Document of The World Bank

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized ECSHD ECCO9 Document of The World Bank IMPLEMENTATION COMPLETION REPORT (TF SCL-44080) ON A LOAN IN THE AMOUNT OF US$11.46 MILLION TO THE LATVIA FOR A HEALTH REFORM PROJECT June 8, 2004 Report No: 27521

2 CURRENCY EQUIVALENTS (Exchange Rate Effective December 2003) Currency Unit = (LVL) LVL 1.0 = US$ US$ 1.00 = LVL FISCAL YEAR January December APL ATLS CAPA CEE CHIP CMC CVD DRG ECA EA EU GOL GP LDP MOE MOF MOW PAD PCU PHC PHRD PIP RSF SAL SCHIA SHC SIDA TB ABBREVIATIONS AND ACRONYMS Adaptable Program Lending Acute Trauma Life Support Computer Assisted Political Analysis Central and Eastern Europe Consolidated Health Investment Program Catastrophe Medical Centre Cardio-Vascular Diseases Diagnosis Related Group Europe and Central Asia Emergency Assistance European Union Government of Latvia General Practitioner Letter of Development Policy Ministry of Economy Ministry of Finance Ministry of Welfare Project Appraisal Document Project Coordination Unit Primary Health Care Population and Human Resources Development (Japanese Grant) Project Implementation Plan Regional Sickness Fund Structural Adjustment Loan State Compulsory Health Insurance Agency Secondary Health Care Swedish International Development Agency Tuberculosis Vice President: Country Director Sector Manager Task Team Leader/Task Manager: Shigeo Katsu Roger Grawe Armin Fidler Dominic S. Haazen

3 LATVIA HEALTH REFORM PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 6 5. Major Factors Affecting Implementation and Outcome Sustainability Bank and Borrower Performance Lessons Learned Partner Comments Additional Information 21 Annex 1. Key Performance Indicators/Log Frame Matrix 22 Annex 2. Project Costs and Financing 24 Annex 3. Economic Costs and Benefits 27 Annex 4. Bank Inputs 28 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 30 Annex 6. Ratings of Bank and Borrower Performance 31 Annex 7. List of Supporting Documents 32 Annex 8. Executive Summary and Conclusions and Recommendations 33 of InDevelop Uppsala Evaluation Report

4 Project ID: P Team Leader: Dominic S. Haazen Project Name: Health TL Unit: ECSHD ICR Type: Core ICR Report Date: June 15, Project Data Name: Health L/C/TF Number: TF-20376; SCL Country/Department: LATVIA Region: Europe and Central Asia Region Sector/subsector: Health (54%); Compulsory health finance (36%); Central government administration (10%) Theme: Health system performance (P); Law reform (S); Other communicable diseases (S); Injuries and non-communicable diseases (S) KEY DATES Original Revised/Actual PCD: 05/18/1998 Effective: 01/01/ /23/1999 Appraisal: 08/20/1998 MTR: 03/26/2001 Approval: 11/12/1998 Closing: 12/31/ /27/2004 Borrower/Implementing Agency: Other Partners: GOVERNMENT OF LATVIA /MINISTRY OF WELFARE SWEDISH INTERNATIONAL DEVELOPMENT AGENCY and STATE COMPULSORY HEALTH INSURANCE AGENCY STAFF Current At Appraisal Vice President: Shigeo Katsu Johannes Linn Country Director: Roger W. Grawe Basil Kavalsky Sector Manager: Armin Fidler Chris Lovelace Team Leader at ICR: Dominic S. Haazen ICR Primary Author: Dominic S. Haazen; Sati Achath 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: Sustainability: Institutional Development Impact: Bank Performance: Borrower Performance: S L SU S S QAG (if available) Quality at Entry: Project at Risk at Any Time: Yes ICR S

5 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The Latvia Health Reform Project sought to support the Government of Latvia (GOL) to implement a long-term health services restructuring strategy, based on an agreed Letter of Development Program which addressed key health policy issues, and using an Adaptable Program Lending (APL). The development objective for Phase I of the APL (US$17.6 million project; Loan US$12.0 million) was to create a framework for a modem and effective health care system, including policy reforms, institution building and skills development for the health financing system, health investment policy, primary health care reform, hospital restructuring and effective public health programs Phase II would provide support to a Consolidated Health Investment Program (CHIP) by directly financing investments to implement health services restructuring, in accordance with the Master Plans.. The project aimed to achieve a sustainable performance-oriented health system where health care providers are rewarded for quality and efficiency; each patient has his/her own primary health care doctor of his/her choice; health insurance coverage ensures access to affordable and effective health care; and continuous progress is made with regard to priority health status targets. Progress towards this purpose was expected to contribute to the improved welfare of the Latvian population as measured by gains in health status and public satisfaction with the national health system. The objective was clearly stated, important to the country s social development, and realistic in scale and scope. It was also timely and appropriate for the situation in Latvia at the time of project preparation, considering the country s need for the improvement of the health system in light of deteriorating health indicators, lack of effective public health policies, ineffective health care delivery system, inefficient management of health expenditures, and lack of transparency. Moreover, aside from the knowledge base, the capacity of implementing such changes was quite limited. The focus of Phase I on capacity building, planning and the limited piloting of interventions was well founded. However, one problem created by this approach was that, it appeared to those outside the system that very little was happening, and excessive amounts were being spent on technical assistance, instead of real reform. This proved to be a problem for the government going into the October 2002 elections. The project was consistent with the Bank's Latvia s Country Assistance Strategy (CAS), discussed by the Board on May 19, 1998 (Report No LV). The CAS outlined five areas for the Bank support to Latvia: economic management; private sector development; support to reshape the State's role; development of sub-national government capacity; and provision of improved social services, including health care. According to the CAS, an improved health care system will be a means to improve the welfare of the Latvian people through improved health status and satisfaction with the national health care system. In addition, the project was expected to: (i) act as catalyst and leverage for some long-term policy strategies; (ii) secure funding for some critical investments to ensure sustainability and credibility of the health care reform; and (iii) mobilize and consolidate donor support. The project was also in line with the government strategy to address the main sector issues, which was defined in: (i) "Strategy for Health Care Development in Latvia" adopted by the Cabinet of Ministers on September 24, 1996; and in (ii) the government regulations on implementing health reforms passed during 1997, including Health Care Law, Physicians Practice Law and a number of Cabinet health financing regulations. The project took into account lessons learned from other health projects in the Europe and Central Asia (ECA) region which showed that: (a) health sector reform is a lengthy, politicized process and expectations for the reform process have been too optimistic for both the World Bank and the client countries; (b) - 2 -

6 institutional aspects of reform are as important as technically proficient strategies; (c) greater attention needs to be paid to the political economy of the reform through marketing reforms to lawmakers, the medical community and the public; (d) projects have been too complex; and (e) adequate resources need to be committed for supervision of projects. The project envisioned the following benefits that justified the implementation of this project on its own merits: Society at large: (i) Improved access to a comprehensive range of secondary health care for all acute illnesses at the multi-specialty emergency centers as proposed in the Secondary Health Care (SHC) development strategy; (ii) Improved quality of care and outcomes due to concentration of specialties and expertise in multi-specialty emergency centers with better understanding of health care reform, patients' rights and obligations; (iii) Information and incentives for healthy lifestyle choices; (iv) Positive externalities from public health legislation to reduce tobacco use, and improve revenue; (v) Improved efficiency of health care spending to allow for more efficient use of scarce public financing to purchase more care for a monetary unit; and (vi) "single pipe" funding and need adjusted regional allocation to reduce cross-regional inequities in terms of available resources. Population at risk (exposed to risk factors): (i) Secondary prevention programs implemented by PHC providers; (ii) TB programs that would disproportionately benefit poorer segments of population where the disease is more prevalent; (iii) Improved support for depressed and suicidal citizens; (iv) Reduced exposure to environmental tobacco smoke; and (v) Reduced risk of alcohol-induced traffic fatalities. In addition, the project also took into account the expected benefits to health policy decision makers and opinion leaders; State Compulsory Health Insurance Agency (SCHIA) and Regional Sickness Funds; Medical Academy, Association of General Practitioners (GP), Center for Professional Medical Education, Center for Health Promotion; and General Practitioners The project had some complexities and risks, although these were recognized from the outset and mitigation strategies were developed. Probably the key element that was not adequately planned for was the changes in mind-set that some of the interventions required, such as the development of the health care master plans and the consolidated health investment strategy. Fluctuating borrower commitment also played a role, although once this issue was addressed implementation progressed quite quickly. There was remarkably little desire on the part of the Borrower to deviate from the original development objectives or implementation program during the course of the project. Some deviations, such as replacing the outpatient center in Daugavpils with eight GP practices due to funding limitations, were agreed to without significant problems. Both the Bank and the Borrower recognized that due to cost over-runs in other civil works activities, there was not enough funding remaining for the outpateint center. The alternative preserved the essence of the development objective by promoting increased access to GP services in an under-serviced area. In this respect, it may have been better than the original concept. 3.2 Revised Objective: The objectives were not revised 3.3 Original Components: The project consisted of the following four components: - 3 -

7 Component I: Implementation of Health Care Financing Reforms: (US$8.3 million: 47% of the total project cost) This component was to include the following activities: (i) improving the effectiveness of the budget process; (ii) developing payment models for health care providers and contracting system; (iii) strengthening institutional capacity of health insurance funds by providing training in general management as well as in technical functions of health insurance; (iv) developing medical and financial audit capacity; (v) developing client relations; (vi) providing appropriate premises for the SCHIA; and (vii) establishing an initial country-wide health financing management information system. Component II: Development and Restructuring of Health Care Services. (US$8.1 million: 46% of the total project cost) Planned activities included: (i) supporting the Ministry of Welfare (MOW) to develop a consolidated health investment and capital financing policy; (ii) developing effective capability in the MOW, State Compulsory Health Insurance Agency (SCHIA) and Regional Sickness Funds (RSFs) to undertake health service planning, (iii) setting investment priorities and monitor the investment program; (iv) developing health technology assessment capacity in the Health Statistics and Medical Technologies Agency; (v) developing an agreed methodology and training in investment project appraisal; (vi) supporting development of regional and national health services master plans, an associated Consolidated Health Investment Program (CHIP) and capital financing plan; (vii) supporting a pilot hospital restructuring project; (viii) developing a standard legal framework for public hospitals; (ix) training hospital managers; (x) developing capacity for training and retraining of primary health care providers and support pilot Primary Health Care (PHC) projects; (xi) developing capacity for surveillance of non-communicable diseases and related risk factors; (xii) supporting operational public health research, developing a national public health report and priorities; and (xiii) supporting pilot health promotion and disease prevention programs. Component III: Implementation of Health Reform Communications Strategy: (US$0.6 million: 4% of the total project cost) This component involved: (i) strengthening the capacity of the MOW to design; and (ii) implementing health policy communication strategies. Component IV: Project Management: (US$0.5 million: 3% of the total project cost) The component included: (i) strengthening the PCU of the MOW; and (ii) supporting development of the Project Implementation Plan (PIP) for the Phase II of the APL. 3.4 Revised Components: N/A 3.5 Quality at Entry: Satisfactory. The ICR deems the quality at entry to be satisfactory and the project as well conceived. As mentioned in the earlier section, the project objectives were consistent with the country assistance strategy and the government priorities and met the critical needs of Latvia s health sector. During preparation of the project, lessons learned from other earlier projects in the health sector in Latvia were considered and - 4 -

8 incorporated into the project design. In addition, the project design recognized and took into account the following major risk factors which could affect project implementation: Government will not remain committed to reform. To mitigate this risk, senior civil servants who participated in the design of the program and the project were expected to stay on after the 1999 elections. The APL instrument was also expected to provide opportunity and flexibility for continuous policy dialogue and establish clear triggers for continuation of the program. Key stakeholders do not accept reform concept. In order to minimize this risk, efforts were to be made to ensure that public and stakeholder communications strategy would develop and maintain a constituency which would support reform. Public communications strategies are not effective in educating public on reform initiatives and choices. For mitigating this risk, regular public opinion studies were to be conducted to assess effectiveness of reform communication function and make adjustments. Local governments will not reach consensus on regional health services restructuring plans. This risk was to be reduced by technically well grounded plans developed by the project, special consensus building efforts and leverage with APL Phase II funds. Ministry of Finance and Ministry of Economy will not support proposed changes in health investment strategy. By the involvement of Ministry of Finance (MOF) and Ministry of Economy (MOE) representatives in the working process, this risk was aimed to be mitigated. Extensive stakeholder consultations and the participatory process in project preparation substantially contributed to the quality and readiness at entry. For example, during project preparation, Latvian experts carried out a stakeholder analysis with regard to the proposed health care reform program and planned stakeholder consultation and participation strategy. The analysis used Computer Assisted Political Analysis (CAPA) methodology to describe the political dimensions of policy decisions and design effective strategies for influencing policies' feasibility. The analysis organized descriptive information on policy content, key stakeholders (position, power, networks and coalitions), policy consequences, interests of stakeholders, opportunities and obstacles for change. The design proved to be remarkably durable during the course of implementation, and in hindsight many of the interventions are probably even more important than originally anticipated. For example, the Master Plans and CHIP approaches are crucial inputs to accessing European Union (EU) structural funds and any other investments, such as the Public Investment Program. The project emphasized capacity building and developing an adequate communications strategy. An APL was expected to allow for management of complex policy issues through a phased approach allowing for less complex design for each phase and better monitoring of progress. However, quality of entry could have been further enhanced in four areas: (a) less ambitious project design; (b) more realistic timelines and implementation targets -- in retrospect, the two and half year implementation period was far too optimistic; (c) more realistic costing of civil works and goods -- many of these costs were grossly under-estimated, leading to reallocation issues during implementation; and (d) more initial capacity building for project implementation, especially for the PCU, and also for the MOW and SCHIA staff - 5 -

9 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Satisfactory. The project succeeded in achieving its specific objectives and laid a good basis for Latvia in continuing with health reforms and undertaking needed investments. The project also succeeded in fulfilling the triggers needed for the Phase II under the APL. The major outcomes and achievements of the project are as follows: Trigger Indicators: There were ten trigger indicators for the project, each of which was met prior to Phase II appraisal: 90% of health services funded through a single pipe financing mechanism by FY2001. In 2002, the target of 90 percent single pipe financing was reached, which was two years later than originally planned. However, while both the expected increase in revenue for 1999 and the agreed allocation from income tax revenue were provided, the 10 percent share of state basic budget revenue was not reached until Despite the LVL 20 million increase in 2002, the total of income tax and state basic budget revenue was still almost LVL 10 million below the level anticipated in the Letter of Development Policy (LDP) and the PAD for Phase 1. The cumulative difference since 1998 of over LVL 49 million is roughly equivalent to the current arrears of the hospitals in Latvia. For the supervision of health care, and monitoring of public health, the budget revenue for 2003 was LVL million, and for 2004 it was LVL million. Budget expenditure for 2003 was LVL million, and for 2004 it was LVL million. According to the Ministry of Finance formula (including administrative costs), budget expenditure (including the Bank Loan) for 2003 was LVL 203,64 million, and for 2004 it was LVL million. DRG/PVQ payment model for hospital services and per capita PHC financing model developed Revised payment systems for hospital and general practitioners have been introduced, and both have been evaluated by independent consultants. In the case of the hospital payment system, the current approach is a combination of a case-based payment by diagnosis group (64 groups), a per diem payment, and an additional payment for specific surgical and medical interventions. A formal system of prospective payment based on Diagnostic Related Groups (DRG) has been in development and a recent consultant s report recommended the use of the Nordic DRG approach. This has been accepted by the SCHIA and MOH. 30% of the population registered with certified GPs to be funded through capitated primary health care contracts for FY2001 A capitation system for general practitioners was introduced for all GPs outside of Riga, and the approach was changed several times over the last several years. In July, 2002, a modified capitation system was implemented on a pilot basis for the 33 percent of the population residing in Riga. Therefore, over 80 percent of the population is currently registered with capitated, certified GPs. In 2003, the Government indicated that it wished to implement a single capitation system across the country, leading to a significant amount of concern and discussion from both groups of GPs, who each prefer their current approach

10 MIS for SCHIF, including Regional Funds, Branch Offices, target hospitals and PHC providers has been procured and is ready for country-wide roll- out. This system is currently in operation, although adjustments are being made through the warranty period. Implementation is currently under way, and the system is technically ready to process all information on state-paid health services. Currently elements of the "old" system are interfacing with the new, as new modules are successively integrated. Government-approved CHIP (Consolidated Health Investment Program), consistent with State Health Care Master Plan and standard hospital legal framework, prepared according to agreed methodology. The guidelines for CHIP were developed and applied in the development of the 2003 Public Investment Program submission. This included the use of the Health Statistics and Medical Technology Agency to ensure that proposals were sound from a health technology point of view, and were consistent with the Master Plans and Ministry priorities. Master plans were developed for all regions of the country (the target was five regions) and a consolidated plan for all of Latvia has been developed. These plans call for improving primary and emergency care services to allow over 70 hospitals to be closed or converted to long-term care or community health centers. Primary health care pilots implemented and evaluation report issued by the government. With regard to the pilot projects, the hospitals in Kraslava and Daugavpils were renovated and the children s division was refurbished and moved from a separate site. GP offices in Daugavpils (1 common practice for 8 GPs), Kraslava (4), Dagda (2) and Indra (1) were renovated and equipped. The government decided to improve one common practive, where 8 GPs provide services for patients in another area of the Daugavpils city (Jauna Forstate) so that primary care services would be provided for patients who live in this neighborhood. The out-patient department of regional rehabilitation center was established in children s health center (previously children s polyclinic). The in-patient department of regional rehabilitation center was established in premises of Daugavpils city hospital as originally planned. An evaluation of the pilot projects (both qualitative and quantitative) was completed at the end of May 2002, and updated early in It showed the following results in the pilot areas: 1/3 increase in proportion of people registered with GP s to 93 percent (target 80 percent) 14% increase in per capita utilization of primary care services (steady over last 2 years) 2 percent increase in the average length of stay at Daugavpils hospital (owing to the merging of the tuberculosis and infectious disease hospitals), and 4 percent decline in Kraslava (target 30 percent) 24 and 7 percent reductions in emergency medical services calls (target 30 percent) the changing hospital structures due to amalgamation and accounting system changes makes the overall financial evaluation of the pilot projects difficult, but it is worth noting that Daugavpils hospital, which underwent the largest restructuring went from a 15 percent budget deficit in 2001 to a break-even position in the heating costs of the Kraslava hospital, which underwent the energy efficiency improvements, decreased by 57 percent between 1999 and 2003, with an NPV and rate of return in line with original estimates. the overall level of support for general practice increased among medical professionals (from more than 70 percent with positive impressions, compared to just over 20 percent in the

11 survey), but declined among the general population (30 percent vs. 55 percent). Regional health services master plans developed for at least five health regions. Eight regional master plans were developed. To ensure national consistency, they were consolidated into a State Master Plan and now form the basis for very essential decisions such as health care system optimization, investment needs for improving of health care services accessibility and quality, as well as EU structural fund submissions. Although not originally envisioned as being part of the master planning process, PHC have been included in the regional master plans. Public health strategy with targets in priority areas issued. The Public Health Strategy was approved and represents a critical reference document for the development of the health system in Latvia. Specific strategies were also developed in a number of areas (mother and child health, HIV/AIDS, mental health, cardiac health), which provide integrated approaches to prevention and treatment covering all areas of the health system (public health, primary, secondary, tertiary and emergency care). This fundamental change in the approach to addressing health issues is a major accomplishment that is not commonly achieved in the region. The various initiatives were also well linked and integrated. The CHIP program provides the foundation for future development, and the Master Plans and Public Health Strategy provide key support and guidance. The specific strategies are based on these three elements and cover the entire health system and beyond as necessary to achieve their objectives. The Government has submitted to the Parliament draft legislation proposing a schedule for gradual increase s of taxes and duties on tobacco products to EU levels. With the intention of providing the underpinning to the projected legislation, background work on a tobacco economics study was completed during late 2000/early Since this was a cross-ministerial subject, and a subject for which the MOW direct responsibility is limited, an inter- Ministerial group chaired by the ministry of Finance was established in mid Progress is slow, since powerful local business interests are reported to be against any such reform. Further, one of the conditions for accession to the EU is a similar requirement. Latvia is trying to negotiate a waiver of this requirement, which is itself an indication of the strength of forces against these reforms. (to update) Regular and coordinated health behavior surveys conducted. Health behavior surveys were started in 1998 using the FINBALT survey model. Initial experience was encouraging and a similar FINBALT survey was conducted in 2000, with a third survey conducted in March Data are being used in the communications component, sector planning and implementation, including sub- nationally with some assistance provided to local offices. Health behavior surveys were started in 1998 using the FINBALT survey model. Initial experience was encouraging and a similar FINBALT survey was conducted in Raw data from the FINBALT surveys are made available by the contractor and the Ministry of Welfare has the capability and expertise to undertake more detailed analyses. [Note: the FINBALT Health Monitor is a collaborative system for monitoring health behavior in Estonia, Finland, Latvia and Lithuania. Research into health behavior is a way to gain information about the public's attitudes toward health, about the distribution of risk factors and about the public's readiness to change. This type of survey has taken place annually in Finland since Estonia joined in 1990, Lithuania in 1994, and Latvia in 1998.] 4.2 Outputs by components: - 8 -

12 Component A: Health Financing Reform Component A.1 Strengthening Health Financing. As discussed in Section 4.1, substantial progress was made in the areas of single pipe financing, payment models, and GP registration. A.2 Strengthening Institutional Capacity of Health Insurance Funds. Renovation of SCHIA building was completed on April 1, 2000 because the MOW decided to restore a historical building to its initial state, the cost significantly exceeded what was budgeted and the Bank was reluctant to proceed. The MOW decided to continue using their own funds. Training for the SCHIA and RSFs personnel. A comprehensive training program was implemented, aimed at building the management capacity of five key institutions involved in the reform,, including SCHIA and sickness fund staff. The program comprised 8 courses targeted for participants per course, and a core group of 6 senior managers. Development of financial and medical audit systems. A system for internal audit has been established within the government structure and is being used, though not fully developed. This is an ongoing process involving all Ministries and ministerial Agencies. An Audit and Control Department has been established within HCISA, responsible for audit of contracting, financing, management, targeting and other processes. Training in financial and accounting management has been carried out under the project. International consultants were contracted to assist in the development of financial and medical audit systems. Development and implementation of the public relations programs. HCISA created a Public Relations Division which actively participated in planning the public information campaigns, coordination of surveys of public and provider satisfaction, and other public information and monitoring activities. A.3 Implementation of Management Information System. See Section 4.1 for a discussion of progress on the MIS trigger indicator. In addition, MIS training was provided to two systems administrators at HCISA. Training of end users has been mostly done in the form of planning activities, due to the delay in implementation. A study visit to Sweden was also carried out, to observe large public organizations with tailor-made applications for health care and law enforcement organizations. The Head of Information Technology and MIS Project Manager participated. The performance of the Health Financing Component and its sub-components as follows: (Sub)-Component Rating A.1 Health Care Financing Policy Satisfactory A.2 SCHIA Development Satisfactory A.3 Management Information Systems Satisfactory Health Financing Component Satisfactory - 9 -

13 Component B. Health Care Services B.1 Investment Policy Development. Investment planning, approval and control approaches, principles and procedures were compiled for the development of Health Care Reform and Consolidated Health Investment Program for In addition, an Investment Manual was prepared and distributed to SCHIA, HSMTA, Regional sickness funds, health care policy makers, hospitals and other interested parties B.2 Support to Primary Health Care Reform. Renovations were completed for the PHC pilot practices and the necessary medical equipment was delivered. An inspection commission that included representatives from the corresponding local governments and regional sickness funds, inspected all these practices and drew up the deeds of conveyance. Finally, the evaluation of pilot project and four PHC training practices located in Latgale region was prepared, fulfilling the trigger indicator. The University of Latvia made up five groups of internists and pediatricians with 50 students in each. In addition, 70 training physicians completed their studies at University of Latvia by November 30, Finally, the education of 240 public health nurses finished in September A total of 16 clinical practice guidelines were prepared, issued and distributed to general practitioners. An evaluation of the use of the guidelines was completed. The Family Health Education Center was provided with computers to assist in the GP Training. Guidelines for General Practitioners Sixteen clinical Guidelines for General Practitioners were prepared and were distributed in Their main purpose is quality improvement and enhancement of the knowledge of newly-qualified GPs. The guidelines cover management of common diagnoses, symptoms, and risk factors frequently seen in primary care. Guidelines were distributed in mid-2002 and an assessment was carried out in early Training of GPs: A total of 250 PHC physicians were trained through the project. Seventy GP physician trainers have been trained and are entitled to train GP residents assigned to their practice. Twenty such training practices have been established. Training of public health nurses: Training of public health nurses was conducted by the Centre of Professional Medical Education. Facilities of the Centre were renovated and training began in mid-january B.3 Hospital Restructuring Program. Training of hospital management staff was done with support from the Government funds. Tutors from different health care institutions involved in this training. Training coordinated and supported by the School of Public Health of Latvia. Training in emergency assistance (EA): In total 170 EA teams, including physicians, nurses and physician assistants, have been trained and 60 additional teams will need to be trained. Ambulance services to deploy EA teams are established at 70 location points. Elaboration of the Regional and State Healthcare Development Plans (Masterplans). One state and eight

14 regional healthcare development plans (master plans) were developed in co-operation with foreign and local consultants. Strengthening of the Emergency Medical Care System. Repair work was completed for the training division of Disaster Medicine Centre; training was accomplished, including Acute Trauma Life Support (ATLS), Acute Cardiac Life Support (ACLS), Emergency Care Management, Emergency Vehicle Operator Training; computers and lay figures for provision of the training process were purchased and raining programmes for emergency care training wee developed. Re- training of existing medical professionals into Emergency Care specialists has also been completed. B.4 & B.5 Pilot Project in Latgale. See section 4.1 discussion on relevant trigger indicator. B.6 Assessment of public health conditions and improvement of monitoring. The Health Promotion Center (HPC) and the Health Statistics and Medical Technology Agency (HSMTA) produced a substantial body of data on the public health situation, including routine statistics, behavioural data, epidemiological, and health systems data. These surveys and routine reports are now institutionalised and self-financed. HPC has performed bi-annual health surveys in 1998, 2000 and 2002 (FINBALT), aimed at public attitudes toward health, risk factors and the prevalence of health problems. The Ministry of Welfare financed the 2002 FINBALT survey, and funding is committed to carry out the survey again in Latvia participated in the Global Youth Tobacco Survey in 2002, and in the WHO World Health Survey in A survey on breastfeeding promotion was conducted in Data from these surveys have been used to guide health promotion plans and interventions, training, and for policy and strategy use by Ministry of Health. HSMTA has produced comprehensive statistical reports on public health, and disseminated the reports widely to providers, managers and policy makers e.g.: - Yearbook of Health Care Statistics - Semi annual Health Care Statistics - Maternal and Infant Health Care Statistics - Statistical overview on Health and Health Care Development of prevention programs for priority public health issues. In the area of public health, a Center of Excellence for Management of Multiple Drug Resistant TB was established, serving national training needs. Public information campaigns on cardiovascular disease were carried out. Studies were completed on alcohol economics, cervical cancer screening and the economics of tobacco taxation. A Health Promotion Infrastructure Scheme, including a possible financing model was developed and is currently in the process of implementation. Implementation of the Public Relations Campaign One continuous campaign was implemented rather than the originally planned six campaigns, based on strategic and professional assessment. The campaign was launched in November 2000 and continued through May Communications media included four nationally televised TV spots, booklets

15 distributed by mail to all households, information posted in health ca e institutions, a supplement in the main newspaper, numerous topical articles in the press, and a World Health Day event. Messages were tested using focus groups before finalising and disseminating. Five main topics were addressed: (i) The health care system and health reform (ii) Access to health services (iii) Advantages and differences between GP and specialist physicians (iv) The hospital optimisation process and master planning (v) Public health The performance of the Development of Health Care Services Component and its sub-components is rated as follows: (Sub)-Component Rating B.1 Investment Policy Development Policy Satisfactory B.2 Support to Primary Health Care Reform Satisfactory B.3 Hospital Restructuring Program Satisfactory B.4 & B.5 Pilot Project in Latgale Satisfactory B.6 Public Health Highly Satisfactory Development of Health Care Services Component Satisfactory Component C: Health Reform Communications Strategy This component played a key role in the preparation for Phase II, by coordinating the social assessment activities and providing the results of both the ongoing surveys and the evaluation of the public information campaign as key inputs into the design of Phase II. It completed all of the planned activities, including a number of extremely useful public opinion polls, which aided project implementation, preparation of Phase II and ongoing management of the MOW. For example, a public information campaign was initiated in October, 2001, focusing on the health care system and health reform, access to medical services, the role of the GP and advantages of using GP s, the hospital optimization process and master planning, and public health. In addition, stakeholder meetings were held on a number of topics, including improvements in the capitation model and hospital restructuring. A special supplement was also done in the main Latvian and Russian language newspapers to provide more information on both primary health care and the master planning process. A public opinion survey was also conducted in May, 2002, to assess the impact of the public information campaign to date and assess the general public perceptions regarding the health reform process. Two documents were prepared: (i) the long-term Communication strategy; and (ii) the activity plan for implementation of the Communication strategy. Overall, this Component is rated as Satisfactory. Component D: Project Management Project management began with a significant learning curve, and it took a fair period of time before capacity was developed. Just before the mid-term review, however, much attention was focused on this, with the result that both the effectiveness and the capacity of the PMU had increased. After the October

16 2002 election, significant staffing reductions were made to the PMU, and implementation shifted into simply completing the remaining activities, rather than actively planning to get the maximum benefit out of the available resources. Overall, this Component is rated as Satisfactory. 4.3 Net Present Value/Economic rate of return: N/A 4.4 Financial rate of return: N/A 4.5 Institutional development impact: The project resulted in a substantial institutional development impact. National level: The project increased significantly the capacity of the Ministry of Health, and the SCHIA to plan and manage the health system. Specific attention was focused on health planning and health investment project preparation and analysis. Administrative staff of all levels of health care system have been trained in health management. The project also assisted the overall health sector reform and strengthened the national capacity for managing three of the main systems in the health care (PHC), Emergency Medical Services (EMS) and Hospital Services rationalization. A national Public Health Strategy and an Action Plan for the period were also drafted. SCHIA has been well established and is operating in an effective manner. Annual financial statements show that the administrative costs of the Agency (including regional funds) are less than two percent of total expenditure, which is very favorable by international standards. Municipal level: The project strengthened the local governments capacity to implement the health reform at their level, by providing training in analyzing their health services and planning for the restructuring of the health care in all regions of the country. The Health Promotion coordinators in some municipalities have been established with a great deal of cooperation between the Health Promotion Centre, municipalities and Sickness Funds. Institutional capacity of HCISA and RSF was strengthened by the project. Capacity development in these agencies came primarily through involvement in developing instruments and systems required for the health sector reform. Working together with numerous international and national consultants, many HCISA staff benefited from hands-on training. HCISA participated in developing the National Health Care Master Plan, and working groups from RSFs and HCISA branches developed Regional Health Care Master Plans. Likewise, the development of the capitation-based payment system for PHC, the Consolidated Health Investment Program, and MIS development, all have conveyed substantial increase in institutional capacity. Regarding MIS, inter-agency working groups were formed for eleven sub-systems, staff were trained in software applications, and computers were provided by the project to HCISA, its branches, and 50 in-patient institutions

17 In addition, through the various communications and public information campaigns financed or otherwise supported through the project, the people of Latvia gained a better understanding of health issues, and were encouraged to focus more on personal responsibility for their own health. For example, the latest Finbalt survey of health related behaviors indicated that a higher percentage of respondents had measured their blood pressure in the last year, and that more respondents are vaccinated against tick-born encephalitis and diphtheria. Further a majority of smokers are either in the process to quit smoking or at least wish to quit smoking and the number of respondents who have concerns over the harmful effects of smoking has increased between 1998 and Dietary habits have also improved, especially among those in rural areas, where the amount of animal fats have been cut in half since Despite this progress, high risk health behavior is often identified among males, smoking prevalence and alcohol consumption are both still very high. Only 1/3 of the population has enough physical activity, with 40.8% of the adult Latvian population being overweight or obese. These data indicate that progress has been made, but that further work is needed through sustained and ongoing attention to health promotion issues. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: (i) Donor coordination under the project was an example of good cooperation and coordination. The project received funding from the Bank and Swedish International Development Agency (SIDA), and bilateral support from CDC and other organizations. SIDA agreed to a common set of implementation rules. (ii) Political turbulence. Although there was some political turbulence during the implementation period, these did not have a marked impact on the actual pace of implementation. However, senior ministry management attention to ensure effective implementation did increase in the year or so prior to the October, 2002, election. (iii) Task complexity. There was some delay in implementation resulting from the number, complexity and variation of the tasks included in the project activities. 5.2 Factors generally subject to government control: (i) Frequent changes of governments in Latvia was a factor influencing the progress of the project, but impossible to control. The most recent change of the government brought in a completely new view of the basic principles in reforming health system in Latvia, which for some time even stopped the project, especially affecting the preparation of the second phase of the APL. There was reluctance from the government to make several serious policy decisions. (ii) Rivalries between medical school and post-graduate education faculty. Because of rivalries between these two medical institutes, there was a delay by the government for selecting the site for retraining of family doctors. This held up the accelerated re-training of physicians and capacity strengthening of a department of family medicine. (iii) Delay in selecting an institution for management training program. There was a delay on the part of government in selecting an institution for development of a management training program for health sector managers because of their internal need for a perceived competition among training providers, and due to the lack of selection criteria. This was holding up training program development and training of health

18 sector managers that was needed for more economic and business-minded decision making under health financing environment in the proposed Phase li of the APL. (iv) Management Information System. The development of the management information system involved great deal of delay, because of factors both within and outside the control of the MOW/SCHIA. Shortly after the start of project implementation, a government-wide review of information technology (IT) activity was conducted by the Ministry of Transport. This process delayed the finalization of the MIS tender documents by approximately 12 months. The lack of technical capacity within the MOW and SCHIA, as well as initial problems with the input from international consultants, also delayed the development of the tender documents, and the subsequent tendering process. However, the PMU, together with a Bank IT procurement specialist and the assistance of competent local and international consultants were eventually able to complete the MIS tender and implementation. (v) Health Service Master-plans. Work on regional health services master-plans was stalled due to difficulty in attracting bidders for foreign TA assignment on master-plan methodology. (vi) Development of healthcare service payment models and contract systems. Completion of these activities was delayed as the initial task requiring the involvement of consultants was restructured several times according to the World Bank s instructions and finally combined with several other tasks under the component. (vii) Development of investment policy. The realisation of all sub-component tasks started after a delay of about 12 months. This was caused by the splitting of one task into separate contracts, complicated and time-consuming procurement procedures and organizing of repeated procurement cycles. (viii) Primary Healthcare reform. During the project planning exercise the majority of activities were planned to start in January Due to lack of training of planners and lack of information on WB tender and no-objection procedures, there arose a necessity to re-plan the timetable of activities, and consequently, all activities were delayed by six months. (ix) Strengthening PHC institutional capacity. Works related to this activity were delayed since the preparation of renovation specifications were not included into initial plans. (x) Strengthening of the Emergency Medical Care System. There was a delay in the ATLS training, which was caused due to limited financial resources since the development of ATLS training program was not included in the State Investment Program for Factors generally subject to implementing agency control: In the beginning stage of project, implementation was delayed due to several reasons, such as: lack of project management capacity and staffing problems; poor quality of documents submitted to the Bank for reviews and no-objections in terms of English, clarity of content, and structure; and poor communications with prospective consultants. 5.4 Costs and financing: The total cost of the project was US$20.40 million compared with the PAD estimate of US$17.6 million. The difference was primarily due to the higher costs for civil works and the Management Information System, which were financed from the Government s own sources. The Bank financed US$11.46 million