Media Center

News Release

Email this   printer friendly format

ADB Loans to Mongolia to Overhaul Health System

Mongolia's health system will be overhauled with the help of two loans totaling nearly US$16 million approved today by the Asian Development Bank for the Health Sector Development Program.

One US$4 million policy loan will bring in reforms to develop a more efficient health system sustainable in a market economy and to encourage private sector participation. An investment loan of US$11.9 million will be used to improve the health system's management and infrastructure as well as health service quality. The ADB will also provide a US$600,000 technical assistance grant, financed from its Japan Special Fund, to strengthen the capacity of local governments to manage and develop health services to better serve local needs.

The delivery of health services is difficult in such a large and sparsely populated country. Despite significant investments under the centrally planned economy, Mongolia's health indicators remain disappointing, with relatively high infant and maternal mortality rates and low life expectancy compared with countries at the same level of development. The break-up of the former Soviet Union and the cessation of aid flows caused a financial crisis in Mongolia's economy. As a result, spending on social services was cut by half in real terms between 1990 and 1996. Increased unemployment and unhealthy lifestyles, including rising consumption of alcohol and tobacco, have exacerbated the situation.

The health program supports the Government’s aim to ensure access to an essential package of quality health services to all citizens.

The policy loan will focus on two major reforms. One is to strengthen and improve the quality of primary health care. Most simple curative and preventive services can be provided effectively at least cost at the primary health care level, and the health care delivery system should shift its focus from hospital-based curative services provided by specialists towards quality primary health care provided by family doctors. The reforms will greatly expand the role of family doctors working in small family group practices. These family group practices, including specially trained general practitioners and specialists, will be able to deal with most health problems and promote disease prevention, and keep hospital in-patient days and the need for more expensive specialist services as low as possible.

The other reform will be in the methods of payment to health care providers. The limited ability of most Mongolians to pay is the major obstacle to a financially sustainable private health system. For primary health care providers, a scheme will be introduced under which family doctors and family group practices will be paid for each person registered with them, under a contract with the local government to provide a package of essential services. For hospital services, the health insurance will shift to a prospective lump sum in relation to the diagnosis when the patient enters the hospital, instead of a retrospective payment based on the number of days that the patient has spent in the hospital. The policy loan will cover the cost of implementing these reforms, including a public awareness campaign to explain the reforms to the general public and to the health professionals.

The investment loan will finance the implementation of the reforms and improve service quality: technical expertise, rehabilitation of the hospital referral system (including the provision of physical infrastructure and equipment), training of health staff, and the development of management tools. Public sector doctors and health workers will be encouraged to transfer to family group practices, and work in the initial stage as private practitioners under contract.

The program will be implemented progressively over five years to facilitate monitoring and evaluation of the social and economic impacts. It will cover the capital of Ulaanbaatar and three provinces, Hovd, Dorngobi and Huvbsgul, which represent different geographic conditions.

Both ADB loans will be from the Asian Development Fund (ADF), the Bank's concessional lending window, which means they are interest-free and carry a service charge of 1 percent per annum. Repayment is over 40 years, including a 10-year grace period. Approval of the loan is subject to the condition that the loan shall be signed when sufficient financial resources are available from the ADF.

Contacts