|Project Rationale and Linkage to Country/Regional Strategy
The original project planned to establish a demonstration multifunctional general hospital in Songinohairkhan, the poorest district of Ulaanbaatar, by renovating and expanding the infrastructure, equipping the hospital, and introducing innovative management systems (original hospital output). Civil works under this output are planned to start in the spring of 2013. In May 2011, the Mongolian Parliament amended the health law requiring general hospitals to provide at least seven specialized medical services. This substantial heightening of mandated standards for delivery of health services by general hospitals means that the funding allocated to the hospital output under the original project is no longer adequate to achieve the stated output. To accommodate all of the upgrading required, and considering the poor state of the existing infrastructure, the government has concluded that it is more efficient to construct a new hospital in the same location than to continue with the original plan of renovating and rehabilitating the old hospital complex, and has therefore requested the additional financing to support the proposed project expansion. The new demonstration general hospital will be used as a model to be replicated in the nine districts of Ulaanbaatar. This 300-bed hospital will include modern features such as surgical and maternity services, adequate diagnostic and laboratory capacity, integrated management of out- and inpatient departments, model nursing care, proper medical waste management, adequate infection prevention and control measures, and advanced information technology tools for patient, procurement, and financial management.
Hospital infrastructure in Mongolia is generally poor and the rapid population growth of Ulaanbaatar requires continuous investments. The expanded hospital output targeted at construction of the demonstration multifunctional general hospital is an integral part of the broader effort to reform the hospital sector which is being undertaken under the original project. As part of the original project, a hospital policy and a strategic hospital development plan to restructure the public and private hospital sector will be approved by the Cabinet within 2012. The broader financial implications and funding requirements of a modern public hospital network are analyzed and are part of the impending strategic plan. A detailed development plan is being developed for the demonstration hospital, including financial, human resources and managerial aspects with the assistance of the World Health Organization. Projected operational costs of the demonstration hospital will increase from the current level to provide higher quality of care. Actual costs will depend on factors such as staff:bed ratio, higher wages to motivate staff, and proper budgeting for maintenance services and capital depreciation. Recent and future trends in public financing suggest that additional operation and maintenance costs for the demonstration hospital can be financed by rising public revenues.
Total out-of-pocket health expenditures are estimated between 17-30% of total health expenditures in Mongolia, which is in line with the World Health Organization's guideline not to exceed 30%. About 80% of the population is covered by health insurance and about 50% of hospital revenues are paid for by direct State funding. This contributes to accessibility and affordability. Nevertheless, equity in accessing health care for the poorer segments of the population remains a challenge, as some of these individuals do not have health insurance. In addition, out-of-pocket payments are the rule for those who are insured. ADB is addressing equity issues through three ongoing projects and the reform of the citizens' health insurance law promoted by the Social Sectors Support Program.
The additional financing is considered to meet the four eligibility criteria for additional financing. First, ADB reviewed the original project in April 2012 and confirmed the satisfactory performance of the original project and that no significant changes in approaches and methodologies are envisioned. Accordingly the original project remains technically feasible, economically viable, and financially sound. Second, the government accords high priority to the original project as proposed to be expanded through the additional financing. The demonstration hospital represents a concrete step in implementing the 2011 amended health law, as acknowledged by the government's request for additional financing. Third, the project outcome remains the same, while the output related to the demonstration hospital, supported by the additional financing, will be enhanced and remains consistent with the project's development objectives. Fourth, the expanded project and its outcome are consistent with the current country partnership strategy, 2012-2016, which emphasizes social development through efficient delivery of health services.
The additional financing modality is highly relevant as the modification in respect to the demonstration hospital output will make it possible to meet the objectives of the original project in light of the amended health law requiring higher standards for general hospitals. The ADF loan modality is relevant to finance major infrastructure rather than using ADF grant funding as in the original project. The current effective project implementation arrangements (i.e., project steering committee, implementing agency and project implementation unit ensure a high degree of readiness and effectiveness in implementing the additional financing. The development of the hospital policy and strategic hospital development plan under the original project and continuing under the overall project provides a framework for the later replication of the demonstration general hospital to be established under the additional financing. The enhanced model character of the new hospital will reinforce its demonstration effect and will be a strong incentive for reforming the hospital sector in Mongolia as promoted under the original project.