-Health Care in Zambia: Reforming the System                                     Page 1 of 4
THEWORLD BANK GROUP
]  i  l      |-~~~~~~~~~~~~~~~~-------12
.  ..........          2 3 1 1 2 ~~~~~~~~~~~~~. ..
Findings reports on ongoing operational, economic and sector work carried out by the World Bank
and its member governments in the Africa Region. It is published periodically by the Africa Technical
Department on behalf of the Region.
Health Care in Zambia: Reforming the System
Health care systems across the developing world are going through a process of reform. Although
situations differ greatly, the motivation for health reform consistently centers around efforts to
improve the effectiveness, efficiency, and equity of health care services. The World Bank's World
Development Report 1993: Investing in Health and Better Health in Africa both assert that even
countries with severe resource constraints can achieve substantial improvements in the health status
of their populations through improving coverage with a basic set of health care services. Over the
past three years, the government of Zambia has attracted attention for the way in which it has
anticipated, and responded, to this message.
The Reform Environment
Zambia was once one of the wealthiest countries in Sub-Saharan Africa. With deteriorating economic
conditions, the inefficient, publicly-financed health care system floundered. Infrastructure was not
maintained so that many health centers in rural areas were without water or sanitation facilities.
Incentives for personnel were insufficient. Consequently, almost half of Zambia's physicians have
been working abroad, while the Ministry purchases the services of expatriate physicians. Most
medical equipment became obsolete, and working vehicles became scarce except in those districts
which received direct donor support. Infant mortality rates and the prevalence of malnutrition
increased significantly. As the population continued to grow at a rate of 3.2%, and the incidence rates
of malaria, tuberculosis and AIDS increased, the deteriorating system could no longer meet demand.
Clients more and more frequently by-passed the first level of care, seeking basic drugs and services at
hospitals. Health centers could not compete with higher levels of care for rehabilitation, staff and
supplies.
In 1991, a new government emphasized health care reform which would manage limited resources in
order to maximize quality care and provide cost-effective, quality health care as close to the
household as possible.
http://www.worldbank.org/afr/findings/english/find43.htm                         11/2/2001



-Health Care in Zambia: Reforming the System                                    Page 2 of 4
Planning for Reform
By early 1993, the initial process of reform was well under way. In July 1993, a visiting World Bank
mission expressed concern that the planning of reform was focused on repairing the existing health
system which had been developed when Zambia was a wealthier country, less concerned with cost-
effectiveness. The team argued that Zambia had sufficient resources to maintain a more efficient
system which could provide essential health care services for all, but in order to achieve this, the
system would have to be re-designed. It subsequently noted that no clear picture existed of the
reformed health care system, only plans for reformed components of the system, inputs and outputs
which were disassociated from one another: family planning, infrastructure, nutrition, human
resources, quality assurance.
The core group of ministry staff charged with planning reform, the Health Reform Implementation
Team (HRIT) and Planning and Management Unit of the Ministry, agreed on an approach which
would:
* Define the health needs of the country;
* Determine how they could most cost-effectively be addressed;
* Quantify the most efficient combination of inputs which would be necessary to ensure the
effective delivery of these services; and
* Estimate how much they would cost.
If an assessment of the resources available (public and private) implied that they would be able to
afford the recurrent costs of the proposed system, then the "gap" between the existing system and the
more cost-effective, financially sustainable system proposed would represent the bulk of the need for
external donor support.
The Ministry, together with donors and other stakeholders, invested extensive staff time into
identifying input requirements, determining which services should be delivered at each level of care,
defining appropriate catchiment areas, and determining what package of cost-effective services it
could afford to ensure to the entire population. The result was a national prototype package of
essential health services comprising immunization, family planning, perinatal care, HIV/AIDS
prevention, treatment of tuberculosis, malaria, diarrhea, respiratory and sexually transmitted diseases,
and some basic surgical care. These services are all capable of being delivered at the levels of the
health center and district hospital. This prototype is subject to modification by districts. To ensure
district health boards employ appropriate criteria when locally adapting the national package,
provincial advisors have received training in assessing the burden of disease and performing cost-
effectiveness analysis.
The core group has also spent time considering what centralized support would be necessary to
maintain quality, oversee logistics systems, coordinate essential national health research, formulate
national plans and budgets, and ensure accountability. They have subsequently begun to define new
terms of reference for the central Ministry departments and parastatals. The vision for the reformed
system is summarized within a Strategic Plan for Health Reform to be updated annually together with
donors and other stakeholders.
From Vision to Reality
http://www.worldbank.org/afr/findings/english/find43.htm                        11/2/2001



*   -Health Care in Zambia: Reforming the System                                    Page 3 of 4
The Ministry of Health was determined that the extensive planning process should not delay the
initiation of reforms. This sense of urgency occasionally pushed implementation too quickly, as with
the rapid initiation of user fees and pre-payment schemes, but it also facilitated some initiatives such
as decentralization. Many of the system's problems had been linked to excessive centralization, and
health care reforms quickly became associated with an effort to decentralize decision-making and
financial responsibility. In January 1993, the government decided to try providing a sample group of
districts with grants from which they would finance all of their own recurrent costs (excluding
salaries and drugs). The Bank, together with UNICEF, WHO and DANIDA persuaded the Ministry to
go ahead with all of Zambia's 61 districts, and DANIDA agreed to finance the initial grants. The
legislation necessary to institutionalize decentralization was drafted with the support of WHO and is
expected to be passed by July 1995.
The disbursement of funds directly to the district level necessitated the rapid establishment of
accounting systems to ensure that decentralization would not be undermined by financial abuse.
Building capacity for financial management at the district level became one of the responsibilities of
the HRIT, formed to provide full-time support to the process of planning and implementing reform.
The terms of reference for the HRIT also focused on quality assurance, human resource development,
district level capacity for planning and policy development/legislation.
Efforts to mobilize private sector resources have been more challenging. The Ministry has
recommended that its own budget be utilized to ensure coverage with the defined essential package of
care. Yet it simultaneously recognizes that
* If those who could afford to pay for services were encouraged to do so, the amount of public
financing available for an essential package would be greater;
* Contributions can be used to instill a sense of community ownership;
* Fees may be necessary to encourage cost-effective patterns of utilization, and in particular
discourage by-passing the primary level; and
* Pre-payment and insurance schemes might target demands for those services which are not
included in the essential package, or those individuals who are willing to pay for "amenities."
Initially, districts and provincial and central hospitals were authorized to charge for services and
utilize any revenues generated without adequate guidelines. Pre-payment schemes were instituted at
central hospitals and copied by provincial hospitals without consideration of the costs of
administration and the increased demand for care (there were no disincentives for overutilization). In
many hospitals, the increase in costs exceeded the increase in revenues. Recognizing the problems,
the Ministry has begun to develop guidelines and to critically assess the schemes which are
underway.
National support to reform has proved essential. Between 1993 and 1994, the government increased
the proportion of the budget allocated to health from 8% to 13%. The Ministry evidenced its
commitment by reducing its allocations for the central teaching hospital from 25% to 17% . Although
the recurrent costs of the new system are intended to be fully financed through local resources,
external support will be necessary to support the transition. There are significant costs associated with
the redistribution and retraining of staff, renovation of infrastructure, and the reallocation of physical
resources between and within districts. The proposed changes have been particularly daring in a
country which had a precedent of publicly financed and provided care, and which had been allocating
increasing proportions of its public resources towards inequitably- accessible, high-technology care.
http://www.worldbank.org/afr/findings/english/find43.htm                           11/2/2001



AHealth Care in Zambia: Reforming the System                                   Page 4 of 4
Bilateral and multilateral donors to the health sector determined that this innovative approach taken
by the Zambian government deserved an equal response on the part of the donor community. At the
time of project appraisal, donors signed a joint statement committing themselves to supporting the
comprehensive process of health reform and not financing inputs outside of the agreed upon plan. An
increasing proportion of donors have agreed to finance the overall plan rather than specified inputs or
discrete projects. A consulting firm has been working with the Ministry and donors to develop a
single accounting, reporting and disbursement system which would meet the requirements of all
donors. IDA, in its position of "donor of last resort" has committed $56 million to supporting those
elements of the plan for which no other source of financing is identified.
A Different Approach to Reform
A common approach to reform has been to identify problems in the system which cause
inefficiencies, ineffectiveness, and insufficient coverage, and then define solutions. The approach
applied in Zambia has rather been to define standards for a cost-effective system which would be
financially sustainable, and then to determine how to move from the existing system to the more cost-
effective one envisioned. This has resulted in an approach notable for its comprehensiveness, the
extent to which every aspect of the system has been open to consideration, and the unique partnership
formed with the donor community. Zambia's health care system offers tangible evidence that national
commitment can spur the transition from rhetoric to actual reform.
This article was prepared by Ms. Julie McLaughlin, Southern Africa Department, Africa Region,
The World Bank. More information is availablefrom Ms. McLaughlin, Room J-11-1 03, The World
Bank, 1818 HStreetNW, Washington, D.C. 20433.
i 0 *A&K    M1 A -        slt wCS-
http://www.worldbank.org/afr/findings/english/find43.htm                       11/2/2001