UNITED NATIONS DEVELOPMENT PROGRAMME KINGDOM OF CAMBODIA PROJECT DOCUMENT

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1 UNITED NATIONS DEVELOPMENT PROGRAMME KINGDOM OF CAMBODIA PROJECT DOCUMENT Project No.: Project Title: Duration: Project Site: ACC/UNDP: sub-sector Executing Agency: Co-operating Agencies: CMB/97/014/A/01/99 HEALTH SECTOR REFORM PHASE III 36 months Phnom Penh and selected Provinces Health Services Ministry of Health WHO, DFID, NORAD UNDP and parallel financing IPF: $750,000 Phase II savings $400,000 DFID: $4,233,980 WHO: $300,000 NORAD: $462,900 (not confirmed) Estimated Starting Date: 1st. January 1998 National Counterpart Inputs: In Kind and National Health Budget Total: $6,146,880 BRIEF DESCRIPTION The Health Sector Reform Project (HSR) - Phase III (Phases I and II were known as the Strengthening Health Systems Project - SHS), with funding from UNDP, DFID, NORAD, WHO and executed by Ministry of Health/WHO is a joint UN agencies-bilateral donors and Royal Government of Cambodia initiative to further implement policies and strategies developed during Phase II support of the SHS project. The purpose of the project will be to contribute to the reduction of poverty in Cambodia through the development of quality basic health services particularly in rural areas. Phase III, to be executed by the Ministry of Health, envisages a rapid transfer to and increased capacity of Ministry of Health managers, a phasing-out of long term in-country technical support, and an increase of direct resources and budgetary support to the sector. The end point of the project will be the development of a Ministry of Health managed sector wide approach to health system management. On behalf of Signature Date Name & Title Ministry of Health WHO UNDP DFID

2 DEVELOPMENT OBJECTIVE To improve the health of all Cambodian people, contributing to their productivity and social development IMMEDIATE OBJECTIVES To increase people s, and in particular poor peoples, access to and utilisation of good quality essential health services. These services include those provided by Government or paid for through a public-private mix, whether delivered by the public or private sectors. OUTPUTS 1. Developed and strengthened capacity in the MoH to develop, support, manage and monitor Health Sector Reform initiatives. 2. Implementation of district-based primary health care systems, according to the health coverage plan, in the five (5) Provinces directly supported by the Project, and in collaboration with UNICEF and other donor agencies in an additional five (5) Provinces. 3. Alternative service delivery models implemented and evaluated for their impact on access and equity. 4. Development and evaluation of health financing models in Project-supported Provinces. 5. Sector-wide approach* to health development and investment adopted. * A Sector Wide Approach (SWAp) to health development introduces new terminology based on the outcomes of two major international conferences on health sector development, the first hosted by the Danish Government and the World Bank in Jan the second a major meeting of donors and governments (Dublin Nov. 1997). SWAp s differ from classical SIP s (Sectoral Investment Programmes) and Programme AID. Programme aid is usually agreed to on a year by year basis and is often linked to macro-economic reform. Classically programme aid is channelled through the national budget. SWAps are less prescriptive in their approach, recognise the varying needs and agendas of donors and governments and can take a longer time horizon, with a process approach that explicitly addresses policy and institutional issues. The individual components of a sector wide approach are not new, what is knew is bringing these separate components together as a coherent strategy (see annex 10). Whilst not substantially different in concept from the UNDP Programme Approach, SWAp s are specific to the health sector and its requirements. 1

3 ACRONYMS ADB AIDAB APW ARC COCOM DFID/UK DHS EOP EPI GTZ HSRG HIS HRD IMF IO IRD ITC/AR JICA MCH MEDICAM MoH MoEF MoP NGO NPAR ODA PHA PHC PHD PIU PMI PROCOCOM SHS STC STD TB UNDP/CARERE UNFPA UNICEF UNV USAID VSO Asian Development Bank Australian International Development Assistance Bureau Agreed Performance for Work American Red Cross Co-ordinating Committee (Ministry of Health) Department for International Development / United Kingdom Demographic Health Survey End of Project Expanded Program of Immunisation German Technical Agency Health Sector Reform Group Health Information Systems Human Resources Department (Ministry of Health) International Monetary Fund International Organisation International Relations Department (Ministry of Health) Inter-Ministerial Technical Committee (Council of Ministers) Japanese International Co-operation Agency Mother and Child Health Medical Cambodia (NGO Health Sector Committee) Ministry of Health Ministry of Economy and Finance Ministry of Planning Non-Governmental Organisation National Program for Administrative Reform Overseas Development Assistance Provincial Health Advisor Primary Health Care Provincial Health Director/Directorate Project Implementation Unit Protection for Maternal and Infant (Ministry of Health) Provincial Co-ordinating Committee (Health Sector) Strengthening Health Systems Short Term Consultant Sexually Transmitted Diseases Tuberculosis UNDP/Cambodia Rehabilitation and Reintegration Program United Nations Fund for Population Activities United Nations Children's Fund United Nations Volunteer United States Agency for International Development Volunteer Service Overseas Table of Contents 2

4 A. CONTEXT 1. Description of the Sub-Sector 2. Host Country Strategy 3. Prior and On-going Support 4. Institutional Framework for the Sub-Sector 5. Phase 3 formulation B. PROJECT JUSTIFICATION 1. Present Situation: Problems to be Addressed 2. Expected End of Project Situation 3. Target Beneficiaries 4. Project Strategy and Implementation Arrangements 5. Budget 6. Reasons for Support from UNDP 7. Special Considerations 8. Counterpart Support Capacity C. DEVELOPMENT OBJECTIVE D. OUTPUTS E. ACTIVITIES F. INPUTS G. RISKS H. PRIOR OBLIGATIONS AND PREREQUISITES J. ANNEXES annex 1 - Logical Framework annex 2 - HSR- Phase III Budget annex 3 - Implementation arrangements (flow of funds and execution) annex 4 - Project implementation Chart annex 5 - HSRG Organisational Chart annex 6 - MoH Organogram annex 7 - Donor Agencies within the Health Sector annex 8 - Position Descriptions annex 9 - The Health Coverage Plan and Operational Districts annex 10 - SWAp s Sector Wide Approach annex 11- Chapter 13 of National Budget. annex 12- Project reviews, reporting and evaluation annex 13- Guidelines to be followed for Government execution (UNDP only) 3

5 A. CONTEXT 1. DESCRIPTION OF THE SUB-SECTOR Prior to 1993 the Cambodian health system was organised according to socialist models of central planning and management. Programmes were vertically managed, services over-extended and, though nominally free, were in fact inadequately funded. Whilst infrastructure was severely damaged by decades of conflict, the organisation of the health system was strongly entrenched along traditional models of health service delivery, that tended to favour the few at the expense of the majority of the population. Following the 1993 elections the Royal Government of Cambodia has moved strongly towards development based upon changes of market liberalisation. The health sector, with project support, has embarked upon a process of health sector reform, with the purpose of providing better health care for all Cambodians. These reforms have been fundamental, sustained and potentially far reaching in their impact on the quality of life of Cambodians. Until recent political events, Cambodia had entered into a process of long term development and relative stability. The economic outlook was positive with an average economic growth of 6% per annum. More recently the situation is considered less optimistic with a decrease in revenues raised and an economic down turn in the SE Asian region. Whilst the country has moved from a period of post conflict rehabilitation to long term development, the legacy of destruction of physical infrastructure and human resource capacity should not be underestimated. The health sector remains challenged by an absolute poverty throughout the country (Ministry of Planning Household Socio-economic Survey 1994 & 1995) that contributes to an unacceptably high level of poor health with maternal mortality rates of 473 per 100,000 live births (UNFPA KAP survey) and infant mortality rates of 89 per 1,000 live births (1996 DHS). The public health system faces the under-utilisation of services, a maldistribution of staff, and an over staffing in some cadres, notably doctors. A rapidly developing but unregulated private sector provides care of dubious quality and excessive cost. Whilst clear evidence exists that poor health in itself contributes directly to poverty, it is evident that an un-restructured system, inequitable in its design and operation, will compound poverty entrapment through the costs of informal charging schemes or an unregulated private sector. A challenge in many least developed countries is to regain control of public services. Similarly in Cambodia, the MoH s primary focus for rehabilitation is to secure the people s confidence by increasing the effectiveness and quality of basic health services, and obtaining greater value from health spending by improving the distribution and management of resources or, alternative contractual mechanisms in the public and private sectors. Equally important is the MoH s commitment to increased access to services, especially for those who cannot afford to pay. As part of this policy the Ministry of Health has adopted organisational and financial reforms to strengthen the health system - health sector reform This process of Health Sector Reform, as adopted by The Royal Government of Cambodia, is based upon fundamental principles of equity, through improved access to health care for all of the population, whether by financing policies or the allocation and distribution of health resources and infrastructure. These policies and strategies have resulted in a redefinition of the roles and functions of each level of the health system and a health financing policy to improve access and quality of services for the poor. 1.1 The health coverage plan Health infrastructure is being reorganised according to population rather than administrative needs. The health coverage plan, developed under phase II, based on decentralised operational districts (see annex 9), covers the whole population leaving neither gaps nor overlap. The catchment areas of the facilities are based on two 4

6 criteria: accessibility and population. Firstly, the health services should be accessible to the community. Health centres, therefore, should be situated within a radius of 10 km, equivalent to two hours walk. Secondly, in order to use resources efficiently and maintain professional competency, the health facility needs to maintain a sufficient workload to justify the resource investment. The optimal size of population covered by a health centre is estimated as 10,000, and for a hospital, between the 100,000 and 200,000 inhabitants. These operational districts are organised so as to become the most peripheral management units for the provision of comprehensive services to the population. To guarantee accessibility for all Cambodians the Ministry of Health has also developed specific guidelines for addressing the needs of people in low and high density areas. The Ministry of Health has defined a costed basic health care package, the minimum package of activities (MPA) for health centres and a complementary package of activities (CPA) for referral hospitals. Management and logistical systems have been reorganised to reflect the new structure of operational districts. This includes the Health Information System, budget allocation and the drug distribution to health facilities. In 1996, the national budget allocation for the Ministry of Health increased by 60%. It is now calculated and allocated according to the new management structure, though some significant problems are still encountered. Resource allocation has been rationalised according to a formula that provides a standard allocation for each province and based upon population, health facilities (fixed costs) and according to health facility utilisation (variable costs). The Health Information System (HIS) is used to determine the level of activities per health facility. Recognition of the provincial constraints in budget access strengthened efforts at national level to initiate a budget system to allow one pilot operational district in each PHA supported province enough decentralised autonomous funds to manage basic services. The piloting of direct release of district funds through chapter 13 (see annex 11), ADD - accelerated district development, has initiated change in the management culture at the district level (decentralisation) with evidence of delegated authority and responsibilities. In addition, a recent survey indicated that families in ADD districts are now less inclined to turn to private drug sellers for care and pay less per illness episode (Health care demand survey, 1996 NIPH) 1.2 The Health Financing Charter During phase II, the Ministry of Health has developed health financing reforms which are intended to protect the poor and mobilise additional resources and support for the objectives of health system reform. The Council of Ministers gave approval and created a legal framework for careful co-ordinated testing of new health financing mechanisms, including contracting and cost recovery mechanisms such as user fees and prepayments. The health financing charter takes into account the lessons learned from other countries and stresses the importance of community involvement, guaranteed quality of health services and transparent accounting systems. Today over fifty projects are either being developed or piloted under the guidance of the Health Economics & Financing Subcommittee and the Health Economics Task Force. A monitoring framework to evaluate and manage the implementation of reforms will be in place by the end of The project will support the skills development of individuals enabling the MoH to use this framework and the data from special surveys for careful monitoring of the impact of reforms on access to services. A human resource development plan ( ) is established that if updated and utilised, should enable a future rational intake and allocation of human resources in support of the new health system. In those 12 provinces with provincial health advisers, operational districts services and management systems provinces have begun to be reorganised according to the new health policy. Support to planning has resulted in increased capacity to develop strategies and monitor implementation using existing information systems. The Health Information System (with UNICEF & project support) has been designed to support the reform process as has the implementation of the new drug distribution system (UNICEF and AEDES support), vital to the functioning of the health system. Information from these reports is now used for planning health coverage, determining priority locations for development, resource allocation, and broad monitoring of activities. 5

7 Provincial and district managers have shown greater capacity to work in teams for decision making with a higher level of participation than before. Local donor co-ordination has improved, and managers can better negotiate on behalf of provincial plans and establish working relationships with external organisations. Increased opportunities to participate in NGO/IO proposals combined with improved provincial planning has dramatically heightened the confidence of the provincial health managers to determine and vocalise their needs. 2. HOST COUNTRY STRATEGY Despite weaknesses in manpower capability and an inadequate policy and planning capacity the RGC has instituted systems and processes for defining national development priorities centring on achieving "sustainable development with equity and social justice". Eradicating poverty is the single most important long term goal of the Royal Government of Cambodia s development plan. Realisation of the stated goal will, however depend on accelerated improvements in national implementation capacity and sustained political support to the social sectors. Table 1 : Government Budget 1994 allocated vs.actual spend 1995 allocated vs.actual spend 1996 allocated vs.actual spend Billions of Riels Budget Outcome Budget Outcome Budget Outcome Defence Education Health Agriculture & Rural Develop't. Other Ministries Total % of Gov t Budget allocated vs. spent Defence Education Health Agriculture and Rural Develop't. Other Ministries Total The economic transition process itself is raising concern for its impact on human conditions of the poor and the vulnerable, especially in a situation where the country's poverty situation is already acute with an estimated 40% of the population living below the poverty line, largely (90%) in rural areas. Recent gains in economic growth and income have occurred mainly in Phnom Penh, while regional, occupational, and gender disparities in income and access to resources have likely widened. More recent downturns in the local and SE Asian regional economies are likely to worsen such differentials. The RGC received generous international support during and after the recent emergency phase. However, in light of the global decline in aid, the government is aware that the present ODA inflow may not be sustained in 6

8 the near future. Therefore, the RGC is intent on enhancing its absorptive and implementation capacity to maximise the impact of aid. The Ministry of Health has now developed and articulated clear policies and strategies for health system development and financing. This has resulted in a significant increase in co-ordinated donor inputs to the sector in support of MoH policies and strategies. The Royal Government of Cambodia has repeatedly stated that health, particularly in rural areas, along with education are its key priorities. In 1996 this resulted in a significant increase (60%) in allocation to the health sector. However accessing budget from both the Ministry of Finance/Treasury centrally and provincially has remained a significant obstacle to MoH expenditure (table 1 ) 3. PRIOR AND ON-GOING SUPPORT 3.1 Background The health coverage plan has received support from UNICEF, UNFPA, WHO, UNDP, the World Bank (WB), Asian Development Bank (ADB), bilaterals, and NGOs. WB and ADB projects, which started this year, follow MoH policy for the development of the district health system in their construction and upgrading of health facilities. Thus from 1996 and 1997 the majority of new donor funds are committed in support of new policies and strategies and in particular the health coverage plan (annex 9), though implemented as a series of separate donor funded projects with individual and separate management units or systems. 3.2 Donor Agencies within the Health Sector Framework (annex 7.) Complementary to the health sector reforms, key national programmes have been supported by WHO, UNICEF, DFID, World Bank, EU and other agencies. These programmes, notably EPI and polio eradication, TB, and malaria have achieved national coverage and impact which has demonstrated the capacity and commitment of the MoH to improved health services. These efforts provide a credible political platform for more comprehensive Health Sector Reform. A continuing challenge for the MoH and donor agencies will be to focus on efforts to integrate such national vertical programmes into the existing policy for integrated district services and into the sector-wide approach to health reform. During Phase II a number of new donors have begun programmes in support of the health sector. The most important of these are loans from the World Bank and Asian Development Bank (ADB). Both loans will support nation-wide construction and rehabilitation of health facilities according to the health coverage plan. The World Bank will also provide support to the TB, Malaria and AIDS programmes. ADB will support the strengthening of management and supervision at districts and health centres in five project Provinces. In addition, ADB will support MoH testing new service delivery models for district services based upon the competitive tendering for contracting-out of services and contracting-in of management skills from the private sector. Early 1998 a National Health Survey is planned to provide basic health indicators and will be funded by the development banks and GTZ. In a separate ADB funded loan, the MoH has started a comprehensive human resource development programme of continuing education for the retraining of health staff in support of the health coverage plan. The European Union will provide support to the Malaria programme and HIV/AIDS. UNICEF will provide support to capacity development of the Director General Health office from 1998 to Until July 1997 the German government (KfW) had agreed significant support for the purchase of drugs ($10 million), support to the National Institute of Public Health and health service development in two provinces, Prey Veng and Kg. Thom (GTZ). This support is now uncertain. For similar reasons USAID is reviewing its $26 million programme of support to MCH and birth spacing activities. 7

9 UNFPA, with DFID funding has provided support to the MCH Centre for the introduction of nation-wide family planning services. From 1997 this programme will expand both in coverage and in content to include wider reproductive health care including safe motherhood services. Japan is a major donor in support of MCH activities, with significant support to the National MCH Hospital. WHO and UNICEF continue to collaborate closely in EPI and polio eradication, and particularly in this Project for the development of provincial and district health systems. AusAID has started a programme of district health development in 4 districts in Kg. Cham and some central support to the National Institute for Health Promotion. Donors have stated that they see the inputs of this project as entirely complementary and necessary to other inputs to the sector, whether in terms of central project inputs or in its provincial support through PHA's. 3.3 NGO inputs to the sector (see overview in Annex 8) Whilst overall donor funding of NGO s, in both real terms and as a proportion of donor funding has fallen significantly since 1995, the majority remain active in support of the health sector in Cambodia, with good collaboration with the Ministry of Health. Whereas in the past many NGO inputs were on an adhoc basis, in some areas support to the health sector has become better co-ordinated for a number of reasons. NGO s have begun to move from an emergency relief agenda to that of long term development, from technical substitution to human resource development. As the Ministry of Health (often with important NGO participation) has established clear policies, strategies, technical guidelines and standardised curricula, NGO s have continued to work closely with MoH in support of implementation of these new co-ordinated services. Many NGO s are important supporters of training and implementation of new services at the periphery, but in some cases poorly co-ordinated with MoH. The very high turnover of NGO staff poses a constant challenge to MoH staff and its institutions in maintaining this effective and collaborative partnership. Thus MEDICAM, the co-ordinating agency for medical NGO s, remains an important and active interlocutor for the NGO community and MoH. Under Phase II core funding was provided to MEDICAM to allow it to set up a full time support office. This is now successfully in place and MEDICAM has secured long term funding from donors that will ensure its continued viability. At the provincial level ProCOCOMS (local co-ordinating committees in the health sector) chaired by provincial health directors and with the support of PHA s have demonstrated more effective co-ordination of important NGO inputs to the health sector at this peripheral level. 4. INSTITUTIONAL FRAMEWORK FOR THE SUB-SECTOR Over the period of Phase II support, the roles and responsibilities of the Ministry of Health have evolved from that of a universal provider of services to that of regulation and resource allocation to the sector as a whole. The sector is now understood to include both public and private sub-sectors and that there is also a continuum between public and private provision. The critical role of the Ministry of Health is to ensure the accessibility of the whole population to affordable basic health care. Thus the Ministry of Health is responsible for policy and strategy development. Provinces and increasingly districts, together with other service providers, are responsible for service provision. National institutes and programmes whilst currently managing vertical activities, sometimes all the way to the health centre level, are now expected to provide technical and strategic support to the integrated delivery of services at the district level. Some key programmes, notably MCH, have actively entered into such a role, others less so. The determining factor would appear to be how donors and technical agencies choose to support and fund national programmes. Drugs are centrally procured and distributed by the state. Recently the Ministry of health has begun a process of privatised procurement of drugs using the national budget. Despite misgivings in some quarters, this procurement process has functioned well in securing national budget and availability of essential drugs within the financial year. A significant improvement in drug availability at the periphery is also seen over previous 8

10 years. More recently the privatised distribution of drugs has been developed for remote and difficult to access provinces. Limited health services are also provided by the police, Ministry of Interior, the armed forces and the Ministry of Social Affairs. The Ministry of Health has also begun to collaborate with prison authorities to undertake responsibility for inmate health care, a situation that if successfully implemented will have a significant impact of health related conditions in prisons. Whilst the Ministry of Health now operates its own budget, the release of funds is still very dependent on cash availability centrally and on archaic mechanisms to access that budget. Promising improvements in directly accessing budget at the district level through Chapter 13 will be expanded to other activities under phase III. At the community level the basic unit of the health system is the health centre component of the operational district (see annex 9). This together with an outreach system provides basic health care to the community. The Ministry of Health together with the project and other organisations is exploring mechanisms for community co-management of services at this level, in particular in relationship to the setting, management and exemption from user fees. The project will continue to work closely with UNDP/CARERE in developing appropriate community models to better respond to household needs and priorities. 5. PHASE 3 FORMULATION Preparation for phase III began with a 2 day retreat in January At this retreat long term reform objectives and the technical support needs of MoH were developed jointly between MoH and the project team. A MoH phase III drafting committee was established that in May 1997 prepared and presented to a joint donor mission (WHO/DFID/UNDP/NORAD/) a concept paper for phase III funding. This concept paper was endorsed by donors for development into a full project document to be submitted to donors for funding. A draft document was prepared based upon comments received by donors during the May mission. This draft formed the basis of a further donor appraisal mission (UNDP/DFID/WHO) in October 1997, with the production of a final document by MoH and the project team thereafter. B. PROJECT JUSTIFICATION 1. PRESENT SITUATION : PROBLEMS TO BE ADDRESSED Under Phase II a clear commitment to health sector reform for the provision of better access to health services has been established by the Ministry of Health. It has demonstrated a strong mission to develop a reformed health sector that is better able to meet the health needs of the people of Cambodia. The Ministry of Health is widely recognised in both government and in the donor community as one of the better managed line ministries, that it is proactive and able to successfully enter into inter-ministerial negotiation in pursuit of its aims. This is reflected not only in increased resources to the sector, in better access to services and in structural reform as a pilot ministry, but also in the development of an appropriate framework of policies and technical guidelines, that are now in place to allow the implementation of these policies. Over the last four years the Ministry of Health has created a clear structure and basic health care package for delivery by the health system down to the district and commune level. A health financing policy and guidelines for its use is now in place. This framework forms the basis for tackling the future challenges in improving the health services in Cambodia. The guiding principles have been to ensure an affordable package of cost-effective health interventions that meet basic health needs (the minimum and complementary package of activities) that are made physically (health coverage plan) and financially (health financing charter) accessible to people in rural and urban areas 9

11 of Cambodia. As a result of an articulation of these policies by the Ministry of Health, the Royal Government of Cambodia s stated commitment to the health sector has been translated into a 60% increase in budget (1996) and the implementation of structural change and the piloting of budgetary and financing reforms. Equally significantly, donor support has been mobilised in support of the implementation of these new policies. However, despite innovative reforms to improve and simplify budget procedures on a pilot basis (Chapter 13), access from Ministry of Finance and Economy and The Treasury has remained problematic (Table 1). Some initial work has also begun on exploring alternative mechanisms for the delivery of those services (contracting and other examples of public/private mix). The mid-term evaluation of the project endorsed both the achievements and the approach and recommended support for the preparation of a phase three project. After appraisal by a donor mission in May 1997, a Ministry of Health concept paper for Phase III was accepted for development into a full project for donor funding. These achievements are significant and should not be under-estimated. But a number of important areas of weakness and problems to be addressed have been identified for support under Phase III. The Capacity of The Ministry of Health to monitor and evaluate the implementation of reforms, and in particular its impact on access to services by the poor and other vulnerable groups. The capacity of the centre to flexibly respond to problems that arise in policy/strategy implementation at the province/district level The ability to rapidly implement health financing schemes whilst effectively evaluating them for impact on utilisation (particularly by the poor) For how long continuation of support to provincial/district management is required Funding of basic health services, rationalisation of staff and their remuneration Ministry of Health leadership and management (co-ordination) of an increasingly complex donor environment The balance of activities between support to the centre and the provinces has been carefully considered. No contradiction is seen between support to the centre and the alleviation of poverty. Unless appropriate systems and resources are in place and functional, the significant and numerous donor inputs at the community level would be rendered substantially less effective in the long term. Currently this project is the only donor funded activity with an explicit objective of capacity and systems building in the MoH. Its continued funding and remit has been endorsed across the donor community. 1.1 Capacity building By the end of 1997 the Ministry of Health will have reorganised itself centrally according to its new roles and functions. A sufficient number of experienced senior managers are now in place and trained, or will shortly return from overseas training to staff these new departments (see annex 6 : The organogram). This has been a significant achievement of the project. At a senior level new policies are well understood and applied in terms of system development and the reform of the sector. However skills in health financing, institutional development and the evaluation of the impact of change remains weak or narrowly based. Lower level management skills are variable. It is neither the scope, nor is it appropriate, that the project comprehensively address management skills at this level throughout the Ministry. Under Phase II computer and English language training was provide across the Ministry through contracts with local agencies. On the job capacity building was also provided on a daily basis by technical advisers, through team building and problem solving. Once the MoH has reorganised and staffed departments according to its new roles and 10

12 functions, it is considered appropriate to respond to an MoH request to address basic office management skills in key departments. A training needs analysis will be completed by the end of phase II. The close collaboration of project technical advisers working in specific areas for problem solving, on a day to day basis, has been a highly successful model (as noted in the tripartite evaluation 1996) for targeted capacity building under the project. 1.2 Link to overall Public Administrative Reform Whilst the Ministry of Health has successfully advanced or tested a number of key structural, budgetary and financing changes to the public health system, substantial challenges remain. Vital issues such as allocation of staff, personnel management, appointments and remuneration are constrained by a lack of progress in the wider public administrative reforms. Whilst designated as a pilot along with other ministries, this concept has not been widely translated into action in government circles. However it is clear that MoH has successfully utilised its designated pilot status to advance its reform agenda, though this has happened more on a bilateral basis rather than through the NPAR. Consequently MoH's current successful strategy of bilateral negotiation with key ministries, will continue to be supported by the project as an intermediary step. As a pilot the Ministry of Health will address substantial issues, including salaries, performance and personnel management that will reinforce the reform process. Such changes will be carefully monitored and systematically evaluated for impact on the quality and access of services within MoH itself centrally, in some provinces and in some districts. The project will support MoH in its continuing efforts to restructure and ensure that rural health service provision remains a clear priority. For example MoH HQ plans a significant reduction in its HQ staff through attrition (3.6% per year) and reallocation of staff. 1.3 Building capacity to manage institutional change, evaluate and support implementation of reforms The MoH Planning and Health Information Department will have completed the major reform framework tasks as previously described. Its roles and functions require new direction. In particular capacity is now required to monitor and evaluate the impact of change (reforms) on the poor. The pace of change has meant that skills are inadequately developed in terms of policy and strategy monitoring and evaluation as it impacts on access to and equity of care. This is of critical importance if the Ministry is to be adequately equipped to adapt policies and institutions, particularly in areas such as user charges and contracting for their impact on the poor. 1.4 Health Financing and Budgetary Reform Ministry financing policies are designed to protect the poor and ensure their access to quality services. MoH surveys have shown the very high proportion of expenditure spent on health by poor households. It is Ministry policy to reduce that proportion through the health coverage plan, transparent financing schemes and through community participation. The Ministry of Health has also identified tertiary hospital financing and administration as an important priority for controlling health expenditure. A health economics task force (HETF) has been set up to provide support to provinces for the development and approval of financing schemes (such as simple cost recovery models). Such a task force should have the capacity to set up and evaluate the impact of financing schemes for the wider replication of the most promising options. However this task force is still very weak, without for example a trained health economist or fully trained accountant on the team. The task force will require continued development and support during Phase III. It is appropriate that regional short term fellowships in health economics be provided to build local capacity. It is 11

13 also critical that a health financing adviser be supported by the project to build this capacity, and that particular attention be paid to monitoring the impact on utilisation of services. Resources and technical support will be provided to the task force through the HSRG (see 4.1). Under Phase II budgetary reforms have been piloted. It is important that these reforms be extended. The Ministry of Finance is supportive of working with MoH in moving from budget line management and towards programme related funding through Chapter 13. As a Sector Wide Approach is developed (see 1.7 below) specific budgetary reforms will be required. It is proposed that the project continue to support a budget adviser to build MoH finance department capacity until the return from overseas masters training of the department budget manager by end Provincial Level At the provincial level there is now a firm commitment by MoH to implement the health coverage plan. In the last year in project supported provinces significant progress has been made in building provincial capacity in their role of operationalising district services. The project through provincial health advisers has also had a significant impact in co-ordinating resources for the physical rehabilitation of services and in increasing utilisation of those services. There remains the need to continue to support implementation and to evaluate impact on the quality of care, equity of access, gains in efficiency through rationalisation of resources (including staff), new service delivery arrangements and contractual arrangements with the private sector. Over Phase III, provincial health advisory support will be phased out as provincial management capacity is established. 1.6 Ministry of Health Execution Core to the philosophy of phase III is a design that reflects MoH ownership of reform and a significant increase in institutional capacity. Under Phase II the UNDP component of the project budget was executed by WHO. Under Phase III, new UNDP funds will be executed by the Ministry of Health through a separate bank account for UNDP resources held by the Ministry, a situation that reflects the developing Ministry capacity to manage and execute its own projects (see implementation strategy B.4). 1.7 Budget Support As Ministry of Health capacity expands, and as a step towards building capacity for the management of a sector wide approach, it is appropriate that MoH increasingly manage resources (including donor support) for the provision of better services. The constraints for the provision of better services shift from lack of technical capacity to that of a lack of absolute resources. Thus the project seeks to work with Ministry of Health to obtain more national resources to the sector, and also long term secure donor funding that shifts from project related support to that of programme aid or the sector wide approach (see below). 1.8 Co-ordination (Sector-wide Approach : annex 10) Aid and donor co-ordination remains weak from a management perspective. Overall sectoral investment analysis has yet to be completed, though much of the information is now available. Increased MoH capacity and overall sector support needs, suggest that the MoH is rapidly moving into a position where it could viably manage and execute the development of a SWAp (Sector Wide Approach). Currently donor support to the sector is managed through a series of ad hoc co-ordination arrangements. In recent years these have been largely successful, but there have been notable exceptions. It is clear that the management of a series of separate projects by MoH is generating a significant overload and difficulties in the overall management of the sector. It also becomes increasingly difficult to ensure that donor and NGO support genuinely reflects MoH policies and priorities. An overall sectoral analysis and a strategy for how donor support can be co-ordinated in support of the sector would now be appropriate. 12

14 Until recently an agreed policy and strategy framework was not established to enable this to take place. These are now in place. The concepts and purpose of reforms are widely understood in MoH and by major donors in the health sector. With the establishment of the HSRG, with increasing MoH management capacity and the implementation of reforms nationally, it is considered appropriate that the MoH, with project support, will develop a sectoral investment programme for donor support during this project. The timing ( ) is appropriate both in terms of SWAp development and key existing project cycles (notably ADB and WB). The annual project investment plan (PIP) required by the Ministry of Planning is a partial tool that could be expanded for this purpose. The development of a Ministry of Health managed SWAp is seen as an important milestone over the three phases of Project support that will reflect a clear capacity of Ministry of Health to manage donor coordination. Initial informal contacts with donors are positive. 1.9 Public/Private mix Under Phase II, the MoH with project support has developed options for working with the private sector under the Health Financing Charter. Based upon this work, ADB has developed contracting models for district health services to test potential gains in efficiency and effectiveness. The private sector is rapidly growing and is by in far the largest provider of health services for rich and poor alike ( Health Care Demand Survey; NIPH Private sector review; SHS project 1996). Quality of care is poor, as is value for money. It is essential that the Ministry of Health develop better methods for collaborating with and regulating the private sector. The ADB project will provide valuable information for rural services. Whilst there has been a much greater expansion of private care in urban areas, the public provision of urban based basic (primary) health care has proved largely ineffective. Under Phase III, it is proposed to work with MoH to develop alternative delivery models for basic health care for the urban poor and that they be monitored for their impact on access and equity Operational Research Under phase II a limited amount of operational research was undertaken in the areas of health care demand and household expenditure. The new poverty agenda of MoH will require that it develop expertise in defining an operational research agenda, contracting that work to local Cambodian Institutions and then utilising the outputs for better policy and planning. The intention is not to develop specific research capacities within MoH but rather to develop the capacity to define data needs, manage new institutional relationships for contracted work (sourced wherever existing expertise is available) and to interpret the results of that work to better inform policy makers. 2. EXPECTED END OF PROJECT SITUATION Provincial-level capacity established to continue with implementation of reforms as demonstrated by at least one (1) operational district in place in each project-supported province. The reforms are intended to result in increased access to good quality essential health services Capacity institutionalised in the MoH to monitor and evaluate the overall reforms in the health sector, in particular on health financing for its impact on the poor. MoH capacity established to manage and lead a sector-wide approach to manage sectoral investment for the delivery of better health services in Cambodia. 3. TARGET BENEFICIARIES Benefit will be provided to Cambodians, as users of health services, especially the poorer sections of the population, by reducing costs, improving access and utilisation of essential health services (public and private) particularly for women and children. Improvement of access to services they obtain is a primary focus of HSR - Phase III activities in project-supported Provinces, and in the longer term on a nation-wide 13

15 basis. The actual improvement of the health status of the Cambodian population would also benefit the country s economic growth, which requires a healthy workforce. The project will continue to be of direct benefit to the MoH's senior management team (Minister, Under- Secretaries of State, Director General Health Services) and the Heads of the Department's Planning and Health Information, Human Resources, Finance, and International Relations by directly strengthening policy formation, planning, management and co-ordination capabilities. Provincial and District Managers will be strengthened in their managerial, budgeting and planning capacities and in their ability to interact with and implement MoH policies and strategies in project supported Provinces. 4. PROJECT STRATEGY AND IMPLEMENTATION ARRANGEMENTS (see implementation chart annex 4) Each year the Ministry of Health through the HSRG will prepare an annual workplan (see below). The first project workplan will be prepared by January 31st following the establishment of the HSRG and Senior Advisory Board (SAB) - and submitted to the SAB for approval. The major difference between phases II and III are, that in reflection of MoH capacities and ownership of reforms that were built under phase II, MoH rather than WHO will manage/execute project resources for implementation of reforms, whilst ensuring appropriate accountability of resources to project donors. The guiding principles that govern phase III implementation arrangements are Management arrangements should promote national ownership of the project and help build capacity in key areas such as contract management and operational planning. WHO should continue to be the lead agency and provider of policy advice to the MoH. To promote flexibility and national ownership, whilst ensuring financial accountability, the means by which funds are provided and staff are recruited should be designed to exploit the comparative advantage of the main co-financiers of the project. 4.1 Health Sector Reform Group (annex 5) National Execution - UNDP funded Component of Project. A Health Sector Reform Group (HSRG) will be set up in MoH. The Health Policy, Planning and Health Sector Reform Bureau of the existing Planning and Health Information Systems Department of the Ministry of Health will fulfil the role of secretariat to this group. The HSRG is carefully designed to ensure it is not isolated from the other departments of the MoH. The establishment of the HSRG is undertaken with the intent that it support and contribute to Health Sector Reform initiatives across the MoH. Unlike a dedicated Project Support Unit, the focus of the HSRG will be on building capacity for implementation and monitoring of overall reforms by MoH. The HSRG and its secretariat will manage technical expertise and resources through the project, according to MoH priorities in reform, whilst at the same time up to 10 core staff will be salaried so that they are able to develop, monitor and evaluate implementation of reforms on a full time basis. The HSRG will comprise of selected existing Planning Department staff and a group of "designated" officers from other MoH Departments who are working on reform options. Designated officers remain in their departments. The HSRG will result in an enhanced planning capacity within the Ministry. 14

16 The purpose of the HSRG will be to institutionalise the capacity to manage change associated with the Health Sector Reform programme and will be a resource to the entire Ministry. HSRG facilitates the co-ordination of activities related to health sector reform. Critical to the success of the health sector reform group will be its integration with key MoH departments and their continued development. The project will support the capacity development of key departments through the Health Sector Reform Group (HSRG). A clear exit strategy based upon appropriate capacity development will be adopted by the project that reduces advisory inputs as local capacity is established. HSRG Characteristics The HSRG will have the following characteristics, in order to carry out the required reform programme. be situated within the MoH at an appropriate level so that it can exercise a high degree of influence and authority; be well integrated and established within the MoH so as to be able to assist and influence all relevant departments; be under the stewardship of a "Senior Advisory Board", chaired by the Secretary of State of Health, and which includes Under-Secretary of State, Ministry of Finance and Economy as a member. have both the technical and executive capacity to undertake and commission work; The HSRG will have a dual function. It will be a "think-tank", in which MoH staff have the opportunity to develop new proposals. It will also have responsibility for overseeing and monitoring the implementation of the reform programme. The HSRG, and in particular the secretariat, are responsible together with the team leader, for management of project resources and for the accountability of those resources to donors. Scope of Work The scope of the work for the HSRG will include: monitoring and evaluating the reform process; developing and monitoring the new models of service delivery; provide resources and expertise to systematically evaluate the implementation of the health coverage plan and health financing schemes in the Provinces and Operational Districts, including the analysis of constraints and the proposing of alternative solutions; providing support to a working group of Provincial Directors in project-supported Provinces and facilitating quarterly national meetings of all Provincial Directors; functioning as the basic technical resource for the development of Sector Wide Approaches (SWAp) in support of the Health Sector Reform goals; presenting and marketing Health Sector Reform policies within the MoH and to the wider community, including donors; providing regular updates on the progress of the Health Sector Reform initiatives to MoH Department Heads; preparing quarterly updates and work plans and budgets; and managing the project budget. Staffing Designated staff, who will complement the existing Planning staff, will include: 15