Précis W O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T S U M M E R 2 0 0 2 N U M B E R 2 2 3 Supporting Health Reform in Eastern Europe A s they undertook the difficult transition to a market econ- omy, the countries of Eastern Europe found that they needed to radically reform their health sectors. The scope, pace, and outcome of the reforms eventually undertaken varied. But they shared many characteristics. Most sought to decentralize care, increase private sector involvement in service delivery, rationalize or downsize hospital services, and strengthen the role of family practice physicians. Many introduced forms of national health insurance. Some took steps to strengthen public health programs and regula- tions (such as controls on public smoking and tobacco advertise- ment). Others sought to improve reproductive health services for women. The World Bank encouraged these reforms OED review of the Bank's reform experi- through its early investment activities in ence in Eastern Europe. OED also con- the region and support to regional initia- ducted in-depth field assessments of tives funded by grants. The Bank's strat- completed projects in Estonia, Hungary, egy for the health, nutrition, and and Romania. population (HNP) sector in the region, Health reform is a slow and contentious articulated in 1998, identified major process. Reform in transition countries has reform challenges, summarized emerging been especially difficult because most have lessons, and identified priorities to had to reform inefficient systems with improve the effectiveness of Bank support. excessive hospital capacity. This required The Bank's HNP portfolio in the region downsizing resisted by health workers, con- is relatively young. Seven projects (in sumers, and local politicians. Furthermore, Albania, Croatia, Estonia, Hungary, Kyr- many countries lacked the knowledge and gyz Republic, Romania, and Turkey) were capacity needed for health policymaking, completed by the end of fiscal 2002 and planning, and management. A long tradi- reviewed by the Bank's Operations Evalu- tion of specialist medical training con- ation Department (OED). Five of these-- tributed to resistance to family medicine, Albania Health Services Rehabilitation, and to cost-effective treatment protocols. Croatia Health Project, Estonia Health Finally, economic transition itself impeded Project, Hungary Health Services and reforms when GDP and health sector budg- Management, and Romania Health Ser- ets were stagnant or declining--as experi- vices Rehabilitation--faced similar chal- enced by most transition countries, lenges and became the basis for a broader particularly in the early 1990s. 2 World Bank Operations Evaluation Department culties of reforms, and were unduly optimistic regarding the pace and prospects for reform. Several other major fac- tors were found to influence the outcome of these early projects. First, the design and sequencing of sector reforms--as well as the Bank's strategy, policy advice, and project design--must be matched to the political and sectoral con- text of the country, particularly the degree of consensus for reform, and capacity for design and implementation of projects and reform programs. Second, the outcome of structural reforms--including introduction of compulsory national health insurance or privatization of family doctors--depends on progress in complementary reforms, as well training and capacity development for health managers and providers. Third, the Bank's most successful project investments-- Although the Bank is often among the most important and most significant contributions to the sector reform international agencies operating in a country, its financial process--resulted from lending and nonlending support for contribution is typically small relative to total health strengthening capacity and building consensus for reform. financing. The Bank plays only a peripheral role in domes- These activities typically represented a small proportion of tic political bargaining and coalition building around total lending. health reforms. Under these constraints, the Bank's influ- Fourth, capital investments can complement and rein- ence depends on catalyzing wider reforms, which it tries to force the reform process, if used properly. But for most of achieve through policy dialogue, investments in training the completed projects, capital investments were only mod- and capacity-building, and policy conditions associated estly successful in bringing about reforms or significant with lending. improvements in health service quality or efficiency. Out- comes were better when investments were carefully linked Bank Support in Context with institutional reforms and complementary support for The health projects in Estonia, Hungary, and Romania illus- capacity development. trate the range of difficulties that have been encountered Fifth, project investment activities were more likely to be when attempting to reform the health sector in transition successful when carried out in partnership with other countries. The projects shared many objectives and charac- donors, nongovernmental organizations, or research insti- teristics, but the evolution of health reform differed. Estonia tutes. Many governments are reluctant to borrow for tech- has been among the most advanced in the region in reform- nical assistance, and other organizations have a ing both its economy and its health sector, while Romania comparative advantage in technical areas or capacity has lagged on both. Hungary has progressed in economic building. reform and is positioning itself for accession to the Euro- Sixth, despite more than 10 years of reform experience, pean Union, but it has been slow to tackle the sector. there is remarkably little evidence regarding the impact of Outcomes of completed projects also varied, from highly various reforms on service quality and efficiency, health satisfactory in Estonia, to moderately satisfactory in Roma- behaviors, or health outcomes. Lack of priority to monitor- nia, and moderately unsatisfactory in Hungary. In Estonia, ing and evaluation has reduced the Bank's contribution to the Bank-sponsored Health Project effectively integrated consensus building and social learning. investment and reform activities, and served as an overall framework for the government's reform program. The Design and Implementation of Sector Reforms Romania Health Sector Rehabilitation Project made impor- The health sector reform agenda has been remarkably simi- tant contributions to rehabilitation of health infrastructure lar across the region. Experience with three areas--national and to catalyzing health reforms, but the outcome of proj- health insurance, strengthening of family medicine and pri- ect investment activities varied considerably. The Hungary vatization of general practitioners, and strengthening health project had low government ownership and, although sev- promotion and public health programs--illustrates some of eral project components were successful, most project the challenges. investments had limited sector impact and their sustainabil- National health insurance--great expectations, mixed ity is uncertain. results: Most countries in Eastern Europe have established some form of compulsory national health insurance, Determinants of Project and Sector Reform Outcomes financed through a payroll tax. The reforms were expected Most of the early Bank-financed health projects in the both to increase resources available to health and to cat- region underestimated the political and institutional diffi- alyze improvements in system efficiency and quality. But Précis 223 3 outcomes have been mixed. In advanced reformers, such as The contrasting Estonia and Romania experiences point Estonia, the new insurance system is well established and to several lessons. First, changes in the employment and beginning to yield benefits. In Hungary cost containment payment systems should be accompanied or preceded by remains a challenge. In countries like Romania, where the intensive training for family doctors, to allow them to economic and institutional context is weak, the reforms adapt to their new roles and to increase credibility for remain fragile, with continued shortcomings in the legal reforms among patients and the medical profession. Sec- framework. ond, general practice reforms should be implemented in Experience in Estonia, Hungary, and Romania shows phases, with the "gatekeeper" function (for specialist care) that insurance and payment reform alone are insufficient to the last to implement--after credibility is established. significantly rationalize or improve the efficiency of the Third, the success of reforms depends not only an establish- hospital sector. The Bank's ability to influence the develop- ing appropriate incentives in the payment system, but also ment of national health insurance has been limited, largely on developing adequate capacity within the purchasing because the decision to implement social insurance has authority for regulation and monitoring of general practi- been driven by political considerations. Thus the Bank's tioners and effective mechanisms to protect budgetary allo- role has been limited to encouraging refinements in the sys- cations for primary care. Finally, establishing family tem and strengthening management systems, as it has done doctors as independent practitioners requires clarification in Croatia and Estonia. in the regulatory framework for primary care, including The Bank remains engaged in national health insurance clarifying ownership of primary care facilities (usually pre- issues in many countries in the region and in the future will viously owned by government), employment for nurses, need to attend to several important questions: Do the bene- and accreditation for private or independent practitioners. fits of compulsory national insurance outweigh the oppor- Health promotion--limited progress: Strengthening tunity cost of establishing these new institutions, health promotion and prevention of noncommunicable particularly in low-capacity settings? Even if compulsory diseases--including reducing tobacco and alcohol con- national health insurance is not ideal, how can countries sumption and improving diets--requires efforts to influence that have made a political commitment to national health individual behavior (through information, education, and insurance best adapt to this system? Should governments communication), as well as changes in policies, laws, and introduce competition among public and private insurance taxes. But progress has been limited because most govern- providers--along with the even greater regulatory burden ments in the region initially assigned health promotion a required by this approach? Should payroll taxes continue low priority. Project-sponsored health promotion compo- to be the primary source of revenue for national health nents were relatively successful in Estonia and Croatia insurance--given their potential to increase labor costs and (where governments were generally supportive), but unsat- tax evasion? If not, what mix of revenue sources might isfactory in Romania and Hungary (where support was reduce negative side effects for the economy? Countries weak). The Bank needs to give greater emphasis to building themselves will make these decisions, but increasing knowl- capacity and commitment for health promotion activities in edge and advising client governments on such questions is project design, supervision, and policy dialogue, particu- an important priority for the Bank and its partners. larly when government commitment is weak. Strengthening family practice--importance of sequenc- The experience in Croatia, Estonia, Hungary, and ing training and reforms. To strengthen primary care, Romania suggests several lessons for future Bank work in countries throughout the region have either piloted or this area: First, changing long-established patterns of indi- implemented reforms to establish family medicine as a dis- vidual and social behavior is a long-term process, as is tinct specialty and to contract family doctors as independ- building institutional capacity and national commitment ent practitioners. Estonia, a leader in these reforms, for health promotion--particularly given the low starting established a Department of Family Medicine at its medical point of most of the countries. Second, the Bank can con- school in the early 1990s (and expanded it with project tribute to building capacity and consensus for health pro- support). By the time the reforms were fully implemented motion through policy dialogue (with ministries of health, in 1997, a critical mass of well-qualified family doctors had ministries of finance, and nongovernmental stakeholders) been trained, increasing acceptance among the public and and through targeted project support (such as establishing medical community. In Romania, a project-sponsored pilot or strengthening health promotion organizations). But tested family doctor reforms in eight districts. The pilot these activities require consistent attention during project built support and helped refine legislation, but reforms design and supervision, despite the modest size of invest- were implemented nationally before family doctors had ments. Third, monitoring and evaluation of health behav- been trained in their new roles. The reforms created the iors was weak in all completed projects--and in most potential for improving primary care, but further refine- countries--both in tracking behavior trends at the national ments are needed. For example, the recently established level (which typically require survey instruments) and in health insurance fund has limited ability to monitor the evaluations of the effectiveness of specific health promotion quantity (billing) or quality of care. interventions. Projects tended to set unrealistic targets for 4 World Bank Operations Evaluation Department changes in health indicators for chronic diseases (cancer, on the extent of local involvement and dissemination, and heart disease); intermediate behavioral indicators are more on the government's absorptive capacity for technical appropriate (smoking prevalence). analysis. Although project conditions cannot force govern- ments to take actions, the Bank can use targeted policy Strengthening Capacity and Consensus for Reform conditionality to strengthen the hand of reformers and help How can the Bank use its lending and nonlending activities "lock in" reforms--as in Estonia and Romania. to help strengthen local capacity and to build consensus for reform among stakeholders? Recommendations Strengthening capacity for design and implementation of The Bank can enhance its contribution to sector reform by: reforms: Project support for establishing or strengthening · Strengthening the knowledge base for sector reform, health management institutes in Hungary and Romania, through improving monitoring and evaluation at both the schools of public health in Estonia and Hungary, and a project and sector levels, and by sponsoring analytic work department of family medicine in Estonia has helped on how to best adapt reforms to local circumstances, par- increase the credibility of these "new" disciplines, built ticularly differing institutional and political contexts. national capacity in skills critical for reform, and strength- · Strengthen focus on neglected priorities, including health ened constituencies for sector reform. Their direct impact on promotion, reducing under-the-table payments, and policy depended on relations with government, however. equity (including for ethnic minorities). Reforming existing organizations--such as ministries of · Continue to experiment with new lending instruments, health or Soviet-era sanitary-epidemiological agencies--has including Adaptable Program Loans, Learning and Inno- proven more difficult than establishing new ones in Estonia vation Loans, and Sector Adjustment Loans--and selec- and Hungary. But long-term dialogue and support for train- tively incorporating health sector­related conditions into ing can pay off. Despite contributions to training and capac- macroeconomic adjustment loans. ity by a variety of donors, the demands of sector reforms on · Further strengthen partnerships with donors, non- both managers and health providers continues to outstrip governmental organizations, and research institutes, the supply of training and technical support in many coun- within the region as well as at the country level. tries. And, based on experience in Albania, Hungary, and Romania, training programs need to be adapted to the busy schedules of providers and hospital managers. Building consensus for reform: Given regular turnover of governments and ministers, engagement with a wide range of stakeholders, including Parliament and opposition Director-General, Operations Evaluation: Robert Picciotto parties, is essential. Pilot projects can contribute to refining Director, Operations Evaluation Department: Gregory Ingram and building consensus for reforms, but need to be well- Manager, Sector and Thematic Evaluation: Alain Barbu Task Manager: Timothy Johnston designed, evaluated, and relevant to government priorities. Bank studies and analyses were often influential, as in This Précis, written by William Hurlbut, is based on the evaluation Albania, Hungary, and Romania, but the impact depended work of Timothy Johnston, Senior Operations Evaluation Officer, Sector and Thematic Evaluation Group, OED. Recent OED Précis Précis are available to Bank Executive Directors and staff from the 222 Bolivia Water Management: A Tale of Three Cities Internal Documents Unit and from regional information service centers, and to the public from the World Bank InfoShop. Précis are 221 Bridging Troubled Waters: A World Bank Strategy also available at no charge by contacting the OED Help Desk: 220 Cultural Properties in Policy and Practice eline@worldbank.org or calling 1-202/458-4497. 219 ARDE 2001: Making Choices 218 IDA's Partnership for Poverty Reduction Précis 217 Community Forestry in Nepal Manager, Partnerships and Knowledge: Osvaldo Feinstein · 216 Promoting Environmentally Sustainable Development Editor-in-Chief: Elizabeth Campbell-Pagé · Series Editor: 215 Rural Water Projects: Lessons Learned Caroline McEuen · Dissemination: Juicy Qureishi-Huq 214 Uganda: Policy, Participation, People DISCLAIMER: OED Précis are produced by the World Bank Operations 213 Developing African Capacity for Monitoring and Evaluation Evaluation Department, Partnerships and Knowledge Group (OEDPK), 212 Chile's Model for Educating Poor Children Outreach and Dissemination Unit. The views in this paper are those of 211 Strengthening Tunisian Municipalities to Foster Local Urban the Operations Evaluation staff and editors and should not be attributed Development to the World Bank, its affiliated organizations, or its Executive Directors. 210 Connecting with the Information Revolution Précis aussi disponible en français 209 Participation in Development Assistance Précis en español tambien disponible @ http://www.worldbank.org/html/oed Précis 223 Supporting Health Reform in Eastern Europe ISSN 1564-6297