Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 20336

IMPLEMENTATION COMPLETION REPORT(Loan-38430)

ONA

LOAN

IN THE AMOUNT OF US$40 MILLION

TO THE

REPUBLIC OF CROATIA

FOR A HEALTH PROJECT

June 20, 2000

South Central Europe Country UnitHuman Development Sector UnitEurope and Central Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective May, 2000)

Currency Unit = Kuna (KN)1 Kuna = US$ 8.4096US$ 1 = .1189 Kuna

FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance StrategyCHII Croatia Health Insurance InstituteICR Implementation Completion ReportICU Intensive Care UnitIBRD International Bank for Reconstruction and DevelopmentMOH Ministry of HealthNIPH - National Institute of Public HealthPIO - Project Implementation OfficerPIP - Project Implementation PlanPPF - Project Preparation FacilityQAG - Quality Assurance Group

Vice President: Johannes LinnCountry Manager/Director: Andrew Vorkink

Sector Manager/Director: Annette DixonTask Team Leader/Task Manager: Virginia Jackson

FOR OFFICIAL USE ONLY

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 86. Sustainability 107. Bank and Borrower Performance 118. Lessons Learned 139. Partner Comments 1410. Additional Information 25Annex 1. Key Performance Indicators/Log Frame Matrix 26Annex 2. Project Costs and Financing 27Annex 3. Economic Costs and Benefits 29Annex 4. Bank Inputs 30Annex 5. Ratings for Achievement of Objectives/Outputs of Components 32Annex 6. Ratings of Bank and Borrower Performance 33Annex 7. List of Supporting Documents 34

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not be otherwise disclosed withoutWorld Bank authorization.

Project AID: P039450 Project Nme: HEALTHTeam Leader: Philip B. O'Keefe TL Unit: ECSHD

ICR Type: Core ICR Report Date: June 20, 2000

1. Project Data

Namne: HEALTH L/C/TFiNumber: Loan-38430CowutrylDepartment: CROATIA Region: Europe and Central

Asia RegionSector/subsector: HB - Basic Health

KEY DATESOriginal Revised/Actual

PCD: 09/16/94 Effective: 06/06/95 08/17/95Appraisal: 11/09/94 MTR:Approval: 02/14/95 Closing: 12/31/98 12/31/99

BorrowerlImplementing Agency: REPUBLIC OF CROATIA/HEALTH INSURANCE INSTITUTEOther Partners: MINISTRY OF HEALTH, NATIONAL INSTITUTE OF PUBLIC HEALTH

STAFF Current At AppraisalVice President: Johannes Linn Wilfried ThalwitzCountry Manager: Andrew Vorkink Kemal DervisSector Manager: Annette Dixon Ralph Harbison and Andrew RogersonTeam Leader at ICR: Virginia Jackson Williarn Bradford HerbertICR Primary Author. Carol Hoppy; Virginia Jackson;

Dorothy A. Clift; Deborah Trent

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, IJN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Aodest, N=Negligible)

Outcome: S

Sustainability: HL

Institutional Development Impact: SU

Bank,Peiformance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

In the early 1990s, the health system was in a state of crisis, with rising expenditures andno systems in place for effective management in the sector. The Government realized the need forfar-reaching reforms in the system, and in 1993 passed the Health Care Act, which establishedprimary care as the foundation of the health care system and defined a new management structurefor all health institutions. The Health Insurance Act established the Croatia Health InsuranceInstitute (CHII) and gave it considerable legal authority to enforce collection of contributions,negotiate and sign contracts with providers, and supervise and control business transactions ofhealth facilities and private practitioners. The Health Insurance Act added mandatorycontributions from the Pension Fund to the payroll-based revenues of the Health Fund, then set at15%; and allowed for the establishment of voluntary insurance schemes to supplementcompulsory insurance. These laws reflected the discipline that would be essential to the successof the Government's reform strategy. The policy changes introduced in the sector weresubsequently effective in reducing the financial deficit and in shifting resources from curative topreventive and primary care. In order to sustain the reform, investment resources were neededand the first Health Project was designed to realize the goal of providing needed support and tosustain the Government's health care reform program. To achieve this goal, the specificobjectives of the Project were to: (a) improve the operational and financial management system ofthe Health Insurance Institute by supporting the computerization of information systems; (b)improve the quality of the health care delivery system by providing laboratory and diagnosticequipment for primary health care facilities and basic equipment (and training to use theequipment) for hospitals and emergency services; and (c) improve the health status of thepopulation by supporting health promotion programs. These development objectives are stillconsidered valid and appropriate. The second operation, the Health System Project, whichbecame effective in March 2000, is expected to build on and expand the foundation establishedduring the implementation of the first Health Project.

3.2 Revised Objective:

Project objectives were not revised.

3.3 Original Components:

The Project included three main components: (a) Health Insurance Administration; (b)Primary Care and Health Promotion Services; and, (c) Essential Hospital and EmergencyServices. These three primary components, for practicality, were further divided into sixsub-components for which there were corresponding working groups: health insuranceadministration; primary health care; health promotion; intensive care; prenatal care; andemergency medical services.

(a) Health Insurance Administration: This component was designed to improve healthinsurance administration by developing the information technology network linking central,district and branch offices of the Health Insurance Fund (CHII); and by introducing "credit card"style health insurance identification cards.

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(b) Primary Care and Health Promotion Services: This component was designed toimprove the quality and availability of basic diagnostic services for the primary care networkthrough the provision of standard diagnostic equipment (x-rays, simple laboratory equipment andmammography equipment), as well as the required training for medical, nursing, and paramedicalpersonnel. It was also concerned with intensifying programs to promote healthier lifestyles amongthe population through the training and support of community health promotion teams, primarycare providers, and school teachers, as well as through mass media education programs.

(c) Essential Hospital and Emergency Services: This component was designed toupgrade essential acute care services through the provision of basic equipment for the emergencymedical system, intensive care units, and perinatal care units in selected hospitals, as well asrelated training for medical, nursing, and paramedical personnel.

3.4 Revised Components:

The original components of the project were not substantially revised during the project'simplementation. A "bridging" sub-component, to carry out a number of studies, was added in1998 when the decision was made to extend the project's closing date by one year.

3.5 Quality at Entry:

Quality at Entry was highly satisfactory. The objectives of the project were clear andwere seen as crucially important at the time for the recovery and development of the countryfollowing the break-up of the Yugoslav Federation, in terms of providing support andimprovement for the Croatian health system which was in disarray, addressing emergency andcritical needs in the health sector resulting from the war, and putting into place a number ofmechanisms to support long-term reform of the system. The objectives were also consistent withthe Bank's strategy as stated in the CAS, of getting Croatia back on a stable and sustainableeconomic track, while addressing the realities resulting from war which created an abnormalsituation that included casualties of the war, pockets of poverty in the country, refugees anddisplaced persons, and concomitant stresses on the country's health system.

QAE review not available at the time of this project's preparation.

4. Achievement of Objective and Outputs

4.1 Outconie/achievement of objective:

The project was successful in achieving all basic project objectives. In the early 1990s, thehealth system was in a state of crisis, with rising expenditures and no systems in place for effectivemanagement in the sector. The Government realized the need for far-reaching reforms in thesystem, and in 1993 passed (a) the Health Care Act, which established primary care as thefoundation of the health care system and defined a new management structure for all healthinstitutions; and, (b) the Health Insurance Act, which established the CHII and gave itconsiderable authority to enforce collection of contributions, negotiate and sign contracts withproviders, and supervise and control business transactions of health facilities and privatepractitioners. The policy changes introduced in the sector were designed to effectively reduce thefinancial deficit and to shift resources from curative to preventive and primary care. To sustainthe reforms, investment resources were needed, and the first Health Project was designed to

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provide support and sustain the Government's health care reform program. Specifically, theHealth Project has been successful in improving the operational and financial management systemof the CHII through computerization of information systems; improving the quality of the healthcare delivery system through provision of laboratory and diagnostic equipment for primaryfacilities, training and basic equipment for hospitals and emergency services; and seeking toimprove the health status of the population by supporting health promotion/awareness programs.

4.2 Outputs by components:To achieve project objectives, the project was implemented through three main

components:

(i) Health Insurance Administration (initial est. base cost US$13.9 million)

- - To finance the computerization of CHII operations at headquarters and CHII localoffices (development, pilot and implementation phases). Related to this relevant goal, training tobe provided, support to replacement of paper cards with insurance type "credit card" productionto improve data recording and minimize fraud, and 5,000 machines to take card imprints, with thedistribution of these machines to health facilities and primary care providers. Also, finance ofstudies leading to further information technology investments in health facilities.

- - To help the National Institute of Public Health (NIPH) in its task of collecting,publishing and analyzing data on health services and health outcomes, provide support to NIPH tocarry out a study to define minimal health data set required, and determination of which datawould be provided by the CHII and which by health providers reporting directly to the NIPH; anda small informatics package provided to upgrade its information system.

- - Support an assessment of cost-effective sectoral interventions in order to assist policymakers in making rational resource allocation decisions. Training, development of casemanagement protocols for each major health problem, and compiling and publishing guidelines ofthese protocols for practitioners. This would also serve as a basis for determining priorities andresource needs and refinement of strategy, as well as building a broader base of consensus, andcooperation from practitioners, by involving professional associations, etc., for the restructuringprocess.

This component was fully implemented as regards the procurement of equipment anddevelopment of a computerized health insurance information system at CHII and in regional andbranch offices (consisting of an information network of 177 locations). A more transparentinformation system is now in place which has resulted in more control over both revenues andexpenditures. Improvements in communications and efficiencies in the administration haveresulted in cost savings. Health insurance cards were developed and a registry of insured personsthroughout the country created, which has resulted in better tracking and cost savings. Thecomprehensive data base of medical information that was created will also provide useful dataregarding prescriptions, sick leave, etc. For the primary health care information system, a pilotwas developed and tested. The program will provide improvement in PHC services delivery,management and administration, and provide assistance to medical professionals. The healthinsurance information database, based on the PHC pilot, will provide a great deal of useful health

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data. A study to define minimal health data was carried out with foreign technical assistance andprovides analysis and recommendations. However, the task of collecting health data sets remainsto be undertaken.

(ii) Primary Care and Health Promotion Services (initial est. base cost US$14.9million

- - Provision of radiology equipment to health centers without such equipment or whereequipment had deteriorated. Provision of selective laboratory equipment. (It was estimatedduring project appraisal that about 10% of this equipment would be allocated to health facilitiesserving the refugee population from Bosnia-Herzegovina.)

- - Short-term training seminars for users of equipment (medical technologists,radiologists, etc.). Training seminars for GPs/Family Practitioners and primary care nurses incatchment areas of facilities receiving equipment to optimize cost-effective use of the newdiagnostic tests. Extra-residency posts in existing Family Practice training program to be financedand reserved for candidates contractually committed to working in designated underserved areas.

- - Health Promotion (HP) activities to take place in schools, primary care facilities, andthrough mass media, to target lifestyle factors, including: diet, smoking, physical fitness andsexual behavior. Survey on health-related behavior to be first carried out to document regionaldifferences, identify specific target groups, refine messages, and serve as a baseline for monitoringprograms; training seminars for principal channels then to be organized, and supporting materialsfor health educators, including audio-visual equipment for schools and health facilities, to beprovided. Also, provision of resources to contract professional services for the design,production and diffusion of media programs.

The focus of the primary health care (PHC) sub-component was to improve theeffectiveness and efficiency of the system by reorienting it from secondary care to PHC. In orderto accomplish this, it was necessary to first replace obsolete x-ray and laboratory diagnosticequipment at the primary level (affecting about 60% of the PHC centers throughout the country atthe beginning of the project), and also provide the concomitant training for medical staff. In theseaspects, and through savings resulting from the competitive international procurement process,the objectives were more than achieved. More than 60% of the centers throughout the countrywere equipped. Similarly, more than 7,500 medical staff participated in over 300 courses, judgedof high quality, during the period that the new equipment was provided to the health centers.Some of the PHC training courses were delayed due to the reluctance of the CHII to use the loanto finance the training, which was eventually funded by the Government. In terms of what mighthave worked better: There were some problems in receiving the new equipment in terms ofappropriate space at some centers. No allowances had been made for the need, in some cases, tore-configure the spacing, and the mis-match caused some delays in installation. In addition, thereis the question of the sustainability of the equipment, which will require periodic replacement.This will be entirely dependent on budgetary allocations in the CHII, and the ability of the healthfacilities to repay.

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The health promotion sub-component was innovative in design, and presented challengesand opportunities for the Croatian health system. As no real baseline study existed, it wasnecessary to plan and undertake a comprehensive baseline health study of the population relatedto behaviors concerning diet, smoking, physical fitness, and sexual activities. The baseline studyneeded to be done before an effective health promotion campaign and education program couldbe designed to respond to and address some of the findings. This comprehensive needsassessment delayed the original time schedule and implementation expectations of thesub-component, as did the fact that it eventually became necessary, due to poor performance toterminate the initial contract with a firm which had won the bid. The second bidder on the listwas then chosen to implement a health promotion campaign, based on the health and behaviordata from the baseline survey. This media campaign was generally recognized as a successfulundertaking, which is supported by several evaluations of the campaign. This resulted in anadditional campaign being launched. As well as the media health promotion campaign, theNational Institute for Public Health, as a part of this subcomponent, provided education seminarsand workshops and other training for key health personnel. Despite significant delays in start-up,these training activities were eventually, during the last year of the project, implementedsuccessfully. In order to sustain the activities of the sub-component, it was decided to create andequip a health promotion unit within the Institute. To further support health promotion activitiesinitiated under the first project, the second Bank Health System Project includes a healthpromotion component.

(iii) Essential Hospital and Emergency Services (initial est. base cost US$19.3million)

- - Provision of equipment to primary care facilities and district hospitals to improvepre-natal diagnosis, resuscitation, and acute care of compromised new-boms. Training ofadditional specialists in obstetrics and neonatology by providing financing for extra-residencyposts in existing specialty programs for candidates contracted to work thereafter for a specificperiod in designated understaffed hospitals.

-- Communications: Radio and telephone equipment.for a national communicationsnetwork to extend existing coverage to all parts of the country and improve contacts withemergency units.

-- Transport: acquisition of replacement ambulances

-- Clinical equipment: replacing out-of-date essential resuscitation equipment forambulances

-- Personnel: training staff of emergency units by financing extra-residency posts inexisting specialty programs for Emergency Medicine

-- Organization: developing fleet deployment strategies and clinical protocols atemergency centers

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-- Organization of Intensive Care Units (ICUs): to reduce avoidable mortality,morbidity and health service costs resulting from sub-optimal IC services, project supported are-organization and re-equipping of these services in selected hospitals. Respirators and monitorsprovided in selected hospitals. Medical staff qualified in IC increased. Fellowships for trainingfor selected medical staff in IC, and continuing education programs for paramedical personnel.

This component, with sub-components including the upgrading of equipment and relatedtraining organized for use of the equipment for emergency medical services, intensive care units,and perinatal care, was largely successful, due in part, to the very efficient procurement of theequipment. Procurement efficiencies resulted, in fact, in the ability to procure additional neededequipment, beyond what had originally been planned, including ambulances (many of which hadbeen destroyed by the war and needed to be replaced), as well as defibrillator and resuscitationequipment. Only the development and implementation of a new telecommunication system(US$500,000) in the Institute for Emergency Medical Services in Zagreb was not completedduring the project because of delays in selecting appropriate consultants for the systemdevelopment, and the need to ensure compatibility with the telecommunications system developedfor the Ministry of Interior Affairs. A team organized by the Faculty for Electro-technicalEngineering and Computing at Zagreb University was eventually selected on a sole-source basis,but, as a result of the earlier delays, work was not able to get underway until September 1999.The actual delivery and installation of new telecommunication system equipment, resulting fromthe study and specifications developed by the Zagreb University team, have been carried over intothe Health System Project.

Training for the component was generally successful and well-received albeit subject todelays in start-up. In addition to training in the use of new equipment, training was provided toupgrade the skills of medical staff, paramedics, and drivers. Similarly, comprehensive training forintensive care unit specialists was organized by the Medical School of Zagreb University, andapproximately 50 ICU physicians were trained. For the perinatal care sub-component, training ofhealth professionals was organized by Zagreb University for some 77 medical doctors andspecialists and 570 perinatal care nurses, midwives, and visiting nurses at regional centers.

4.3 Net Present Value/Economic rate of return:

N/A

4.4 Financial rate of return:

N/A

4.5 Institutional development impact:

Through targeted inputs, the project had the effect of strengthening the implementinginstitutions, CHII and the MOH, as well as other entities involved in the project including theNIPH and the whole essential hospital and emergency services network system, and selectedhealth care units throughout the country. Indirectly, the legislative and policy frameworkimproved for procurement in Croatia. At the beginning of the project, there was no realprocurement experience to draw upon or laws set up. In 1995, rules for procurement wereinitiated, and in 1997, the Government adopted a Law on Procurement.

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5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or imnplementing agency:

The turmoil in the former Yugoslavia was a primary factor beyond the control of theimplementing agencies during the project preparation period. The results of the war, whichincreased poverty and created a number of displaced persons, as well as further stressing analready vulnerable health system, certainly were not without effect on the implementation of theproject. Reorganization of the inherited health system, which was fragmented, inefficient, and in astate of crisis, started in 1990, after the first democratic elections were held in Croatia. TheGovernment and the Ministry of Health initiated wide-reaching reforms for the sector in 1991,which were built around: a reduction in the role of the state; a more efficient allocation ofresponsibility between central and local governments; a redefmition of basic health services andimprovement in quality of services; and restructuring of health financing. However, the outbreakof war in 1991, which continued through 1995, interrupted reform efforts and had a major impacton the health system. Still, the Govemment and MOH believed it was important to proceed withsectoral reforms, and with this determnination, the project's preparation went forward despite thespecial background circumstances presented by the confusion, turmoil and social, political andeconomic disruptions of a war-time country.

The backdrop for the life of the project has been complicated. Since independence, Croatiahas gone through a different macro-economic transition and political process than most formersocialist economies: a transition period (1991-1992); a period of consolidation (1993-1995); and aperiod of economic recovery (1995-1998). The Health Project was prepared, in part, during aperiod of armed conflict in the country, which ceased in late 1995, and implemented mainlyduring the period of economic recovery. The period of strong economic expansion lasted wellinto 1998 and was characterized by a consumption and investment boom, financed by acombination of capital repatriation (1995-96) and a significant increase in overall indebtedness(1997). Continued expansion of domestic demand has led to a growing extemal imbalance, and alagging pace of structural reforms during the period of recovery and growth. The country'seconomic situation, involving growing indebtedness and intemal inflation, was also affected bythe East Asian and Russian crises.

It was not possible to start implementation activities (some activities were scheduled tobegin in the last quarter of 1994) for the Health Project as originally projected in the ProjectImplementation Plan (PIP), as Board approval of the project did not come until mid-February1995, and Project Effectiveness occurred in August 1995, two months later than planned. Thisdelay in effectiveness was the result of time required for parliamentary ratification of the legalagreements, and signing of the Subsidiary Agreement. The Bank during this two month periodsent a pre-effectiveness mission to provide support to start-up activities. Because of the fact thatthere was a Project Preparation Advance in place, as well as a retroactive financing mechanism forthe project, start-up activities did begin. There were delays in start-up of some activities by threeto four months, including preparation of technical specifications for the bidding documents for theprocurement of medical equipment and terms-of-reference for technical assistance. Followingeffectiveness, the project launch workshop was held in Zagreb and Lovran in September 1995.Both the Bank and the Government agreed on the major causes of the delays. The Bankrecommended increasing the project implementation capacity, and organizational arrangements

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for improving implementation performance were introduced in September 1995 at a meetingconsisting of project participants and headed by the MOH. As a result, the procurement plan wasrevised and the project implementation plan rescheduled. Project implementation capacity wasfurther improved by the extended engagement of CHII staff in the daily project implementationactivities, and the initiation of weekly meetings at the CHII, chaired by the Director of theInstitute. However, no supplementary staff to support the Project Implementation Officer (PIO)were employed.

5.2 Factors generally subject to government control:

The Government's commitment and enthusiasm for the project did not waver andcontinued to be strong throughout the life of the project. Similarly, commitment to new strategicreforms in the health sector, for which the project provided a basis, remained firm. There weretwo changes in the director of the CHII, and two changes in leadership of the MOH which didimpact on the project's implementation to an extent, but did not in the end affect the forwarddirection of the project.

5.3 Factors generally subject to implementing agency control:While the management arrangements for implementation seem unduly complex, involving

the CHII as the official implementing agency, an Assistant Minister of Health as the officialproject coordinator, and a full-time Project Implementation Officer (PIO) reporting to theDirector of the ClIII but needing to coordinate directly with the MOH, working groups, etc., theproject still was successful in terms of overall implementation and in achieving the developmentobjectives. This was the case despite the fact that this was the first Bank-financed project in thehealth sector. Further, while the CHlI was the 'designated' implementing agency, it did not takeover officially from the MOH until the project became effective, once the subsidiary agreementshad been signed. In terms of staff changes, during the project's implementation there were twodirectors of the CHII (the second being appointed in 1998) and two Ministers of Health, whichcould have disrupted the continuity of the project's implementation more if it had not been for thecontinuity of the PIO, the Assistant Minister of Health, and key technical staff..

5.4 Costs andfinancing:

Total project cost was estimated at US$54.0 million equivalent at appraisal, with a BankLoan of US$40.0 million (75 per cent of total costs), and including a Project Preparation Facilityadvance (PPF) of US$350,000, and a Government contribution totaling US$14.0 million,ircluding taxes and duties, to be financed from the Health Insurance Institute's (CHII) ownrevenues, i.e., payroll taxes. Retroactive financing was provided for the CHII in the amount ofapproximately US$4.0 million to cover expenditures incurred up to 12 months prior to loansigning to support specific activities related to (a) the initial procurement of health careequipment; and (b) technical assistance for the health promotion survey.

The Bank loan was made to the Government of Croatia, and the Government,subsequently, entered into a subsidiary Loan Agreement with the CHII, which was a condition ofproject effectiveness. On-lending terms to the CHII were the same as the terms of the Bank'sLoan to the Government, and the CHII is responsible for servicing the Loan to the Government.

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6. Sustainability

6. Rationale for sustainability rating:

Overall, most aspects of the project are judged highly likely to be sustainable over the longrun. There is continued strong Government commitment for sustaining achievements of theproject in all major areas, including health insurance administration, primary care, healthpromotion, and hospital and emergency services. The Government's strategy and commitment toreform, including instituting fiscal discipline, reducing waste, improving management through theintroduction of incentives, and revamping the financing system, remains firm. In addition, thefollow-on Health System Project which is now under implementation, will further support thedeepening and expansion of some of the reform efforts that were started in the first HealthProject. A number of institutions, including the CHII, the MOH, the NIPH, and selected primaryhealth care facilities and hospitals have been strengthened through tangible inputs and trainingprovided by the first Health Project, and it is likely that the strengthening of these institutions willbe sustainable as long as there is strong commitment to the sector. In order to reinforce andensure the sustainability of the health promotion activities initiated under the project, a new healthpromotion unit has been created recently within the National Institute for Public Health.

A sustainability issue affecting the CHII, which has been particularly difficult to address,concerns those staff trained under the project in the field of information technology (IT). Thereis a trend of high staff turn-over, with young IT staff frequently leaving for higher salaries in theprivate sector soon after receiving training and getting some experience at the Institute.

6.2 Transition arrangement to regular operations:A follow-on project, the Health System Project, was designed to build on the foundation

of the first Health Project in terms of further strengthening institutions, including the MOH, CHII,and NPHI. Related to this, a "bridging sub-component" was added to the first project in 1998, atthe same time that the Government requested a one-year extension to complete project activities.The "bridging" activities were funded through 'freed-up' funds, amounting to about US$770,000,resulting from the efficient management of project funds. These activities were intended toconnect the two projects and included technical assistance packages for pre-investment studiesrelated to: (a) fund-holding and group practice in primary health care; (b) national health datastrategy; (c) categorization of hospitals; (d) development of clinical protocols; (e) humanresources development for new hospital information systems; (f) Koprivnica pilot region hospitalinformation system analysis and planning; and (g) alternative sources of financing. The secondproject was designed to reinforce the gains and expand the scope of successful activities carriedout under the first Health Project. With regard to the "bridging" funds used for these studies asthe basis for the follow-on project, delays in the selection process did occur, due to bunching oftoo many contracts at the same time. In an effort to strengthen implementation, the follow-onHealth System Project also provides funds for increased support to project management and thePIU during the project's implementation. Significant emphasis, for the second project, will beplaced on staff training and support to management for all activities.

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7. Bank and Borrower Performance

Bank7.1 Lending:

Bank staff assisted the Government in the identification and preparation of the project.From the beginning, there was a partnership formed between the Bank staff and the Governmentteam. Staff appraised the project thoroughly, in a condensed time period in order to respond tothe crisis situation in the country. The project objectives were consistent with the country's needsat the time and with the Government's strategy to respond to them. The objectives also supportedthe Bank's Country Assistance Strategy for Croatia. It was important for this first Bank loan tothe health sector in Croatia, to try to keep the project's development objectives simple andmanageable, while at the same time providing support to the Government's sectoral strategy andlaying the groundwork for reform in future operations.

7.2 Supervision:

There were no reflected deviations from IBRD policies and procedures on financialmanagement, procurement and disbursement.

7.3 Overall Bank performance:

Overall, the Bank's performance is assessed as very satisfactory. The Loan was processedunder intense and difficult conditions in the country, but it was accomplished within record time(eight months). Reducing preparation time, without compromising quality, was possible becauseof the commitment and continuity of both the Bank and the Government teams. A muchaccelerated preparation time was also critically important due to the urgency of the war conditionsand the need to respond to the social and health needs resulting from these conditions and duringthe transition period that followed.

Borrower7.4 Preparation:

The project's preparation was led by the Govemment at the design stage through the activeparticipation of the Ministry of Health and the Health Insurance Institute, the National Institute ofPublic Health and other relevant entities. The project also benefited from the formation of anumber of active working groups early in the project preparation phase that contributedsignificantly to the technical design of the project's components and sub-components. Thepreparation was facilitated by the Bank team. The Government, with very strong commitmentand enthusiasm, identified the project and worked closely with the Bank team to refine elementsthat could be included in the Bank Loan.

7.5 Government implementation performance:

The Government's strong commitment to realizing the objectives of the project continuedthroughout the implementation phase. It should be noted that the Health Project was the firstWorld Bank funded project in the health or social sectors in Croatia, and only the second Bankloan in the Republic. As a result, there was very little in terms of a base of accumulatedexperience in implementing projects or familiarity with Bank rules and procedures for theimplementing agencies to draw upon. There may have been an under-estimation on the part of theGovernment as to the amount of work that would be involved in executing the project. In

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addition, local procurement regulations and the subsequent Procurement Law had not beendeveloped at the start of the project. These factors, and the requisite learning curve, contributedto some initial delays in implementation activities which were nevertheless overcome successfully.

7.6 Implementing Agency:

A Project Implementation/Coordination Unit, as a separate entity or an entity within either theMOH or the CHII, was not created for the project. The reasoning for doing without a discreteentity was based on the Government's view, during the project preparation phase, that CHII hadthe capacity to implement the project activities, under the day-to-day management of the PIO.Ultimately, the project used a rather complex matrix organization for implementing the project.The project was technically managed by the CHII, even though the CHII began working on theproject in an official capacity only after the project's effectiveness (five months after the signing).However, to ensure that there was adequate coordination between the Ministry of Health (MOH),whose primary function is that of policy-maker, and the CHII, the Assistant Minister of Health forEconomics and Planning was appointed as the overall Project Coordinator. In this capacity, theAssistant Minister's function was to ensure that MOH policy was carried out, relevant to theHealth Project. A Project Advisory Cormmittee, headed by the Project Coordinator, was alsoestablished, and was tasked with providing policy advice and guidance throughout the project'simplementation. In addition to the Project Coordinator, the Advisory Committee was comprisedof the CHII Director, the PIO, and team leaders of the six working groups, with special taskforces convening, as necessary.

In order to coordinate the day-to-day activities for the Health Project, a full-time ProjectImplementation Officer (PIO) was appointed and reported directly to the CHII Director. Inaddition to the day-to-day responsibility for project administration and initiating and coordinatingimplementation activities, including procurement, the PIO essentially served as a critical, andextremely effective core liaison officer for the CHII, the MOH, the NIPH, the working groups,and other entities involved in the project. The PIO was also the main counterpart link with Bankstaff, and was responsible for submitting to the Bank periodic status reports on the project. Itwould have been useful to the PIO if the CHII had approved specific management training abroadfor the PIO in the early phases of the project. This training was eventually approved at themid-point in the project's implementation.

7.7 Overall Borrower performance:The Borrower's performance, overall, inclusive of the project's preparation phase and the

implementation phase, was satisfactory. There was strong commitment on the borrower's part toachieving the goals of the project. At the beginning of the project, the country was in a period ofinstability caused by the on-going regional conflict, but in spite of the political, economic andsocial chaos, the borrower was determined to address emergency situations in the health systemcreated by the war, as well as to move forward with longer-term reforms in the health sector.

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8. Lessons Learned

As indicated earlier, the project, as the first Bank loan for health in the social sectors inCroatia, as well as one of the first Bank projects since the country's independence fromYugoslavia in 1991, was a 'pioneer' and for this reason in many ways had to break new ground inseveral different areas. There was little to draw upon in terms of country experience in the region.However, by 1994 when this project was being designed and prepared, the Bank was beginning toacquire some pertinent design and implementation experience from health projects in theformer-socialist economies of Eastern Europe. As elaborated at the Initial Executive ProjectSummary stage, two of these lessons were: (i) in order to ensure a stable environment forinvestment in the sector, there was a need for a rational health financing policy and commitmentto fiscal discipline; and (ii) project design should be adapted to the frequently limited managerialcapacities in such countries. To accommodate these regional lessons, it was intended that a healthinsurance administration component in the project would help consolidate its achievements. And,although it was felt that management capacity in both the MOH and CHII was "exceptional byregional standards," it was an expressed intention to keep the project simple, with fewer and lesscomplex components than in many other health projects in the region.

A number of specific lessons have emerged from the experience of the first Croatia HealthProject:

Expectations: While there was an attempt to keep the first project 'simple', there were overlyambitious expectations on the part of the Bank and the Government as to the natural learningcurve that is required in getting a project started, preparing bidding documents,terms-of-reference for technical assistance, etc. The Government may not have realized the trueextent of all of the procedural and administrative requirements, and the Bank may have beenoverly optimistic about the possibility of moving things forward as quickly as was expected in theearly stages of the project's implementation. More realism on both parts might have contributedto more realistic implementation targets.

Implementation/Management/Staffing: Related to the need for more realistic expectations,in terms of the start-up implementation activities, is the fact that essentially all day-to-dayimplementation and coordination activities were made the responsibility of the PIO, whose onlystaff, other than himself, included a secretary. The original reasoning for this was that the MOHwould provide policy guidance, and the CHII, which had demonstrated good managementcapacity during the design and preparation stages, would be the primary implementing agency.However, there may have been an under-estimation of the amount of work that would berequired, in terms of procurement, coordination of the six working groups for thesub-components, providing a liaison between the MOH and the CHII, reporting requirements, etc.It was extremely fortunate that the PIO for this project was a very competent and well organizedindividual, who was able to handle multiple tasks simultaneously. As his office was also outsidethe MOH and the CHII, the coordination tasks, including getting "no objections" and contractssigned, were even more challenging. In addition, he never received any real management trainingunder the project until the project was well into its implementation. It is primarily as a result of

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the PIO's determination and activism that he overcame these deficiencies. In sum, the PIO couldhave benefited from additional staff support assistance, and earlier training in project management.

Borrower Commitment: On the positive side, the impact of the Government's commitmentto the success of project and its goals cannot be understated. During the design and preparationphases, and through a good part of the implementation, there was strong, hands-on involvementby Government officials, including both the Director of the CHII and the Minister of Health,which filtered throughout the ranks of the health system. Strong commitment and determinationat the top to a project, which essentially provides support for a strategy that has been developedby the Borrower, is requisite to achieving a successful project outcome. In the case of this project,these factors existed.

9. Partner Comments

(a) Borrower/implementing agency:

Project Summary

Background

The First Croatian Health Project was prepared with overall aim to support and sustainthe Government's health care reform program, which was initiated in 1990. The reform processwas slowed down by the homeland war that has been imposed to Croatia causing also newspecific problems connected to destruction of health facilities and medical equipment, as wellas increased demand for medical services in the population, especially displaced persons and agreat number of refugees.

The identification mission from the World Bank visited Croatia in June 1994. Due tovery strong commitment in the Ministry of Health the project objectives and components wereclearly defined during the first mission and the preparation phase went on very quickly. Aftersuccessful pre-appraisal, the Loan was negotiated in Washington in December 1994, andsigned in March 1995. Therefore, the whole preparation took only eight months, which wasunusually short time for preparation of a World Bank financed project in the region, and wasachievable because of good organization of the Ministry of Health driven by the emergencyneeds of the country.

The Loan became effective on August 17, 1995, after the Croatian Institute for HealthInsurance signed the Subsidiary Agreement with the Ministry of Health and tookresponsibilities as the implementing agency for the project.

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Project objectives

The main objectives of the project were (i) to improve the operational and financialmanagement system of the Croatian Institute for Health Insurance CHII by supporting thecomputerization of information systems; (ii) to improve the quality of the health care deliverysystem by providing laboratory and diagnostic equipment for primary health care facilities andessential equipment for hospitals and emergency services as well as relevant training; and (iii)to improve the health status of the population by supporting health promotion programs.

Project description and organization

The project was designed having three main components: (a) Health InsuranceAdministration; (b) Primary Health Care and Health Promotion Services; and (c) EssentialHospital and Emergency Services.

Since the project was designed to support the Govemment's ongoing health care reformprogram, a separate project implementation unit was not envisaged, given the implementationcapacity and commitment of the agencies involved. The project was implemented by the CHII,through a full time Project Implementation Officer (PIO), directly responsible to the Directorof the CHII. To ensure coordination between the Ministry of Health (MOH) and the CHII, theAssistant Minister of Health for Economics and Planning has been appointed to act as theoverall Project Coordinator.

For practical and professional reasons the three outlined project components werefurther divided in six sub-components. A technical working group providing expert knowledgeand necessary professional inputs during project implementation supported each of thesub-components. The working groups were responsible for: (i) Health InsuranceAdministration; (ii) Primary Health Care; (iii) Health Promotion; (iv) Intensive Care Units; (v)Perinatal Care; and (vi) Emergency Medical Services. These sub-components were fullycorresponding to the project activities breakdown structure, as well as the breakdown ofplanned costs for the project.

Evaluation of development objectives

The development objectives stated at the beginning of the project are still considered asappropriate and feasible, because none of them has been changed or modified in the five yearsof project implementation.

Improvement of the Health Insurance Administration was urgently needed prerequisitein transition from planned to market economy. The CHII required without delay anadministrative system that enables accurate and quick tracking of both revenues andexpenditures, as well as the exact information on the insured population. The current state inhealth care financing requires further refinement of the system developed in order to evaluate,test and apply alternative sources of financing. This fact additionally supports the conclusionthat the project objectives in this field were properly set and will be constantly developed infuture.

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One of the main objectives of the project was to impose reduction of secondary healthcare costs by shifting as much as possible of the health care delivery to the primary care levelthrough providing of essential x-ray and laboratory diagnostic equipment and additionaltraining of health professionals. Since the reduction of high costs of secondary health care areidentified as one of the greatest challenges of any health system, this project objective is stillconsidered as a high mid-term priority.

Promoting healthier lifestyles is considered to be the most powerful and cost-effectiveapproach in improving the health status of the population on the long-term basis.Appropriateness of this project objective cannot be argued.

Higher than expected mortality in some emergencies, such as automobile accidents,together with poor and deficient medical emergency equipment for cardio-pulmonaryresuscitation in smaller units out of bigger urban centers justified the objective to improveemergency medical services. On the same line was the aim to improve hospital intensive careunits and perinatal care units. Those objectives were also appropriate because the quality ofhealth care delivery in these units is highly dependent on sophisticated medical equipment andappropriate training of medical staff, whereas, because of lack of resources, the equipmentbecame insufficient and obsolete during the war.

Achievement of objectives

The Government considers that the project achieved most of its major developmentobjectives.

The health insurance administration information system has been fully developed andimplemented in the headquarters, as well as in all of the branch offices. The system enabled fullcontrol of revenues and expenditures and also provides potential for additional upgrading andimprovements.

The health promotion sub-component delivered a baseline survey, design andimplementation of successful media campaign, and nationwide education of health promotersand health educators through a Croatian Institute for Public Health, and its network at aCounty level. A new health promotion department has been established and equipped in theCroatian Institute for Public Health enabling capacity building and providing on-goingactivities, as well as sustainability of the national health promotion program. In this was a newlong-term program for improvement of population health status has been successfullyintroduced.

Providing equipment and training to primary health care was useful and well acceptedby most of the beneficiaries in health centers through Croatia. However, the leasing andprivatization scheme introduced simultaneously interfered with the incentives of the generalpractitioners and health centers. The project outputs provided prerequisites for shifting servicesfrom secondary to primary health care. Unfortunately, without necessary changes in financialarrangements and incentives the benefits are limited.

Providing appropriate medical equipment and training in essential hospital servicesimproved the quality of care significantly. Training for the intensive care units physicians was

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developed specially for the project, having a great impact on professional ability of medicalstaff. Unfortunately, the acquisition of equipment and training of personnel did not lead toreorganization of services to desired rational model of polyvalent intensive care unit in all ofthe hospitals included in the project.

Deprived status of ambulances in emergency medical services throughout Croatia wasgreatly improved by input of 218 fully equipped emergency vehicles from the project. Inaddition, the complete portable resuscitation equipment was supplied for all emergencymedical services in Croatia. Together with appropriate training of all professional staff, thisenabled achieving the higher level of emergency medical care on the whole Croatian territory.Unfortunately, the telecommunication system for emergency medical services was notdeveloped as planned and the completion of this task had to be left for the new Health SystemProject.

Major factors that affected implementation and outcome

The project used very complex project implementation matrix organization. The keyadministrative and expert staff worked in different organizations: CHII, MOH, CroatianInstitute for Public Health, and several hospitals, some of them outside Zagreb (Rijeka,Slavonski Brod). Therefore, work on the project could be delayed when the key humanresources were occupied with their other professional duties.

To a large extent this problem was overcome by the extremely enthusiastic approachand strong commitment of key stakeholders, including CHII leadership and Minister of Health.

However, change of the CHII director after four years of project implementationcaused delays in the implementation due to the period needed for familiarization of the newadministration with the project activities and practices.

Coordination by the MOH, together with the permanent staff at the working levelhelped in granting continuity and keeping focus on the project implementation activities.

Development of new telecommunication system in the emergency medical caresub-component, had been delayed for a long period due to different interpretation of theproject design for the component between the implementing agency and the professionalworking group. After these divergences had been solved, the proposed new system wasattached to the existing telecommunications' system in the Ministry of Interior Affairs. Thisreliance on another system caused cancellation of the whole activity, since the base systemneeded upgrading for the Y2K and there was no time to install necessary equipment beforeproject closing date.

Sustainability

Health insurance administration information system represents one of the fundamentalparts of the system. Therefore, this sub-component is not only sustainable, but stands for thebasis of future upgrades and system improvements.

The health promotion program was made sustainable through the newly established unit

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in the Croatian Institute for Public Health. Also, continuation was ensured through includinghealth promotion activities in the new Health System Project.

Concerning the primary health care diagnostic equipment, sustainability will be testedafter 5 to 7 years after installation. The sustainability of the sub-component will depend also onthe success of the Health System Project, which should introduce new incentives to resolve agreater portion of health problems at the primary level.

In emergency medical services sub-component, the higher level of education andresuscitation equipment in all units established new professional standards and increased publicexpectations to the extent that warrants keeping the same standards in the future.

Specialist education financed by the CHII is still going on beyond the project closingdate providing continuation will provide sustainability in the essential hospital servicessub-component.

Bank performance

Overall Bank performance was highly satisfactory. In procurement of goods, the Bankresponse to the documents submitted to evaluation was almost always prompt. In many casesprocurement specialist would come in the country and work together with the counterparttechnical experts and professional staff, resulting in better and quicker procurement process.However, in preparation of some technical assistance TORs there were some delays, and theBank experts were slow in answering to the requests submitted by the Borrower technicalworking groups.

Borrower-performance

At the beginning there was no experience in implementation of the World Bankprojects. It was the second project in Republic of Croatia, and the first in the health sector.Also, local procurement regulations and subsequent procurement Law had not been developedat the start of the project. A period of six months was needed to learn the Bank procedures.

The implementing agency (CHII) started to work on the project only aftereffectiveness, and this was five months after project signing.

After the initial delay caused by the six months' learning phase and with addedimplementing capacity of the CHII on effectiveness, the project activities were implementedquickly and successfully.

Throughout the project, the Ministry of Health supported the implementation andshowed great commitment to the project main objectives realization.

The Ministry of Health considers the unused amount of approximately 2.5% of theloan unsatisfactory, since some of the planned activities have not been completed before theclosing date. More efficient performance of the implementing agency and more resources in theeveryday project implementation activities should prevent such events in the future projects.

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Major lessons leamed

Projects should not be led by the politics. Although designed to support a politicallyapproved reform the project needs to be tailored to the needs of all stakeholders includinggeneral public, medical professionals, accepted professional standards and practices,professional organizations and chambers, as well as the beneficiaries. The political commitmentis essential for preparation and implementation of the project, but only acceptance byprofessionals and general public can guarantee its sustainability.

Roles and responsibilities of key personnel and stakeholders in project implementationshould be clearly defined. Levels of decision-making authority should be carefully distributedto assure effective implementation without unnecessary delays caused by waiting for the higherauthority approval.

Full time professional staff working on the project implementation is necessary toensure continuity and provide professional standards and efficacy required by the Bank and theGovernment.

Continuous feedback from the beneficiaries, general and professional public and otherrelevant agencies is required in order to assure achievement of the project objectives as well astheir sustainability.

Bank assistance through visits of specialists in different fields (procurement,disbursement, accounting) that can work with local staff is very useful, shortens the learningprocess and expedites preparation of necessary documents and reports. Regional Bank officescan supply such assistance in effective and cost-saving manner.

Bidding documents should be completed before submitting for bank no-objection inorder to save time for both parties.

Making the project activities dependent on other events not controlled or financed bythe project should be avoided or designed in a way that provides suitable tools to obtainnecessary inputs.

Project Components

Health Insurance Administration

The health insurance administration component was designed to improve the financialand management capacity of the Croatian Institute for Health Insurance by introducing a newinformation system. The main objectives were to: (i) improve health insurance administrationby procurement of information technology (IT) equipment for the system based on thepreviously developed software; (ii) design a software and procure hardware for the primaryhealth care (PHC) services information system pilot; (iii) create a minimal health data set andrelated procedures; and (iv) add quality assurance to the health insurance information system.

The overall objective to improve the health insurance administration in the financialcontrol on both revenues' and expenditures' sides was successfully achieved. The information

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network established on 177 locations included all regional offices and branches. Theseconnections increased communications speed and saved costs by a great deal. Therefore itimproved the efficacy and efficiency of the health insurance administration. New healthinsurance cards have been introduced for the whole population in order to facilitate financialoperations. Also, the registry of insured persons was completed for the first time in Croatia.The substantial financial savings were enabled by eliminating double registrations of patients onthe general practitioners' and dentists' lists. The hospital and pharmacy bills control has beenimproved, as well as the orthopedic aids reimbursement. A comprehensive data base of medicalinformation was created offering among other potentials also useful analysis of sick leave andtherapy prescription patterns. Revenue collections were essentially improved and accelerated.

The software for the PHC information system pilot has been developed and tested by alocal company selected after repeated requests for proposals were sent to a list of internationaland local companies. The program called PRIMIS provides improvements in health primaryhealth care services delivery, as well as in the administration and management. It gives toolsfor cost containment and a offers professional aid to medical doctors, nurses, pharmacists andbiochemists in diagnostic laboratories. The hardware for the pilot sites has also been suppliedunder the project, and further testing on the pilot sites will take place after the project closingdate.

The health insurance information system database, including the new database that willbe created in implementation of the PHC information pilot provides a large volume of valuablehealth data. The study to define a minimal health data set and related procedures wasconducted by the London School of Economics and Political Science. Although it provided allnecessary analyses and recommendations, the actual health data sets to be collected at differentpoints in the health systems still have to be developed.

Concerning the capacity building, a team of 50 information system specialists workingin four regional offices was established. Unfortunately, the IT professionals trained in thesystem frequently leave for better paid positions in private companies. Together with the factthat the planned quality assurance support was not provided by the project, this creates somedifficulties in keeping the system sustainable.

Primary Health Care and Health Promotion

Sub-component: Primary Health Care

The main objective of the Primary health care sub-component was to promote shiftingof health services delivery from the more expensive secondary care to the more cost-effectiveprimary health care. The sub-component has been designed to achieve this goal by providingnecessary x-ray and laboratory diagnostic equipment together with adequate training toprimary health care professionals.

At the beginning of the project, the x-ray machines in the Croatian primary health carefacilities were practically 100% obsolete and presented increased risk for safety of professionalstaff and patients. Carefully prepared and conducted international competitive bidding providedspecified equipment for much lower prices than originally planned. This enabled supply of

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additional machiLnes which increased the project outputs to the health system. Unfortunately,the site refurbishment needed to accommodate installation of the new equipment was notfinanced by the project. This has caused some delays in project implementation.

Laboratory diagnostic equipment in primary health care was also over 80% obsolete atthe beginning of the project. Good prices achieved through the ICB enabled supply of moreequipment than originally planned. Therefore, although at the end of the project there were stillsome old obsolete equipment in use, the status of laboratory diagnostic equipment has beenrisen. to a higher level in the Croatian primary health care and project targets in this sense wereachieved with more than 100%.

The evaluation survey carried out by an independent consulting company showed thatthe beneficiaries, primary health care centers receiving the diagnostic medical equipment, weresatisfied with its performance, durability and maintenance support. Most of them also statedthat the new equipment improved the quality of their health services delivery. The averagemedical equipment evaluation score made by the beneficiaries was 4.4 out of 5 maximumpoints.

The education of medical professionals in primary health care was prepared and carriedout from the Government funds provided by the Croatian Institute for Health Insurance(CHII). Eleven course curricula have been developed for the different profiles of healthprofessionals and their special positions in the primary health care delivery. The courses wereorganized by the Medical School at the Zagreb University, and at the schools for medicalnurses and laboratory technicians. Most of the courses took place in Zagreb, where the boardand lodgings for participants out of Zagreb was fully covered by the CHII. However, whenpractical, courses were also organized in regional centers in order to reduce travel costs for theparticipants. The education started in 1996, and finished in 1999, and during 2,5 years ofimplementation had 7500 participants in more than 300 courses. Each of the courses wasevaluated by the participants and the average scores ranged from 3.7 to 4.7 (out of 5maximum), and therefore they can be evaluated as highly satisfactory for the primary healthcare medical professionals.

Although the procurement of diagnostic medical equipment exceeded the plannedquantities and the training of medical staff was very good and with more participants thaninitially planned, the expected impact on shifting health care services delivery from thesecondary to primary health care was relatively small. The reason for this was the fact that thepreconditions for the shift provided by the project through equipment and training can notwork alone without introducing appropriate financial incentives for the primary health carepractitioners.

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Sub component: Health Promotion

Croatia has a long tradition in preventive medicine, and the term "health promotion"was introduced in Croatia in early thirties by our famous public health physician Dr. AndrijaStampar, one of the founders of the World Health Organization. However, the preventivemeasures were traditionally connected with prevention of infectious diseases. At the same timethe rising burden of non-communicable chronic diseases reached the level where more than50% of deaths were caused by cardiovascular disorders. The Health Promotion sub-componentwas included to the project to address this contemporary challenge for Croatian health caresystem on the long-term basis. The main objectives were to: (i) conduct a baseline survey todetermine knowledge, attitude and lifestyle of population regarding the most important riskfactors for national health; (ii) based on the results of the survey, to prepare and implement anation-wide health promotion campaign promoting non-smoking, healthy diet, physical activityand responsible sexual behavior; (iii) provide sustainability of the health promotion activitiesthrough education of key personnel, health educators and health promoters.

The comprehensive and ambitious design of the project was a great challenge to theCroatian public health organizations, since it was very innovative and demanding comparedwith some previous activities of much smaller scale. Also, the World Bank loan fundingprovided support that could not be found earlier for a single preventive project. In thebeginning this immediately created delays caused by uncertainty in definition of necessaryTerms of Reference both on the Government and on the Bank side. However, this initiated alearning process and the result was substantial capacity building within the Croatian publichealth experts, culminating in the education for health promotion at the end of the project.

The baseline study started later than planned, but provided good quality data andanalyses necessary for design of the health promotion campaign, as well as the educationcurricula. It was carried out by the Croatian Institute for Public Health assisted by the CroatianInstitute for Anthropology. As the first results showed unexpected high proportion ofpathologic values of blood lipids and cholesterol, the initial tests were expanded through aseparate field investigation. The results of the both surveys offered many useful informationbeyond their originally planned scope and purpose.

Health promotion campaign was prepared by a Croatian company selected byevaluation of proposals submitted by six local short-listed companies. Since the first selectedcompany did not produce satisfactory outputs even after six months of implementation, thecontract was terminated by the Client. This caused another delay in sub-componentimplementation. Fortunately, after signing the contract with the second-ranked company thehealth promotion campaign was successfully prepared and broadcast in the media. Theevaluation carried out four times during one-year campaign period showed that it had identityrecognized by the public, and was seen and well accepted by the population throughout thecountry. Based on this success a three months additional campaign was launched at the end ofthe project using already prepared media materials and part of the remaining project funds fortime and space in private (non-govemment) media.

The education for key personnel was carried out by the Croatian Institute for PublicHealth with participation of foreign guest-lecturers. After this initial training, a series of

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training workshops were organized using the Public Health Institute network. Participantswere the public health professionals including school medicine specialists and epidemiologists,as well as the school professors and teachers. All of the trainees, the newly promoted healthpromoters and health educators, received appropriate teaching kits to support their futurework on health promotion.

During the implementation of the project, both the Bank and the Government sideagreed that the sustainability of the component would be reinforced by institutionalization ofhealth promotion activity at the state level. Therefore, a new health promotion unit wasestablished in the Croatian Institute for Public Health. The complete equipment for a 30 personclassroom, and 3 staff office was supplied from the funds provided by the World Bank loan.Sustainability of health promotion was further secured by including this component in the newHealth System P'roject that was prepared by the Croatian Government and the World Bank.

Essential Hospital Services

Sub component: Emergency Medical Services

The Emergency Medical Services sub-component was designed to contribute toreduction of avoidable deaths from cardiovascular diseases and trauma in Croatia due to lackof availability of emergency medical care at the spot of the event. This objective was plannedto be achieved by: (i) supply of fully equipped ambulances and necessary portable resuscitationequipment; (ii) training of emergency medical staff for better resuscitation; (iii) acquiring a newtelecommunication system and organization of emergency medical services.

Procurement of ambulances and medical equipment for emergency medical serviceswas very successful. The prices offered through international competitive bidding providedsufficient funds for addenda to the original contracts and a second ICB for ambulances, whichenabled supply of much more equipment that initially planned. Given the fact that ambulanceswere often targets during the war activities and therefore their number was very reduced at thebeginning of the project, supply of 218 vehicles (more than double compared to the plan) wasvery useful anld needed. The portable resuscitation medical equipment was distributedthroughout the country including all of the 110 health centers in Croatia rising the level ofemergency services nation-wide.

Theoretical and practical training of health professionals in emergency medicine andresuscitation techniques additionally supported the new national emergency medicineprofessional standards. The courses for physicians in emergency outpatient medical care wereorganized by the Medical School at the Zagreb University with 107 participants in fourfive-months courses. One week training for 270 nurses and medical technicians, as well as 163drivers were organized by the Institution for Emergency Medical Services in Zagreb teachingcenter. Participants' satisfaction was tested by an independent consulting agency showing theaverage score range from 4.0 to 4.7 (out of 5 maximum score).

Unfortunately, the third objective - the telecommunication system for emergencymedical services was not implemented. The reasons for this were constant delays caused by theobjective and subjective reasons on the Government side. Objective reasons were necessary

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coordination with the telecommunication system developed in the Ministry of Interior Affairsin order to secure cost-effectiveness and compatibility. However, there were also difficulties inselecting local expert team necessary for situation analysis and needs assessment. Finally, theproject was prepared by the Faculty for Electrical Engineering and Computing at ZagrebUniversity, but there was not enough time to allow delivery and installation of equipmentbefore the project closing date. However, this part of the project is included in the new HealthSystem Project financed by the World Bank loan.

Sub-component: Intensive Care Units

The main objective of the Intensive Care Units sub-component was to providenecessary equipment for intensive care units in selected hospitals, and, together withappropriate training, build a base for reorganization of these units in order to reduce mortality.

The procurement of equipment was successful in most cases. Only in the case ofhaemodinamic monitors the supplier failed to deliver all the required performances that causedlimitations in use of the equipment. As the prices of equipment left some budget remaining,there was an additional ICB for ICU monitors organized, and together with the previoussupplies of ICU medical equipment, provided technical base necessary for improvement ofintensive care units organization and perfornance.

A very comprehensive and detailed training for Intensive Care Units specialists wasorganized at the Medical School of Zagreb University. Completing this course 44 ICUphysicians were successfully trained. The curriculum used for this training was later adopted bythe Physicians Professional Association for Intensive Medicine and further courses organizedout of the project framework supported its sustainability

Sub-component: Perinatal Care

The Perinatal Care sub-component was developed to reduce perinatal mortality inhospitals where it was much higher than Croatian average by providing necessary medicalequipment and training.

The procurement of medical equipment for perinatal care was successful, and suppliedmore equipment than initially planned. The survey made by an independent consulting agencyshowed that the use of the equipment was appropriate and that the users were highly satisfiedby its performance and quality. The average score was 4.34 out of maximum 5.

Training of health professionals for perinatal care was organized at two levels. Seventyseven medical doctors, specialists in gynecology and obstetrics as well as in pediatrics weretrained at the Medical School of Zagreb University. The training for 570 perinatal care nurses,visiting nurses and midwifes was organized in specialized schools for nurses in several regionalcenters. The participants' satisfaction scores average for the two courses were 4.3 and 4.4 (outof maximum score 5) respectively.

Based on the evaluation of independent consulting company, successful implementationof this sub-component contributed to achieving higher quality of perinatal care.

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Sub-component: "Bridging" Activities

The sub-component "Bridging" activities was added to the project during the extensionof the project for one year in 1998, granted by the Bank at the request made by the Director ofthe Croatian Institute for Health Insurance.

Efficient use of project funds together with favorable exchange rate of USD to othercurrencies used for payments under the project, enabled considerable amount of free funds. Atthe same time, funds necessary to prepare the new Health System Project were inadequate.Therefore, a part of the free amount was assigned to a new sub-component proposed by boththe Government and the Bank side to support preparation activities for the new health project.For this purpose, TORs for seven technical assistance packages were prepared. These includedpre-investment studies for the Health System Project in (i) new initiatives includingfund-holding and group practice in primary health care; (ii) national health data strategy; (iii)categorization of hospitals; (iv) development of clinical protocols; (v) human resourcesdevelopment for new hospital infortnation systems; (vi) Koprivnica pilot region hospitalinformation system analysis and planning; and (vii) altemative sources of financing.

The procurement of technical assistance was difficult because the requests forproposals were sent in the time of NATO military actions in Kosovo and Serbia and some ofthe invited companies were discouraged to send their proposals. Also, the relatively smallscope of work in each of the studies did not appear attractive enough to the invitedconsultants. The two subsequent requests for proposals sent to ten consulting companies didnot result in receiving a proposal for the primary health care study, while the London School ofEconomics and Political Science did not decide to accept proposed continuation of work onthe minimal data set and the national health data strategy in time due to their othercommitments at the time.

However, five of listed seven studies were successfully completed before December 31,1999, the project closing date, providing the Ministry of Health with a lot of valuableinformation on the existing health system and possible impacts of improvements planned forthe future health reform process.

The major lesson learned in procurement and implementation of the technical assistancefor the bridging studies was that several TORs for smaller assignments should be put togetherin a single TOR with a broader scope of work. Such assignment would be more attractive tothe consulting companies and also provide better coordination between project activities,analyses and recommendations.

(b) Cofinanciers:N/A

(c) Other partners (NGOs/private sector):N/A

10. Additional Information

N/A

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Imeact Indicators:

indicator/Matrix ProjeedinlastPSR ActualtLatest EstimateA. Health Insurance Administration(i) age profile of CHII receivables <1 month <1 month(ii) percentage of transactions reviewed 50-60% 100%

(iii) percentage of reviewed transactions approx. 5% approx. 10%referred back to the originator for corrections(iv) percentage of administrative expenses 3.70% 3.71%

B. Primary Care and Health PromotionServices

(i) proportion of patient referrals tospecialists

(ii) proportion of patients undergoing labtests

(iii) number of patients using primaryhealth centers

C. Essential Hospital and EmergencyServices

(i) medical services response time to n/a 14.8 minutes (data for City of Zagreb, 1999emergencies only available)

(ii) rate of mortality from automobileaccidents(iii) number of hospital deliveries 45,488 46,225(iv) neonatal mortality rate 5.96 5.76(v) perinatal mortality rate 9.20 8.90(vi) maternal mortality rate 11.96 6.37

Output Indicators:

. l77 7 Indicator/Matrix Projected in lastiPSR Actual/Latest Estimate- Number of studies/reports completed 10 8

- Number of trained persons 6989 8896Primary Health Care 5160 7902Perinatal Care 351 408Emergency Medical Care 300 238Intensive Care Units 908 44Health Promotion 270 304

- Number of health promotion TV or 45 45radio spots

- Equipment procured 1338 1364Primary Health Care 228 257Perinatal Care 159 161Emergency Medical Care 621 450Intensive Care Units 330 496

End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)Appraisal ActuallLatest Percentage ofEstimate Estimate Appraisal

Pro ect Cost By Component US$ million US$ million1. Health Insurance Administration 15.10 14.50 96

2. Primary Health Care Services 17.00 15.20 89.43. Essential Hospital Services 21.90 19.20 87.7

Total Baseline Cost 54.00 77.90

Total Project Costs 54.00 77.90

Total Financing Required 54.00 77.90

Project Costs by Procureme nt Arrangements (Appraisal Estimate) (US$ million equivalent)

Procurement MethodExpenditure Category ICB NCB Other N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.30 0.30(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 31.30 0.00 2.00 4.20 37.50(31.30) (0.00) (1.70) (0.00) (33.00)

3. Services 0.00 0.00 4.10 0.00 4.10Technical Assistance (0.00) (0.00) (4.10) (0.00) (4.10)4. Miscellaneous 0.00 0.00 6.60 0.00 6.60Training, Fellowships, (0.00) (0.00) (2.90) (0.00) (2.90)Study Tours

5. Miscellaneous (PPF) 0.00 0.00 0.40 0.00 0.40(0.00) (0.00) (0.40) (0.00) (0.40)

6. Miscellaneous 0.00 0.00 0.00 5.10 5.10Operations & Maintenance (0.00) (0.00) (0.00) (0.00) (0.00)

Total 31.30 0.00 13.10 9.60 54.00(31.30) (0.00) (9.10) (0.00) (40.40)

-27 -

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)I ure CategProcrrnnt Mtho

Expenditure Catory IC CB' Other N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 34.70 0.00 0.00 0.00 34.70(34.70) (0.00) (0.00) (0.00) (34.70)

3. Services 0.00 0.00 4.20 0.00 4.20Technical Assistance (0.00) (0.00) (4.00) (0.00) (4.00)4. Miscellaneous 0.00 0.00 0.00 2.20 2.20Training, Fellowships, (0.00) (0.00) (0.00) (0.00) (0.00)Study Tours5. Miscellaneous (PPF) 0.00 0.00 0.30 0.00 0.30

(0.00) (0.00) (0.30) (0.00) (0.30)6. Miscellaneous 0.00 0.00 0.00 0.20 0.20Operations & Maintenance (0.00) (0.00) (0.00) (0.00) (0.00)

Total 34.70 0.00 4.50 2.40 41.60(34.70) (0.00) (4.30) (0.00) (39.00)

Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

'i Includes civil works and goods to be procured through national shopping, consulting services, services of contractedstaff of the project management office, training, technical assistance services, and incremental operating costs related to(i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)Percentage Of Appraisa

Appraial Estmate ctual/atestEstimt_________________ Bamik Ovt CoF Ban Gvt coP. Bank Govt. CoP.

I. Health Insurance 9.50 5.60 10.60 3.90 111.6 69.6 0.0Administration

0.0 0.0 0.02. Primary Health Care 12.60 4.40 12.10 3.20 96.0 72.7 0.0Services3. Essential Hospital 17.90 4.00 16.30 2.90 91.1 72.5 0.0Services

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Annex 3: Economic Costs and Benefits

N/A

- 29 -

Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle No. of Persons and Specialty Performance Rating

(e.g. 2 Economists, I FMS, etc.) Implementation DevelopmentMonth/Year Count Specialty Progress Objective

Identification/PreparationFY 1994 8 Mission Leader S HSFY 1995

Operations OfficerImplementation SpecialistInformation Tech SpecialistHealth EconomistHealth Services Specialist(consultant)2 health insurance consultantsManager, ECS

Appraisal/Negotiation

10 Mission Leader S HS

Operations OfficerFY95 Health Economist

IT SpecialistIImplementation SpecialistHealth Services Specialist

(consultant)Health Economist (consultant)Implementation Spec (cons)Health Insurance Spec (cons)Manager, ECS

SupervisionFY 1995 through 8 Mission Leader HS HSFY 1999 Operations Officer

Implementation SpecialistHealth EconomistIT SpecialistProcurement SpecialistLead Health EconomistSr. Health Specialist

ICRFY 2000 2 Operations Officer HS HS

Team Assistant HS HS

- 30 -

(b) Staff:

| Stage of Project Cycle Actual/Latest Estimate

No. Staff weeks US$ (,000)Identification/Preparation 31.6 111.8Appraisal/Negotiation 13.4 35.1Supervision 118.4 376.0ICR 5.2 17.0Total 200.2 539.9

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingfMacro policies O H O SU O M O N * NA

SectorPolicies O H * SU O M O N C NAM Physical O H OSUOM O N O NAF Financial O H * SU O M O N O NAX Institutional Development O H 0 SU O M 0 N 0 NAF Environmental 0 H 0 SU O M 0 N 0 NA

SocialZ Poverty Reduction O H O SU O M * N O NAN Gender O H O SU O M * .N OVNA0 Other (Please specify)

X Private sector development 0 H 0 SU 0 M 0 N * NAZ Public sector management 0 H O SU 0 M 0 N 0 NA

Other (Please specify)

- 32 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bankperformance Rating

• Lending *HSOS OU OHU• Supervision OHS * S OU OHUE Overall OHS OS O U O HU

6.2 Borrowerperformance Rating

Z Preparation *HS OS O U O HUE Government implementation performance O HS * S 0 U 0 HUZ Implementation agency performance O HS OS 0 U 0 HUZ Overall OHS OS 0 U 0 HU

- 33 -

Annex 7. List of Supporting Documents

--Staff Appraisal Report, No. 13717-HR, January 1995

--Memorandum and Recommendation of the President, Report No. 6489-HR

--Loan Agreement, No. 3843-HR

--World Bank Mission Aide-Memoires:

--World Bank Project Summary Reports:

--Progress Reports from the Borrower,-September 1999

--Country Assistance Strategy, Report No. 14088-HR, April 1995

--Project Operation Manual

- 34 -

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