Document of The World Bank Report No. 12768-ALB STAFF APPRAISAL REPORT ALBANIA HEALTH SERVICES REHABILITATION PROJECT NOVEMBER 8, 1994 Human Resources Sector Operations Division Central and Southern Europe Departments Europe and Central Asia Region CURRENCY EOUIVALENTS Currency Unit - Lek US$1.00 = Lek 101 (September 1994) WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CEE Central and Eastem Europe CY Calendar Year DEcon Department of Economics DHC District Health Committee DHosp Department of Hospitals DHR Department of Human Resources DHT District Health Team DPH Department of Public Health DPT District Project Implementation Team DPharm Department of Pharmacy EU European Union EME Established Market Economies FUFARMA Public Sector Drug Distribution Agency FY Fiscal Year HSRP Health Services Rehabilitation Project ICB Intemational Competitive Bidding IS Intemational Shopping IDA Intemational Development Association LCB Local Competitive Bidding LS Local Shopping MOH Ministry of Health MOF Ministry of Finance and Economy OECD Organization for Economic Cooperation and Development PCU Project Coordination Unit PHC Primary Health Center PIP Project Implementation Plan POM Project Operational Manual SOE Statement of Expenditure TA Technical Assistance TOR Terms of Reference SAR Staff Appraisal Report TSD Technical Services Department ALBANIA HEALTH SERVICES REHABILITATION PROJECT STAFF APPRAISAL REPORT Table of Contents Credit and Project Summary .............................................. i I. HEALTH STATUS AND SERVICES IN ALBANIA . A. Health Status of the Population .1 B. Health Services in Transition .3 C. Issues for Health System Reform .3 C. Government Strategy in the Health Sector .7 E. Role of the International Donor Community .9 F. Rationale for IDA Involvement .10 G. Previous IDA Involvement .11 II. THE PROJECT ............................................... 12 A. Project Objectives ............................................ 12 B. Project Description . ......................................... 12 C. Environmental Impacts ............ ............................ 19 m. PROJECT COSTS, FINANCING AND IMPLEMENTATION ................. 20 A. Project Costs ............................................... 20 B. Project Financing . .......................................... 23 C. Project Management and Implementation ............................. 24 D. Project Procurement Arrangements ................................ 29 E. Disbursements . ............................................ 32 F. Status of Preparation . ........................................ 33 IV. BENEFITS AND RISKS .......................................... 35 A. Benefits ................................................ 35 B. Risks ................................................ 35 V. AGREEMENTS TO BE REACHED AND RECOMMENDATION .. 36 Table of Contents (continued) TEXT TABLES Table 1: Demographic and Health Indicators, 1991 .............................. 2 Table 2: Project Cost Summary by Component ........ ........................ 20 Table 3: Project Cost Summary by Category of Expenditure ....................... 21 Table 4: Cost Summary by Component &Source of Financing ...................... 23 Table 5: Summary by Expenditure Category & Financing ......................... 24 Table 6: Project Procurement Arrangements .......... ........................ 29 ANNEXES Annex 1: Basic Country Data ........................................... 38 Annex 2: Project Implementation Plan . .................................... 39 Annex 3: Detailed Cost Tables . ......................................... 72 Annex 4: Supervision Plan ............................................ 86 Annex 5: Procurement Plan ............................................ 87 MAP: IBRD No. 25813 (Albania country map showing prefectures, districts, location of health Centers and hospitals) This report is based on findingsof an appraisalmission which visited Albaniain February 1994. The missioncomprised: Ellen Goldstein,Task Manager, EC1/2HR;Leonardo M. Concepcion,Senior ImplementationSpecialist, EC1/2HR; James Stevens, OperationsOfficer, EC1/2HR;and consultantsThiery Tuxen, HospitalSpecialist; and Pierre Fournier, HealthOrganization and ManagementSpecialist. The mission's work was supportedby Elim Sakiqi,Liaison Officer, EC2AL. This report incorporates earlier work by Teresa Ho, Task Manager for the initialstages of project preparation, EC2HU; and consultantsJean-Marc Guimnier,Pharmaceutical Specialist and Gilles des Rochers, Health FinanceSpecialist. The Peer Reviewersare: Denis Broun, PHN and Philip Musgrove,PHN. AndrewRogerson, EC2HU, ManagerCentral EuropeanServices and RalphW. Harbison, Chief, EC1/2HR are the supervisingmanagers. Kemal Dervis, EC2DR is the Country Director. ALBANIA HEALTH SERVICES REHABILITATION PROJECT Credit and Project Summary BORROWER: Albania BENEFICIARY: Ministry of Health (MOH) AMOUNT: SDR8.6 million (US$12.4million equivalent) TERMS: Standard IDA, with 40 years maturity PROJECT OBJECTIVES: The Project will help prevent deterioration in health status during the economic transition by improvingthe qualityof basic preventiveand curativehealth services. This will be accomplished by upgrading primary and secondary facilities to minimum sanitary and physical standards, improving treatment skills of hospital physicians and nurses (to complement skill-training programs for primary care personnel supportedby other donors) and buildingcapacity at the central and district levels to manage health resources and implementsectoral reforms. PROJECT DESCRIPTION: The Project consists of a main componentto rehabilitate primary and secondary health services, and a complementarycomponent to build institutionalcapacity at the district and central levels. The Project will be implementedover a five-yearperiod by line Departmentsof the MOH, with implementationactivities coordinated by a Project CoordinatingUnit. Health Services Rehabilitation(US$10.9 million base cost). This componentwill support: i) rehabilitation and upgrading of 100 primary health centers out of an initial network of 200 in six pilot districts (with an aggregatepopulation of around 600,000); ii) rehabilitation and upgrading of two secondary referral hospitals (Shkoder and Vlore) serving these districts and surrounding areas; and iii) strengthenedcapacity to plan and implementa comprehensivepublic health facilities maintenance program (buildings and equipment) through development of maintenancenorms/procedures and staff training. Capacity Building (US$3.2 base cost million). This component will provide assistanceto: i) improve managementof basic health services at the district level; ii) provide in-service training for hospital physicians and nurses; and iii) build institutionalcapacity at the central level to improve sector planning, health financing and drug distribution. A portion of the proposed IDA Credit (US$0.5 million)will also be set aside to cover the costs of project coordination. - ii - BENEFlT: The Project will help prevent increasesin prematureand preventablemorbidity and mortality during the economictransition by improving the quality of basic primary and secondary health services. Specifically, it will begin rehabilitation of a streamlinedprimary care network and its secondaryreferral hospitals. It will also update the skills of medical personnel and improve managementof health services at the district level. By buildinginstitutional capacity at the central level in the areas of sector planning, health finance and drug distribution, the Project will begin to improve resource managementand incentive structures in the health sector. RISKS: The complexity of procurement for rehabilitation of primary health centers and regional hospitals is a risk. This will be particularlydifficult for a Ministrywith no previous experiencein Bank lendingand procurementprocedures. To facilitatecivil works procurement,the Project will follow a simplifiedlocal procurementprocedure developedfor the IDA-fundedHousing Project. In addition,the Project will provide training in procurement and contracting in both the Project CoordinationUnit and the TechnicalServices Department of the MOH. Another Project risk is the almost completelack of familiaritywith decentralizeddecision-making and managementin Albania, and the decision by Governmentto build local capacityfor managementof health resourceswithout extensive recourse to technicalassistance. To addressthis, the Project will focus on buildinga core team of trainers at the national level which can transfer managementskills and introduce managementsystems at the district level. A twinning arrangement with an academic institution will provide limited technical support to the national team. Estimated Project Costs Lal Foreign Tota1 -------- US$ Million A. Health Services Rehabilitation 1. Rehabilitationof Primary Health Centers 2.1 1.1 3.2 2. Rehabilitationof Regional Hospitals 2.5 4.8 7.3 3. Health Facilities Maintenance DA1 0Q1 02 Sub-total 4.7 6.0 10.9 B. CapacityBuilding 1. Managementof Basic Health Services 0.1 0.4 0.5 2. Hospital Staff Retraining 0.3 0.6 0.9 3. Sector Policy and Planning 0.3 1.0 1.3 4. Project CoordinationUnit O.1 0Q4 0 5 Sub-total 0.8 2.4 3.2 Total Base Costs 5.5 8.6 14.1 Physical Contingencies 0.5 0.6 1.1 Price Contingencies 0 5 Q40 1 Total Project Costs 642 Financing Plan Governmentof Albania 2.2 1.4 3.6 IDA 4.2 8.2 12.4 Total Financing Requirements 6.4 9.6 16.0 Estimated Disbursements (US$ million) IDA FY FY94