancy at birth is only 47 years (versus 59 years in low-income countries generally), the crude death rate is 19 per 1000 population (versus 10 per 1000 in low-income countries); the under-5 mortality rate is 185 per 1000 live births (versus 100 per thousand in low-income countries); and about 23% of children in a survey were found to display low weight-for-age, reflecting nutritional deficiencies. The leading causes of death are AIDS, tuberculosis, and malaria, for adults; and malaria, pneumonia, and diarrhea for children. The leading causes of illness and death are all preventable, although with varying degrees of difficulty. 1.2 Uganda's health problems are compounded by a high total fertility rate (TFR) of 7. 1, reflecting a contraceptive prevalence rate of only 5%, and yielding a high population growth rate of 2.8%. A comparative study based on Demographic and Health Surveys from eleven countries found that, within this group, Ugandan women had the least access to family planning services. Uganda's maternal mortality rate of about 550 per 100,000 live births is more than twelve times higher than in developed countries, and a survey found that 7% of young Ugandan women reported having had an abortion. B. THE HEALTH CARE SYSTEM 1.3 Roles of Government and non governmental sectors. The Government sector accounts for 62% of hospital beds and 58% of registered outpatient clinics. Government health facilities suffer from a shortage of funds, particularly for essential supplies and pharmaceuticals, staff salaries and incentives, and routine maintenance of equipment and facilities. Although the non governmental sector accounts for only 38% of hospital beds, it provides 54% of bed-days, reflecting greater capacity utilization and staff productivity. NGO facilities pay their staff significantly more than the government. Health facilities are well- distributed throughout the country, except for the North which is underserved and existing facilities are in a state of disrepair. 1.4 Utilization of the health care system. A population-based health budget survey found that, among households surveyed who had experienced a recent illness, 21% visited a Government facility, and 31 % visited a Non Government Organization (NGO) or other private facility, while 48% resorted to informal sector providers. The limited utilization of the formal health care system is also illustrated by the Uganda Demographic and Health Survey (UDHS) 1988/89, which found that only 3% of births are attended by doctors, only 36% by nurse/midwives, and that almost 60% of births take place outside the formal health delivery system. Among toddlers, only 24% had received a full set of recommended immunizations, and only about 40% were fully immunized against DPT and measles. Thus, at present neither the Government nor the NGOs provide adequate primary health care to a majority of the population.  1.5 Organization of Government health services. The Government health care system has been organized into three principal tiers: Mulago Hospital, the national referral hospital, in Kampala, the district hospital, headed by a Medical Superintendent, reporting directly to the Ministry of Health; and lower-level facilities in each district, reporting to the District Medical Officer of the Ministry of Health, The upper tiers have been administered by the Ministry of Health, while district administrations have had responsibility, in principle, for the lower-level facilities. In fact, most of the health workers in the lower-level facilities are on the MOH payroll and are seconded to local governments. 1.6 The health sector will be affected in a major way by the Government's ongoing Decentralization program, which transfers control of most Government services from Central Government ministries to District governments. Ministry headquarters will be streamlined to a core of policy makers, planners, and inspectors. The Local Governments Statute, 1993, provides the legal framework for decentralization, including changes in: (a) personnel management, (b) budget and financial management, and (c) sectoral functions, powers, and responsibilities. 1 7 The Statute states that the District Executive Secretary shall be the chief executive officer and accounting officer for the District Resistance Council, and will supervise officers seconded from Central Government ministries, as well as locally-hired staff. District Service Committees will be established to exercise powers relating to District personnel management, formerly exercised by the Public Service Commission. 1.8 Beginning with the 1993/94 financial year, district votes (earmarked by sector) were created for 13 districts in the national government budget, so that recurrent expenditure allocations can be sent directly from the Treasury to the district. Fourteen more districts have been added with the 1994/95 financial year, and the remaining twelve districts will receive their recurrent budget allocations directly from Treasury beginning with the 1995/96 financial year. The Statute enables local administrations to charge fees for any services provided by them. A Local Government Accounts Committee and a Local Government Tender Board will be established in each district. 1.9 The Statute provides that a Minister may issue an instrument of devolution fully transferring functions, powers, and responsibilities to a local government, or may delegate functions and powers to a local government, in which case the final responsibility shall continue to vest in the delegating party. 1. 10 For the health sector, the implication is that the central mission of the MOH will evolve, relatively away from service provision, toward formulating a policy framework within which health services can be efficiently and equitably provided by district health administrations and non governmental providers, with MOH retaining whatever specialized "vertical" responsibilities cannot be decentralized efficiently. A Task Force on Health Services Decentralization, drawn from MOH, the Ministry of Local Government (MOLG), and the Ministry of Finance and Economic Planning (MOFP), has submitted a Report (June 1993) making specific recommendations, including restructuring of vertical programs, and  3 integration at the district level, of many components of current, donor-financed vertical programs. In addition, the Ministry of Public Service (MPS) has submitted a report (September 1993), as part of the Civil Service Reform program, for restructuring MOH. Additional details of this Report and IDA's comments are given in Annex 5. The report has been reviewed and approved by Cabinet. C. HEALTH EXPENDITURES AND FINANCING 1.11 Health Expenditures. Total health spending (public plus private) in Uganda (Annex 7) stands at only $7.73 per capita (Government health expenditure, $2.82 per capita; household health expenditure, $4.91 per capita - Annex 7), as compared with $11-19 per capita in most Sub-Saharan African countries, and an estimated cost of $12 per capita in low- income countries to provide a minimum package of the health services which are most cost- effective in averting the Burden of Disease. Analysis done for the Bank's Social Sector Strategy report found that Government health expenditure was skewed toward subsidization of curative services in hospitals, with public health and preventive services seriously under- funded.2 1.12 Health Financing. NGO facilities recover most of their costs through user charges. At the local level, many Government health units, with the approval of their management committees, have begun to charge fees. A study in Kabarole district found that revenues from user charges in Government health units were used for supplies, repairs, transportation, and staff allowances, contributing to increased availability of health workers and reduced waiting time. Interviewees generally expressed willingness to pay higher fees to obtain further improvements in service.3 In the 1992 Budget Speech, it was announced that Government hospitals would be allowed to operate private wings which would charge full cost. As already noted above, the authority of local administrations to charge fees for services is recognized by the Local Governments Statute. User charges are playing an increasing role in the financing of Government health services though this is still at an early stage. A comprehensive analysis of the consequences and effects of user charges for the poor and vulnerable groups is needed. Initiatives have also been taken in order to study the possibility and feasibility to introduce health insurance schemes. D. HEALTH PLANS AND POLICIES 1.13 The Ministry of Health issued the Three Year Health Plan (TYHP) Frame 1993- 95 in December 1992. TYHP proposes a strategy emphasizing rehabilitation; reallocation of resources more toward prevention and promotion, collection of significant amounts from user charges, and considei-ation of tlie role of NGO facilitics I The Burden of Disease and the varying cost-effectiveness of different health interventions are explained in IYorld Developenten Report 1993: Investing in hlealth. 2 Report No. 10765-UG, Uganda: Social Sector Strategy. 3 J. Kamugisha, "Health Cost Sharing in Kabarole District" (June 1993).  4 1.14 Elaborating on the themes of the TYHP, and also building upon its participation in the Eastern Africa Health Strategy Workshop (a World Development Report dissemination activity) in June 1993, the Ministry of Health prepared the White Paper on Health Policy, which was approved by the Cabinet in November 1993. The White Paper recognizes that it will be necessary both to mobilize more resources for the health sector, and allocate resources more efficiently. The White Paper states that the health sector strategy should reflect the overall public expenditure strategy set out in The Way Forward II, of taking into account the comparative advantages of the public and private sectors, avoiding spreading Government resources thinly and ineffectively, and ensuring that public expenditures within priority sectors are cost effective. As applied to the health sector, these principles mean that the Government should concentrate on public health interventions, and on ensuring that the most cost-effective clinical services are available to the majority of the population. Public health interventions are those whose utilization or benefits are not limited to one individual. 1 .15 Under the theme of increased resource mobilization, the White Paper proposes that the recent trend of devoting an increasing share of the Central Government budget to the health sector should continue. Central Government expenditure on health, including external aid, was budgeted at 60 billion Uganda Shillings in 1992/93, and 91 billion shillings in 1993/94. In the decentralized system, districts may decide to supplement Central Government allocations, by raising revenues locally to improve service quality. The Government will develop guidelines for the protection of the poor as well as for appropriate practices to ensure accountability. 1.16 Under the theme of more efficient resource utilization, the following policies are put forward: (a) Resources will be shifted from hospital-based curative services, toward more cost-effective preventive and promotive services. (b) Under the decentralization policy, detailed planning of health services will take place at the district and lower levels, involving communities. District health administrations will be provided with training in planning, budgeting, and financial management The role of the MOH will change, and under the decentralized system its major responsibilities will include health policy formulation, standard-setting, training and capacity building, supervision, and medical auditing. (c) The functional capacity and efficiency of essential existing Government facilities will be restored through repairs to buildings and providing necessary equipment, drugs, and supplies, but expansion by building new hospitals and major facilities will be discouraged The staffing of the Government health services will be rationalized. Mulago Hospital will become autonomous, with the establishment of a Board responsible for the management of the hospital and its resources. As the leading referral and teaching hospital of the country,  5 Mulago will reduce its provision of primary and secondary services and a strategic plan for the delivery of health services in the Kampala area will be developed. (d) Closer collaboration with NGOs and the private sector will be developed, in order to reduce duplication, improve services, and make health infrastructure development more affordable. Appropriate financing arrangements will be pilot-tested. (e) In order to strengthen the management capacity of the health sector, the roles and responsibilities of institutions in the health system will be clearly defined, the availability and utilization of information will be improved, and mechanisms will be established to monitor and evaluate inputs, outputs, and outcomes (impact). 1.17 The White Paper provides an excellent basis for the future development of the health sector in Uganda. However, substantial institutional strengthening and well-directed financial assistance from donors will be needed for the effective implementation of these policies. 1.18 With guidance from the Ministry of Health, three-year District Health Plans were prepared for 38 districts during 1992-93. For district level capacity building, 38 districts have already completed preparation for the next 2-3 years. Detailed work plans and budgets with assistance from the MOH's Health Planning Unit (HPU) and technical advisers provided by SIDA have been completed for 3 pilot districts where their implementation is now underway. E. IDA INVOLVEMENT IN THE HEALTH SECTOR 1.19 IDA is financing an ongoing First Health Project (FHP) which became effective in 1988. The Mid-Term Review of the Project conducted in August 1992 spelled out the following problems. * Long delays between credit signing and credit effectiveness; * Inadequate and untimely release of counterpart funds, * Delays in procurement of goods and services and weak contract administration; * Inadequate use of Special Account Funds and delays in disbursement processing; * Poor financial management and budgetary controls and unsatisfactory compliance with audit covenant; * Inadequate utilization of technical assistance support, * Inadequate salary and incentive payments to government employees supporting project implementation; and * Ineffective project management and coordination.  6 1.20 The MOH undertook a number of corrective steps to improve project performance. These steps have begun to bear fruit. In spite of these problems, the rates of Credit disbursement are among the highest in Uganda for Government/IDA projects. FHP design was ambitious in scope, based on good prior sector analysis, but did not fully anticipate the constraining effects of known risks, particularly effects outside the health sector particular, in regard to tendering and civil works. The initial difficulties have been overcome and though some problems remain the project is expected to be completed on schedule. These included strengthening of project management, closer supervision by senior MOH officials, and increased availability of counterpart funds. 1.21 Discussions on health policy reform have resulted in efforts to develop a new project. Initially a Community Health and AIDS Project (CHAP) was proposed to address health policy issues and to support efforts to contain the growing AIDS epidemic. As preparation proceeded it was decided to split CHAP into 2 closely linked projects -- an STD/AIDS project and, a District Health Services Project Pilot and Demonstration Project (DHSP). The STI Project, for US$ 73.4 became effective in July 22, 1994. In the context of DHSP, IDA is seeking to reach agreement with the government on a Letter of Sector Policy and Action Plan for the health sector, aiming at monitorability of implementation of the most important policies in the White Paper (paras. 1.10 - 1.13). Drafts of the LSP and Action Plan have already been discussed with the Ministry of Health and are attached as Annex 3. The project is in complete conformity with IDA's country strategy for Uganda which emphasizes poverty alleviation. F. ROLE OF OTHER MAJOR DONORS 1.22 The combination of political stability, economic stability, and years of neglect by donors have made Uganda an attractive and receptive recipient of foreign assistance. The World Bank and the European Community are the largest multilateral donors while USAID, ODA, GTZ, SIDA and DANIDA have been the most important bilateral donors. 1.23 Many multilateral, bilateral and private (NGO) donors support health activities of various sizes and scopes. The MOH and most local NGOs receive the majority of their support from these donors. According to a survey contracted by ODA (UK), Uganda received US$ 115.0 million for health and US$ 14.0 million for population in financial year 1991-92 out of which US$ 65.0 million came from multilateral sources, US$ 45.0 million from bilateral and US$ 17.0 million from NGO sources. 1.24 In recent years, as donor contributions and coordination in health have increased, the need to avoid duplication has become clear. IDA is in regular contact with all major donors through donor coordination meetings and personal visits by Bank staff The GOU has also encouraged major donors to operate in separate districts in order to distribute resources more evenly. 1.25 WHO provides long and short-term technical assistance to the GOU and has been one of the main financial supporters of the AIDS Control Program (ACP) primarily in the  7 areas of IEC, epidemiology, patient care and STD control. Uganda is one of four countries where WHO sponsored HIV vaccine trials will be launched. The United Nations Development Program (UNDP) provides funding for the Uganda AIDS Commission Secretariat and supports small, community-based projects concentrating on AIDS education and counseling, care and education of orphans, and care of people with AIDS. UNICEF provides funding to the Ministries of Health and Education to support the Health Education Network. One component is a new Safeguarding Youth from AIDS project, which focuses especially on preventing HIV infection among young women. 1.26 The United States Agency for International Development's (USAID) Delivering Improved Health Services project has begun a sixth year, US$ 25.0 million program in 10 districts of Uganda to reduce HIV transmission and fertility. It will focus on reproductive health, IEC, provide HIV testing and counseling, and STD diagnosis. Condom and STD drugs will not be provided on a large scale. USAID also has a US$ 12.0 million program, which is contracted to World Learning Inc.. 1.27 The European Community finances the national blood bank, which is responsible for maintaining an HIV-free blood supply and conducts most of the HIV testing in Uganda. The EC is also financing the rehabilitation of health facilities and service delivery in eight districts and plans to expand this to three more districts. DANIDA (Denmark) provides major funding and technical assistance for the provision of essential drugs and for the improved operation of the Central Medical Stores. SIDA (Sweden) has provided substantial assistance to the STI sub sector through GPA, UNICEF and the World Bank. SIDA is co-financing the IDA supported First Health project and substantial resources for the preparation of the proposed District Health Services Project. The National TB care and Leprosy program, launched in 1990, covers 22 districts. It is funded by a German NGO and the Italian government. 1.28 Several international NGOs are operating in fields related to improvement of health status and a multitude of National NGOs have emerged. This project will take advantage of these resources by utilizing selected NGOs to implement some components. G. LESSONS FROM THE OTHER BANK HEALTH PROJECTS 1.29 A review of lessons of experience from other Bank projects, in health and related sectors, revealed three problem areas: (a) overly ambitious and complex designs overloaded the institutional capacity for project implementation in many cases; (b) lack of borrower commitment to project objectives impeded implementation when projects stretched over too many years; and (c) some borrowers proved unable or unwilling to finance incremental recurrent costs after IDA lending ceased. 1.30 The design of the proposed project anticipates these problems with the following features: (a) responding to the express needs of intermediate and final beneficiaries of the project through a decentralized district approach including increased NGO and Community Based Organization (CBO) participation; (b) pilot testing the delivery of the essential health services package in 3 districts, thereby testing and if necessary strengthening the absorptive  8 capacity of district administrations; (c) a Letter of Sector Policy setting forth the Government's commitment and steps to improve the health status of its people; and (d) by fully costing the essential health services package, the Government is well aware of the recurrent cost implications the program entails.  II. THE PROJECT A. PROJECT OBJECTIVES 2.1 The ultimate objective of IDA's involvement in Uganda's health sector and in the improvement of the health status of its people, is to contribute to overall economic productivity by enhancing the human capital of the population. The objective of this project is to pilot-test and demonstrate the feasibility of delivering an essential health services package to district populations, within a prudent financial policy framework for the sector in order to improve the efficiency and equity in the provision of health services. These objectives will be pursued through an integrated program of policy, institutional and financial improvements, with close monitoring. 2.2 The project is designed to support the Government's strategy of decentralizing health services. It plans to increase the efficiency of the existing health infrastructure and institutions through consolidation and improved management with increased local accountability, while simultaneously supporting cost recovery and budgetary policies that will enable the health care system to move toward long term sustainability. It supports the Government's efforts to reorder priorities within the existing health care system through efficiency improvements and by reallocating financial and human resources toward ensuring the provision of a package of essential health services for all Uganda's citizens. Moreover, the project provides the basis for a continuing dialogue with the Government on the development of the health sector. 2.3 Accordingly, the proposed project would (a) pilot and test new sector policies and strategies which will facilitate the implementation of essential health services; (b) strengthen management and planning capacity at district levels so that they are prepared to provide essential health services; and (c) restructure the MOH so as to build its capacity to provide health policy leadership and to support the Government's decentralization policy. B. PROJECT COMPONENTS 2.4 Consistency with Government Health Sector Strategy. The structure of this project reflects and supports the movement in Uganda toward decentralization and community mobilization. The national health policy framework is reflected in the Letter of Sector Policy and Action Plan, attached as Annex 3. Emphasis will be placed on reallocating Government expenditures toward a package of essential health services, improving the sustainability of all health services through cost recovery and insurance schemes; improving the efficiency of services through institutional autonomy such as Self- Governing Trusts, and experimentation with contracting out and voucher schemes. 2.5 The proposed project has four main components corresponding to the objectives identified in the previous Section. The components of the project are. Pilot Activities; Demonstration Activities; Capacity Building for District Health Administrations, and Restructuring and Capacity Building for MOH. These four components are presented as a package to ensure the implementation and sustainability of the essential package of health  lo care services at the district level in conformity with the central policy thrust of the Government of Uganda. The project is designed to be flexible and innovative so as to encourage community initiatives, and to respond to changing circumstances which will evolve through implementation of policy reform. C. PROJECT DESCRIPTION Enabling Policy Environment 2.6 The Government of Uganda is committed to the provision of a package of essential health services to all its citizens. Achieving this goal requires a thorough reexamination of the way health services are delivered in the country today, the introduction of suitable and sustainable policies, the development of appropriate institutional capacity at the national and district levels, and, the full use of private providers. This project will pilot and demonstrate the feasibility of delivering an essential health services package to district populations via all providers and will develop national and district capability for subsequent nationwide expansion. Baseline surveys will be undertaken prior to project effectiveness in the pilot districts to provide a benchmark for systematic monitoring and evaluation. 2.7 Policy Environment of the Package of Essential Health Services. The policies set forth in the Letter of Sector Policy will be implemented in a phased manner as set out in annual implementation plans. Uganda's Ministry of Health has collaborated with the IDA project appraisal team to define a package of essential health services. While district level modifications may be desirable and necessary, the adoption of an essential health services package for the country is necessary. The implications of such a policy are that, government expenditures in the health sector will increasingly finance components of the essential package of health services. Government financing of non essential health services is expected to decline significantly. Part A. Pilot Activities (US$ 8.2 million) 2.8 Identification of Cost-Effective Services. The MOH produced the 7hree Year Health P'lan Frame, 1993194 - 1995/96 which set national policies and priorities, districts used the national guidelines to develop their own detailed plans taking into account their particular health conditions, resources and local priorities. The districts selected activities based on their own experience and implementation capacity, guidance from national experts and international experience. In their endeavor to improve the effectiveness of health services, the district plans have been guided by ideas similar to those in the World D)evelopment Report, 1993, by identifying a package of essential and cost-effective health services the government would take responsibility for delivering throughout each district. As part of the Eastern Africa Burden of Disease workshop which was completed in August 1994, a team of officials from Uganda participated in the development of a package of essential health services and the results of that work have been fully integrated into the design of the project. The districts have an established basis from which to proceed. It is recognized that districts will not be able to reach full service coverage by  II the end of the project. The objectives are to provide the essential package of health services to about 60% of the population of each district from the current level of 20%. Pilot testing of these activities will evaluate the absorptive capacity of the district. Health staff have had little experience in handling funds or in taking decisions at the local level. Training to correct these shortcomings has been provided. Project costings are consistent with the 60% coverage objective. 2.9 Implementation of Essential Services in Selected Districts. The project will initially support the implementation of essential health services in three districts (Soroti, Mukono and Masindi). Based on the experience gained in these three pilot districts, essential health services will be extended to about ten districts during the life of the project. Activities in three other districts (Gulu, Kabale and Tororo) have commenced with funding from the First Health Project and SIDA. These districts will also be evaluated before proceeding with the demonstration phase. All districts included in the project must have been decentralized by the central government. During negotiations, assurances were obtained that only districts whose recurrent budgets have been decentralized by the central government will be included in the project (para. 5.1 (a)). 2.10 Package of Essential Health Services. Health services interact with households in two fundamentally different ways. Public health programs strike against health problems of entire populations or population subgroups. Their objective is to prevent disease or injury and to provide information on self-cure and on the importance of seeking care. Clinical services respond to demand from individuals. They generally seek to cure or to ease the pain of those already sick. The package of essential health services is a mixture of the most cost-effective public health programs and clinical services to be provided to the greatest number of beneficiaries. The Government of Uganda faced difficult choices about the best use of public money to identify a desirable combination of public health and clinical services. Drawing upon the Burden of Disease/Cost Effectiveness Analysis, and also the district health plans, the MOH decided the following services would constitute a cost-effective package: (a) Malaria Control, (b) MCH/FP/EPI Services, (c) Hygiene, Sanitation and Water, (d) Nutrition, (e) TB and STI Control, (f) Treatment of Other Common Diseases and Health Problems, and, (g) Continue Surveillance and Treat Special Health Problems such as Guinea Worm, Schistosomiasis, Trypanosomiasis, Onchocerciasis, and Meningitis. 2.11 District Work Plans/Annual Allocation of Resources to Selected Districts. Districts will prepare annual workplans, including a budget for the services to be carried out. 38 districts have prepared plans. These will be evaluated and reformulated on an annual basis. A formula has been developed to ensure an equitable allocation of IDA credit resources between districts . For essential services, the allocation of resources will be based on the total population of the district, weighted by the infant mortality rate and  12 absorptive capacity constraints. The allocation also depends on the funding levels of other donors active in the district. Recurrent costs supporting the managerial and supervisory activities of DMOs (and their staff) is fixed on the assumption that overhead costs are similar between districts. The project will not support any new capital development, except in districts located in the Northern Region where civil strife has inhibited rehabilitation This support will be limited to rehabilitation of buildings and provision of equipment required for the provision of essential health services or for the management of those health services. 2. 12 For purposes of this project the TB/STI control activities have been excluded as they are fully funded. Details of each element of the essential package are given in Annex 4. 2.13 The project will support drugs, vitamins, equipment and supplies, bed nets (malaria control), valley tanks, wells (sanitation), training, research and studies, monitoring and evaluation and short term technical assistance. 2 14 District Level Supporting Services. In addition to the delivery of the clinical and public health services embodied in the essential package components, the district level supporting services are necessary for the implementation and sustainability of the essential service package elements. These vital supporting service components have been identified and include. (a) strengthen district health team supervision activities including development of IEC materials and services; (b) social mobilization of the community to extend these public health package activities in their respective districts and communities; (c) provide continuing education for health care providers to improve technical skills and to train community based health workers such as TBAs and CHWs, (d) equip and rehabilitate buildings, and health facilities, (e) develop sustainable repair and maintenance services for health equipment, facilities, and transport, (f) conduct necessary operational research, and (g) design and implement monitoring and evaluation system, including for assessing the ex-post cost-effectiveness of essential package elements. 2 15 There are five areas of specific support required throughout all pilot and demonstration districts to enhance the long term sustainability of the essential services identified by the appraisal mission and recognized as essential by officials of the Ugandan government First, work must be developed and implemented on a number of individual tests of evolving district level user charges for publicly provided health care services. This activity will include work on financial management, accounting system implementation, assessing feasibility of facility pricing proposals, feasibility studies of drug revolving funds and other community based income generating activities through which health services may be financed, local health insurance proposals, and the financial feasibility of health facility trusts. Work is also envisioned to encourage private investments in the health sector and initiatives to provide essential health packages to workers of large and medium size private firms. 2. 16 Second, districts must be used to develop procedures and methods to contract out repair and maintenance services for vehicles, equipment and buildings, and for the  13 rehabilitation of facilities requiring major work. Third, contracting mechanisms proposed for use by districts to procure specified health services, including from NGOs and private providers are to be developed and strengthened to accommodate existing and envisioned management requirements. Fourth, options for paying health workers at all levels, including in the community, will be assessed in terms of their productivity in delivering quality essential health services and sustaining that service delivery. The options tested will include a district health team bonus scheme to assess the usefulness and workability of bonuses based on health status improvement. Finally, resources required to assess the ex- post health status impact of delivering the essential health package will be incorporated into the project with significant district health team involvement in the design of the assessment, but implemented and analyzed by an independent organization such as the Central Statistics Office of the MOFEP. 2.17 Modifications in the Essential Package and The Cost of the Package as Proposed Within the Project Districts. It is likely that the definition of the essential package may require modification over the life of the project and adjustments made as priorities change. The annual district health plans include an analysis of the essential package mix, and, will, if necessary, make recommendations for its revision and substitutions. The WDR, 93 estimates that it costs between $12-21 to provide the essential health services package per capita. While the essential health package may be modified over the life of the project in some districts, the costs will undoubtedly continue to be in the above mentioned range. The essential health service package as it has been described above is estimated to cost about $1 1. 10 per capita per year to cover about 60% of the population (Annex 2). Part B. Demonstration Activities (US$ 19.1 million) 2.18 Upon the completion of an assessment of the delivery, management and impact of the essential health package in the three pilot districts, an additional seven districts will be incorporated into the project during the project demonstration phase. During this phase, the findings of the first phase assessment will be implemented more widely in these additional districts. 2.19 In that regard, it is anticipated that managerial and sustainability issues of managing cost recovery, extending and sustaining community based essential health care delivery and experimeniting with optional managerial incentive structures to sustain and monitor program impact will be emphasized. These issues, among many others, will require support from the project and the cooperating international organizations. For example, while many Ugandans are now paying for the health care they obtain, it is unclear how a publicly operated facility will be able to manage the resources generated from the community to sustain the cost-effective package of essential health services identified h , tit, .vl()1I duiring the period of developing the Three Year FIlealth Plan. It will be important to learn from those districts involved in the pilot phase how a management system can be implemented throughout the district to manage user charge generated resources to finance essential services and then test these ideas and systems on a larger basis in the additional demonstration districts.  14 2.20 In addition, several important essential health package activities will require a much larger implementation test during the demonstration phase. The most important of these activities include: a) a full scale test of community based mechanisms to sell and maintain impregnated bed nets for up to one third of the district's population, and b) efforts to increase the use of pit latrines. Finally, it will be critical to learn how to work more closely with private health providers in increasing the availability of quality preventive essential health services in such areas as reproductive health, TB and STI control, and diarrheal disease prevention. 2.21 Establishing improved working relationships with the mission groups in those districts involved in the project to extend the delivery of essential health services will be important. However, it will be more difficult to develop and sustain these relationships with other modern and traditional providers, even to the community level during the life of this project. It is expected therefore, that during the demonstration phase of the project, this aspect of the project will require further emphasis. 2.22 The project will finance drugs, vitamins, equipment and supplies, bed nets (malaria control), valley tanks, wells (sanitation), training, research and studies, monitoring and evaluation and short term technical assistance. 2.23 Finally, it will be important to test alternative approaches of personnel remuneration of the district health management team to obtain the desired health status outcome from the set of essential services being implemented via this project. Often information systems have not worked in the past since the staff in the field have not been motivated to provide the type of information required to complete such an assessment. During this demonstration phase, ideas which appear feasible during the pilot phase can undergo additional testing prior to full implementation throughout the entire country. 2.24 Since not all Ugandan districts will be assisted via this district support component of the project, four criteria have been established for including a district during this phase. First, the district must be one of the districts to be decentralized by the Central government. Second, it must have a district health policy and implementation plans satisfactory to IDA. Third, it must volunteer for inclusion in the project on an annual basis. Fourth, it must ensure that ongoing health programs supported by external donors are undertaken within the framework of the essential health services package. The number of districts to be selected for this component is indicative and will depend on the success of the initial pilot phase. A condition of disbursement for the demonstration component is the successful completion of the pilot phase (para. 5.3). The criteria for successful completion of the pilot phase are: (a) D)isbursemeri oat least 60% of the approved budget of the district- (b) Timely submission of quarterly progress reports and plans in accordance with the project implementation manual,  Is (c) Satisfactory quarterly financial reports in accordance with the project implementation manual; and (d) Satisfactory completion of scheduled management training programs for the District Health Team. Progress of the demonstration activities, with emphasis on the administrative and logistical aspects of sustaining service delivery will be reviewed periodically (at least once a year) and the pace of expansion/replication in each district will be determined on the basis of appropriate performance indicators. Necessary assurances to that effect were obtained during negotiations (para. 5.1 (b)). Part C. Capacity Building for District Health Administrations (US$ 36.7 million) 2.25 District Health Administration. The project will support institutional development of the District Health Teams to enable them to assume newly acquired management responsibilities effectively. The DMO will be responsible for inspection and control of health operations. He/She will also assume greater responsibility for management of human, physical and financial resources; planning and programming, supervision, and monitoring and evaluation. District Health Committees made up of political and community representatives will manage resources and participate in program development within each district at the RCV level. The DMO is the secretary of this committee. The DMO will have primary responsibility for financial control and monitoring and controlling financial resources collected through cost recovery and will be accountable to the PS., MOH. In collaboration with the DMO, the PCU will review monthly financial reports, monitor expenditures and define financing needs. The project will provide computers and office equipment for the district medical offices. 2.26 The project will provide training to district health teams. Training will focus on the development of skills in management, planning, accounting, stock inventory, drug supply management, health information systems, training and supervision of staff, monitoring and evaluation. Training in the management of financial resources will be conducted as appropriate. The project will also finance training in quality assurance management 2.27 Because the Government's program of decentralization will have covered all 39 districts by FY 96-97, and to ensure that all districts develop the capacity to efficiently and effectively deliver the essential package, it is proposed that the DHSP's capacity building activities cover the nation in a phased manner over the 5-year project implementation period. Most capacity building activities would focus on the district and lower levels. Central level activities would be geared to ensuring that district level activities are supported by a strong (though not large) suitably-organized MOH, capable of undertaking its primary functions of policy making, planning, inspection, technical support and training. This approach would also ensure that the DHSP complements the IDA-funded Uganda Capacity Building Project that will also be nationwide in scope, and is expected to become effective in early 1995.  16 2.28 During project implementation, DHSP staff and advisors would work closely with line departments of the MOH (particularly the Health Planning Department (HPD)), so that nationwide coverage of the capacity building activities could be accomplished in the first 3 years of DHSP implementation (covering 15, 30 and 39 districts, respectively, in years 1, 2 and 3). This is considered feasible because intensive district-level capacity building has already started in 3 pilot districts, funded by the ongoing First Health Project, with assistance from 3 SIDA-funded advisors attached to the DHSP (preparation) Office and because of the completion of district health plans for 38 districts. Management systems for detailed work planning, budgeting, implementation and monitoring are being developed in conjunction with the national guidelines being prepared by the Decentralization Secretariat. 2.29 Supporting NGOs and private health units to provide essential health services. At present, in Uganda, NGOs are largely curative oriented, their only common public health activities are vaccinations (funded under EPI) and, in some cases, antenatal care (largely paid for by patients). There is scope for increased involvement by both NGOs and the private clinics which are usually entirely curative to provide public health and preventive services. The project proposes to: (a) encourage NGO units to carry out school health activities; (b) increase the number of units offering reproductive health services; (c) extend community based bed net sales and maintenance programs; and (d) extend use of pit latrines via subsequent financial support for community water initiatives. Guidelines for NGO involvement have been developed and are attached as Annex 14. 2.30 The project will finance the training of NGO staff and the provision of supplies and equipment for public health activities. Support to NGOs will be limited to the package of essential health services. During negotiations, assurances were obtained that, formal proposals from NGOs would be a pre-condition for funding and that annual reviews of all NGO activities under the project would be carried out (para. 5.1 (c)). Furthermore, for replenishment, annual reviews of District level activities will be conducted to assess the essential health package coverage in pilot and demonstration districts. District collaboration and financial support of NGOs will be reviewed if required. 2.31 Encouraging the development of private health units. The private sector (including the NGOs) is already a major provider of health services in the country. Still, there is room for expansion, particularly in underserved areas as defined by local district officials, including the DMO. This project will encourage private investment in the health sector. The project will finance a study to review existing regulations, procedures and statutes to eliminate entry barriers for the private sector and to establish minimum standards. In addition, US$ 500,000 will be provided for the purchase of equipment for privately established units in underserved areas meeting MOH building and construction standards, and where, if electricity and water is required for the use of the equipment, it must meet minimum standards of quality and availability. Underserved areas will be identified by the MOH and agreed with IDA. A maximum of US$ 25,000 per unit will be available to assure greater equity throughout the country during the project. During  17 negotiations, assurances were obtained that, the provision of equipment from a pre- approved list to private health units be limited to those in underserved areas and at a cost not exceeding US$ 25,000 per health unit (para. 5.1 (d)). 232 Testing greater autonomy for Government health units through Self- Governing Trusts and similar mechanisms. The benefit of increasing the managerial autonomy of health units is that decisions on resource allocation can be made locally. Hence, services will be more responsive to local concerns and needs. Government has already taken steps to shift the managerial responsibility from the center to localities by forming health unit management committees. The project will support this new policy by training local management committees to have greater control over their resources and activities and by providing appropriate equipment and supplies. Mulago Hospital in Kampala and 3 other hospitals will be the first to test the concept of Self-Governing Trusts. The Government also proposes to involve NGO units, with good track record, in the supervision of nearby Government health units and community based activities. The project will finance the costs of this supervision upon the presentation of a management development plan for the respective government health unit with a set of monitorable indicators at least focusing on financial sustainability and service use. Based on the experience gained and modifications made, the concept will be replicated to other health units. During negotiations, assurances were obtained that, only NGO units with satisfactory management capabilities be contracted to supervise nearby Government health units and community based activities and that for each such contract a management development plan for the Government health unit with a set of monitorable indicators be prepared focusing on financing sustainability and service use (para. 5.1 (e)). 2.33 Measures to improve the effectiveness of training in Government institutions. Government training institutions face chronic problems with underfunding leading to low salary levels and dilapidated buildings. They also lack trained tutors, teaching materials and equipment, and their curricula are outdated. Excessive central control has also dampened any local initiatives to improve the quality of the training institutions. In addition, there are high entry qualification requirements which prevent capable candidates from receiving training and which inhibit the hiring of NGO trained staff in Government. The entry requirements need to be revised and recognition arrangements established. 2.34 The project will support the following measures: (a) testing mechanisms for improving staff motivation by giving managers of the training institutions the authority to pay staff incentives. Different management and funding models will be tested starting with the nursing schools in Kabale ( 150 student capacity) and Lira (I 50 students), and the laboratory assistant school in Jinja (50 students), (b) charging fees to students (with an initial minimum charge to cover food and living expenses) though fellowships would be provided to no more than 50% of students based on need,  18 (c) rehabilitate and equip training schools where recurrent funding is being enhanced. This quality improvement measure will increase the acceptance of student charges and improve the effectiveness of the training provided, (d) curricula reform (with emphasis on primary health care and public health, including a review of entry requirements and career paths); and (e) delegating the responsibility for training to the district level. 2.35 Recurrent funding from the project for the training institutions would be on a declining basis over the implementation period with the Government providing rising amounts of matching funds. During negotiations, assurances were obtained that, all training institutions supported through the Project would be given administrative and financial autonomy (except for the policy on admissions, which shall be retained by MOH), and ensure that, while the training institutions shall continue to be accountable to MOH for all technical matters, MOH will provide them with funding for a period of at least five years (para. S. l (f)). 2.36 Contracting out services and supplies. There is increasing evidence that the Ministry of Health cannot (and should not) provide all services needed by the health sector. It is not cost effective in many instances to do so. The MOH is committed to adopt the most cost-effective ways to obtain optimal value for money. The project will support the following activities. (a) A study will be carried out to identify areas for hospitals to contract out services, such as catering, cleaning and gardening, (b) Districts will be encouraged to contract out in-service training to capable NGOs, (c) Districts will be encouraged to contract out the management and supervision of health units to NGOs and/or private providers; (d) A new training course for health information clerks will be contracted out to private training institutions; (e) In Kamuli and Kampala districts, the Government will experiment contracting out with district hospitals and health centers to NGOs, and (f) A study will be carried out to determine whether contracting out blood transfusion services is feasible. In conducting these assessments, international experience will be incorporated from other countries where the long term impacts of contracting out is available. During negotiations, assurances were obtained that, the studies and contracting out of services be  19 completed no later than the end of the first year of the project and that the findings, together with a plan for implementation of the recommendations, be submitted to IDA for review and comment (para. 5.1 (g)). 2.37 Establishing new funding mechanisms. A major constraint to health sector development is the serious underfunding of the health sector and the inability of the Government to restore adequate funding levels in the short term (Annex 7). It also shows the limited coverage of existing services due to the same constraints. Communities have recognized this problem and have developed ways of raising funds for health services, including the construction and rehabilitation of facilities, the introduction of user charges and innovative schemes such as health cards. Unfortunately, these community initiatives are limited in scope, they are in selected areas and they have had little impact on health care financing. ODA is currently carrying out a study to develop financing options focusing on insurance and pre-payment schemes and on exemption mechanisms for the poor (e.g. vouchers). In the meantime, the Government is preparing guidelines on user fee levels, their collection and reinvestment. After IDA's review of the guidelines, the project would fund the implementation of those recommendations. The following activities would be supported: training of health management committees and health unit staff on their roles and responsibilities in proper revenue collection and management; and provision of equipment and supplies, e.g. safes, receipt books for the proper management of revenues. A review and dissemination of experiences of different financing systems and exchange of ideas between communities through inter and intra district workshops will be supported. Funds will also be set aside for the development and testing of new financing initiatives as well as testing of exemption mechanisms for those unable to pay for services. 2.38 Reviewing and updating relevant statutes and regulations governing the health sector. With the enactment by Parliament in September 1993 of the Local Government Statute, several central government functions/powers have been transferred to local authorities. As a result, several of the existing statutes/regulations need to be revised and updated to operationalize the decentralization and re-orientation of health policies. The project will support the process of updating Acts and Regulations. Workshops will be held to discuss the proposed changes in legislation, licensing regulations and personnel matters. 2.39 Strengthening the Public Health Directorate of the NRA. The National Resistance Army (NRA) is one of the largest organized bodies that can easily be reached with public health messages. The existence of extended families would mean that more people can be reached through the NRA. Indeed the NRA received substantial support under the First Health Project to strengthen health education services. This project will continue to support the NRA's commitment to integrate health education into all its health services and to build up its public health capacity further.  20 Part D. Restructuring and Capacity Building for the Ministry of Health (US$ 8.0 million) 2.40 With the introduction of the Government's decentralization policy, the roles and functions of the Ministry of Health have changed from direct management of services to policy formulation, planning, central training, setting standards, inspection, monitoring of activities and donor coordination. The role of the MOHi is expected to evolve from being primarily a "Ministry of Hospitals" to being primarily a "Ministry of Health Policy". Accordingly, there is need to restructure and strengthen the Ministry to carry out these new responsibilities. Simultaneously, there is need to develop the capacity for decentralized health service delivery at district and lower levels. For the DHSP in particular, because of its emphasis on decentralized delivery of the essential package of health services, building the institutional capacity at district and central levels is essential. 2.41 Recent assessments of the MOH have identified the ministry's present organization and management as key constraints to decentralized service delivery. The Civil Service Reform Program (CSRP) report for restructuring the MOH (September 1993; see Annex 5 for details), and the report of the Joint Task Force on Decentralization of Health Services (July 1993) provide detailed assessments of the implications of the Government's decentralization policy on the role, functions, organization and management of health services at central MOH and district levels. Based on these reports, the DHSP's capacity building component would seek to ensure that the restructured MOH would be re-oriented toward integrated service delivery of the essential package at the district level (instead of maintaining its present emphasis on centrally-managed vertical programs and curative services). 2.42 The project will help strengthen the proposed Health Planning and Inspection Department through the provision of funds for development of planning and management systems, studies, study tours, training, short term technical assistance, selective computerization for budgeting, accounting, and health information systems, and introduction of a Quality Assurance (QA) program in the MOH. In addition, since the MOH is presently located in Entebbe in scattered buildings -- and this leads to considerable internal inefficiency, as well as lack of coordination with other ministries, most of which are in Kampala -- the project would support the movement of the MOH to Kampala through the rehabilitation, furnishing and equipping of existing buildings. New construction is not envisaged. 2.43 It is expected that the MOH and MPS would agree in the next few months on the measures to be taken for implementing the CSRP recommendations over the next 1-2 years. For implementing the capacity building component at district and central levels, the project proposes a high-level Implementation Committee chaired by the Permanent Secretary, Ministry of Health, and including representatives from the ministries of Public Service, Local Government (Decentralization Secretariat), Finance and Economic Planning, and (a small number of selected) local authorities.  21 2.44 MOH would formulate and implement two Action Plans during the next 2-3 years: one for Health Services Decentralization; and the other for Restructuring the Ministry of Health. These action plans would include: creating a stronger but smaller central MOH; suitably streamlining the organization structure and staffing in order to improve policy making, planning, and district-level and technical support; and strengthening the management systems for budgeting, accounting, information systems and manpower utilization in the context of decentralized implementation of health services delivery. MOH has established a high level Implementation Committee for effecting management and organizational reforms. An implementation plan for management and organizational reforms for the first year of the project has been submitted. 2.45 The proposed Implementation Committee, assisted by staff of the Health Planning Department, and the MOH's Management Advisor, are reviewing the CSRP report with the MPS, and are expected to soon prioritize the various recommendations of the CSRP report, and identify those that could be implemented immediately and those that require a medium-term (1-2 years) time frame. Once agreement has been reached between MOH and MNPS, responsibilities would be assigned to senior/functional managers of MOH for implementing various recommendations. In doing this, reform of the personnel, accounting, budgeting and information systems would be given high priority, both at the central and district levels. MOH's Implementation Committee would ensure that, in the context of decentralized implementation of health services, its activities are closely coordinated with those of other relevant agencies (such as the MPS, MOLG, MOFEP, the Decentralization Secretariat and local authorities). 2.46 Also, since some of the CSRP recommendations have significant financial, personnel and administrative implications, in implementing the Action Plan, the MOH would collaborate closely with other relevant Ministries and government agencies, including district-level local authorities, as appropriate. The reform process itself would be facilitated by staff of the Management Services Department of the MPS (who helped prepare the CSRP Report), assisted by other consultants, as required. The MOH would also introduce a systematic program of orientation, education and training geared to reducing the central staffs natural resistance to restructuring the ministry. 2.47 Thus, the capacity building component recognizes that for the DHSP to meet its objectives, it is imperative that the GOU successfully implement its phased (nation-wide) decentralization program, and that the MOH speedily implement its Restructuring Program along the lines proposed by the CSRP Report. In due course, the MOH and local administrations would gradually consolidate their respective roles in delivering the essential health services package. As the MOH's responsibility for curative services, particularly in tertiary hospitals, is gradually devolved to autonomous Boards or NGOs, further structural and staffing changes might become necessary in the ministry. The immediate steps needed to initiate this long-term process of reform are noted in the Action Plan and Policy Matrix attached to the Letter of Sector Policy (see Annex 3), and would be monitored closely by IDA during DHSP implementation. The project will support the service delivery cost as well as the support costs incurred at the district level for supervision, training, community mobilization, IEC, research and evaluation of service  delivery and incremental recurrent costs. The project would also finance essential pharmaceuticals, vaccines, supplies (bed nets for TB control) and equipment (valley tanks, wells, etc. for the water and sanitation component.) D. PROJECT ORGANIZATION AND MANAGEMENT 2.48 The Ministry of Health will be responsible for overall project coordination. The Permanent Secretary (PS.), MOH will be the Project Director. The existing Project Coordination Unit for other IDA operations in the health sector will have responsibility for the Project. It will be headed by a senior Public Health specialist who will be designated the project coordinator. A project coordinator whose qualifications and experience are satisfactory to IDA has been appointed. During negotiations assurances were sought that the project coordinator be acceptable to IDA during the entire implementation period (para. 5. I (h)). The PCU will include I project administrator, 3 accountants, I procurement specialist, I engineer and 3 secretaries. Two vehicles will be provided. Approximately US$ 250,000 will be allocated for the preparation of a subsequent project and US$ 50,000 for a project launch workshop. Short-term technical assistance (preferably local) will be engaged as necessary. A sum of US$ 100,000 is allocated for this purpose. Since the bulk of the activities of the project will be in the districts, the HPD includes two district support teams comprising of an implementation management and primary health care specialists. These teams have been provided with a vehicle each and will be expected to travel to project districts on a regular basis. These teams will be further supported by appropriate technical assistance financed by SIDA. Terms of reference for the teams and the technical assistance will be included in the implementation manual. 2.49 A Project Steering Committee chaired by the PS., MOH, with representatives from the MOH and MOLG will be established to act as an advisory body. NGOs and other interested parties will be invited to participate in the Committee on an ad hoc basis. The Project Coordinator will be the Secretary to the Steering Committee. The Committee is expected to meet quarterly. A Project Steering Committee has been established. 2.50 At the district level, the District Medical Officer (DMO) will be responsible for coordinating and implementing the essential health packages component. Together with the District Health Team he/she will ensure that the essential package of health services is appropriate for the district. If changes are necessary, he/she will make a request to the PCU giving reasons why the packages should be changed. Any request for changes in essential health packages will be discussed with IDA before decisions are taken. During negotiations, assurances were obtained that, all changes to the essential package of health services be submitted to IDA for review and comment before implementation (para. 5.1 (i)). The DMO will work closely with the DES and the RCs in the district to enable public opinion to be taken into account during implementation. 2.51 The implementation of policy reforms will include an annual work plan for certain key actions to be undertaken. These are detailed in the Action Plan attached to the Letter of Sector Policy (Annex 3). In addition, the Health Planning and Inspection  23 Departments will be responsible to undertake pilot activities and studies identified under this component. 2.52 The PS, MOH, will be responsible for the implementation of the capacity building component for the MOH and district health administration. In consultation with the high level Implementation Committee for effecting management and organizational reforms, the PS. will issue necessary guidelines and take appropriate administrative decisions. The expenditures for this project will be controlled and accounted for by the PS., MOH. All Government audit and accounting procedures will apply. DMOs will receive their financial allocations from the PS, MOH and will be accountable to him for the proper utilization of funds. As is customary, the Director General of Health Services and other technical staff of the MOH will provide technical backstopping to the DMOs. Accounting capacity at the district level has been strengthened and performance of district accounting units will be closely monitored during the pilot phase. 2.53 Status of Project Preparation. The project was prepared by the Government with assistance from outside consultants. In addition, SIDA has financed three districts in which pilot activities have begun . The design of the project has been heavily influenced by the World Development Report 1993. The Government has participated in a number of workshops and seminars in this regard. A detailed procurement plan has been drawn up and is included as Annex 10. Pilot activities in 3 districts are ongoing. SIDA has financed technical assistance in management, implementation and financial management. The Government has prepared guidelines for financial accounting and procurement at the district level. 2.54 Implementation Schedule. Project implementation is expected to take five years starting in early 1995. A condition of effectiveness would be the submission of a final implementation manual for all project components (para. 5.2 (a)). Implementation will follow a phased approach from a pilot to a demonstration mode as envisaged in the project design. E. MONITORING AND EVALUATION 2.55 The program monitoring/evaluation activities will seek to determine the impact and cost effectiveness of the Health programs as well as to draw lessons from the implementation of programs to improve the management and delivery of all health services in Uganda. In addition, both the monitoring and evaluation activities will provide information to the project management during implementation that will help in identifying necessary adjustments in program design. An operational plan is attached as Annex 9. Monitoring 2.56 Monitoring during the project is done to: (a) ensure that the project is progressing as planned; (b) ensure that the funds are directed to the right purposes; and (c) identify changes in health or other indicators selected during the project activities.  24 2.57 It is important to determine the indicators against which the project is to be monitored before the implementation starts to ensure that sufficient data is gathered, both in terms of the baseline to monitor progress against and the determinants of the final outcome. In the DHSP, the sets of indicators are for assessing progress in performing project activities and for assessing overall program impact for each of the components. Due to the complexity and the variety of indicators, the indicators presented must be regarded as preliminary. The final sets of indicators will have to be carefully chosen considering the significance that the indicator has in determining the progress/development made and how possible it will be to collect the data required for defining progress made. A workshop on monitoring and evaluation was held in Uganda in November 1994. A fully determined set of project activity and program impact indicators will be developed during the first six months of the project. 2.58 Delivery of Essential Health Packages at the District Level. The areas to be covered with suitable health indicators are the different components of the essential health package, i.e. Malaria Control; MCH/FP/EPI; Water & Sanitation; Nutrition; STI/HIV Control; Tuberculosis, Common Diseases; and Special Health Problems. 2.59 It is important to recognize that routine monitoring must be done within the regular reporting system at district level. The pilot activities with a new Health Management Information System will be used as the main vehicle to monitor implementation of an essential health services package to cover a larger share of the population. It will therefore be crucial that the information system proposed is introduced and made to function in the capacity building program, and including information about essential health service delivery from private providers. Other more in depth analyses of impact of health indicators will have to be done on a basis of sentinel surveys or other methods of gathering information. 2.60 Thirdly, it is important to determine both the baseline and the continuous development of the annual cost and financing of the different health packages in the different districts. Such assessments will include health services provided by all providers -- private and public, and facility and community based. This requires special health care expenditure surveys for each district, both as part of the baseline studies and as part of the evaluation of the districts. 2 61 District Capacity Building. The activities under district capacity building aim at establishing well-functioning management systems and management teams in all districts in the country. The indicators of these activities are therefore not directly related to health activities. The indicators are instead more defined in terms of acceptable financial reports, good quarterly reports, good working programs, adequate supplies of essential items, etc. (Annex 9). 2.62 Progress reporting from districts involved will be done on a quarterly basis comprising of both financial and performance reporting including changes in health indicators. Satisfactory progress reports are conditional for continued release of funds. The precise formats for the progress reporting from districts based on the suggested  2S indicators will be developed. Within the capacity building for district health administration component (Part C, pp 15-19), there are nine district project activities identified. Examples of these include supporting NGOs and private health units in providing essential health services, establishing self-governing trusts for government health units, and strengthening the public health directorate of the NRA. Appropriate evaluation and assessment studies will be designed and implemented in accordance with the implementation manual. Preliminary reviews of all project components will be conducted in time for inclusion in the project's mid-term evaluation. 2.63 Capacity Building at National Level. The indicators at National level will be similar to the indicators for assessing management on district level (Annex 9). Base Line Studies 2.64 To give a correct picture of the progress of the project, it is necessary to determine the initial status of the different key issues of the different components. 2.65 For pilot and demonstration districts involved in implementing the essential health packages: (a) the health status and disease burden indicators, (b) expenditure on the different health packages, including by private providers; and (c) for all districts prior to obtaining project capacity building assistance, a managerial capacity assessment will be coordinated covering all the indicators. Evaluation of Pilot Activities 2.66 An evaluation of all pilot activities related to this project will be conducted during the initial I year trial period. The evaluation of the pilot activities aim at providing information about: (a) costs of the essential health package relative to initial plans; (b) health service implementation relative to district health plans; (c) the most cost-effective interventions being implemented, and (d) project impact on health status indicators. 2.67 The evaluation of the pilot phase will be undertaken in stages. The first stage will be a design stage in which a TOR for the evaluation will be defined. In the second stage the actual evaluation will be carried out. A third stage would include any supplementary evaluations, in light of earlier findings. The evaluation will rely on information from routine reporting, original base line studies, or on special studies and surveys developed for that purpose. Evaluation/Research on Different Aspects of the Project 2.68 The DHSP is a project with new approaches, especially concerning the delivery of essential health packages, and the close monitoring of the capacity building project component. Documentation of decentralization of health services, including assessment of  26 improved functioning of health services is relatively limited as is documentation of the positive effects of a comprehensive basic health packages approach. Thus, in depth studies with a health systems research approach are necessary to establish lessons learned for the design of other projects with the same purpose. The following potential areas of research or in depth studies were identified by the appraisal team: * Cost and impact of essential health packages, * Testing alternative approaches for health impact assessment, including community level surveys for assessing health impact cost effectively; * Assessments of cost recovery schemes; and * Other studies defined under each component. 2.69 The above studies may be financed by the project or by contributions from different agencies involved in the project. It is however, important that the studies focus on issues relevant to the future enhancement of health status and health care delivery in Uganda. External institutions may be contracted to carry out evaluations ordered by the project, in collaboration with local authority and experts. The project will maintain close contact with all studies through progress reports and by discussions with principal investigators at least twice a year (for longer studies). Program Reviews 2.70 Implementation reviews of the project will take place every six months based on an implementation report from the project. Every second review will serve as an annual program evaluation which will occur in Uganda. Two months before the mid-term review, the Government will submit a comprehensive progress report to IDA. At the mid-term review on or around September 1997, the need to fine tune or restructure the project design will be based on the data collected on the given indicators and on the progress reports given to the PCU from the districts involved. The final evaluation will include an assessment of the impact on health indicators, other project indicators, and the project's cost-effectiveness. The MOH will prepare and make available to IDA its own evaluation report on the project's execution and initial operation costs and benefits; IDA's and the Government's performance of their respective obligations under the Credit Agreement, and the extent to which the purposes of the Credit were achieved. During negotiations, assurances were obtained that a mid-term evaluation of the project be held in 1997 and that the implementation evaluation report be prepared by the Government within six months of the project closing date (para. 5.1 (j)). Role of the PCU 2.71 In the area of monitoring and evaluation the PCU will: (a) compile and consolidate progress reports to the progress review meetings; (b) approve progress reports from the districts as a condition for continued flow of funds; (c) review the indicators used for assessing project progress and impact; (d) initiate evaluation/research activities connected to the project; (e) monitor research/evaluation activities related to the project, (f) obtain copies of all assessments, studies and analysis conducted and develop a  27 set of general findings and lessons learned; and (g) approve terms of reference for designing and implementing evaluation activities.   III. COSTS, FINANCING, PROCUREMENT AND DISBURSEMENTS A. COSTS AND FINANCING OF ESSENTIAL HEALTH SERVICES 3.1 Costing the Essential Health Services Package. The are are two different methodologies for costing essential health services. The first is to define the resources to be employed for implementing and sustaining the project's proposed set of project activities, in this case a set of essential health services. To accomplish this objective it will also be necessary to develop the infrastructure at the district level to sustain essential health service delivery. While this costing achieves the objective of knowing what resources are being utilized to implement agreed project activities, it does not set the project within the larger context of fully costing and financing all the direct service delivery and support activities involved in delivering essential health services at the district level, including those supported by the project. Thus, a second approach to costing essential health services was developed for use by this project. This alternative method involves the full costing and financing of the package of essential health services at the district level irrespective of service provider, and explicitly includes private and mission providers. This costing endeavor involves an explicit consideration of the demand for health care services, including essential health care services, taking into consideration the fact that those who are ill (including other relevant household members in the case of children and the elderly) have several care provider options from which to chose regarding where they go for care. The costing approach was initially developed as a computer model by the Economic Development Institute for use in Zaire but can be utilized in other contexts by utilizing data from an alternative country setting. This approach was initially used by the Health Planning Unit of the MOH of Uganda to develop its own project proposal costing and this work provides the underpinning for the costing approach used in the development of the costing of the essential health package component of this project. Following is a table (Table 3.1) reflecting details of the "all inclusive" costs for the essential health services package; details of the costing methodology are provided in Annex 2.  29 Table 3.1: Financing the Essential Health Service Package in Three Pilot and Ten Demonstration Districts in Uganda During a Five Year DHSP Project Period Beginning in FY1995 (In US$ millions) Sources of Financing Essential Health Other Total Percent Package Components Govt. Community Donors DHSP Financing of Total I . Malaria Control 0.22 9.14 0.66 2.75 12.77 6.3 2. MCH/FP/EPI 2.08 21.03 6.59 3.81 33.51 16.4 3. Hygiene, Water & Sanitation 2.41 24.93 10.71 7.22 45,26 22.2 4. Nutrition 1.24 0.75 1.37 5.84 9.19 4.5 5. STIIHIV Control 0.68 5.60 11,97 0.00 18.24 8.9 6. TB Control 0.00 0.18 1.09 0.00 1.27 0.6 7. Treatment of Common Diseases 2.86 52.14 9.93 0.29 65.23 32.0 8. Special Health Problems 0.21 1.60 1.33 0.05 3.20 1.6 Total 9.7 115.36 43.65 19.96 188.67 92.4 Notes: Expenditures Equal $11.50 per person per year. B. COSTS OF THE DISTRICT HEALTH SERVICES PROJECT 3.2 The conventional approach to project costing has been used for the cost tables, financing and procurement sections. The total cost of the project is Ush. 74.4 billion or US$ 75. 1 million equivalent. Base costs are estimated at US$ 66.3 million equivalent (87%) and contingencies at US$ 8.8 equivalent (13%). Foreign exchange costs are estimated at US$ 38.9 million or 52% oftotal project costs, Taxes and duties are negligible. All costs are based on June 1994 prices. Project costs are summarized by component in Table 3.2; details are in Annex 1.  Table 3.2: Components Project Cost Summary (Local Million) (USS '000) % % Total % % Total Foreign Base Foreign Base Local Foreign Total Exchange Costs Local Foreign Total Exchange Costs 1. PILOT ACTIVITIES 2,650.8 4,613.6 7,2644 64 11 2,718.8 4,731.9 7,450.6 64 11 2. DEMONSTRATION ACTIVITIES 6,467.2 9,934.6 16,401 8 61 25 6,633.0 10,189 3 16,822.4 61 25 3. CAPACITY BUILDING FOR DISTRICT HEALTH ADMINISTRATIONS 17,086.7 14,124.4 31,211 0 45 48 17,524.8 14,486.5 32,011 3 45 48 4. RESTRUCTURING& CAPACITY BUILDING FOR THE MIN. OF HEALTH 3,315 4 3,609.1 6,924.5 52 11 3,400.4 3,701.7 7,102.1 52 11 5. MONITORING & EVALUATION 413 6 657.7 1,071 3 61 2 424.2 674.5 1,098.7 61 2 6. PROJECT ORGANIZATION & MANAGEMENT 658.0 1,096.1 1,754.1 62 3 674 9 1,124 2 1,799 1 62 3 Total BASELINE COSTS 30,591.6 34,035.4 64,627.1 53 100 31,376.0 34,908 1 66,284 2 53 100 Physical Contingencies 350 3 1,545 0 1,895 3 82 3 359.3 1,584.7 1,943 9 82 3 Price Contingencies 5,2240 2,6999 7,923 9 34 12 4,473.3 2,381 7 6,8550 35 10 Total PROJECT COSTS 36,166.0 38,280.4 74,446.3 51 115 36,208.6 38,874.5 75,083.1 52 113  3' 3.3 Project costs by expenditure category are shown in Table 3.3. Civil works account for 17% of base costs, equipment and vehicles for 25%, medical supplies for 9%, local training for 19%, technical assistance, research/studies and monitoring/evaluation/supervision for 16%; the remaining 14% are for recurrent expenditures. Table 3.3: Expenditure Accounts Project Cost Summary UGANDA DISTRICT HEALTH SERVICES PILOT & DEMONSTRATION PROJECT Expenditure Accounts Project Cost Summary (Local Million) (USS '000) % % Total % % Total Foreign Base Foreign Base Local Foreign Total Exchange Costs Local Foreign Total Exchange Costs L Investment Costs A.CMI Works 2,095.4 8,885.1 10,980.6 81 17 2,149.2 9,113.0 11,262.1 81 17 8. Equipment 2,815.1 11,936.7 14 751.8 81 23 2,887.3 12,2427 15,130.0 81 23 C. Materials 177.7 125.6 303.2 41 - 182.2 128.8 311.0 41 - D. Vehicles - 1,193.7 1,193.7 100 2 - 1,224.4 1,224.4 100 2 E. Medical Supplies 531.6 5,071.4 5,603.0 91 9 545.2 5,201.5 5,746.7 91 9 F. Furniture 70.5 74.7 145.2 51 - 72.3 76.7 149.0 51 G. Local Training 12,161.7 - 12,161.7 - 19 12,473.6 - 12,473.6 - 19 I. Technical Assistance- 802.1 802.1 100 1 - 822.7 822.7 100 1 J. Research & Studies 592.2 2,511.1 3,103.3 81 5 607.4 2,575.4 3,182.8 81 5 KS Monitorlng & Evaluation 1,149.8 1,828.3 2,978.1 61 5 1,179.3 1,875.2 3,054.5 61 5 L. Supervision 3,478.0 - 3,478.0 - 5 3,567.2 - 3,567.2 - 5 Total Investment Costs 23,072.0 32,428.8 55,500.8 58 86 23,663.6 33,260.3 56,923.9 58 86 N. Recurrent Costs A. Salaries 2,820.0 - 2,820.0 - 4 2,892.3 - 2,892.3 - 4 C. Equipment O & M 1,357.0 297.3 1,654.3 18 3 1,391.8 305 0 1,696.7 18 3 0. Vehicles 0 & M 274.5 72.7 347.2 21 1 281.5 74.6 356.1 21 1 E. Building 0 & M 2,457.2 588.9 3,046.1 19 5 2,520.2 604.0 3,124.2 19 5 F. Supplies 611.0 647.7 1,258.7 51 2 626.7 664.3 1,291.0 51 2 TotalRecurrentCosts 7.5196 1,606.7 9,126.3 18 14 7,712.4 1,647.9 9,360.3 18 14 Total BASELINE COSTS 30,591.6 34,035.4 64,627.1 53 100 31,376.0 34,908.1 66,284.2 53 100 Physical Contingencies 350.3 1,545.0 1,895.3 82 3 359.3 1,584.7 1,943.9 82 3 PriceContingencies 5,224.0 2,6999 7,923.9 34 12 4,473.3 2,381.7 6,855.0 35 10 Total PROJECT COSTS 36,166.0 38,280.4 74,446.3 51 115 36,208.6 38,874.5 75,083.1 52 113 3.4 Sources of Cost Estimates. All costs are estimates and subject to change. The costs for the package of essential health services is based on the methodology outlined in Annex 2. Pharmaceutical costs were estimated from the Uganda Government NMS most recent price list from the essential Drugs Program, and from WHO for drugs not currently in use in Uganda. Local training and service costs, and operational and maintenance expenses are based on current actual MOH costs.  32 3.5 Costs Contingencies and Exchange Rate. The total costs include an allowance of US$ 8.8 million equivalent for contingencies which have been estimated using Bank projections of international and domestic inflation. The exchange rate used for 1994 is Ush. 940.0 = US$ 1. The nominal exchange rate is assumed to adjust during the life of the project so as to maintain a constant real exchange rate, given projected inflation differentials. 3.6 Foreign Exchange Costs. Foreign exchange costs of US$ 8.8 million are calculated on the following bases: (a) civil works 80%; (b) equipment 80%; (c) vehicles 1 00%; (d) medical supplies 90%, (e) furniture 50%; (f) technical assistance 100%, (g) research and studies 50%, (h) monitoring and evaluation 50%, (i) equipment/vehicles/ building operation and maintenance 20%, and (j) supplies 50%. 3.7 Sustainability. As set out in the Letter of Sector Policy (Annex 3), and in Annex 7 on Health Expenditures and Financing, it is expected that there will be increases in the real value of (a) Treasury resources flowing to the health sector, (b) user charges; and (c) donor financing, reflecting the utilization of more rapid disbursement methods. The Government will provide an annual report on sectoral expenditures and financing, no later than November I each year, beginning in 1995. District level reports on expenditures and financing would also be produced annually by December 31 each year, beginning in 1995. These will be reviewed by IDA and discussed between the IDA staff and the Government, with the objective of ensuring that domestic resources mobilization efforts do not lag. Increased cost recovery for the less cost-effective health services will enable a greater share of Treasury funding for the health sector to be devoted to the most cost- effective ("essential") health services. There is no commitment to having lower donor funding over the medium term, either in absolute levels, or as a share of health financing, because such a commitment would be inconsistent with the objective of providing the package of essential health services to the Ugandan population. Over the long term, improved health arising from increased provision of essential health services will contribute to productivity. The capacity building component will strengthen the district level administration structures to deliver decentralized health services. New management systems for financial management, procurement and monitoring will be established, both at district and central levels. These activities will complement the ongoing capacity building program of the Ministries of Local Government and the Decentralized Secretariat. By project completion, it is expected that Uganda's health system would be much more decentralized and responsive to local needs, and would thus be more sustainable over the long term. Financing 3.8 The total project cost of US$ 75. 1 million equivalent will be financed as follows: a proposed IDA Credit of US$ 45.0 million would cover 60% of total project cost. Co- financing contributions are anticipated from: SIDA (US$ 7.0 million equivalent); DANIDA (US$ 5.0 million equivalent); KfW (US$ 9.0 million equivalent); and ODA (US$ 2.2 million equivalent). The Government would finance from its annual budget the  33 remaining costs of Ush. 6.8 billion (US$ 6.9 million). To ensure that adequate counterpart funds will be available for the nationwide components, assurances were obtained during negotiations that: (a) the annual work programs be prepared at the same time as the preparation of the annual national budget; (b) relevant line items be included in the national budget aimed at providing adequate counterpart funding each year; and (c) the Government produce, on an annual basis, evidence that resources thus allocated in the previous year's budget were used for the intended purpose (para. 5. 1 (k)). Table 3.4: Financing Plan (US$ million) Expenditure IDA SIDA KfW ODA DANIDA Govt. Total Category Civil Works 12.2 1.0 13.2 Equipment 12.0 5.1 17.1 Materials 0.3 0.3 Vehicles 1.4 1.4 Medical Supplies 3.0 3.2 6.2 Furniture 0.2 0.2 Local Training 6.0 4.6 2.2 1.4 14.2 Technical Assistance 0.5 0.4 0.9 Research/Studies 1.0 2.5 3.5 Monitoring/Evaluation 3.0 0.3 0.1 3.4 Supervision 1.7 2.4 4.1 Recurrent Costs 5.1 5.5 10.6 Total 45.0 7.0 9.0 2.2 5.0 6.9 75.1 C. PROCUREMENT 3.9 Procurement arrangements are summarized in Table 3.6. Items financed by IDA will be procured as discrete procurements according to IBRD guidelines as outlined in the paras. below. All ICBs for Goods and Works and internationally recruited consultants will follow Bank's Standard Bidding and Contract documents. Details of all procurement under this project are provided in Annex 10. Standard bidding documents for key procurement packages have been prepared and reviewed by IDA. Estimated time periods for processing of international competitive bidding tender will be no more than 180 days. 3.10 Civil Works (US$ 12.2 million). The renovation of a MOH headquarters building which is estimated to cost approximately US$ 2.0 million will be procured through ICB procedures. District and community level civil works are small and scattered, each estimated to cost less than US$ 500,000 aggregating not more than US$ 10.2 million and therefore unlikely to attract ICB competition. These will be tendered through LCB procedures.  34 3.11 Equipment, Materials, Furniture (US$ 12.5 million). Equipment, materials and furniture would be grouped together wherever possible. Contracts in excess of US$ 0.2 million would be awarded through ICB according to IBRD guidelines. Procurement below this amount would be carried out through local competitive bidding (LCB) acceptable to IDA. LCB procurement will not exceed US$ 1.0 million and will apply to items for which there is adequate competition. Procurement below US$ 50,000 would be procured through international or local shopping requiring three quotations in accordance with IBRD guidelines up to a total of no more than US$ 0.2 million. 3.12 Medical Supplies/Drugs (US $3.30 million) will be procured according to IBRD guidelines. Items will be grouped wherever possible and procured on a semi-annual basis based on projected requirements agreed to by IDA. Should unforeseen needs or emergencies arise, international shopping according to IBRD guidelines will be used for goods valued at no more than US$ 50,000 per package, up to a total of no more than US$ 0.5 million. 3.13 Local Training (US$ 6.0 million). Training needs have been identified for the national and district level. Annual work plans will include the numbers of staff to be trained, type of curriculum and method of selection of training institutions, cost estimates, etc. and will be cleared with the Bank. NGO and private consultants will be encouraged to bid for training consultancies. 3.14 Technical Assistance, Research/Studies, Monitoring/Evaluation/Supervision (US$ 5.2 million). International and local consultants services would be procured according to the IBRD guidelines on the Use of Consultants. Consultants contracts estimated to cost less than US$ 100,000 for firms and US$ 50,000 for individuals do not require prior Bank approval. All consultant terms of reference, qualifications, experience and conditions of employment will be satisfactory to IDA and subject to review before an agreement (or contract) is negotiated and signed. Any proposals for single source selection of consultant will be examined by the Bank. Details of the technical assistance requirements are contained in Annex 13. Long term technical assistance is also being provided by SIDA but financed outside the project.  35 Table 3.5: Procurement Arrangements (US$ million) (IDA contributions are shown in brackets) Project Element ICB LCB Other NBFa Total CIVIL WORKS: Civil Works 2.0 11.2 13.2 (2.0) (10.2) (12.2) GOODS. Equipment/Materials/ 11.3 1.0 0.2 5 lb 17.6 Furniture (11.3) (1.0) (0.2) (0. ) (12.5) Vehicles 1.4 1.4 (0.0) (0.0) Medical 2.5 0.0 0.5 3.2 6.2 Supplies/Drugs (2.5) (0.0) (0.5) (0.0) (3.0) CONSULTANCIES: Local Training 6.0 8.2 14.2 (6.0) (0. 0) (6.0) Technical Assistance 0.5 0.4 0.9 (0.5) (0.0) (0.5) Research/Studies 1.0 2.5 3.5 (1.0) (0.0) (1.0) Monitoring/Evaluation 3.0 0.4 3.4 (3.0) (0.0) (3.0) Supervision 1.7 2.4 4.1 (1.7) (0.0) (1.7) MISCELLANEOUS Recurrent Costs 5.1 5.5 10.6 (5.1) (0.0) (5.1) Total 15.8 12.2 18.0 29.1 75.1 (15.8) (11.2) (18.0) (0.0) (45.0) a) NBF: Not Bank Financed. b) Co-financed in parallel by KfW, SIDA, ODA and DANIDA. 3.15 Procurement Review Thresholds. All contracts for Goods and Works equivalent of US$ 200,000 or more will be submitted to the IDA for prior review of  36 bidding documentation, award recommendations, etc., in accordance with IBRD guidelines. Procurement below this threshold will be subject to selective post review by IDA. Therefore the Borrower is required to maintain proper records for easy access by the IDA. Table 3.6: Allocation and Disbursements of the IDA Credit (US$ million) Disbursement Category IDA Allocation % of Expenditures to be Financed 1. (a) Civil Works 2.2 100% of foreign expenditures; (b) Civil Works 10.0 80% of local expenditures. 2. Equipment, Materials, 100% of foreign expenditures; Furniture 100% of ex-factory local expenditures; (a) 3.5 90% of local expenditures for other (b) 7.0 items procured locally. (c) 1.0 3. Medical Supplies/ 100% of all expenditures. Drugs (a) 0.8 (b) 1.5 (c) 0.2 4. Local Training 5.0 90% of all expenditures. 5. Technical Assistance, 4.5 100% of foreign expenditures and Consultants' Services, 90% of local expenditures. Research/Monitoring/ Studies 6. Recurrent Costs 4.8 80%. 7. Unallocated 4.5 Total 45.0 D. DISBURSEMENT AND SPECIAL ACCOUNTS 3.16 The IDA Credit will be disbursed over a period of 8 years, from FY1996- FY2003, with procurement and disbursements completed by June 30, 2002 (completion date) and December 31, 2002 (closing date) respectively. TIhe disbursement estimates are based on the standard disbursement profile (June 30,1994) for Uganda (all sectors). The proposed allocation of the credit and an estimated quarterly schedule are shown in Annex  37 12. Under DHSP disbursement procedures would be streamlined and decentralized to the various Districts. Funds would be advanced to the Districts on a quarterly basis based on the Annual Work Program and Funding Requirement (AWP and FR). Each year the Project Coordination Unit (PCU) in MOH would prepare (and agree with donors) an AWP and FR indicating activities and location (naming districts) where each activity will take place with appropriate yardsticks to measure progress. To ensure that the advanced funds are only used for intended purposes, comprehensive monitoring and evaluation arrangements would be put in place after consultation with donors. 3.17 To facilitate project implementation the MOH would prepare and agree with all Donors the AWP and FR. Each donor would contribute their individual share of the Special Account Advance into a separate Central Special Account established per donor by the PCU, in a commercial bank acceptable to IDA. PCU will also open a Special Account for IDA with the same or any other commercial bank, acceptable to IDA for which IDA would make available an initial deposit of US$ 1.5 million, covering 4 months of project expenditures. The PCU will be free to decentralize the funds from the central special accounts to the district levels based on the funding needs identified for each such location in the AWP and FR. Funds identified for the headquarters (PCU) activities would be retained in the central special account. Disbursements would be made against standard IDA documentation with the following exceptions, for which certified statements of expenditures (SOEs) would be used: (i) contracts for goods and civil works costing less than US$ 200,000 equivalent; (ii) all local training; (iii) performance and field allowances; and (iv) recurrent operating expenditures. All SOE documentation will be stored in a specified place in the PCU and will be subject to review by supervision mission and annual audits. 3. 18 Each district level implementing unit would open a separate bank account into which an advance would be transferred from any of the Donor or IDA central special accounts. Although the funds in the central special accounts are kept separately, funds in accounts at the district level could be combined with IDA, Donor, and GOU funds. The PCU would be responsible for submitting regular replenishment applications with appropriate supporting documents for expenditures under the Program. Such applications must be submitted at least once every three months. Disbursement would be made against simplified statements of expenditures, which would show the summary for expenditures by categories collected from the various decentralized locations as well as from the records of expenses incurred at the center. The PCU of MOH would follow up regularly with each implementation unit to ensure that their statements of expenditures are submitted within the three month period. No further advances would be made from the central special account to delinquent locations until proper accounting has been received from them. E. AUDITING 3.19 The MOH would maintain accounts and records for Project activities, including SOE's and the Special Accounts in accordance with sound accounting practices. Assurances were obtained during negotiations that the Government would have the  38 records and accounts of the Project, including those for the Special Accounts and SOE's, audited for each fiscal year by independent auditors acceptable to IDA, and that it would submit the audit reports to IDA within six months of the end of every fiscal year, with a separate opinion by the auditors on SOE's. Similarly, assurances were obtained at negotiations that the MOH would have its accounts and those accounts of the various Districts, including SOE's, audited for each fiscal year by independent auditors acceptable to IDA and submit audit reports to IDA within six months of the end of every fiscal year with a separate opinion by the auditors on SOE's (para. 5.1 (1)).   IV. BENEFITS AND RISKS 4.1 Benefits. The objective of the District Health Services Project is to test and implement, at the district level, sustainable models for delivery of essential health services to district populations. The project will help reduce the burden of disease and thus improve the health status of the populations in the project districts through the implementation of sectoral policy, expenditure and institutional reforms and through the introduction of the concept of essential public health and clinical packages. It will also serve as a vital pilot project for effective decentralization, thus contributing through an evolving learning exercise, to institution and capacity building, and overall sustainability. 4.2 By the end of the project, an ambitious policy reform agenda would have been substantially implemented throughout the country; 10 districts would have received support for delivering, on a sustainable basis, an essential package of health services; and the capacity of the central MOH to develop and implement policy would have been greatly strengthened. The policy reforms, outlined in the Letter of Sector Policy, would have a substantial impact on the effectiveness and efficiency of Government health service delivery. They would encourage district health administrations to collect user charges, contract with NGOs for services, etc. is a major departure from the status quo, and will help improve access to health services and the utilization of Government health facilities. 4.3 The project will help reallocate Government expenditure toward essential public health and preventive services; improving the sustainability of health services through cost recovery and insurance schemes; improving the efficiency of services through institutional autonomy such as self-governing Trusts, and experimentation with contracting out and voucher schemes. In addition, for a district to receive major financing from the Credit, the districts and MOH would have institutionalized the practice of developing annual implementation plans that address national and district health priorities. Resource mobilization and resource utilization will have been monitored to ensure that there is slow but steady movement in the direction of long-term sustainability. 4.4 Risks. One risk is the extent to which conservative elements in the health sector and the MOH can slow or block progress. For the DHSP to be effectively implemented, it is imperative that the GOU simultaneously and successfully implement its phased (nation- wide) Decentralization Program and that the MOH speedily implement its Restructuring Program along the lines proposed by the CSRP Report (1993). An Action Plan for implementing the Health Policy Reform Program, as outlined in the Policy Matrix attached to the Letter of Sector Policy (LSP), includes some of the key measures required to be taken. The MOH has established its top-level Implementation Committee for effecting these reforms. Similarly, progress on building the district-level capacity for undertaking the pilot -- DHSP activities in 3 districts has also been slow. 4.5 Recent discussions with government officials, however, indicate a keen interest and high level of commitment, at the senior-most level of Government, to rapidly move forward both with the content of the policy reform package and the  40 mechanisms/modalities for implementing it. The policy package (particularly the design of the essential health services based on the BOD and cost effectiveness studies) and the policy implementation mechanisms have been developed and will be revised after the pilot phase. The Government strongly supports reform and there is every expectation that this process can move forward. It is also expected that a number of measures will be in place before credit effectiveness thereby reducing the risks significantly. 4.6 Second, the implementation capacity of the MOH and district level institutions might still prove inadequate despite the reforms to be proposed. The project is seeking major changes in the way health services are delivered; and implementation will require use of approaches such as contracting out. There is concern regarding the MOH's limited capacity to undertake major reforms encompassing health financing, liberalization and decentralization, all at the same time but willingness to work closely with the local authorities will be of considerable help. Annual work plans and reviews will enable modifications to project-design to be made promptly thereby reducing the risks of poor implementation. Third, it will be difficult to improve the skills and motivation of undertrained and underpaid civil servants, and undertake project activities through local administrations that are not familiar with donor procedures and are, in addition, likely to undergo a difficult transition to decentralization. 4.7 In the decentralized system, the district health administrations will be critically important not only for implementation, but also for practical policy decisions. It has been recognized that, once decisions have been taken on the specific design of the decentralized system, it will be necessary to reorganize MOH. Since the largest component is being defined as "essential health services in a district", the contributions to financing would be not only IDA, but also the Treasury, other donor contributions to essential health services, and user charges. In addition, in project Districts, elements of donor-funded vertical programs, such as UNICEF's immunization program or the Danish-aided Essential Drugs program, should be included as part of "essential health services", and therefore as part of program costs. 4.8 Presently, Government health workers are inadequately compensated. The Government's structural adjustment program, being supported by SAC II from IDA, includes Civil Service Reform. The first stage of compensation reform is the monetization of non-salary benefits such as housing and transport with a view toward making compensation more transparent and equitable. This will be followed by salary enhancement. A number of donors pay "top-ups" to health workers. IDA cannot finance contributions to the salaries of health workers. Salaries are only 29% of the MOH Recurrent budget, while Medical Stores are 41% of the Recurrent budget. 4 Q) A related question is the levelness of the "playing field" between Government and non governmental clinical services. At the present time, Government clinical facilities are subsidized by the Government while NGO facilities are not. On the other hand, NGO facilities have institutional autonomy, have been freer to collect revenues, and presumably can reject non paying patients. This present environment poses a risk for project  41 implementation in that decentralized decision making and accountability are key. The White Paper on Health Policy reflects more evenness in the policy environment for Government and NGO services, by encouraging Government facilities to collect revenues while allowing subsidization of NGO services in some circumstances. This should reduce the importance of the Government/non government distinction. DHSP is aiming at a substantial influx of donor aid. Therefore, DHSP will be sensitive to the distribution of subsidies between Government and NGO services.   V. ASSURANCES AND RECOMMENDATION 5.1 During negotiations assurances were obtained that: (a) only districts whose recurrent budgets have been decentralized by the central government be included in the project (para. 2.9); (b) progress of the demonstration activities, with emphasis on the administrative and logistical aspects of sustaining service delivery will be reviewed periodically (at least once a year) and the pace of expansion/replication in each district will be determined on the basis of appropriate performance indicators. (para. 2.24); (c) formal proposals from NGOs would be a pre-condition for project funding and that annual reviews of all NGO activities under the project would be carried out (para. 2.30); (d) the provision of equipment from a pre approved list to private health units be limited to those in underserved areas and at a cost not exceeding US$ 25,000 per health unit (para. 2.31); (e) only NGO units with satisfactory management capabilities be contracted to supervise nearby Government health units and community based activities and that for each such contract a management development plan for the Government health unit with a set of monitorable indicators be prepared focusing on financing sustainability and service use (para. 2.32); (f) all training institutions supported under the Project would be given administrative and financial autonomy (except for the policy on admissions, which shall be retained by MOH), and ensure that, while the training institutions shall continue to be accountable to MOH for all technical matters, MOH will provide them with funding for a period of at least five years (2.35); (g) studies and contracting out of services be completed no later than the end of the first year of the project and that the findings, together with a plan for implementation of the recommendations, be submitted to IDA for review and comment (para. 2.36); (h) the project coordinator be acceptable to IDA during the entire implementation period (para. 2.48); (i) all changes to the essential package of health services be submitted to IDA for review and comment before implementation (para. 2.50);  43 (j) a Mid-Term evaluation of the project be held in 1997 and that the implementation evaluation report be prepared by the Government within six months of the project closing date (para. 2.70); (k) (i) the annual work programs be prepared at the same time as the preparation of the annual national budget; (ii) relevant line items be included in the national budget aimed at providing adequate counterpart funding each year; and (iii) the Government produce, on an annual basis, evidence that resources thus allocated in the previous year's budget were used for the intended purpose (para. 3.8); and (I) the Government would have the records and accounts of the Project, including those for the Special Accounts and SOE's, audited for each fiscal year by independent auditors acceptable to IDA, and that it would submit the audit reports to IDA within six months of the end of every fiscal year, with a separate opinion by the auditors on SOE's. Similarly, MOH would have its accounts and those accounts of the various Districts, including SOE's, audited for each fiscal year by independent auditors acceptable to IDA and submit audit reports to IDA within six months of the end of every fiscal year with a separate opinion by the auditors on SOE's (para. 3.20). 5.2 The following would be a condition of effectiveness: (a) the submission of a final implementation manual for all project components (para. 2.54). 5.3 A condition of disbursement for the demonstration component would be the successful completion of the pilot phase of the project (para. 2.24). RECOMMENDATION 5.4 Based on the above assurances obtained during negotiations, the proposed project will constitute a suitable basis for an IDA Credit of US$ 45.0 million to the Government of Uganda for a term of 40 years, including a grace period of 10 years, at standard IDA terms  UGANDA DISTRICT HEALTH SERVICES PILOT & DEMONSTRATION PROJECT Expenditure Accounts by Components - Totals Including Contingencies (US$ '000) RESTRUCTURING CAPACITY & CAPACITY BUILDING FOR BUILDING FOR MONITORING PROJECT PILOT DEMONSTRATION DISTRICT HEALTH THE MIN. OF & ORGANIZATION ACTIVITIES ACTIVITIES ADMINISTRATIONS HEALTH EVALUATION & MANAGEMENT Total I. Investment Costs A. Civil Works - 11,685.1 1,545.9 - - 13,231.0 B. Equipment 4,375.4 9,584.4 2,277.1 871.8 - - 17,108,7 C. Materials - 194 3 1457 340.0 D. Vehicles - - 1,304.4 56 0 - - 1,360.4 E. Medical Supplies 1,494.6 3,098.3 1,620.6 - - 6,213.5 F. Furniture - - - 165.4 - - 165.4 G. Local Training 962.0 1,866.9 9,833.4 1,504.1 52.8 14,219.3 1. Technical Assistance - - - 386.1 - 489.3 875.3 J. Research & Studies 107.9 649.9 717.0 1,978.0 - - 3,452.8 K Monitoring & Evaluation 161.9 607.9 1,371.2 - 1,209.0 - 3,349.9 L. Supervision - 2,755.1 1,344.1 - 4,099.2 Total Investment Costs 7,101.8 15,807.5 31,758 1 7,997.2 1,209.0 542.1 64,415.6 II. Recurrent Costs A. Salaries 854.1 2,477.9 - - - - 3,332.0 C. Equipment 0 & M 107.9 392.2 1,438.4 - 1,938 5 D. Vehicles 0 & M - - 407.1 - 407.1 E. Building 0 & M 107.9 392 2 3,055.3 - - - 3,555.4 F. Supplies -- - 1,434.5 1,434.5 Total Recurrent Costs 1,069.9 3,262.3 4,900.8 - - 1,434.5 10,667.5 Total PROJECT COSTS 8,171.7 19,069.8 36,658.9 7,997.2 1,209.0 1,976.6 75,083.1 Taxes Foreign Exchange 5,115.3 11,340.7 16,386.9 4,099.7 725.4 1,206.5 38,874.5 NB: Price contingencies are based on projected inflation rate of 2.2% for foreign costs > and 9.5% in 1995 and 5.0% thereafter for local costs.  45 Annex 2 Page I of 7 COSTING METHODOLOGY 1. Introduction to Costing the District Health Services Project in Uganda. The cost of this proposed project has been estimated utilizing a different methodology than usually followed. The rationale for developing a different approach is based on two important reasons. First, for most World Bank projects, estimates of the cost of the project is developed as if no prior similar activity or service has been in existence and that the Bank project will finance all of the required costs. In the case of health service delivery improvements, however, often there is a structure already providing some set of services, although perhaps inadequately. In this and many other health projects, it is expected that the existing structure will be used and improved to deliver more efficacious and sustainable essential health services. In order to accomplish this task, a number of additional tasks and support services must be operating and functioning well. Thus, the existing context, including an explicit awareness of how the other health sector financiers will be collaborating with the World Bank in supporting and sustaining the envisioned project activities, represents a constructive departure from prior costing exercises. 2. Second, this project is seeking to incorporate a package of essential health services into the nexus of health care all providers in the country deliver, not just by government owned and operated facilities. Thus, the cost of service provision not only includes the cost of resources used by government providers, but also the cost of resources owned and operated by private entities involved in the provision of various health services. By including these costs, demand considerations are implicitly incorporated into the essential health package costing exercise, since all sources of care provision are included. 3. In the paragraphs which follow, the alternative methodology for costing this district health services project (DHSP) for Uganda is developed and the results of the exercise is presented. It provides a context in which the cost elements financed by the Bank and collaborating donors are included as a component of the full set of costs incurred at the district level to provide essential health care services by a number of alternative providers in Uganda over five years during the mid-1990s. 4. The approach followed to cost the Uganda DHSP involves the full costing and financing of the package of essential health services at the district level, irrespective of service provider and financier, and explicitly includes private and mission providers, and government as well as community and donor sources of financial support. This costing endeavor involves an explicit consideration of the demand for health care services, including essential health care services, taking into consideration the provider options from which those who are ill may seek care. In addition, this costing exercise distinguishes between those costs explicitly involved in the direct provision of essential health services as distinct from supporting their delivery. For example, the cost of managing and supervising personnel involved in service provision is considered for this analysis as a supporting rather than a direct service cost. Finally, the costs of operating a national health service responsible for extending the coverage and improving the quality of  46 Annex 2 Page 2 of 7 essential health services throughout a country is assessed separately and included in the final analysis of the project's costs. A. COSTING OF THE ESSENTIAL HEALTH PACKAGE AT THE DISTRICT LEVEL 5. Service Delivery Costs. The service delivery costs included in this project cost exercise is a summation of the aggregate annual estimate of the resources used during each year of the life of the project for the three pilot districts in which project activities will be initiated during the first year of the project and will extend for the remaining four years of the project. The resources involved in service provision include: a) personnel (skilled and unskilled), b) estimates of the annual depreciation of building and equipment in health facilities operated by the district, c) petrol cost for transport and maintaining a cold chain, d) pharmaceutical costs, e) lab costs, and f) other consumables and supplies required for direct service provision and record keeping. These cost elements were derived for this project from the earlier costing work of the Planning Unit of the MOH (8/17/93 version of Chapter Five of the DHSP project document) and revised during a project preparation mission in March 1994. 6. Supportive Services Costs. A number of managerial, skill development and other supportive services are required to sustain the direct delivery of health services at the district level. These services include, but are not limited to: supervision of public and private health facilities, logistical support for preventive and other essential services, community mobilization, personnel training, planning and budgeting, local IEC strategy and materials development, building and equipment maintenance, monitoring and evaluation and operations research support. To provide these important supportive services, personnel must be hired and trained, options for contracting these activities to non-governmental entities must be explored, and long term financing plans must be developed and explained to district level managers and persons responsible for financing these activities The project has examined the likely costs of these district level supportive services and has made estimates for each specific essential service. In addition, the cost of common district level managerial support services have also been costed for this component 7. Costs Not Included in The District Package. Since the GOU is in the process of implementing its decentralization policy, the roles and responsibilities of the central Ministry of Health visa vie the district level governments is undergoing restructuring. The central government has the responsibility to ensure that all thirty-nine district level governments can develop and implement a program of essential health services for the people of each district Thus, the central government's role will change from a direct management function of health service delivery to one which provides policy and planning leadership to the districts and technical support for implementing each essential service with a reasonable level of quality. The resources required to strengthen these types of MOH functions and assist the government in restructuring the MOH to deliver this support has been separately costed and the results of that analysis is incorporated into the project budgets.  47 Annex 2 Page 3 of 7 B. COSTING DISTRICT FACILITY BASED ESSENTIAL HEALTH CARE SERVICES 8. In an effort to capture the effects of both demand and supply considerations on the costs of delivering an essential health care package via all possible health care providers (public and private) in three pilot and ten demonstration districts of Uganda during the life of this project, the designers assessed various available user friendly computer based models. The model initially developed for the EDI has many of the features necessary to conduct this assessmentl. The model was modified by health planners working for the MOH of Uganda to conform to the special features of district level service provision and the priorities which the districts have established via the three year planning exercise, defined nationally by the MOH through The Three Year Health Plan Frame, l993./4 - 1995/6. 9. Uganda specific information about competitive market forces for various types of essential health services delivered in rural and urban areas of the country, including prices and income, as well as distance between alternative providers, population densities, acute illness incidence, and birth rates was obtained from the planning unit of the MOH to estimate service coverage and cost, both for public as well as private providers within typically configured market areas of Uganda. These "typical" market areas were aggregated into two district level scenarios consistent with specific districts in Uganda which would be included in the District Health Support Project (DHSP). By developing these two district scenarios of the cost and financing of delivering essential health services, an estimate of the cost and financing of these services, irrespective of provider, could be obtained for the entire set of project districts. The two districts specifically modeled in this manner was Kabale district, a densely populated southwestern district with about 475 thousand people and one large town of Kabale, and Apac, a northern district with a slightly smaller population and much less densely populated 2 10. The specific set of essential health services explicitly considered in this modeling exercise were facility or provider based services including a) inpatient health care for typical health problems found in rural areas of Uganda, including normal obstetric care, b) basic ambulatory care services for common acute and chronic health problems, and c) preventive health care services such as (i) ante-natal services and family planning, and (ii) child health, including immunization services. For each health care service considered within the model framework, it was necessary to input information about the cost structure, structure of market demand, and the demographic and epidemiological situation facing each type of government operated health facility. l Ricardo Bitran. >1 .$1f!whl )cmwut Afudc! a/ llea/l7 ( are Iinan in I gth Wa/ . Ipplication to Zaire, (Washingtoni t) C: \VGirid Bank. IL,! TLLh hil Malhials. 1994). 2 The health senrice delivery characteristics of these twvo districts have bcen specified n detail in the MOH proposal to the World Bank and SIDA for the DHSP project. See the Ministry of Health, District Health Services project (I)lfSP): A Proposal to the IWorld Bank andl 811.I, (Entebbe, Uganda: Government of Uganda, May 20, 1994).  Annex 2 48 Page 4 of 7 11. To estimate the cost of care, information about: (a) building and equipment cost and depreciation, (b) labor time inputs, (c) drugs used, and (d) other ancillary costs, i.e., laboratory costs used to provide each service were provided by the Health Planning Unit of the MOH, in part by reviewing earlier drafts of the DHSP project document, and by assessing other sources of information available to the MOH. Basic demographic information was available from the 1990 census, and epidemiological information was available from The Three Year Health Plan Frame, 1993 4 - 1995 '6. The structure of the market and estimates of prices charged by competing providers for each type of health facility were developed by the Health Planning Unit of the MOH for facilities in both Kabale and Apac districts. Once this information was assembled in the model, simultaneous cost and demand estimates were obtained for each basic scenario district, and aggregated for the remaining pilot and demonstration districts included in the project. Finally, given MOH planning unit policy guidance regarding trends in user charges at government health facilities, and other donor commitments for financing certain types of health service costs, it was also possible to estimate the financing structure of the essential health package at the district level, including the resources from the central government and the DHSP project and assess the financing feasibility of the project3. C. COSTING OTHER ESSENTIAL HEALTH SERVICE DELIVERY, NOT INCLUDED ABOVE 12. To extend the health benefits of the essential health care service package beyond the traditional catchment areas of existing health services operated by public and private providers, and obtain greater population coverage of the identified essential health services within the pilot and demonstration districts, project planners explicitly considered various community based options for extending care to previously non-covered villages. These options included the use of community based health care workers (CHWS) and traditional health practitioners, such as traditional birth attendants (TBAs), as well as the political leadership of sub-districts and villages via the Reconstruction Committee (RC) system. The cost of mobilizing public opinion about the importance of these essential public health preventive services, and utilizing these additional types of provider options have been separately costed for reaching certain targets of coverage for each of the essential services within the pilot and demonstration districts, after allowing for the already existing facility based public and private health care system 4. The costing of these additional components have been developed according to the standard World Bank approach for project component costing and these costs have been included into the costs of the district essential health services component of the project. The cost components have included the direct recurrent cost of specific essential health service provision as well as the necessary district level supporting costs such as supervision, community mobilization, health worker training, equipment and building rehabilitation, vehicle and other equipment 3 See Tables I and 2 for the summary tables of the district scenario costing exercise found in the Project File. These tables are summarized in Annex Tables 2.1 and 2.2. 4 This system includes part and full time private and public health providers, including nurses, midwives, medical assistants, and pharmacy workers.  49 Annex 2 Page 5 of 7 maintenance, IEC, operational research and monitoring and evaluation required to ensure that the services provided were of high quality, managed well and could be sustained (for additional details, see background papers available in the Project File). 13. Annex Table 2.1 shows over the LOP the estimated recurrent cost of the direct health care provided in the three pilot and ten demonstration districts will amount to about 178 million dollars. During the project, about ten and one half million dollars will be invested as indicated to strengthen and sustain the delivery of these services. District level management costs are estimated to be fifteen and a half million during the project as well, with the total district cost, including support costs, equaling US$ 204.0 million. D. FINANCING THE DISTRICT LEVEL ESSENTIAL HEALTH PACKAGE 14. Table 3.1 presents a summary of expected financing of the district level essential health service financing component of the project. It shows the government financing about five per cent of the total five year cost, with other donors (including the STI and HIV/AIDS World Bank project) contributing about 23 percent of the cost. These figures have been obtained from the Health Planning Unit of the MOH. The DlIISP project itself is expected to finance about 13 percent of the cost. Primarily through user charges which have already been implemented in publicly operated health facilities, the community is expected to finance about 58.4 percent of the total cost of essential health services. This level of user charge revenue is consistent with the letter of sector policy statements regarding health sector financing and revenue collections from this source is already wide spread throughout the country. User charges revenue also includes revenue raised by private health care providers. It is expected that by the end of the project in FY2002, private health providers will finance a much larger share of the total cost of essential health services provision via user charges (73 percent) than will be the case for publicly operated health facilities about 40 percent (see Annex Table 2.2)  Annex Table 2.1: Summary of Investment and Recurrent Costs of Essential Health package for the Three Pilot and Ten Demonstration Districts in Uganda Over the Life of the Project, 1995-1999, (thousands of US Dollars). Maint. Perccnt Direct Equip & of Equip, Direct Essential Health Scrvice Community Building Especially Ops. Monitoring Care Service Provision Mobilization Training Rehab. Transport IEC Research & Eval. Other Total 1. Malaria Control 640.5 33.3 211.2 323.8 12,771.3 0.91 11,562.5 2. MCH/FP/IEC 31,901.0 642.9 221.8 424.7 316.8 33.507.2 0.95 3 Water& 44,520.4 319.1 105.6 105 6 213.5 45,264.2 0.98 Sanitation 4. Nutrition 7,227.8 105.6 319.1 1,219.6 105.6 213.5 9,191.2 0 79 5. STI/HIV 13,341.3 2,979.9 861.1 1,055.9 18,238.2 0.73 2 6. TB 1,271.8 1,271.8 1.00 7. Treat Common 65,120.5 105.6 65,226.1 1.00 Diseases 8. Special Health 3,202.7 3,202.7 1.00 Problems Sub-Total 178,148.0 1,170.8 1,067.6 255.1 1,219.6 3,404.6 1,600.3 1,806.7 0.0 188,672.7 0.94 9. District Health 10,567,7 4,903.9 15,471.6 0.68 Team Support Total 188,715.7 1,170.8 1,067.6 255.1 1,219.6 3,404.6 1,600.3 1,806.7 4,903.9 204,144.3 0.92 t > x 0  Table Annex 2.2: Examples of District Level Financing of the Essential Health Package in Uganda by the end of the Project, FY2000, (thousand of Ugandan Shillings) Sources of Financing District Govt/Tax Percent User Percent Other Percent World Pcrcent Total Revenue of Total Charges/ of Total Intl. of Total Bank DHSP of Total Community Donors Project I . KabaleTotal 278.5 8.3 L918.0 57.2 768.7 22.93 386.6 11.5 3,351.8 A. Publiclx Operated Senrices 250.5 17.3 593.9 41.1 410.7 28.4 188.3 13.0 1.443.4 a. Ambulatory 88.5 8.68 371.8 36.4 370.8 36.3 188 3 I .4 1,019.4 Services b. Inpatient Services 162.0 38.2 222.1 52.3 39.9 9.41 0.() 0.0 424.0 B. Privatelv Operated Services 0.0 0.0 1.324.1 730 331.0 182 157.9 8.71 1.813 0 a. Ambulatorv Senrices 0.0 0.0 1.294.0 72.8 323.5 18 2 157.9 8 8 1.775.4 b. Inpatient Services 0.0 0 0 30.1 80.0 7.5 19.9 0.0 0.( 37.6 C. District Health Mgt. Team 28.0 29.3 0 0 0 0 27.0 28.3 40.4 42.3 95.4 2. Apac Total 143.8 7.3 1.160.7 59.5 390 4 20.0 253.0 12.9 1,947.9 A. Public Operated Services 115.8 20.8 213.2 38.3 126.5 22.7 99.8 17.9 555.3 a. Ambulatory Services 34.1 10.1 98.0 29.2 102.9 30.7 99.8 29.8 334.8 b. Inpatient Services 81.7 37.0 115.2 52.2 23.6 10.7 0.0 0,0 220.5 B PrivatelyOperatedServices 0.0 0.0 947.5 73.0 236.9 18.2 112.8 8.7 1,297.2 a. Ambulatory Senrices 0.0 0.0 367.7 64.2 91.9 16.0 112.8 19.7 572.4 b. Inpatient Services (.0 0.0 579.8 79.9 145.0 20.0 0 0 0.0 724.8 C. District Health Mgmt. Team 28.0 29.3 0.0 0.0 27 0 28.3 40.4 42.3 95.4 Source. Health Planning Unit of the MOH, Uganda, March 1994. rC  Annex 3 52 Page 1 of 12 Telegrams: 'MEDMIN'. 52 Office of the Minister of Telephones: General Office 20201. Health, Accounts Office 20201. P.O. Box 8, In any correspondence on M/2/1 Entebbe, this subject please quote No. THE REPUBLIC OF UGANDA Uganda. November 10th., 1994 Mr. Edward V. K. Jaycox Vice President, Africa Region The World Bank Dear Mr. Jaycox: Re: LETTER OF HEALTH SECTOR POLICY The purpose of this letter is to describe the health sector policies that we intend to follow during the next five years, during which time we will be implementing the District Health Services Pilot and Demonstration Project (DHSP). This letter draws upon the White Paper on Health Policy, which was recently approved by Cabinet. The letter is also consistent with the Three Year Health Plan Frame 1993/94 - 1995/96. Specific monitorable actions are included in the attached Action Plan. Overall Development Strategy In recent years, the Government of Uganda has been implementing a program of stabilization, economic recovery, and structural adjustment. Our most recent statements of development strategy are in the Way Forward I and Way Forward II (1992), dealing with macroeconomic and sectoral strategies respectively; and the Policy Framework Paper for 1994/95 - 1996/97 (June 1994). As indicated in these statements, the role of public institutions will be to establish the infrastructure and policy environment conducive to private sector development. The ongoing process of liberalization, defined as "moving toward policies which work through markets", will be continued. We intend to further reduce the Government budget deficit, in order to maintain price stability while making a greater share of credit resources available to the private sector. Our public expenditure strategy is to concentrate expenditute on those activities in which Government must play a leading role, and to ensure that expenditures within priority sectors are cost-effective. Additionally, the Government is implementing a Decentralization program, in order to increase local democratic control and participation in decision- making, and to mobilize support for development which is relevant to local needs. An enabling legal framework for Decentralization is provided by the Local Governments (Resistance Councils) Statute, 1993. As part of this program, control over field personnel is being shifted from Central Government ministries to the District Executive Secretary (DES). Ministries that are being decentralized will have the Headquarters streamlined to a core of policy makers, planners, and inspectors.  53 Annex 3 Page 2 of 12 2 Recurrent expenditure authority is being decentralized to the districts through a phased process. In the first phase, district votes are being created in the Central Government budget, with the funds earmarked by sector, and the DES becoming the accounting officer. In the second phase, all Central Government Recurrent funding for decentralized services is in the form of a block grant to the district. Thirteen districts were in the first phase of expenditure decentralization in the 1993/94 financial year. With the 1994/95 financial year, the first group of districts entered the second phase of expenditure decentralization, while a second group composed of fourteen districts entered the first phase. It is expected that the process of moving all districts through both phases will be completed with the 1996/97 financial year. Health and Health Care in Uganda Uganda's aggregate health indicators, such as the infant mortality rate (recorded in the Report on the 1991 National Population Census to be 121.7 per thousand live births) and, life expectancy at birth, (estimated to be only 43 years), are poor. Uganda is one of the countries most severely impacted by the AIDS epidemic. The Total Fertility Rate of 7.1 is among the highest in the world. The health care sector is pluralistic. In terms of bed-days or clinical visits, the Government sector provides 40-45% of health care in Uganda, with the balance coming from non-governmental providers. The Government's clinical health services include district hospitals reporting to the Ministry of Health, and lower-level units supported by district administrations. Recognising the effect that Government health services suffer from inadequately paid workers, and inadequate non-wage expenditure, Government is putting in place arrangements to improve the welfare of health workers from the on going civil service reform exercise. NGO facilities display greater capacity utilization and staff productivity. Despite the prevailing poor health conditions, spending on health in Uganda is relatively low. In 1992/93, Government expenditure on health (including external aid) was $2.82 per capita, while private expenditure on health is estimated to have been $4.91 per capita, yielding total health spending of $7.73 per capita. For comparison, total health spending lies in the range $11-19 per capita in most Sub-Saharan African countries, and the cost of providing a package of essential, highly cost-effective health services in low-income countries has been estimated at $12 per capita. Furthermore, health spending in Uganda has been skewed toward curative treatment of mostly preventable problems in secondary and tertiary facilities, with preventive and primary curative services substantially underfunded. Health Policy As indicated in the current Public Investment Plan (the "PIP" previously called the Rehabilitation and Development Plan, "RDP"), we wish to move from the prevailing situation of high mortality and high fertility to a situation  54 Annex 3 Page 3 of 12 3 of lower mortality and lower fertility. We wish to alleviate the burden of illness on the population as a matter of welfare, and also to protect the population's productive capacity. Taking the current situation of the health sector into account, we intend to mobilize more resources for the health sector, both through the Central Government budget, and through additional financing mechanisms. We also intend to improve resource allocation in the health sector, by: reallocating toward the most cost-effective public health and clinical interventions; implementing effectively the Decentralization program in the health sector, including capacity building; restoring the functional capacity and improving the efficiency of essential existing Government facilities; and facilitating a greater role for NGOs, the private sector and, communities. Resource Mobilization through the Central Government Budget. Resource Mobilization through the Central Government Budget. In recent years, Central Government expenditure on the health sector has been on an increasing trend, reaching 91 billion shillings (about 2.0% of GDP) in 1993/94, which was the last year before the shift to block grant system for the decentralized districts. One of our objectives is that Central Government expenditure for the health sector increases, in real per capita terms, each year over the medium term. This will require monitoring the utilization of block grants by the districts. Alternative/Additional Financing Mechanisms. The Local Governments (Resistance Councils) Statute enables local administrations to charge fees for any services provided by them. The White Paper confirms that the Government encourages local initiatives in health financing to improve service quality. In their district health plans, the objectives chosen by the districts for raising revenues at the health unit level range from 7% to 25% of the direct costs of providing services. The Local Governments Statute also requires districts to keep proper books of accounts, which shall be audited by the Auditor-General or an auditor appointed by him. Quarterly financial and technical reports, on the basis of submissions by Government health units, will be prepared by the District Health Team and provided to the District Resistance Council. The districts will prepare consolidated quarterly reports to the Ministry of Health, starting with the three DHSP pilot districts during 1994/95; this system will be implemented nationwide not later than June 1996. The Government will develop and issue guidelines, by January 1996, on the raising of revenues at the health unit level, addressing issues including protection for the poor, subsidization of services with public health benefits, and appropriate management practice. At the present time, civil servants are entitled to free health care. Civil servants are expected to visit Government health units to obtain the free care to which they are entitled; however, upon certification of need by a Government health unit, they may utilize private services and claim reimbursement. As part of the Civil Service Reform program, a plan for monetization of civil servants' benefits is being developed. Under this plan, housing, transportation, and health care benefits will be replaced with approximate cash salary equivalents. Free health care for civil servants,  55 Annex 3 Page 4 of 12 4 including health workers, will therefore be discontinued, as soon as monetization of civil servants' benefits becomes effective within the period projected by the Ministry of Public Service of about four (4) years. This step will result in additional resources for the health sector. The Government will explore options for meeting the health financing needs of employees by the medium-to-large scale corporate sector. This could include corporate health facilities or mandatory health insurance. As part of DHSP, the Government will experiment on a pilot basis with capitation grants / voucher schemes for health financing. Drawing upon the initiatives mentioned above, and experience with other financing options, the Government will issue a comprehensive policy statement on health care financing, no later than December, 1996. Reallocation Toward the Most Cost-effective Public Health and Clinical Interventions. The Government has decided to concentrate its efforts on those interventions, called "essential", which are most cost-effective in averting the burden of disease. The package of essential health services for Uganda is described in the DHSP proposal appraised by the Bank (IDA) in June of 1994. Many of these services are preventive, and generally are not provided by private providers to the full extent justified by cost-effectiveness considerations. Such interventions are provided primarily in lower-level clinical facilities, and in non-clinic based public health programs. Therefore, the allocation of Government health expenditure among (a) hospitals, (b) primary health care (lower-level clinical facilities and nonclinical public health programs) and (c) other functions (training, research, and administration) will be monitored. For 1993/94, this allocation is 52% for hospitals, 33% for lower-level clinical facilities and public health programs, and 15% for other functions (training, research, and administration). Other options for expenditure categorisation (such as that expressed in the "PIP") for monitoring policy objectives attainment will continue to be explored in collaboration with the Bank. For the future, our intention is that most of the growth of Government expenditure (in real terms) will be devoted to health facilities below the hospital level and public health programs. With the shift to the block grant system and delegation of many district hospital management functions by the Ministry to the district administrations (1995/96 financial year), most public expenditure in the health sector will be under the direct control of the district administrations, rather than the Ministry of Health. Guidelines have been issued by Government to the decentralized districts concerning the expectation that appropriate priority will be devoted to core services such as primary education and primary health care. We will take corrective action if our monitoring reveals the need for it. Considering that the local government financial year runs from October through September, which means that the District Councils must approve their annual estimates no later than September, we will prepare and provide to IDA a report with relevant data on budgeted and  Annex 3 56 Page 5 of 12 5 recent actual Government expenditure in the health sector, not later than December 1 of each year. To ensure that public funds are focussed on the essential package, the Government will monitor the implementation of these services, to assess the health benefits arising from them in relation to cost. Effective Implementation of the Decentralization Program in the Health Sector, including Capacity Building. The past arrangement in which district hospitals have operated outside the formal coordination of the district administrations, and therefore have not been integrated into the district health delivery system, has been recognized as an organizational anomaly. As indicated in the White Paper, district hospitals will be expected to participate in district health services outside their physical premises, and to give technical support to the District Health Team in supervision of lower health units. In order to more effectively integrate the district hospitals into the district health administration, district hospitals will be brought under the authority of the district health admninstrations by the 1995/96 financial year. The implications of decentralization for the Central Government Recurrent budget have already been discussed above. With regard to the Central Government Development budget, much of the funding appearing there is for donor-financed vertical programs, with much of the expenditure actually recurrent in terms of its economic nature. The Report of the Joint Task Force on Health Services Decentralization has recognized that the proliferation of parallel vertical programs has tended to undermine integrated delivery of health services. This Task Force has recommended that the practice of vertical program managers being involved in the execution of programs should be discontinued, with all vertical programs at the district level integrated under the District Medical Officer. It has specifically recommended that funds disbursed from the Central Government Development budget in support of services which are recurrent in nature should be transferred to the District Health Services Account, to be managed by the local authorities. We will review the major vertical programs and donor support, with a view to determining which aspects can be decentralized, and integrated at the district level. The general principle will be that only responsibilities where there are economies of scale and are the most technically demanding will remain with the Central Government. The tuberculosis and AIDS control programs have recently been restructured along these lines. We will strongly urge donors to adopt a common approach to funding essential health services at the district level. In order to further clarify responsibilities in the decentralized system, an Implementation Committee chaired by the Permanent Secretary, Ministry of Health, and including representatives from the ministries for Public Service, Local Government (Decentralization Secretariat), and Finance and Economic Planning, and a small number of local authorities, will formulate an Action Plan for Health Services Decentralization. The Action Plan will be circulated for discussion in draft form by March, 1995, and adopted by Government by July, 1996.  Annlex3 I';ae 6 of 12 6 In order to effectively implement the Decentralization program for the health sector, substantial capacity building at both district and central levels will be required. In order to assist the district health administrations to carry out their enhanced responsibilities, we intend to support them in strengthening management; planning, budgeting and accounting; health management information systems; and community participation. Under decentralization, the role of the Ministry of Health will change to policy and standard setting, planning, technical supervision, and training. This will require a restructuring and reduction in size of MOH. The Implementation Committee mentioned will also prepare an Action Plan for Restructuring the Ministry of Health, drawing upon the relevant reports on this subject. The Action Plan for restructuring MOH will be circulated for discussion in draft form by mid-January 1995, and adopted by Government no later than July, 1995. Appropriate capacity building will be provided for the restructured MOH. Restoring the Functional Capacity and Improving the Efficiency of Essential Government Services. The Government will concentrate on bringing essential services up to an acceptable standard, through repair of buildings; improvement of maintenance systems; providing necessary inputs such as equipment, drugs, and supplies; and greater motivation and training of health personnel. Where there is a lack of Government facilities, district administrations will be encouraged to negotiate with non-governmental providers to extend the coverage and improve the quality of the most cost- effective, "essential" health services. Any expansion by building of new Government hospitals and major facilities will be avoided, unless subsidization of resulting recurrent costs is strictly limited to the essential package. Standards for health units and health facilities at different levels will be re-examined, and refined as justified. About 82% of Medical Officers and 79% of registered nurses are in hospitals. The shortage of trained health staff in the rural and difficult areas of the country must be addressed. Under the decentralized system, all non-hospital health staff are employed by the district and are responsible to the District Executive Secretary. Following the devolution of hospitals to the districts, this will also be the case with hospital staff. The Ministry of Health will assist the districts to identify, recruit, and deploy senior trained staff. The Government, together with the local authorities, will develop guidelines on staffing, and appropriate career paths for health professionals in public employment. The National Medical Stores Statute, 1993, establishes the National Medical Stores (NMS) as an organization which will complement the private sector. NMS has a broadly representative Board of Directors, and management recruited from the open market. The supply system is being reformed, with districts purchasing most drugs and other supplies with the funds available to them, instead of being supplied "in kind" by the former Central Medical Stores.  58 Annex 3 Page 7 of 12 7 Government has agreed that Mulago Hospital, which is Uganda's leading referral and teaching hospital, will become autonomous, and will be limited to tertiary health care services. This will involve establishing a Management Board with much greater responsibility for financial, personnel, and operational management, and the clear mandate to raise resources, thereby reducing Mulago's dependence on the Government budget. The Management Board with enhanced powers will assume responsibility for the Hospital no later than January, 1995. The Government will also develop by July, 1996, a strategic plan for the delivery of health services in the Kampala area, and subsequently implement it. This plan will include a strict referral protocol and include a major role for NGOs/private sector in provision of primary and secondary services. Facilitating a Greater Role for NGOs, the Private Sector, and Communities. Pilot schemes will be introduced to test such approaches as (a) involving NGO hospitals in the supervision of Government health units; (b) supporting NGOs to provide specified services, including training; (c) contracting NGOs to take over management of some Government facilities; (d) designating some NGO hospitals as district hospitals. The District Medical Officer will monitor the clinical services at public sector, NGO, and private sector facilities to ensure that minimum clinical standards, to be set by the Government, are maintained. Communities will be encouraged to take more direct responsibility for their health, through education and motivation programs, and by encouraging contributions toward the cost of providing services. We are looking forward to continued collaboration with IDA and other donors in the implementation of these policies. Sincerely, Hon. J.G.S. Makumbi MINISTER OF HEALTH cc. The Hon. J.S. Mayanja-Nkangi, Minister of Finance and Economic Development, P.O. Box 8147. Kampala, Uganda  UGANDA DISTRICT HEALTH SERVICES PROJECT Action Plan The activities associated with the District Health Services Project include delivery of essential health packages, institutional capacity building, and health policy reform measures. Key policy and institutional measures are listed below, while activities for the delivery of essential health service packages are treated elsewhere. MEASURES TIMING RESPONSIBILITIES NOTES 1. Level of Central Government Funding for the Health Sector. In 1992/93, Central Each fiscal MFEP HPU to follow- Government expenditure on health was about $2.83 per capita. In the White Paper year. up. on Health Policy, the Government has committed itself to increase the budget allocation to the health sector each year. In addition, the White Paper states that the recent trend of an increasing share of the budget going to the social sectors, is expected to continue. 2. Alternative/Additional Financing Mechanisms. In 1992/93, private expenditure on health services was about $4.91 per capita. Total health spending in Uganda was therefore only $7.73 per capita. Under the Local Governments Statute, local administrations may charge fees for services, and the White Paper confirms that the Government encourages local revenue-raising initiatives to improve health services. Local administrations are required to keep proper books of account, which shall be audited. a. (i) Distnrcts will monitor, on a quarterly basis, progress toward the objective of (i) Pilot- (i)Districts reporting to PCO to follow increasing cost recovery, with a system of Distnrct reports to the Ministry of Health testing Oct 94- HPU up, (SIDA to be established. Mar 95. Financing). (ii) Government will issue guidelines on cost recovery for health services, (ii) Jan 1996. (ii) MOH HPU to follow- addressing relevant issues. up. b. As part of Civil Service Reform program, discontinue free health care for civil July 1998. MPS HPU to follow- x servants. up. o -hh c. Explore compulsory health financing for employees in the corporate sector, and Oct 94-Oct 95. HPU ODA-financed _ insurance schemes. studies to I___________________________________________________I_________________________ I_________________________________ examine.  Df MEASURES | TIMING | RESPONSIBILITIES | NOTES 3. Reallocate toward the most cost-effective interventions. Government has decided to concentrate its efforts on those interventions which tend to be undersupplied by the private sector, and which are the most cost-effective in averting the burden of disease. These would be public health interventions, and the most cost-effective clinical interventions for undcrprovided populations, especially in the rural areas and areas for the urban poor. a. Measure progress in reallocating Government expenditure. The pnrority areas Measurement HPU PCU to follow- for Government expenditure are public health programs, and interventions provided for FY92/93 up. mainly by lower-level clinical facilities, as distinguished from hospitals. Therefore, budget, the allocation of Central Government expenditure among (i) hospitals, (ii) lower-level FY92/93 actual, clinical facilities, and (iii) non clinic-based public health programs, will be and FY93/94 monitored. Other approaches for expenditure categorization to improve the focus for budget due Feb monitoring allocation toward policy objectives will be explored. 1, 1995 b. Establish a capability to measure the cost-effectiveness of interventions. Develop HPU World Bank proposal for to assist and follow-on PCU to follow- activities of up. Regional Burden of Disease Studies by Feb. 95. 0D rD x D. 0  [ MEASURES TIMING RESPONSIBILITIES NOTES 4. Effectively Implement the Decentralization Programn in the Health Sector. The Decentralization (Local Government) Act provides an enabling legal framework for Decentralization. The Task Force on Health Services Decentralization has made recommendations for the health sector, including restructuring of vertical programs, so that only responsibilities where there are economies of scale or which are the most technically demanding remain with the Central Government. a. Delegation of Recurrent Expenditure authority to the districts. (i) Recurrent Expenditure authority for health, as a lump-sum, delegated to July 1993 MFEP, MOH the 13 districts, which may allocate these funds according to the pnonrties set out in their health plans. (ii) Delegate Recurrent Expenditure authority for health to an additional 14 July 1994 MFEP, MOH districts. (iii) Delegate Recurrent expenditure authority for health to the remaining (12) July 1995 MFEP, MOH districts. b. Restructure vertical programs. Jan 1995 to Dec Directors of Operations ODA-financed (i) AIDS control 1996. and of Technical study will (ii) Tuberculosis Support. examine (mii) Immunization structures. (iv) Control of Diarrhea Disease (v) Communicable Disease Control (Malaria) (VI) Any other major programs c. Strengthen budgeting, accounting, Health Information System, health planning, Jan 1995 to Dec HPU and PCO. SIDA funds and supervision in the district health administrations. 1997. available for pilots. (D x o w 0  MEASURES l TIMING l RESPONSIBILITIES l NOTES 5. Restore the Functional Capacity and Improve the Efficiency of Essential Existing Government Facilities. a. Establish standards for health units and health facilitics at different levels. Bx' Jan 1996 Director of Operations PCO to folloNN- up. b. Rationalize and re-deploy staffing. including schemes to attract qualified staff to Bv July 1998 Director-Gcneral. difficult areas. DES's & DMO's c. Medical Stores Act, under which the Central Medical Stores will operate in Now operational NDA & NMS. competition wvith the private sector, wNas recently passed by Parliament. The supply under an Act of system is being reformed, with districts purchasing drugs and other supplies wsith the Parliament. funds available to them, instead of being supplied "in kind" by CMS. d. (i) Government has agreed that Mulago Hospital should become autonomous. By July 1996. Director-Gcneral This wvill involve establishing a responsible and accountable management board The basis for allocating Government funding for Mulago will need to be developed. (ni) Options for reallocating primary and secondar\ services away from Director-Gencral ODA-finaniced Mulago to lowcr-level facilities will be pursued. study to examine e. Explore delegation of increased authority to boards of district hospitals. 6. Facilitating a Greater Role for NGOs. the Private Sector, and Communities. Pilot schemes xvill bc introduced to test such approaches as; (a) involving NGO hospitals in the supervision of Govcrnmcnt health units: 94/95. HPU. ODA-financed studics will (b) supporting NGOs to provide specified services; 94/95. HPU. examine and PCO to follox\- (c) contracting NGOs to take over management of some Government facilities, 94/95. HPU. up. (d) designating some NGO hospitals as district hospitals. 94/95. HPU.  MEASURES TIMING [ RESPONSIBILITIES [ NOTES 1] 7. Capacity building in the health sector. The Ministry of Health wvill be restructured to reflect Decentralization, provided with appropriate facilities, and strengthened to better perform its functions as restructured. (i) Draw up a new organization chart. Bx Dec. 1994. PS HPU/PCO to follow-up. (ii) Implement new structure. Bx Dec 1995. PS (iii) Strengthen functions. B\ Ju Iv 1996. PS (iv) Move MOH Headquarters to suitable facilities in Kampala. By July 1998. PS and MoL&H. Study has found move justified and feasible. CJ N,)2  64 Annex 4 Page 1 of 6 THE ESSENTIAL HEALTH PACKAGE OF UGANDA A. INTRODUCTION 1 An analysis of the package of essential services Uganda identified is presented in Table 1 which shows that a large share of the disease burden in the country is addressed by the set of essential services identified, perhaps as much as 90 percent 'V. Some essential services such as malaria, TB and STI control focus attention on one major health problem. Others, such as the treatment of common health problems and nutrition have a broader health impact. Two recent exercises have been conducted to establish the potential health benefit (measured in Disability Adjusted Life Years (DALYS)) and the associated cost of various essential and other types of health services in Uganda. The results of these two studies that the rough cost per life year saved from the essential health package among the top ten health problems is less than $50, with many less than $10. It also indicates that the less significant health problems in Uganda cost considerably more than $50 to save a year of healthy life, most of which are not directly targeted by the services provided by the identified essential package. 2. General Considerations Underlying Essential Package Definition. The underlying objective for defining this essential package of health services is to obtain the greatest health improvement in terms of disease reduction as possible, given the resources Uganda and its partner donors can mobilize for a sustained period. In addition, three overarching considerations were involved in the development of this essential package. These considerations have been; (a) all health care providers, including those who work for the public sector, as well as those in NGO and private capacities, including those which work at the community level, e.g., CHWs and TBAs, are involved in the delivery of the essential package, (b) the total cost of delivering the essential package includes both the service delivery cost as well as the support costs incurred at the district level for supervision, training, community mobilization, IEC, physical rehabilitation and repair of buildings, equipment and transport, information system implementation, financial sustainability systems development, and research and evaluation of service delivery, including the related health status impact; and (c) defining a feasible financing plan for the essential package elements from resources made available from government, community charges, community contributions in the form of labor, other donor assistance, and via the support of the District Health Services Project (DHSP) donor consortium I Table I shows the main and secondary disease specific focus of each essential health service. In addition, it shows the ranking of each health problem in terms of its disease burden in DALY terms as well as the relative cost-effectiveness of preventive and curative health interventions designed to address each specific health problem. The top ten disease problems according to the analvsis of the HPU, MOH are associated with perhaps as much as 85 percent of the healthy life lost each year in Uganda.  65 Annex 4 Pagc 2 of 6 MALARIA CONTROL 3. According to Ugandan health statistics, malaria is responsible for a larger share of mortality and sickness than any other single cause. At present, approximately 25% of all hospital outpatient attendance, 20% of hospital admissions, and 14% of hospital in-patient deaths are caused by malaria. As in other parts of Sub-Saharan Africa, the deaths are concentrated in children. Adults who lack immunity are also at high risk of death. In terms of morbidity, large numbers of children and adults suffer from numerous bouts of fever each year. Finally, malaria is a primary cause of anemia in women and children. Hence, through these different causes, malaria is a major cause of ill-health, death, and economic loss. 4. A range of highly cost-effective preventive and curative interventions are available to reduce the losses caused by malaria. This component of the essential package focuses on raising the coverage and quality of these interventions from the currently very low levels prevailing in Uganda. They include: (a) develop health education programs; (b) establish at least one district level drug revolving fund for items used for treatment and prophylaxis; (c) provide presumptive treatment of malaria with chloroquine and, as second-line drugs, Fansidar or quinine, and improve treatment by training staff and improving diagnostic capacity, (d) provide prophylaxis with chloroquine for pregnant women, (e) promote the use of impregnated materials, including bed nets, by households to achieve a coverage rate of at least thirty percent or more in each district, (f) mobilize communities to make environmental improvements to prevent mosquitoes from breeding; and (g) conduct assessments and evaluations to determine whether further program extensions may be warranted (the strategies for implementing these programmatic activities are specified in greater detail in reports available in the project file.) With the exception of conducting assessments and evaluations, these interventions will be delivered by using existing public and private sector health facilities and workers. As a component of the national supporting activities for the delivery of essential health services at the district level, it will also be important to implement a malaria drug policy which encourages the rational use of safe and efficacious generic drugs; and takes irrational and hazardous anti-malarials off the market. This policy component is consistent with the establishment of drug revolving funds as they will require some national guidance regarding the rational use of safe and efficacious generic drugs. MCII/FP/EPI SERVICES 5. A large proportion of the burden of disease in Uganda is associated with poor maternal and child health. The infant mortality rate is estimated to be about 122 per thousand and increased over the last two decades in comparison with many other countries in the region where there has been at least a forty percent decline (e.g., Kenya, Tanzania, and Zimbabwe). Further, the health status of Ugandan women is marked by a high rate of maternal mortality (550 per 100,000 live births), a prevalence rate of HIV of between 5 and 30 percent, and a total fertility rate of about 7. 1 women with contraceptive  66 Annex 4 Page 3 of 6 prevalence being six percent (2.7). The mean age at first birth is past over 18, thus making early child bearing and adolescent reproductive health significant concerns. 6. The overall objective of the MCH/FP component is to improve the health status of women and children through the provision of integrated family planning, antenatal and maternity services. Focusing on women in their reproductive years, the interventions are aimed at reducing fertility, the risks associated with childbirth and neonatal and perinatal illness. The specific goals of the component are to: (a) improve the quality and range of reproductive health services for women; (b) improve accessibility by providing integrated services for family planning and maternal child health care; (c) build capacity of community-level and facility-based providers to provide a continuum of care from the community to the first-referral level; (d) raise awareness of reproductive health care issues to stimulate demand for services and to encourage community participation in efforts to improve health status; (e) enhance the coverage and effectiveness of services by supporting collaboration among governmental, NGO and private providers; and (f) improve MCH/FP health policy and service delivery by increasing knowledge of the effectiveness and cost of interventions through operations research. 7. The major interventions of the component are to: (a) extend the availability of government and private family planning services; (b) develop safe delivery and referral at the community level; (c) improve antenatal and delivery care in government and private facilities; (d) establish community mobilization and IEC activities in collaboration with NGOs; and (e) ensure the Expanded Program of Immunization (EPI) is in fact expanded and sustained. Each component intervention has several specific elements. For example, the extension of family planning services includes training health workers, increasing the provision of family planning equipment and supplies and the number of service delivery points. Similarly, improving community and facility based care implies additional training of personnel at both levels and increasing the provision of equipment and supplies for TBAs and facility based nurses and midwives. Community mobilization and IEC activities are particularly focused on extending reproductive health education to adults and adolescents at the community level and developing community transport and referral system for emergency complications. In addition, operations research on maternal health and adolescent sexuality will inform policy decision making. HYGIENE, SANITATION, AND WATER 8. While Ugandan data on the proportion of deaths and sickness caused by low water quality and sanitation are weak, available health statistics show that non-specific gastrointestinal conditions contribute to roughly 10% of infant deaths, and about 4% of deaths in both children between 2-4 years of age and in adults. The burden of sickness is likely to be equally great, with significant deleterious effects on the productive of school- age children and workers, and on household income because of the time spent on care and expenditures made on treatment. In addition to diarrheal diseases, intestinal helminths and schistosomes are transmitted as a result of poor water and sanitary conditions, resulting in  67 Annex 4 Page 4 of 6 a large additional burden of ill-health, especially in children. Equally important, water availability and quality -- and water-borne diseases -- are top concerns of rural Ugandans, according to the results of a Beneficiary Assessment Survey that was undertaken by the Government in May 1994, designed projects combining water supply, excreta disposal, and hygiene education may achieve reductions of 35 to 50 percent in diarrhea morbidity, quite apart from reducing mortality and morbidity caused by other water-borne infections. 9. The water and sanitation component of the essential package focuses on two broad areas: (a) supply of safe water, and (b) environmental sanitation and hygiene education. To improve the supply of safe water, the project will complement the work of several ongoing programs in Uganda that are directed at improving access to safe water. These programs will be contracted to provide safe water sources to communities in the pilot and demonstration districts actively involved in this project. The provision of water ill be used by the project as an entry point for raising community awareness and the demand for latrines, including gravity schemes, rain water catchment, valley tanks, shallow wells and bore holes. It is also widely accepted that without abundant water in or near the home, hygiene becomes difficult or impossible. 10. The emphasis in the area of environmental health and sanitation is four fold. First, the project encourages communities and individual households to increase the use of pit latrines to levels above 60 percent of households, the rate prevailing throughout the country as of 1990. To accomplish this important objective, efforts will focus on community mobilization, increasing the number of demonstration latrines in public locations, and by reducing the price of constructing them by seeking ways to incorporate local materials, and by mass producing key items like floor slabs. Second, hygiene education will promote hand-washing as the first priority message for mass dissemination. Third, communities will be encouraged to carry out needed sanitary and point-of-se water quality improvements. Point-of-use water quality refers to whether collection and storage is done hygienically. Finally, communities will be mobilized to improve the environmental health of their respective villages by re-establishing a village competition program, successfully initiated in the 1960s, but discontinued due to political instability. Details are available in the project file. NUTRITION 11. Poor nutrition underlies many health problems in the country. Poor nutrition not only occurs due to inadequate food intake, but nutritional status is also affected by a lack of micro nutrients such as Vitamin A and iron deficiency, poor food handling and sanitation, and the presence of other diseases such as helminthic infections. Many of these nutritional problems manifest themselves in women and children who often eat only after adult males have completed their meal. The nutrition package component has been extended in scope and level of effort. 12. It is proposed that nutritional status can be most cost-effectively improved by implementing four extended activity programs in selected pilot and demonstration  68 Annex 4 Page 5 of 6 districts. First, it is proposed to address two specific micro nutrient problems, Vitamin A deficiency which contributes to blindness, and iodine deficiency which manifests itself in goiter. In addition to controlling Vitamin A deficiency by targeting Vitamin A micro nutrient supplements to risk groups (such as pregnant women, infants and children with acute illness), diet diversification will also be encouraged by producing Vitamin A rich foods and new food preparation demonstrations. It is envisioned that controlling iodine deficiency disease (IDD) can occur by targeting pregnant women with supplementary iodine capsules in districts where severe iodine deficiency is determined (largely in higher altitude and rainy areas) and by working on a national strategy to ensure iodized salt throughout the country regardless of production source. Second, guidelines and training for clinical based child health care will be modified to include growth monitoring as an integral part of all child health care, and not just during specialized "growth monitoring" clinic sessions. Third, it is proposed to provide special training to the district health team and others who will be involved in social mobilization activities so that the district teams can more rapidly design sustainable nutrition interventions appropriate for the identified nutrition problems. Finally, little is known about the determinants of maternal nutrition and how the nutritional status of mothers may be improved. In this regard, special study will focus on how to introduce intermediate and low cost labor saving activities into rural Ugandan households. Details are available in the project file. STI/HIV AND TB CONTROL 13. In Uganda during the mid-1990s, STDs and HIV/AIDS underlie the largest annual health status loss with the exception of malaria and measles. The prevalence of HIV in the general population is as high as in any country in Africa. Further, as HIV/AIDS increasingly compromises the body's immune system, latent TB bacillus is reactivated and over one-half of the AIDS cases in Uganda are contracting active cases of TB, and other opportunistic infections are also increasing among those who have HIV. The Government of Uganda acknowledges these problems and has recently begun to implement a World Bank lead and multi-donor financed project initiative as defined in the Staff Appraisal Report of the Sexually Transmitted Infection Project, (Report No. 12630-UG, March 9, 1994) to prevent the further transmission of HIV, and mitigate the personal impact of AIDS. The District Health Support Project envisions working closely with the MOH in implementing this project in the pilot and demonstration districts. 14. To prevent the sexual transmission of STDs and HIV, the GOU will be working with both private entities, including NGOs, and various government ministries, e.g., defense and industry as well as health, to: (a) promote and provide effective STD care; (b) promote safer sexual behavior; and (c) widely disseminate condoms. To mitigate the personal impact of AIDS and related secondary complications, the government will be seeking ways to: (a) develop community and home based care for people with AIDS; (b) improve health sector staff training (government and non-government) and provide necessary drugs and supplies to all health facilities which address opportunistic infections occurring among those with AIDS; and (c) provide for TB diagnosis by providing  69 Annex 4 Page 6 of 6 resources necessary to conduct sputum testing for TB case identification and case management via efficacious drug therapy. TREATMENT OF COMMON DISEASES. 15. Besides the health problems directly affected by the essential health service package components defined above, there are other common diseases and injuries for which Ugandan seek basic health care. The most notable include diarrhea, acute respiratory infections (ARI), measles, and various forms of trauma. Private and government operated health services are responsible for providing the care required by the Ugandan public for these common problems, though user charges are involved in financing an increasingly large share of these services.2 16. To ensure demand for public and private health care providers, and, thus, the continued financial sustainability of existing public and private health providers involved in the provision of essential health services, the quality of the services involved in treating common diseases must be continually improved. Thus, the project will support the treatment of common diseases by: (a) providing continuing education of district level staff in diagnostic and treatment skills; and (b) improving the rational use of pharmaceutical products used in treatment. These activities are consistent with the program of the Danish govemment in its support to the Central Medical Stores, and to improve the cost- effectiveness of drug use throughout the country. Finally, the project will support at the district and national levels those efforts required to improve the management of health facilities and their long term financing. CONTROL AND TREATMENT OF SPECIAL HEALTH PROBLEMS. 17. There are a number of special infectious and other health problems which are found in just a few specific places in the country due to the environmental requirements of the disease vector. For example, Onchocerciasis is only found in Uganda where there is rapidly moving water flowing from the high mountains of the eastern and western borders of the country. Other special health problems of Uganda include, but are not limited to, Trypanosomiasis, Schistosomiasis, Meningitis, and Guinea Worm. 18. This project will make funds available to specific districts for: (a) use in disease surveillance, and (b) health staff training and efficacious drug treatment for those diseases mentioned above. Funds will be made available through the Ministry of Health to each district on the basis of an analysis documenting the existence of and trend in specific local health problems for surveillance and selected health problems. 2 See Annex 2 for an analvsis of the financing ot the essential health package. It is estimated that user charges Nvill finance about 58 percent of the total cost of-thic district level essential health care package.  70 Annex 5 Page 1 of 7 ORGANIZATION AND MANAGEMENT OF GOVERNMENT HEALTH SERVICES Organization of Government Health Services 1. Health services in Uganda are provided by both Government and Non-Government institutions. Health facilities are well-distributed throughout the country, except for the North which is underserved. The Government sector accounts for 62% of hospital beds and 58% of registered outpatient clinics, but there is a general shortage of funds, particularly for essential supplies and pharmaceuticals, staff salaries and incentives, and routine maintenance of equipment and facilities. As a result, there is limited utilization of Government health facilities, both in relation to their potential and in comparison with NGO or private sector facilities. A key constraint is how the Government facilities are organized and managed, including issues of the overall structure of the health services, and the planning, staffing, financing, supervision and monitoring of the services provided. This Annex covers some of the problems faced, how they might be addressed in the future, and how the District Health Services (DHS) Project seeks to address some of the issues identified. 2. In general, the Government health care system is organized into three principal tiers: Mulago Hospital, the national referral hospital, in Kampala; the district hospital in each district, headed by a Medical Superintendent, reporting directly to the Ministry of Health, and lower-level facilities in each district, reporting to the District Medical Officer of the Ministry of Health. The upper tiers are administered by the Ministry of Health, while district administrations, in principle, are supposed to be responsible for the lower- level facilities In fact, most of the health workers in the lower-level facilities are on the MOH payroll and are seconded to local governments 3. The health sector will be affected in a major way by the Decentralization program, the principles of which were announced by the President of Uganda in October 1992. As part of this program, control over field personnel will be shifted from Central Government ministries to the District Executive Secretary (DES). Beginning with the 1993/94 financial year, district votes have been created in the national government budget, initially for thirteen districts, so that recurrent expenditure allocations can be sent directly from the Treasury to the district. Ministry headquarters will be streamlined to a core of policy makers, planners, and inspectors. A Decentralization Bill which includes the necessary changes to relevant laws has been enacted by Parliament in September 1993. 4. For the health sector, Decentralization has the following major implications: (a) the district hospitals, for administrative and budgetary purposes, will now report to the District Medical Officer, who in turn will report functionally to the Permanent Secretary, MOH but administratively to the DES (in other words, the current "dualistic" administration will remain at the district level), (b) the role of the MOH will evolve from being primarily a "Ministry of Hospitals", to being primarily a "Ministry of Health Policy", while retaining whatever "vertical" responsibilities for national programs/projects it would  71 Annex 5 Page 2 of 7 be inefficient to decentralize. A Task Force on Health Services Decentralization, drawn from MOH, the Ministry of Local Government, and the Ministry of Finance and Economic Planning, has submitted a Report (June 1993) making specific recommendations, including de-verticalization, and integration at the district level, of many components of current, donor-financed vertical programs. 5. In addition, the Ministry of Public Service (MPS) has submitted a report (September 1993) under its Civil Service Reform Program (CSRP) for the next restructuring of the MOH. The report undertakes a fundamental review of the current structure and establishment of the MOH, to make it more effective and efficient in light of issues relevant to the MPS and the aims and objectives of the MOH. Its recommendations cover both MOH and the public service itself The CSRP Report, prepared by the Ministry of Public Service (MPS, Management Services Department; September 1993) is very comprehensive and detailed - it is over 500 pages long, and includes 160 pages of Appendices. The report also includes a detailed Implementation Action Plan (Section 9) and Job Descriptions of key posts (Appendix D). It gives detailed findings, conclusions and recommendations for the Ministry as a whole, as well as for all the major Departments of the MOH, including: Primary Health Care, Planning and Training, Communicable Disease Control, Curative and Rehabilitative Services; Engineering; Administration and Finance. Assessment of MOH's Organization and Management 6. The CSRP report on restructuring the MOH proposes a number of wide-ranging recommendations, and an Action Plan for implementing these during the next few years. Its major conclusions and recommendations, for each of the areas covered, are outlined below, along with IDA's comments - which have been incorporated in the proposed Letter of Sector Policy (LSP) and Matrix. 7. General Public Services. In accordance with the GOU's policy of Decentralization, many public service functions will be devolved to district level. Accordingly, the CSRP Report notes that for the MOH, as for other Government ministries: a) project staff will no longer automatically remain, or become, established public servants, b) the size of the public service will only be under the control of either the public or district service commission; c) the group employee scheme will be abolished (existing group employees will be engaged in newly established grades or fixed term contracts or retrenched); and d) administrative, finance, planning and personnel cadres will become permanent MOH staff, but their individual career planning and collective manpower planning will be done by MPS. 8. The Report also identifies the need to: a) reevaluate many of the new jobs, and define their status and grade within the new Public Service grade structure, and b) to substantially raise pay levels of MOH staff to ensure their cooperation in implementing this CSRP recommendations. Effective resolution of these issues could have a far-reaching impact on the functioning of the MOH. It is important that staff motivation and salaries be  72 Annex 5 Page 3 of 7 improved substantially, so that support for health reform and restructuring is further strengthened. The MOH and MPS need to agree in the next few months on an Action Plan for implementing the CSRP recommendations over the next 1-2 years. A summary list of about 30 key implementation tasks for top management of the MOH is provided in Appendix F of the CSRP report, and provides a good starting point for undertaking the reforms needed. 9. Health Policy. The CSRP Report notes that even though much progress has recently been made in setting a policy reform agenda, there is no national health policy formally declared by the MOH, and that formal planning and strategy formulation are lacking, leading to what appears to be a crisis management approach. The report identifies gaps in policies regarding: a) the distribution and development of health units; b) medical research; c) food and nutrition; d) the role of hospitals in primary health care (PHC); e) community participation in health financing; and f) rehabilitation and development of health services. In addition, some of the existing policies, such as the policy on private medical practice, appear not to be strictly enforced. 10. It is recommended that MOH urgently finalize its new health policy and strategy, based on the White Paper approved by Cabinet in 1993 (and the proposed LSP for DHS project), and seek its formal approval by Parliament. Program priorities and resource allocation should then be in accordance with the new health policy, and should focus on preventive and promotive aspects of health and changing the health services orientation from curative to PHC, as outlined in the Three-Year-Plan (1993-95). IDA is proposing that effective implementation of the policy reform package/LSP would be a condition for continued IDA funding of the DHS project. Hence it would be useful for the MOH to establish a high-level Implementation Committee for health policy and MOH restructuring, as suggested in the CSRP report. It is proposed that this would be a condition of project effectiveness for the DHSP, and that implementation of the reform package would be closely monitored by IDA in accordance with the policy matrix attached to the LSP. 11 Health Operating Systems. The Government's operating systems for planning and managing its resources in the health sector appear to be rather weak. The CSRP Report notes several deficiencies: a) the health sector is inappropriately oriented to curative, hospital and urban services, instead of preventive, primary and rural care; b) the referral system (between primary, secondary and tertiary levels of care) is not functional, leading to waste of resources and distorted work plans; c) the lack of prioritization of activities has led to resource waste and abuse (e.g., on the hotel function for supply of food in Government hospitals); d) there is a serious lack of incentives for health personnel to improve resource utilization; and e) drug trafficking is apparently rampant, and many health workers do private practice in Government facilities. 12. In addition, the Report noted that health personnel have low productivity and low quality of services - in part due to declining real wages, and having to work in poorly maintained and ill equipped health units. Also, absenteeism is common, there is little supervision of work done, and there is poor accountability for resource utilization.  73 Annex 5 Page 4 of 7 Furthermore: a) communication, both vertically and horizontally within the MOH, and across the entire health sector, is inadequate; b) intersectoral communication and coordination of activities with NGOs and other health care providers is limited; c) intersectoral planning and prioritization are weak; and d) there is notable absence of a unified system of administration and accountability. 13. It is clear that the CSRP report outlines a number of key management areas that require substantial improvement. The report is comprehensive, and outlines many useful ideas. In response, an equally comprehensive Management Reform Program would be needed to tackle the basic issues raised. The proposed top-level Implementation Committee, assisted by staff of the proposed Planning and Inspection department and the Management Advisor, need to review the CSRP report with the MPS and to initiate a program of action for the Ministry as a whole. In addition, separate Task Forces may need to be established for major functional areas or issues, as appropriate. The Implementation Action Plan (Section 9 of the CSRP report; pp. 343-352) provides a useful starting point for this program of restructuring. 14. Management and Control. As noted earlier, according to the CSRP report, the MOH's efficiency and effectiveness of management and control are affected by several constraints. These include: the lack of a deliberate health policy and well articulated health plans, shared responsibilities in the provision of health services with MOLG; an unconducive internal structure; and the inadequate integration and coordination of research activities in health services. Also, MOH is grossly under-funded, and funds are released irregularly through bureaucratic procedures leading to insufficient logistics, infrastructure, and misallocation and maldistribution of materials, finances and human resources. 15. Furthermore, the CSRP Report notes that in the Government health sector as a whole, there is inadequate coordination of health activities and services; inadequate supervision of health services; inappropriate attitudes of health professionals, workers and the community, insufficient lateral and vertical coordination of work responsibility and authority, and inaccessibility to health care services. Also, there is little or no accountability for resources allocated to various units, and no inspectorate to monitor activities. The Report recommends that strong leadership is needed to ensure discipline and coordinated delivery of the health services; target-setting needs to be strengthened at district and hospital levels, there is also need for flexible planning and priority-setting, and supportive supervision is needed at all levels to ensure performance. 16. Obviously, the top management structure of MOH needs to be rationalized further (the recent separation of the PS and DMS positions is a welcome development). Improved management and control of the Ministry's operations are essential, and priority should be given to issues of accountability, efficiency and effectiveness. The CSRP report makes some very useful suggestions (particularly in Sections 8 and 9, pp. 293-352; and Appendix F). These deserve serious consideration and implementation according to an agreed action plan.  74 Annex 5 Page 5 of 7 17. Implementation Tasks. Since the new health policy emphasizes preventive and primary health care in rural areas, the MOH needs to re-orient its role vis-a-vis district- level and municipal health offices. Suitable structural changes would be needed in MOH to accomplish this; and these changes would need to be accompanied by complementary changes in the role/function, skills and attitudes of district-level staff responsible for providing rural health services. The CSRP Report provides a long list of tasks that need to be undertaken to implement the report's recommendations (see attached Table xx, based on the Report's Appendix F). There is obviously a need to prioritize the various recommendations, and to identify those that can be implemented immediately and those that require a medium-term (1-2 years) time frame. Once agreement has been reached between MOH and MPS, responsibilities need to be assigned to senior/functional managers of MOH for implementing various recommendations. 18. Reform of the personnel, accounting, budgeting and information systems needs to be given high priority, both at the central and district levels. MOH's Implementation Committee should ensure that, in the context of decentralized implementation of health services, its activities are closely coordinated with those of other relevant agencies (such as the MIPS, MOLG, MOFP, the Decentralization Secretariat and local authorities). 19. Some of the recommendations involving financial, personnel and administrative matters would need to be studied further. For this, close collaboration would be needed with other relevant Ministries and government agencies, including district-level local authorities, as appropriate. The reform process itself needs to be properly managed. This could be facilitated by staff of the Management Services Department of the MIPS (who helped prepare the CSRP Report), assisted by other consultants, if required It would also be useful to involve the affected staff through a program of orientation, education and training geared to reducing their natural resistance to restructuring the MOH. 20. Furthermore, to implement the Government's decentralization policy, a review of present arrangements for disease control programs and curative services is essential, along the lines proposed in the CSRP Report. Disease control programs, whether vertical or integrated, need strong capabilities both at the central MOH and at district/field levels, although the functions performed at each level are different. MOH's responsibility for curative services, particularly in tertiary hospitals, should gradually be devolved to autonomous Boards or NGOs, and this would require structural and staffing changes in the MOH, as proposed in the CSRP report. In addition, a comprehensive effort is needed on health financing issues; and a high level task force should be established urgently, as recommended. Implications for the District Health Services Project 21. The DHS project is seeking major changes in the way health services are delivered; and implementation will require use of approaches such as contracting out. There is concern regarding the MOH's limited capacity to undertake major reforms encompassing  75 Annex 5 Page 6 of 7 health financing, liberalization and decentralization, all at the same time but willingness to work closely with the local authorities will be of considerable help. Third, it will be difficult to improve the skills and motivation of undertrained and underpaid civil servants, and undertake project activities through local administrations that are not familiar with Bank procedures and are, in addition, likely to undergo a difficult transition to decentralization. 22. Presently, Government health workers are inadequately compensated. SAC II will include a Civil Service Reform component, but it is doubtful that it would adequately address the problem of health workers' salaries. A number of donors pay "top-ups" to health workers. One question is whether IDA would finance contributions to the salaries of health workers. Salaries are only 29% of the MOH Recurrent budget, while Medical Stores are 41% of the Recurrent budget. If IDA were to finance non-wage expenditures presently in the Recurrent budget, this would enable the Government to increase salaries toward the living wage from its tax revenues. Another option would be to disburse against services performed in such a way as to enable health workers to be more adequately compensated. 23. A related question is the levelness of the "playing field" between Government and non governmental clinical services. At the present time, Government clinical facilities are subsidized by the Government while NGO facilities are not. On the other hand, NGO facilities have institutional autonomy, have been freer to collect revenues, and presumably can reject non paying patients. The White paper on Health Policy reflects more evenness in the policy environment for Government and NGO services, by encouraging Government facilities to collect revenues while allowing subsidization of NGO services in some circumstances. This should reduce the importance of the Government/non government distinction. DHSP is aiming at a substantial influx of donor aid. Therefore, DHSP will need to be sensitive to the distribution of subsidies between Government and NGO services. (On the other hand, there are some donors, such as Italy, who give aid only to NGOs. 24. For the DHS project to be effectively implemented, it is imperative that the GOU simultaneously and successfully implement its phased (nation-wide) Decentralization Program and that the MOH speedily implement its Restructuring Program along the lines proposed by the CSRP Report. An Action Plan for implementing the Health Policy Reform Program, as outlined in the Policy Matrix attached to the Letter of Sector Policy (LSP), includes some of the key measures required to be taken. However, the MOH has not yet established its top-level Implementation Committee for effecting these reforms. Similarly, progress on building the district-level capacity for undertaking the pilot-DHSP activities in 3 districts has also been slow. 25. Recent discussions with the Governmilent, hokN ever, indicate a keen interest and high level of commitment, at the senior-most level of Government, to rapidly move forward both with the content of the policy reform package and the mechanisms/modalities for implementing it. The policy package (particularly the design of  76 Annex 5 Page 7 of 7 the essential health services based on the BOD and cost effectiveness studies) and the policy implementation mechanisms are proposed to be examined further during Appraisal. 26. The DHS project includes a capacity building component, both for District Health Administrations (48% of project costs) and for restructuring the MOH (11% of project costs). This includes funds for training and selective computerization for budgeting, accounting, and health information systems, and introduction of a Quality Assurance (QA) program in the MOH. The project will also help strengthen the proposed Health Planning Unit and Inspection Department. A capability to measure the National Burden of Disease (in terms of Disability-Adjusted Life Years) in Uganda would also be established. MOH is presently located in Entebbe, in scattered buildings. To improve MOH's internal efficiency, and coordination with other ministries, it has been proposed to move the restructured MOH to suitable facilities in Kampala. All of these activities would be supported by this component of the project. 27. Regarding the organizational arrangements for project implementation, the District Medical Officers in Qualifying Districts would have principal responsibility for the "Adequate Financing of Essential Health Services" component. Responsibility for coordinating the implementation of all project components would be with a small Project Coordination Unit in the Ministry of Health, headed by an experienced full-time Coordinator, and staffed by specialists in project administration, procurement, and accounting. The Project Coordination Unit would report to a Project Steering Committee chaired by the Permanent Secretary, MOH. Local and international contracting would be utilized to the maximum extent, as appropriate.  77 Annex 6 SUMMARY OF BURDEN OF DISEASE FOR UGANDA* Disease Relevant Deaths Discounted Life Years Lost Population Total % of Total Total % of Total AIDS over 15 22507 6.43 573923 6.49 CV over 30 8778 2.51 170549 1.93 DD under 5 25225 7.20 756245 8.55 Injury all 2501 0.71 57918 0.65 Malaria under 5 37837 10.81 1134367 12.82 Maternal pregnant women 6669 1.90 177187 2.00 Measles under 5 12612 3.60 378122 4.27 Nutrition (PCM) under 5 7883 2.25 234277 2.65 Perinatal total births 55017 15.71 1652699 18.68 Pneumonia under 5 31531 9.01 945306 10.68 TB all 9503 2.71 242323 2.74 TOTAL: Target Diseases 220062 62.86 6322917 71.45 All Other Diseases all 130043 37.14 2526745 28.55 Note: This table was prepared by the Government of Uganda in the Burden of Disease, Cost Effectiveness, and Implications for Health Policy exercise, August 1994.  78 Annex 7 Page I of 6 HEALTH EXPENDITURES AND FINANCING A. LEVEL, COMPOSITION, AND FINANCING OF HEALTH EXPENDITURES 1. Private Expenditure on Health. The Integrated Household Survey (IHS) found that, in 1992/93, average household expenditure on health care in Uganda was 2337 shillings per month (Table 7 1). On the basis of the estimated number of households in Uganda (3 73 million), annual household expenditure on health care was about 105 billion shillings. Table 7. 1: Monthly Household Expenditure on Health Care, 1993/93 Expcnditurc Group Expenditure on Pcrcentage of (shillings/month) Health Carc Total Expenditure Zcro-I00.()000 1579 4.0 I00.000-200.)00 7163 5.7 Above 200.000 20128 7.3 All Groups 2337 4.4 Source: Statistics Department, MFEP, Integrated Household Survey 1992-93. 2. Expenditure on health care among the lowest expenditure group, accounting for 910% of households and 86% of persons, was only 1579 shillings/month. The percentage of total household expenditure devoted to health care increased from 4.0% for the lowest expenditure group to 7 3% for the highest expenditure group, demonstrating that expenditure on health care has a positive income elasticity. 3. About 64% o of household health expenditure was devoted to drugs, with consultation fees and hospital/clinic charges accounting for most of the remainder. IHS did not record how much of the expenditure was incurred at Government facilities and how much at private facilities. However, it did find that among sick people seeking treatment, 34%/ sought treatment from Government facilities while 66% sought treatment from the private sector 4. Government Expenditure on Health. Through fiscal year 1992/93, Central Government funds were channeled to the health sector through three "votes" in the Central Government budget: the Ministry of Health, Mulago Hospital (the national teaching and referral hospital), and the Ministry of Local Government. Beginning in fiscal year 1993/94, Central Government funds have additionally been channeled to the health sector through District votes for the Decentralized Districts (Table 7.2). Central Government expenditure on health, including external aid, was budgeted at 60 billion Uganda shillings in 1992/93, and 91 billion shillings in 1993/94.  79 Annex 7 Page 2 of 6 Table 7.2: Central Government Expenditure on Health 1992/93 1993/94 1994/95 Budgct Actual Budget Actual Budget In millions of Shillings Recurrent Expend. on Health 20956 29510 MinistryofHealth 15551 12075 14638 17059 Mulago Hospital 4855 5595 6917 MoLG 550 547 Decentralized districts 8730 Develop. Expend. on Health 39026 62273 Ministry of Health 29083 41457 Mulago Hospital 8546 13991 MoLG 1397 6825 Health - Total 59982 9(0783 As a Perccntage of Ccntral Government Expenditure (excluding interest payments) Health Recur./C.G. Recur. 8.55 9.28 Health Devt./C.G. Devt. 9.97 12.09 Health Total/C.G. Total 9.42 1(09( As a perccntagc of GDP C.G. Expenditure on Health 1.54 1 97 In constant prices ( 1991 = I (0) C.G. Expenditure on Health 36419 49045 5. As can be seen from Table 7.2, health expenditure in the Development Estimates is almost twice as large as health expenditure in the Recurrent Estimates. This reflects the fact that all donor-financed expenditure is recorded in the Development budget, even though most of it is devoted to recurrent inputs for delivering health services, such as drugs and fuel, with only a minority of donor expenditure going to civil works and equipment, 6. In the past, the structure of the MOH Recurrent budget has been dominated by inputs (such as the wage bill as a lump-sum under the "Headquarters" program, and drugs under the former Central Medical Stores) rather than services, while the Development budget is on a project-by-project basis which does not correspond to the program structure in the Recurrent budget. Therefore, expenditures on preventive and curative  8() Annex 7 Page 3 of 6 services, on specific "vertical" programs, have not been readily identifiable. In the National Health Personnel Study (1991), the Ministry noted that: Budget reforms are yet to be initiated within the MOH . . . There is no effective, functionally-oriented or program budgeting ... Recently, there has been some improvement in the budget structure. For example, with the former Central Medical Stores having been succeeded in 1993 by the National Medical Stores, a semi-autonomous, self-financing organization, from which public sector and private sector health providers may make purchases, beginning in 1994/95 procurement of drugs by Government hospitals is now shown under the "Hospitals" program. 7. Analysis done for the World Bank's Uganda: Social Sectors report found that, in 1990/91, only 1 1% of Government expenditure in the health sector was for "community health" or "public health" services (these are services whose benefits extend beyond an individual), while 69% was for personal health services (63% curative, 6% preventive), and 20% on training, research, and administration. 8. The Wor ld Development Reeporl 1993: Investing ini Health publicized the concept of "essential health services", i.e., those which are most cost-effective in averting the burden of disease. In this context, it is useful to measure how much Government expenditure is going to hospitals and how much to lower-level clinical facilities and public health programs, for two reasons: (a) the more cost-effective services are delivered primarily through the lower-level facilities and public health programs; (b) hospital services have greater potential for cost recovery. An exercise analyzing the 1993/94 budget for the health sector has found that 52% of it is devoted to hospitals, 33% to lower-level clinical facilities and public health programs, and 15% to other purposes (training, research, and administration). 9. Financing of Clinical Health Services. NGO facilities typically recover 80-90% of costs through user charges. In the 1992 Budget Speech, it was announced that Government hospitals would be allowed to operate private wings which would charge full cost. At the local level, many health units, with the approval of their management committees, have begun to charge fees. The authority of local administrations to charge fees was formally recognized in the Local Governments Statute, 1993. A study in Kabarole District found that revenues from user fees were used for supplies such as fuel and soap, repairs to buildings and equipment, transportation, and staff allowances, contributing to increased availability of health workers and reduced waiting time. Interviewees generally expressed willingness to pay higher fees to obtain further improvements in service. However, thus far recognized user charges have played only a minor role in the financing of Government health services. 10. Health insurance has not yet been developed in Uganda. Some employers provide health services directly to their employees, and others have contracts with private providers to offer services to their employees.  8 Annex 7 Page 4 of 6 11. Total Health Expenditure. As can be seen from Table 7.3, total health expenditure in Uganda was about $7.73 per capita, consisting of Government health expenditure of $2.82 per capita, and household expenditure of about $4.91 per capita. Considering that the cost of a minimum package of essential health services has been estimated at $1 2 per capita in low-income countries, and that Uganda's health indicators are worse than average among low-income countries, this is clearly inadequate. Furthermore, health expenditure has been skewed toward curative treatment of mostly preventable problems, with public health and preventive services seriously underfunded. Table 7.3: Private and Government Expenditure on I lealth, 1992/93 Shillings US$ US$ Perccntagc (millions) (millions) per capita of GDP Household Expcnditurc 104604 87 4 91 2.69 Ccntral Govt Expenditure 59982 50 2,82 1.54 Total 164586 137 7.73 4.23 Source: Tables 7 1 and 7.2. B. MONITORING OF HEALTH EXPENDITURE AND FINANCING UNDER DHSP 12 As set out in the White Paper on Health Policy, and reflected in the DHSP Letter of Sector Policy, the Government intends to mobilize more resources for the health sector, both through the Central Government budget, and through additional financing mechanisms. The Government also intends to reallocate its expenditure relatively toward the most cost-effective public health and clinical interventions. Under DHSP, implementation of these policies will be monitored at two levels: the national (macro) level; and at the level of the project districts. 13. Monitoring at the National (macro) level. Central Government expenditure is budgeted to be about 16% of GDP in 1994/95 (Table 7.4). As set out in the Government's Policy Framework Paper for 1994 , the Government is aiming at increasing the domestic revenue effort from about 9% of GDP in 1994/95 to about I I% of GDP in 1996/97, through enactment of revenue-raising measures, and improved tax administration. At the same time, the Government intends to reduce the budget deficit in order to contain inflationary pressures while enhancing private sector access to bank credit. Central Government expenditure is therefore expected to remain at about 16% of GDP through 1996/97. With real GDP programmed to increase by 5.5% annually, Central Government expenditure in real terms would also increase by about 5 5% annually. In recent years, the share of Central Government expenditure devoted to the  82 Annex 7 Page 5 of 6 health sector has been on an increasing trend. The Government budget allocation to the health sector will increase, in real per capita terms, each year over the medium-term. 14. Considering that the local government (including district administrations) financial year runs from October through September, the Government will prepare and provide to IDA a report with relevant data on budgeted and recent actual Government expenditure (Central Government and district administrations) in the health sector, no later than November I of each year, beginning with November 1, 1995. This report will include the distribution of expenditure among: (a) hospitals: (b) lower-level clinical facilities and public health programs; and (c) other functions (training, research, and administration). 15. In their district health plans, the objectives chosen by the districts for raising revenues at the health unit level range from 7% to 25% of the direct costs of providing services. ODA is financing a study for the Government on options, including user charges and insurance, for health finance. The Government will develop and issue guidelines, by October 1995, on the raising of revenues at the health unit level, addressing issues including protection for the poor, subsidization of services with public health benefits, and appropriate management practice. A system of quarterly financial and technical reports prepared by the District Health Teams, and distributed to the District Resistance Councils and the Ministry of Health, will be implemented nationwide no later than June 1996. As part of monetization of benefits under the Civil Service Reform Program, free health care for civil servants will be discontinued. The Govemment will experiment on a pilot basis with capitation grants or voucher schemes for health financing. Drawing upon these initiatives and experience with other financing options, the Government will issue a comprehensive policy statement on health care financing, no later than June 1996. 16. The level of the Project districts. In order to be eligible to participate in the Project, district health administrations will need to have workplans, budgets, and cost recovery policies acceptable to the Ministry of Health and to IDA. The system of quarterly financial and technical reports will be piloted in the three SIDA-financed DHSP pilot districts during 1994/95 and continued in the DHSP pilot districts during 1995/96.  83 Annex 7 Page 6 of 6 Table 7.4: Projection of Central Government Finance 1993/94 1994/95 1995/96 1996/97 Estimated Program Projected Projected In billions of Uganda shillings: Revenue and Grants 651 685 819 941 Revenue 364 472 591 720 Grants 288 213 228 221 Total Expenditure 817 854 946 1051 Deficit 165 168 127 111 GDP at Market Prices 4613 5344 5928 6589 As a percentage of GDP: Revenuc and Grants 14.1 12.8 13.8 14.3 Revenue 7.9 8.8 10.0 10.9 Grants 6.2 4.0 3.8 3.4 Total Expenditure 17.7 16.0 16.0 16.0 Deficit 3.6 3.1 2.1 1.7 Memorandum items: GDP deflator (1991=100) 185.1 202.7 212.9 223.5 Total Expenditure at Constant Prices 441.0 421.0 444.0 470.0 Source: Policy Framework Paper for 1994/95 - 1996/97.  84 Annex 8 Page I of 3 SUPERVISION STRATEGY Borrower's Contribution to Supervision (a) The PCU will submit semi-annual reports of project monitoring data to IDA in March and September of each year. (b) The PCU in the MOH will maintain up-to date project accounts and present summary accounts to IDA every six months. (c) The audits of project accounts by the Auditor General or by independent auditors acceptable to IDA will be made available to the Bank within six months of the close of each fiscal year. (d) Each district will report semi-annually to the PIU on implementation, including progress and delays. (e) By June 1, 1997, the MOH in consultation with the project Steering Committee will prepare and provide to IDA for its approval a plan for carrying out a Mid- Term Project Review by September 1997 in consultation with IDA. The MOH will, with the assistance of the implementing units, carry out a Mid-Term Review in accordance with the agreed plan. Thereafter, Government will promptly take all actions recommended as a result of the review that are required to achieve project objectives. (f) The PCU will be responsible for coordinating arrangements for Bank supervision missions and for providing information required by missions. (g) Mission briefing meetings on arrival and wrap-up meetings before departure will normally be chaired by the Permanent Secretary of the MOH. Bank Supervision Inputs. It is estimated that regular supervision from Washington (to review progress reports, procurement actions, correspondence, etc.) will require eight staffweeks in the first year of the project and six weeks per year thereafter. The staff time in the table that follows is in addition to this day-to-day supervision. Donor Supervision Inputs. Several donors are co-financing this project. They will be invited to actively participate in and contribute to supervision missions. It is estimated donors will provide an additional 15 staffiweeks per year for supervision.  85 Annex 8 Page 2 of 3 Bank Supervision Inputs into Key Activities Approximate Dates Expccted Skill Activity Staff Inputs Requiremcnts (in staffweeks) 04/1995 Mission Leader Project Launch 8 Procurement Specialist Discase Specialist Managemcnt Specialist Total FY1995 = 8 10/1995 Mission Leader Supervision 6 Economist Disease Specialist 04/1996 Mission Leader Supervision 6 Disbursement Specialist Disease Specialist Total FY1996 = 12 10/1996 Mission Leader Supervision 6 Procurcmcnt Specialist Disease Specialist 03/1997 Mission Leader Supervision 6 Disease Specialist Management Specialist Total FY1997= 12 09/1997 Mission Lcader Mid-Term Review 12 Disease Specialist Economist Procurement Specialist 03/1998 Mission Leadcr Supervision 6 Disease Specialist Management Specialist Total FY1998 = 18 09/1998 Mission Lcader Supervision 4 Economist 03/1999 Mission Leader Supervision 4 Disease Specialist Total FY1999= 8 09/1999 Mission Leader Supervision 4 Management Specialist 03/2000 Mission Leader Supervision 6 Management Specialist Economist Total FY2000= 10 09/2000 Mission Leader Supervision 4 Economist 03/2001 Mission Leader Supervision 4 Disease Specialist Total FY2001 = 8  86 Annex 8 Page 3 of 3 Approximate Dates Expected Skill Activitv Staff Inputs Requirements (in staffweeks) 09/2001 Mission Leader Supervision 4 Economist 03/2002 Mission Leader Supervision 4 Disease Specialist Total FY2002 = 8 09/2002 Mission Leader Project Completion/ 6 Management Specialist Review Mission Economist Total FY2003 = 6 Note: Economies of Scale will be realized bv supenrising this project jointly with the First Health and Sexuall, Transmitted Infections Project.  87 Annex 9 OPERATIONAL PLAN This Annex consists of two parts: (a) Example Process and Performance Indicators and (b) expected development impact at the end of the project implementation period. Example Process and Performance Indicators: Measurement Area Monitoring Indicators Goal Monitoring (%) Frequency Key Tasks! 1. Fulfillment of key tasks/activities by planned starting Activities: date (%) Specified for - number of tasks/activities scheduled for initiation xx starting up each within period;, component - % initiated within proposed starting date; 90 % progressing satisfactorily, 80 2. Achievement of key tasks/activities by planned completion date (%) Quarterly - number of key tasks/activities scheduled within xx period;- - % completed as planned. 80 3. Report explaining variances. Quarterly 4. Exception report on problems encountered and action Monthly taken or proposed. Routine Tasks/ 1. Achievement of routine tasks/activities by planned Activities: starting date (%) Specified for - number of routine tasks/activities scheduled for xx ongoing work in initiation within period; each component - % initiated within proposed starting date; 80 % progressing satisfactorily. 75 2. Achievement of key tasks/activities by planned completion date (%) Quarterly - number of key tasks/activities scheduled within xx period; - % completed as planned. 75 3. Report explaining variances. Quarterly 4. Exception report on problems encountered and action Monthly taken or proposed. IDA Credit % of loan used compared to planned According Execution - utilized to Schedule - disbursed Procurement Achievement of procurement activities by planned starting Quarterly date (%)  88 Annex 10 Page 1 of 3 PROCUREMENT PLAN Project procurement will be performed on a scheduled basis as follows: PROCUREMENT SCHEDULE (US$ MILLION) Project Element Procurement FY96 FY97 FY98 FY99 FY2000 Total Frequency/Year CIVIL WORKS: Civil Works 2 4.0 4.0 3.0 1.2 12.2 GOODS: Equipment/Materials/ 2 2.0 4.0 5.0 4.0 2.6 17.6 Furniture Medical Supplies/ 2 1.0 1.5 1.5 1.5 0.7 6.2 Drugs Vehicles 1 1.4 1.4 CONSULTANCIES: Local Training N/A 3.0 3.0 3.0 3.0 2.2 14.2 Technical Assistance 2 0.4 0.5 0.9 Research/Studies 2 0.5 1.5 1.5 3.5 Monitoring/Evaluation 2 0.4 1.0 1.0 0.5 0.5 3.4 Supervision N/A 0.5 1.1 1.1 0.8 0.6 4.1 MISCELLANEOUS: Recurrent Costs N/A 1.0 2.0 3.0 2.6 2.0 10.6 Total 11.2 18.6 20.1 15.4 9.8 75.1 The Borrower will submit updates to the Bank on a semi-annual basis. These updated reports will monitor actual versus estimated procurement dates, US dollar totals by supplier and aggregate US dollar totals by project element. The Borrower will indicate causes of, and corrective actions to be taken, on all substantial variances and schedule delays.  89 Annex 10 Page 2 of 3 OUTLINE OF PROCUREMENT ACTIVITIES Description Method Timing CIVIL WORKS: (a) Renovation of MOH ICB 1996 (b) Renovation of 90 health centers/units in 10 LCB 1996-2000 districts (c) Construction of 10 new health centers in LCB 1996-2000 Northern Uganda GOODS: (a) Equipment: Hand pumps, water filtration ICB* 1996-2000 units, pit latrines (b) Materials: Bed nets, chemical sprays, IEC ICB* 1996-2000 materials (c) Furniture: for health centers/units ICB* 1996-2000 (d) Medical supplies/drugs ICB* 1996-2000 (e) Vehicles: 4-wheel drive, motorcycles, combi NBF 1996/1997 CONSULTANCIES: (a) Local Training: National: Other 1996-2000 Appointment of consultants, workshops in management, finance, administration, personnel, workshops in planning, monitoring and evaluation, workshops in program implementation District: Other 1996-2000 Pilot: workshops in management, finance, administration, personnel, workshops in planning, monitoring and evaluation, workshops in program implementation, workshops in essential package delivery (b) Technical Assistance See Annex 13 *Note: or other procedures - LCB/Shopping as permitted under Table 3.6.  90 Annex 10 Page 3 of 3 Description Method Timing (c) Research/Studies Other 1996-2000 Appointment of consultant services; Field Work; Data Analysis; Workshops to disseminate results; Project Modification; Workshops (these will be held both at national and local levels) (d) Monitoring /Evaluation Other 1996-2000 Same as for Research/Studies (e) Supervision Other 1996-2000 Consultants and NGOs to supervise health care delivery. STANDARD TIME FOR BID PROCESSING At negotiations IDA and the Government agreed on standard procurement times (see Implementation Manual.)  9] Annex I I PROJECT ORGANIZATION AND MANAGEMENT PROJECT STEERING COMMITTEE Terms of Reference I. The Committee will act as the advisory body to all implementing agencies by: monitoring project implementation, addressing and seeking solution to problems, that cannot be resolved through the normal lines of command; and * advising the P. S. on policies and other matters related to the project. 2. Coordination will thus take place through the established mechanisms of the Ministry of Health. The membership of the Project Steering Committee is limited but can be expanded if necessary. Particularly, District Medical Officers and representatives from District Health Teams will be invited on an ad hoc basis. 3. The Committee meets four times per year, with additional meetings as required. 4. Members (a) Permanent Secretary, MOH (b) Director General of Health Services (c) Commissioner for Health Planning (d) Director of Medical Services (Operations) (e) Director of Medical Services (Support) (f) General Manager, NMS (g) Representative from Ministry of Local Government (h) Representative from Ministry of Finance and Economic Planning (i) Representative from Ministry of Justice and Constitutional Affairs (j) Project Coordinator, Secretary  92 Annex 12 Page 1 of 2 ESTIMATED IDA DISBURSEMENT SCHEDULE IDA Fiscal Year Disbursement Accumulated Accumulated and Quarter Ending During Quarter Disbursement Disbursement % ---US$ thousand--- FY1995 Mar. 31, 1995 0 0 0 Jun. 30, 1995 0 0 0 FY1996 Sept. 30, 1995 1,350 1,350 3 Dec. 31, 1995 1,350 2,700 6 Mar. 31, 1996 450 3,150 7 Jun. 30, 1996 450 3,600 8 FY1997 Sept. 30, 1996 450 4,050 9 Dec. 31, 1996 450 4,500 10 Mar. 31, 1997 1,800 6,300 14 Jun. 30, 1997 1,800 8,100 18 FY1998 Sept. 30, 1997 1,800 9,900 22 Dec. 31, 1997 1,800 11,700 26 Mar. 31, 1998 1,800 13,500 30 Jun. 30, 1998 1,800 15,300 34 FY1999 Sept. 30, 1998 2,700 18,000 40 Dec. 31, 1998 2,700 20,700 46 Mar. 31, 1999 2,700 23,400 52 Jun. 30, 1999 2,700 26,100 58 FY2000 Sept. 30, 1999 2,700 28,800 64 Dec. 31, 1999 2,700 31,500 70 Mar. 31, 2000 1,800 33,300 74 Jun. 30, 2000 1,800 35,100 78  93 Annex 12 Page 1 of 2 IDA Fiscal Year Disbursement Accumulated Accumulated and Quarter Ending During Quarter Disbursement Disbursement % ---US$ thousand--- FY2001 Sept. 30, 2000 1,800 36,900 82 Dec. 31, 2000 1,800 38,700 86 Mar. 31, 2001 900 39,600 88 Jun, 31, 2001 900 40,500 90 FY2002 Sept. 30, 2001 900 41,400 92 Dec. 31, 2001 900 42,300 94 Mar. 31, 2002 900 43,200 96 Jun. 30, 2002 900 44,100 98 FY2003 Sept. 30, 2002 450 44,550 99 Dec. 31, 2002 450 45,000 100  4 Annex 13 Technical Assistance Provided by the Project Contractual Services Staffmonth 1. Contracts with Firms/Institutes Single Package with One Firm (a) Monitoring and Evaluation M & E Program Manager 15 Beneficiary Assessment Specialist 3 Computer Specialist 24 Statistician 24 Report Writer 6 (b) Operational Research Epidemiologist 12 Program Manager 12 Statistician 6 Report Writer 6 2. Individuals (a) Project Management Evaluation Specialist 6 Epidemiologist 6 MIS Specialist 6 Accountant 6  Annex 14 Page I of 5 Guidelines for NGO Participation 1. Objective. The objective is to ensure NGO participation in the design and implementation of the District Health Services Pilot and Demonstration Project. The guidelines are a result of the current policy decision by the government to decentralize its operations and transfer greater authority to the district level administration. Implications in the health sector involve devolving the responsibility for implementing health related activities to district level non-governmental organizations (NGOs) and community based organizations (CBOs) at the -illnaoe lwViJ Institutional Framework 2. Elements of the framework. The institutional framework would comprise of the following elements: coordination, selection, networking, technical support, financial management, and monitoring and evaluation. The functions of the entities include: 3. At the national level, the following entities would be instituted: a national Panel to review and select NGO proposals based on attached criteria; NGO/CBO/Government consultative meeting to discuss and decide priorities in health; NGO Coordination Officer in the PCU of the Ministry of Health; a technical support/training agency to train and support national NGOs and regional training institutes; and a monitoring and evaluation agency to assess the functioning of the institutions at the national and district levels. 4. At the district level, the following entities would be instituted: a district Panel in the District Health Management Team office; NGO/CBO/District health authorities consultative meeting to discuss and decide priorities in health, and technical support agency (consultants). Functions of the Institutions 5. NGO/CBO/Government Consultative Meetings. NGO/CBO/Government consultative meetings would be held at the national and district levels with the purpose of bringing health NGOs under one umbrella to discuss issues. The meeting would perform the following functions: discussing and shortlisting names of individuals who would sit on the national and district Panels; documenting and disseminating information on government and NGO activities in health, and providing a forum for discussing national and district level priorities.  96 Annex 14 Page 2 of 5 6. The meetings would be convened by the NGO Coordination Officer in the Ministry of Health. In Uganda; the multiplicity of NGOs (around 800 registered NGOs) makes the task of organizing meetings very difficult. One option could be to choose NGOs based on their functions and nature of work, based on the attached criteria for NGO eligibility. 7. National/District Panel. A Panel would be established at the national level to perform the role of an autonomous selector of NGO/CBO proposals, based on the attached criteria. The Panel would be selected by the Ministry of Health, based on the shortlist recommended by a consultative meeting. At the district level, when necessary, the District Health Management Team would coopt NGO/CBO representatives recommended by the consultative meeting, to form the district level Panel. To ensure impartiality, the 8-10 members would sit in their individual capacity. 8. Coordinator. A NGO Coordination Officer would be appointed in the PCU of the MOH and will perform the following functions: - identify NGOs and CBOs based on the attached criteria for NGO eligibility, - convene consultative meetings and represent government priorities at discussions; - ensure general administrative support, procurement of supplies and availability of these supplies to NGOs/CBOs; and - act as secretary to the Panel. 9. Technical Support. Technical support to NGOs and CBOs in areas of financial management and capacity building would be provided by a competitively selected NGO at the national level, and several NGOs at the district level (one in each district). The Panel would select them based on their strengths, past efforts at conducting training programs, and building institutional capacity. 10. District level NGO trainers/consultants would be periodically trained by the national agency. The bulk of training and technical support to district NGOs/CBOs in the formulation of proposals and implementation of the programs, would be provided by the district level NGO trainers. 11. Monitoring and Evaluation. Monitoring and evaluation (M&E) would be in two areas: M&E of the framework M&E of individual NGO performance 12. Both functions would be contracted out to an independent agency (either a local social science research organization or a local NGO), recommended by the National Panel, and appointed by the Ministry of Health. The agency would submit quarterly reports to  97 Annex 14 Page 3 of 5 the MOH. Donor agencies would receive these reports, as appropriate, through normal channels. The reports would assess the following: nature and effectiveness of operations of the framework (e.g. selection, administration, and financial), and recommend corrective measures, if necessary, effectiveness of NGO performance in implementing programs; and suggest emerging and future priorities for consideration by NGO programs. 13. Evaluations would be conducted on an annual basis. Studies would also be commissioned from universities or other independent bodies to assess: (a) whether implementation of the mechanism had an impact; (b) whether the implementation of the NGO proposals had a broad impact; and (c) whether specific NGO implemented programs have been successful. 14. Funding. The ability to provide funds in a timely manner is critical to the success of the NGO/Government collaboration. To ensure success, funding mechanisms should have minimum bureaucratic delays and speedy audit and disbursement of funds. Each district would be allotted a sum of approximately $100,000 per year, to be reviewed and revised annually based on the work program. The following procedures would be adopted (see Chart 2): IDA deposits money in the Special Accounts established by the Government of Uganda, The MOH would contract out the disbursement function to a competitively selected commercial bank; and The audit function would be contracted to a management consultancy firm. Institutional Process 15. At the village level, CBOs could form a group and send their representatives to consultative meetings convened at the district level. The delegates at the meetings would comprise of representatives of the district health management team, district level NGOs, and representatives of the CBO group. They would discuss and identify areas of critical importance in implementing the project in the district, and assess comparative advantages of the government and NGOs on the one hand and between NGOs and CBOs on the other. A representative of the district consultative meeting would be sent to the national level consultative meeting. Activities and priorities in health which impinge on the project, would be discussed from a national perspective. 16. The government would invite proposals from NGOs/CBOs on project related activities in health. NGOs and CBOs would prepare proposals and submit them to the national and district panels. In the preparation of the proposals, technical support would  98 Annex 14 Page 4 of 5 be provided by the district trainers/consultants through seminars, workshops and individual support. 17. The Panels would select promising proposals, based on the attached criteria. Decisions would be transmitted by the NGO Coordination Officer in MOH. 18. The district trainers/consultants (after being trained by the national trainer) would provide technical support in the design and implementation of the programs to the selected NGOs. Issues and problems during implementation would be discussed at the district and national consultative meetings. 19. Funding arrangements would be the following: The NGOs/CBOs would submit receipts directly to the commercial bank. The bank would have them audited by the consultancy firm and then disburse funds to the NGO. Time limits would be established for the disbursement of funds, and penalties would be imposed in case of delay. The funding mechanism would be monitored closely by the M&E agency. Benefits 20. Benefits of the above structure are that coordination of activities in the health sector by NGOs and government would be achieved, participation would be built up, program efforts would be targeted, and outputs would be monitored. It would result in decentralization of efforts to the grass root level and participation by that level in decisions that affect it. The funding mechanism would ensure speedy delivery of funds, with minimal bureaucratic delays, thereby ensuring continuity and sustainability of implementation, and eventual success of the project. Risks 21. Political commitment to NGO participation and decentralization is critical to the success of the mechanism. The entire structure has to be coordinated by the government. If the NGO Coordination Officer in the PCU of MOH is not strong, the consultative meetings, panels, etc, would not be able to function effectively. If the distribution system between the MOH at the national level and the district level is not streamlined and monitored, shortages and delays in providing supplies to NGOs/CBOs could jeopardize implementation. 22. Criteria for NGO Eligibility. - Structure of the organization;  99 Annex 14 Page 5 of 5 Legal status; Profile of the organization and its activities; Technical capacity of the NGO based on its previous work; Organization and staffing; Sources of support; and Technical assessment of the NGO by district health officials and its record working with those entitites. Criteria for Evaluating NGO Proposals. 23. Technical Criteria: - extent to which the proposal reflects national and project objectives; - linkages with local programs; - extent to which it addresses local needs; and - technical quality of proposed activities. 24. Management and Financial Criteria: administrative and managerial capacity; acceptability and viability of cost proposal; and co-financing potential. 25. Epidemiological and Geographic Criteria: geographic distribution of proposals (e.g. underserved areas will be given greater weight); degree to which activities would target the following: high incidence areas, places with high rates of transmission, or areas at risk of having the infection introduced, and extent to which project would build partnership with other actors.  loo Annex 15 DOCUMENTS AVAILABLE IN PROJECT FILES 1. Cost Effectiveness Part I: Intervention Costs; Part II: Effectiveness of Interventions Life Years Saved; Part III: Calculating the Burden of Disease. 2. Indicators for MCH/FP 3. MCH/FP/EPI Component of Uganda DHSP, September 1994 4. Monitoring & Evaluation - Component: District Capacity Building 5. HELP (Health Evaluation and Planning) Manual - Volume 3: The Health Unit Data Base, March 1994 6. Monitoring & Evaluation, June 1994 7. Uganda: Burden of Disease, Cost Effectiveness, and Implications for Health Policy, June-August 1994 8. Training inQuality Assurance Programme: - April 1994 - May 1994 9. Estimated Costs and Demand for Essential Health Services in 1998/99 10. A Proposal to the World Bank and SIDA by the Ministry of Health, Government of Uganda, May 1994 11. Report and Recommendations of the Health Policy Review Commission, September 1987 12. Statutes Supplement No. 8, December 1993 13. Implementation Manual.   MAP SECTION   34, . - 3,, 3A ,/ IBRD 25052R SUDAN o"gf \o'ro<w_l\/~o SUGANDA -- xiTGUM < _ ) 6 , C L ~~~~~~~~~RIVERS 0 /\) . ~~~~~ARUA - KO-r,.r'- TI /t<,FALL5 7 <~~~~~~~~~-NORTHERN KOIOFALLS Q~~AA - -M'A'g 4 *l FERRIES ; ZAIRE / ~ 0 0 - - > e< i to; \ 57 PRIMARY BITUMEN ROADS LNEB31- 1 ORFTO\ L NEBBI* - -- - MOY DT?' - PRIMARY GRAVEL ROADS - -- - ~~~~~~~~~~~~~~~~~ ~UNSURFACED ROADS - 3;) , - f P RA ILRO A D S -r / ) g vAPAC / .,~~~~~~~~~~~ ,,, ~~~~~~~~~~SELECTED TOWNS AND VILLAGES t j/ 'h AS IN D I -<! < S Q\ O T I f i . A D I S T R I C T C A P I T A L S HOIMA*. _KUMl NATIONAL CAPITAL / *,\. , 4 7' ' .,,, ~ OoqS KAFSHOR A DISTRICT BOUNDARIES * t