Leadership Case Study. Apply principles of leadership, governance and management to the CLAS Case Study of Peru. Formulate yo

Case Study of CLAS in Peru:

Opportunity and Empowerment for Health Equity

Prepared by:

Laura C Altobelli, Future Generations www.future.org , [email protected]

August 26, 2008

This paper was prepared for “Case Studies of Programmes Addressing Social Determinants of Health and Equity” organized by the Priority Public Health Conditions – Knowledge Network (PPHC-KN) of the World Health Organization Commission on Social Determinants of Health, with support from the Alliance for Health Policy and Systems Research, World Health Organization 1211 Geneva 27 Switzerland

ABSTRACT Local Health Administration Communities (CLAS) in Peru are private non-profit civil associations that enter into agreements with government and receive public funds to administer primary health care (PHC) services applying private sector law for purchasing and contracting. CLAS is an example of a government strategy that effectively addresses social determinants of health (SDH), referring to the social, cultural, and economic barriers at the local level that keep people from obtaining services. Bottom-up approaches such as empowerment strategies and community participation have become important paradigms in public health and development efforts to address these local barriers and are becoming part of the discourse on SDH. Citizen participation is essential as a path to empowerment, and evidence is now available showing that empowerment strategies do have a positive effect on health outcomes and in reducing inequalities in health. Initially through a Supreme Decree, and now a national law on CLAS, the Peruvian government provides the opportunity structure for more flexible financial management with social participation that gives citizens direct control in the transparent management of primary health services, in planning and as facilitator of community development, and in promotion of healthy behaviors and lifestyles of individuals in the community, thereby building agency and empowerment. Evidence is presented showing the effectiveness, efficiency, equity, and coverage of CLAS as compared to PHC services that are administered through the cumbersome traditional public system that still operates in 70% of the Ministry of Health PHC system. “Peru´s CLAS program…is one of the world’s best demonstrations of rapid expansion with decentralization of the Alma Ata model of community-based primary health care.” (from report by H. Mahler et al. 2001).

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ACRONYMS

CHA Community Health Agents CLAS Comunidad Local de Administración de Salud

Local Community Health Administration Association DHS Demographic and Heath Survey DISA Dirección de Salud

Regional Health Office DIRESA Dirección Regional de Salud

Regional Health Office ENDES Encuesta Demográfica y de Salud Familiar Demographic and Health Survey FONCODES Fondo de Compensación para el Desarrollo Social

Compensation Fund for Social Development GOP Government of Peru IBRD International Bank for Reconstruction and Development (World Bank) IADB InterAmerican Development Bank MOH Ministry of Health of Peru NGO Non-governmental organization PAC Programa de Administración Compartida Shared Administration Program PAHO Pan American Health Organization PARSalud Proyecto de Apoyo a la Reforma de Salud Health Reform Support Project PHC Primary health care PRORESEP Programa de Revitalización de Servicios Periféricos Program for Revitalization of Peripheral Health Services PSBPT Programa de Salud Básica para Todos Basic Health for All Program PSL Plan de Salud Local Local Health Plan PSNB Programa de Salud y Nutrición Básica Basic Health and Nutrition Program RM Resolución Ministerial Ministerial Resolution SEG Seguro Escolar Gratuíto Free Health Insurance for School Children SIS Seguro Integral de Salud Integrated Health Insurance SMI Seguro Materno-Infantil Maternal-Infant Health Insurance SUTEP Sindicato Unico de Trabajadores de Educación del Perú Unique Union for Peruvian Education Workers WHO World Health Organization

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TABLE OF CONTENTS

Abstract i Acronyms ii Table of contents iii 1. Background 1

1.1 How CLAS effectively address social determinants of health 1.2 How CLAS operate 1.3 Objectives of Shared Administration and CLAS 1.4 Geographic distribution of CLAS in the primary health care

system of the Ministry of Health 1.5 Past evidence on the effects of CLAS on the health system and

on health of the population

2. Case Study Method 6

3. Findings 6

3.1 Mechanisms by which CLAS improve equity of access, quality of service, and social capital

3.2 Key political processes to establish and expand CLAS

4. Discussion 13

4.1 Going to scale 4.2 Managing policy change 4.3 Managing intersectoral processes 4.4 Adjusting design 4.5 Ensuring sustainability

5. Conclusions 17

6. Acknowledgements 19

7. References 21

8. Graphs 1-7 25

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1 BACKGROUND Peru has been successful in reducing its infant mortality to a par with the Latin American average. However, maternal mortality and chronic child malnutrition are still excessively high, and inequities in access and quality remain associated with large gaps in income. The country has one of the lowest per capita expenditures on health, $100, as compared to an average of $262 in Latin America (Alvarado and Mrazek, 2006), and the distribution of this expenditure has been highly inequitable. Peru delivers health care through a mix of providers. The Social Security Institute (EsSalud) provides obligatory employee health insurance with payroll deduction, serving 20 % of the population with formal employment. The Armed Forces has its own system of care for military families comprising 3 % of the population. The wealthiest 12 % utilizes private services and the private health insurance industry. The poorest 65% of the population is covered the Ministry of Health (MOH) network of primary health care (PHC) services and hospitals. Of this group about 45% have access and 20% remain excluded due to geographic, social, cultural, and economic barriers. This case study refers to the 65% nominally covered by the MOH health system, focusing on the primary level of care where 80% of all health care needs can be attended. Peru is among the few countries in the world that has a government health program with legalized, regulated, and institutionalized community participation. The Shared Administration Program, formalized in April of 1994 by Supreme Decree 01-94-SA, gives responsibility and decision-making power over the management of public resources for the administration of, currently, 31% of the Ministry of Health (MOH) primary health care (PHC) system. Despite the fact that community participation is now universally accepted as a basic strategy for primary health care, the legalized form of participation established in the Shared Administration Program is a rare phenomenon in the Latin American region and in the world. Participation is based on specific law and regulations, and a contract signed between the community non-profit entity (called the CLAS) and the Regional Health Department. This private-public contract is based on a local health plan: the CLAS is obligated to supervise its administration and completion, and the MOH takes responsibility for financing implementation of the plan. This program for co-management of MOH PHC services was initiated in 1994 in the upswing from a decade-long downturn of terrorism, hyperinflation, and collapse of the health sector. Decentralization was entering political discourse on governance but without clear strategies. Most Peruvian communities have strong traditions of internal organization, though their relationship with government has swung between dependency, independence, and mistrust. In the few years following the Alma Ata Declaration on Primary Health Care in 1978, the initial projects promoting PHC were better defined as community manipulation than community participation. MOH PHC services were medicalized and dominated by physicians. Government and health sector politics and the strong influence of physicians´ and health workers unions were forces affecting the development of the CLAS from its beginnings.

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1.1 HOW CLAS EFFECTIVELY ADDRESS SOCIAL DETERMINANTS OF HEALTH This case study describes the ways in which CLAS is an example of a government strategy for managing PHC services that effectively addresses social determinants of health (SDH). SDH frequently refer to factors outside the reach of the health care sector that affect health status, particularly in regard to the social and economic conditions in which people live that affect their health. Other aspects of SDH refer to the social, cultural, and economic barriers at the community level that keep people from obtaining the services they need. Bottom-up approaches such as empowerment strategies and community participation have become important paradigms in public health and development efforts to address these local barriers and are becoming part of the discourse on SDH. There is consensus in the literature that citizen participation is essential as a path to empowerment, given the type of participation. Experiences with development programs around the world are providing evidence that when people are assisted to assess their situation and select their own priorities based on local data and to build leadership capacity, they are able to identify creative solutions that are unique to their needs and resources and become empowered to implement and maintain the solutions on a long-term basis (Taylor-Ide and Taylor, 2002). Evidence is now available showing that empowerment strategies do have a positive effect on health outcomes and in reducing inequalities in health (Wallerstein, 2006). Social participation and empowerment have been adopted as basic concepts by the World Bank, the InterAmerican Development Bank, the United Nations system, and bilateral agencies. The World Bank considers two attributes of empowerment: agency, in terms of the exercise of choice by marginalized communities; and opportunity structure, in terms of the design of government programs that allows people to create effective action (World Bank, 2001). CLAS provides the opportunity structure which allows for development of agency through formalized social participation in health. Social participation in CLAS allows critical roles in the surveillance and control of health services, in planning and as facilitator of community development, and in promotion of health behaviors and lifestyles of individuals in the community, therefore building agency and empowerment. Furthermore, these roles depend on the public sector to provide the opportunity structure to promote and facilitate capacity-building, especially among the poorest members of the community and women, a view promoted by Amartya Sen (2000). As will be described in this chapter, CLAS in Peru are composed of community members who are given legal authority to administer public funds for organizing and delivering health care. Evidence will be presented that shows how much better CLAS work in delivering services effectively and efficiently, of better quality, greater equity, and with greater health impact as compared to PHC services that are administered through the cumbersome traditional public system that still operates in 70% of the MOH PHC system.

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1.3. HOW CLAS OPERATE From 1994 to 2008 when new regulations went into effect, CLAS have been formed of six elected community members, organized as non-profit civil associations under rules of the Peruvian Civil Code. Candidates are nominated by community members, and democratic voting takes place for the six community members of the General Assembly in the presence of municipal and Regional Health Directorate (DIRESA) representatives. The six elected Association members have a two-year term, and among themselves vote on three members to form the Board of Directors with president, secretary, and treasurer who have a one-year term. The health facility medical chief is CLAS Manager. The relationship between CLAS and the government through the regional DIRESA is formalized with a Shared Administration Contract, with responsibilities on both sides specified in detail. An annual operational plan and budget called the Local Health Plan (Spanish acronym – PSL), is a key instrument for co-management beyond standard clinical services to include community- identified needs. CLAS-run health services depend primarily on government funding through: (1) direct cash transfers from the public treasury, (2) cash reimbursements from the government health insurance program (SIS) for the poor and, (3) in-kind receipt of medicines and some supplies purchased in bulk by the DIRESA. Fees collected from patients for non-covered health services are administered by CLAS as opposed to non-CLAS health services who do not control funds. Cash transfers from the public treasury and public health insurance reimbursements go into a commercial private bank account controlled by CLAS. All funds are publicly owned but under the joint stewardship of DIRESA and CLAS, which provide monthly financial reports to the DIRESA. Expenditures of public funds for acquisitions and infrastructure are faster and simpler under the CLAS system. CLAS are not required to adhere to cumbersome rules of public administration that were set up to avoid misuse of funds and instead create incapacity to spend, forcing return of funds to the central government at the end of each fiscal year. Success of CLAS is importantly due to their agility in financial management with more efficient spending on priority and community-identified needs for better quality of health care. For example, CLAS can purchase laboratory equipment or contract lab services to third parties, renovate the health facility, hire more personnel, purchase security equipment and personnel to prevent thefts, and make other improvements that increase the perception of quality of care which increases demand for services. Misuse of funds in CLAS has not been an issue: social control by the community promotes transparency. Social control over health personnel is exercised by CLAS and the general population who are empowered to feel ownership of health services and demand accountability by health personnel. Personnel are hired and fired by CLAS under private labor contracts. In contrast, government payroll personnel’s labor regimen provides permanent job stability, a six-hour work day, one- month vacation, health insurance, and a full public pension. Entitlements and lack of accountability create a shield for minimal productivity and many refuse to do work they find disagreeable such as going into communities (Webb and Valencia, 2006). The new law on CLAS signed in 2007 includes a clause to correct this problem.

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1.3. OBJECTIVES OF SHARED ADMINISTRATION AND CLAS The objectives of CLAS are being achieved as much for its unique legal structure as the favorable inclination of communities to become empowered. These objectives include: Contribute to modernization of public health administration by incorporating private sector law in the administration of State resources. Decentralize by allocating state resources directly to the place of budget execution. Involve elected community members in exercising management and social control of public funds, directly administering their use for contracting personnel, construction and maintenance of infrastructure, and purchase of equipment, medicines, and supplies. Improve quality and quantity of health services through a Local Health Plan based on community decisions. Improve equality by determining fee scales and identifying excluded community members who need exoneration of fees and/or increased efforts to reach them. Promote more public and private investment in public health services by expanding possible sources of funding. 1.4 GEOGRAPHIC DISTRIBUTION OF CLAS AMONG PRIMARY HEALTH CARE FACILITIES OF THE MINISTRY OF HEALTH Of 6,871 PHC facilities of the MOH, 2,133 (31%) are administered by 783 CLAS. Individual CLAS administer one facility, and aggregate CLAS can administer two or more PHC facilities. The PHC system has five categories of care. These are, in descending order, Level I-3 and I-4 health centers (more than one physician, full staff, no in-patient care except normal maternity services), Level I-2 health posts (one physician, few other staff), Level I-1 or I-0 health posts (no physician). Graph 1 shows the distribution of CLAS and non-CLAS PHC facilities disaggregated by rural/urban areas and level of categorization in the year 2006. CLAS comprise 42% to 52% of large health centers in rural and urban areas, respectively, and 43% of larger rural health posts. Among small health posts in rural and urban areas, CLAS administer only 26 to 27% of them, respectively. Of the larger health posts (Level I-2) in urban areas, 33% are administered by CLAS. When the CLAS program initiated in 1994, the early CLAS tended to be small health posts with one doctor. These have been able to develop over time into larger facilities with more personnel, more infrastructure and equipment, and greater demand for services due in large part to their flexible management structure, as compared to non-CLAS. 1.5 PAST EVIDENCE ON THE EFFECTS OF CLAS ON THE HEALTH SYSTEM AND ON HEALTH OF THE POPULATION Prior studies comparing CLAS and non-CLAS have findings that by and large show positive impacts of CLAS on equity, quality, and coverage of health services (Altobelli, 1998a, 1998b; Cortez 1998; Vicuña et al, 2000; Altobelli and Pancorvo, 2000; Altobelli and Sovero, 2004). Impact on Equity Research on equity of access in CLAS-administered primary care facilities has provided evidence that the program is more effective in delivering affordable services to the poor. One of these studies was conducted on national data from the 1997 National Living Standards Survey in Peru. As shown on Graph 2, CLAS provided significantly more full or partial exoneration of fees in each of the three lowest income quintiles in rural area, as compared to non-CLAS facilities.

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These data were collected just as the school health insurance program was put into place, and prior to the maternal-child health insurance program, so those programs should not have influenced the findings on this table. Impact on Efficiency Graphs 3 and 4 illustrate the greater efficiency of CLAS versus non-CLAS PHC services by showing the number of physicians and productivity of patient care. Graph 3 shows the mean number of physicians working in CLAS and non-CLAS health posts and health centers in both rural and urban areas. Among health posts, rural CLAS have more than twice the number of physicians than rural non-CLAS (.41 vs .16); the number of physicians is similar in urban health posts whether CLAS (.63) or non-CLAS (.74). On the other hand, urban health centers that non- CLAS have significantly more doctors on average (3.62) than either rural non-CLAS (2.8) or rural and urban CLAS (2.63 and 2.40, respectively). Graph 4 shows coverage of health services for children from data on Integrated Health Insurance (SIS) reimbursements which was abstracted manually from records of all 675 health facilities, 200 CLAS and 475 non-CLAS in three of 24 Regions of Peru – Cusco, Huánuco, and La Libertad. Results show the number of visits per child in Plan A (0-4 years) in relation to the total number of children 0-4 years of age living in the jurisdiction of each health facility by whether it is CLAS or non-CLAS, urban or rural. CLAS in both rural and urban areas have twice or nearly twice the average number of visits per child as compared to non-CLAS. Impact on Demand

Evidence of differential utilization of health services for children in CLAS as compared to non- CLAS was assessed from Peru National Demographic and Health Survey-DHS data from 2000. As shown on Graph 5, three variables showed differences between populations living in CLAS and non-CLAS jurisdictions on utilization of health services for sick children. This graph suggests that CLAS has a positive influence on intermediate variables of access and utilization for children, and confirms findings from the year 2002 shown in Graph 4. Impact on chronic malnutrition in children Using maternal education as a proxy indicator for socioeconomic status, the Peru DHS data showed that CLAS populations in rural areas were on average poorer than non-CLAS populations (Altobelli, 2006). Furthermore, maternal education and socio-economic status as defined by household expenditure is the most significant predictor of chronic malnutrition in children (Mercer, 1988). This can be seen clearly in Graph 6. In order to remove the effect of distributional socio-economic differences in the interpretation of the data, data on chronic malnutrition in children under age five were analyzed by stratified categories of maternal education. Results in Graph 6 show that among children whose mothers had any primary schooling, chronic malnutrition was 40.8% in those living in CLAS jurisdictions, and 44% in those living in non-CLAS jurisdictions. The difference is significant. This educational stratum is most likely to use Ministry of Health services, being neither the very poorest stratum of mothers who are frequently excluded from any use of health services (No Education category), nor the better-educated stratum that is more likely to use sources of health care other than the Ministry of

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Health (Any Secondary or More category). This difference is not explained by higher educational levels of mothers in the CLAS groups. 2 CASE STUDY METHOD This case study focuses on the process of implementation, with five types of processes of particular interest: (1) going to scale – the challenges faced in moving from small pilot program to a widespread intervention; (2) managing policy change – in terms of policy formulation toward policies that are likely to benefit the poor and vulnerable, the influence of the political environment, the role of individuals as policy champions, managing opposing professional views; (3) managing intersectoral processes – including stewardship challenges in working with other sectors, difficulties in coordination, etc.; (4) adjusting design – adjustments made to the original program design during implementation, issues of sequencing elements of the program, effects of stakeholder views upon design; (5) ensuring sustainability – issues in securing ongoing financial support for the program, as well as promoting institutional sustainability. Data collection for this study combined several methods of data collection. Qualitative data was collected through semi-structured interviews with a series of stake-holders on their retrospective and current knowledge and opinions, listed by name and title in the acknowledgements. Interviews were tape recorded, if permitted by the respondent, and transcribed. Further qualitative data was collected through semi-structured interviews with members of 18 CLAS to determine how CLAS influence equity and social determinants of health. Three regions were selected for interviews on the basis of geographic distribution (coast, mountains, high jungle) and level of regional support to CLAS (high, low, medium). In each were selected three “good” CLAS and three “poor” CLAS utilizing the MOH classification based on management criteria. Random selection of CLAS was attenuated by accessibility so as to facilitate the field work. Specific documentation reviewed for this case study included government legislation (law decrees, supreme decrees, regulations, administrative directives, etc.) relating to (i) the Shared Administration Program, (ii) co-management and commu

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