The first objective of this component under HSPM was the retraining of family physicians and family nurses and completion of the planned retraining of 1650 family physicians and of equal number of family nurses to ensure 100% coverage of population under the family medicine scheme.

The family physicians’ retraining process was based on the Unified Family Medicine curriculum (RA Minister of Health Order, N613, 2003) that includes 8 months academic education and 4 months practical/clinical training. The family nurses’ retraining was based on the Unified Family Nursing curriculum (RA Minister of Health, Order N1254, 2006) that includes 5 months academic education and 1 month practical/clinical training. Trainees were selected from currently working district therapeutists, district pediatricians and nurses employed by urban polyclinics, rural ambulatories and health centers. As of completion date of the Project in total the number of retrained family physicians within WB supported projects is 1,676 and the number of family nurses is 1,804. Retraining of family physicians and nurses within HSMP APL-1 and APL-2 phases was completed in March 2012.

With the support of the HSMP two family physicians group practices from Abovyan city of Kotayk marz were established in accordance to Governmental Decree # 497-N, dated on April 19, 2007

Under this component 145 practical guidelines for provision of primary health care services were developed, printed and disseminated among PHC providers.

The second objective of this component was the strengthening of PHC infrastructure and improvement of working environment for PHC providers. In addition to 76 rural community medical facilities, which were modernized under the first WB financed project, 97 rural ambulatories were constructed and renovated under HSMP. As a result of infrastructure development the PHC services have become accessible for about 630,000 rural population in the new ambulatories.

This component intends to support restructuring of selected hospital networks in Yerevan and in the regions. The program implementation in is based on the GOA Decree from November 21, 2003, that effectively merged 24 hospitals and 14 policlinics into 10 hospital networks and on the GOA Decree #1911 from November 02, 2006 on optimization of the marz health care delivery systems. Project hospitals are subject to optimization in accordance with the governmental hospital optimization program. They offer a significant potential for bed reductions along with elimination of duplication and overlap in administration and maintenance, diagnostic capacity and clinical departments. The project supports hospital building renovation costs; essential medical equipment for diagnostic imaging, laboratory services, operating theatres, intensive care unit and functional diagnostics; management IT hardware and software, training/technical assistance for the management team; and, training and supplies for management of medical waste. The activities supporting the improvement of handling health care waste are part of the environmental management plan linked to this project. Hospitals supported by the project are subjected to improved governance and management arrangements as described in the Government action plan and supervision by Oversight Committees set up by the appropriate level of Government (MOH, municipality of Yerevan or regional (marz) administration). The selected hospitals will receive ad hoc support to develop and introduce:
• effective management structures and functions;
• strategic development plans and performance plans for top executive management;
• consolidated budgets;
• new financial management systems and accounting methodologies;
• internal quality assurance systems;
• health care waste management system;
• annual and independent audit reports.
Prior to making funds available for the hospital modernization, implementation agreements acceptable to the Bank are signed between the MOH, owner of the hospital (local government) and the chief executive (director) of the hospital confirming the commitment to the modernization program, implementation of management and governance arrangements, resources available under the project and hospital contribution to the project.

The project hospital networks in Yerevan are M.Heratsi State Medical University Hospitals, “Grigor Lusavorich” and “Surb Astvatsamayr” Medical Centers (MC).

The project hospital networks in Yerevan are M.Heratsi State Medical University Hospitals, “Grigor Lusavorich” and “Surb Astvatsamayr” Medical Centers (MC). Merger of “Mkhitar Heraci Yerevan State Medical University Hospital”

• Composition

This hospital organization comprises a merger of the University Hospital #1, University Hospital #3 (formerly University Children’s hospital#1), University Eye Clinic and University Hospital #2 (“Hayk Medical Center” in the past).The expected internal rate of return (IRR) from hospital business case point of view is 7 percent. In addition to quantified benefits, additional benefit is expected from improvement of clinical training conditions for medical students.

The tripartite agreement for this merger was signed on May 22, 2005 between the University Rector, Ministry of Health and the Ministry of Science and Education of Armenia, based on the original proposal on re-location of adult hospital services from hospital #1 and concentration of all medical services (adult and pediatric) in hospital #2 and of all surgical services (adult and pediatric) in hospital #3. Amendment was in the tri-partite agreement on August 8, 2006 upon approval by the World Bank. The University will regroup clinical chairs and service bases currently dispersed in hospitals across the city into the merged network with overall space saving of 1821 square meters (vacation of rented facilities). By the year 2008 the bed capacity was reduced from 485 beds to 292 beds resulted in increased bed occupancy of 51% with ALOS of 7.8 days.

In 2006-2007 University hospitals #2 and #3 received new biomedical equipment items intended for radiology and functional diagnostics departments, intensive care, operating theatres and endoscopies, as well as central sterilization department. University hospitals clinical and administrative departments were furnished with IT hardware and software.
Merger of “Surb Grigor Lusavorich Medical Center”


This hospital organization comprises the merger of former State Emergency Care Hospital (SEMC), Maternity Hospital #4, Children’s Neurological Hospital #6, Children’s Policlinic #5 and Policlinic #14. The expected internal rate of return (RR) from the hospital business case point of view is 67 percent.

Proposed modernization

The tri-partied agreement for this merger was signed on December 16, 2005 and the project implementation started. Under the modernization program facilities of neurology hospital #6 have been relocated to SEMC and the facility has been closed; and, services of the policlinic #5 were re-located into policlinic #14 in order to create a combined service from one facility. The facility of the policlinic #5 will be closed. The above restructuring resulted in space saving of about 6500 square meters, bed capacity reduction from 563 beds to 385 beds achieving the occupancy level of 88 percent with ALOS of 7.3 in the year 2008.

In 2006-2007 civil works related to the construction of a new boiler unit for heating of both hospital and polyclinic buildings, as well as renovation of maternity hospital have been carried out. Pediatric services have been re-located to the multi-profile hospital building by financial means of hospital. Thus the children’s neurological hospital #6 building is vacated and returned to municipality. Hospital received new biomedical equipment items. Clinical and administrative departments were equipped with IT hardware and software.
Merger of “Surb Astvatsamayr Medical Center”


This hospital organization comprises the merger of the former Children’s Emergency Care Hospital (CEMH) together with children’s policlinic, a secondary care hospital “Medical Union # 6”, “Surb Astvatsamayr” Maternity Hospital” and policlinics #6, 9 and 18.The expected internal rate of return (IRR) from the hospital business case point of view is 11 percent.

Proposed modernization

The tri-partite agreement acceptable to the World Bank was signed by the parties on April 9, 2005.According to the modernization program services from Medical Union #6 have been relocated to CEMH, maternity and gynecology services at the maternity hospital are consolidated into one of the two blocks; adult services from policlinic #6 have been relocated to the children’s policlinic at the CEMH. The program resulted in space reduction by 9795 square meters, bed capacity reduction from 427 beds to 362 beds resulting in increased bed occupancy of 71% with ALOS of 7.8 days in the year 2008.

In the following years architectural design and renovation activities were implemented in multi-profile hospital and in maternity hospital related to re-location of services from hospital #6 and to consolidation of obstetrics and gynecology services in one block. Delivery of biomedical equipment items and of IT hardware and software has been completed.
Marz hospital networks modernization

Following upon the optimization process in Yerevan regional optimization initiatives were undertaken through development of general master-plans of regional health care delivery systems, which were approved by the Government on November 2006 by decree of Government #1911-N. As a result of the marz optimization program around 40% of the current marz hospital bed capacity is reduced and over 70 thousand square metres of unused hospital and polyclinic space vacated from medical services. Upon completion of implementation of the marz programs and establishment of marz hospital networks as efficient providers of quality health care services for the marz population, the Yerevan hospital system would be re-examined with the aim of further consolidation of hospital services.
A thorough mapping exercise was performed in 2007 within the project, including assessment of current capacities, utilization and patient flows of regional hospital services and preparation of map layers of all regions with all health facilities per type and location, showing patient flows, service use and resources for each specialty so that to provide enough data to make evidence-based decisions on where and what to invest on to complement the optimization plans.

Building capacity for evaluation of health sector performance
Strengthening of health sector regulation, governance and management
Improvement of public expenditure management
Development of Armenian Public Health System, needs assessment plan and monitoring evaluation system for the Avian Influenza, HIV/AIDS and other Public Health threats

This component aims to strengthen capacity of the Ministry of Health and its key agencies to perform its major functions of policy development and implementation monitoring, regulation and oversight of the health sector.
Building capacity for evaluation of health sector performance
his subcomponent will strengthen the capacity of MOH and its key agencies to monitor & evaluate success of the health sector reforms, to report regularly on the health of the population and the functioning of the health care system; foster greater accountability to the public on how the health care system is serving them; provide a set of internationally comparable health accounts in the form of standard tables.
• Health Sector Performance Assessment (HSPA)
In order to provide evidence-based information to the Government for health policy analysis, formulation and management the Health Sector Performance Assessment (HSPA) should be carried out on regular basis. In order to assess whether the entire health system is moving toward success and policy objectives, the appropriate instrument of measurement was required. The methodology was adopted for the Republic of Armenia The methods of measurements of these indicators are diverse and include both primary and secondary data collection. The coordination of HSPA report development is maintained by the Heath Information Analytical Center National Institute of Health of MOH. In the framework of “Health system modernization project” the HSPA reports for the years 2007, 2009, 2012 were developed, published and distributed among the key stakeholders. The final reports can be found in the field of Reports and official documents.
• National Health Accounts Development (NHA)
National Health Accounts are significant and very useful tool for understanding the financial issues of health system. NHA gives an opportunity to the MOH to implement the assessment of health financing provided by different sources and the prospects to increase funding allocated to the sector, main projects of the health sector, the distribution of financial resources allocated for the population and to identify important actors in the area of health sector financing and provision of health care services as an instrument for developing and implementing a future reform strategy.
Current NHA Working group comprises of representatives from SHA, MOF, NSS, donor organizations. The statistical data for the NHA reports is collected from various sources: record of the national, regional and local bodies of the health system, records maintained by insurance companies (social and private insurance), records of medical service providers, health related data from “Households Integrated Living Conditions Survey (ILCS)” implemented by NSS and “Financial Activities of Health Care Organizations and Drugstores” and “Household Survey on Expenditures for Health Service”, and data on assistance provided by donor organizations. At present, the NHA 2004, 2005, 2006, 2007, 2008, 2009 and 2010 reports are developed, the NHA reports for 2006 and 2008 were published and disseminated among stakeholders. Top
Strengthening of health sector regulation, governance and management
This sub-component provides support for revising and improving health legislation, developing quality assurance mechanisms, improving MoH capacity as regulatory agency for the health sector; strengthening central and local Government oversight function, building up management structures of hospitals, and developing regulations for health care waste management.
• Licensing and Accreditation
The licensing of physical and juridical persons, with medical or pharmaceutical practices, started in 1996. Before 1996 physical and juridical persons were not licensed. Only the diplomas were sufficient to have the right for medical practice. The licensing procedures were regulated through Republic of Armenia (RA) State laws and Ministry of Health (MoH) decrees.
In order to re-establish the Health licensing and accreditation system for healthcare professionals and facilities international consultant was invited and the local WG was created. The objectives of the assignment were: a. to develop alternative licensing, accreditation and certification approaches in the Armenian context; b. to develop in detail the selected licensing, accreditation and certification approach that will address the key issues yet be suitable for the capabilities of the Ministry of Health, the marz level, and the health care facilities themselves and suitable implementation strategy jointly with the system stakeholders; c. to outline the resources, training and other inputs required to successfully implement selected licensing, accreditation and certification approach in Armenia. The final report produced by the International Consultant on Licensing, Accreditation systems development has been distributed among major stakeholders. Based on the experience of 25 EU countries, which was presented by the consultant in the final report, the local WG developed the list of medical specialties as well as draft government decree for implementation of proposed strategy for registration of health professionals. The list comprised of 32 High Medical and Pharmacological specialties, as well as 7 Middle level Medical and Pharmaceutical specialties. Top
• Health Care Waste Management Regulatory Documents Development
Improper management of healthcare waste can have direct or indirect negative impacts on patients, health workers, local communities, and on the environment. Healthcare waste pose biological, physical, chemical, and/or radiological hazards to those involved in their handling, treatment, and disposal. Hazardous healthcare waste is a public health risk whenever persons in the community, including children, come in contact with untreated healthcare waste. In addition, improper treatment methods can also result in public health problems and pollute the environment.
The government of Armenia has undertaken a process to develop a new legal framework to address healthcare waste. At present there are no legal acts that directly regulate the field of healthcare waste. In a broad context, healthcare waste is included as a part of the field of hazardous waste management.An interim approach to solve the problem of hospital waste management in Armenia is the adoption of sanitary and hygienic regulations connected to healthcare waste. In order to develop the Health Care Waste Management Regulatory Documents the International and local Consultants were selected by HPIU. Consultants reviewed the current legal framework on waste management in Armenia, developed draft legal package and draft National guidelines with detailed description of classification of Health Care Waste, process of estimation waste generation, current management practices, waste management implementation plan, waste minimization and pollution prevention, waste segregation and collection containers, waste collection, transportation and treatment, common treatment technologies, training and public education. In addition, TOT course on Health Care Waste Management (in accordance with developed guidelines) was conducted for epidemiologists who are responsible for waste management in merger hospitals as well as for specialists from State Hygienic and Anti-Epidemic Inspectorate.
• Strengthening of Hospital Management
HPIU contracted with the local training institution in basic management and health governance courses curricula development and training conduction, as well as, the foreign firms Oxford Policy Management Ltd & Pi Associates (Europe) Ltd to develop the modules of basic management course and health care governance course. This assignment contributed to the creation of sustainable training capacity in both health care management and health care governance in Armenia, providing core knowledge base that will be used to build management and governance capacity in hospitals, the Ministry of Health, the Municipality and Marz health departments. The management training started at March, 2006 and has been completed by the end of 2008. The trainings were conducted for three different groups of management: a. Top Management – representatives of MoH, Marz health departments, municipality, Heads of hospitals, deputy heads of hospitals (with duration of 44 days), Basic Management – for Heads of the hospital departments (with a duration of 16 days), Lower Management – Head Nurses (duration- 26 days).
At the end of the Management Program 108 representatives of top level management, 271 representatives of middle level management and 347 representatives of low level management completed the training course and received corresponding certificates. Top
• Hospital’s owners oversight functions strengthening
Within the frame of the Health System Modernization Project the regulatory and oversight functions of the MoH, the Yerevan Municipality and the Marzes’ Health Departments were strengthened. A review of an appropriate accountability system was conducted, which includes the board model that is internationally considered as best practice for the supervision of independent public hospitals. According to the agreement with the system key stakeholders the implementation is done by steps and in a first phase the hospital supervisory committees, subordinated to the JSC owners will initiate the oversight role of the hospitals and other healthcare organizations. The committees have clearly defined roles and responsibilities and appropriate staffing.
An International Consultant in collaboration with local expert available under the assignment has worked to ensure clarity and shared understanding of respective roles, responsibilities and accountabilities of the organizations involved at the strategic and supervisory levels. The final report was developed and submitted by Consultant, which includes information regarding the proposed hospital board governance structure, with its main elements such as definition, responsibilities, functions, accountability, size, members’ roles, members’ skills/competencies, and others as appropriate. Moreover, the report includes the roles, functions and accountability of the parties involved in hospital governance.
• Developing hospital accounting and services cost accounting standard software requirements specification
In order to develop hospital accounting and services cost accounting standard software requirements specifications to improve the hospital financial accounting and reporting system the local company has been selected by HPIU. The company examined the current hospital accounting and cost accounting system (including systems of hospital management accounting, financial accounting, taxation accounting, and statistical accounting) through review of existing documents, hospital accounting related data, collection forms and reports as well as through meetings with hospitals chief accountants of a sample of public hospitals and defined strengths and weaknesses of accounting software packages used by health care providers. The final report with detailed description of hospital accounting and services cost accounting standard software requirements specification was submitted and the assignment has been completed in the beginning of year 2006. The final report can be found in the field of Reports and official documents. Top
Improvement of public expenditure management
• MIDAS Development
Local company in financial management information system development has been selected by HPIU to improve MIDAS-2 software package at the State Health Agency as well as to develop new subsystems. The local company has worked on software means development for standardization and coding of primary health care standard reports and data, including personal information about the patients, social security card number, forming, updating and transfer of standard information tables. Software means for forming and transfer of reports about the treatment process of a given patient as well as about ambulance visits of patients are also under the development. Based on all requisites MIDAS-2 package has been successfully developed and installed. In addition, internet site for State Health Agency was developed. The web site contains Laws related to SHA mandate, information about all SHA procedures and structure, services provided under the State Order and data about hospitals. Top
• Basic Benefits Package Costing Study
For the assignment of the Basic Benefits Package Costing Study, in 2006 HPIU invited an International Expert, who in collaboration with the local company “Business Consult”, developed methodology and tools for the costing study. As the real cost of the BBP cannot be estimated just at the health provider side, the Consultant proposed that the total real cost should include the actual expenditure at the supply side (health providers) and the real out of pocket expenditure (OOPE) at the demand side (patients). The approved sample for the Costing Study has included the primary and secondary care levels, the rural and urban areas, the public and private sector (the list of selected facilities were the following: Yerevan: 2 hospital mergers (including maternities and polyclinics), 1 private hospital, 1 polyclinic; and 1 TB dispensary; marzes: 1 hospital, 1 polyclinic, 1 dispensary and 4 rural ambulatories. In 2007 after the above mentioned surveys “Costing Basic Benefit Package in Armenia; Pitfalls and Policy Implications” was conducted by an international consultant. This assignment served as a basis for further improvement of the contents and public financing of the current BBP; to show, how further applicable conclusions could be achieved using the previous BBP study, to contribute with further relevant data and to come up with policy recommendations regarding BBP, complementing those already presented by the World Bank. The final report can be found in the field of Reports and official documents. Top
• Strengthening of SHA capacity
In the background report developed by the International Consultant, who was selected by the HPIU to review the organizational and governance arrangements of the SHA, it was presented that the general consensus among the interviewed stakeholders exists on the need to enhance the role of the SHA from that of a contracting and payment agency to that of a strategic purchaser – but there is not a shared vision as to what that role really means in the context of the Armenian health sector. In addition, the consultant presented the current weaknesses in the performance of the purchaser role and the boundaries of SHA decision making authority, defined performance criteria for SHA and developed procedures for increased transparency of its operations (e.g. setting of explicit annual performance targets, external auditing and performance reviews, development of annual reports and financial statements). The Consultant also proposed action plan to implement suggested institutional changes to enable MOH/SHA to become a strategic purchaser. A medium-term health financing scenario is projected in the report that would enable the SHA to act more as a strategic purchaser and a number of ways are suggested in which the SHA should develop its capacity to more efficiently and effectively use public funds for the purchasing of health care services. In particular, the report suggests that “the SHA needs to use its authority, its strategic advantage and its institutional capacity to influence provider behavior towards greater cost-efficiency, better performance and good quality, while SHA continues to defend the patient rights and to put patient health needs as its first objective”. The IT equipment for the State Health Agency (SHA) were purchased and installed. In the scope of the second phase of the project (APL 2) the following activities were carried out:
• The TORs for Health Care Quality Assessment and Measurement of True Costs Related to Medical Processes in Armenian Hospitals were developed and presented to the WB and MoH for their recommendations.
• A local company and an international consultant for the implementation of assignment “Measurement of True Costs Related to Medical Processes in Armenian Hospitals” continued the costing study. With the purpose of the study two types of information has been collected and analysed:
1. Economic data. This includes item by item presentation of hospital facility expenditures and costs items assigned to individual cost centers used at a particular facility.
2. Medical data, which in their turn consist of following elements:
o General medical information obtained by direct interviews with physicians and other medical staff of hospitals involved in the study. This enables to have general parameters of the main surgical interventions carried out at a particular hospital and understand the cost drivers of such interventions.
o Specific, case related data, which had been collected by sample survey of predefined number of medical records. The information obtained through this survey would be combined with the SHA database and presented in one, united database format.
With the purposes of sampling of individual medical cases, at first they have been grouped in case mix groups, using the All patients DRG (AP-DRG) criteria. Grouping of patients into AP-DRG groups was completely manual and proved to be very labour intensive process and it took more time than was anticipated at the project inception stage. Running the AP-DRG grouper through the hospitalization database was unfortunately not an option because first, there is no consistency in the use of 3 or 4 digits for the same pathology in the selected hospitals and, second, there is no standard procedure coding in use. The AP-DRG grouper would have grouped, with much optimism, perhaps 20% of the cases. In this project, average costs related to treating different case mix groups is being measured altogether in 5 hospitals. The involvement of the 5 participating hospitals was a decision made by the Ministry of Health of Armenia. One of criteria for selection of participating hospitals was the profile and composition and scope of provided services. Another factor that drove the selection was the geographical location of the hospital. Therefore, 3 of the selected hospitals are located in Yerevan, and 2 others are regional hospital facilities located in Gegharkunik and Tavush Marzes, respectively. The list of the selected five hospitals includes:
 “Surb Grigor Lusavorich” Medical Centre (Yerevan);
 “Erebuni” Medical Centre (Yerevan);
 “Surb Nesres Mets” Medical Centre (Yerevan);
 “Sevan Hospital” (town Sevan, Gegharkunik Marz); and
 “Ijevan” Medical Centre (town Ijevan, Tavush Marz).
Development of Armenian Public Health System, needs assessment plan and monitoring evaluation system for the Avian Influenza, HIV/AIDS and other Public Health threats
The purpose of this subcomponent was to implement needs assessment for creation of Reference laboratory center of Public health, to develop detailed Action plan for National Public health system and to implement one-week TOT on epidemiological control of Avian Influenza, its treatment and diagnosis. An International company was selected for the Public health system revision, who presented reports on Assessment of Public Health system in Armenia, creation and improvement of Public Health Reference Laboratories, as well as recommendations were presented on creation of Public Health Laboratory Network of Armenia, on making amendments in public health sphere etc. Top
Improvement of the Medical Education
This sub-component will provide technical assistance to improve the Undergraduate and Continuous Medical Education. The project will cover the fields of Formal Medical Education, introduction of new technologies, and Continuous Medical Education.
• To improve the quality of under-graduate and post-graduate medical education in Armenia through a revision of curricula and of quality assurance, the International Consultant was selected and invited. The final report on Revision of Under- and Post-Graduate Medical Education was developed and presented to the main stakeholders by the Consultant. The final report includes list of recommendations, comments under each component of medical education.