Functional Review of the Ministry of Health

Transcription

1 Functional Review and Institutional Design of Ministries Functional Review of the Ministry of Health FRIDOM Functional Review and Institutional Design of Ministries is a DFID-funded project, implemented by HELM Corporation, Consulting and Public Management Group, Governance institute Slovakia and Altair Asesores.

2 TABLE OF CONTENTS EXECUTIVE SUMMARY... 3 INTRODUCTION... 8 SECTION I: LEGAL, POLICY AND MEDIUM TERM PLANNING FRAMEWORK... 9 SECTION II: BARRIERS TO CHANGE... 9 SECTION III: OVERVIEW OF STRUCTURE SECTION IV: CORPORATE FUNCTIONS SECTION V: STRATEGIC MANAGEMENT SECTION VI SECONDARY AND TERTIARY SERVICES SECTION VII: PHARMACEUTICALS SECTION VIII: PUBLIC HEALTH SERVICES SECTION IX: PRIMARY HEALTH SERVICES SECTION X: MENTAL HEALTH SERVICES SECTION XI: HEALTH INFORMATION, INTERNAL AUDIT, LICENSING, INSPECTION, SPECIAL OFFICES AND COMMITTEES SECTION XII: EXAMPLES FROM OTHER COUNTRIES SECTION XIII: NEW STRUCTURE AND CURRENT STRUCTURE

3 Executive Summary 1. The process for this review involved working with MOH and others to indentify issues and opportunities for improvement, followed by feedback from the Minister of Health and his advisers. This report considers the current services of the MOH, the organisational arrangements including the structure and related matters, the challenges the ministry has, the constraints on making changes, and options for improvements. 2. The Minister of Health has advised that there is political will to make improvements to the structure and functioning of the Ministry of Health and its related institutions. This has been demonstrated in recent improvements in the tender selection processes; management and supply of drugs; the publication of the status of licensing for private health facilities; the formation and empowerment of the Pharmacy Inspectorate; other changes to improve health services; and the guidance provided by the Minister of Health on the areas to focus on in order to improve the performance of the Ministry of Health and related institutions. The following areas were considered in more depth during the revision of the draft report and are discussed in Appendix G of this report: The implementation of the reforms in particular what can be undertaken in the coming months and what will require more time. The timing for changes are set out later in this executive summary and discussed in more depth in the Appendix G. Note that an Institutional Development Plan is intended to follow this report which can be incorporated as appropriate in the Ministry of Health s strategic plan, operational plan and budget proposal for the forthcoming MTEF and annual budget. It could also be the basis for a proposal to be put to the government for approval of the changes to the MOH as this report is not in a suitable format for that purpose. Appendix G has advice on implementation. Developing purchasing/funding function in MOH. Further advice is provided in Appendix G on strengthening the purchasing/funding function in the MOH, including developing capability to specify, cost, price, contract for services, and undertake related work. This work could be developed by the MOH and applied to service providers including municipalities, hospitals, the NIPH, private providers and others. This offers the potential for the MOH to improve services through using incentive based contracts that are clear about performance expectations, have resources aligned to expected performance and are designed to encourage particular behaviours. It takes time for public service providers and for government officials involved in funding/purchasing to develop skills, information and mature behaviours. The sooner they start this work, the sooner the benefits will result from it. Arrangements for hospitals. Further advice on strengthening the governance and accountability arrangements for hospitals to improve performance is provided in Appendix G in the form of draft revisions to the Health Law, following discussions with the Working Group on the Health Law. The suggested arrangements include setting up hospitals as Health Sector Public Enterprises with an adapted set of governance and accountability arrangements from those applying to Public Sector Enterprises. The adaptations reflect the broader requirements on health sector public enterprises from enterprises that have the main function of maximising shareholder value. If implemented well, the suggested arrangements could strengthen the strategic roles of the Minister of Health and Ministry of Health and reduce the need for intensive operational involvement. There are many safeguards proposed to permit interventions when necessary, but the focus is on assigning appropriate roles to ministers, boards and management, and using tools to ensure there are incentives for performance including an annual business plan and periodic formal reporting with full external auditing. There are provisions to reduce conflicts of interest and to help ensure that board members have appropriate skills to provide good governance. Issues with Kosovo Medicines Agency s proposal for more independence. The inappropriateness of this Agency being constituted as an independent agency similar to constitutional agencies is discussed in Appendix G in the context of the governance and accountability framework for institutions in the health sector. Options for addressing inefficiencies caused by the MOF role in policy and budget formulation and execution arrangements. This includes considering the issues with 3

4 rigidities in the budget that prevent the efficient use of resources; the roles of the MOF vs MOH in deciding on what policies and services to finance; and arrangements for returning revenue to the entities earning it. Suggestions are made in Appendix G to improve current arrangements, including strengthening the analysis of the share of the budget received by the MOH and promoting the health sector as an early pilot for some elements of performance based budgeting, which can support a case for increased flexibility in the use of resources, if certain conditions are met. Linking planning (Health Strategy) to budgeting (medium term expenditure framework and annual budget), MOH strategic and operating plans, annual plans of hospitals and others, reporting and monitoring. The Health Strategy needs to be put into operation through the plans of various institutions. Some suggestions on this are made in Appendix G, including the use of plans by institutions that reflect the health strategy and the medium term expenditure framework projections. Also the incorporation of key parts of the Institutional Development Plan for the MOH in its operational plan is covered. With regard to the Master Plan, it is suggested that it be presented for formal approval as a high level document with less detail, so the MOH has the necessary scope to refine it as information emerges, and in response to changing financial and other conditions. 3. With regard to the structure of the Ministry of Health, the current arrangements in terms of working practices, systems, processes, staffing and structure are not adequately supporting the Ministry to deliver on its mandate and to deal with the significant challenges noted in the draft Strategic Plan and in the Medium Term Expenditure Framework. Key problems include: lack of sustained leadership with many changes of the Permanent Secretary (PS); gaps in policy and planning; poor access to information for policy making, planning and monitoring; limited ability to monitor performance given the information problems; lack of sharing of information and cooperative working practices; many vacant positions; lack of skills in some areas; and a structure that is not well designed to support the key functions of the Ministry. 4. Improvements could involve changes to structure, systems, processes, staffing, working practices and the culture of the Ministry towards more flexible working arrangements where information flows are improved and staff can work in teams that are more effective than the current working arrangements. The main changes discussed in this review are: Streamlining the structure to release the PS from operational management. Around 30 positions reporting to the PS are too many. Reporting positions for corporate functions could be reduced and the reporting by agencies to the PS could be refined to focus on high level matters. Stronger policy, planning, and monitoring in an integrated way for main service areas rather than being fragmented in different departments, divisions, and offices. Also policy making and strategic management could be developed to support ministry-wide policy and planning. Developing a strong corporate services function to support the MOH policy, planning, and monitoring services, as well as the direct services provided. Realigning some functions to avoid duplication and separations that are not working well. Streamlining the internal structure of departments to facilitate cooperative teams with more flexibility to respond to changing demands and rationalising the structure of divisions, centres, and offices. Changing the relationship with hospitals and other agencies with the MOH fulfilling a policy, regulation, purchasing/funding, and monitoring role and agencies being set up with more robust governance and accountability frameworks to provide stronger incentives for performance. 4

5 5. There are many constraints on making these changes that need to be dealt with at the government level. The working arrangements and structure of the Ministry has evolved in response to issues such as: Current governance and accountability framework for the hospitals and other agencies that are not creating sufficient incentives for performance. Method of setting pay levels which provide incentives to create divisions, centres, and agencies. Incentives for doctors and other technically skilled staff to be managers to get into the higher paid management positions. This reduces breadth of other skills at senior levels. There is insufficient recognition in the civil service classifications and pay scales of the value of technicians in the public sector compared to managers. The draft Civil Service Law and the proposed Law on Salaries continue these problems. Government-wide administrative instructions that require a legal department, an information department, and other government requirements such as the European Integration Office and the Gender, Human Rights and Quality office. These instructions specify positions and staffing but a one size fits all approach is not suitable for all ministries. Frequent changes of senior leaders. There have been four ministers and six PSs since 2002, with three changes in PSs in the past year. The current PS is acting in the role. Some key departments have acting directors. Funding decisions by the government. In some areas there has been insufficient investment to support critical changes and improvements. Rigidities in the allocation and management of finances that make it difficult for health institutions to manage effectively (see World Bank report s comments on hospitals in Appendix D) Changes need to be sequenced in a way that will build on current capabilities without putting the organisation at risk of failing at its key roles during the changes. The organisational arrangements and structure are the way they are in response to the environment. If changes are forced without dealing with the barriers mentioned earlier, there will be unintended consequences, such as losing key people. Best practice ideas could be bad practice if the constraints affecting the MOH are not addressed. The reforms must be designed to deal with the unique conditions in Kosovo and not simply transport models from other countries. While there are many valuable lessons from other countries, the best design will be the one that fully taps into the potential for rapid development, given the situation in Kosovo. Recommendations for the short term- next three months 1. Develop a process to consider the reform options for MOH functions, structure, systems, processes, staffing and culture with a timeline for analysis and decision making, resulting in the production of the Institutional Development Plan. As part of this process, consider the options and variations presented in this report alongside others that may emerge from the internal work on the reform options. If possible, conclude this plan within three months and start implementing it as soon as possible. 2. Contribute to the policy and preparation of the changes to the laws on civil service, labour and pay to address the potential problems emerging in these draft laws, including the civil service job classifications; the pay mechanism; and the implications for workers in the wider health sector who will not be civil servants. Consider if there are opportunities to influence the law and policies impeding good design for the MOH relating to the form of 1 World Bank, Kosovo Health Financing Reform Study, page 11. 5

6 organisational structures (departments, divisions, centres, agencies, offices, etc) and administrative instructions from Office of the Prime Minister that require certain structures. 3. Undertake critical policy work that affects the structure and functions of the MOH. A policy direction with large potential to change the MOH is health insurance. The policy work could be rapidly strengthened so a realistic transition path is developed to move from where the health sector is now to a feasible model. An important building block is changing the MOH from an integrated policy maker and provider of services to a planning, policy, funding, monitoring and regulation role for the MOH with more autonomy for providers linked to robust accountability frameworks for those providers (hospitals and other agencies) as suggested in Appendix G. Other building blocks include: better health status analysis and demand analysis; improved health information on provider activity/services; specification of services; costing of services; defining the basic package that government can fund and aligning entitlements to this; complex contracting including designing contracts to manage the risks of cost shifting, cream skimming and other risks; monitoring many aspects of performance; improvements in configuration, efficiency and effectiveness of government owned providers; improvements in governance and accountability arrangements for government service providers; market development; and institutional development work for the health insurance model including investment risks (if this model proceeds). All these developments require leadership from the MOH, including policy analysis, planning and driving the implementation of many changes. The MOH could strengthen its capability in these areas and the restructuring of the ministry needs to address this. Further advice on this is set out in Appendix G. 4. Use the opportunity to revise the Health Law to put policy changes into the legal framework including the improved governance and accountability arrangements for hospitals. The transition arrangements for the Ministry of Health to develop the purchasing/funding function could also be set out in the Health Law. Implementation of the Institutional Development Plan from 3 to 12 months- following completion of the work listed above for the first 3 months Ministry of Health internal changes (subject to the Institutional Development Plan): 5. Reduce the number of reports to PS; consider creating a senior management level with more services represented on it in the form of directors of departments for: Public Health; Primary Health; Secondary and Tertiary Services; Pharmaceuticals; and Mental Health, as well as departments for Corporate Services (Administration and Finance); and Strategic Management. The best arrangement should be selected based on a thorough analysis. 6. For each of the service departments listed above establish units for 1. policy and planning; 2. monitoring. Where these departments provide services, a third unit could be established for service provision. Variations on this are possible where there is a purchasing/funding function which could be undertaken by the Health Care Commissioning Agency or other options. An option covered in Appendix G is to locate the Health Care Commissioning Agency within a much strengthened Department of Strategic Management so the full resources of that department could be used to support the purchasing/funding function. All units should have staff members who are skilled in various areas and who are able to take on a range of work. The units should not have tightly segmented jobs focused on narrow areas of work. 7. Reduce the number of corporate services type of reports by creating a Department of Corporate Services that includes finance and budget; administration and personnel; legal services; communications; and procurement. 8. Strengthen the Department of Strategic Management so it has a unit for: 1. facilitating ministry-wide policy, ministry-wide planning, ministry-level reporting and ministry-level monitoring functions, as well as units for 2. HIMS; 3. Sector HR development and regulation; and 4. Productivity and quality improvement. There is an option to locate the Health Care Commissioning function in this department as a 5 th unit as discussed in Appendix G. 6

7 9. Once the structure is decided the staffing should be considered. There is little point in restructuring if the people with the right skills and capabilities are not placed in the jobs and if non performers remain. Job descriptions with the person specifications need to be developed for all positions in the MOH, followed by a placement process that is designed to ensure that appointments are made on merit and that people with the right skills are appointed to the positions. This might involve confirming some people in roles similar to ones they have now, moving them, replacing them, recruiting new staff and making some redundancies. The legal implications and costs of this part of the restructuring need to be considered and the legal rights of the employees complied with. A special law relating to the MOH restructuring may be required if there are provisions in the law that prevent an effective approach to the restructuring. 10. There are back office functions that may be able to be aggregated and delivered for many government entities. There are also functions that could be considered for contracting out to national and international providers, such as testing pharmaceuticals, some tertiary health services, medical training, etc. Further work on the Institutional Development Plan could consider this. Beginning in the coming year and extending over the medium term Changes to agency arrangements: hospitals, inspectorates, other agencies, boards 11. Consider increasing the ability of hospitals and other agencies to manage resources alongside introducing incentives for performance (such as improving the alignment of the budget to outputs) and adequate controls. 2 The draft changes to the Health Law in appendix G provide a potential framework for doing this, but considerable work would need to be undertaken to implement these changes. Other agencies including the National Institute for Public Health, Centre for Telemedicine, and the Kosovo Medicines Agency could also be brought within this governance and accountability framework as appropriate. This framework includes forecast financial statements, forecasts statements of service performance, reporting against these forecasts, and service agreements/contracts with reporting against these, monitoring and external audit of service performance. In addition the MOH could offer to be a pilot for aspects of performance based budgeting involving the hospitals as a way to develop, test and prove ways to improve performance and thereby gain the credibility to seek increased flexibilities in the management of resources. 12. Consider options for improving the arrangements for licensing and inspectorates. This report has not covered these areas in detail but raises some issues and options, including the possibility of combining the functions of some licensing boards. 13. Continually monitor progress with the reforms and make adjustments when necessary. Ensure that the changes are managed in a way that the MOH can deliver on critical accountabilities and can manage risks to its performance. 2 The term agency is used in a broad sense in this report to cover institutions that are not the MOH or its departments and offices. It includes hospitals, NIPH, KMA, and others. 7

8 Introduction This report contains findings and recommendations of the vertical functional review of the Kosovo Ministry of Health (MOH) conducted in the period of February to June 2009 as a part of the Functional Review and Institutional Design of Ministries (FRIDOM) project. The review involved interviewing many health sector personnel. The report has been reviewed by the Minister of Health and the new acting PS, but has not been circulated more widely within the MOH. Further work leading to the Institutional Development Plan should include thoroughly testing this report with MOH senior officials and others from the health sector. Note that the information on the organisational structure and the vacant positions was valid in April but will have changed. We requested up-to-date information on the position in June but did not have this information at the time this final version was prepared. This report has been prepared by the FRIDOM Project funded by the Department for International Development of the United Kingdom (UK) Government. We would like to thank the Minister of Health, the Deputy Minister of Health, and the Minister s advisers for the advice provided, including the insights on the key issues facing the health sector. We would also like to thanks staff members from the MOH, the National Institute of Public Health (NIPH), the Kosovo Medicines Agency, the Kosovo University Hospital Clinic, the Telemedicine Centre, the Registration and Licensing Board, the FRIDOM team members, the EC, the World Bank, UNICEF, WHO, the Ministry of Finance and others who contributed ideas and provided advice to contribute to this report. We would like to thank Mentor Sadiku and Diana Pacolli for their very supportive assistance with the arrangement of meetings in the MOH. The suggestions in the report do not necessarily represent the views of people interviewed, or the Department for International Development, or the UK Government. The review has been conducted by Qamile Ramadani and Lynne McKenzie. The review is set out in the following sections. Section I Legal, policy and medium term planning framework Section II Barriers to change Section III Overview of structure Section IV Corporate functions Section V Strategic management Section VI Secondary and tertiary services Section VII Pharmaceuticals Section VIII Public health services Section IX Primary health services Section X Mental health services Section XI Health information, internal audit, licensing, inspection, special offices and committees Section XII Examples from other countries Section XIII New structure and current structure Appendices: Appendix A Abbreviations; Appendix B Review Methodology; Appendix C Legal Framework; Appendix D MTEF policy and planning priorities and strategic challenges for the MOH; Appendix E Staff numbers and budget 2009; Appendix F Organisation structure (current official one); and Appendix G Additional Advice in Response to Requests from the Minister of Health. 8

9 SECTION I: Legal, policy and medium term planning framework The legal framework for the health sector is described in Appendix C. There are significant changes being considered that will impact on the MOH, including the role of private and public providers and health insurance. Regardless of whether health insurance is adopted via the use of a Health Insurance Fund, the legal framework has requirements which need to be reviewed, including roles, responsibilities and reporting arrangements for many health sector institutions (see Appendix C). Advice on possible changes to the Health law was provided in response to a request from the Ministry of Health s Working Group (see Appendix G). The draft Strategic Plan sets out a very challenging agenda of major changes in the health sector with far reaching implications for the MOH in terms of developing its role in policy, planning, monitoring and review. While it retains its responsibilities for the providers of public health, secondary and tertiary health, pharmaceuticals and mental health services, it carries considerable responsibilities for leading improvements in the providers of services in these areas. Appendix D provides an overview of the MTEF, the draft Health Sector Strategy, and some major policy issues affecting the structure of the MOH and other institutions in the health sector. SECTION II: Barriers to change There are many constraints on making changes to the structure, functions and operations of the MOH that need to be dealt with at the government level. The working arrangements and structure of the Ministry has evolved in response to issues such as the ones set out below. The method of setting pay levels is providing incentives to create divisions, centres, and agencies with many management positions. There are incentives for doctors and other technically skilled staff to be managers to get into the higher paid management positions. This reduces the breadth of other skills at senior levels. There is insufficient recognition in the civil service classifications and pay scales of the value of technicians in the public sector compared to managers. The proposals to change the Civil Service Law include four levels of civil servants with the top two being managers and the third level being professionals. Many officials are holding more than one position by being responsible for their usual position plus fulfilling an acting management role for a higher position. This situation can continue for some time with no active efforts to recruit vacant positions. Some contributing factors to this problem identified by officials include: rigid job structure; low funding levels resulting in multiple vacant positions that are being covered by one person; and narrow jobs resulting from government or donor policy decisions. Government-wide administrative instructions require a legal department, an information department, and other government requirements such as the European Integration Office; the Gender, Human Rights and Quality Office, etc. This results in many offices and positions with narrow roles and an inability to use these people for other priority work. It can overload a ministry with staff of lower priority, for example, the MOH is not filling some of the positions in the administrative instructions as it has more pressing needs in other areas. It also overloads the PS as many of these functions have to report to the PS according to the administrative instructions. The political situation and the civil service arrangements do not support an adequate level of continuity in ministers and PSs. There have been four ministers and six permanent secretaries since Many senior positions have staff in acting roles, including the PS. In these circumstances it is difficult to provide leadership for a sufficient period to design and implement necessary reforms. Government entities do not appear to be incentivised to consider contracting out options. For example, the Department of Pharmacy is refurbishing a government owned building instead of continuing to contract out the warehousing service. While there is an analysis of the comparative costs, this analysis does not ye4t cover the cost of owning the building and other assets. There is an opportunity cost to owning buildings and vehicles, maintenance including repairs and insurance costs, and depreciation costs. Some countries levy a capital 9

10 charge on assets to make ministries recognise the true cost of using a government owned building so they are motivated to make better decisions about whether to use a government building, or lease one, or in the case of the Department of Pharmacy, whether to contract out the service. The adviser working on the study intends to refine it to more fully take account of the full costs. Inefficiencies in processing decisions and payments were identified which would require improvements to government-wide requirements. There is a very legalistic culture with many formal instructions which can create management inefficiencies. There is a lack of a robust governance and accountability framework for agencies including hospitals and other institutions, such as an agency law. This would need to be addressed as part of resolving some of the problems with the hospitals and other agencies. Some suggestions have been made in Appendix G to modify the Law on Public Enterprises to suit health agencies. The level of funding for the health sector in the MTEF appears to be flat or falling and low compared to what might be expected as a percentage of the budget and GDP, particularly going forward. It is difficult to implement changes such as improving health information without significant investments. There is also an issue with rigidities in the budget appropriations and practices which are common in countries focused on fiscal control, but a path of progression from this situation should be set out so the performance issues related to inefficiencies caused by the budget practices can be addressed. Unless these barriers are dealt with, it will be very difficult to improve on the MOH s structure and operations as the current arrangements are a rational response to the MOH s situation. The changes suggested in this report favour a flatter structure with more generic roles, fewer divisions and offices and specialised positions, and consequently fewer people reporting to the PS and fewer people with high level job titles. This could affect their pay, status, and willingness to make changes, unless these barriers to a flatter structure are removed. SECTION III: Overview of structure Organisational structure and staff numbers According to the structure approved by the Office of the Prime Minister in 2007, the MOH consists of six departments, two inspectorates, seven offices/officers and a health care commission agency, set out in Appendix F. The following institutions report to the PS: Regional hospitals (8) Kosovo University Clinic Hospital Kosovo Dentistry Clinic National Institute Public Health Institute of Labour Medicine National Institute for Blood Transfusion The approved structure shows one agency reporting to the Minister: the Kosovo Agency for Medical Products. MOH staff members have advised that the following changes have been made to the approved structure as at April 2009: New Pharmacy Inspectorate reporting to the Minister (formerly part of the Kosovo Medicines Agency) Executive Assistant and one other assistant reporting to the PS Health Inspectorate reports to Minister not the PS Sanitary Inspectorate will move to a new Food Safety Agency reporting to the Prime Minister s Office Legal Office has been changed into a department due to an administrative instruction from the PMO Information Office has been changed into a department due to an administrative instruction from the PMO 10

11 Centre of Telemedicine reports to PS and not to the division of HIMS There are formal boards that report to the Minister that are not shown in the structure: Board for Professional Continual Education; Central Board of Residency; Board for Registration and Licensing; and Professional Ethical Board. The following positions are currently vacant and are not being actively recruited for (as at April 2009): Office for Health Policy Chief Information Department Several legal department positions Head of Division of Administrative Support Office for Hospital Institutions Office for HIV AIDs Given the budget, the MOH has selected the positions it can afford to fill that are a priority and is leaving others vacant. Established positions being recruited for as at April 2009 included key positions: Permanent Secretary, Director Department of Budget and Finance, Head of Division of Health Care; Head of Division of Private Practice; Capital Investments officer, and Information Officer. This indicates the degree of management change that this ministry is under-going. The table below sets out the current establishments in the budget. 3 Table 3 Staff levels, March 2009 Entity Positions in 2009 budget Minister s office 8 Ministry of Health: departments, offices Central administration Sanitary Inspectorate Kosovo Pharmaceutical Inspectorate Health Inspectorate Health Care Commissioning Funded under MOH and reporting to PS but not MOH staff Hospitals National Institute Public Health Labour Medicine National Institute for Blood Transfusion Telemedicine centre Kosovo Agency for Medical Products Funded under MOH Department of Health Services but not MOH staff Primary health care Mental health services Division of care (?) Doctors in country Minority Health Mix of the above Other programs 13 Hospital services 5878 Grand total subtotal subtotal subtotal The budget for 2009 set out in Appendix E is difficult to align with the organisational structure as the cost centres are at a more aggregated level. Unfortunately we were unable to get sufficiently detailed 3 We suggested to the MOH that it would be good to identify the established positions that are vacant and of those, the ones that will be recruited for and the ones that will not be filled, to get an accurate picture of the situation. This information was not readily available. 11

12 information to undertake further work on aligning the staffing arrangements to the budget and assessing the costs of the proposed changes. The work on the Institutional Development Plan should involve breaking the budget down to smaller cost centres to make it clearer what costs are related to various functions and what the fiscal costs to the budget are for the proposed changes. Positions reporting to the Permanent Secretary The PS has around direct reporting positions with many of these being corporate services and providers of health services to the public. This suggests that the PS is at risk of being overwhelmed by provider issues and corporate issues, with little space to focus on the core functions of the ministry in terms of planning, policy, regulation, monitoring and review. The MOH needs to be providing strategic leadership in the sector, but this may be compromised by the reporting arrangements in relation to the PS. A more common range is around eight to ten including the support staff. The options for reducing this number of reports are discussed in this report. The corporate functions reporting to the PS are identified below, with options suggested for changing these. In contrast to the high profile that many corporate service functions have, key health policy, planning, monitoring and review functions lack a high profile in the structure of the MOH. The policy, planning, and review functions for public health, primary health, mental health, and secondary and tertiary services are all located under one director, along with the role of monitoring the hospitals. This causes many problems related to a lack of adequate representation for these functions at a high level in the ministry. 4 It also overloads the Director of the Health Services Department according to comments from staff. It potentially overloads the vacant position of the head of the Division of Health Services as this position has the Office for Hospital Institutions (vacant) and the Office for Primary Health Care. The Permanent Secretary has 13 agencies (institutions) reporting to this position, covering most hospital services. The reporting involves more than just exercising the role of appointment and management of the executive director of the agencies. In some cases it extends to receiving the performance reports of these agencies and dealing in some detail with their issues. There is an Office for Hospital Institutions under the Department of Health Services that is vacant and is not being filled. This situation of many direct reports by agencies to the PS and a lack of an oversight function elsewhere in the ministry, coupled with weaknesses in the accountability framework for the agencies are discussed in section VI. The options for reorganising the corporate functions, lifting the profile of core MOH services, and improving the arrangement for the agencies is discussed in the sections that follow. SECTION IV: Corporate functions The corporate functions located at the level of reporting to the PS are discussed below. Legal Department: An administrative instruction from the Office of the Prime Minister requires this office to be designated as a department. This department has five staff including the Director of the Department, with other positions required by the PMO administrative instruction, but which the MOH is not filling due to other priorities (as at April 2009). The Department focuses on legal aspects of administrative instructions and draft laws. It does not provide advice on legal matters relating to contracting, procurement, or personnel, nor does it represent the MOH in legal proceedings as this is a Ministry of Justice role. Consideration should be given to revoking the PMO instruction as it presumes all ministries will be well served by having a predetermined level of legal resources and that they should be delivered through specified jobs. This is proving not to be the case in the MOH, where under a budget constraint, the MOH has identified other priorities. To maximise the use of the legal resources, consideration could be given to changing the structure and roles. For example the Department could be a unit under a Corporate Services Department where it could be located with 4 Hospitals report to the PS. This is discussed later in this report, including an option to have this reporting relate to high level matters only with other areas of the MOH dealing with the function of monitoring hospitals. 12

13 other functions it could work alongside, including personnel, procurement and risk management where legal issues can often arise. Given its small size and the opportunity to broaden the advisory role of this function, the divisions could be replaced with a flat structure where all staff report to the manager of the legal unit and could be allocated roles to suit the broader functions, with scope to amend these as demands for services from this unit evolved. Information Department: An administrative instruction from the PMO requires this function to be a department. This department has no staff. An officer is being recruited, but the director s position is being left vacant. This is a clear demonstration of how inappropriate it is to centrally mandate the structure of this function for every ministry. As with the Legal Department, under a budget constraint the MOH has decided that it has other priorities and would rather have a lower level employee without a director. As there is only one person in this function, it would be possible to include it as part of an administration function (discussed below) however the communications role is usually a critical one with a reasonable level of profile in the Ministry. Another option is to have a communications unit reporting to the Director of the Department of Corporate Services. Certifying Officer: This is a part time position for one person that some staff members in the MOH have suggested could be suitably located within the functions undertaken by the finance unit. There would need to be a change in the law to permit this as the Public Finance Law sets out the reporting line for this role. If there are any conflicts of interest likely to be caused by the change in reporting lines, then these conflicts should be dealt with. Department of Administration: This department has 15 established positions with three of these being vacant. For this small number of staff there are three divisions and several units and positions under these divisions as set out in Appendix F. Given that the MOH is not recruiting vacant positions in two of the units (logistics and central archives) this indicates that some restructuring could be useful. One option is to flatten the structure of this department to reduce the number of mid level positions and to increase the potential for using the resources more flexibly by removing some separations caused by the current structure. This could increase the ability to engage staff in a wider range of work and to cover functions with fewer staff. An example has been set out below that covers administration and personnel services. Later sections of this report suggest further additions to the Department of Corporate Services. The units for administration and logistics could have a manager with staff below the manager where this is warranted by the number of employees and the nature of the functions. Department of Corporate Services Administration and personnel services (1 manager) -Executive assistant to manager (1 staff member) -Personnel services unit (1 manager and staff) -Administration services: secretarial, reception, translation, records (archives) and office services unit (1 manager and staff) -Logistics unit (1 manager and staff for warehouse, transport) 13

14 Some advantages of the proposed structure include: reduction in vacant positions that MOH does not intend to fill and cannot resource; joining the management role together for personnel and administration where one of these unfilled vacancies exists and thereby providing a management structure that is more affordable and has a more usual level of employees (current structure has division managers for very few employees); and creating the potential for more flexible use of resources by aggregating some functions and reducing the detailed designation of jobs. This is just one example of a possible reorganisation of these functions. It would need to be analysed in more depth. Suggestions need to be made for the level of staffing and these suggestions need to be considered by the MOH before a firm recommendation could be made. In the medium term the government may wish to consider using a back office function servicing many ministries for some of the services set out above. Department of Budget and Finance: This department has nine staff. The Director is being recruited, making a total of 10. It is organised into two divisions as set out in Appendix F. The Division of Budget has a manager and three staff. The Division of Finance has one manager and five staff positions, but we have been advised that the Assets Officer s position has been moved to the Department of Administration. This function could be added to the Administration Services in the diagram above. The role of the Chief Financial Officer is carried out by the Director of the Department. We have been advised that the law requires this position to report to the PS. In interviews with staff from this department the following issues were raised. changes are noted. Some possible Process issues Very detailed sign off, documentation and other processing requirements for making payments (eg, five signatures for payments) with opportunities to streamline these. If this is done, it would require changes to regulations for all ministries. The Government may wish to consider reviewing the major business processes that are common across ministries and look for ways to improve their efficiency, including options for shared back office functions. Budgeting issues Problems with a lack of alignment between capital and recurrent budgeting and planning, including a position dealing with donor capital being located under the Department of Strategic Management and poor communications between that position and the Department of Budget and Finance. This contributes to a lack of quality in capital planning along with other issues such as the approach to capital planning being reactive and not sufficiently forward looking. There are problems with commissioning buildings without considering recurrent costs. The wider issue of a lack of alignment between capital and recurrent budgeting needs to be addressed through the planning and budgeting process, but the issue with the structural separation could be addressed by locating the capital investment role with the finance and budgeting functions. At a minimum, there should be clear requirements for this donor coordination and donor related capital planning functions to exchange information freely with the budget and finance functions. MOH manages some capital for agencies reporting to it which some staff think could be better managed by the agency, so decision making is better aligned to the actual capital requirements of the agency and to improve the clarity of roles and accountabilities. There are issues with capital planning and management in agencies identified in the 2007 report from the Office of the Auditor General that would need to be considered in making any changes to roles and responsibilities for capital planning. 5 5 The Office of the Auditor General s report for 2007 identified issues with a lack of financial statements, procurement, capital being purchased and not used, service issues in regulating medicines, and unauthorised purchases. The MOH rejected many of these findings and the OAG did not accept many of the reasons put forward by MOH. 14

15 The whole-of-government budget process is not yet mature and there are issues like the MOH s strategic plan coming after the MTEF and some significant changes between the MTEF and the annual budget, with decisions being made to allocate funds for capital without a lot of analysis backing this up. The strategic planning process and its links to operational plans could be strengthened. The Health Sector Strategy is being developed and has many good points but could be improved by linking it to the MTEF. The Health Sector Strategy is intended to be used to communicate the gap in funding to donors and to support requests for donor funding. Ideally donor funding could be better predicted and included as part of the MTEF planning and there could be more focus on improving the outputs for the funds forecasted. Separation of budgeting and finance Some lack of coordination between budget and finance divisions and divisions being too small to stand alone, with a possibility of combining these functions. Some of the issues above require improvements in internal processes. These have not been examined closely enough to make recommendations. Some initial ideas about changes that could be made to the arrangements of functions include options to: Join the finance and budget functions with administration services to form one department. There are many consequences that would need to be worked through in assessing this possibility. Some obvious advantages include: reducing the number of corporate service reports to the PS and making space on the senior management team for key services (discussed later); reducing the payroll costs for senior management; and providing opportunities for the director of corporate services to streamline functions and maximise the use of resources in this larger department. A disadvantage may include possibly overloading the role of the director, particularly if that person has to fulfil the role of the chief financial officer. Move the donor capital investment role to this department. Move the certifying officer to this department (would require a change in the law to implement this fully as they report to the PS under the Public Finance Law) provided any issues with conflicts of interest can be managed. The testing and full formulation of these options and other options to improve the structure, roles, systems and processes in this department would require working in detail with the MOH. Procurement This department has one director reporting to the PS and six staff in two divisions, as shown in Appendix F. At some periods during the year the Director has frequent daily contact with the PS. It is unusual for a corporate service like this to report directly to the PS and to have frequent contact. There are considerable problems identified in the OAG report relating to procurement. Many staff commented on issues with capital and drugs procurement, including problems relating to the unsuitability of legal provisions for dealing with the purchasing of these items. This review does not extend to reviewing procurement law and procedural issues, but it appears to be a key issue that the MOH needs to focus on. Presumably if the legal issues with the procurement situation were resolved then the need to interact so frequently with the PS would reduce and the function would become routine. An option could be considered to place this function under a corporate services function, with other functions discussed above. 15

16 Aggregation of corporate functions In line with the discussion above a possible option for the corporate services is set out below. Corporate services Administration and personnel services unit Finance and budget services unit Procurement services unit Communications services unit Legal services unit Options for the arrangements below this level need to be worked out in detail. This would include improving work processes and practices as well as developing the structure and getting the right people into the jobs. SECTION V: Strategic management Current situation and issues The formal structure for this department has four divisions, five offices, two centres and a position covering special programs, as set out in Appendix F. Like many other departments there are unfilled positions and some changes from the official structure. The director s position is vacant and is being filled on an acting basis by the Head of the Division of Health Information. There are eight staff and four vacant positions including: capital investments (being recruited) and positions not being recruited in the Division of Human Resources, including the position related to the central server. This department provides a range of services including: HR for the sector focused on workforce planning and development for primary, secondary and tertiary levels (not to be confused with the MOH personnel function); this is delivered via the Division of Human Resources (head of this Division is vacant) which has the Office of Specialist Education (vacant position) and the Office for Continuing Professional Development (3 positions). Quality standards for health facilities and strategy to implement these (1 Head of Office and no staff). Licensing of health professionals (Office for Registration and Licensing with two staff supporting a large number of boards). HMIS services covering management of the health information system, standards, and policies, including the patient management systems in hospitals, drug management system, HR management system, and finance system. These services are at a developmental stage (1 staff, central server position vacant as there is no central server). Donor coordination and capital investments (one staff; plus capital investment position which is vacant and is being recruited). Issues raised during interviews in relation to the functions and organisation of this department have been set out below with some comments: 16

17 Lack of planning and policy functions Planning, strategic management and policy making could be strengthened in the MOH. There is no health policy and planning coordination or facilitation capacity in this department. This appears to be a core role that is missing. Working groups tend to take on the functions of planning and policy making due in part to the immediate need to cover the gaps in the capability of the MOH. The draft Health Sector Strategy is proposing a Strategy Forum for the sector; a strategic planning working group for the MOH; and a new unit to support these groups reporting to the PS called the Strategic Development and Monitoring Unit. In the absence of these functions operating fully, the Minister has been using working groups. It would be good to develop capability in the MOH and use working groups for advisory roles rather than carrying out core functions. There are large strategic management challenges in the health sector including: improving the financing models; developing information systems; policy work and planning related to the building blocks for health insurance; and improving the cycle of planning, budgeting, management and reporting in the MOH and wider health sector (see appendix D). The department is not resourced to deal with these challenges as well as the planning requirements in the Health Law 2004 (section 56 see Appendix C). Planning and management of health reforms could be improved. For example, primary care performance based payments were introduced before the necessary preparatory work was done. Preparation for health insurance and the policy work underpinning changes to the Health Law are not yet well advanced. Some decision-making is undertaken at the political level on routine and technical matters. This could be partially addressed by strengthening the role of the Department of Strategic Management to improve the processes underpinning the decision-making. Need stronger link of strategic planning and budgeting. The Budget Commission is constituted each year and could be better supported by a more strategic planning department that can provide information that links planning and budgeting. Lack of high level monitoring The stewardship role is not functioning well in terms of accountability for different levels and in terms of implementing what is planned. No one is systematically assessing the strategies and implementation. There are no monitoring or review functions in this department and there is difficulty in accessing monitoring information. The draft Health Sector Strategy proposes that the Strategic Development and Monitoring Unit carry out monitoring and evaluation functions. This could be a core role of the Department of Strategic Management. Under-development health information system Under-developed HIS with a lack of resources to improve this situation and some lack of role clarity with the NIPH. Activity data exists for hospitals and other providers but is not up to date and readily accessible from a central point. Hospitals do not use DRGs and this is a core element of pricing services if there is a movement to health insurance. Many providers do not have PCs, internet links or software. Health status data has many problems as noted in the World Bank report on financing. Work is underway on the HIS strategy which may result in suggestions about roles and functions for various entities, so suggestions have not been made about this area. Poor flows of information within MOH including monitoring information from the inspectorates. A problem was noted with a culture of some entities reporting to PS not cooperating with other parts of the MOH and treating information as confidential to them. Issues were noted with a lack of clarity on roles and responsibilities including job descriptions not being clear enough, with no requirements to share information and cooperate with other parts of the Ministry. This may be a MOH wide issue that needs addressing. The lack of recent census data makes it very difficult to design some health sector policies like capitation payments for primary care. Quality control needs strengthening There is one person in MOH with quality control and assurance responsibilities at the policy level. One hospital commented that there is a lack of feedback from this function in the MOH. There are considerable opportunities to improve quality and productivity in the health 17

18 sector, but few incentives and poor information to drive this. There is an option to combine the MOH s policy role in quality with a policy role in productivity, given the close relationship of these policy areas and the need to make tradeoffs. These comments indicate that the Department of Strategic Management is lacking some core functions, including policy and planning facilitation and coordination. Ideally the parts of the MOH and its agencies that are knowledgeable about core services such as primary health, public health, secondary and tertiary health, mental health, pharmaceuticals and health information, would lead policy development in their areas and provide inputs into the policy making, planning and budgeting processes. These processes could be facilitated by the Department of Strategic Management, but at the moment the Department lacks resources assigned to do this. Similarly, a coordinated approach to the monitoring and review functions is missing from the MOH. There are two inspectorates reporting to the Minister and one inspectorate reporting to the PS (soon to move to the Office of the Prime Minister). We have not reviewed the option to combine the inspection functions as these are complex areas that would require in depth analysis, including fully understanding the reasons for the recent changes. There are obviously issues they are being used to address that make the routine application of good practice ideas in this area too superficial. Distinct from an inspection function is a routine monitoring function. There is no routine monitoring of providers services in terms of output quantities, quality and efficiency measures. There is also no systematic or targeted pre-planned review of providers performance, apart from the work of the small Health Inspectorate. There is apparently a lack of open sharing of monitoring information within the MOH making monitoring difficult. There are options for improving the monitoring arrangements including developing a whole-ofministry routine monitoring function in the Department of Strategic Management that focuses on the MOH s high level reporting and monitoring. This is not an inspection role, rather it would involve the routine review of periodic performance reports from providers, fed through to this department. The detailed monitoring could be carried out in the service departments (discussed later) and key information provided to the Department of Strategic Management to compile and process into various management reports for the PS and others. Taking into account the missing functions, the overly segmented structure of the department particularly given its low staff numbers and vacancies, and the comments from MOH staff on the issues related to the functions of this department, an option for reorganising the department has been set out below. This is just one of many options, but it captures some of the key ideas as a basis for discussion with the MOH. Department of Strategic Management Policy planning, monitoring and review Health information services unit HR development and regulation unit Productivity and quality improvement services unit Purchasing /funding services HCCA Policy, planning, monitoring and review would include coordinating the strategic and annual planning processes and coordinating this with the budget work; facilitating major policy making processes that involve cross ministry and agency inputs; working with staff in MOH and agencies to 18

19 improve their planning and policy making work; donor coordination; gender and human rights policy; and EU integration activities. The monitoring function could include systematic monitoring of the performance of the MOH against its performance obligations. The detailed monitoring of providers could be undertaken in the service areas discussed later in this report and there could be close cooperation between those service areas and this monitoring function. Sometimes the monitoring and evaluation function is separate from policy and planning but there are probably insufficient resources to support this for the Department of Strategic Management. Also the same skills used in facilitating policy and planning can be used for monitoring. A full evaluation function has not been suggested at this stage as this requires well developed policy, planning, monitoring and supporting information to be in place before it can deliver much value, however, targeted areas could be reviewed using methods tailored to the level of information available. There may be changes required to administrative instructions to permit the placement of the EU integration and the gender and human rights offices in this unit. Health information services would include policy and planning for HIS development and management. A strategy for the HIS is under development so this report does not deal further with this area. HR development and regulation would include policy and planning in this area and provision or funding of training and other related services for health professionals. Given the small size of the registration and licensing office and the two offices providing HR development services, consideration could be given to combining the administrative parts of these offices. The professional development functions in the Department of Health Services need to be considered to assess opportunities for rationalisation and improvement. Productivity and quality improvement services could focus on the strategy for improving productivity in the health sector as well as promoting improvements in quality, including developing standards, guidelines and clinical protocols. The productivity work is likely to be a significant one at the strategic level. The policy settings in this sector should be constantly reviewed to look for ways to improve productivity. Health Care Commissioning Agency would undertake work to develop and implement the purchasing/funding role. This role needs to draw on the rest of this department as well as the rest of the MOH. Some possible variations on this include: HIS reporting directly to the PS as one of the key services of the MOH given its critical importance to supporting many of the reforms and improvements in health services in the future. Health Care Commissioning Agency could remain as a separate agency but given the large demands and the need to draw on the rest of the department this may not be a viable option. See the discussion in Appendix G. SECTION VI Secondary and Tertiary Services Current situation and issues As noted above, there are currently many corporate services positions reporting to the PS, but only two positions reporting to the PS that relate to MOH s role in health services: the Department of Health Services and the Department of Pharmacy. The Department of Health Services has around 11.5 staff in positions in three divisions spanning primary health, public health, mental health and secondary and tertiary health and another 13 staff located in two training centres. The three divisions are: health care (head vacant), private practice (3 staff), and public health (head in place). There are five offices situated within divisions: Office for Primary Health Care (1 staff), Office for Hospital Institutions (vacant), Office of Mental Health (half time position), Office for HIV/AIDs (vacant), and Office for Overseas Treatment Abroad (2 staff). There are two centres: Centre Development Family Medicine (7 staff) and Centre for Nursing Education (6 staff but 3 may move to the Office for 19

20 Continuous Professional Development in the Department of Strategic Management). The Centre for Telemedicine supports the hospitals (15 staff). Issues identified by staff in the MOH, hospitals and other agencies in relation to secondary and tertiary services include the following. Allocation of roles and responsibilities- lack of delegated power Decision making on technical and routine matters sometimes occurs at the political level that sidelines the technical level. There are frequent interactions some staff members with the PS on operational matters. Overload on PS with hospitals and NIPH reporting directly to the PS while the Office of Hospital Institutions is vacant and has no active role. This also causes an overload on the Director of Health Services as this Director analyses the performance reports. Consideration could be given to clarifying the nature of the reporting to the PS or Minister for health sector agencies, being in the nature of very high level matters such as signing off accountability documents (see Appendix G). Regular and ad hoc performance reporting could be provided to the Office of Hospital Institutions and it could take on the relationship management role and related tasks. There may be opportunities to improve the allocation of roles and responsibilities for the education functions in the Department of Strategic Management and the education functions in the Department of Health Services. We were advised that a third centre for professional education may be set up soon which seems unusual given the current number of centres and the fragmentation of these between two departments. Health services are not represented well at senior management level Lack of profile at senior levels for the health services and overload on the Director of Health Services. As noted earlier, there are many corporate service functions with direct reports to the PS. There is an opportunity to consider raising the position of the various health services and providing integrated policy, planning and service monitoring functions for service areas including secondary and tertiary services. There is no function for systematically monitoring and reporting on the performance in secondary and tertiary health care (Division of Health Care head vacant and Office for Hospital Institutions vacant). Policy making is also very limited. Process problems Many staff mentioned issues with delays and wasted effort in getting routine things processed and approved. The major services and outputs of the MOH could be specified and then the processes underpinning the production of these services and outputs could be examined to find ways to streamline them and make them more efficient. This can involve many changes like removing unnecessary steps, using IT solutions to reduce the need to go from office to office to get things done, making information more readily available on the intranet, etc. Cultural practices affecting performance Departments and agencies reporting to the PS and minister do not always cooperate well and freely exchange information, despite weekly meetings for directors and meetings for wider groups. Examples were given of staff members not being willing to share draft strategy documents within the MOH and performance reports from agencies not being made available to the departments that have monitoring roles. There are many ways to address this problem including requiring cooperation in job descriptions and assessing performance in relation to this; making information available on the intranet; and treating non cooperation as a serious performance issue for the director or manager causing problems. There is a large use of working groups to do core roles like producing strategies and monitoring these, which may be necessary in the short term, but capability should be developed in the MOH. Sometimes tasks are given to working groups that they are unlikely to be able to do given their incentives, such as working on the organisational structure of the ministry. This involves many personal interests and requires leadership from the top, rather than placing this task with a group of directors that will include winners and losers from the changes. Working groups can be advisory, but should not be doing core MOH technical functions. 20

21 Structural problems with excessive segmentation There is a great deal of segmentation of jobs into narrow roles and a lack of generalists able to take on a range of policy, planning and monitoring work. Many examples were given of functions that operate well because the person in the role is competent, and examples of functions that do not operate well because a key person left, or the incumbent is not performing well. Some basic information that could be expected to be available in some departments was not accessible because someone left the department. This indicates that the MOH is relying too much on the work of individuals and not enough on ensuring that good systems and processes are in place to manage the risk of losing good staff, such as document and information management and coverage by other staff when people leave jobs. An examination of the structure in Appendix F illustrates the segmentation in many areas. The segmentation of jobs undermines the ability of staff in departments to work as highly functioning teams where their various skills can be drawn on to target the pressing issues for the department. This is an effective way of working that requires leadership to create a good team environment. Even if directors have these leadership skills, they will be impeded in running highly functioning teams because of the segmentation of jobs in their departments. Consideration could be given to removing these segmented jobs and developing more generic policy, planning and monitoring positions that are filled by staff with the range of skills required. Skill issues There is a lack of some types of skills in the MOH, such as health economics, health status analysis linked to policy analysis, policy analysis including developing robust cost benefit or cost effectiveness analysis of major changes, health information development and management, general management, strategic planning linked to medium term budgeting, and other areas. There appears to be many staff with medical training and people with administration backgrounds. The MOH could include strategic HR development as part of the Institutional Development Plan that is intended to follow on from this review. Management skills are not highly developed. There has been a training course but graduates from this are not rapidly turning up in management roles. Most managers are doctors and it is not easy to get other skilled personnel into management positions. Nursing advisory services not fully utilised Work of nursing advisers has reduced in impact since the Division of Nursing has been disestablished. The answer may not be to have such a division as there is too much segmentation in the MOH, but the restructuring should consider how to ensure that policy and other work related to the nursing profession is able to be effective. Hospitals and other agencies indicated many problems: Information o lack of information systems and data for patient management, hospital management, health status analysis including incidences of diseases to forecast demand, and for funding and budgeting purposes; sometimes this information exists but in a collection of different databases (some manual) that are not readily accessible o need population census to help with demand forecasting Budget (some of the problems relate to Ministry of Finance requirements and role) o lack of clear basis for allocating hospital budgets, for example, the budgets are not linked to output so some hospitals providing more services can be funded at a lower level than hospitals providing less services o budgets being cut by the MOF and passed though the MOH to hospitals without full discussions on options and ways to reduce spending, although note that the hospitals have representation on the Budget Commission o capital purchases managed by the MOH being left until the final months of the financial year despite being required earlier o no robust and agreed approach to costing and pricing services o long standing problems accessing necessary drugs (supplied by MOH) including drugs from the essential list- patients mostly pay for the drugs themselves in the 21

22 o o o o o o Policy o o o o o past but there have been recent significant improvements in the supply of drugs to health institutions budget out of line with priorities and demands including maintenance costs- difficult to keep buildings and equipment maintained difficulties in making changes to the budget during the year (virement process is not easy) difficulties in purchasing minor items when required urgently (procurement procedures not designed to deal with the hospital situation) lack of effective effort in locating donors to support the hospital services do not always get the revenues earned from fees returned to the agency earning it which decreases incentives to collect the revenues operating costs associated with services that attract fees are not fully compensated for decreasing the incentives to provide these services lack of progress by MOH on critical health policies, possibly related to the frequent changes of ministers and PSs lack of clarity on the basic health package to be provided to citizens, demand for services is increasing but funding is falling and there is no limit to the service entitlement, so rationing happens in an ad hoc way by each hospital and health facility consequent lack of ability to use mix of public and private services as way to cover budget shortfalls, given that the boundary between the entitlement under the law and private services is unclear lack of policy development on purchaser/provider split and other steps to support health insurance and a lack of policy work on health insurance lack of development of clinical protocols although there has been recent progress in this area with the engagement of advisers to provide advice on protocols Operational o low salaries that are centrally set o difficulties in removing non performing staff o lack of feedback from MOH on quality assurance work Regional hospitals in minority areas There is a large management challenge in relation to the regional hospitals in minority areas that are linked to the Serbian health system and are funded from Serbia. The funding is planned for these areas in the Kosovo budget, but not distributed and no information is flowing back from Serbian dominated areas for health services. Reconfiguration of hospital services A lack of progress with the Master Plan to reconfigure the secondary and tertiary providers was noted by staff. Key recommendations from the draft Master Plan have been set out in appendix D. Options MOH Consideration could be given to raising the profile of secondary and tertiary services by making it a Department directly reporting to the PS. It could cover policy, planning (linked to the budget), monitoring (including monitoring of the hospital providers) and targeted reviews. If the MOH developed into a funder rather than being an integrated policy, planning, monitoring, and service provision entity, then this department it could support the funding/purchasing role led by the Health Care Commissioning Agency. The roles of the department can evolve over time as the health system changes. If a health insurance fund was set up, the MOH could monitor the access to and adequacy of the secondary and tertiary services and the impacts of these services. The function of monitoring the ownership interest in the hospitals and other agencies could be shared with the MOF unit. The purchase interest is very much a role for the Minister of Health assisted by the MOH. 22

23 One option for the organisation of a Department of Secondary and Tertiary Services has been set out below. It is only one of many possible options and needs to be discussed and tested with the MOH. The primary health, public health and mental health services are dealt with later in this report. Department of secondary and tertiary services Policy & planning unit (also support to funding/purchasing function) Monitoring unit Detailed policy and planning related to secondary and tertiary services could be carried out by this Department. Note that the policy and planning role in the Department of Strategic Management is a facilitation role that helps departments like this one feed into ministry-wide policy, planning and budgeting processes. The services provided by the Office for Treatment Abroad could be included in the Policy and Planning Unit or the HCCA. The monitoring role would include monitoring hospitals. This would involve routine monitoring of the performance reports, as distinct from the inspection functions if the Health Inspectorate. The idea of having monitoring units requires more work to assess whether there is sufficient capability able to be attracted the individual units or whether fewer units are more realistic, although note that the skills to do policy analysis are similar to the skills used in routine monitoring. Options agencies Staff members in the MOH and hospitals have commented that the current arrangements of the MOH having detailed decision making roles with regard to the agencies including the hospitals is not an efficient and effective way to deliver services. The problems noted above in relation to budgets are examples of the issues affecting performance. The creation of a robust governance and accountability framework for the agencies including the hospitals could include the following: A suitable legal framework that covers all essential components of an agency law, tailored to the situation in Kosovo. While the Health Law 2004 has many useful provisions it does not provide a full accountability framework for an agency. If an agency law is not likely any time soon then amend the Health Law. Chapter VIII of this law could be expanded. Appendix G has some suggested draft provisions. Governance arrangements with a separation of governance and management roles, boards with members with governance skills, good governance practices in the part of the board including management of conflicts of interest. The Health Law provides for a supervisory board but hospitals do not tend to have these boards. The suggested provisions for revisions to the Health Law in Appendix G include the application of the provisions about the board of directors from the Public Enterprise Law with some modification. That law has many provisions designed to minimise conflicts of interest and to ensure that the boards can be set up well to carry out their functions. Clarity of roles and responsibilities between governance boards, management, MOH officials, and others. The Health Law 2004 could be expanded to do this as suggested in Appendix G. Good ex ante accountability document covering forecast finances and forecast service performance. The Health Law has high level requirements for the Annual Plan but there are 23

24 many areas not covered in order for this to be a suitable accountability document- such as timing of plan, reporting on plan, external audit of report on plan, etc. Suggestions are made in Appendix G to expand the specifications for the annual plan and the annual report. Ex post formal annual reporting of financial and service performance with external audit and external monitoring, including by MOF of the government s ownership interests related to the maintenance of the agency s capability using the POE Policy and Monitoring Unit. Service agreement with MOH covering detail of services to be provided and funds to be provided, designed to incentivise good performance. The Health Law can provide for this as per Appendix G. Regular reporting on service agreement to MOH, eg, quarterly and a full annual report. The Health Law can provide for this. Monitoring of performance by MOH including comparative performance reports to encourage better performance. The Health Law could define MOH s role in relation to these agencies. Readily accessible information on performance for service users, monitors, and others. The Health Law can provide for this. Adequate internal controls to support greater flexibilities to manage resources. Increased flexibilities to manage resources need to be balanced with increased accountability for performance. The framework outlined above has the basic components required to achieve this, if implemented well. The barriers to performance need to be addressed such as the very detailed budget execution method implemented by the MOF. This detailed approach to budget execution is not appropriate for an agency that has an adequate governance and accountability framework and internal financial management capabilities. Hospitals would need to develop these capabilities and the framework for governance and accountability would need to work well. Policy work on designing an accountability framework for agencies must take account of the situation in Kosovo, including the level of capability and the risks that need to be managed. It is unrealistic to expect to be able to rapidly develop a robust governance and accountability framework and to have all processes relating to this operating very well, given the constraints in Kosovo. A transition path could be developed with incremental changes that involve the adequate management of risks. Problems can be expected in moving to an agency model, but this should not justify maintaining the status quo which is characterised by some notable problems. Managers in hospitals and other agencies could be trained in management and in future, selected according to suitable criteria. If they are set up with more flexibility to manage resources, then the management role becomes more challenging. MOH could have a funding, purchasing and monitoring role instead of a direct procurement role and other direct roles in relation to hospitals and agencies, if hospitals and agencies have robust accountability frameworks. Agencies could report to the PS or Minister for high level matters like agreement on key strategic and accountability issues. With regard to the provision of services, reporting and monitoring, the agencies could report to the appropriate part of the MOH and in the case of the hospitals, this could be to the Department of Secondary and Tertiary Services. The MOH would need to develop its capabilities to effectively exercise its roles. SECTION VII: Pharmaceuticals Current situation and issues The Department of Pharmacy has two divisions: one for monitoring and one for supply. There is a director, one person in each division and two assistants serving both divisions (five in total). See Appendix F. The Kosovo Medicines Agency regulates drugs and other medical products. It is an agency of around 38 staff, reporting to the Minister. There is a separate Pharmacy Inspectorate that used to be part of the Kosovo Medicines Agency, but has recently been set up as an inspectorate reporting to the Minister. It has a staff of six being a director, an assistant and four inspectors. 24

25 Some issues raised by staff include: Options Problems in providing an adequate service supplying pharmaceuticals to the providers due to the incompatibility of the Procurement Law with the special conditions in the drugs sector such as urgent and changing demands, the need to be able to purchase at a price and adjust the volume rather than purchase set volumes, and other issues. The MOH needs to proposed changes to the Procurement Law. The Kosovo Medicines Agency considers that it needs more independence. The reason the agency is seeking more independence relates to difficulties experienced with the lack of financing and other input flexibility, and how this impacts on services provided by this agency. The agency advised that it is proposing a law to become an independent agency under the Constitution (142). Independent agencies reporting to parliament should be agencies that need to be far removed from government influence such as State Audit, Courts, Auditor General, and the Ombudsman. These are parliament s agencies not the government s agencies, whereas many of the agencies that exist now do not need full independence from government. While this agency provides services to external users and generates revenues about equal to its annual budget, this is not a reason in itself for increased independence, given that it is exercising a monopoly service that is a core part of the regulatory framework in the health sector (see Appendix G). A government-wide solution to the situation with agencies could be addressed in a law for agencies. The separation of the pharmacy inspectorate from the Kosovo Medicines Agency is causing some practical problems as they need to work closely together. Options for this department include: Removing the divisions as this department is too small to justify these. Consider the possibility of either including this department as a division of the Department of Secondary and Tertiary Services or consider options to enlarge the department, however we do not have sufficient information to make suggestions about options to improve the arrangements for the pharmacy functions in all the entities (MOH, Kosovo Medicines Agency and Pharmacy Inspectorate) and further work is required on this area. We are not aware of the reason why the Pharmacy Inspectorate has been created and why it reports directly to the Minister and without information on the problems that this structural change is intended to address, we are not in a position to comment. There is a proposal to enlarge the pharmacy department by bringing the warehousing and distribution functions in the MOH rather than continuing the contract to the private sector for these services. The comparative costs analysis for this proposal needs further development to take account of the full costs to the government of this proposal including the costs of owning the building and running the vehicles including depreciation, insurance, maintenance etc., as well as the opportunity costs. The performance differences between an in house service and a contracted service should also be considered, as sometimes it is possible to get a higher quality service through using contracting techniques compared to an in house service. If the decision is taken to enlarge the department by taking the warehousing and distribution functions in house then this strengthens the case for keeping the Pharmacy Department as a department and not making it a division in another department. SECTION VIII: Public health services Current situation and issues The Division of Public Health has a head of the division with three areas: an Office of Mental Health (0.5 staff); an Office for HIV AIDs (vacant) and programs for mother and child and TB (1 staff and recruiting 1 assistant that UNICEF will fund). This is an unusual collection of services to associate with public health. Public health policy, health education and promotion, and health status monitoring are not well resourced in the MOH. 25

26 There is a National Institute of Public Health (NIPH) with a staff of 297 that covers many areas of public health including: a school of public health, services related to communicable diseases, non communicable diseases, public health observation, food control, water quality, laboratory diagnostics, health education, health promotion, HIS, research, and environmental health services. The NIPH is planning to set up seven centres to deliver services. This reorganisation is not expected to result in any staff changes, but is expected to improve the efficiency of services. The NIPH is not actively involved in public health policy unless invited to contribute by the MOH. It does not routinely monitor health status, although it does keep databases on aspects of health. The public health functions managed by the NIPH are decentralised at a regional level and they report activities to the Director of Finance. The Director of the NIPH is not involved in detail on regional activities, but considers that the reporting is adequate for this country at this stage. Issues raised by staff include: Policy development based on good health status analysis for public health could be strengthened. There is a lack of resources allocated to this in the MOH and no formal arrangements with the NIPH to provide inputs to the MOH s role in doing this. No one is doing health status analysis in a planned and systematic way. There are possibilities of using the capacities of the NIPH more effectively to contribute to health status analysis, public health policy making and planning. The services of the NIPH and Division of Public Health could be better coordinated to take advantage of the capacity of the NIPH. A lack of clarity in roles and poor access by the MOH Division of Public Health to health status information in the NIPH were noted as problems. The World Bank report on financing noted problems with the quality of health status and patient activity data. Planning for improvements in data and analysis could be part of the policy and planning work of the MOH at a high level and undertaken in cooperation with the NIPH. Work underway on the Health Information Strategy will be considering this. Duplication with a department of Health Information Systems in the NIPH that collects and analyses field data. There is also an HIS division in the MOH. Roles are not entirely clear. Little progress has been made on improving information, however the WHO is supporting consulting work to improve the Health Information Strategy, beginning in March The program for mother and child in MOH is a possible duplication with the NIPH work in this area. NIPH does monitoring of the referral policy and other matters while MOH does policy, but sometimes they mix functions. Also reproductive health policy in MOH affects services provided by University hospital, NIHP and others. There are coordination issues. MOH s role in implementation is not clear. This is normally a role for NIPH. Options Better clarity on roles and responsibilities is critical to improving performance in public health services, whatever option for restructuring is chosen. There are several options that could be considered. One option is to raise the profile of public health services and make it a department reporting to the PS. The NIPH could be more closely involved in the policy, information, planning and monitoring work of the MOH. For high level matters it could report to the PS. It could deliver services to the Director of the Department of Public Health Services, including contributing to the policy and planning work of that Department. If the option of having a Department of Public Health Services was to be considered further, the internal arrangements could be researched to develop the best structure for these. A simple example has been set out below. It would require clarity on the roles of the MOH and the NIPH. In addition to its usual services, there is an option to fund the NIPH to provide specified services to the MOH and an agreement used to clarify the expectations. The public health services in the diagram below are MOH level services, but they could also cover responsibility for the service agreements with the NIPH for various public health services. The monitoring by the MOH envisaged in the diagram below is not the detailed health status surveillance and other monitoring that NIPH does, rather it would involve routine monitoring of the 26

27 main providers of services funded by the MOH and monitoring health status for the nation using NIPH and other data. A structure for the public health function has been suggested by staff, but it uses current jobs and adds specific jobs to these (such as a position to deal with drug misuse), resulting in a large degree of segmentation into narrow roles. The Department could be designed to have generic jobs in policy, services and monitoring where staff can be flexible in what they undertake, making it possible for this department to be more responsive to emerging priorities. See section X for a discussion of mental health services. Department of Public Health Services Policy and planning unit Public health promotion services unit Monitoring unit The policy and planning box above could have a third area added to it: funding/purchasing public health services. This could reflect the role of the MOH in forming an agreement with the NIPH on what services it will provide for the funding it will receive under the Budget. Another option is for the Health Care Commissioning Agency to undertake the purchasing role. Further analysis would be required to form a view on the most suitable option. SECTION IX: Primary health services Current situation and issues The Office for Primary Health Care is located in the Department of Health Services under the Division of Health Care. The Office of Primary Health Care has an acting position and the head of the Division of Health Care position is vacant. The Office for Primary Health Care has one position and has two centres reporting to it. The Centre for Family Medicine has seven staff and deals mainly with education for family medicine doctors. The Centre for Nursing Development has six staff (three are to move to the Department of Strategic Management) and deals mainly with education for nurses. The issues raised by staff and others include the following: Lack of policy and planning Lack of active policy and planning for primary health care. The strategy is dated 2004 and needs revision. Problems in municipal health authority management Municipal health authorities are not supporting primary health care providers as fully as they should. For example if the centrally supplied drugs run out, municipalities do not cover the gap. Procurement units in municipalities are disconnected from primary health care providers and this is causing problems with supply of drugs. Many municipal health authorities lack expertise so implementation suffers. There is a lack of a management culture in small municipalities and sometimes a lack of basic facilities like a telephone and computer. 27

28 Lack of information Lack of primary health care information available to the MOH. There is a pilot to develop performance based payments in primary health care for 5% of the grants and while efforts are being made to do the ground work now through the Health Care Commissioning Agency, this is challenging given the problems with the lack of data and quality issues with population data, registration data, health status data and patient activity data. Rolling out this pilot to all regions before solving core information and other problems was noted as a concern. A stronger policy and planning function in primary health in the MOH may have been able to better prepare the sector for the movement to performance based payment Fragmented monitoring With regard to monitoring, the Office of Primary Health Care is not expected to have a role in the performance based payments to municipalities. Municipalities are expected to send data to the NIPH; the Health Inspectorate will access this and monitor; the Health Care Commissioning Agency will do ad hoc monitoring; and the Office for Quality of Health Services will also be involved. Municipalities will do some self assessment of performance and monitoring. This is a very fragmented approach to monitoring. Problems in funding approach There are issues with the approach to funding primary health care as set out in the World Bank report on financing noted below, indicating the need for policy work at the MOH level. 6 Options The decentralisation of primary health care does not mean that the MOH should not have a strong policy, planning and monitoring role. The options for strengthening this include considering creating a Department of Primary Health with these functions. 6 World Bank, Kosovo Health Financing Reform Study, 2008, page

29 Department of Primary Health Policy and planning unit Monitoring unit A variation on this option is to add a funding/purchasing function which could involve making an agreement with each municipality on the minimum level of access to services and quality that each municipality will provide for the budget funding it receives. This could include requirements relating to the performance based agreements that are developing. Another option is for the Health Care Commissioning Agency to undertake the purchasing/funding role. Further analysis would be required to form a view on the most suitable option. SECTION X: Mental health services Current situation and issues There is an Office of Mental Health with a part time staff member under the Division of Public Health in the Department of Health Services. The MOH has a budget line for 227 staff located in mental health centres in nine regional centres, eight integrated houses for 10 patients each providing 24 hour care, and child and adolescent services co-located with the family medicine centres. This reflects the administrative instruction 01/2005 which sets out the structure for the mental health services. These instructions require a director for each of the mental health centres who reports to the Head of the Office of Mental Health in the MOH. Local authorities have a role in monitoring and coordinating services. There is also a mental health service provided through the Kosovo University Clinical Hospital and some inpatient services in a few regional hospitals. There is a Mental Health Board to ensure integration of services and continuity of care. Some issues noted by staff included: Options There is a lack of clarity in roles and responsibilities for the entities in the administrative instruction and in practice, particularly in relation to who is accountable for policy, governance and oversight of the entities, and monitoring. MOH has role issues in being the policy maker, funder and monitor, while also being the provider of services. There is a need to retrain staff from the institutional approach to delivering services to a community based approach. As may be expected with only a half time position in the MOH, there is not a strong policy, planning and monitoring role. If there were more resources in the MOH, the Head of the Office noted that he would improve monitoring and conduct surveys on mental health issues such as suicide levels and the quality of services. Policy work would be undertaken on how to spread services into rural areas and how to make underserviced areas more functional. There are many mental health issues in Kosovo related to the war and a lack of capacity to provide a sufficient level of services. There are large budget issues including the end of donor funding for many staff positions and an inability to fully staff the regional centres. If the mental health services are going to be developed and if the MOH is going to take a strong policy and monitoring role, then consideration could be given to lifting the profile of these services within the MOH and resourcing this function. 29

30 At this stage we do not have enough information on the intentions for the MOH s role in the future. If it is going to be increased, then there is an option to lift mental health to a level of reporting to the PS and set it up as a department, like other service areas with policy, planning and monitoring functions. The Department could have a policy and planning unit which could also be responsible for the agreement with mental health centres and other providers on the services they will provide for the funding they receive from the central government. At the early stages the agreements may be very general, but as information improved, the agreements could specify minimum levels of service access and quality. This reflects some elements of a purchaser/provider split, but the centres are still directly accountable administratively to the MOH and not separate legal and budget entities. Department of Mental Health Policy and planning unit Mental health services unit Monitoring unit Another option is for the Health Care Commissioning Agency to undertake the purchasing/funding role. Further analysis would be required to form a view on the most suitable option. If the role of the MOH is going to remain small in the medium term, then mental health could be a unit in one of the other service department, such as the Primary Health Department, given that the bulk of this service is at the primary care level. Its current location with public health appears unusual as its main synergies would be with primary care services and to a lesser extent, with the secondary and tertiary services. SECTION XI: Health information, internal audit, licensing, inspection, special offices and committees Health information current situation, issues and options Many reports have documented issues with health information and many people we interviewed mentioned health information as a critical issue. It is one of the five priorities of the MOH in its draft Strategic Plan and in the MTEF, although it does not appear to be well resourced in the proposed medium term budget (see appendix D). The WHO consultant helping the MOH with the Health Information Strategy is recommending that a formal national HIS Assessment be prepared as a step towards a national HIS strategy that can be implemented. 7 Stakeholders are being involved in this work which includes identifying the data needed for management, disease control and response, strategic decision-making and policy development. This will involve determining what data should be collected, at which levels of the system and by whom. 7 Rudi Samoszynski, International Consultant, advice from his communications with stakeholders 15 March

31 Health information is part of the Department of Strategic Management but is not resourced. The NIPH collects patient information data from hospitals using a mix of transmission methods including paper based records. We have been advised that some records are not up to date and incomplete. We have not made recommendations on health information given that there is an in-depth study of this underway. Internal audit current situation, issues and options The Office of Internal Audit currently reports to the PS according to the organisation chart, but it also reports to the Minister. It has a director and two staff members. The Director advised that based on the law, internal audit should be reporting to an Internal Audit Committee made up of ministerial appointees, including some from outside the MOH. The Office of Internal Audit sends its reports to the MOF s internal auditor. The issues raised included: the need to establish the Internal Audit Committee; lack of clear definition over to whom the internal audit function in the University Clinical Hospital reports, issues with lack of role clarity between the finance, pharmacy and procurement departments; no licensing of auditors although this is planned; and low salaries making it hard to attract and retain staff. The forthcoming FRIDOM review of public financial management arrangements notes the need to set up the internal audit committees in all ministries. If this was done for the MOH it would be more in line with good practice and would reduce the overload of reports on the PS. Standards, licensing and registration functions: current situation, issues and options Standard setting, licensing and registration functions are carried out for various activities, professionals and products as summarised below. It involves five different entities. Standard setting and licensing health facilities The Division of Private Practice in the Department of Health Services has a director and two staff members involved in private practice regulation, licensing, monitoring, and accreditation, for around 1000 private practices including hospitals, private polyclinics, and laboratories. Their work mainly focuses on licensing, monitoring of institutions, developing the law, and creating a database. They are not involved in enforcement. Standards are based on an administrative instruction issued in 2007 for day-care hospitals, ambulatory services and inpatient hospitals (special and general), and polyclinics. The Commission for Licenses is a ministerial committee appointed to assess technical and professional activities that run across the MOH. It contributes to the licensing process by considering problems with unlicensed hospitals including assessing facilities, and the adequacy of staffing, space, equipment and other matters. This would appear to be a core MOH function that could be carried out by staff, but the commission may be a way to solve staffing shortages and other issues. The Office for Quality of Health Services in the Department of Strategic Management mainly works on health quality standards and the strategy for improving the quality of health services for the private and public health facilities. The scope of the work is supposed to include developing guidelines, protocols, monitoring, evaluation, working with coordinators for quality for primary, secondary and tertiary care and the main family medicine centres and while this is done in part, it is constrained by the size of this office (1 person). Licensing medical products including drugs The Kosovo Medicines Agency licences pharmacies, licenses drug warehouses, issues import licenses for medical products, lists authorised medical products, tests drugs, and licenses pharmacies. 31

32 Registration and licensing of health professionals The Office for Registration and Licensing under the Department of Strategic Management has one administration staff and a part time head of the Registration and Licensing Board managing the registration and licensing of health professionals. Options There may be opportunities to rationalise and amalgamate some of the standard setting, registration and licensing functions. If not in terms of combining these, then possibly in terms of the back office support for their data bases and document management. See the comments later on the boards. Further work needs to be undertaken before formulating firm suggestions. Inspection services current situation, issues and options Pharmacy Inspectorate The Pharmacy Inspectorate is a recently established inspectorate reporting to the Minister. It was formerly part of the Kosovo Medicines Agency. It has four inspectors, a director and an assistant. Its responsibilities including inspecting licensed facilities and professional staff, checking warehouse licenses, examining import documents, inspecting expiry dates on drugs, and labelling. As noted earlier, it is unclear why the Pharmacy Inspectorate was recently separated from the Kosovo Medicines Agency and why it reports directly to the Minister and without further information on what problems these changes are addressing, we are not in a position to comment. Health Inspectorate The Health Inspectorate is organised into three sections: one for inspection; one for implementing law; and one for information. Staff members work across these areas as they are small in number (five inspectors and one director). The Inspectorate inspects public and private health institutions (around 1400 of these but note that this number differs from the number quoted by the licensing staff). The scope of the Health Inspectorate s roles under the law is very large. It includes monitoring health regulations, providing technical and professional advice, promoting best medical practices and supporting institutions to interpret legal norms and sub legal acts as well as other roles (see Appendix D). The Inspectorate is currently working in line with five priorities: gynaecology and obstetrics as it is in MOH strategy and is related to improving areas related to the millennium development goals (MDGS); hospital infections; dentistry; the referral system from primary to secondary services and from secondary to tertiary services; and medical equipment. This Inspectorate reports directly to the Minister. As noted with regard to the Pharmacy Inspectorate, we would need further information on what problems this reporting line is solving before commenting further on this. With regard to its roles, there is an option for the service departments (secondary and tertiary, primary health, mental health and public health) to undertake routine monitoring roles including assessing performance reports from service providers that the MOH has performance contracts or MOUs with. The Health Inspectorate s role could be defined more tightly as an inspection role with access to the necessary powers to do this, rather than the very broad monitoring role it currently has. Sanitary Inspectorate Under the recently passed law on food safety, the Sanitary Inspectorate is expected to move to a new Food Safety Agency reporting to the Office of the Prime Minister. 32

33 Issues raised by staff and others Options The new arrangements for the Pharmacy Inspectorate are causing some problems such as having to report through the Minister to the Kosovo Medicines Agency about regional inspections and some practical coordination problems. There are problems with roles and responsibilities and information flows related to the work for the Health Inspectorate. The Department of Health Services is not routinely provided with the results of inspections and information can be difficult to access, making it difficult for this department to fulfil its functions, including the functions related to the Office for Hospital Institutions (vacant position). Once the Sanitary Inspectorate moves to the Food Safety Agency, there are remaining functions, such as inspecting hospitals and educational institutions, which needs to be assessed in terms of future options. If the option of having service areas like public health; primary health; secondary and tertiary services and mental health and pharmaceuticals is accepted, then these departments could undertake routine monitoring of performance of providers such as quarterly performance reports against performance expectations in service agreements and the statement of service performance (see Appendix G). The service auditing and inspection function (inspectorates) could focus more narrowly on priority issues. The problems associated with the Pharmacy Inspectorate s separation could be addressed in a number of ways ranging from information sharing protocols to structural solutions. Further work could be done on possible solutions. With regard to the option to combine inspectorates for pharmacy, health and the sanitary inspectorate functions remaining after the other functions move to the new food safety agency, as noted earlier, this would require careful analysis given the gravity of the issues these inspectorates are dealing with and the reasons the government has for constituting them in their current forms. Special offices and departments There are several special offices, often set up under administrative instructions from the PMO such as: Office for Gender, Human Rights and Equality Office for European Integration Office for Donor Coordination and Capital Investment Office or Department of Legal Services Office or Department of Information Some of the special interest offices appear to be staffed by well qualified people who would be capable of contributing to policy and planning in much wider areas than the areas they are assigned to under these offices. There appears to be a large number of special interest positions, for example the legal office is supposed to have two positions relating to EU integration and law. This appears to be an overload of legal positions in a ministry that is lacking key health policy and planning positions. As noted in the section on Strategic Management, consideration should be given to how to free these staff members up to permit them to work more broadly, including creating a more generic policy and planning function under the Department of Strategic Management where the gender, human rights, equality, donor coordination and EU work could be undertaken along with other core work to facilitate the ministry-wide policy, planning and monitoring processes. Training issues and options Staff and others have noted that there is a great need for competent managers in the health sector, particularly given the increasing management demands being placed on directors of providers to manage resources more effectively. Problems with management positions being filled by doctors lacking management skills was noted as an issue, including in the hospitals and family medicine centres. There are also increasing demands on directors in the MOH to meet a very challenging set 33

34 of issues within constrained resources. The senior officials in the MOH mainly come from medical backgrounds and there is a lack of senior level staff from other relevant backgrounds that could contribute to policy, planning and other areas of work, such as economics, finance, general management, social science and other areas of expertise. A DIFD project supported management training in through the UK National School of Government for around 100 managers, however apparently not many of these trainees hold management positions in the health sector. Also few of the 100 or so students who entered the Masters in Health Management at Prishtina University have management positions in the health sector. The barriers to this need to be considered. The World Bank has provided management training in the form of short courses which have been commented on positively by the staff who attended. The World Bank offered to provide resources for further management training in the form of short courses but this offer was not taken up. There may be opportunities for the MOH to make use of the services of the Kosovo Institute of Public Administration under the Ministry of Public Services. In addition to management training, there are many other skills that staff could benefit from being trained in, including the skills required for policy advice, purchasing skills, and monitoring. Developing the human resources through training and other approaches needs to be a key part of the Institutional Development Plan that follows this functional review. Committees and working groups issues and options There are some formal committees including: Board for Registration and Licensing Board for Professional Continual Education Central Board of Residency Professional Ethical Board Commission for Treatment Overseas (2) Professional Mental Health Services Commission This review does not cover the roles and functions of these committees in any detail as this could not be covered within the scope of the review, however some preliminary observations have been made. There may be opportunities to streamline the boards. The Board for Registration and Licensing has several sub-committees dealing with various types of medical professionals and under these subcommittees there are around 50 committees for each sub-speciality. This appears to be a large apparatus for the registration function. The Board for Registration and Licensing noted issues with a lack of activity and information on continuing education, making re-registration of health officials difficult. Previous registrations are being rolled over. Consideration could be given to whether there are opportunities to improve the performance of the boards and use resources better by combining the roles of some boards, such as continuing education, registration and licensing and ethics boards. Some issues have been raised about a lack of coordination with MOH departments in some areas. The Board for Registration and Licensing considers that it does not get sufficient access to monitoring reports from various inspectorates including the one covering pharmacies. As noted earlier, there are several ways to address this including information sharing protocols and job performance expectations that specifically require cooperative sharing of information in a timely way. There may be an emerging problem with paying members of these commissions due to a recent instruction from the PMO not to pay commissions or working groups. If this instruction applies to the boards listed above, then the MOH will have problems as some of these are performing core functions. 34

35 The roles and functions of the boards could be considered as part of the Institutional Development Plan and the issue with the payment of these entities addressed. SECTION XII: Examples from other countries Care needs to be taken in using other countries examples of arrangements for their MOH as a guide as the structure and functions of ministries reflect the unique constitution, government arrangements, culture and history of each country. While there is much to be learned from other countries, the Kosovo Government needs to interpret examples in the context of what will work well in this country. Many OECD countries have advanced purchaser/provider splits and many health providers, sometimes including health insurance arrangements. Some recent EU entrants are still carrying the legacies of the Soviet health structures that are not functioning well and should not be replicated in Kosovo. With these reservations in mind about considering country examples in context, some general observations are set out in this section. Compared to some OECD countries, the unusual features of the structure of the Kosovo MOH include: The large number of reporting positions to the PS The large number of corporate services and the low number of health policy, planning and monitoring services in the upper levels of the MOH structure The role of the MOH as a service provider with staff and other costs of many health service providers under its direct control, including appearing in the MOH s budget detailed to the level of economic classifications The fragmented nature of some of the MOH s functions with many offices, divisions, centres, and inspectorates and many specialised positions with few generic policy, planning and monitoring positions The large number of doctors holding management positions and the lack of other skills and background in management positions Compared to some recent entrants to the EU and countries in this region, the Kosovo MOH is unusual in some of the areas mentioned above. For example: They commonly have far fewer direct reports to the equivalent PS position when there is one. They commonly have more than one health service as a direct report to the PS, for example Lithuania has a public health division and a personal health division with high level reporting positions; Slovenia has a directorate for public health and a directorate for health protection reporting at a high level; Latvia has public health, heath care and pharmacy reporting at a high level. The Albanian MOH has concentrated its corporate services and has more health service areas at the upper levels of the structure (primary health; hospitals; pharmaceuticals). Many countries have created semi-autonomous formal structure for the hospitals as described below. Kosovo has made steps in this direction, but has not established some of the essential elements to support a semi-autonomous structure as discussed earlier. 8 The table below sets out the organisation of hospitals in some recent EU entrant countries. 8 World Bank, Kosovo Health Financing Reform Study, 2008, op cit., page 5. 35

36 Many countries have some form a government purchaser/funder or health insurance arrangements, Kosovo is a long way from establishing the basic building blocks for health insurance as discussed earlier, but can take some practical steps to improve arrangements such as a purchaser/provider split within the government funded system, as discussed earlier. The box below describes the health insurance arrangements in some countries. 9 Box Legal Status of Health Insurance in European Countries Germany has statutory health funds and private health insurance companies that also act as purchasers of health care. Health funds are corporatist, nongovernmental organizations, operating on a not-for-profit basis. German law requires professional management of funds. France has a main health insurance scheme (régime général) with a network of 16 regional offices that are not for profit organizations with their own boards and a degree of managerial autonomy. They are supervised by the national fund organization. Lithuania has a single statutory HIF that is a governmental budgetary institution largely financed by general taxation. The Estonia Health Insurance Fund (EHIF) is an autonomous public organization Hungarv s National Health Insurance Fund Administration (NHIFA) is a not for profit organization closely supervised by the MOH In February 2008 the Parliament approved the creation of 22 insurance companies with 49 percent of stakes owned by private investors. Health insurers in the Netherlands are private not for profit organizations In Switzerland, insurers can be incorporated under public oi private law and take various legal forms including associations not for profit stock company and mutuality. The Czech Republic has nine HIFs and one national fund (General Fund) Insurers are public not for profit organizations that have a degree of autonomy from the government. Slovakia has two public health insurers and four private for profit health insurance companies that until recently were allowed to pay dividends to their shareholders. Source a Schweizerisches Bundes esetz fuer die Krankenversischerung 1994 Stand 2005 Art Ibid., page

37 Some countries have combined health and social functions in one ministry, for example Finland and many states in Australia. Some countries combine health and disability functions, but not other social functions. At this stage the option to enlarge the scope of the MOH has not been considered given the large challenges the MOH faces; weaknesses in key policy, planning and monitoring areas; the legacy of having had many changes in ministers and PSs; and the considerable capacity problems. Adding to this ministry s functions or transporting this ministry s functions into another ministry, is likely to create an agenda of issues that would overload any PS and senior management team. SECTION XIII: New structure and current structure The process to develop a new structure reflecting the functions of the MOH needs to be determined. The Working Group on the Structure has not been able to resolve differences and is not a suitable forum for this work, given that it is comprised of directors who will be affected by the restructuring. An alternative process could be to have strong leadership supported by the ministers. A small team could work with the group to develop and test the proposals before making recommendations to the PS and ministers. The team could be made up of people skilled in this work with many coming from outside the MOH. The process should involve gathering the necessary information. This draft report could be a partial contribution to that work, but it needs to be thoroughly tested. The option that is most strongly supported by the analysis should be fully costed and refined to make sure it is financially realistic and sustainable in the medium term. The main changes suggested for further testing have been set out in the executive summary. Table 4 maps these changes to the current structure. While this table presents one option, note that variations on this option have been discussed in the report for many areas. Further work should test the variations in this report and other variations that emerge from the process outlined above. The mapping table below is not intended to suggest that staff members from the current structure are automatically transferred to the new structure. The restructuring should involve new job descriptions with suitable person specifications for all positions and a process for staff selection that might result in jobs for existing staff, or might involve recruiting new people with the required skills. 37

38 Table 4 Suggested structure mapped to old structure New structure Department of Secondary and Tertiary Services: Policy and planning unit Monitoring unit (option to have service unit given that hospitals report to MOH or to enlarge the purchasing/funding function relating to them either in this department or the Health Care Commissioning Agency) Department of Primary Health Policy and planning unit Monitoring unit (option for purchasing/funding as noted above if progress is made on specifying services to be provided for the grants made to local government) Department of Public Health Policy and planning unit Monitoring unit (option to have service unit if provide health promotion services; also option for purchasing/funding as noted above) Department of Mental Health Policy and planning unit Monitoring unit Mental health services (MOH currently has responsibility for staff and resources in the community MH services) (option to have this as a division in Department of Primary Health) Department of Pharmaceuticals Policy and planning unit Monitoring unit (depends on decisions about future of pharmacy inspectorate) Pharmaceutical supply unit Department of Corporate Services Administration and personnel unit Budget and finance unit Procurement unit Communications unit Legal unit Department of strategic management Ministry wide policy, planning and monitoring unit Health information unit Health sector HR regulation and development unit Productivity and quality improvement unit HCCA [option to leave HCCA as a separate agency] Other: Office of Internal Audit reporting to Internal Audit Committee Executive assistants to PS and other senior staff reporting directly to the director or other manager they are assisting [Could have Health Care Commissioning Agency reporting to PS or as part of Department of Strategic Management] Current structure Part of the Department of Health Services including part of the Division of Health Services, in particular the Office for Hospital Institutions. The services of the Office for Treatment Abroad could be included in the services of the Department of Secondary and Tertiary Services Part of the Department of Health Services including the Office for Primary Health Care under the Division of Health Services which has the two training centres (Centre for Family Medicine and Centre for Nursing Education). Part of the Department of Public Health in particular the Office for HIV AIDs and the particular programs for TB etc. Part of the Department of Public Health in particular the office for Mental Health All divisions in the Department of Pharmacy. The relationship of the Kosovo Medicines Agency and the Pharmacy Inspectorate need to be considered in further work. Legal Department, Information Officer, Certifying Officer, all divisions of Department of Administration, all divisions of Department of Budget and Finance, all offices of Department of Procurement. May include Capital Investments position in budget and finance unit Department of Strategic Management including the Division of HR, Office for Quality of Health Services, Division of HMIS, Donor Co-ordination, Office for European Integration, Office for Health Policy, Office for Equality, Human Rights and Gender. Possibly also includes the donor coordination office. Location of capital investments position needs further work. Includes HCCA. Office of Internal Audit Executive assistants [Could have separate Health Care Commissioning Agency] 38

39 Appendices Vertical Functional Review Kosovo Ministry of Health Appendix A: Abbreviations CFO DFID EC EU FRIDOM HCCA HIMS HIS HR KMA MOF MOH MTEF NIPH PMO PS SWAp UNMIK WB WHO Chief Financial Officer Department of International Development Economic Commission for Europe European Union Functional Review and Institutional Design of Ministries Health Care Commissioning Agency Health Information Management Services Health Information System Human Resources Kosovo Medicines Agency Ministry of Finance and Economy Ministry of Health Medium Term Expenditure Framework National Institute of Public Health Prime Minister s Office Permanent Secretary Sector Wide Approach United Nations Interim Administration Mission in Kosovo World Bank World Health Organisation 1

40 Appendix B: Review Approach and Methodology The review has involved three phases. Phase I: Designing the review and developing the Design Note. Phase II: Collecting and analysing data, including reviewing reports, budgets, administrative instructions, plans, interviewing staff from the MOH, agencies, donors and others. Phase III: Setting out issues and options for MOH feedback in March and April; formulating recommendations following this feedback and providing a report in May 2009; discussions with the Minister and others and refining the report; final version produced June List of people consulted: Ministers and advisers Minister of Health: Professor Dr Alush Gashi Deputy Minister of Health: Dr. Mybera Mustafa Ministerial advisers: Flakron Sylejmani and Arianit Jakupi Ministry of Health Afrim Sylejmani, Acting Permanent Secretary Haxhi Kamberi- Acting Permanent Secretary Qerkin Bytyqui, Acting Director of Budget and Finance Ukshin Vllasa, Head of Budget Division Arberesha Turjaka, Donor Coordinator from Office of Donor Coordination and Capital Investments Din Kastrati, Director, Department of Administration Curr Gjocaj, Director Department of Health Services Osman Veliu, Acting Head of Division of Private Practice Lutfi Mulaku, Director Department of Pharmacy Sanie Kicmari, Coordinator for Human Rights in the Office for Equality, Human Rights and Gender Mentor Sadiku, Office for European Integration Diana Pacolli, Office for European Integration Xhevat Ukag, Director of the Department of Strategic Management Asim Qardarbasha, Director, Health Care Commissioning Agency Ismet Hyseni, Director, Department of Procurement Iliriana Zymberaj, Director of Sanitary Inspectorate Zef Komoni, Director of Health Inspectorate Skender Berisha, Adviser to the Minister Isa Latifa, Director Internal Audit Fatime Aliu, Director Legal Office Gani Shabani, Head of Office for Mental Health Mentor Bislimi, Acting Head Division of Personnel Rifat Muriqi, Acting Head, Pharmacy Inspectorate 2

41 Valdet Hashani, Primary Health Care Coordinator Pashk Buzhala, Head Public Health Division Agron Kasumi, Office of Quality for Health Services Agencies and boards Naser Ramadani, Director National Institute of Public Health Arben Grazhdani, Deputy Director for Health, Kosovo University Clinical Hospital Zehadin Gashi, CEO, Kosovo Medicines Agency Mr Hysni Bajrami, Head of the Board for Registration and Licensing Myzafer Kalanderi, Director, Prizren Hospital Ismet Lecaj, Director, Telemedicine Centre International organisations Samir Selimi, European Community Skender Syla, Head of WHO Office in Kosovo Flora Kelmendi, Human Development Sector, WB Lulzim Cela, UNICEF Others Naim Jerliu, Adviser to President and Working Group on Health Law Chair of the Working Group on the Health Strategy, Professor Merita Berisha 3

42 Appendix C: Legal Framework Legal framework The legal framework contains the roles, responsibilities and accountabilities for the various institutions operating in the health sector. It represents a health system where policy and provision are integrated and where the MOH has a very broad role. Under the law the MOH has key roles in policy, regulation, oversight of providers including the hospitals and other health institutions, licensing, monitoring and control. Municipalties are responsible for primary care and in some limited cases, secondary care services. There are insitutions created under the law with various status, reporting lines and decision rights, with most of them being directly accountable to the MOH, including three reporting directly to the Minister. Their abilities to manage resources are limited, including many aspects of managing human resources and other inputs. The staff in the health sector are civil servants and subject to the provisions applying to the civil service, which is unusual and brings a large number of personnel into the core civil service (5,878 hospital employees and 227 mental health service employees, as well as other health sector employees in the 2009 budget). There are changes being proposed to the Civil Service Law and a Law on Salaries is being prepared. These proposed laws could have far reaching impacts on the the health sector including: Removing health sector workers from the designation of civil servants, while MOH staff would still be civil servants. It is not clear what conditions will apply to the new class of public sector workers and the impact on the ability to attract and retain staff, remove staff and finance the payroll. Creating two categories of positions: career civil servant positions that exercise functions on a permanent basis, for the achievement of general institutional objectives; and non-career civil servant positions that exercise functions of a limited duration up to two years, for the implementation of specific projects, replacement of permanent civil servants and in cases of work overload. This impact on the health sector needs to be assessed. Defining four functional categories of employees: 1. Civil servants, senior-level management; 2. Civil servants, management level; 3. Civil servants, the implementing and professional level; 4. Civil servants, the administrative level. A consequence of this will be to continue the incentives for doctors to be managers and to create difficulties in adequately rewarding technicians and professionals. The draft law provides for special categories to be treated differently. The impact of this law change on the health sector needs to be assessed. Creating 15 grades which are combined with the functional categories to derive the pay level. There are provisions creating automatic entitlements to pay rises based on satisfactory performance reviews. The latter point is a concern as it means that the MOH cannot control its wage bill as there will be automatic increases flowing through each year. These impacts need to be assessed. A Health Insurance Law was formulated some years ago and is still in the process of development, but many of the basic building blocks for health insurance are absent, such as the purchaser/provider split. Other changes are underway including setting up a new agency for food safety reporting to the Prime Minister under a law that has been recently passed. This would place the services of the Sanitary Inspectorate currently reporting to the Permanent Secretary (PS) of the MOH, under the Office of the Prime Minister. The possibility of developing a general law covering agencies that provides a sound accountability and governance framework is discussed in this report as a possible tool to assist with a purchaser/provider 4

43 split proposed in the World Bank report on finances in the health sector. 1 This would be a longer term solution as there is no work evident on the rpeparation of such as law. The key laws are summarised below. Main laws: 1. Health Law 2004/4 The main law regulating the health sector is the Health Law 2004 which provides a policy and legal framework for the health system by setting out key policies and defining roles, responsibilities, and powers. It applies to all public and private health service providers. The policy platform in the law includes principles for the health services; 2 the mix of financing sources (12, 57); 3 the groups that receive free health care (22); the services that will be provided (22, 23, 27); the arrangements of services in three levels: primary, secondary and tertiary; and defines key goals (25). The law refers to compulsory and voluntary health insurance and a Health Insurance Fund (7), however compulsory insurance and the Fund is not yet operating, with a Health Insurance Law being reconsidered. The roles of the MOH are defined (17) and include: policy, law drafting, coordiantion, standards, supervision, monitoring, infrastructure, licensing, health promotion, education, and food safety (with Ministry of Agriculture). The law is not specific about the role of the MOH in relation to the institutions that it oversees, such as the secondary and tertiary hopsitals, but provides for sublegal acts to cover this (30,31). Some institutions are specially mentioned in the law including: Kosovo University Clinical Centre (75); General Health Council (100); Health Inspectorate (102); and Sanitary Inspectorate (100). The Health Law establishes that municipalities are responsible for primary health care, defines the range of services (28) and the method of delivery through family medicine teams (29). An amendment to the Health Law (03/L 124) provides three municipalities with some autonomy in secondary care including: licensing facilities, hiring, salaries, and training in accordance with guidelines and law. The MOH provides the procedures for the mid term, strategic and operational plans to these municipalities and still has power to set licensing and accreditation requirements. The Health Law provides a policy and legal framework for the health system by setting out key policies and defining roles, reposinsibilities, and powers. It applies to all health service providers, public and private. The Health Law 2004 is under review with regard to the requirements for public and private sector providers. The MOH is considering if there are ways to deal with some performance issues in the public sector by changing provisions of this law. The policy platform in the law includes principles for the health services; 4 the mix of financing sources (12, 57); the groups that receive free health care (22); the services that will be provided (22, 23, 27); the arrangements of services in three levels: primary, secondary and tertiary; and defines key goals (25) as noted below. a) Raise of the average life-expectancy; b) Decrease of the maternal and infant mortality rate c) Decrease of the general and specific morbidity; d) Decrease of the rate of traumas; e) Decrease of the absenteeism due to the illnesses or injuries 1 World Bank, Kosovo Health Financing Reform Study, Equity, quality, honesty/responsibility, inclusiveness and non-discrimination, sustainable financing, financing cost/effectiveness, and co-financing (12). 3 Kosovo budget, municipal budgets, contributions of citizens and employers to the Health Insurance Fund and other insurance agencies, and direct payment. 4 Equity, quality, honesty/responsibility, inclusiveness and non-discrimination, sustainable financing, financing cost/effectiveness, and co-financing (12). 5

44 The law refers to compulsory and voluntary health insurance and a Health Insurance Fund (7), however compulsory insurance and the Fund is not yet operating, with a Health Insurance Law pending in Parliament. The roles of the MOH are defined in the following section The Ministry of Health develops and executes the health care policies through creating the systemic conditions as follows: a) Develop policies and implement legislation for a non-discriminatory and accountable health care system; b) Coordinate activities in the health sector in order to promote coherent development of health policies; c) Set up norms and standards and issue guidelines for the health sector with due regard to relevant international standards; d) Supervise adherence to such standards, including where appropriate, conducting inspections and other services; e) Monitor the health situation and implement appropriate measures to prevent, identify and control health care problems; f) Manage the use and development of the infrastructure related to health care which falls under the responsibility of the Ministry; g) Promote community participation and the development of citizens initiatives and activities related to health; h) Participate in the development and implementation of public information campaigns and other promotional schemes to increase public awareness and compliance with health standards; i) Encouraging development of health education in order to raise knowledge and competencies in the health field; j) Supervise, in coordination with the competent Ministries managing agriculture, forestry and rural development, services for food quality control and agricultural inputs in order to protect consumers. The roles and responsibilities of the Ministry of Health are expanded on in other provisions in relation to supervision (10; 18); primary health care (65, 67, 68); health information standards; licensing for facilities (71 et seq); regulating health specialisations (92). The law is not specific about the role of the MOH in relation to the institutions that it oversees, such as the secondary and tertiary hopsitals but provides for sublegal acts to cover this (30,31. Some institutions are specially mentioned in the law including: Kosovo University Clinicl Centre (75); General Health Council (100); Health Inspectorate (102); Sanitary Inspectorate (100). Public health care can also be covered by sublegal acts (35). The Health Law establishes that municipalities are responsible for primary health care, defines the range of services (28) and method of delivery through family medicine teams (29). An amendment to the Health Law (03/L 124) provides three municipalities with some autonomy in secondary care including: licensing facilities, hiring, salaries, training in accordance with guidelines and law. The MOH provides the procedures for the mid term, strategic and operational plans to these municipalities and still has power to set licensing and accreditation requirements. A set of plans are prescribed by the Health Law with requirements for the approval of the Kosovo Assembly for strategic plans; government approval for mid-term plans and operational plans; and municipal govenrment approval for primary care operations plans (56). Health care insitutions are required to prepare annual plans. 6

45 56.2. Implementation of the health care development policy shall be provided through: a) Operational plans; b) Mid-term plans; and c) Strategic plans Operational objectives are defined in operational plan of necessary measures and activities related to implementation of the mid-term and strategic plan ascertains including: a) Health care; b) Institutional organization; c) Human resources; d) Health care financing Mid-term objectives are deined through the health care mid-term plan for Eve (5) years that include: a) Structure of the health care system; b) Organization and management; c) Human resources; d) Health care financing Strategic objectives are defined by the strategic plan of health care for 10 (ten) years that of include: a) Assessment health care material needs and capabilities; b) Network Plan of public Health Care Institutions; c) Plan of education and continual professional development of health care workers; d) Funds for health care expenditures; e) Funds for capital investments. 2. Sanitary Inspectorate Law 2003/22 and 2003/39 The law establishes the MOH as the supervising authority for the Sanitary Inspectorate which also has a relationship with minicipalities (2). The functions of the Sanitary Inpectorate include health-related border control services, food safety, serviecs for epidemics and natural disasters, ensuring the implementation of relevant laws, inspection of specified insitutions and other services (4, 5, et seq). 3. Law for Medical Products and Medical Equipment 2003/26 and 2004/23 MOH issues import licenses for medical products (5); lists authorised medical products (7); issues guidelines for labs (8); makes pharmceutical policies relating to safety etc in association with the Kosovo Medicines Agnecy (29); and licenses facilities such as pharmacies. 4. Law on the Rights and Responsibilities of Citizens 2004/38 and 2004/47 Sets out citizen rights and responsibilities. MOH is required to have a Commission for Evaluation and Compensation of Damage to Health (27) and to have a Patients Insurance Fund (31). 5. Law on Private Practice 2005/1 Establishes the requirement for licensing of private health care practitioners and facilities and sets out the MOH roles as follows (8): 7

46 a) Take care of the health of citizens utilizing health services in private health care sector of Kosovo; b) Compile the development policy and strategy of private health sector: e) Compile necessary and additional norms and standards regarding space, equipments and staff ofthe Institutions; d) Cooperate with the General Professional Council on compiling the unique price schedule of health care services in the Institutions: e) Cooperate with the Ministry. Municipalities and other Institutions that in a certain way are involved in development of private health sector; f) Practice external administrative monitoring on Institutions: g) Monitor the activity of the licensing Board; h) Issue operative regulation and respective documentation on the procedure and work of Committees; i) Monitor the role of Municipalities on implementation of legislation regarding private health sector. Joint committees from MOH, other government insitutions, municipalities and the private sector have a monitoring role in line with standards set by MOH (18). 6. Health Inspectorate Law 2006/02-L38 and 2006/13 The inspectorate is establised as an administrative authority of MOH with responsibility to monitor ethical and profesisonal norms and standards; and monitoring of health institutions regardless of ownership. The functions of the Inspectorate are (2): 1. Monitors implementation of the Health Law and other provisions in conformity with Article 1.5 regulating the health field. 2. Ensures technical and professional advice for health activities in order to implement legal provisions and standards foreseen with the Health Law. 3. Ensures necessary information regarding methods and techniques for fulfillment of respective standards in the health field. 4. Informs the Ministry of Health, institutions and competent authorities regarding illegal work in the health care institutions and undertakes measures foreseen by this law and other laws in conformity with given authorizations. 5. Ensures information, provides help and promotes the best medical practice for health care institutions. 6. The duty of the Inspectorate is to provide support to health care institutions in interpretation of legal norms and all other sub-legal acts issued by the Ministry of Health in order to carry out their efficient implementation The MOH sets the internal orgnaisation and fucntioning of the Inspectorate through sublegal acts (3) and finances the inspectorate (5). Chief Inspector provides monthly and annual reports to MOH (4). 7. Law on Emergency Health Care 2006/21 Sets out what these services are and requirements relating to them. The MOH is responsible for policy. The law creates a position of Legal Office for Medical Emergency Services to provide scrutiny of legal and professional elements (11). Municipalities must cooerate with MOH on primary emergency care services (16). There are dual reporting lines for Medical Emergency depts in hospitals to Director of Hopsital and to MOH (26). 8. Law on Tobacco Use 2007/01 8

47 This law regulates tobacco products and their use and provides for health prevention services. It assigns monitoring roles to various MOH inspectorates and other ministries inspecotrates (12). 9. Law on Reproductive Health 2007/11 Sets out role of MOH as follows: Ministry of Health organizes and coordinates activities in these sexual and reproductive health fields: 1. Reproductive right; 2. Information, education and advice on selmal and reproductive health during all life cycle 3. Safe matemity; 4. Family planning; 5. Prevention and appropriate infertility treatment; 6. Safe pregnancy interruption-stoppage; 7. Preventation services and sexually transmissible treatment such as HIV/AIDS, as well infections and diseases of the reproductive tract; 8. Preventation early detection-discover and treatment of the malign diseases of the reproductive system and breast carcinoma It defines citizen rights, services, and prohibited activities. 10. Law on Public Health 02/L-78 and 2008/6 Sets out the responsibiilties of MOH and the National Insitute of Public Health which is the MOH s agent for public health Ministry of Health compiles-sets forth and supervises application of public health policies through the National Institute of Public Health of Kosova. 4.2 National Institute for Public Health of Kosovo (NIPHK) is a public institution which exercises referral actitivities in the area of public health as follows: a) Planning and health progrannning; b) Processing, analyzing and publishing of records in the area of health economy. c) Work quality control; d) Epidemiological preparedness and responsibility check; e) Managing and evaluating the epidemiological situation of the infectious disease; f) Managing the exceeded program of immunization; g) Managing the hospitalized intra infections; h) Analyzing and evaluating the Sanitary hygienic situation in public and private facilities; i) Analyzing and evaluating the quality of the drinking water; j) Analyzing and evaluating the sanitation; k) Analyzing and evaluating quality of food and nourishment; l) Analyzing and evaluating the areolation; m) Analyzing and evaluating the hygiene in pre school and school facilities; n) Analyzing and managing of activities regarding the microbiology of the Environment; o) Evaluating and controlling the labs that exercise activities in the area of public health; p) Referring center in the area of public health for TB. HIV/AIDS and STI; 9

48 q) Referring center in public health for zoonozes; r) Referring center in the area of public health for health and educational promotion; s) Analyzing, evaluating and managing the health protection of special categories of the population with social medical importance as well the malignity, cardiovascular, diabetes diseases and similar: t) Gathering, processing and analyzing of the records from the System of health information (SHI) and proposing the measures for advancement and managing of SHI; u) Gathering, processing and analyzing ofthe records from the System of geographical Information (SGI) and proposing the measures for advancement and managing of SGI; The law details the roles and responsibilities of the National Institite of Public Health across a large range of areas. 11. Law on Blood Tranfusion and Blood Products 02/L-101 and 2008/7 This law gives the MOH the role of regulating blood collection and use via sub legal acts including ensuring quality requirements for blood donation facilities, conditions for unused blood products, and record keeping. The National Centre for Blood Transfusion has detailed responsibilities relating to blood collection, storage, use, educaiton of workers and information (5). 12. Law on Narcotics, Psychotropic Drugs and Precursers 02/L-128 and 2008/10 MOH licenses entities for importing, exporting, and other activies relating to drugs through the Kosovo Agency for Medical Products; Committee for Narcotics has some coordination and strategy roles (6); in copperation with this Committee, MOH is responsible for the action plan on prevention, treatment and rehabilitiation of dependent illnesses (7); MOH is required to ensure the National Institute of Publi Health keeps appropriate data (32) 13. Law on Prevention and Fighting Infectious Diseases 02/L-109 and 2008/23 MOH has a very broad mandate (48) that includes the following roles: Adopts the program and determines measures for prevention and fighting the infectious diseases which jeopardize the whole country; Organizes the work for administrative competent authorities, other Ministries that get engaged in eradication of a specific infectious disease and for application the protection measures from infectious diseases, in cases of an epidemic which jeopardizes the whole country. MOH has an overall supervision role in relation to the work of health insitutions on infectious diseases (4) including via the plans of the National Institute for Public Health (9) which reports to the MOH on aspects of disease prevention and control (12); and has other roles in association with the National Insitute of Public Health relating to quarantine. MOH regulates matters relating to outbreaks and risks (34, 41); receives reports from municipalies (46); and holds powers to issues mandatory instructions (47). 14. Law on Abortion Sets out the legal basis for abortion and the services to be provided. 15. Law on Local Self Government Sets out the inclusion of primary health care and public health as municipality responsibilities (17) and secondary care for selected municipalities (20). 16. Law on Local Government Finance 10

49 Provides for a grant for minimum standards of public primary health services (25) 25.5 The Specific Grant tor health shall ba defined and allocated to municipalities according to the allocation formula established by the Grants Commission; and such formula shall be based on the normalized population and standards established by the Ministry of Health. Normalisation shall cosider the age and gender distribution of the population registered with primary health care providers, and the number of elderly persons and of persons needing special health care. Enhanced Competencies in Secondary Health Care The municipalities of Mitrovicë/Mitrovica North, Graçanice/Gracanica, Shtërpce / Štrpce shall have the competence for provision of secondary heath care, including registration and licensing of health care institutions, recruitment, payment of salaries and training of health care personnel and administrations; 11

50 Appendix D: Medium term policy, planning and budgeting MTEF priorities for the health sector II. First goal - Reduce i morbidity and address mortality of the population (through further development of health services). Specific objectives include: 1. Improvement of maternal and children s health: a) Renovation and construction of health institutional facilities; b) Improvement of health institutions facilities; c) Equipment for the improvement of health institutions; d) Development of strategies for Women immunization and action for emergency situations, as well as programs for mother and children health protection and measurement of immunity against vaccine diseases. 2. Reduction in the number of contagious diseases and mass chronic diseases: a) Renovation and construction of health institutions facilities; b) Equipments for the functioning of health institutions; c) Development of national strategy for hemorrhagic fever, project for natural focuses of infective diseases. 3. Supply the list of essential medicines - fulfillment of 80% of needs for the list of essential medicines: a) Improvement of medicament supply level; b) Conditions improvements in central pharmacy. 4. Rationalization of the program for Medical treatments abroad: a) Efficient review of the requests and reduction of waiting period for the treatment abroad. 5. More investments into the quality of care and set up and accreditation system to monitor quality of care. III. Second goal Improved resource management. Specific objectives include: 1. Continuous education and management capacity building: a) Determination and implementation of mechanisms and programs for continuous professional education; b) Development of strategy for health education and implementation of the IHR; 2. Improvements in monitoring and accountability: a) Review and completion of existing legislation and implementation monitoring; 3. Preparation of the human resource strategy and implementation plan to address issues of staff miss-allocation across hospitals and improve productivity in hospitals. IV. Third goal Creation of a sustainable funding system for the health sector. Specific objectives include: 1. Examine possibilities for the establishment of health insurance fund: a) Determination (definition) of the basic package; b) Determination (definition) of the cost of health services; c) Determination of a funding mechanism for health services. 2. Institutionalize legal, regulatory and governance framework to implement health financing reforms 12

51 V. Fourth goal Functionalize, reorganization and comletation of the existing infrastructure of health services. Specific objectives include: 1. Reorganization of health services: a) Master plan development for health institutions facilities; b) Renovation of health institutions facilities; c) Equipment for the functioning of health institutions. Having better equipment in the health institutions will create possibilities for treatment of differenet cases which currently need treatment abroad, at the same time this will contribute on savings of this funds whish are spend now on this. VI. Fifth goal Develop a Health Information System: Specific objectives include: 1. Progressive development of qualitative information systems for entire health system: a) Networking of HIS system in three health systems levels; b) Equipping and maintenance of HIS network. c) Using the data for policy analysis and decision making Health Sector Strategy The MTEF sets out the goals, objectives and proposed interventions for the health sector as noted above. These are similar although not identical to the draft Strategic Plan The Health Sector Strategy is being revised. The draft Health Sector Strategy was reviewed in May and comments provided. A summary of the comments are set out below. The Health Sector Strategy (dated May 2009) is a useful draft that can be further refined. It identifies strategic objectives and changes that need to occur to achieve these. It is understandably limited in its analysis by data problems. The ongoing refinement of the Health Sector Strategy could consider some key areas noted below, and set out in more detail in the following sections: The health status analysis and analysis of demand drivers could be developed further. There are some critical strategic changes being anticipated in this sector (e.g., health insurance and implementation of the master plan). The Health Sector Strategy is still vague in these areas, but this may be reflecting the situation with these strategies. Is it possible to be more specific about what is intended? The financial implications of the Health Sector Strategy and its relation to the MTEF allocations could be considered. The presentation of Health Sector Strategy could be adjusted to convey the main issues, strategic priorities and strategies early in the document, as many people only read the front sections of long documents. Accountability for specific strategies could be more clearly defined (tables on this miss out key institutions and list several institutions together so specific accountabilities are unclear). The monitoring indicators have design problems that mean that as a set they are not as strong as they could be for encouraging performance improvements and changes in the health sector. The suggested institutional arrangements for monitoring the Health Sector Strategy appear to bypass key accountabilities for MOH departments and instead recommend new arrangements. The strengthening of the MOH departments to fulfil the monitoring role and provide analysis would be a better option. The monitoring of the strategy should be put in the content of the wider monitoring that the MOH should be doing. Preparing a sector strategy in the circumstances that this one is being prepared in is a very difficult task. While there are many suggestions for improvements above, these should be read in the context that this draft strategy offers the potential to be a good quality document if refined further. At this stage the strategy sets out the following strategic objectives and issues priorities. The strategic objectives in the draft Health Sector Strategy are: 13

52 1. Reduce morbidity and mortality of the overall population. 2. Improve management of existing resources and quality of services 3. The reorganisation and the completion of the existing infrastructure of the healthcare system and the procurement of medical equipment in accordance with European standards 4. Implement and develop the Health Information System 5. Develop a sustainable funding system for the health sector The issues are summarized as follows: 1. An inability to effectively plan and allocate resources owing to an inadequate health information system 2. Inadequate management systems to ensure satisfactory performance and quality services 3. Difficulties over accountability arising from a lack of clarity in the roles and responsibilities of organisations and individuals 4. Serious shortcomings in the supply and distribution of drugs 5. Limited funds available The Master Plan referred to in 3 above has the following recommendations: Service improvements through improved planning capital planning linked to recurrent planning (maintenance) Improving the capital planning in the sector- problems were noted with not maintaining current infrastructure and constructing new facilities without ensuring there is sufficient funding for their operations and maintenance Restructuring of the University Clinical Hospital to separate secondary and tertiary services Improving the maintenance of laboratory and radiology equipment; improving access to CT scanning and MRI scanning (no MRI at present) Reducing the number of emergency callout centres Better monitoring of the quality of health services, the maintenance of health facilities and the state of cleanliness- address lack of use of clinical protocols (sequencing of interventions) and treatment guidelines (evidenced based best practice treatments) tailored for Kosovo and the inspection focus of monitoring rather than more modern QA approaches Improvements in inputs Addressing the issues of low salaries which results in doctors practising privately and a shortage in areas like pharmacists Improving primary health services through better provision of essential supplies including drugs and training for staff; improving supply of drugs to secondary and tertiary services; improving the procurement process for drugs Increase in services Planning for a small increase in tertiary hospital capacity including in speciality areas of oncology, stroke, burns and cardiac surgery and a small increase in specialists in cardiology, thoracic surgery and vascular surgery Using telemedicine to access overseas advice for tertiary and secondary cases Dealing with problems of access to secondary care in Mitrovice where people in the South cannot access care in the hospital in the North Increasing health promotion services including in the areas of food safety, smoking cessation, road safety, diabetes and heart disease prevention, reducing injuries in the workplace and other areas. Contracting for some services from the private sector such as laboratory tests, day surgery and cardiac surgery where there are cost advantages in doing this (will require market development) and developing the procedures to support this such as sound contracting approaches and timely and accurate payments 14

53 Health information Develop effective HIS (though not dealt with in detail in this study) Interestingly many of the priorities in the Health Sector Strategy are not well resourced. With regard to reducing mobility and mortality, the analysis work to do this is not well resourced. There are issues with the quality of the health status data and no one in the MOH has the role of analysing the key health status issues. The NIPH has health status data and undertakes policy work in some areas, but does not have the role of doing the full range of public health policy development. With regard to the priority about the HIS, there is little funding for the HIS apart from a pilot project in one municipality that is funded by donors. There is one staff member in the MOH assigned to the HIS and he is acting in another management role. Regarding the priority about improving the management and quality of services, there is one staff person in the MOH working on quality assurance and the work is still in the early stages of implementation in providers. There is no work on improving overall productivity of the health sector by considering the policy settings and other key factors, and no one in the MOH with this as a specific role. Regarding the priority about reorganising the infrastructure, the Master Plan is in a draft stage. The capital planned for hospitals in the medium term budget is falling from 9,543,000 Euros in 2009 to 9,190,330 in In 2011 the figure is 10,405,847 which is an increase in nominal terms over 2009, but may not be in real terms once inflation is taken into account. The MOH costed some activities to support the priorities which were not funded in the 2009 budget. There do not appear to be any significant changes in the resources in the medium term budget to support these priorities, although it is difficult to assess this properly as the budget is at an aggregated level. Budget Budget figures for the medium term were provided by the Deputy Minister who headed the Budget Commission in This shows a 3.69% increase between 2009 to 2010 excluding THV and a 2.16% decrease if THV is included in 2009 base; and a 6.15% increase between 2010 and In real terms, the 2009 to 2011 change may be a decrease after taking account of inflation for two years. This indicates that the MOH has a challenge in providing services on a declining budget. Table 1 Ministry of Health s internal medium term budget document Budget 2009 Boundaries 2010 Boundaries 2011 Total of Operative Expenditur es 2009 Capital Expenditur es Total 2009 Plan of THV 2009 Operative Expenditur es Capital Expenditur es Operative Expenditur es Capital Expenditur es 53,785,032 9,543,150 63,328,1 82 3,753, ,474,284 9,190,330 59,297,998 10,405,847 Total incl THV 67,081,628 65,664,614 69,703,845 In contrast to the MOH s budget figures above, the MTEF figures are higher, but they relate to the entire health sector so include the grants to municipalities. The MTEF figures indicate an increase in the health sector funding from 2008 to 2009 of 29%; from 2009 to 2010 of 1.5%; from 2010 to 2011 of 5%. In real 15

54 terms the two outer years may be decreases after taking account of inflation. As these figures are not broken down by central and local government levels, it is not possible to estimate the changes relating to the budget of the MOH. Table 2 MTEF for Health Note that the annual budget provided by the MOH has a total sum of 66,282,033 euros for 2009 which is below the 67,081,628 euros indicated in the MOH s medium term budget figures. In summary, over the medium term the MOH can expect a flat or declining government budget. The effect of donor contributions also needs to be considered and a full MTEF projection prepared that takes these into account. At this stage we have not been able to locate a full projection that takes account of all sources of funding. EC policy As part of the consideration of how to improve the MOH, the EC policy requirements need to be taken into account. The Government s 2008 Action Plan on the Implementation of the European Partnership includes the following activities that relate to the MOH: 5 5 Health related requirements are assigned to other ministries in relation to environmental matters, safety at work, and other areas, e.g., MAFRD is responsible for the requirement to adopt the law on food and the consequent implementing legislation, and establish the relevant agency to implement and enforce the law. MLSW is primarily responsible for strengthening cooperation with mental health centres. 16

55 Two projects on Health and Environment: 1) modernization of monitoring equipment for the Institute for public health, and 2) the review of regulations on standards for the quality of the drinking water Improvement of Health Care Information Systems Continued assessment of health care services provided to all communities, and publishes quarterly reports Continued financial and technical support for health care institutions providing services to minority communities and minority-inhabited municipalities Continued provision of health care services through mobile teams in minority settlements and to returnees, through District Health Authorities and Municipal Health Departments Review complaints and undertake legal and disciplinary measures against ethical, professional and legal violations, in cases of failure to provide health care services to all communities Ensure health care policies and programs respond to gender differences and health needs of women (with PMO) Work on a sector-wide approach (SWAp) is expected to begin soon with EC support. This will involve: 1. Understanding the strategy and subsectors, mapping donors and interests 2. Understanding the legal framework in the health sector considering what other ministries do 3. Health information system and strategy. 4. Assess the management capacities in MOH and municipalities including the gaps in the municipalities ability to fulfil their role in primary health in terms of staff, skills, buildings, etc. 5. Awareness campaign on public health issues. This work has overlaps with this review of the ministry and it would be good to ensure that the SWAp work can take advantage of the work from this project. Extent of the strategic management challenges It is important to consider the extent of the strategic management challenges facing the MOH as this has implications for its structure and functions. The MoH is dealing with major policy and planning challenges in financing, information, health insurance, purchaser/provider split and other areas, as set out in appendix D. Financing An area of major reform that has been considered in recent work is how to improve the financing of health services. The current arrangements are set out below: 17

56 Some issues with this method of financing include: Information Lack of an integrated funding approach for health services resulting in poor links between capital and recurrent funding (a problem identified in the Master Plan), difficulties in linking funding to performance, difficulties for providers in managing resources when they are controlled by different entities, and difficulties in creating incentives for performance. Poor links between primary, secondary and tertiary care with different funders with incentives that may not always be aligned (e.g., municipalities with incentives to increase resources for their area at the expenses of others and to cost shift from primary care onto hospitals, including the University clinic, etc). Fragmented and inadequate information on health status and services provided in various institutions, making it difficult to plan, manage and monitor health services. The challenges noted in the draft Health Sector Strategy include improving the information in the health sector. A report on health financing in Kosovo noted that: 6 There is a lack of information on health outcomes, including morbidity and mortality statistics that could be used for international comparison. Kosovo does not collect data on common health indicators, including bacis demographic indicators; lifestyle- and environment-related indicators; mortality, morbidity, and disability; and health care resources comprehensive utilization, and expenditure. The existing data on the population s demographic characteristics and health status are highly contradictory, and highlight the need for investment in better monitoring and evaluation capacity at the MoH. This lack of data prevents analysis of trends and comparisons of international health statistics that could help to support the formulation and monitoring of health policyat the national level. Health insurance Another challenge is the preparatory work for health insurance. The report by the World Bank on health financing outlines the considerable work required to establish the foundations for such a development including: 7 Planning the reforms and providing a structure to manage and monitor them; planning needs to cover the areas outlined below and set out the transition path for these changes over time, in a feasible sequence that takes account of critical paths and capacity to undertake the reforms as well as the finances available for making the changes. Risk management strategies should be included in the reform plan. Developing the policy and drafting and putting law in place including law relating to redefined roles for a purchaser provider split; governance and accountability structure for hospitals, other providers, and the insurance or purchasing body; financing; licensing and accreditation; definition of entitlements (health care package); fees and charges; health information requirements relating to roles, use, transfer, storage, etc; prohibitions including on fees and charges; etc. Rationalisation and development of providers and other key institutions as discussed in the Master Plan and in line with requirements for progression to a health purchaser/provider split whether in the form of a health insurance model or single funder/purchaser. Capacity building in all institutions including governance of semi-autonomous institutions such as hospitals and the health insurer or purchaser/funder; developing MOH capability in policy, planning, regulation, information management, reporting, monitoring, and review; developing the purchasing/funding role whether in the insurer or MOH or other institution (discussed further below); improving management including internal financial management, information management, contracting, and many other capabilities for hospitals and other providers; developing capacity in 6 World Bank, Kosovo Health Financing Reform Study, page World Bank, Kosovo Health Financing Reform Study, table 7.2 page

57 local government in relation to their roles; and improvements in the scope, quality and flows of health information in all institutions and between institutions. If the government proceeds to a full health insurance model, the Health Insurance Fund would require the following capabilities: planning and budgeting in short, medium and long term including revenue and expenditure forecasting; health demand analysis related to the entitlements; costing likely exposure to entitlements including actuarial analysis; financing including investment and debt management; claims management; risk analysis and management including full recognition of contingent and other liabilities; contracting including pricing or rate setting, market development, model contracts for classes of providers, contracting procedures, provider relationship management; monitoring; auditing; review and evaluation of provider performance and impacts of interventions being purchased or funded; client management; stakeholder management; and information management. The World Bank s report on health financing notes some barriers to the development of a health insurance model based on contributions from employers/employees from payroll taxes and private premiums, given the small size of the working population (15% working in the formal sector). 8 Corruption was also noted as a possible issue in developing an effective health insurer, given the need to have functioning levels of governance, transparency, responsibility and accountability for results. 9 Risks to the misuse of resources could impede the successful development of a purchaser/provider whether this was taken further to full health insurance model or not. A purchaser/provider split includes a movement from centralised administrative controls to more flexibility for the funding agency and for providers in the use of resources. This requires incentives for performance and effective inhibiters to the misuse of resources. Effective reporting, monitoring and auditing functions may be difficult to establish in 8 Ibid., page iii executive summary. 9 Ibid., page 6. The report notes that research indicates that the health sector has particular vulnerabilities to corruption, page

58 an environment where corruption levels are a problem. The World Bank report noted four factors often associated with successful health insurance systems: 10 The presence of fair competition in the market and an effective regulatory framework The degree of public trust in public institutions The effectiveness of political processes The presence of an organized civil society that demands accountability in society. These are difficult conditions to establish in developing countries, particularly when the level of income per capita is low and the population is small. The entry and exit barriers for providers are very large in small countries, notably for hospital and related clinical support services requiring considerable capital and HR investments. Not all these conditions are in place in Kosovo and would take considerable resources, time and other changes to achieve. The capability required to operate a successful health insurance model spans some very complex areas and requires staff with skills that are in demand in the labour market, such as governance, management, accounting, financial management, IT, contracting, investment, risk management, economic analysis and other policy analysis skills. Given that the MOH is in the very early stages of developing policies, plans and capability related to health insurance, it can be assumed that the movement to a full health insurance model is unlikely to be achieved in the next three to five years. Purchaser/provider split Even if the MOH does not proceed to a full health insurance model in the medium term, there are many functions and capabilities that could be developed to improve the efficiency and delivery of health services. If a purchaser/provider split as discussed in the World Bank report is considered feasible, then this development can be part of the progression to health insurance or an improvement in its own right, whether or not the health insurance model is adopted. In a purchaser/provider split the purchaser/funding functions could be undertaken by the Ministry of Health (see Appendix G for a fuller discussion of this). The Ministry of Health could have the role of contracting for the basic health package that can be financed from the government budget, through contracting with a mix of government and private providers, using the health budget provided by the government. It can develop many of the capabilities required for a health insurer, but tailored to its role as a government funder/purchaser of health services, rather than a full blown health insurer processing claims and managing revenues from a variety of sources. 11 The essential difference is that it would fund or purchase services and providers would manage demand according to the contracts and funding they received, rather than the insurer managing the demand through direct management of the claims. The roles of the MOH under a purchaser/provider split would move away from having such direct control over the providers to one of policy, funding, regulation, and monitoring, including monitoring of health status and results from the insurer (or similar entity) and aspects of performance of providers where the MOH has a direct monitoring role such as compliance with licensing requirements. Note that the insurer (or similar entity) would take on some monitoring functions of providers relating to the performance expected under the contracts. Under a purchaser/provider split the hospitals and some other providers that report to the MOH would be granted more flexibility to manage resources in return for being accountable for their performance as discussed in Appendix G. Currently the hospitals report directly to the PS of the MOH, and while they have some autonomy in budget execution, they are part of the MOH budget process. As an example of the decision rights of the MOH compared to a hospital, the following situation exists for the Kosovo University Clinical Hospital: Formal reporting line is to the PS of the MOH 10 Ibid, page Ibid, page 23 provides various examples of health insurance and similar arrangements, including Lithuania which has a similar model to the purchaser/provider model described in this paragraph. See also page 86 for a discussion of various models in OECD and transition countries. 20

59 Hospital prepares its own budget and sends it to MOH; bulk of the budget is salaries which are fixed due to government wide caps; consulted on proposed budget during the budget process managed by the Budget Commission of the MOH Hospital executes the budget; does not request many changes as virements are difficult and limited in scope MOH purchases the drugs so a large input to services is not procured by hospital Hospital hires staff except executive director; can fire but procedures are difficult; limited potential for promotion except into formal positions in structure; no potential to reward performance; all staff are civil servants (this will change soon under the changes to the Civil Service Law) Do internal reporting during the year but no formal in year reporting to MOH on activity data; prepare budget execution report which is submitted to MOH Finances- have own bank subaccount in Treasury system; do not retain fees and charges which are subject to an MOU between MOF and MOH and only 51% revenue earned in health sector is to be returned to MOH in 2009 Monitoring- some internal audit type monitoring on procurement The World Bank report on health financing noted that: 12 Health facility managers have little authority over spending, staff levels, staff selection and performance, and capital; they are unable to take stpes that would improve efficiency of care, for example, throught strategic staffing or pharmaceutical management. Hospitals are manged centrally by bureaucratic rules rather than on the basis of efficinet operations. The formal accountability framework currently in place for the hospitals, the National Institute of Public Health and other institutions in the health sector is not designed for an institution with some autonomy, as it lacks features commonly associated with these institutions such as: a governance board; an ex ante plan of performance linked to the finances that is treated as an accountability document; ex post reporting, monitoring and external auditing of this; and agreements on services to be produced with funders of services. These agencies lack internal management functions including financial management and full HR management functions. Instead they have limited decision rights with regard to HR and finances and under-developed management capabilities to plan, manage and monitor services, including a serious lack of management information. Considerable work would need to be undertaken to develop the legal governance and accountability framework and to put it into operation. As noted in the Whole of Government Review, the Government could consider an agency law to provide a robust accountability framework for agencies that are suitable to be moved out from the usual ministry-style arrangements. The Government would also need to classify the entities into groups that are suitable to be agencies and those that are not. Some may be commercial State Owned Entities (SOEs) regulated by private commercial laws and sometimes by a SOE law. Some might be better as a department under a ministry. Others might be suited to be agencies with varying degrees of freedom, possibly expressed in the form of requirements tailored to certain classes: Those that must implement government policies (e.g., suppliers of services like health services, research council, etc) Those with independence from government policy and responsibilities under law (e.g., Competition Commission, Securities Commission, etc) Both agencies can have similar basic accountability requirements, but the degree of independence can be reflected in the law through defining the requirement or not to follow government policy. Ministers can be required to make their directions transparent, by tabling them in parliament. Note that the class of agencies with greater independence discussed here must not be confused with the independent agencies under the Constitution which are a very special class of institutions with special protections. The health sector institutions should not fall into this class of constitutionally independent agencies for the reasons discussed in Appendix G. The basic accountability framework would need to consider the governance arrangements, powers in relation to the use of resources, reporting line, ex ante specification of performance and finances, ex post 12 Ibid, page 11. See also the draft Master Plan page 129 which discussed the lack of flexibility for hospital managers to use inputs in an efficient way. 21

60 reporting, monitoring arrangements, external auditing, and internal controls and capabilities (such as internal audit) 13 to support the greater flexibilities, information to provided and published, etc. Understandably the agencies are not doing many of these things and it would take time to develop capabilities in the agencies. The MOH s and MOF s monitoring roles would also have to be developed. Public and private sector The MOH is working on revisions to the Health Law with regard to the roles and regulation of the public and private sectors. From our brief discussions with the MOH staff we understand that an option that may be suggested is to prevent medical staff and other staff from working on both sectors. We have suggested that the MOH should identify the problems it wishes to address and considers the range of options available. There is a risk that this has not been done to a sufficient degree and that choosing a ban on working on both sectors may not address the problems and may bring unintended consequences, such as a loss of staff from the public sector. There are options to have the public and private sector operating closely and to manage potential conflicts of interest in a variety of ways. 13 Other areas including budget planning, costing, procurement management, budget/funds control, financial and performance reporting, and asset management. 22

61 Appendix E: Number of Staff and Budgets Green shaded (darker shaded) items are controlled MOH; yellow shaded (lighter shaded) items are funded by MOH Programmes Staff numbers Wages salaries and Goods Services and utilities subv trans & Capital Expenditures Total Ministry of Health 7,393 20,272,409 29,293,131 3,146,073 1,070,420 12,500,000 66,282,033 Department of Hospital Services 5,878 16,138,304 8,684,896 2,816,554-9,135,000 36,774,754 KUCC, Prishtina 2,704 7,409,178 4,774,415 1,614,520-4,899,983 18,698,096 Regional Hospital, Gjilan 524 1,466, , , ,700 2,738,850 Regional Hospital, Prizren 759 2,049, , , ,000 3,758,542 Regional Hospital, Gjakova 557 1,550, , , ,000 3,028,799 Regional Hospital, Peja 557 1,600, , ,500-1,711,230 4,250,430 Regional Hospital, Mitrovica , ,300 46, ,087 1,762,991 Regional Hospital, Vushtri , ,316 43,100-65, ,450 23

62 Regional Hospital, Ferizaj , ,235 51, ,000 1,119,341 Dentistry Clinic , ,230 66, , ,255 Department of Other Health Services 1,399 3,727,249 20,265, ,479 1,070,420 3,340,000 28,702,306 Primary Health Care 10 26,500 81,607 13, ,150 1,098,457 National Institute of Public Health , ,241 66, ,000 1,497,421 Mental Health Services of Kosovo , ,964 94,316-65,000 1,355,051 Pharmaceutical Programme - 16,100, ,100,000 Labour Medicine Programme , ,800 40, , ,042 Division of care 10 27,935 33,070 3, ,005 Minority Health Programme , ,037 29, ,737 Out of country treatment ,070,420-1,070,420 National Office/Institute for Blood Transfusion , ,000 10, , ,495 Telemedicine Centre of Kosovo 15 45,900 30,000 5, ,900 24

63 Agency for the control of health care 7 24,235 2,129 1, ,564 Kosovo Agency for Medical Products , ,000 30, ,942 Other Programmes 13 30,905 1,415,780 1,883-1,747,850 3,196,418 Doctors in country 427 1,283, , ,589,515 Sanitary Inspectorate 11 36,352 20,000 3, ,352 Kosovo Pharmaceutical Inspectorate 9 29,737 20,000 1,000 50,737 Health Inspectorate of Kosovo 6 24,000 16,750 1,500 42,250 Department of Administration , ,077 30,040-25, ,973 Central Administration , ,497 23,040-25, ,282 Minister's Office 8 69,111 50,580 7, ,691 25

64 Appendix F Structure 26

65 Appendix G Additional advice provided in response to requests made in June 2009 Reform implementation The following steps are recommended to get the reforms underway and to complete them in a timely way. Reform proposal and plan Identify a manager and group of people to consider the recommendations in this review, consult with relevant people and to prepare: (1) a reform proposal for the government to consider in a format suitable for the Cabinet; (2) a draft Institutional Development Plan for approval by the Minister before being annexed to the Cabinet paper. This group of advisers should be selected with the range of skills needed for this work and should not be dominated by people with personal interests in the outcome of the results. The Cabinet paper should cover at a minimum: Description of issues to be addressed Proposed changes with rationale for these including expected improvements to health services Fiscal costs on the budget for a three year period and other implications compared to the status quo Recommendations including legal changes and other actions Annex Institutional Development Plan The Institutional Development Plan should cover at a minimum: Roles and responsibilities for reform work including oversight, management and other roles Proposed changes and actions required to implement the changes, sequencing of changes, detailed responsibilities, and a realistic timeframe for the structural and other changes Budget for reforms Risks and risk management strategies Progress reporting arrangements Some key aspects of the reform The reform work should include selecting the most suitable structure from the range of options; calculating the staffing level and types of positions; costing these and ensuring they are realistic. Once this is done, job descriptions should be designed that include the capability required as well as the specifications for the position. These descriptions should be of sufficient quality to form the basis for performance expectations and reviews in the future. They should also be of sufficient quality to ensure that people with the right skills and experience are selected for the positions. 27

66 The selection process should be set up to ensure that good quality candidates apply for the positions and that the best person for the job is likely to be selected. This includes advertising the jobs in media where good candidates will see the advertisements, personally approaching potential candidates including people within the MOH and other health institutions who have high potential to perform in the roles; and ensuring that the interview process and wider selection process will be able to identify unsuitable from suitable candidates (e.g., use of well designed criteria, suitable selection panel, thorough reference checking, work testing of key skills, etc.) There may be legal issues with the proposed reforms. The rights of employees who lose their jobs or are appointed to other positions of lower status or pay need to be considered. The legal situation must be thoroughly assessed and well managed. Support should be set up for people who lose their positions, including counselling, job seeking assistance, retraining and redundancy payments. Employment contracts should be designed to encourage performance including fixed terms, probation period, performance reviews with consequences for good performance and poor performance, and a portion of pay linked to performance. The communications around the reforms need to be carefully managed as there will be disgruntled employees who may cause unnecessary media issues. The MOH should be proactive with the media and present the reforms as an important step to improving health services. The executive summary sets out suggested sequencing at a broad level for the changes covered by this review. The information on the current staffing and detailed budgets related to this was not available, so we have not been able to advance the advice on implementation to include more fully developed suggestions on the changes and costs. This should be covered in the Institutional Development Plan. There are some changes that cannot be implemented at this stage unless the government changes administrative instructions and some provisions of the law. The Institutional Development Plan can identify these changes and sequence the reform in line with the likely timing of such changes. Developing the purchasing/funding function Appendix D sets out some suggestions about developing the purchasing/funding function in the context of implementing a split between the purchasing/funding functions and the function of providing services. The Ministry of Health could start implementing this split through developing the purchasing/funding function and supporting the changes to improve the arrangements for the hospitals and other health service providers suggested later in this appendix in relation to changes to the Health Law. Note that section 123 of the Health Law provides for the Health Care Commissioning Agency (HCCA) to carry out functions in the absence of the Health Insurance Fund. This could be modified to say the Ministry of Health and its agencies and institutions, so there is flexibility to allocate roles as sensible, rather than doing everything through the HCCA, which at this stage is very under resourced. The large range of work noted below supports the conclusion that many departments in the MOH would need to get involved, even if it is led by one part of the MOH such as the HCCA. The MOH would need to undertake the following work: Designing and implementing the improved governance and accountability arrangements for hospitals and other public sector health providers- see later section of this appendix on possible legal changes Strengthening the MOH planning, policy, funding, monitoring and regulation roles in all the health areas including primary health, mental health, secondary and tertiary health services, public health services and pharmaceuticals 28

67 Improving the health status analysis and demand analysis to help forecast the demand for services Defining the basic health package at an affordable level and in a way that can be contracted for. Align entitlements to services to this package Improving health information on provider activity/services Specifying services into purchase units that can be used in service agreements/contracts with prices based on costs for an efficient provider (there are methods for doing this that permit gradual increases in sophistication over time starting from a simple approach tailored to the available information and skills). Costs should cover the full costs of the services otherwise this creates distortions in behaviours that can lead to inefficiencies. Designing contracts and contracting approaches to create good incentives for performance and mitigate risks such as cost shifting, cream skimming, and driving down quality to increase profits. This includes using incentive based contracting approaches and using competition where feasible. Contracting strategies have to be carefully designed as only a portion of elective services can be removed from a hospital before making its services expensive due to problems in managing the relationship between acute/elective services. Clinical viability also has to be considered. The government has to manage its ownership interests in public hospitals by not unnecessarily undermining their ability to be clinically and financially viable while also taking advantage of the gains from competition. Monitoring many aspects of performance including performance on service contracts and acting on performance issues. Encouraging improvements in the provider market. This will include changing the configuration of government owned providers to lift efficiency and effectiveness; making improvements in governance and accountability arrangements for government service providers; and market development including encouraging the development of an effective private sector The view has been expressed that contracts or service agreements are not required in the health sector with publicly owned providers, but this overlooks the considerable gains that these agreements can deliver through clarifying performance expectations linked to funding, setting out service volume and quality requirements, and creating incentives for performance through their design and application. They can be a critical part of improving information and incentives. They are also going to be essential as tools to manage the various flows of funding and performance expectations related to each of those flows, if the insurance model is implemented and if public health providers supply services to fee paying patients and groups. Service agreements are also a critical tool for the Minister of Health and MOH to ensure that providers are being required to deliver appropriate services, allowing the Minister and MOH to use these agreements (and the annual plan with the statement of service performance) and formal performance reports as strategic management tools. The MOH could make progress in all these areas which could bring improvements to the health services whether or not the system evolved into a model with a central Health Insurance Fund. The MOH can have the role of contracting for the basic health package that can be financed from the government budget, through contracting with a mix of government and private providers, using the health budget provided by the government. It can develop many of the capabilities required for a health insurer noted above, but tailored to its role as a government funder/purchaser of health services rather than a full blown health insurer processing claims and managing revenues from a variety of sources. The changes recommended in this review for the MOH structure could be implemented to strengthen the overall capability of the MOH. This would increase its ability to perform the functions set out above. The Health Sector Strategy and the operational plan, MTEF and budget bid could all be adjusted to accommodate the development of the work set out above. There will be consequences 29

68 for the budget as some areas will require increased resources if resources cannot be moved from lower priority areas. The Department of Strategic Management could have a key role in leading the work set out above, particularly if the HCCA was included into this department. It would be risky to load all this work onto the HCCA even if it was provided with considerable extra resources, as the work set out above is very broad and requires many inputs from all departments, which the Department of Strategic Management could have a key role in leading and facilitating. By placing the lead role with the Department of Strategic Management this reduces the risk of relying on a very small agency that would need to be rapidly developed and instead can use the resources of this agency as well as the entire department (if the HCCA is put into the Strategic Management Department). The success of this approach would depend on getting core skills into the Strategic Management Department and ensuring that the director of the department is sufficiently skilled and motivated to undertake this challenging role. External assistance could be provided to help with the planning of the work and key technical work. There are examples Kosovo can draw on and avoid the pitfalls that countries make when they start doing this work, such as buying expensive and useless IT systems when simple approaches are possible. Possible changes to Health Law to create an improved governance and accountability framework for hospitals Introduction Several points have been raised about how to improve the performance of hospitals which are noted below: How to increase incentives for performance- budgets are not always the problem, for example cleaning is fully funded but the standards of cleanliness vary between hospitals with some being less satisfactory than others How to ensure that service of an adequate quality are provided through-out the country and that there is reasonable even access to services within the constraints on the health system How to deal with potential problems of uneven service levels and quality if some hospitals are under the control of municipalities How the MOH can exercise its regulatory, standard setting, policy, monitoring and other roles to provide a positive influence on hospital services, including its role in setting policies to deal with issues with referral patterns Some of the performance issues are symptoms of problems with the design of the institutional arrangements in the health sector. Four key principles are important in ensuring good institutional design: Clarity in objectives, roles, and responsibilities and avoiding conflicts between them. Objectives, roles and responsibilities need to be clear and non-conflicting so that each institution has a clear sense of its task(s) and goal(s) and can be held directly accountability for achieving/not achieving them. 2. Freedom to operate. Boards/managers need to be able to make effective resource allocation decisions not hampered by inappropriate input controls or detailed ministerial directions. 14 These were the high level principles that underpinned the New Zealand public sector reforms. 30

69 3. Accountability. Incentives and sanctions must be in place to induce the right behaviour. Boards and managers must be accountable for the decisions they make. 4. Performance assessment. Sufficient information needs to be available to effectively assess performance. The suggestions for strengthening the governance and accountability arrangements for hospitals in the Health Law that are set out below are based on the four principles. The suggested arrangements include setting up hospitals as Health Sector Public Enterprises with an adapted set of governance and accountability arrangements from those applying to Public Sector Enterprises. The adaptations reflect the broader requirements on Health Sector Public Enterprises from enterprises that have the main function of maximising shareholder value. If implemented well, the suggested arrangements could strengthen the strategic roles of the Minister of Health and Ministry of Health and reduce the need for intensive operational involvement. There are many safeguards proposed to permit interventions when necessary, but the focus is on assigning appropriate roles to ministers, boards and management and using tools to ensure there are incentives for performance including an annual business plan, service agreement and periodic formal reporting with full external auditing. There are provisions to reduce conflicts of interest and to help ensure that board members have appropriate skills to provide good governance. The Working Group on the Health Law considered whether it was appropriate to classify hospitals as Public Enterprises and use the provisions of the Law on Public Enterprises, but that law has a focus on the responsibility to make a return on shareholder assets, whereas the framework for hospitals has to have a broader focus including the requirement to provide public services. Also the Minister of Health needs to have a key role in representing the ownership and purchase (service provision) interests of the government, while the Law on Public Enterprises gives the ownership role to the Minister of Finance and assumes that consumers will fulfil the purchase role. It is important to understand the notion of ownership and purchase (service provision interests) in understanding the draft provisions below. The ownership interest relates to the government s interest in the ongoing financial viability and capability of the institution. This interest with regard to agencies is commonly monitored for all sector agencies by the MOF. The Public Enterprises Law refers to a unit in the MOF that will do this. The purchase interest (service provision interest) relates to the government s interest in the services provided by the government institution. Sometimes competition is used to move services to other government owned or non government owned providers that provide better value for money. For mainly commercial agencies, the sector minister may not have a strong ownership interest and may be content to leave that to the MOF to monitor, but the health sector is different in this regard. If the providers fail, then essential services fail and the ownership and purchase interests are closely linked and of great concern to the Minister of Health. For this reason the provisions of the Public Enterprise Law have been modified to include the Minister of Health and Ministry of Health s roles in exercising responsibilities related to the ownership interest. In many countries an agency law is used for public institutions that are not mainly commercial but are not suitable to be ministries or departments. In the absence of a law for agencies, the Health Law can be used to strengthen the governance and accountability framework by applying the parts of the Public Enterprises Law that are appropriate and modifying other parts. The suggestions below have been prepared in a very short time in response to an urgent request. They need to be thoroughly tested to assess how they may work in practice and they need to be considered in the context of other laws. Ideally the drafting of these provisions would be based on a full analysis of the current decision rights for hospitals, the issues, and the solutions that can be addressed through the law. The table attached to this note provides an approach for doing this analysis. It can be used to analyse the current situation, identify problems, and to analyse the proposed solution. The draft provisions in this note should be tested using this table to see if the allocation of decision rights is appropriate. 31

70 In the absence of this analysis, some suggestions have been made below, but they must be tested to ensure that they are likely to provide better arrangements for hospitals with a stronger incentive environment for lifting performance. This work usually takes several weeks, rather than a day or two, so it is critical that the draft provisions below are thoroughly tested. The provisions for the Health Law suggested in this note have been designed with hospitals in mind. Consideration should be given to whether they can be applied (possibly refined) to cover other agencies in the health sector such as the NIPH, KMA and others. There has not been sufficient time to consider this in preparing this note. The framework The Public Enterprise Law provides a potentially robust governance and accountability framework that can be adapted to suit the situation for hospitals. Some key features include: Clear roles and responsibilities for ministers and local government exercising ownership responsibilities; monitoring unit for monitoring ownership performance including capability; and board of directors for overseeing performance. Mechanisms for specifying performance (business plan) and reporting on this, providing ministers with a way to influence the performance ex ante via the business plan and to monitor progress via the reports. Incentives for performance through clarity of specification of intended performance and the reporting including publication of these documents; through the influence of the role of the board of directors monitoring progress and exercising governance functions; through the influence of internal audit and external audit; through the monitoring of the POE Policy and Monitoring Unit; and through the increased flexibility to manage resources- note that these arrangements for hospitals potentially remove many of the issues about the detailed budget controls and inflexibilities that are impeding hospital management but these freedoms need to be matched with increased accountability for performance expectations (financial forecast and statement of service performance expectations), reporting, and good internal financial controls including internal audit. While these steps involve modern accounting standards, good quality performance specification and reporting and service auditing, it is possible to take simple and valuable steps to develop better information in all these areas, matched to the evolving capability in the health sector institutions. Very transparent appointment process for boards of directors designed to avoid conflicts of interest and to result in the appointment of qualified people. Requirements to use an accounting approach that would raise the level of transparency about the finances (full accounts with a balance sheet and P&L rather than the current cash budgeting- but should still have a cash flow statement) and potentially provide the hospitals with flexibility to manage resources. Subjects public sector health entities to the same standards as private sector ones so helps create a more level playing field for the public and private sector should the health insurance model be implemented. Has potentially robust provisions if implemented well that are designed to limit conflicts of interest which will become increasingly important if Health Sector Public Enterprises develop service for paying clients (private health insurance companies, Health Insurance Fund, consumers not covered by insurance, others). The adjustments that can be made to this framework include the following: 32

71 While there is clarity of central government ownership of most hospitals, for the minority regions where the municipalities are intended to have an ownership role, the draft law below suggests joint ownership given the reality that the central government should have an ownership responsibility for these hospitals as it ultimately carries the performance and financial risks (if this is not what is intended then amend this section to give full ownership to these municipalities). Addition of role of Minister of Health and roles for MOH in monitoring and other areas. Addition of requirement to have a statement of service performance and to report on this- also provision for service agreements with clarity on services to be provided (quantities and standards) and reporting on these with access to the reports by the public and interest groups. Other modifications to broaden the principally commercial focus of the Public Enterprise Law including addition of requirements to comply with service requirements from the MOH and a provision for the MOH to act if there is significant service or financial failures. Matters to consider In assessing the potential use of the modified framework for Public Sector Enterprises the following matters should be considered: How well is this framework working now for Public Enterprises? Are there problems that could be addressed in the provisions specially tailored for the Health Sector Public Enterprises? Will there be a large enough pool of qualified people to fulfil the role of directors on boards? Do the provisions below appropriately allocate the roles and responsibilities of the Minister of Finance and the Minister of Health and their ministries? The Minister of Finance s role relates to the ownership interests and the Minister of Health s role to ownership and purchase (service provision) interests. In some countries these ministers can operate effectively but will this be less likely in Kosovo if these portfolios are allocated to ministers from different parties? If this is an issue then the provisions below could be much more detailed about the respective roles. The allocation of roles and responsibilities to municipalities needs to be carefully considered. Some provisions have been included as examples below but these need further development. The law is designed so that the municipalities are specially named and presumably they are the ones relating to the minority areas where some transfer of responsibility is required by obligations on the government. This note does not discuss the suitability of these roles and responsibilities and they need to be designed carefully as this is a very difficult area of policy development. Are the arrangements proposed below suitable for the minority areas and compliant with the government s obligations in relation to these areas? Will hospitals be able to manage the increased freedoms and requirements; are there sufficient controls under law on asset and debt management and sufficient controls potentially in practice; what capabilities have to be developed; how long will it take to develop these capabilities? Related to this, what are the risks of the changes and how can they be managed? Can the MOH develop its service specification and monitoring role which is a different sort role to the one it has now? How long will this take? The draft provisions focus on the MOH role rather than trying to anticipate the role of the Health Insurance Fund as this is not entirely clear, some years away and the law can be amended later on to accommodate this. 33

72 Can the information quality and flows be developed to support this more hands off arrangement for hospitals? What are the costs of the changes and can they be accommodated? Fiscal costs include payments for boards of directors; improved salaries for top management; more accountants required; staff with other skills required to meet the more sophisticated management and reporting demands; more workload for the POE Monitoring and Policy Unit; changes to capability in MOH; information requirements; annual external audit costs; etc. Alongside these fiscal costs on the budget the social and economic benefits needs to be considered. Amendments to chapter VIII Replace section 49 with the provisions below and add a new section 50. There are notes in italics on points to consider in refining these provisions. Once these provisions are refined then bring the rest of the Health Law into line with these provisions. For example the provision about the plans in section 56 will need to be aligned with the provision about the business plan below. This note has not extended to considering what provisions of the Health Law need to be changed as this is premature. It would be good to get clarity on how to apply the Public Enterprise Law before adapting the rest of the Health Law. As noted earlier, the suggestions below must be thoroughly tested including assessing if the new allocation of decision rights is appropriate (see table at the end of this note). Health sector publicly owned institutions Section The institutions named in schedule * [of this law not the Public Enterprise Law] shall be Health Sector Public Enterprises owned by the Republic of Kosovo with the ownership responsibilities [define these] exercised on behalf of the government jointly by the Minister of Health and the Minister of Finance and the purchase (service provision) responsibilities exercised by the Minister of Health. [this joint allocation of responsibilities can only work if there is a culture of cooperation between ministers and ministries- if not then it may be better to allocate all the responsibilities to the Minister of Health BUT keep the role of the MOF monitoring unit for financial monitoring as it should develop expertise in the financial monitoring that the MOH is unlikely to be able to do] 49.2 The institutions named in schedule* [of this law not the Public Enterprise Law] shall be Health Sector Public Enterprises 50% owned by Republic of Kosovo and 50% owned by the specified municipality named in the schedule with the ownership responsibilities exercised on behalf of the central government jointly by the Minister of Health and Minister of Finance and ownership responsibilities of the municipality exercised by the municipality council. [need to think about how this joint ownership would work in practice] The purchase (service provision) responsibilities shall be exercised by the Minister of Health. [need to have this role exercised by the Minister of Health otherwise there will be issues with uneven access to and quality of secondary care services] 49.3 The Law on Public Enterprises shall apply to the Health Sector Public Enterprises except as specified in article 50. [check every provision of the Public Enterprise Law very carefully to see how applicable it is to the health sector and modify it where necessary. Some modifications have been suggested below but these are based on a limited knowledge of the Kosovo law and health system and refinements to these provisions are likely to be required] Special provisions for Health Sector Public Enterprises Section The Law on Public Enterprises shall apply to the health sector institutions named in the schedules to the Health Law with the modifications specified in this section. 34

73 50.2 Section 1.2 of the Law on Pubic Enterprises shall not apply with respect to... [must check all the laws referred to including the law on Business Organisations and exclude any provisions that would be inappropriate for Health Sector Public Enterprises- this is VERY important to do as it is highly likely there are some inappropriate provisions.] 50.3 The definitions in the Law on Public Enterprises shall apply with the following modifications... [go through the definitions and adjust any that are inappropriate and specifically include them in this change to the Health Law and say they apply and not the ones in the law on Public Enterprisers- for example see if the definition of board of directors is OK] 50.4 Sections 3 and 4 of the Law on Pubic Enterprises shall not apply and the Health Law shall prevail with regard to ownership of Health Sector Public Enterprises. [Need to review company law to see how relevant the provisions are to health sector institutions and use it if appropriate or exclude it and have replacement provisions if it is not] The government shall hold 100% of the shares in the Health Sector Public Enterprises or 50% of the shares as specified in schedule * for enterprises partially owned by municipalities. The government and municipalities shall not sell shares, use shares for security, or otherwise deal in the shares of Health Sector Public Enterprises as prohibited by section 41 of the Law on Public Enterprises except that the government may amalgamate enterprises, close enterprises and otherwise reorganise them. [must prevent dealing in shares- this has been a problem in some countries- but need scope to change the configuration of hospitals] 50.5 Section 5 of the Law on Public Enterprises shall apply with the modification that: (a) The Minister of Health and the Minister of Finance shall jointly exercise the ownership responsibilities on behalf of the Government and shall be the shareholders of Health Sector Public Enterprises. The Minister of Finance s role shall relate to the ownership interest [define this] and the Minister of Health s role shall relate to the ownership as well as they purchase (service provision) interest. Define this- the intention is for the Minister of Health to retain the role in policy on services while Minister of Finance is concerned about the assets, liabilities, fiscal risks from a general point of view in terms of oversight of these matters for the whole of the government. Another option to have the Minister of Health alone as the shareholding minister]. For Health Sector Enterprises partially owned by a municipality the Council of the Municipality shall be the shareholder for the municipality shares. The Minister of Health and the Minister of Finance shall jointly exercise the ownership responsibilities in respect of the central Government shares and the purchase (service provision) responsibilities shall be exercised by the Minister of Health. (b) The Select Committee shall include the Minister of Health and other ministers nominated by the Prime Minister but shall not necessarily include the ministers named in section 5. (c) The decisions of the government shall be implemented by the Minister of Health and other ministers nominated by the Prime Minister [check the implication of the Law on Business and exclude the explicit reference to it or modify the reference to it if it is inappropriate] (d) Section 5.2 shall apply to Health Sector Public Enterprises that are partially owned by municipalities [check the implication of the Law on Business and exclude the explicit reference to it or modify the reference to it if it is inappropriate] 50.6 Ownership policies shall be issued as required by section 6 of the Law on Public Enterprises with the modification that the Minister of Health and Minister of Finance shall jointly approve such policies for all Health Sector Public Enterprises and the policy shall reflect the special nature of the Health Sector Public Enterprises including the obligation to deliver public services while maintaining financial and clinical viability. Section 6.2 shall apply to Health Sector Public Enterprises partially owned by a municipality with the modification that the Minister of Health and Minister of Finance shall jointly approve the ownership policy in addition to approval by the Municipality Shareholding Committee. [note that ownership policy relates to the assets and liabilities of an organisation and the need to maintain capability- the purchase interest (service provision) can be dealt with in the business plan and service agreements and is much more in the domain of the Minister of Health while the ownership interests is commonly a concern of a Ministry of Finance as well as a Ministry of Health- this is a 35

74 public finance distinction and if it is not well understood and used in Kosovo then it would be important to clarify exactly how it will be used so the roles of the Minister of Finance and Minister of Health are very clear and not confused.] 50.7 In addition to the powers and requirements in section 7 the shareholding ministers shall be entitled to remove any or all members of the Board of Directors at an earlier date than two years if one or both of the ministers are of the view that performance failures have occurred that relate to the exercise of the governance role of the Board of Directors The POE Policy and Monitoring Unit shall focus on the ownership interests [define this] and shall coordinate its monitoring with the Ministry of Health. The Ministry of Health shall have principal responsibility for monitoring the service performance of Health Sector Public Enterprises and shall have a joint responsibility with the POE Policy and Monitoring Unit to monitor the ownership interests. The POE Policy and Monitoring Unit and the Ministry of Health shall proactively exchange information and analysis to ensure that the monitoring is effective and efficient. [this expression of the roles and responsibilities of these two entities could be more deeply defined to ensure clarity and how they will cooperate] 50.9 The Ministry of Health shall have the power to exercise its roles assigned by law and the restrictions in section 7.6 shall not apply to the proper exercise of such powers. [make sure that the Ministry of Health has the power to fulfil its regulatory role and also the purchase interest] Section 7.7 shall not entitle Health Sector Public Enterprises or the POE Policy and Monitoring Unit to withhold information that should be in the public domain according to law or a decision of the Minister of Health or Minister of Finance The reporting required by section 8 shall be included in the periodic and annual reports of the Health Sector Public Enterprises which shall comply with the requirements pursuant to the Health Law. [the reporting requirements need to cover the service performance which is not adequately covered in the Public Enterprise law] Section 9 shall not apply to Health Sector Public Enterprises. The government and municipalities shall not sell shares, use shares for security, or otherwise deal in the shares of Health Sector Public Enterprises as prohibited by section 41 of the Law on Public Enterprises except that the government may amalgamate enterprises, close enterprises and otherwise reorganise them Section 10.1 shall not apply to Health Sector Public Enterprises Section 12.1 shall not apply to Health Sector Public Enterprises. The Health Sector Public Enterprise shall provide services in an effective, economical and efficient way in compliance with its obligations and shall ensure that it maintains and develops capability in a financially sustainable way. The Health Sector Public Enterprise shall provide services in accordance with its statement of forecast service performance in the business plan, any service agreements with the Ministry of Health and other entities, and its other legal obligations. If the Ministry of Health and the Health Sector Public Enterprise are unable to reach agreement then the Ministry of Health shall have the power to impose the service agreement by serving a notice under this section setting out the terms of the service agreement. Without affecting the status of this service agreement, the Health Sector Public Enterprise shall be entitled to prepare an analysis of the issues with the service agreement imposed under this section and proposals for variations to the service agreement for consideration by the shareholding ministers who shall have the power to jointly require variations to the agreement. [this provides for service agreements which are a key step towards clarifying what is provided for the funds used and will be a basis for the future contracting with the Health Insurance Fund and other purchasers if the health sector evolves in that direction. It can be a very useful tool for driving performance improvements and can be designed to be very simple in the beginning to match capabilities and become more sophisticated over time. The last resort power to impose the agreement is necessary as the government needs this method to close down negotiations that become unproductive and difficult to resolve as can happen in the early years of specifying and pricing or costing services] 36

75 [check if section 13 is OK or are there laws that are unsuitable for Health Sector Public Enterprises?] [section 14 it would be good to apply modern accounting standards to Health Sector Public Enterprises but check how long it might take before they could comply as it requires staff with accounting skills] Section 15.2 shall be modified so that the appointment of the Recommendation Committee shall be undertaken jointly by the permanent secretaries of the Ministry of Health and the Ministry of Finance with the Permanent Secretary of the Minister of Health being entitled to appoint four members and the Permanent Secretary of the Ministry of Finance being entitled to appoint three members. Section shall be modified so that the Minister of Health has the power to appoint an acting chairperson. [check other provisions of section 15 to test how suitable they are to apply to health Sector Public Enterprises] [modify section 16 to provide for Health Sector Public Enterprises that are jointly owned by central government and municipalities] [check section 17 to see if it will work for the Health Sector Public Enterprises- will there be enough people with these requirements to fill all the board positions?- need to at least make the following change] Section 17 (3) b shall be modified to add one more specification for a director that they may qualify under (i), (ii) or (iii) has experience in the health sector [the other requirements are about commercial expertise so it would be useful to permit board members that have health sector expertise] Section 18 shall be modified so that the Board of Directors shall have the power to remove a CEO for any material failure of organisational or personal employment performance or breach of organisational or personal employment obligations without the limitation of the two year period. [Modify section 20 to cover Health Sector Public Enterprise owned by central and local government] [section 21.1 looks unfair as it permits termination of an employment contract without cause] Section 29 shall be modified to include a requirement to report to the Ministry of Health on service performance in the form and on the dates specified by the Ministry of Health. [MOH could specify the reporting requirements for the statement of service performance in the business plan, the service agreement and any other reporting requirements. It would be good to consolidate these reporting requirements into simple templates that can be filled in electronically on commonly available software like excel] Section 30.1 shall be modified to require the approval of the Minister of Health and the Minister of Finance of the business plan. The Minister of Health in consultation with the Minister of Finance shall have the power to direct changes to the business plan should the Board of Directors not agree with the Minister of Health s request to change the business plan. All directions from the Minister of Health to change the Business Plan shall be made in writing and provided to the Kosovo National Assembly for information. [this is important as Health Sector Public Enterprises are not simply commercial entities and the Minister of Health needs to have a role in approving the business plan as it will relate to the provision of essential public health services. Need to have the transparency about directions. This draft gives the main power to the Minister of Health to give directions after consulting with Minister of Finance. Need to draft a provision to cover the rights to direct changes to the business plans of the entities that local government partly own.] Section 30 (1) a shall be modified to include a requirement that from a date to be specified by the Minister of Finance the requirement for financial targets will be replaced by a requirement to provide the following information in the form specified by the Ministry of Finance: [see an example below- this can be adapted to suit Kosovo] 37

76 Forecast financial statements including the balance sheet; an income and expense statement (operating statement); and cash flow statement for the forthcoming year and two further years A statement of the fiscal risks and risk management strategies A statement of accounting policies to be used Other information necessary to fairly reflect the financial operations of the Budgetary Body for that year and its financial position at the end of the financial year [phase this in as it will take time for hospitals to be able to do this] Section 30.1 (e) shall be modified to add the requirement for Health Sector Public Enterprises to provide a forecast statement of service performance in the form specified by the Ministry of Health. Section 30.2 shall be modified to add the requirement that Health Sector Public Enterprises shall have the obligation to disclose information and shall not be permitted to with-hold information on the basis of commercial confidentiality except for information directly related to an actual competitive service tender. The Health Sector Public Enterprise shall publish the Business Plan on its website by [date] and the Ministry of Health shall publish the business plans for all Health Sector Public Enterprises on the Ministry of Health website by [date]. [New Zealand health sector experienced many problems with hospitals trying to make core service performance information confidential on the grounds they were competing when in reality most hospitals are monopolies or near monopolies for the bulk of their services and they use their dominant market power to prevent competition] Section 31 (1) b shall be modified to add the requirement to report service performance in the format specified by the Ministry of Health and financial performance in the format required by the Ministry of Finance. [financial reporting should eventually be against the set of forecast financial statements but this takes time to develop- should show these results compared to the previous 2 years] Section 31 (2) shall be modified to add the requirement to provide the report to the Minister of Health and Ministry of Health. Section 31 (3) shall be modified to add the requirement to report on the statement of service performance comparing the forecast service performance in the annual business plan to the performance achieved in the format specified by the Ministry of Health. Section 31 (3) shall be modified to add the requirement to submit the annual report to the Minister of Health and the Ministry of Health. The Health Sector Public Enterprise shall publish the Annual Report Plan on its website by [date] and the Ministry of Health shall publish the annual reports for all Health Sector Public Enterprises on the Ministry of Health website by [date]. Section 31 (4) shall be modified to add that this requirement includes providing information as required by the Ministry of Health. [align these provisions to the earlier one about reporting. Cover the reporting to municipalities when they partly own an entity] Section 33 (2) shall be modified to include a requirement to audit service performance as specified by the Ministry of Health. [service performance auditing can be gradually introduced as capability for specifying the requirements and doing the work develops- it takes time for auditors to learn these skills] Section 37 (2) shall be modified to include a requirement to provide information to the Minister of Health and Ministry of Health on the performance of Health Sector Public Enterprises Section 41 shall be modified by adding the requirement that a Health Sector Public Enterprise shall not create liabilities in the nature of debt without the express written approval of the shareholding ministers. Such written approval shall be tabled in the Kosovo Assembly for information.[check how this lines up with restrictions on debt] The shareholding ministers shall have the power to suspend the Board of Directors in the case of a service, financial or other failure that the ministers consider requires immediate intervention and in such case the Ministry of Health shall take over the governance role of the Board of Directors for a period determined by the shareholding ministers. The shareholding ministers shall replace some or 38

77 all of the directors as soon as practicable and return the governance functions to the board of directors. The exercise of powers under this section shall be by notice in writing to the board of directors and the notice shall be tabled in the Kosovo Assembly for information The Ministry of Health shall publish on its website all service agreements and contracts in their entirety, with all health service providers, within 10 days of concluding the service agreements and contracts. The transition provisions need to allow of gradual implementation of new structures and requirements. Consequential amendments There will be consequential amendments required including the Public Finance Act to deal with the new class of Health Sector Public Enterprises. Other changes to the Health Law Suitable transition provisions should be put in the Health Law. Some of the suggestions above take time to implement and require capability to be developed. The provisions drafted above do not provide for the role of the Health Insurance Fund at this stage as that can be provided for later when its role is clearer. This note has focused on the provisions relating to setting up Health Sector Public Enterprises and has not considered other aspects of the Health Law that may need to be refined. Some areas include: The intention of the Working Committee to split the Kosovo Clinical Centre into three separate autonomous clinics (section 75). They would need a clear organisational status with a governance and accountability framework with clear roles and responsibilities which is unclear from the current draft. The Health Law is not clear enough about the role of the Ministry of Health in policy, strategy, and monitoring in primary care and other sectors and the proposed changes to the law does not improve this situation. Primary health care centres appear to be expanding into secondary care under the proposed changes to section 29. Has this been carefully assessed to ensure it is likely to improve the efficiency and effectiveness of service? The Working Group discussed the issues relating to public and private practice including various proposals to deal with the current conflicts of interest. It is suggested that the conflicts of interest be assessed in detail and various possible solutions to dealing with them be considered. Some may require changes to laws but some will have contract, managerial, information provision, monitoring, auditing and other solutions. The Working Group has suggested a 2010 date for commencing the Health Insurance Fund s operations. This appears a highly unlikely target date. A suggested change to the Health Law involves exempting a large group of people from copayments. Co-payments can be very useful in modifying behaviour and should not be excluded in such a broad way. For example higher copayments for casual visits for treatments in secondary care can be set at a higher level than copayments for the treatment in primary care. There is a proposed provision that uninsured people will pay for services at economic prices. What does this mean? It would be better to simply say they will pay and not to put other requirements in the law (like economic price). The Ministry of Health and providers will 39

78 need to work out the pricing policies which are likely to vary according to provider and services and change over time. The permission in the law for health institutions to provide additional service under contract makes it very important that the institutions are put into a more robust governance and accountability framework as discussed in Appendix G to increase the controls and incentives for good management of their operations to meet their obligations and use resources as appropriate. There will be increased revenue flows and increased risks of not using these well unless many of the suggested improvements in Appendix G are made. The Working Group has added requirements for master s qualifications for pharmacists. Is this realistic and necessary? Is this an unnecessary restriction of the market? 40

79 Template for examining decision rights of various agencies The current allocation of decision rights for hospitals and other health sector public institutions could be analysed to identify problems. The changes to the law should reflect solutions to those problems. The draft legal provisions in this report should also be analysed in this template to see if they represent a workable arrangement of decision rights. This is particularly important given that the provisions represent some significant changes to decision rights and given that the provisions were prepared in a very short period of time without being able to discuss the implications with the Working Committee on the Health Law. Name of agency National Assembly Cabinet President (Office of President ) Ministers (specify which ones) Ministry of Health (PS or other managers) Board of agency Head (CEO) of agency or other managers Others (specify such as MOF roles) Personnel Hire CEO and others Pay and conditions CEO & others Promote Discipline Dismissal Train Change positions and structure of organisation 41

80 Name of agency National Assembly Cabinet President (Office of President ) Ministers (specify which ones) Ministry of Health (PS or other managers) Board of agency Head (CEO) of agency or other managers Others (specify such as MOF roles) Procurement Minor items Major capital Contract out work Finances Approve budget Manage cash Raise revenue and use it Use of surplus Obtain grants Borrow 42

81 Name of agency National Assembly Cabinet President (Office of President ) Ministers (specify which ones) Ministry of Health (PS or other managers) Board of agency Head (CEO) of agency or other managers Others (specify such as MOF roles) Invest Give loans buy assets Sell assets Set internal accounting and reporting conditions Set external accounting and reporting conditions Set internal audit conditions Set external audit conditions Service standards and quantities Set service volumes 43

82 Name of agency National Assembly Cabinet President (Office of President ) Ministers (specify which ones) Ministry of Health (PS or other managers) Board of agency Head (CEO) of agency or other managers Others (specify such as MOF roles) Set service standards Review Review performance Deal with performance issues of entity Policy decisions Major policy changes Operational policy Grant a property right Grant licence, lease or other property right Remove property right 44

83 Name of agency National Assembly Cabinet President (Office of President ) Ministers (specify which ones) Ministry of Health (PS or other managers) Board of agency Head (CEO) of agency or other managers Others (specify such as MOF roles) Modify a license Cancel a license Apply fee or charge Apply a fee or charge for a license or service or other reason Waive tax, duty, charge, fee, debt, requirement Waive or reduce a charge or fee (specify) Waive a debt Waive a condition of a license Enforcement Seize property 45

84 Name of agency National Assembly Cabinet President (Office of President ) Ministers (specify which ones) Ministry of Health (PS or other managers) Board of agency Head (CEO) of agency or other managers Others (specify such as MOF roles) Suspend or cancel license Other enforcement (specify) Waive enforcement Waive other penalty due e.g. interest on debt Waive prosecution or laying of complaint Waive other type of enforcement (specify) Regulations, rules, instruction making powers Make regulations, rules, instructions that bind other legal entities, public or groups 46

85 The issues raised at the start of this section can be reviewed to see if the provisions suggested above would resolve these issues. Notes are made on this below in italics. Increasing incentives for performance- budgets are not always the problem, for example cleaning is fully funded but the standards of cleanliness vary between hospitals with some being less satisfactory than others. Service quality can be poor in some hospitals. There would be greater transparency about the level and quality of service provided if there was a systematic approach to specifying services in the Statement of Service Performance, service agreements, and the reports on performance. The Minister of Health would have power to influence the business plan. The Ministry of Health would have power to set requirements for volumes and standards in the service agreements and to monitor their achievement. Payment could be tied to performance to incentivises hospitals to comply although this needs to be carefully implemented. Ensuring that services of an adequate quality are provided though-out the country and that there is reasonable even access to services within the constraints on the health system. See the comments above as the same tools can be used. How the MOH can exercise its regulatory, standard setting, policy, monitoring and other roles to provide a positive influence on hospital services, including its role in setting policies to deal with issues with referral patterns. As above- the service agreements can be used to create requirements, incentives and sanctions to change referral behaviours. For example hospital contracts in New Zealand were designed to create incentives for hospitals to refer patients who presented at accident and emergency services with minor complaints back to primary care by allowing hospitals to retain a portion of the savings and to apply these to agreed projects including staff education and improved equipment. How to deal with potential problems of uneven service levels and quality if some hospitals are under the control of municipalities. The changes to the Health Law suggested above retain key ownership and purchase roles for central government in hospitals where municipalities have a joint ownership interest in minority areas. Kosovo is a very small country in terms of geography and population and devolution to local government of hospitals would be likely to result in considerable efficiency and effectiveness issues. This is a particular risk given the possible capability issues with municipalities taking on this role given the complex nature of the ownership role for hospitals and the lack of skilled staff. A critical mass of staff with the required skills would be very difficult to develop at the municipality level. Another problem that can occur is that local governments can have interests in these hospitals that are aligned to their desire to retain jobs and expand services that are out of line with national interests and taxpayer interests in having an efficient and effective health service. It can be very hard to restructure and downsize hospital services once they are devolved to local government. These are some obvious points to consider and a fuller analysis should be undertaken to fully assess this matter. Kosovo Medicines Agency There is a suggestion that the Kosovo Medicines Agency should have set up as an independent body under the Constitution. There are reasons that this would not be appropriate as discussed below. Constitutional bodies that have special status are bodies that serve interests that are aligned to the Parliament and the public that it is inappropriate for government to influence. These are a narrow range of bodies including the courts which may have to rule against the government, the Ombudsmen who has to investigate government, the Auditor General who provides assurance to Parliament on the proposer use of resources by government, the Electoral Commission which must be free of government influence in undertaking its duties, the Central Bank which has to exercise its monetary policy role free of government influence, and in the case of Kosovo, the Independent Media Commission which has a role of protecting media freedom. The independence of these entities is reinforced by provisions in the Public Finance Act which restricts the ability of the government to interfere with these institutions by providing insufficient budget funds. While the Constitution provides for the creation of other independent institutions these should only be institutions in the same class as the other institutions, being institutions that can significantly affect the government and that may require protection from the government. The Kosovo Medicines Agency is not in this class of institutions. It is performing functions on behalf of government in regulating and licensing drugs and medical products as well as other functions. While it is performing regulatory functions, it is regulating the private sector and public sector providers, and not 47

86 assessing or making decisions on the activities of the Government in the sense of the cabinet and MPs, unlike many of the constitutional independent bodies which can be required to do this. It would be possible to improve the governance and accountability arrangements for the KMA by applying the arrangements proposed for hospitals, discussed above. A similar institution in New Zealand (Pharmac) is set up under arrangements like those proposed for hospitals and it is classified as an agency that must give effect to government policy, rather than an agency with a degree of autonomy. Linking planning, budgeting, reporting and monitoring The government as a whole can operate an integrated management cycle as illustrated below. This links planning, budgeting reporting, monitoring and auditing at an aggregate level for the government. Figure 1: Cycle of planning, budgeting, management, reporting 1. Strategic public financial resource management: Policy formation; resource envelopes; strategies for revenue, expenditure, assets, liabilities, & risks for the medium term 6. Monitoring, reviews, external audit and scrutiny-monitoring by various institutions; reviews including joint donor/government reviews; audit by Supreme Audit Authority and scrutiny by Parliamentary Committees 2. Short term financial planning (annual budget) Allocations to budget institutions, local government, civil society & citizens; financial and non financial specifications for budget institutions and agencies- financial and ownership performance 5. Accounting and reporting Internal and external quarterly and annual reports on financial and non financial performance 3. Execution of revenue and expenditure policies, implementation and management- Management of performance of budget institutions and agencies including service delivery, procurement, personnel, information, cash management, fixed assets, risks, raising and managing debt, managing SOE financial performance 4. Internal control, internal audit and internal monitoring for all government institutions during the year Box 1 is often reflected in the fiscal strategy document preceding the annual budget. Box 2 is reflected in the annual budget and related accountability documents like a formal plan for each ministry and other budgetary body. Box 3 is the budget execution. Box 4 shows the internal control for ministries and budgetary bodies. Box 5 shows the internal and external reporting. Box 6 shows the monitoring, reviews and audits that provide assurance on the performance data (audit) and reviews of performance to help provide information on how to make improvements in the future. The integrated management cycle provides the environment for performance based management to operate. It involves good performance specification, reporting on that performance, management to deliver the performance and review of the performance. This cycle can be reflected at the level of every ministry and other health institution with the preparation of the institutional plans and budget, delivery of services, preparation of performance reports, monitoring and auditing as shown in the figure below. 48

87 Figure 2: Integrated management cycle at institutional level At the moment some health institutions are not preparing operating plans as required by the Health Law. There is an opportunity to reinforce this cycle through the use of institutional level plans that are linked to the higher level plans and budget requirements. The suggestions above relating to the hospitals include key aspects of this cycle. As systems, processes, information and skills developed, this cycle could be used to increasingly lift performance by creating performance expectations and revealing performance results in a more systematic and informative way. If the Department of Strategic Management in the MOH is strengthened it could formulate guidelines and templates for the plans and reports and take a key role in facilitating the planning, budgeting, reporting and monitoring work in the MOH. While the detail of this work can be undertaken in the relevant departments, the Department of Strategic Management would take a leading facilitation role. Ministry of Finance role in policy and finances Introduction Four issues were raised about the role of the Ministry of Finance in affecting the policy and finances of the health sector: insufficient funding and some health sector priorities not being funded; difficulties in changing funding allocations during the year; revenues not returned to institutions earning them and rigid caps on employee numbers. Comments are made about possible improvements in these areas. Insufficient funding Comments were made that the health sector budget is low as a % of GDP and as a % of the State Budget and that it is not receiving a sizable share of the budget increase each year. The MOH has not been successful with all its budget bids despite being recognised as producing budget bids that are well aligned 49