F F

ASIAN DEVELOPMENT BANK RRP:TAJ 33036

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

BOARD OF DIRECTORS

ON A

PROPOSED LOAN

AND TECHNICAL ASSISTANCE GRANTS

TO THE

REPUBLIC OF TAJIKISTAN

FOR THE

HEALTH SECTOR REFORM PROJECT

November 2003

CURRENCY EQUIVALENTS (as of 15 November 2003)

Currency Unit – somoni (TJS)

TJS1.00 = $0.3274 $1.00 = TJS3.0544

ABBREVIATIONS

ADB – Asian Development Bank CAR – Central Asian republic CG – consultative group ECHO – European Commission Humanitarian Office EMP – environment management plan ESRP – Education Sector Reform Project FGP – family group practice GBAR – Gorno-Badakhshan Autonomous Region GDP – gross domestic product HIV/AIDS – human-immuno deficiency virus/acquired immuno deficiency syndrome HMIS – health management information system HSRP – Health Sector Reform Project ICB – international competitive bidding IEC – information education and communication IMR – infant mortality rate LCB – local competitive bidding MEP – Ministry of Environmental Protection MDG – Millennium Development Goal MMR – maternal mortality rate MOE – Ministry of Education MOF – Ministry of Finance MOH – Ministry of Health NGO – nongovernment organization NPV – net present value PAU – Project Administration Unit PCU – Project Coordination Unit PHC – primary health care PIU – project implementation unit PSF – Pharmaciens sans Frontières (Pharmacists Without Borders) PPMES – project performance monitoring and evaluation system RRS – Region of Republican Subordination SDR – special drawing rights SES – sanitary epidemiological services SIEE – summary of initial environment examination SSRP – Social Sector Rehabilitation Project SOE – statement of expenditure UNFPA – United Nations Population Fund UNICEF – United Nations Children’s Fund USAID – United States Agency for International Development TA – technical assistance WHO – World Health Organization

NOTES

(i) The fiscal year (FY) of the Government ends on 31 December. (ii) In this report, “$” refers to US dollars.

This report was prepared by a team consisting of T. Yasukawa (Team Leader), R. Clendon, K. Motomura, B. Panth, and S. Popov.

CONTENTS

Page

LOAN AND PROJECT SUMMARY iii

MAP ix

I. THE PROPOSAL 1

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1 A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 3

III. THE PROPOSED PROJECT 5 A. Objectives 5 B. Components and Outputs 6 C. Special Features 10 D. Cost Estimates 11 E. Financing Plan 11 F. Implementation Arrangements 12

IV. TECHNICAL ASSISTANCE 14

V. PROJECT BENEFITS, IMPACTS, AND RISKS 15 A. Project Benefits 15 B. Project Risks 15 C. Environment 16 D. Social Analysis 17 E. Economic and Financial Analysis 18

VI. ASSURANCES 19

VII. RECOMMENDATION 20

APPENDIXES 1. Health Sector Analysis 21 2. External Assistance to the Health Sector in Tajikistan 25 3. Project Framework 26 4. Project Conceptual Framework 30 5. Profile of Project Districts 31 6. Family Group Practices 32 7. Cost Estimates and Financing Plan 36 8. Potential Cofinancing 37 9. Implementation Arrangements 38 10. Implementation Schedule 39 11. Indicative Contract Packages 40 12. Outline Terms of Reference for Consulting Services 41 13. Indicators for Project Performance and Monitoring and Evaluation System 44 14 Technical Assistance for Planning and Policy Dialogue for Health Reform 45 15. Technical Assistance for Drug Procurement and Distribution Strategy 48 16. Summary of Initial Environmental Examination 51

17. Summary Poverty Reduction and Social Strategy Form 55 18. Economic and Financial Analysis 57 SUPPLEMENTARY APPENDIXES (available on request) A. Public Health Expenditure Review B. Pharmaceutical Sector Review C. A pro-poor health package-content and delivery strategies D. Indicative list of Procurement E. Consultant Service Based on Quality-and Cost-Based Selection F. Indicative Training Programs G. Draft Contract with Pharmaciens sans Frontières H. Full Summary of Initial Environment Examination

LOAN AND PROJECT SUMMARY Borrower Republic of Tajikistan Classification Poverty: Core poverty intervention

Thematic: Human development, gender and development Environment Assessment

Category B: An Initial environmental examination was undertaken and the summary is a core appendix.

Project Description The Project will help improve people’s health, especially the

health of the poor, women, and children by providing a pro-poor health service package, and by reforming the health service delivery and financing mechanisms.

Rationale Following independence in 1991, Tajikistan began to build a society based on a market economy. The cessation of economic transfers to Tajikistan from the former Soviet Union, the transition process, a civil war, and the subsequent political instability that started in 1992 and continued until 1997 have resulted in a prolonged economic depression. The aftermath of the civil war and economic depression have put more than 83% of the Tajik population below the poverty line. The Asian Development Bank (ADB) responded to the postconflict situation in 1999 through the Social Sector Rehabilitation Project (SSRP) that provided basic rehabilitation assistance to the education, health, and social protection sectors. The major focus in the health sector was to rehabilitate health facilities, provide supplies such as drugs and equipment, and train doctors and nurses to address immediate needs. With security and political stability restored, humanitarian agencies that have supported health service delivery and drug supply in the postconflict period are about to exit. Currently more than 30% of health expenditure is financed by humanitarian agencies. A comprehensive social sector study by ADB identified the following as major concerns in the health sector: (i) high burden of diseases and precarious health status of the population; (ii) shrunken public health expenditures and inefficient use of resources; (iii) collapsed public health care system; (iv) increased out-of–pocket payment by beneficiaries; (v) reduced access to and use of health services, particularly by the poor; (vi) weakened and unreliable health information system; and (vii) limited managerial, technical, administrative, and financial capacity at all levels of the health sector. The study highlighted the urgent need to replace the drug supply system introduced and managed by humanitarian agencies with a well-managed, sustainable procurement and distribution system before their exit. The health sector reform project (HSRP) is designed to respond to the findings of this study.

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At the recent consultative group meeting in May 2003, substantial grant assistance was pledged, but is not yet visible. Even when grant funds are forthcoming, it will be necessary to ensure that they are used efficiently to address key system deficiencies. HSRP provides an investment framework and a vehicle for dialogue on policy and priorities and hence provides a useful basis for actions by Government and by aid agencies.

Objectives and Scope The goal of the HSRP is to improve people’s health, in particular the poor, women, and children in Tajikistan. The HSRP has three objectives: (i) improve the management capacity of the health sector and system efficiency through institutional strengthening and reforms; (ii) increase equitable access to and use of quality basic health services by the poor, women, and children; and (iii) support informed policy dialogue to pursue reform.

The HSRP has three components: (i) institutional development for the health sector, (ii) drug supply and quality control, and (iii) efficient and sustainable delivery of a pro-poor health service package. The HSRP will have national and pilot district components. Health service improvement will be implemented in five rural districts selected for severity of poverty and level of infant and maternal mortality. The HSRP will focus investment in areas that will have the greatest impact on the poor and vulnerable.

Cost Estimates The total project cost is $9.375 million equivalent, of which $5.340

million is foreign exchange and $4.035 million equivalent is local currency.

Financing Plan ($ million)

Source

Foreign Exchange

Local Currency

Total Cost

%

Asian Development Bank

5.340 2.160 7.500 80

Government – 1.875 1.875 20 Total 5.340 4.035 9.375 100

Source: Asian Development Bank estimates.

In view of Tajikistan’s debt position and as requested by the Government, ADB is trying to mobilize cofinancing in the form of grants from other sources to substitute for the loan particularly for the “soft” components like training and consulting services. Once grants are firmly committed, corresponding savings under the loan may be reallocated or cancelled as appropriate.

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Loan Amount and Terms The proposed ADB loan is for SDR5.238 million ($7.5 million equivalent) from its Asian Development Fund. The balance of $1.875 million equivalent will be provided by the Government. The ADB loan will have a maturity of 32 years, including a grace period of 8 years. Interest will be charged at 1% per annum during the grace period and 1.5% thereafter. The ADB loan will include financing of the interest charge. The Borrower will be the Republic of Tajikistan.

Period of Utilization Until 30 June 2009 Estimated Project Completion Date

31 December 2008

Implementation Arrangements

The President’s Office will be the Executing Agency with a deputy prime minister as project coordinator. A project implementation unit (PIU) will be established within the Ministry of Health (MOH). A Project Administration Unit (PAU) will be established under the PIU. The PAU will be shared with the parallel Education Sector Reform Project and will function as a secretariat providing administrative support to both projects. In each HSRP district, a district PIU will be established. The PIU will make technical decisions on the projects. A national steering committee and district supervisory groups will be established to provide policy guidance and coordination.

Executing Agency The President’s Office Procurement ADB-financed goods, related services, and civil works will be

procured in accordance with ADB’s Guidelines for Procurement. Equipment and supplies will be procured by international competitive bidding for contracts in excess of $500,000, international shopping for contracts in excess of $100,000, and direct purchase for contracts less than $100,000. Civil works valued at $1 million or less will be carried out under local competitive bidding.

Consulting Services Consultants to supply 164 person-months of services (48 international and 106 domestic) will be recruited following ADB’s Guidelines on the Use of Consultants and other procedures acceptable to ADB for engaging international and domestic consultants. International consulting firms or individuals will be engaged to provide these consulting services.

Project Benefits and Beneficiaries

The HSRP will benefit the whole population indirectly through nationwide components. Across MOH, capacity will be built to effectively plan, finance, and manage the health sector. Reforms in health services delivery and financing aim to create a more responsive, sustainable, and equitable system.

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The HSRP will improve people’s health, especially women, children, and the poor, in five of the poorest districts. Approximately 5.5% of the population of 6.3 million will be covered. The targeted districts have high infant and maternal mortality rates. The HSRP will focus on the health care levels most used by the poor and will pilot-test the primary health care (PHC) system based on family group practices (FGPs). PHC is an internationally proven cost-effective method to respond to the needs of the poor, women, and children. The FGP system can serve the poor and vulnerable better than will other types of services, including hospitals. Based on lessons learned from pilot testing, the PHC system will be expanded nationwide, thus disseminating the benefits gained through the HSRP. To induce synergy effects, the HSRP will work in the same districts with the Education Sector Reform Project. The HSRP is classified as a core poverty intervention with a human development focus and gender and development.

Risks and Safeguards Successful implementation of the reform-oriented project will

depend largely on the capacity of MOH. The HSRP will strengthen MOH’s capacity to analyze situations, and elaborate and implement reform strategies and action plans. The HMIS will be set up to plan, monitor, and evaluate reforms. A significant risk is the limited capacity of MOH staff to implement the work promptly and efficiently. Close monitoring and oversight by experienced staff and committed government officials are key to smooth project implementation. This risk will be managed through the continued involvement of a deputy prime minister in the President’s Office, an effective implementation structure built on the successful framework developed by the SSRP, provision of capacity-building support, and engagement of experienced domestic and international consultants. The changes being introduced in health services delivery require a change in the attitude of staff and clients and a change in managing resources for optimal use. The HSRP will invest in a public information campaign to elicit public perceptions on a responsive health system, and will strengthen management.

Technical Assistance

The TA financed on a grant basis by the Japan Special Fund in the amount of $300,000 will be provided initially to support building management information systems for informed policy dialogue, decision making, and monitoring. The technical assistance (TA) will serve as a central policy tool to improve MOH’s planning and budgeting and support reform in the health sector. The objectives are to (i) develop the health management information system (HMIS) framework and action plans at the MOH, region, and district levels; (ii) provide a basis for planning,

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monitoring, and measuring system performance and progress of reforms; and (iii) provide a mechanism to support monitoring and policy dialogue between the Government and aid agencies.

A second grant of $150,000 financed on a grant basis by the Japan Special Fund will develop a long-term national drug procurement and distribution strategy. The TA objectives are to (i) support policy dialogue and develop a clear strategy and framework for establishing a drug procurement and distribution system; (ii) prepare a rational plan for warehousing, equipment distribution, and staffing; and (iii) provide operational guidelines on the whole procurement and distribution process.

I. THE PROPOSAL 1. I submit for your approval the following report and recommendation on a proposed loan to the Republic of Tajikistan for the Health Sector Reform Project. The report also describes two proposed technical assistance (TA) grants: (i) Planning and Policy Dialogue for Health Reform, and (ii) Developing the Drug Procurement and Distribution Strategy, and if the Board approves the proposed loan, I, acting under the authority delegated to me by the Board, will approve the TAs.

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES A. Performance Indicators and Analysis 2. Cessation of economic transfers to Tajikistan from the former Soviet Union following independence in 1991 and the release of ethnic pressures contributed to the outbreak of civil war in mid-1992. Macroeconomic conditions worsened until the 1997 cease-fire agreement. Since then the economy has shown signs of recovery, but the gross domestic product (GDP) in 2001 was only 43% of that of 1991. Benefits from improvement in GDP growth have not reached the household level. GDP per capita in 2001 was $162. Annual inflation rate, although much reduced compared with the level in the early 1990s, is still high, while real wages decreased to 25% of 1991 levels in 1999.1 The aftermath of the civil war together with economic depression has put more than 83% of the Tajik population below the poverty line. 3. The Government places a high priority on poverty reduction. External agencies supported the development of the national poverty reduction strategy adopted in 2002 that sets out efficient and fair provision of basic social services as one of the key approaches. The poverty partnership agreement between the Asian Development Bank (ADB) and the Government stipulates that ADB and the Government will promote efficient and effective social services delivery to the poor and rationalize social sector expenditures to ensure equitable access. The Government has adopted the Millennium Development Goals (MDGs) for 2015 as the key targets in poverty reduction (Table 1).

Table 1: Tajikistan Millennium Development Goals (MDGs)

Area Goal

Indicator

1990

Latest year a

2015 (target)

Poverty Reduce poverty by 50% by 2015 % of population – 82.6 58 Child Health Reduce infant mortality rate by two thirds

from 1990 to 2015

Deaths per 1,000 live births

40.4 36.7 25

Maternal Health

Reduce maternal mortality ratio by three quarters from 1990 to 2015

Deaths per 100,000 live births

– 43.1 35

Reproductive Health

Increase access to contraceptives % of female population aged 15-45

– 21.8

30

Adult Health

Halt and reverse incidence of tuberculosis and other major infectious diseases by 2015

Incidence per 100,000 population

– 33.5 22

(— = no data available.) a Official figures. Reliability of health data is discussed in para. 10 of text. Source: Poverty reduction strategy, Republic of Tajikistan, 2002 (based on Government data).

1 2000. Tajikistan’s Household Livelihood Security Assessment Study, Background Report to CARE. Dushanbe.

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4. Tajikistan has a rapidly growing population with a young population structure. The population in 2000 was about 6.3 million with 49.5% under 17 years old. This implies that health services must be planned to accommodate the needs of this young population. The fertility rate declined from 5.0 in 1990 to 3.7 in 2000. But it is still the highest among the Central Asian republics (CARs) and risks doubling the population every 20 years. 5. The reduction in the GDP and the parallel reduction of the proportion of GDP spent on health have resulted in a very large decline in per capita spending on health. Public health expenditure as a percentage of GDP was only 0.9% in 2002 from 4.8% in 1990. This is the lowest among CARs and much lower than the 5% target figure for developing countries advocated by the World Health Organization (WHO). In 2001 per capita public health expenditure was only $1.60 equivalent, about 1.5% of that in 1990. 6. During the Soviet era, the health system in Tajikistan was characterized by widespread access to health services, but the services were costly and very inefficient (overstaffing and excess accommodation, hospital-based services biased toward curative rather than preventive care). It provided low-quality care and was based on outdated treatment protocols. The considerable reduction in financial resources and enormous demographic pressure have resulted in: (i) lower quality of health services, (ii) collapse of the already inefficient public health system, and (iii) increased prevalence of informal out-of-pocket payments for officially free services. Together with prevailing poverty at household level, the reduction resulted in decreased service use and deteriorating health status of the population. The sector analysis is in Appendix 1. 7. Since 1991, the Ministry of Health (MOH) has adopted major changes in national health policy directions. Particularly in 1998-2000, MOH developed a health sector reform plan supported by WHO and the European Commission Humanitarian Office (ECHO). In adjusting to the socioeconomic, demographic, and epidemiological situation, the reform emphasizes primary health care (PHC) system based on a family group practice (FGP) 2 as the strategy for delivering health services. The strategy responds to client needs (particularly to the poor, women, and children), and provides cost-effective, good-quality care that is equitable with sustainable access. 8. International assistance to Tajikistan in the postconflict period has concentrated on humanitarian assistance. Humanitarian nongovernment organizations (NGOs) have been active in providing health services to the population affected by conflict and poverty. A shift in international assistance is now occurring from emergency relief and short-term rehabilitation to development. As long-term stability has been secured, the nature of the required work has begun to shift. Development agencies started to work in the health sector in the late 1990s, when NGOs and emergency-oriented agencies were beginning to withdraw. In 1998 the World Bank approved the Primary Health Care Project that focused on strengthening PHC in two districts. The ADB-funded Social Sector Rehabilitation Project (SSRP) approved in 1999 focused on rehabilitating and re-equipping schools and health facilities. ADB and the World Bank collaborate closely through information exchange to avoid duplication and consolidate efforts on the health sector.

2 A FGP is a team of doctors and nurses who work as a private enti ty under contract with the local government and

provide holistic family health services.

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9. International assistance in the health sector has accounted for at least one third of the total health expenditures for 1992–1997. In 2001 total health expenditures amounted to $39 million equivalent or $6.30 equivalent per capita financed by users (31%), the Government (26%), development banks (7%), and humanitarian and United Nations agencies (36%). Appendix 2 summarizes external assistance to the health sector. Timely support from development agencies is important to ensure that the exit of humanitarian agencies will not create a vacuum and that health sector development and reforms stay on track. B. Analysis of Key Problems and Opportunities 10. Unreliable Health Data and a Double Burden of Diseases. Life expectancy and mortality trends in Tajikistan have improved steadily according to official figures. However, other information suggests a more precarious health situation. Using other information sources, mortality rates, particularly the infant mortality rate (IMR), appear to have stagnated over the decade. The officially reported IMR, a key MDG, was 36.7 per 1,000 live births for 2000, but the United Nations Children’s Fund (UNICEF) estimated it as 82.4. Health data is unreliable due to substantial underreporting attributable to the breakdown of the data collection system during the war and the introduction of registration fees that discourage poor families from recording births and deaths. A 1998 United Nations Population Fund (UNFPA) survey revealed that over 80% of births and infant deaths were not registered. Continued use of the Soviet definition of live births3 is another reason for underreporting, despite the official adoption of the WHO definition. In addition, a death is recorded where it occurs, for example, in urban hospitals, instead of the place of residence. This practice distorts data and results in incomplete statistical data for rural areas. 11. Cardiovascular diseases (33%) are the biggest cause of death in Tajikistan, followed by respiratory diseases (17%), accidents (10%), and infectious and parasitic diseases (9%). Over the decade, infectious and respiratory diseases and those related to poverty are reemerging and increasing. They include malnutrition, tuberculosis, typhoid, and diarrhea. Malnutrition is prevalent in many parts of the country. For example, as many as 39% of children in Khatlon, one of the regions affected by the civil war, suffer from chronic malnutrition. Another 7% suffer from acute malnutrition. Major causes of infant mortality are respiratory, diarrheal diseases, and perinatal conditions. Causes of maternal mortality are hemorrhages, eclampsia, and infection, most of which are preventable. Anemia, from which 60% of women of reproductive age suffer, is a strong factor contributing to maternal complications. Tajikistan thus suffers from a double burden of communicable and noncommunicable diseases. 12. Limited and Reduced Access to, Quality of, and Use of PHC. PHC in Tajikistan is provided by feldshers (community nurses), midwives, and doctors at medical houses, polyclinics, rural health centers, and rural hospitals. Patients are referred to central district hospitals. The PHC network is extensive, but is not functioning effectively. Despite the high percentage of anemia among reproductive women, officially recorded maternal complications are less than 10% of the total recorded pregnancies. This is substantially less than in other CARs, suggesting that the antenatal care system in Tajikistan fails to identify and respond to needy people. Another issue requiring attention is the increasing proportion of home deliveries and births without skilled health personnel in attendance. According to UNICEF, these births were less than 10% in 1990, but increased to 45% in 2000. The rising proportion of home deliveries

3 The Soviet definition of live births does not include premature and low-birth weight babies who do not survive

during the first week. This lowers the infant mortality rate estimate.

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suggests the breakdown of the local health care system and the financial inability of families to pay for medical care. 13. PHC facilities are in poor condition, with equipment, pharmaceuticals, and reference material largely absent if not supplied through humanitarian aid. Although most of the PHC budget is allocated to salaries, salaries are well below the level necessary for survival and demoralize health staff. Unofficial fees are now widely charged. Fixed salaries provide no financial incentive for health staff to serve those unable to pay. The knowledge and skills of health staff at all levels of the heath system are often outdated and limited. Many remote health centers are seriously understaffed. These factors limit access to PHC. A lack of awareness of PHC among the population also reduces the demand for it. Many people still believe that the hospital-based health care system developed before independence remains the best and that the former health system must be rebuilt. 14. The cost of health services, including pharmaceuticals and out-of-pocket costs, is a key access issue, particularly for the poor even at the PHC level. Even where user fees have been established, the official cost of health services can be unaffordable. Fear of unpredictable demands for additional unofficial fees also deter the poor from using government health services. ADB’s poverty assessment indicates that the poor seek health care less than richer groups do because of the difficulty of paying for it and resort to self-medication. To set up a fully functional and pro-poor PHC system, a comprehensive approach covering the following is required: material and facility support, staff training, removal of barriers to access to health services among the poor, and changing perceptions of health services among the population. Effective community participation will ensure that the community is aware of services, understands the problems of delivery, and thereby contributes to strengthening the quality and responsiveness of the services. Better services will in turn increase use, permit regularizing informal out-of-pocket payments, and contribute to the full integration of the health sector in the community. 15. The health reform concept adopted in 2000 proposes to base PHC on the FGP system. Development agencies, including ADB, the World Bank, and ZdravPlus program supported by the United States Agency for International Development (USAID), have been retraining specialists. So far 240 family doctors and 188 family nurses have been trained. However, no legal framework has been set up for the FGP system, and hence trained staff continue to see patients who fall within their original clinical specialty in unchanged working conditions. For family doctors and nurses to effectively serve the population, particularly the poor, they need a new working environment that involves a change in provider payment, introduction of performance-based contracts, and registration of the population with FGPs. 16. Limited Institutional Capacity of the Health Sector. MOH has limited institutional capacity to effectively plan, manage, finance, and monitor the public health sector. The health management information system (HMIS) should provide a basis for planning and monitoring. But the current HMIS is inadequate. Health care is inadequately funded and resources are not well managed, resulting in failure to base resource allocation on needs and evidence. Health budget allocations do not reflect MOH’s policy on PHC, but continue to be based on traditional norms, such as hospital beds and staff numbers, so that the majority of the budget goes to hospitals. PHC’s share of the total health budget is extremely small, and even decreased from 7.3% in 2000 to 6.0% in 2002.4

4 The Health expenditure review is in Supplementary Appendix A.

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17. The human resource policy and planning capacity of the health sector are not well developed. Analysis suggests lack of consistency in available staffing data; overstaffing at national and provincial levels and understaffing at district and health centers; significant gaps in key staff categories; inappropriate deployment of specialty staff; poorly defined roles and functions of staff; and weak human resource management. The cost-effective use of human resources and efficient use of the budget are key in a resource-constrained context such as in Tajikistan. Capacity building is required at all levels of the health sector. 18. Lessons Learned. The Government and its development partners have learned many lessons in recent years. ADB fully considered the experience of World Bank pilot activities and the ADB SSRP in project design. 5 The most important lesson is that capacity building and implementation of expanded capacity is a long-term process that involves training and on-the-job support. Staff will perform to a high standard when appropriate salary and performance-related incentives are provided and when effective management and operating resources are present. Effective human resource management at the district and facility levels requires sufficient delegation of authority and responsibility. Appropriate training is also required with ongoing supervision. Functional analysis is needed to identify staffing needs and support planning and management for an effective workforce. 19. The SSRP demonstrates that experienced project staff familiar with ADB guidelines and committed government officials are key to smooth project implementation. To compensate for the lack of experience of line ministries in administering ADB projects and to ensure cost-effectiveness, the Health Sector Reform Project (HSRP) and the parallel Education Sector Reform Project (ESRP) will share the same project administration structure based on the SSRP implementation framework that has proved successful. The deputy prime minister will continue as project director, capacity building will be supported, and experienced domestic and international consultants will be recruited.

III. THE PROPOSED PROJECT A. Objectives 20. The HSRP will improve people’s health, especially of women, children, and the poor in Tajikistan, and lay a foundation for longer-term development. The HSRP will help Tajikistan achieve the MDG by reducing by 30% IMR, under-5 mortality rate, and maternal mortality rate (MMR) in pilot districts. Specifically, the HSRP aims to

(i) improve the management capacity of the health sector and system efficiency through institutional strengthening and reforms;

(ii) increase equitable access to and use of basic health services by the poor, women,

and children; and (iii) support informed policy dialogue to pursue health sector reform.

5 Experience in the ADB-funded Mongolia Health Sector Development Program, that achieved considerable success

in introducing FGPs has also been considered.

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B. Components and Outputs 21. The HSRP has three components: (i) institutional development for the health sector, (ii) drug supply and quality control, and (iii) efficient and sustainable delivery of a pro-poor health service package. The project framework is in Appendix 3. The project conceptual framework (Appendix 4), illustrates that all subcomponents are interlinked to support the efficient delivery of the pro-poor health service package. 22. The HSRP will have national and pilot district components. Health service improvement will be implemented in five rural districts (Roshkala in Gorno-Badakhshan Autonomous Region [GBAR], Ayni and Gornaya Matcha in Sughd region, Garm in Region of Republican Subordination [RRS], and Kulyab in Khatlon region) selected for their level and severity of poverty and the level of infant and maternal mortality (Map, page viii). Synergistic effects of parallel implementation of the HSRP and the ESRP in the same districts will be particularly beneficial to community mobilization and child health and early education. The profile of the project districts is in Appendix 5. The HSRP will invest in areas that will have the greatest impact on the poor, women, and children.

1. Institutional Development

23. In the emergency and postconflict situations, health sector staff have so far received limited capacity-building support. The HSRP will build the capacity to plan, manage, and monitor at the national, region, and district levels. The HSRP will strengthen MOH and training institutes, such as the medical university, to enable them to train staff so that the health sector can effectively plan, manage, and monitor services delivery, financing, and staffing. Gender balance will be ensured in training. Enhanced efficiency is one of the benefits of capacity building. The HSRP will reform the health services delivery system to improve system efficiency. The initial focus in reform is to develop the FGP-based PHC system. Appendix 6 describes a plan for introducing FGPs in Tajikistan. The HSRP will help MOH and the medical university to analyze workforce situations and prepare a workforce development plan. An effective HMIS will be developed to support planning and monitoring.

a. Capacity Building for Planning and Management

24. The HSRP will finance overseas training of key staff of MOH and the medical university. Staff of MOH, regions, and pilot districts will receive in-country training in health sector planning and management. The HSRP will enhance the ability of MOH, Ministry of Labor and Social Protection, and the medical university to analyze workforce situations and to develop a human resource policy and a workforce plan. The medical university must better understand health staff needs and required qualifications under the reformed health system. MOH and the medical university will need to better coordinate student intake, distribution of graduates, staff numbers, profiles and distribution, job descriptions, and training needs. The plan will provide a basis for rationalizing staff for pilot districts. However, lack of reliable data on the existing workforce seriously impairs effective human resource planning. Therefore, HMIS development and district surveys on staffing will proceed. The licensing system for medical staff will be improved and the accreditation system will be developed and implemented. The HSRP will strengthen continuing education programs that have been provided by humanitarian agencies but are not standardized and coordinated. The HSRP will develop a facility rationalization plan based on the health reform concept. The HSRP will strengthen the capacity of MOH and pilot districts to plan and supervise a public information campaign in close cooperation with UNICEF. Public

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campaigns will be a strong tool in changing people’s perception and behavior toward health and health services. 25. Using the framework developed under the associated TA (paras. 55-56), the HSRP will implement HMIS and train staff nationwide to collect, analyze, and use data. The HSRP will computerize HMIS at MOH and at strategic planning levels. An intersectoral and aid agency forum will be set up to supervise HMIS and help plan, implement, and monitor the reform. HMIS reports will be published annually in Russian and in English. Surveys in the five HSRP pilot districts will supplement and strengthen the reliability of HMIS data at the national level.

b. Developing a Family Group Practice Framework 26. The HSRP will help MOH establish legislative, financial, and operational frameworks for the FGP system. This includes setting up the accreditation scheme of FGPs, developing a framework and guidelines for FGP mapping and population registration, and designing performance-based contracts and capitation payment mechanisms for proper incentives. A monitoring system will be prepared to measure the impacts. The HSRP, together with other sources, will train the staff of MOH, Ministry of Finance (MOF), regions, and pilot districts in the FGP system and help them finalize its framework. The FGP framework will be tested in pilot districts.

2. Drug Supply and Quality Control 27. Eleven NGOs have been providing emergency drugs effectively through a supply system set up, coordinated, and maintained by the Pharmaciens Sans Frontières (PSF).6 The public supply system collapsed after independence and has not been able to distribute any drugs for the last 6 years. The Government intends to incorporate the humanitarian system in the national system, but lacks capacity for it. Another issue is uncontrolled poor-quality drugs. The Government is unable to control the quality of drugs that come into the country from a wide range of sources. Fake, counterfeit, and low-quality drugs have contributed to the prescription of multiple drugs. The result is increased drug expense, developing drug resistance, and distrust of the health sector among the population.

a. Establishing of an Efficient Drug Procurement Center 28. The subcomponent will strengthen the capacity of the national procurement and distribution system. A new drug procurement center will be established with the assistance of PSF. The HSRP will directly contract PSF to exploit its expertise in building public capacity and transferring responsibility for running the humanitarian supply system. Public capacity regarding drug supply management will be strengthened in (i) the procurement process: drug selection, tender management; (ii) distribution and management: need assessment, stock management, distribution; (iii) storage: warehouse management, working protocols; (iv) software for implementing stock management; (v) training and retraining of health workers in pilot districts in stock management; and (vii) rational planning for warehousing, equipment distribution, and staffing.

6 A summary of the pharmaceutical sector review is in Supplementary Appendix B.

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b. Developing a Drug Quality Control Mechanism 29. Medicines must meet international quality requirements. The HSRP will strengthen the drug quality control center, which is part of MOH, by (i) assessing the current capacity of the center and establishing a time-bound improvement plan; (ii) providing a regulatory framework and guidelines for drug quality control; (iii) providing a laboratory for drug quality monitoring with equipment, reagents, and reference literature; and (iv) guaranteeing sustainability through a cost recovery mechanism for quality control services and capacity building for human resources. The drug quality control center will receive resources to improve the existing equipment and reagents for drug analysis. An international consultant will conduct training on up-to-date methods of drug quality analysis. Waste and reagent management will be addressed.

3. Efficient and Sustainable Delivery of a Pro-Poor Health Service Package 30. This component will focus on enhancing the quality and increasing access to, and use of basic health services especially among the poor, women, and children in the five HSRP districts. The HSRP will finance and deliver the pro-poor service package reflecting MOH’s reform plan. The HSRP will train staff, provide equipment, and rehabilitate health facilities for the package to be effectively used. Simultaneously, the HSRP will reform the service delivery and financing mechanisms. Although family doctors and nurses have been trained, the FGP system where they can work has not yet been set up. The HSRP will introduce, finance, and test the FGP- based PHC system as developed at the national level. FGP’s contractual arrangements and capitation rates will entail incentives for pro-poor and efficient service delivery. The quality control of FGP services and ongoing performance and impact assessment of the reformed system will be ensured. The plan to rationalize excess hospital beds will be implemented in HSRP districts. Rationalization will bring savings that will be reallocated to the FGP system and PHC to increase the financial sustainability of the reformed system. The pro-poor package and the reformed system nationwide will be extended once the pilot activities prove successful. 31. For the first 2 years, the HSRP will focus on capacity building and development of the system framework at the national, regional, and pilot district levels. Capacity building before implementing reforms is important. Health departments will be created in HSRP districts to take full-time responsibility for health sector planning, management, and reforms. Currently the chief doctor of the district hospital manages district health programs under the supervision of the regional health department. District health departments will have the following functions in addition to implementing and administering regular district health programs: (i) monitor workforce distribution, FGP system implementation, capitation payments, performance-based contracts, facility functions, caseloads in individual facilities, and use of pharmaceuticals; (ii) oversee of rehabilitation and distribution of equipment; (iii) coordinate and manage public information campaigns; and (iv) act as a conduit for community input into PHC management. 32. Feasibility studies of the FGP system and pro-poor package delivery will ensure effectiveness and sustainability. A critical mass of FGPs must be created in the HSRP pilot districts.7 Actual delivery of the pro-poor health package though the FGP system will start in the third year. The information campaigns will coincide with FGP system introduction.

7 Currently only seven family doctors are working in the five pilot districts.

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a. Providing of a Pro-Poor Health Service Package 33. The HSRP will provide a standard pro-poor health package, including basic drugs and contraceptives, to FGPs and rural health centers in the pilot districts. The package will be free for patients. The package is part of the guaranteed health package proposed by MOH, but is more focused for service cost-effectiveness. The package covers basic neonatal care, breast-feeding, growth monitoring, nutrition, integrated management of child illness, acute respiratory diseases, diarrhea, typhoid, school health, worms, contraceptives, safe motherhood (antenatal, delivery, and postnatal care), sexually transmitted infections, brucellosis, and hypertension.8 A life-cycle approach will be considered in targeting services. Immunization and tuberculosis control are important contents of the package, and are financed in parallel by UNICEF and USAID. The HSRP will complement immunization and tuberculosis control by providing relevant equipment and training and raising awareness through public information campaigns. 34. Staff of FGPs, rural health centers, and district hospitals will be trained to deliver the services in the standard pro-poor package. Roles of health staff will be defined in line with pro-poor interventions and delivery strategies. Roles of community nurses in providing communication and information services for the population will be emphasized to increase the demand for health services and improve family health practices. An international consultant will set up quality control measures for FGP services covering classroom training, on-the-job training, and impact monitoring. The district health department will monitor training impacts. The HSRP will also train pharmacists in five HSRP districts on Tajikistan’s essential drug list, treatment guidelines, clinical pharmacy and evidence-based medicine, stock management, and procurement. The HSRP will create a critical mass of FGPs in HSRP pilot districts by retraining specialists and mid-level personnel in family medicine through 6-month courses. 35. The HSRP will procure basic equipment for FGPs, rural health centers, and central district hospitals to provide quality services related to the pro-poor package. As the equipment will be basic, recurrent costs will be manageable. The HSRP will rehabilitate and rebuild PHC facilities according to district rationalization plans. The health facility and FGP mapping to be conducted in the first year will be a basis for the rationalization plan in each HSRP district. In total, about 40 PHC facilities will be rehabilitated or rebuilt. If it is necessary to build new facilities, district administrations will screen proposals for any involuntary resettlement effects and prepare land acquisition and resettlement plans, in line with ADB’s policy on involuntary resettlement. An international consultant will assist. Civil works will be designed according to services provided at facilities, actual caseloads, energy efficiency, provision of appropriate technical services such as telephones, heating, water, and sanitation and environmental requirements. A medical waste management plan and wastewater management measures will be developed and implemented at the rehabilitated and rebuilt facilities.

b. Reforming Service Delivery and Financing

36. The HSRP will finance and test the capitation payment mechanism for paying the FGPs. MOH has proposed capitation payment in the broader health care financing reforms and will formulate the capitation method and the contractual arrangements for FGPs, assisted by international consultants. Performance-based contracts will be made between FGPs and the district health departments established under the HSRP. The arrangements will be adjusted and introduced at the district level after intensive meetings among international consultants, district

8 The content of the package with delivery strategies is explained in Supplementary Appendix C. The list of drugs

and equipment to implement the package are explained in Supplementary Appendix D.

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and region administrations, and MOH. Capitation rates will be higher for infants, women of reproductive age, and the aged, while the contract will stipulate in detail services for the poor, women, and children. The monitoring system will assess FGP’s performance and impacts, including access to basic health services by the poor, women, and children. 37. The HSRP will rationalize the health system and staffing distribution in pilot districts to reflect the national plans and reallocate savings to finance the FGP system, PHC, and the pro-poor health package. Under the current input-based budget allocation scheme, reduced hospital beds and staff imply lower budget allocations and act as a disincentive to rationalization. MOF claims the savings from rationalization. An agreement will be made with MOF so that district health departments will be entitled to keep those savings and not suffer any corresponding reduction in their budgets from rationalization. District health departments will produce proposals demonstrating the savings to be achieved and presenting a business plan for using the saved resources. The HSRP will help district health departments design the business plan. 38. The HSRP will strengthen the capacity of the region and district administrations to manage the reformed system, rationalize hospitals, plan the budget, and monitor all. District health department staff in each pilot district will be trained intensively in management, health care financing, health sector reform, and HMIS. The HMIS based on the framework developed under the associated TA will be set up and implemented in the pilot districts. HMIS data will be collected routinely and surveys will be conducted for monitoring reforms. The survey data will complement and verify the quality of HMIS data at the national level. The initial in-depth survey will be designed and conducted under the associated TA. Staff at all levels of the health system in the pilot districts will be trained to collect, analyze, and use data. 39. The HSRP will help district administrations conduct public information campaigns and mobilize community participation to raise awareness and understanding of health reforms, the FGP-based PHC system, and major health problems. Campaigns will be conducted with the full participation of local governments, communities, and local NGOs. MOH will supervise and coordinate campaigns on major health problems (diarrhea, tuberculosis, typhoid), reproductive health, sexually transmitted infections and HIV/AIDS9 control, health promotion based on the life-cycle approach, health care reform, and the introduction of the free pro-poor health package. Information on the purposes, content, and benefits of the reformed system are critical messages of the campaigns. The campaigns will be designed to reach the poor and women as their lack of information on health services is one of the barriers that keep them from accessing services. Local government staff will be trained to organize campaigns and mobilize communities. C. Special Features 40. Tajikistan in the postconflict period faces complex development challenges: volatile and unstable security, fluid coalition Government, uncertain political commitment, limited institutional capacity, governance concerns, and years in a development vacuum. Involvement of humanitarian and grant-based agencies has contributed to creating dependency expectations and have established duplicate systems that parallel national and local structures. Development agencies have not been active for security and governance reasons. Changes in services delivery, management, and financing of the health sector are required, but difficult in a context where changes take place slowly. The HSRP will focus on capacity building across the health sector and reforms at the PHC level. The HSRP will support the national drug supply system in

9 HIV/AIDS = human immunodeficiency virus/acquired immunodeficiency syndrome.

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collaboration with humanitarian NGOs that have been implementing the efficient drug supply system to prevent its collapse after their withdrawal. 41. Tajikistan is also a transition economy where the move from rigid central planning to a more open market environment has created many new challenges to the health system. To cope with these challenges, the HSRP supports policy and institutional reforms including (i) reorienting health service delivery from hospital-based and cure-biased to PHC, (ii) shifting provider payment mechanisms from fixed salary to capitation payment with pro-poor and efficiency incentives, (iii) refocusing budget preparation from norm-based to per capita allocation, and (iv) accelerating system rationalization. D. Cost Estimates 42. The total cost of the HSRP is estimated at $9.375 million equivalent, of which $5.340 million, or 57%, is the foreign exchange cost. The local currency cost is estimated at $4.035 million equivalent or 43% of the total cost. The costs are summarized in Table 2, with details in Appendix 7.

Table 2: Cost Estimates, by Component ($ million)

Cost by Component

Foreign Exchange

Local Currency

Total Cost

A. Base Cost

1. Institutional Development 1.196 0.826 2.022 2. Drug supply and Quality Control 1.112 0.142 1.254 3. Pro-Poor Health Package 2.290 1.937 4.227 4. Project Management 0.260 0.326 0.586

B. Contingencies 1. Physical Contingency 0.132 0.045 0.177 2. Price Contingency 0.153 0.759 0.912

C. Interest Charge 0.197 0.000 0.197 Total Cost 5.340 4.035 9.375 Source: Asian Development Bank estimates. E. Financing Plan 43. It is proposed that ADB provide a loan of $7.5 million equivalent from its Special Funds resources to finance 80% of the total project cost. The ADB loan will be repayable over 32 years with a grace period of 8 years, and with an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter. The Borrower will be Tajikistan. ADB will fund 100% of the foreign exchange cost, totaling 57% of the estimated project cost, and 54% of the local currency cost. The Government will provide the remaining $1.875 million equivalent as counterpart financing, which accounts for 20% of the total cost. This includes financing civil works; taxes and duties; training, workshops, surveys, studies; and other recurrent costs. The financial plan is in Table 3. 44. In view of the difficult debt situation, the Government has requested that costs for consultants, project management, and training be reduced or grants attracted for these

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activities, noting pledges made at the recent consultative group meeting (CG).10 ADB has been actively seeking grants to substitute for some of the loan proceeds. The HSRP has been broken down into self-contained packages based on the conceptual framework and proposed to sources for cofinancing (Appendix 8). If grant funds are firmly committed, corresponding savings under the loan may be reallocated or cancelled.

Table 3: Financing Plan

Foreign Exchange

Local Currency

Total Cost

($ million) ($ million) ($ million) Share (%) Asian Development Bank 5.340 2.160 7.500 80 Government 0.000 1.875 1.875 20 Total 5.340 4.035 9.375 100 Source: Asian Development Bank estimates. F. Implementation Arrangements

1. Project Management and Implementation Period

45. The HSRP will be implemented in parallel with the proposed ESRP. The President’s Office will be the Executing Agency, with the deputy prime minister as project coordinator for both HSRP and ESRP. A national steering committee will be established to give overall guidance and coordinate both projects. The committee will be chaired by the project coordinator and composed of senior officials from MOH, Ministry of Education, MOF, and regions, and pilot districts. Both projects will work in the same pilot districts. The national steering committee will meet quarterly. It will approve the annual HSRP budget and activity plan and review and advise on implementation progress. Task teams will be established at MOH for key areas, e.g., health care financing (use of the existing one), human resource development, FGP system, and HMIS. 46. A project implementation unit (PIU) will be set up in MOH with a project manager and two other full-time staff. In full consultation with MOH, the PIU will make a detailed annual plan, develop the time frame, decide on procurement of consultants, select fellowships, and monitor pilot district activities. A project administration unit (PAU) will be set up in Dushanbe, based on the existing SSRP structure, under PIU. The PAU will serve as a secretariat to provide administrative support for procurement, consultant recruitment, and disbursement; and monitor and report on progress against indicators. The PAU head will be assisted by staff for administration, accounting, monitoring, procurement/civil works, and interpretation. 47. Each pilot district will have a district supervisory group, shared by the ESRP, comprising representatives of the district governor’s office, district departments of health and education, village leaders, schools, feldshers, FGPs, health centers, and hospitals. The group will guide and coordinate district activities. Each pilot district will have a district PIU for the HSRP, comprising a district project coordinator, a reform officer, and an administrator. Project management and monitoring capacities at PAU, PIU, and district PIU will be strengthened through staff training. The implementation arrangements are described in Appendix 9. The

10 At the CG meeting in May 2003, aid agencies pledged $900 million, including $700 million grants for over a 3-year

period. Aid agencies and the Government noted that it would be preferable to finance social sectors by grants to the extent possible.

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HSRP will be implemented over 5 years, from 2004 to 2008. Appendix 10 gives the implementation schedule. 48. Mobilizing parallel grant funds in response to the Government's request will result in a variety of financing sources and will impose an additional degree of difficulty in implementing and coordinating the HSRP. To complement the roles of the PAU and the PIU, an effective aid coordination mechanism will be set up.

2. Procurement 49. Goods, related services, and civil works will be procured in accordance with ADB‘s Guidelines for Procurement. Equipment will be procured by international competitive bidding (ICB) for contracts in excess of $500,000, international shopping for contracts in excess of $100,000, and direct purchase for contracts valued at less than $100,000. Civil works valued in excess of $1 million will be awarded through ICB and civil works contracts valued at or less than $1 million will be awarded under local competitive bidding (LCB), in accordance with procedures acceptable to ADB. The indicative contract packages are in Appendix 11. In accordance with ADB procedures, eligible foreign contractors may participate in the bid for contracts through LCB. ADB’s domestic preference scheme may be applied when evaluating bids under ICB.

3. Consulting Services 50. A total of 164 person-months of consulting services (48 person-months international and 106 domestic) will be required for the HSRP following ADB’s Guidelines on the Use of Consultants and other procedures acceptable to ADB for engaging domestic consultants. The consultants will be recruited individually (for project management and for specific technical expertise) or through a firm. Quality and cost-based selection will be applied to a firm. Detailed costing is in Supplementary Appendix E. The outline of terms of reference for consulting services are in Appendix 12. The indicative training program is in Supplementary Appendix F.

4. Direct Contracting of Pharmaciens sans Frontières (PSF) 51. PSF will be directly selected 11 to support the establishment of an efficient drug procurement center by transferring its experience and knowledge to the Government. PSF has been operating the humanitarian drug supply system in Tajikistan since 1994 and has coordinated all major NGOs’ drug distribution. A lump sum contract will be implemented with quarterly progress payments made contingent on satisfactory contractor performance. The contract will specify objectively measurable service delivery goals, a minimal acceptable level of improvement, and penalties that will be incurred if these levels are not met.

5. Disbursement Arrangements 52. The PAU will establish an imprest account in a commercial bank acceptable to ADB to expedite disbursement of the loan proceeds, in accordance with ADB’s Loan Disbursement Handbook dated January 2001 and detailed arrangements between the Government and ADB. The Government may make withdrawals from the imprest account for PAU/PIU staff costs; training, seminars, and studies; locally available material; domestic consultants; rationalization incentives; and civil works contracts under LCB. The initial amount to be deposited into the imprest account will not exceed $250,000. Procedures from ADB’s statement of expenditure

11 Terms of reference for the PSF are included in Appendix 12 and a draft contract is in Supplementary Appendix G.

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(SOE) will be followed to liquidate the imprest account and reimburse individual SOE payments that do not exceed $50,000

6. Reports, Accounts, and Audit 53. The PIU together with the PAU will prepare quarterly reports on project implementation in line with ADB’s project performance report and submit them to ADB within 30 days after the end of the applicable period. Within 3 months after physical completion, PIU will submit a project completion report to the ADB. The PAU will maintain separate records and accounts for all expenditures financed from the proceeds of the loan, in accordance with sound accounting principles. Auditors acceptable to ADB will audit the project accounts, including financial statements. SOEs, and imprest account records annually. The audit report will be submitted to ADB in English not later than 6 months after the fiscal year to which it relates.

7. Project Performance Monitoring and Evaluation System 54. The President’s Office, MOH, PIU, and PAU will establish a project performance monitoring and evaluation system (PPMES), acceptable to ADB. PPMES aims to (i) review HSRP technical performance; (ii) evaluate the delivery of planned activities; (iii) measure HSRP impacts; (iv) measure social and economic benefits with a focus on the poor, women, and children; and (v) monitor achievement of MDGs. PPMES indicators will be used in preparing reports on project implementation and the reform process covering fiscal impacts, improved use of resources, change in access to services, improved services quality, cost savings from rationalization, and client satisfaction. Routine HMIS and special surveys financed by the HSRP will supply PPMES with information. Where feasible, indicators will be disaggregated by socioeconomic levels and sex. The HSRP will assist the President’s Office, PIU, and PAU to finalize indicators and the monitoring system during HSRP inception. A close link among MDG, PPMES, and HMIS will be ensured. Appendix 13 shows an indicative list of PPMES indicators.

IV. TECHNICAL ASSISTANCE 55. The technical assistance (TA) will support developing management information systems for informed policy dialogue, decision making, and monitoring. The TA will serve as a central policy tool to improve MOH’s planning, budgeting, and reform for the health sector. The objectives are to (i) develop the HMIS framework and action plans at MOH, region, and district levels; (ii) lay the basis for planning, monitoring, and measuring system performance and reforms; and (iii) create a mechanism for monitoring and policy dialogue between the Government and aid agencies. The TA will conduct an in-depth survey in pilot districts to obtain an accurate and disaggregated baseline database for the health sector. The TA will finance consultants (7 person-months international, 14 person-months domestic) with expertise in surveys, poverty, and HMIS. The TA will be implemented over 12 months. More detailed information on the TA is in Appendix 14. Consultants will be engaged individually or through a firm in accordance with ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for engaging domestic consultants. 56. The TA will be financed on a grant basis by the Japan Special Fund, funded by the Government of Japan. The TA is estimated to cost $355,000 equivalent, comprising $169,000 in foreign exchange and $186,000 equivalent in local currency. ADB will provide $300,000 to finance the entire foreign currency expenditures and $131,000 equivalent of local currency expenditures. The Government will provide the remaining $55,000 equivalent in kind.

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57. A second TA will develop a drug procurement and distribution strategy. The strategy will cover all aspects of the procurement and distribution process, namely: selecting drugs, ensuring quality, managing the tender process, distributing drugs, managing stocks, and monitoring drug use and prices. The objectives are to (i) support policy dialogue and develop a clear strategy and framework for establishing a drug procurement and distribution system, supported by action plans at MOH, region, and district levels; (ii) prepare a rational plan for warehousing, equipment distribution, and staffing; and (iii) supply operational guidelines on the above procurement process. Support for developing strategies to strengthen public drug procurement and distribution capacity is urgently needed to ensure the continuation of an adequate and reliable supply of quality drugs when assistance from humanitarian agencies ends. The private sector currently does not have the capacity and lacks an appropriate legal framework to assume these responsibilities immediately. The TA will fill the vacuum created by private sector absence and a lack of public sector capacity, while proposing long-term development strategies to increase private sector involvement, including public-private partnerships, in drug procurement and distribution. The TA will finance consultants (4 person-months international, 18 person-months domestic) with expertise in drug procurement. The TA will be implemented over 6 months. More detailed information is in Appendix 15. PSF will be directly engaged (para. 50). 58. The TA will be financed on a grant basis by the Japan Special Fund, funded by the Government of Japan. The TA is estimated to cost $180,000 equivalent, comprising $114,000 in foreign exchange and $66,000 equivalent in local currency. ADB will provide $150,000 to finance the entire foreign currency expenditures and $36,000 equivalent of local currency expenditures. The Government will provide the remaining $30,000 equivalent in kind.

V. PROJECT BENEFITS, IMPACTS, AND RISKS A. Project Benefits 59. The HSRP addresses both immediate needs and long-term sustainability. It responds to the most urgent health needs of the poor and vulnerable, while making a positive impact on the current weak health care system and increasing access to and use of basic health services. The HSRP will improve people’s health—especially that of the poor, women, and children—in five of the poorest districts, covering approximately 5.5% of Tajikistan’s population of 6.3 million. The targeted districts have high infant and maternal mortality rates. The HSRP will focus on the most accessible health care levels and will pilot-test the FGP-based PHC system. The PHC is an internationally proven cost-effective method to respond to the needs of the poor, women, and children. The FGP system benefits the poor and vulnerable better than any other service delivery modalities. Considering the results of the pilot testing, the system will be expanded nationwide, disseminating the benefits gained through the HSRP. 60. To strengthen equity, efficiency, and sustainability of the health sector, the HSRP will build MOH’s capacity to effectively plan and manage the health sector and to pursue reforms. In particular, the HSRP will support reforms in health service delivery and financing. In reforming the systems, the HSRP will especially challenge the situation where patients currently finance about 80% of the total health expenditure, while the Government contributes about 5%, thus putting the financial burden on the poor. B. Project Risks 61. The successful implementation of the reform-oriented HSRP depends largely on the capacity of the local governments and MOH. The HSRP will strengthen MOH’s capacity to

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analyze situations and develop reform strategies and action plans. HMIS will be set up to plan, monitor, and evaluate the reform. 62. Risks in project management relate to the limited capacity of line ministries and their staff. The presence of experienced staff and committed government officials is key to smooth project implementation. This risk will be managed by continuously involving a deputy prime minister in the President’s Office, using an implementation structure based on the ADB SSRP framework, providing capacity-building support, and engaging experienced domestic and international consultants. Involvement of the President's Office and shared implementation arrangements with the ESRP, based on an experienced PAU, offset to some degree the complicated implementation arrangements and risks, aggravated by the Government's reluctance to borrow for training, consulting services, and project management. These activities are at the minimum level feasible and any further attempt to prune them may pose a serious risk to project implementability. 63. The changes being introduced in health services delivery require changes in attitudes of staff and clients and a change in management style. The HSRP will invest in public information campaigns to elicit public perceptions on responsive health systems and will strengthen management. 64. Financial sustainability of the HSRP depends on the financial sustainability of the health sector in Tajikistan itself. Efficient and sustainable delivery of a pro-poor service package, a major HSRP component, will involve a profound change in the current health budget allocation mechanism in Tajikistan and require an increase in the allocation to PHC. Financial sustainability means that the reforms introduced by the HSRP should continue beyond the 5 years life span of the HSRP, and this continuity must rely on Government resources. In this sense, the HSRP aims to improve the government’s capacity to develop and maintain reforms in its health financing system and to reform health service delivery. 65. The low level of public expenditure on health is explained by the low level of economic development, low relative priority given to the health sector, and the poor capacity of the Government to raise revenues. In Tajikistan the total revenue from taxes has remained around 11% of the GDP, a very low level of tax collection (revenue collected as a percentage of GDP in low-income countries is 14% on average). It is hard to expect a significant raise in the economy, health sector priority, and tax revenue in the short term. The baseline scenario for planning health financing is that the health share of the public budget will not increase significantly. While it is necessary to increase resource allocations for health, it is also vital to assure that the money spent achieves the best possible results and health gains. That efficiency concerns have to penetrate the system is one of the major targets of the HSRP in capacity building, rationalization, and reforms. If the required changes do not materialize under the HSRP or are not sustained, there will be failure of not only the financial sustainability of the HSRP but also that of the entire health system as well. The Government must sustain its commitment to PHC. The HSRP will intensify policy dialogue in pursuing capacity building, rationalization, and reforms as well as in giving priority to the health sector. C. Environment 66. The HSRP has been classified in category B for environmental impact. The summary of the initial environmental examination is in Appendix 16.12 The HSRP will rehabilitate and rebuild

12 The full Summary of the Initial Environmental Examination is in Supplementary Appendix H.

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hospitals and health centers in five districts. Environmental benefits will be realized through improved medical waste management and wastewater disposal. The HSRP will (i) ensure that appropriate environmental measures are put in place, (ii) organize training for health workers and local governments on medical waste management, (iii) set up an environment monitoring mechanism, and (iv) improve wastewater and reagent management at the drug quality center when reagents are provided for drug quality analysis. Guidelines for reagent management will be prepared, training organized, and environmental monitoring done. D. Social Analysis 67. The HSRP aims to increase equity and effectiveness in distributing health benefits in Tajikistan by focusing on five districts disadvantaged by recent natural disasters, the civil war, poverty, and health status. For the poor, women, and children who are also specific foci, HSRP will use health measures that are internationally proven. The summary poverty reduction and social strategy form is in Appendix 17. 68. Poverty remains the central development issue in Tajikistan. The Tajikistan Living Standards Survey reported that 83% of the population lined below the poverty line in 1999. The survey also revealed that poverty rates were high for households with many children and those headed by women, the unemployed, persons without access to any social safety net (the disabled, school dropouts, street children, and the elderly), single pensioners, and returnees and internally displaced population. Geographically, rural areas particularly in remote mountainous areas, have more and deeper poverty. The HSRP will target poor areas, particularly, mountainous districts, to ensure access to health services. 69. The HSRP is also designed to respond effectively to the poor’s health-seeking behavior and health conditions. Thus, the HSRP will address the most important health problems of the population, particularly the poor, and make it easier for them to use the necessary health services. Despite the generally worse health outcomes, the poor do not recognize their poor health as reflected in the low percentage of people who report illness in surveys. Many do not seek health services until conditions become very serious and rely on self-medication. Surveys indicate that use of health services by the poor is about half of that by the non-poor. The poor are more likely to suffer from infectious diseases, maternal and child health problems, and malnutrition. Financial burden is the major factor preventing the poor from using health services. Lack of information or ignorance is also a concern. Information that the public sector provides to the poor is limited. The HSRP will supply the pro-poor health package free by considering the poor’s priority health problems and the cost-effectiveness of health services. To deliver the package, the HSRP will develop the FGP system that is considered the most pro-poor delivery method. Information will be disseminated to reach the poor. The HSRP expects to bring the poor’s use of health services to the same level as that of the non-poor and reduce the burden of poverty-related diseases. 70. Reproductive health is a major concern in Tajikistan. High birth rates, high rates of maternal and infant mortality, large numbers of abortions, and rising prevalence of sexually transmitted infections all contribute to low women’s health status. The situation is compounded by the growing incidence of informal charges for health care services. The perceived financial burden is particularly high among women seeking reproductive health services: 80% of women of reproductive age who were not pregnant cited cost as the main reason for not using contraceptives; 60% of pregnant women who do not obtain antenatal care think that they cannot afford it. Poor women increasingly give birth at home without medical assistance to reduce the costs associated with childbirth. About half of all births in 1998 were delivered at home. If the

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pro-poor package including antenatal and delivery care, family planning, and treatment of sexually transmitted infections is used effectively, the HSRP will reduce the number of women without access to reproductive health by more than half. 71. The Republic of Tajikistan is composed of a number of cultural groups. Tajiks have increased from 56.2% of the population in 1970 to 62.3% in 1989. Ethnic groups are widely distributed throughout the country, although locally some clustering tends to occur. No specific data is available on the health and education status of ethnic minority groups. All understand and speak the Tajik language and there are health workers and teachers from minority groups. The constitution of Tajikistan states that no person will be discriminated against on the basis of ethnic origin, and minorities are guaranteed equal access to education and health. According to NGOs working in the HSRP pilot districts, ethnic minorities are well integrated in society and have the same level of health and education status, with the exception of elderly Russians. The HSRP is classified in Category C in terms of indigenous people. E. Economic and Financial Analysis 72. Improved people’s health status with the HSRP can be quantified in economic terms. The economic benefits will result from resource cost savings, representing a reduction in out-of-pocket expenses, and productivity gains. The HSRP will reform health service delivery and financing mechanisms to promote system efficiency and service quality. The proposed FGP system has operational advantages and would be more cost-effective, compared with the NGO-run health system (Appendix 6). It will also provide incentives for providers to serve the poor, women, and children. Service users will receive effective services with reduced risk of informal payments. Community mobilization and strengthened monitoring will reinforce the supervisory functions over service quality and payment. In addition, HSRP’s free pro-poor health service package, including drugs, will constitute a substantial economic benefit itself, given the level of private expenditure on drugs. More effective services, reduced informal payment, and free drugs will substantially contribute to resource cost savings. 73. Productivity gains will result from fewer days lost because of illness and a consequent increase in productivity. HSRP will provide cost-effective measures to reduce IMR, MRM, and under-5 mortality corresponding to MDG by 30% in HSRP districts. The economic internal rate of return (EIRR) is estimated to be around 24.1%. HSRP has a potential to directly benefit approximately 350,000 people in pilot districts and will generate further benefits for the whole country. Sensitivity analysis shows that the strongest factor influencing economic returns is the extension of the benefits by expanding reformed systems nationwide. The results of the sensitivity analysis call attention to the need for keeping a nationwide perspective and for extracting valuable lessons from the pilot regions to be applied to the whole country. Analysis of the financial sustainability of nationwide establishment of the FGP system indicates that the total public health budget must be increased to 1.5% of GDP. This percentage represents a substantive increase from the current level of 0.9%, but is still well below the 3% observed in other Central Asian republics (Appendix 6). MOF plans to increase the public health allocations to 1.8% of GDP (as indicated in Supplementary Appendix A) to increase the chances of FGP system sustainability. The HSRP will undertake policy dialogue to ensure that the increase is realized. 74. The analysis also evaluated the HSRP impact on the Government budget. The Government’s annual share in project costs will average around $0.38 million, about 2.8% of the health sector annual budget of about $13.5 million. The recurrent costs borne by the Government during the HSRP are about $0.18 million per year. The budgetary impact of the

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estimated annual recurrent costs during and after HSRP implementation is considered manageable. The detailed economic and financial analyses are in Appendix 18.

VI. ASSURANCES 75. In addition to the standard assurances, the Government has given the following assurances, which are incorporated in the legal document.

1. Project Implementation and Monitoring 76. A distinct supervisory group will have been established in each HSRP district, acceptable to ADB, within 3 months of loan effectiveness 77. MOH and MOF will agree to establish in each pilot district a district PIU that will cover the roles of the district health department, within 3 months of loan effectiveness 78. The President’s Office, MOH, and HSRP district governments will finalize the PPMES indicators, acceptable to ADB, and integrate these into HMIS within 6 months of loan effectiveness date. Indicators of the poor’s access to and use of essential health services will be included. Impact indicators will contribute to monitoring the achievement of MDGs.

2. Reform Planning, Monitoring, and Policy Dialogue Based on Health Management Information System

79. An intersectoral committee (MOH, MOF, medical university, and aid agencies) will be created within 6 months of loan effectiveness to review and use the HMIS data to plan and monitor the reform process and to maintain policy dialogue with aid agencies on reform.

3. Human Resource Development 80. MOH and the medical university will develop a workforce plan and targets within 15 months of loan effectiveness. MOH will develop a time-bound action plan to meet workforce targets on staff reduction and equitable distribution of staff; the medical university will develop a time-bound action plan on student intake and outputs consistent with the workforce plan, within 21 months of loan effectiveness.

4. Introducing the FGP System in the HSRP Districts 81. MOH will develop the legal and financial framework of the FGP system to be pilot-tested in the HSRP districts within 18 months of loan effectiveness. 82. The Government should legalize, as a pilot test, the introduction of the FGP system with a financial and monitoring package in the HSRP districts within 21 months of loan effectiveness. The package covers FGP geographical mapping; population registration; capitation payment; performance-based contracts; monitoring of access to and use of FGP services by the general population, particularly the poor, women of reproductive age, infants, and other vulnerable groups; user satisfaction; and FGP’s performance.

5. Rationalizing System and Staffing in HSRP Districts 83. The local government of the HSRP districts, together with MOH, will develop and adopt plans, acceptable to ADB, for rationalizing excess health facilities and hospital beds and poor

20

staff distribution in the HSRP districts within 21 months of loan effectiveness. The plans will be implemented from year 3 of the HSRP.

6. Financial Matters 84. MOF will issue decrees to allow local governments to keep and reuse the district health budget savings from system rationalization and to allow local governments to reallocate the health workforce at their discretion and as appropriate to the health system in the HSRP districts, within 1 month of loan effectiveness. 85. MOH and MOF will agree to provide—after the HSRP’s completion—through its public health budget the capitation payment budget and the pro-poor health package cost introduced by the HSRP to ensure their sustainability. The Government will submit a budget plan covering capitation payment and the pro-poor package by the midterm review of the HSRP. 86. Throughout project implementation, ADB will continue the policy dialogue with MOH and MOF to increase the share of public health expenditure devoted to PHC from 6% in 2003 to 20% by the end of 2008. MOH and MOF will provide baseline data of the budget allocation among the levels of the health system within 6 months of loan effectiveness.

7. Environmental Measures and Other Safeguards 87. The Government will ensure that (i) environmental classification will be conducted for each subproject and IEE will be prepared, if necessary, during civil works surveys, in accordance with ADB’s environmental guidelines; (ii) an environmental management plan (EMP) covering medical waste will be developed and implemented corresponding to the laws and procedures of the Government and the environmental requirements presented in the summary IEE in Appendix 16; and (iii) a report on the progress of EMP will be submitted semiannually. 88. If it becomes necessary to build new facilities under the HSRP, the district administration will screen for any involuntary resettlement effects and prepare land acquisition and resettlement plans, in line with ADB’s policy on involuntary resettlement.

VII. RECOMMENDATION 89. I am satisfied that the proposed loan would comply with the Articles of Agreement of ADB and recommend that the Board approve the loan in various currencies equivalent to Special Drawing Rights 5,238,000 to the Republic of Tajikistan for the Health Sector Reform Project from ADB’s Special Funds resources with an interest charge at the rate of 1% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan Agreement presented to the Board. Tadao Chino

President

20 November 2003

Appendix 1

21

HEALTH SECTOR ANALYSIS

1. Large-scale changes in the political and economic environment over the decade have created many new challenges to the health care system in Tajikistan. But little has changed since Soviet times and the health system is unable to protect the health of the population. A. Management Structure and Function 2. The Government remains the main public financier and provider of health care services. There are five main levels of management: the Ministry of Finance (MOF), the Ministry of Health (MOH), region and Dushanbe health departments, chief doctors of central district hospitals who are responsible for district health services, and facility managers. MOF budgets and transfers the funds to regional administrations. The budget allocation is based on norms, such as numbers of beds and staff, rather than on outputs. Norms have not been revised since independence. MOH sets up health policies but has no control over the health budget, nor over policy execution. A considerable degree of autonomy in the use of approved resources is given to local administrations at the district level. Local governments may use the resources according to the approved plan, but could use them differently. MOH can’t ensure whether the health budget has been executed properly or not. 3. Despite overall responsibility for health care delivery at the district level, a district health department does not exist, but a chief doctor of the central district hospital manages it. Management of primary health care (PHC) by hospital staff creates a conflict of interest, such as the priority given to hospital budget allocations rather than to PHC. Budgets throughout the system are based on 11 line items and facility managers cannot transfer funds, giving no flexibility to lower-level managers. The current system lacks incentives for quality or efficiency. Due to the collapsed information system, managers at the national level have no accurate data on which to base their decisions, while those at the field level who face real situations have no authority to introduce changes. 4. Institutional capacity to effectively plan, budget, manage, and monitor the health sector is weak at all levels. This capacity was not required before independence, as decisions were made in Moscow. Capacity building efforts and opportunities for exposure to efficient management have been limited for several reasons: limited developmental work and capacity building by external agencies under emergency situations, and the Government’s limited recognition of the need for increased capacity and learning alternative health system management. B. Health Care Delivery 5. PHC is provided by community nurses, midwives, nurses, and doctors in a range of facilities. The health care delivery system inherited from the former Soviet Union is extensive, complex, and fragmented at all levels. It is also costly. PHC is provided in cities at polyclinics that are fragmented, with separate clinics for adults, children, and women’s reproductive health; in specialized dispensaries, and in health posts of universities. In rural areas, PHC facilities are more complicated and consist of medical houses, the rural health centers, and rural hospitals. About 2,670 PHC facilities exist in the country. The high degree of specializations of doctors and nurses adds complications and makes actual services to patients inefficient. There are about 125 specialties. To provide care to the broad community, a number of specialists of different disciplines are present even at the PHC level. Health resources are used in providing potential access to medical care rather than in actual services to patients.

Appendix 1 22

6. The PHC network has deteriorated substantially due to the economic depression and the civil war. Facilities are in poor condition. If not supplied through humanitarian aid, equipment, pharmaceuticals, and reference material are largely absent. Although the bulk of the PHC budget is for salaries, salary levels are below the level necessary for survival, demoralizing the health staff. Unofficial fees are widely charged. Many staff members are forced to work outside of the health system. Overstaffing has been amended without any regulations, as many have officially left the system to seek better pay. Some remain officially within the system but do not work where they are supposed to. Facilities are often seen not staffed or not used. One facility survey of the ADB Social Sector Rehabilitation Project revealed that a staff of only 70 are working in a district where more than 230 are supposed to work. 7. The hospital sector is overly specialized, extensive, and fragmented. About 428 hospitals with 41,925 beds (1 bed per 150 persons) exist. Physical infrastructure is often in poor condition, particularly in rural and central district hospitals. Equipment has not been upgraded since independence and much is nonfunctional. Consumables are in short supply, patients usually have to purchase pharmaceuticals, and pay for their food although these items are officially free. Patients usually make payments to nurses and doctors. The number of hospital beds decreased from 1,096 per 100,000 population in 1991 to 680 per 100,000 in 1999, generating reported savings of $5 million. However, the savings from rationalization were taken from the health sector by MOF which bases budget allocation on the number of beds. The average length of stay has changed little at 14.0 days in 1999, well above the European average of 9.6 days. Hospital rationalization is Government policy, but the current plan includes only closure of rural hospitals or their conversion to rural health centers. Conversion of so many highly specialized hospitals into general hospitals or inefficient hospital management, such as low intensity of care and long period of stay, has not yet been addressed in the Government policy paper. 8. Reflecting the deteriorated health care system, the use of health services is low, particularly among the poor. The poor's use of health services is about half that of the non-poor. This is due to several factors: cost of consultation, official and unofficial; distrust of health staff; and cost of drugs. Regional difference in health service use also exists. In Sughd region, people use health services four times a year, while in Gorno-Badakhshan Autonomous Region (GBAR) and Kahtlon, the poorest regions, people use services only at 1.5 and 1.6 times a year. The population, but excluding the poor, use hospitals more. A fixed salary provides no incentives for health staff to serve those unable to pay. Another issue requiring attention is the increasing proportion of home deliveries and births without skilled health personnel. According to the United Nations Children’s Fund (UNICEF), these births were less than 10% in 1990, but had increased to 45% in 2000. The rising proportion of home delivery suggests the breakdown of the local health care system and the financial inability of families to pay for medical care. 9. Against this background, the Government has adopted a policy to move to a generalist-based system (family group practice [FGP]), so as to alter the balance toward expenditure on direct patient care, rationalize PHC facilities, and promote access to basic health care by the poor. Aid agencies have been actively retraining specialists and transforming them into family doctors and nurses. So far around 400 staff members have been trained. Medical students who take family medicine have started to graduate. However, the FGP system itself has not been set up and trained staff continue to cover the same narrow field that were their original specialty. Without a system in place, training benefits will quickly be lost.

Appendix 1

23

C. Health Care Financing and Budget Allocation 10. A large out-of-pocket payment is the main feature of health care financing in Tajikistan. The total health expenditures in 2001, which amounted to TJS95 million ($39 million) or TJS15 per capita ($6.3), were financed by (i) users, at least 31% of total expenditures; (ii) Government, 26%; (iii) development banks, 7%; and (iv) humanitarian agencies, 36%. Salaries of personnel are the government focus, with users matching these resources. Drugs are the users’ main spending item funded by external agencies that are leading the investment efforts. 11. Out-of-pocket expenses, in order of importance are for (i) drugs and ancillary items, (ii) in-patient and outpatient consultation fees (official and unofficial), and (iii) hospitalization fees. Consultation fees are collected according to the price schedule of each hospital or health center. Most other services are left to discretionary price setting. Fees collected at the health center are kept in the facility. MOH does not standardize and regulate user charges. Users charges at the time of use of health care are likely to impede access of the poor to the needed services. On the other hand, although the population pays a significant share of the medical care, these resources don’t address the priority problems. Out-of-pocket payment is the most regressive way to pay for health care. This fact highlights the need to “rationalize” the user payments or the need to pool resources in a more efficient and equitable way. 12. Currently, MOH is elaborating a proposal to introduce co-payments at the hospital and PHC level. The proposal recommends Identifying various mechanisms to bring into the health system out-of-pocket payments. The mechanisms are (i) introducing standardized user charges; and (ii) pooling resources through different community financing schemes, including a drug revolving fund, prepayment at PHC level, and community insurance at the hospital level. It is planned that the users charges should combine with free provision of a health package within the current budgetary resources available. 13. During the decade of political crisis, the health sector lost priority, and public health expenditures fell from 4.8% of GDP in 1990, 3.1% in 1995, 0.96% in 2001, and to 0.86% in 2002. As the GDP itself has shrunk to 40% of its 1991 level in 1999, the actual public spending on health per capita has decreased to 1.5% of that in 1991. The public health expenditure is limited not only in its budget size, but also in its efficient use. About 50% of the budget goes to salaries and staff’s social security, 20% to maintenance and operation, and 14% to food. Medicine accounts for 10% and others such as training receive only 1.5%. Capital expenses for equipment and civil works account for about 5%. At the PHC level, about 95% goes to salaries and social security. The distribution of expenditures by line item shows a distorted picture, especially at the PHC level, leaving actual services unmet. Despite the Government policy on strengthening PHC, the share of public health expenditure at the PHC level is low and decreasing: 7.3% in 2000 and 6% in 2002. The hospital sector receives majority of the budget. D. Human Resource Development 14. A number of human resource issues have been constraining the delivery of affordable, effective, quality health services in Tajikistan. They include issues related to efficiency and cost of the use of human resources, staff distribution and equity of services, staff performance, and capacity for human resource policy and planning. The cost-effective use of human resources is key to the delivery of health services in a resource-constrained context as in Tajikistan. Analysis of the current situation suggests a lack of consistency in available staffing data, overstaffing at national and provincial levels and understaffing at district and health centers levels, significant gaps in key staff categories, inappropriate deployment of specialty staff, poorly defined roles

Appendix 1 24

and functions of staff, and weak human resource management. It is difficult to allocate staff to remote facilities because of low salaries and incentives and weak workforce management. 15. Human resource policy and planning capacity is not well developed. The implementation of human resource policy and plans is incomplete. The capacity within MOH is insufficient. Existing standards for service delivery and staffing are outdated. The human resource database is not yet ready for use in comprehensive workforce planning. B. The Government Policy and Strategies 16. Since 1991, MOH has adopted major changes in national health policy direction. Particularly in 1998–2000, MOH developed the comprehensive health sector reform plan supported by international agencies, such as World Health Organization (WHO) and European Committee Humanitarian Office (ECHO). In adjusting to the socioeconomic, demographic, and epidemiological situation, the master plan emphasizes PHC as the strategy for delivering health services to the population that is responsive to needs of client, particularly the poor, women, and children; cost-effective; and of good quality with equitable and sustainable access. 17. To implement the reform plan, further health strategies such as the “Conception on Health Care Reform in the Republic of Tajikistan” were developed. The developmental strategies for health care reform defined in this document have the following objectives:

(i) Setting Priorities. State resources are inadequate to solve all existing problems; therefore, there is a need to prioritize.

(ii) Strengthening the primary health care. As the majority of health problems can

be solved at the PHC level in a more cost-effective way, all strategic measures are directed to improving PHC.

(iii) Distributing resources according to need. Health care resources will be

allocated in accordance with the system requirements, considering geographical peculiarities, demographic and health indicators, and level of health service.

(iv) Developing human resources. Human resources are key to the health status of

the population and solving priority health problems. Health policy should be directed to supplying health care facilities with quality human resources.

(v) Rationalization of services. Scarce resources should be used wisely. (vi) Improving the quality of care. The quality of the provided health care will

continuously be improved and will be oriented to the final result. (vii) Strengthening management capacity. Developing management capacity is

indispensable for successful realization of health care reforms.

(viii) Ensuring necessary information for management. Information systems are important in providing feedback for decisions and monitoring reform impact.

(ix) Creating among the population personal responsibility for their own health.

Health care reforms should address the needs of the population. It is important to consider public opinion in developing the health care structure and sector activity.

Appendix 2 25

EXTERNAL ASSISTANCE TO THE HEALTH SECTOR IN TAJIKISTAN

ADB = Asian Development Bank, AKF = Aga Khan Foundation, ECHO = European Community Humanitarian Office, GBAR = Gorno-Badakhshan Autonomous Region, IFRC = International Federation of Red Cross and Red Crescent Society, KfW = Kreditanstalt fur Wiederaufbau (Germany), MERLI = Medical Emergency Relief International, MOH = Ministry of Health, MSF = Doctors Without Borders, PSF = Pharmacists Without Borders, RRS = Region of Republican Subordination, SDC= Swiss Development Cooperation, UNICEF = United Nations Children’s Fund, UNOPS = United Nations Office for Project Support, USAID = United States Agency for International Development, WHO = World Health Organization.

Funding Agency

Type Implementing Agencies

Time Frame

Amount ($ million)

Description Region

ADB Loan MOH 2000-2003 7.8 Rehabilitation of 200 health centers and 15 central rayon hospitals plus equipment and drugs

Khatlon, Sughd

World Bank Loan MOH 2000-2003 5.5 Rehabilitation/ furnishing of primary health care facilities plus equipment, rationalization, and training

Dangara and Varzob

Project Hope Grant 2001-2002 16.0 Tuberculosis program Dushanbe, RRS, Khatlon

ECHO Grant IFRC, MERLI, MSF, PSF, WHO

2000-2003 11.0 Construction/ rehabilitation, drugs, equipment, and training

Countrywide

USAID Grant ZdravPlus, AKF, global partners, Avesta, CARE International, MERLI, Hope

2001-2003 1.0 Training Khatlon, Sughd, Dushanbe, RRS

UNICEF Grant 2000-2002 3.4 Drug, equipment, training, immunization

Countrywide

AKF Grant 2000 3.2 Construction, drugs, training

GBAR

UNOPS Grant 2000-2003 1.3 Rehabilitation, equipment, training

Khatlon, RRS, Sughd

KfW Grant 2002 1.5 Equipment Countrywide

SDC Grant AKF, CARE 0.8 Training, financing studies

Dangara, Varzob, GBAR

26 Appendix 3

PROJECT FRAMEWORK1

Design Summary Performance Targets Monitoring Mechanisms

Assumptions and Risks

Goal Improve health status

of people, especially women, children, and the poor

By 2008, MMR reduced from 43.1 to 39.1/1000,000 live births 2 nationwide by MOH data IMR reduced from 36.7 to 30.9/1,000 live births 2 nationwide by MOH data Increased access to reproductive health services from 21.8% to 25.9%2 among females of reproductive age nationwide

National demographic and health survey National health statistics

Purpose Improve system efficiency and management capacity Increase equitable access to and use of basic health services by women, children, and the poor Support informed policy dialogue for health sector reform

By 2008, Increased share of PHC budget in public health expenditure from 6% in 2001 to 20% Improved capacity for annual planning and budgeting at all levels HMIS set up and implemented at the national and pilot district levels Rationalization plans implemented to reduce excess accommodation and poor staff distribution in pilot districts

By 2008 in five HSRP pilot districts, At least 90% of children under 1 year immunized against DTP, polio, and tuberculosis (56% in 2000) 100% of antenatal care coverage among pregnant women At least 75% of deliveries attended by qualified health attendants (50% in 2000) Consultation by the poor increased to the level of that by the non-poor

By 2008, An intersector committee organized to monitor system rationalization and reforms based on HMIS data National workshops organized to evaluate the FGP system in HSRP pilot districts and decide its nationwide expansion Relevant policies and laws promulgated for nationwide expansion of the FGP system

National health Statistics Reports Human resource development database statistics Baseline and evaluation surveys MOH financial reports and budgets Demographic and health surveys

The Government continues to regard health as a high priority. Political and civil stability is maintained. External funding for health is maintained. MOH has capacity to absorb external inputs .

1 The framework covers the Health Sector Reform Project (HSRP), the technical assistance (TA) for planning and

policy dialogue for health sector reform, and the TA for drug procurement and distribution strategy. Outputs of 1.3, 2.1, and 3.2 are expected from the HSRP and TAs, and the rest from the HSRP.

2 These figures indicate proportionate reductions by 2008 in line with the 2015 targets.

Appendix 3 27

Design Summary Performance Targets Monitoring Mechanisms

Assumptions and Risks

Outputs 1: Institutional development of the health sector

1.1 Strengthened capacity of MOH, regional, and district in planning and managing services delivery, financing, and staffing

1.2 Built MOH and the

medical university’s capacity for staffing

1.3 Strengthened

HMIS as a planning and monitoring tool

1.4 Developed

legislative, financial, and operational frameworks of the FGP system

6 senior staff trained overseas – master’s course on health sector planning and management 30 MOH and PGMI staff with short courses on health service delivery, financing, human resource development, and health system in Dushanbe 100 staff at all levels trained in health services and hospital planning and management in Dushanbe

A workforce plan with goals developed by early 2005 Detailed action plans for MOH and the medical university developed by mid–2005 A working group set up and functioning comprising MOH and aid agencies to review continuing medical education HMIS concept developed and operational by mid 2004 200 Staff at all levels trained on data collection, analysis and use Annual HMIS reports published and disseminated to donors

50 MOH, region, and pilot districts trained in the FGP system and financing mechanisms (study tour and in-country training) The FGP accreditation scheme set up and operational by end of 2004 through office capacity increase, developing criteria and procedures, legislation, and operational documents Guidelines for introducing FGPs prepared by end of 2005 (to be implemented in pilot districts from 2006) FGP monitoring system proposed by end of 2005

Project reports HMIS reports National health statistics Workforce plan Records of medical university Records of PGMI

Management authority is delegated to lower level management The Government at all levels will remain committed to reform. Local governments will al low their staff to attend training. Trained staff will remain in their posts .

2: Drug supply and quality control 2.1 An efficient drug procurement center established 2.2 Drug quality control mechanism set up and functioning

By 2008, 80% of the essential drugs timely distributed to health facilities nationwide 100% of 60 pharmacists from Dorui Tojik trained inn stock management 800 pharmacies officially registered in Tajikistan from 450 pharmacies currently registered among 2,000 pharmacies nationwide 100% of 40 laboratory personnel trained A cost recovery measure for drug quality analysis set up and operational by midterm of the HSRP 100% of the drugs of the pro-poor health package of international quality standard in pilot districts

Project reports Distribution and stock management reports Report from consultant Monitoring reports from MOH and PMU Activity report

The MOH will not close the center. Security situation remains stable. The PSF will not exit suddenly.

28 Appendix 3

Design Summary Performance Targets Monitoring Mechanisms

Assumptions and Risks

3: Effective and sustainable delivery of a pro-poor health services package 3.1 A pro-poor health

service package provided effectively

3.2 Increased

efficiency and pro-poor focus in services delivery

3.3. Increased

management capacity in district administration

3.4 Increased

sustainability of service package and PHC

3.5 Increased

community awareness of and participation in health practice and services

In 5 pilot districts , 25 PHC facilities renovated or constructed 5 existing referral hospitals renovated 100% of drug kits and equipment timely delivered and installed at FGPs and rural health centers All FGPs, staff of rural health centers , and pharmacists to be trained to deliver the service package effectively 246 family doctors and 20 family nurses trained and qualified

Capitation payment with performance based contract tested for FGPs from year 3 100% of the pilot district population registered with FGPs 100% of the FGPs in the pilot district contracted HMIS system set up with baseline data collected to measure the impact of the FGP system At least the same level of contacts with FGPs reached among the poor and non-poor 100% coverage of quality control (on-the-job training and consultation) of FGP services District health department created in each pilot district by mid– 2004 Two staff members from each district health department and one staff member from regional office trained 3-6 months in health planning and management courses in Dushanbe Intensive consultation and monitoring meetings organized at districts for staff of regions and HSRP districts to install and monitor the FGP system Rationalization plan developed and im plemented in five HSRP districts from end of 2004 100% of savings retained at the level of district health departments (legislation as conditions for loan negotiations) Increased share in public health budget allocation for PHC from 6% in 2003 to 20% by 2008 Increased health knowledge and practice in family planning and nutrition Informal payment reduced to35 % from 60% 5 feldsher in each pilot district trained in community participation and public campaign

PIU and PCU monitoring report National health statistics Baseline, midterm, and final surveys HMIS reports Consultant reports Knowledge, attitude, and practice surveys

The MOH remains committed to pro-poor services . Trained staff remained in posts. FGPs are accepted by the population. Local Governments will not reduce health budgets.

Appendix 3 29

Design Summary Performance Targets Monitoring Mechanisms

Assumptions and Risks

Inputs Under HSRP Civil works Equipment Materials Training/Workshops Consulting Services Surveys and Studies Public Information NGO Contract FGP Seed Capital Project Implementation Recurrent Cost Support

Contingency Total

$1.145 million $1.136 million $0.894 million $1.504 million $0.733 million $0.200 million $0.365 million $0.580 million $0.342 million $0.835 million $0.303 million $1.147 million $9.375 million

Under the 1st TA Equipment Training/Workshops Consulting Services Surveys Administration Cost Representation Cost

Counterpart Staff Contingency Total

$8,000 $40,000 $172,000 $80,000 $30,000 $4,000 $5,000 $16,000 $355,000

Under the 2nd TA Equipment Training/Workshops Consulting Services Overseas Study Tour Administration Cost

Counterpart Staff Contingency Total

$6,000 $30,000 $109,000 $15,000 $8,000 $5,000 $7,000 $180,000

FGP = family group practice, HMIS = health management information system , HSRP = Health Sector Reform Project, IMR = infant mortality rate, MMR = maternal mortality rate, MOH = Ministry of Health, NGO = nongovernment organization, PCU = Project Coordination Unit, PGMI = postgraduate medical institute, PHC = primary health care, PIU = project implementation unit, PSF = Pharmaciens sans Frontières .

30 A

ppendix 4

PROJECT CONCEPTUAL FRAMEWORK

Planning and Monitoring

Planning and Monitoring

Clear Job

Increased Financial Sustainability

Increased Planning and Management Capacity

Improved Drug Quality

Efficient Supply

Increased Awareness and Poverty Focus

HSRP Support Subcomponents HSRP Core Subcomponents HSRP Support Subcomponents

Provision of Pro-poor Health Service Package

- Design of the Package - Feasibility Study - Provision of Drug and Equipment - Training - Civil Works

Reforming Services Delivery and Financing (FGP)

- Increase in the number of family doctors/nurses - Accreditation system - Developing legal, operational, financial framework of FGP - Piloting the FGP system - Quality control - Monitoring impacts of reform - Improved planning/monitoring capacity - Pilot district health department

Public Information Campaign and Community Participation

Drug Supply System

Drug Quality Control

General Capacity Building

System Rationalization

Human Resource Development

HMIS

Improved Workforce Planning

FGP = family group practice, HMIS = health information management system, HSRP = Health Sector Reform Project.

Appendix 5 31

PROFILE OF PROJECT DISTRICTS 1. The HSRP will improve health services in five pilot districts namely Roshkala in Gorno-Badakhshan Autonomous Region (GBAR), Ayni and Gornaya Matcha in Sughd region, Garm in Region of Republican subordination (RRS), and Kulyab in Khatlon region. They are rural and mountainous districts that have more profound poverty in Tajikistan where 83% of the population on average are below the poverty line. They suffer also from poor health status of mothers and children. These districts face multiple deviations. Access to Ayni and Gornaya-Mastcha is virtually cut during the winter season; Garm has been isolated until recently due to security problems: and Kulyab is the most devastated area during the civil war. 2. Table A5.1 gives some characteristics of the plot activities.

Table A5.1: Key Statistics on Pilot Districts

Key Statistics Ayni Garm Gornaya Matcha

Kulyab Roshkala

Population

65,200

82,900

17,000

152,100

24,600

Poverty ratinga Very poor Extremely poor

Very poor Very poor Extremely poor

IMR 21.2 22.4 26.6 29.1 26.3 MMR 140.0 147.7 46.9 292.4 Number of central district hospitals

1 1 0 1 1

Number of rural hospitals 6 5 3 2 2 Number of rural health centers 12 7 2 8 3 Number of medical houses 34 29 10 35 25 Number of doctors (per 1,000 population)

82 (1.26)

72 (0.87)

10 (0.59)

48 (0.32)

Number of nurses (per 1,000 population)

238 (3.65)

169 (2.04)

49 (2.88)

350 (2.30)

Number of feldshers (per 1,000 population)

87 (1.33)

73 (0.88)

IMR = infant morality rate, MMR = maternal mortality rate. a Derived from World Bank’s list of districts classified under three categories: poor, very poor, and extremely

poor. Source: Asian Development Bank estimates.

3. Information on the ethnic minorities is in Table A5.2.

Table A5.2: Summary Information on Ethnic Minorities

Item

Ayni Garm Gornaya Matcha

Kulyab Roshkala

Regions Sughd RRS Sughd Khation GBAR Minority groups Russian – 4%

Uzbek – 3% Kyrgyz - 0.05%

Russian –0.5% Kyrgyz – 1.5% Tatar – 0.05%

Russian – 2% Kyrgyz – 0.05% Uzbek – 0.05%

Uzbek – 19.2% Russian, Tatar, Acetinan – 1%

Shugni more than 99% Russian less than 1%

NGO working in pilot districts

IFRC MSF IFRC IFRC, MERLI AGH

AKF = Aga Khan Foundation, IFRC = International Federation of Red Cross and Red Crescent Societies, GBAR = Gorno Badakshan Autonomous Region, MSF = Medicins sans frontières (doctors without borders), RRS = Region of Republican Subordination.

32 Appendix 6

FAMILY GROUP PRACTICES A. Introduction 1. A family group practice (FGP) is a team of doctors and nurses who work as a private entity through contract with the local government and provides primary health care (PHC) and holistic family health services to the population. Tajikistan has no tradition of general practice. The health care delivery system inherited from the former Soviet Union and continuing without significant changes is extensive, complex, and fragmented at all levels of the system. PHC is provided in cities at polyclinics that are fragmented with separate clinics for adults, children, and women’s reproductive health; at specialized dispensaries; and at health posts of universities. In rural areas it is more complicated. PHC facilities in rural areas are medical houses (previously called FAP), rural clinics, and rural hospitals. 2. The specialist system of around 125 different specialties further adds complications and inefficiency to actual services to patients. For example, a doctor could be a specialist “cardiac reanimator” whose sole responsibility is resuscitating patients suffering from cardiac arrest and cardiogenic shock. To provide care to the broad community, a number of specialists of different disciplines are found even at the PHC level. A consequence of this high degree of specialization, the number of patients seen by many individual doctors is extremely low; thus, most resources are used in providing potential access to medical care rather than on actual services to patients. The move to a generalist-based system aims to allocate funds for direct patient care through the provision of doctors who are able to treat, at least in the first instance, patients of both genders and all ages exhibiting the most problems. 3. As part of overall health sector reforms, a general practice model has been proposed. In 2000, the Ministry of Health (MOH) prepared the draft document on Health Reform Master Plan 2000–2010 that sets out a plan for retraining and training family doctors and nurses. On 4 March 2002, the Government approved the concept of health reforms including the retraining of family doctors and nurses. Students choosing to specialize in family medicine undertake training in years 6 and 7 at the Tajik medical university, which is the only institution providing medical undergraduate training. At first, 11 students took the family doctor training program in 2001 and graduated in June 2003. In 2002, only 25 out of 500 students chose to go to family medicine, indicating the low popularity of the program. 4. The postgraduate medical institute conducts retraining of family doctors and nurses. So far, over 240 specialists have been retrained since 1998. In 2001, 13,400 medical doctors registered in Tajikistan. Only 1.8% majored in family medicine. In 2001 MOH and the World Health Organization (WHO) shortened the course from 8 months to 6 months. Several international agencies, such as Asian Development Bank/Social Sector Rehabilitation Project, the World Bank, WHO, Agha Khan Foundation, and Zdravplus, support retraining programs. Currently 20-26 family doctors are trained annually. The same agencies support the retraining of family nurses. 5. Evaluation of the family medicine retraining program has shown that doctors completing the program continue to work in medical houses or polyclinics under the same working conditions as before and tend to continue to see patients who fall within their original clinical specialty. Apparently family doctors and nurses are not only limited in numbers, but also ineffective in providing services for which they have been trained.

Appendix 6 33

6. Introducing the FGP process involves, not only adoption of general and group practice, but also (i) a change in provider payment (from the norm-based budget allocation for state employees to risk-adjusted capitation payment to private providers of service); (ii) introduction of performance based contracts; (iii) the purchaser-provider split where the public health authority plays the role of purchaser while a FGP takes the role of an independently contracted provider, and registration of the population with FGPs; (iv) retraining programs; (v) accreditation systems to assure the quality of FGP services; and (vi) public information campaigns on the FGP system. A monitoring system is another important pillar for population registration, and performance and impact monitoring. The pro-poor nature of the FGP system is strengthened by capitation payment and contractual arrangements, and ensured by the monitoring system. The plan is to set up a FGP unit with a staff of two family doctors and two family nurses for multiple functions including management of the facility. The unit will cover 3,000 persons on average. (The reform plan proposal is for one family doctor to cover 1,500 persons.) B. Proposed Assistance Under the Health Sector Reform Project 7. The capacity of the Government for policy development and administration is limited. It lacks experience in planning and implementing reforms. The Health Sector Reform Project (HSRP) will strengthen MOH capacity and assist MOH to develop the operational, legal, and financial framework for the FGP system. The capitation rates and contracts’ contents will be carefully designed to have pro-poor incentives. District health departments will be created and their capacities built. Regional supervisory functions will be strengthened. 8. The HSRP will finance capitation payment in pilot districts and will pilot-test the FGP system. The pilot activity will start from year 3 of project implementation. By that time, the design of the FGP system will have been completed and enough trained staff available to start working in the pilot districts. The necessary legal framework and regulations will have been enacted and the management requisites will be in place. Simultaneously, facilities will have been rehabilitated, equipped, and supplied with medicines. Before the purchaser-provider split and contractual status of FGPs are introduced, extensive public campaigns, consultation, and discussion must take place to raise awareness and understanding. C. Capitation Payment 9. Capitation is the payment scheme by which FGPs are paid according to the number of people registered with them. Capitation should be introduced only when all requirements are in place. Basic characteristics of the proposed capitation payment scheme follow: (i) Contracts will be established between the FGP units and the district health departments.

The contract will set a series of targets, procedures, and monitoring measures. The pro-poor objective must be clearly stated in the contract. Specific monitoring instruments will systematically evaluate the accomplishment of objectives.

(ii) The package will include consultation to start the scheme. The package will be expanded to include drug costs after experience on FGP management has accumulated and health workers follow rational drug use.

(iii) The capitation rating will consider age, sex, and the poverty level of the registered population. This is to increase incentives for the provider to see needy people (for instance, infants and pregnant women) and the poor.

34 Appendix 6

(iv) The FGP unit will be accountable to the district health authority, and must comply with the health policy being implemented. The staff might still keep their employee status and their salaries guaranteed until the purchaser-provider split is fully introduced.

(v) At the end of year 2 of the HSRP there will be around 100 trained family doctors.

Considering that each FGP unit (two doctors and two nurses) will cover a population of 3,000 people, around 114 FGPs will be necessary to cover the whole population (350,000) of the five pilot districts. The full coverage in the pilot areas should be achieved by year 5 of the HSRP. For the 3 years of the HSRP, there should thus be 57 FGPs on average.

(vi) The HSRP will allocate seed money to support the scheme for 3 years until the end of the Project.

D. Financial Feasibility of Nationwide Capitation Payment 10. After being evaluated in five HSRP districts, the FGP system will expand nationwide. 11. The actual composition of the FGP unit and the capitation rate for the pilot districts will be determined during the first 2 years of the HSRP. Due to the absence of suitable data for detailed planning, the following indicative planning is made for estimating budget requirement for the FGP system under the HSRP and nationwide. This indicative planning is based on the experience in Mongolia that has successfully introduced FGP nationwide, but adjusted by the economic difference between Mongolia ($400 of GDP per capita) and Tajikistan ($162). In Mongolia, the introduction of FGP nationwide has increased by 7% in the allocation to PHC in the public health budget, and transferring the hospital allocation to PHC offset this increase. The Government continues to pay the salary of family doctors and family nurses. Other costs 1 (capitation, performance and development) will be met by the HSRP. Under the contractual arrangement, the FGP unit will receive $1,800 (TJS5,500) annually for 3,000 enrollees, based on $0.6 per enrollee per year.

12. For a nationwide FGP system, around 2,066 FGP units will be set up and around TJS11,363,000 per year will be required to finance the system. (Considering that the annual cost of one FGP unit is TJS5,500, TJS11,363,000 per year will be necessary). Two possible funding strategies are proposed to extend the scheme nationwide: one is based on increases in the health budget, as in the Mongolian case, and the other on pooling private contributions collected locally. The HSRP will support a detailed feasibility analysis when the HSRP and the Government evaluate the pilot FGP system. The two strategies are briefly examined in paras. 13-16.

1. Increasing Allocation to PHC or Increasing Public Expenditure 13. If the additional requirement is to be covered by reallocation from the public health budget, the allocation to PHC must increase from 6% to 34%. For a proposed forecasted public health budget of TJS36 million by the end of year 5 of the HSRP (2008), the estimated total of TJS11.4 million for funding the scheme will represent 32% of the total budget. Considering that the total spent on PHC currently represents only 6% of the public health budget, an increase by

1 In the context of this paper, capitation refers to funding for the delivery of health care to enrolled populations.

Performance relates to payments made to FGPs who meet predefined performance standards for priority services and appropriate referral practices, and so on. Development refers to competitive grants for innovation in case practices. With other costs, the FGP will manage its services, excluding drug prescription.

Appendix 6 35

34% would bring the system to a more adequate and efficient distribution of resources between primary and hospital levels. The new distribution will correct a serious distortion of the current allocation. The HSRP will promote system rationalization, including reduction of beds, appropriate staff distribution, and increased efficient hospital management, and will help the Government reallocate funds from the hospital sector to the PHC level. 14. If the requirement is to be covered by increasing the total public health budget, the total budget will have to account for 1.5% of GDP. This percentage, despite representing a substantive increase from the current level of 0.9%, is still well below the 3% observed in other central Asian republics. This plan will make the FGP system sustainable. The Ministry of Finance plans to increase the public health budget to 1.8% by 2008. The HSRP will undertake policy dialogue to see this plan happening and furthermore to raise public health expenditure to the level in the other central Asian republics.

2. Pooling Private Contributions 15. Health care users have been making substantive formal and informal payments to healthcare providers. The payments are estimated to be larger than the Government expenditure in health; therefore, it is important to design alternatives to bring these resources to the system in a transparent and nondiscretionary way. The proposal discussed here envisages collecting a yearly contribution from the beneficiaries. The contributions should entitle the beneficiaries to free health care throughout the year, and should be pooled at the district level. 16. For estimation purposes, an indicative contribution of TJS2 should be collected annually for each of the 3,000 inhabitants of the area covered by a FGP unit. Assuming 100% compliance, a total of TJS6,000 will be collected in the catchment area of the FGP unit. According to estimates, this fund will be enough for paying TJS500 a month to the FGP unit. Such a scheme would release pressure on the Government budget. Considering that the annual out-of-pocket private expenditure in Tajikistan is estimated as S$2 (TJS6.2) per capita, and assuming that 50% (TJS3.1) of that is spent on drugs and the other 50% is payment to health care providers, the suggested contribution of TJS2 per capita should easily be affordable to the majority of the population. E. Comparative Analysis of the FGP System and a NGO Service System 17. Involvement of nongovernment organizations (NGOs) in running health services improves access to and the quality of the services. It is necessary to examine the possibility of setting up a NGO-run health system in Tajikistan before deciding to set up the FGP system. Tajikistan was an emergency country, and its public health system has collapsed. Only NGO-supported health facilities function well. Continuing to use NGOs is an option. However, such an approach is not financially or operationally sustainable in Tajikistan for the following reasons. The NGOs are international or affiliated with international support and too costly to be financed by the Government budget. NGOs’ overhead cost is high and their health workers receive much higher salaries than public health workers do. At present, emergency NGOs are withdrawing, while development NGOs or local NGOs are too few. In conclusion, the NGO health system is not sustainable in Tajikistan. The proposed FGP system, as understood here, involves, not only adoption of general practice, but also (i) a change in provider payment and (ii) introduction of performance-based contracts with rigid monitoring. These aspects will enhance the pro-poor nature of the FGP system and service efficiency. Hence, the proposed FGP system has the advantages of the NGO system, but at the same time has the least cost based on appropriate capitation rates.

36 A

ppendix 7

COST ESTIMATES AND FINANCING PLAN ($ million)

Item Total Project

Cost ADB

Financing Government Financing

Foreign Local Total Foreign Local Total Foreign Local Total Exchange Currency Cost Exchange Currency Cost Exchange Currency Cost A. Investment Cost

1. Civil Works 0.476 0.834 1.310 0.476 0.441 0.917 - 0.393 0.393 2. Equipment and Furniture 1.776 - 1.776 1.776 - 1.776 - - - 3. Training and Workshops a. Overseas Training 0.150 - 0.150 0.150 - 0.150 - - - b. In-country Training - 0.811 0.811 - 0.406 0.406 - 0.406 0.406 4. Consulting services a. International Consultants 0.616 - 0.616 0.616 - 0.616 - - - b. Domestic Consultants - 0.053 0.053 - 0.053 0.053 - - - 5. Surveys and Studies 0.020 0.180 0.200 0.020 0.080 0.100 - 0.100 0.100 6. Public Information Campaign 0.073 0.292 0.365 0.073 0.109 0.182 - 0.183 0.183 7. Materials and Consumables 0.824 0.070 0.894 0.824 0.070 0.894 - - - 8. Project Management 0.260 0.326 0.586 0.260 0.326 0.586 - - - 9. Procurement Center/ PSF Work 0.580 - 0.580 0.580 - 0.580 - - -

10. FGP Seed Capital - 0.342 0.342 - 0.342 0.342 - - - Total Investment Cost 4.774 2.908 7.683 4.774 1.827 6.520 - 1.081 1.081

B. Recurrent Cost 0.083 0.323 0.405 0.083 0.000 0.083 - 0.323 0.323

C. Total Base Cost 4.857 3.231 8.088 4.857 1.827 6.602 - 1.404 1.404 D. Contingencies a

1. Physical Contingencies 0.132 0.045 0.177 0.132 0.023 0.155 - 0.022 0.022 2. Price Contingencies 0.153 0.759 0.913 0.153 0.310 0.463 - 0.450 0.450

E. Interest Charges 0.198 - 0.198 0.198 - 0.198 - - - Total 5.340 4.035 9.375 5.340 2.160 7.500 - 1.875 1.875 FGP = family group practice; PSF = Pharmaciens sans Frontières. a Physical contingency is estimated at 5% of civil works and equipment costs. Price contingency is estimated based on 2.4% inflation for foreign exchange and

14%, 12% and 12%, 12% and 12% for local currency for 2003-2007. Source: Asian Development Bank estimates.

Appendix 8 37

POTENTIAL COFINANCING

Project Component Possible Cofinancing

Package Content of the

Package Indicative Amount of

Cofinancing ($) A. Institutional Development 1. Planning and Management Capacity 2. FGP system development

Institutional building HMIS training

Procurement of Consultants Training Consultants Training

650,000

300,000

B. Drug Supply and Quality 1. Drug Supply 2. Drug Quality

Drug supply

Civil Works Procurement Consultants Training Operational Costs

580,000

C. Pro-Poor Health Package 1. Provision of the Package 2. Reforms in Service Delivery

Community participation

Consultants Procurement NGOs supervision Access studies Training IEC operational costs

599,000

FGP = family group practice, HMIS = health management information system, IEC = information education and communication, NGO = nongovernment organization.

38 Appendix 9

IMPLEMENTATION ARRANGEMENTS

A. Steering Committee

1. The steering committee will be chaired by a deputy prime minister and consist of key stakeholders including the President’s Office, Ministry of Health (MOH), Ministry of Education (MOE), Ministry of Finance, district representatives, and selected sector specialists. The committee will meet on a quarterly basis and will be responsible for (i) approving the annual sector plan, and (ii) reviewing implementation progress and resolving any bottlenecks that may require high-level interventions and intergovernment consultation. B. Project Director and Project Manager 2. The deputy prime minister will be the project director and will be responsible for the timely and efficient execution of the work for the Project as approved by the steering committee. Under the guidance of the project director, the project manager, heading the project implementation unit (PIU), will (i) coordinate the implementation of the annual work plan as approved by the steering committee, (ii) review project expenditures and procurement and ensure that they are in line with approved plans and pertinent administrative procedures, and (iii) be the main focal point in policy coordination and project discussions with the Asian Development Bank (ADB). C. Project Implementation Unit and Project Administration Unit

3. A PIU comprising a project manager/sector leader, health sector reform coordinator, civil engineers, and support staff will be established at MOH. The PIU will conduct project implementation in close consultation and coordination with the project administration unit (PAU) and as directed by the project director. The key responsibilities of PIU are to (i) prepare the project work plans, budget, and progress report; (ii) propose project expenditures and procurement needs; and (iii) implement project activities as per the annual work plan 4. The PAU will provide secretarial and administrative support to PIU at MOH and district PIU in administrative (procurement/civil works, disbursement, and consultant recruitment) and logistic arrangements and reporting. The PAU will comprise 9 administrative, procurement/civil engineer, logistic, staff, and drivers. The Education Sector Reform Project and Health Sector Reform Project will share the PAU, steering committee, and district supervisory group. The President's Office will assign PAU Government office space outside MOE and MOH. D. District Supervisory Group and District PIU 5. The district supervisory group comprising the district governor (chair), directors of departments of health and education, selected village leaders, and sector staff at schools health facilities will guide the preparation of district plans, review progress on a quarterly basis, and coordinate and implement all district activities. Each district will have a district PIU comprising a project coordinator, district reform officer, procurement/civil engineer. and an administrator responsible for district-level implementation and day-to-day management. The district PIU will also act as the district health department. E. International consultants for Project Management 6. An international project management adviser and a civil work/procurement/environment adviser will be recruited to assist the PAU and PIU in project management. A land acquisition/resettlement planner will be recruited, as necessary, to advise and help district administrations prepare a resettlement plan acceptable to ADB.

Appendix 10 39

IMPLEMENTATION SCHEDULE 1. Institutional development Year 1 Year 2 Year 3 Year 4 Year 5 1.1 Capacity Building of MOH, PGMI, and the Medical University Overseas Training of Staff Creating the National Training Team Training in Planning/Management Improving the Licensing System FGP Accreditation Development Facility Rationalization Plan Refined Training in Public Information Campaign 1.2 Workforce Planning Review of Status and Legislation Workforce Model and Legislations Produced Workforce Workshops Action Plans Developed and Implemented Standardization and Regular Meetings on Continuing Education 1.3 HMIS Development Review HMIS Performance and Capacity Development of HMIS Framework Training and Computerized System Proposed Regular Intersector/Donor Committee Training for Data Collection and Analysis Computerized HMIS Set up 1.4 FGP System Framework Development Training on FGP System and Payment Development of Framework National Workshop 2. Drug Supply and Quality Control On-the-job training of Dorui Tajik Review of drug supply system Procurement of equipment laboratory Training of laboratory analysis Review of quality control system

3. Effective and Sustainable Delivery of a Pro-Poor Health Service Package 3.1 Provision of a Pro-Poor Health Services Package Distribution of Drug Kits Installation of Equipment Training of Staff Rehabilitation/Construction of Facilities Training of Family Doctors and Nurses 3.2 Increase in Efficiency and Pro-Poor Focus of Services Discussion for FGP System Installation Test System and Payment Mechanism FGP Mapping/Population Registration Capitation Payment and Arrangements HMIS Set up and Functioning Framework and Data Surveys Monitoring and Quality Control of FGP Monitoring and Quality Control of FGP Conference to Evaluate FGP System 3.3 Management Capacity Building of District Administration Creation of District Health Department Training of Staff for the Health Department 3.4 Facility Rationalization Plan Development and Implementation Workshops on Business Plan Preparation 3.5 Community Awareness and Participation Training of Feldshers and Health Workers Community Mobilization and Participation Public Information Campaign Conducted FGP = family groups practice, HMIS = health management information system, MOH = Ministry of Health, PGMI = Post-graduate medical institute, PHC = primary health care.

40 Appendix 11

INDICATIVE CONTRACT PACKAGES Items Number of

Contracts Mode of Procurement Aggregate Amount

($ '000) Civil Works Health Center Construction and Renovation

40

LCB

1,190

PIU/PAU/ District PIU Offices Renovation

7 LCB 120

Equipment

Vehicles

1

IS

178

Health/Lab Equipment/Furniture multiple ICB/IS 1,075 Office/ Training Equipment Multiple IS/DP 523 Drugs/Reagent/Consumable 2 ICB/IS 894 DP = direct payment, ICB = international competitive bidding, IS = international shopping, LCB = local competitive bidding, PIU = project implementation unit. Source: Asian Development Bank estimates.

Appendix 12 41

OUTLINE OF TERMS OF REFERENCE FOR CONSULTING SERVICES A. Introduction 1. The consulting services requirements are summarized in Table A12. The human resource specialists are involved in human resource development and health personnel licensing and accreditation. The health system specialists include those in the family group practice (FGP) system, capitation payment, health planning and rationalization and health management information system (HMIS). The pharmaceutical specialists will be involved in laboratory and drug quality control and clinical pharmaceuticals. The project management specialists include a project management adviser, civil works/procurement specialist, and a land acquisition/resettlement specialist.

Table A12: Summary of Expertise

Number of Consultants Role

Person-Months International Domestic International Domestic

Technical Specialists Human Resource Specialists 7 25 3 3 Health System Specialists 14 43 5 5 Social Mobilization and Community Specialist

1 24 1 1

Pharmaceutical Specialists 5 10 2 2 Environment Specialist 1 4 1 1 Subtotal 28 106 12 12 Project Management Specialists 20 3 Total 48 106 15 Source: Asian Development Bank estimates . 2. International consultants' inputs are focused on selected reform needs envisaged under the Health Sector Reform Project (HSRP). Where other agencies provide technical inputs, the HSRP will not provide international consultants, but instead, will work with such agencies. International project management specialists will accelerate project implementation. Together with the Education Sector Reform Project, the HSRP will recruit international consultants for 40 person-months of service. It is expected that the capacity of the local staff of the project coordination unit will be established within 40 months. B. Technical Consultants 3. Human Resource Development (international, 4 person-months; and domestic, 14). The consultants will (i) prepare and conduct the section on human resource development and management in the in-country health planning and management course; (ii) help the Ministry of Health (MOH) and the medical university (MU) review, develop, and implement a workforce plan; (iii) help the HMIS team identify a minimum database set for proper human resource planning; (iv) help the survey teams review questionnaires on human resources for the surveys in pilot districts; and (v) help MOH review and standardize continuing education programs. In particular, the consultants for workforce review and planning will (i) organize a workforce planning workshop for MOH departments of planning and human resource, and the MU, (ii) help MOH and the MU review size, skills mix, distribution, and use of the MOH workforce; (iii) help MOH and the MU develop workforce strategies and plans; and (iv) review current and proposed legislation and regulations related to the health workforce.

42 Appendix 12

4. Health Personnel Licensing and Accreditation (international, 3 person-months; and domestic, 6). The consultants will standardize the licensing and accreditation systems. They will help MOH (i) improve and implement the licensing system for all health personnel, (ii) develop accreditation for family doctors and nurses, (iii) set up a monitoring system for accreditation, and (iv) help MOH draft legislative documents for licensing and accreditation. 5. Family Group Practice (international, 5 person-months; domestic, 15). The consultants will (i) develop a time-bound action plan for FGP establishment; (ii) develop targets and indicators for monitoring and evaluating the FGP system in collaboration with the HMIS team; (iii) organize a workshop on the FGP system for MOH departments of planning and health system development; (iv) help MOH develop the framework of and compile guidelines on FGP mapping, population registration procedures, capitation payment introduction (in consultation with heath care financing specialist), contractual arrangements, and FGP management; (v) help MOH evaluate the FGP initiatives in pilot districts; and (vi) develop an implementation plan to extend the FGP initiatives nationwide. For pilot districts, the consultants will (i) organize training courses and consultation meetings for pilot district administrations on the guidelines for setting up an FGP system, (ii) help districts implement the FGP system and the monitoring system, and (iii) set up a quality control mechanism. 6. Capitation Payment Specialist (international, 2 person-months; and domestic, 12). The consultants will (i) help MOH develop and implement the framework of the capitation payment to FGPs in consultation with FGP consultants, (ii) help the HMIS team identify a minimum database set for proper financing and budget planning, (iii) help the survey teams prepare questionnaires related to health financing for the surveys in pilot districts, and (iv) help pilot districts introduce and monitor the capitation payment mechanism. The domestic consultant will conduct the health care financing and budget allocation section in the in-country course. 7. Health Planning and Rationalization (international, 4 person-months; domestic, 15). The consultants will (i) take responsibility for planning and initiating the in-country health planning and management course; (ii) help MOH prepare guidelines on facility mapping and hospital sector rationalization; (iii) perform an in-depth cost and management study of the hospital sector in pilot districts including the present provision, use, and organization of services; (iv) help pilot districts plan and implement rationalization; and (v) help districts prepare business plans to use the savings from rationalization. 8. Health Management Information System (international, 3 person-months; domestic , 6). The consultants will (i) help the project coordination unit (PCU) to set up the project performance and benefit monitoring system, as a part of HMIS, (ii) help the HMIS intersector committee review and use HMIS for proper planning and monitoring; (iii) develop and install the computerized HMIS at MOH and other strategic planning places; and (iv) train relevant staff in using the computerized HMIS. 9. Social Marketing, Community Mobilization, and Public Information Campaign (international, 1 person-month; domestic consultants/local NGOs, 24). The consultants will develop public information campaigns to increase understanding of and support for health sector reform and health practices, in collaboration with the United Nations Children’s Fund and MOH. The campaigns will be based on knowledge and skills in social marketing and community mobilization. The consultants will also develop and implement pre- and post-campaign surveys to evaluate impacts.

Appendix 12 43

10. Laboratory and Drug Quality Control (international, 3 person-months; domestic, 4). The consultants will (i) assess equipment needs, rehabilitation needs, and literature and training needs to improve the capacity of the Tajik laboratory for drug expertise, (ii) produce technical specifications for equipment, (iii) develop guidelines for the training, and (iv) train the laboratory team and teachers in the faculty of pharmacy. 11. Clinical Pharmaceutical Specialist (international, 2 person-months; domestic, 6). The consultants will (i) retrain specialists in clinical pharmacy, covering evidence based medicine, prescription comments and analysis, drug interaction, antibiotic use, Tajik essential drug list, and drug kits for the pro-poor services; and (ii) prepare a retraining curriculum and material. 12. Environmental Assessment and Measures (international, 1 person-month; domestic, 4). The consultants will work with relevant government agencies to (i) set up guidelines on environmental assessment, measures, and monitoring related to drug quality control, medical waste and water conservation activities; and (ii) develop and conduct training for relevant staff. C. Project Management Consultants 13. Project Management Adviser (international, 15 person-months). The consultant will (i) help the project administration unit (PAU) and the project implementation unit (PIU) establish detailed project activities plan and arrangements; (ii) advise and help PAU and PIU on all matters related to project administration, including report preparation; and (iii) train PAU, PIU, and counterpart staff on the job in the various project management tasks. 14. Civil Works/Procurement/Environment Adviser (international, 4 person-months). The consultant will (i) advise and help the PAU and PIU on project administration related to civil works, procurement of goods and services, and environmental needs in association with civil works; (ii) help the PIU and the districts plan and implement civil work surveys; and (iii) prepare guidelines for operating and maintaining rehabilitated/rebuilt facilities. 15. Land Acquisition/Resettlement Planner (international, 1 person-month). As necessary (when facilities are to be built in new places), a consultant will be recruited to help the district administration prepare a resettlement plan acceptable to the Asian Development Bank. D. Nongovernment Organizations’ Drug Supply 16. It is proposed that the Pharmaciens Sans Frontières (PSF) be selected directly for supporting the drug supply system. PSF has overall responsibility to run the humanitarian drug supply system that has been set up in parallel with the national drug supply system. PSF coordinates all drug requirements of 11 humanitarian nongovernment organizations. The humanitarian drug supply system functions effectively and it is important to ensure that the efficient system be absorbed into the national system before humanitarian agencies exit. 17. PSF will build the capacity of the national drug procurement center to enable it to perform efficient drug procurement and distribution. PSF’s specific activities include (i) preparing guidelines and protocols for managing drug supply at national and regional levels, covering, assessment of drug needs, procurement, stock management, distribution, and warehouse management; (ii) preparing software for stock management implementation; and (iii) training staff at the national and regional levels on guidelines, protocols, and software; and (iv) rationalizing the center for efficient operation.

44 Appendix 13

INDICATORS FOR PROJECT PERFORMANCE MONITORING AND EVALUATION SYSTEM

1. Project performance monitoring and evaluation system data will comprise data of health management information system (at the national and pilot district levels) and findings of district surveys as indicated in the following list. (i) Millennium Development Goals

(a) Infant mortality rate per 1,000 live births

(b) Under-five mortality rate per 1,000 live births (c) Maternal mortality rate per 100,000 live births

(ii) Management efficiency

(a) Percentage of budget allocation to primary health care (PHC) of public

health expenditure (b) Number of doctors, nurses, and feldshers per 10,000 population

(iii) Access and equity

(a) Number of individuals registered and receiving services at family group practices (FGPs) disaggregated by sex, age, and income (baseline and follow-up surveys in pilot districts)

(b) Prevalence of contraceptives (c) Antenatal care coverage (d) Percentage of deliveries attended by qualified health workers (e) Immunization rate

(iv) Quality and effectiveness of health services

(a) Percentage of patients satisfied with services (baseline and follow-up

surveys in pilot districts) (b) Average length of stay at hospitals (c) Reduced referral rate from PHC facilities to district hospitals (baseline

and follow-up surveys in pilot districts) (d) Case fatality rates of selected diseases (baseline and follow-up

surveys in pilot districts) (e) Percentage of health facilities implementing medical waste

management (v) Effectiveness of Health and nutrition knowledge and practice (baseline

and follow-up surveys in pilot districts)

1. Breast feeding percentage 2. Households using iodized salt 3. Prevalence of smoking

Appendix 14 45

TECHNICAL ASSISTANCE FOR PLANNING AND POLICY DIALOGUE FOR HEALTH REFORM

A. Background and Rationale 1. An effective health management information system (HMIS) is essential for planning, reforming, managing, and monitoring the health sector of Tajikistan. However, reliable and disaggregated information is currently lacking. The lack of reliable data on the existing workforce seriously hampers effective human resource development planning. Financing data is required to design financing strategies and develop mechanisms for performance-based budget allocations. HMIS needs streamlining. The Health Sector Reform Project (HSRP) aims to reform the health care delivery system by introducing the family group practice (FGP) and the capitation payment scheme. It is important to ensure that HMIS functions effectively in monitoring the new systems’ performance and evaluating the impacts of changes. 2. In addition to lack of accurate information, the use of data for planning and monitoring is low at all levels of the health system. Neither does a forum exist where the Government and external agencies could monitor and discuss the reform process and sector development. The technical assistance (TA) will set a foundation for improving decision making and policy and planning capacity, supporting monitoring, and facilitating policy dialogue on sector reform and development between the government and external agencies. 3. Critical for measuring impacts is the availability of a baseline data that indicates the actual situation in the health sector. It is important to survey HSRP pilot districts to determine the level of health care delivery, including service use, and health status. B. Objectives 4. TA will (i) develop the HMIS framework and action plans at the Ministry of Health (MOH), region, and district levels; (ii) provide a basis for planning, monitoring, and measuring system performance and reforms; and (iii) provide a monitoring and policy dialogue mechanism between the Government and external agencies. The TA will conduct an in-depth survey in pilot districts to obtain accurate and disaggregated baseline database for the health sector. The TA will technically orient HSRP’s HMIS component. Based on the TA’s outputs, the HSRP will establish HMIS, conduct training nationwide, and facilitate policy dialogue on reforms C. Scope and Methodology 5. First, the TA will review the situation and assess current capacity in handling HMIS data. It will examine a list of data currently collected, the process of data collection, gaps and usefulness of data collected, actual use of information at all levels, capacity of staff to effectively analyze data, and accuracy of data. Consequently, the TA will develop the HMIS framework with a minimum required data set, cost-effective methods, and a scheme to improve data quality. The TA will train key MOH officials on HMIS while developing the HMIS framework. 6. Second, the TA will design and implement an in-depth survey on health care delivery and health status for the pilot district level. The baseline data produced by the survey will be used for planning, monitoring, and measuring HSRP activities. It will be fed into HMIS at the national level to complement the system as well. Finally, the TA will create a forum where the Government and external agencies can review HMIS data and discuss the reform process.

46 Appendix 14

D. Cost and Financing 7. The total cost of the TA is estimated at $355,000, of which $169,000 is in foreign exchange and $186,000 equivalent is in local currency. The Government has requested the Asian Development Bank (ADB) to finance $300,000, covering the entire foreign exchange cost of $169,000 and $131,000 equivalent of the local currency cost. The Government will finance the balance of the local currency cost through the provision of counterpart staff, office space with utilities, and workshop facilities. The TA will be financed on a grant basis by the Japan Special Fund, funded by the Government of Japan. The detailed cost estimates and financing plan in Table A14.

Table A14: Cost Estimates and Financing Plan ($'000)

Foreign Local Total Item Exchange Currency Cost

A. Japan Special Fund Financing 1. Consultants a. Remuneration and Per Diem i. International Consultants 132 0 132 ii. Domestic Consultants 0 7 7 b. International and Local Travel 15 10 2 c. Reports and Communications 0 8 8 2. Equipment (Computer, Printer, etc.) a 8 0 8 3. Workshops, Training and Seminars 0 10 10 4. Surveys 0 80 80 6. Administration and Support Costs 0 10 10 7. Representative for Contract Negotiations 4 0 4 8. Contingencies 10 6 16 Subtotal (A) 169 131 300

B. Government Financingb 1. Office Accommodation/Workshop Facilities 0 30 30 2. Counterpart Support 0 5 5 3. Domestic Transport 0 20 20 Subtotal (B) 0 55 55

Total 169 186 355 a Includes purchase of fax machine, photocopier, overhead projector, computers, printers, and communication

equipment for TA office. b Government contribution is provided in-kind by national and local governments. Source: Asian Development Bank estimates. E. Implementation Arrangements 8. The TA will start in March 2004 and end in February 2005. The President’s Office will be the Executing Agency. MOH will be the implementing agency. The steering committee for the HSRP will guide the TA as well, ensuring a close link with the HSRP 9. A team of international and domestic consultants will implement the TA. The TA will provide 5.75 person-months of international consulting services in the areas of HMIS, surveys, and in poverty assessment and community participation. The TA will also provide 14 person-months of domestic consulting services in above areas, and in poverty assessment and community participation. The consultants will be recruited through a firm in accordance with ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB. Office

Appendix 14 47

equipment, computers, and printers will be procured in accordance with ADB’s Guidelines for Procurement. F. Terms of References for International Consultants 10. The specific duties of the consultants are in paras. 11-13. 11. Health Management Information System Specialist (international, 2.5 person-months; domestic, 5).

(i) Assess the current HMIS in the country in terms of a list of data currently collected, ease of data collection, gaps in data collected, usefulness of data collected, reflection of gender concerns, actual use of information at all levels, capacity of staff to effectively analyze data, and accuracy of data.

(ii) Propose an HMIS framework with minimum database set, cost-effective data

collection methods, and a scheme to monitor and improve data quality that takes into account the planning/management/monitoring purpose and reform agenda.

(iii) Organize initial training in HMIS for key MOH officials. (iv) Organize a national conference to finalize the HMIS framework. (v) Develop training curriculum for data collection, analysis. (vi) For pilot districts, design with survey teams a comprehensive monitoring plan that

entails regular surveys, expanded HMIS to be added on the national HMIS with indicators monitoring pilot activities and small ad hoc surveys as necessary.

12. Poverty and Participation Specialist (international, 1 person-month; domestic, 2)

(i) Review health service-seeking behavior among the poor and vulnerable, and analyze barriers that prevent them from using health services, especially barriers to women seeking access to health services.

(ii) Advise the HMIS and survey teams on monitoring/survey indicators and

methodologies that can effectively identify access to and use of health services among the poor and vulnerable.

(iii) Advise HMIS and survey teams on the role and modalities of community participation

in improving data quality. 13. Survey Specialist (international, 2.5 person-months; domestic, 5)

(i) Work with the HMIS team to design a comprehensive monitoring system and plan as above in the pilot districts.

(ii) Design the baseline data survey, train survey staff, supervise the start of the survey,

analyze the survey results, and make a report in pilot districts.

(iii) Identify and design small ad hoc surveys on access to use of health services among the poor.

48 Appendix 15

TECHNICAL ASSISTANCE FOR DRUG PROCUREMENT AND DISTRIBUTION STRATEGY A. Background and Rationale 1. The former state drug procurement (including quality control) and distribution system in Tajikistan collapsed after independence and has not been able to distribute any drugs in the last 6 years. All drugs except those donated by humanitarian agencies must be purchased through private suppliers based in the country, either through out-of-pocket payment by individuals or through use of the state budget by public hospitals. Small-scale drug procurement by individual health facilities or individuals cannot benefit from economies of scale. Drug quality is uncertain. Facilities buy whichever drugs are readily available, without following the essential drugs list. This situation contributes to further impoverishing the population and to wasting the already inadequate state budget allocated for medicines. Rebuilding public procurement, establishing quality control, and improving distribution capacity will lead to the availability and ensure the quality of cost-effective drugs needed by the poorest among the population. 2. The Government plans to establish a new drug procurement and nationwide distribution system under the MOH. Some elements of the system are in place, including a nationwide network of MOH warehouses, but the Government will require support in developing a long-term strategy and in strengthening key aspects of the new system. A drug procurement center run by nongovernment organizations (NGOs) financed by the European Commission Humanitarian Office (ECHO), and established and maintained by Pharmaciens Sans Frontières (PSF) has been delivering essential drugs to health facilities supported by NGOs nationwide, but continued support is in doubt as emergency-oriented, humanitarian agencies plan to exit the country. ECHO had planned to cease financial support by May 2003, but support has since been extended by 1 year. The Government hopes to incorporate essential elements of the PSF system into the national system before ECHO and PSF exit, but it currently lacks the capacity to plan or manage this process. B. Objectives 3. The technical assistance (TA) will develop a drug procurement and distribution strategy through a participatory process involving discussions, exposing MOH staff to several development options, and reaching consensus. The strategy will cover all aspects of the procurement and distribution process, namely: selecting drugs, ensuring quality, managing the tender process, distributing drugs, managing stocks, and monitoring drug use and prices. The TA will (i) support policy dialogue and develop a clear strategy and framework for establishing a drug procurement and distribution system, supported by action plans at MOH, region, and district levels; (ii) prepare a rational plan for warehousing, equipment distribution, and staffing; and (iii) provide operational guidelines for the procurement process. Support for developing strategies to strengthen public drug procurement and distribution capacity is urgently required to ensure continuation of an adequate and reliable supply of quality drugs when assistance from humanitarian agencies ends. The private sector currently does not have the capacity and lacks an appropriate policy/legal framework to assume these responsibilities immediately. The TA will fill the vacuum created by private sector absence and a lack of public sector capacity, while proposing long-term development strategies to increase private sector involvement, including public-private partnerships, in drug procurement and distribution. 4. The TA will complement and technically support the Health Sector Reform Project (HSRP) subcomponent for establishing a drug procurement center. Using the TA’s outputs, the

Appendix 15 49

HSRP will establish the drug procurement and distribution system and conduct necessary training at the national, regional, and pilot district levels. C. Scope and Methodology 5. Through study tours, training, and workshops, the TA will build the capacity of MOH for drug procurement. The TA will help MOH assess capacity, performance, problems, and opportunities of the current public drug procurement system and the NGO system. Based on the assessment, the TA will support a consultative process to help MOH develop the drug procurement strategy (1 month) to achieve the core principles of public drug procurement, such as (i) procuring the most cost-effective drugs in the right quantities to treat prevailing health problems in the majority of patients served; (ii) achieving the lowest possible total cost, taking into account purchase price, hidden costs, holding costs, and operating costs; (iii) ensuring timely delivery of products to health facilities and to patients; and (iv) assuring drug quality through suppliers selection, monitoring of supplies, and quality control programs (quality control programs will be covered under the quality control subcomponent of the HSRP). 6. Based on the new drug procurement strategy, the TA will propose a drug procurement system framework and an implementation plan with minimum required interventions, cost-effective methods, and a scheme to establish a drug procurement system incorporating the PSF system. The TA will also prepare a detailed rationalized plan for warehousing, equipment distribution and staffing of the center; formulate guidelines for the procurement process; and establish contents and schedule for training. As proposed by the TA, the HSRP will establish the drug procurement system and train MOH. D. Cost and Financing

7. The total cost of the TA is estimated at $180,000, of which $114,000 is in foreign exchange and $66,000 equivalent is in local currency. The Government has requested ADB to finance $150,000, covering the entire foreign exchange cost of $114,000 and $36,000 equivalent of the local currency cost. The Government will finance the balance of the local currency cost through the provision of counterpart staff, office space with utilities for TA administration, and workshop facilities. The TA will be financed on a grant basis by the Japan Special Fund, funded by the Government of Japan. The detailed cost estimates and financing plan are in Table A15. E. Implementation Arrangements 8. The TA will start in January 2004 and last for 6 months. The President’s Office will be the Executing Agency. MOH and PSF will be the implementing agencies. The steering committee for the HSRP will guide the TA and oversee Government coordination, ensuring close links with the HSRP. It will meet on a quarterly basis. 9. The TA will directly contract with PSF.1 A team of international and domestic consultants will implement the TA. The TA will provide 4 person-months of international consulting services in the areas of drug procurement and management of the drug supply. The TA will also provide 18 person-months of domestic consulting services in the same areas and in logistics.

1 As approved by ADB, HSRP will directly contract PSF to exploit its expertise in building new system's capacity and

transferring responsibility for running the humanitarian supply system. For the same reason, it is proposed to directly select PSF for the TA as well.

50 Appendix 15

Table A15: Cost Estimates and Financing Plan ($'000)

Foreign Local Total Item Exchange Currency Cost

A. Japan Special Fund Financing 1. Consultants a. Remuneration and Per Diem i. International Consultants 88 0 88 ii. Domestic Consultants 0 9 9 b. International and Local Travel 6 3 9 c. Reports and Communications 0 3 3 2. Equipment (Computer, Printer, etc.) a 9 0 9 3. Workshops, Training and Seminars 0 15 15 4. Overseas Study Tour 6 0 6 6. Administration and Support Costs 0 4 4 7. Representative for Contract Negotiations 0 0 0 8. Contingencies 5 2 7 Subtotal (A) 114 36 150

B. Government Financingb 1. Office Accommodation/Workshop Facilities 0 20 15 2. Counterpart Support 0 5 5 3. Domestic Transport 0 5 0 Subtotal (B) 0 30 30

Total 114 66 180 a Includes purchase of facsimile machine, photocopier, computers, printers, and communication equipment for TA

office. b Government contribution is provided in kind by national and local governments. Source: Asian Development Bank estimates. F. Terms of References 12. The pharmacists and logistic specialists (international, 4.0 person-months; domestic pharmacists and logisticians, 18) will undertake the following tasks:

(i) Assess the capacity, performance, problems, and opportunities of the current public drug procurement and distribution system and the NGO system.

(ii) Outline strategic options for a national drug procurement and distribution system. (iii) Organize initial training on drug procurement and distribution systems and plan an

overseas study tour for key MOH staff. (iv) Develop the framework for establishing a drug procurement and distribution system. (v) Design a comprehensive project implementation plan and guidelines for establishing

a drug procurement and distribution system.

Appendix 16 51

SUMMARY OF INITIAL ENVIRONMENTAL EXAMINATION A. Introduction 1. The Health Sector Reform Project (HSRP) was rated as environmental category B in the rapid environmental assessment. This summary initial environmental examination (SIEE) analyzes the scope of the potential environmental, health, safety, and social impacts. B. Description of the Environment 2. SIEE fieldwork and interviews did not reveal concern about the vegetation at the subproject sites. Endangered species and other wildlife are not affected since their living areas are far from the subproject sites. There are no cultural heritage sites in the project areas. Public health conditions are very poor. Generally, the health facilities are in very poor condition. Even buildings erected after 1990 show substantial damage to structures and equipment due to lack of maintenance. Because of their potential environmental impact, water supply, wastewater, waste disposal, and drug handling are identified as issues of concern for the Project. 3. Water Supply. The availability of safe drinking water is a high priority need. The water supply infrastructure of most hospitals is old. It is not maintained and, as a result, is either not working properly or completely out of order. While central district hospitals are connected to the water supply networks, others depend on on-site artesian wells (over 60 meters deep). The quality of the local pipe system usually does not meet Government standards and is unsafe using any other possible benchmarks. The poor technical condition of wells is a major problem, as they are filled with sediment and the well equipment is in bad condition or inoperative. Due to lack of a continuous supply of electricity, drinking water from both networks and on-site wells is usually supplied only 2-4 hours a day. Smaller medical structures like medical houses or rural health centers are as a rule not connected to piped water. Their demand for drinking water is significantly smaller than that of hospitals, as no beds are occupied. 4. Wastewater. The current situation wastewater management in with hospitals/clinics is unsustainable, causing pollution of drinking water sources and waterborne epidemics. Hospitals have toilets, but there are no provisions for safe wastewater treatment/discharge. Only hospital buildings located in central towns of rural areas are connected to sewer systems, which are in a very bad condition. Sewer systems and treatment of municipal wastewater are the responsibility of local authorities. On-site wastewater treatment facilities, if in place, lack maintenance and are functioning badly. Clinics in most cases have pit latrines that are not protected from the elements, have no provision for their maintenance, and lack basic hygiene education requirements. 5. Waste Management. There is concern about the potential transmission of infectious diseases through inadequate management of waste from medical facilities. A number of laws and guidelines for handling hazardous waste are in place, but it is not clear whether waste from medical facilities is considered hazardous. Hospitals operate solid, medical (syringes, blood bags), and human waste (placenta, fetuses, body parts). Medical houses and rural health centers produce solid and medical waste. 6. In the medical houses the total amount of waste is small because medical services offered are limited. However, safe waste storage is needed. Hospitals have a significant amount of waste due to their larger size, the number of beds and the more comprehensive health treatment offered. For a central district hospital, about 2-3 cubic meters of waste excluding

52 Appendix 16

municipal solid waste is typically generated weekly. Waste generation is slightly higher in summer than in winter, as people tend to postpone nonemergency medical treatment until summer due to lack of heating or acceptable sanitation. Currently, at best, medical waste is stored in containers together with other kinds of waste and disposed of, where other municipal solid waste is also dumped. Human waste is mostly generated in maternity houses (placenta, fetus) and surgery departments (body parts) and is often mixed with medical waste. Solid waste is disposed of at local dump sites. Technical methods of disposal are poor and inappropriate because there are no regular and safe disposal facilities. With road connections between the project areas and district centers bad or absent, particularly in mountainous areas in winter times, waste is often stored conducted on-site. 7. Drug Handling. The Ministry of Health (MOH) has issued regulations for the safe storage of medical drugs and equipment, including syringes, plastics, etc., to guide all ministries and agencies. In rural areas, however, institutions are generally not able to comply with the regulations. C. Potential Environmental Impacts and Mitigation Measures 8. The Ministry of Environmental Protection (MEP) is the state body responsible for environmental protection and management. The Government agency responsible for testing and approving all drinking water supplies is the Sanitary Epidemiological Services (SES) under MOH. The SES offices at district level take water samples, conduct tests and issues permits. The regulation on environmental impact assessment issued by MEP in August 2000 details the contents of an Environmental Impact Statement (EIS), specifies its documentation, and establishes a process of review and approval, including public review. 9. Water Supply. Comprehensive improvement of the water supply pipe networks from communities is beyond the scope of HSRP. HSRP will repair the pipe in hospital premises or dig wells or provide disinfectants, but will not repair the whole pipe network. If there is no pipe network and/or the decision is made to provide an individual water source, the HSRP will study how acceptable quality of drinking water can be provided in cost-effective and sustainable ways by (i) monitoring the quality of the new/former water source; (ii) improving the existing source of water or using an alternative water source if improvement of sources is not possible (tube wells over 60 meter deep are recommended as surface water and ground water sources are considered unsafe); and (iii) establishing adequate operation and maintenance and water quality monitoring procedures. The relatively small demand for drinking water for medical houses and heath centers will be satisfied through bottled water or other appropriate and affordable options. There are no existing groundwater-related subsidence problems in HSRP districts and limited amount of water intake for rebuilt or renovated facilities is not likely to cause shortages or cause conflicts with other water users. No special monitoring will be required. 10. Wastewater Disposal. The HSRP will not cover rehabilitation of sewer systems in the towns. If local authorities cannot ensure the reliability of sewage systems, the HSRP will provide on-site septic tanks to health facilities. Chemicals for septic tanks treatment processes will be provided (e.g., lime chloride). 11. Waste Management. For medical houses and health centers, the HSRP will provide safe, temporary on-site storage equipped with transport containers. The HSRP will arrange for temporary stored waste to be transported for final disposal to the center district hospitals. Leachate will be collected and treated on site or disposed of in sewer systems. For hospitals, two disposal routes will be established under the HSRP: (i) human waste will be burned in on-

Appendix 16 53

site incinerators; if no combustion capability is available, other appropriate equipment will be installed at hospitals; and (ii) solid and medical waste will be disposed of either on-site or in upgraded designated areas of existing landfills. The technical staff of the hospital will supervise all major activities regarding on-site waste management. 12. Handling of Expired Drugs and Wasted Reagents. The HSRP will provide necessary furniture to ensure that expired drugs are stored safely in designated metal lockable containers, placed in an administration room until collection takes place. The HSRP will provide on-site tanks for wasted reagents with chemicals, as necessary, to avoid environmental damage by reagents. 13. Project Location and Design. The HSRP will attempt to rehabilitate/build structures at existing locations as much as possible and therefore is not likely to cause any incremental environmental impacts due to conflicting land use or impediments to movement of people and livestock. Designated sites for disposing of hospital waste disposal will not require expansion of currently functioning landfills run by local authorities. No resettlement is anticipated. However, when necessary, resettlement will be pursued according to guidelines of the Asian Development Bank (ADB). The HSRP will ensure that rehabilitated/rebuilt infrastructure facilities meet safety, seismic and fire compliance norms (including building materials, electrical systems, operations and maintenance of boilers and remaining stoves). 14. Construction Stage. Adverse environmental impacts associated with civil works will be minimal, of short duration, and mitigated by appropriate design and management of facilities construction and operation. 15. Project Operation. The HSRP will establish a monitoring system, which will include checks on drinking water quality, maintenance and operations of water supply, waste collection, sanitation, waste disposal, and drug and reagent handling. D. Environmental Monitoring Program 16. Civil works will be subject to environmental classification conducted jointly by the project implementation unit (PIU) assisted by environment consultants. IEEs for facilities will be conducted where they are required. IEEs will be (i) based on the results of the civil work surveys and social analysis; (ii) designed in accordance with the Government and ADB requirements by local design institutes in charge of designing of subproject civil works; and (iii) approved by MOH. 1 Environmental monitoring procedures during design, construction and operation will be specified and monitored by implementing an environmental management plan (EMP) designed for each health facility. The EMP will cover the design and implementation of mitigation measures, and specify monitoring activities to ensure compliance. EMPs will be designed by local design institutes and approved by MOH. 2 They will include (i) an action plan on staff hygiene education; (ii) a handbook on operations and maintenance procedures; (iii) internal and external monitoring procedures; (iv) a financial sustainability plan for operating facilities, and a follow-up monitoring plan; (v) contracts with qualified technical permanent/contractual staff to operate facilities; (vi) contracts with local authorities for emptying septic tanks regularly; (vii) contract agreements for dispos ing of medical waste to the landfills/rural hospitals, and for disposing of human waste in furnaces; and (viii) training courses in operating environmental

1 I EEs for subprojects exceeding $100,000 for civil works will be approved by ADB. 2 EMPs for subprojects exceeding $100,000 for civil works will be approved by ADB.

54 Appendix 16

equipment, safe management/disposal of medical waste, water conservation practice, and employee health and safety training. 17. Civil work surveys, IEEs, and EMPs will be designed in a participatory manner through input of local information, and intensive public discussions with health and education providers, hospital management and personnel, district administrators, and village development committees. Environmental public information campaign and training will be a part of project-wide health management information system and public information campaigns. 18. The national steering committee, consisting of MOH, MEP, and Ministry of Construction, will direct and supervise the implementation of project environmental mitigation measures. The PIU will be responsible for administering the project’s environmental monitoring system. It will ensure the incorporation of environmental due diligence into the subproject cycle; incorporate environmental mitigation measures into subproject design, construction, and operations; and provide the Government and ADB with timely information on progress toward the expected outputs. A civil engineer/environmental specialist will serve as a full-time PIU staff, with responsibility for (i) overseeing the development of environmental items in the selection criteria for subprojects; (ii) assisting in civil works survey concerning environmental issues, including initial quality testing of drinking water source before involvement of SES; (iii) participating in selecting subprojects; (iv) liaising with MOH on subproject environmental classification; (v) establishing contact with local key stakeholders; (vi) overseeing the development of IEEs by selected design institutes according to Government and ADB guidelines; (vii) submitting IEEs for approval to MOH and ADB as necessary; (viii) overseeing the preparation of EMPs by design institutes at the subproject design stage; (ix) submitting for approval to MOH and MOE and ADB, as necessary; (x) administering monitoring surveys during the construction phase and audits after the completion of construction; and (xi) developing reports on the implementation of the project-specific EMPs on a semiannual basis, reporting to ADB, and informing the project steering committee. 19. On the Government side, MEP (through local environmental protection committees), will be responsible for (i) environmental clearance of physical investments; (ii) environmental compliance monitoring during construction; and (iii) routine environmental monitoring. SES (at province and district levels) will be responsible for (i) testing and approving water supplies; (ii) routine water quality monitoring; (iii) aspects of public health education and awareness; and (iv) public health monitoring. The Government will ensure that SES carries out tests for drinking water quality, bacteriological analysis, and conventional pollutants according to their mandate, and as part of project counterpart contribution. E. Conclusions 20. The screening process carried out in this SIEE has not identified any significant negative environmental impacts likely to be caused by the Project. The HSRP will promote enhanced quality of living in rural communities and reduce poverty through access to improved health and education and improved environmental management of clinics and hospitals. Therefore it will have major positive environmental impacts. The HSRP will improve drinking water supplies; and introduce appropriate medical waste management, adequate wastewater treatment, and safe drug and reagent management. These measures will have a significant positive effect on public health.

Appendix 17 55

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY FORM A. Linkages to the Country Poverty Analysis Sector identified as a national priority in country poverty analysis? Yes

Sector identified as a national priority in country poverty partnership agreement? Yes

Contribution of the health sector to reduce poverty in Tajikistan:

1. Investment in the health sector, in particular in primary health care (PHC) will help reduce the burden of diseases among the poor. The poor will benefit from productivity gains from improved health status and resource cost savings.

B. Poverty Analysis Proposed Classification: Core Poverty Intervention 2. The Health Sector Reform Project (HSRP) has national level components and a pilot district component. At the national level, the HSRP will help the Ministry of Health develop the heath service system that responds to the needs of the poor and the vulnerable. The system will also reduce barriers to access to services. The HSRP will design the health management information system framework that will monitor use of services among the poor and the vulnerable. 3. The district component will improve the health status of the poor, women, and children in five districts that are poor and with high maternal and infant mortality rates. The pilot districts represent 5.5% of the population of 6.3 million. The HSRP will strengthen PHC, deliver a pro-poor health service package, and establish the family group practice (FGP). 4. PHC is an internationally proven best practice to meet the needs of the poor and vulnerable groups, especially women and children. The pro-poor service package is designed to cover ill conditions that are closely related to poverty. The FGP system serves the poor, women and children better than other types of services such as hospitals. The FGP system has incentives for family doctors and nurses to see the poor and vulnerable through capitation payment weighted with the poverty rate and performance-based contracts. C. Participation Process Stakeholder analysis? Yes 5. The project preparatory technical assistance (TA) team carried out a multilevel consultation process with a wide range of stakeholders. Information on health-seeking behavior among service users was obtained through interviews, focus group discussions and literatures. Health service providers often expressed dissatisfaction with human resource issues and working environment. They include poor salary level, lack of training opportunities, lack of reference material, lack of drugs and equipment, and poor conditions of facilities . The TA team closely consulted nongovernment organizations (NGOs), aid agencies, and national and local policymakers and decision makers in designing the project activities. Participation strategy? Yes 6. Stakeholders ’ perception of access to and quality of health services was considered in designing the HSRP scope and detailed activities. Community participation will be supported as part of a public information campaign under the HSRP. Community participation will be used as well in monitoring access to health care services.

D. Gender and Development 7. Strategy to maximize impacts on women: HSRP’s strategies to maximize the impacts on women follow. (i) The pro-poor health service package offer services in family planning, antenatal care and safe motherhood, (ii) the capitation payment rate will be set higher for women of reproductive age, (iii) the performance based contract will specify the need for facility based and outreach services for women of reproductive age, and (iv) data of the project performance monitoring and evaluation system be gender disaggregated. 8. Special attention will be given to (i) ensuring no gender bias in the health staff training opportunities; (ii) the use of the local women's network in the community awareness and public campaign on health services. Gender plan prepared? No. The above strategies are well reflected in the HSRP, no special gender plan is required.

56 Appendix 17

E. Social Safeguards and other Social Risks

Significant/

Nonsignificant/ None

Strategy to Address Issues

Plan

Required

Resettlement

Uncertain Resettlement is unlikely as rehabilitation and rebuilding will take place in existing facilities . If it becomes necessary to build new health centers, the HSRP will recruit consultants to assist local governments to prepare land acquisition and settlement plans.

Short resettlement plan as needed

Indigenous Peoples

Not significant Under the public information campaign, NGOs and communities will be mobilized to assess access to heath services among vulnerable groups. Indigenous people will become a part of the vulnerable groups and will receive due attention.

No

Labor

None No

Affordability

Significant positive impacts

The HSRP will reduce financial burdens to access to health services among the poor, women and children. These mechanisms include introduction of the FGP system, which is a service type serving the poor better, and a pro-poor health service package. The poor’s access to basic health services will also be monitored.

No

Other Risks/ Vulnerabilities

Not significant The HSRP is environment category B, as there is a need to improve medical waste management when the HSRP rehabilitates/rebuilds health facilities. In designing civil works, an environmental management plan will be developed. Environmental measures will be also addressed in the drug quality control component.

Summary of Initial Environment Examination

Appendix 18 57

ECONOMIC AND FINANCIAL ANALYSIS A. Economic Benefits 1. Economic benefits potentially include social returns from the investment through (i) productivity gains from the improved health status of intended beneficiaries, and (ii) resource cost savings. The Health Sector Reform Project (HSRP) will improve the internal efficiency of the health system and increase the use of quality primary health care (PHC). PHC is cost-effective for decreasing maternal mortality ratio (MMR), infant mortality rate (IMR), and general morbidity. The HSRP will increase the number of persons receiving quality health care and will contribute to raising the productivity of the target beneficiaries. Where possible, the expected effects have been summarized in monetary terms as either resource cost savings or increased productivity. These benefits exclude externalities that accrue to the Project. 2. Productivity gains due to reduction in days lost because of illness are expected to accrue from HSRP interventions. Increased access to quality care will lead to improved in health status that will lead to longer healthy life years, that, in turn, will lead to increases in productivity. Reduction in morbidity and mortality will translate into productivity gains. Through system reforms, the entire country is envisioned to benefit from the HSRP, particularly as institutional capacity at the central level permeates the health system. 3. Resource cost savings include reduction in out-of-pocket health expenditures and in expenditures on drugs in the pilot areas. By introducing a free pro-poor health package at HSRP districts, the basic health needs of the target population will be addressed. The package will be delivered efficiently. The services will be provided through the family group practice (FGP) system, which serves the poor and the vulnerable better than other types of service. The beneficiaries will receive better quality health care at reduced costs. The pharmaceutical support under the HSRP will constitute a substantial economic benefit itself, given the current level of out-of-pocket expenditure on drugs. Patients are currently purchasing drugs of unknown quality—which are often counterfeit, or low quality—in an unregulated environment. By receiving quality drugs dispensed free in the HSRP, cost savings will accrue to intended beneficiaries. 4. These measurable economic benefits are linked to the final health outcomes of the HSRP. Intermediate benefits likewise result from developing capacity and rationalizing the system. An effective health system delivering equitable and quality health care will improve health outcomes. Human capital development is an economic benefit creating the potential for yielding sustainable synergies through the proposed system reforms. For estimation purposes, the economic analysis assumes that human capital in the health sector will generate increasing returns as economic gains that will accrue to the pilot areas and to the entire country.

1. Key Assumptions 5. By 2008, the HSRP targets are (i) reducing IMR, MMR , and under-5 mortality by 30%; (ii) reducing the number of deliveries without assistance; (iii) reducing children’s respiratory infection and diarrhea; (iv) improving maternal and child health by at preventing at least 200 deaths; and (v) increasing allocation for PHC. The economic benefits of the HSRP were quantified based on varying assumptions. Table A18.1 presents the key benefit assumptions and corresponding economic rate of return and net present value (NPV) of the HSRP.

58 Appendix 18

Table A18.1: Economic Benefits, EIRR, and NPV Reduction in Productivity Losses Base Data

Population of Tajikistan 6,200,000 Population in the Pilot Areas 350,000 GDP ($ billion) 1 Productivity Loss (% GDP) 9 Productivity Loss Whole Country ($) 90,000,000 Productivity Loss in Pilot Areas (n $) 5,080,645 Reduction in Productivity Loss in Pilot Areas 10 Total Annual Reduction of Loss in Pilot Areas ($) (A) 508,065 Reduction in Productivity Loss for the Rest of the Country (%) 0.5 Total Annual Reduction of Loss for the Rest of the Country ($) (B) 450,000 Total Annual Reduction in Productivity Loss (Pilot + rest of the country) (A + B) 958,065

Reduction in Out-of-Pocket Health Expenditure (formal and informal payments)

Out-of-Pocket Health Expenditure ($ per capita per year) 2 Total Out-of-Pocket Annual Expenditure in Pilot Areas ($) 700,000 Reduction in Annual Out-of-Pocket Expenditure (%) 15 Total Annual Reduction in Out-of-Pocket Expenditure (pilot areas) 105,000 Total Out-of-Pocket Annual Expenditure in the Whole Country Minus Pilot Areas ($) 11,700,000 Reduction in Annual Out-of-Pocket Expenditure (%) 8 Total Annual Reduction in Out-of-Pocket Expenditure for Whole Country ($) 936,000

Reduction in expenditure with drugs in pilot areas

Percentage of Out-of-Pocket Expenditure Spent on Drugs (%) 50 Out-of-Pocket Expenditure with Drugs ($ per capita per year) 1 Total Out-of-Pocket Expenditure (Drugs) in Pilot Areas ($) 350,000 Percentage of Yearly Savings Due to the Distribution of Drugs Free of Charge in Pilot Areas (%) 65 Total Drugs Benefit in the Pilot Areas ($) 227,500 Total Economic Benefits ($) 2,226,565 EIRR (%) 24.1 NPV ($) 3,828,079 EIRR = economic rate of return; GDP = gross domestic product; NPV = net present value. Source: Asian Development Bank estimates. 6. The 1998 Viet Nam Living Standards Survey shows that the economic cost of working days lost due to sickness is about 8.7% of gross domestic product (GDP). The International Labour Organization (ILO) report1 published in April 2003 gives the figure for Latin America as 10%, assuming that this is the general condition in developing countries. Based on these reports, the total reduction in productivity loss under the HSRP is estimated at 9% of GDP (10% in pilot areas and 0.5% in the whole country). HSRP’s pro-poor health package component aims to have a 15% reduction in the out-of-pocket health expenditures of target beneficiaries in the pilot districts. It is estimated that the out-of-pocket expenditure averages about $2 per capita.2 Although the component targets 25% reduction in out-of-pocket expenditure, this analysis

1 International Labour Organization, 2003. Safety in Numbers 2 Tajikistan Living Standards Survey, 1998.

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considers the reduction to be 15%. These conservative estimates are justified since informal fees and formal copayment are existent in Tajikistan. It is estimated that decreases in out-of-pocket expenditure in the whole country would be 8%. Under the HSRP, a reduction in expenditure on drugs is assumed to be 65% of out-of-pocket expenditures. This is based on the assumption that about 50% out-of-pocket health expenditure is spent on pharmaceuticals.

2. Economic Rates of Return and Net Present Value 7. Even with these relatively conservative assumptions, the HSRP yields a return of 24.1%. These benefits exclude externalities that accrue to the HSRP. Table A18.2 shows the estimated economic internal rate of return for the HSRP. The analysis covers 20 years (2003-2023) and was carried out in constant 2002 prices, with domestic prices used as numeraire. Economic costs were calculated based on the annual project cost disbursements. Incremental recurrent costs were estimated at about 5% of capital costs. Tradable goods of capital and operation and maintenance costs were adjusted by a shadow exchange rate factor (SERF) of 1.20.3 Tradable goods are about 50% of project costs. At a discount rate of 12%, NPV is $3,828,079. The analysis indicates that the main factors influencing the economic returns include the reduction in productivity loss and the reduction in out-of-pocket expenditures estimated for the whole country. This means that the extension of the benefits nationwide will be crucial in guaranteeing that the investments will yield acceptable returns. While focusing on the pilot areas, it is necessary to consider the systemic gains from the pharmaceutical reforms and capacity building at the central level. B. Financial Sustainability and Fiscal Impact 8. The total financial cost of the HSRP is $9.375 million for 5 years. About 80% of the HSRP will be financed by the Asian Development Bank (ADB), and the rest by the Government. A financial sustainability analysis was done to evaluate HSRP’s impact on the Government budget under the following assumptions: (i) health expenditure will be maintained at over 1% of GDP and 5% of state expenditure throughout the project period; and (ii) incremental recurrent costs after the Project will be maintained at minimal levels and increases will be contained through allocation of existing resources. The Government’s annual share in project costs will average around $0.38 million, or about 0.36% of the average annual health budget (projected) of about $13.5 million. The recurrent costs borne by the Government during the HSRP are estimated to be about $0.18 million per year and include (i) operating expenses for project management, and (ii) operation and maintenance of renovated health facilities and equipment. Assuming the health spending is maintained, the budgetary impact of the estimated annual recurrent costs during and after project implementation is considered minimal. 9. In the health sector, humanitarian agencies finance more than 30% of the total health expenditures. Users finance about 30%, while the Government covers about 26%. Development banks average 7%. Humanitarian agencies are withdrawing, but the probability of development agencies' support is mixed. ADB has dropped loans for social sectors from the country program of 2004-2006. The World Bank's health project is planned for 2006. Bilateral sources have not firmly committed yet, although $900 million, including a $700 million grant, was pledged at the Consultative Group meeting in May 2003. Significant deterioration may happen to health expenditure over the years. It is critical to keep updating the full picture of all financing sources to capture overall budgetary implications.

3 Based on Asian Development Bank’s guidelines .

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ppendix 18 Table A18.2: Economic Internal Rate of Return and Net Present Value

Year Economic Costs Economic Benefits

Capital Costs

Incremental Recurrent

Costs

Incremental Benefits

(productivity- pilot)

Incremental Benefits

(productivity-country)

Cost Savings

(pilot free drugs)

Cost Savings (Project: lower

formal and informal

payments)

Cost Savings (country, lower

formal and informal

payments)

Total Benefits

Net Benefits

2003 848,100 15,435 203,226 0.00 227,500.00 52,500.00 0.00 483,225.81 -380,310

2004 1,696,200 46,306 304,839 0.00 227,500.00 84,000.00 0.00 616,338.71 -1,126,168

2005 2,120,250 88,711 406,452 45,000 227,500.00 105,000.00 93,600.00 877,551.61 -1,331,410

2006 2,544,300 139,597 508,065 135,000 227,500.00 105,000.00 280,800.00 1,256,364.52 -1,427,533

2007 1,272,150 165,040 508,065 225,000 227,500.00 105,000.00 468,000.00 1,533,564.52 96,394

2008 0.00 165,040 508,065 315,000 0.00 105,000.00 655,200.00 1,583,264.52 1,418,224

2009 0.00 165,040 508,065 360,000 0.00 105,000.00 748,800.00 1,721,864.52 1,556,824

2010 0.00 165,040 508,065 405,000 0.00 105,000.00 842,400.00 1,860,464.52 1,695,424

2011 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2012 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2013 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2014 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2015 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2016 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2017 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2018 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2019 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2020 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2021 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2022 0.00 165,040 508,065 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

2023 0.00 165,040 508,064.52 450,000 0.00 105,000.00 936,000.00 1,999,064.52 1,834,024

Economic Internal Rate of Return = 24.1% Net Present Value (12% discount rate) = $3,828,079 Source: Asian Development Bank estimates.