Report No. 32612-AL Albania Health Sector Note February 2006 Human Development Sector Unit South East Europe Country Unit Europe and Central Asia Region Document of the World Bank ALBANIA HEALTH SECTORNOTE Contents Acknowledgments.......................................................................................................................................................... i Main Findings and Recommendations........................................................................................................................... i A The Heritage............................................. ................................................................................ i B.. ............................................................................................... i C. HealthOutcomes and HealthChallenges. Health Care Delivery ...................................................................................................................................... ii D Financing Health Care.................................................................................................................................... vi E.. Improvingthe Health Sector's Ability to Meet the Population'sChangingHealthNeeds........................... vii Chapter 1: Health Status ofthe Albanian Population................................................................................................... 1 A. Introduction..................................................................................................................................................... 1 B. Sourcesof Information and Data Quality Concerns ........................................................................................ 1 C. Demographic Profile ....................................................................................................................................... 3 C.l, Internal and External Migrations ........................................................................................................... 3 C.2. 4 4 Population Age Structure.,..................................................................................................................... Population Growth................................................................................................................................. Geographic Distribution ofthe Population............................................................................................ C.3. D.c.4.PopulationHealth Status................................................................................................................................. 5 7 D.1. Life Expectancy ..................................................................................................................................... 7 D.2. Mortality Rates and Causes of Death.................................................................................................... 9 D.2.1. 9 MaternalMortality ..................................................................................................................... Youth Mortality ......................................................................................................................... Infant and Under-five Mortality Rates......................................................................................... D.2.2. 11 D.2.3. 11 D.2.4. D.3. Morbidity and Epidemiological Profile ............................................................................................... Main Causes ofDeath................................................................................................................ 12 13 D.3.1. Infectious Diseases..................................................................................................................... 13 D.3.2. SexuallyTransmitted Diseases and HIV/AIDS ......................................................................... 15 D.3.3. NoncommunicableDiseases........................................... ..................................................... 15 D.3.4. Nutrition..................................................................................................................................... 16 D.3.5. ReproductiveHealth .................................................................................................................. 17 E. Health Risks and Determinants ..................................................................................................................... 19 E.1. Life-style Determinants ...................................................................................................................... 19 E.l.l. 19 E.1.2. Smoking..................................................................................................................................... Alcohol Consumption ................................................................................................................ 20 E.1.3. DrugUse .................................................................................................................................... 20 E.2. SocioeconomicandEnvironmental Factors ........................................................................................ 21 E.2.1. Access to Water, Sanitation, Housing, and Power Supply......................................................... 21 E.2.2. Roads and Traffic Volumes ....................................................................................................... 22 Solid Waste ................................................................................................................................ 21 E.2.3. F. Conclusionsand Recommendations .............................................................................................................. 22 Chapter 2: Supply andUtilization of Health Care...................................................................................................... 24 A . Introduction ................................................................................................................................................... 24 B. B 1. . SupplySupplyPlanningand of Care .............................................................................................................................................. 24 of Outpatient Care ................................................................................................................... 24 24 B.2. B.1.1.Availability of Outpatient Care ........................................................................................................... Management ofHealth Facilities and Public Health............................................ 24 B.3. 27 C. Supply of Inpatient Care ............................................................................................................................... 28 Productivity of Primary Care Providers............................................................................................... C.1. Availability of Inpatient Care.............................................................................................................. Management of Hospitals .................................................................................................................... 28 C.2. 28 D.(2.3.SupplyofPrivate Hospital Productivity........................................................................................................................... 30 34 E. Sector Services................................................................................................................. E 1. . Utilizationo f HealthCare............................................................................................................................. 37 E.2. Demand for Care Basedon HouseholdSurvey Findings .................................................................... Utilization of Inpatient Care................................................................................................................ 38 39 E.3. Self-reported Morbidity and Care Seeking in2002 and 2004 ............................................................. 39 E.4. Service Provider Location ................................................................................................................... 41 E.4.1. Hospitalization........................................................................................................................... 43 E.4.2. 43 E.4.3. 44 F. Conclusions and Recommendations.............................................................................................................. Reasonsfor Delaying Care Seeking or Being Excluded from Care........................................... Satisfactionwith Hospital Care.................................................................................................. 44 Chapter 3: Human Resources in Health ..................................................................................................................... 48 B. A. Introduction................................................................................................................................................... 48 52 D. C. Motivation..................................................................................................................................................... Workforce Coverage ..................................................................................................................................... 49 E. Major Issues inMedicalEducation............................................................................................................... Competence................................................................................................................................................... 60 63 F. Conclusionsand Recommendations.............................................................................................................. 65 Chapter 4: PharmaceuticalPolicy .............................................................................................................................. 70 A. Introduction................................................................................................................................................... 70 B 72 Registration andLicensing............................................................................................................................ Legal Framework and PharmaceuticalPolicy............................................................................................... C 72 D. .. E. Price Setting.................................................................................................................................................. 73 F G.. Access and Coverage .................................................................................................................................... 75 Quality Assurance ......................................................................................................................................... 74 Health Insurance InstituteDrugManagement............................................................................................... 75 H. Hospital DrugExpenditure Management................................................................... .............................. 78 I. PhysiciansandPrescribing............................................................................................................................ 80 Corruption and Harmful Business Practices ................................................................................................. 79 J K.. 81 L. Pharmacy andPharmacists............................................................................................................................ Remaining Challengesand Recommendations............................................................................................. 81 Chapter 5: Health Sector Financing............................................................................................................................ 85 A . Introduction................................................................................................................................................... 85 B Structure of Health Care Financing inAlbania ............................................................................................. 85 C.. 86 D. Trends inPublic Sector Spending................................................................................................................. Health Insurance........................................................................................................................................... 90 E Private Expenditureson Health Care ............................................................................................................ 92 F.. G. Provider Payments ........................................................................................................................................ 96 Strengtheningthe Health Financing System ................................................................................................. G.l. Resource Mobilization......................................................................................................................... 97 96 G.2. Pooling of Funds................................................................................................................................ 100 G.3. Purchasingof Health Services........................................................................................................... 101 G.4. InvestmentPlanning .......................................................................................................................... 104 6.5. Balancing Private andPublic Spendinginthe Health Sector ............................................................ Monitoring ofResourceFlow and SectoralPerformance.................................................................. 105 G.6. 105 G.7. Summaryand Conclusions................................................................................................................ 105 Chapter 6: Health Sector Governanceand Organization.......................................................................................... 107 107 B. A. Introduction................................................................................................................................................. Legislative and Regulatory Base................................................................................................................. 107 B.l. Key Legislative Acts andRegulations............................................................................................... 107 C. The Role of Key Players andNecessary Changes....................................................................................... 109 C .1. OrganizationalModels ...................................................................................................................... 109 C.2. Role ofthe Ministry of Health........................................................................................................... 114 C.3. Role ofthe HI1............... .................................................. ................................................... 115 C.4. Role of RegionalHealth orities and Local Government.. ................................................... 115 C.5. Role of Service Providers.......... ................................................................................................. 116 D.C.6.StrengtheningSectoralAccountability........................................................................................................ Role of Other Key Stakeholders........................................................................................................ 119 120 D.1. The Compact BetweenMOHand Service Providers ........................................................................ 121 D.2. Policy Makers and Citizens............................................................................................................... 122 123 E .D.3.Conclusions Health Care Providersand Citizens................................................................................................... and Recommendations............................................................................................................ 123 Chapter 7: Conclusions. Implementationof Health Sector Reforms...................................................................... 128 Bibiliography ............................................................................................................................................................. 136 Boxes Box 1.1.Demographic and Health Status DataConcerns . Illustration................................................................. 2 Box 1.2 - Albania's Box 2.1 - FactorsAffecting Private Sector DevelopmentinHealth Care................................................................... National Immunization Program................................................................................................. An 14 Box 2.2 Licensing and Accreditation of Health Care Providers............................................................................... 35 Box 3.1 The Dynamics ofHealthHuman Resources................................................................................................ 36 Box 4.1 Long-term PharmaceuticalSector DevelopmentStrategy........................................................................... 62 71 95 Box 5.2 The Rationale for Purchaser-Provider Split ............................................................................................ Box 5.1 The Kyrgyz Experiencewith ReducingInformal Paymentsin Hospitals ................................................... 101 Box 5.3 Box 6.1 GovernanceinPrimary Health Care.......................................................................................................... ------- Provider Payment Mechanismsand Behavioral Change........................................................................... 102 118 Box 6.2 Governance and OrganizationalStructures inHospitals........................................................................... 119 Box 6.3 -- ServiceProvider GovernanceFrameworkBasedon WDR04 ................................................................... 121 Figures Figure 1.RecurrentHealth Care Expendituresand HeadcountPoverty Index by Region......................................... vii Figure 1.2 Evolutionof PopulationAge Structure...................................................................................................... Figure 1.1 Albania Fertility Rate, 1950-2005............................................................................................................. 5 5 Figure 1.4 Life Expectancy:Albania and Other SEE Countries................................................................................. Figure 1.3 Population Pyramids, 1989 and 2001 ........................................................................................................ 6 8 Figure 1.6 Infant Mortality Rate inAlbania andNeighboring Countries.................................................................. Figure 1.5 Healthy Life Expectancy:Albania and SEE Countries.............................................................................. ----- 9 10 Figure 1.8- Incidence ofMalnutritionby Region ...................................................................................................... Figure 1.7 -- Evolutionof Youth Mortality Rate, 1990-2002....................................................................................... 11 16 Figure 1.9-Incidenceof Malnutritionby Household ConsumptionQuintile ............................................................ 17 Figure 1.10 - Prevalence 20 Figure 2.1 Hospital Beds per 100,000 Inhabitants, International Comparison, 2003................................................ 29 32 Figure 2.3 PHC Visit Rates per Capitaper Year, Country Comparison................................................................... Figure 2.2 Cumulative Proportion of Hospital Beds Across Hospitals..................................................................... Figure 2.4 Hospital ServiceUtilization Per Capita, Across Regions, 2003 .............................................................. ---- of Smoking inAlbania and the EuropeanRegion ............................................................... 37 Figure 2.5 Self-reportedIllness and Care Seekingby HouseholdExpenditure Quintiles, 2002............................... 39 41 Figure 2.6 -- Satisfaction with Inpatient and OutpatientHospital Care, 2004.............................................................. ............................................ 43 48 Figure 3.3 PopulationPyramidsby Profession......................................................................................................... 53 Figure 3.2 RegionalVariation inPublic Sector Staffing ........................................................................................... Figure 3.1 - Frameworkto Analyze Health Sector Human Resource Issues.............. 52 Figure 3.5 Health Sector Wages by Location............................................................................................................ Figure 3.4 Distribution ofHealth Professionsby Location, 2003............................................................................. 55 Figure 3.6 Monthly Salaries of GPs (`000 lek)......................................................................................................... ---- 56 Figure 3.7 GP Salaries versus per Capita Distribution.............................................................................................. -- 57 57 Figure 3.8 .Visits per Day per GeneralPractitionerby Region.................................................................................. Figure 3.9a .HospitalCases per Physicianor Nurse .................................................................................................. 59 58 Figure 3.9b HospitalDays per Physician or Nurse................................................................................................... 59 Figure 3.10 Formal andInformal Payments.. 60 Figure 3.11 Graduates per 100Active Professionals,2002 --- ..................................................................................................... ...................................................................................... Figure 3.12 - ComparativePhysician andNurse Coverage-Albania and Other ECA Countries.............................. 63 Figure 4.2 - Expenditure on Drugs,% Share PermanentIncome................................................................................ 68 75 75 Figure 4.4 - Composition ofHI1Expenditures, 1995-2004......................................................................................... Figure 4.3 - HI1PharmaceuticalExpenditureand PovertyHeadcount by Prefecture................................................. 76 Figure 4.5 - ReimbursementPrescriptions, ................................................................................................................. Headcountby Prefecture 1996-2004........................................................................................................................... 76 Figure 5.1 Sources of Health Sector Funding ........................................................................................................... 76 Figure 5.2 FinancingAgents, 2003 ........................................................................................................................... 86 86 Figure 5.3 Public SectorExpenditureson Health and BudgetExecution................................................................. Figure 5.4 Sources and Funding Agents of Public Health Expenditures.................................................................. 87 Figure 5.5 Public Sector RecurrentExpenditureson Health by Region................................................................... 87 89 Figure 5.7 Source of Health InsuranceRevenues ..................................................................................................... Figure 5.6 RecurrentExpenditure on Health and PovertyHeadcountby Region..................................................... ------- 90 Figure 5.8 - Health InsuranceContributors ................................................................................................................. 90 90 Figure 5.9 - Health Figure 5.10 - Out-of-pocket Spendingon Health by ExpenditureQuintile................................................................. InsuranceCoverageby ConsumptionQuintile and Region ......................................................... 91 92 Figure 5.11 - Poverty 92 Figure 6.1 Health System Organization (Current) .................................................................................................. 110 Figure 6.2 ModelA: Purchaser - Provider 111 Figure 6.3 Model B: RegionalHealth Authority Structures.................................................................................... 112 Figure 6.4 Model C: Regional Planning and Coordination Structures ---- Impact of Health Expenditures................................................................................................. Model.................................................................................................. ................................................................... 114 Tables Table 1.Distribution of Hospitals and Utilization. by Number ofBeds. 2003 ........................................................... iv Table 1.1 4 Table 1.2 Fertility Rate inAlbania andNeighboring Countries, 1990-2003 .............................................................. Table 1.3 Age Structure ofthe Albanian Population .................................................................................................. -- RegionalDistributionof Population,2001.................................................................................................. 5 Table 1.4 Life Expectancyat BirthAccording to Various Sources ............................................................................ 6 8 10 Table 1.6 Officially ReportedMaternal Mortality Rates, Albania andNeighboring Countries................................ Table 1.5 Infant and Child Mortality Rates According to Different Data Sources................................................... 12 Table 1.7 MainCauses of Death, 1993 and2003 ..................................................................................................... Table 1.8 CoverageRates for EPIAntigens inAlbania (% of age cohort)............................................................... ----- 13 Table 1.9 Access to Water Across Regions .............................................................................................................. 14 Table 2.1 Number of Outpatient Facilities, 1995 and 2000-2003............................................................................. 21 25 26 Table 2.3 PopulationCatchmentArea of PHC Facilities, by Region ....................................................................... Table 2.2 Area Distributionof PHC Facilities, in% of Total, 2003 ......................................................................... Table 2.4 Number of Visits per Health Center per Day ............................................................................................ 26 Table 2.5 Productivity of PhysiciansWorking inOutpatientFacilities, by Facility, 2003 ....................................... 27 28 Table 2.6 Numberof Hospitals and Hospital Beds inAlbania, 1993-2003 .............................................................. 29 Table 2.7 RegionalDistributionof All Hospitals Providing Inpatient Care inAlbania, 2003.................................. Table 2.8 Utilizationof Inpatient Care Facilities inAlbania, 1993-2003............................................................... --------- 30 Table 2.9 Distribution of Hospitals andUtilization, by Numberof Beds, 2003 ....................................................... 31 31 Table 2.10 Hospital Staffing by Hospital Size and Characteristics,2003................................................................. 32 33 Table 2.12 Utilizationof Inpatient Care Facilities, Country Comparison, 2002-2003.............................................. Table 2.11 Utilizationof Inpatient Care inAll Hospitals, by Regions and inComparison, 2003 ............................ 33 Table 2.13 Number of Private Outpatient Facilities by Regions,2003..................................................................... Table 2.14 Utilizationof Outpatient Care inAlbanian PHC Facilities, 2000-2003.................................................. 34 37 Table 2.16 Percent of Individuals with Chronic or SuddenIllness, by Gender and Age, 2002/2004....................... Table 2.15 Number of PHC Visits per Capitaper Year, by Region andHealth Facilities, 2003.............................. 38 Table 2.17 Percent of Individuals with Any Kindof Inpatient or Outpatient Care................................................... -- -------- 40 40 Table 2.18 .Proportion of Individuals with Outpatient Care. by Health Status. 2002-2004 ............................. 41 Table 2.19 .Location of Care Seeking for Persons Reporting Sudden Illness. 2004.................................................. 42 Table 2.20 - Proportion of Hospital Stay, by Socio-demographic Characteristics, inPercent o f All.......................... 43 Table 3.1 Distribution o f Employed by Nature o f Employment, 1997-2003 (%) ..................................................... Table 3.2 Number o f Physicians and Nurses, 1996-2002 ...................... 49 49 Table 3.4 Other Medical Staff per 100,000 (2003 or latest year).............................................................................. Table 3.3 50 50 Table 3.5 Number o f Physicians by Basic Specialities, 1999-2003.......................................................................... Table 3.6 Number o f Nurses by Basic Specialities, 1999-2003................................................................................ ------ ..................................................... Physicians and Nursesper 100,000 Population (2003 or latest year) ....................................................... 51 Table 3.7 - Medical Staff per 100,000 Population by Region, 2002 ........................................................................... 51 52 Table 3.8a - Distribution Table 3.9 NumberEmployed inLocation by Year, 1999-2003................................................................................ Table 3.8b - Distribution of Medical Staff by Age -Female, 2003 ............................................................................ of Medical Staff by Age -Male, 2003 ................................................................. 53 Table 3.10 Average Monthly Public Sector Wages, 2000-2003 ............................................................................... 54 56 Table 3.11 Average Salaries by Type o f Institution, Health Sector (x 1,000 Lek) ................................................... 56 Table 3.12 Urban and Rural Salary Structures ---- 57 Table 3.13 Hospital Productivity (2003 or latest year) Table 3.14 Medical Schools inAlbania, 2001-2003 ................................................................................................. 59 61 Table 3.15 Total Graduates from Medicalschools by Year, 1997-2003................................................................... 61 62 Table 3.17 Current Post-Graduate Enrollment by Specialty and Year...................................................................... Table 3.16 Graduates per 100 Practicing Professionals by Year, 1997-2003 ........................................................... Table 3.18 Approaches to Skill M i x and Substitution inNursing............................................................................. ------ .......................................................................................................... ............................................................................................. 64 65 Table 4.1 Degressive Margin System for Medicines ................................................................................................ 74 Table 4.2 Top Ten ReimbursedDrugs by Value....................................................................................................... 77 Table 5.2 Public Sector FundingResponsibilities inthe Health Sector .................................................................... Table 5.1 Health Sector Financing - Albania and InternationalComparisons, 2002 ............................................... 86 88 Table 5.3 Allocation o f Public Sector Recurrent Health Expenditures by Level of Care, 2000-2004 ...................... 89 Table 5.4 Out-of-Pocket Expenditures for Outpatient Care 93 Table 5.5 Out-of-pocket Payments for Hospital Care ............................................................................................... Table 7.1 Proposed Phasing o f Health Sector Reforms .......................................................................................... -------- ...................................................................................... 94 129 ACKNOWLEDGMENTS This report was prepared by a World Bank team ledby MonikaHuppi(Main Author and HealthFinance), and comprising Jan Bultman (Quality of Care), Francois Decaillet (Health Status) Dominic Haazen (Human Resources; Health System Organization and Governance), Pia Schneider (Supply and Utilization o f Health Services), Monique Mrazek and Andreas Seiter (Pharmaceutical Policy), Florian Tomini, Lorena Kostallari, Shweta Jain (Data Collection and Statistical Analysis) and Carmen Laurente (Document Processing). The report was prepared under the overall supervision o f Armin Fidler, Sector Manager (ECSHD) and sponsored by Orsalia Kalantzopoulos, Country Director, (ECCU4). Peer reviewers were Akiko Maeda, Sector Manager (MNSHD) and Cristian Baeza, Sr. Health Specialist (LCHSS). The team gratefully acknowledges the collaboration provided by the Ministry o f Health, the Institute of Public Health, the Health Insurance Instituteand the Ministryo f Finance o f the Government of Albania, 1 MAIN FINDINGSAND RECOMMENDATIONS A. THEHERITAGE 1. Albania's health care system prior to the transition was characterized by strong central government control over all aspects of the system. Despite a widespread primary care network, which had been established with a focus on antenatal care and immunization, Albania's pre-transition health care system was largely led by secondary care. The system was highly centralized, with the Ministry o f Health providing and regulating all health services in the country and deciding on resource allocation and the nomination o f health care staff. The construction o f new facilities was favored over the maintenance and operation o f existing infrastructure, which led to considerable deterioration in facilities and equipment. Inadequate recurrent expenditures, obsolete drug therapies, and outdated medical skills resulted in low quality o f care and inefficient use o f resources. 2. Civil unrest and the Kosovo crisis took a heavy toll on the health care system during the 1990s. The violence and civil unrest during the early transition years and again in 1997 resulted in extensive damage to the health care infrastructure and in the disruption o f essential services, including immunization, surveillance, and environmental health programs, such as water quality and waste removal. Almost one third o f the country's medical staff abandoned their posts during the 1997 unrest. The Kosovo crisis in 1999 put additional strains on the system, as over 4,000 refugees were admitted to hospitals, while others were provided accommodation in hospitals for want o f other shelter. The crisis caused further damage, consumed a significant amount o f resources, and brought to a halt nascent structural reforms inthe sector. 3. A series of sectoral reformswere initiated in the mid-l990s, but limited progress has been made over the past 5 years in advancing these reforms. While focusing on re-establishing services following the events o f the early- and mid-l990s, the Government also initiated a series of reforms to beginto address some o f the sector's weaknesses inthe mid-1990s. The reforms included some reduction in the overextended provider network capacity, the decentralization of primary care management to district public health directorates and integration o f the former with public health functions, the privatization o f the pharmaceutical sector and most dental care, and the establishment o f the Health Insurance Institute (HII), inview o f a gradual aspired change o f the health financing system. Plans were also made to substantially upgrade the quality o f the primary care system through physical investments and skills upgrading. The Kosovo crisis interrupted many o f these initiatives, and limited progress has been made in most o f the reform areas since then. Some pilot projects on the provider organization and financing front were initiated over the past 4 years, which have yielded valuable lessons. More recently, encouraging progress has been made on pharmaceutical policy issues. B. HEALTH OUTCOMESAND HEALTH CHALLENGES Albania's health outcomes comparefavorably with those of lower middle income countries outside the Europe and Central Asia region, but lag behind those of other countries in the South East European region. 4. Despite progress achieved, Albania's health outcomes lag behind those of other countries in the South East European region. While all sources show an improvement in key health outcome indicators over the past decade, different data sources paint a different picture as to how well Albania is faring compared to other countries in the region. By most accounts, Albania's health outcomes compare i relatively favorably to those o f other lower middle-income countries outside the Europe and Central Asia (ECA) Region, but not to other lower middle-income countries inthe South East European (SEE) region. On the basis o f official data, Albania enjoys the longest life expectancy in the Balkans --just 2 years below the EU average. Other sources put Albania's life expectancy below that o f all other countries in the SEE Region, and 8 years below the EUaverage. Albania has the lowest healthy life expectancy inthe SEE Region. Similarly, estimated data, which correct for expected underreporting, put Albania behind other countries in SEE regarding infant mortality. 5. Albania's demographic and epidemiological profile is changing. The relative burden of infectiousdiseases is decreasing while noncommunicable diseases have become the leadingcause of death among the adult population. Infectious diseases are still a leading cause o f infant and child deaths, but they are no longer a major cause o f mortality among adults. Although HIV/AIDS prevalence is reportedly still low, the risk o f HIV transmission is high, owing to mobility o f the population and human and drug trafficking. Noncommunicable diseases, mainly cardiovascular diseases and cancer, have become the leading cause o f death among adults. The incidence o f these diseases is expected to increase substantially as the population over 65 years o f age doubles in the next 20 years. Some studies suggest that the diabetes incidence rate is higher than in many Western European countries and likely to grow substantially over the coming two decades. Among the top new health risk factors are the high tobacco consumption, the rapidly increasing rate o f fatal road accidents, and changing diets. The health care system i s illprepared to face the increase o f noncommunicable diseases and the lengthy and costly treatment associated with them. Albania's health care system is ill prepared to face the growing incidence of noncommunicable diseasesand other new health risks. 6. A significant portion of chronic disease conditions could be prevented through the promotion of healthy lifestyles, screening, and primary and secondary preventive care measures. Increasedfocus on preventive health care is therefore becoming a pressing need in Albania. The capacity for health promotion and for primary and secondary prevention for cardiovascular diseases and cancer requires significant strengthening. This will require aggressive efforts to build up the capacity o f primary care providers to adequately assess patient risk factors and to effectively manage the conditions o f those exhibiting such risks. Concerted efforts are also required to improve Albania's health promotion capacity, so as to inform the population about new health risk factors and ways to avert them. Addressing these factors requires inter-sectoral coordination and outreach to the local community, in addition to the strengtheningo f the surveillance system. The Institute o f Public Health is well placed to play a leading role in these efforts, but its capacity will require further strengthening and the resources allocated to public health issues, including health promotion and new public health initiatives, as well as health information, needto be increasedto effectively address these challenges. c. HEALTH CAREDELIVERY Physical and human resourcesin the sector are ill aligned with thepopulation's health needs. 7. A review of the distribution of physical and human resource capacity in the health sector points to large variations in coverage across districts and regions. The significant internal and out- migration inAlbania over the past 15 years, combinedwith the massive destruction o f facilities duringthe 1990s, has left an already imbalanced health care provider network further out of line with the population's health needs. The distribution o f physical and human resource capacity in the sector remains uneven across regions, as well as within regions. While substantial efforts have gone into rehabilitating primary care facilities following the widespread destruction duringthe early- and mid-1990s, these efforts .. 11 appear to have been made without any thorough analysis o f population needs and the suitability o f proposed facilities in a given area. Similarly, investments in hospital facilities continue to be made without a clear hospital map in mind, often leading to opportunistic investment decisions, which contribute little to much needed consolidation and efficiency improvements inthe sector. 8. There are marked regional imbalances in medical personnel coverage. Regional variations are highest for specialists and pharmacists and lowest, though still considerable, for primary care physicians. The relatively lower variation in general practitioner coverage appears to reflect concerted Government efforts to rebalance the ratio o f general practitioners versus specialists, to substantially upgrade salaries for general practitioners, and, most importantly, to allow for considerably higher salaries for general practitioners serving in the more remote rural areas. There are also imbalances in terms o f hospital versus primary care medical staff, and the ratio o f doctors to nurses is high by international standards. There is considerable scope for substitutingnursingtime for physician time and clerical staff for nursing staff in hospitals in the medium to longer term. The skewed geographic distribution o f health sector staff will need to be corrected over time, as part o f an overall planning exercise for health sector human resources. Productivity in the health sector is low and resources are used inefficiently. 9. Productivity is low, both for primary and hospital care, and it varies substantially across regions and individual facilities. Administrative data suggest that Albanians have significantly less outpatient contracts with health care providers than people from other countries in Eastern Europe and Central Asia, Latin America and the Caribbean, or Western Europe. Due to low perceived quality, bypassing o f primary care in favor o f seeking care at polyclinics or hospital outpatient facilities is widespread even for simple conditions like a cold or a flu. This leads to low utilization o f primary care facilities and extremely low productivity o f primary care staff. On average, a primary care doctor sees only about eight patients per day, with marked regional variations resulting in as few as three visits per day in certain regions. Analysis o f primary care activity in Tirana region further points to substantial inter-facility variation in productivity. The gatekeeper role that general practitioners (GPs) are expected to play i s not functioning, even though the MOH has introduced a fee system, which would require payment for care by all those who seek outpatient care directly at a polyclinic or at the hospital. The fee structure, however, is such that it provides the estimated 60 percent o f the population without a health insurance card with little incentive to see a primary care physician, particularly if it is felt that the physician will be unable to provide the expected care. Experience in other transition countries and initial evidence from recent pilot activities in Albania suggest that productivity o f primary care providers, particularly in rural areas, can substantially improve if they are provided with skills upgrading to offer a more comprehensive population-centered set o f services and have access to adequate supplies and equipment. 10. A large number of small hospitals with low utilization and occupancy rates point to a sub- optimal hospital structure. While low compared to European averages, Albania's hospital capacity (3.03 beds per 1,000 population) compares favorably to that o f many other lower middle income countries and is similar to that o f Spain and Turkey. However, the configuration o f the hospital network points to large inefficiencies. Over 60 percent o f Albania's hospitals are too small to exploit scale economies in the general acute care hospital setting. Thirty out of 46 hospitals have less than 200 beds and jointly account for only one quarter o f all hospital admissions, while they continue to consume a considerable amount o f scarce resources. L o w admission and occupancy rates lead to high staff per occupied bed ratios in the smaller hospitals and raise serious concerns about fixed costs, ineffective utilization o f limited resources, and quality assurance. Several hospitals exhibit an oversupply o f identical departments that could be merged, thus allowing for substantial efficiency gains. Hospital managers have neither incentives nor authority to undertake changes to improve the efficiency and quality o f their operation. ... 111 Table 1 DistributionofHospitalsand Utilization,by Number of Beds, 2003 - MOHHospitals Beds Admissions Bed occup ALOS Bed range Total In YO Total I n YO Total I n YO rate <49 beds 11 23.9 331 3.7 5,392 2.0 26.7 6.7 50-99 9 19.6 728 8.0 16,000 6.0 34.5 5.6 100-199 10 21.7 1,386 15.3 44,438 16.5 47.8 5.9 200-299 7 15.2 1,774 19.6 59,064 22.0 67.5 35.8 (*) 300-399 3 6.5 1,072 11.8 27,33 1 10.2 53.5 76.0 (*) 400-499 3 6.5 1,236 13.7 37,232 13.9 39.0 4.8 500-599 2 4.3 1,099 12.1 27,459 10.2 48.3 7.3 1,000+ 1 2.2 1,423 15.7 5 1,609 19.2 74.4 7.5 Total 46 100 9,049 100 268,525 100 53.6% 6.7 Source: Ministry of Health, Albania. Albania Health Indicators for Years 1993-2003. Note: (*) includes psychiatric hospitals with each havingALOS of more than 100 days. Quality of health care is low. 11. The quality of health care is low, particularly at the primary care level. The substantial amount o f primary care bypassing and qualitative surveys point to serious deficiencies in the quality o f care, particularly at the primary care level. Quality o f care standards and standard treatment protocols have not been developed and adopted for outpatient care, and providers do not have an established system for continuous quality improvement. The current incentive framework for providers gives no importance to quality o f care. Quality issues identified by focus group participants and other surveys include low skills o f medical staff, the lack o f drugs, supplies and equipment, poor infrastructure, limited scope o f services provided at PHC facilities, and the level o f quality being conditional upon the informal amount a patient is willing to pay. Household survey data suggest that bypassing o f primary care is more prevalent among the rural population and low-income groups, although seeking care at a higher end facility results in higher out-of-pocket payments and longer travel times. This suggests that the quality and scope of service delivery in primary care facilities in rural and peri-urban areas with a high concentration o f poor households is o f particularly concern. 12. A recent survey on reproductivehealthfound that the quality and coverage of prenatalcare i s of serious concern and ranks among the lowest in the ECA Region. The survey found that while officially reported coverage of prenatal care i s high, one in five women who gave birthbetween 1997 and 2002 did not have any prenatal care. This is one o fthe highest ratios inthe ECA Region, and is similar to Central Asia. The survey also showed that 70 percent o f pre-natal care provided was inadequate and that only one in five women had any postnatal follow-up. Although regional data on infant mortality are o f questionable reliability, there are indications that mortality rates are higher in the poorest mountainous regions. Improvements inthe quality o f prenatal and obstetrical care will need to be given higher priority, particularly in the more disadvantaged regions, if Albania strives to move closer towards European averages for maternal and child health outcomes. 13. Health personnel in Albania continue to remain isolated and lack in-service training to upgrade their skills. At the same time, they are often over-specialized for the type of population- centered medicine needed to ensure that people can obtain comprehensive service at the primary care level. The limited efforts to strengthen clinical skills o f primary care providers to date have been uncoordinated and dispersed. Albania's primary care physician and nurses have insufficient knowledge iv about the prevention, detection, and management o f non-communicable diseases and o f other growing health risks such as HIV/AIDs. There is also a need to carefully review and determine the scope o f services, which primary care providers can offer and ensure improvedmanagement o f patient pathways. 14. Quality improvement is a core objective of the Government's Health Sector Strategy.' Albania has already undertaken substantial work on the establishment o f quality standards for hospitals and strives to establish a hospital accreditation system. A set o f quality standards covering the main domains o f hospital functioning are currently beingpilot tested. However, before a final decision on the appropriate mechanism to ensure quality control in the Albanian context is taken, it should be further assessed whether the financial and human resource capacities to support an accreditation system are available. Introduction o f a quality improvement system will require a multi-pronged approach involving facilities managers, designated facilities staff, external surveyors, and the health insurance institute as the agency, which will purchase health services. It will also require raising awareness about the importance of continuous quality improvement among the medical profession as well as the wider population. Efforts at establishing and implementing standards will need to be complemented by skills upgrading o f health care professionals. As theprovision of private health care is growing, the regulatoryframework to ensure that theprivate sector will contribute to meet the country's overall health sector goals needs to be strengthened. 15. Although the private sector is still relatively small, its importance in providing outpatient services is growing. Dental care and the pharmaceutical sector are largely privatized. The provision of other health care i s still dominated by public providers, but the importance o f the private sector is growing in the areas of diagnostics and outpatient services. While public sector physicians and nurses are not allowed to operate in private practice (with the exception o f university professors), anecdotal evidence suggests that the incidence o f private care provided by publicly employed physicians may be growing. The 2004 household survey data found that somewhat over 10 percent of those who sought outpatient care did so from a private provider, although official statistics point to only 626 private outpatient doctor's offices and 907 licensed private physicians, compared to over 2,100 public outpatient facilities with over 10,000 medical staff. As the economy grows and the health system develops, privateproviders will invariably become more important players. The Government's Health Sector Strategy foresees that much of primary care would, in the medium to long term, be provided through independent primary care physicians or groups o f independent physicians. Yet, an adequate regulatory framework and an effective systemo f safety and quality regulation and inspection have not yet been developed. Albania has taken important steps towards enhancing thefunctioning of its pharmaceutical sector but further steps are necessary to contain costs, to improve the transparency in decision making and to strengthenquality assurance. 16. Substantial steps have been taken to improve transparency along the pharmaceuticals distribution chain and to institute cost containment on HI1 reimbursed prescription drugs and hospital drugs. A new Drugs Law, enacted in 2005, simplifies the registration o f new drugs but raises the bar in terms of quality standards, requiring approval in a major foreign market before a drug can be marketed inAlbania. Local manufacturers have to adhere to European standards for Good Manufacturing Practice within 2 years. Irregularities in the distribution network are being addressed by a sticker system for legally marketed drugs. Competitive tendering for hospital drugs has resulted in substantial cost savings; and problems in the distribution to hospitals have been addressed through contracting with a private distributor, cutting back theft and diversion, and leadingto significant savings. Price negotiations Government of Albania, Long Term Strategy for the Development ofthe Albanian Health System, July 2004. This document is referredto as the Health Sector Strategy inthis note. V for innovative drugs reimbursed by HII, an internal reference pricing system for generic drugs and informal budgets for prescribing physicians have been introduced in an attempt to contain the rapidly increasing expenditures on prescription drugs. The large prescription drugs related HI1deficit in 2005, however, suggests that these measures were not sufficient to curb rapidly increasing expenditures. Remaining challenges include introduction o f additional cost containment measures for prescription drugs, strengthening quality control in the market, increasing transparency o f various commissions that make decisions affecting the pharmaceutical market and further revising the margins on drugs to encourage consolidation o f a fragmented wholesale and distribution system. D. FINANCING HEALTH CARE Low income groups are illprotectedfrom health shocks and are easily thrown intopoverty as a result of out-of-pocket spending on health care. 17. The 6 percent of GDP which Albania spends on health care is in line with the average for lower middle income countries, but Albania's public sector contributes a below average share to these expenditures. As a result o f low public sector spending, out-of-pocket expenditures at the point o f service account for almost 60 percent o f sectoral funding. The high level of direct household spending indicates that the existing health financing system offers Albania's population limited protection against catastrophic illness or injury and allows for little redistribution o f resources to protect the most vulnerable groups from health shocks. Although health insurance is mandatory, household survey data suggest that only between 40-45 percent o f the population actually have a health insurance license and thus benefit from coverage. As is to be expected in a country with a large informal labor market, the coverage is significantly higher among the urban population and the upper income groups. Active contributors account for less than one third o f the active labor force, pointing to large contribution evasion. 18. The high share of out-of-pocket payments at the point of service and outside an overall health finance framework creates serious inequities in access, has a considerable poverty impact and limits effectivenessof the Government'ssectoral stewardship. Lower income households exhibit a significantly higher likelihood of incurring catastrophic health care expenditures than better off households. The average out-of-pocket spending for one episode o f outpatient care amounts to 50 percent o f the average monthly per capita expenditure o f the lowest consumption quintile. Although the law provides for free inpatient care, survey data suggests that essentially everybody who i s hospitalized incurs substantial costs and that informal payments account for at least one quarter o f these costs. Average outlays for hospital care amount to four times the monthly per capita expenditure of the lowest consumption quintile. The likelihood o f paying for health care and the absolute amounts paid are lowest in Tirana and highest in the mountainous regions. Such regional inequities are of particular concern in view o f the high incidence o f poverty in the mountainous regions. Household survey data suggests that income and insurance coverage are important determinants o f seeking health care, despite the fact that insurance benefits are limited to primary care and drugs benefits only. The health financing system is fragmented. It neither gives providers incentives for efficiency and quality improvements, nor does it establish clear lines of accountability. 19. The continued fragmentation of the health finance system and at times unclear assignment of financing responsibilities have resulted in a lack of accountability for sectoral performance in general and individual providers' performance in particular. The health finance system is fragmented with the MOH paying for hospital care, non-physician salaries, and at times other operating costs for primary care, while HI1 pays for salaries o f primary care physicians, prescription drugs, and high-end diagnostics. Financing responsibilities have changed repeatedly over the past several years, vi with local governments at times expected to cover operating costs for primary care. As a result of dispersed funding sources, the lines o f accountability are unclear, particularly at the primary care level. The introduction o f user fees for outpatient care for those not covered by health insurance or those who circumvent primary care has not been applied evenly and tended to create uncertainty among providers and patients, leaving ample room for abuse. While informal payments are relatively modest for outpatient care, they are widespread and substantial for inpatient care. Input based financing gives providers no incentive to improve quality or efficiency and has led to skewed geographic allocation o f resources. The geographic imbalance in the provider network and human resource base, combined with uneven access to health insurance, have resulted in highlyunequal distribution o f public sector expenditure for health care, with regions with the highest poverty incidence generally receivingthe least amount o fpublic expenditure on health per capita as demonstrated inFigure 1below. Figure1 RecurrentHealthCare Expendituresand HeadcountPoverty Index by Region - Health Expenditures by Region and Poverty Health Expenditures by Region and Poverty `g 50% 50% a 40% g 40% g tE 30% 30% 20% 20% 0 10% 2 10% 0% 0% 2000 4000 6000 8000 10000 12000 2000 3000 4000 5000 6000 7000 8000 Recurrentspending per caplta (excl prescriptiondrugs) RecurrentExpendlturelcaplta(incl. prescrlptlon drugs) E. IMPROVING THE HEALTH SECTOR'S ABILITY TO MEET POPULATION'S CHANGING THE HEALTH NEEDS The main challengefor Albania's health sector is to consolidate the achievements in health outcomes to date, while establishingcapacity to effectively address the growing incidence of non-communicable diseases and affording low-incomegroups betterprotectionfrom impoverishinghealth expenditures. 20. Consolidating achievements in health outcomes, while also establishing capacity to effectively address new health needs and better protecting low-income groups from health risks, will require fundamental changes in the way health care is financed, delivered, and organized. These can best be summarized around three core pillars: (i)more efficient resource mobilization and allocation; (ii)improvements in quality o f service delivery; and (iii)improvements in sectoral management and stewardship. ResourceMobilization andAllocation 21. Poolall public sector resources under one funding agency. To improve efficiency inresource mobilization and allocation and ensure maximum accountability o f the funding agency and providers, all public sector resources, meaning budgetary funds and health insurance funds, should be pooled and channeled through one agency (the Health Insurance Institute), which will then purchase health care on behalf o f Albania's population from health care providers. Pre-conditions for successful expansion o f a payroll tax based social insurance system are not met in Albania. Preconditions include a large formal vii labor market, strong administrative capacity for contribution collection, good regulatory and oversight structures, and strong economic growth. If these conditions are not met, and they rarely are in middle- income countries, payroll tax based social insurance results in substantial inequity in access to health care; a problem, which Albania is already beginningto face. 22. Rely on general taxation rather than payroll tax contributionsas the main source of public funding for health care. This note recommends that Albania consider phasing out the current 3.4 percent payroll tax contribution for health insurance and shift entirely to general taxation as a public source o f fundinghealth care, fiscal space permitting. Currently, only 7 percent o f public sector spending on health come from non-budgetary contributions to HII, this amounts to only 0.2 percent o f GDP and could be absorbed by the general budget over the next few years. A second best solution would be to maintain, but not increase, the current health insurance contribution rate, pool contributions with general revenues under the Health Insurance Institute (HII) and introduce a two-tiered benefits package. However, this solution would administratively prove substantially more demanding. In view o f HII's limited administrative capacity, it would appear more prudent to focus on building up HII's capacity on the purchasing side and rely exclusively on a general revenue financed system inthe years to come. 23. Clearly definethe health care benefits, which will be made availablefrom publicfunds, and introduce copayments for a wider range of services, includinginpatient care. The amount o f public sector funding for health care will invariably remain limited. To increase transparency, enhance provider accountability and improve equity in access; it is necessary to clearly spell out what services the population is entitled to receive free o f charge from public providers, what services will require a , copayment from the patient, and for what services the populationmust pay in full. The limited amount o f public sector resources available in the medium term will require that copayments for most care be substantial and some high-end procedures be excluded from public funding. Inview o f the currently low consumption o f primary care and its potential cost effectiveness, copayments for such care should remain relatively low, while substantially higher copayments could be introduced for higher order care, with hefty supplements for those who self-refer to higher order care. Protection mechanisms should be put in place to mitigate against the impact o f the out-of-pocket payments for low-income groups. This could take the form o f copayment limits for social assistance recipients or alternatively selected target groups usingproxi means indicators. The highpoverty impact o f out-of-pocket drugs expenditures suggests that low-income groups should eventually be accorded limited drugs benefits. If funding is purely general revenue based, this would essentially mean that a single basic benefits package be introduced for all, with limits on copayments and limited drugs benefits for low-income groups and possible drugs benefits for other target groups. If the funding remains two-tiered (e.g., general revenues, plus payroll tax based contribution) general revenues would provide for a basic package for all, with expanded benefits for low- income groups commensurate to those received by HI1contributors. 24. Combine the introduction of increased copayments with broad based action to root out informal payments. Informal payments create a substantial burden on those who seek care, both financially and through the uncertainty, which they create. Furthermore, these funds remain completely outside the managerial control o f the health system. The objective o f introducing broader copayments would be to formalize these payments, rather than to increase the already high out-of-pocket payments. Therefore, the introductiono f wider formal copayments must be combined with aggressive efforts to curb informal payments, through public awareness raising campaigns, allowing providers to allocate a substantial amount o f copayments collected towards performance based salary supplements, introduction of patient complaint mechanisms, and prosecution o f gross violators. Evidence from other countries suggests that combining such efforts with the introduction o f formal copayments does allow for reduction in informal payments. In the medium term, further revisions to the medical staff remuneration system will also be required, but these could be undertaken within the overall framework o f changes to provider viii payments. Given the prevalence o f informal payments in hospitals, it is advisable that efforts first focus on reducing informal payments there. 25. Increase resource allocation for public health and health information. The health care system remains skewed towards clinical care, while public health initiatives remain underdeveloped and under funded. The increasing burden o f noncommunicable diseases and the new health risk factors call for increased emphasis on health promotion and public health initiatives. Furthermore, the analysis o f epidemiological trends in Albania i s severely compromised by the availability and reliability o f data. Incomplete and inadequate data cannot form the basis o f effective policy. It poses the risk o f distorted emphasis and attention. This is an area which has not received sufficient attention over the past. The Institute o f Public Health (IPH) has a good basis and would be a natural body to assume responsibility for the collection and analysis o f routine health information as well as increased focused research efforts. Similarly, IPH has a good basis and would be the natural locus for increased efforts in health promotion and public health initiatives. However, IPH can only effectively carry out these tasks if more resources are allocated towards health promotion, new public health initiatives, and health information and its capacity is further strengthened. 26. In the medium term, shift to a population based regional allocation of health sector funds. The current system o f allocating funds merely based on existing infrastructure and human resources results in inequitable allocation o f resources and gives health care providers no incentive to improve performance and efficiency. Therefore, as Albania introduces changes in the way providers will be financed and further streamlines the provider network, it may want to move toward a system where resources are allocated regionally on a risk adjusted capitation basis, with adjustment factors taking account o f demographic and socio-economic factors. 27. In the medium term, improvethe balance between public and private spending on health care to enhance the population's protection from health shocks. Albania spends about 6 percent o f GDP on health care. While this is less than most ECA countries spend, it is about on par with the average for lower middle-income countries. However, Albania's share o f public sector spending in total sectoral spending (38 percent) is below the average o f lower middle-income countries (45 percent) and substantially below the average o f upper middle-income countries (58 percent). Over time, Albania may wish to improve the balance between public and private funding, by gradually increasing the share o f public funding. An increase in the share o f public funding could be linked to the expansion o f the publicly provided benefits package. The high share o f private out-of-pocket funding creates serious inequities in access, has a considerable poverty impact and limits the effectiveness o f the Government's sectoral stewardship. However, any increase in public funding should be closely linked to fundamental reforms inthe way resources are allocated and utilized. 28. Finalize and use the hospital map as an instrument to guide any future investment in the hospitalinfrastructure. The large number o f small hospitals with low utilization rates and poor physical conditions, overall low hospital occupancy rates and the continued indecisiveness about which hospitals should expand their capacity to serve as regional hospitals call for a careful evaluation o f the country's hospital infrastructure. In view o f the substantial remaining investment needs inthe hospital sector, there is a critical need to finalize the hospital map based on efficiency, quality assurance, and accessibility considerations; and then utilize this map to guide further investments inthe sector. While the poor quality of the road network may not allow for highest optimization o f the hospital network in the medium term, there is, nevertheless, a need to consolidate those facilities, which are rarely utilized, but continue to consume a substantial amount o f resources. Options to better organize the multiple departments with the same profile across a relatively small catchment area or at times even within the same hospital, should also be explored. The decision to establish a regional hospital that would provide a substantial range o f ix services in each o f the 12 regional prefectures also deserves further consideration, in view o f Albania's limited resources to maintaining such a network. 29. Develop regional primary health care plans. The overall low but largely varying productivity o f primary care providers calls for an evaluation o f current PHC planning standards and the revision o f the scope o f services, which GPs and PHC facilities can provide. Further investments in primary care facilities should be based on a thorough analysis o f current and expected utilization o f existing facilities and targeted efficiency improvements, rather than be driven by blindly applied coverage standards. Improve Qualio and Efficiency of Health Services Delivery 30. Improvementsin service deliverywill require action on four fronts: (i) upgrading the clinical effectiveness, (ii)changing the incentive framework for providers, and (iii)establishing a quality assurance system, and (iv) further consolidating reforms inthe pharmaceutical sector. 3 1. Consolidate pilot efforts to improve clinical effectiveness and quality of care. Pilot efforts to develop clinical guidelines, to train primary care providers in their use and to introduce quality improvement and case management processes at provider level appear to have yielded promising results, as demonstrated by lower bypass rates and an increase in visits to concerned primary care facilities. These efforts should now be taken a step further by institutionalizing the development and adoption o f treatment and prescribing guidelines, establishing a national in-service training program for physicians and nurses, and developing and implementing a training program. The latter could initially focus on providing primary care staff with the skills necessary to better meet the population's demand for health care. While there clearly also i s a need to improve the skills o f outpatient specialist and hospital physicians, the substantial amount o f primary care bypassing and the need to strengthen capacity for health promotion, and primary and secondary prevention for noncommunicable diseases, make skills improvement at the primary care level a first priority. However, efforts to strengthen the clinical skills o f providers are unlikely to reap the desired results unlessthey are accompanied by changes inthe incentive system. 32. Shift from input based financing of health care providers to performancebased payments. Under the current input based financing system, providers have no incentives to increase efficiency and improve quality and quantity o f care. It i s therefore suggested that the payments for providers be changed to a performance based system by means o f having HI1contract with providers for a defined bundle o f services. Experience in other transition economies as well as OECD countries suggests that capitation based payments (with possible performance supplements) for primary care and global budgets with case mix adjusters may present a good basis for such changes in Albania. It would, however, be critical that capitation payments (or a variant thereof) for primary care include the full cost o f providing care (including operating costs and allowance for equipment depreciation) and be based on actual enrollment o f patients with a particular doctor or facility. The development o f global budgets for hospital providers would need to occur gradually. The introduction o f case mix adjusters would be conditional upon provider information systems becoming more developed so that they can provide the necessary data on the financial and clinical performance o f facilities and, ultimately, o f facility departments. Work in this respect could build on the achievements to date at Durres Hospital. However, such changes can only be expected to lead to desired behavioral changes o f providers if they are accompanied by organizational changes, which give providers increased managerial autonomy and by efforts to strengthen the quality o f care. 33, Establish a quality assurance system. Ongoing efforts to establish hospital quality standards should continue, in parallelwith the development o f quality standards for primary care. Standards should cover clinical care, administrative and financial services, as well as facilities and equipment. The X feasibility of establishing an accreditation system deserves further review on fiscal sustainability grounds. As a first priority, the provider licensing system would benefit from substantial strengthening so that it can serve as an instrument to ensure higher quality o f care. This would require the development o f new licensing standards and the development o f capacity in the MOH to enforce these standards. Physician licenses could be rendered more meaningful if they were subject to periodic renewal (re-licensing), conditional upon completion o f continuing education requirements. 34. Consolidate reforms inthe pharmaceuticalsector. The possible expansion o f drugs benefitsto a wider population group, together with stricter registration requirements for generic drugs, are likely to put additional pressure on already rapidly increasing drug expenditures. Further steps are therefore necessary to curb the rapidly increasing expenditures on prescription drugs. This will require keeping a close watch on prescription patterns, reviewing the copayments structure and copayment exemption policy, tightening the positive list o f reimbursable drugs, and introducing an indication reference group based reimbursement system for innovative drugs. A review o f the positive drugs list and copayment policies could take place within the framework o f the overall definition o f the publicly financed benefits package. The structure and level o f margins for distributors and pharmacists also deserve further review. Current margins are relatively high and do not encourage consolidation o f the fragmented distribution system. The composition and modus operandi of the main commissions dealing with registration, reimbursement of drugs, and licensing o f professionals would benefit from further review to rule out conflict o f interest and to increase the transparency o f their decision making. The capacity for quality assurance needs to be strengthened to avert widespread perception o f the low quality o f many generic drugs. In the absence o f local laboratory capacity, this service could be contracted from a qualified international laboratory, but a rigorous system o f random sampling at customs and in retail pharmacies, combined with public information about potential quality violations and decisive action against violators, will needto be established. Improve SectoralManagementand Stewardship 35. The roles and responsibilitiesof all core actors in the sector need to be clearly defined and accountability mechanisms established. Accountability in Albania's health sector is weak due to unclear definition o f responsibilities, lack o f proper performance standards and monitoring tools and insufficient integration o f feedback from stakeholders into policy formulation and decision making. The Government's Health Sector Strategy and the reforms proposed here entail substantial changes in the roles and responsibilities o f various actors in the sector. The MOH would assume a policy making and stewardship role and increasingly withdraw from service provision and financing o f health care. The HI1 would assume full responsibility for financing of health care, channeling the Government's health budget to health care providers by contracting them to offer a defined set o f services to the population against an established price. Service providers would be given increased autonomy to decide how to most effectively produce these services and their performance would be evaluated against an established set o f performance standards. These changes require a supportive legislative framework, establishment o f performance standards and monitoring tools, and most o f all, a clear definition o f each actor's functions and responsibilities. They would also require substantial stakeholder consultation to ensure broad based support for the proposed changes and adequate capacity buildingat MOH, HI1and provider level. 36. The potential role of regional health authorities needs to be reviewed in light of the pilot experience gained in Tirana and a decision needs to be made about the future of regional health authorities in Albania. The Tirana Regional Health Authority (TRHA) was established in the Tirana region as a pilot experiment, with the objective to consolidate previously dispersed public health, health planning, and health management functions under one umbrella, and optimize service delivery in the Tirana region, The experiment did not reach its expected results for a variety o f reasons. The effectiveness o f R H A s stems mainly from their ability to allocate the available funding amongst service xi providers in a region and make the necessary trade-offs to improve the overall quality and access to patient care. This, however, requires that R H A s be granted full autonomy to make such decisions and calls for highly skilled managerial talent to prepare for, propose, and subsequently execute such decisions. The experience in Tirana suggests that the required skills may be difficult to find in Albania, and that there is a continuous danger that M O H retains decision rights, thus obviating potential benefits of RHAs. Ifthese conditions are not met, it is unlikelythat the benefits ofthe RHA approach outweighthe costs in terms o f an additional layer o f management and decision-making, and especially in terms o f the use o f scarce managerial talent. This would suggest that the direct purchasing model, whereby HI1 would contract individual providers or groups o f providers directly, may be a more appropriate solution to consider for Albania, and that the further expansion o f R H A s should be carefully revisited. Therefore, it i s recommended that the Government commission an external evaluation o f the TRHA pilot as a basis for a decision about the role o f R H A s in Albania in general and TRHA in particular. The TRHA was conceived as a pilot and therefore calls for careful evaluation and corrective action based on the evaluation results. 37. Organizationand managementof primary care providers. The Government's Health Sector Strategy envisages that primary care will eventually be provided through independently contracted general practitioners or groups o f such practitioners. While this i s the model, which many ECA countries have adopted, it would be important to carefully evaluate the feasibility o f such arrangements for primary care provided in rural areas. Alternative set-ups to consider for rural areas might be community based health organizations or affiliation o f rural health care providers with urban providers under an umbrella contract with HII. To this effect, stakeholder consultations with providers in rural areas might be carried out and the feasibility o f various organizational arrangements inthe Albanian context further evaluated. 38. Increasing autonomy for hospitals. The Government's Health Sector Strategy and proposed amendments to the Hospital Law foresee that hospital providers will become autonomous non-budgetary not-for-profit public organizations governed by a board, while the M O H will retain the right to appoint the hospital director. This points to inherent conflict between granting providers increased autonomy under the governance o f their boards and the MOH's reluctance to withdraw from service delivery. It also points to a need to further evaluate the proposed governance structures for autonomous hospitals. Increasingautonomy o f hospitals will require substantial capacity building, both o f hospital managers and of the governing board members, and important decisions will need to be taken about the extent o f autonomy, which such institutionswill be granted. Inthe medium term, granting hospitals full autonomy, including over decisions o f the desired profile, scope o f services to be provided, and large investments is not advisable in the Albanian context. Similarly, it is not advisable inthe medium term to grant hospitals full financial autonomy to the extent of lettingthem borrow commercially for investments. Onthe other hand, as provider management capacity increases, providers could be granted increased autonomy over human and financial resource allocation within a given budget, including staffing positions and salaries, and they could be given the right to decide on the utilization o f potential savings achieved under HI1 contracts. 39. Populationfeedback and community participation. To date, both community participation in the health sector and seeking direct feedback from the population on sectoral performance have been largely neglected. Local authorities and community representatives can play an important role in ensuring accountability o f providers through, for example, representation on provider governing boards and through participation in local or national sectoral performance reviews. To the extent that the reforms will be implemented gradually on a regional basis, the Government may wish to institute regular stakeholder consultations and sectoral performance discussions with the involvement o f sectoral and community representatives. Sectoral performance targets for the region could be established, monitoring mechanisms agreed upon, and outcomes subsequently reviewed on a regular basis. Targets could include provider performance indicators, health outcomes, and the extent o f financial protection o f low-income groups. Similarly, feedback mechanisms from users o f health services, particularly as the reforms begin to take hold, will be o f critical importance to gauge the success o f such reforms. Inthe short and medium run, this would require specific efforts to gain such feedback through patient satisfaction surveys, possible report card systems as they have been introduced by Tirana Municipality, focus group discussions, provider utilization surveys and the establishments o f patient complaint mechanisms. In the longer run, more organized feedback through patient right organizations or similar set-ups mighttake hold. Implementation 40. The changes in the organization and financing of health care will require a gradual introduction and careful preparation and capacity building of health care providers, HII, and MOHto ensure that they are ready to assume their increased responsibilities. Fundamental decisions on the legal status, organizational arrangements, governance structures, and extent o f autonomy for health care providers will need to be taken before such changes can be introduced. Provider accounting systems need to be strengthened, performance standards established, and adequate provider reporting and information systems introduced to allow for appropriate performance monitoring and transparency. Provider management capacity will need to be developed and payment reforms will need to be coordinated with efforts to improve the quality o f care to enhance payment mechanisms' incentives for behavioral change on the provider as well as the patients' side. Therefore, it is proposed that the Government consider implementing reforms in a phased approach. The first phase would be a preparatory phase, which would involve deciding on provider organization and governance structures, developing appropriate accountability and reporting mechanisms, developing and costing out the benefits package to be made available from public funding, enhancing the legislative framework to support the changes, and establish training programs in provider management and clinical skills upgrading. The second phase would gradually introduce changes in provider organization and financing in parallel with upgrading o f clinical and managerial skills. Building on work already undertaken with the support o f USAID financing, the emphasis during the second phase would be on supporting the gradual roll out o f changes at the primary care level, while piloting proposed managerial and financing changes in a limited number o f hospitals only. Duringa third phase, reforms would be further expanded across the remainder of the hospital network. In parallel, during the first and second phase, the capacity o f the IPH to assume increased responsibilities in health promotion, health information and health intelligence, and new public health initiatives, would strengthened. xiii CHAPTER 1: HEALTHSTATUS OF THE ALBANIAN POPULATION A. INTRODUCTION 1. Over the past decade and a half, Albania has undergone major political, economic, and social changes that have affected almost all aspects o f the population's life, including health outcomes and health care services. Despite some progress over the past decade, the population's health status remains below that o f most other countries in the region. Moreover, the transition years have resulted in marked lifestyle changes and exposure o fthe population to new health risks. 2. After a brief discussion o f data sources and limitations, this chapter will first review the demographic changes that have occurred over the past 15 years and present the current demographic situation. It will then review the health status o f the population, examining the core health indicators and the causes o f mortality and morbidity. The next section will look at the determinants o f health status. The chapter ends with a section that spells out the main health challenges that the Albanian health system must be preparedto face over the coming years. B. SOURCES OF INFORMATIONAND DATA QUALITY CONCERNS 3. An analysis of the Albanian population's health status and the main health challenges is rendered difficult by data limitations. The available data on the population's health status are scarce and often o f questionable reliability. There is a need to establish a reliable health information database, which could help guide sectoral policy and investment decisions. This chapter draws on a variety o f data sources in an attempt to provide a picture o f the population's health status and its main determinants.* Often, the picture presented by these data i s inconsistent and difficult to interpret. While the available information is deemed sufficient to identify the main health status trends and key health challenges, the available information must be used and interpreted with caution. The chapter will draw comparisons to other countries in the region where the data permit. Data on many key health status aspects are missing. For example, essentially no information is available on the incidence o f noncommunicable diseases and their main risk factors. No information is available on the health status o f core vulnerable groups andno data exist to draw credible conclusions about regional variations in health outcomes or health outcome differences across socioeconomic group^.^ Box 1.1illustrates some o f the key data issues faced. 'Datautilizedin this chapter include administrative datafrom MOH, INSTATandIPH, datafrom internationaldata bases, including the WHO' HealthFor All (HFA) database andthe World Bank's WorldDevelopment Indicators. Datafrom the Albania Reproductive Health Survey (2002), the Living StandardsMeasurementSurvey (2002) and UNICEF's Multiple Indicators Survey (2000) are also utilized. Householdsurvey data provide some indication of health status across broad geographic areas and incomegroups; however,they are basedon self-reported health status and are not specifically designedto provide reliable health status information, as, for example, a Demographic and Health Survey would be. 1 Box 1.1 Demographicand HealthStatusDataConcerns An Illustration - - Demographic and health indicators for Albania are affected by a variety o f issues, which call for caution when interpreting the data. The following illustrates some o fthe issues affectingthe data. 1. Most o fthe indicators for the period 1989-2001have been calculated usingdenominators based on projections from the 1989 Census. The large migration waves during this period are likely to have affected these denominators and thus cast some doubt on the reliability o f data from this period. 2. In some locations, the registration o f vital events was significantly and durably disruptedby the events that followed the collapse o f the pyramid schemes in 1997. This has further affected the quality o f routine registration data, which, inany event, remain incomplete. 3. In Albania, the number o f officially registered births varies significantly from one year to another: for example, from 52,888 in 2001 to 42,273 in 2002 (a 20 percent difference). While such large variations have been observed in some countries in the past and attributed to clearly identified factors, the underlyingfactors for such a drastic change inAlbania are not clear. 4. Infant under-five and maternal mortality are difficult to estimate in most countries owing to incomplete reporting and the sensitivity o f the enumerator to even small absolute changes in events. This is particularly true for countries with small populations and a small number o f vital events. Thus, an increase o f two maternal deaths per year in Albania can lead to a 25 percent increase in maternal mortality statistics. 5. Different methods o f analysis used to produce estimates o f demographic measures can result in different figures, which, in some cases, contradict each other. This is, for example, the case with Albanian life expectancy figures. According to official Albanian figures, life expectancy at birth was 75.7 years in 2003, while the WHO'S HFA database shows an estimated life expectancy at birth o f 70.4 years. Based on official figures, Albania enjoys the longest life expectancy in the Balkans, above the average for the entire European region and just 2 years below the average for EU countries. WHO estimates show a completely different picture, with life expectancy in Albania being the lowest in the Balkans, 3 years below the average for the entire European region and 8 years below the average for EUcountries. 6. The results o f household surveys can also provide a very different picture from that o f the official data and, in some cases, are hardly reliable despite the robustness o f the methodology used. For example, the Multi Indicator Cluster Survey conducted in 2000, surveyed the immunization status o f children based on data from vaccination cards and mothers' declarations. It found that only 17 percent o f children had all eight recommended vaccinations by their first year, with a measles immunization rate o f only 61 percent. Official figures for the same year show measles vaccination coverage o f 92 percent. No outbreaks o f any o f the related diseases were reported. The 2002 Albania Reproductive Health Survey reported a number for induced abortions that was 64 percent lower than the official data, leading to the conclusion that the underreporting o f abortions would make survey results unreliable. 2 C. DEMOGRAPHIC PROFILE 4. Albania's demographic profile is characterized by three main phenomena: large internal and external migratory waves, improving mortality rates, and declining fertility rates. The 2001 Census put Albania's population at 3,063 million. Based on projections from this Census, the population was estimated at 3.1 million in 2004 and is expected to increase to about 3.7 million by 2025.4 While Albania remains one o f the youngest countries in Europe, the population's age structure has changed significantly in the past decade. The population below 15 years o f age is now decreasing and the population over 65 years is growing faster than the rest o f the adult population. The Albanian population is still predominantly rural, although the cities, particularly Tirana, have grown very rapidly over the past 15 years. C.1. Internal and ExternalMigrations 5. Migration has been a dominating socioeconomic fact over the past 15 years. Migratory flows have been both international and internal, and permanent and temporary. With the return of political stability and economic growth, migratory flows have begun to stabilize somewhat. Following the collapse of the Hoxha regime, a great migratory wave begana5Duringthe 1990s, about 20 percent of the population left the country and are now living abroad. A second peak o f international migration followed the collapse o f the pyramid schemes in 1997. Most o f the foreign residents live in Greece, Italy, and other countries o f the European Union. 6. Large internal migration movements have taken place from rural to urban areas as well as from smaller to bigger cities. The main flows o f internal migrants originated from the Northern Mountain and the Center regions towards Tirana and Durres. As a result, about 60 percent o f households currently have at least some members who were not born in the municipality in which they currently reside. In addition to permanent migration, temporary migration has also been common among Albanians since the 1990s. The 2002 LSMS reported that about 10 percent of households had at least one adult who had been absent for one month or more in the year prior to the survey. The vast majority o f temporary migrants travel to Greece. International migration has been an important part o f many households' strategy to cope with economic transition. Remittances have beenthe largest source of foreign exchange. 7. International and internal migration have several important implications for the health sector. First, the health sector workforce lost a significant amount o f staff to international migration. While almost 2,200 physicians have graduated since 1992, the ratio o f doctors to the population has essentially remained unchanged. Albania lost over 2,800 nurses to migration over the past decade. Second, remittances constitute an important source to finance out-of-pocket health care expenditures. The 2002 LSMS showed that about 9 percent o f remittances are used to cover medical expenses. Third, large internal migration from rural to urban areas has resulted in further misalignment o f the health care provider network with population needs, while it has also left some o f the more remote areas without adequate medical staff. Fourth, while migration to urban areas has resultedin improved livingconditions and access to health care for some, others have ended up in peri-urban areas, which remain inappropriately served with basic amenities and health care services. Finally, the economic transformation and internal migration have precipitated lifestyle changes and exposure to new health risks, as reflected bythe sharp increase in smoking and car accidents. PopulationReferenceBureau, 2003. For more detailedinformation on internal and external migration, see the World Bank Albania Poverty Assessment, ReportNo. 26213-AL, 2003, Chapter VIII, pages 121-134. C.2. GeographicDistributionof the Population 8. With 58 percent of its population livingin rural areas, Albania has one of the highest rural population shares in Europe and the highest in the Balkans. Based on the 2001 population and housing census, about 58 percent of the population live inrural areas. However, the urban population has grown rapidly, from about 36 percent in 1989 to 42 percent in 2001. The 2001 population distribution by region and prefecture is presented inTable 1.1. The Tirana region now accounts for about one-fifth of the total population. Table 1.1 RegionalDistributionofPopulation,2001 - Region Population % of total Berat 193,020 6.3 Elbasan 362,736 11.8 Gjirokaster 112,831 3.7 Korce 265,182 8.6 Shkoder 256,473 8.4 Durres 245,179 8.0 Fier 382,544 12.5 Lezhe 159,182 5.2 Vlore 192,982 6.3 Diber 189,854 6.2 Kukes 111,393 3.6 Tirana Region 597,899 19.5 Total 3,069,275 100 Source: INSTAT. C.3. PopulationGrowth 9. Population growth and fertility rates have been falling, but Albania still has one of the highest fertility rates in Europe. The population growth rate has been declining steadily, from above 3 percent in the 1960s, to slightly over 2 percent between 1970 and 1990, and to about 0.5 percent since then. Owing to migration, the overall population dropped by over 200,000 between 1990 and 2001. Based on the 2001 Census, the annual natural increase in the population i s estimated at about 20,000 persons. Official figures point to a marked decrease in the fertility rate over the past five decades, from about six in the 1950sto three in 1990 and 2.1 in 2001 (Figure 1.1). This would put the current fertility rate at about the replacement rate. Other sources point to a somewhat higher fertility rate. The 2002 Reproductive Health Survey (RHS) estimates the total fertility rate at 2.6 percent, which is only slightly higher than the rates estimated by the WHO (2.4 percent) and the UNPopulation Division (2.3 percent). The crude birth rate is officially estimated at around 15 live births per 1,000 in 2003, a decrease from about 23 percent in the early 1990s. Albania has the highest fertility rate in the South East European region (Table 1.2) and one o f the highest in the European region, but it is below that of Turkey and Central Asia. 4 Figure 1.1 Albania Fertility Rate, 1950-2005 - 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Source:FalkinghamandGjonca, 2001, INSTAT. Table 1.2 FertilityRate inAlbania and NeighboringCountries, 1990-2003 - 1990 1995 2000 2003" Albania 3.O 2.6 2.4 2.0 Bosniaand Herzegovina 1.7 1.4 Croatia 1.6 1.6 1.4 Greece 1.3 1.3 1.3 Italy 1.2 1.2 1.2 Romania 1.3 1.3 1.3 Serbiaand Montenegro 2.1 1.8 1.7 1.6 Slovenia 1.5 1.3 1.2 1.2 TFYR Macedonia 2.1 2.0 1.8 * 2003 or latestavailableyear. Source:UNICEF Social monitor 2003 and WHO HFA database. C.4. PopulationAge Structure 10. Albania is still characterized by a relatively young population, but the number of people over 65 years of age is expected to double in the next 20 years. The population age structure has changed significantly over the past few Figure 1.2 Evolution of PopulationAge Structure I decades (Figure 1.2). INSTAT data show that somewhat over one-quarter of the population is aged 0-14 years and 46 percent of the total population is less than 25 years old (Table 1.3). Less than 8 percent of the total population is above 65 years and less than 3 percent of the population is above 75, a much lower proportion than that observed in neighboring countries. The population over 65 years is however growing Source:WorldDevelopmentIndicators. relatively rapidly--by 3 percent, or about 5 9,000 individuals per year. The elderly population is growing at a significantly higher rate than the population between the ages of 15 and 64 years (1.3 percent) and is expected to double in the next 20 years. Overall, the population pyramid has been affected by migration and declining fertility. While the top of the pyramid does not yet show a major expansion, the youth base has startedto shrink (Figure 1.3). Table 1.3 Age Structure of the Albanian Population - 1990 2001 2004 Age groups 0-4 11.7% 8.9% 8.2% 5-9 10.7% 10.0% 9.1% 10-14 10.1% 10.6% 10.0% 15-19 9.8% 9.6% 10.1% 20-24 9.5% 7.5% 8.3% 25-29 9.3% 7.0% 7.0% 30-34 8.2% 7.0% 6.7% 35-39 6.3% 7.3% 6.8% 40-44 4.8% 7.0% 7.1% 45-49 4.5% 5.5% 6.2% 50-54 4.0% 4.6% 4.9% 55-59 3.3% 4.0% 3.8% 60-64 2.6% 3.7% 3.9% 65-69 2.1% 2.8% 3.1% 70-74 1.4% 2.1% 2.2% 75-79 1.O% 1.3% 1.4% 80+ 0.8% 1.3% 1.3% Source: INSTAT. - - - 85+ 3661 7656 - 10-84 6131- 10513 75-79 mm 70-74 35-69 10-64 55-59 50-54 15-49 10-44 15-39 0-34 5-29 0-24 15-19 10-14 5-9 0-4 6 Population pyramid 2001 1 1 MMeshkui MFernra I 85+ 80-84 75-7E 70-74 65-69 60.84 55-55 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15.1! 10-14 200000 I50000 10000 5000 0 50000 100000 150000 200000 Source: INSTAT D. POPULATIONHEALTH STATUS D.l. Life Expectancy 11. Albania's life expectancy compares relatively favorably to that of other lower middle- income countries. Official Albanian statistics show a-life expectancy at birth o f 75.7 years in 2003 (Table 1.4), with a female life expectancy o f 76.4 years and a male life expectancy o f 71.7 years. These data would suggest that Albanians enjoy the longest life expectancy in the Balkans following Slovenia, above the average for the entire European region and just 2 years below the average for EU countries (Figure 1.4). WHO data, however, paint a different picture, with an estimated life expectancy at birtho f 70.4 years -- 67.3 years for men and 74.1 years for women. Based on WHO estimates, life expectancy in Albania is the lowest in the Balkans, 3 ears below the average for the entire European region and 8 years below the average for EU countries. P Compared to other lower middle-income countries, however, Albania's life expectancy compares relatively favorably, using either data source. This "Albanian para do^"^ is often attributed to the Mediterranean lifestyles and, more specifically, to a diet characterized by highconsumption o ffruits and vegetables, and low consumption o fmeat and milk products. Although diet seems the most plausible explanation, other factors may also have contributed to lower mortality in Albania, including the high physical activity and relatively low prevalence o f smoking before the transition. Data inconsistencies make it difficult to assess the impact o f the social and economic WHO uses specialdemographytechniquesto estimate vital statistics for countries where birthand death registrationsare knownto be incomplete. WHO estimates canresult invital statistics, which differ substantially from those basedon officially registeredbirth and death figures. Albania falls into this category. For details, see WHO, HealthFor All database, 2005. Arjan Gjonca, Martin Bobak: "Albanian Paradox; Another Example of Protective Effect of Mediterranean Lifestyle?"- The Lancet, Vol. 350, 1997. 7 transition on life expectancy. Official statistics indicate that life expectancy dropped by about one year between 1990 and 1995, but has since increased by 3 years. Table 1.4 Life Expectancy at BirthAccordingto Various Sources - 1980 1985 1990 1995 2000 2003 Total Population Albania official statistics 69.5 71.9 72.2 71.4 74.0 75.7 World DevelopmentIndicators 72.2 71.3 74.0 WHO estimatedlife expectancy 68.9 70.4 Male Population Albania official statistics 67.0 68.7 69.3 68.5 71.7 73.3 World DevelopmentIndicators 69.3 68.5 71.7 WHO estimatedlife expectancy 65.1 67.3 Female Population Albania official statistics 72.3 75.5 75.4 74.3 76.4 78.4 World DevelopmentIndicators 75.4 74.3 76.4 WHO estimatedlife expectancy 72.7 74.1 Source: INSTAT, WDI, WHO-HFA database, 2005. Figure 1.4 Life Expectancy:Albania and Other SEE Countries - 90 80 70 60 50 40 30 20 10 0 Albania Bosnia Croatia HungaryRomania SAM Slovenia Maced. Turkey European Region Source: WHO - HFA, 2005. 12. Albania fares worst in the South East Europeanregion in terms of healthylife expectancy. WHO'Shealthy life expectancy indicator measures the equivalent number o f years in full health that a newborn child can expect to live based on the current mortality rates and the prevalence distribution o f health status in the population. In 2002, WHO estimated healthy life expectancy at birth in Albania at 61.4 years, with 59.5 years for males and 63.3 years for females (Figure 1.5). This places Albania below other countries in the South East European region. The gender gap (3.8 years) is just below the average for the region (4 years). 8 Figure 1.5 Healthy Life Expectancy: Albania and SEE Countries - 1 60 I W 50 u k 40 Imales 30 I a 20 10 0 Source: WHO-HFA, 2005. D.2. Mortality Rates and Causes of Death D.2.1. Infant and Under-JiveMortality Rates 13. Although all data sources point to an encouraging improvementin infant mortality over the past decades, Albania's infant mortality rates continue to compare unfavorablywith those of other countries in the region. Official MOH figures, based on civil registration reports, show an infant mortality rate of 16 per 1,000 live births in 2000 and 15.5 in 2003 (Table lS), down from 28.3 in 1990 and from 35.4 in 1993. The World Development Indicators data and WHO data also point to a considerable decrease in infant mortality over the past decade, but show slightly higher absolute levels, although also drawing on official statistics. Other sources, however, use much higher figures of infant mortality. For instance, the Multiple Indicator Cluster Survey, conducted in 2000 by UNICEF, estimated infantmortality at 28 per 1,000 live births using a simulation model that corrects for underreporting based on survey and other data, 75 percent higher than the official rate. Using a similar model, WHO estimates for 2000 show an infant mortality rate of 23 per 1,000 live births in 2000, almost 50 percent higher than the government's reported estimates. Similarly, the 2002 Reproductive Health Survey calculated an infant mortality rate of 26.2 per 1,000 for the period 1997-2002. Given the known reporting difficulties, particularly in the more remote areas, it is likely that the official figures present a considerable underestimate. Based on WHO estimates, Albania has the highest infant mortality rate in the South East Europeanregion (Figure 1.6) and one of the highest inthe European region. However, irrespective of the source, infant and child mortality rates compare favorably to the average for lower middle-income countries and put Albania at a similar level as, for example, Colombia and Thailand. Figures for under- five mortality vary from 18 to 33 per 1,000 live births, depending on the source. 9 Table 1.5 Infant and Child Mortality Rates According to Different Data Sources - 1970 1975 1980 1985 1990 1995 2000 2003 Infant Mortality Rate MOH/IPH 28.3 30.0 16.0 15.5 UNICEF 2000 MIC Survey 28.0 World DevelopmentIndicators 78.0 55,O 37.0 25.0 22.0 18.0 WHO estimates 23.0 Under five mortality rate MOWIPH 41.5 37.0 20.4 22.1* UNICEF 2000 MIC survey 33.0 World DevelopmentIndicators 10.09 72.0 45.0 34.0 25.0 21.0 *Figure for 2002 Source: Ministry of Health, UNICEF, WDI, WHO-HFA. Figure 1.6 Infant Mortality Rate in Albania and NeighboringCountries - Note: Figures are WHO estimates for 2002 or latest available. Source: WHO-HFA, 2005. 14. About 40 percentof infant deaths occur during the first month of life and one-quarter occur during the first week, suggesting that improved prenatal care and post-natal follow up during the early weeks of life should be given a higher priority. Analysis o f infant mortality data between 1995 and 2000, carried out by the Institute o f Public Health (IPH), showed that early neonatal deaths (0-6 days) accounted for about one-quarter o f all infant deaths, deaths during the first month o f life accounted for about 40 percent, and 60 percent occurred between the second month and one year o f age.* The 2002 Reproductive Health Survey found similar results. This suggests that improvements in prenatal care to screen for high-riskpregnancies, combined with improved obstetrical care and higher quality follow-up duringthe first weeks after birth, should constitute a relatively high priority for the health care system. Institute of Public Health, "Epidemiological Studies of InfantMortality inAlbania: A Descriptive Study," 2003, and "Epidemiological Studies of Infant Mortality inAlbania: A Case Control Study," 2004. 10 Not surprisingly, the IPH study found that the mother's level o f education was an important predictor o f infant mortality, as were the quality o f the dwelling, the presence o f a smoking father, the number of prenatal visits, and cesarean sections. The child's gender and birthorder were not found to be significant determinants o f infant mortality. 15. Statistical series on infant mortality by district, produced by the MOH, show considerable variations over the years inthe number o f registered birthsand deaths. In some cases, these variations are due to a statistical bias (small number o f events), but in many others, they are probably due to unreliable reporting, including underreporting. Therefore, the available regional and district data are judged not sufficiently reliable to permit credible conclusions to be drawn on regionalvariations in infant mortality. D.2.2. YouthMortality 16. Albania's youth mortality rate peaked in 1997 owing to violence, but it has recovered since then. As elsewhere, young people (15-24 year olds) have the lowest mortality rate among any age group in Albania. During the transition, the death rate ~~ Pigun 1.7 -Evolution of Youth Moltality Rate, 1990.2002 among young people increased significantly, from 74 per 100,000 population in 1989 to a peak of 148 180 160 per 100,000 in 1997. The rate has now returned to g- 140 g 120 the pre-transition levels, at around 66 per 100,000 1100 0L (Figure 1.7). Data from the mid-1990s (prior to the 80 ;; 60 1997 events) show that the death rate among young I4 people in Albania was significantly higher than that 0 in other transition economies, and was principally 1990 1992 1994 1996 1998 2000 2002 drivenby violence and motor vehicle accident^.^ Source: INSTAT. D.2.3. Maternal Mortality 17. Although progress has been made, maternal mortality rates in Albania still appear relatively high in comparisonwith other Balkancountries. The officially reported maternal mortality rate (MMR) was 18 per 100,000 live births in 2003, pointing to a decrease o f 30 percent over the past 20 years. However, other sources, such as UNICEF and the World Bank's World Development Indicators, estimate a significantly higher maternal mortality rate (55 per 100,000 live births in 2000). Worldwide, the measurement and analysis o f maternal mortality i s problematic because o f complex data collection and computation methods, and therefore such differences in maternal mortality rates are not surprising." With the relatively small absolute numbers involved in Albania (eight reported deaths in 2003), even a minimal change in the enumerator can result in substantial variations. Given the state o f obstetrical services inAlbania, it i s likely that the maternal mortality rate is above that officially reported. Evenwith officially reported data, however, Albania compares relatively unfavorably with many other countries in the region (Table 1.6). INSTAT, "Youth and Transition: Issues Confronting Albania's Key Resource," 2003. loWHO estimates maternalmortality using: (i)routine mortality data by cause statistics as reportedto WHO by the Central StatisticalOffices, and (ii) Hospitaldata reportedto the Ministries of Health. Experts argue that evenin countrieswith good vital registration systems, maternalmortality is actually higher by approximately 50 percent. WHO, UNICEF and the UNFPA have developedadjustedestimates to take into considerationthe underreportingof events. 11 Table 1.6 Officially ReportedMaternalMortalityRates,Albania and NeighboringCountries - 1996 2003* Albania 32.1 18.0 Bulgaria 19.3 5.7 Croatia 1.8 7.5 Greece 4.9 3.9 Hungary 11.4 7.4 Italy 3.7 2.0 Macedonia, FYR 3.7 Romania 41.0 30.5 SerbiaandMontenegro 7.2 5.7 Slovenia 26.7 17.2 Europeanregion 20.6 15.6 *Or latest available. Source: WHO HFA, 2005. D.2.4. Main Causes of Death 18. There has been a significant shift in the causes of death over the past decade; cardiovascular roblems and cancer have replaced infectious and parasitic diseases as the leading causes of death?' Reported deaths due to infectious and parasitic diseases have continued to drop over the past 10 years and now reportedly constitute only about 1 percent of all deaths (Table 1.7). At the same time, deaths due to cancers and cardiovascular diseases increased by 58 percent and 43 percent respectively, between 1993 and 2003. Cardiovascular diseases and cancers now account for about two- thirds of all reported deaths and are the leading causes of death among the adult population. Adult circulatory problem death rates are on par with those in neighboring countries, while cancer death rates remain below those o f other SEE countries.12 Lung cancer deaths account for one-fourth of all cancer deaths and are likely to increase in the years to come, given the high incidence o f tobacco use. Road accidents resulted in 8.9 fatalities per 100,000 people in 2002 --about the same level as inMacedonia, but lower than in other South East European countries. However, Albania's traffic death rate per driven kilometer is among the highest inthe region and is likely to become a major public health issue as vehicle density increases. Albania has one o f the lowest suicide rates (2.1 per 100,000 people) in the European region. 19. Infectious diseases remain a major cause of death among children. Acute respiratory infections and diarrheal diseases continue to be a major cause o f child death. Whereas violence was a major cause o f deaths for adolescents and young adults (mainly males) in 1996-1997, car accidents now appear to constitute the major problem. The causes o f deaths are analyzedfrom the deaths forms using the StandardInternational Classification ICD9. l2Comparisons of death rates with other countriesmust be interpretedwith caution, due to limited reliability of data. 12 Table 1.7 Main Causes ofDeath,1993 and 2003 - 1993 2003 Deaths per Deaths per 100,000 YOof all 100,000 people deaths people O hof all deaths Total Deaths 543 574 out of which Infectious diseases 11 2 3 1 Diseases of the circulatory system 201 37 288 50 Neoplasms 61 11 95 17 Diseasesofthe respiratory system 72 13 33 6 Diseases o f the digestive system 21 4 10 2 Accidents, Injuries,Poisoning 48 9 39 7 Diseases o f the nervous system 22 4 15 3 111-definedconditions 72 13 65 11 Source: Ministry of Health. D.3. Morbidity and EpidemiologicalProfile D.3.1. Infectious Diseases 20. Infectiousand parasiticdiseases no longer present a major cause of mortality,but remaina significant morbidity burden. Vaccine preventablediseases appear largelyunder control. After the last outbreak o f polio in 1996, Albania was declared a polio-free country in 2002. The last nationwide measles epidemic took place in 1989-1990. Measles has since continued to circulate, with sporadic and limited outbreaks, but causing no deaths. The Government's National Vaccination Program aims at completely eradicating measles by 2010. Ifcases o f diphtheria, pertussis, tetanus, and rubella continue tQ be reported, the annual incidence o f these diseases is close to zero. Mumps still circulates, but the Government has introduced MMR vaccination (replacing MR) in 2005. After a drop in vaccination rates duringthe early- and mid-l990s, owing to budget crisis and civil unrest, reported vaccination rates have recovered to high recorded levels, thanks to the Government's commitment and to support from international agencies (UNICEF, WHO and GAVI). As Table 1.8 indicates, over 95 percent o f children are reported to have been immunized against a range o f infectious diseases. Two-course tetanus vaccinations for pregnant women are also reported to be in the 95 percent range. While the National Immunization Program has thus been successfully regaining its strength duringthe last 5 years, Albania's financial sustainability plan for the program points out that some problems need to be addressed. Among them are the need to more effectively measure and report population base figures (denominator) for vaccination coverage, a task complicated by widespread and frequent population migration; the need to reach out more effectively to migrant and minority populations in cities, and the need to further strengthen vaccination quality control. Box 1.2 spells out the goals and challenges o f Albania's National Immunization Program. 21. Zoonoses and parasitic diseases do not constitute a major disease burden, although the incidenceof episotic diseases is increasing. Brucellosis, for example, has been increasing significantly since the mid-l990s, pointing to the need for increased veterinary control o f domestic animals and to close monitoring o f the evolution o f episotic diseases. No case o f indigenous malaria has been reported since 1967, but leishmanisis is still present. 13 Table 1.8 Coverage Ratesfor EPIAntigens inAlbania (% of age cohort) - 1998 1999 2000 2001 2002 2003 BCG 87 93 93 93 94 95 DTP-1 98 97 98 98 DTP-3 96 97 97 97 98 97 Hepatitis-B-3 94 96 96 96 96 95 Measles 89 85 95 95 96 94 OPV-3 97 97 97 97 98 97 Source: MOHIIPH, Albania, Financial Sustainability Plan for National Vaccination Program. Box 1.2 Albania's NationalImmunizationProgram - Objectives of the NationalImmunizationProgram 1. Achieving and maintaining 90 percent or higher vaccination coverage rates for each EPI antigen at all administrative units; 2. Introducingnew antigens to the NIS, specifically mumps and Hib vaccines; 3. Developing and implementing immunizationpolicies for high-risk groups; 4. Strengthening epidemiological surveillance and monitoring o f EPI-targeted diseases; 5. Maintaining an effective cold chain system; 6. Reducingvaccine wastage rates to operationally possible levels; 7. Introducingpresentation mix analysis for the vaccine supplies to ensure the most efficient vaccine prices and combinations; 8. Strengtheningpolitical commitmentto EPI; 9. Strengthening the management and coordination of the EPI; and 10. Ensuring immunization safety and safe injection practices during immunization. The NationalImmunizationProgram Age Visit Vaccine BCG DTP OPV Hep-B Hib M(M)R At birth 1 BCG-1 Hep-B-1 2 months 2 DTP-1 OPV-1 Hep-B-2 Hib* 4 months 3 DTP-2 OPV-2 Hib* 6 months 4 DTP-3 OPV-3 Hep-B-3 Hib* 12 months 5 MMR* * 24 months 6 DTP-3 OPV-4 5-6 years 7 DT OPV-5 MMR* * 14years 8 Td * Introduction o f Hib-vaccine is subject to availability o f GAVI funding for which M O Hplans to apply in September 2005. ** MRvaccine was administered untilthe end ofthe year 2004 and substituted by MMRvaccine starting in2005. Source: Ministry o f Health/Institute o f Public Health, Financial Sustainability Plan for the National Immunization Program, 14 22. Although decreasing, waterborne diseases still constitute a significant public health issue. Gastroenteritis, shigellosis, typhoid and paratyphoid diseases, and hepatitis A are present, due to the relatively widespread lack o f basic amenities. Less than half o f the population has access to piped water in their homes, there is no systematic monitoring of water quality, and the risks o f water contamination from human waste are high.13 The last cholera epidemic (with about 2,000 reported cases) occurred in 1994. Most cases o f diarrheal diseases are reported to affect the young. Given that these diseasesmainly result from poor water quality and sanitary conditions, they are likely to affect the poor disproportionately. 23. Albania's reported tuberculosis incidence is lower than that of other countries in the region and substantially below the average of lower middle income countries, but it has not significantly improved over the past decade. The reported TB incidence has been averaging around 20 cases per 100,000 population over the past 10 years, although a slight decrease to 17.5 cases per 100,000 has been reported over the past 3 years. Overall, the TB incidence in Albania appears to compare favorably with that o f other countries in the SEE region and is significantly below the wider European region average (46 per 100,000).'4 However, the relatively high weight o f extra-pulmonary TB indicates that there is a need to improve veterinary services. Overall, the TB prevention and treatment systems are judged to be weak, which calls for increased attention, particularly in view o f the disease's linkages to HIV/AIDS and poverty. D.3.2. Sexually TransmittedDiseases and HIV/AIDS 24. Sexually transmitted diseases are underreported and no clear picture can be drawn from the available figures. Despite some IPH efforts, no credible surveillance system for STDs is in place. Limited surveys suggest that STDs could have increased in the mid-1990s and might now constitute a public health problem. Migration is likely to be contributingto the increase in the transmission o f STIs. 25. Albania ranks low among HIVIAIDS prevalence rate countries, but it exhibits all risk factors that may lead to a rapid increase in the disease. The reported incidence o f HIV/AIDS (0.1 percent) is low, but underreporting is likely and there are indications that the incidence o f the disease i s on the rise. Sixty percent of the 116 HIV cases registered between 1993 and 2003 were reported after 2000, with 30 new cases reported between November 2003 and July 2004. Over 70 percent o f notified cases are thought to have acquired the infection abroad and the main mode o f transmission is heterosexual population -- particularly temporary migration -- is facilitating HIV transmission. A UNICEF conducted contact, Several contextual factors make Albania vulnerable to HIV/AIDS. The mobility o f the rapid assessment showed that about 40 percent of sexually active migrants had sex with a sex worker abroad, and that more than 80 percent of them did not always use a condom. Albania is a source and transit country for women trafficked for sexual exploitation, and drug injecting is on the increase. HIV/AIDS awareness and knowledge are low and opinion leaders do not regard HIV/AIDS as an issue requiring immediate attention. Surveillance, prevention, and control activities remain limited. D.3,3. Noncommunicable Diseases 26. Information on the incidence and prevalence of noncommunicable diseases (NCDs) is extremely scarce, despite a marked increase in reported deaths due to such diseases. Neither national nor international databases make it possible to paint a coherent picture o f the incidence o f NCDs in Albania. However, a key indicator of the overall increasing trend innoncommunicable diseases is the fact that standardized death rates for cardiovascular diseases and cancer have risen markedly over the past l3MinistryofHealth,Public Health andHealthPromotion Strategy. l4Figuresbasedon WHO-HFA, 2005. 15 decade. A recent study shows a rapid increase in type I1 diabetes, with an overall prevalence of 6.3 percent and a peak o f 8.3 percent among 55-64 year olds. These are double the figures for many Western European countries and reportedly twice as high as in the 1980s. By some estimates, the prevalence o f diabetes can be expected to double again in the next 20 years." Given the rapid reported increase in deaths from NCDs and the indications o f relatively rapid increases in the prevalence o f diabetes, there clearly is a need to establish a better monitoring and reporting system for such diseases and to make efforts to improve physician capacity for early detection and disease management. Little information is available on the prevalence o f mental health disorders and disability. D.3.4. Nutrition 27. Although they are spotty, survey data suggest a considerable incidence of malnutrition among Albania's children. According to the 2002 LSMS, almost one in three children is moderately stunted, while one in five is severely stunted. About 8 percent are moderately wasted, while about 1 percent is severely wasted. About 13 percent and 3 percent are moderately and severely underweight, respectively. UNICEF's MICS found similar figures in 2000. The prevalence o f malnutrition (for all three indicators) is highest in the Central region, but no clear pattern emerges in the other regions. Similarly, there appears to be little variation in the incidence o f malnutrition among children from the lower three household consumption quintiles, but malnutrition, by all measures, i s lower among the top two quintiles (Figures 1.8 and 1.9). Not enough is known to explain the relatively important incidence o f stunting. Figure 1.8 Incidenceof Malnutrition by Region - 40.0 35.0 30.0 QI Coastal 25.0 20.0 rn Central 15.0 Mountain 10.0 5.0 Tirana 0.0 Source: LSMS 2002. ~~~ ~ l5Ministry of Health, Public Health andHealth Promotion Strategy. 16 Figure 1.9 -IncidenceofMalnutritionbyHouseholdConsumption Quintile 50.0 Quintile 1 40.0 Quintile 2 30.0 20.0 Quintile 3 10.0 0.0 Quintile 4 12Quintile 5 28. According to the 2000 UNICEF MICS, only 9 percent o f children under the age o f 4 months are exclusively breastfed. At the age o f 6-9 months, one-fourth of children are receiving breast milk and solid or semi-solid foods, and by the age o f 20-23 months, only 6 percent continue to be breastfed. Approximately 3 percent o f infants are estimated to weigh less than 2,500 grams at birth, a figure that does not vary much between urban and rural areas or by the educational level o f the mother. About 80 percent of households use adequately iodized salt, but less than 50 percent o f households in rural areas do so. According to the MICS results, vitamin A supplementation in under-five children is less than 8 percent, a low level. D.3.5. Reproductive Health 29. Despite relatively widespread awareness of contraceptive methods, only a small share of women use modern contraceptive methods. Knowledge of reproductivehealthissues is low among men and women. The 2002 Reproductive Health Survey16found that Albanian women demonstrate a relatively high awareness o f both traditional methods (87 percent o f women) and modern methods (90 percent o f women) o f contraception, but make relatively little use o f modern contraceptive methods. Modern contraception i s used by only 8 percent o f married women and withdrawal remains the main method o f birth control (by about 70 percent o f married women). About 25 percent o f married women declared not using any contraceptive methods. Female sterilization i s reported by 4 percent o f married women (15-44 years old), with condoms (2.1 percent) being the second modern method used. Only 1 percent o f married women report using contraceptive pills. Not surprisingly, the level o f awareness o f contraceptive methods and the utilization o f modern contraceptive methods is lower in rural areas and is correlated with the level of education. Less than one in five women and only one in ten men know when a woman is most fertile and only one in five women know that breastfeeding reduces a woman's fertility. 30. While official figures point to a high prenatal care coverage rate, one in five women who gave birth between January 1997 and 2002 reports that she did not receive any prenatal care by health professionals." This is one o f the highest proportions in the European region, and is similar to Central Asian figures (for example, 1 percent in the Czech Republic and in Moldova, 4 percent in Russia, l6Albania ReproductiveHealth Survey 2002 (final report-draft April 2005): INSTAT and IPH, with the support of the Centers for DiseaseControl (U.S.), USAID,UNFPA andUNICEF. l7Albania ReproductiveHealth Survey. 17 that coverage with prenatal care is significantly lower in the mountainous region -- which has the highest 8 percent in Armenia, 11 percent in Romania, but 30 percent in Azerbaijan). The LSMS data also show poverty incidence -- than in the rest o f the country, and that it is lower among the poor." Similarly, the LSMS figures show that the share o f children who died under one year o f age as reported by surveyed mothers is substantially higher inthe mountainous regionthan e1~ewhere.l~ 3 1. The quality of prenatal care is of serious concern. The reproductive health survey found that less than 10 percent of prenatalcare providedis adequate and that 70 percent is inadequate?' This is one o f the highest rates o f observed inadequate prenatal care in Europe and Central Asia (ECA). As a comparison, prenatal care was deemed inadequate in 53 percent o f cases in Romania, 13 percent in Moldova, and 47 percent in Georgia. On the other hand, over three-quarter o f pregnant Albanian women (77 percent) had at least one ultrasound examination. The utility o f such examinations in an environment where the technical capacity o f caregivers is generally low and the overall quality o f care is deemed mostly inadequate is questionable. 32. Findings from the survey indicate that 84 percent of births took place in a health care facility between 1997 and 2002. Most women deliver in a district maternity hospital (71 percent), in Tirana Maternity Hospital (14 percent) or in a birth house or health center (8 percent). Home births are more likely in rural areas, among older women, among the least educated, and among those with no prenatal care. For the period surveyed, the rate o f cesarean section deliveries was at a relatively high 13.4 percent.21 Only one in five women had a postpartum visit. Urban women and women with higher levels of education were more likely to have a postpartum visit than rural and less educated women. Women who delivered at Tirana Maternity were considerably more likely to attend a postpartum visit (3 1 percent) than women delivering at district maternity hospitals (19 percent) or other locations (11 percent). The survey indicates that 92 percent o f women registered their newborns, but only 20 percent o f them during the first week. 33. Family planning was practically nonexistent before 1991. In the absence o f other alternatives, women have often resorted to abortion, which was legalized in 1992. The legalization resulted in a tremendous increase in the abortion rate, which reached 47.6 abortions per 100 deliveries in 1996 and dropped to 34.4 in 1999. The reported absolute number o f abortions dropped from about 36,000 in 1996 to 11,000 in 2003. Family planning i s easily accessible for approximately 60 percent o f women in Albania. Although family planning services are free o f charge, the number o f people, especially teenagers, receiving services i s low, which may be related to the social and cultural barriers that exist in Albanian society and the need to improve the quality o f care offered by these services. 34. The findings of the reproductive healthsurvey point to the overall poor performanceof the maternaland child health care system. IfAlbania strives to move closer to European levels for infant mortality, the quality of prenatal and obstetrical care, as well as the utilization o f post-natal care must be substantially improved. While a relatively high share o f births occur with the attendance o f a health care professional, the quality of prenatal and obstetrical care is poor and only a small share o f women have any postnatal care. In 2000, UNICEF found that many o f the infant deaths could be attributed to poor sanitary '*Albania PovertyAssessment. The LSMS2002 asked each woman of reproductive age about the number of children to whom she gave birth and whether each child was still alive. For those who died, the approximateage at death can be calculated,allowing for a proximateestimate ofthe rate of children who diedbelow the age o f one. This estimate shows that 4.9 percent of *'UsingtheKotelchuck children under the age of one died inthe mountainous region, comparedto 1.3 percent inTirana. index. For reference, internationalevidence suggests that little improvement inbirth outcomes occurs ifthe rate is higher than 7 percent. 18 conditions in hospitals with such basics as gloves not widely available and antibiotics not distributedto all districts.22 Similarly, a safe motherhood needs assessment conducted in five districts and six maternity hospitals by the International Medical Corps found that essential drugs for obstetric care were often missing and that the available drugs were sometimes used inappropriately. The equipment for maternal and neonatal care was missing and maintenance capabilities were minimal. Delivery practices were substandard, health center midwives did not have the required skills to perform their tasks and were infrequently ~upervised.~~Since the time o f these surveys, relatively little effort has gone into improving the situation. The poor quality o f prenatal and obstetrical care helps explain why an important share o f infant deaths occur duringthe first week o f life. High infant mortality rates and serious concerns with the quality o f care for maternal and child health point to the need for concerted efforts to improve prenatal and post-natal care, as well as the quality o f obstetrical care. E. HEALTHSKSANDDETERMINANTS R I E.l. Life-style Determinants E.I,I. Smoking 35. Smoking has becomea major healthrisk factor inAlbania. According to WHO/HFA data, 39 percent o f adults inAlbania are reguladdaily smokers, far above the level observed in EUcountries. The WHO tobacco country profiles shows a daunting figure o f 60 percent o f adult males being regular daily smokers. This is one of the highest ratios in the European region, just after the Russian Federation and Armenia. Smoking is less common among adult women than among men. The high smoking prevalence among adults i s confirmed by surveys, but the comparability o f data is limited owing to the use o f different methods. While WHO data show that the total number o f cigarettes consumed per person per year (at about 750 cigarettes) is among the lowest in Europe, the Economic Research Service found that per capita consumption o f cigarettes was already at 2,150 in 1999 and at the average level observed in SEE countries. These data should be treated with caution as they are based on market figures and do not take into account the widespread smuggling o f cigarettes. It i s estimated that Albania spends about US$260 million on tobacco each year. There are indications that smoking among the youth (and even among children) increased considerably after 1990. Surveys on limited samples show that about 90 percent o f young people and 47 percent o f children have tried tobacco, and that 65 percent o f young people and 16 percent o f children are addicted to it.24 22UNICEF, "Assessment of Social and Economic Conditions of Districts inAlbania," Tirana, 2000. 23InternationalMedical Corps, "Needs Assessment of Health Systems Infrastructure," Tirana, 1999. 24INSTAT, "Youth and Transition," 2003. 19 Figure 1.10 Prevalenceof Smoking in Albania and the EuropeanRegion - Smoking Smokers among adults and 15-year-otds Source: Atlas for Health in Europe, WHO, 2003. 36. Zoonoses and parasitic diseases do not constitute a major disease burden, although the incidenceof episotic diseases is increasing. Brucellosis, for example, has been increasing significantly since the mid-1990s, pointing to the need for increased veterinary control o f domestic animals and to close monitoring o f the evolution of episotic diseases. N o case o f indigenous malaria has been reported since 1967, but leishmanisis i s still present. E.1.2. Alcohol Consumption 37. Unlike smoking, alcohol consumption is at a low level in Albania. Average consumption of pure alcohol is 1.4 liter per year. This is 10 times lower than in Portugal and five times lower than in Germany. There are no indications on the trends in consumption and no data on the number o f persons suffering from alcoholism and alcoholic psychosis. People drink wine and beer, but consumption o f spirits is low. E.1.3. Drug Use 38. In the past decade, drug trafficking has increased and Albania is now recognized as a main transit country for cannabis, heroin, and cocaine smuggling. It is estimated that 20,000 to 30,000 Albanians are using illicit drugs. Surveys have found that inthe main cities (Tirana, Shkodra, Vlora, and Durres) about 4 percent of young people use drugs. However, the data available are not accurate enough and figures do not differentiate between users o f "soft" and hard drugs. 20 E.2. Socioeconomic and EnvironmentalFactors E.2.1, Access to Water,Sanitation, Housing, and Power Supply 39. Access to safe water remains a significant public health issue in Albania. The LSMS data indicate that less than half o f the population has access to piped water inside the house (Table 1.9). Less than 20 percent o f rural dwellers have access to runningwater inside their dwelling and less than one in two has access to any running water, inside or outside their dwelling. On the other hand, in Tirana, virtually everyone has running water (97 percent) but most people think that this water is not o f good drinkingquality. Only 41 percent of rural dwellers have atoilet inside their dwelling, while 45 percent do not have any access to a piped toilet. Comparisons across regions indicate that the rural mountain region has the worst sanitation problems, while more than 90 percent o f the Tirana population lives in dwellings with at least one toilet inside. However, even in urban areas, there is a serious risk o f sewage water contaminating the water supply. It is estimated that, in Tirana alone, there are 24,000 connections between clean water pipes and wastewater pipes owing to breaks to the pipes.25Overall, the low level o f access to piped water and adequate sanitation continues to pose a serious risk for epidemics o f water- borne diseases inAlbania. 40. The coverage o f the electricity network is virtually universal. However, delivery o f the service is still unreliable, and the situation is worse in rural communities. About 78 percent o f the population reports daily interruptions, on an average o f almost nine hours per day. International evidence shows a close correlation between the availability o f electricity and infant mortality. According to the LSMS data, 12.5 percent o f the population perceive their housing conditions as inadequate, mostly in rural areas (16.5 percent) but also in Tirana (8.5 percent). Table 1.9 Access to Water AcrossRegions - Main households water source (% ofhouseholds) Coastal Central Mountain Tirana Total Running water inside 44.8 45.8 29.7 92.1 48.3 Running water outside 15.1 19.5 28.3 4.6 17.6 Water truck 0.4 1.5 0.3 0.1 0.9 Public tap 6.9 9.7 18.3 2.0 9.0 Springor well 30.2 21.5 23.1 1.3 22.3 River, lake, pond 0.1 1.7 0.3 0.0 0.9 Other 2.5 0.3 0.0 0.0 0.9 100.0 100.0 100.0 100.0 100.0 Source: LSMS 2002. E.2.2. Solid Waste 41. Only half of all citizens have access to solid waste removalservices.,26The opening up o f the economy has led to an increase in packaged consumer goods, which has increased pressure on the already weak waste management system, as has the rapid movement o f rural populations into cities. When it is not removed, waste is left on the streets, where it attracts insects and animals that are vectors o f 25MOH/IPH, Public Health and Health Promotion Strategy. 26MOH/IPH, Albania Public Health and Health Promotion Strategy. 21 communicable diseases. There are no managed dumpsites or incinerators. Solid waste removal is the responsibility o f local governments and will require concerted efforts in the years to come, particularly in the main cities. E.2.3. Roads and Traffic Volumes 42. Road safety has become a serious public health threat. Albania has the lowest rate of vehicles--66 per 1,000 people inthe region (Croatia has 274 per 1,000; Macedonia has 170 per 1,000; and Bosnia has 114 per 1,000; and the traffic volume in Albania is still low by regional comparison (11 million vehicle kilometers per year, versus 44 million in Croatia, 27 million in Macedonia, and 24 million in Bosnia). However, road safety has become a considerable concern in Albania. Only 12 percent of roads are paved and only 8 percent o f all roads can be considered good. Combined with limited signage, a highproportion o f old vehicles inuse and poor driving behavior, the low road quality leads to highroad accident fatality rates (8.9 per 100,000). F. CONCLUSIONSAND RECOMMENDATIONS 43, Albania's health outcomes compare favorably to those of other middle-income countries, but lag behind those of other countriesin the SEE region. The political and economic transitions have not had a lasting negative impact on health outcomes. If some health indicators deteriorated in the early 1990s, all have by now at least returned to their 1989 level, and most have improved. However, most health outcome indicators do not compare well with the levels observed in the South East European region and are below the average o f the European region. The many changes that occurred inthe past 15 years have contributed to an accelerated demographic and epidemiological transition. As a result, Albania's health care system is faced with several challenges. 44. The quality of maternal and child health care needs to be substantially strengthened if Albania strives to bring infant and maternalmortality rates close to the regional average. Despite the dramatic reduction achieved in the past 50 years, infant, under-five and maternal mortality are still among the highest in the European region and reflect the low quality o f prenatal, obstetrical and post- natal care rather than access to such care. Without substantial efforts to address the situation, Albania is unlikely to meet the related MDGs. Therefore, the improvement o f maternal and child health should be a priority for public health action. Particular attention should be paid to maternal and child health issues in the mountainous region, which exhibits higher infant and child mortality rates than the rest ofthe country. 45. Albania's health care system needs to shift its emphasis from almost exclusive focus on curative care to more preventive care and health promotion. Albania's epidemiological profile is changing and the health care system i s illprepared to face the increasing incidence o f noncommunicable diseases while also continuing to control infectious diseases. The latter are still prevalent and are a leading cause o f infant and child deaths, but cardiovascular disease and cancer have become the leading causes o f death among the adult population. They are expected to substantially increase as the population over 65 years o f age doubles over the next 20 years. A significant portion o f chronic disease conditions can be prevented through the promotion o f healthy lifestyles, screening, and primary and secondary preventive care measures. Increased focus on preventive care i s therefore becoming a high priority for Albania's health system. The main focus should be on strengthening the capacity for health promotion, as well as for primary and secondary prevention o f cardiovascular diseases and cancer. This will require concerted action to build up the capacity o f providers to adequately assess patient risk factors and to effectively manage the conditions o fthose exhibiting such risks. 22 46. Although HIV/AIDS prevalenceis reportedlystill low, the risk of HIV transmission is high owing to the mobility of the populationand humantrafficking. Inthis context, action should not only be directed to groups at highrisk (drug users, commercial sex workers, male homosexuals, migrants) but it should also be combined with efforts to inform and educate the general population. Albania should also strengthenits surveillance capacity and build a second generation surveillance system, develop reference laboratories outside Tirana, and move to implement its HIV/AIDS strategy, 47. Albania needs to strengthen its health information system to allow for informed policy decisions and monitoring of sectoral performance. Good public health systems depend on ready access to routine information on health status, impending disease outbreaks, health risk factors, provider performance, and sectoral resource flows. The current status o f the health information system, including basic data on health outcomes and health risk factors, is largely inadequate for appropriate sectoral performance monitoring and informed decision making. Health information has fallen short in both attention and financing in the past years. While there is an overall shortage o f personnel with appropriate knowledge and skills in medical research and statistics, particularly at the district level, the IPH has a good basis and would be a natural body to assume responsibility for the collection and analysis o f routine health information as well as for increased focused research efforts. Consideration should, therefore, be given to making IPHthe core locus for health information and transferring all data collection and analysis responsibilities to this body. While IPH has already gained considerable experience working with various international partners in health information and health research activities, its capacity will need further strengthening to develop into a full-fledged body that can produce the data and analysis necessary to support a modern health sector. Developing a credible health information capacity will also require increased financial commitment from the Government. The recently established Public Health School could also become an important locus for the analysis o f health information. 48. The disease surveillance and monitoring system requires further strengthening. The early warning system for outbreaks (Alert) is in place but needs to be strengthened on two fronts: first, by training and retrainingthe general practitioners who are acting as sentinels and reporting suspicious cases; and second, by reinforcing the capacity o f the IPH to investigate these cases and provide the government authorities with reliable and timely information and advice. 49. Efforts are also neededto curb the rapidly increasingtobacco consumptionand fatal traffic accidents. Tobacco consumption inAlbania is high, and smoking is a major health risk factor. Past and current efforts to curb smoking appear inadequate. The health impact o f tobacco use is likely to worsen in the years to come. Therefore, developing anti-smoking activities should be seen as a top priority for public action. International experience shows that only a multi-sectoral approach to the smoking problem and continued efforts can be effective. Similarly, the rapidly increasing traffic accident rate requires concerted public education efforts and coordination among the health sector, police, local governments and the Ministrieso f Transportation and Education. 23 CHAPTER 2: SUPPLY AND UTILIZATIONOF HEALTHCARE A. INTRODUCTION 50. This chapter will review the supply and utilization o f health services in Albania. It draws on administrative data, data provided by the M O H for the purpose o f this study and the 2002 and 2004 LSMS waves for the analysis o f utilization o f care. Appendix 1gives further details about the LSMS data usedinthis chapter. B. SUPPLY OF CARE B.1. Supply of Outpatient Care B.1.1. Planning and Management of Health Facilities and Public Health 5 1. Administratively, Albania is divided into 12 regions that include 36 districts, 65 municipalities and 309 communities. The health sector follows the same subdivision on a regional/prefecture and district level. Each prefecture comprises about three districts that are responsible for administering district hospitals, polyclinics and primary health care centers (PHC) through the regional or district public health departments, which are the MOH's local affiliates. Health care i s supplied by a multitude o f public and a limited number o f private providers. The key public provider is the MOH. Other public Ministries (Defense, Education, and Justice) also provide health care services, but their capacities are limited. 52. The MOH is the main provider of health care in Albania. I t provides care through an extensive network of hospitals, polyclinics, and primary health care centers. Specialized services such as obstetrics/gynecology and pediatrics are integrated within the PHC system. The Institute for Public Health (IPH) attached to the MOH, is responsible for health protection (e.g., prevention and control o f infectious diseases, national vaccination), and environmental health; it mainly works through the district public health directorates. The directorates are accountable to both the IPH and the MOH. Local authorities are directly responsible for public health issues such as waste disposal, drinking-water supplies and some forms o f environmental protection. Government sanitary inspections are the responsibility o f the MOH. The MOH runs vertical interventions in national programs, such as child vaccination, reproductive health, epidemiological surveillance, HIV/AIDS, and the national program against tuberculosis. These programs are implemented with the help o f health centers and health posts as well as promotionalcampaigns (e.g., against HIV/AIDS) at the national and local levels. B.2. Availability of Outpatient Care 53. A basic PHC system oriented towards the health of mothers and children was established prior to 1990 through a nationwide network of health centers and health posts. Despite the expansive PHC network, however, the health care system prior to transition was secondary care-led and largely remains so today. Primary health care is provided through a network o f health centers and health posts, supplemented by polyclinics in urban areas. Polyclinics are the responsibility o f the district hospital or regional hospital with which they are affiliated and provide specialist care. Ownership o f some primary care facilities in rural areas was transferred to the local governments in the mid-1990s. Ownership transfer o f facilities housing primary health care inurban areas is ongoing. All primary health care facilities are, however, operated under the general administration o f the MOH's regional and district 24 affiliates. The exception is the Tirana region. Under a decentralization pilot project, the Tirana Regional Health Authority was established to administer all PHC, including polyclinics and public health in the region. 54. In 1997, the government developed a PHC policy with planning standards that aims at securing one health post (ambulances) per village and a health center per commune, and to create PHC teams led by family physicians. Outpatient care in the public sector is provided in health centers, health posts, polyclinics and through home visits. Health centers are generally located in commune's administrative centers, and in smaller cities and villages. Health centers in rural areas have limited medical technology and a small number o f beds, mainly for maternity care, though the bed occupancy rate does not exceed 10 percent. Health centers are staffed by one to three general practitioners (GPs) and nursingstaff. In rural areas, a typical health center i s staffed by one GP and two or three nurses, while a health post is staffed by a nurse or a midwife. Polyclinics are staffed by specialists as well as by GPs - the latter posted there to serve as the first point o f contact for all patients coming to the polyclinic. Primary care teams led by GPs in PHC facilities are supposed to act as a gatekeeper for secondary care. However, bypassing is frequent due to the perceived low quality o f care. 55. The primary health care infrastructurewas extensively damaged during the civil unrest in the 1990sand the processof facilities reconstructionis still ongoing. The civil turmoil inthe early and mid-1990s resulted in considerable damage to the primary care network, leading to a sharp decline in the number o f operational facilities. Inthe last few years, there has been an intensified effort to renovate and update many PHC facilities, but about half o f all health posts still remain nonoperational. To the extent that staff affiliated with these facilities are still at their post, they provide services from alternative locations, including their homes. In2003, the MOHreported a total o f 2,133 PHC facilities including 582 health centers, 1,501 health posts, and 50 polyclinics (Table 2.1). An estimated 700 health posts only are operational, although it is not known in how many cases personnel i s operating out o f alternative locations. Table2.1 Numberof OutpatientFacilities,1995 and 2000-2003 - Years 1995 2000 2001 2002 2003 Total population 3,185,000 3,113,000 3,132,000 3,150,000 3,169,000 HealthCenters 622 580 604 571 582 No. o fHealth Centers /1,000 pop 0.20 0.19 0.19 0.18 0.18 HealthPosts/ Ambulances 1,832 1,505 1,433 1,375 1,501 No. o fHealth Posts/1,000 pop 0.58 0.48 0.46 0.44 0.47 Polyclinics with specialists, urban 53 50 50 50 50 No, o f Polyclinics /1,000 pop 0.02 0.02 0.02 0.02 0.02 Total numberof HC,HP, PC 2,507 2,135 2,087 1,996 2,133 Total HC, HP,PC/1,000 pop 0.79 0.69 0.67 0.63 0.67 Source: Ministry o f Health, HNP at a Glance. 56, There are marked regional variations in the availability and coverage of primary health care facilities. Table 2.2 shows that the Central area has about 39 percent o f the population and a considerably larger proportion o f total PHC facilities (54 percent). Compared to their respective 25 population shares, the Mountain and Tirana areas are better served with polyclinics. The proportion of total PHC facilities in Tirana is smaller than the population share, mainly because o f the under- representation o f health posts; however, Tirana compensates for this difference through hospitals providing outpatient services. Similarly, there are large variations in catchment areas across regions, as demonstrated by Table 2.3.27 On average, there are 5,274 people per health center, 2,045 per health post, and 62,638 per polyclinic, resulting in an average catchment area o f 1,440 inhabitants per public outpatient facility, with significant inter-regional variations. Compared to WHO recommendations,28 these catchment areas are relatively small. Table 2.2 Area Distribution ofPHC Facilities,in YOof Total, 2003 - Area Health Health Polyclinics All PHC Pop Centers Posts" Facilities Total Total Total Total Total Central 46 58 35 54 39 Coastal 28 30 20 30 32 Mountain 11 5 12 7 10 Tirana 15 7 33 9 19 Albania 582 1,501* 50 2,133 100 100 100 100 100 Note: Only about 700 healthposts are operational. Source: Ministryof Health. Table 2.3 PopulationCatchment Area of PHC Facilities, by Region - Area Regions Number of inhabitants per PHC facility Health Health Posts Polyclinics All PHC Centers Facilities Central Berat 5,079 1,02 1 64,340 839 Elbasan 5,668 1,570 90,684 1,213 Gjirokaster 2,686 752 37,610 579 Korce 5,765 1,128 53,036 927 Shkoder 3,288 3,612 28,237 1,698 Coastal Durres 16,345 2,452 22,590 2,096 Fier 8,139 2,161 27315 1,685 Lezhe 3,061 2,067 53,061 1,206 Vlore 3,860 1,892 96,491 1,253 Mountain Diber 4,868 5,753 63,285 2,53 1 Kukes 4,284 2,93 1 37,131 1,663 Tirana Tirana 7,034 6,101 37,369 3,005 Average Albania 5,274 2,045 62,638 1,440 Source: Ministry o f Health. ~ 27Inthe absence of information onthe number ofactually hnctioning healthposts, the information on total catchment area needs to be interpretedwith caution, though figures on variability of catchment areas for health centers and polyclinics confirm the large variability in catchmentareas. 28WHO recommendsacatchmentarea of 10,000 to 15,000 inhabitantsper health center with aphysician; of 2,000 to 5,000 inhabitantsper healthpost with nurse/midwife. 26 57. To some extent these regional differences are driven by the financial incentives set to providers. At the beginning o f the transition, many physicians left rural and remote areas lured by more lucrative opportunities in tertiary hospitals and the private sector in the cities, especially Tirana. The introduction of new payments for the GPs, which included a capitation system with higher weights for rural and isolated populations, succeeded in attracting some GPs to rural areas but only with difficulty to the most remote areas. An estimated 1 percent o f the population in 15 communities remain outside the M O H established norms for a GP. Almost half o f this population is located in the Lehze region. To limit the number o f physicians working in cities, the Health Insurance Institute (HI)requires that contracted GPs in urban areas register at least 2,000 patients, compared to 1,700 patients in rural areas. The PHC policy developed in 1997 proposes that inhabitants should be free to register with the provider o f their choice. The size o f the catchment area and the number o f registered people do not match, pointing to physicians over-reporting registrants to reach the minimum numbers set by the HI1 for capitation payment.29 Another reason for the large variability is the significant internal and out-migration, which Albania has witnessed over the past decade. B.3. Productivity of Primary Care Providers 58. Utilization of primary health care facilities in Albania is low, leading to overall low productivityof physical and human resourcesin these facilities. Table 2.4 shows great variability in productivity o f health centers across regions, but points to overall low utilization. Some health centers in rural areas see as few as three patients per day. As shown in Chapter 3, the low utilization o f health care facilities also leads to overall low productivity o f health care staff, with the average primary care physician seeing only about eight patients per day, dropping to as little as an average o f three patients in some regions. Assuming an average patient contact time o f 20 minutes, this would suggest that the average primary care physician spends only about 2.5 hours per day seeing patients. Table 2.4 Number ofVisits per HealthCenter perDay - Area Regions Health Number of Centers Patients per GP per Day Central Berat 14 7 Elbasan 10 7 Gjirokaster 7 5 Korce 22 9 Shkoder 12 5 Coastal Durres 43 7 Fier 21 7 Lezhe 5 5 Vlore 12 10 Mountain Diber 5 3 Kukes 10 6 Tirana Tirana 9 4 Source: Ministry o f Health. 59. A more detailed review o f productivity o f outpatient care physicians in Tirana region shows that productivity among specialists is lower than among general practitioners, particularly in health centers (Table 2.5). Family physicians are slightly more productive than specialists indicating an oversupply o f 29The total numberof GP-reportedregisteredpatients is substantiallyhigher than Albania's total population. 27 specialists. Others have found that productivity in PHC facilities in urban areas i s significantly higher than in rural areas. L o w productivity is related to overstaffing and underutilization in facilities, causing considerable increases inthe overall average cost o f a PHC visit to a health fa~ility.~'The large variation in availability and utilization of primary care facilities and staff points to an overall need to carefully revisit the primary care service standards and restructure service delivery in line with population distributions and needs. Table 2.5 Productivity ofPhysiciansWorking in Outpatient Facilities, by Facility, 2003 - Location in Number of visits per day per: Facility Type Tirana Region Family physician Specialist UrbanI 9.2 5.6 UrbanI1 7.1 3.O Health centers Rural I11 4.2 1.1 Rural IV 5.4 1.1 Total 6.7 3.3 Polyclinics Total 11.1 6.5 SpecialPolyclinics Total n/a 1.8 Other Facilities Total n/a 2.7 Total Health Facilities 12.2 3.6 Source: Tirana Regional Health Plan. Annex L:Productivity of Primary Health Care Institutions. c. SUPPLY OF INPATIENT CARE C.l. Management of Hospitals 60. The M O H is the owner and administrator of all hospitals, except the Military Hospital. Public hospitals are headed by a chief head physician, who i s in charge o f overall hospital operations and management, but not trained to manage hospitals. As a result, many o f them lack the management capacity required to effectively manage a modern hospital. Furthermore, they often continue to operate as physicians at the hospital or in private practice, thus decreasing the time and effort devoted to hospital management. Public hospitals have limited financial and administrative autonomy. All health personnel are recruited and assigned to specific hospitals centrally by the MOH, following norm-based requests by the head physician. C.2. Availability of Inpatient Care 61. Albania's hospital capacity (3.04 beds per 1,000 population) compares favorably to that of many other lower middle-incomecountries, but is on the lower end of the European scale. There are 50 hospitals in Albania, o f which 46 reported bed activity in 2003. With an average of 1.53 hospitals per 100,000 inhabitants, Albania reports similar hospital densities as Croatia (1.78), Hungary (1.76), Turkey (1.66), and Slovenia (1.4), but a considerably higher density than the Netherlands (1.2) and Sweden (0,9).31While Albania has one o f the lowest bed densities in the ECA region, several Western countries, including Sweden, Finland, Spain, and Turkey, report lower densities than Albania (see Figure 2.1). 30 Fairbanks, A. and G. Gaumer, Organizationand Financing of Primary Health Care inAlbania: Problems, Issues andAlternative Approaches, PHR+, Tirana, 2003. 3 1WHO Health For All database. http://data.euro.who.int/hfadb/ 28 Figure 2.1 HospitalBeds per 100,000 Inhabitants,International Comparison, 2003 - 800 600 400 200 0 Albania Turkey Spain Canada Romania Bulgaria ~ Source: OECD health data 2004. Table 2.6 Number ofHospitalsand HospitalBedsinAlbania, 1993-2003 - Years 1993 1995 2000 2001 2002 2003 Hospitals 50 51 50 50 50 50 Number of beds / 275.7 3 19.2 326.3 328.1 313.7 303.6 100,000 Source: Ministry of Health, Albania Health Indicators for Years 1993-2003 62. A decision to establish a three-tiered hospital network with district and regional hospitals and some tertiary care in Tirana has not yet been fully implemented, as agreement could not always be reached on the downgrading o f certain hospitals to district facilities and the upgrading o f others. The three-tiered structure foresees 23 district hospitals located inthe district center offering four basic services (Pediatrics, Obstetrics-Gynecology, Surgery, and Pathology), and 11 regional hospitals located in the prefecture centers offering specialized services in Ophthalmology, Orthopedics, Trauma, Neuro- Psychiatry, Chest Medicine, and Infectious Diseases, together with basic services. Tertiary care is offered in Tirana by the Tirana University Hospital, the Tirana Obstetric and Gynecology Hospital, the Lung Disease Hospital, and the Military Hospital. The latter is under the Ministry o f Defense, specializes in traumatology and contains the university orthopedic department. There currently also remain nine rural hospitals, directly reporting to district hospitals and operating as an integral part o f district hospitals. They offer Pathology and Pediatric services. Two psychiatric hospitals, located in Vlora and Elbasan, with 680 beds intotal, specialize inthe treatment o f chronic and acute psychic patients. Inadditionto the tertiary hospitals, there are three specialized institutions: the National Center for the Well-Being and Development o f Children, the VIP Clinic, and the Helicopter Center. The availability o f hospitals and hospital beds varies considerably across regions, ranging from 0.78 hospitals per 100,000 inhabitants in Fierand Shkoder to 3.6 hospitals per 100,000 inGjirokaster (Table 2.7). 63, Consolidationof hospitaldepartmentswould allow for efficiency gains. Several hospitalsin Albania have identical departments within the same hospital or within close proximity. For example, the Mother Theresa University Hospital in Tirana has four pathology departments, and several districts with two and more hospitals (e.g., Durres, Elbasan, Skrapar) have a pathology department ineach hospital. Tirana has overall ten emergency departments in three hospitals with eight emergency rooms at the Mother Theresa University Hospital alone, an additional one at the LungDisease Hospital and one at the Obstetric University Hospital. Emergency departments are costly, due to their resource intensity. Therefore, most OECD countries have only a small number o f emergency rooms per city; for example, 29 Vancouver, Canada, with a population size similar to Tirana has only two emergency rooms for adults and one for children; similarly, Base1in Switzerland has three emergency rooms (one for adults, one for children, and one for OB/GYN). While physical dispersion of facilities may make merger of various departments somewhat difficult in the short term, appropriate planning for such mergers should be an integral part of developing an Albanian hospital map that would guide future investments in the hospital sector. Table 2.7 RegionalDistribution of All HospitalsProviding Inpatient Care inAlbania, 2003 - Area Regions - MOH Hospitals / Hospital Beds/ Total Staff Hospitals 100,000 Beds 100,000 per bed Central Berat 4 2.07 43 1 223-29 1.16 Elbasan 6 1.65 1,071 295.26 1.oo Gjirokaster 4 3.55 372 329.70 1.23 Korce 4 1.51 835 3 14.88 1.05 Shkoder 2 0.78 653 254.61 1.32 Coastal Durres 2 0.82 544 221.88 1.74 Fier 3 0.78 678 177.23 0.82 Lezhe 3 1.88 334 209.82 1.62 Vlore 6 3.11 83 1 430.61 1.02 Mountain Diber 4 2.11 518 272.84 1.18 Kukes 3 2.69 383 343.83 1.17 Tirana Tirana Region 6 1.oo 2,399 401.24 1.88 Total Albania 50 1.53 9,049 303.6 1.27 Source: AlbaniaHealthIndicatorsfor Years 1993-2003Ministryof Health. C.3. HospitalProductivity Hospital capacity has continued to increase over the past decade, despite falling admissions and shorter lengths of stay. Growing hospital capacity relative to the population, but falling admission rates and shorter average lengths of stay (ALOS) have led to a 10 percentage point drop in hospital bed occupancy since 1993. Over the past 5 years, the main hospital performance indicators including admission rates, ALOS, bed occupancy and bed turnover rates have remained on a similar low level (Table 2.8), pointing towards inefficiencies in production and idle resources in hospitals. Compared to other Europeancountries, Albanian hospitals report relatively low rates for hospital admissions, surgeries, and bed occupancy. Resulting annual bed turnover rates in Albanian hospitals (29.4 in 2003) are markedly lower than rates for hospitals inAustria (46.9), Hungary (41.7), and the UnitedKingdom (56.8) in2002.~~ 32OECD, Health Data 2004, 2ndedition. http:/lwww.oecd.org/document/30/0,2340,en~2649~37407~12968734_1_1~1_37407,00.html 30 Table 2.8 Utilization of Inpatient Care Facilities inAlbania, 1993-2003 - Years 1993 1995 2000 2001 2002 2003 Inpatient care admissions per 100 population per year 8.9 8.9 8.5 8.8 8.8 8.7 Average Length of Stay ALOS 12.2 9.1 6.9 7.0 6.7 6.6 BedOccupancyrate % 63.0 63.0 52.0 52.8 53.1 53.6 Bedturnover rate 29.0 28.1 26.9 26.4 28.6 29.4 Note:Turnover rates show the number ofpatientsper bedperyear =(Number ofavailable beds Number ofoccupied - beds) *(Number of days instudy period)/ (Number of discharges instudy period). Source: Ministry of Health, Albania. Albania HealthIndicators for Years 1993-2003. 64. A large number of small hospitals with low utilization and occupancy rates point to an overall sub-optimal hospital structure. Over 60 percent o f Albania's hospitals are too small to exploit scale economies in the general acute care hospital setting. Thirty out o f 46 hospitals have less than 200 beds. Together, these hospitals account for only one quarter o f all hospital admissions. International evidence suggests that acute hospitals with less than 200 beds are too small to provide a full range o f acute general hospital functions and achieve scale economies, while hospitals that have more than 600 beds are likely to display diseconomies o f scale.33 Only three hospitals in Albania have more than 500 beds, but these account for about 28 percent o f all hospital beds and 30 percent o f all admissions. The largest hospital, the Tirana University Hospital, reports the highest bed occupancy rate and accounts for almost 20 percent o f all admissions in the country. Bed occupancy rates increase slightly in larger hospitals, while the ALOS i s similar across hospital sizes and types, with the exception o f the psychiatric hospitals (Table 2.9). Table 2.9 Distribution ofHospitals and Utilization, by Number of Beds, 2003 - MOHHospitals Beds Admissions Bedoccup ALOS Bed range Total In YO Total In YO Total InO h rate <49 beds 11 23.9 331 3.7 5,392 2.0 26.7 6.7 50 - 99 9 19.6 728 8.0 16,000 6.0 34.5 5.6 100 -199 10 21.7 1,386 15.3 44,438 16.5 47.8 5.9 200 299 7 15.2 1,774 19.6 59,064 22.0 67.5 35.8 (*) 300 399 3 6.5 1,072 11.8 27,33 1 10.2 53.5 76.0 (*) 400 499 --- 3 6.5 1,236 13.7 37,232 13.9 39.0 4.8 500 - 599 2 4.3 1,099 12.1 27,459 10.2 48.3 7.3 1,000+ 1 2.2 1,423 15.7 51,609 19.2 74.4 7.5 Total 46 100.0 9,049 100 268,525 100.0 53.6 6.7 Note: (*) includespsychiatric hospitals with each havingALOS of more than 100 days. Source: Ministry of Health, Albania. Albania Health Indicators for Years 1993-2003. 33Commissionfor Macroeconomicsand Health. Working Group 5. 31 Figure 2.2 Cumulative Proportion of Hospital Beds Across Hospitals - 4 I I I I I 8 0 % -I1 ! i 60 OA 40% I 2 0 % 0 X 20% 40% 6 0 % 8 0 % 100% Cumulstlve percent of hoipltals Source: Ministry of Health 65. Smaller hospitals have low occupancy rates and a significantly higher ratio of staff per utilized bed than larger facilities, pointingto inefficient use of scarce resources. Hospitals with less than 100 beds report occupancy rates that are substantially below those o f larger hospitals. This reflects patients' failure to trust that these facilities can provide adequate quality o f care. Insufficient human capacity and equipment in these small facilities lead people to circumvent small hospitals in favor or lager facilities. This in turn leads to two sets o f inefficiencies. It causes unnecessary hospitalization of less severe cases at the more costly tertiary care level, and at the same time, leads to underutilization o f facilities and human resources in the small hospitals. Hospitals with less than 50 beds have almost four staff per occupied bed and occupancy rates below 30 percent, pointing to high staff costs and low productivity. This compares to an average o f about 2.5 staff for hospitals with 200 or more beds. Underutilization o f small facilities also leads to concerns about the quality o f care, which such facilities can provide. L o w patient volumes lead to inadequate patient loads per practicing physician, in turn endangering the quality o f care. Table 2.10 HospitalStaffingby Hospital Size and Characteristics,2003 - MOH Bed Hospitals Occup. bed range rate Staff per bed Staff per OCCUPIED bed Physicians Nurses Other Total Physicians Nurses Other Total <49 beds 26.7% 0.14 0.55 0.34 1.03 0.52 2.07 1.26 3.85 50 -99 34.5% 0.20 0.73 0.44 1.36 0.57 2.11 1.27 3.95 100 -199 47.8% 0.19 0.67 0.49 1.35 0.39 1.40 1.04 2.82 200 -299 67.5% 0.17 0.49 0.52 1.19 0.26 0.73 0.77 1.76 300 - 399 53.5% 0.10 0.28 0.22 0.60 0.18 0.52 0.41 1.12 400 -499 39.0% 0.21 0.53 0.57 1.30 0.53 1.35 1.46 3.34 500 - 599 48.3% 0.19 0.46 0.45 1.10 0.38 0.95 0.94 2.27 1,000+ 74.4% 0.29 0.76 0.86 1.91 0.38 1.02 1.16 2.56 Total 53.6% 0.19 0.56 0.52 1.27 0.36 1.04 0.97 2.37 Source: Ministry of Health, 2003. 66. Hospital occupancy ratesvary considerably across regions, reflectingregional disparities in hospital capacity and varying utilization rates. Six out o f ten regions report occupancy rates below 40 percent. Only two regions, Lezhe and Diber in the mountainous area report occupancy rates above 50 percent. These are also the two regions which post the lowest utilization and productivity o f primary care 32 doctors. This suggests that quality o f primary care in these regions is o f particular concern, leading the populationto not seek care until hospitalization i s required. This, inturn, can lead to significantly higher costs, both for the patient and for the health care system. The relatively short ALOS in most regions mirror to some extent the limited hospital capacity to treat less severe case mixes outside Tirana. At the same time, the relatively short ALOS intertiary care facilities in Tirana suggest that a significant share of cases treated inthese facilities may be basic cases, which do not require secondary or tertiary care. Table2.11 Utilizationof InpatientCare inAll Hospitals,by Regionsand inComparison,2003 - Area Regions Admissions/ All Deliv I Surgeries I Bed Occup. ALOS 100 pop 100,000 100,000 rate (YO) Central Berat 7.98 1,207.6 1,207.6 35.4 4.8 Elbasan 6.35 1,638.9 1,45 1.5 40.4 17.6 Gjirokaster 8.72 797.7 931.5 36.2 5.4 Korce 7.01 1,200.7 1,017.0 37.0 6.3 Shkoder 7.24 1,407.6 1,349.5 33.2 4.4 Coastal Durres 5.97 1,377.0 1,101.6 44.7 4.9 Fier 6.57 1,2 14.5 1,011.4 35.0 3.9 Lezhe 7.63 1,542.3 733.8 52.4 6.3 Vlore 10.56 1,281.5 1,622.4 42.1 39.9 Mountain Diber 7.76 1,778.2 891.2 55.4 6.8 Kukes 10.35 1,759.5 954.3 39.2 5.6 Tirana Tirana 4.16 1,809.2 4,463.5 50.3 7.5 Total Albania (2003) 8.74 1,468.5 1,813.3 53.6 6.7 Source: Ministry of Health, Albania Health Indicators for Years 1993-2003. Table 2.12 Utilizationof InpatientCareFacilities,Country Comparison,2002-2003 - Country Hospital beds / Admissions/ 100 ALOS Bed Occ rate SurgeriesI 100,000 pop (YO) lob,OOO Albania 2003 303.6 8.74 6.6 53.6 1.813.3 Turkey 2003 260.0 8.11 5.8 62.0 3i115.8 Romania2003 749 24.92 d a d a 17,065.3 Bulgaria 2003 720 17.54 d a d a n/a Spain, 2003 280 11.94 9 77.2 5,252.1 EU2002 795.8 18.55 9.5 76.9 7,200.7 Note: Other countrieshave acute care hospitals with higher level tertiary care that are not available in Albania, hence, their longer ALOS. Source: WHO HealthFor All database. www.who.dldhfadb 67. Finalizing the country's hospital map is an important prerequisite to well guided future investments in the overall poor quality of Albania's hospital infrastructure. While accessibility concerns must be taken into consideration, there i s a need to carefully review Albania's hospital map and explore the possibility o f closing some o f the smaller facilities or turning them into outpatient facilities. Options to better organize the multiple departments with the same profile across a relatively small catchment area or at times even within the same hospital should also be explored. Furthermore, the decision to establish a regional hospitalthat would provide a substantial range o f services in each regional prefecture also deserves further consideration, given Albania's limited resources to maintaining such a network. In view o f the substantial remaining investment needs in the hospital sector, there is a critical 33 needto finalize the hospital map based on efficiency, quality assurance, and accessibility considerations; and then utilize this map to guide further investments inthe sector. D. SUPPLY OF PRIVATE SECTOR SERVICES 68. Although still relatively small, private provision of outpatient services is growing. Dental care and the pharmaceutical sector are largely privatized. The provision o f other health care is still dominated by public providers, but the importance o f the private sector is growing in the areas o f diagnostics and outpatient services. Some private services are financed and organized by foreign NGOs, private agencies, or religious bodies. There are no private hospitals, though the Hospital Act allows for establishment o f private inpatient facilities. International experience suggests that due to the highup front capital investments for hospitals, private hospitals in lower income countries generally require good prospects for regular operational fundingthrough provider contracts with public or private purchasers. 69. Private facilities are concentrated in the two largest cities, Tirana and Durres. Most private sector facilities are well equipped and organized, tend to offer high technology diagnostic and treatment services, and better infrastructure than the public sector facilities. The MOH figures suggest that about 4.300 medical professionals work in the private health care sector, with dentists and pharmacists accounting for about one third and 45 percent respectively. Two-thirds o f private doctor offices and diagnostic facilities are located in Tirana and Durres (Table 2.13). Table 2.13 Number of Private Outpatient Facilitiesby Regions, 2003 - Type of Outpatient Care Tirana Durres Other Regions Albania Total Number of Private Providers: No. of private outpatient facilities, of 1,212 161 1,412 2,785 which Doctor's office 402 29 195 626 Laboratories Diagnostic Centers 60 5 27 92 Dentists 376 61 533 970 Pharmacies, private 374 66 657 1,097 TotalPrivate Providersper 1,000Population: No, of private outpatient facilities, of 2.03 0.66 0.63 0.91 which Doctor'soffice 0.67 0.12 0.09 0.20 LaboratoriesDiagnostic Centers 0.10 0.02 0.01 0.03 Dentists 0.63 0.25 0.24 0.32 Pharmaciesprivate 0.63 0.27 0.30 0.36 Percent distribution across regions Total private outpatient facilities 44% 6% 51% 100% Source: Ministryof Health 70. Anecdotal evidence suggests that the incidence of private care provided by publicly employed physicians is considerable and may be growing, although public sector physicians and nurses are not allowed to operate in private practice,j4 The 2004 household survey data found that somewhat over 10 percent o f those who sought outpatient care did so from a private provider, although 34Doctorsat the University Hospitalare allowed to also engage inprivate practice. 34 official statistics point to only 626 private outpatient doctor's offices and 907 licensed private physicians, compared to over 2,100 public outpatient facilities with over 4,000 medical staff. The Government's Health Sector Strategy foresees that much o f primary care could, in the medium- to long-term, be provided through independent primary care physicians or groups o f independent physicians. Overall, the private sector can be expected to play an increasingly important role in the provision o f health care as the economy grows and the health system further develops. Box 2.1 spells out several preconditions for successful private sector involvement in health care delivery. Box 2.1 FactorsAffectingPrivate Sector DevelopmentinHealth Care - Three factors must be in place to support effective public policy towards private health care providers in a health system: (i)policy makersmust have knowledgeabout private sector capabilities, activities, and finances; (ii) there is an ongoing dialogue between public and private stakeholders to improve policy formulation; and (iii)there are institutionalized policy instruments for interacting (especially financing, regulation and dissemination of information) with the private sector and ensure that the latter contributesto overall healthpolicy objectives. Strategies to increase the contribution of the private sector to health objectives include: (a) harnessing the existing private sector inform of contracting, regulation, outreachmechanisms (information disseminationand education); or paying financial subsidies to providers (especially NGOs) that predominantly serve the poor, or operate in areas inhabited by the poor; (b) supporting the growth of the private sector to contribute to critical sector objectives in targeted areas through contracting, subsidies and a regulatory framework; and (c) convertinglprivatizing public providersto private sector providers. ISource: Harding, A. (2001): Private Participation inHealth Services Handbook. World Bank. I 71, Albania's regulatory framework is inadequate to properly harness the benefits of private sector health care providers. The health care sector is characterized by asymmetry o f information, which leads to market imperfections. Consumers o f health care services have insufficient information and technical knowledge to judge whether they are provided with the adequate amounts, types, and quality o f care. Therefore, there i s a role for government to regulate private sector activity, so as to ensure patient safety and minimal standards o f care. This includes, among others, the licensing o f providers, accreditation and inspection o f facilities, establishment o f reporting requirements, and the development o f pricing policies for private care. Most o f these functions are still ill developed in Albania. Although private providers in Albania must have a license to operate, the system is not always enforced; and the M O H has had difficulty developing and enforcing standards to ensure adequate quality o f care and ultimately patient safety. Furthermore, neither the MOH nor any other body maintains an adequate database on private providers. There is overall insufficient information on private sector activities in the health care system and the capacity to monitor such activity i s largely absent. 72. As public providers are granted increased autonomy and the private sector further develops, Albania will need to put in place a strong regulatory framework and set up mechanisms to ensure quality control. A supportive regulatory framework for private provision o f health care is critical to ensure that the private sector helps meet overall sectoral goals such as improved health outcomes, efficiency, and cost containment. An effective system o f safety, quality regulation, and inspection is needed to ensure adequate standards o f quality for equipment and facilities, and in particular, to protect patients and staff from hazardous practice. A variety o f regulatory mechanisms are available, and the appropriate selection depends largely on the regulatory objectives, available financial and human resources, and the level o f technical expertise in the country. Aside from legislation and regulations, provider licensing, accreditation and certification systems are core tools, which countries use to regulate 35 private (and increasingly also public) provision o f health care. Independent regulatory agencies and professional bodies can play an importantrole inthis area. Box 2.2 Licensingand Accreditation of Health Care Providers - Accreditation is a means to systematically promote the continuous improvement of health services quality. Accreditation combines internal improvement and assessment with external assessment mechanisms, and uses a set o f standards, specifically designed or adapted for a country's need. Hospitals may request accreditation of an international accreditation agency, but most countries prefer to develop their own system by adapting existing models and standards for services. Various types of healthcare providers canbe subject o f accreditation: hospitals, primary care centers, GP offices, etc., and specific activities or departments can also be accredited (e.g., laboratories). In most accreditation systems, providers do their own internal assessments, working continuously to reach the required level (standard) of care, while an accreditationbody provides periodic external assessment and grants accreditationstatus to the surveyedprovider. The status may be with or without conditions; for the standard period or for a limited period. The latter case would specify needed improvements. Various models exist - mandatory or voluntary, public or privately organized - and countries may have more than one accreditationbody (e.g., separately for PHC and hospitals). Many accreditationbodies also provide training for quality management staff at the provider level as well as for external surveyors. Standards of services delivery are periodically upgradedto match the development of the health sector in general and medical and nursing science and practice inparticular. Standards can cover all aspects of health care provision, Le., the physical and human resources infrastructure, the management and administration, organizational components, various processes (clinical and administrative), as well as the desired outcomes of the care process. If clinical practice guidelines are developed and endorsed, they should be referred to in the accreditation standards. International experience indicates that financial and institutional questions need to be dealt with up front to ensure that investments in the development of an accreditation system are not in vain. Some countries have realized that the running costs for an accreditationsystem couldnot be mobilized after making the establishmentinvestments. Successful introduction of quality improvement mechanisms in general and accreditation systems in particular also call for: (a) raising awareness about the importanceof continuous quality improvement among the hospital staff and patients; (b) active involvement of hospital management in the quality improvement process, (c) appointment or designation of special staff in the hospitals to deal, on a daily basis, with quality issues and to assist in the preparationfor the internal assessment as well as for the external survey; (d) training a sufficient number of external surveyors (eventually preceded via a train the trainers program); (e) providing a legal framework; and (0 involvement of the Health InsuranceFund or other purchasingagency. With a licensing system, a governmental authority grants permission to an individual practitioner or a health care organizationto operate or to engage in an occupation or profession-basedon minimal standards. The development o f a strong licensing system, based on transparent licensing standards to ensure a minimum level of hospital care would generally proceed the development of an accreditation system, which aims at continuous quality improvement. 73. Albania has already undertaken substantialwork on the establishment of quality standards for hospitals and initiated work towards the establishment of a hospital accreditation system. With the support of WHO, it has developed a total o f 252 standards, which cover the main domains ofhospital functioning. The MOH has also developed various monitoring indicators, which, together with the standards, form an instrument for external assessment o f hospitals and a basis for establishing an accreditation program. The standards are currently piloted in four Albanian hospitals (Berat, Lezha, Durres, and Lunghospital inTirana), with results expected bythe end o fJuly 2005, The MOHalso plans to establish an accreditation body, starting with an in-house office, which later could be made more independent and moved out o f the MOH. The achievements to date are indeed an accomplishment. 36 However, before a final decision on the appropriate mechanism to ensure quality control in the Albanian context is taken, a number o f key questions need to be answered, including, whether the financial and human resource capacity to support an accreditation systemare available (see Box 2.2) 74. As a first priority, the provider licensing system should be substantially strengthened so that it can serve as an instrument to ensure higher quality of care. This will require swift action to develop appropriate licensing standards. Consideration should also be given to introducing a certificate o f needs procedure for high-end equipment and for high-riskprocedures. This could help support explicit and well informed decision making about such investments and to carefully plan for the introduction and distribution o f such medical technology, which inturn will be essential for cost containment. E. UTILIZATION OF HEALTH CARE 75. Administrative data suggest that Albanians have significantly less outpatient contacts with health care providers than the people of other countries in the ECA Region. Table 2.14 shows the average annual visit rate to PHC health facilities in the public sector decreased from 1.8 in 2000 to 1.6 visits per capita in 2003. This may partly be a reflection o f growing, albeit still small, utilization of private outpatient facilities by those frustrated with the low quality o f care provided in public facilities. Albania's per capita outpatient visit rate is considerably below the average visit rates reported inthe ECA, and Latin American Caribbean region. It is also below values reported in nearby Macedonia and Turkey, and Finland, one of the most efficient European health systems (Figure 2.3). Table 2.14 Utilization of Outpatient Care in Albanian PHC Facilities,2000-2003 - ~ Years PHCvisits 2000 2001 2002 2003 Total visits, inthousands 5,547 5,524 4,835 5,099 Visits per capita/ year 1.78 1.76 1.53 1.61 Total visits / facility / day (300 workdays) 8.66 8.82 8.07 7.97* Note: Visits/facility/day based on all reportedfacilities. Source: Ministry of Health. Figure2.3 PHC Visit Ratesper Capita per Year, Country Comparison - 6 4 2 0 .-mc - A A c ) .- '0, e z z= c.- h( 0 hl hl 0 0 shl m z C A m o 0 0 0 a 2 s c! c! c! 0 a 3 w 0 I < W 2 Source: World Bank, HNP Statistics, http://devdata,worIdbank.ordhnpstats. 37 76. Outpatient utilization varies considerably across regions. Visits range from 3.2 visits per capita per year in Durres to less than one visit in Diber and Elbasan. Interestingly, Durres, which shows the highest contact rate per capita overall, shows the lowest per capita visits to polyclinics, resultingin substantially higher workloads o f primary care physicians and less idle primary care capacity in this region than anywhere else. This may partly be a reflection o f the health insurance pilot project with Durres Hospital resulting in better gate keeping functions o f GP providers than elsewhere. On the other hand, the data also point to the failure o f the gatekeeper function o f the primary health care system in Tirana region where 80 percent o f contacts are at polyclinics, despite concerted efforts to upgrade the primary care infrastructure. The highest annual visit rates are reported in the two regions with the largest catchment areas, Durres and Tirana, suggesting that larger catchment areas do not negatively affect access to care. The reported higher contact rates in Durres and Tirana are likely to be even higher, given the comparatively high presence o f formal private providers in these cities. They may also reflect higher health insurance coverage and an overall lower likelihood o f having to pay for outpatient care in these cities than elsewhere in the country (see Chapter 5). Table2.15 NumberofPHC Visits per Capita per Year, by Regionand HealthFacilities, 2003 - Area Regions Health Health Polyclinics Home Home Total Centers Posts visits HC visits HP visits Central Berat 0.80 0.22 0.38 0.02 0.01 1.43 Elbasan 0.53 0.13 0.32 0.01 0.01 0.99 Gjirokaster 0.86 0.09 0.51 0.01 0.00 1.49 Korce 1.13 0.28 0.57 0.03 0.01 2.02 Shkoder 1.10 0.45 0.30 0.16 0.05 2.07 Coastal Durres 0.78 1.37 0.24 0.02 0.75 3.16 Fier 0.77 0.27 0.48 0.02 0.01 1.56 Lezhe 0.47 0.14 0.72 0.02 0.03 1.39 Vlore 0.93 0.18 0.32 0.03 0.01 1.47 Mountain Diber 0.29 0.18 0.3 1 0.03 0.01 0.82 Kukes 0.71 0.04 0.25 0.06 0.01 1.06 Tirana Tirana 0.39 0.07 1.78 0.01 0.01 2.26 Annual visits per capita 0.70 0.28 0.67 0.03 0.07 1.75 Source: Health Indicatorsfor Years 1993-2003, Ministryof Health. E.l. Utilizationof InpatientCare 77. Although at the lower end of the European scale, Albania's inpatient admission rates are similar to those in other SEE countries. Inpatient admission rates appear to have remained relatively stable over the past decade, despite the upheavals during the early and mid-1990s. There are marked regional variations in hospitalizationrates (Figure 2.4). The substantially higher incidence o f surgeries in Tirana suggests that a large share o f the population from across the country travels to the capital for hospital treatment, as the relevant services are not available or the quality deemed inadequate in hospitals nearby. 38 Figure 2.4 Hospital ServiceUtilizationPer Capita, Across Regions,2003 - 50 45 40 35 30 Admissions/ 100 pop 25 Deliveries I1,OOO 20 15 0 Surgeries / 1,000 10 5 0 Source: Ministryof Health. E.2. Demand for Care Based on HouseholdSurveyFindings 78. This section examines the utilization o f outpatient and inpatient care based on the household survey data from the LSMS 2002 and 2004. The analysis provides additional information on the socio- demographic and economic background o f individuals who are sick and who seek care. To circumvent any self-selection issues among sick individuals, the analysis examines utilization based on all individuals, as well as by including all sick individuals only. Results o f the former are presented in the annex. To ensure highest comparability o f the two data sets, the analysis i s carried out using the panel survey set in 2002 rather than the full LSMS data set. The 2004 survey did not include any household income or expenditure information. Using the socio-economic status quintile variables that were identified inthe LSMS 2002 to classify households interviewed in 2004 may cause implausible results as it assumes that households did not change their relative socio-economic ranking position since 2002. Therefore, the socio-economic analysis is limited to 2002 data. Reference to results from the full LSMS data i s made where appropriate. E.3. Self-reportedMorbidity and Care Seeking in2002 and 2004 79. Inthe LSMS 2002 about 16 percent o f all individuals interviewedreported chronic illness during the three months before the interview and 14 percent had a sudden illness duringthe four weeks prior to the interview.35 Women were more likely to report having been sick than men. Chronic diseases were reported more frequently among those who lived in urban areas outside Tirana and in rural areas and among the non-poor. Sudden illness was most frequent among the rural population and the extreme poor. 80. In Table 2.16, utilizing the panel data for 2002 and 2004, shows that a higher proportion o f individuals interviewed in 2004 report having had an illness than in 2002. This difference may be related to people finding it difficult to self-assess their health status and define their illness, specifically if they were not diagnosed by a health care provider, or not informed about the diagnosis. In both years, chronic 35See World Bank: Albania Poverty Assessment, November 2003. 39 and sudden illness was significantly more frequent among women than men; and rural individuals significantly more often reported sudden illness than urban groups. Table 2.16 Percent of Individuals with Chronic or Sudden Illness, by Gender and Age, 2002/2004 - APS Gender Area Year Illness Female Male Rural Urban Chronic 16.09** 11.96 14.05 14.16 2002 Sudden 14.89** 12.76 15.72* 10.33 Total 26.62** 21.97 25.64* 21.95 Chronic 25.92** 19.04 22.71 22.68 2004 Sudden 12.52** 5.15 11.08** 6.13 Total 33.69** 21.73 29.21 26.46 Notes: For comparison with full LSMS sample 2002, see Albania Poverty Assessment, Table 5.4. Level of significance betweenurbanirural, femaleimale variables:.*p-value<0.05; **p-value 10% of total 525% of total > 50% of total expel0 ,-I.% erpencn. e9 e*pev ,.res expenditures expenditures expenditures Source: World Bank Poverty Assessment 198. Out-of-pocket payments for outpatient care are highest in the mountainous region and lowest in Tirana, and the likelihoodof paying for outpatient care is lowest in Tirana. The share o f 62The pre-healthcare paymentpoverty is measured as the percentage ofpeople whose householdexpenditure falls below the poverty line. Post-healthcare paymentpoverty i s measuredas the percentageof peoplewhose household expenditure net of healthcare expenditure falls below the poverty line. The rationale being that expenditures on healthcare could have been used for other essentialhouseholdconsumption. See World Bank,Albania Poverty Assessment, 2003. 92 those who pay for outpatient care, particularly medicines and treatment costs i s lower inTirana than inthe rest o f the country, while the amounts spent on treatment, informal payments and transportation are markedly lower in Tirana than elsewhere (Table 5.4). This results in significantly lower average out-of- pocket payments for outpatient care in Tirana. This can, to some extent, be explained by the fact that those in rural areas, including the mountainous region, tend to circumvent primary care and go straight to a polyclinic or the hospital where they incur higher costs for treatment and also spend more on transportation. In Tirana, on the other hand, the majority of the population seeks care at the health center, a reflection o f a somewhat better enforced referral system for those covered by health insurance and o f the higher incidence o fhealth insurance coverage. Table 5.4 Out-of-Pocket Expendituresfor Outpatient Care - (Lek paid per episode of care for those who made payments) payment per Yo who episode as YO paid (excl. of monthly transport per capita Quintiles treatment gift drugs laboratory transport Total costs) consumption 1 319 92 1,071 144 212 1,838 95 50 2 344 147 1,256 218 312 2,277 96 40 3 312 146 1,276 238 266 2,238 97 30 4 294 153 1,244 334 205 2,231 94 22 5 314 158 1,314 383 188 2,356 95 15 Total 319 135 1,217 240 244 2,155 95 30 YOof Total Payment 15 6 56 11 11 100 Region Coast 244 186 ,435 346 151 2,362 98 31 Central 372 104 ,058 169 308 2,013 94 29 Mountain 396 150 ,239 196 401 2,382 98 42 Tirana 206 43 ,146 254 13 1,663 87 20 Urban 255 109 ,101 283 85 1,834 94 23 Rural 354 148 1,279 217 331 2,329 96 35 Health Insurance Status N o insurance 329 150 1,213 241 267 2,200 96 30 insurance 308 117 1,222 239 218 2,103 95 24 Source: LSMS2002. 199. The share of those who pay for outpatient care varies little across consumption quintiles. While the lowest income quintile spends somewhat less in absolute terms per episode o f care, there i s little variation across the other income groups. The lowest income group appears to spend somewhat less on drugs and informal payments than the upper income groups. This is probably a reflection o f the fact that the poorest income groups do not always fill their drug prescriptions, owing to financial constraints. Health insurance does not appear to significantly affect the amounts paid for outpatient care, with the exception o f Tirana, where lower overall payments and the lower likelihood o f having to pay can be explained partly by the higher incidence o f health insurance coverage and partly by substantially higher per capita public expenditures on primary care. Another study, using data from Berat, Fier, and Kucova, 93 only found that health insurance coverage reduces the likelihood o f havingto pay for drugs, as well as the amounts paid.63 Overall, by far the highest share o f out-of-pocket payments (56 percent) goes to drugs, followed by consultation fees (15 percent) and diagnostics (11 percent), while 6 percent goes to informal payments. 200. Although Albanian legislationprovides for free inpatient hospitalcare for all, out-of-pocket expenditures in the event of hospitalizationare substantial, with informal payments accounting for at least one-quarter of all payments.64 The available data on out-of-pocket spending for hospital care must be utilized with caution, owing to the relatively low occurrence o f hospitalization and the ensuing small universe o f observations in household surveys.65 The LSMS data indicate that virtually everyone who is hospitalized incurs substantial out-of-pocket expenditures, averaging about 21,000 lek. While low-income groups appear to pay less than upper income groups, the catastrophic extent o f these expenditures for low-income groups is substantially more marked than for upper-income groups. Hospital expenditures for the lowest income quintile amounted to more than four times the monthly per capita expenditure, while they reached about twice the monthly per capita expenditure o fthe top quintile. Table 5.5 Out-of-Pocket Payments for Hospital Care - Yo of % of monthly per monthly capita household Quintile Treatment Gift Drugs Diagnostics Transport Total expenditure expenditure 1 6,492 4,057 2,212 790 1,450 15,001 405% 61% 2 10,684 4,373 3,716 2,082 1,980 22,835 398% 69% 3 5,204 5,521 3,680 1,304 1,504 17,213 229% 43% 4 15,839 5,843 3,683 948 1,603 27,916 279% 61% 5 13,531 8,121 4,497 1,377 2,257 29,783 107% 41yo % of total payment 41Yo 26% 17% 7% 9Yo 100% Source: LSMS2002. 201. Informal payments account for a relatively modest share (6-7 percent) of out-of-pocket expenditures for outpatient care, but for at least one-quarter to 40 percent of inpatient care The system of informal payments is partly encouraged by an ill-defined and enforced copayments policy. Overall, about 30 percent o f those seeking outpatient care report making informal payments, but almost 60 percent o f those seeking inpatient care state that they made a "gift." It is likely that the share o f those paying informally for hospital care i s even higher, as at least a part o f reported 63Hotchkisset al. (2004). 64 While the Health Care Act provides for free care, government decisions allow for charges for certain diagnostic procedures. Patientsare often also askedto provide their own drugs. 6sThe LSMS2002 coveredabout 17,000 individuals in3,600 households and asked each individual whether shehe had been hospitalized over the 12 months preceding the survey, in the affirmative, information on hospital expenditures was collected. Of the surveyed population, 4.6 percent reported hospitalization. This compares to administrative data of 8.4 admissions per 100 people. However, the LSMS did not ask about re-admissions or multiple admissions, and thus a somewhatlower rate than the administrative data would suggest is to be expected. 66 Reported informal payments based on the LSMS amount to 26 percent of inpatient care. However, it is quite likely that a share of the 41 percent reported as treatment costs also constitutes informal payments, when one considers that hospitaltreatment is inprinciple free of charge. A PHR+ survey inBerat, Fier, Kucova found similar results for primary care (informal payments = 7 percent of the total out-of-pocket expenditures) but showed that patientsreportedpaying almost 40 percentininformal paymentsfor inpatient care (Hotchkiss et. al, 2004). 94 treatment costs may also be informal payments (LSMS 2002).67 Informal payments for hospital care create a significant burden on low income groups seeking care, amounting to over 100 percent o f the monthly per capita consumption o f households inthe lowest income groups (Table 5.5). Because they are not known in advance, the uncertainty surrounding informal payments creates a significant additional burden on those seeking care in hospitals. Furthermore, as these payments do not go to the providing institution, they are not subject to the policy and managerial controls o f the health system and are a major source o f lack o f transparency. The system o f informal payments i s partly encouraged by an unclear copayments policy, which often blurs the distinction between formal and informal payments.6g The Government's efforts to change the provider payment system to induce providers to attain higher efficiency and improved performance risk being thwarted if the problem of informal payments, particularly in hospitals, i s not addressed. Experience elsewhere has shown that it is possible to reduce informal payments when this issue is addressed as an integral part o f health finance reforms (see Box 5.1). Box 5.1 The Kyrgyz Experiencewith ReducingInformal PaymentsinHospitals - Health finance reforms in Kyrgyz aimed at improving the efficiency o f resource utilization, transparency and improving equity of access to health care. The Government decidedto pool all public resources (state budget, local government budget, health insurance fhding) under the Health Insurance Fund (HIF) and to make the latter the sole purchaser of health services. A basic package of health benefits to which the entire population is entitledwas clearly defined, with supplementalbenefits accruingto those who paid insurancecontributions and certain vulnerable groups. The package provides for free primary care from HIF contractedfamily physicians, and specialistoutpatient and inpatient care on referral with copayments. Those who have made contributionsto HIF are entitled to lower copayments and an outpatient drug benefit package. The introduction of formal inpatientcopayments has been a central part of the reform with the objective of reducing informal payments in hospitalsso as to increase transparency and uncertainty and subjectthese funds to the managerialcontrol o f the healthsystem. Copayment revenues stay at the hospital which can utilize them based on allocative guidelines issued by the MOH/HIF (50 percent for drugs, 20 percent for food, 20 percent for supplemental staff salaries, 10 percent for the reserve fund to provide free drugs to the poorest population). Furthermore, HIF provided exemptions or lower copayments for those covered under HIF (including low income vulnerable groups) were significantly better applied, thus lowering out-of-pocket spendingby those who qualified (including low income groups). Thus, by formalizing patient payments, new formal hospital revenues became subject to policy and management directives, which resulted intargeting these payments to key inputs. An evaluation of the reform indistricts where it has thus far been implementedshows encouraging results. While patients' total out-of- pocket expenditures did not decrease, surveys show that the share of patients with foreknowledge of the amounts to be paid upon hospitalization tripled following the reforms, out-of-pocket expendituresfor drugs and medical supplies for hospital care decreased by over 90 percent and informal payments made to hospital staff droppedby over 70 percent. Source: Kutzin, J. and S. Chakraborty, Background Paper for Health Chapter of World Bank, Kyrgyz Public ExpenditureReview, 2003. `'Giventhat inpatienttreatment is free inprinciple, the relatively important reported treatment costs for inpatient care may well containadditional informal expenses. For example, ifapatientrequires certain treatmentsandthe suppliesare not available at the providing institution, patients may be requiredto either purchase their own suppliesor reimbursethe attendingphysician or nurse for the supplies which shehe purchasedfrom own funds. This may be consideredas an informal paymentby some. 95 F. PROVIDER PAYMENTS 202. The current provider payment system, fragmented at the primary care level and input- based for specialist and inpatient care, fails to make providers accountable for performance. Resource allocations which are driven by staffing norms and infrastructure fail to give providers any incentives to work efficiently and provide a high quality o f care. Several steps have been undertaken to attempt to move towards more performance-based payment mechanisms. However, the measures introduced have not been comprehensive and financing remains fragmented, with the result that primary care providers are not accountable to anyone in particular for the results which they achieve. Primary care general practitioners are paid by the HI1on a modified capitation basis (base salary plus capitation supplement depending on location and registered patients), which in principle depends on the number o f registered patients. In practice, however, the registration system is not properly implemented, as demonstrated by the fact that the number o f people that GPs declare as beingregistered amounts to about 1 million more than Albania's total population. While the system allows for higher pay in remote areas to attract and retain GPs in such areas, it does not include any rewards linked to performance and quality targets. Furthermore, the fact that other primary care personnel and operations and maintenance costs are paid from a different source, gives primary care physicians limited control over the performance of their entire operation, thus diluting the incentives which the HI1payment system was intended to introduce. 203. With the exception of Durres Hospital, hospital providers are financed through the MOH with an input-based line item budget. Hospital managers have limited expenditure management and managerial autonomy. They can hire and dismiss staff within the MOH-set norms with ministerial approval and can select vendors for supplies other than pharmaceuticals. However, they cannot reallocate funds across budget categories and adjust the overall staffing levels according to a given hospital's needs. Input-based financing gives providers no incentive to improve performance, nor does it lead to resource allocation based on outputs or local needs. This has resulted in skewed regional resource allocation and lack o f provider accountability for low quality performance and a high level o f informal payments at the hospital level. The lack o f a formal copayment system for hospital care further perpetuates informal payments. G. STRENGTHENING THE HEALTH FINANCING SYSTEM 204. Albania's health finance system is afflicted by several key shortcomings that need to be addressed. They include (i)the high share o f out-of-pocket spendingon care outside an overall financing framework resulting in the Government's limited ability to exercise its stewardship function and creating serious access barriers for low income households; (ii)the inequitable allocation o f public sector resources; (iii)fragmentation in public sector financing, resulting in inefficiencies, lack o f accountability and uncertainties; and (iii)provider payment systems which fail to harbor incentives to improve accountability for performance. To address these issues, a considerable change in the health sector financing system is required. The suggested reforms are discussed under the key health sector financing functions, resource mobilization, the pooling o f funds, purchasing, and payment for health services. They center around the following: 9 Eliminating the fragmentation of health care financing by pooling all public sector resources for health care under one financing agency which would allocate the funds and purchase health services on behalf o fthe population. 9 Relyingon general taxation rather than payroll tax contributions as the main, ifnot the sole source o f public sector funding for health care, and channeling budgetary funds allocated for 96 health care through a designated agency (the HII), which would utilize these funds to purchase health care services directly from providers. Separating the financing from the provision o f health care and using the HI1as an agent to purchase health care services on behalf o f the population directly from health care providers. Allocating funds for health care based on population health needs rather than the existing infrastructure and staffing distributions. Changing the provider payment system from an input-based system to an output- and performance-based system, and gradually granting health care providers increased autonomy over resource use. Formalizing out-of-pocket payments for services, including inpatient hospital care, by clearly defining what public funds will pay for in full, for which services users will pay a copayment and for which services users will fully bear the costs, with a system o f lower copayments and concurrent higher budgetary payments for clearly defined low income target groups. Gradually improving the balance o f public and private out-of-pocket spending by increasing the share o f public sector spending intotal health sector spending inthe medium to long term. Developing a well defined provider network map, which will help guide future investments in line with population needs, particularly for the hospital sector. Establishing a system o f regular monitoring and analysis o f the resource flow in the health sector. G.1. Resource Mobilization 205. The high cost and uncertaintysurrounding the need for curative healthprocedures call for a mechanismto protect individualsfrom unwarranted health shocks. In countries with a relatively low per capita income and substantial poverty incidence, even expenditures for relatively low cost interventions can result in catastrophic expenditures for low income households. Therefore, financial protection from impoverishment through health shocks and the desire o f most societies to ensure equity in access to health care make pre-payment for health care and pooling o f these prepaid funds an essential instrument of protection against health shocks. Typically, these pre-paid funds are pooled by a third party, which then purchases a set bundle o f health services on behalf o f the population which has made pre-payments. Insurance against the risk o f health shocks does not necessarily require that individuals pay direct contributions to a health insurance organization. Pre-payment for health care and the pooling o f funds can also occur through general taxation. The concept o f insurance simply implies that the population i s provided with financial protection from health shocks with pre-paid and pooled funds. In health care systems where the funding comes from general taxation, pre-payment occurs at the time o f payment o f non-earmarked tax revenues to the government. In other words, it i s possible to create a system in which funds are pooled and channeled through a purchaser without altering the current sources of public funds, ifbudget funds for health are pooled inthe HI. 206. Albania should continue to rely on generaltaxationas the main public source of fundingfor health care rather than increase payroll tax contributions for health care. To date, 93 percent o f public sector spending comes from general taxation, while only 7 percent comes from non-budgetary payroll tax contributions to HII. Only one-third o f the active labor force participates in what is by law a mandatory health insurance scheme, suggesting large contribution evasion. The MOH and the HI1have proposed that payroll tax contribution rates for HI1be raised to 7.5 percent in an attempt to increase the amount o f funding available under health insurance and expand the depth o f health insurance coverage to hospital care. Proponents o f this proposal foresee that increased payroll tax contributions for health 97 insurance would lead to a gradual reduction in the budgetary financing o f health care with a concurrent increase in funding from higher payroll tax contributions. This proposal is not advisable for several reasons: (i) International experience has shown that health care systems which rely primarily on payroll tax contributions to fund health care result in considerably greater inequity in access to care than systems in which the main source o f public funding is general taxation. This is particularly the case in low and middle income countries where a large share o f the labor force is either inthe informal sector or unsalaried. In such situations, payroll tax based contribution systems create incentives for non- particiation in the scheme and for adverse selection. The latter means that only those who expect to have significant health care outlays will tend to participate, leading to an overall drag on the system. Those in good health often perceive the benefits as less than the required contribution and thus opt not to contribute. Low income households generally cannot afford to contribute on a regular basis. Experience in Albania has already shown that non-salaried workers tend to join and contribute to health insurance when they expect to incur substantial expenditures on pharmaceuticals, but not otherwise. (ii) In an attempt to ensure the insurance coverage of certain vulnerable groups, many countries with a payroll tax based social health insurance system have created generous categories o f insurance beneficiaries that are exempt from making their own contributions, aiming for nominal contributions on their behalf from alternative sources (e.g., pension funds for pensioners, unemployment funds for the unemployed, government budgets), while expecting cross-subsidization from active contributors to those who are exempt. The system has tended to create incentives for a significant share o f the population to seek contribution exemptions by, for example, registering as unemployed. In combination with broad based contribution evasion by the active labor force, this has resulted in systems in which a minority o f beneficiaries pays for health services consumed by all insurance beneficiaires. This has resulted in the need to keep payroll tax contribution rates high to allow for a minority o f contributors to cover costs o f the majority o fthe beneficiaries. (iii) Payroll tax contributions for social insurance in Albania are already among the highest in the region (419 percent) and a further increase is likely to push additional workers into the informal sector, which would result in a further decline in insurance coverage. High payroll tax contributions raise the cost o f labor and create labor market distortions, thereby hurtingthe competitiveness o f Albanian labor. Proposals to raise the health insurance contribution rate through the reallocation o f contribution rates from other insurance funds are not based on thorough actuarial analysis o f the potential impact o f such a reallocation, and harbor the danger o f further throwing those insurance funds into deficit. Furthermore, the administrative, infrastructure, and human resource capacity required to properly build a payroll tax based insurance system are extremely taxing. There is a serious risk that the revenue collection part o f the system would divert much-needed efforts and resources o f the HI1that are required to adequately build up its purchaser capacity. This is the case even ifthe HI1i s not directly in charge o f revenue collection. (iv) Countries which have relied more on general taxation rather than payroll tax contributions have tended to face less steep increases in health care expenditures than those that have relied on contributionbased insurance schemes.69 69See, for example, OECD, Health Care Systems - Lessons from the ReformExperience, OECD Health Working Paper 3,2003. 98 (v) It is entirely possible to reap the benefits of a single purchaser system without altering the current sources o f public funds if budget funds for health are pooled and channelled through the HI1 as a health care demand rather than as a supply subsidy. 207. I t is recommended that Albania consider shifting to a public health financing system which relies exclusively on general taxation rather than an increase in payroll taxes and a concomitant reduction in general revenue financing. To streamline the funding system, Albania may want to consider phasing out the payroll tax contribution for health care and replacing it with general revenue financing. Given that non-budgetary social insurance contributions amount to only 7 percent o f public sector spending on health care, replacing payroll tax contributions for health insurance with general tax revenues would require an increase in budgetary spendingon health care o f less than 0.2 percent o f GDP. General tax funding could still be channeled through the HI1in the form o f a generalized contribution subsidy, which would allow HI1 to purchase certain health services on behalf o f the population, thus shifting from the current system that subsidizes the supply o f health services to one that subsidizes consumption under well-defined conditions. 208. A second option would be to maintain the current payroll tax based health insurance contribution in addition to channeling all budgetary funds for personalhealth care through the HI1 and creating a two-tiered benefits package. Government contributions to the HI1 would then essentially be a first level contribution subsidy, which would compliment the payroll and/or other income based contributions o f those who make active contributions. Government payments for well defined low- income groups could be higher than for others, thus making it possible to provide them with the same benefits package as that for those who make their own payroll tax based contributions. General revenue based contributions to HI1would then provide for a limited benefits package available to all, which would be supplemented by copayments, while those who have made their own HI1contributions and the low income groups would enjoy access to an expanded benefits package that could include access to expanded outpatient drug reimbursement benefits and conceivably lower copayments or expanded benefits. To ensure adequate financial protection o f the lowest income groups, the expanded benefits package could be made available from general revenues for the most vulnerable groups (which could be identified through a system of proxy-means indicators). Such a system would prove administratively more burdensome, as it would require that the HI1establish and maintain an information infrastructure that tracks the insurance status o f all contributors, in addition to buildingup its capacity on the purchasing side. It might also offer increased room for abuse. Given the currently limited experience and capacity o f HI1as a purchaser of health services, it may be preferable to focus HII's energy on building up its capacity as an effective purchaser o f health services in an administratively less burdensome environment and thus limit public fundingto a single source (the general budget). 209. To ensure greater transparency in the provider system, formal copayments should be introduced for a wider range of health care services, including inpatient care. The introduction of a wider range o f copayments, however, would need to be coupled with efforts to address the issue o f informal payments. The objective should not be to increase the overall volume o f out-of-pocket payments, which is already high, but to replace, as much as possible, informal payments with formal payments. The development o f the copayment system should be linked to the definition o f the benefits package that will be made available to the population with public funding (see section G.2). When designing the copayment system, care should be taken to ensure that the system harbors the right incentives for the population to seek care at the adequate provider level, and that the system will not lead to the underutilization o f essential and cost-effective care, particularly preventive care. This would mean that preventive health care would largely be excluded from copayments. Protection mechanisms would also need to be put in place to mitigate the impact o f the out-of-pocket payments for low-income groups. One possibility might be to exempt the lowest income groups from copayments for a given package o f services by giving them a health card, which entitles them to copayment exemptions. Selection could be 99 based on proxi-means indicators and linked to possible changes inthat direction with the targeting o f cash social assistance benefits. The high poverty impact o f out-of-pocket expenditures for outpatient care suggests that the lowest income groups should be exempt from copayments at the primary care level and also accorded with limited drugs benefits. Furthermore, while the poverty impact from hospital expenditures i s lower due to the rare occurrence o f hospitalization, hospital expenditures have highly catastrophic proportions for low-income households. Therefore, the benefits package for low-income households should also include limits on copayments for a defined bundle o f hospital care for lower income groups. Another option might be to regionally target copayment exemptions for core services (e.g., primary care and limited drugs benefits, maternal and child health services in mountainous regions). 210. The introduction of formal copayments would need to be linked to efforts to address the issue of informal payments, particularly in the hospitalsector, so as to ensure that copayments would not result in an additional burden on those seeking care. Such efforts might include allowing the provider institution which collects the copayments to allocate at least part o f these amounts to improved remuneration o f health workers, aggressive information campaigns that would inform the population about the changes, their entitlements and their obligations and the rationale for those measures, introduction o f grievance mechanisms for patients and distinct efforts by the provider managers and the HI1as their main purchaser to take action uponthe receipt of complaints. Finally, a decision would need to be taken on whether copayments will remain the property o f the provider or whether they will be returned to the HI. In either case, the provider should be required to account for all revenues and report to the HI1on all revenues raised. G.2. Pooling of Funds 211. Albania should strive to put all public sector funding for health care in a single pool, with the exception of financingfor certain public healthinterventionsprovided by the Institute of Public Health and its local affiliates. The main purpose o f pooling health care funds is to increase the redistributive potential o f the health financing system to enhance equity in financing and equity in access to services irrespective o f the geographical location or socioeconomic status o f the individuals in need. The broader the pools are, the easier it will be to rearrange the flow o f funds to meet these objectives, It would also make it possible to redistribute funds across types o f care or categories o f costs. When combined with a single purchaser system, the pooling o f funds would also make it possible to structure the purchasing o f and payment for health services in a manner that would enhance the efficiency, quality, and transparency o f service provision. To guarantee this objective, however, it is important that financing from all sources and for all services be pooled and flow to the provider through the same purchaser. The current system o f fragmented payments, particularly for primary care, creates inequities in access as well as inquality o f care. 212. Some proposals that envisage future changes in the system of hospital financing, where HI1 would finance hospitalservices for those who are insuredwhile the MOHwould continueto finance emergency care for all and capital investments, threaten to have a negativeeffect on the efficiency of the delivery system. They would provide incentives to increase the use o f emergency services if proof o f insurance status was enforced in primary and secondary care and would thus distort the allocation o f resources while also undermining the leverage o f the HI1 over providers. A complete separation o f funding for investments from funding for operations and maintenance creates little incentive for service providers to effectively maintain equipment and ensure that investments are based on expected utilizations and are thus needs based. While the MOHmay inthe medium term want to keep control over investment decisions, particularly in the case o f hospitals, this does not necessarily mean that funding for all investments should stay outside o f the overall provider payment system. What will be required is the development o f a clear strategic plan for hospital development in Albania to guide future investment decisions. But once this plan is adopted, and as providers are gradually provided with increased 100 autonomy in the medium term, a system could be developed in which simple capital investments that fall within the realm o f well specified parameters could be left to the discretion o f the provider management, while more extensive investments, particularly those pertaining to high end equipment and plant expansion, would require a certificate o f needs approved by the MOH. G.3. Purchasingof HealthServices 213. Effective utilization of limited public sector resourceswill require that the extent of health services provided from public funding be clearly delineated within the available resource envelope. Clearly defining the boundaries o f what public funds will provide for is important for several reasons: first, it helps improve equity in access to at least a basic package o f services; second, it helps to clearly spell out the services for which a health care provider is held accountable under public funding; third, if the information about the patients' entitlements is widely publicized, it can help limit the scope for providers to extract informal payments; and fourth, it helps relate budgets to explicit services rather than inputs. Defining the benefits package requires taking decisions on who will benefit from publicly financed services (breadth o f coverage), what services will be financed (depth o f coverage), what out-of- pocket contributions beneficiaries will need to make and where and under what conditions services can be accessed. To date, the available benefits package in Albania has not been clearly defined, with the exception o f the positive drugs reimbursement list to which HI1beneficiaries have access. The challenge for the Government will thus be to introduce financially realistic but socially acceptable limits on the obligations o f the public sector to provide for and finance health care, while ensuring that individuals have access at affordable prices to health care services that are appropriate to their medical needs. Box 5.2 The Rationalefor Purchaser Provider Split - - The rationale for splitting the functions of funding from the functions of providing health care can be summarizedinterms of five main objectives. First, services may be improved by linking plans and priorities to resource allocation, for example, shifting resources to more cost-effective interventions and across care boundaries (such as from inpatient to outpatient care). Second, population health needs and consumer expectations may be met by building them into purchasing decisions. Third, providers' performance can be improved by giving purchasers levers such as financial incentives or monitoring tools, which can be used to increase provider responsiveness and efficiency. Fourth, the separation of functions within publicly operated healthsystems can reduce administrative rigidities generated by hierarchically structured command-and-control models. Management can be decentralizedand decision making devolved by allowing providers to focus on efficiently producing the services determinedby the purchaser. Finally, the separationof functions can be used to introduce competition or contestability among public as well as private providers and thereby use market mechanismsto increase efficiency. Source: J. Figueiras,R. Robinson, E. Jakubowski (eds), Purchasing to Improve Health Systems Performance, European Obersvatory to Improve Health Systems and Policies, Oxford University Press, 2005. 214. The current system of resource allocation, based on historical budgets rather than actual provider utilization, perpetuates inequitable resource allocation and gives providers no incentives to improve efficiency or quality of care. To help address this issue, the Government's Health Sector Strategy proposes to shift to a system where providers would be paid on the basis o f contracts between the HI1and providers. As Box 5.2 indicates, separating the functions of financing and provision of health care harbors the potential to improve resource allocation, technical efficiency and quality, and to contain costs. However, these advantages can only be reaped if an appropriate regulatory framework, a good 101 institutional capacity, and efficient information systems at the purchasing institution and at the provider level are in place. Furthermore, changes in provider payments need to be accompanied by other reforms (e.g., quality improvement efforts) and institutional changes (e.g., changes in provider status and increased facility autonomy) to effect the expected behavioral change (see Box 5.3). 215. Priority should be given to financing preventive care, affording health protection to the poor, and services, which can yield substantialimprovementsin health outcomes in a cost-effective manner. These might be services which would be provided free o f charge or against a lower copayment, while others would be provided against a higher copayment or full payment. Definition of the benefits package has proven a politically difficult process in most transition economies, and some countries have chosen to introduce a negative rather than a positive list o f services, meaning that they have produced a list o f services which are explicitly excluded from state funding. Other countries have defined a positive list based on analysis o f high frequency hospital admissions for conditions that could be treated cost effectively at the primary care level or based on interventions which permit the highest health outcome gains among the poor and vulnerable groups.70 Box 5.3 Provider Payment Mechanisms and Behavioral Change - Changes in payment incentives have effected behavior changes, especially if these have been accompanied by other reforms or institutional changes at the provider level. An important adjunct reform has been the educationand retraining of providers to improve quality and introduce new protocols. This coordination o f reforms can increase impact, even in low-income countries. For example, Uzbekistan began implementation o f anew rural primary care model inthree pilot regions. The basic elements ofthe model included formation of new, independent rural physician posts, upgrading o f clinical skills and training in general practice, new information systems, pooling of finds for primary care at the regional level, and a new capitated rate payment system driven by consumer choice o f physician post. Among other things, the increased autonomy of the providersto allocatetheir capitation payments ledto changes inthe cost structure of providers. Inone of the three pilot regions for example, the share of provider expenditures devoted to drugs increased by 44 percent from 1999 to 2001. Between 1998 and 2001, average annual visits to primary care providers increasedby 224 percent,while referrals from primary care providers decreasedby 33 percent. The need to decentralize management, improve efficiency, and contain costs in the health care system has encouraged the move away from line item budgeting towards performance-basedpayment mechanisms for inpatientcare inmany transition countries. Subsequently, payment systems became activity based. Payment was based on measurable units of hospital outputs in the early stages of transition and included per diem and "simple" per case payment not adjusted for patient severity. These models required little data and were relatively easy to implement. Providers responded to these incentives by decreasingthe average length of stay. However, any savings to payers were offset by increases inthe volume of cases admitted (e.g., Croatia, Czech Republic, Hungary, Russian Federation), especially easy cases that were less costly. In response to cost pressures, many countries have now moved to a form of global budget based on prospective levels of activity and adjusted for severity through some case-mix measure. Source: Langenbrunner, J.C., Kutzin, J. Wiley, M. Orosz, E. "Rewarding Providers," Chapter 11, in: J. Figueras, R. Robinson and E. Jakubowski (Eds.) Purchasing Health Services, Buckingham: Open University Press, 2004. ' O Several LatinAmerican countries, includingMexico and Colombia, for example, have defined positive lists for vulnerable groups basedon the highest expectedhealth gains. The Slovak Republic has recently defined its positive list benefitspackagebasedon an analysis o f the main diagnosisof illnesses and treatment protocols. The Kyrgyz Republic definedits reimbursabledrugs list basedon an analysis of main diagnoses for hospital admissions, which could cost effectively be treatedat the primary care level with drugtherapy. 102 216. To ensure that the proposed systemic changes to provider contracting and payments will havethe intendedeffects on provider efficiency and service quality, the introductionof new funding mechanismsshould be carefully plannedand combinedwith efforts to develop managerialcapacity, improve information systems, and increasethe levelof provider autonomy. Critical steps, which will need to be taken prior to the HI1 embarking on large scale contracting with providers, include the fo1lowing:'l Taking a decision on the legal status, organization arrangements, governance structures and extent o f autonomy for health care providers, and putting in place the necessary regulatory framework to support organizational and governance changes. Developing adequate provider reporting and information systems so as to allow for adequate monitoring o f provider activity and resource use. Developing appropriate provider accounting and financial reporting systems. Developing provider accountability mechanisms, including the identification o f performance standards, which providers are expected to adhere to and HI1will monitor. Strengthening provider management capacity and ability to understand and react to incentives incontracts. Strengthening HI1contracting and contract management capacity. Establishingand implementing an adequate physicianenrollment program for primary care. Developing a medium term strategy and implementation plan for provider payment mechanisms. Coordinating provider payment reforms with efforts to improve the quality o f care to enhance payment mechanism incentives for behavioral change on the provider as well as the patient side. 217. Effective utilization of provider contracting also requires that adequate provider payment mechanisms be introduced. These should give providers sufficient incentives to utilize resources effectively and enhance efficiency, while also allowing them to contain costs. Experience in other transition economies as well as OECD countries suggests that capitation based payments (with possible performance supplements) for primary care and global budgets with case mix adjusters may present a good basis for such changes inAlbania. It will, however, be critical that capitation payments (or a variant theory) for primary care include the full cost of providing care (including operating costs and allowance for equipment depreciation) and be based on actual enrollment o f patients with a particular doctor or facility. The development o f global budgets for hospital providers will need to occur gradually, with the case mix adjusters o f gradually increasing complexity evolving as information systems become more developed to provide the necessary data on the financial and clinical performance o f facilities and, later, of facility departments. 218. Albania's experience to date with health finance reforms in Durres and Tirana bring to bear the need to ensure that such reforms are carefully planned and aligned with institutional reforms and efforts to ensure quality improvements. Albania has experimented with HI1and provider contracting in two contexts: the contracting of the HI1 with Durres Hospital and the contracting for primary care between the HI1and TRHA. The Durres pilot has made it possible to develop valuable tools pertaining to information collection and reporting by the provider and has permitted the exchange o f information between the provider and the HII. However, it has also pointed to the current systemic " The steps listedbelow are not exclusive; inparticular, ifthe payroll tax contribution basedsystem i s maintained, significant efforts will needto be put into the developmentof ahealth insurancebeneficiary database and systems, which allow for regular reconciliation o f individual contribution paymentsby the HII. 103 weaknesses that need to be addressed before the pilot is replicated more widely.72In particular, while the HI1currently contracts and pays for services provided by Durres Hospital, the payment system and contract are such that payments continue to be largely unrelated to hospital activity, and therefore the HI1 i s merely a conduit for budgetary resources to the hospital. While the contract in principle i s conceived as a global budget, surplus utilization has been subject to year on year negotiation between the HI1and the hospital after the fact, thus providing the hospital with little incentive for efficiency improvements. Similarly, only limited additional autonomy has been granted to the hospital's management and even that has not been fully utilized, thus thwarting the potential beneficial effects that such reforms could have on provider performance. Furthermore, in the absence o f a clearly defined benefits package, the hospital's contractual obligations with respect to the extent o f service delivery have remained blurred. Similarly, the reforms in Tirana region have brought little change overall and have largely failed to improve the quality and responsiveness o f primary care providers. This has been due to the fact that the Tirana Health Authority, which i s contracted by the HI1as the umbrella organization for primary health care in the region, has not been granted any rights to reorganize the provider network and thus to take an active management role, while individual providers have not seen any o f their incentives change. As discussed in Chapter 6, the rationale for maintaining a regionalhealth authority at the same time as the MIand for the HI1to contract with the health authority rather than with providers directly has also remained unclear. The additional Regional Health Authority layer appears to have brought little benefit, while it may have prevented giving individual primary care providers the direct incentives for client responsiveness and performance improvement. Other planned efforts in Berat, where the HI1was to contract directly with individual primary care providers, never got o f f the ground because o f Government inertia and the ensuing failure to decide on the organizational and legal frameworks for primary care providers that were to be contracted. G.4. InvestmentPlanning 219. As Chapters 2 and 3 have shown, there are substantial variations in the distribution o f health care facilities and medical staffs across regions. More detailed analysis o f the situation in Tirana carried out by the TRHA further points to gross imbalances in the distribution o f facilities and medical personnel even within a region. This points to the need to substantially reshape the provider network. Variations may partly be due to the significant internal and out-migration, which has taken place over the past decade. This not only creates inequities but also leads to ineffective use o f scarce resources when medical facilities and staff are underutilized. Currently, investment decisions in the sector are not guided by an overall vision o f the sector's structure. This often leads to questionable investments, particularly in the hospital sector. Overall, the needs for investment inthe sector remain substantial, as many facilities are in poor condition and lack basic equipment. Therefore, the need to make the most effective use o f the country's limited resources for sectoral investments is pressing. As a first step towards ensuring more effective use o f resources, the M O H should develop a master plan for the hospital sector, which clearly identifies once and for all which hospitals will be designated regional or multi-regional hospitals, which hospitals will be district hospitals, and which facilities would best be closed or consolidated with facilities close by. Any future investments inthe hospital infrastructure should then be guided by this plan. 72 See the WHO Organizational Audit on the contractualrelationshipsbetweenthe hospital of Durres and the Health Insurance Institute (HII)o f Albania, Tirana, March2005, and METIS Advisory Group, Hospital Sector Management Report, Ministry of Health, August 2004. 104 G.5. Monitoringof Resource Flow and SectoralPerformance 220. To assess the effectiveness o f planned reforms and the overall efficiency with which resources in the sector are utilized, it will be imperative that the M O H and the HI1have access to reliable information about health outcomes, the utilization o f health care, access to health care, the utilization o f human resources, provider performance, and the movement o f public and private financial flows in the system. Similarly, it will be increasingly important for providers themselves, particularly their managers, to gain a clear picture o f how well their institution performs against established performance indicators and how effectively their resources are utilized. This will become o f increasing importance as providers gain increased autonomy. The need for such information, at the policy level, at the level o f the purchasing agency and at the level o f providers, will require the development o f information systems. Management information systems that could integrate clinical, financial, managerial, administrative, and policy- oriented data could give providers more powerful tools for managing care cost effectively and improving its quality. They could give policymakers organized information for evaluating the health system's performance and for designing further improvements. In addition to developing and introducing the relevant information systems, efforts should be made to institutionalize the analysis o f sectoral resource flows through the regular updating and refinement o f national health accounts. G.6. Balancing Private and Public Spendinginthe Health Sector 221. In the medium to long term, Albania should strive to improve the balance between public and private spending on health care. Albania spends about 6 percent o f GDP on health care. While this is less than most ECA countries spend, it is about on a par with the average for lower middle-income countries. However, the share o f public sector spending in Albania (38 percent) i s below the average share o f lower middle-income countries (38 percent). Over time, Albania should strive to improve the balance between public and private funding. An increase inthe share o f public funding could be linked to the expansion ofthe publicly provided benefitspackage. The highshare o f private out-of-pocket funding creates serious inequities in access, has a considerable poverty impact, and limits the effectiveness o f the Government's sectoral stewardship. However, any increase in public funding should be closely linked to fundamental reforms in the way resources are allocated and utilized. G.7. Summary and Conclusions Albania's health financing system is afflicted by several key shortcomings. They include (i) high share o f the out-of-pocket spending on care outside an overall financing framework, resulting inthe Government's limited ability to properly exercise its stewardship function and creating serious access barriers and financial hardships for low income households; (ii)the inequitable allocation o f public sector resources; (iii) fragmentation in public sector financing, resulting in inefficiencies, lack o f accountability, and uncertainties; and (iii)provider payment systems which fail to harbor incentives to improve accountability for performance. To address these issues, a considerable change in the health sector financing system i s required. This report proposes that the Government introduce substantial changes to the way the health sector is financed. Proposed changes include: 0 Pooling all public sector resources under one funding agency (HII), which will contract providers for health services on behalf o f the population. 0 Relyingon general taxation rather than payroll taxes as the main source o f public sector financing for health care. 0 Clearly defining the benefits which will be made available from public funding. 105 0 Introducingcopaymentsfor a wider range of services, includinghospitalcare. 0 Introducingcopayments for prescriptiondrugs for all beneficiaries. 0 Combining introduction of copayments with aggressive efforts to root out informal payments, particularly inhospitals. 0 Introducingprospectiveproviderpayment mechanisms. 0 Inthe mediumterm, introducinga better balancebetweenpublic andprivate spendingon health care. 0 Developinga hospitalmaster planto guide future investments inthe hospitalsector. 106 CHAPTER 6: HEALTHSECTOR GOVERNANCE AND ORGANIZATION A. INTRODUCTION 222. The governance, regulatory and accountability frameworks in the health sector are key elements of the system's overall performance. This chapter will first discuss the legislative and regulatory base o f the health sector in Albania, including recent initiatives. The next section will look at the role o f the key players in the system and how these roles may need to be changed. It will then review what aspects o f sectoral governance may need to be revisited to ensure adequate accountability under a revised system o f health care organization. B. LEGISLATIVE REGULATORY AND BASE B.l. Key LegislativeActs and Reg~lations'~ 223. Albania's Constitution sets out that (i)its citizens enjoy in an equal manner the right to health care from the state, and (ii) everyone has the right to health insurance pursuant to the procedure provided by law.74 It thus tasks the state with ensuring equity in access to health care and ensuring financial protection from health shocks. Within the context o f discussions on changes in the financial responsibilities o f the sector, these constitutional provisions have often been referred to as requiring that the M O H through budgetary funds would pay for all emergency care, while the HI1would pay for all other care only for those who are covered by insurance. Within the parameters set out by the Constitution, four key laws currently provide the legislative framework for the health sector; these include the Health Care Act (1963, with subsequent amendments), the Hospital Act (2003), the Law on Health Insurance (1994), and the Law on Medicines (2005).75 224. The Law on Health Care sets out the general framework for the organization and functioning of the healthsector. The most recent amendments to the law date from the mid-1990s and introduced important new concepts, including the concept o f mixed public and private health services, the licensing o f providers by the MOH, out-of-pocket payment for services stipulated by the Health Care Act, thus canceling the notion of completely free access to care and the principle that foreigners pay for health services unless covered by a bilateral agreement.76 These amendments set the stage for important changes in the health system. However, as the Health Care Act is only a framework law, it leaves the 73This sectiondraws on areport preparedby Igor Tomes for the Ministry ofHealth, "TechnicalAssistancefor Drafting Health Financing Legislation In TheRepublic of Albania, Report 2: Proposals to EnhanceHealth- FinancingLegislation,", 74Constitution ofthe Republic ofAlbania, 1998, Art. 55. 75Act on Health Care: On Health Care and Free Delivery of Medical Aid by theState, Law no.3766 (1963), as amended; "On the hospital care in the Republic ofAlbania", Law No. 9106 of 17.7.2003, "On health insurance in the Republic ofAlbania", Law No. 7870 of 13 April 1994, as amended, and "On Medicaments and the Pharmaceutical Service", Law No. 9323, Date Nov. 25,2004. 76 The amendments to the Health Care Act stipulate that out-of-pocket payments apply for issuance of health certificates at the individual's request, prosthesis, ambulatory care, and reimbursement of prescription drugs if not referred to/prescribed by a primary care physician, cosmetic interventions, spa treatments, technical-laboratory services or other medical services required by the individual or juridical persons, blood transfusions except if in emergencies, provision of drugs and supplies as stipulated by CoM regulations, and against a 70 percent copayment for adult dentalcare, and nonemergency home visits. 107 regulation o f many critical aspects to the Council o f Ministers and the MOH through secondary legislation. Most o f this secondary legislation was never passed, while amendments to other legislation (e.g., the Health Insurance Act) ended up being inconsistent with the provisions in the Law on Health Care. 225. The Hospital Act regulates all aspects of hospital care and hospitalmanagement. I t allows for the operations of private hospitalsand anticipates the licensingof hospitalsby the MOH. It also regulates hospital planning at both the central and regional levels and foresees that hospitals be managed through a regional hospital authority. It envisages that the basis for further development o f the (public) hospital sector be a state hospital plan, which would be proposed by the M O H and adopted by the Council o f Ministers. The Council o f Ministers is called upon to clearly spell out the role and functioning o f regional hospital authorities and o f the Hospital Planning Commission, the criteria for the opening and closing o f hospitals, and the definition o f criteria to establish the emergency status o f a hospital patient so he would qualify for free care. The MOH is called upon to authorize the opening and order the closure o f a hospital, to define criteria for medical services for inpatients and outpatients to be provided by public hospitals, to define the organization, structure and rules o f the functioning o f the public hospital, and to propose the state hospital plan. As with the Law on Health Care and its amendments, most of the secondary legislation to support implementation o f the new legislation was never adopted. 226. The Law on Health Insurance sets the overall framework for health sector financing by defining the sources of financing and the respective financial responsibilities of various funding agencies. It also establishes the HI1as an independent public institution with an independent budget and sets the stage for compulsory national health insurance financed through payroll tax and other contributions. A 2002 amendment introduced the possibility o f voluntary and supplementary insurance, in addition to the mandatory health insurance system, but left implementation to Council of Ministers decisions and MOH regulations. These have not yet been adopted. The amendment also opened the systemto wholesale pharmaceutical entrepreneurs, and allowed for the creation o f a commission to define the positive list of drugs reimbursable by the HI1and the corresponding price list, thereby opening the way for regular price negotiation. Finally, the amendment introduced the obligation to register with the HI1and pay contributions and imposedpenalties for breach ofthe law. 227. The recently adopted Law on Pharmaceuticals provides a sound framework for the operation of the pharmaceuticalsector. The Law was adopted in 2005 and establishes the framework o f operation for the private sector, sets the conditions for drug registration and licensing o f pharmaceutical providers, and defines the role o f the National Center for Drugs Control (NCDC) (see Chapter 4). The Law again calls for a significant number of by-laws, which have not yet been finalized. 228. Framework legislationto support fundamentalchanges in the sector has been in place, but the failure to adopt the required secondary legislationhas prevented implementation of envisaged changes. This may be a reflection o f the lack o f an overall shared vision o f the sector's future direction and a sectoral strategy, which could have ensured decisive implementation o f the legislation. In the absence o f an overall strategy, various legislative acts were often amended in a piecemeal fashion without ensuring overall coherence. A review o fthe core health sector legal acts carried out by an MOHworking group and technical assistance has pointed to inconsistencies across the various acts and the need for a systematic overhaul once a broad based sectoral strategy, including its organizational set-up and financing arrangements has been decided upon and subscribed to by the major stakeholder^.^^ "SeeIgorTomes,FinalReport2, TechnicalAssistancefor DraftingHealthFinancingLegislation,Ministryof Health,2004. 108 229. The Government's Health Sector Strategy envisages fundamental organizational and structural changes in the health sector. The strategy spells out the sectoral vision for the coming years and points to significant changes in the way the sector will be organized and financed, including the following: 0 The reorientation o f the role o f the MOH away from service delivery towards policymaking and sectoral stewardship and the strengthening o f its regulatory and oversight capacity 0 Increasingly strong reliance on the HI1as the key financier for health care services, with the HI1contracting directly with providers for service delivery 0 The decentralization o f service delivery by transforming hospital care providers into autonomous public entities under the governance o f hospital boards, while primary care providers would eventually operate as independent providers or groups o f independent providers 0 The establishment o f regional health authorities that would have a planning function and be in charge of managing national public health programs. 230. Implementing the strategy will require significant legislative changes, but several aspects pertaining to sectoral organization and financing deserve further clarification prior to proceeding with such changes. A working group comprised o f staff from the MOH and the HI1has drafted a new Health Care Act, along with new health finance legislation and amendments to the Hospital Act, but the legislation has not yet been adopted. These draft acts will require further revisions once the details o f the system's organizational set-up and financing have been agreed upon. In particular, the sources o f public sector funding, the pooling arrangements, the purchasing o f services and the role o f various institutions, including regional health authorities and individual providers, require further consideration before legislation is finalized and adopted. Beyond the passage o f legislation, there needs to be an increased focus on following through with the appropriate regulations necessary to operationalize various acts. It is clear that much more could have been accomplished in terms o f health sector reform, even within the boundaries o f the existing legislation, had the potential decision-making and regulatory powers been used to the full extent envisioned in the original legislation. c. THEROLE OFKEY PLAYERS AND NECESSARY CHANGES C.l. Organizational Models 23 1. The health sector's current financing and oversight arrangements are complex. Figure 6.1 provides an overview of the current organizational relationships within the health system in Albania. Financing comes from the HI1for primary health care physician salaries, for the TRHA, and for one o f the regional hospitals (Durres). MOHfinancing is provided for most other services and providers. Non- wage recurrent costs for primary care are funded through the MOH, with payments executed by local governments. The MOH exercises functional oversight for all parts o f the health system, concurrent with its line reporting relationships. Outside Tirana, primary care providers report to the regional or district directorate o f public health, while hospital providers report to the corresponding hospital directorate. These local directorates in turn report to their corresponding departments in the MOH. As discussed in Chapter 5, the complexity o f the arrangements leads to lack o f accountability and inefficiencies. 109 Figure 6.1 Health System Organization (Current) - i MINISTRY OF HEALTH - I HEALTH INSURANCE INSTITUTE - ......................... ...................... HEALTH SUPPORTEDflRUCTUR!?S ~ v MATERNITY LUNG CNlVERSlTV DISEASES DENTISTRY HOSPITAL CLISIC T.H.U.C ~. OTHER CITIES _ _ _ _ . _ I _ _ ' ....CARE ....t.... PRIMARY .r..., ., ~ HOSPITAL CARE 232. The system currently piloted in Tirana is a hybrid between a fully regionalized approach and a truly decentralized purchaser-provider model. It retains many o f the problems associated with the previous centralized approach and fails to achieve the benefits of the purchaser-provider split. The TRHA was established as a pilot experiment with the objective to consolidate previously dispersed public health and primary health care functions under one umbrella and have TRHA plan and manage these services in Tirana Region so as to optimize regional service delivery. The TRHA experiment is generally regarded as not having met the original expectations for a variety o f reasons, including differences in the perceptions o f various stakeholders in the key concepts, and indifferent government ownership. While the TRHA advocated keeping all resources in the region under its management and control, the HI1 continued to advocate the model o f direct purchasing between the HI1 and primary and hospital care providers. Another issue was that the TRHA was in practice granted neither functional nor administrative authority over the health service providers in the Tirana region. Therefore, THRA did not manage to restructure and optimize service delivery in the region. While the TRHA has been contracted by the HI1 for the provision o f primary care, it has not been given the powers to act as the true provider o f care. As a result, the costs o f an additional administrative layer are maintained while the benefits o f regional decentralization and decision-making are not realized. Further, the lines o f authority and accountability between the HI,the MOH and the TRHA and front line providers have remained blurred, reducing the overall level o f accountability in the health system inthe Tirana region. To put the problems experienced with the hybrid system in Tirana in perspective, it is worth reviewing both the fully regionalized model (Figure 6.3) and the decentralized purchaser provider split (Figure 6.2). 110 Figure 6.2 ModelA: Purchaser Provider Model - - ..... 4 MINISTRY OF HEALTH L - - - r - - ; + + ........... I N.W.D.RC.C j ~ SUP'ORTED5TRUCTU S I I I I ~ DRlG I ................................................... ~ CONTROL I I I I ' I 233. Under a fully decentralized purchaser-provider system, the HI1would contract directly with the individual health service providers, thus eliminating the need for a Regional Health Authority. Under this model, individual providers are generally given more autonomy and responsibility than under a regional model. This requires an adequate regulatory framework and governance structures, as well as financing mechanisms and provider contracts which include incentives for providers to produce quality health services at the right level o f care and as efficiently as possible. It also requires that the HI1 establish a capacity to adequately monitor and enforce provider contracts and performance. To reap the model's full benefits, providers would eventually needto be given a substantial amount o f managerial and financial autonomy, so as to allow them to adequately react to the incentive structures embodied in the performance contracts. However, such autonomy should only be granted gradually while ensuring that providers (particularly hospitals) have developed the capacity to exercise increased autonomy responsibly. Although this model requires managerial skills at the helm o f each provider or group o f providers, the level o f managerial talent required i s less elevated than that in a well functioning RHA model. The purchaser provider split model tends to be a more flexible organizational form and allows individual providers to adjust more promptly to incentives, but it can also lead to fragmentation and lack o f continuity o f care. Care must therefore be taken to structure purchasing arrangements and contracts in a way that encourages continuity o f care and establishes clear patient pathways. 111 234. Under a fully regionalized approach with Regional Health Authorities, the budget to producehealth care in a particular regionwould be allocatedto the RHAwhich in turn would be in charge of providing all health care in the region and could sub-contractwith individual providers. The budgetary allocation could either happen through HI1in the form o f a contractual arrangement with RHA or, in a situation where essentially all of the public funding comes from general revenues, as in Albania, it could be allocated to RHA directly by the Ministry o f Finance based on recommendations from the MOH. The latter would set performance targets and monitor the R H A ' s achievements. RHA would be responsible for the management o f the entire health care system in the region, including all hospitals, and decide upon the allocation o f funds across providers. The RHA model has the potential to better ensure full continuum o f patient care and facilitate horizontal and vertical integration among providers at the regional level than the purchaser model. However, because o f its more hierarchical organizational structure, the RHA model also harbors the danger o f becoming more rigid than the purchaser model. This might result in individual service providers having less incentives to produce health care efficiently and effectively. Figure 6.3 ModelB: RegionalHealth Authority Structures - MINISTRY OF HEALTH --- ---- Reportingrelationship Financing .. .... Functionaloversight MMlSTRY OF FMANCE ORHll fI I I I '' ' PRIMARY HOSPITAL HEALTHCARE CARE DIRECTOR DIRECTOR ' PRIMARY HOSPITAL HEALTHCARE CARE DIRECTOR DIRECTOR f f f HYCIPIIEAW ePmEIlloLOO AMBULATORY CARE v f f Note: Inthe above model Tirana is shown separately becausethe TRHA would also cover tertiary care in a fully regionalized model. Other than that the organization would be the same for all regions. 112 235. To reap its full benefits, the RHA modelrequireshighly qualified managers. While the RHA model requires fewer managers than the purchaser model, the skills level and qualifications o f RHA managers need to be much higher than those o f managers o f individual health facilities. The experience in Tirana suggests that the required skills may be difficult to find in Albania, particularly if they are required ineach region. 236. Even in countrieswith highly developed health care systems and infrastructures, the move to regionalauthorities has not been easy. A study o f R H A s in Alberta, Canada, concluded: "Because of limited resources, decision makers must examine how best to allocate health system resources. Health region personnel do not necessarily have the skills to set priorities and make choices about how best to allocate resources. >,78The effectiveness o f R H A s stems mainly from their ability to allocate the available funding among service providers in the region and to make the necessary trade-offs to improve overall quality and access to patient care. A recent review o f the RHA structures in British Columbia, Canada, concluded: "They have assumed significant responsibility for thefull continuum of patient services and outcomes, as well as accountable fiscal management. Across the spectrum of health care, an unprecedented level of coordination and cooperation has been achieved, allowing for immediate mobilization among careproviders when threats topublic health emerge." Inthe absence of the ability 79 to make those trade-offs, it i s unlikely that the benefits o f the RHA approach outweigh the costs in terms o f an additional layer o f management and decision-making. 237. The Health Sector Strategy advocates another hybrid between a direct contracting model and a regional model. I t envisages direct contracting between the HI1and autonomous providers, with RHAs serving a planning and coordination function (Figure 6.4). This model was used until recently in Ontario, Canada," but is currently being replaced with a new approach which also devolves resource allocation to the regional level.81 It is important to note that the MOH in Ontario is currently serving as the "purchaser" of health services and that there is thus no involvement o f an HII. The complexity o f the organizational relationships shown in Figure 6.4 compared to the other two options indicates that it would be even more important to specify clearly the relative roles and responsibilities o f the various players inthe health system - including the MOH, the HII,regional and local authorities, and service providers - prior to further dissemination o f a regional authority model. Given the limited institutional and management capacity within the health system, the value and impact of constructing planning-only agencies in addition to the current constellation o f health care managers should be carefully assessed. l8Priority Setting within Regional Funding Envelopes: The Use of Program Budgeting and Marginal Analysis, Donaldsonet al., CanadianHealthCare ResearchFoundation, 2001, p. i. l9Report on Health Authority Performance Agreements2002/03, BritishColumbia Ministry o f Health Services, p. 34. *'See: See: http:iiwww.health.eov.on.ca/englishlpublicicontactidhcldhc mnhtml http:ilwww.health,gov.on.ca/transformationJlhinllhin mn.htm1 113 Figure6.4 Model C: RegionalPlanningand CoordinationStructures - -I ..............' +I 238. The merits of expandingregionalhealthauthoritiesshould be carefully assessed, basedon a thorough evaluation of the TRHA pilot experiment. The TRHA was set up as a pilot and as such has been a valuable experience. However, as every pilot, it deserves careful evaluation to decide what the future should hold for TRHA. It is therefore recommended that the Government commission an independent evaluation o f the TRHA experiment as a basis for a decision on whether TRHA should be maintained, its functions and purpose should be restructured or whether it should be dissolved. This is particularly important as Albania's Health Sector Strategy clearly envisages a system where MI would directly contract with individual health care providers or groups o f providers. In a small country like Albania, where general revenues constitute the main source o f public sector funding for health care and where there are serious constraints on managerial capacity, the establishment o f an extra administrative layer in the form o f regional health authorities that would co-exist with MIseems o f questionable value. The arrangement risks leading to little more than an extra administrative layer which would consume resources that could otherwise be allocated to the direct provision o f health care. C.2. Roleof the Ministry of Health 239. Regardless of the organizational option chosen, the MOH needs to move from its current role as the owner and provider of services towards one where it ensures sectoral stewardship. This 114 would mean that the MOHevolves into a body which sets the overall policy framework, develops system- wide strategies, and provides guidance, oversight, quality monitoring and various central functions to support the overall health system. Although the recent documents o f the MOH appear to support this approach, there seems to be a reluctance on the part o f various departments in the Ministry to "let go." The latest draft o f the package o f laws still gives the M O H considerable operational input into the day-to- day functioning o f health care providers. Given the overall level o f organizational capacity at the individual provider level at this time, this may not necessarily be inappropriate, but there will need to be a coherent strategy o f capacity buildingto allow this devolution to take place. C.3. Role of the HI1 240. The future role of HI1will depend on the organizational model adopted. HII's role and responsibility would increase substantially under the direct purchasing model. The Health Sector Strategy foresees that HI1will become the core public sector funding agent for health care. This would require substantial efforts to build the HII's capacity to act as a true purchaser o f health care services rather than a mere conduit for the transfer o f public resources to providers. It would also requirethat the appropriate accountability structures be set up, both for the HI1 and for providers. Under a direct contracting model, the HI1would eventually be contracting with hundreds o f individual providers. Under such a system, there would be some merit in encouraging smaller service providers (solo practitioners or small group practices) to affiliate for purchasing purposes and share the costs o f practice management and other overheads. A direct contracting system will require HI1offices and staff in at least every district, although the majority o f the contracts would require relatively simple monitoring systems. The transition to this model would need to be introduced gradually. HI1would need to develop its capacity at the central and local levels, while time would also be needed to allow providers to develop their capacity to assume increased managerial responsibilities. 241. Under an integrated RHA approach, with the bulk of public sector funding coming from general revenues, the need for HI1would be debatable. Public sector funds could be allocated directly to RHA by MoF, based on recommendations and performance targets established by MOH. Alternatively, if funding remains mixed, HI1 could remain the purchasing agent which contracts with RHA for the delivery o f all health care services in the region. However, the costs and benefits o f two administrative bodies, HI1and RHA, would need to be carefully evaluated, given the small size o f the country, There is a considerable risk that the coexistence o f HI1and RHAs would result in the same situation as inTirana, with the additional layer o f a RHA adding little benefit to the new system. C.4. Role of Regional Health Authorities and Local Government 242. The expansion of the integrated RHA approach would result in the health authorities becoming the de facto service provider in each region. As noted above, this is essential ifthe benefits of regionalization are to be realized. This expanded role o f the RHA would likely result in a diminished role for local governments and the HII, although there is still considerable scope for local input and "voice" in a regionalized system, such as, for example, representation on the RHA board. 243. Under a direct purchasing approach, the RHA could essentially disappear. It may be possible to retain the TRHA and/or other R H A s as regional planning bodies, but experience elsewhere has shown that these are o f limited use. The role o f the local government could expand substantially under a decentralized approach, including in the participation o f decision-making with different provider types. For example, there might be local government, regional and/or direct citizen representation on regional hospital boards or local health center boards (see Boxes 6.2 and 6.3 for examples from other countries). These types o f initiatives would have to be supported through specific capacity-buildingmeasures which would provide essential training in board governance procedures and functions. 115 C.5. Role of Service Providers 244. Providersare likely to be most affected by the choice of the organizational approach. Under the regionalized approach, current service providers would simply change their reporting relationship from the M O H to the RHA. Under the direct purchaser model, on the other hand, they would gradually gain increased autonomy, with primary care providers potentially becoming fully independent providers and hospitals becomingautonomous or semi-autonomous public enterprises or entities. 245. The legal status and organizational set-up for primary care physicians will need to be revisited. The Health Sector Strategy foresees that primary care physicians will operate as autonomous individual practitioners or in group practices contracted by the HII. This is the approach which many countries in the ECA region have adopted. In these countries, PHC providers have essentially been privatized and are operating as independent entrepreneurs who have specific contracts with the HII. While this could be a feasible approach in urban areas, the applicability o f this model in rural areas deserves further consideration. Alternative options to consider for rural areas might be community based health organizations with which HI1would then contract (see Box 6.1) or requiring urban GP groups to also take responsibility for rural areas served by a nurse or midwife under the HI1contract. Different organizational models may work for different locations and must be further explored in the Albanian context. Regardless o f the final organizational form adopted for primary care, specific training and capacity building in practice management will be needed if the HI1i s to contract directly with health service providers. Capacity will also need to be developed at the HI1level to allow patients to select their primary care physician and to make changes, if desired, at specified intervals. 246. The Health Sector Strategy foresees that hospital providers will eventually become autonomous public organizationsgoverned by a board, while the M O Hwill retainthe right to appoint the hospital director. This points to inherent conflict between granting providers increased autonomy under the governance o f their boards and MOH's reluctance to withdraw from service delivery. Over time, MOH should completely withdraw from the appointment o f managers for hospitals and other health care facilities. Depending in the organizational model chosen, the appointment o f hospital directors would become the responsibility o f the hospital board or an alternative governing body (see Box 6.3). Under an RHA approach, the health authority director would select key managerial positions for service providers in the region. Managerial autonomy would also entail that provider managers can freely decide on staffing needs and profiles and be given freedom over hiring and firing o f hospital staff within established standards. 247. Changes in the provider payment structure will only be effective if providers are given increased authority over the allocationof resourceswithin a given budget. This will be a significant change, since with the exception o f a few pilot programs, the degree of financial autonomy in the health is system currently very small. However, there are varying degrees o f financial autonomy, and clear choices will have to be made by the Government o f Albania in settin the boundaries o f that autonomy. Some o f the issues that will need to be addressed in this area include: (i) *F decision rights over labor inputs (hiring, firing, wage levels, performance pay); (ii)decision rights over assets and capital inputs (ownership, disposal, borrowing and for what purposes - capital or operating, certificate o f need or other authorization procedures for acquiring/operating certain equipment, depreciation and asset replacement), (iii)decision rights over other inputs such as supplies, pharmaceuticals, etc.; (iv) market exposure (the extent hospitals '*For amore in-depth examination o fthe issues, see: Martin McKee and Judith Healy (eds.), Hospitals in a ChangingEurope, EuropeanObservatoryon Health Care Systems, OpenUniversity Press, Buckingham,2002, pp. 186-194. 116 are at risk for their performance, whether they lose revenues as they treat fewer patients or, conversely, whether they gain revenues as they treat more patients83);and (v) residual claimant status.84 248. I n the medium term, granting hospitals full managerialautonomy, including over decisions of the desired profile, scope of services to be provided and large investments is not advisable in the Albanian context. Similarly, it is not advisable in the medium term to grant hospitals full financial autonomy to the extent o f letting them borrow commercially for investments. On the other hand, as provider management capacity increases, providers should be granted increased autonomy over human and financial resource allocation within a given budget, including staffing positions and salaries, and they should be given the right to decide on the utilization o f potential savings achieved under HI1contracts. The move to more autonomous hospitals should be a gradual process, with the pace and extent of autonomy provided commensurate with providers' ability to demonstrate capacity and readiness for self- governance by way of reaching gradually rising performance targets. 249. The move towards increased managerial and financial autonomy of health care providers will require extensive capacity building for staff at all levels of the health system. This will include training in financial management and control, as well as clear guidelines on the limits and prerogatives related to financial transactions. The autonomy-accountability nexus is particularly important in the financial area and needs to be clearly enunciatedthrough performance contracts, accounting standards and reporting requirements. It also has much wider implications, since it is a major part o f the incentive systemthat directly influences the performance o f the health providers interms o f the volume o f services provided, the quality of care, and, to a large extent, informal payments (see Chapter 3). The development o f these systems o f control and accountability is a major undertaking, and must be closely tied to the training needs and activities. 83Ibid.,p. 191. 84Residualclaimant status is defined as the degree of financial responsibility, referring to boththe ability to keep savings and responsibility for financial losses (debt). The residualclaimant status of ahospital is akey incentiveto generate savings and efficiency gains. 117 Box 6.1 GovernanceinPrimary Health Care - Indeuendent Contractor Model - Bulgaria- Primary care physicians in Bulgaria have the legal status o f independent contractors rather than civil servants. All primary care physicians who wish contracts with the NHIF must register as single or group practices, and physicians contract with the National Health Insurance Fund(NHIF). A doctor who does not contract with the Fund may provide services to private patients on a private pay basis. Single and group practices have the right to acquire ownership o f premises and medical equipment or to pay low rents to the municipalities for consulting rooms in the former public polyclinics. Alternatively, privately owned premises or rented privately owned offices may be used. Health care is paid for in accordance with the National Framework Contract, which is signed between the NHIF and representatives o f the professional organizations o f physicians and dentists. Coouerative Model - Costa Rica - Contracted providers perform their work under the general oversight o f the Health Insurance Fund and the Health Ministry (MS) but retain direct governance over their resources and business objectives. The governance o f the contracted provider is established wholly by the provider organization. A governing board is established which includes the staff of the cooperative and in some cases members o f the community; in the case o f the private sector clinics, private management boards have been established; and in the case o f the University, a joint University board is established for oversight. The internal organization o f the contracted providers is entirely up to the management. Management is named by an administrative council which itself is selected every 2 years by the General Assembly. Communitv Co-ManagementModel -Peru - Health services at the community level are co-managed through a committee o f elected community members called CLAS (Comite Local de Administracion de Salud). The CLAS administers and manages financial resources transferred from the public treasury for the purposes o f providing health services to the community. The CLAS is a private, non- profit entity that i s legally registered, composed o f three members elected by the community, and three community members selected by the health facility manager. The seventh member is the facility manager, who i s usually the chief physician and participates in all decisions o f the CLAS and completes the scheme o f co-management. Three members form a Board o f Directors. All members work on a gratuitous basis for a period o f 3 years, after which new members are elected. Members can be replaced before their term i s completed due to breach o f responsibilities. Communitv Board Model - Ouebec. Canada - The Centres Locawc des Services Communautaires (CLSCs) are the exclusive providers o f home care, public health and certain specialized services for individuals, such as programs for children's mental health. Most CLSCs have extended hours (evenings and some weekends) providing an alternative to private walk-in clinics and emergency departments. CLSCs have elected boards comprising members o f the community, consumers, medical staff and employees, o f the foundation attached to the agency and the executive director of the agency. The Quebec model allows for broad representation and encourages representation from community groups. Because a large number o f the board o f directors are elected at public Regional Assemblies, strong accountability is inherent inthe model. 118 Box 6.2 Governanceand OrganizationalStructures inHospitals - The organizational structure o f hospitals i s increasingly recognized as a significant determinant of hospital behavior. Previous literature on hospital performance mostly focused on the impact of incentives emanating from the external environment. In particular, payment mechanisms and competitive pressures were much explored. Focusing on external incentives alone, however, assumes that hospital behavior is the result o f a rational adaptation process to external determinants. This approach ignores the possibility that the organizational structure o f hospitals might mitigate any pressures emerging from the external environment. The behavior o f hospitals is determined by the interaction o f external incentives and organizational structure. Inthis framework, hospital behavior is changed positively by introducing complementary and synergetic reforms to both the external environment and the organizational structure o f hospitals or hospital networks. Alone, neither is sufficient to change the behavior o f organizations. If the external environment does not generate performance pressures, hospitals will have no reason to strive for high performance. However, even with a well-structured external environment, the direction and magnitude o f hospital behavioral change might be moderated by the organizational structure o f the hospital. Thus, synergistic design between the external environment and the organizational structure of hospitals together create the incentives hospitals face, and hence their alignment is critical to successfully change organizational performance. The following table describes the main governance structures that currently exists in central and eastern Europe: Country Governance Status Director Appointed by: Croatia Separate legal entity Mayor Estonia Three types of non-tertiary hospitals(a) (a) Mayor municipal not-for-profit (b) joint-stock company (b) companyboard (c) trust (c) trust board Georgia Treasury enterprises (self-financing state MinisterofHealth enterprises) as separate legal entity governedby Law on Enterprises Hungary (a) Separate legal entity that can enter into Municipality (assembly or contractualarrangements, (b) budgetunit subject mayor) to public finance law Lithuania Not-for-profit institutions under Law on Health Owning localgovernment Care Institutions from June 1996 Poland Budgetaryunits; legislation passedon Owning local government `independent units' Romania Extra-budgetaryunits governedby the Public District health authority FinanceLaw from 1998 based on MOHcriteria Basedon: Martin McKee and Judith Healy (eds.), Hospitals in a ChangingEurope, EuropeanObservatory on Health Care Systems, Open University Press, Buckingham, 2002, pp. 177-186. C.6. Role of Other Key Stakeholders 250. In modern health care systems the Institute of PublicHealth plays a key role in supporting the overall management of the system. For example, the National Network o f Public Health Institutes in the United States defines a Public Health Institute (PHI) as "A PHI is a multi-sector entity able to 119 function as a convener to improve health status andfoster innovations in health systems,"" while the Finnish Institute of Public Health highlights the following as their key functions: Research, expert functions, health monitoring, public health services, education and training, international collaboration, development, assessment and performing of laboratory research, and participating in the dissemination of health information and health education.86 251. Albania's Public Health and Health Promotion Strategy envisages an expanded role of the IPH along these lines, in addition to being responsible for health protection and environmental health. However, to date, IPH has neither been given the full mandate nor the resources to effectively carry out the expanded functions of a modern public health institute. Giventhe importantrole that IPHcan play in a reformed health sector, including inthe collection, analysis and provision o f health informationto MOH and the public, IPH should be provided with the resources and powers to expand its functions and develop into a modern IPH as outlined inthe strategy. 252. The Medical Association is an important player in a modern health system. As the roles and reporting relationships o f physicians evolve from government employees to independent professionals, new structures will be needed to provide ethical leadership, fulfill registration and licensing functions, and monitor quality and professional standards, including discipline. An effective medical association (order o f physicians) can play an important role in establishing and maintaining quality and standards, and through this can perform valuable patient advocacy functions. At the regional and local levels they can also provide useful input to health boards and planningagencies, although care needs to be taken to avoid conflicts o f interest. For example, the medical association may be included for technical input only, without having a vote on the final result. However, it must be borne in mindthat if adequate governance and control structures are not put into place, such a group can quickly evolve into a trade association or an advocacy group for the medical profession. In many countries two groups are used, with one taking on the "union" roles and the other the professional licensing and monitoring roles. Given the general governance situation inAlbania, this may be a preferable approach. D. STRENGTHENING SECTORAL ACCOUNTABILITY 253, Albania's Health Sector Strategy and the reforms proposed here entail substantial changes in the roles and responsibilitiesof various actors in the sector and will require concerted efforts to strengthen the accountability framework in the sector. The MOH will assume a policy making and stewardship role and increasingly withdraw from service provision and financing o f health care. The HI1 will assume full responsibility for financing o f health care, channeling the Government's health budgetto health care providers by contracting them to offer a defined set o f services to the population against an established price. Service providers will be given increased autonomy to decide how to most effectively produce these services and their performance will be evaluated against an established set o f performance standards, These changes will require investments in the establishment o f new governance structures so as to ensure proper accountability o f all actors 254. The World Bank's World Development Report 2004 uses a three-Cornered framework to analyze the accountability relationships between policymakers and service providers; clients and service providers; and clientskitizens and policymakers in a situation where the Government is no longer directly involved in service delivery (see Box 6.1). This framework is utilized here to review the potential National Network of Public Health Institutes, httD://www.nnDhi.orp/what.htm 86 FinnishInstitute o f PublicHealth, http://www.ktl.fi/~ortal/enrlish/ 120 measures that would need to be taken to ensure proper accountability inthe envisaged restructuredhealth sector. Box 6.3 Service Provider GovernanceFramework Based on WDR04 - The WDR04 governance frameworks encompasses three routes of accountability: the long route, going from citizensto policy makers to providers, where by citizens express their level of satisfaction with service provision through their voice either directly in government or independently sponsored mechansism to seek citizen feedback (e.g. report card system) or indirectly when chosing policy makers through elections. The second part of the long route links the policy makers to the providers through three core mechanisms: (i) the legislative and regulatory framework; (ii) incentive system the and (iii)regular monitoring of provider performance against well established performance targets. The short route of accountability is the one where citizens provide feedback directly to the service providers, most notably by changing their choice of service provider if they are not satisfied with a particular provider. Another dimension of the short route is for citizens to be directly involved inthe decision making of service providers through, for example, community representation on provider governance boards or community healthboards. Figure 1: GovernanceFramework-Key Relationshipsof Power Services Source: World DevelopmentReport 2004: Making Services Work for Poor Peoplep. 49 D. The Compact Between MOH and Service Providers 255. Establishing a strong system of provider accountability will be particularly important if providers are granted increased managerial and financial autonomy. The relationship between the MOHand service providers (the compact) would be defined through three core mechanisms: (i)revised a legislative and regulatory framework establishing the roles, legal status, governance structures, obligations and reporting requirements o f all actors involved, (ii)a system o f established performance indicators against which the performance o f the providers will be monitored and evaluated and, (iii)a system to collect and analyze the data to determine how well providers are performing against the established indicators individually and as a whole. A substantial amount o f work will be required in each one o fthese areas to ensure that a satisfactory accountability system will be in place. 256. While revisions to the legislative and regulatory framework will be imperative, establishment of performance standards and of a system to monitor and analyze performancewill require particular attention. Both have fallen short o f attention to date. Work on performance standards has already been initiated in the hospital sector, but this area will require substantial additional investments and efforts. As indicated in Chapter 2, a key short run priority is the development and 121 adoption o f revised standards in support o f an improved licensing system. Performance standards for non-hospital providers, in particularly PHC providers will also need to be developed. Standards need to cover clinical aspects to ensure patient safety, but also physical plant and equipment and managerial and financial operations. 257. The introduction of a performance monitoring system will require substantial investments in the establishment of a health informationsystem to provide M O Hwith the intelligence necessaryto appropriately gauge the performance o f individual providers and the health system as a whole. This will need to cover all aspects o f the health care system, including monitoring o f production and delivery o f health care by providers, providers' meeting established standards for clinical quality, plant and equipment quality, managerial and financial performance and overall service provision. It will evidently also need to include information on how well the sector is performing on the two ultimate objectives o f improving health outcomes and protecting people from health shock induced poverty. Routine information reported by providers, HI1and regulatory bodies will need to be complemented by specific surveys to help assess progress against improving equity in access to health care and effects o f reforms on households' health seeking behaviors. IPH can play an important role inthis area. D.2. Policy Makers and Citizens 258. The relationship between policy makers and citizens as a means to strengthen accountability in the health sector has fallen short of attention. Sectoral stakeholders and citizens need to be given a voice in two respects: first, stakeholders needto be more involved inthe formulation o f policies and in the decision making process if the envisaged changes are to find broad based support. There is a clear need for MOHto strengthen its outreach efforts and undertake regular public consultation efforts where the objectives and rational for proposed changes are discussed with stakeholders and their feedback integrated into the design o f detailed policy implementation plans. Second, there is a need to seek regular feedback from citizens and local communities about the performance o f the health care system. This will be particularly important to assess the impact o f proposed changes. In the short and medium run this will require specific efforts to gain such feedback through patient satisfaction surveys, report card systems as they have been introduced by Tirana Municipality, focus group discussions, provider utilization surveys and the establishments o f patient complaint mechanisms. In the longer run, more systematic feedback through patient right organizations or similar set-ups mighttake hold. 259. MOH should make public information about the performance of the system, including information about the performance o f individual providers in terms o f providers meeting or failing to meet established standards, achievement o f health outcome targets, utilization o f financial resources and corrective action taken by the government against providers who fail to fulfill to meet standards (e.g., withdrawal o f license). 260. Corruption in the health sector is the most visible embodiment of governance failure. A recent corruption perception surveys7notes that bribes (informal payments) in hospitals have the third highest incidence after customs and courts, yet the available data indicate that there are few, if any, prosecutions related to this activity; raising an important question about how to increase the focus and visibility o f these problems. Decisive action in this area will be particularly important if formal copayments are introduced for hospital services. The objective o f these copayments can not be to increase out-of-pocket expenditures for health care, which are already high, but to replace informal payments with formal payments. To address this issue, a comprehensive approach encompassing the ''Reporton Tri-partite Survey: Civil Society Corruption Reduction Project in Albania, Management Systems International, Washington, DC, M a y 2004 122 following elements will be required: (i)informing the public clearly about their rights and obligations with respect to payment for health care services, including what their entitlements are for free or partially subsidized services and who should provide these, what the price i s for services where partial o f full copayment applies, who this payment should be made to, who can provide further information in the case o f uncertainty and where complaints against violations can be launched; (ii)establishment o f a patient grievance system where violators can be identified; (iii)commitment by provider managers to take action against staff who request informal payments; (iv) criminal prosecution o f gross violators, (v) explicit provisioning for punitive action for informal payments inthe HII-provider contract; (vi) a revision o f the remuneration system for health care providers. D.3. Health Care Providersand Citizens 261. The relationship between health care providers and citizens can take two dimensions, the population choosing its service provider and the community engaging in supervision of health care providers. A market based competition is a powerful vehicle for exercise o f client power. People chose their service provider and if they are unhappy with the services received move to a different provider. However, the health sector, particularly above primary care, is subject to significant information asymmetries which often make it difficult for care seekers to exercise their voice in an informed manner. Thus, it is primarily at the primary care level where market power can play a role. To a large extent Albanian citizens already exercise this power by circumventing primary care for higher order or private care because o f quality concerns at the primary care level. However, this i s not an effective mechanism, as it results in higher costs and by extension increased inequity in access to health care. To the extent that primary care providers will be given the support to improve quality o f care through skills upgrading and the resources for supplies and equipment, market competitioncan be introduced by letting the population enroll with the GP o f their choice and base physician payment on the number o f patients enrolled. While Albanian GPs are currently paid on a capitation basis, this system i s not based on an effective enrollment. Thus, as part o f the efforts to revise the incentive framework for health care providers, an enrollment based GP payment system may prove to be an effective mechanism to let citizens provide feedback to providers on their performance in areas where citizens indeed have a choice (e.g., where there are multipleproviders). Inother areas, alternative mechanisms will need to be sought. One possibility is the involvement o f local communities in community health organizations which supervise the performance o f the provider, another one is the representationof communities on the board ofproviders. E. CONCLUSIONSAND RECOMMENDATIONS 262. This chapter has sought to cover a large and often ignored aspect o f the health system - the regulatory, governance and organizational framework - and has attempted to relate these to the health reform strategy that i s currently being pursued. It is clear from the reform process in many other countries that these issues are often ignored or inadequately addressed, which results in the failure of many sound technical approaches to be implemented correctly or completely. 263. Compoundingthe importance o f these areas are (i) the fact that it i s not possible for the system or its managers to start afresh, and (ii) reality that it is not prudent or feasible to put off all changes until the appropriate capacity building, regulatory and structural organizational and governance changes have been put into place. Establishingthe appropriate pace o f all o f these activities, so that even small changes are mutually reinforcing, will be a significant challenge. However, a sound implementation plan will have to accomplish just that. 264. Before the legislative packages are finalized it will be critical to carefully examine the organizational structures o f the health system to ensure that there are no inconsistencies or paradoxes 123 between the stated objectives o f the reform effort and the structures established to move that effort along. Specific areas that need to be examined, in consultation with all o f the relevant stakeholders, include the following: 0 Commission an external evaluation o f the TRHA pilot and deciding whether TRHA should continue to exist in its current format, whether it should be restructured and its mandate revisitedor whether it should be abolished. 0 Deciding on the future organizational and managerial set-up in the health sector outside Tirana region in light o f TRHA pilot evaluation and Government's stated strategy to shift to a direct purchaser model. 0 Deciding on the desired role o f local government in the planning and governance o f health care providers. 0 Deciding on the organizational and governance structures for primary and hospital care providers. 0 Developing the regulatory framework which supports the aspired organizational model. 0 Developing a system o f performance standards to gauge performance o f individual providers and the sector as a whole. 0 Establishing a system o f regular performance monitoring and develop health information system to support it. 0 Establishing mechanisms to seek regular feedback on provider and sectoral performance from citizens. 124 Annex 6.1 -Models of PrimaryHealth Care Organization and Financing Independent ContractorModel Bul.t?aria88 - Primary care physicians in Bulgaria have the legal status o f independent contractors rather than civil servants. All primary care physicians who wish contracts with the NHIF must register as single or group practices, and physicians must contract with the National Health Insurance Fund (NHIF). Some group practices employ a practice manager to handle financial affairs, logistics and interactions with the NHF. A doctor who does not contract with the Fund may provide services to private patients on a private pay basis. Most existing polyclinics have been transformed into diagnostic and consultation centers or medical centers and registered as trade companies. These new organizational forms are housed in the buildingso f former polyclinics, owned by the municipalities. Single and group practices have the right to acquire ownership o f premises and medical equipment or to pay low rents to the municipalities for consulting rooms in the former public polyclinics. Alternatively, privately owned premises or rented privately owned offices may be used. Health care i s paid for in accordance with the National Framework Contract, which is signed between the NHIF and representatives o f the professional organizations of physicians and dentists. At the beginning o f July 2000, contracts signed with the NHIF filled 98.4 percent o f the primary care positions specified by the National Health Map. Patients are given free choice o f a primary care physician (general practitioner), but must register with a particular GP. General practitioners act as gatekeepers to the system, with visits to specialists requiring referral from the primary care physician. The basic package for primary health care contains the following services: ......ambulatory care (examination) surveillance, home visits, consultations health promotion and health prophylactics immunizations referrals for medical and diagnostic tests prescription o f drugs, etc. For the performance o f services included in the basic package, general practitioners are paid by capitation .. on the basis o f the number o f patients on their list. In addition to the basic package o f services general practitioners participate in a special health program, called Management o f Health Priorities, including: maternal and infant health care .. adolescent health care health care for chronic diseases (diabetes, cardiovascular diseases, etc.) care for elderly persons health care for terminally ill. These activities are not obligatory for a general practitioner, but additional remuneration for performing these interventions encourages general practitioners to provide such additional preventive and other services. Extra remuneration is paid to general practitioners working in practices under unfavorable conditions, such as regions with poor infrastructure, remote or mountainous areas. 88 Adapted from Health Care Systems in Transition: Bulgaria, The EuropeanObservatory on Health Care Systems, 2003. 125 CoouerativeModel - CostaRica8' The main objective o f the cooperative model is to generate the best possible social well-being o f an assigned population with the existingresources. Regulation: Contracted providers perform their work under the general oversight o f the CCSS [Health .. Insurance Fund] and the Health Ministry (MS) but retain direct governance over their resources and businessobjectives. Service agreements contain three key elements: The population to be covered and the types o f services to be delivered, including established protocols and guidelines which outline the purchaser's expectations. Performance indicators covering (i)provision, including coverage rates and compliance with protocols; (ii)quality indicators related to technical and perceived quality o f services; (iii) organization o f the services, management capacity and its role in managing patients and . resources; and (iii)billing including the providers role in documenting the cost and volume o f services provided. A system for monitoring and evaluation which outlines not only the procedures but also the process by which the providers will be evaluated. Governance: The governance o f the contracted provider is established wholly by the provider organization. In the case o f cooperatives a governing board is established which includes the staff o f the cooperative and in some cases members o f the community; inthe case o f the private sector clinics, private management boards have been established; and in the case o f the University, a joint Universityboard i s established for oversight. Financing: The financing function has been fully retained by the CCSS, which is responsible for financing 100 percent o f the health care services through payroll contributions and government transfers for the uninsured. The financing o f the contracting model retains public financing and no additional fees are charged by the providers. Organization. The internal organization o fthe contracted providers is entirely up to the management. In the case of the cooperatives, management is named by an administrative council which itself is selected every 2 years by the General Assembly. The model is guided by Law 4179 o f cooperative associations and their reforms. The most important aspect o f this kind o f organization is the contribution by all associates to the social capital o f the company. Periodically, associates receive a share o f the profits generated by the cooperative. Communitv Co-Management Model -Peru9' Health services at the community level are co-managed through a committee o f elected community members called CLAS (Comite Local de Administracion de Salud). The CLAS administers and manages financial resources transferred from the public treasury for the purposes o f providing health services to the community. The CLAS i s a private, non-profit entity that is legally registered, composed to three members elected by the community, and three community members selected by the health facility manager. The seventh member is the facility manager, who is usually the chief physician and participates inall decisions ofthe CLAS and completes the scheme of co-management. Three members form a Board 89Adapted from: Health System Innovations in Central America, Contracting Primary Health CareServices: The Case of Costa Rica, Cerconeet al., September 2004, pp. 8-9. 90Adapted from Health Reform, Community Participation, and Social Inclusion: TheShared Administration Program, UNICEF Peru, August, 1998, and The Challenge of Health Reform: Reaching the Poor, Europeand the Americas Forum on Health Sector Reform, San Jose, Costa Rica, May, 2000. 126 o f Directors. All members work on a gratuitous basis for a period o f 3 years, after which new members are elected. Members can be replaced before their term is completed due to breach o f responsibilities. Two types o f contracts exists between the CLAS and MOH: a Shared Administration Agreement (covering infrastructure, equipment, medicines and personnel posts) which lasts 3 years, and an annual Management Contract for the provision o f health services. CLAS i s held accountable for ensuring implementation o f the local health program that is developed annually on the basis o f the community health diagnosis. CLAS is given the power to contract health personnel and other workers of the health facility, and make decisions on how funds are utilized. An alternative organizational form is the "aggregate CLAS," where multiple facilities (an ideal number of five or six is mentioned), are incorporated into a single network administered by a single CLAS. Each facility has a local health plan, which is joined into an aggregate plan to serve as the basis for the Management Contract. Communi& Board Model - Ouebec, Canada The Centres locaux des services communautaire (CLSCs) are the exclusive providers o f home care, public health and certain specialized services for individuals, such as programs for children's mental health. Most CLSCs have extended hours (evenings and some weekends) providing an alternative to privatewalk-in clinics and emergency departments. The CLSCs also have elected boards comprising members o f the community, consumers, medical staff and employees, o f the foundation attached to the agency and the executive director o f the agency. The Quebec model allows for broad representation and encourages representation from community groups. Because a large number of the board o f directors are elected at public Regional Assemblies, there is a strong accountability feature built in. 127 CHAPTER 7: CONCLUSIONS-IMPLEMENTATIONOF HEALTH SECTORREFORMS 265. The changes in the organization, financing and delivery of health care proposed here, and also largely subscribed to in the Government's Health Sector Strategy, will require a gradual introduction and careful preparation. Timing and sequencing of reforms are critically important to allow the health system to prepare itself to absorb the changes and to ensure that capacity at all levels is establishedto reap the benefits of the intended changes. Substantialefforts in capacity building of health care providers, HII,and MOHwill be required to ensure that all actors are ready to assume their increased responsibilities. Fundamental decisions on the legal status, organizational arrangements, governance structures, and extent of autonomy for health care providers will needto be taken before such changes can be introduced. Provider accounting systems need to be strengthened, performance standards established and adequate provider reportingand information systems introduced to allow for appropriate performance monitoring and transparency. Provider management capacity will need to be developed and payment reforms will need to be coordinated with efforts to improve the quality of care to enhance payment mechanisms' incentives for behavioral change on the provider as well as the patients' side. 266. Therefore, it is proposed that the Government consider implementing reforms in a phased approach. The first phase consists of a preparatory phase, which involves deciding on provider organization and governance structures, developing appropriate accountability and reporting mechanisms, developing and costing out the benefits package to be made available from public funding, enhancingthe legislative framework to support the changes, and establishingtraining programs in provider management and clinical skills upgrading, with initial emphasis on primary care providers. The second phase would gradually introduce changes in provider organization and financing in parallel with upgrading of clinical and managerial skills. Building on work already undertaken with the support of USAID financing, the emphasis during the second phase would be on supporting the gradual roll out of changes at the primary care level, while piloting proposed managerial and financing changes in a limited number of hospitals only. It is proposed that the roll out of reforms during phase two be undertaken gradually. Initially in two regions, then in a limited number of additional regions and, by the end of phase two, to all regions. During a third phase, reforms would be further consolidated and expanded to cover the rest of hospital providers. In parallel, during the first and second phase the capacity of IPH to assume increased responsibilities in health promotion, health information and health intelligence, and new public health initiatives would be strengthenedto ensure that it can assume these important new functions effectively. The table below summarizes proposed actions inthis phased framework. 128 Table 7.1 ProposedPhasingof Health Sector Reforms - Objectives and Phase 1: Phase 2: Phase 3: Programs One year preparatory Three to four years Three to five years phase following completionof following completion phase 1 of ohase 2 Establish Evaluate TRHA Initiate implementation o f Registration o f all institutional experience and decide on revised sectoral remaining hospitals as framework to sectoral organization, governance system independent legal support reforms clearly define role and zntities allowedto responsibilities o f all key Registrationo f PHC :ontract with HI1 actors providers as independent legal entities allowed to Decide on organizational contract with HI1 set-up, legal status, and governance structure o f Registration o f pilot primary care providers in hospitals as independent urban and rural settings legal entities allowed to contract with HI1 Decide on legal status and governance structure o f hospital providers Establish legal basis for revised organizational set-up, including revised legal status o f providers Introduce single Decide whether HI1 Set up unified database o f Gradual expansion o f payer health payroll tax contribution all HI1beneficiaries and HI1contractingto finance system should be replaced with register populationwith remaininghospitals general revenue financing primary care physician, staged region based roll Generalized Establishlegal basis for out introductiono f revised revisedhealth finance hospital accounting, system, allowing for Introduce revised PHC reporting, and pooling o f all public provider accounting and information system funding under a single and activity information payer and direct systems, staged region Generalized contracting o f providers based roll out introductiono f revised with HI1 copayment system at Train PHC providers in hospital level and Determine scope o f practice management, system to eradicate services covered from stage region based informal payments public resources, in line coverage with available resource envelope, determine Evaluate Durres-HI1pilot content and cost structure and define revised o f package o f services to prospective hospital 129 Objectivesand Phase 1: Phase2: Phase3: Programs One year preparatory Three to four years Three to five years phase followingcompletionof followingcompletion phase 1 of phase2 be delivered by PHC 3ayments systemto be providers to be contracted 3iloted in additional 3 by HI1 iospitals Finalize design of revised Develop revised hospital PHC provider accounting accounting system and reportingsystem and of primary care Develop and pilot test information system to revisedhospital financial, support direct contracting activity and reporting with HI1 system Determine PHC provider StrengthenHI1 payment mechanisms, information system, draft contracts and including provider monitoring indicators interface Pilot HI1contracting with hospitals in 3 additional hospitals (2ndhalf of phase 2) Train HI1staff inall aspects of health insurancemanagement Establish population risk adjustedformula for regional allocation of HI1 resources Adopt scope of services to be provided with public funding and complete computation of unitcosts of covered services Gradually introduce revised copayment policy, including for inpatient care Implement public information campaign informing populationof rights and obligations 130 Objectivesand Phase 1: Phase2: Phase3: Programs One year preparatory Three to four years Three to five years phase followingcompletionof followingcompletion phase 1 of phase2 under new scope o f service provision and :opayments policy [nparallel to introduction 3 f revised copayments policy, launch no tolerance for informal payments campaign includingestablishment o f patient grievance system Strengthen quality Continue development o f Complete core PHC 3xpand depth and snd effectiveness zlinical practice clinical practice :overage o f continuous 3 f primary care guidelines and establish guidelines nedical education for system o f continuous 'HC providers medical education Initiate continuous medical education system Establish center for and train PHC providers continuous medical inutilizationo f initial set education and develop o f clinical practice initial retraining courses guidelines and rational with focus on training on prescribing, staged initial set o f clinical regional roll out guidelines Complete regional PHC Initiate preparation o f plans and utilize as basis regional PHC plans based for future investments in on existing and expected PHC utilization and aspired efficiency targets to guide any future investments in PHC Hospital sector Complete hospital Launch implementation Continue reorganization network master plan as o f hospital network implementation o f basis for all future master plan, including hospital network mastei investments inhospital consolidation and/or plan sector conversion o f small hospitals Determine role, Based on experience composition, rights, and with pilot hospitals, responsibilities o f gradually expand hospitalboards and limited autonomy to hospitalmanagers for remaininghospitals, pilot hospitals to be based on individual contracted bv HII. hostitals meeting 131 Objectives and Phase 1: Phase 2: Phase 3: Programs One year preparatory Three to four years Three to five years phase following completion of following completion phase 1 of phase2 iutonomy readiness Establish performance nilestones criteria for various stages of hospital autonomy 3xpand coverage of iospital management Establish hospital wogram management training program for managers and board members of pilot hospitals Establish legal basis for Introduce revised, time 3xpand coverage of regulatory revised physician and bound physician and :ontinuous medical framework and facilities licensing system facilities licensing :ducation system to quality assurance requiring regular system, with objective of iospital physicians system relicensing having first PHC physician cohort gone Zontinue through relicensing by implementation of Establish independent end ofphase 2 physician licensing and quality assurance group relicensing system to to set provider quality Develop and adopt :over all physicians by standards provider standards for 2nd of reform program clinical care, physical Decide on institutionalset plant and equipment in Continue development up to monitor and enforce hospitals and outpatient and regular updating of standards and establish setting quality assurance and corresponding legal basis control guidelines Set up and implement Determine body to adopt systemto survey provider Regular assessment of clinical practice performance against all providers against guidelines, review standards established standards completed hospital and against progress guidelines, and proceed Set up and implement under adopted quality to adoption of revision systemto assist hospital improvement plans providers with development of quality Revise and update improvement plans to hospital treatment move towards meeting guidelines standards within agreed timeframe Determineroles and Designand establish Continue practice of responsibilities of IPH systemto monitor and regular performance health information and M O HPolicy and evaluate impact of reviews and PlanningUnit inthe area reforms at provider and performance of health information healthcare consumer monitoring collection and analysis level, based on baseline 132 Objectivesand Phase 1: Phase 2: Phase3: Programs One year preparatory Three to four years Three to five years phase followingcompletionof followingcompletion phase 1 of phase2 and regular follow-up Further Strengthen surveys and provider inalysis o f health activity and financial informationand reporting system surveillance capacity Institutesystem o f Further develop annual sector surveillance system performance review with :apacity at provider key stakeholders level Standardize reportingo f mortality and diseases to allow for tracking and time trend analysis Establish protocols and case definitions o f reportable mortality and morbidity information Train providers in reporting system and strengthen IPH investigative capacity Strengthen HIV/AIDS surveillance capacity Strengthen capacity Ensure appropriate Implement public health Continue for public health budgetary allocations to and health promotion implementation o f and health initiate implementation o f strategy, revise and public health and health promotion public health and health update as necessary promotion strategy, promotion strategy revise and update as necessary Enhance Clarify status and role o f Strengthen NCDC Regular review o f pharmaceutical NCDC and adopt relevant capacity to sample drugs pharmaceutical sector stewardship subsidiary legislation for quality checks and expenditure trends and and cost contract with an introduction o f containment Define and adopt international laboratory corrective measures as strategies transparent criteria for for sample analysis required selection o f commission members, standard Establish public Generalized operating procedures, information system to introduction o f decision making process, inform public about improved hospital and reporting outcomes o f quality drugs management requirements o f controls. system commissions for registration, Introduceexternal 133 I Objectivesand Phase 1: Phase 2: Phase3: Programs One year preparatory Three to four years Three to five years phase followingcompletionof followingcompletion Dhase 1 of Dhase 2 reimbursement and reference price system for licensing single source drugs Revise positive list o f Further revise wholesale drugs to be more and retail drugs margin restrictive and based on system, based on cost-effectiveness potential fiscal impact considerations, evaluation o f flat fee per instituterequirementthat prescription of dispensed any revision of positive drugor lower overall list must be accompanied margin without wholesale by fiscal impact and cost- and retail specifications effectiveness evaluation Adopt legislation making Introduce revised adoption o f EFPIA copayment system for all guidelines for marketing prescriptiondrugs, o f drugs a prerequisite for eliminating non-income licensing of targeted copayment manufacturers and exemptions importers Revise reimbursement Develop improved system to limit hospital drugs reimbursement to lowest management procedures cost alternative for an indication based reference group Enhance sectoral Strengthen the human Implementthe human human resource resource management resource strategy management information system at the MOHand use Implement salary informationfor resource reform that awards planning quality o f care and sets incentives to increase Establish inter-agency productivity HRworking group to address core health sector HR issues beyond scope o f MOH Define a human resource strategy for the health sector taking into account changes inprovider autonomy and synergies 134 Objectives and Phase 1: Phase 2: Phase 3: Programs One year preparatory Three to four years Three to five years phase following completion of following completion phase 1 of phase 2 from the private sector Definea strategyto reformthe current provider salary mechanismsby paying providers based on their performance 135 BIBILIOGRAPHY ACHO, Considering Health at the Local Level: Results of a Qualitative Stakeholder Assessment in Albania. Final Report to the Ministry o f Health, Tirana, 2003. British Columbia Ministry of Health Services, Report on Health Authority Performance Agreements 2002/03. Cercone James, et. al., Health System Innovations in Central America, Contracting Primary Health Care Services: The Case of CostaRica, mimeo, September 2004. Donaldson, et. al., Priority Settingwithin Regional Funding Envelopes: The Use of Program Budgeting andMarginalAnalysis, Canadian Health Care Research Foundation, 2001. Europe and the Americas Forum on Health Sector Reform, The Challenge of Health Reform: Reaching the Poor, San Jose, Costa Rica, May, 2000 European Observatory on Health Care Systems, Health Care Systems in Transition Series: Albania. Vol 4, N o 6.2002 Fairbanks, A. and G. Gaumer, Organization and Financing of Primary Health Care in Albania: Problems, Issues and Alternative Approaches, PHR+, Tirana, 2003 Falkingham J. and A., Gjonca, Fertility Transition in Communist Albania, Population Studies, Vol 55, No3 (NOV 2001), 309-3 18 Figueiras J. Robinson, R. Jakubowski E. (eds): Purchasing to Improve Health Systems Performance, European Observatory to Improve Health Systems and Policies, Oxford University Press, 2005 Gjonca Arjan, ExplainingRegional Differences in Mortality in the Balkans: A First Look at the Evidence fromAggregateData, Eurohealth, Vol. No3-43, 10-14 Gjonca Arjan and Martin Bobak, Albanian Paradox, Another Example of Protective Effect of Mediterranean Lifestyle? The Lancet, Vol350, December 20127, 1997. Government o f Albania, Long Strategy for the Development o f the Health Sector, Tirana, 2004 Harding, April, Private Participation in Health Services Handbook. The World Bank, Washington DC, 2001. Hotchkiss, D.P. Hutchinson, A. Malaj, and A. Benuti, Out-of-Pocket Payments and Utilization o f Health Care Services in Albania, Evidence from Three Districts, August, 2004 INSTAT Social Research Center, Youth and Transition: Issues confronting Albania's Key Resource, Tirana, November 2003. INSTAT, Causes o fDeath, Tirana, 2002 INSTAT, Causes o fDeath, Tirana, 2003 136 INSTAT, HealthIndicatorsfor Years 1994-1998, Tirana, 2001. International Medical Corps, Needs Assessment o f Health Systems Infrastructure, Tirana, 1999 IPH / INSTATKDC, Albania-2002 Reproductive Health Survey - Final Report (draft), with the support of USAID, UNFPA and UNICEF, 2005, IPH- InstitutiIShendetit Publik, Sjellet me reisk tek te rinjte e shkollave te mesme ne Shqiperi 2004, Tirana, March 2005. IPH- Instituti IShendetit Publik-Tirane: Epidemiological Studies on Infant Mortality in Albania: A Descriptive Study (2003) and A Case Control Study (2004). Kakarriqi Eduard, Epidemiological Background o f InfectiousDiseases in Albania (1996-2001) and Their Prevention and Control in the Context o f Natural Disasters and Infectious Diseases. Institute o f Public Health, Tirana 2002. Management Systems International, Report on Tri-Partite Survey: Civil Society Corruption Reduction Project in Albania, Washington, DC, May 2004 McKee M. and J. Healy (eds.), Hospitals in a Changing Europe, European Observatory on Health Care Systems, Open University Press, Buckingham, 2002 Metis Advisory Group, Hospital Sector Management Report, Ministryo f Health, August 2004 Metis Advisory Group: Hospital Sector Management, Tirana University Medical Center "Mother Theresa," Final Report to the Ministryo fHealth, September, 2004. MinistryofHealth, National HealthAccounts, December 2004. Ministry of Health, Department of Statistics and Information Technology; Health Indicators for Years 1993-2003. Ministryo f Health and Institute of Public Health, Albania Public Health and Health Promotion Strategy, 2003 Ministry of Health and Institute o f Public Health, Financial Sustainability Plan for the National Immunization Program, 2004 Mossialos, E., M. Mrazek and T. Walley (Eds.) "Regulating pharmaceuticals in Europe: Striving for Efficiency, Equity and Quality". Maidenhead, Birkshire: Open University Press. 2004. Population Reference Bureau: Reproductive HealthTrends in Eastern Europe and Eurasia. Population Reference Bureau: Albania Country Profile for Population and Reproductive Health: Policy Developments and Indicators 2003. OECD, HealthCare Systems - Lessons from the Reform Experience, OECD Health Working Paper 3, 2003 OECD HealthData, 2004 (http://www.oecd.org) 137 PHR Plus, Primary Health Care Reform In Albania, Baseline Survey of Primary Health Care Utilization, Expenditures and Quality, February 2004. Tirana Regional Health Authority, Tirana Regional Health Plan, 2003, Tomes, Igor, Technical Assistance for Drafting Health Financing Legislation In The Republic of Albania, Report 2: Proposalsto EnhanceHealth-Financing Legislation, Ministry of Health, Tirana, Albania, 2004. UNFPA-WHO, Safe Motherhood Needs Assessment inAlbania, Tirana, 1999. UNICEF- Albania, Multiple Cluster Survey Report Albania, December 2000: UNICEF-Albania, Assessment of Social & Economic Conditions of Districts inAlbania, December 2000. UNICEF, ICMHReport- Albania KABP Survey, 2002. UNICEF, HealthReform, Community Participation, and Social Inclusion: The Shared Administration Program, Lima, Peru, August, 1998. USAIDAlbania, Pro Shendetit, HealthCare FinancingandReform inAlbania, A Situation Analysis, March 2005 World Bank, Albania Poverty Assessment. Report No 26213-AL, Washington DC, 2003 World Bank, HIV/AIDS in the Western Balkans: Priorities for Early Prevention in a High-Risk Environment, 2005. World Bank, Transport InfrastructureRegional Study (TIRS), 2002,. http://ecaweb.worldbank.org World Bank, Making Services Work for Poor People, World Development Report 2005, Washington DC, 2005. World Health Organization, Organizational Audit onthe Contractual Relationships betweenthe Hospital of Durres and the Health Insurance Institute (HII) of Albania, Tirana, March 2005, World Health Organization, Report of the WHO Expert Committee on National Drug Policies. Geneva, 1995 World Health Organization: Statistics from the Health For All-HFA database. www.euro.who.int World Health Organization, Assessment of National Capacity for Non communicable Disease Prevention and Control: The Report of a Global Survey, Geneva, 2001 138