ReportNo. 18410-RO Romania Health Sector Support Strategy Public Disclosure Authorized June22, 1999 Human Development Sector Unit Bulgaria and Romania Country Unit Europeand Central Asia Region um Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Docmnt of the WorldBank Vice President: Johannes F. Linn Country Director: Andrew N. Vorkink Sector Director: Chris Lovelace Program Team Leader: Olusoji Adeyi Romania Health Sector Support Strategy CONTENTS PAGE FOREWORD ......................................................................... iii PREFACE ......................................................................... v ACKNOWLEDGMENTS ......................................................................... vii ACRONYMS ......................................................................... ix EXECUTIVE SUMMARY ......................................................................... xi SECTION I. GOVERNANCE AND REGULATION............................................... 1 A. Policy Environment and Leadership...................................................................... I B. Quality Assurance and Accreditation..................................................................... 3 SECTION II. HEALTH SECTOR FINANCE......................................................... 6 A. Trends in Revenues and Expenditures................................................................... 6 B. Recent Legislative Changes......................................................................... 10 C Health Finance Reform........................................................................ 13 SECTION III. HEALTH PROBLEMS AND HEALTH SERVICES . 16 A. Mismatch between Needs and Services.16 B. Organization and Management of Health Services.20 C. Rationalization of Physical Assets .23 D. Rationalization of Human Assets .26 E. Pharmaceuticals.30 F. Innovation and Research .36 SECTION IV. THE CHALLENGE OF IMPLEMENTATION . 37 A. A Phased Approach........................................................................ 37 B. The Role of the Government........................................................................ 38 C. Program Implementation........................................................................ 40 1 Tables Page Table 2.1 Public Health Care Spending in Romania, 1990-1997....................................... 6 Table 2.2 Estimated Private Spending on Health Care Goods and Services, 1996.................. 7 Table 2.3 Recurrent Health Care Spending, by Category, 1996........................................ 8 Table 2.4 Ministry of Health Spending, by Type of Expenditure, 1996.............................. 8 Table 2.5 Private Sector Health Care Institutions in Romania, 1995.................................. 9 Table 2.6 Estimated Public Sector Health Revenues and Expenditures, 1997-1999................ 13 Table 3.1 Average Life Expectancy at Birth by Sex in Romania, 1964-1994........................ 16 Table 3.2 Maternal Mortality Ratios in Selected Countries, 1996..................................... 17 Table 3.3 Framework for Health Services Coverage in Romania...................................... 19 Table 3.4 Number of Beds, by Type of Health Care Facility, 1998.................................... 23 Table 3.5 Number of Beds, by Type of Provider and Region, 1998................................... 24 Table 3.6 Spending on Pharmaceuticals in Selected Countries, as Percentage of GDP ............. 31 Table 3.7 Spending on Pharmaceuticals in Selected Countries, as Percentage of Total Health Care Spending.............................................................. 31 Table 3.8 Composition of the Romanian Pharmaceutical Market, 1997.............................. 33 Figures Figure 2.1 Comparison of Per Capita Health Expenditure of Romanian Districts, 1997............ 10 Figure 3.1 Burden of Disease, Disability and Premature Death in Romania ........................... 18 Boxes Box 3.1 Setting Priorities for Public Health and Disease Control .................................... 20 Box 3.2 Changes in the Provider Remuneration System: Contracts as Tools...................... 21 ANNEXES Annex la Recommended Implementation Schedule..................................................... 41 Annex I b Recommended Amendments to the Legal Framework...................................... 44 Annex I c Ministry of Health Organizational Chart...................................................... 47 Annex 2 National Health Accounts, 1996.............................................................. 48 Annex 3 Health Insurance Revenues and Needs Index, 1998.......................................... 5 1 Annex 4a Burden of Disease and Prioritization of Health Services.................................... 55 Annex 4b Public Health and Disease Control Priorities ................................................. 70 Annex 4c Contracting and Provider Payment Systems................................................... 77 Annex 5 Recommended Organizational Structure of the Pharmaceutical Sector: ....... ........... 8 1 ROMANIA AT A GLANCE.82 REFERENCES. .84 ii FOREWORD Like most countries in Central and Eastern Europe, Romania is in the midst of profound political, social, and economic changes. The transition from central planning to market-oriented systems has increased the urgency of evaluating policy options and implementing reform in the health sector. A decade after the 1989 revolution, only a few reforms have been implemented in Romania's health sector. Some health status indicators-most notably, maternal mortality ratio-have improved; a cohort of young Romanian professionals with the skills and commitment to establish an effective health system has emerged; and the government has demonstrated a new commitment to reform. The World Bank has been an active partner in this endeavor. Three major challenges remain. First, Romania faces a large burden of preventable disease, disability, and premature death that reduces productivity and causes needless suffering. Second, resources for health care are limited, and there are serious inequities in resource allocation and utilization. Third, the health sector suffers from persistent inefficiencies, both allocative and technical. The challenge of health sector reform is to identify and implement reasonable strategies for tackling these problems in a nascent democracy. This strategy document was conceived and prepared in consultation with a range of stakeholders within and outside Romania. It is intended to guide the Bank's work program in support of health sector reform in Romania. As such, it emphasizes the intellectual basis for the work program and explores feasible options for achieving key objectives set forth by the government of Romania. It also examines approaches to health sector development beyond the immediate purview of the Ministry of Health. This sector support strategy will improve the quality and focus of the Bank's efforts in Romania. It will serve as a useful tool in the Bank's work with the Government of Romania, as well as with partner agencies. James Christopher Lovelace Director Human Development Sector Unit Europe and Central Asia Region .. iv PREFACE Romania's health sector is in crisis. To deal with the sector's problems, the government approved legislation in 1997 that commits it to major changes in the financing, organization, and delivery of health care. Since January 1999, funds for health care have come from mandatory health insurance, financed by a payroll tax (additional funding for programs of national importance is provided out of general revenues). By the end of March 1999, the government had set up 42 autonomous public insurance funds. Major changes are planned in the management and delivery of health services, in relationships between payers and service providers, and in relationships between service providers and consumers. To date, these complex issues have been handled largely on an ad hoc basis, and the government has not produced a comprehensive strategy to guide its health sector efforts. This report is not a substitute for a government health sector strategy. It is intended to serve three purposes. First, it presents policy options and recommendations that will help the government prepare a health sector strategy. Second, it will guide the policy dialogue between the World Bank and Romania. Third, it will serve as a useful reference for consultations among local, bilateral, and international organizations working in the health sector in Romania. Much of the material in this document was-and still is-the subject of intense debate among stakeholders in Romania. The challenge is to deploy limited resources to achieve better health status and quality health services for all Romanians. This sector support strategy is consistent with the Country Assistance Strategy for Romania (Report 16559-RO 1997). It offers country-specific recommendations that are consistent with the more general recommendations made in the World Bank's Health Nutrition and Population Sector Strategy (World Bank 1997a) and Health Sector Strategy for the Europe and Central Asia Region (World Bank 1998). It also draws on recent analyses of current strategies for health care reform in Europe (WHO 1997). The strategy focuses on improving the health outcomes of the poor, enhancing the performance of Romania's health care system, and securing sustainable health care financing. The first section of the report examines the governance, regulation, and leadership