Economic and Social Reforms for Peace and Reconciliation

Prepared by the World Bank

February 1, 2001

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Even before the crisis, Kosovo’s health care statistics were among the poorest in Europe on virtually every indicator. Results from a national survey conducted by the International Organization for Migration (IOM) and the UN Population Fund (UNFPA) confirm that Kosovo continues to have one of the highest infant mortality rates in Europe, with 25 deaths per 1,000 live births. According to the survey, undertaken from November 1999 to February 2000, 15 percent of pregnant women do not see a health-care worker and 20 percent of deliveries take place at home without professional help. Failures in the immunization system have placed the population at even higher risk. A recent outbreak of tularemia, a bacterial disease transmitted from wild animal hosts to humans, confirms the dangers of the breakdown in sanitation and waste management.

However alarming these statistics may seem, the central issue confronting the sector in Kosovo, as in other parts of FRY or, more generally, Central and Eastern Europe, is how to maintain these standards at a time of economic collapse and sharp reductions in public sector spending on health. For most countries, this has required significant reforms in how the sector is organized and financed, moving from an overspecialized, inefficient system that provided all health care services free of charge towards a leaner public system financed from both public and private sources and based on the principles of primary health care. New incentives such as paying providers by their outputs (patients treated) rather than their inputs (number of beds) and requiring patients to contribute to the cost of their care (co-payments, co-insurance) have been introduced to limit unnecessary utilization of health care services and control cost escalation.

Kosovo, in addition to facing these typical challenges of the health reform transition, must also deal with the special circumstances of its history and its current reality. These include a more insecure revenue source than most countries, given that the Kosovo recurrent budget (that finances health expenditures) enjoys a high degree of donor funding, a cadre of health sector providers that was trained under a parallel system, excluded from practicing in specialized facilities, and who now wish to return there; and more than 250 NGOs and donors working in the sector, often providing services without consideration of their longer term fiscal sustainability.

Prior to 1989, the Kosovar health system was financed through a health insurance fund (HIF) organized as a "self-managing community of interest" (SIZ) at the central level of the province, and through 29 "elementary units" (OZs), which were municipal branches of the SIZ at the community level. This health insurance system provided insurance for health care and a range of cash benefits (for sick leave, disability, funeral benefits, eyeglasses, orthopedic devices, etc.) to those who paid insurance contributions and to their families. Health insurance revenues were derived from compulsory contributions from employers and their employees, calculated at 9 percent of gross salary. This accounted for 80 percent of the HIF’s revenue. The pension fund contributed 14 percent of pension income for pensioners and other social funds also contributed. Farmers and small businesses were expected to contribute 20 percent of farm income while in reality, collection was far below this level. Many Kosovars worked abroad, contributing nearly US$7 million from foreign health insurance funds to cover family members in Kosovo. In addition, 8.5 percent of health care revenue (US$5.8 million in 1989) came from a federal Solidarity Fund.

The financing and provider payment system did not create incentives for efficiency. The OZs paid providers using a modified-fee-for-service "point" system. This system encouraged higher numbers of hospital bed days and hence longer than average length of stays. Relative prices were derived from norms regarding number of beds, equipment, staff ratios, and building size while absolute prices were not based on any true estimate of costs. Instead, they were adjusted according to the available funds. Under these circumstances, as the real payments for services declined, informal co-payments for services emerged as a supplementary source of finance. By 1989, the health system was already in financial deficit, with expenditures (US$89.8 million) exceeding revenues (US$68.9 million) by 24.5 percent. Average expenditure per capita in 1989 was about US$55 in Kosovo, or between 4 and 4.6 percent of Kosovo’s estimated GDP.

Between 1990-92, responsibility for financing and management of health care was moved from Pristina to Belgrade as the system became more centralized. The central Health Insurance Fund in Belgrade assumed responsibility for health finance in Kosovo. Kosovo’s five regional offices (Pristina, Prizren, Gjilan, Pec/Peja, and Mitrovica) were responsible for collecting contributions, 70 percent of which they could retain and the remainder to be sent to the Solidarity/Equalization Fund in Belgrade. However, local perceptions were that nearly all revenue went to Belgrade, and redistribution to the regions was unpredictable and untransparent.

During this time, most Kosovar Albanians were dismissed from management and senior positions in the health system, as in other public services. Many Kosovar Albanians had limited access to coverage under the centralized health insurance system. More than 50 percent of Albanians lacked a social insurance card needed for health insurance coverage. A parallel charitable primary health care system was organized through the Mother Theresa Society to provide basic health services free of charge to those unable to afford private medical care and who had no social insurance card. The Mother Theresa Society established 96 clinics throughout Kosovo, many in remote villages with predominantly Kosovar Albanian populations. Staff worked as volunteers. Additional resources were financed by a parallel tax system. Kosovar Albanians also organized a system of parallel medical education, as they were no longer able to obtain medical education in their own language in this period. Over 700 doctors and 1,200 nurses graduated from this system.

Responsibility for organizing and delivering health services has been given to UNMIK’s Department of Health and Social Welfare, which operates with the advice and assistance of the World Health Organization (WHO). The Department has a Kosovar co-head and a number of Kosovar senior staff. The Department’s health policy is guided by the UNMIK Interim Health Policy Guidelines (commonly referred to as The Blue Book) that was drafted by an UNMIK/WHO/local professional policy group and published in October 1999. The Department was subsequently given the authority to issue administrative decrees and regulations necessary to implement the new health policies.

In April 2000, a Working Group on Health Policy and Planning was set up by the Department of Health and Social Welfare with the objectives being to: (a) improve the capacity in health planning and policy in Kosovo; (b) review the interim health policy guidelines and update as necessary; (c) produce an action plan for the health sector through the year 2000; and (d) form study groups on key areas of policy to prepare future policy options for decision-makers. The membership of the group reflects the professional and geographic diversity of Kosovar stakeholders involved in health policy, and is an attempt to consult with a wider group of stakeholders in the development of health policy and planning for the future governing structure of Kosovo. In August, a revised version of the policy guidelines was circulated.

Health status indicators, while of concern, have not deteriorated as significantly as many experts had expected. The country is currently experiencing a transition where rates of infectious diseases are still high but chronic, non-communicable diseases pose the greatest burden on the health system.

During the conflict, the hospitals and most health houses remained intact. Damage occurred mainly in remote dispensaries and small clinics, particularly the Mother Theresa Society (MTS) facilities. An estimated 10 to 15 percent MTS facilities continue to operate, mainly in the cities. The building in Pristina used jointly by the Health Insurance Fund, the Social Welfare Agency, and the Pension Fund was also damaged. However, the effects of the conflict highlighted the underlying problems caused by over 10 years of neglect and weak management. Among these are chronic under-investment in maintenance of physical infrastructure and equipment and staff development. Much of the equipment installed in hospitals is either obsolete, will not work because of poor maintenance, is unused due to lack of consumables, or is underutilized for lack of personnel. Since the conflict ended, considerable work has been done on assessing the condition of health care facilities in Kosovo. UNMIK’s Department of Health and Social Welfare (DHSW) has identified the reconstruction needs and damaged equipment in primary health care facilities as a priority for capital investment. Equally important, essential repairs such as heating, electricity, water supply and sanitation, must be undertaken in the district hospitals.

Many health professionals who worked in the Mother Theresa Society clinics have now left to seek employment and specialist training positions at the hospitals. Kosovar Albanians who were expelled from their positions in 1989 returned to the hospitals to reclaim their old jobs as the Kosovar Serbs left. Medical staff who graduated from the parallel system also claimed a right to positions in hospitals so they could complete an "intern year" of supervised practice, and then obtain certification. The combined effect of these trends is that doctors have now moved from primary care to the hospitals, hoping to work or train as specialists. This has overburdening the hospitals and the system of specialist clinical training, while primary health care facilities, particularly in remote areas, are deprived of staff.

UNMIK’s Central Fiscal Authority has assumed responsibility for financing health services from the Kosovo Consolidated Budget. The budgets for the last quarter of 1999 as well as 2000 were prepared with the assistance of the Department of Health and Social Welfare, the World Health Organization, and the World Bank. The budgets for the health sector were based on norms in surrounding countries and projected revenues.

The budget for the final four months of 1999 was under-spent as expenditure systems for paying salaries and procuring goods and services were not fully in place. The 2000 recurrent budget for health is DM 81 million (see table below). The proposed capital budget is DM 83.6 million in 2000 and DM 35.3 million in 2001. The 2000 budget will see over-spending on salaries as it has proven difficult to shed surplus staff in the sector, but substantial under-spending in goods and services as pharmaceutical stocks, benefiting from donor replenishments, proved to be adequate. The capital budget is expected to be entirely financed by donors.

The 2000 budget is based on a combination of donor pledges and tax revenues. There is now a discussion focused on whether to implement a payroll tax earmarked for health, as was done in the past. For now, UNMIK has decided against introducing the wage tax because current rules would make UN employees exempt and it was felt that this would be inequitable and place an unfair burden on government employees and the private sector. Therefore, UNMIK’s short-term policy is to finance the health sector from general revenues raised from other taxes and to review health sector financing options over the coming year as part of the World Bank financed project.

Recently the Department of Health and Social Welfare introduced a system of co-payments. While the budget did not explicitly account for co-payments, introducing a system was considered to be a priority to not only fill a financing gap but also to attempt to control some demand and restore transparency to a system that was rapidly moving towards increasing informal payments. Evidence suggested that people were already paying a significant amount of money for health care. The Kosovar Albanian Health Survey Report (September 1999)¹ found 55 percent of patients had spent money on health the previous two weeks. Of those households that spent money, the largest expenditure by far was for medication – the mean expenditure being 73 percent of total expenditures (DM 41.4). The next largest expenditure was on transportation (17 percent). Extrapolating to the total population of 1.5 million ethnic Albanian Kosovars, and assuming health expenditures remain relatively constant, the report estimated that private health care expenditures totaled DM 150 million a year or approximately DM 100 per capita. This is nearly twice the size of the entire UNMIK recurrent budget for health in 2000.²

One of the main issues Kosovo will face is how to finance health care services. Currently the sector is reliant on donor funding, which is a major problem for all of the social services in Kosovo, not just health. The uncertainty of donor funds makes planning extremely difficult.

The Interim Health Policy Guidelines already indicate a preference for Kosovo to restore a system of compulsory health insurance contributions. The examples of other countries in the region could help Kosovar health authorities to re-establish a health insurance system that preserves the main virtue of the pre-1990 system – widespread population coverage – while improving transparency and creating incentives for efficiency. Nearly every Central European country finances health care through compulsory payroll tax contributions to health insurance funds, often supplemented by revenue from the general government budget.

In the short to medium term, however, Kosovo will be unable to move entirely to a social insurance system. The most immediate problem is the issue of the personal income tax; until this is resolved it will be difficult to plan for any contributory tax for health. Most of the financing for the health sector in the near future will have to come from the consolidated budget. A risk currently facing the sector is that a large portion of health spending will be paid out of pocket with limited risk pooling. There is already a growing prevalence of under the table payments to health care providers that according to experiences in other countries, will become more difficult to control over time.

Priority will have to be given to tax collection, doing everything possible to strengthen the overall capacity to raise general taxes, continue to press for an exemption for the income tax exemption of UN employees, and consider other possible taxes for the health sector. Given the past history of voluntary contributions to the parallel system to finance health care services, it may be possible to raise additional revenue in a similar manner. The highest priority should be given to decreasing the proportion of total health spending that is paid directly out of pocket.

Policies to govern the distribution of health revenue to different districts and health care providers across Kosovo, and the mechanisms for paying health care providers will need attention in the medium term. Initially, health providers will be reimbursed for the costs of inputs (salaries, pharmaceuticals, other supplies, and capital), based on approved plans for staff numbers, approved capital investment and so on. In the medium term, mechanisms should be developed to pay providers for defined outputs - i.e., number of patients registered with a primary health care clinic, numbers of hospital admissions for various conditions - subject to a global limit on their budgets. Ideally, providers also should be given incentives to improve service quality, efficiency, and effectiveness. The previous system for paying providers encouraged inefficiency - for example, by encouraging long hospital stays, with excessive doctor consultations - and should not be reinstated.

The main component of the recently approved World Bank health project aims to develop local capacity for health sector revenue collection and provider payment. What type of system will best suit Kosovo, given its projected revenue outlook and unique circumstances, will be considered. Also, no assumption is being made a priori that a rapid return to restoring the health insurance fund is the most desirable option. Given the revenue outlook, as well as lessons learned from other countries in the region, it seems advisable to move slowly, and gradually develop and hand over functions to an HIF-like agency.

In the near term, prioritizing spending will entail rationing the limited budgetary resources for health - deciding where to spend public sector funds. While there are numerous ways to think about this, and various levels of consultation that can be undertaken before reaching a final decision, most agree that the first priority should be given to services such as immunizations, which have clear public good aspects, as well as to the most essential and cost-effective clinical services. The tradeoff comes in deciding how many people to fully cover because of their inability to pay versus offering a bigger package for everyone. The 2000 budget of DM 81 million budget already represents a significant decline in real spending on health care services for Kosovars. UNMIK may want to prioritize some of its health spending based on an income means test, perhaps along with the issuance of social assistance benefits, to ensure that the poorest are not excluded. Even with additional revenue from co-payments, a significant cut in the health budget makes some sort of list inevitable. In the medium term, as part of the Bank project, a more systematic approach to prioritizing should be introduced.

Another component of the prioritization strategy that DHSW has already embraced is to build capacity in primary health care to deliver services that address the most common health problems - including Kosovo’s specific post-conflict needs and problems arising from past lack of access to public services. There may be value in defining a basic set of services to be managed in primary health care. In addition to the need for mental health interventions for conflict victims, primary health care should be equipped to manage serious mental illness, given the lack of psychiatric services in Kosovo, as well as the return of a number of Kosovar patients from long-term psychiatric facilities in Serbia.

In the short term, WHO and a range of donor agencies and NGOs have begun to offer short-course training to provide orientation and basic training for doctors in primary health care/family medicine. The aim is to encourage a large share of the parallel system graduates and other returning medical school graduates to shift into primary health care. This type of training will need to be supplemented by a more medium-term approach to provide a good quality primary health care system, and to raise the status of family medicine in a credible way.

Resource allocation tools and provider payment mechanisms need to be developed to support the strategy of treating more patients in primary health care, and at the district rather than central level. Financial incentives in the salary structure for doctors and nurses have already been put in place to encourage health workers to take up primary health care. These incentives will need to be refined to encourage providers to move from urban to rural areas (a problem in many countries) as well as between various specialties.

The Eastern Bloc countries are dealing with problems related to excess capacity in both physical infrastructure and human resources. This was caused by outdated clinical practices as well as financial incentives based on the number of inputs instead of outputs. Interestingly, in Kosovo the number of physicians and the number of beds per capita are both relatively low. For example, there are 4,769 beds in acute care hospitals – equivalent to an average of 264 per 100,000 population. In Europe, only Turkey and the UK have lower ratios; however, these numbers are misleading. First, Europe and the other OECD countries have too many beds and hospitals and are trying to reduce their number in response to changes in clinical practice and pressure to lower health care expenditures. Kosovo’s low bed ratio is not an indication of high efficiency. Second, by looking only at the number of beds, other potential efficiency gains from reorganizing service delivery may be overlooked.

In Kosovo, there are several indications that efficiency improvements can be made, including:

• A relatively high average length of stay (11.5 days) in hospitals, reflecting in part the under-performance of the primary care system. Most patients currently self-refer to hospitals because of the collapse of the official referral system during the crises. Re-establishing referral systems and guidelines for referral will be required along with the redevelopment of primary care;

• An occupancy rate of only 70 percent; which is higher than most countries in the region, but low by OECD standards;

• An excess of beds in specialties, which modern practices suggest requires less or no in-patient care: ENT, dermatology, ophthalmology and infectious diseases; and under-provision in areas such as cancer services, which were provided in Belgrade. Re-organization of bed use will be needed to achieve more effective care within the financial constraints.

One example of how to improve the existing system is provided by Gjakove hospital, where a master plan was completed by its international management team and the Norwegian Aid Committee. The plan calls for taking one of the hospital’s six building, adding a new wing, and merging nearly all of the services into the single building. The plan would reduce the number of beds by almost 30 percent, put an end to duplication of services, make better use of specialist staff and equipment, and lead to savings in salaries and overhead. There are similar proposals for consolidating the small dispensaries into larger primary health care practices.

On the human resources side, counting the number of staff has been an ongoing exercise related to paying the stipends and preparing the 2000 budget. The numbers vary from 11,270 (November 1999) to 13,610 (March 2000). Either number shows Kosovo at the bottom in terms of doctors and nurses per 100,000. With somewhere between 2,100 and 2,500 physicians, the average would be approximately 13 per 10,000, compared to the EU average of 35. The main issue is therefore not the number of health sector personnel, but their distribution both by specialty and region. In secondary care, the most urgent shortages are in anesthesiology and radiology; in primary care fully trained family health care doctors and nurses are needed.

A human resources strategy is under preparation that will take into account issues of standards of care as well as the impact on the Kosovo economy and population. Efficiencies can be expected as staff are reassigned to match the change in the clinical profile of the system occurring as primary health care is introduced and hospital services are restructured. Emphasis should be put on assessing the current skill level of staff (and verifying their existence) in preparation for the development of the human resources plan before any organizational restructuring is done.

Pharmaceuticals is another area where there is potential for significant savings. In Eastern European countries, pharmaceuticals typically account for 15 to 30 percent of public health spending, and a large share of private out-of-pocket spending. In Kosovo’s 2000 budget, pharmaceuticals are estimated to be 57 percent of the total. The recent study of private spending confirmed that pharmaceuticals are the largest out-of-pocket expense for the population. In addition, UNMIK and donors are keen to not allow an uncontrolled private drug supply system to develop that could push up the cost of drugs dramatically. This happened in many countries in Eastern Europe. Macedonian drugs, for example, cost five times more than international prices.

As the emergency situation subsides, responsibility for pharmaceutical management is shifting from humanitarian agencies to UNMIK, which agencies are in turn preparing for a Kosovo-owned system. A number of positive steps have been taken over the last six months that should lead to significant savings and improvements in the safety and efficacy of treatment. These include:

• Formation of the Co-operative of Kosovo Pharmacists (KKK) that brought together the former state pharmacies and linked them to the current distributor of drugs (PSF) to facilitate a transition from an externally-run to a Kosovar-run system;³

• Establishment of a Kosovo Drugs Regulatory Office (KDRO), which will be responsible for the regulation of import, manufacture, export, wholesale and retail and supply of pharmaceuticals. Regulations, tools, and procedures are currently being developed with advice from WHO;

• Adoption of an essentials drug list for procurement;

• Completion of a survey of prescribing practices that will be used to retrain clinical staff on updated and more cost-efficient practices;

• Launch of an international tender for supply of hospital drugs; and

• Dissemination of guidelines for drug donations to mitigate risks of expired or therapeutically useless drug donations.

Other issues under discussion include the introduction of user co-payments (prescription charges) for drugs dispensed in public pharmacies and competition between public and private pharmacies. The competition between public and private pharmacies is part of a larger debate that Kosovo will need to have regarding the mix of public and private provision of all health services. However, in the short to medium term, it would seem advisable to concentrate scarce resources on the smaller number of pharmacies that are part of the KKK, thereby benefiting from bulk purchases.

In the years 1992/93, it became increasingly difficult for Kosovar Albanian physicians to work in the health care system in Kosovo. In particular it was almost impossible for them to be accepted as medical students in Pristina University Medical Faculty. For these and other political reasons, a "parallel university" was established. Teaching was carried out in private homes and clinics both by academic staff who had lost their formal university positions and also by some of those who had managed to retain them. The latter worked in both systems. Through this mechanism it appears that quite a high standard of theoretical knowledge was acquired by the students. The major problem concerned clinical training, as access to patients in hospitals was very difficult to achieve. Considerable ingenuity was used to overcome the obstacles. In part experience was gained in the ambulances. Also some staff in the university hospital used great ingenuity (and took some risk) to enable students to make ward rounds and see cases first-hand. In some instances, courses were concluded by examinations and degrees and certificates were awarded for satisfactory completion of training - but not in all situations. A number of students completed their training in universities of neighboring countries outside Kosovo and were awarded degrees there.

An estimated 710 students graduated with degrees in General Medicine and 140 in Dentistry from the parallel years. Some of those students had begun their training in academic institutions and hospitals, so their deficiencies are less than later students who were denied that opportunity. Since June 1999, teaching has recommenced in the university and students of the "parallel era" have either returned to formal academic studies or are practicing medicine and dentistry in hospitals and clinics under the supervision of more senior clinicians. However, the social demand for formal proof of education, examinations, and clinical expertise has increased with the return of peace and normalization of everyday life. The students who studied in the parallel system are increasingly concerned that they should not be denied career opportunities given the risks and sacrifices made during exceptionally difficult times.

The only rational way to resolve this issue is through the creation of a single accrediting body responsible for the registration of all diplomas and documents that formally certify the satisfactory completion of training. The registration and licensing body would have the following functions:

• Consider formal evidence of completion of medical education and qualifications in medicine submitted to it, and, on the basis of the evidence submitted;

• Issue licenses to practice medicine in the Administrative area of Kosovo to those who possess the necessary basic medical qualifications;

• Receive and where appropriate register accredited certificates of completion of specialist training and other recognized qualifications;

• Consider, and when appropriate, approve and register certificates of completion of newly developed specialist and other formal postgraduate medical training;

• Maintain and regularly update a Register of those persons licensed to practice medicine in Kosovo; and

• Consider evidence of non-Kosovar/FRY qualifications submitted for the purpose of licensing for practice in Kosovo.

Many of these steps above are underway. At a later stage, without unreasonable delay, responsibilities should be extended as follows:

• Establish and publish a code of medical ethics;

• Issue guidelines on acceptable standards of medical practice, and promote the professional obligation to participate in continuing medical education and professional development;

• Consider and where appropriate approve newly developed specialist training and other formal evidence of further medical training; and

• To establish a mechanism to regulate the observance of the above standards for practice in all areas of medical practice, including private practice.

The appropriate degree of fiscal and administrative decentralization will need to be considered when developing local institutions to manage and oversee the health financing and service delivery system in Kosovo. Decentralization of public health services often is viewed as potentially the most important force for improving efficiency and responding to local health needs in former socialist economies. Success will come only when local government health agencies and providers develop a sound financial base, solid administrative capacity, incentives for improving efficiency, and accountability to patients and local citizens. Hasty decentralization, or decentralization at too small a governmental unit can lead to inefficiencies.

The functions of pooling financial risk and redistributing revenue from higher to lower income areas should be centralized at the provincial level. The average municipal population is too small to make efficient use of general hospital services or to pool financial risks (the risk that some of the population will require very high cost health care), or to distribute revenue fairly across high and low-income populations. Therefore, the health sector will be better served by a single health fund with five or six district branches than by a more decentralized approach to financing. Policy, planning and regulation functions for the health sector are also best carried out at the province-wide level.

There is room for debate about whether there are benefits from more decentralized ownership of health care facilities. Municipal ownership of primary health care facilities creates fewer problems, though the benefits of local ownership (such as greater community support) need to be weighed against the benefits of common management for both primary health care and secondary health care (better co-ordination, stronger clinical and managerial support).

The recent decision to devolve responsibility for primary health care to municipalities in Kosovo could be problematic, depending on how actual responsibilities between the DHSW and the municipalities are defined. It currently appears that policy making as well as financial control will remain with the center while responsibility for the delivery of services will be handed over to the municipalities. It would be best to hold off on any further decisions regarding the financial responsibilities until decisions had been reached about the overall design of the new system.

UNMIK is now pursuing a health policy of "co-existence" rather than "multi-ethnicity." This means "parallel" facilities can be set up if relationships between ethnic communities exclude any group from access to health care. WHO has been instrumental in encouraging Serbian doctors to return to serve Serb villages. As a result, many minority enclaves now have access to primary health care services provided by staff of their own ethnicity. Where this is not possible, humanitarian organizations serve patients using mobile clinics. However, secure transportation for those living in more isolated areas or between enclaves and regional hospitals are problematic. UNHCR set up KFOR-protected bus services in some districts; in others there are local arrangements with KFOR.

With numerous donors and NGOs operating in Kosovo, one of the biggest difficulties is coordination. While individual donors will want to operate their own project implementation arrangements, stronger coordination will be needed to mitigate risks that emerged in the post-conflict environment in Bosnia and Herzegovina, including inappropriate and unsustainable investments. Examples of this can already be found in Kosovo. For example, in Gjakove, where the district hospital developed a master plan that reduced the bed capacity by 30 and merged 6 buildings into 1, an Austrian NGO was simultaneously signing a contract with the municipality to invest DM 7 million in a new building for mine injured children on the hospital grounds. This was done without the knowledge of the hospital board, the DHSW, or the municipality’s director of health. It not only conflicted with the master plan that was developed to rationalize the hospital’s already extensive buildings, but the services to be offered by the Austrian hospital also duplicated many of the activities already carried out by another NGO at a different site.

These mistakes are much less likely to happen now that the Department of Health and Social Welfare has been granted the authority to issue an administrative instruction that requires registration and approval of all NGO projects. The Department also has taken the initiative to convene a weekly tripartite meeting of the DHSW and representatives of donors and the NGO council.

• Prioritize tax collection, doing everything possible to strengthen the overall capacity to raise general revenue, some of which in the short term will be needed to finance health care, continuing to press for an exception for the income tax exemption of UN employees.

• Begin to monitor the financial flows and impact of the recently introduced co-payment system.

• Decide on the main principles of rationing health services and implement them as soon as possible.

• Develop integrated health care restructuring plans, with participation and commitment of donors, health care providers, and communities, to begin to introduce key changes to remove existing inefficiencies and waste. Use purchase of equipment and refurbishments, particularly at hospitals, to leverage some of these changes.

• Initiate and sustain training in family medicine.

• Create a Registration and Licensing Body for Medical Graduates with the aim of re-training (as necessary) and integrating the parallel medical graduates

• Design future financing system (i.e., considering such issues as whether to proceed with a health insurance fund, how to pay providers, which services to offer, and governance structures) and begin implementation. (To be supported by Bank-financed project.)

• Upgrade a rationalized network of health centers and dispensaries to provide modern primary health care/family medicine.

• Gain commitment of health care providers and the population for the reform of the health care system through strong communication programs.

¹ International Rescue Committee, Institute for Public Health, Kosovo, WHO, and US Centers for Disease Control. 1197 households in 25 of the 29 municipalities in Kosovo. The four municipalities with a majority Serbian population were not surveyed because of security concerns.

² The survey used a crude instrument to collect baseline data on a variety of health status and health behaviors. For this reason it probably underestimated the amount of private payments as no reference was made to informal payments to health care providers. Also, the amounts for inpatient and outpatient services seem unreasonable given the use rate of 5.6 OPD visits per person per year.

³ The intent is that the KKK would supervise a central procurement unit for pharmaceuticals hand and be responsible for procuring, storing, and distributing drugs. Patients would go to a network of state pharmacists to get their prescriptions filled.