A WORLD BANK COUNTRY STUDY 1 %378 Aoto&t I9 8 West Bank and Gaza Medium-Term Development Strategy for the Health Sector A WORLD BANK COUNTRY STUDY West Bank and Gaza Medium-Term Development Strategy for the Health Sector The World Bank Washington, D. C. Copyright i) 1998 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing August 1998 World Bank Country Studies are among the many reports originally prepared for internal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the governments. Some of the reports are published in this series with the least possible delay for the use of governments and the academic, business and financial, and develop- ment communities. The typescript of this paper therefore has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to mem- bers of its Board of Executive Directors or the countries they represent. The World Bank does not guaran- tee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this vol- ume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Office of the Publisher at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to copy portions for classroom use is granted through the Copyright Clearance Center, Inc., Suite 910,222 Rosewood Drive, Danvers, Massachusetts 01923, U.S.A. ISSN: 0253-2123 Library of Congress Cataloging-in-Publication Data West Bank and Gaza: medium-tern development strategy for the health sector. p. cm. - (A World Bank country study) Includes bibliographical references (p.). ISBN 0-8213-4230-4 1. Medical policy-West Bank. 2. Medical policy-Gaza Strip. 3. Medical care-West Bank. 4. Medical care-Gaza Strip. 5. Medical economics-West Bank. 6. Medical economics-Gaza Strip. I. World Bank. II. Series. RA395.W47W47 1998 362.1'095695'3-dc2l 98-12237 CIP CONTENTS FOREWORD ..................................................v ABSTRACT ................................................. . vi CURRENCY EQUIVALENTS ................................................. vii EXECUTIVE SUM[MARY ................................................. viii 1. BACKGROUND .................................................I IN'TRODUCTION .............................................................................I ECONOMIC AND POLITICAL BACKGROUND ...........................................................I DEMOGRAPHIC AND HEALTH STATUS ...........................................................4 2. HEALTH SERVICE DELIVERY SYSTEM .................................................5 INFRASTRUCTURE ..........................................................5 HUMAN RESOURCES ...........................................................6 PHARMACEUJTICALS ...........................................................7 3. HEALTH FINANCING SYSTEM ..................................................9 MAJOR CHANGES IN HEALTH FINANCING ...........................................................9 ROLE OF PA3LESTINIAN AUTHORITY IN HEALTH FINANCING ............................... ................ I 0 SOURCES OF FINANCING ...........................................................11 MANAGEMENT OF FINANCING .......................................................... 11 USES OF FINANCING .......................................................... 11 4. ACCESS AND EQUITY OF HEALTH SERVICES ................................................. 12 5. DEVELOPING A NEW STRATEGY FOR THE SECTOR . ............................... 14 SHORT TO MEDIUM TERM .......................................................... 14 Organization and Management .......................................................... 14 Provision: Financing .......................................................... 14 Provision: Infrastructure and Service Delivery ...................................................... 16 Provision: Human Resources .......................................................... 18 Provision of Pharmaceuticals ................. ......................................... 19 LONGER TERM: ACHIEVING UNIVERSAL COVERAGE ................................................... 20 Universal Coverage ........................ 20 Hoslpitals ............................ 2 1 6. PUBLIC PRIORITIES AND CONCLUSION .................................... 22 - iv - APPENDICES Appendix 1: Flow of Funds ................................................ 24 Appendix 2: Ministry of Health Priorities and Recurrent Cost Implications .............................. 25 Appendix 3: Structure of Health System ................................................ 33 Appendix 4: Savings of Pharmaceutical Reforms ................................................ 34 Appendix 5: Different Models of Health Financing and Management Systems ........................ 35 Appendix 6: Estimated Levels of Subsidies ................................................ 36 Appendix 7: Follow Up Studies on Health Sector in the West Bank and Gaza .......................... 37 Appendix 8: Organizational Structure of Ministry of Health ................................................ 45 Appendix 9: Macroeconomic Projections ................................................ 46 Appendix 10: Working Paper on Financing and Organization of Health Services .51 Appendix 11: Reproductive Health .112 Appendix 12: The Pharmaceutical Sector .125 Appendix 13: Development of a Legislative Framework for Health Insurance .145 Appendix 14: Updated Selected Population and Financial Information .154 This report is based on the findings of a mission which visited West Bank and Gaza in May 1997. This report is the work of the MOH, World Bank and WHO. The MOH team was led by H.E. Dr. Riyad Zanoun (Minister of Health and Head of the Policy Planning Committee) and Dr. Munzer Sharif (Deputy Minister). The World Bank team included: Egbe Osifo (Task Manager), Atsuko Aoyama (Health Specialist), Jan Bultman (Health Insurance Specialist), Ernst Lauridsen (Pharmaceutical Specialist), Akiko Maeda (Health Financing Specialist), Isabelle Schnadig (Economist), Philippe Schpereel (Hospital Management Specialist) and Shehla Zaidi (Health Specialist). Ali Khadr (Deputy Resident Representative) provided macroeconomic advice. Nigel Roberts (HQ Manager) provided NGO advice. The WHO team consisted of Dr. Paolo Piva (Resident Coordinator), Mr. Joseph Hazbun (Senior Adviser, Emergency Humanitarian Assistance Division) and Dr. Othman Karameh (Medical Officer). The study team would like to acknowledge UNRWA, Palestinian Bureau of Statistics and other agencies and individuals for the information and insight they provided during the preparation of this report. The peer reviewers were Messrs. Willy De Geydnt and Jack Langenbunner. The report was formatted by Vivian Nwachukwu and Karine Pezzani, MNSHD. The Sector Director is Mr. Jacques Baudouy and the Country Director is Mr. Joseph Saba. Zoreworl Wlwen i tado a Iwart attach while readiny tle concltding remarlh flop tid dt4ay, J theo.ykt it Ltadjut leen tle excitement mixed wit!t tlhe datid/action tro"lyt atoat ty the Lard wort of a/llpartie. and tle outcome olf tkjii very important event. nk7ow, afleir mj recovery and cominy lact to continue our Lea/Il developmentalmarch, tle /ir4t thiny J tlheykt to do wad write thid foreword to Iyhlaykt tLe uniqtue iituation oftL14 waort which prejenti a modelof hlow tlhe W/et /Sanh andl faza, repredented ty tlhe Minidtry ofleailL, ii wort iny hand in Land witlA World iAea/th OrYanization and tlhe Worll L?an.. 9 fee/do proud ofalt/tat had leen done ly the ,nternationaland o4ioca/expertj wlw met Ioyetlter to exchange idead and choome the Ledt availatle alternative to achieve Lea&t4 for people. L?ef ore the finalverjion wad completed, thi. report had teen tact/nd with great concern ly the Miniitry olfJ ealth ,to the extent that immediate dtep for lhealtL reform were put into action. he Wl/iniitr. f oJjealth ij folowing tlhe report h advice regarding maximizing utilization oftlhe availae tedi in government lwjpitali and jda-contractiny with non yovernmentaloryanizationd and private health faci!4tiei. /he /arye fiy9ue olexpenditure, for overdead referraQd had teen reduced ty 35 % ducin. f 99 7. /e dituation in Paledline i4dynamic witl continuoud chang9ed that are di/iicalt to predict. fh lait Patedtin!an population cendud dhe wed that we have to mate planning a continuoai dtynamic procedd. /e totalpopulation exceedd oar previoud expectationd anl id now 3. 1 milion inhatitantb. J4 econd exampte of the frecjuent chan94ed id the dlcference tetween our expectationw o/ UiS$2 7 mi/lion in health inJarance premiamd andl the US$50 mi/ion achieved in extremeQy dulicult circumJtanced. 9Ke percentage ofinduced amiiiei reached 48%. j4ede dynamic changed have neceJJitated the attachment ofrelevant apdated data. Jinal4, we have to extend our deep t4antd to the great determination, commitment and dedication jhowed It each anl every participant in thid dertoud tat reaiidtic and wellcoordinated ef/ort. /jtad Zanoun ?/iniiter oflJea< -vi - ABSTRACT West Bank and Gaza's health system is at an evolutionary crossroads. Its improvement will depend largely on the Ministry of Health's ability to mobilize political support among various stakeholders, including policymakers, consumers, care providers, the legislative council and donors. The Ministry also faces the challenge of developing a coherent health strategy to cover a divided geographical area in a complex political and economic situation. The issues this challenge presents are unique and difficult. This report - a joint product of the Palestinian Authority, the World Bank and the World Health Organization - assesses the performance and prospects of the health sector in West Bank-Gaza, providing a focal point for an ongoing development dialogue. Its analysis of sector delivery, financing and governance suggests the following short and medium term actions: (a) ensure financial sustainability by reevaluating the public investment plan in light of revised macroeconomic projections; (b) improve efficiency through sector wide initiatives; (c) improve the quality of services provided by improving delivery processes; and (d) clarify the roles and responsibilities of various sector agencies, with a focus on strengthening the Ministry's role in regulatory and policy functions and improving its insurance operations, as well as those at the Government Health Insurance organization. - vii - CURRENCY EQUIVALENTS Currency Unit - New Israeli Shekel (NIS) Currency Unit = Jordanian Dinar (JD) EXCHANGE RATE AS OF JUNE 1997 NIS 1.00 = US$0.29 US$1.00 =NIS 3.52 JD 1.00 = US$1.49 US$1.00 =JD 0.71 WEST BANK AND GAZA FISCAL YEAR January I - December 31 LIST OF ACRONYMS BSN Baccalaureate Degree of Nursing GHI Government Health Insurance GMP Good Manufacturing Practices GNP Gross National Product GDP Gross Domestic Product IEC Information, Education and Communication IMR Infant Mortality Rate JMA Jordanian Medical Association MENA Middle East and North Africa MOH Ministry of Health MRIs Magnetic Resonance Imagers NGOs Nongovernmental Organizations NIS New Israeli Shekel PA Palestinian Authority PHC Primary Health Care PRCS Palestine Red Crescent Society QIP Quality Improvement Program TBA Traditional Birth Attendant UNRWA United Nations Relief and Work Agency for Palestine Refugees in the Near East WBG West Bank and Gaza WHO World Health Organization -viii - EXECUTIVE SUMMARY the National Health Plan was prepared with an assumption that economic growth would be relatively stable and with a goal of rapid INTRODUCTION health system expansion. In 1997, when many of the planned investments are about to This report, a joint effort of the Ministry of become operational, resources available to Health (MOH), World Bank and WHO, operate them are declining. By 2002, provides the MOH with short to medium estimates place the annual cost associated term policy recommendations designed to with operating all planned new facilities at ensure the financial sustainability of the over 25 percent of the total MOH budget. health sector while improving access to Financial sustainability of all sector activities health care as well as its efficiency and - not just of investments - is further quality. threatened by rising drug expenditure. Pharmaceuticals are the fastest growing The West Bank and Gaza (WBG) is component of MOH's recurrent budget, comprised of two geographically separated increasing from 22 percent of total health areas with a combined population currently expenditure in 1995 to a projected 32 percent at 2.3 million and growing at 3.7 percent per of expenditure in 1997. annum. The WBG, a lower middle income economy, has a GNP per capita of While investment planning assumptions US$1,710.1 Compared to other lower middle affect the prospects for sustainability, the income countries, the Palestinian population current organization of the system presents is well educated (84 percent literacy) and other problems. Overall sectoral efficiency their overall health status is relatively good could be improved, as shown in the varying (e.g., IMR is 28 per 1,000 live births). utilization rates, with for instance 83 percent of capacity at use in MOH hospitals, PROBLEMS compared to 64 percent in NGO hospitals. The impressive health and education status At the same time, the perception of both now enjoyed in WBG may not be providers and patients is that the quality of sustainable. Severe economic disruptions health services could be enhanced. While related to the extremely complex political most of the population has reasonable situation have caused the macroeconomic physical access to health facilities, effective environment to deteriorate: per capita financial access is constrained for the one incomes fell by 7 percent in 1996 alone, half of all households which is not covered unemployment is estimated at least at 30 by the health insurance program - percent and about one fifth of the population Government Health Insurance (GHI) -. These is estimated to live in poverty. The households must bear, in out of pocket deteriorating economic environment can payments at the time of illness, the full cost influence health status through rising poverty of health care. Many of these households (the poor are less healthy) and by may have chosen to opt out of the GHI. constraining expenditures on health and Anecdotal evidence however suggests that education. others such as the non-refugee poor have not done so voluntarily and yet face great The financial sustainability of currently financial difficulties in accessing health care. planned investments provides a good This raises concerns about the effectiveness illustration of this latter problem. In 1994, of the government's social welfare program, which is supposed to fully cover the indigent World Bank estimates, using the Atlas methodology. population's GHI premiums. UNRWA, However, the purchasing power of one dollar within the which is currently facing major financial WBG is likely to be influenced by its close links to the much richer Israeli economy and rising inflation (8 percent problems, is responsible for the provision of in 1996). basic care to registered refugees. - ix - REcOMMENDATIONS Measures designed to pursue these strategies will also require staged development of a The challenges facing the MOH in its provider payment system conducive to cost attempt to develop a coherent health strategy containment and the capacity to contract to cover a divided geographical area in a between MOHIGHI and various complex political siltuation are unique and NGO/private providers and to monitor difficult. The recent economic downturn provider performance under these contracts. exacerbates the dlifficulties. Inaction Improving sectoral management information however will result only in further systems will thus be crucial to efficiency deterioration of the system and the health improvement efforts. status of the population. This report offers a number of suggestions for short and medium The gains to be had from improving sector termn actions to improve the situation. efficiency are large. If, for example, the average occupancy rate of the hospital beds Ensure that the system is financially reaches 80 percent, the cost of the proposed sustainable public investment plan could be reduced by at least US$63 million. This would in turn Reevaluation of the affordability and reduce the recurrent costs needed to operate sustainability of the public investment the new facilities investments by about strategy is urgently needed. At the same US$32 million each year. time, immediate action is also needed to contain recurrent ic6sts in critical areas Improve the quality of services provided including drug expenditure and overseas treatment. Pharmaceutical reforms could Improving the processes involved in delivery reduce drug expenditures by 30 to 40 percent should b e the first focus of quality of their present level, improvement measures. Protocols and standards for medical procedures need to be Improve efficiency through sector wide established and integrated into various initiatives training programs. Similar protocols and standards should be gradually introduced in Employing strategies to increase the MOH and UNRWA facilities. Uniform efficiency and effectiveness of resource use licensing for all health professionals should will require an improved understanding of be required and could be used to spur f-inancial flows, utilization patterns and demand for continuing education among demand for services in all sub-sectors. This professionals. This would also contribute to information can be used to design measures harmonizing the level of professional under the following, three broad strategies, competence of health care providers. A each of which wouLld result in significant sustainable human resource strategy for the efficiency gains. sector should be developed. Improved • Impove he dHver sysem'stechical planning and training of the health work- * Imrovethedeliery ystm's echncal force however will not by itself improve efficiency by strengthening facility level patient care; it must also be accompanied by management capacity. work conditions (including salaries and non- • Stengten te rle o priary are financial remuneration) which motivate giStrengthe theproleheo peeriar ysaem professionals in the sector to provide quality giver and mprov thereferal sytem.services. • Increase the complementarity of government, pri'vate and NGO ser-vices. - x The role and responsibilities of various discussion by Palestinian constituencies and agencies (including MOH) within the the donor community. It has to be sector should be better defined, and recognized that the Palestinian health sector should form part of a unified regulatory is not static, and the MOH has already framework. started implementing several of the recommendations included in this report The MOH needs to strengthen its role in during the course of its preparation. regulatory and policy functions, and to Whatever answers are ultimately adopted by improve the insurance function of WBG authorities, the strategic issues MOH/GHI. Immediate steps could be taken identified in this report will have a to strengthen MOH's revenue collection significant impact on the Palestinian health capacity. Mobilizing employers contribution system in the years to come. through group contracts would be a reasonable first step in this regard. In the longer term, the government needs to decide on its chosen option towards achieving universal financial access for health care. CONCLUSION WBG is at a crossroads in the evolution of its health system. The prospects for improving the health system depend largely on the ability of the MOH to mobilize sufficient political support among various stakeholders (including key policy-makers, consumers, providers, the legislative council and donor agencies) to implement the changes proposed in this report. The process of developing the new National Health Plan will provide an opportunity to foster a policy dialogue and to build consensus. This will help ensure that the necessary political support materializes. Donors can help in two main ways. They can support capacity building in management, policy formulation and service delivery that would result in the development of sustainable local institutions, and they can provide financial assistance to those investments which are financially sustainable within the limits of WBG resources in the medium to long term. Together, these measures will engender an effective and efficient health delivery system. This report attempts to provide a focal point for ongoing dialogue in the sector. The World Bank and WHO stand ready to assist in facilitating a process of review and 1. BACKGROUND health plan being developed by the PA. The study draws on data from available sources INTRODUCTION and reports from the MOH and other PA agencies including the Palestinian Central The Palestinian Authority (PA) is facing Bureau of Statistics, United Nations extremely difficult economic and political agencies, WHO, the World Bank and other challenges as it tries to develop policies to relevant organizations. Other sources of lead the transformation of the Palestinian information included direct interviews with economy into a globally-oriented, market- local responsible personnel and clients and based economy. Hurnan capital development field visits. - which includes improving health status - is a key factor in ensuring sustainable ECONOMIC AND POLITICAL BACKGROUND economic development. The PA is taking steps to ensure that previous gains in health The West Bank and Gaza (WBG) comprises status are not compromised; and that the two geographically separated areas with a health sector develops the capacity to play an combined area of 6,000 square kilometers. important role in developing the main The 1996 estimated population was about Palestinian resource - its people. 2.3 million, of which about 65 percent reside in the West Bank. Registered refugees Consequently, this joint effort by the MOH, represent about a quarter of the West Bank the World Bank and WHO will assess the population and two thirds of Gaza Strip sector and suggest a medium term strategy population. The population is young (47 that could help the PA achieve its objectives. percent is under 15 years) and growing It will assess the health sector in terms of: rapidly at 3.7 percent per year. (a) efficiency and q[uality of services; (b) sustainability of present financial The West Bank and Gaza Strip differ in arrangements; and (c) equity and terms of natural landscape, population accessibility to services. It provides the distribution and legal heritage. The West MOH with policy recommendations to Bank population is dispersed among 422 ensure financial sustainability while towns, villages and camps at a population improving efficiency, quality and access to density of 267 persons per square kilometer health care. The study concludes with compared with Gaza Strip where the suggested public financing priorities for the population is concentrated into 16 towns, short to medium terrn and identifies possible villages and camps with a population density areas in which the World Bank, WHO, and of 2,596 persons per square kilometer. In other interested donors might be able to Gaza Strip, about half of the refugee assist the PA in the future. This report is population lives in camps compared to about complemented by technical background a quarter in the West Bank. Historically papers in health financing, reproductive Gaza Strip was administered by Egypt while health, pharmaceuticals and health insurance the West Bank was administered by Jordan, which are available in a separate volume. and this difference is still reflected in their respective legal regimes. The WBG had a The report complements recent World Bank GNP per capita of US$1,710 in 1996,2 economic and sector work, primarily the which categorizes it as a lower-middle multisectoral economic report "The West Bank and Gaza: Economic Report" and the 2 World Bank estimates, using the Atlas methodology. work financed under the health component of However the purchasing power of one dollar within the the Technical Assistance Trust Fund WBG is likely to be influenced by its close links to the much richer Israeli economy and rising inflation (8 percent administered by the World Bank. It also in 1996). complements on-going work on the five-year income economy. GNP per capita in Gaza Although recent data on output and incomes Strip is half of that of the West Bank. in the WBG remain sparse and incomplete, Between 1993 and 1996, there has been a tentative estimates suggested that real GNP deterioration in economic conditions. These per capita (which, in addition to domestic may be explained, to a large extent, by the output takes account of income earned tumultuous socio-political and economic abroad) fell sharply in the WBG by about 7 environment which has proved to be far less percent in 1996 alone. The unemployment positive and less predictable than initially rate4 was estimated to be about 28 percent anticipated. For example: in 19965 compared to 11 percent in 1993. The dire macroeconomic situation is Figure 1: Impact of the Closures on Monthly Health Insurance Premium Revenues Health Insurance M onthly Prem ium Revenues, 1996 5,000 4 4,500 , _ 4,000 0_______ ^i2, 5 0 0 :~vu+W e st B an k az2,0 00 -0#-_Gaza Strip a 1,500 3 1,500 Closures o 5 oo 0 > <___3 E O0 (seriescfi racges) 0 1 2 3 4 5 6 7 S 9 10 I 1 12 M onth Source: Health Insurance Department, Ministry of Health 1997. - The massive contraction of employment reflected in individual incomes. About half a opportunities in Israel from 116,000 million people live in poverty.6 Poverty workers in 1992 to 28,000 workers in levels are higher in Gaza Strip, where about 1996 was totally unforeseen. 40 percent of the population is estimated to be below the poverty line, compared to the * It is estimated that between 1993 and West Bank where 10 percent is below the 1996, border closures resulted in the loss poverty line. of US$2.8 billion dollars which is equivalent to about 70 percent of annual Consequently, the present bleak economic GNP.Cneunl,tepeetbekeool GNP. and political outlook is very different from * The flow of external assistance to WBG the optimistic expectations at the signing of has been much slower than initially the Oslo Peace Accord. The severe hasxbeten mbuch USlo .r tano disruptions to the economy have direct expleced. About4 US$.3 billionkof (th implications for the financial sustainability plede US$3.4ti billion aid4packet (to and the efficiency of the Palestinian health cover activities between 1994-1998) had been disbursed by the end of 1996. 3 system. Health sector investment plans 4 Unemployment rate includes individuals who are totally or temporarily unemployed. 3 Forty four percent of health aid had been disbursed by the S World Bank staff estimates. end of 1996. 6 Poverty line is defined at $650 per capita per year. Table 1: Selected Health and Social Indicators for the WBG and Selected Middle Eastern Countries (most recent estimates from 1993 to 1996) _ West Bank Jordan Egypt Lebanon Tunisia Turkey Lower Israel and Gaza l Middle l [ _ _ _ _ [ j _ _ _ * Income ________________ l_________ _ lEconomies GNP per Capita in US$ 1,710 1,510 790 2,660 1,820 2,780 1,090 15,920 Population (million) _ 2.3 4.2 57.8 4.0 9.0 61.1 - 5.5 Infant Mortality Rate (per 28 34 57 32 40 49 60 8 1.000 live births) l Maternal Mortality Ratio 70 45 170 300 139 183 - 7 (per 100.000 live births) Total Fertility Rate 6.1 4.6 3.5 2.9 3.0 2.7 3.1 2.4 Adult Literacy Rate 84 87 51 92 67 82 - 95 (percent) Per Capita Health 122 118 38 124 105 99 - 1,114 Expenditure in US$ I_ Sources: Palestinian Central Bureau of Statistics 1996; Ministry of Health 1996; Health Nutrition and Population Sector Strategy, World Development Report, Hashemite Kingdom of Jordan Health Sector Study, the World Bank, 1997; The State of the World's Children, UNICEF, 1998. prepared in 1994 were designed to achieve a responsibility for the rest of the West Bank rapid expansion of the health system' under was transferred in December 1994. In spite the assumption of a relatively stable of the enormity of problems facing it, the economic growth. Many of these newly formed Palestinian MOH quickly investments in the new health facilities are succeeded in organizing an effective about to come on stream at a time when bureaucracy to administer and manage resources to operate these new facilities are facilities transferred to it by the Israeli Civil declining. Figure 1 illustrates the impact of Administration. At the same time the MOH closures on the flow of revenues from health began to assert its authority in the sector and insurance premiums. The border closures define a sustainable long term strategy for also result in unexpected disruptions to the sector. The MOH needs to strengthen its movement and cornmunications between strategic role and the present health system Gaza Strip, the WVest Bank and East may be heading towards financial Jerusalem thus placing challenges not just on difficulties'0. There is a risk that impressive financing but on the flow of patients, staff, gains already achieved as shown in major drugs, and supplies between these areas.9 health indicators (Table 1) may not be Responsibility for public health services in sustainable.'1 The development of a long Gaza and Jericho was taken over by the term health strategy is also hindered by both Palestinian MOH in May 1994, while 7 To compensate for previous presumed underinvestment 1B prior to the Oslo Peace Accord. Because of the recurrent implications of infrastructure prNatioral to lthe Peace Ac9ord. investment and deteriorating macroeconomic environment. sNational Health Plan, 1994. 9 The.last intemalborder closure in September 1997 Economic recession in Latin America is estimated to have The last Internal border closure in September 1997 been responsible for 12,000 additional deaths in 1983, or 2 directly resulted in the documented deaths of at least 2 individuals and 4 births at Israeli checkpoints in the West percent of all infant deaths in the region that year. Bank (MOH). Essential drugs and supplies in this period were distributed by intemational UN staff (MOH and UNRWA). - 4 - short term12 and longer term coverage) have been instrumental in political uncertainty.13 controlling vaccine-preventable childhood diseases. Preventable accidents such as road DEMOGRAPHIC AND HEATH STATUS traffic accidents and burns are important causes of childhood mortality and account Compared to other economies at similar for over a quarter of deaths in children level of economic development, the between the ages of one and five. Palestinian population is fairly well educated and overall health status is relatively good Most of the population growth is due to (Table 1). There are significant regional natural population growth and the WBG has differences in socio-economic status and one of the highest fertility rates in the region health status between the West Bank and (Table 1). Maternal mortality ratio is Gaza Strip (Table 2). There are also large estimated at about 70 per 100,000 live births, differences between the WBG and which is significantly lower than several neighboring Israel. other lower middle income economies in MENA. While certain reproductive health services are well utilized (e.g. 93 percent of Table 2: Regional Variation: Selected Health and deliveries are attended by trained personnel), Socio-economic Indicators (1996) other services such as postnatal care and family planning are much less utilized (only West Gaza 20 percent of women have postnatal ______ _____ _____ _____ _____ Bank Strip c e k p ) GNP per Capita (US$) 2.359 1.1S 9 checkups). Infant Mortality Rate 25 32 (per 1,000 live births) Total Fertility Rate 6.9 7.4 Annual Population Growth (percent) 3.5 4.2 Adult Literacy Rate (percent) 90 76 Annual Household Health 66 39 Expenditure (US$ per capita) _II I Source: Palestinian Bureau of Statistics 1996; World Bank staff estimates. Tlhe epidemiological transition is underway and the leading causes of adult death are cardiovascular diseases (about 27 percent of adult deaths) and cancers (about 10 percent of adult deaths). On the other hand, diseases of poverty are still prevalent and respiratory infections and diarrheal diseases remain important causes of child mortality and morbidity. The latter conditions are due, to a large extent, to widespread poor sanitary (only 35 percent of households are connected to sewage networks) and environmental conditions. However, successful immunization programs (94 percent 12 Political and economic uncertainty after each violent incident results in a refocusing on short term issues such as provision of emergency services. 13 The geographical separation between the West Bank and Gaza Strip remains a significant challenges to the development of an integrated health system. Table 3: Hospital Capacity and Utilization Pattern, 1996 Percent of Total Size of Hospital/ Bed Occupancy Average Length Acute Bed Clinic (beds) Rate of Stay Capacity (percent) (days) (percent) MOH Hospitals West Bank 35.0 50 -142 84 2.8 Gaza Strip 36.1 31 - 402 81 3.2 NGO liospitals 22.5 10 - 88/ a 64/a 3. /a NGO Maternity Clinics 5.5 10 - 12 24 1.2 UNRWA Qalqilya Flospital 1.8 38 114 2.8 a. West Bank only Source: Ministry of Health 1997, WHO 1996. See Appendix 10 for further details. 2. HEALTH SERVICE DELIVERY the various health subsystems to reduce SYSTEM duplication and wastage of resources. INFRASTRUCTURE The MOH provides health services through its 14 hospitals and 209 clinics. NGOs and There are four major health service providers the private sector run 10 hospitals and 208 in the WBG: the MOH, United Nations clinics. UNRWA runs one hospital and 41 Relief and Work Agency (UNRWA), non- clinics. The average MOH hospital bed governmental organizations (NGOs), and occupancy rate in 1996 was about 83 private for-profit providers. The MOH percent (which is about the accepted range of provides both primary and secondary health optimal utilization) compared to 64 percent services and purchases tertiary services from in NGO hospitals (Table 3) 17. Although private providers domestically and abroad. further analysis will be required to evaluate IJNRWA provides free primary health the hospital utilization patterns in detail, services to all registered refugees (regardless available government statistics indicate that of income) and contracts other providers to inpatient admission rates in 1996 were provide secondary and tertiary services. around 9 percent (compared to 3 percent in NGOs provide primary, secondary and Egypt or 8 percent in Tunisia). This is a 14 tertiary health care . Private for profit relatively high admission rate for a young providers range in size; from general population with less than 3 percent above 65 physicians to advanced hospitals with a wide years of age. Given the limited bed supply range of diagnostic and curative services. (currently around 1.1 beds per 1,000 There appears to be increasing involvement population), this large number of inpatient of the private sector in the delivery of admissions appears to be accommodated tertiary care and diagnostic services15. On through a high turnover rate and a relatively the other hand, the MOH is also expanding short average length of stay of around 3 18 its services at both primary and referral days . This would suggest that some levels16. Thus there is a need to coordinate admissions may be unnecessary or that activities (including defining roles) among patients are being discharged too soon. The uneven utilization rates among hospitals 4 The distinction between private and NGO providers is ill- in different sub-sectors could indicate defined. It appears that several NGOs may be evolving significant potential for improved efficiency into for-profit organizations. 5 For example, a private company is planning to open a new 120 bed hospital in Ramallah within the next two years. 16 The MOH priorities (presented in June 1997) include plans Excluding psychiatric hospitals. for 100 bed expansion in Ramallah for tertiary services IS Actually 1.3 beds per 1,000 population if overseas referrals including neurosurgery and cardiac surgery. are included. -6 - in the system.19 Many MOH hospitals are The MOH recently assigned the Palestine operating at or above capacity, and Red Crescent Society (PRCS) the overcrowding appears to be a problem at responsibility to establish comprehensive some of these hospitals. Meanwhile, most ambulance services throughout the WBG. NGO hospitals are operating below capacity, Currently PRCS has 31 ambulances at 8 particularly small NGO maternity clinics branches and 4 sub-centers in the West Bank which have an occupancy rate of 24 percent. which are connected with centralized radio- Part of the low utilization rate at NGO communication system. PRCS is preparing hospitals may be related to financing to start activities in Gaza Strip soon. difficulties as patients admitted to NGO However, the challenges in organizing an hospitals are not covered by the government effective and efficient ambulance service are health insurance program (GHI). Expansion formidable. Such challenges include the of insurance benefits to include the NGO underdeveloped phone and communication hospitals could help to increase their system and complex logistic issues (as the utilization rates, and hence promote a more majority of major intercity roads are under efficient use of available capacity.20 Israeli control). Forty percent of outpatient visits occur in Box 1: Medical School MOH facilities compared to 31 percent in The only Faculty of Medicine in the WBG was UNRWA facilities and 29 percent with established in 1994 at Al-Quds University in the private practitioners or NGO facilities. Each West Bank. The Faculty is expected to take a lJNRWA doctor sees 101 patients per day leading role to standardize medical education compared to about 51 per day seen by an which meets local needs in the WBG. The MOH doctor in Gaza Strip. This difference University is supervised by the Ministry of is partially explained by greater likelihood of Higher Education. Each annual class intake for repeated visits in UJNRWA clinics which the 7 year program consists of 40 students. usually serve a defined community and the Although about 40 percent of the students are high ratio of administrative physicians (about from Gaza Strip, some of them cannot attend due a third of PHC physicians in Gaza Strip are to logistic difficulties in moving to the West anvthird of PaCd sicisrantion) Gaza Strit ae Bank. Tuition is JD 45 per credit hour with 35 to involved in administration). The effect of 40 credit hours required annually. Funds are the number of patients seen per doctor on available for poor students. The university quality of services should be explored. opened a school of public health in September 1997. There are plans to expand the government sector by 97 additional clinics by 2002.21 Efficiency could be improved by decreasing HUMAN RESOURCES government-NGO overlap and integrating Two thirds of the 7,000 health personnel in NGO/private clinics within the planned mlilvlPCsse.22 the WBG are employed by the MOH. There are about 56 doctors per 100,000 people in the West Bank and 78 doctors per 100,000 people in Gaza Strip. These ratios are similar to the regional average.23 Currently more 9 UJtilization rates in this report is used as a reflection of than 2,000 medical doctors who graduated efficiency as it was the single consistent data measurement from over 600 different medical schools are available across providers. Further detailed analysis including length of stay by specialty and case-mix as working in the WBG. Because of the wide described in appendix should be carlied out. 20 The MOH is already contracting selected services from the NGO and private sector. 23 The average numbers of doctors per 100,000 people are: 21 MOH Priorities, June 1997. 80 in the Middle East and North African countries; 30 in the lower-middle income economies; and 250 in OECD 22 National Health Plan 1994; MOH priorities list, June 1997. countries. -7 - variation in the educationial background of birth attendants (TBAs) in public health doctors, standardization in the quality of care facilities. There is at present a shortage of is a problemn that should be addressed staff nurses in the West Bank in contrast to quickly (Box 1). The MOH has made Gaza Strip where 500 staff nurses are significant efforts in upgrading health unemployed. However, the restriction of personnel's skills through various training movement of personnel makes it difficult to programs. encourage relocation. The MOH is planning to more than double the number of nurses but The licensinig framework for physicianis is this plan should be reviewed in light of beilg unified. In the West Bank, doctors are budgetary concerns, employment patterns 25 registered (after passing a licensing and identified needs examiin1ationi) by the Jordanian Medical Association (.IMA) and then licensed by the PHARMACEUTICALS MOI-l. The JMA also plays a role in fee setting, malpractice complaints, and medical A major achievement of the MOH has been edtucation. In the absence of an active the good and regular availability of drugs medical association in Gaza Strip, the role of and vaccines. Very few economies have the JMA is being temporarily plIayed - been through a period of rapid transition and pending development of an active medical turmoil without experiencing severe drug association - by the MOH. shortages. However, widespread availability 24 has been achieved at considerable financial Many public sector doctors work in their cost and drug expenditure is the fastest own private practices after regular office growing component of MOH's recurrent hours. It is prohibited for both specialists budget (increased from 22 percent of total and general practitioners to practice privately health expenditure in 1995 to projected in the West Bank, and it is legal only for expenditure in 1997 of 32 percent). In 1996, specialists in Gaza Strip. However, because total costs of drugs and disposables were of low wages in the public sector, the MOH estimated to be about 1.9 percent of GDP. does not enforce these regulations (Table 4). Households spend about US$168 per year on The dual employment in both public and drugs, or about 50 percent of their total private sector may result in conflict of health budget. Expenditure on the top ten interests. Table 4: Human Resources in Health There are 4 different educational levels of nursing professionals: staff nurses with 4 Physician: Basic Nurse Ratio Monthly year baccalaureate degree (BSN) or 3 year Wage of diploma program; practical nurses; and _ Physicilains midwives. Training for these professionals Ministry of Health 2:1/a $625 arecaried utal: 3MOH nursing United Nations 1:1.8 $921 are carried out at the 3MO nusg Relief and Work schools, UNRWA's 2 nursing schools and 3 Agency for baccalaureate level courses at private Palestine Refugees universities. The MOH has taken steps to Private 1:1.4 $1,000 improve the quality of the nursing $1,200 professionals in the WBG by upgrading Nongovernmental 1:1.3 $900 -$1,000 training courses of practical nurses and Organizations -- A midwives, abolishing the training of nursing a. Ministry of Health 1997. aides and stopping the hiring of traditional 24 UNRWA physicians are allowed to run private practices after duty hours, farther than 10 kilometers from the particular UNRWA facility where they work. 25 National Health Plan, 1994. -8- induced demand may play a role in inducing Box 2: Private Pharmaceutical Companies drug over-consumption and the ratio of There are 8 pharmnaceutical companies in the pharmacies to population are much higher WBG, none of which are producing drugs at than small relatively densely populated Good Manufacturing Standards level. They European countries (1:4,071 in the WBG produce about 50 percent of total consumption. compared to 1:15,000 in Denmark). Plant utilization is low and cost of production is high (with the best operating at perhaps two to three times higher costs than comparable factories in other countries). Israeli restrictions on importation from abroad protects the domestic industry from price competition, but also results in higher prices in both the public and private sectors. The domestic industry produces many combination products (with two or more active ingredients) which are generally marketed for product differentiation as opposed to any additional therapeutic values. drugs are responsible for about 25 percent of total MOH annual drug expenditure. The major impediments to rational and cost- effective development of the pharmaceutical sector are the lack of a national drug policy and antiquated non-unified drug legislation. Drug prices are very high in the private sector (Box 2). MOH is reasonably successful in securing prices for most drugs which are not much higher than average international prices. However, UNRWA's prices are consistently lower. The Israeli requirement that drugs be registered in Israel is a hindrance to the import of low-cost generics into WBG. There is a trend towards limited drug lists and many NGOs and UNRWA use such lists. The MOH tenders for only about 600 different drugs under generic names and a national essential drug list is in draft form. In spite of such initiatives, there is widespread over-prescription and polypharmacy, particularly of antibiotics, injections and combination products. The absence of standard treatment protocols makes it difficult to monitor and control prescription practices. Doctors in private practice rely primarily on expensive branded products and the present drug law does not allow for generic substitution. Supplier Table 5: Government Services for Insured and Uninsured Population Population Group Type of Services Covered Personal Care for All Population * Antenatal and postnatal care (insured and uninsured) * Preventive and curative care for all children under the age of three (including immunization) * Hospital psychiatric services and community mental health programm * School health services: preventive and basic treatment during school hours in government schools * Public environmental health program Benefits for Insured Population * Primary curative care (50 percent of population) * Secondary care: hospitalization, including rehabilitation * Tertiary care, including overseas treatment or referrals to local private providers Source: Ministry of health. 1997. 3. HEALTH frINANCING significant part of health financing (over 40 SYSTEM percent in 1991, including UNRWA), (b) relatively limited The WBG devotes an unusually large share contributions from the Civil Administration, of its resources to the health sector. In 1995, derived primarily from health insurance health spending was estimated at about 9 premiums accounting for less than a fifth of percent of GDP , which is substantially total health expenditure and only covering more than most middle income countries about a fifth of the Palestinian population), (typically spend between 5 to 6 percent) and (c) direct household expenditures that and several OECD countries (7 percent in accounted for about 40 percent of the total UK, Denmark, and Japan). health expenditures. MAJOR CHANGES IN HEALTH FINANCING Since the handover, the following critical The health financing system that has evolved changes have occurred in the overall since the handover reflects both the features financing structure of the health system inherited from the Civil Administration as (Appendix I illustrates the present financing well as the aspects introduced by the newly flows in the sector): established MOH. IPrior to the handover, the notable features of the health financing * Premium levels were reduced to system included: (a) a heavy reliance on encourage the expansion of coverage external assistance28 for a (see Table 5 for services covered). This had the effect of lowering the total revenues from insurance premium 26 World Bank data from latest available year (1990 - 1995). 29 These new policies to encourage enrollment (e.g. by 27 Schieber, G. and Maeda, A., World Bank, 1997. removing a waiting period) for the voluntary component of the social insurance scheme contributes to adverse 28 Including international NGOs. selection. - 10- despite the higher participation rate.30 * Private investors groups (particularly in The shortfall has been increasingly urban areas of the West Bank) are covered by budgetary allocations from entering the market primarily in tertiary the government's general tax revenues. care and modem diagnostic technology. * Donor contributions continue to be an important source of revenues for the puThe appears to be replacing the health~~ ~ setr.u h anrcpeto purchase of overseas referral care with health sector, but the main recipient ofsevcspoidbyte mrgn aid has shifted from the NGO sector srvicesepro (mainly providing basic services) to the MOH (80 percent of donor assistance ROLE OF PALESTINIAN AUTHORITY IN directed to capital investment and HEALTH FINANCING capacity building). * Overall international contributions to In 1996, government spending accounted for the health sector have probably declined, about a third of total expenditure, direct out- in real terms, in recent years (Table A of-pocket spending accounted for about 40 10.6, Appendix 10). percent, NGOs about 7 percent and external donors (including UNRWA) about 24 * UNRWA continues to finance basic percent (Table 6). The large external health services for the refugee contributions partially explain the high level population. Its budget no longer keeps of health spending. up with the rapid refugee population growth rate (over 4 percent). Figure 2: Ministry of Health Expenditure 1993-97 Percent 100 - 80 - iOperating Expenditures 60 - gDrug and Disposable 40 lOvrseasTreatment Salaries 20 ~~~(Not Available) 20 1993 1994 1995 1996 1997 Year 30 Enroliment rates have grown fastest in categories - such as voluntary and group contracts - where it has being particularly difficult in reducing evasion of payments. SOURCES OF FINANCING within the MOH, and does not function as an independent insurance agency. It functions Government health financing is derived from primarily as a premium collection system for three sources: general taxation (about 60 the MOH, and has an extremely limited role percent), insurance premiums (25-30 in the design of benefits packages and percent) and copayments/fees (10-15 contracting of services. The MOH contracts percent). Despite recent economic services from overseas providers and a difficulties, government revenues have limited number of private providers which shown a strong growth over the period of are usually negotiated on a case-by-case 1995-97 due to the significant improvements basis through the medical referral in tax administration (see Table 7)31; and this committees of the MOH. The MOH does not reflected in a nearly 30 percent have a provider payment system that allows increase in health expenditure in 1996. performance-based remuneration of providers.32 MANAGEMENT OF FINANCING USES OF FINANCING All revenues collected by MOH are Figure 2 illustrates the recurrent expenditure transferred directly to the Ministry of pattern between 1993 and 1997. The very Finance, and are reallocated to MOH through rapid growth in drug expenditure and the the annual budgetary process. Government decline in the relative share of expenditure of providers are then financed through salaries are major sources of concern. As traditional administered line-item budgets, discussed above, rationalization of drug use and are given little scope for financial requires urgent attention. MOH salary management. The Health Insurance increases have been held down for several Department is an administrative division Table 6: National Health Expenditures in the West Bank and Gaza, 1991-97 (US$ millions, unless otherwise indicated) 1991 1995 1996 1997 (projected) Health Expenditure as Percent of GDPa 8-9 8.6 8.6 Not Available Real Per Capita lHealth Expenditure (US$) $120-30 $125 $122 $111 Total Health Expenditure'-h 224 276 -278 (100 %) -263 Government Health Insurance 42 24 22 (8 %) 27/c General Revenues - 45 67 (24 %) 61 UNRWA 13 29 23 (8 %) 30 Donors 77/d 33 44 (16%) 31 NGOs - 37 -20 t (7 %) _10e Private'f 91 108 102 (37 %) 105 a. Includes capital expenditures, except for 1991. b. Includes contributions from both international donors and NGOs. c. Private expenditure includes household expenditure on health care, MOH copayments and private capital investments, but excludes household payments for government insurance premium. d. World Bank staff estimates. e. GDP. World Bank / IMF estimates. f Based on revenues in the first half of the financial year. Sources: The World Bank, "Developing the Occupied Territories," Vol. 6, 1993; Barghouti and Lennock, 1997; and World Bank staff estimates. See Appendix 10 for details. 31 Zavadjil, M. et al, "Recent Economic Developments: Prospects and Progress in Institution Building in the WBG; IMF, 1997. 32 Individual publicly employed health providers are salaried. - 12 - years, and are fueling considerable such as UK (1.4) and Canada (1.0). In dissatisfaction among MOH staff.33 Any addition to associated high maintenance and further deterioration in wage rates could operating costs of such equipment, supplier- have serious consequences on quality of care induced demand could result in rising health and may lead to labor unrest.34 costs. Although the MOH already experiences The MOH has initiated measures that begin serious constraints in available resources, to address its cost concerns (see Appendix 10 measures needed for rationalization of for further details). For example, the MOH resources and cost containment appear to be is reducing reliance on costly overseas lagging behind. According to the latest referral (accounted for 16 percent of MOH current public investment plan, the MOH expenditure in 1996) for tertiary cases that sector plans to expand its hospital capacity cannot be treated within the WBG. In 1997 by 60 percent and its primary health care it is expected there will be zero growth in clinics by 20 percent by the year 2002.35 expenditure for such treatment due to a This could imply US$50 million in annual decreasing number of referrals to Israel recurrent costs in 2002 (at constant 1997 (average cost of per case declined by about prices). This translates to an increase in 50 percent). Cost pressures will be further budget of 11 percent per year in real terms in exacerbated by the expected rise in demand the next five years just to cover the for health services due to expansion of health additional recurrent cost of the expanded insurance coverage, rapid population growth services (see Appendix 2, Table A 2.1 for rate and the effects of epidemiological details). This does not take into account the transition planned 10 percent increase in bed capacity in the private for profit sector. To cover the 4. ACCESS AND EQUITY OF recurrent cost of the additional investment HEALTH SERVICES without increasing general revenue allocation, the GHI enrollment rate would Most of the Palestinian population have need to increase by about 15 percent per year reasonable physical access to health care. over the next five years at twice the present According to a recent survey, more than 90 household contribution rate of US$130 per percent of the households in the West Bank household (at constant 1997 price). and all the households in Gaza Strip have access to public and private clinics within 5 The proximity of Israel, with a per capita kilometers. Forty five percent of households income almost ten times that of the WBG, in the West Bank and 74 percent of has raised expectations on the part of the households in Gaza Strip have access to Palestinian population for a level of medical hospitals within 5 kilometers care and technology which might be difficult to sustain at their present income levels.36 For example, the number of Magnetic 36 The Israeli health expenditure was around 7 percent of Resonance Imagers (MRIs) per million GDP in fiscal year 1990/91 (Chemichovsky and Chinitz, population in the West Bank (1.6) already 1995). If we project the same percentage of health to exceeds that of several richer economies GDP rate to 1995, it would amount to US$1,114 per capita expenditure on health, which is around nine times the per capita health expenditure in the WBG. Israel also enacted 33 the National Health Insurance bill only in 1994, and is in A survey of MOH hospital staff indicated that a salary the process of undergoing a major health sector reformn to raise was one of the top two suggested administrative improve efficiency and contain costs. items that could result in improved quality. 37 items that could result in improved quality. ~' Likely to raise the per capita utilization of health services The legislative council recently approved a salary increase (moral hazard). of about US$60 per month for doctors. ~3 Palestinian Household Survey, Palestinian Central Bureau 35 Ministry of Health Priorities, June 1997. of Statistics 1996. - 13 - Over a third of households are covered by Table 8: Percentage of household expenditure the GHI. For insured households, the level spent on medical care and estimated level of of government subsidy in Gaza Strip (which hospitalization subsidy per insured household has lower income levels, higher poverty levels and lower private per capita spending) Percent Hospitalization is higher (Table 8). On the other hand, half Household Subsidy per of households have to bear the full cost of Expenditure Insured health care. Many of these households could (percent) Household probably afford to pay premiums, but are West Bank and 3.5 138 probably healthier and prefer to save on Gaza premium payments until they are ill. The West Bank 3.7 113 relative ease with which one could join the Gaza Strip 2.8 179 GHI scheme probably encourages this Level of No Infornation behavior. Anecdotal evidence39 suggests that Living: certain groups, e.g. non-refugee poor are Worse-off 3.1 No Infornation facing greater financial difficulties in Middle 3.5 No Inforration accessing health care.40 However, on the Well-off 3.8 No Information Source: Palestinian Bureau of Statistics, World Bank staff whole poor households spend less as a estimates. See Appendix 10. proportion of their total household expenditure on medical care when compared To improve financial access to health to other income categories (Table 8). services, the MOH will need to expand coverage to currently uninsured population while ensuring that contributions are made according to ability to pay. There are certain Table 7: Total Government Revenues and apcso h xsigisrnesse Health Expenditure, 1995-97 aspects of the existing insurance system HealthiElpenditure, 1995-97 which are likely to present major obstacles to expanding coverage, maintaining solidarity 1995 1996 1997 and protecting access to care for the poor. (projected) They include: (a) the relatively low ceiling Govemment Revenues 425 670 814 on monthly insurance premium payments (NIS 75) which establishes a regressive Total budget Allocation 69 89 88 system of revenue collection and limits the contributions from the well-to-do; and (b) General Revenues 45 67 61 the voluntary nature of participation in the Health Insurance Premium 24 22 27 social insurance system that allows the well- Ministry of Health Budget to-do and low risk population groups to "opt (including insurance) as Percent of Total 16 13 11 out" of the system, (c) the relatively high Government Revenues refugee population who are entitled to free Sources: IMF, 1997; Ministry of Health 1997. health care from UNRWA and (d) recent economic and political trends (such as high unemployment, declining wages and large informal sector). 39 Based on discussions with the World Food Program which, in collaboration with the Ministry of Social Affairs, run a food supplementation program for the poor. 40 About 20 percent of GHI enrollees are social welfare recipients whose premiums are fully covered by the PA. However, the relative high costs of co-payments may hinder financial access to health care. - 14- 5. DEVELOPING A NEW harmonized to reduce duplication and STRATEGY FOR THE SECTOR wastage of resources (see Appendix 3 for present structure). The MOH needs to define The MOH faces unique challenges in and strengthen its role with respect to its attempting to develop a coherent health regulatory, policy-setting and coordinating strategy to deliver quality services functions; and to redefine and reevaluate its efficiently, while ensuring its financial financing and service delivery/provider sustainability, in a non-contiguous functions. The present structure would need geographical area embroiled in an extremely to be reorganized to effectively carry out complex political situation. The recent redefined roles and functions. economic downturn can only exacerbate this challenge. However, inaction is not a viable To be more effective in its regulatory and option as it would lead to one or both of the policy-making functions, the MOH will need following undesirable outcomes: to improve its capacity to collect and analyze policy-relevant data (such as the flow of * Across the board underfinancing of the funds through the establishment of national public system, resulting in a decline in health accounts) in all sectors not limited to 41 the quality of health services , labor the public sector, and to assess the unrest, public dissatisfaction and effectiveness of the subsidies and deterioration in public support for the redistributive mechanisms in terms of system and declining willingness to pay ensuring equitable access to health services. for the services. * Increasing inequity due to reduction in Financing resources available for subsidies, and Reevaluation of the public investment increasing segmentation of the system as the rivte ecto inreaingl fouse on strategy. There is an urgent need to review those whovave s theabinly tocpay an the present public investment plan in terms thus opt out of the publicly funded of their affordability and sustainability, with system. greater attention to improving efficiency. (See Appendix 7 for sample terms of To achieve the goal of ensuring a viable reference). As a start, the investment sustainable health system, certain priority requirements should be based on a better areas need to be addressed in the short to understanding of expected demand and medium term. utilization of services rather than on a static standards of capacity (e.g. two beds per SHORT TO MEDIUM TERM: GETTING THE 1,000 zpopulation). Rapid technological SYSTEM ON TRACK IN DIFFICULT changes render this traditional mode of ECONOMIC CONDITIONS investment planning obsolete. An investment plan should include specification Organization and Management of standards on buildings and equipment; projections of throughputs and estimations of Defining role andfunctions of various health fixed and variable costs at different levels of subsystems. At present, coordination among utilization; and the impact of public the MOH (Box 3), UNRWA (Box 4), NGOs investments on the rest of the health systems (Box 5) and private providers could be (private, NGO and UNRWA). improved. The role and functions of each of the subsystems should be clarified and 41 An MOH survey of patients in August 1996, revealed that 80 percent of patients were satisfied with their professional care. 42 Such as the increased use of outpatient surgery. - 15- Defining a benefits package. Definition of a Box 4: UNRWA's Role in Health Care benefits package would help to identify the Delivery priority areas for public financing. The list of benefits covered by MOH/GHI (see UNRWA was created in 1949 with a dual role: Table 5) is too general to be effective as a to fulfill the humanitarian needs of Palestinian means for rationalizing services. A more refugees and to defend their legal rights. refined definition of benefits package could UNRWA has provided, for almost 50 years, be developed, e.g. through negative lists relief and social services, basic education and (services excluded from public financing) or health care to the Palestinian population. positive lists (services included in public UNRWA is facing major financial problems. financing). The increased demand of a growing population, Improving complementarity between coupled with a dwindling budget supported government and ,rivateNGO hospmainly by voluntary contributions (90-95 governmcent Eand ringthebenefits hospital percent of total budget) from international donors. These donors appear to have reduced under the GHI scherne to include NGO and their financial support to UNRWA, preferring private providers would have the advantage instead to support the PA bilaterally. This of making a more efficient use of available resulted in a financial deficit in 1996, which resources as well as increasing the choice of may yet threaten the delivery of basic services providers for the patients. However, prior to to the refugees. The agency has countered expanding such benefits the MOH/GHI recent financial difficulties by introducing needs to improve its capacity to monitor the austerity measures, utilizing reserves while attempting to improve the efficiency and Box 3: Organizational Structure of Ministry effectiveness of services provided. of Health Nevertheless, it is clear that unless significant financial resources are made available, a The MOH, headed by the Minister, is based in reduction in extent and quality of provided Gaza City. The Deputy Ministry is based in the services will be unavoidable. West Bank city of Nablus. Six departments including Public Relations and International Even allowing for the logistic advantages of Cooperation report directly to the Minister. providing services to a clustered population, Seven departments including Health Insurance UNRWA strategy and approach to health report directly to the Deputy Minister. Due to delivery has been efficient and could provide a logistic difficulties and differing legal heritage, basis to the development of a sustainable 6 administrative units including Financial and Palestinian health system. With an annual per Administrative Affairs, Planning and capita expenditure on health of US$18, in a Development, and Hospital Administration are cultural and epidemiological situation similar to duplicated in the West Bank and Gaza Strip (see that of non-refugees, certain aspects of the Appendix 8 for further details). UNRWA system e.g. treatment protocols and material resources management could be easily Hospital administration is delegated to hospital adopted and adapted to the government sector. directors who report directly to the respective Because of the economic and political Director General of Hospital Administration. implications, it is unlikely that the PA will While the management of service delivery is accept the taking over of UNRWA's delegated to the 6 administrative units, budget responsibilities outside an agreed political and policy-making decisions are highly settlement of the refugee issue. However, a de centralized. Certain decisions, such as the level facto harmonization of policies and service of health insurance premiums, require the delivery between the MOH and the Agency approval of the Legislative Council. In 1996, would create the basis for a more efficient, less the MOH employed 5,8.38 staff, of which about fragmented and more effective health system. 32 percent were employed in the administrative positions. - 16- Box: 5 NGO's Role in Health Care Delivery between the government doctors who also have part-time private practice in the NGOs, in the pre-Oslo period, played a major role NGO/private hospitals and clinics. in the delivery of public services, particularly in the health sector. World Bank data suggests that Improving the complementarity between the between US$140-215 million in external funding private insurance market and public was received by NGOs in 1992, the peak year for financing. The government will need to be external funding - a sum that declined to perhaps more active in regulating the growth of the US$60 million per annum in 1995 (of which an private ms reguat the growth ofth estimated 60 percent funded health activities). The private insurance market (see Appendix 10). precipitated cut in the funding base for health As a start, MOH will need information on NGOs came about as the result of two factors first: the existing private insurance market, and to the reduction of Arab support at the wake of the identify areas where better complementarity Gulf War; and second, the switching by western could be achieved between the GHI and donors of a considerable proportion of their health private insurance market. financing to the PA. Harmonizing MOH and UNRWA payment Faced with this loss of support, NGOs adapted in a schemes. Given the financial difficulties variety of ways. A few attempted to introduce fees UNRWA is facing and the expectation that for service while others elected to be absorbed into MOH and UNRWA services may be unified the PA. The majority, however, cut back on in the long term. UNRWA may consider, services by closing rural clinics and/or by reducing the range and frequency of services offered. Lack which might be difficult given its regional of funds for operating budgets appears to be a mandate, gradually introducing a similar co- major reason for declining rates of occupancy in payment scheme to that of MOH. NGO hospitals (other reasons include the current access restrictions to East Jerusalem facilities, the Provision: Infrastructure and Service types of services provided and the lack of insurance Delivery coverage for NGO services). Despite the existence of an informnal MOH-NGO forum in which issues Rationalization of tertiary care subsector. of mutual concern are discussed, NGOs have Because of the serious long-term cost tended to react to the funding crisis and the changed implications of investments in the tertiary realities of governance in an adhoc manner. The care subsector, special attention should be vision underlying the operations of many NGOs - pare developing achent invstme independence in a financially unconstrained paid to developing a coherent investment environment - no longer corresponds to reality, and strategy in this sector (closely related to the needs to be adjusted. It will require the PA to development of a public investment plan). develop effective public/private partnerships. Priority should be given to the introduction of the most medically effective (evidence- Developing a more integrated and efficient health based medicine), most appropriate (in terms system would require greater willingness of both of health outcomes and epidemiological PA and NGOs to see each other as sectoral partners. profile of the population) and most cost- effective interventions. Consolidation of quality, efficiency and costs of the private specialties within single hospitals rather than and NGO hospitals (see Appendix 7). This in providing multiple specialties in several will involve the development of an small hospitals should be considered44. This appropriate provider payment system that exercise should be closely linked to a review will facilitate the contracting of services of available medical technology as well as between GHI and the providers. In addition, strategies for overseas referrals. There is a potential conflict of interests exists 43 For example, it is well known that an unmanaged 44 To ensure that medical staff do take adequate procedures to indemnity system based on a retrospective fee-for-service maintain their skills. For example the American Heart payment can lead to serious cost-escalation problems Association recommends that regional specialty cardiac without necessarily leading to better health outcomes. centers perform at least 200 open heart surgeries annually. - 17- some urgency in undertaking this review, constructed primary care facilities. (See since a number of investment plans are Appendix 7). already being implemented in both the private and public sectors. Once established, Strengthening the referral system. An a restructuring of the tertiary sector would be effective referral system needs to be costly as well as technically and politically established. Primary health care services extremely difficult to undertake. should be strengthened to relieve the 45 crowding and overuse of hospital services The government has two main instruments There is considerable scope for redesigning for influencing the growth of tertiary care the co-payment system to discourage the services in the private sector. The first is unnecessary use of hospital care and promote through direct regulation of capital the appropriate use of primary care. In investment and meidical technology, e.g. principle, patients must be referred from the through licensing or issuance of a primary care physician to access hospital and certification of need. The second is through specialist services, but at the moment there its role as the purchaser, and increasingly a are no financial penalties for patients who provider of tertiary care services. MOH will choose to skip this process, and many need to evaluate ilts current practice of primary care patients enter the hospital reimbursing tertiary care services, and system through the emergency unit. develop appropriate payment systems. However, any changes in the co-payment system should be accompanied by concurrent New approaches to delivering primary adjustments and improvements in the health care. As an alternative to direct primary care services (e.g. better quality of expansion of the government-run primary care and longer operating hours in the health care system, MOH could explore the government primary care clinics). option of purchasing primary care services from other NGO clinics and private Strengthening hospital management. Greater practitioners (especially in underserved involvement of public hospital managers in areas). Such a plan could provide a more the area of financial management and cost flexible arrangement to meeting the needs of containment would be essential for achieving the population, make use of existing better performance in terms of efficiency and capacities in the other sectors, and improve quality of services. The MOH is already the complementarity and coordination of initiating some steps in this direction but primary care services among the different these activities should be given a much subsectors. One possible strategy would be higher priority in view of the increasing to contract qualified private practitioners to financial constraints. This will be a first step operate out of the government PHC centers. toward the introduction of greater managerial Such a primary care system could provide a autonomy, and perhaps alternative hospital clearer delineation of the roles and payment systems based on financial responsibilities of the physician and, if incentives that promote efficiency. These properly designed, could circumvent the efforts must be accompanied by concurrent problems created by salaried public doctors strengthening of financing and management engaging in private practice. Another systems, and management capacity (senior advantage is that it will also give the ministerial staff and hospital directors) to government greater flexibility in the ensure such efforts are successful. management of P'HC services, while introducing better regulation of the private Improving preventive care. Greater attention practitioners. The ongoing pilot program for needs to be paid to prevent non- Family Doctors could be expanded to pilot such strategies, perhaps from the newly 45 For example, by expanding specialty care available at primary care clinics. -18- communicable diseases which are now the resource master plan, which prioritize commonest causes of adult deaths in the national needs based on financial WBG. Risk factors for these diseases (such sustainability, needs to be developed (see as smoking and diet in the case of Appendix 7) 48. Existing human resources cardiovascular disease) should be targets of may need to be re-trained or relocated in IEC campaigns. The preventive approach is order to improve efficiency49. This plan usually much more cost effective than should take into account the present job treating patients of non-communicable market and the changing role of health diseases.46 The MOH has established a professionals.50 Such a plan must encompass health education department which has the training of professionals in universities initiated health education programs in and colleges (including the new medical selected schools.47 Additional preventive school) to avoid oversupply of highly skilled interventions which can be started in the staff (such as seen in Eastern Europe etc.). immediate future include: This plan should closely complement the . nutrition education and counseling to National Health Plan being developed. prevent diabetes, hypertension, and Improved planning and training of the health cardiovascular diseases; work force will not automatically result in * anti-smoking campaign; improved patient care unless these workers i dental health education; are provided with work conditions (includes * health education and public awareness salaries and non-financial remuneration) and campaign against domestic accidents such supportive supervision that stimulates them as burn and traffic accidents; to excel, motivates them to provide quality , confidential counseling and home visits services, and gives them professional for mental and psychological disorders; satisfaction. In the immediate future, some i advocating and counseling for family of the savings from the new drug policies planning, and counseling to prevent could be applied towards increases in staff genetic diseases; salaries and benefits, but such stop-gap * health education and public awareness measures will probably not suffice to deal campaign on sanitation and personal with the problem of low wage rates. The hygiene. government will need to undertake an in- depth review of the wage structure and staff Provision: Human Resources deployment strategies to come up with viable solutions for the medium-term. The MOH has already made significant efforts to upgrade capacity of human Improving quality and technical efficiency. resources in the health sector (e.g. Protocols and standards for medical establishing the Health Services procedures and interventions need to be Management Unit). The following established quickly and integrated into suggestions are made to build upon such various training programs. This has already efforts. being initiated (diabetes protocol by Quality Develop a sustainable human resource 48 Such a plan should not be used to promote rigid central strategy. A medium to long term human planning at the facility level where increasing autonomy is being encouraged. 49 Between the West Bank and Gaza Strip. However, the lack 46 For people eating a "western diet", a 60 percent reduction of free physical access between both areas is likely to in salt intake would reduce the risk of death from coronary impede such a plan. heart disease at age 55 by 16 percent and from stroke by 50 23 percent. World Development Report, 1993. World For example, several OECD countries are rethinking the Bank. 1993. role of dispensing pharmacists as the role of pharmacy technicians and advanced information technologies 47 Partially financed by several donors. increase. - 19- Improvement Program) and UNRWA has professionals to clarify roles and been using such protocols in the past. It is responsibilities of each individual. The suggested that a gradual move to using MOH has already taken steps to improve the identical protocols in MOH and UNRWA be quality of its services by establishing QIP commenced. Explicit job descriptions are (Box 6) which should be continued. required for each category of health It is suggested that a unified licensing system Box 6: Quality of Services should be established for all health There is some evidence that the quality of health professionals both in the public and private services as perceived by providers' and patients2 sector in the medium term. Such a licensing is inadequate. It is however difficult to provide system could be used to promote continuing an objective assessment of the situation due to education and to harmonize the level of limited available informnation. Quality can be professional competence of professionals accessed in terms of structural input (e.g. from various training background. The infrastructure drugs, personnel), process (what is MOH, in collaboration with professional actually done for the patient through delivering ascto 51 health care), and outcomes (the end results of associations , should be responsible for correct processes and structural inputs). The PA, monitoring the quality and efficiency of with help from several donors, has focused on the services provided using consistent and improvement of structural inputs e.g. building transparent indicators. new infrastructure and equipment3 . However, such improvements alone cannot correct process Provision: Pharmaceuticals shortcomings which require quite different actions. For example, the non availability of a Given international experience in thermometer is a structural deficiency whereas the pharmaceutical reform, there is significant use of non-sterile eq[uipment is a process scope in reducing resources allocated for the deficiency. pharmaceutical subsector which could result The MOH has initiated a pilot quality in the savings of up to 30-40 percent of improvement program at several sites including present drug expenditure (Appendix 4). Rafidia Hospital. This program has resulted in Because of the many stakeholders and vested several process improvements such as 56 percent interests in the pharmaceutical sector, any reduction in turn around time for urgent major reform needs not only to be carefully laboratory tests and 92 percent reduction in planned but should be implemented waiting time at outpatient clinics. Perhaps more incrementally. Major issues in the sector important than the actLal improvements is the would need to be discussed among various development of a quality culture in the hospital. stakeholders and detailed studies are a prerequisite. Major pharmaceutical reforms i Half of staff surveyed in Rafidiah hospital indicated that would need to be closely linked to reforms in improvement in medical practice e.g. infection control was financing and provider payments. However, the most important priority in improving quality of care. there appears to be, at present, sufficient 2 The most important clinical priority of patient surveyed in information for pharmaceutical reform to Shifa hospital was improving medical practice (over 75 begin. percent of surveyed patients). 3 Inputs such as renovation of infrastructure (15 percent of patients surveyed in Shifa hospital) and medical equipment (2 percent of patients and 8 percent of health personnel surveyed in Shifa hospital) appear to be less likely perceived to be inadequate. 5i The MOH should promote and encourage the development of professional syndicates. - 20 - Immediate (within one year). * GMP certifications are established, and a scheme for generic substitution is * Approve and implement the essential developed, tested and implemented. drugs list, starting in public primary health care facilities; * Finalize and introduce standard LONGER TERM: ACHIEVING UNIVERSAL treatment protocols at all levels of care; COVERAGE * Take steps to have the Israeli requirements on registration of imported In the longer term, there are certain key drugs lifted for products from GMP issues - such as financing and delivery certified manufacturers supplying the arrangements - which would need to be MOH; addressed. Detailed analysis of these are * Introduce stricter requirements for the beyond the scope of this report but these key establishment of private pharmacies and issues will be mentioned briefly. restrict student intake to schools of pharmacy and the closure of one school Universal Coverage of pharmacy should also be considered52 - Computerized central drug store The government has several options with management is implemented and regard to developing a system towards improved methods for estimation of drug universal coverage. Two possible options requirements are introduced; are briefly outlined below (see Appendix 5 * Combination drugs are removed from the for further details). In both options, private market. insurance could develop a supplementary role to the public financing system. Short to medium term. It is recommended that once the suggested immediate reforms Integrated health system. This approach are being implemented that the following most closely parallels the present investment recommendations should be considered: strategy of the government, since it will involve the expansion of the public delivery e Essential drugs lists for secondary public system under the MOH rather than through health facilities are implemented and the expansion of the purchasing function of then progressively introduced into NGO the MOH. In a modification of this model, primary care services and hospitals, and the single payer system- expansion of drug co-payments and pricing are services may be achieved through reviewed in collaboration with other contractin of services from private financial changes53; providers * The capacity of the pharmaceutical . . - . sector administration and infrastructure Many countries with this form of health is strengthened through additional system are experimenting with greater technical staff, managerial training and autonomy at the facility level and greater equipment54; separation between provider and purchaser functions. This model relies primarily on taxation to finance the health system. However, most middle income countries do 52 It might be difficult to implement in the West Bank, at not have a sufficiently large tax base to be present, given the continuos threat of limited accessibility able to finance a full basic package of health during closures. during closures. services from government budget alone. 5 Fixed pricing is a standard feature in most Westem European countries. 54 The Ramallah Central Medical Store is renovated and equipped and the Gaza Store's first floor is completed and 55 Such as in Canada and increasingly in the United the store equipped. Kingdom. - 21 - Social insurance model. This will involve hospital subsystem, there are areas where the establishment of a separate social significant efficiency gains might be made. insurance agency, or a group of insurance For example, a consolidation of specialties agencies operating under a public mandate. within single hospitals rather than in A major portion of its revenues will be providing multiple specialties in many derived through insurance premiums, but the hospitals, may result in some degree of funds will also require subsidies through economy in scale and scope, and better general revenues to equalize access for outcomes from complex medical procedures. different subgroups within the population. This system has the advantage of clearly distinguishing the health insurance functions from the other government functions, and making the process of health financing more transparent to the public. However, it will also involve a major restructuring of the health financing system in order to establish an insurance agency or a sickness fund that is independent from the MOH. One potential drawbaLck of this system is that in many middle income countries an independent social insurance agency or sickness fund have shown a tendency to develop their own, separate health delivery system paralleling the system financed directly by the MOH. It could lead to further fragmentation of the financing and delivery system, and to duplication and wastage of resources as well as inequities in access to services. There is no single "correct" path toward universal coverage. Palestinian policy makers will need to weigh out the potential drawbacks and advantages of each approach (based on further information as suggested in Appendix 7) and select the approach that is in keeping with the social and political values as well as economic capacities of the country. Hospitals The existence of many small hospitals and clinics (approx. 10-30 beds), particularly in the NGO sector raises questions about the efficiency of the delivery structure. However, given the present political situation and geographical accessibility, these issues probably cannot be addressed in great detail in the short term. Within the - 22 - 6. PUBLIC FINANCING Table 9: Implications of Planned Capital PRIORITIES AND CONCLUSION Investment Program on Ministry of Health Recurrent Health Expenditure The government has given high priority to its health programs and has developed a list of 1997 2002 priorities for the period 1997-2002 Recurrent Expenditure/ ($ million) 0 48.8 presented to the Health Sector Working As Percent of Ministry of Health 0 35 in June 1997. Based on theExpenditure Group in June 1997. Based on the Ministry of Health Expenditure as information in this document and Percent of Palestinian Authority 8.6 12 assumptions of recurrent cost, it has been Expenditure estimated that implementation of this Scenario I program would require about US$422 Scenario 11 8.6 11.4 program would require about US$422Ministry of Health Expenditure as million (includes about US$151 million in PercentofGDP recurrent costs) over the next five years (see Scenario I 2.7 3.6 Appendix 2 of further details). This program Scenario II 2.7 3.4 is not likely to be financially sustainable in Note: Scenario I represents a GDP growth rate negative or equal to zero; Scenario 11 represents a growth rate ranging the longer term. between 2-3.5 percent. Source: Appendix 9: Recurrent Expenditure. To illustrate this, the report assesses the public hospital investment plan (if the EU financial sustainability of such a program as hospital is included). If it is assumed that a share of projected GDP and public 210 beds are provided by the private sector expenditures. If it is assumed that all capital (as planned), the number of additional public costs (US$271 million) are financed by beds required would be 826. This would donors, the annualized recurrent costs reduce the cost of the hospital investment implications of such a program would plan by US$63 million (resulting in a amount to 25 percent of the annual MOH reduction of recurrent costs by about US$32 budget in 2002 (further details and million). These costs are an illustrative assumptions are available in Appendix 9). scenario and do not take into account beds in This would mean that by 2002, 12 percent of East Jerusalem. If beds in East Jerusalem the PA budget would be needed annually to were easily accessible and the private sector finance just these additional operating costs provides 210 beds, the cost of the proposed (Appendix 9) and is not likely to be hospital investment plan will be reduced by financially sustainable in the longer term US$85 million (resulting in a reduction of (Table 9). It would also reduce resources recurrent costs by about $43 million). While available for salary increase and might these costs do not take physical accessibility reduce resources available for primary care into account, it indicates there is room for (as most of the rise in recurrent expenditure greater efficiency in resource allocation would be in secondary and tertiary care - see (Appendix 2, Table A 2.7). Appendix 2). For example, implementation of the present However, if the MOH is able to improve the public investment plan (assuming no changes efficiency of the health sector as reflected in in admission rates) may result in occupancy average occupancy rate of 80 percent, to rates as low as 26 percent in Jericho or 44 increase average length of stay to 4 days and percent in Nablus (see Appendix 2, Table A reduce admission rates to 8 percent, the 2.8). Thus, it is suggested that a national number of new hospital beds required in master plan that takes into account financial 2002 (assuming population growth and sustainability, utilization of health facilities epidemiology remains constant) will be and present resources is drawn up before 1,036 beds (Appendix 2, Table A 2.2). This major capital investment decisions are made. will represent 179 less beds than the present - 23 - To a large extent, tlhe proposed plan focuses plans56 that may be detrimental to the long on the infrastructure development - which in term financial sustainability of the health itself cannot guarantee the delivery of quality system. An important role for the PA, is to services. The PA has the unique opportunity ensure adequate donor coordination to to avoid the development of an unsustainable prevent overlapping donor financed projects infrastructure seen elsewhere and should and/or projects that might not be harness this opportunity. institutionally or financially sustainable by the PA in the longer term It is suggested to improve the efficiency and quality of health services, greater emphasis The World Bank and WHO have been needs to be placed on the development of partners with the PA and are prepared to processes delivered by capable staff to continue to assist in the development of an deliver health services to the Palestinian effective and efficient health system for the people. The presenit economic and political Palestinian people. Other donors such as the challenges, only rnake this task more Italian Cooperation (the Health Shepherd), pressing. the Japanese and the European Union have played major roles in the health sector. They Table 10: Implications of Suggested Capital and other interested donors would obviously Investment Program on Recurrent Health be key players in implementing an Expenditure investment program that supports the 1997 2002 development of such a health system. It has Recurrent Expenditure ($ million) 0 40.2 to be recognized that the Palestinian health As percent of Ministry of Health 0 28 sector is not static, and the MOH has already Expenditure started implementing several of the Ministry of Health Expenditure as Percent of Palestinian Authority 8.6 11.4 recommendations included in this report Expenditure during the course of its preparation. Scenario I Scenario ll 8.6 11.0 This report does not intend to be the final Ministry of Health Expenditure as Percent of GDP 2.7 3.4 word on health strategy. Instead, it attempts Scenario I to provide a focal point to continue the on- Scenario II 2.7 3.3 going dialogue on the future of the sector. It Note: Scenario I represents a GDP growth rate negative or iS suggested that this report be reviewed and equal to zero; Scenario 11 represents a growth rate ranging between 2-3.5 percent. discussed by various Palestinian Source: Appendix 9: Recurrent Expenditure. constituencies and the donor community to bring the dream - of improving the health status of all Palestinians - closer. The donors can help in two main ways to assist the Palestinians in achieving their health goals. They can: (a) support capacity building and training in management, policy- formulation and research, service delivery and information management that would result in the development of sustainable local institutions, and (b) provide financial support for investment program that supports the development of an effective and efficient health system. This may require a reassessment of present capital investment s6 In 1996, the donors spent about US$43 million of which 62 percent went to capital investment 57 The presence of an active health sector working group in the WBG is an initial step in this direction. West Bank and Gaza Health Systems: Flow of Funds Source of Tax Revenues Government Workers in Israel External Private Household Private Health Revenues Insurance (via Israeli Assistance Investors Out-of-pocket Insurance Premium Covernement) Funds/MiityoHelh URAC Purchaser Adin atio Ministry of Health Adiitrto Administration /oca tion opyets 0 Police & Security Overseas Ministry of Health Private Providers NGO Private General UNRWA Health Provider Health Service? Provider Provider (tertiary) asina cs Physicians, Serviccs ~~~~~iI1 Li~~~~~~~~~~~~~~~~~~~ Cinc Specialists * Direct Payments, Fund Transfers _'m - Internal Budget Transfer >, Contracts, Reimbursements ..... v Copayments - 25 - Appendix 2: MlNISTRY OF HEALTH PRIORITIES AND RECURRENT COST IMPLICATIONS Table A 2.1: West Bank and Gaza Strip Ministry of Health Priorities, June 1997 jNumber New Beds, Upgrading Rehabilitationi Equip- Total Description of Investments New Facility I Renovation ment Beds US$ millions Tulkarem Hospital Phase I Emergency department, suppiy, kitchen, dining, laundry 2.0 Blood bank, slb, X-ray, gynecology, physiotherapy, cardiac anit 2 4 Phase 11 Staff residence, administration, pharmacy, ICCU, pediatric department 3.7 Qalqilya Commnity Hospital 100 13.0 Doorm Community Hospital 50 5.0 Yatta Community Hospital 50 3.0 Beit Jalla Phase I Construction CSSD, linen store, workshops, OPD clinic 2.S Equipment 1.0 Phase 11 Cardiac unit, X-ray, blood bank, administration, new beds 25 1.S Rafidiya Hospital Imaging Dept. 0.8 Surgery Dept. 25 beds 25 L 5 New Nablus Hospital (MCH) Phase I20hbeds 120 25.0 Phase ll 120 beds 120 15.0 Jicr/ho New Jericho Hospital, 70 beds 70 19.0 Bethlehem Phase I Bethlehem Psychiatric Hospital chronic patient building 2.3 Phase 11 Rehabilitation facility/building 3.2 Jetni Jenin Hospital Phase I Emergency, Op theatre, X-ray, machinery/energy etc 4.0 Phase 11 Construction of additional floor, adds 30 beds 30 5.0 Hebron - FHRP/Saldi 7 Phase I Construction of 2 floors, phanmacy, machinery, dining etc. 7.0 Phase 11 Expansion to 50 beds SO 3.0 Ramol/all Existing Hospital Building Renovation of medical dept and heast catheterization lab 2.4 Angiography miachine 1.4 Construction (SOOsq.m.) new floor for ICCU, etc 1.1 Construction of new floor (SOOsq.m.) for pediatric 1.1 New Building Construction (2900sq.m.) emergency, day care etc 3.5 Equipment for emergency, day care 1.0 Expansion for neurosurgery, cardiac,orthop. ENT 100 10.0 West irtk Snbiota/ 740 1013 26.4 4.6 3.9 136.2 Geat Shifa Hospital new building 8 floors Phase I - first three floors 7.3 Phase !! next live floors 5.A Phase III - equipment, furniture 3.7 Shifa hospital - other upgrades & rehab 1.81 0 02 Shifa hospital specialized surgery building, ne beds Pbase 1 60 beds, cardio, surgical, catheteni., ENT 60 7.5 Phase 11- 70 bhids: urosurgery, pediatric, neuro, plastic 70 5.2 Equipment 4.8 CT Scanner, Shifa hospitail 1.3 Children's Hospital Admin, storage, neonatal ICU, library, water tank 1.32 Khan Yornis Naser hospital Constroction ol 3 story building 1.6 Equipment 0.6 ICU, day care center, emergency, 37 beds 37 0.5 Old Khan Yonnis Hospital - reconstruction 1.0 Ophthalmic Hiospital - OPD clinic, administration, hostel 1.0 edit/e Area Community Hospital (DflerEI-Balah? EHRP/Saudi) SO 3.0 Gaza S/rip Subtoal 217 16.2 18.1 1.02 10.40 45.7 Other Eqn/pmentfor West Bank& C, aza 33.2 WestBi tska dGaw StripTotal 957 117.5 44.52 5062 47.5 215,2 NWte: Cost ofpyah,,aer/c hoopit/ee hur hUet ndrc h-ee bsclntsked in the total. * 238 beds of the EU hospitallnenkr crsstrsct/a have nut been, i/rchlnd is I/he total Sonsoce: Afseinsy of Health, 199Th - 26 - Table A2.2: Total Investment 1997-9002 in Accordance with Ministry of Health Priorities, June 1997 (US$ million) 1997 1998 1999 1998 2001 2002 Cumulative West Bank and Gaza including European U nion__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Hospitallnvestment 35.87 35.87 35.87 35.87 35.87 35.87 215.2 Recurrent Cost 20 Percent 0 7.17 14.35 21.52 28.69 35.87 107.60 Recurrent Cost 25 Percent 0 8.97 17.93 26.90 35.87 44.83 134.50 Recurrent Cost 30 Percent 0 10.76 21.52 32.28 43.04 53.80 161.40 PHC Investment 11.1 8.5 8.5 6.9 4.2 4 43.1 Recurrent Cost 30 Percent 0 3.3 5.9 8.4 10.5 11.8 39.9 Recurrent Cost 40 Percent 0 4.44 7.84 11.24 14 15.68 53.2 Other Investment 1. Ambulance Services 0.83 0.83 0.83 0.83 0.83 0.83 5.00 II. Buildings Public Health Laboratory 0.47 0.47 0.47 0.47 0.47 0.47 2.80 Laundry Building 0.04 0.04 0.04 0.04 0.04 0.04 0.25 Nursing School 0.25 0.25 0.25 0.25 0.25 0.25 1.50 Central Stores 0.42 0.42 0.42 0.42 0.42 0.42 2.50 Maintenance Workshop 0.04 0.04 0.04 0.04 0.04 0.04 0.25 Sub Total Buildings 1.22 1.22 1.22 1.22 1.22 1.22 7.30 Total Other Investments 12.30 Recurrent Cost of Other Ambulance 15 Percent 0 0.12 0.31 0.49 0.67 0.85 2.45 Miscellaneous 0 0.06 0.12 0.18 0.24 0.30 0.91 Buildings 5 Percent Total Investment Cost 49.02 46.42 46.42 44.82 42.12 41.92 270.60 Total Recurrent 0.00 10.69 20.66 30.62 40.11 48.79 150.86 Expenditure Note: Hospital and PHC investment costs include cost of infrastructure, rehabilitation and equipment as listed by MOH priorities, June 1997. Recurrent cost for hospital sector [in terms of salaries, supplies, etc.] also includes operating cost of EU hospital presently under construction. Capital cost of EU Hospital has not been included as it is assumed to be supported by EU and UNRWA. Total recurrent cost calculated using hospital cost ( 20% of investment, PHC @ 30% and recurrent cost of other investments as their given rates. Rates for calculation of recurrent cost vary from 20 - 33% for hospitals and are higher for smaller facilities. Source: M. Hopkinson and K. Kostermans, Building for Health Care. World Bank 1996. - 27 - Table A2.3: Recommended Annual Investment for Hospital Sector, Including East Jerusalem Assumptions: Population in 1996 2,349,019 Number of beds in 1996 2,640 Population growth rate 4% Admissions 8% Average length of stay 4 days Hospital occupancy 80% Bed replacement for new hospital 20 years Bed replacement for old hospital 60 years Investment cost/sqm (option 1) $1,000 Investment costlsqm (option II) $1,350 Area required/bed 50 sqm Year 1997 1998 1999 2000 2001 2002 Cumulative Population (4 percent growth 2,442,979.8 2,533,370 2,627,104.7 2,724,307.6 2,825,107 2,929,635.9 rate) Number of Admissions 195,438 202,670 210,168 217,945 226,009 234,371 Number of Bed Days 781,754 810,678 840,674 871,778 904,034 937,483 Beds Required (80 percent 2,677 2,776 2,879 2,986 3,096 3,211 occupancy) ! ! !_I Old Beds to be Replaced 45 46 48 50 52 54 294 New Beds Required 37 99 103 107 110 115 571 Total Beds to Construct 82 145 151 156 162 168 864 Investment Costs Option I 4,092,936 7,266,470 7,535,330 7,814,137 8,103,260 8,403,081 43,215,214 Option II 5,525,464.1 9,809,735 10,172,695 10,549,085 10,939,401 11,344,159 58,340,539 Recurrent Costs Option I 20 Percent 0 818,587 2,271,881 3,778,947 5,341,775 6,962,427 19,173,617 Option I 25 Percent 0 1,023,234 2,907,066 4,790,899 6,677,218 8,703,033 24,235,881 Option 1 30 Percent 0 1,227,881 5,749,078 5,749,079 8,012,662 10,443,640 29,083,057 Note: Population estimates have been calculated assuming that approximately 20% of the E. Jerusalem population utilizes East Jerusalem hospitals area for construction of new hospital beds is 30 sqm in an existing hospital and 50 sqm in new hospitals. We took the higher figure of 50 sqm for our calculations. Source: World Bank Staff Calculations. -28 - Table A2.4: Recommended Annual Investment for Hospital Sector, Excluding East Jerusalem Assumptions: Population in 1996 2,280,000 Number of beds in 1996 2,080 Population growth rate 4% Admissions 8% Average length of stay 4 days Hospital occupancy 80% Bed replacement for new hospital 20 years Bed replacement for old hospital 60 years Investment cost/sqm (option 1) $1,000 Investment cost/sqm (option II) $1,350 Area required/ bed 50 sqm Year 1997 1998 1999 2000 2001 2002 Cumulative Population (4 percent growth 2,371,200 2,458,934.4 2,549,915 2,644,261.8 2,742,099.5 2,843,557.2 rate)__ _ _ _ _ __ _ _ _ _ __ _ _ _ _ Number of Admissions 189,696 196,715 203,993 211,541 219,368 227,485 Number of Bed Days 758,784 786,859 815,973 846,164 877,472 909,938 Beds Required (80 percent 2,599 2,695 2,794 2,898 3,005 3,116 occupancy) Old Beds to be Replaced 43 45 47 48 50 52 285 New Beds Required 519 96 100 103 107 III 1,036 Total Beds to Construct 562 141 146 152 157 163 1,321 Investment Costs Option I 28,094,247 7,052,967 7,313,926 7,584,542 7,865,170 8,156,181 66,067,032 Option II 37,927,233 95,215,04.9 9,873,800.6 10,239,131 10,617,979 11,010,844 89,190,493 Recurrent Costs Option I 20 Percent 0 5,618,849 7,029,442 8,492,228 10,009,136 11,582,170 42,731,826 Option I 25 Percent 0 7,023,561 8,786,803 10,615,285 12,411,420 14,477,713 53,414,783 Option I 30 Percent 0 8,428,273 10,544,164 12,738,342 15,013,704 17,373,255 64,097,739 Note: Recommended area for construction of new hospital beds is 30 sqm in an existing hospital and 50 sqm in new hospitals. We took the higher figure of 50 sqm for our calculations. Number of beds required in 1997 is the difference between existing number of beds in the WBG (2,080) and those required to match population needs in 1997 at 8% admission rate, 80% occupancy and average length of stay of 4 days. Number of beds required for rest of the years is equivalent to old beds needing to be replaced every year and new beds to be constructed to meet the needs of the population as it grows. Source: World Bank Staff Calculations. - 29 - Table A2.5: Total Recommended Investment 1997-2002, Including East Jerusalem West Bank and Gaza 1997 1998 1999 1998 2001 2002 Cumulative including European Union Hospital Investment 23.60 23.60 23.60 23.60 23.60 23.60 141.64 Recurrent Cost 20 Percent 0 4.72 9.44 14.16 18.88 23.60 70.80 Recurrent Cost 25 Percent 0 5.90 11.80 17.70 23.60 29.50 88.50 Recurrent Cost 30 Percent 0 7.08 14.16 21.24 28.32 35.40 106.20 PHCInvestnent 11.1 8.5 8.5 6.9 4.2 4 43.1 Recurrent Cost30Percent 0 3.3 5.9 8.4 10.5 11.8 39.9 Recurrent Cost 40 Percent 0 4.44 7.84 11.24 14 15.68 53.2 Other Investment L. Ambulanec Services 0.83 0.83 0.83 0.83 0.83 0.83 5.00 II. Buildings Public Health Laboratory 0.47 0.47 0.47 0.47 0.47 0.47 2.80 Laundry Building 0.04 0.04 0.04 0.04 0.04 0.04 0.25 Nursing School 0.25 0.25 0.25 0.25 0.25 0.25 1.50 Central Stores 0.42 0.42 0.42 0.42 0.42 0.42 2.50 Maintenance Workshop 0.04 0.04 0.04 0.04 0.04 0.04 0.25 Sub Total Buildings 1.22 1.22 1.22 1.22 1.22 1.22 7.30 Total Other Investments 12.30 Recurrent Cost of Other Ambulance 15 Percent 0 0.12 0.31 0.49 0.67 0.85 2.45 Miscellaneous Buildings 5 0 0.06 0.12 0.18 0.24 0.30 0.91 Percent Total Investment Cost 36.75 34.15 34.15 32.55 29.85 29.65 197.04 Total Recurrent Cost 0.00 8.24 15.75 23.26 30.30 36.52 114.06 Note: All costs are in US$ million. Hospital Investment includes construction cost of additional hospital beds needed by MOH [App. 2c, option 1] plus costs of upgrading, rehabilitation and equipment as budgeted in MOH June Priorities, 1997 [App. 2a]. Recurrent cost calculated using hospital cost @ 20% of investment, PHC @ 30% and recurrent cost of other investments as their given rates. Rates for calculation of recurrent cost vary from 20 - 33% for hospitals and are higher for smaller facilities. Source: M. Hopkinson and K. Kostermans, Building for Health Care, World Bank 1996. - 30 - Table A2.6: Total Recommended Investment 1997-2002, Excluding East Jerusalem West Bank and Gaza 1997 .1998 1999 1998 2001 2002 Cumulative including European Union Hospital Investment 27.27 27.27 27.27 27.27 27.27 27.27 163.64 Recurrent Cost 20 Percent 0 5.45 10.91 16.36 21.82 27.27 81.82 Recurrent Cost 25 Percent 0 6.85 13.64 20.46 27.27 34.09 102.28 Recurrent Cost 30 Percent 0 8.18 16.36 24.55 32.73 40.91 122.73 PHC Investment 11.1 8.5 8.5 6.9 4.2 4 43.1 Recurrent Cost 30 Percent 0 3.3 5.9 8.4 10.5 11.8 39.9 Recurrent Cost 40 Percent 0 4.44 7.84 11.24 14 15.68 53.2 Other Investment 1. Ambulance Services 0.83 0.83 0.83 0.83 0.83 0.83 5.00 II. Buildings Public Health Laboratory 0.47 0.47 0.47 0.47 0.47 0.47 2.80 Laundry Building 0.04 0.04 0.04 0.04 0.04 0.04 0.25 Nursing School 0.25 0.25 0.25 0.25 0.25 0.25 1.50 Central Stores 0.42 0.42 0.42 0.42 0.42 0.42 2.50 Maintenance Workshop 0.04 0.04 0.04 0.04 0.04 0.04 0.25 Sub Total Buildings 1.22 1.22 1.22 1.22 1.22 1.22 7.30 Total Other Investments 12.30 Recurrent Cost of Other Ambulance 15 Percent 0 0.12 0.31 0.49 0.67 0.85 2.45 Miscellaneous Buildings 5 0 0.06 0.12 0.18 0.24 0.30 0.91 Percent Total Investment Cost 40.42 37.82 37.82 36.22 33.32 33.32 219.04 Total Recurrent Cost 0.00 8.97 17.22 25.47 33.23 40.19 125.08 Note: All costs are in US$ million. Hospital Investment includes construction cost of additional hospital beds needed by MOH [App. 2c, option 1] plus costs of upgrading, rehabilitation and equipment as budgeted in MOH June Priorities, 1997 [App. 2a]. Recurrent cost calculated using hospital cost @ 20% of investment, PHC @ 30% and recurrent cost of other investments as their given rates. Rates for calculation of recurrent cost vary from 20 - 33% for hospitals and are higher for smaller facilities. Source: M. Hopkinson and K. Kostermans, Building for Health Care, World Bank 1996. Table A2.7: Summary of Possible Savings in Investment Hospital Investment Beds Capital Cost Cumulative Recurrent Cost (US$ million) (US$ million) 1. Ministry of Health Investment Plan 957 215 108" - including operating 258 N. A cost of European Union 1,215a hospital 2. Recommended Investment .for Whole Sector Excluding East Jerusalem 1,036 163c 82 3. Savings on Ministry of Health Plan (subtracting item 2 from item 1) 179 52 26 4. Adjusting for Proposed Private Investment 826 152 .5 76 by Reducing 210 beds 5. Total Adjusted Savings on Ministry of 389 62.5 32 Health plan (subtracting item 4 from item 1) 6. Recommended Investment for Whole Sector Including East Jerusalem 571 141c 71 7. Savings on Ministry of Health Plan (subtracting item 6 from item 1) 644 74 37 8. Adjusting for Proposed Private Investment 361 130.5 65 by Reducing 210 beds 9. Total Adjusted Savings on Ministry of 854 84.5 43 Health Plan (subtracting item 8 from item 1) Source: World Bank Staff Calculations. a 957: Ministry of Health, 258: EU hospital. b Including operating cost of EU hospital. c Also includes cost of replacement beds, upgrading and equipment. - 32 - Table A2.8: Implication of Additional Beds on Occupancy of Ministry of Health Hospitals by Region Assumption: Estimates of additional beds taken from MOH Priorities, June 1997. Admission rate of 1996 based on discharge data of the various MOH hospitals, May 1997. Admission rate for 2002 is based on the 1996 rate with only incremental changes in patient population due to population growth rate of 3.7 percent. Average length of hospital stay for 1996 by different regions, obtained from Annex 2 and kept constant for projections. Region Existing Admissions Bed Days Occupancy Total Beds Admissions Bed Days Occupancy Beds 1996 1996 1996 1996 2002 2002 2002 2002 (Percent) (percent) Tulkarem . 84 8,418 18,800 80 84 10,468 23,343.6 76 Qalaqilya I 0 200 Beit Jala 70 6,390 21,085 82 95 7,946 26,221.8 76 Jericho 50 3,133 9,001 49 120 3,896 11,181.5 26 Beit Lahem . . Jenin 55 12,435 23,667 118 85 15,464 30,928.0 100 Ramallah 142 11,601 43,301 83 242 13,912 51,474.4 58 Hebron 103 16,804 38,401 102 153 20,897 48,063.1 86 Nablus [Al Watani] 86 7,340 21,867 69 [Rafidia] 138 16,573 41,678 83 Sub total 224 23,913 63,545 77 489 29,738 79,103.1 44 Gaza City . 433 38,494 128,581 81 563 47,870 157,971.0 77 Khan Younis 318 34,575 97,126 84 355 42,997 120,391.6 93 Middle Area I I 50 _ _ _ Note: Chronic care beds such as psychiatric beds have not been included. Source: For number of beds: Annex 2 - 33 - Appendix 3: STRUCTURE OF HEALTH SYSTEM Table A3.1: Structure of the Health System: Entitlements, Financial Responsibilities and Principal Providers in the West Bank and Gaza, 1996 Type of Services Entitlement / Direct Financial Principal Providers Responsibility (principal payers) All Population: Preventive Care, All citizens/' Government Government, NGOs Including Early Child Care (0-3 years); Antenatal and Postnatal Care Basic Curative Care GHI holders (50 % of Government (budget, Government, private, households) GHI), households (fees) NGOs Secondary and GHI holders, police Government(budget, Government, NGO/ Tertiary Care and security forces GHI), households private, overseas (premium, co-payments providers or fees for service)/t Rehabilitation All citizens Government, NGOs NGO Mental Health All citizens Government Government/ NGOs Dental Selective services Government, households Government, private, covered by (fees for service) NGO government health . service Registered Refugee Population.:f Free care for refugees UNRWA (external UNRWA Primary Care assistance) Secondary Care A limited number of UNRWA, households Subcontracted cases approved for (cost-sharing) hospitals (NGO, referral overseas), one UNRWA hospital a. "Entitlement' refers to those services for which the citizens of the West Bank and Gaza are, in principle, guaranteed some level of public financing: it is not equiLvalent to actual access to services, since that depends on the actual availability of government services in the area. b. Social welfare cases have health insurance premiums paid by the government. c. As noted in the text, the refugee population also have access to all of the government services if they participate in the GHI plan. Source: Ministry of Health, United Nations Relief and Work Agency for Palestine Refugees in the Near East. - 34 - Appendix 4: SAVINGS OF PHARMACEUTICAL REFORMS Activity Savings (percent) Implement National Drug Policy and Legislation 5 Introduce Essential Drugs List at All Health Care Levels 5-10 Improve Ministry of Health Procurement 10 Implement Standard Treatment Protocols in Public Health Facilities 5-10 Introduce and Enforce Generic Substitution 5-10 Improve Storage and Distribution Management 5-10 Shift from Injections to Tablets and Capsules When Justified 2-5 Remove Inappropriate Drugs from the Market 3-5 Total Rationalization of Drug Sector 30-40 Source: World Bank Staff Calculations. - 35 - Appendix 5: DIFFERENT MODELS OF HEALTH FINANCING AND MANAGEMENT SYSTEMS Single Payer System Integrated Health Social Insurance System System Examples Canada - financed mainly UK / Scandinavian Germany, France, Belgium - Examples by taxation with mainly countries, Portugal - financed mainly by social private providers financed mainly by taxation insurance with mixed public with mainly public and private providers providers Netherlands - financed by a mixture of social and private insurance with mainly private providers Provincial, regional or local Ministry of Health, Sickness fund, social Type of Public health authority regional/local health security agency Purchasing Agency authorities, municipalities Main Source of Revenue General tax revenues General tax revenues Payroll tax, employer and Main Source of Revenue employee contributions - Typical Hospital Contracts and other forms Direct administrative Contracts, and other forms yPayment Systems of provider payment system control with salaried of prospective payment Payment Systems with autonomous providers personnel and budget systems with autonomous transfers; increasingly, this providers (private and system is being replaced by public) contracts with semi- autonomous public providers Typical Physician Fee-for-service with Salaried physicians; general Fee-for-service, sometimes Payment Systems referrals required for practitioners, fundholding, with balanced billing specialist services fee-for-service with referrals required for specialist services Private Insurance Mainly supplementary to Mainly supplementary to Mainly supplementary to public financing public financing social insurance; certain groups, e.g. the wealthy, are allowed to finance their health care services entirely from private insurance Source: World Bank. -36 - Appendix 6: ESTIMATED OF LEVELS OF SUBSIDIES West Bank Gaza Strip WBG (US$ thousands) Percent (US$ thousands) Percent (US$ thousands) Percent Actual Estimation/i Estimation/l MOH Health Expenditure Overseas Treatment 9,231 19 6,476 13 15,707 16 Hospital 21,953 45 22,659 45 44,612 45 Primary Care 11,073 23 11,429 23 22,502 23 Other 6,258 13 9,511 19 15,769 16 Total 48,515 100 50,075 100 98,590 100 Number of Insured Households 102,723 73,787 176,510 Cost of Hospitalization per Household 295 386 333 (US$) /2 ___ ___ Contribution per Household 168 181 176 Copayment per Household 14 26 19 Subsidy per Household 113 179 138 Subsidy as Percent of Premium 67 99 78 Contribution l_l_l 1. For Gaza Strip, the distribution of expenditure between hospital and public health sectors was assumed to be the sane as in the West Bank. 2. About 10 percent of hospitalization is assumed to be uninsured population. Therefore the total expenditure on hospital for the insured population was reduced by 10 percent Source: Ministry of Health, World Bank Staff Calculations. - 37- Appendix 7: FOLLOW UP STUDIES ON HEALTH SECTOR IN THE WEST BANK AND GAZA Exploring Options for Financing with Relevance to Macroeconomic Scenario Sources of financing of health care in the country are currently fragmented and a more coherent strategy for revenue generation L needed. Attention needs to be given as to how will additional revenues be raised such that they are well tied to the overall macro-economic scenario. i. Assessing flow of funds outside the health sector: To come up with sources for financing, it would be extremely useful to explore the general flow of funds outside the health sector. The study should look at what taxes are raised and spent at both national and local levels; what flexibility is available in the current legal framework for raising taxes at local levels; how much flexibility there is in spending national budgets at the local level. The information can be helpful in designing both sources and use of health financing. ii. Analyzing impact of different tax collection mechanisms : Different options for tax collections can be studied and simple simulation models set up to look at the impact of different tax options such as payroll tax, earmarked taxes, VAT, general revenues, copayments oI premiums etc. For example, is revenue generation tied to employment a good idea given the volatility of the labor market, will payroll tax only hurt economic growth by discouraging small businesses or is VAT a better option and feasible to implement. Feasibility Study on the Expansion of the Government Health Insurance System This study will evaluate the feasibility of alternative options for medium and long-term strategy for expanding the coverage of Government Health Insurance System towards the goal of universal coverage, and will include the evaluation of the private insurance market as part of the overall strategy. The study will involve field data collection, data analyses, and the presentation of various policy scenarios based on different options which will be used for future policy formulations and policy decisions by the Palestinian Authority. The study will offer recommendations on various options for changes in the design of the GHI to expand coverage and achieve adequate social protection, while maintaining financial solvency and promoting efficient delivery of services. The study will, comprise the following subcomponents: i. Analysis of the determinants of demand for health insurance: The 1996 household consumption and expenditure surveys collected by the Palestinian Central Statistical Bureau in 1996 provides valuable source of data on the characteristics of households with and without insurance, including income levels, household size and composition, geographical location and employment status. The 1996 data would be supplemented by sample surveys of households on their health status, utilization of health services, and income profile, including the impact of border closures on the household expenditures on medical care and insurance. These household data will provide critical information on the demand for insurance that are necessary for identifying major obstacles to expanding coverage, as well as estimating the effects on the GHI system of income fluctuations (border closures), changes in the premium levels, and other changes in the design of the insurance plan. - 38 - ii. Social Welfare Cases: The effectiveness of the existing GHI system in providing adequate financial protection to the social welfare recipients will be analyzed under this subcomponent. Among the issues to be analyzed by this study will include a review of the affordability of the copayment system for the indigent population, and the adequacy of social welfare program in identifying households in need. iii. Flow of Funds Analysis of the GHI System: Revenue and Expenditure Patterns: At present the GHI system operates as a part of the government budget system and does not function as an independent fund. Consequently, it is difficult to follow the flow of funds from its source and its final use, and to evaluate the effectiveness of the system. This component of the study will analyze the financial data to determine the actual expenditures on major categories of benefits provided by the GHI system, evaluate the efficiency of fund use, and make recommendations on ways to improve efficiency and strengthen the financial management and accountability of the system. In addition, the study will make projections on the revenues and expenditures of the GHI system under a variety of policy scenarios. iv. Participation of the Employers and Corporations in the Gi: Eliciting a more active participation and contributions into the GHI system from the employers and corporations will be critical for future sustainability of the GHI funds. This component of the study will review the current involvement of the formal employment sector in providing health benefits to their employers and their relations to the labor laws, identify opportunities for promoting greater participation of the employer groups in the GHI scheme, and offer recommendations for the health insurance legislation with regard to the responsibilities of the employer. v. Role of the Private Insurance Market in Expanding Health Coverage: Private insurance will play an increasingly important role in the financing of health services in the WBG. The first part of the study will focus on collecting data on the extent and types of services covered by the private insurance companies, and identifying key issues and challenges facing the private insurance companies. The second part of the study will promote a dialogue between the government and private sector representatives to develop a policy framework for establishing an effective private insurance market within the context of expanding GHI system. Issues to be discussed will include: the complementarity of benefits financed by private insurance and GHI system, supplementary financing of GMI system through private insurance, and regulation of the private insurance market. Promoting a Rational Investment Strategy for the Public and Private Hospital Sector - Facility and Equipment Planning The present public investment plan does not take into account ongoing expansion in the non- public sub-sectors. Therefore it can result in greater inefficiency in terms of utilization of health facilities and will also be difficult to sustain financially. It is suggested that a national master plan that takes into account financial sustainability, utilization of facilities and present resources is drawn up before making major capital investment decisions. For details see Appendix 7b. - 39- Study on Improving the Quality and Efficiency of Hospital Services and Promoting Private / Public Complementarity While the government is planning a major expansion in the public hospital system, relatively less attention has been focused on improving the efficiency of the public hospitals or making greater use of the existing NC;O and private hospital capacity. This study will help to establish the necessary baseline data and provide training and technical assistance in the following areas: i. Strengthening management and quality of services in public hospitals: This component will expand upon the various studies and training in hospital cost analysis, financial management and quality improvement, and integrate these into a comprehensive hospital management training and evaluation program. This will also include the establishment of financial management and cost accounting system, establishment of quality benchmarks End evaluation systems for various wards and departments, and comparative analysis of unit costs, expenditure and utilization patterns of each hospital. ii. Improving Complementarity of Services with Private Hospitals: At present only a few private hospitals receive reimbursements from the GHI system, and for only a very limited category of treatments and diagnoses. Expanding the benefits covered by GHI to include services provided at private hospitals will be an important step in providing efficient services as well as offering greater choice of providers to the patients. This component of the study will gather information and identify the measures needed to support the expansion of GHI system lto private hospital care. The study will help to collect data on the capacities, costs, utilization patterns and quality of services provided by various private and NGO hospitals. T'hese data will form the basis for establishing appropriate tariffs and provider payment systems with the private providers. In addition the study will support the govermnent efforts in developing a clear regulatory and legal framework for the GiH system as it pertains to the rights and responsibilities in relation to any contractual arrangements with private entities. These steps are essential in strengthening the accountability of the public system, averting collusion and conflict of interest, and applying appropriate sanctions against fraudulent activities. Improving the Efficiency of the Primary Health Care System This study will focus on improving the efficiency and quality of the primary health care system to complement the major expansion in the government PHC system over the medium-term. The expansion in the PHC system will entail a substantial increase in the staffing to operate the system. However, tlhe number of MOH staff and wage rates are not likely to increase sufficiently over the next five years to meet the proposed expansion of PHC services. This study will assist the government in examining the feasibility of alternative approaches to expanding the PHC services through arrangements that make efficient use of existing resources while promoting quality and professional improvements. For this purpose, more data on the availability and qualifications of private physicians will be necessary. The activities to be supported by this study could include: * Survey of private practitioners in the WBG with respect to their numbers, qualifications, fees charged and number of visits by patients; * Review of private insurance payments for various categories of private physicians, including any group contracts; - 40 - * Testing the feasibility of contracting with private physicians to work in government PHC clinics, either on a full or part-time basis; * Development of a prototype for physician payment system for the GHI system; * Linking quality assurance and continuing education program for physicians with licensing and contractual arrangements with the GHI system; * Strengthening of the referral system based on better training of primary care physicians and specialists at PHC clinics, and improved coordination with the hospital sector and the health insurance system. Study on the Medical Standards, Quality and Appropriateness of Health Services in Hospitals and Primary Health Care Providers Due to the varied backgrounds of the medical personnel, the lack of medical standards and procedures, and the limited capacity in the system to monitor the quality of service, there is evidence of problems in the quality of medical care in the WBG. This study will investigate in detail the medical practices in hospitals and primary care services to identify the major problems in terms of the quality appropriateness of: diagnosis, treatment and medical procedures, referrals and laboratory procedures. The study will include the analysis of available data on case-specific utilization patterns on hospitals and primary care clinics and will be supplemented by data collected at the facilities through observational studies (e.g., time-and-motion study); interviews of medical personnel regarding the common medical practice, qualifications, knowledge of medical procedures; and review of medical records. Information collected from these data will be synthesized to identify major problem areas requiring special attention, e.g., performance of unnecessary surgery, overprescription of particular drugs, inappropriate referrals, etc. For example, the very short length of stay in government hospitals suggests the likelihood of unnecessary admissions in hospitals. This study will furnish qualitative data on medical practices and quality of services at government, private and NGO hospitals and clinics. These data could be used to develop future medical education and continuing education program for medical personnel; promote the establishment of quality improvement programs through the key professional associations (e.g., medical, hospital and pharmaceutical associations); set standards for licensing requirements; and establish a basic information and monitoring system for quality regulation by the MOH. In addition, these data will be compared with population-based epidemiological data to ensure that the health services are meeting the priority health needs of the population. -41- INFRASTRUCTURE INVESTMENT PLAN: TERMS OF REFERENCE Health system in the West Bank and Gaza is a complex amalgam of providers including MOH, UJNRWA, NGOs and an emerging private sector. Investment in health infrastructure calls for assessment of number of facilities available and their utilization pattem across all sub- sectors, consideration of the demographic and epidemiological characteristics of the population, and also of existing resources available. Design of facilities in terms of allocation of space, relative proximity of services and appropriateness for medical equipment also needs to be considered. Rationalization of investment will require (i) development of institutional capacity of planning units in public sector (ii) development of a facility and equipment masterplan based on revised norms and standards. SUGGESTED SCOPIE OF WORK Contribution from Palestinian Authority * Formation of Core Group consisting of representatives from Planning and Policy Making Council and other sub-sectors such as UNRWA, NGOs and private providers who are familiar with facility planning and needs assessments. Its function would be to quantify the need for health services, and identify appropriate facility and equipment norms and standards. It would also follow up on activities of the Task Group. * Formation of Task Group, whose members will be drawn from health ministry from amongst those who are working in planning [e.g. department of planning], facility management [e.g. hospital director], construction and maintenance. They will undergo training by technical specialists and be responsible for, collecting and analyzing the relevant data, development of health services map, assisting in the formulation and application of norms and standards, and managing the implementation of outcomes. * Organization of a study tour to observe the effect of applying criteria and standards developed to facilities and equipment. * Organizing ancl making arrangements for training workshops * Provision of available data and information and transportation for data collection teams. * Organization of meeting at completion, for presentation of findings to National Health Committee and relevant ministries [e.g. Health, Planning, etc.], with inclusion from various sub-sectors such as UNRWA. - 42 - Contribution from Technical Specialist Team * Work with the Core Group to develop criteria and indicators to be used to quantify the need for health services, and appropriate facility and equipment norms and standards. * Train Task Group in collection of relevant data on which to quantify demand and measure the degree of compliance to norms and standards. * Initiate preparations for the training workshops and provide training * Initiate planning for the study tour * Further expand the health services map, developed by the Department of Planning at MOH, to incorporates data on existing equipment and facilities and serve as a tool to identify priority areas for future investment. * Present findings, conclusions and recommendations at meeting of National Health Planning Committee, other relevant ministries and UJNRWA. * Institutionalize the preparation of sound investment strategies which maximize through staff training, codifying norms and standards, preparing conceptual designs and developing databases for synthesizing information collected. - 43 - DATA FOR HUMAN IRESOURCES DEVELOPMENT The following are data which should be collected across the various providers and payers and made available at various levels to people involved in policy, organization, management and delivery of services., It can be especially useful in the development of a human resources masterplan and its irnplementation in the West Bank and Gaza. Environment of the Health Care System Actors involved. * interested groups (government ministries and departments, UNRWA, NGOs, and private sector, political groups, professional syndicates, associations, training institutions, students/teachers associations, unions, research agencies, consumers representatives) - their views and objectives and their relative influence These can be collected through the analysis of policy statements, recommendations of official reports and other relevant reports (research, UNRWA, NGOs, donor agencies, professional associations, etc.) and through surveys. Legal framework. * all laws and regulations related to health and population human resources * administrative/institutional framework of public services * economic trends * resources available for training, employing health personnel Stock ofproviders. * distribution by category of establishments; hospitals, health centers, polyclinics, individual clinics * distribution by type of activities (clinical - public and private, administrative, teaching); time devoted to each type of activity (information needed to calculate full-time equivalence) * distribution by level of training * distribution by level of activity: in training, at work, not employed * geographical distribution; by governorate; rural/urban * distribution by age, gender, other available socio-demographic variables * ratios: population/provider, provider/provider (e.g.: nurse/doctor, specialist/generalist), government/private, NGOs, UNRWA * human resource dynamics: entries, migration, attrition; human resource trends * training (number and type of schools, intake capacity, real intake, attrition, number of graduates, duration of programs, contents, quality, training abroad, teaching staff, curricula, teaching methods, admission procedures) and development (continuing education, in-service training) * recruitment, posting, transfer, promotion, career plans (mobility of personnel); - 44 - * definition of duties and responsibilities (job description, workload, under/over- utilization) * working conditions (including pay) * supervision and evaluation * system of incentives (financial and others) which must be related to financing of the sector Services and Facilities (actual and projected) * number of establishments by category; hospitals, health centers, polyclinics, individual clinics * number of establishments by level of service delivery (primary, secondary, tertiary) * geographical distribution of establishments; by region; rural/urban * number of establishments by source of funding (government - MOH, UNRWA, other ministries; donors; private; NGOs) * establishments by size (number of clinical and non-clinical posts) * costs by budget chapter * function, structure of establishments; functional links Palestinian Authority - Ministry of Health Organization Structure, 1996/1997 00 | Minister of Health t. Planning and Policy | Deputy Minister Making Council C Ministry- Director General N Deputy Minister Office Deputy Ministry C- Health Insurance 0 Department Director General Minister Office Z General Inspection Office Public Relations Department Department CO) Department PubliccRelationsaDepartmen Private Medicine Purchase Department International Cooperation x Department Dental Department Department e Quality Improvement Abroad Treatment Legal Adviser DeDartment Department Health Education Abroad Palestinians'Health Department Nursing Department Department Rehabilitation Centers hysiotherapy Department Women's Health Department Department Lab & Blood Bank Child Health Department Z Coordination with Department NGO's Denartment | Ministry Director General / Gaza Strip Ministry Director General I West Bank | g < | t;~~~~- eneral Administratlons ll Financial and Administrative Research Planning & Pharmaceuticals Primary Health| Hospitals Emergency l ~~Affairs ll Development |. Car t .. ................. ......... ....................................................... ..... ......................................... ............................... ....................., South Provinces of Palestine (5) (The Gaza Strip) North Provinces of Palestine (10) (The West Bank) [jiiI I 3 1X l 3 l l 111IEI Rafahs Middle Gaza Not HboiBtlhm Jrslm aaah Jrco Tkae aliy afetL buIIenn Zone - 46 - Appendix 9: MACROECONOMIC PROJECTIONS METHOD OF CALCULATION GDP: Real GDP at constant prices was projected assuming annual growth rates at low GDP growth for scenario 1 and higher GDP growth for scenario 2. GDP at current prices was calculated by multiplying GDP at constant prices with deflator. PA Budget: PA budget in terms of revenue, current PA expenditure, public investment and foreign financed program was given for 1997 and worked out to be 23% of the GDP. We assumed that PA expenditure would remain at the same proportion of GDP for the next five years. MOH Budget: MOH revenue and current expenditure as percentage of PA revenue and expenditure was given for 1997. We assumed that MOH budget would remain constant during the next five year period with the only incremental increase being that of recurrent cost of investments. Recurrent Costs: Recurrent cost estimates were provided for the entire period based on MOH Investment Plan for Scenario 1 and Recommended Investment Plan for Scenario 2. They are shown as annual incremental expenditure and also expressed as percentage of MOH expenditure. Total MOH Expenditures: In order to have a full picture of the MOH expenditures, we added up the annual incremental recurrent expenditure to the MOH budget. The total MOH expenditure was then expressed as percentage of GDP and percentage of total PA expenditure. SCENARIOS A: HIGHER RECURRENT COSTS See Scenarios Al and A2 in Pages 2 and 3. SCENARIOS B: LOWER RECURRENT COSTS See Scenarios B I and B2 in Pages 4 and 5. - 47 - Scenario #A1: Low Case Real GDP growth rate: negative or equal to zero Pa revenue: decrease/GDP Pa expenditure: same proportion/GDP MOH revenue: same proportion/PA revenue MOH expenditure: same proportion/PA expenditure 1997 1998 1999 2000 2001 200 Assumptions Real GDP (growth rate) 5.4% -1.0% -1.0% -0.5% 0% 0% Real GDP (constant prices) 1,154 1,142 1,131 1,125 1,125 1,12 GDP (current prices) 3,546 3,795 4,061 4,405 4,801 5,23 Deflator 3.07 3.32 3.59 3.91 4.27 4.65 ilnlation 8% 8% 8% 9% 9% 9% PA Budoet Revenue 814 759 731 749 768 785 Current Ependiture 866 911 975 1057 1152 125 Current Deficit -52 -152 -244 -308 -384 -471 Public Investment 255 228 244 264 288 314 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit (percentage of GDP) -307 -379 -487 -573 -672 -785 Revenue 23 20 18 17 16 15 Current Expenditure 24 24 24 24 24 24 Current Deficit -1 -4 -6 -7 -8 -9 Public Investment 7 6 6 6 6 6 Foreign Financed Progranm 0 0 0 0 0 0 Overall Deficit -9 -10 -12 -13 -14 -15 MOH Budget Revenue 30.91 30.36 29.24 29.95 30.73 31.4 Current Expenditure 96.94 100.19 107.22 116.28 126.75 138.1 Current Deficit (percentage of -66.03 -69.83 -77.98 -86.33 -96.02 -106.7 PA budget) Revenue 4 4 4 4 4 4 Current Expenditure 11 11 11 11 11 11 Public Investment Plan and Recurrent Cost Implications for the Health Sector. 1997 - 2002 Public Investment Plan 0 0 0 0 0 0 Recurrent cost estimates Projection I (high) 0.00 10.69 20.66 30.62 40.11 48.7 Total 0.00 10.69 20.66 30.62 40.11 48.7 Total I (as % of MOH cLirrent expenditure) 0% 11% 19% 26% 32% 35° Result In the low case scenario, these additional investments and recurrent costs will represent up to 35 percent of the MOH current expenditure at the end of the period. Total MOH expenditure Total 96.94 110.88 127.88 146.90 166.86 186.9 as percentage of GDP Tctal I 2.7% 2.9% 3.1 % 3.3% 3.5% 3.6% as percentage of PA total expenditure Totall 8.6% 9.7% 10.5% 11.1% 11.6% 11.90/ Result in the low case scenario, MOH total expenditure represent about 3.6% of GDP and up to 12% of PA total expenditure. -48 - Scenario #A2: Medium Case Real GDP growth rate: lower than case #1 Pa revenue: lower than case #1 Pa expenditure: same proportion/GDP MOH revenue: same proportion/PA revenue MOH expenditure: same proportion/PA expenditure 1997 1998 1999 2000 2001 2002 Assumptions Real GDP (growth rate) 5.4% 2.0% 2.5% 3.3% 3.5% 3.5% Real GDP (constant prices) 1,154 1,177 1,206 1,246 1,289 1,334 GDP (current prices) 3,546 3,910 4,332 4,876 5,500 6,205 Deflator 3.07 3.32 3.59 3.91 4.27 4.65 Inflation 8% 8% 8% 9% 9% 9% PA Budget Revenue 814 841 910 1024 1155 1272 Current Expenditure 866 938 1040 1170 1320 1489 Current Deficit -52 -98 -130 -146 -165 -217 Public Investment 255 235 260 293 330 372 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit (percentage of GDP) -307 -332 -390 -439 -495 -590 Revenue 23 22 21 21 21 21 Current Expenditure 24 24 24 24 24 24 Current Deficit -1 -3 -3 -3 -3 -4 Public Investment 7 6 6 6 6 6 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit -9 -9 -9 -9 -9 -10 MOH Budaet Revenue 30.91 33.63 36.39 40.96 46.20 50.8 Current Expenditure 96.94 103.22 114.37 128.72 145.21 163.8 Current deficit (percentage of -66.03 -69.60 -77.98 -87.76 -99.01 -112.9 PA Budget) Revenue 4 4 4 4 4 4 Current Expenditure 11 11 11 11 11 11 Public Investment Plan and Recurrent Cost Implications for the Health Sector. 1997 - 2002 Public Investment Plan 0 0 0 0 0 0 Recurrent Cost Estimates 0.00 10.69 20.66 30.62 40.11 48.79 Total 0.00 10.69 20.66 30.62 40.11 48.79 Total I (% of MOH current expenditure) 0 10 18 24 28 30 Result In the low case scenario, these additional investments and recurrent costs will represent up to 30 percent of the MOH current expenditure at the end of the period. Total MOH Expenditure 96.94 113.91 135.03 159.34 185.32 212.61 As Percentage of GDP 2.7 2.9 3.1 3.3 3.4 3.4 As Percentage of PA total Expenditure 8.6 9.7 10.4 10.9 11.2 11.4 Result in the medium case scenario, MOH total expenditure represent about 3.4% of GDP and up to 11.4% of PA total expenditure. - 49 - Scenario #B1: Low Case Real GDP growth rate: negative or equal to zero Pa revenue: decrease/GDP Pa expenditure: same proportion/GDP MOH revenue: same proportion/PA revenue MOH expenditure: same proportion/PA expenditure 1997 1998 1999 2000 2001 2002 Assumptions Real GDP (growth rate) 5.4% -1.0% -1.0% -0.5% 0% 0% Real GDP (constant prices) 1,154 1,142 1,131 1,125 1,125 1,125 GDP (current prices) 3,546 3,795 4,061 4,405 4,801 5,233 Deflator 3.07 3.32 3.59 3.91 4.27 4.65 Inflation 8% 8% 8% 9% 9% 9% PA Budget Revenue 814 759 731 749 768 785 Current Expenditure 866 911 975 1057 1152 1256 Current Deficit -52 -152 -244 -308 -384 -471 Public Investment 255 228 244 264 288 314 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit (percentage of -307 -379 -487 -573 -672 -785 GDP) Revenue 23 20 18 17 16 15 Current Expenditure 24 24 24 24 24 24 Current Deficit -1 -4 -6 -7 -8 -9 Public Investment 7 6 6 6 6 6 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit -9 -10 -12 -13 -14 -15 MOH Budget Revenue 30.91 30.36 29.24 29.95 30.73 31.4C Current Expenditure 96.94 100.19 107.22 116.28 126.75 138.1E Current Deficit (percentage of PA -66.03 -69.83 -77.98 -86.33 -96.02 -106.7E budget) Revenue 4 4 4 4 4 4 Current expenditure 11 11 11 11 11 11 Public Investment Plan and Recurrent Cost Implications for the Health Sector. 1997 - 2002 Public Investment Plan 0 0 0 0 0 0 Recurrent Cost Estimates Projection I (high) 0.00 8.64 16.55 24.47 31.90 38.53 Total 0.00 8.64 16.55 24.47 31.90 38.53 Total 1 (% of MOH current expenditure) 0 9 15 21 25 28 Result In the low case scenario, these additional investments and recurrent costs will represent up to 28 percent of the MOH current expenditure at the end of the period. Total MOH Expenditure 96.94 108.83 123.77 140.75 158.65 176.69 As Percentage of GDP 2.7 2.9 3.0 3.2 3.3 3.4 As Percentage of PA Total Expenditure 8.6 9.6 10.2 10.7 11.0 11.3 Resul in the low case scenario, MOH total expenditure represent about 3.4% of GDP and up to 11.3% of PA total expenditure. - 50- Scenario #B2: Medium Case Real GDP growth rate: lower than case #1 Pa revenue: lower than case #1 Pa expenditure: same proportion/GDP MOH revenue: same proportion/PA revenue MOH expenditure: same proportion/PA expenditure 1997 1998 1999 2000 2001 2005 Assumptions Real GDP (growth rate) 5.4% 2.0% 2.5% 3.3% 3.5% 3.5"! Real GDP (constantprices) 1,154 1,177 1,206 1,246 1,289 1,33 GDP (current prices) 3,546 3,910 4,332 4,876 5,500 6,20 Deflator 3.07 3.32 3.59 3.91 4.27 4.6 Inflation 8% 8% 8% 9% 9% 9% PA Budge Revenue 814 841 910 1024 1155 127 Current Expenditure 866 938 1040 1170 1320 148 Current Deficit -52 -98 -130 -146 -165 -21 Public Investment 255 235 260 293 330 372 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit (percentage of GDP) -307 -332 -390 -439 -495 -59 Revenue 23 22 21 21 21 21 Current Expenditure 24 24 24 24 24 24 Current Deficit -1 -3 -3 -3 -3 -4 Public Investment 7 6 6 6 6 6 Foreign Financed Program 0 0 0 0 0 0 Overall Deficit -9 -9 -9 -9 -9 -10 MOH Budg Revenue 30.91 33.63 36.39 40.96 46.20 50.8 Current Expenditure 96.94 103.22 114.37 128.72 145.21 163.8 Current deficit (percentage of PA -66.03 -69.60 -77.98 -87.76 -99.01 -112.9 budget) Revenue 4 4 4 4 4 4 Current Expenditure 11 11 11 11 11 11 Public Investment Plan and Recurrent Cost Implications for the Health Sector. 1997 - 2002 Public Investment Plan 0 0 0 0 0 0 Recurrent Cost Estimates 0.00 8.64 16.55 24.47 31.90 38.5 Total 0.00 8.64 16.55 24.47 31.90 38.5 Total I (% of MOH Current Expenditure) 0 8 14 19 22 24 Result In the low case scenario, these additional investments and recurrent costs will represent up to 61 percent of the MOH current expenditure at the end of the period. Total MOH Expenditure 96.94 111.86 130.92 153.19 177.11 202.3 As Percentage of GDP 2.7 2.9 3.0 3.1 3.2 3.3 As Percentage of PA Total Expenditure 8.6 9.5 10.1 10.5 10.7 10.9 Result in the medium case scenario, MOH total expenditure represent about 3.3% of GDP and up to 10.9% of PA total expenditure. - 51 - Appendix 10: WORKING PAPER ON FINANCING AND ORGANIZATION OF HEALTH SERVICES INTRODUCTION This paper hbas been prepared as part of the Health Sector Study for the West Bank and Gaza (WBG) conducted jointly by the Ministry of Health (MOH), World Health Organization (WHO) and the World Bank in May 1997. The paper focuses on issues related to health financing, and aims too: * update and synthesize the latest available information on health financing, including a flow of funds analysis and, where possible, unit cost analysis; * examine the salient trends in health financing and analyze their implications on the short and medium-term development of the health system in terms of (a) affordability (sustainability), (b) quality and efficiency, and (c) equity; * estimate the projected revenue and expenditure patterns for the MOH under different policy scenarios; and * identify areas that require urgent action to address the imminent financial crisis in the health sector, and suggest some longer-term health financing policies that would support the development of an efficient and equitable health system. A team from the World Bank visited the WBG from May 6 - May 22, 1997. The analyses presented herein are based on the available studies and reports as well as information collected by the team during the visits to various offices of the MOH in WBG; hospitals and health centers in the government, non-governmental and private sectors; UN and other donor agencies; non-governmental organization (NGO) representatives and a number of individuals in the private sector involved in the health sector in the WBG; and the Palestinian Central Statistical Bureau. T he list of persons met by the mission are provided in Annex 1; the main references are listed in Annex 2. With regard to data analysis in this report, two points of clarification are worth mentioning. First, an estimation of health financing in per capita terms or as a percentage of GDP is subject to significant variation because of the considerable uncertainties in the key demographic and macroeconomic figures for the WBG. Unless otherwise indicated, the population and macroeconomic figures shown in Table A 10.1 are used throughout this paper. Some discrepancies in health financing figures between the estimates provided in this paper and other previously published papers might occur due to these differences in the choice of population and macroeconomic figures. Secondly, in this paper East Jerusalem is treated as a separate entity from WBG. Readers are cautionecd that some of the published reports include East Jerusalem in the aggregate analyses of WBG. This could result in some discrepancies between the numbers cited in this report and those of previously published reports. - 52 - Table A 10.1: Macroeconomic and Demographic Indicators for West Bank and Gaza 1993 1994 1995 1996 GDP, US$ million 2,557 3,077 3,222 3,233 GNP, US$ million 3.109 3,463 3,469 3,438 Population, total 1,901 2,015 2,151 2,280 West Bank 1,113 1,172 1,246 1,317 Gaza Strip 788 843 905 963 l Sources: GDP and GNP figures are from International Monetary Fund (IMF). "Recent Economic Developments, Prospects, and Progress in Institution Building in the West Bank and Gaza Strip", Middle Eastern Department, 1997. The population figures are World Bank estimates (1997), which excludes the East Jerusalem population. The report is divided into five sections: Section 11 provides an overview of the trends in health financing in the WBG, including a discussion on the government policies in the health sector; Section III provides a more detailed analysis of the various components of the health financing system based on the latest available data; Section IV evaluates the performance of the existing health financing system in terms of (a) affordability and sustainability, (b) efficiency and quality of care, and (c) equity and access to care; and Section V will conclude with suggestions for a number options for actions and policies to improve the performance of the health financing system in the short, medium-term and long-term. HEALTH FINANCING IN WEST BANK AND GAZA: RECENT TRENDS General Trends: 1994-1997 Just three years have passed since the Palestinian Authority (PA) assumed the responsibility of managing and financing the health service sector from the Israeli Civil Administration. The health system that has evolved in that short period reflects both the features inherited from the Civil Administration as well as the aspects introduced by the newly established MOH. Prior to the handover, the notable features of the health financing system included: (a) a heavy reliance on external assistance and NGO contributions for a significant part of health financing (over 40 percent in 1991, including UNRWA), (b) relatively limited contributions from the government (i.e., Civil Administration), derived primarily from health insurance premium, that covered less than a fifth of total health expenditure and only about a fifth of the Palestinian population, and (c) direct household expenditures that accounted for about 40 percent of the total health expenditures. Since the handover, the following critical changes have occurred in the overall health financing system: * While the basic structure. of the Government Health Insurance (GHI) system has been retained, premium levels were reduced significantly to encourage the expansion of coverage. This had reduced the ratio of premium revenues to expenditure and the difference has been increasingly made up through budgetary allocations from the government's general tax revenues. In net effect, the financing of government health system has shifted from one based on social insurance to a system based primarily on general tax revenues, with supplementary revenues from health insurance premium payments. - 53 - * Donor contributions continue to be an important source of revenues for the health sector, but the main recipient of aid has shifted from the NGO sector to MOH. The substance of donor assistance has also changed from budgetary support for the delivery of health services to a greater emphasis on capital investments, training and other developmental activities aimed at expanding the capacity of the government health clelivery system. For the NGO sector, this loss of revenues has not been compensated by an inflow of funds from the other sectors. For example, since the GHI only covers tertiary services, it does not reimburse many services provided by the NGOs and thus many NGO providers have not benefited from the expansion in insurance coverage. * JUNRWA continues to provide free basic health services for the refugee population. Although donor contributions to UNRWA swelled in the early 1990s, the budget is no longer keeping up with the rapid refugee population growth rate. * Private investors are entering the market primarily at the high technology end of health services (diagnostic centers polyclinics and specialty hospitals). Private practitioners, however, remain largely unorganized as a group, although the expansion in the for-profit clinics and hospitals may provide a focal point for future organization of medical practitioners. - While actual enrollment figures are not available, private health insurance coverage appears to be very limited. A number of local insurance companies that began offering health insurance plans in the last two years appear to be experiencing problems typical of nascent insurance markets (moral hazard and selection bias). Predictably, these companies are beginning to introduce measures to select out the high risk population in order to maintain financial solvency. Table A 10.2 summarizes the national health expenditure patterns by sources of revenue for the years 1991 and 1995-97. These figures should be treated only as indicative figures, particularly because of the uncertainties in the size of the NGO sector. Data on contributions from private corporations for their employee health care are also missing. The slight increase in the health expenditure to GDP ratio from 1995 to 1996 can be attributed to a slowdown in the overall economic growth rate rather than to a significant increase in health expenditure. Total health expenditures for 1995-97 include public and private capital investments. Using the GDP and population figures shown in Table A 10.1, the total health expenditure is estimnated to be around 9 percent of GDP. By international standards this is a relatively high level of health expenditure for countries at a comparable income level: middle income countries typically spend between 4 to 6 percent of GDP on health care. It should be emphasized that part of this high level of spending has been supported by the substantial donor assistance: on average donor contributions accounted for about 12 percent of the total health spending between 1995-97. - 54 - Table A 10.2: National Health Expenditures in West Bank and Gaza, 1991-97 (US$, millions, unless otherwise indicated) 1991 1995 1996 1997 (projected) Total GDP - 2,600 3,222 3,233 Not Available Health Expenditure as Percent of GDP - 9 8.690 8.6 Not Available Per Capita Health Expenditure (US$) Not Available/! $125 - $122 -$111 Total Health Expenditure 12 224 276 - 278 263 Govemment Health Insurance 42 24 22 27 l 3 General Revenues 45 67 61 UNRWA 13 29 23 30 Donors 77 /4 33 44 31 NGOs 37 -20?/ I 10?/5 Private / 6 91 108 102 105 Notes: 1. The per capita figure is not shown for this year because of the very large uncertainties in the population size. 2. Includes capital expenditures, except for 1991. 3. Based on revenues in the first half of the 1997 financial year. 4. This figure combines the contributions from international donors and NGOs. S. NGO contributions for 1996 and 1997 are not available. The figures shown are rough estimations based on the assumption that NGO contributions have been shrinking steadily during these years. 6. Private expenditure includes household expenditure on health care, MOH copayments and private capital investments, but excludes household payments for govemment insurance premium. Sources: 1991 figures are from The World Bank, "Developing the Occupied Territories," Vol. 6, 1993; 1995 figures are based on Barghouti and Lennock; and 1996,1997 figures are World Bank staff estimates based on data collected during the study. See Appendix 11 for details. Table A 10.3: National Health Expenditures in West Bank and Gaza, 1991-97 (percent distribution by sources of revenues) Source 1991 1995 1996 1997 Government Health Insurance 19 9 8 10 General Revenues 0 17 24 23 .UNRWA 6 11 8 11 Donor Contributions 34 9 16 12 NGOs 0 14 7 4 Private 41 40 37 40 Total 100 100 100 100 Source: Table A 10.2, above. IMPACT OF BORDER CLOSURES AND EcoNoMIc DIFFICULTIES, 1996-97 The frequent border closures and political uncertainties that marked the year 1996 resulted in severe disruptions to the economy and a sharp rise in unemployment rates. These events could not have come at a more inopportune moment in the development of the Palestinian health system. Health sector investment plans prepared in the early days of the PA were designed to achieve a rapid expansion of the health system under the assumption of a relatively stable economic growth (see National Health Plan 1994). Many of the investments in the new health facilities are about to come on stream at a time when resources to operate these new facilities are declining. Moreover, these closures impede the movement of goods and services as well as health staff and patients to and from the health facilities, and create shortages and delays in ongoing constructions projects. The deteriorating economic conditions also present a serious set back to PA's plans to expand social insurance coverage, since the success of such policies requires steady economic growth and an expanding formal employment sector. Figure A 10.1 illustrates the impact of closures on the flow of revenues from health insurance premium, as households appear to withhold payments during times of economic hardship. - 55 - Figure A 101: Impact of Border Closures on the Government Health Insurance Government Health Insurance - Monthly Premium Revenues, 1996 NIS, thousands 5,000, 4,500 2,000 - - 0Gaza Strip 1,5000 -_ - - Closures Closure Series of Closures 500 __ 1 2 3 4 5 6 7 8 9 10 11 12 Month Source: Health Insurance Department, Ministry of Health, Gaza City, 1997. GOVERNMENT POLICIES ON HEALTH FINANCING, 1994-96 Expansion of the Government Health System At the time of its inception in 1994, the Health Council, and subsequently the MOH, has accorded the highest priority to the expansion of the health insurance coverage and access to health care services to the Palestinian population. This is reflected in the 1994 National Health Plan which laid out an investment strategy to compensate for years of underinvestment in the health services during the years of occupation. In the last two years, the MOH has been relatively successful in: (a) achieving a significant expansion in health insurance coverage and in maintaining the system of revenue collection inherited from the Israeli Civil Administration; (b) organizing a centralized budgeting, procurement and distribution system to finance and manage a growing network of public providers; and (c) managing a system of subcontracting from health care providers mainly to through overseas providers, and increasingly to providers within the WBG. These achievements are not trivial given the very short time in which they have been implemented. PA's commitment to the expansion of the health delivery system is evident from the sizable allocation of government revenues to the MOH (Table A 10.4). Health insurance is included as part cf the government budget since all revenues from insurance premiums are transferred directly to the Ministry of Finance (MOF), and reallocated to MOH as part of the budget appropriations process. Despite recent economic difficulties, total government revenues have shown a strong growth over the period of 1995-97 due to the significant improvements in tax administration during this period. PA supported a nearly 30 percent increase in health budget for 1996, of which most of the increase came from the general revenues. The pro-expansion policies of the past two years are generating a momentum towards cost-escalation. They include: (a) the expansion of health insurance coverage which will raise the per capita utilization of health services as additional households gain financial access to - 56- services through insurance (moral hazard); (b) a growing supply of health care services, particularly through the planned expansion of acute care bed capacities (by as much as 50 percent over existing capacity - see Annex 9) which will raise utilization rates as well as incur additional fixed operating and capital costs; (c) the introduction of major technology upgrades within the existing public hospitals as well as the encouragement of private investments in facilities equipped with advanced medical technology; (e) a rapid rise in the consumption of drugs (a jump from 22 percent of total expenditure in 1995 to about 32 percent in 1997 in the government sector alone) promoted by a policy of providing ready access to a plethora of drugs (see the Pharmaceutical Sector Report); and (e) a generous policy of subsidizing overseas treatment for cases which cannot be treated within the WBG. Moreover, the underlying epidemiological changes and rapid population growth rates will create a strong demand for health services in the coming decades. The government continues to support a public investment program which will substantially expand the MOH health delivery capacity over the next five years. Table A 10.4: Total Government Revenues and Health Budget, 1995-97 (US$ million) Budget Category 1995 1996 1997 (projection) Govemment Revenues 425 670 814 MOH Budget 69 89 88 - From General Revenues 45 67 61 - From Health Insurance Premium 24 22 27 MOH Budget (including insurance premium) as Percent of Total Govemment Revenues 16 13 11 Sources: Government revenues are IMF estimates (see IMF, 1997); the MOH budget data were provided by MOH, Gaza and Nablus, 1997. Cost containment and rationalization of resource use The worsening economic situation will impose a global constraint on the growth in government financing of health services in the coming years. The effects are likely to be felt more immediately through the retrenchment in revenues from the health insurance premiums, reflecting the sensitivities of household income to border closures and rising unemployment rates. The shortfall from health insurance revenues could be partially compensated by an increase in budget allocation from general revenues, but according to at least one MOH projection the total MOH budget (including health insurance) for 1997 might fall below the 1996 level58. These fiscal problems are compounded this year by delays in the budget approval process by the Legislative Council. As of May 1997 all ministries were continuing to operate at the 1996 budget levels, with the notable exception of the MOH which has been permitted selective increases over its 1996 budget to accommodate the previously planned expansion in government health services. In response to these fiscal uncertainties, the MOH has begun to introduce some measures that focus on efficiency gains and cost containment. Since 1996 the Ministry has started restricting the number of referrals to the Israeli hospitals -- which are several times more costly than referrals to providers in Jordan or Egypt. To control the rising expenditure on drugs, the Ministry is currently developing an essential drugs policy which will be introduced shortly. Preparatory work is also underway -- with technical assistance from a variety of donor agencies - - to improve the efficiency and quality of medical services, including a cost analysis of hospital 58 The recent restriction to Palestinian tax revenues collected by the Israeli authorities could affect budget allocations - 57- services, the establishment of standards and protocols for effective and efficient clinical procedures, and the introduction of Quality Improvement Program to strengthen the management of health services. Cost containment policies are also producing some adverse effects. For example, salary increases have been held down in recent years to the extent that they are beginning to have a negative impact on staff morale and quality of care. On the whole, measures to rationalize the use of resources appear to be somewhat fragmented and could benefit from a more coherent and strategic policy framework. Policies toward pirivate providers The MOH has been encouraging private investments in the health delivery system as a means of expanding the total health service capacity within the WBG, promoting competition, and reducing the number of overseas treatments. Because priority is given to reducing the number of overseas treatment, MOH generally confines the purchase of services to tertiary care and advanced diagnostics services which are not available at the government hospitals. With regard to secondary and primary care services, the MOH has pursued a policy of expanding services to the population through its own public delivery rather than by extending the purchasing arrangements with the existing private and NGO providers. One, possibly unintended, effect of this policy is to have encouraged private investments at the high technology end while restricting growth at the secondary level. The majority of the population have few alternatives to the GHI scheme, since the private health insurance is expensive and limited in scope. As a result, many NGO hospitals and clinics are currently facing financial difficulties because few patients have insurance coverage that reimburse them for the cost of hospitalization. This effect is also manifested in the relative under-utilization of the NGO hospitals (where bed occupancy rates are below the optimal capacity) while most government hospitals are operating at or above optimal capacity. Private insurance market To date, the private insurance market has received little attention from the MOH. There is a general perception among the MOH policy makers that because private health insurance covers mainly the well-to-do population, the government has a relatively little role to play in the sector. However, international experience shows that governments should have an interest in regulating the private insurance market for at least two reasons. First, a well-functioning private health insurance market can supplement the public financing of health services and increase the choice of providers and services for the patients. Secondly, by containing the negative effects of adverse selection among the competing private insurers, the government can play an important role in protecting social solidarity and ensuring a fair redistribution of resources for the poor. Private health insurance markets are highly susceptible to market failure problems, and in order to reduce these risks private insurers have very strong incentives to select out the high risk cases ("cherry-picking"). These adverse selection problems can lead to segmentation of the insurance market and to inequities in access to health care that are especially harmful for the poor. A well- designed regulatory regime can help to reduce the risk of failure for the insurers as well as mitigate the negative effects of adverse selection on equity. The rules governing the use of government health services by privately insured patients are not clear. Thle MOH gives priority to patients covered under the GI scheme, although patients without GHI coverage can be admitted into government hospitals if they pay the full fees. Patients injured in automobile accidents will have their hospitalization costs covered by - 58- their automobile iinsurance company, and the MOH collects the payments directly from the insurance companies. In principle, the MOH does not allow private insurance companies to purchase hospital services directly from government providers, but patients presumably have the option of being reimbursed retrospectively by their insurers for fees paid to the government health providers. Universal coverage As a long-term objective, the National Health Plan of 1994 proposed the development of a compulsory social insurance system as a means of achieving universal coverage. The Plan does not articulate this strategy beyond a very broad statement of objectives (see the report on Health Insurance Legislation). The policies and actions of the MOH since 1994 reveal a certain degree of ambivalence towards the implementation of this policy goal. First, the government health financing system has expanded largely in the direct provision of health services financed largely through general tax revenues (i.e., in the direction of an integrated health system typified by the National Health Service model of UK and the Scandinavian health systems) rather than through the expansion of the purchasing role of the GHI. Secondly, apart from the government employees and workers in Israel the enrollment in the GHI remains voluntary. For political reasons as well as in deference to the economic difficulties faced by households, the MOH has shown reluctance in imposing a compulsory system at this early stage in implementation. Policy makers should be aware that no country in the world has so far succeeded in achieving universal coverage by relying solely on voluntary participation. A voluntary insurance system tends to segment the market, and these tendencies toward fragmentation create major obstacles to universal coverage. OVERVIEW OF THE HEALTH SYSTEM An analysis of the health financing would be incomplete without an understanding of the overall organization of the health delivery system. The health system in the WBG can be broadly divided into three subsystems: the government sector, UNRWA, and NGO and private sector. The government sector is primarily defined by the system directly financed and operated by the MOH, although a separate smaller, health service program exists for the military and police, and some of the MOH services are purchased from overseas or from local private providers. An important characteristic of the public financing system that merits mentioning is that the revenues from various sources are collected into the single budget of the MOH. This distinguishes the Palestinian system from the other countries in the region (including Israel) which are dominated by a pluralistic health financing system. By retaining the structure of a single public financing agency, the Palestinian system avoids some of the inefficiencies and inequities associated with a pluralistic health financing system. The distinction between "private" and "NGO" sectors is not well-defined: the NGO health providers, most of which were established during the occupation period through charitable donations, might be described as non-profit organizations although some appear to be developing into for-profit organizations. The Government purchases only a very limited selection of services from the NGO and private providers. UNRWA continues to operate independently to provide basic health services for the refugee population, but some of the UNRWA funds are also used to subcontract secondary services from the NGO hospitals for a limited number of refugee patients. - 59 - Figure in Appendix I presents an overview of the flow of funds from various sources to the health providers in different subsectors of the system. Table A 10.5 describes the health systems in terms of the entitlements to different types of services, the main financial responsibilities and principal providers. The refugees are identified as a distinct subpopulation, with its own basic health services financed and delivered directly by UNRWA. Many of the refugee population also make use of government services although the exact figures are not known. An important component missing in Table A 10.5 is the contribution from the private corporations and employers to health financing. For example, the GHI scheme does not require direct contributions from the employers. Data are also not available on the extent to which private corporations contribute to their employees' health benefits. Table A 10.5: Structure of the Health Systems: Entitlements, Financial Responsibilities and Principal Providers in West Bank and Gaza, 1996 Type of Services Entitlement /' Direct Financial Principal Providers Responsibility (principal _________________________ ~~ ~~ ~~payers)_ _ _ _ _ _ _ _ _ _ _ _ _ _ All Population: Preventive Care /Public All citizens/ Govemment Government, NGOs Health Early Child Care (0 - 3 All citizens Government Government, NGOs Years); Antenatal and Postnatal Care Primary Curative Care GHI holders (50 percent of Government (budget, GHI), Government health services, l_________________________ households) Households (fees) private practitioners, NGOs Secondary and Tertiary Care GHI holders, police and Govemment(budget, GHI), Government, NGO/ private security forces ? and households (premium, co- providers, overseas providers payments or fees for service)! Rehabilitation All citizens Government, NGOs NGO rehabilitation clinics Mental Health All citizens Govemment Government Dental Selective services covered by Govemment, households (fees Government PHC centers, government health service for service) private practitioners Refugee Population:/3 Primary Care Free care for refugees UNRWA (extemal assistance) UNRWA health centers Secondary Care A limited number of cases UNRWA and households Subcontracted hospitals approved for referral (cost-sharing) (NGO, overseas), one _UNRWA hospital I. "Entitlement" refers to those services for which the citizens of WBG are, in principle, guaranteed some level of public financing: it is not equivalent to actual access to services, since that depends on the actual availability of govemment services in the area. 2. Social welfare cases have health insurance premiums paid by the govemment. 3. As noted in the text, the refugee population also have access to all of the govemment services if they participate in the GHI plan. Source: Ministry of Health. Table A 10.6 shows the relative capacities and activities of the hospitals in the three major subsectors. The government sector has become by far the largest provider of hospital services, and is expected to expand its capacity by as much as 35 percent over the next five years according to the current public investment plan. These investments will also increase the capacities in the government hospital services toward tertiary care services. There is some expected growth in the private/NGO sector, mainly through the building of private hospitals in West Bank and one at least one NGO (Palestine Red Crescent Society) hospital. UJNRWA will - 60 - continue to maintain its focus on basic primary care services. However, the new 230 bed European hospital in Khan Younis, will be managed initially by UNRWA, although its management is expected to be transferred to the MOH at an unspecified date in the future. Table A 10.6: Distribution of Acute Care Hospital Beds and Discharges by Sector, 1996 Beds Discharges Sector Number Percent Number Percent Ministry of Health 1,479 71 155,763 78 NGOs / Private 563 27 38,936 20 UNRWA 38 2 3,933 2 TOTAL 2,080 100 198,632 100 Source: Compiled from the data provided by MOH, Nablus and Gaza City; and UNRWA, 1997. These figures exclude: hospitals in East Jerusalem and psychiatric and rehabilitation hospitals that provide long-term care. The MOH and UNRWA are the main providers of primary health care services in the WBG. although private practitioners working individually or through private/NGO clinics probably provide a significant share of first-contact physician services. Table A 10.7 summarizes the utilization rates of ambulatory services by different sectors. The number of visits to MOH facilities and NGO hospitals is based on actual recorded visits obtained from MOH database; the figure for UNRWA is an extrapolation from the 1995 data and the number for private practitioners is based on author's estimates. Although the number of visits to private practitioners is only an indicative figure, it underscores the importance of private physicians. Table A 10.7: Distribution of Ambulatory and Primary Care Services by Sector, 1996 l Sector | No. of Visits IS Percent of total Visits per Person visits r Total 8,808,000 100 3.9 Ministry of Health, Total 3,499,577 40 1.5 West Bank MOH Hospitals 530,431 West Bank Public Health Facilities 1,507,732 Gaza Strip MOH Hospitals 230,609 Gaza Strip Public Health Facilities 1,230,805 NGO Hospitals 103,055 1 0.05 UNRWA Health Services b 2,500,000 28 1.9/ ' Private Practitioners /d 2,736,000 31 1.2 a. "Visits" include first time and repeat visits. b. UNRWA figure is based on the extrapolation of 1995 data to 1996 using population growth rates (see Annex 11 for details). c. Based on the refugee population only. d. The number of visits to private practitioners is based on author's estimation, and should be treated as only indicative figures (see Annex 11 for details). Sources: For MOH facilities and NGO hospitals, based on data provided by MOH, Nablus and Gaza City, 1997; for UNRWA health services, based on projections from 1995 figures in UNRWA Annual Report of the Department of Health, 1995; for private practitioners, author's estimates, see Annex Table 11. 1. HEALTH FINANCING IN WEST BANK AND GAZA Government Sector Financing and organizational structure. The MOH's present financing and organizational structure can be described as a hybrid between a social insurance system and an integrated health system based on general tax revenues. While the MOH exercises direct financial and administrative control over the government health providers, it functions as a third-party payer in respect to the overseas referral cases. With the expansion of the private providers in recent - 61 - years, the MOH has also begun to purchase services from local private health care providers, albeit on a very limited basis. But despite this expansion in the purchasing role of the MOH, the GHI scheme has not yet evolved beyond its basic function as an earmarked tax collection mechanism to supplement the MOH budget. Other essential features of an insurance / purchasing agency, such as the designing, costing and evaluating the benefits packages for the insured population, the development of appropriate provider payment systems and contracting mechanisms with various providers, and fund management, have yet to be fully developed. This is not surprising given that the MOH's "purchasing" functions are circumscribed by the administrative procedures and regulation of the central government, and MOH exercises little financial autonomy over the GHI revenues. Internationall experience shows that universal coverage can be achieved either through a payroll-tax based social insurance system or through general tax-based health service system. However, no country relies exclusively on payroll tax alone to finance their health system: in the industrialized countries, social health insurance funds are supplemented in varying degrees by general revenues as a means of redistributing resources between different income groups. Developing countries tend to rely on general revenues for other reasons. Because of the limited number of the workforce in the formal wage-earning sector and the limited revenue collection capacity of governments, most middle income countries face difficulties in expanding the social insurance coverage. As a result, even in those countries where the social insurance system is relatively well-estabilished, governments continue to rely on general revenues to supplement their social insurance receipts. Within the Middle East and North Africa (MENA) region Algeria derives about one third of health financing from social insurance receipts, the highest in the region. In the rest of the MENA region social insurance contributions account between 0 to 20 percent of the total health revenues. Against these statistics, the proportion of revenues derived from the GHI premium in the WBG (around 10 percent) appear to be fairly typical for its level of income and development. Sources of revenues. In 1996 about 27 percent of revenues were collected from the GHI premium (including transfers from the Israeli Government for the insurance premium deducted from the Palestinian workers in Israel), 10 percent from copayments and fees collected by the health facilities, and the remaining 63 percent from general tax revenues. Latest data on the actual receipts from insurance premium payments for the first half of 1997 show a significant increase over the previous year's first half. If this first half 1997 figure is used to project the revenues for the remainder of the year, the total MOH revenues for 1997 would increase by over 20 percent the 1996 level. This optimistic estimation assumes that there will be no closures cir other economic disturbances in the remainder of 1997. The actual revenue for 1997 will probably fall somewhat below this projection. Although enrollment rates have been expanding steadily over the last two years, a commensurate increase in revenues from the GHI sources has not been achieved. Table A 10.8 shows the average annual contribution rate per household for various categories of GHI beneficiaries. Except in the category of Group Contracts, the average household contribution rates have fallen between 1995 and 1996. The contribution rates among the voluntary participants (individlual and group contracts) are only about half as much as the contribution level of the compulsory groups. These lower rates probably reflect not only the lower basic premium rate but a lower collection rate, since voluntary contributions are more difficult to verify and enforce. - 62 - About 10 percent of MOH revenues are derived from copayments, licensing fees and other fees collected by the health facilities. Copayments for drugs and diagnostic tests are collected in the form of "stamps", and these stamps give an indication of the level of service utilization by the insured population. As shown in Table 9 in 1996 insured households on average spent $19 per year on copayments. Households in Gaza Strip appear to make more frequent use of government health services than in West Bank, possibly a reflection of the fact that there are fewer alternative (NGO or private) providers in Gaza Strip than in West Bank. From the changes in copayments between 1995 and 1996, it can be inferred that the service utilization rates per household went up in Gaza Strip, but remained nearly constant in West Bank. Table A 10.8: Average Annual Contributions per Household to Government Health Insurance Premium, 1995-96 (US$ at official exchange rate) 1995 1996 West Bank and Gaza Voluntary 153 117 Group Contracts 81 133 Compulsory 256 246 Workers in Israel 248 218 Social Welfare Group 0 0 West Bank Voluntary 187 143 Group Contracts 136 167 Compulsory 266 239 Workers in Israel 163 177 Social Welfare Group 0 0 Gaza Strip Voluntary 123 84 Group Contracts 22 83 Compulsory 236 251 Workers in Israel 378 272 Social Welfare Group 0 0 Source: Calculated from data provided by MOH, Gaza City, 1997. Table A 10.9: Average Annual Household Contributions in the Form of Stamps (Copayment) for Drugs and Diagnostic Services (in US$ at official exchange rate) . West Rank and Gaza I 1995 1996 West Bank and Gaza l 8 19 West Bank 15 14 Gaza Strip 21 26 Source: Calculated from data provided by the Health Insurance Department, Gaza City, MOH, 1997. - 63 - Table A 10.10: Estimated Levels of Subsidies Per Insured Household, 1996 (in US$, official exchange rate) Average per insured household Expenditure on Insurance Contribution Copayments (stamps) Subsidy for Hospitalization Hospitalization West Bank and Gaza 333 176 19 138 West Bank 295 168 14 113 Gaza Strip 386 181 26 179 Source: Author's estimates. See Amex 17 for details. Table A 10.10 compares the estimated expenditures on hospitalization with average household contribution rates. If all insured households contributed US$333 per year, then the premium contribution would cover the entire cost of hospitalization (including overseas treatment). At the present contribution rates, however, a dollar of contribution from the GHI participant is matched by about 80 cents of contribution from the general revenues towards the cost of hospitalization for all insured population. These figures do not include the costs of other services provided by ithe government, such as preventive care and public health programs which do not require insurance coverage and are therefore covered in its entirety by taxation. The sources of revenues by different categories of GHI holders for 1996 are: compulsory (35 percent); workers in Israel (26 percent); voluntary - individual (13 percent); group contracts (12 percent); and copayments (stamps) (12 percent). Contributions from the workers in Israel tend to fluctuate during periods of uncertainties in the job market in Israel. Although the enrollment rates have expanded significantly for those on Group Contracts, their total contributions have been relatively small due to the very low premiums collected from this group. In fact, the total contributions from the voluntary participants have actually declined in the past year. The unemployed and hardship cases are charged a minimum premium of NIS 40 per month for GHI coverage. The Ministry of Social Welfare, in principle, covers the premium cost (equivalent to about $150 per year) for household who qualify as social welfare cases. In 1996 the Ministry of Social Welfare would have contributed around US$ 5.3 million, or about 16 percent of the total GlII contributions, for about 3 5,000 households who were registered as social welfare cases. Presumably this amount would have been included in the budget allocation from the Treasury to the MOH, but this budget transfer is not formally recorded as an expenditure item for the Ministry of Social Welfare and a revenue item for the MOH. Members of the Police Force contribute 2.5 percent of their base salary for medical care5. As in the case of the social welfare group, their contributions do not appear specifically as revenues for the GHI. A separate extrabudgetary account exists for financing the medical services for the Police Force. It is unclear whether all their contributions are allocated to a separate medical service account for the Police Force or to the MOH budget. Enrollment and eligibility. The entire Palestinian population in the WBG is eligible for the GHI scheme, although there appears to be some questions regarding the eligibility of the overseas Palestinians. Enrollment in GHI grew from 20 percent of the total WBG population in 1993 under the Israeli Civil Administration, to over 35 percent in June 1997. The latest figures from the first half of 1l 997 indicate an accelerating growth in the enrollment rate. 59 The GHI is covering about 25,000 households (average 5.2 persons per household) of the Police Force. - 64 - A number of critical changes introduced by the government on the GHI scheme have supported this rapid expansion in enrollment. * The lowering the monthly premium rates from NIS 110 per month under the Civil Administration to variable rates of 5 percent of monthly wage or NIS 75 maximum has made the scheme more affordable to a larger segment of the population. * For an additional NIS 15 per month, the first two dependents of the head of the household can be included in the GHI scheme (then for an additional NIS 35 per month additional dependents may be insured). This generous policy offers an added incentive to enroll in the scheme, particularly for families with ailing elderly parents. Since most Palestinian families retain an extended family structure, the policy has probably helped to bring a significant number of the elderly population under the GHI scheme, but has also contributed to a major escalation in cost of care. Data on the actual number and age of dependents under the GHI scheme are not available to 60 confirm these trends * The introduction of the Group Contract scheme encourages employer groups and associations to purchase health insurance coverage for their employees or members at a discounted rate. This category has shown the highest expansion in enrollment in the last two years, but because of the very low premium rates their overall level of contribution has been low. The number of households who enrolled voluntarily in the GilH, either as individuals or as members of the group contracts, more than tripled between 1993 and 1997. Group contracts are actively promoted by the MOH and are showing a strong growth in enrollment in 1997, but voluntary enrollment by individuals appears to have peaked in 1996. The number of workers in Israel has been growing relatively more slowly than the rest of the enrollees. Their contributions stop during border closures. Social welfare cases accounted for 20 percent of total GMI holders in 1996. Data are not available on the composition and characteristics of the uninsured population. The existing policy of the voluntary participation in the GHI probably leads to some form of selection bias. The uninsured group probably includes the well-to-do households, many of whom have their own private insurance coverage, and the young and relatively healthy households who are at a low risk of falling ill. There is no waiting period to access primary care and a two months waiting period for hospitalization (though patients would have to pay 50 percent of annual contribution and 25 percent of hospital costs) I; in emergency cases patients are able to access overseas treatment upon payment of a full year's premium. This flexible and relatively easy enrollment requirements give households an incentive to stay out of the insurance until they are compelled to join when a member of the household falls ill. Population with the refugee status are eligible for free basic health services from UNRWA, but many also enroll in the GHI scheme although they are likely to be government employees who are required to enroll. This cross-over is probably encouraged by the overcrowding and limited services available at UNRWA health facilities. Most UNRWA health 60 The most recent estimate of the average family size in Gaza Strip is 6 persons (the MOH, 1997). 61 Insured patients, after the waiting period, pay 25 percent of hospital costs excluding certain conditions including heart disease, kidney disease and cancers. - 65 - facilities are located within the camps and are used mainly by the residents in these camps. Refugees who reside outside of the camps (mainly in West Bank) are more likely to make use of the government facilities. Details on the premiums, copayment rates and benefits of the GHI scheme are discussed in Annex 5. Figure A 10.2: Enrollment Patterns in Government Health Insurance, 1993-96 A. Number of Households Enrolled Number of households 200,000 180,000 160,000 / *Social Welfare Group M Workers in Israel 100 000 s0 n °Compulsory 60,000 lSV | | /1 *Group Contracts 402000 o°° t FVoluntary - Individual 0 1993 1994 1995 1996 First Quarter 1997 Year B. Percent Distribution, 1993-97 100% 80% l nSocial Welfare Group 60% *Workers in Israel Percent 40% lCompulsory lGroup Contracts 20%o L Voluntary - Individual 1993 1994 1995 1996 First Quarter Year 1997 Source: Health Insurance Department, MOH, Gaza City, 1997. Budgeting and resource allocation process. MOH follows the standard centralized budgeting process typical of a traditional public administration, which emphasizes control over efficiency. Ministry of Finance (MOF) transfers monthly advance to the MOH's current expenditure account based on a ceiling established by the annual budget, and MOH must contain expenditures to within the limits set for each line-item. Revenues from the insurance premium payments and copayments collected at points of service are also transferred directly to the MOF - 66 - accounts, and the MOH does not have direct access to these funds. The MOH, in turn, centrally manages the financing and procurement requirements for all of the public health facilities (hospitals, primary health care centers) under its administration. Financial management is, therefore, almost nonexistent at the facilities level, since all the necessary information and authority for making financial decisions are held at the central ministry level. Expenditure Patterns. Figure A 10.3 presents the MOH expenditure pattern by types of inputs for 1993-97. Between 1995-97 drug expenditures accounted for the fastest growing component in the MOH's expenditure item. Serious attention is needed to introduce drug policies and reforms that will reverse the rise in drug consumption rate. The projected decline in the salary component is another source of concern. MOH salary increases have been held down for number of years already, and are fueling considerable dissatisfaction among the MOH staff. Any further deterioration in the wage rate will likely have serious consequences on the quality of care and may lead to labor unrest. In the government hospitals in West Bank, salaries accounted for 42 percent of total expenditures in 1996. By comparison, in the UNRWA hospital in Qalqilya, salaries accounted for about 76 percent of total hospital expenditure. Some of this difference can be attributed to the fact that MOH hospitals manage more complex cases than the UNRWA hospital, and are therefore likely to have higher drug costs. However, a significant portion of the difference could also be due to wage differentials. In the MOH primary health care services, salaries accounted for about 39 percent of the total in 1996. Figure A 10.4 shows the MOH expenditure for different levels of health care in West Bank. Similar data for Gaza Strip were not available at this time. Secondary and tertiary care services accounted for nearly two thirds of the total MOH expenditure in West Bank while primary health care ("public health services") accounted for less than a quarter of the total. In the medium-term the expenditures on overseas treatment are expected to decline as increasing number of tertiary cases become admitted to the local private or government hospitals. Under the planned expansion of the public delivery system with a heavy emphasis on hospital capacity, the share of expenditure on hospitals will probably become even higher relative to expenditures on primary health care (see Annex 9 for details). In 1996, around 3.7 percent of all inpatient cases in the WBG were referred overseas, and this group accounted for over 16 percent of total MOH health expenditure. From Table A 10.11 it is evident that the cost per case has been falling steadily due to the decreasing number of referrals to Israeli hospitals. By 1997 the growth in expenditure for overseas treatment is projected to be contained to the previous year's level. However, the government's policy of replacing overseas treatment with local treatment will not necessarily result in a reduction in the total cost of care. Because of the higher cost of living and wage rates within the WBG, the unit cost of tertiary care services within the WBG will be higher than the cost of comparable services in either Jordan or Egypt. In the coming years the government will face a difficult choice between promoting local capacity or on saving costs by purchasing services from the relatively less expensive overseas providers. - 67 - Figure A 10.3: Ministry of Health - Expenditures Patterns, 1993-97 A. In Thousands of US$ US$, thousands 100,000 80,000 U dn Expendiurs OFood 60,000 Da*I)g&Disposale 40,000 (No0t Available) u Ovas TreabTnnt 20,000 ESailaies 0 1993 1994 1995 19% 1997 (projectea,) Year B. Percent Distribution Percent Distribution 100 _ 80 - *Operating Expenditures 60 E] Food El Drug and Disposable 40 . . ..... Eg Overseas Treatment (Not Available) ~Slre 20 ~ 0 44 1993 1994 1995 1996 1997 Year - 68 - Figure A 10.4: Ministry of Health Expenditures by Levels of Health Care in West Bank, 1996 Hospital 45% Overseas Treatment 19% Other ~ v 29 2% Pills 6% Source: Family Planning and Women's Reproductive Health Survey. Planning and Research Center (1996). - 117- Sexual Transmitted Diseases It is believed that incidence of sexual transmitted diseases (STD) is low in the WBG. Only four gonorrhea cases and no syphilis case were reported to the MOH in 1996. Physicians in public hospitals say that they never encounter syphilis or gonorrhea, but do find quite a few cases of minor infection caused by trichomonas or candida. STD surveillance system has not been reliable enough. Because of lack of adequate counseling services and shortage of female doctors, women are often reluctant to seek care even they have symptom of STD. Donor blood is routinely screened for hepatitis B (HB) but not for VDRL, while HIV testing is done only for suspected cases. In 1996, 1,178 HB carriers and 114 HB cases, 73 hepatitis C carriers and one case were reported. In 1996, among tested donor samples in the blood banks of MC)H hospital in West Bank, HB antigen positive cases were 477 out of 16,826 samples, and hepaltitis C positive cases were 50 out of 14,249 samples. HB antigen positive cases were four to five percent among 17,424 samples tested at the Central Laboratory in Gaza Strip in 1996 and hepatitis C positive cases were one to two percent among 10,150 samples. Two positive VDRLs found among 1,222 samples were confirmed as false positive at an Israeli referral laboratory. Newborns are now routinely vaccinated against HB. During 1987-1993, 24 AIDS cases were reported among Palestinians in WBG and Jerusalem. Seven cases were adult women while two were infants. Six cases were transmitted heterosexually, four homosexually, and six through blood transfusion and blood products. Among 15,498 donor samples tested in the blood banks at MOH hospitals in West Bank in 1996, two samples were found HIV positive. Among the 12,439 samples tested at the Central Laboratory in Gaza Strip in 1996, only one was HIV positive and the patient died in two weeks. In 1994, the Laboratory found an HIV positive pregnant woman, whose infant was also infected. Both mother and child eventually died of AIDS. Since only suspected cases are tested, the accurate HIV positive rate is not yet known. Cancers in Women About one tenths of deaths are caused by cancer, which is the third leading cause of death among adults. Since cancer screening programs do not exist and only limited number of facilities have pathology units, accurate cancer incidences among women have not been determined yet. According to the 1994 study, mammary cancer comprised 28.5 percent, uterine corpus cancer 5.5 percent, uterine cervical cancer 3.1 percent, and ovarian cancer 4.1 percent of the 3,435 female cancer cases included in the study. The incidence of uterine cervical cancer appeared to be relatively low among Palestinian women, which may relate to their life style. Mammary and uterine cancer incidences increase dramatically after 45 years of age (Table A 11.5). This suggests that cancer prevention programs should target menopausal and post menopausal women at first. - 118- Table A 11.5: Age Distribution of Mammary, Uterine and Ovarian Cancer Cases ________________ _ || Number Age Distribution (years) of Cases -25 25 - 35 [ 5 - 45 J 46 - Manmary Cancer 980 10 93 249 628 Uterine Corps Cancer 189 0 3 22 164 Uterine Cervical Cancer 107 1 13 23 70 Ovarian Cancer 140 27 20 29 64 Total 1,416 38 129 323 926 Rate (percent) 100 2.7 9.1 22.8 65.4 Source: Abdeen, Z. and Barghuthy, F. Palestinian cancer statistics, seventeen years of cancer incidence, 1976-1992. Data Bank and Health Related Research Center, Arab College of Medical Professions, Al-Quds University (1994). Adolescent Health Early marriage is still common among Palestinian girls. Currently, girls are allowed to marry at 16 years of age, following Islamic regulations that allow marriage when girls become physically and mentally matured. However, quite a few number of girls get married even at the age of 14 or 15 years. Early marriage is likely to cause high risk pregnancies, high fertility and low education attainment. Women Health and Development Administration of the MOH, Directorate of Gender Planning and Development of the Ministry of Planning and International Cooperation (MOPIC), UNRWA, and NGOs are advocating health and economic benefits of later marriage. Marriage between cousins or relatives are common and result in relatively high incidences of genetic or inherited disorders such as thalasemia. UNRWA's school health program is targeted to ninth grade girls, many of whom are about to marry. UNRWA nurses visit schools and teach family health classes. The MOH's Health Education Department also conducts school health programs and youth programs in Gaza Strip. However, health education and counseling regarding sexuality among youths are still very limited. Some of NGOs' IEC programs are targeting youth groups, which include training of youth peer counselors. It is difficult for unmarried youth to access family planning services. Women's Health During and Post Menopause Nearly half of Palestinian female population is under 15 years old, reproductive age women are 43 percent of female population and only 10 percent is older than 49 years old. Until now, very little is known about women's health during and post menopause. Particular programs targeting elder women have not been developed. Infertility Although having children is considered to be of social value to women, accurate rate and cause of infertility is not yet known. The rate of infertility among Palestinian couples is estimated to be at the same level as that in developed countries. According to the 1996 reproductive health survey in West Bank, seven percent of women have never been pregnant as yet, and 28 percent women wanted to be pregnant as soon as possible. Since women are expected to be pregnant immediately after getting married, it is not unusual that women visit physicians seek treatment of infertility only two or three months after marriage. A private in vitro fertilization clinic has opened in Nablus, suggesting that there are women who desperately - 119- want to get pregnant. Infertility counseling and treatment integrated with other reproductive health services, standard protocol for infertility treatment, and technical and ethical regulation for applying advanced reproductive technique have to be established urgently74. Mental health and violerce against women Due to the difficult social and economic situation and restricted social mobility, many women are said to be suffering from mental disorders such as depression. Besides the violence caused by political turmoil, women are also exposed to various degrees of domestic violence. For example one woman in Gaza Strip and another in West Bank were killed in a month by their male family members due to "disgrace of the family honor." Constant threat by domestic violence affects women's mental condition to a large extent. However, female genital mutilation is not practiced among Palestinian women, unlike neighboring Egypt. NEW APPROACHES AND CHALLENGES FOR COMPREHENSIVE REPRODUCTIVE HEALTH SERVICES PA is giving serious attention to promote women's health and has emphasized equality and non-discrimination in public rights of men and women in the "Palestinian Declaration of Independence." Directorate of Gender Planning and Development, MOPIC, advocates various women's issues, prepares the Palestinian National Plan of Action for the Advancement of Women and coordinates inter-ministerial committee for women's development. Women's Health and Development Administration was established in the MOH one and half year ago. Following the Strategic Plan for Women Health and Development in Palestine, the administration is promoting a comprehensive approach for reproductive health. Receiving three year financial support of ECU 4.5 million from European Commission (EC), the MOH is building family planning units in the existing health facilities and providing training for nurses and doctors. Up to 15 health centers in West Bank are to be upgraded, and eight MOH health centers and three N4GO clinics in Gaza Strip currently provide family planning services. IPPF, through PFPPA, has also supported to provide family planing services in five MOH health centers. EC and :IPPF support provision of contraceptives, too. Recently UNFPA proposed technical and financial support of US $1.2 million over the next five years. Human resource development is vital for providing comprehensive reproductive health services. Since farnily planning, STD management and other reproductive health services are to be integrated into the existing primary health care services, health professionals need to be trained both technically and conceptually. To encourage women for seeking care, doctors and nurses need to develop counseling skills and qualified female service providers need to be increased. 74 Recently the MOH started to prepare a standard protocol for infertility treatment in West Bank, that emphasize counseling and prevention of pelvic inflammatory diseases. - 120 - RECOMMENDATIONS FOR THE MEDIUM TERM STRATEGY AND IMMEDIATE INTERVENTIONS Public and Private Role Considering the current heavy involvement of the private sector in providing reproductive health services, the roles of public and private sectors need to be defined in the medium term. The MOH is responsible for establishing legal framework to secure efficient provision of reproductive health services and for monitoring the quality of services and supervising health professionals. The MOH also need to establish financing and payment mechanism for both public and private sectors for sustaining reproductive health services and securing access to services. On the other hand, the MOH will be able to hand over the provision of family planning services to the NGO and private sector, when public becomes well aware of the benefit and access to the services are secured. Most low risk maternal care services can also be provided by the NGO and private sector under the MOH's quality monitoring. In addition to regulation and monitoring, the MOH hospitals have responsibility to handle obstetric emergencies and difficult cases. An efficient referral system needs to be established in the medium term. Recently, the MOH designated PRCS to provide ambulance services in the WBG. The ambulance services will possibly connect primary health care services provided mainly by the private sector, to the referral services mainly provided by the public sector. Primary health care personnel need to be further trained for the selection of cases and timing of referral. Political issues which obstruct emergency transportation may remain for an uncertain period of time. Upgraded Preventive Care Although preventive care for women's health in the WBG is relatively good, more efforts are needed to raise public awareness of promoting reproductive health. The following are examples which can be started immediately once health personnel are trained: •nutritional education to prevent complications during pregnancy, such as hypertension and diabetes; *increased postnatal care coverage at clinics, as well as by home visits; 75 *promotion of birth spacing among young women •raising husbands' awareness of family planning76 *health education including sexuality and reproductive health for male and female youths; •premarriage counseling including knowledge of genetic diseases; •improved counseling services for family planning, STD, infertility and mental health; Before starting new interventions, it is necessary to have accurate figures of prevalence and incidence. For example, STD is obviously under-reported and it is necessary to establish a surveillance system which is integrated to the ongoing health information system development. Cancer screening programs have not been undertaken as yet. Taking into account the 75 The MOH has already started to implement this recommendation. 76 The MOH has started awareness programs targeting ninth grade school children, young men, husbands, and old women who often make decisions in households. - 121 - population's age structure and disease pattern, possible cancer screening programs have to be carefully planned and prioritized after extensive cost-benefit analyses. Interventions targeted to underprivileged areas Despite a relatively small population concentrate in small areas, there are some regional differences in terms of access and attitude to health care services. Access to the family planning services and advocation of the benefit, especially to males, needs to be strengthened in Gaza Strip. Maternal care services need to be improved in particular districts in West Bank. Some of the public facilities for deliveries need to be rehabilitated. Cost of reproductive health interventions Cost of providing reproductive health care in the WBG, comprising of benefits such as maternal care, obstetric and neonatal complications, management of incomplete abortion, treatment of STD and family planning services, is estimated at US$6.6 million annually. This assumes that 100 percent of pregnancies will be provided with maternal care and that family planning services can be extended to at least 50 percent of all married women in the reproductive age group. Prevalence of STD and of different complications of pregnancy have been taken into account when estimating the cost required for their management. Table A 11.6 shows the cost of different interventions by level of health care. It is assumed that about 50 percent of women will have contact with clinics, 40 percent including referrals will be utilizing comprehensive health centers and 10 percent will have contact with hospitals. Cost per client at the clinic is minimal at US$7.5 per client with provision of only basic maternity care, STD and family planning services; US$22.6 at comprehensive centers where management of some complicated cases will also done; and is US$64.5 at hospitals. Calculations assume that no new construction is done and share of overhead costs such as maintenance, salaries, equipment, etc. are assigned to the reproductive health package. Table A 11.6: Summary of Cost by Service Levels || Cost (US$) 1 Share Per Client | Per Capita Per Birth .___________ _____ I (percent) (US$) (US$) (US$) Clinic 1,278,256 19.4 7.45 0.56 Comprehensive Health Center 3,107,220 47.1 22.64 1.36 Hospital 2,214,654 33.6 64.54 0.97 Total 6,600,630 100.0 2.90 65.80 Source: World Bank staff estimates. As described previously, the coverage of maternal care and other basic primary health care services in the WBG is relatively high. In addition, the MOH, in collaboration with donor agencies, has already started to upgrade reproductive health services including family planning services. Therefore if we assume that required staff and equipment is to a great extent present in most facilities, the cost estimated would be reduced by more than two thirds to US$1.9 million. This includes training for physicians, nurses and midwives; incentives for their additional workload; and recurrent costs and is the equivalent of US$19 per birth or $0.83 per capita. - 122 - CONCLUSION Comprehensive approach for reproductive health service has started in the WBG. The MOH, in collaboration with international agencies and NGOs, is taking measures steadily for improving women's health. Considering relatively high education level among women, it is expected to achieve major progress in near future. After the transitional stage, the role of the MOH needs to be re-defined for better utilization of resources and promotion of public and private partnership. RESOURCE PERSONS Dr. Munzer Sharif, Deputy Minister, Ministry of Health Dr. Dina Abu-Sha'ban, Director of Women Health and Development Administration, Gaza, Ministry of Health Dr. Souzan Abdu, Director of Women Health and Development Administration, Nablus, West Bank, Ministry of Health Dr. Faten El-Hammami, Director of Family Planning, Gaza, Ministry of Health Dr. Randa El-Khodary, Director, Central Laboratory, Gaza, Ministry of Health Ms. Zahira Kamal, General Director, Directorate of Gender Planning and Development, Ministry of Planning and International Cooperation Dr. Amna Shurbasi, Field Family Health Officer, UNRWA Field Office, Gaza Ms. Joyce Ajlouny, National Programme Officer, UNFPA Ms. Monica Awad, Senior Health Assistant, UNICEF Ms. Battina Musheidt, European Commission Technical Assistance Office Mr. Haidar Husseini, Secretary General Ms. Dima Aweidah-Nashashibi, Executive Director Mr. Ziad Yaish, IEC Officer Palestinian Family Planning and Protection Association, Executive Office, Jerusalem Mr. Younis N. Al-Khatib, General Director Dr. Izzat N. Ayoub, Emergency Medical Services Department Palestine Red Crescent Society - 123 - REFERENCES Women Health and Development Administration, Ministry of Health: Strategic plan for women health and development in Palestine. (1995). Women Health and Development Administration, Ministry of Health: Achievement of women's health and development administration for 1996. (1997). Directorate of Gender Planning and Development, Ministry of Planning and International Cooperation: Directorate of gender planning and development, a concept paper, mission and conceptual framework. (1996). Health Research ancl Planning Directorate, Statistics and Information Department, Ministry of Health: The Status of Health in Palestine Annual Report 1996. (1997) Statistics and Information Department, Ministry of Health: Health statistics, West Bank districts. (1996). National Health Plan Commission: The national health plan for the Palestinian people, objectives and strategies. Planning and Research Center, Jerusalem (1994). Palestinian Central Bureau of Statistics: The health survey in the West Bank and Gaza Strip, main findings. (1997). Ismail, N., and Shahin, M.: Family planning and women's reproductive health survey. Planning and Research Center., Jerusalem (1996). Stephenson, P.: The health of Palestinian women in the West Bank and Gaza Strip, problems and priorities - resources and opportunities. UNICEF, Jerusalem (1996). UJNFPA: Programme of assistance to the Palestinian people in Gaza and West Bank. (1996). United Nations General Assembly Official Records - Fifty-first Session: Report of the Commissioner-General of the United Nations Relief and Works Agency for Palestine Refugees in the Near East, 1 July 1995 - 30 June 1996. United Nations, New York (1996). Shurbasi, A.: Current practices of contraceptive use at MCH center, Gaza field. UNRWA Field Office, Gaza (1995). Palestinian Family Planning and Protection Association, International Planned Parenthood Federation Arab World Region, Palestinian Red Crescent Society, and European Commission: The Palestinian conference on population and family planning, final statement and recommendations, Palestine Hospital, Cairo. (1994). Barghouthi, M. and Lennock, J. Health in Palestine: Potential and Challenges. Palestine Economic Policy Research Institute (MAS). (1997) -124- Abdeen, Z. and Barghuthy, F. Palestinian cancer statistics, seventeen years of cancer incidence, 1976-1992. Data Bank and Health Related Research Center, Arab College of Medical Professions, Al-Quds University (1994). Abdeen, Z. and Barghuthy, F. Acquired immunodeficiency syndrome (AIDS), questions and answers. Data Bank and Health Related Research Center, Arab College of Medical Professions, Al-Quds University (1994). - 125 - Appendix 12: THE PHARMACEUTICAL SECTOR BACKGROUND This working paper is part of the Health Sector Study commissioned by the Ministry of Health (MOH), the World Health Organization (WHO) and the World Bank. The pharmaceutical sector study and other sub-sector studies were carried out from May 9 to 22, 1997. It included visits to the MOH, hospitals, health centers, pharmaceutical wholesalers, factories, retail pharmacies, and numerous NGO and UTN organizations involved in health care in the West Bank and Gaza (WBG). The study draws upon work done in 1993 by UNICEF, and on a WHO supported analysis of the drugs situation conducted by the MOH in 1997. Available data on the drug sector has been reviewed. The study is based primarily on analysis of data. Observations on the working of the sector and detailed interviews with numerous stakeholders were undertaken to confirm data and solicit opinions on the achievements. It considers problems and possible future strategies for improvements in the pharmaceutical sector in support of an improved quality of care in the WBG. Though somre data and figures are difficult to validate, however most figures are believed to be accurate within a range of plus or minus 10 percent. Given the transitional situation in the W'BG, the analysis and recommendations can quite safely be made even with such uncertainty. EXECUTIVE SUMMARY Major Issues The annual cost of drugs to the individual and society is high and increasing. The per capita consumption is US$21 - 29, and in total US$47 - 67 million. The 1997 projected budget for drugs and consumables is 30 percent of total MOH expenditure, up from 28 percent in 1996. The drug costs are also high when compared to countries at the same level of socio-economic development. About 10 drugs, often very sophisticated ones, consume about 25 percent of the annual drug budget. There is no national drug policy and a very antiquated drug legislation. These factors are a major impediment to the rational and cost-effective development of the pharmaceutical sector. There are eight pharmaceutical companies, while a new plant is under construction. They produce about 50 percent of total consumption. Although none of the factories are producing according to good mnanufacturing standards, they are quite successful in winning MOH tenders. The relatively low prices offered to the MOH are offset by much higher prices in the private sector. Plant utilization is low, with even those at higher utilization operating at perhaps two to three times greater costs than comparable factories in other countries. Israeli restrictions on importation from abroad provides a shield for the industry in terms of prices, but also results in higher prices in both the public and private sectors. The industry produces many combination products, i.e. withL two or more active ingredients. These products are not generally recommended. Existing drug formulations are copied locally and marketed as branded generics - 126- There may be as many as 4,000 different drugs on the market. This is very high compared to countries with a rational drug policy. There is a trend towards limited drug lists, but a national essential drug list is still in draft form. Many NGOs and UNRWA use such essential drug lists, and MOH tenders for only about 600 different drugs under generic names. The pharmaceutical sector administration has only been in existence for about two years. It is suffering from severe resource constraints in terms of qualified staff, equipment, computers and transportation, as well as access to knowledge of modern drug administration. There is good availability of drugs. However, drug consumption is very much demand and consumption driven, rather than based on medical needs and morbidity statistics. Drug prices are very high in the private sector. MOH is reasonably successful in securing prices for most drugs which are not much higher than average international prices. However, UNRWA's prices are consistently lower. The Israeli requirement that drugs must be registered in Israel is a hindrance to the import of low-cost generics into WBG. Households spend about US$168 per year on drugs and vitamins, which is equivalent to 50 percent of their total health budget. In 1996, MOH's budget for drugs, funded from general revenue, was US$17.5 million. Both the NIS 3 paid per drug item by patients in MOH facilities and the 17 percent VAT in private pharmacies, revert to the Ministry of Finance. There is widespread overprescription and polypharmacy, particularly of antibiotics, injections and combination products. The absence of standard treatment protocols makes it difficult to monitor and control prescription practices. Doctors in private practice rely primarily on expensive branded products and the present drug law does not allow for generic substitution. There are about 560 private pharmacies which is a high figure considering the small size of the population and the relatively short distances. The present pharmacy law and new regulations stipulate that pharmacies must be 100 meters or more apart but cannot limit the number of pharmacies when applicants meet the legal requirements. Many pharmacy owners have a hard time running a profitable business. Framework for Reform While the issue of availability of drugs in most facilities seems to have been solved, there is plenty of scope for reform of the pharmaceutical sector. The major objectives for reform are: * Cost containment * The rational use of drugs There is abundant international experience in reforming the pharmaceutical sector, in particular the public sector. Such experience and "best practices" from other countries should be carefully reviewed with a view to determining how they can best be used in the WBG. Any major reform is likely to provoke resistance, if not outright protests. The presence of numerous stakeholders and much vested interest must be considered in the planning of extensive reforms. - 127- Experience has shown that major reform elements should not only be carefully planned but also gradually introduced. Nearly all elements of the present drug sector should be made the subject of detailed reviews with changes carefully planned and implemented. There is already a reasonable volume of studies and research, and more studies are under way. This seems to provide sufficient material for reform activities to start soon. The reform process should be carefully designed by experts with relevant country experience. WHO and the World Bank may be relied upon to identify expertise for providing technical support to MOH staff. An important element is to involve as many stakeholders as possible in the process. The study's recommendations are therefore listed in terms of how they can be most easily implemented. While there is no blueprint for reform, the new edition of Managing Drugs Supply (MSH with WHO, 1997) can serve as a useful tool for reform and not least for teaching and training of all health staff involved in the management of drugs and vaccines. Conclusions and Recommendations This study concludes that MOH has achieved a major success, under difficult circumstances, in securing the regular availability of drugs and vaccines. However, availability has been achieved at a high cost. There are too many drugs in the sector and prices in the private sector are very high. The domestic industry provides a large share of the annual consumption, but does not operate efficiently in terms of quality and price. Consumption is too driven by past consumption and patients' demand for drugs. There are also too many private pharmacies in operation. Restrictions on the part of Israel with regard to drug registration influence the WBG drug market, not least in terms of branded products and resulting high prices. The study also concludes that there is considerable scope for reform of the health sector to contain costs and to rationalize the use of drugs. The study makes the following major recommendations: * Implement a national essential drugs list with standard treatment protocols; * Seek lifting of Israeli drug registration requirements; * Shift estimation of drug requirements to morbidity and service statistics; * Improve drug price intelligence for better procurement prices; * Introduce generic substitution; * Draft a National Drug Policy and a modem drug legislation. - 128- INTRODUCTION In 1996, the 2.3 million residents of the WBG consumed drugs and vaccines worth a total cost of at least $47 million, or $21 per person. Due to considerable uncertainly about the size of the private sector, this estimate may be significantly low. Some sources indicate that private sector provision may be much more substantial, estimating total annual drug consumption at $67 million, or $29 per person. In comparison, Israeli consumption was $53 in 1996 and Jordanian $36 in 1995 (up from $21 in 1994). In Egypt, annual drug consumption is about $15 per capita and further declining. Drugs and vaccines are provided from multiple sources, including the MOH (37 percent), NGOs (17 percent), UNRWA (4 percent), UNICEF (vaccines), WHO (polio-vaccine), other UN and bilateral donations, and the private pharmacy sector (42 percent). Drugs are procured from eight domestic manufacturers, from Israeli factories and from abroad through agents and wholesalers. While most donations are in cash to finance local procurement of domestic or imported drugs, some are made in kind. Availability of drugs and vaccines to cover the needs of the health services and the population has been and continues to be good and regular. Drugs not available in a given sub- sector can normally be obtained from another source, often from a private pharmacy. This is a major achievement for the Palestinian Authority (PA) and the MOH, as very few countries have gone through a period of rapid transition and turmoil without experiencing severe shortages of even vital drugs. Despite good availability, there are disparities and inequities in access. While refugees, insured people, and registered social welfare patients have access to free or subsidized drugs, uninsured and poorer patients frequently have access only to expensive pharmacy drugs. Because fees for subsidized outpatient department (OPD) drugs are low, better off patients may get normally expensive drugs at very low cost to themselves. However, the General Administration of Pharmacy's ability to cope with the drug situation augurs well for future improvements in the supply of pharmaceuticals. Good availability has also not been without cost. In 1996 the total cost of drugs and disposables was about 1.9 percent of GDP. In 1997, expenditures for drugs and disposable supplies are projected at 32.5 percent of total MOH expenditures, up from 28.6 percent in 1996 and 21.5 percent in 1995. This is the fastest growth of any single line item in the budget and is not sustainable in the long run. In 1996 the top 10 drugs consumed about 25 percent of MOH's drug budget. These drugs are mostly expensive remedies for immunosuppression, hematological and hormonal disorders, and latest generation antibiotics. Some are not on WHO's list of essential drugs. High costs per patient and the prospect of increasing demand for treatment of chronic conditions as the epidemiological transition unfolds call for increased attention to the cost of procurement, selection of and rational use of drugs. The current situation presents many challenges as well as multiple options for improving the drugs situation now and in the future. Proven approaches to cost-containment in the supply of pharmaceuticals exist. A strategy to reduce cost without negative medical results would be a priority in halting cost escalation and eventually reducing the total cost of drugs to the population. - 129- NATIONAL DRUG POLICY AND LEGISLATION There is no national drug policy (NDP). Lack of time, pressing daily problems and lack of resources have prevented the MOH from developing such a policy. However, plans for an NDP have been drawn up in collaboration with WHO's Drug Action Program. The current legislative framework is severely outdated: the West Bank follows the Jordanian Pharmaceutical Association Law of 1957 while Gaza Strip follows the Egyptian Public Health Law of 1956. These laws deal primarily with retail pharmacy practice and are unsuitable to cover or facilitate development of a modern pharmaceutical sector. The sector is governed less by these laws than by a combination of past practices, MOH decrees and guidelines, and international rules for Good Manufacturing Practice (GMP). Sector management is still somewhat influenced by the former Israeli administration, as registration is not yet completely under Palestinian control. The Israeli requirement that all drugs imported into WBG be registered in Israel both presents a barrier to entry for many low-cost generic manufacturers, and provides a captive market for higher priced Israeli products. At the same time, Israel does not register products produced in the West Bank or registered with the Palestinian authorities. The lack of clear NDP objectives and strategies, supported by modern drug legislation and ministerial guidelines, makes it difficult for the many parties involved to effectively manage their respective parts of the drug sector. Although the sector has performed well in terms of availability of drugs, many problems can be fully or partly explained by the lack of a policy and legal framework wilhin which the sector can further develop. Uncertainty about policy and legislation may have a negative impact on investments, particularly from abroad. Limited guidelines for the supply of pharmaceuticals have been provided in the 1994 National Health Plan and expressed as objectives and targets to be achieved. The Plan mentions the need for provision of essential drugs in PHC. It also notes the issue of the cost of drugs, estimating that pharmnaceuticals cost $17 million (in public sector) or about 13.3 percent of the total health service costs in 1992, and forecasts that this will fall to 11.1 percent of health costs by the year 2000. The projections however are based on an assumption of real economic growth and the Plan falls short of providing solutions for issues effecting drugs costs. The percentage is also incorrectly calculated since MOH drug expenditure is estimated at $61 million. The next Health Plan, now under early development, must address the issue of pharmaceutical supplies since they are not only costly but also necessary for the credibility of the health services. The many pressing priorities in health and other sectors for both policy development and legislation may make it infeasible to press for early adoption of an NDP and a new legislation. However, an interim measure to start the process of drafting a national drug policy and drug legislation, and to begin consultations to this end, would have substantial benefits. It would provide sector leaders with some opinion on the direction in which policy and legislation should move, and will assure wider consultation in preparation for the time when prospects are good for a cabinet presentation. - 130- THE DOMESTIC PHARMACEUTICAL INDUSTRY There are seven drug companies in the West Bank; in Gaza Strip there is one small plant, and a medium-sized plant nearing completion. All companies are public share companies, although some are family based. In 1996, total value in ex-factory prices was estimated at $20 million. The largest company, Birzeit-Palestine Pharmaceutical, had 180 employees and reported a good profit on sales of about $9 million. Companies with less turnover are suffering from the small size of the market, competition for government contracts, and the loss of purchasing power. Exports to other countries are negligible. While none of the factories have certificates of GMP, some are believed to be very close to qualifying and the Middle East Pharmaceutical Co. in Gaza Strip is being constructed to GMP standards. All factories formulate their products with imported raw materials and other ingredients. They all market their products as branded generics, with none producing brand- name drugs under license. Most of the factories have a large number of products. Together, the eight factories produce 725 different branded generics, with Birzeit- Palestine leading with 221 products, followed by Jerusalem Pharmaceutical with 114. With only 12 branded generics, Al-Razi Chemical is the smallest. Many of the products are combination drugs, those that have two or more active ingredients. Of 502 drugs analyzed in 1995, 23 percent had two active ingredients and 24 percent had three or more. WHO does not recommend the use of combination products as they contribute little or nothing to drug therapy. They are marketed primarily for purposes of product differentiation in order to gain market share for the individual company and are more expensive than single-ingredient drugs. Steps should be taken to gradually remove combination products from the market, particularly those with no scientifically proven advantage. Plant capacity utilization is low - Birzeit-Palestine Co. reports capacity utilization of only 35 percent. A number of factors combine to produce a non-competitive drug manufacturing sector. There are many producers compared to the size of the market, barriers to export are nearly complete, and there is a need for production of many small batches. In addition, Israeli registration requirements and the high-priced Israeli pharmaceutical industry effectively shields WBG drug producers from low-cost competition. As a result, production costs may be two to three times higher than those of foreign, low-cost generic manufacturers. A 15 percent allowance for domestic manufacturers will, in a few cases, be needed to award a contract to a local company. Because production costs are high, the companies do not have good export prospects. When barriers to imports from non-Israeli companies are lifted, the drug manufacturing sector is thus likely to come under considerable pressure. In order to make the industry competitive in the branded-generic market, a number of changes will be necessary. Capacity utilization will have to increase considerably, batch sizes enlarged, and raw materials procurement consolidated to obtain better prices. The industry may also need to reduce the number of products manufactured at each plant. Factories will also need to qualify for and obtain the GMP certification. The cost of introducing GMP is not negligible and may further diminish the industry's competitiveness. The MOH and the manufacturers association will likely decide to adopt GMP guidelines from the Arab Union of the Manufacturers of Pharmaceuticals and Medical Appliances. The Arab GMP requirements are higher and more costly than WHO requirements. - 131 - The local market, even with economic growth, is too small to sustain the present industry, not least in view of expansion plans. When the social and political situation stabilizes, it would be useful for the industry to conduct a detailed feasibilit- study in order to asses means of increasing both its competitiveness and export orientation. MOH cannot indefinitely subsidize the industry through allowances and prices that are substantially higher in the private sector. With open borders, the industry is likely to face stiff competlition from at least Egypt and Jordan and possibly from other countries with generic drug production. NATIONAL LISTS OF ESSENTIAL DRUGS There is as yet no official list of essential drugs. A committee has drafted a list which includes about 600 drugs, based on the principles of WHO's model lists, which has 250 drugs. Further consultations are needed prior to approval and publication of the draft list. Presently the exact number of drugs on the market is not knowvn but according to UNICEF the figure was as high as 1,626 in 1993. However, pharmacy administration estimates that there may be as many as 4,000 drugs prese.ntly available. Over the years there has been a trend towards the use of limited lists. MOH operates with about 600 different items and other agencies are even more restrictive. UNRWA follows WHO's model list very closely, with only about 250 drugs. UNRWA's experience with a limited list, standard treatment schedules, training and supervision has been positive in terms of availability, therapeutic results and patient satisfaction. At the primary health care (PHC) level this was achieved at a cost of about $1.20 per person in 1996, for the 1.678 million refugees covered by UNRWA, services. Many NGO service providers also operate with limited lists. The Palestine Red Crescent Society (PRCS) used WIO's list prior to the peace process and now has a PHC list of only 67 drugs. Donors such as Pharmaciens sans Frontieres and many others restrict their drug procurement to essential drugs. The health sector appears to be ready for the introduction of a national list of essential drugs, which should be constructed by level of health care. The list for PHC could have 40-60 drugs and for secondary care 80-100 drugs; the full list should contain no more than 250-300 drugs and vaccines. Special provision must be made for drugs needed for rare conditions, and for patients who have started treatment abroad. A solution must also be found for the use of very expensive and sophisticated drugs for the relatively few patients who benefit from these. The national list of essential drugs should be introduced and implemented gradually. Introduction, which should start in PHC centers, will require training and should be complemented by well-tested standard treatment protocols and careful monitoring. Consideration should also be given to introducing incentives for prescribers and dispensers. This could be in the form of training or promotion, or perhaps as a small share of savings from the drug budget. Implementation must be facilitated by public information and a thorough introduction of the principles and practice of the concept of essential drugs and the rational use of drugs. Because resistance to the essential drugs concept should be anticipated, measures to deal with it could be put in place prior to implementation. UNRWA's management of essential drugs in health centers has been a very cost effective approach to drug management with a limited list and should be disseminated and adapted to MOH clinics. - 132- DRUG ADMINISTRATION The pharmaceutical sector is regulated and administered by the General Administration of Pharmacy (GAP) in Gaza City and Ramallah. The Administration is headed by a Director General and Deputy Dir.ctor General. The Deputy Director General reports, for practical reasons, to the Deputy Minister of Health. Prior to April 1994 the drug sector was almost completely under the control of the Israeli civil administration. Some functions, such as control of imports, are still under Israeli control. Transfer of pharmaceutical control began in April, 1995 with the appointment of the Director General, who quickly started to develop the drug administration apparatus. This apparatus compromises eight divisions in Gaza and an office in Ramallah, with five divisions covering all areas of drug administration. GAP has now assumed most of the regulatory functions. Close contact is maintained between the two offices to coordinate rules and regulations. Both GAP offices suffer from severe resource constraints. The skeleton staff administers everything from procurement, storage and distribution to inspection of factories and pharmacies, as well as registrations and quality control. There is no computer system linking the different functions and no drug information system for professionals or the public. There is a severe lack of senior technical staff, and present staff due to years of isolation, lack the professional experiences needed for development of a modern drug regulatory agency. Office space and storage capacity are lacking, and there are serious shortages of equipment, furniture and transport for the two central medical stores (CMSs). Funds for testing of special drugs like hormones, anticancer drugs and immunosuppressants are either absent or wholly inadequate. The registration process has now been taken over completely. Drug applications are reviewed according to requirements and criteria defined by GAP. While all drugs which meet the criteria can in principle be registered, a committee may review an application to determine whether a drug is "needed" or if its price is reasonable. A negative determination by the committee on either of these issues is grounds for rejection of an application. Registration takes place in both Gaza and Ramallah. There are at present about 450 products registered in Gaza Strip and 750 in the West Bank, covering both public and private markets. Administration offices in Gaza and Ramallah share information and recognize drugs registered by the other office. All drugs must be registered before they enter the WBG market. However, some Israeli companies are negligent in this respect. Other foreign companies register through their Palestinian agents. The registration fee is $300, with re-registration required after five years. Quality control is a part of the registration process. GAP presently uses the Center for Environmental and Occupational Health Laboratories at Birzeit University for all its drug testing, and anticipates establishing its own quality control facilities in the planned Public Health Laboratory. Drugs bought on tender or through MOH contracts are in principle tested before marketing, as are donated drugs. Major donors also arrange for testing of drugs procured abroad (UNRWA) or locally (Pharmaciens sans Frontieres and many others). Although the Birzeit University laboratory cannot fully test biological and hormonal substances or bioavailability, the quality of drugs in the market is believed to be acceptable. When a fully developed pharmacy administration is in place, including a quality control - 133 - laboratory, increasing the reliance on GMP for ensuring quality may be advisable. GAP could then restrict testing to random samples, and to be used in case of doubt about a particular product's quality. To implement such a regime, a strong inspection system covering manufacturers, importers, drug stores and pharmacies would be needed. The pharmacy administration and drug regulatory system clearly needs strengthening. A modest input may go a long way towards safeguarding the quality of pharmaceuticals in the market and could be a cheap insurance in a sector covering drugs worth over $50 million a year. ESTIMATION OF P]HARMACEUTICAL REQUIREMENTS Estimations of public sector drug requirements are based on a combination of past consumption and availability of resources. The MOH allocates funds for drugs and consumables from its annual budget and allocated about $28 million in 1996. Quantities of drugs needed are estimated at 110 percent of past consumption for each health care facility; this automatic increase is intended to account for expanding population and services. There is therefore no linkage between morbidity patterns and service statistics (i.e., number of inpatients, outpatients, age distribution etc.) in determining drug requirements. The past consumption method is widely used and has some merit, particularly in stable conditions of supply and demand. However, it also lends itself to distortions between medical needs and actual supply. Basing supplies on past consumption, all other things being equal, tends to reward the bigger consumers also. When only past consumption is used to determine supply, irrational prescribing may even be reinforced rather than controlled. Requirements in the private sector are a composite of retail pharmacy projections of demand as well as the suppliers (drug stores, agents and manufacturers) estimation of the demand in the private market. In order to match the real medical needs in the public sector with the supply of pharmaceuticals, it may soon be advisable to include morbidity patterns as part of the system of ascertaining drug requirements. This can be done on a pilot basis, using a few hospitals and clinics to test the degree to which such a system would improve drug therapy and/or save money. WHO has a tested methodology for estimating requirement and may be called upon for both testing, guidelines znd equipment. DRUG PRICING, COST OF DRUG CONSUMPTION AND FINANCING The price of drugs for the public sector is in principle determined by competition. All qualified bidders have their offers examined by MOH's technical committee. The contract is awarded based or the best price, together with an assessment of the product and the manufacturer's past performance. If there are no bids for a product, three quotations are invited and a negotiated price is arrived at within a ceiling of NIS 25,000. MOH is reasonably successful in obtaining prices for many products around the international average for generic products but for some products it pays considerably higher prices (see Table A 12.2 for a comparison of MOH tender prices, UNRWA prices, retail pharmacy prices and international prices for the ten large volume products). -134- UNRWA obtains the lowest prices of all agencies in the WBG. Their prices for several products are very low, and in some cases even below international or UNICEF prices. NGOs often buy on tender and are assumed to obtain prices close to those of the Ministry. However, it may depend on their volt!me and ability to negotiate rebates etc. Their prices are outside the scope of this study. Prices in the retail pharmacy sector in West Bank are determined by the Ministry of Health together with the Syndicate of Pharmacists. 77 Manufacturers, wholesalers and agents sell their products at the price they think the market will bear. Local prices are generally some 20-30 percent below Israeli prices and even lower than those of imported brand-name drugs. The company prepares price lists indicating the price to the pharmacy and the patient and seeks MOH approval. The retail price is the ex-factory price plus 25 percent profit margin for the pharmacy and with 17 percent VAT (Value Added Tax) added. The factory or wholesaler post this price on each package and are not allowed to give rebates to the patients. Wholesalers have no specific mark up. They also charge for their service what the private pharmacy market will bear. Pharmacy drug prices are considered high by the general public. They are indeed high when compared with international and MOH tender prices. Prices may increase, on similar products, by a factor of two or more. The price comparison in Table A 12.2 is not entirely fair to the retail sector, as the price calculations are based on units of 100s or 1,000s, whereas most retail pharmacies dispense drugs in packages with a course of treatment. However, prices are high compared to other countries at the same level of economic development and are in part influenced by the high retail prices prevailing in the Israeli market. There is pressure on the MOH to increase price levels in the private sector. Two months ago, the pharmaceutical manufacturers attempted to increase overall prices by 20-25 percent. Price negotiations following these increases resulted in a lowering of the price increases to 10 percent. Such price increases require negotiations between several parties: The Manufacturers Association, Syndicate of Pharmacists, Ministry of Commerce, Ministry of Industry and of course the MOH. Such price increases may be justified on the grounds that the local industry must pay for their raw materials in foreign currencies. Drug consumption in WBG is high compared to other countries at the same level of economic development. Consumption per capita is about 50 percent that of Israel, which has a much stronger economy and is about the same level as in Jordan, which has a somewhat stronger economy. However, drug consumption in Jordan is considered out of control and efforts are being made to reduce the cost of drugs in both the public and private sector. Egypt provides an interesting example. In 1996, drug consumption per capita was between US$14-15, and has steadily declined from a high of US$17 in 1987. As stated earlier, the fastest growing item of expenditure for MOH is the cost of drugs, vaccines, reagents and consumables. Such a high increase is not sustainable even in the near term, and certainly not in the medium- and long term. 77 Prices in Gaza Strip are determined by a committee which consists of Ministries of Health, Commerce and Industry, etc. There are no Syndicates of Pharmacists in Gaza Strip. - 135 - Drugs are also a financial burden on households. In 1996 the Palestinian Central Bureau of Statistics, in its estimate of average monthly household expenditure on health, found that half of all expenditure goes on drugs and vitamins. A household will spend JD 10 each month, or JD 120 per year (US$168). With a household size of 6.9 persons, this means an average annual outlay of about US$24 per person. This is a very high figure posing considerable burden on the individual and his family, and would be even higher if refugees, who have access to free drugs, are excluded. It is very difficult to determine the total value of drug consumption in the WBG. Budgets and expenditures for drugs are often combined with consumables and the drug costs cannot be desegregated. The volume of drugs imported to the private sector is not recorded by the administration, nor is it easy to determine the value of drugs supplied through the NGOs' health services. The following is the best estimate that the study could produce. Table A 12.1: Estimate of Total Drug Consumption in West Bank and Gaza Subsector Total consumption (US$ million) Percent of total Ministry of Health 17.5 37 UNRtWA 2 4 Nongovemmental Organizations 8 17 Private Sector 20 42 Total 47 100 Source: Ministry of Health, World Bank Staff Estimates. The two first amounts are well documented, however there is uncertainty regarding estimates for the NGO and private sector. There are about 250 NGO facilities, but many do not provide drugs. Some of the larger NGOs', provide large amounts such as Pharmaciens sans Frontieres about US$1 million; PRCS, about US$800,000 (include disposables); and MAP around US$1 million. Small NGOs provide anything from US$100.000 to much less. According to informed people, these estimates seem to be of the right magnitude. The estimate for the private sector is the subject of more dispute. Estimates by the administration place private sales at US$20 million, while UNICEF's report of 1993 suggested a total retail price of US$55 million. Pharmacists and drug stores report that sales have fallen in the last year or two, but hardly to a level of US$20 million. Household expenditure on drugs of $24 per person seems to confirm a much higher level of private sector expenditure, since a large part of the population is receiving drugs free or at very low cost. US$24 per person per year would indicate a private sector expenditure of the similar magnitude as UNICEF's estimate i.e. US$55 million. Deducting MOH and UNRWA drug costs and taking into account the drug fees in the NGO and MOH services and a reduction in purchasing power of about 10 percent, would give a figure of perhaps US$40 million. Using these rough estimates the annual drug bill could be as much as US$ 67 million. This would mean an annual per capita consumption of drugs of US$29. Efforts and interventions to reduce the total drug bill in WBG must be made a priority for short term. The inefficiencies in the system, from registration, pricing, procurement, storage, distribution, prescription and use, provide a wide range of opportunities for cost containment (for possible savings see Table A 12.3). - 136- MOH's drug and medical consumables budget is financed from general revenue sources and is in 1997 expected to reach 32.5 percent of total MOH expenditure. There is some co- payment by patients. Patients with health insurance obtain their in-patient drugs completely free of charge. OPD drugs are paid for with a flat fee of NIS 3 per drug item or unit (a unit corresponds to a normal course of treatment). Drugs for children under three years cost only NIS 1. In the case of a few expensive drugs the patient may be required to pay up to 50 percent of the cost price. Clinics have a petty cash of NIS 500 to use for local purchase in case of stock- shortages. There may be some unfaimess in the application of a flat fee for very low cost drugs. Many essential drugs cost much less than NIS 3 for a treatment course, and with the flat fee the patient is in a way being taxed or is indirectly subsidizing the more expensive drugs. Many countries link co-payment fully or partly to the cost of the drug. It may, at some point in the future, be advisable to review the present co-payment scheme and perhaps find a fairer system. UJNRWA provides all drugs free of charge and will refund part of the cost of drugs procured in private pharmacies or used in in-patient care, for those drugs not available in UNRWA's own stores. Many NGOs charge the actual cost of drugs to patients who can pay, but will allow non-insured or poor patients to obtain drugs for part-payment or free of charge. The private pharmacies charge a fixed price. There is little discounting, and free drugs cannot be obtained through the retail pharmacies. Some pharmacies report that poor patients sometimes leaves without a drug due to high price. All co-payments for drugs are collected at the dispensary and the revenue, lumped together with other payments, go through MOH's directorate of finance to the Ministry of Finance. The accounts do not show the magnitude of co-payments for drugs. In addition to the fees collected at MOH facilities, the MOF receive considerable revenue from the 17 percent VAT added to the pharmacy price. DRUG PROCUREMENT The MOH buys 85 percent of its drug needs through two annual tenders. The remaining 15 percent is bought directly following requests for quotations. Direct purchasing is used when there are no bidders for the required items. The largest direct purchase is for immunosuppressants at about $2 million annually. The Ministry advertises its tender in the local newspapers. Eligible companies and agents then buy the tender documents from the Ministry. Bids are examined by a technical committee which advises the tender committee on quality and reputation of suppliers. Price is the determining factor in awarding a contract. In the first tender in 1997, 50 percent was awarded to the lowest bidder and 30 percent was awarded to companies which were the only bidders. Other considerations are delivery terms, reputation of the company and past experience with the product. In most cases the second or third lowest bidder will then get the contract. In view of the constraints imposed by Israeli registration requirements for imported drugs, the MOH does quite well in terms of prices. Table A 12.2 shows that, of 10 high volume drugs, the Ministry in two cases obtained prices below international indicator prices for generics and in most other cases was only marginally above. This is quite impressive when seen that the MOH price also includes delivery to the warehouse. There are, however, instances where the - 137 - Ministry buys at very high prices. It may be advisable for MOH to regularly compare international indicator prices with those they obtain to ensure that they are operating in the right price range. The 15 percent allowance for local manufacturers is rarely used. In the last tender only six items out of 1 16 required this subsidy in order that the contract could be awarded to a local manufacturer. This is fortunate, since it is not MOH's role to subsidize industry. UNRWA uses international competitive bidding and consolidates all its drug requirements for P'alestinian refugees.(Syria, Jordan, Egypt and WBG) in one large tender. They obtain exceptiona[ly good prices, as shown in Table A 12.2. Table A 12.2: Prices of Selected Drugs in West Bank and Gaza and International Prices (1996) Organization Ministry of UNRWA Pharmacy International l Health Price Drug Strength Unit NIS ($) US ($) NIS ($) US $ Amoxycillin 500 mg 1,000 210 (61.8) 750 (220) 60.00 Acetylsalisylic Acid 100mg 1,000 133 (39) 275 (81) 3.00 Acetylsalisylic Acid 300 mg 1,000 5.5 (500 mg) 3.60 Ampicillin Injection I g Vial 1.64 (0.48) 0.279 8.4 (2.5) 0.37 Cephalexin 500 mg 1,000 327 (96) 120 1,375 (404) 132.00 Carbamazepine 200 mg 1,000 170 (50) 30.00 Diazepam 5 mg 1,000 26 (7.6) 175 (51) 3.00 Diazepam Injection 5 mg/ml 2 ml vial 1.17 (0.38) 0.064 2.6(0.76) 0.09 ORS I Sachet 1.24 (0.36) 0.08 6.13 (1.80) 0.10 Dextrose 5 Percent 5% 500 ml 3.99 (1.2) 1.35 Ferreous Salt + Folic 60 mg + 0.26 1,000 94 (27.61) 3.50 Acid Glibenclamide 5 mg 1,000 24 (7.1) 624 (183.5) 5.00 Insulin (Human insulin) 100 IU/ml 10 ml 28 (8.2) (BI) 4.8; (HI) (BI) 5.90 8.1 Mebentazole 100mg 1,000 180 (53) 1760 (517) 6.00 Metronidazole 500 mg Vial 5.51 (1.62) 21.5 (6.3) 1.10 Nefidipine 10mg 1,000 130 (38.2) 326 (96) 22.80 Oxytocin Inj. 10 IU Vial 2.85 (0.84) 0.13 Note: BI = Beef Insulin; HI= Human Insulin. VAT (Value Added Tax) = 17 %. Source: Ministry of Health, UNRWA, World Bank Staff Estimates, Management Sciences for Health. - 138- DRUG DISTRIBUTION Drugs are stored and distributed through numerous channels. MOH operates two central warehouses. The Ramallah CMS is located in a two-storied, former cement store (1,800 square meters), and has very little equipment and transportation. The Gaza store is smaller and is housed on the compound of the Shifa hospital, but also with very little store equipment and is difficult to access. There are satellite stores for equipment and disposables. In Gaza a new, large store is under construction. The 1,300 square meters ground floor is nearing completion, but funds are lacking for its completion and for the building of the first floor for equipment and offices. Both stores are very well stocked, nearly to choking point. The Ramallah CMS, for instance, in mid-May had an inventory holding of about US$6 million - sufficient for six months or more. Computer systems and modern store management systems are sorely lacking. MOH drugs, vaccines, disposables and reagents are distributed to hospitals and district stores on a bimonthly basis, based on requests from facilities. These request sheets contain information on stocks of each item and the request for replenishment. The CMS will then evaluate the request based on past performance and availability of the specific item. This often results in a severe reduction in the amount actually delivered. The requesting health facility is not guided by a budget, but has some information on the quantities of drugs and consumables, which they can expect to receive during the year. Hospital and clinical pharmacies keep stocks and distribute these regularly (daily) to wards and OPD clinics. However, the district central store delivers drugs to its satellite clinics monthly. UNRWA operates two major stores. They receive their drugs and consumables directly from UNRWA's international procurement program and rarely supplement with local procurement due to its higher cost. UNRWA's stores are computerized and follow modem drug store management systems. They distribute on a regular basis to all their clinics based on actual needs. The UNRWA drug management system is a good model of how an effective supply organization can work, even under difficult circumstances. The UNRWA drug system should be adapted for MOH use and their experience transferred through training or perhaps exchange of staff. As it is now, there is virtually no collaboration between the UNRWA and the MOH system. Many NGOs operate their own stores and distribute either to their own clinics or, in the case of foreign agents, to the clinics which come under their program. Most procure locally, in spite of the price. The barrier to low-cost procurement is the difficulty with regards to registration and import via Israel. The local pharmaceutical manufacturers supply directly to retail pharmacies, often on long-term credit. Imported drugs are distributed from the approximately 50 drug wholesalers and distributors. Most of these have small stores where they stock the drugs they anticipate will be needed in the retail pharmacy store. Some are agents for big pharmaceutical houses in Europe or act as sub-agents for Israeli companies. Some act only as middlemen for MOH contracts, submitting the bid on behalf of the companies they represent. However, they do not provide a service in the form of warehouses and distribution. - 139 - The storage and distribution systems have contributed to the safety of supplies and the good and regular availability of drugs in most facilities. Indeed, the stock levels are very high both in the public and private sector, whereas UNRWA operates a leaner system. The supply system, however, does not always assure that the peripheral clinics have a good stock of drugs. A consequence of this is that patienis then need to return to the doctor to get the prescription changed or get a referral slip to the district pharmacy or a private pharmacy. One reason for non- availability, however, is that some doctors prescribe drugs which are not on the MOH clinical drugs list. There is merit, in times of conflict and border closures, in maintaining a high inventory level. However, this is always at a cost in terms of tied-up capital and not least in the risk of having many drugs expire before use. In view of the relatively small territory of WBG and the size of the population, one can question the need for such a large number of stores and distributors. There may be some merit in trying to be restrictive in the granting of licenses for agents and perhaps also in attempts to encourage organizations to combine their procurement, storage and distribution systems. DRUG PRESCRIPTION, DISPENSING AND CONSUMPTION This component of drug use represents a multitude of problems and real opportunities for improvements and savings. The 1993 UNICEF study on the supply of pharmaceuticals clearly demonstrated problems in the prescription and use of drugs. It recorded excessive use of antibiotics and the use of many inappropriate combination drugs, as well as overuse of vitamins and mineral preparations. Overprescription and overuse of drugs is widespread throughout the world, and the Middle East has more than its share of this problem. This study recorded that in 1991 an estimated 25 million packages of drugs were prescribed to the population, corresponding to about 12 courses oif treatment per capita per year. Prescribing practices have recently been examined by the pharmacy administration (Jan- March 1997) in six MOH institutions (hospitals and urban clinics). The reports have recorded numerous problems. There is widespread over-prescription of drugs - the result of a vicious circle where patients expect or demand drugs from the doctors and the doctors know that patients expect them to prescribe. Indeed, it is widely believed that a doctor's status among his patients is partly determined by his ability or willingness to prescribe powerful drugs. There is also strong demand for injections and suppositories, not least in the private clinics. These are much more expensive than tablets or capsules, which nearly always have the same therapeutic effect. Many doctors prescribe several drugs or combination drugs, where one ingredient would often have been sufficient. This may be a reflection of the short time spent in examination of the patient. Antibiotics, combination drugs or other inappropriate combinations then act as substitute for a good diagnosis and dialogue with the patient. Several studies have shown that up to 50 percent of PHC patients are not really in need of medication. Yet, few leave without one. One problem is also the doctors' preference for brand-name prescriptions or products from a specific producer. In the above MOH study, it was found that the number of drugs per - 140- prescription ranged from 1.8 to 3.1 and that nearly all were brand names. One hospitals had no single generic prescription and the highest percentage was only 8 percent. This is of lesser importance in MOH clinics, since the Ministry buys by generic name. However, the reliance on brand names produces patient loyalty to a specific product, even when he or she moves to another clinic or seeks treatment in the private sector. Doctors in private practice are very particular about using brand-name drugs for their patients. Some even insist that the patient return to their clinic to show that he/she actually received the prescribed drug. This contributes to higher costs to both the patient and society, since generic substitution is not allowed under pharmacy law. In the case of patients who cannot afford an expensive brand product, the pharmacist or the patient must contact the doctor to get his permission to dispense a lower-cost branded-generic or generic product. The pharmacist, of course, also has an incentive for dispensing the highest priced drugs, since he gets 25 percent on top of the purchase price. Although it takes about the same amount of work to dispense a package of low-cost generics than an expensive brand-name drug, the pharmacist is rewarded for the latter rather than for the former. There is pressure on the doctors and perhaps also on the pharmacists to function at the expensive end of the drug spectrum. The industry as well as the major importers use medical representatives for information on their products. The sales promotion may take the form of many samples, which can be passed on to patients, or loyalty to a product or company may be developed through seminars, travels and other means. There are WHO guidelines for the ethical promotion of pharmaceuticals. It could be well worth the effort to consider these in the drafting of a national drug policy or drug legislation. Education and licensing of medical representatives may also safeguard against unethical marketing. The above study and other reports also point to a widespread belief among the population that there is a drug for (nearly) all ills. The high priority assigned to drugs is clearly demonstrated in the statistics regarding monthly household expenditure. Drugs and vitamins account for by far the largest cost, at about 50 percent of total cost or US$160 per year. This is followed by the cost of physician services at US$70 per household each year. The physician's visit is, in many cases, for the purpose of obtaining a prescription. The study shows there is also widespread belief that injections and suppositories are better than tablets and capsules. In addition many patients believe that imported medicines are "better" than locally manufactured products. RETAIL PHARMACIES There are a total of 560 retail pharmacies: 358 in West Bank and 202 in Gaza Strip. This gives a ratio of retail pharmacies to population of 1:4.071. Registered pharmacists in West Bank and in Gaza Strip can apply for a license and if the pharmacist meets the requirements of the pharmacy laws applicable in his/her geographical location, he or she will be granted a license provided the premises are 32 square meters or bigger. Until recently it was a requirement in West Bank that a new pharmacy must be situated at least 40 meters away form an established pharmacy. In Gaza Strip the required distance was 200 meters. A compromise has now been reached and MOH has decreed that the distance should be no less than 100 meters between pharmacies. - 141 - The ratio of pharmacies to population is high compared to European countries with greater population density (Denmark 1: 15.000, Norway: 1:13,000), but not to, for instance, a neighboring country like Jordan with a ratio of 1: 3,451 or Egypt with 1: 4,400. However, the retail pharmacy sector is under considerable strain. Quite a few pharmacies in Gaza Strip have been forced to close, but this has not prevented other pharmacists from opening up. There are too few patients in need of private pharmacy products who are able to pay. The market is very small since most patients get medicines free (UNRWA and some NGOs) or, in public sector facilities for a small flat fee. The last few years' decline in the economy has also been severely felt in the private pharmacy sector. Many pharmacies have only 10 to 20 clients per day and even bigger ones may not have more than 30-40. A few well-located pharmacies may, however, have hundreds of clients daily. Many patients shop around for discounts or return empty-handed when they realize the cost of the medicine. Pharmacy owners may be tempted to dispense drugs without a prescription, although the degree to which such practice is used is not known. With few other employment opportunities, pharmacists will be tempted to open a pharmacy to make sure that they obtain a license. They may be investing in the long-term prospects, in the hope that patients and customers for perfumes and other toiletries will give them some turnover and perhaps even some profit. There are no legal tools for the Ministry to reduce the number of pharmacies. The old but still valid pharmacy laws give those who comply with the requirements the right to receive a license and operate a private pharmacy. The proliferation of pharmacies, however, have not improved the drug retail service. The few times a year (or month) when a family needs drugs does not require the presence of a pharmacy every one hundred meters. It is also wasteful in terms of having well-educated pharmacists severely underemployed in their profession, as well as in terms of tying up capital which could be put to more productive use. The basic problem seems to be that there are too many pharmacy graduates for society's needs. The WBG area has a total of 1,240 registered pharmacists (ratio of pharmacists to pop. 52:100,000). There are no easy solutions to this problem. It may be tempting to allow the market forces to determine who will survive. Some other, albeit richer, countries in the region allow the virtual free establishment of pharmacies. However, most countries have a rationing system which takes into account population density and related factors. Too many pharmacies may lead to undesirable malpractice in the form of dispensing drugs without prescription, pushing higher- price drugs or, as is the case in some countries, buying smuggled drugs and combining their sales with tax evasion. The cost of inefficiency in having more pharmacies than needed will, one way or another, have to be passed on to patients in the form of higher prices or unnecessary consumption. It would seem necessary to relieve the pressure on the pharmacy owners through MOH intervention. A first, though rather long-term, solution would be to reduce the annual intake to the pharmacy schools, which is presently at 80 in each of the two existing schools. Consequently, this may lead to the closure of either the West Bank or Gaza school. If implemented for a sustained period, this may bring the ratio of pharmacists to population closer to what is needed and financially viable. A somewhat shorter-term solution, at least for new pharmacies, would be to tighten the rules on the size of premises and the years of practice required before a pharmacist can apply for a license. A new regulation may also require the - 142- presence of the pharmacy owner for at least part of the working day and require that only registered pharmacists are hired for dispensing of medicines. The use of non-pharmacy staff for dispensing should be completely disallowed. COST CONTAINMENT IN THE DRUG SECTOR There are many opportunities for savings in the supply and use of drugs. Some can be implemented with relative ease and may still contribute to cost containment. Other measures are more difficult to formnulate and implement. The biggest savings require both time, commitmnent and some luck to achieve. When cost containment measures are put in place, there are always groups or individuals who resist or feel hurt, not least if they are seeing their profits reduced. However, much resistance can be countered, while keeping in mind that the patients should continue to get the best possible treatment. Many countries have gone through a partial or comprehensive drug sector reform. The results have in many cases been very encouraging, whether in developed or developing countries. The experiences have demonstrated the potential for savings and some of these are listed below. The percentages indicate the maximum achievable and therefore do not necessarily add up. Each saving has consequences for the savings in other elements, and the percentages merely indicate what could be achieved if a specific intervention was carried out in isolation. The total savings could well be in the range of 30 - 40 percent. Table A 12.3: Potential Savings in Drug Sector Reform Activity Saving (percent) Implement National Drug Policy and Legislation 5 Introduce Essential Drug List at All Health Care Levels 5 - 10 Improve MOH Procurement 10 Implement Standard Treatment Protocols in Public Health Facilities 5 - 10 Introduce and Enforce Generic Substitution 5 - 10 Improve Storage and Distribution Management 5 - 10 Shift from Injections to Tablets and Capsules When Justified 2 - 5 Remove Inappropriate Drugs from the Market 3 - 5 Total Rationalization Of Drug Sector 30 - 40 - 143 - RECOMMENDATIONS Recommendations following the study of the pharmaceutical sector are grouped in three categories, not necessarily in order of priority or importance. Rather, an attempt has been made to categorize the recommendations as those which can be implemented soon and with relative ease (Category I); those which will require more time and preparation and may be more difficult to implement (Category II); and finally the long-term activities (Category III), necessary to improving the performance of the sector but which may be difficult to implement, or which may require the involvement of many sectors and interest groups: In Category I * Early approval and implementation of the essential drugs list, starting in primary health care of the public sector; * Finalization and introduction of standard treatment protocols at all levels of care; * Steps are taken to have the Israeli requirements on registration of imported drugs lifted for products from GMP certified manufacturers being supplied to the MOH; * Introduction of stricter requirements for the establishment of private pharmacies; * Intake to pharmacy schools is severely restricted and the closure of one pharmacy school is considered; * Plans for computerization of central drug stores' management are implemented; * Improved methods for estimation of drug requirements are introduced; * Process is begun whereby combination drugs (drugs containing two, three or more active ingredients) are removed from the market as they become due for re-registration. It is further recommended, once the category I recommendations are under implementation that: In Category II * Essential drugs lists for secondary public health facilities is implemented and also introduced into NGO primary care services; * Capacity of the pharmaceutical sector administration is strengthened though additional technical staff and managerial training; * Ramallah Central Medical Store is renovated and equipped and first floor of Gaza Store is completed and equipped; * Proper Quality Control Laboratory is established; * GMP certifications are established; - 144- * System of co-payments for drugs is reviewed and streamlined; * Drug pricing and fixed pricing for pharmacies is reviewed and streamlined. For longer-term results, it is recommended that: In Category III * Essential drugs lists are implemented in the tertiary health care as well as in NGO hospitals; * Scheme for generic substitution is developed, tested and implemented; * National Drug Plan is drafted, discussed and approved by the legislative council; * Modem drug legislation is drafted, approved and implemented; * Regulations and guidelines for all elements of the pharmaceutical sector are drafted, discussed and implemented. Table A 12.4: Cost Estimates for Pharmaceutical Sector Reform (US$ thousand) Activity Year 1 2 3 1. Implement National Drug Policy and Legislation Workshops 30 30 20 Technical Assistance 20 20 - Printing, Distribution and Promotion 15 10 - 2. Introduce Essential Drug Lists at All Levels of Care Workshops 100 50 50 Technical Assistance 20 - - Printing, Distribution and Promotion 30 30 20 Study Tours 20 20 - 3 . Improve Ministry of Health Procurement Training Abroad 30 30 Computer Equipment 10 - - 4 . Implement Standard Treatment Protocols In Public Health Facilities Workshops 50 30 10 Technical Assistance 30 - - Printing, Distribution and Promotion 30 15 10 5 . Introduce And Enforce Generic Substitution Workshops 50 30 - Technical Assistance 20 - - Printing, Distribution and Promotion 30 30 30 6 . Improve Storage and Distribution Management Training Abroad 50 25 Computerization 30 20 10 Civil Works/Rehabilitation 200 50 50 7 . Change in Clinical Practice (from injections to tablets etc.) Workshops 30 20 10 Technical Assistance 15 - - Printing, Distribution and Promotion 20 15 10 8 Remove Inappropriate Drugs from the Market Technical Assistance 15 10 10 Printing, Distribution, Promotion and Monitoring 15 10 10 Source: World Bank Staff Estimates. - 145 - Appendix 13: DEVELOPMENT OF A LEGISLATIVE FRAMEWORK FOR HEALTH INSURANCE INTRODUCTION The establishment of a comprehensive health insurance system is stated as a goal in the National Health Plan for the Palestinian people (1994). Until now this goal has been only partly 78 realized, and much work remains to establish adequate regulations in place . A few options for and elements of a possible regulatory framework for a national health insurance system are described below. T hese will hopefully serve as a guide for future efforts by the Palestinian Authority (PA) to establish a national health insurance system. OBJECTIVES OF A IIEALTH INSURANCE SYSTEM To finance and regulate health services, countries can opt either for a national health service paid by general revenues, or an insurance system paid by contributions of the insured. Experiences in Western European countries have shown that both ways can be effective in providing access to good quality care for the population for roughly comparable costs.79 Health insurance has the advantage of clearly earmarking the funds allocated for health care, thereby making their transactions transparent to the population (the contributors know what they are paying, and for what services). In principle, health insurance funds are also less likely to be subject to ad hoc policy changes by political process (e.g., budget alterations), in contrast to national health services that are financed directly through government budgets. Under the social insurance system, providers are more likely to be private or independent parastatal entities, unlike the national health services in which the providers usually come under the direct management of the government agency. However in most countries with social insurance programs., governments impose strict regulations for setting contribution rates as part of a general social and employment policies, and for the same reason restrict the basket of services reimbursedl through social insurance. At the same time, systems with government- managed providers have been experimenting with a greater separation of provider and payers through the introduction of contractual relations and greater managerial autonomy for the public providers. As a result, the distinction between social insurance and national health services is becoming increasingly blurred. Under whatever choice of health system, it is important to define the objectives and establish the legislative and regulatory framework of the health financing system. In the National Health Plan, the national health insurance program is described as: "an indemnity coverage against financial losses associated with the treatment of a health problem." 80 This statement focuses only on the financing aspects of the system, and does not capture the full scope 78 For a brief description of the present state of health insurance, see, Piva, P., M.A. Hashish, and R. Zanoun, "The Palestinian Universal Social Health Insurance", West Bank and Gaza Strip, 1997. 79 This is subject to some controversy: at least one study (J.P. Poullier, "Administrative Costs in Selected Industrial Countries." Health Care Financing Review (summer), 1992: 167-72) suggests that the administrative costs of managing a social insurance system might be higher than the costs associated with the management of general tax-based national health services. 80National Health Plan, 1994, Annex 2, p. ix. - 146- of the objectives of a national insurance program. A more appropriate definition that is more in line with the health policy of the National Health Plan would be to describe the health insurance and its regulations as a means for guaranteeing access for the whole population to efficiently provided essential care (i.e. care for which there is an objective medical need and which is of proven effectiveness in relation to need). The mandate of the health insurance program could be further expanded to encompass a more pro-active role in reducing the avoidable health risks among the insured population: for example, through contracts with the providers, health insurance programs could actively promote an early detection of potential health threats and consequently provide preventive care or early treatment of disease. Given the present economic situation in West Bank and Gaza (WBG), the Palestinian will first need to attend to cost-containment measures and other measures needed to improve the efficiency of the present delivery system before attempting major reforms into the organization of the health financing structure. An important first step in that process will be to estimate the real costs for the various services to be implemented in the future package of benefits of the insurance system. These data will form the basis for calculating the appropriate prices for contracting individual providers and estimating the contribution rates from the insurance beneficiaries. Subsidization of the insurance system from general revenues will likely continue to be an important means for ensuring a redistribution of resources across different categories of population: this is a common feature of most social insurance systems around the world. CONTENTS OF THE HEALTH INSURANCE LEGISLATION The following sections describe the key issues and topics that should be included in a health insurance legislation. Legal Status of Health Insurance The responsibilities of the PA, the Legislative Council and the Ministry of Health (MOH) must first be clearly articulated in relation to the health insurance system. One of the first question that must be settled in the health insurance legislation is the identification of the institution that will function as the health insurance agency: whether it should remain as a department or a division under the direct authority of the Ministry, or to be established as a separate agency outside of the Ministry. If the agency is to be established outside the Ministry, then the relations between the MOH and the health insurance agency must be specified in terms of their respective managerial and oversight responsibilities and capacities. In doing so, particular attention must be given to role of the MOH in its oversight and regulatory capacity with respect to the health insurance agency, for example, through the review of the agency's management decisions, the evaluation of its financial performance, and the exercise of sanctions against any undesirable decision- making by the agency. The legislation should specify the reporting requirements of the health insurance agency in terms of the timing and levels and types of decisions must be submitted to the MOH for approval. Alternatively, health insurance could be administered separately through a self- governing body (such as a mutual or sickness fund) under the oversight of a publicly regulated board comprising representatives drawn from various interest groups. As with the health - 147- insurance agency, the rights and responsibilities of the organization must clearly be defined, along with the oversight and regulatory functions for the MOH. The possibility of an appeal to a court or arbitration procedure must also be included in the formulation of the legal framework for these independent agencies or bodies (see below). In defining the legal status of the health insurance agency or body, the broader legal framework must be taken into consideration. For example, the health insurance legislation should be consistent with the rules and regulations governing financial institutions, e.g., with respect to accounting and audit requirements of the insurance fund. In addition, the legislation should also be consistent with the specific laws pertaining to the licensing of health providers, investments in health facilities, quality assurance, importation of pharmaceuticals, and others. Some aspects of these laws could be incorporated into the health insurance legislation if they are closely related. Given the simall size of the Palestinian population, there seems to be little justification in having more than one agency in place. The agency could place several regional offices but managed under the jurisdiction of the central agency. Two separate agencies could be established respectively for the West Bank and Gaza Strip, but if this split is introduced then mechanisms should be put in place to redistribute resources between the two agencies to ensure that funding and provision of services between the two territories are equitable. Coverage The health insurance legislation should include provisions on the eligibility and coverage of the health insurance system. Some examples of how these eligibility criteria can be defined are presented below: * all Palestinians, living in and outside the territories, defined by characteristics recognizable to the health insurance agency. Including Palestinians living outside the territories could cause administrative problems in collecting contributions and in dealing with the costs for services. * only the residents of the territories * residents temporarily staying outside (e.g., on holiday or business; civil servants of PA working temporarily outside the territories.) * specific categories of the population to be automatically covered (e.g., the unemployed, workers earningy below a minimum wage, social welfare recipients), or excluded (e.g., military personnel and their dependents). Contributions This section. of the legislation describes the respective duties and responsibilities of the health insurance agency and the beneficiaries in terms of the beneficiary contributions to the insurance plan. The following list provides examples of items which could be included in this section: Party responsible for paying the premiums: * all covered insured persons * only the heads of families (including a legal definition of the family unit) - 148- * specialized agencies, such as Ministry of Social Welfare, pension funds Means for collecting premiums: * direct payments by individuals * payroll deductions, or payments through employers * payments through other agencies, such as social security agency, cooperatives, associations Party responsible for determining contribution rates: * the PA * the MOH * the health insurance agency * patient/community representative Methods for establishing contribution rates: * income-dependent, up to a certain maximum * income-independent or fixed rate * as a combination of these two Special categories of contributors. The MOH or the health insurance agency could be delegated the authority to define a lower percentage or a lower fixed rate contribution for certain categories of the insured population, e.g., people over 65, students, people on a social welfare. These categories must be well-defined and easily recognizable in order to avoid administrative problems. However, since the determination of these special categories depend on social and political notion of fairness and justice, these will probably need to be ratified through some process. Establishment of a common fund into which all contributionsflow. At present, all contributions from the government health insurance premiums are submitted directly to the Treasury. If a health insurance agency is established, it will be necessary to set up a separate fund into which all contributions are channeled, including contributions from the general taxation. As noted earlier, subsidies from general tax revenues will likely be a necessary feature of the health insurance fund as long as it remains under the government jurisdiction. An alternative to direct transfers from general revenues would be for the government or the MOH to act as guarantors for loans from commercial banks. Payments This section describes the expenditure items which the health insurance agency is allowed to make payments. Examples include: * the administrative costs of the insurance fund * the costs of health services covered in the benefits package * payments for activities related to health service and health insurance pre-approved by the governing board or the PA/MOH, e.g., research on evaluation of health services, health education, community outreach programs, and preventive care programs. * interests on loans - 149 - Benefits Package This section describes the benefits package, or the services, to which the beneficiaries are entitled. Designing the benefits package. The benefits package presently used by the PA/MOH is typical of a more global list of services that defines benefits in broad categories of service types, e.g., ambulatory care visits or hospitalization. These general descriptions do not provide sufficiently clear specification of the types of care the beneficiaries. They creates confusion on the part of the beneficiaries and leave few options on the part of the health-insurance agency to control costs and gularantee quality of services. A more refined benefits package could be developed that specifies the services and types of care through the use of well-defined positive or negative lists. A positive list must specify precisely the kinds of services and pharmaceuticals to which the insured are entitled. For example, the patient does not have entitlement to drugs that are not included in the positive list. A negative list is often used in conjunction with a global description of services, e.g., the benefits could include all forms of hospitalization excluding cosmetic surgery or certain types of organ transplantation. Determining the service providers. The definition of benefits must also include the description of providers and programs which are included in the list. For example, currently the government health insurance does not cover visits to private physicians. Some examples of the description of eligible service providers are given below: * all available providers within the WBG, or all public providers and private providers with a written contract with the health insurance agency; * overseas providers with contracts with the health insurance agency; * the place where the service can be obtained, at home or in an institution, must also be specified (e.g., for mental health services, community based and institutional care are both currently covered by the government health insurance). Specification of the providers depends on the types of contractual relations with the providers and provider payment systems in place. The legislation should allow sufficient flexibility to accormmodate the changes in the system as the relationship between the health insurance agency and providers evolves. Some health insurance systems require their beneficiaries to register with a specific primary health care clinic or a family doctor. By appointing a particular primary care giver as the gatekeeper for the insurance beneficiaries, it allows the insurance agency to follow more easily the utilization pattern of the provider (referrals, drug prescriptions, diagnostic tests) and control the moral hazard problems created by patients "shopping" around. This measure must be balanced by the need to protect the patients' right to choose their primary care giver. Conditions for obtaining a special type of service. Some services could be provided under special conditions, e.g., overseas referrals for cases requiring treatment not available within WBG. The process by which these cases are approved should be specified, e.g.: - 150- * proof of objective medical need * written referral from qualified specialists * approval of the health insurance agency before rendering the services * cost sharing by the patient Copayment system. Different options exist for designing the copayment system. They include: (i) a fixed amount per service, (ii) a percentage of the costs per service, (iii) all the costs over a certain amount paid for by the health insurance agency (limited reimbursement-system), or (iv) a combination of these. A copayment can be made income-dependent and a maximum amount of copayment per service (or for all services) per year can be formulated. A general deductible system fits better in a reimbursement system (see below) since this form of payment is generally used by private insurers. Payment of Benefits. The benefits can be provided to the patients in two broadly different ways: * Reimbursement system: In this system, the costs of services are first paid by the insured, and reimbursed by the insurance agency to the patient retrospectively upon submission of the bills. Such a system is usually used by private health insurers but it is costly to run since the insurer must review and reimburse individual bills. * Benefits in kind: In this system the beneficiary is entitled to services and does not have to make payments to the provider (except for copayments or deductibles). In such a system, the insurer deals directly with the provider (e.g. through contracts). This system is administratively more efficient and it allows the insurers to keep track of the behavior of the providers. Parties responsiblefor defining the benefits package. In defining a package of benefits, the legislation should address the question of who decides about the content of the package and how often revisions should be made. These decisions should be made by multidisciplinary group with representatives from interested parties as well as representatives of key technical disciplines. In situations of rapid changes, e.g., rapid progress in medical technology, reforms in the payment systems, changes in economic conditions, it is especially important to have in place a procedure that allows the benefits package to be revised quickly. The system of negative lists in particular requires a rapid adjustment procedure. The decisions on benefits package will involve a continual review of new technologies (including the review of cost effectiveness and cost benefits at individual and social levels). There should be in place a system for monitoring the existing services and technologies. Any use of technologies that are obsolete or not effective should be removed from the positive list of services or added to the negative list. Immediate savings can thus be achieved. Contracts Contracting services will likely become an increasingly important feature of the health insurance agency. The legislation should be written in a way that encourages the health - 151 - insurance agency to organize contracts efficiently and in sufficient number ensure good services for the beneficiaries. In the future, the public providers might also enter into contractual relations with the MOH or health insurance agency. Some examples of the conditions which can be speciFied in a contract are listed below: * the type of service to be delivered * the way in wlhich the service is given: only on strict indication and in the most efficient way, using as much as possible the accepted standards, protocols and clinical guidelines * access to the provider: opening hours, on call during weekends etc., referring to a colleague when on holiday etc. * the obligation to have a sufficient administration (concerning financial as well as patients records) * the conditions under which the health insurance agency has access to the administration ( as for example the medical advisor to the medical records when there are doubts about the "production-pattern" of the provider * the billing process * the timely and properly payment of the provider e the information about the insured registered to the practice of the provider * specification of the arbitration process Separate attention must be paid to the tariffs (medical price) and the adjustment mechanism. Tariffs must be adjusted frequently and the process and timing of this adjustment process should be specified. Appeals and Comnplaint Procedures This section must specify the appeals and complaints procedures on the part of providers as well as the insured. They might include: * going to the court * use of special appeals committees * a combination of the two International Affairs In the future it may become necessary to include some provisions for dealing with overseas health insurance agencies for entitlement to services provided overseas. Administrative Organization of the Health Insurance System In this chapter rules can be laid down about: * the organizational structure of the health insurance agency; * the prerogatives of the MOH in appointing the board or the director of the agency; * the obligation to produce a period (year or quarterly ) general and financial account of the activities, revenues and expenditures of the health insurance fund; * the way healtl-h insurance system should execute its mandated authority; and - 152 - * the reporting requirements to the MOH and specification of decisions requiring approval from the MOH and others that can be delegated to management. Implementation This section should describe the timing and process of implementing the various chapters and articles of the regulation. The implementation schedule could be tied to the execution or completion of other conditions, for example: * financial development (availability of funds for health insurance, or establishment of health insurance as an independent agency) * the restructuring of the service delivery system * the passage of other laws that have an impact on the health insurance fund, e.g., human resource planning and regulation; the planning and licensing of facilities; the quality- assurance issues, etc. PREREQUISITES TO THE IMPLEMENTATION OF THE LEGISLATIVE SYSTEM FOR HEALTH INSURANCE Before implementing a new regulation on health insurance, the PA and the MOH should pay particular attention to the following: * improving the performance of the present providers * strengthening the information systems, inside the institutions, between the providers and betwee'i the MOH (health insurance agency) and providers * improving the contribution collection mechanism * strengthening efforts to prevent fraud (unauthorized use of the provisions without payment of contributions or copayment) * enhancing the capacities of the MOH to formulate policies and evaluate their impact X strengtlhening the capabilities of the MOH in reviewing and evaluating the quality and efficiency of the providers, including private providers * evaluating and revising the copayment system. One of the short-term options is to introduce copayments for emergency care and hospitalizations to promote greater use of the primary health care services. Subsequently, copayments per bed-day could be considered. PRIVA1TE HEALTHI INSURANCE The opportunities for private insurers to offer private health insurance and the need for the population to use it will be influenced by the extension of the coverage: if everybody has to be in compulsory insurance for a well-defined package of a reasonable quality, then there will be no incentive to buy a private insurance policy for the same package. In such a situation there will be only; need for supplementary insurance (covering services not enlisted in the public healtlh insurance system or the more luxury variant of the health insurance service as for example a one bed room in an hospital) Such a supplementary private insurance can not be avoided, not even by prohibiting it in the territories: one simply can buy it abroad. However in order to prevent any problems (financial loss) at the side of the insurers as well as the insured the PA must be clear in stating its long-tern objectives towards private health insurance and universal coverage. - 153- In the short run it seems even more important to regulate the private providers to avoid a two tier system: a luxury one for the well to do and an old fashioned, less equipped and less friendly system for the average Palestinian. A proper licensing system t.,wards the private providers must be developed and maintained. In this licensing mechanism can be specified the kind of services tc be offered and requirements for the facilities (buildings and equipment) in stating minimum and maximum levels. The present way of subcontracting the a limited number of private providers can be extended to the other private and NGO providers insofar as they are required to meet the service needs of the health insurance beneficiaries. - 154 - Appendix 14: UPDATED SELECTED POPULATION AND FINANCIAL INFORMATION Table A 14.1: Selected Figures from Last Population Census Total Total Population (GWB) 3,100,000 Total Population abroad 320,000 Holding ID abroad West Bank 248,000 Gaza 76,000 Jerusalem (inside boarders) 210,000 Jerusalem (out side boarders) 113,000 No. of Families GWB 406,896 No of Families in West Bank 262,373 No of Families in Gaza 144,523 Average family size 6.4 West Bank 6.1 Gaza 6.9 Health Insurance Table A 14.2: No of Insured Families during 1997 Item No of Insured Total No of Families Coverage Families % Gaza 89,200 144,523 62% West Bank 108,517 262,373 41% Police Families 30,000 Total GWB 227,819 48% Table A 14.3: Total Revenues from Health Insurance Type Revenues (US$ million) Health insurance revenue 31 Social welfare revenue 5 Police families revenue 3.5 Other revenues 10.5 Grand Total 50 - 155 - Table A 14.4: Detailed Financial Statement of NGO and Private Hospitals & Medical Centers within the PA territories paid by the PA during 1997 No Hospitals & Medical Centers Amount I Arab Care 183,228 2 Khalid Abu Hospital 103,546 3 Son John Hospital 273,4 11 4 El-Awda Hospital 23,885 5 Khalil Abu Raia Hospital 166,564 6 Mar Yousif Hospital 38,899 7 Augesta Vectoria Hospital 45,614 8 Gaza Diagnostic Center 206,602 9 El-Wafa Rehabilitation Center 243,550 10 Nablus-Patient Friendship Association 2,980 11 Women's Union Hospital 6,249 12 Prince Basma Association 22,637 13 Islamic Solidarity Center 11,445 14 Artificial Limb) Center 66,323 15 Mute Children Society 90,951 16 Medical Technology Company 576 17 Med.-Lab Center 54,568 18 Physical Handicapped Society 5387 19 Beit Lahem Society 67,746 20 El-Bait El-Samed Society 3,356 21 Cerebral Pulsy Center 26,970 22 El-Engely Hospital 2,086 23 Mohamed Ali El-Mohtaseb Hospital 114,306 24 El-Amal Center 896 25 El-Naser Optics 3,101 26 Handicapped Care Society - Gaza 11,335 27 Abli Arab Hospital - Center 442 28 Al-Qudes Medical Center 37,469 29 Al-Catholic Center- WB 764 30 Makased Benevolent Society 282,121 31 Gaza - Patient friendship Association 33,126 Grand Total 2,166,133 Table A 14.5: Hospital Data in Governmental Hospitals in Palestine, 1996 No of Bed Discharge Deaths Operations Births Days of Bed Average Out patient Hospital Minor Major care Occupa ney length of Clinic visits ._______ __________ (%) stay (days) West Bank Jenin 55 12,435 180 1,575 1,082 4,583 23,667 117.6 1.9 44,763 Tulkarm 64 8,418 159 928 408 1,929 18,800 80.3 2.2 45,866 Nablus 86 7,340 361 21,867 69.5 3.0 47,191 Rafidiha 138 16,573 138 2,855 1,276 7,863 41,678 82.5 2.5 78,352 Ramallah 142 11,501 304 4,562 1,649 2,581 43,301 83.3 3.8 103,465 Beit Jala 70 6,390 115 1,029 811 1,830 21,085 82.3 3.3 66,745 Jericho 50 3,133 25 499 381 557 9,001 49.2 2.9 33,114 Hebron 103 16,804 182 2,236 2,170 5,435 38,401 101.9 2.3 111,907 Kamal 320 571 4 127,823 109.1 223.9 3,366 Psychiatric Hosp. ___ Gaza Strip Shifa 402 36,743 848 3,907 7,7414 9,811 121,591 82.9 3.3 148,368 Khan-younis 213 24,182 336 6,931 2,989 6,073 65,200 83.7 2.7 49,100 Pediatric 105 10.39 307 * * * 31,926 Q3.3 3.1 8,219 Opthamalic 31 1,751 0 10,301 1,091 6,990 61.8 4.0 67.667 Psychiatric 34 602 0 * 10,140 81.7 16.8 24.922 Table A 14.6: MOH Revenues ($000) 1 H. Insurance Other Revenues Total Revenues MOH Expenses Coverage % 1996 __ Palestine 22,008 9,120 31,128 89,545 34.8 West Bank 12,563 5,824 18,387 Gaza 9,445 3,296 12,741 1997 Palestine 31,014 10,041 41,055 89,448 45.0 West Bank 18,469 6,097 24,566 Gaza 12,545 3,944 16,489 _9_ Social Welfare Insurance: $5,000 Police Families Medical Services $3,500 Total MOH Revenues in 1997 $49,555 millioni 55% Table A 14.7: Households Contribution (1995-1997) Year voluntary Compulsory Workers Contract Soc. Welf Total 1995 X _ _ Palestine 24813 31815 20713 19157 27190 123688 West Bank 9275 19331 8122 9931 12181 58840 Gaza 15538 12484 12591 9226 15009 64848 1996 Palestine 33136 37975 23559 33927 32315 160912 West Bank 14976 23589 8918 19750 16573 83806 Gaza 18160 14386 14641 14177 15742 77106 1997 Palestine 36023 45542 28878 47975 39391 197809 West Bank 16919 28571 11992 30151 20884 108517 Gaza 19104 16971 16886 17824 18507 89292o 1997 Area Population Households Ins. 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