Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT ( IBRD-70010, JPN-26137, SIDA ) ON A

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1 Public Disclosure Authorized Document of The World Bank Report No:ICR Public Disclosure Authorized IMPLEMENTATION COMPLETION AND RESULTS REPORT ( IBRD-70010, JPN-26137, SIDA ) ON A LOAN IN THE AMOUNT OF US$21.86 MILLION Public Disclosure Authorized TO THE REPUBLIC OF LITHUANIA FOR A HEALTH PROJECT Public Disclosure Authorized Human Development Sector Unit Europe and Central Asia Region June 28, 2007

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 28, 2007) Currency Unit = Lithuanian Lita (LTL) LTL 1.00 = US$ 0.39 US$ 1.00 = LTL 2.56 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ALOS Average Length of Stay M&E Monitoring and Evaluation BBP Basic Benefit Package MOH Ministry of Health BOR Bed Occupancy Rate NPV Net Present Value CAS Country Assistance Strategy PAD Project Appraisal Document CHIF Compulsory Health Insurance Fund PCU Project Implementation Unit EMS Emergency Medical Services PDO Project Development Objective EU European Union PEH Public Expenditure on Health FRR Financial Rate of Return PIA Project Implementation Agreement FSU Former Soviet Union PHC Primary Health Care GDP Gross Domestic Product PPP Public-Private Partnership GOL Government of Lithuania PSR Project Status Report GP General Practitioner PTL Program Team Leader HMIS Health Management Information System QAG Quality Assurance Group HR Human Resources SIDA Swedish International Development Agency HSR Health Service Restructuring SPF State Patient Fund ICR Implementation Completion and Results TA Technical Assistance Report IRR Internal Rate of Return TOR Terms of Reference ISR Implementation Status and Results TPF Territorial Patient Fund Report LHIC Lithuanian Health Information Center TTL Task Team Leader LHP Lithuania Health Project WB World Bank MTR Mid-Term Review WHO World Health Organization MOF Ministry of Finance Vice President: Shigeo Katsu Acting Country Director: Suman Mehra Sector Manager: Armin H. Fidler Project Team Leader: Pia Helene Schneider ICR Team Leader: Pia Helene Schneider ICR Primary Author: Panagiota Panopoulou

3 COUNTRY Project Name CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Outputs by Component Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Beneficiary Survey Results Annex 6. Stakeholder Workshop Report and Results Annex 7. Summary of Borrower's ICR and/or on Draft ICR Annex 8. of Cofinanciers and Other Partners/Stakeholders Annex 9. List of Supporting Documents MAP

4 A. Basic Information Country: Lithuania Project Name: Health Project Project ID: P L/C/TF Number(s): IBRD-70010,JPN ,SIDA ICR Date: 06/29/2007 ICR Type: Core ICR Lending Instrument: SIL Borrower: Original Total Commitment: Environmental Category: C Implementing Agencies: Ministry of Health Cofinanciers and Other External Partners: B. Key Dates REPUBLIC OF LITHUANIA USD 21.2M Disbursed Amount: USD 19.5M Process Date Process Original Date Revised / Actual Date(s) Concept Review: 04/17/1996 Effectiveness: 05/17/ /17/2000 Appraisal: 03/21/1999 Restructuring(s): Approval: 11/30/1999 Mid-term Review: 06/03/2002 Closing: 09/30/ /30/2006 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Satisfactory Moderate Moderately Satisfactory Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Satisfactory Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Overall Borrower Moderately Satisfactory Performance: Performance: Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Project No Quality at Entry None Rating i

5 at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: No Satisfactory (QEA): Quality of Supervision (QSA): Moderately Unsatisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration Health Theme Code (Primary/Secondary) Health system performance Primary Primary Injuries and non-communicable diseases Secondary Secondary Other communicable diseases Secondary Secondary Participation and civic engagement Secondary Secondary E. Bank Staff Positions At ICR At Approval Vice President: Shigeo Katsu Johannes F. Linn Country Director: Suman Mehra Basil G. Kavalsky Sector Manager: Armin H. Fidler Annette Dixon Project Team Leader: Pia Helene Schneider Toomas Palu ICR Team Leader: ICR Primary Author: Pia Helene Schneider Panagiota Panopoulou F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project s development objective was to improve the quality, efficiency, equity and access of the Lithuania health care system. Key performance indicators measured: (i) improved equity of resource allocation among health regions (apskritis), (ii) costcontainment through effective contracting between the State Patient Funds and health care providers; (iii) efficiency gains through hospital services consolidation and restructuring in four pilot regions; and (iv) improved access to General Practitioner services in four pilot regions. Revised Project Development Objectives (as approved by original approving authority) The project development objective did not change during the project life. ii

6 (a) PDO Indicator(s) Indicator Indicator 1 : Value quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Standard health service efficiency indicators improve yearly over the life of the project. ALOS (national level): ALOS (national Decrease in 7.8 days; level): 6.7 days; ALOS; BOR (national level): BOR (national increase in BOR. 25.1%. level): 29%. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 2 : 90% of health care providers stay within year-end, predefined fixed price-volume budgets. Value quantitative or Qualitative) No data is available. Increase in the number of health care providers that stay within yearend, predefined fixed price-volume budgets. 92.5% Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 3 : 50% of population in project areas is covered by certified GPs providing comprehensive services by end of project. Value quantitative or 24.7%. 50%. 61.8%. Qualitative) Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 4 : Referrals and self-referrals to ambulatory care specialists and hospitals are reduced by 20% in pilot areas by end of project. Value quantitative or Qualitative) Ambulatory specialist visits per capita Alytus: 1.34; Kaunas: 2.84; Utena: 1.48; Vilnius: Hospital admissions per 20% decrease. Ambulatory specialist visits per capita Alytus: 1.5 (11.9%); Kaunas: 3.2 (12.7%); Utena: 1.34 (- iii

7 1,000 Alytus: 176.0; Kaunas: 262.9; Utena: 175.3; Vilnius: %); Vilnius: 2.64 (- 7.4%). Hospital admissions per 1,000 Alytus: (2.9%); Kaunas: (8.6%); Utena: (- 0.7%); Vilnius: 257 (2.6%). Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) There is no data on referral and self-referrals to ambulatory care specialists and hospitals. For the evaluation of this indicator ambulatory specialist visits per capita and admissions to hospital inpatient care per 1,000 population are used. Indicator 5 : Patient satisfaction with the services they get from their primary care physicians is improved in pilot areas by end of project. Value quantitative or Qualitative) Project group Polyclinics: 3.73; Ambulatories: 4.01; All: Increase in population satisfaction. Project group Polyclinics: 3.67; Ambulatories: 4.39; All: Date achieved 03/31/ /30/ /31/2005 Respondents were asked to qualify services using a scale from 1 (absolutely (incl. % dissatisfied) to 5 (very satisfied). achievement) Policy framework for health service planning and restructuring in place and used Indicator 6 : by health administrators by end of project. Value quantitative or Qualitative) No policy framework in place. Policy framewokr in place and used by health administrators. The Strategy for the Restructuring of Health Care Institutions was approved on 03/18/2003 by GOL Resolution No The second stage of the Strategy was approved on 06/29/2006 by the GOL Resolution No Date achieved 12/31/ /30/ /30/2006 (incl. % iv

8 achievement) (b) Intermediate Outcome Indicator(s) Indicator Indicator 1 : Value (quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years 80% of funds allocated to regions according to population and needs-based formula by mid-term evaluation (June 2002) and 100% of health funds by end of project. 28%. 80% by June 2002; 100% by end of project. 54% in June % by end of project. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) The delay in the adoption of the revised formula was mainly the result of the reorganization of the Territorial Patient Funds (which were reduced from 10 in 2002 to 5 in 2003). Indicator 2 : A revised hospital reimbursement schedule based on standard costing study is in place by Value (quantitative or Qualitative) Old hospital reimbursement schedule is in place. Revised hospital reimbursement schedule based on a costing study is in place by A revised reimbursement schedule was introduced in February 2003 but it was not based on a national costing exercise and is expected to be revised again in the near future. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 3 : Government guidelines for appraisal, allocation, monitoring and financing of health sector investments are developed and in use by Year 3 of project. Value (quantitative or Qualitative) No government guidelines exist. Government guidelines are developed and in use by Year 3 of project. Government guidelines were approved on 02/21/2002 by MOH Order No. 91 and are still in use. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 4 : National and regional needs-based health service plans are developed in at least 7 counties (out of 10). v

9 Value (quantitative or Qualitative) No needs-based health service plans. Needs-based health service plans are developed in at least 7 counties. Although no separate needsbased health service plans were developed at the county level, the Strategy for the Restructuring of Health Care Institutions was implicitly based on a needs assessment and service planning. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 5 : Numbers of health institution managers are trained in management Value (quantitative or Qualitative) No managers are trained. Increase in number of trained managers. There were no project activities related to this indicator. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 6 : Ambulance service review report is developed and disseminated by Value (quantitative or Qualitative) No ambulance service review report. Ambulance service review report is developed and disseminated by Ambulance service development plans were prepared and adopted in 2003 in Kaunas and Utena counties. No national ambulance service review report prepared by the GOL exists. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 7 : National Health Report is published regularly. Value (quantitative or Qualitative) No National Health Report is published. National Health Report is published regularly. National Health Report is published yearly by the LHIC. Date achieved 12/31/ /30/ /30/2004 vi

10 (incl. % achievement) Indicator 8 : 55% of the Alytus County population is covered by qualified GPs by end of project. Value (quantitative 27%. 55%. 62%. or Qualitative) Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 9 : Total number of hospital beds in the Alytus County Hospital is reduced by 20%. Value (quantitative or Qualitative) 583 beds. 20% decrease. 431 beds (26% decrease). Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 10 : Not less than 40% of all operations are performed in the day surgery of the Alytus County Hospital. Value (quantitative or Qualitative) No day surgery center. Not less than 40% of all operations are performed in the day surgery center. 31%. Date achieved 12/31/ /30/ /30/2006 The lower level of day surgery operations was to due to the fact that the center (incl. % started functioning in achievement) Indicator 11 : Average length of stay in the Alytus County Hospital is reduced to 9 days. Value (quantitative 9 days. 9 days. 6.9 days. or Qualitative) Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 12 : 55% of the Kaunas County population is covered by qualified GPs by end of project. Value (quantitative 14.5%. 55%. 76.6%. or Qualitative) Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 13 : The number of surgery beds in Kaunas Clinical Hospitals No.2 and No. 3 is vii

11 Value (quantitative or Qualitative) reduced by 30%. Kaunas Clinical Hospital No. 2: 150 beds. Kaunas Clinical Hospital No. 3: 140 beds 30% reduction. Kaunas Clinical Hospital No. 2: 79 beds (38% reduction). Kaunas Clinical Hospital No. 3: 87 beds (35% reduction). Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 14 : Not less than 4,000 operations (each) are performed in the day surgery centers of Kaunas Clinical Hospitals No. 2 and 3. Value (quantitative or Qualitative) No day surgery centers. Not less than 4,000 operations (each) in day surgery centers of Kaunas Clinical Hospitals No. 2 and 3. 1,391 operations in 2006 in both centers. Date achieved 12/31/ /30/ /30/2006 The lower number of operations is due to the fact that day surgery centers started (incl. % operating in Kaunas Clinical Hospitals No. 2 and No. 3 in March achievement) Indicator 15 : 20% reduction in the number of referrals to specialists in Utena county. Value (quantitative or Qualitative) 5 visits per capita. 20% reduction. 5.6 visits per capita (11% increase). Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) The increase in the no. of specialist visits appears to be closely related to the decrease in hospitalizations for the same period (substitution effect). In addition, there was an increase of 15.5% in the no. of ambulatory non-specialist visits. Indicator 16 : 20% reduction in the number of direct arrangements to see specialists in Utena county. Value (quantitative or Qualitative) Date achieved (incl. % This indicator cannot be assessed due to lack of data. achievement) Indicator 17 : 30% reduction in the number of emergency calls in Utena County. Value (quantitative or Qualitative) 31,008 calls per year. 30% reduction. 47,126 calls per year (51% increase). viii

12 Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) This increase was mainly due to calls for transportation of pregnant women after the closing of the obstetric departments in Ignalina, Moletai and Zarasai hospitals. Indicator 18 : 5% reduction in the number of hospitalization cases in Utena county. Value (quantitative or Qualitative) 32,000. 5% reduction. 30,000 (6.25% reduction). Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Provision of general surgical, gynecological and pediatric services is introduced Indicator 19 : without increasing total number of beds in Visaginas Town Hospital (Utena county). Value (quantitative or Qualitative) 180 births per year. Increase in the number of services provided. 338 births per year (88% increase). Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 20 : Regular monitoring of progress towards achievement of key performance indicators and agreed development objectives. Value (quantitative or Qualitative) No monitoring in place. Regular monitoring in place. Incomplete monitoring of key performance indicators. Date achieved 12/31/ /12/ /12/2006 Monitoring of key performance indicators took place ex post with the assistance (incl. % of the PCU. achievement) Indicator 21 : Timely contracting of goods, works, and services with quality outputs. Value (quantitative or Qualitative) Beginning of contracting of goods, works, and services with quality outputs. Timely contracting of goods, works, and services with quality outputs. Timely contracting of goods, works, and services with quality outputs. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 22 : Efficiently managed PCU, with adequate staff and resources. Value (quantitative or Qualitative) The PCU is created including: Director, Administrator, Accountant (financed by the MoH), Project Implementation Officer, Efficiently managed PCU, with adequate staff and resources. Efficiently managed PCU, with adequate staff and resources. ix

13 Procurement Specialist and Chief Financial Officer (financed by SIDA grant). PMU equipped from the WB Loan budget. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 23 : Value (quantitative or Qualitative) After the closing of SIDA grant (March 30, 2005) the PCU staff was reduced to a minimum (Director, Administrator and Accountant) and finance by the MOH. PCU promotes an effective dialogue among key project actors and stakeholders, in particular in the four pilot regions. PCU promotes an PCU promotes an effective dialogue effective dialogue among key project among key project Beginning of PCU actors and actors and operation. stakeholders, in stakeholders, in particular in the particular in the four pilot counties. four pilot counties. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 24 : Satisfactory project accounting systems and annual audits. Value (quantitative or Qualitative) Beginning of PCU operation. Satisfactory project accounting systems and annual audits. The accounting system HANSA Financial was used during project implementation. Audits are performed yearly and are unqualified. Date achieved 12/31/ /30/ /30/2006 (incl. % achievement) Indicator 25 : Annual PCU staff performance evaluations and training programs. Value (quantitative or Qualitative) Beginning of PCU operation. Annual PCU staff performance evaluations and training programs. Project Steering Committee evaluates PCU staff performance annually. PCU key staff undertakes classes in international courses. Date achieved 12/31/ /30/ /30/2006 x

14 (incl. % achievement) G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 12/27/1999 Satisfactory Satisfactory /04/2000 Satisfactory Satisfactory /22/2000 Satisfactory Satisfactory /25/2001 Satisfactory Satisfactory /12/2001 Satisfactory Satisfactory /27/2002 Satisfactory Satisfactory /27/2002 Satisfactory Satisfactory /25/2003 Satisfactory Satisfactory /04/2003 Satisfactory Satisfactory /28/2004 Satisfactory Satisfactory /22/2004 Satisfactory Satisfactory /04/2005 Satisfactory Satisfactory /23/2005 Satisfactory Satisfactory /27/2006 Satisfactory Satisfactory H. Restructuring (if any) Not Applicable xi

15 I. Disbursement Profile xii

16 1. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., PAD/ISR, not evaluative) 1.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance) Country macroeconomic background Lithuania had made good progress in macroeconomic stabilization and the transition to a market economy during the 1990s. The consolidated fiscal deficit had fallen from 4.4% of GDP in 1996 to 1.7% in 1997, while the currency board-backed exchange rate remained fixed since April In 1997, accelerated privatization supported the growth of Foreign Direct Investment to record levels, while most other structural reforms proceeded apace. As a result, the GDP growth rate increased from 3.3% in 1995 to a 7.3% in The main objectives of the Country Assistance Strategy (CAS) for Lithuania for were to: (i) help improve macroeconomic and financial stability; (ii) support the reform agenda and investments needed for EU accession; and (iii) support reforms, institution building and investments in social assistance and the health and education sectors. Country and sector background In the late 1990s, Lithuania faced problems in the health sector similar to other CEE/FSU countries. Aggregate health indicators had deteriorated compared to the pre-transition period (pre-1991), leaving Lithuania with a significant gap in health status in comparison with the EU. The health system did not proactively address the root causes of ill health because of lack of effective public health policies and programs. The health system was also not able to cope with the increased burden of ill health because of an inefficient health care delivery and health financing system. Declining public funding for health services and poor maintenance of investments in health care infrastructure exacerbated the situation. In 1995, Lithuania adopted a Primary Health Care Reform Strategy to restructure its health sector and adjust to changing socioeconomic, epidemiologic, and demographic circumstances. There was a lack of effective public health policies and programs to address an emerging wave of non-communicable diseases. Historically oriented towards infectious diseases and environmental health, the public health system had little capacity and leadership to comprehensively address non-communicable diseases such as circulatory diseases, external injuries and malignant tumors that were the most frequent mortality causes. This situation was further aggravated by deteriorating socio-economic conditions during transition and life-style related risk factors. The health care delivery system was characterized by inefficient primary, secondary and tertiary level institutions, and work force. The system had an excessive number of poorly organized and low quality hospitals; absence of first level and family care services; and an inadequate skill mix in the work force. As a result of the imbalance between primary, and secondary and tertiary health institutions, there was an over-reliance on inpatient treatment. At the same time, there was a need for less acute care beds and more nursing and support beds where frail elderly and chronically ill individuals could be better taken care of at lower cost within the framework of community-based health services. Human resources, especially physicians, were in excess compared to the EU and Lithuania s Baltic neighbors. There were also significant regional imbalances ranging from 1.3 physicians per 1,000 population in some predominantly rural counties to 6.2 in big cities. 1

17 Although Lithuania had taken considerable steps in reforming its health financing system towards separation of purchasing (through the State Patient Fund, SPF) and provision of services, it still faced challenges posed by a supply driven resource allocation formula, inefficient management of investment resources, inefficient purchasing practices, and payment systems that encouraged over-referral and hospital admission. Patient fund allocations were determined by the level of services provided by secondary and tertiary facilities within the territorial boundaries, which in turn resulted in large cross-territorial variations in per capita allocation. Investment decisions were taken by the Ministry of Health (MOH) and the municipal authorities without SPF participation. Service prices did not incorporate the cost of buildings and equipment. Consequently, investment decisions were encouraging ineffective resource use as health care institutions were receiving investment funding on the basis of criteria other than the number of services rendered. Territorial Patient Funds (TPF) distributed their budget on the basis of historical patterns and not actual needs, while the combination of capitation for primary care and activity-based payments for secondary care created incentives for underutilization of primary health care (PHC) services and high level of referrals to specialists and the hospital sector. The health care benefit package was unaffordable. Officially all services were covered by the SPF unless there was a specific exclusion. The remaining benefit package was still too extensive to be sustained by country resources and rationing occurred in a number of different implicit ways. There was a need to strengthen institutional capacity and better define the institutional framework for public accountability. The MOH and SPF were the key institutions implementing health reforms. During project preparation, many stakeholders viewed the lack of capacity in the areas of reform planning, implementation and monitoring as one of the main reform obstacles. The MOH had important strengths that it could build upon, but also needed to strengthen institutional capacity for program management, monitoring and evaluation (M&E), communication, and needs and technology assessment. The change of health care facilities from budget organizations to public institutions in 1997 led to substantial autonomy and flexibility for these institutions, but it did not provide clear rules for public accountability. In reality, hospital owners (central government, health regions, and municipalities) played a passive role in oversight, leaving the task of financial monitoring largely to the SPF/TPFs, although the latter did not have the necessary power to address poor business hospital performance. Rationale for Bank Assistance The Lithuania Health Project supported the FY00-02 CAS objectives to design cost-effective, financially viable social safety net and human development programs and to help reorient public services and infrastructure in order to provide adequate and cost-effective social services. In the health sector, this translated into reorientation of medical services towards a general practicebased primary health care system, optimization and improvement in quality of hospital services, and introduction of appropriate incentives and efficient management into the health financing system. Support to the Government s reform health program. The project supported the Government s health reform policy agenda at a time that Lithuania was in need of external donor support. The project was financed by a World Bank Loan, a Grant from the Swedish International Development Agency (SIDA) and a Grant from the Government of Japan. Competitive selection of pilot counties based on the quality of proposals and consistency with the national health care 2

18 reforms was perceived to contribute to successful project implementation. Tangible positive results from the first successful activities were believed to facilitate nation-wide implementation of health sector reforms. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The project development objective was to improve the quality, efficiency, equity and access of the Lithuania health care system. Key performance indicators measured: (i) improved equity of resource allocation among health regions (apskritis), (ii) cost-containment through effective contracting between the SPFs and health care providers; (iii) efficiency gains through hospital services consolidation and restructuring in four pilot regions; and (iv) improved access to General Practitioner services in four pilot regions. 1 Key Indicators The Lithuania Health Project (LHP) had the following sector related indicators from the CAS: Improved efficiency of the health care system; Improved population satisfaction with national health services; and the following indicators for PDO: Standard health services efficiency indicators improve yearly over the life of the project; 90% of health care providers stay within year-end predefined fixed price-volume budgets; 50% of population in project areas is covered by certified General Practitioners (GPs) providing comprehensive services by end of project; Referrals and self-referrals to ambulatory care specialists and hospitals beds are reduced by 20% in pilot areas by end of project; Patient satisfaction with the services they get from their primary care physicians is improved in pilot areas by end of project; Policy framework for health service planning and restructuring in place, and used by health administrators by end of project. In addition, the LHP had 25 indicators related to component outputs/outcomes. For a detailed list of the component-related indicators see the Results Framework Analysis. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The project development objective and key indicators did not change during the project life. 1.4 Main Beneficiaries, (original and revised, briefly describe the "primary target group" identified in the PAD and as captured in the PDO, as well as any other individuals and organizations expected to benefit from the project) The PAD identified seven groups of project beneficiaries: 1 For the purposes of this ICR we will refer to the 10 apskritis of Lithuania as counties. The term region will be used when referring to the five regions of the TPFs. 3

19 (i) (ii) (iii) (iv) (v) (vi) (vii) Society at large benefited from improved efficiency of public expenditure on health, better standards of care; and improved equity as a result of a needs-based resource allocation; Population in pilot counties benefited from better access to care; better quality of care; reduction in urban-rural inequities; increased community participation in health and health care issues; and community nursing services (the latter mainly benefited the elderly and the chronically ill); The Government benefited from improved decision making capacity through institutional and process improvements, and greater data availability from an improved information management; and better communication with the population and system stakeholders; SPF and TPFs benefited from strengthened institutional capacity; improved job satisfaction through skill development activities and clear job descriptions; automation of data gathering, aggregation, and analysis function supporting statistics, policy development, and resource allocation; and reduction of fraud in the health insurance system; Health policy decision makers and opinion leaders, the Government, the Patient Funds, the Parliament and influential stakeholders benefited from improved information about reform processes; improved transparency of health care funding that would allow for better planning and accountability; strategic planning for the improvement of the health of the population through policy and other broad-based approaches; and improved detailed and aggregated data on health from the Health Management Information System (HMIS); Health administration managers benefited from better management skills; GPs benefited from improved skills and incentives for good performance; improved professional prestige; better control and flexibility over professional lives; and improved working conditions. 1.5 Original Components (as approved) The LHP had three components: Component A. Support to Health Reform (estimated total cost US$8.46 million). This component consisted of three sub-components, namely: A.1. Policy Development, A.2. Strengthening Capacity of National Health Institutions, and A.3. Information Management. Each sub-component was further divided into sub-components. Sub-component A1. Policy Development (estimated total cost US$1.16 million). This subcomponent aimed at supporting the development of a regional resource allocation formula, a mechanism for the allocation of investment funding, provider reimbursement and contracting mechanisms, needs assessment and service planning, a basic package of services and clinical protocols, and health care service restructuring. Sub-component A1 included six sub-components. Sub-component A2. Strengthening Capacity of National Health Institutions (estimated total cost US$1.47 million). The objective of this sub-component was to strengthen institutional capacity to implement policy reforms. Institutional strengthening included staff skill development, provision of information, tools, and methodologies, and building capacity to effectively communicate with the consumers of the health care system and the main stakeholders. The beneficiaries of the component activities were the Medical Library, the Lithuanian Health Information Centre, the MOH, Patient Funds, and the National Health Board. Sub-component A2 included five sub-components. 4

20 Sub-component A3. Information Management (estimated total cost US$5.83 million). This subcomponent aimed at strengthening the Lithuanian Health Information Center (LHIC) and developing a hospital and PHC information system. The Health Information System envisaged the development of an open-ended information system in a modular fashion that would be a flexible and cost-effective tool for patient management, administration and documentation. The sub-component also supported MIS development in four pilot counties and was linked to the facilities supported through Component B. Sub-component A3 included two sub-components. Component B: Health Services Restructuring (estimated total cost US$24.13 million). This component was designed to support health service restructuring in four pilot counties: Alytus, Kaunas, Utena and Vilnius. Lithuania has 10 counties in total. The pilot counties were selected on a competitive basis out of nine applications. Following selection, the four selected counties developed detailed regional health sector restructuring and development programs supported by international technical assistance. Sub-component B1. Alytus Pilot Project (estimated total cost US$5.26 million) included a Regional PHC Development Program and a Hospital Restructuring Program. Sub-component B2. Kaunas Pilot Project (estimated total cost US$7.01 million) included a Health Promotion and Primary Prevention Program, a Regional PHC Development Program, a Hospital Restructuring Program, a Community Mental Health Service Program, and an Ambulance and Emergency Services Development Program. Sub-component B3. Utena Pilot Project (estimated total cost US$4.38 million) included a Regional PHC Development Program, a Hospital Restructuring Program, and an Ambulance Service Development Program. Sub-component B4. Vilnius Pilot Project (estimated total cost US$7.48 million) included a Vilnius Apskrtitis PHC Service Restructuring Program and a Hospital Restructuring Program. Component C: Project Management (estimated total cost US$1.35 million). This component supported the operation of a Project Coordination Unit (PCU), staffed by project management and technical staff in the MOH. To oversee the restructuring of health services in the four pilot counties and facilitate implementation at the local level, a core team of at least two staff was placed at each of the four apskritis participating in the project. 1.6 Revised Components Component A. Sub-component A2. There was no substantial restructuring of this component during project implementation. However, the activities of sub-components A2.2. Management and Development Adviser to the MOH and A2.3. Management Training to be financed under the EU/PHARE project were implemented earlier and separate from the LHP activities because of delays in the negotiation of the World Bank (WB) loan. The implementation of these subcomponents was primarily the responsibility of the Division of Foreign Affairs of the MOH. The LHP PCU did not participate in their implementation and therefore did not have any information on these activities. Efforts were made to obtain relevant information from the Division of Foreign Affairs of the MOH but because of changes in the Ministry s personnel, the individual(s) responsible for the EU/PHARE project could not be located and interviewed and information could not be retrieved. 5

21 Due to changes in the activities financed under Sub-component A2 and a change in the exchange rate between the Lithunian Lita (LTL) and the US dollar (US$) which left activities under Subcomponent A1 under-funded, Sub-component A2 funds were re-allocated to Sub-component A1 activities. During the re-allocation process, the Government decided to use funds under subcomponent A2.5 for study tours for the National Health Board to finance activities under subcomponent A1. Consequently, activities under sub-component A2.5 were cancelled. 1.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) Extensions of project closing date. The original closing date of the LHP was September 30, The closing date was extended twice and the project closed on September 30, The Government requested the first extension of the project's closing date (from October 1, 2004 to March 30, 2006) in order to: (i) complete activities under sub-component A3.2. Development of Hospital and Primary Health Care Information System or HMIS; and (ii) finalize payments for the day-surgery centers equipment, ambulances for the Emergency Medical Services (EMS) and civil works in the Vilnius Railway Hospital. Following the first extension, the second extension from April 1, 2006 to September 30, 2006 was granted to finalize activities under the HMIS. The six-month extension request was based on the understanding between the Bank and the Borrower that a minimum of nine months was needed to ensure effective procurement and implementation of the HMIS. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy of participatory processes, as applicable) Quality at entry is rated moderately satisfactory by this ICR. The project was based on a sound and detailed background analysis. The project preparation period lasted for more than two years, from April 1996 (Concept Review) to November 1999 (Board Approval). This was due to a number of reasons including, the complexity of the proposed reform activities, both at the level of policy development and health service restructuring (HSR); the involvement of pilot areas with varying health sector characteristics and thus different needs; and structural changes in the MOH (during preparation, the Ministry leadership changed three times). To address the complexity of health services restructuring, pilot counties were selected on a competitive basis. Subsequently, the four selected counties developed detailed regional health sector restructuring and development programs supported by international technical assistance. The demand driven approach for competitive selection of pilot regions strengthened the project s local ownership and assisted the process of addressing the complex political context of health sector restructuring. The Project Appraisal Document (PAD) highlighted a number of lessons learned from other projects in the region: for example, health sector reforms in the ECA region were a lengthy and politicized process; expectations from the reform process had been too optimistic for both the World Bank and the client countries; and projects per se were complex. 6

22 Unfortunately, the Bank team did not apply all these lessons when designing the LHP. The LHP was a complex project with three components and a total of 17 sub-components; 13 subcomponents under Component A and 4 county sub-components under Component B; county subcomponents were further divided in programs/other sub-components. In the case of Component A, the area of Policy Development aimed to address issues of resource allocation, investment funding, provider reimbursement and contracting, needs assessment and service planning, the basic package of services, and health sector restructuring. These issues are all inter-related and it could be argued that they have to be addressed simultaneously in order for a reform process to be comprehensive and effective. However, their inclusion under one project umbrella in an environment of weak institutional capacity, frequent political changes and a relatively low level of political commitment posed serious risks for project implementation. As is argued in Section 3. Assessment of Outcomes, while the majority of these issues were put on the table and discussed by the sector s stakeholders, few political decisions were eventually taken in these areas. The latter was probably due to (i) the high political cost that these decisions involved, and (ii) the need for stronger institutional capacity in the MOH. A smaller number of sub-components could have benefited project implementation, and M&E. This is particularly true in the case of Component A that consisted of three subcomponents and where each sub-component was further divided to multiple sub-components. In retrospect, the project could have followed a more modest approach and focused on a smaller number of policy issues. This would have allowed for a faster and easier implementation process as discussed in section 2.2, the project faced various problems during the first years of implementation. At the same time, it would have allowed for the M&E arrangements to focus on a smaller number of key performance indicators, which under the present design reached approximately 30 indicators (see also discussion in section 2.3). 2.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, and actions taken, as applicable) Up to Mid-Term Review (MTR), which took place in June 2002, the implementation process of both Components A and B was slow. As far as Component A was concerned, few political decisions were taken, although working groups had been formed and the issues had been discussed in multiple fora and with the participation of main stakeholders. Project activities on the HMIS started only two years after project effectiveness. There were various reasons for this delay: i) there was lack of clarity in the Government and the health sector in general regarding the content of the HMIS, ii) non-technical issues such as issues of confidentiality and legal needed to be addressed in advance of any project activities, iii) there were various institutions that demanded the control of primary data and iv) there was lack of institutional capacity to fully develop the HMIS. Regarding Component B, during the first year of implementation there were considerable delays in signing the implementation agreements between the MOH, and the pilot counties and municipalities due to local elections which took place during that year. Eventually, three out of four agreements were signed by the end of 2000 (Alytus, Utena, and Vilnius), while it took until March 2001 for the Kaunas implementation agreement to be signed. The length of time and difficulty in the signing of the agreements was also due to the fact that the restructuring programs in some pilot counties were challenging, involving the merging of hospital facilities and the closing of hospital departments. Project implementation was affected by frequent changes in the MOH leadership and in the composition of the Bank team. During the project life (from May 2000 when it became effective until September 2006 when it closed) there were six Ministers of Health. On average, a 7

23 minister s tenure was less than 18 months. The frequent changes of the MOH leadership caused delays in project implementation, especially in Component A, as each incoming Minister needed time to get acquainted with the project and provide support and leadership to the program. The existence of a Project Steering Committee, which was created during preparation and tasked to offer policy guidance and donor coordination, might have assisted in faster project implementation despite ministerial changes. However, the Chair of the Steering Committee appeared reluctant to cooperate with World Bank (WB) colleagues during the first three years of the Project period, thus posing additional difficulties for project implementation. At the same time, the Bank team also experienced frequent changes of task team leaders (TTL) and program team leaders (PTL). In total, there were three TTLs and four PTLs during the project life. Continuity in the relationships between the MOH and the Bank was affected by frequent changes of team members from both sides. A well-performing Project Coordination Unit (PCU) had a highly positive impact in project implementation and outcomes. The LPH benefited from a strong PCU, both in the MOH and the pilot counties. The PCU worked in a professional and dedicated manner in order to guarantee smooth implementation of a complex project in an unstable political environment. This had a highly positive impact on project implementation and it was acknowledged, unanimously, by Bank staff and project beneficiaries (e.g., health care providers involved in the project, employees of national health institutions, etc.) in project documents and interviews carried out during the preparation of this ICR. Activities under sub-components A2.2 Management and Development Adviser to the MOH and A2.3. Management Training were financed by the EU/PHARE project and supervised by the Division of Foreign Affairs of the MOH before the LHP became effective (see Section 1.6). Activities under sub-component A2.5 were cancelled as the Government decided to re-allocate funds from this sub-component to the financing of activities under subcomponent A1. A Quality Assessment Group (QAG) assessment carried out in October 2002 rated the quality of supervision as marginal (overall rating 3). 2 The assessment stated that the project had an overly ambitious policy and institutional reform agenda in a local context characterized by continuous changes of sectoral authorities and insufficient buy-in of reforms by the national government. As a result, the project got off to a very slow start with serious implementation problems in the area of support to health reform (Component A). The QAG panel recognized the commitment and steady efforts of the Bank team to supervise a project with design problems from the outset causing slow and difficult implementation and commented that the management could have made stronger efforts to find solutions and provide strategic guidance to the team. The QAG panel observed that while the diagnosis of the problems was satisfactory, it was not translated into agreement with the Government on revising and possibly restructuring the scope and content of the project. The assessment concluded that the task team should revisit the MTR findings and move from problem diagnosis to discussion and agreement with national authorities on concrete remedial measures, including project restructuring. The panel also advocated the 2 The assessment rating for QAG is: 1=Highly Satisfactory, 2=Satisfactory, 3=Marginal, 4=Unsatisfactory, NA=Not Applicable. The ratings available in the ICR Portal (Section C in the Datasheet) are not compatible with QAG's ratings. In particular, they do not have an option for a marginal rating. Therefore, the rating for quality of supervision in Section C.3 of the Datasheet is different from QAG's rating shown in the main text. 8

24 active involvement of the country unit that could help raise project related issues to the appropriate senior levels of Government as part of a broader country portfolio review. 9

25 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The M&E design identified an ambitious set of indicators to monitor progress towards the PDO and component outcomes. As discussed in section 1.2, the project had approximately 30 indicators for measuring progress against CAS related goals, the PDO and project components. In the case of Component B, the Results Framework Analysis stated that individual targets for each project apskritis were to be defined in Project Implementation Agreements (PIAs) and it made reference to examples of indicators that could be included in these agreements (e.g., reductions in hospital beds, increases in population coverage by certified GPs, etc.). The PAD also identified the collection methods for these indicators which included routine project monitoring by the PCU and the Bank team, reports of sectoral authorities such as the MOH, the SPF and regional authorities, and population surveys. The latter were expected to provide data on population satisfaction with PHC health services before and after implementation of project activities in the pilot counties using two types of population groups; individuals who visited PHC facilities that participated in the project (project group) and individuals who visited PHC facilities that did not participate in the project (control group). The implementation of M&E arrangements was not done in a systematic way during project life. During project implementation, data on key performance indicators were collected in a sporadic way and not for all indicators. Furthermore, there was an absence of documentation of the M&E process in Project Status Reports (PSR) and Implementation Status and Results (ISR) reports. In interviews carried out during the preparation of this ICR, Bank team members and PCU staff mentioned that efforts were made to gather an additional/alternative set of national and regional data with the assistance of a Bank consultant (including data on number of hospital admissions, number of inpatient days, number of hospital beds, utilization of ambulatory services and utilization of ambulance and emergency services). Unfortunately, these efforts were not completed and the above mentioned data were not collected. As a result, when the project closed there were no baseline data or other type of data against which the project could be evaluated. The only exception was the baseline and evaluation surveys on patient satisfaction that were carried out in 2001 and 2005, respectively. During ICR preparation, data on key performance indicators were collected. In November 2006, the ICR author requested the collection of relevant project data ex post. An agreement was reached between the MOH (PCU) and the SPF that data in their disposal would be provided to the ICR author for the years 2000 (baseline), 2002 (MTR) and 2006 (actual). At the same time, the LHIC completed the data put together by the M&E Bank consultant for the period A complete set of data was provided to the ICR author by March The fact that the Lithuanian authorities were able to provide detailed data ex post is evidence of their M&E institutional capacity. However, it is not clear why this effort was not made earlier in the project and if it was made, why it was not documented accordingly. One possible reason could be that the large number of key performance indicators had an adverse effect on the M&E process. The PCU members who were primarily responsible for M&E stated that they did provide data to the Bank mission sporadically. From the Bank side, the need for data collection for M&E purposes was raised by the Bank team in aide-memoires as well as in management s comments on the PSRs and ISRs, and the QAG assessment. 2.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as applicable) 10

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