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Functional Review and Institutional Design of Ministries
Functional Review of the
Ministry of Health
FRIDOM – Functional Review and Institutional Design of Ministries is a DFID-funded project, implemented by
HELM Corporation, Consulting and Public Management Group, Governance institute Slovakia and Altair
Asesores.

TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................................................................... 3
INTRODUCTION .................................................................................................................................. 8
SECTION I: LEGAL, POLICY AND MEDIUM TERM PLANNING FRAMEWORK ............................. 9
SECTION II: BARRIERS TO CHANGE ............................................................................................... 9
SECTION III: OVERVIEW OF STRUCTURE ..................................................................................... 10
SECTION IV: CORPORATE FUNCTIONS ........................................................................................ 12
SECTION V: STRATEGIC MANAGEMENT ...................................................................................... 16
SECTION VI SECONDARY AND TERTIARY SERVICES ................................................................ 19
SECTION VII: PHARMACEUTICALS ................................................................................................ 24
SECTION VIII: PUBLIC HEALTH SERVICES ................................................................................... 25
SECTION IX: PRIMARY HEALTH SERVICES .................................................................................. 27
SECTION X: MENTAL HEALTH SERVICES .................................................................................... 29
SECTION XI: HEALTH INFORMATION, INTERNAL AUDIT, LICENSING, INSPECTION, SPECIAL
OFFICES AND COMMITTEES........................................................................................................... 30
SECTION XII: EXAMPLES FROM OTHER COUNTRIES ................................................................. 35
SECTION XIII: NEW STRUCTURE AND CURRENT STRUCTURE ................................................. 37
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Executive Summary
1. The process for this review involved working with MOH and others to indentify issues
and opportunities for improvement, followed by feedback from the Minister of Health
and his advisers. This report considers the current services of the MOH, the organisational
arrangements including the structure and related matters, the challenges the ministry has,
the constraints on making changes, and options for improvements.
2. The Minister of Health has advised that there is political will to make improvements to
the structure and functioning of the Ministry of Health and its related institutions. This
has been demonstrated in recent improvements in the tender selection processes;
management and supply of drugs; the publication of the status of licensing for private health
facilities; the formation and empowerment of the Pharmacy Inspectorate; other changes to
improve health services; and the guidance provided by the Minister of Health on the areas to
focus on in order to improve the performance of the Ministry of Health and related
institutions. The following areas were considered in more depth during the revision of the
draft report and are discussed in Appendix G of this report:
The implementation of the reforms in particular what can be undertaken in the coming
months and what will require more time. The timing for changes are set out later in this
executive summary and discussed in more depth in the Appendix G. Note that an
Institutional Development Plan is intended to follow this report which can be incorporated
as appropriate in the Ministry of Health’s strategic plan, operational plan and budget
proposal for the forthcoming MTEF and annual budget. It could also be the basis for a
proposal to be put to the government for approval of the changes to the MOH as this
report is not in a suitable format for that purpose. Appendix G has advice on
implementation.
Developing purchasing/funding function in MOH. Further advice is provided in
Appendix G on strengthening the purchasing/funding function in the MOH, including
developing capability to specify, cost, price, contract for services, and undertake related
work. This work could be developed by the MOH and applied to service providers
including municipalities, hospitals, the NIPH, private providers and others. This offers the
potential for the MOH to improve services through using incentive based contracts that
are clear about performance expectations, have resources aligned to expected
performance and are designed to encourage particular behaviours. It takes time for
public service providers and for government officials involved in funding/purchasing to
develop skills, information and mature behaviours. The sooner they start this work, the
sooner the benefits will result from it.
Arrangements for hospitals. Further advice on strengthening the governance and
accountability arrangements for hospitals to improve performance is provided in
Appendix G in the form of draft revisions to the Health Law, following discussions with
the Working Group on the Health Law. The suggested arrangements include setting up
hospitals as Health Sector Public Enterprises with an adapted set of governance and
accountability arrangements from those applying to Public Sector Enterprises. The
adaptations reflect the broader requirements on health sector public enterprises from
enterprises that have the main function of maximising shareholder value. If implemented
well, the suggested arrangements could strengthen the strategic roles of the Minister of
Health and Ministry of Health and reduce the need for intensive operational involvement.
There are many safeguards proposed to permit interventions when necessary, but the
focus is on assigning appropriate roles to ministers, boards and management, and using
tools to ensure there are incentives for performance including an annual business plan
and periodic formal reporting with full external auditing. There are provisions to reduce
conflicts of interest and to help ensure that board members have appropriate skills to
provide good governance.
Issues with Kosovo Medicines Agency’s proposal for more independence. The
inappropriateness of this Agency being constituted as an independent agency similar to
constitutional agencies is discussed in Appendix G in the context of the governance and
accountability framework for institutions in the health sector.
Options for addressing inefficiencies caused by the MOF role in policy and budget
formulation and execution arrangements. This includes considering the issues with
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igidities in the budget that prevent the efficient use of resources; the roles of the MOF
vs MOH in deciding on what policies and services to finance; and arrangements for
returning revenue to the entities earning it. Suggestions are made in Appendix G to
improve current arrangements, including strengthening the analysis of the share of the
budget received by the MOH and promoting the health sector as an early pilot for some
elements of performance based budgeting, which can support a case for increased
flexibility in the use of resources, if certain conditions are met.
Linking planning (Health Strategy) to budgeting (medium term expenditure
framework and annual budget), MOH strategic and operating plans, annual plans
of hospitals and others, reporting and monitoring. The Health Strategy needs to be
put into operation through the plans of various institutions. Some suggestions on this
are made in Appendix G, including the use of plans by institutions that reflect the health
strategy and the medium term expenditure framework projections. Also the
incorporation of key parts of the Institutional Development Plan for the MOH in its
operational plan is covered. With regard to the Master Plan, it is suggested that it be
presented for formal approval as a high level document with less detail, so the MOH has
the necessary scope to refine it as information emerges, and in response to changing
financial and other conditions.
3. With regard to the structure of the Ministry of Health, the current arrangements in
terms of working practices, systems, processes, staffing and structure are not
adequately supporting the Ministry to deliver on its mandate and to deal with the
significant challenges noted in the draft Strategic Plan and in the Medium Term Expenditure
Framework. Key problems include: lack of sustained leadership with many changes of the
Permanent Secretary (PS); gaps in policy and planning; poor access to information for policy
making, planning and monitoring; limited ability to monitor performance given the information
problems; lack of sharing of information and cooperative working practices; many vacant
positions; lack of skills in some areas; and a structure that is not well designed to support the
key functions of the Ministry.
4. Improvements could involve changes to structure, systems, processes, staffing,
working practices and the culture of the Ministry towards more flexible working
arrangements where information flows are improved and staff can work in teams that are
more effective than the current working arrangements. The main changes discussed in this
review are:
Streamlining the structure to release the PS from operational management. Around 30
positions reporting to the PS are too many. Reporting positions for corporate functions
could be reduced and the reporting by agencies to the PS could be refined to focus on
high level matters.
Stronger policy, planning, and monitoring in an integrated way for main service areas
rather than being fragmented in different departments, divisions, and offices. Also policy
making and strategic management could be developed to support ministry-wide policy
and planning.
Developing a strong corporate services function to support the MOH policy, planning,
and monitoring services, as well as the direct services provided.
Realigning some functions to avoid duplication and separations that are not working
well.
Streamlining the internal structure of departments to facilitate cooperative teams with
more flexibility to respond to changing demands and rationalising the structure of
divisions, centres, and offices.
Changing the relationship with hospitals and other agencies with the MOH fulfilling a
policy, regulation, purchasing/funding, and monitoring role and agencies being set up
with more robust governance and accountability frameworks to provide stronger
incentives for performance.
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5. There are many constraints on making these changes that need to be dealt with at the
government level. The working arrangements and structure of the Ministry has evolved in
response to issues such as:
Current governance and accountability framework for the hospitals and other agencies
that are not creating sufficient incentives for performance.
Method of setting pay levels which provide incentives to create divisions, centres, and
agencies.
Incentives for doctors and other technically skilled staff to be managers to get into the
higher paid management positions. This reduces breadth of other skills at senior levels.
There is insufficient recognition in the civil service classifications and pay scales of the
value of technicians in the public sector compared to managers. The draft Civil Service
Law and the proposed Law on Salaries continue these problems.
Government-wide administrative instructions that require a legal department, an
information department, and other government requirements such as the European
Integration Office and the Gender, Human Rights and Quality office. These instructions
specify positions and staffing but a “one size fits all” approach is not suitable for all
ministries.
Frequent changes of senior leaders. There have been four ministers and six PSs since
2002, with three changes in PSs in the past year. The current PS is acting in the role.
Some key departments have acting directors.
Funding decisions by the government. In some areas there has been insufficient
investment to support critical changes and improvements.
Rigidities in the allocation and management of finances that make it difficult for health
institutions to manage effectively (see World Bank report’s comments on hospitals in
Appendix D). 1
6. Changes need to be sequenced in a way that will build on current capabilities without
putting the organisation at risk of failing at its key roles during the changes. The
organisational arrangements and structure are the way they are in response to the
environment. If changes are forced without dealing with the barriers mentioned earlier, there
will be unintended consequences, such as losing key people. Best practice ideas could be
bad practice if the constraints affecting the MOH are not addressed. The reforms must be
designed to deal with the unique conditions in Kosovo and not simply transport models from
other countries. While there are many valuable lessons from other countries, the best
design will be the one that fully taps into the potential for rapid development, given the
situation in Kosovo.
Recommendations for the short term- next three months
1. Develop a process to consider the reform options for MOH functions, structure,
systems, processes, staffing and culture with a timeline for analysis and decision
making, resulting in the production of the Institutional Development Plan. As part of this
process, consider the options and variations presented in this report alongside others that
may emerge from the internal work on the reform options. If possible, conclude this plan
within three months and start implementing it as soon as possible.
2. Contribute to the policy and preparation of the changes to the laws on civil service,
labour and pay to address the potential problems emerging in these draft laws, including
the civil service job classifications; the pay mechanism; and the implications for workers in
the wider health sector who will not be civil servants. Consider if there are opportunities to
influence the law and policies impeding good design for the MOH relating to the form of
1 World Bank, “Kosovo Health Financing Reform Study”, page 11.
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organisational structures (departments, divisions, centres, agencies, offices, etc) and
administrative instructions from Office of the Prime Minister that require certain structures.
3. Undertake critical policy work that affects the structure and functions of the MOH. A
policy direction with large potential to change the MOH is health insurance. The policy work
could be rapidly strengthened so a realistic transition path is developed to move from where
the health sector is now to a feasible model. An important building block is changing the
MOH from an integrated policy maker and provider of services to a planning, policy, funding,
monitoring and regulation role for the MOH with more autonomy for providers linked to
robust accountability frameworks for those providers (hospitals and other agencies) as
suggested in Appendix G. Other building blocks include: better health status analysis and
demand analysis; improved health information on provider activity/services; specification of
services; costing of services; defining the basic package that government can fund and
aligning entitlements to this; complex contracting including designing contracts to manage
the risks of cost shifting, cream skimming and other risks; monitoring many aspects of
performance; improvements in configuration, efficiency and effectiveness of government
owned providers; improvements in governance and accountability arrangements for
government service providers; market development; and institutional development work for
the health insurance model including investment risks (if this model proceeds). All these
developments require leadership from the MOH, including policy analysis, planning and
driving the implementation of many changes. The MOH could strengthen its capability in
these areas and the restructuring of the ministry needs to address this. Further advice on
this is set out in Appendix G.
4. Use the opportunity to revise the Health Law to put policy changes into the legal
framework including the improved governance and accountability arrangements for
hospitals. The transition arrangements for the Ministry of Health to develop the
purchasing/funding function could also be set out in the Health Law.
Implementation of the Institutional Development Plan from 3 to 12 months- following
completion of the work listed above for the first 3 months
Ministry of Health internal changes (subject to the Institutional Development Plan):
5. Reduce the number of reports to PS; consider creating a senior management level
with more services represented on it in the form of directors of departments for: Public
Health; Primary Health; Secondary and Tertiary Services; Pharmaceuticals; and Mental
Health, as well as departments for Corporate Services (Administration and Finance); and
Strategic Management. The best arrangement should be selected based on a thorough
analysis.
6. For each of the service departments listed above establish units for 1. policy and
planning; 2. monitoring. Where these departments provide services, a third unit could be
established for service provision. Variations on this are possible where there is a
purchasing/funding function which could be undertaken by the Health Care Commissioning
Agency or other options. An option covered in Appendix G is to locate the Health Care
Commissioning Agency within a much strengthened Department of Strategic Management
so the full resources of that department could be used to support the purchasing/funding
function. All units should have staff members who are skilled in various areas and who are
able to take on a range of work. The units should not have tightly segmented jobs focused
on narrow areas of work.
7. Reduce the number of corporate services type of reports by creating a Department of
Corporate Services that includes finance and budget; administration and personnel; legal
services; communications; and procurement.
8. Strengthen the Department of Strategic Management so it has a unit for: 1. facilitating
ministry-wide policy, ministry-wide planning, ministry-level reporting and ministry-level
monitoring functions, as well as units for 2. HIMS; 3. Sector HR development and regulation;
and 4. Productivity and quality improvement. There is an option to locate the Health Care
Commissioning function in this department as a 5 th unit as discussed in Appendix G.
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9. Once the structure is decided the staffing should be considered. There is little point in
restructuring if the people with the right skills and capabilities are not placed in the jobs and if
non performers remain. Job descriptions with the person specifications need to be
developed for all positions in the MOH, followed by a placement process that is designed to
ensure that appointments are made on merit and that people with the right skills are
appointed to the positions. This might involve confirming some people in roles similar to
ones they have now, moving them, replacing them, recruiting new staff and making some
redundancies. The legal implications and costs of this part of the restructuring need to be
considered and the legal rights of the employees complied with. A special law relating to the
MOH restructuring may be required if there are provisions in the law that prevent an effective
approach to the restructuring.
10. There are back office functions that may be able to be aggregated and delivered for
many government entities. There are also functions that could be considered for
contracting out to national and international providers, such as testing pharmaceuticals,
some tertiary health services, medical training, etc. Further work on the Institutional
Development Plan could consider this.
Beginning in the coming year and extending over the medium term
Changes to agency arrangements: hospitals, inspectorates, other agencies, boards
11. Consider increasing the ability of hospitals and other agencies to manage resources
alongside introducing incentives for performance (such as improving the alignment of
the budget to outputs) and adequate controls. 2 The draft changes to the Health Law in
appendix G provide a potential framework for doing this, but considerable work would need
to be undertaken to implement these changes. Other agencies including the National
Institute for Public Health, Centre for Telemedicine, and the Kosovo Medicines Agency could
also be brought within this governance and accountability framework as appropriate. This
framework includes forecast financial statements, forecasts statements of service
performance, reporting against these forecasts, and service agreements/contracts with
reporting against these, monitoring and external audit of service performance. In addition the
MOH could offer to be a pilot for aspects of performance based budgeting involving the
hospitals as a way to develop, test and prove ways to improve performance and thereby
gain the credibility to seek increased flexibilities in the management of resources.
12. Consider options for improving the arrangements for licensing and inspectorates.
This report has not covered these areas in detail but raises some issues and options,
including the possibility of combining the functions of some licensing boards.
13. Continually monitor progress with the reforms and make adjustments when
necessary. Ensure that the changes are managed in a way that the MOH can deliver on
critical accountabilities and can manage risks to its performance.
2 The term “agency” is used in a broad sense in this report to cover institutions that are not the MOH or its departments
and offices. It includes hospitals, NIPH, KMA, and others.
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Introduction
This report contains findings and recommendations of the vertical functional review of the Kosovo
Ministry of Health (MOH) conducted in the period of February to June 2009 as a part of the
Functional Review and Institutional Design of Ministries (FRIDOM) project.
The review involved interviewing many health sector personnel. The report has been reviewed by
the Minister of Health and the new acting PS, but has not been circulated more widely within the
MOH. Further work leading to the Institutional Development Plan should include thoroughly testing
this report with MOH senior officials and others from the health sector.
Note that the information on the organisational structure and the vacant positions was valid in April
but will have changed. We requested up-to-date information on the position in June but did not have
this information at the time this final version was prepared.
This report has been prepared by the FRIDOM Project funded by the Department for International
Development of the United Kingdom (UK) Government. We would like to thank the Minister of
Health, the Deputy Minister of Health, and the Minister’s advisers for the advice provided, including
the insights on the key issues facing the health sector. We would also like to thanks staff members
from the MOH, the National Institute of Public Health (NIPH), the Kosovo Medicines Agency, the
Kosovo University Hospital Clinic, the Telemedicine Centre, the Registration and Licensing Board,
the FRIDOM team members, the EC, the World Bank, UNICEF, WHO, the Ministry of Finance and
others who contributed ideas and provided advice to contribute to this report. We would like to thank
Mentor Sadiku and Diana Pacolli for their very supportive assistance with the arrangement of
meetings in the MOH. The suggestions in the report do not necessarily represent the views of people
interviewed, or the Department for International Development, or the UK Government. The review
has been conducted by Qamile Ramadani and Lynne McKenzie.
The review is set out in the following sections.
Section I Legal, policy and medium term planning framework
Section II Barriers to change
Section III Overview of structure
Section IV Corporate functions
Section V Strategic management
Section VI Secondary and tertiary services
Section VII Pharmaceuticals
Section VIII Public health services
Section IX Primary health services
Section X Mental health services
Section XI Health information, internal audit, licensing, inspection, special offices and
committees
Section XII Examples from other countries
Section XIII New structure and current structure
Appendices: Appendix A Abbreviations; Appendix B Review Methodology; Appendix C
Legal Framework; Appendix D MTEF policy and planning priorities and strategic challenges
for the MOH; Appendix E Staff numbers and budget 2009; Appendix F Organisation
structure (current official one); and Appendix G Additional Advice in Response to Requests
from the Minister of Health.
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SECTION I: Legal, policy and medium term planning framework
The legal framework for the health sector is described in Appendix C. There are significant changes
being considered that will impact on the MOH, including the role of private and public providers and
health insurance. Regardless of whether health insurance is adopted via the use of a Health
Insurance Fund, the legal framework has requirements which need to be reviewed, including roles,
responsibilities and reporting arrangements for many health sector institutions (see Appendix C).
Advice on possible changes to the Health law was provided in response to a request from the
Ministry of Health’s Working Group (see Appendix G).
The draft Strategic Plan sets out a very challenging agenda of major changes in the health sector
with far reaching implications for the MOH in terms of developing its role in policy, planning,
monitoring and review. While it retains its responsibilities for the providers of public health,
secondary and tertiary health, pharmaceuticals and mental health services, it carries considerable
responsibilities for leading improvements in the providers of services in these areas.
Appendix D provides an overview of the MTEF, the draft Health Sector Strategy, and some major
policy issues affecting the structure of the MOH and other institutions in the health sector.
SECTION II: Barriers to change
There are many constraints on making changes to the structure, functions and operations of the
MOH that need to be dealt with at the government level. The working arrangements and structure of
the Ministry has evolved in response to issues such as the ones set out below.
The method of setting pay levels is providing incentives to create divisions, centres, and
agencies with many management positions.
There are incentives for doctors and other technically skilled staff to be managers to get into
the higher paid management positions. This reduces the breadth of other skills at senior
levels. There is insufficient recognition in the civil service classifications and pay scales of
the value of technicians in the public sector compared to managers. The proposals to
change the Civil Service Law include four levels of civil servants with the top two being
managers and the third level being professionals.
Many officials are holding more than one position by being responsible for their usual
position plus fulfilling an acting management role for a higher position. This situation can
continue for some time with no active efforts to recruit vacant positions. Some contributing
factors to this problem identified by officials include: rigid job structure; low funding levels
resulting in multiple vacant positions that are being covered by one person; and narrow jobs
resulting from government or donor policy decisions.
Government-wide administrative instructions require a legal department, an information
department, and other government requirements such as the European Integration Office;
the Gender, Human Rights and Quality Office, etc. This results in many offices and positions
with narrow roles and an inability to use these people for other priority work. It can overload
a ministry with staff of lower priority, for example, the MOH is not filling some of the positions
in the administrative instructions as it has more pressing needs in other areas. It also
overloads the PS as many of these functions have to report to the PS according to the
administrative instructions.
The political situation and the civil service arrangements do not support an adequate level of
continuity in ministers and PSs. There have been four ministers and six permanent
secretaries since 2002. Many senior positions have staff in acting roles, including the PS. In
these circumstances it is difficult to provide leadership for a sufficient period to design and
implement necessary reforms.
Government entities do not appear to be incentivised to consider contracting out options. For
example, the Department of Pharmacy is refurbishing a government owned building instead
of continuing to contract out the warehousing service. While there is an analysis of the
comparative costs, this analysis does not ye4t cover the cost of owning the building and
other assets. There is an opportunity cost to owning buildings and vehicles, maintenance
including repairs and insurance costs, and depreciation costs. Some countries levy a capital
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charge on assets to make ministries recognise the true cost of using a government owned
building so they are motivated to make better decisions about whether to use a government
building, or lease one, or in the case of the Department of Pharmacy, whether to contract out
the service. The adviser working on the study intends to refine it to more fully take account of
the full costs.
Inefficiencies in processing decisions and payments were identified which would require
improvements to government-wide requirements. There is a very legalistic culture with
many formal instructions which can create management inefficiencies.
There is a lack of a robust governance and accountability framework for agencies including
hospitals and other institutions, such as an agency law. This would need to be addressed as
part of resolving some of the problems with the hospitals and other agencies. Some
suggestions have been made in Appendix G to modify the Law on Public Enterprises to suit
health agencies.
The level of funding for the health sector in the MTEF appears to be flat or falling and low
compared to what might be expected as a percentage of the budget and GDP, particularly
going forward. It is difficult to implement changes such as improving health information
without significant investments.
There is also an issue with rigidities in the budget appropriations and practices which are
common in countries focused on fiscal control, but a path of progression from this situation
should be set out so the performance issues related to inefficiencies caused by the budget
practices can be addressed.
Unless these barriers are dealt with, it will be very difficult to improve on the MOH’s structure and
operations as the current arrangements are a rational response to the MOH’s situation. The
changes suggested in this report favour a flatter structure with more generic roles, fewer divisions
and offices and specialised positions, and consequently fewer people reporting to the PS and fewer
people with high level job titles. This could affect their pay, status, and willingness to make changes,
unless these barriers to a flatter structure are removed.
SECTION III: Overview of structure
Organisational structure and staff numbers
According to the structure approved by the Office of the Prime Minister in 2007, the MOH consists of
six departments, two inspectorates, seven offices/officers and a health care commission agency, set
out in Appendix F. The following institutions report to the PS:
Regional hospitals (8)
Kosovo University Clinic Hospital
Kosovo Dentistry Clinic
National Institute Public Health
Institute of Labour Medicine
National Institute for Blood Transfusion
The approved structure shows one agency reporting to the Minister: the Kosovo Agency for Medical
Products. MOH staff members have advised that the following changes have been made to the
approved structure as at April 2009:
New Pharmacy Inspectorate reporting to the Minister (formerly part of the Kosovo Medicines
Agency)
Executive Assistant and one other assistant reporting to the PS
Health Inspectorate reports to Minister not the PS
Sanitary Inspectorate will move to a new Food Safety Agency reporting to the Prime
Minister’s Office
Legal Office has been changed into a department due to an administrative instruction from
the PMO
Information Office has been changed into a department due to an administrative instruction
from the PMO
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Centre of Telemedicine reports to PS and not to the division of HIMS
There are formal boards that report to the Minister that are not shown in the structure: Board
for Professional Continual Education; Central Board of Residency; Board for Registration
and Licensing; and Professional Ethical Board.
The following positions are currently vacant and are not being actively recruited for (as at April
2009):
Office for Health Policy
Chief Information Department
Several legal department positions
Head of Division of Administrative Support
Office for Hospital Institutions
Office for HIV AIDs
Given the budget, the MOH has selected the positions it can afford to fill that are a priority and is
leaving others vacant. Established positions being recruited for as at April 2009 included key
positions: Permanent Secretary, Director Department of Budget and Finance, Head of Division of
Health Care; Head of Division of Private Practice; Capital Investments officer, and Information
Officer. This indicates the degree of management change that this ministry is under-going. The table
below sets out the current establishments in the budget. 3
Table 3 Staff levels, March 2009
Entity Positions in 2009
budget
Minister’s office 8
Ministry of Health: departments, offices
Central administration
Sanitary Inspectorate
Kosovo Pharmaceutical Inspectorate
Health Inspectorate
Health Care Commissioning
Funded under MOH and reporting to PS but not MOH staff
Hospitals
National Institute Public Health
Labour Medicine
National Institute for Blood Transfusion
Telemedicine centre
Kosovo Agency for Medical Products
Funded under MOH Department of Health Services but not MOH
staff
Primary health care
Mental health services
Division of care (?)
Doctors in country
Minority Health
Mix of the above
Other programs
Hospital services
Grand total
11
108
11
9
6
7
141 subtotal
5878
289
86
56
15
38
6362 subtotal
10
227
10
427
195
869 subtotal
13
5878
7393
The budget for 2009 set out in Appendix E is difficult to align with the organisational structure as the
cost centres are at a more aggregated level. Unfortunately we were unable to get sufficiently detailed
3 We suggested to the MOH that it would be good to identify the established positions that are vacant and of those, the
ones that will be recruited for and the ones that will not be filled, to get an accurate picture of the situation. This
information was not readily available.

information to undertake further work on aligning the staffing arrangements to the budget and
assessing the costs of the proposed changes. The work on the Institutional Development Plan
should involve breaking the budget down to smaller cost centres to make it clearer what costs are
related to various functions and what the fiscal costs to the budget are for the proposed changes.
Positions reporting to the Permanent Secretary
The PS has around 28-30 direct reporting positions with many of these being corporate services and
providers of health services to the public. This suggests that the PS is at risk of being overwhelmed
by provider issues and corporate issues, with little space to focus on the core functions of the
ministry in terms of planning, policy, regulation, monitoring and review. The MOH needs to be
providing strategic leadership in the sector, but this may be compromised by the reporting
arrangements in relation to the PS. A more common range is around eight to ten including the
support staff. The options for reducing this number of reports are discussed in this report.
The corporate functions reporting to the PS are identified below, with options suggested for changing
these. In contrast to the high profile that many corporate service functions have, key health policy,
planning, monitoring and review functions lack a high profile in the structure of the MOH. The policy,
planning, and review functions for public health, primary health, mental health, and secondary and
tertiary services are all located under one director, along with the role of monitoring the hospitals.
This causes many problems related to a lack of adequate representation for these functions at a high
level in the ministry. 4 It also overloads the Director of the Health Services Department according to
comments from staff. It potentially overloads the vacant position of the head of the Division of Health
Services as this position has the Office for Hospital Institutions (vacant) and the Office for Primary
Health Care.
The Permanent Secretary has 13 agencies (institutions) reporting to this position, covering most
hospital services. The reporting involves more than just exercising the role of appointment and
management of the executive director of the agencies. In some cases it extends to receiving the
performance reports of these agencies and dealing in some detail with their issues. There is an
Office for Hospital Institutions under the Department of Health Services that is vacant and is not
being filled. This situation of many direct reports by agencies to the PS and a lack of an oversight
function elsewhere in the ministry, coupled with weaknesses in the accountability framework for the
agencies are discussed in section VI.
The options for reorganising the corporate functions, lifting the profile of core MOH services, and
improving the arrangement for the agencies is discussed in the sections that follow.
SECTION IV: Corporate functions
The corporate functions located at the level of reporting to the PS are discussed below.
Legal Department: An administrative instruction from the Office of the Prime Minister requires this
office to be designated as a department. This department has five staff including the Director of the
Department, with other positions required by the PMO administrative instruction, but which the MOH
is not filling due to other priorities (as at April 2009). The Department focuses on legal aspects of
administrative instructions and draft laws. It does not provide advice on legal matters relating to
contracting, procurement, or personnel, nor does it represent the MOH in legal proceedings as this is
a Ministry of Justice role. Consideration should be given to revoking the PMO instruction as it
presumes all ministries will be well served by having a predetermined level of legal resources and
that they should be delivered through specified jobs. This is proving not to be the case in the MOH,
where under a budget constraint, the MOH has identified other priorities. To maximise the use of the
legal resources, consideration could be given to changing the structure and roles. For example the
Department could be a unit under a Corporate Services Department where it could be located with
4 Hospitals report to the PS. This is discussed later in this report, including an option to have this reporting relate to high
level matters only with other areas of the MOH dealing with the function of monitoring hospitals.
12

other functions it could work alongside, including personnel, procurement and risk management
where legal issues can often arise.
Given its small size and the opportunity to broaden the advisory role of this function, the divisions
could be replaced with a flat structure where all staff report to the manager of the legal unit and could
be allocated roles to suit the broader functions, with scope to amend these as demands for services
from this unit evolved.
Information Department: An administrative instruction from the PMO requires this function to be a
department. This department has no staff. An officer is being recruited, but the director’s position is
being left vacant. This is a clear demonstration of how inappropriate it is to centrally mandate the
structure of this function for every ministry. As with the Legal Department, under a budget constraint
the MOH has decided that it has other priorities and would rather have a lower level employee
without a director. As there is only one person in this function, it would be possible to include it as
part of an administration function (discussed below) however the communications role is usually a
critical one with a reasonable level of profile in the Ministry. Another option is to have a
communications unit reporting to the Director of the Department of Corporate Services.
Certifying Officer: This is a part time position for one person that some staff members in the MOH
have suggested could be suitably located within the functions undertaken by the finance unit. There
would need to be a change in the law to permit this as the Public Finance Law sets out the reporting
line for this role. If there are any conflicts of interest likely to be caused by the change in reporting
lines, then these conflicts should be dealt with.
Department of Administration: This department has 15 established positions with three of these
being vacant. For this small number of staff there are three divisions and several units and positions
under these divisions as set out in Appendix F. Given that the MOH is not recruiting vacant positions
in two of the units (logistics and central archives) this indicates that some restructuring could be
useful. One option is to flatten the structure of this department to reduce the number of mid level
positions and to increase the potential for using the resources more flexibly by removing some
separations caused by the current structure. This could increase the ability to engage staff in a wider
range of work and to cover functions with fewer staff. An example has been set out below that covers
administration and personnel services. Later sections of this report suggest further additions to the
Department of Corporate Services. The units for administration and logistics could have a manager
with staff below the manager where this is warranted by the number of employees and the nature of
the functions.
Administration and personnel
services (1 manager)
Department of Corporate
Services
-Executive assistant to manager (1 staff member)
-Personnel services unit (1 manager and staff)
-Administration services: secretarial, reception, translation, records (archives) and
office services unit (1 manager and staff)
-Logistics unit (1 manager and staff for warehouse, transport)
13

Some advantages of the proposed structure include: reduction in vacant positions that MOH does
not intend to fill and cannot resource; joining the management role together for personnel and
administration where one of these unfilled vacancies exists and thereby providing a management
structure that is more affordable and has a more usual level of employees (current structure has
division managers for very few employees); and creating the potential for more flexible use of
resources by aggregating some functions and reducing the detailed designation of jobs.
This is just one example of a possible reorganisation of these functions. It would need to be
analysed in more depth. Suggestions need to be made for the level of staffing and these suggestions
need to be considered by the MOH before a firm recommendation could be made.
In the medium term the government may wish to consider using a back office function servicing
many ministries for some of the services set out above.
Department of Budget and Finance: This department has nine staff. The Director is being
recruited, making a total of 10. It is organised into two divisions as set out in Appendix F. The
Division of Budget has a manager and three staff. The Division of Finance has one manager and
five staff positions, but we have been advised that the Assets Officer’s position has been moved to
the Department of Administration. This function could be added to the “Administration Services” in
the diagram above.
The role of the Chief Financial Officer is carried out by the Director of the Department. We have
been advised that the law requires this position to report to the PS.
In interviews with staff from this department the following issues were raised. Some possible
changes are noted.
Process issues
Very detailed sign off, documentation and other processing requirements for making
payments (eg, five signatures for payments) with opportunities to streamline these. If this is
done, it would require changes to regulations for all ministries. The Government may wish to
consider reviewing the major business processes that are common across ministries and
look for ways to improve their efficiency, including options for shared back office functions.
Budgeting issues
Problems with a lack of alignment between capital and recurrent budgeting and planning,
including a position dealing with donor capital being located under the Department of
Strategic Management and poor communications between that position and the Department
of Budget and Finance. This contributes to a lack of quality in capital planning along with
other issues such as the approach to capital planning being reactive and not sufficiently
forward looking. There are problems with commissioning buildings without considering
recurrent costs. The wider issue of a lack of alignment between capital and recurrent
budgeting needs to be addressed through the planning and budgeting process, but the issue
with the structural separation could be addressed by locating the capital investment role with
the finance and budgeting functions. At a minimum, there should be clear requirements for
this donor coordination and donor related capital planning functions to exchange information
freely with the budget and finance functions.
MOH manages some capital for agencies reporting to it which some staff think could be
better managed by the agency, so decision making is better aligned to the actual capital
requirements of the agency and to improve the clarity of roles and accountabilities. There
are issues with capital planning and management in agencies identified in the 2007 report
from the Office of the Auditor General that would need to be considered in making any
changes to roles and responsibilities for capital planning. 5
5 The Office of the Auditor General’s report for 2007 identified issues with a lack of financial statements, procurement,
capital being purchased and not used, service issues in regulating medicines, and unauthorised purchases. The MOH
rejected many of these findings and the OAG did not accept many of the reasons put forward by MOH.
14

The whole-of-government budget process is not yet mature and there are issues like the
MOH’s strategic plan coming after the MTEF and some significant changes between the
MTEF and the annual budget, with decisions being made to allocate funds for capital without
a lot of analysis backing this up. The strategic planning process and its links to operational
plans could be strengthened. The Health Sector Strategy is being developed and has many
good points but could be improved by linking it to the MTEF. The Health Sector Strategy is
intended to be used to communicate the gap in funding to donors and to support requests for
donor funding. Ideally donor funding could be better predicted and included as part of the
MTEF planning and there could be more focus on improving the outputs for the funds
forecasted.
Separation of budgeting and finance
Some lack of coordination between budget and finance divisions and divisions being too
small to stand alone, with a possibility of combining these functions.
Some of the issues above require improvements in internal processes. These have not been
examined closely enough to make recommendations. Some initial ideas about changes that could
be made to the arrangements of functions include options to:
Join the finance and budget functions with administration services to form one department.
There are many consequences that would need to be worked through in assessing this
possibility. Some obvious advantages include: reducing the number of corporate service
reports to the PS and making space on the senior management team for key services
(discussed later); reducing the payroll costs for senior management; and providing
opportunities for the director of corporate services to streamline functions and maximise the
use of resources in this larger department. A disadvantage may include possibly overloading
the role of the director, particularly if that person has to fulfil the role of the chief financial
officer.
Move the donor capital investment role to this department.
Move the certifying officer to this department (would require a change in the law to
implement this fully as they report to the PS under the Public Finance Law) provided any
issues with conflicts of interest can be managed.
The testing and full formulation of these options and other options to improve the structure, roles,
systems and processes in this department would require working in detail with the MOH.
Procurement
This department has one director reporting to the PS and six staff in two divisions, as shown in
Appendix F. At some periods during the year the Director has frequent daily contact with the PS. It
is unusual for a corporate service like this to report directly to the PS and to have frequent contact.
There are considerable problems identified in the OAG report relating to procurement. Many staff
commented on issues with capital and drugs procurement, including problems relating to the
unsuitability of legal provisions for dealing with the purchasing of these items. This review does not
extend to reviewing procurement law and procedural issues, but it appears to be a key issue that the
MOH needs to focus on. Presumably if the legal issues with the procurement situation were
resolved then the need to interact so frequently with the PS would reduce and the function would
become routine. An option could be considered to place this function under a corporate services
function, with other functions discussed above.
15

Aggregation of corporate functions
In line with the discussion above a possible option for the corporate services is set out below.
Administration
and personnel
services unit
Finance and
budget
services unit
Options for the arrangements below this level need to be worked out in detail. This would include
improving work processes and practices as well as developing the structure and getting the right
people into the jobs.
SECTION V: Strategic management
Current situation and issues
Corporate services
Procurement
services unit
The formal structure for this department has four divisions, five offices, two centres and a position
covering special programs, as set out in Appendix F. Like many other departments there are unfilled
positions and some changes from the official structure. The director’s position is vacant and is being
filled on an acting basis by the Head of the Division of Health Information. There are eight staff and
four vacant positions including: capital investments (being recruited) and positions not being
recruited in the Division of Human Resources, including the position related to the central server.
This department provides a range of services including:
HR for the sector focused on workforce planning and development for primary, secondary
and tertiary levels (not to be confused with the MOH personnel function); this is delivered via
the Division of Human Resources (head of this Division is vacant) which has the Office of
Specialist Education (vacant position) and the Office for Continuing Professional
Development (3 positions).
Quality standards for health facilities and strategy to implement these (1 Head of Office and
no staff).
Licensing of health professionals (Office for Registration and Licensing with two staff
supporting a large number of boards).
HMIS services covering management of the health information system, standards, and
policies, including the patient management systems in hospitals, drug management system,
HR management system, and finance system. These services are at a developmental stage
(1 staff, central server position vacant as there is no central server).
Donor coordination and capital investments (one staff; plus capital investment position which
is vacant and is being recruited).
Issues raised during interviews in relation to the functions and organisation of this department have
been set out below with some comments:
16
Communications
services unit
Legal services
unit

Lack of planning and policy functions
Planning, strategic management and policy making could be strengthened in the MOH.
There is no health policy and planning coordination or facilitation capacity in this department.
This appears to be a core role that is missing. Working groups tend to take on the functions
of planning and policy making due in part to the immediate need to cover the gaps in the
capability of the MOH. The draft Health Sector Strategy is proposing a Strategy Forum for
the sector; a strategic planning working group for the MOH; and a new unit to support these
groups reporting to the PS called the “Strategic Development and Monitoring Unit.” In the
absence of these functions operating fully, the Minister has been using working groups. It
would be good to develop capability in the MOH and use working groups for advisory roles
rather than carrying out core functions.
There are large strategic management challenges in the health sector including: improving
the financing models; developing information systems; policy work and planning related to
the building blocks for health insurance; and improving the cycle of planning, budgeting,
management and reporting in the MOH and wider health sector (see appendix D). The
department is not resourced to deal with these challenges as well as the planning
requirements in the Health Law 2004 (section 56 see Appendix C).
Planning and management of health reforms could be improved. For example, primary care
performance based payments were introduced before the necessary preparatory work was
done. Preparation for health insurance and the policy work underpinning changes to the
Health Law are not yet well advanced.
Some decision-making is undertaken at the political level on routine and technical matters.
This could be partially addressed by strengthening the role of the Department of Strategic
Management to improve the processes underpinning the decision-making.
Need stronger link of strategic planning and budgeting. The Budget Commission is
constituted each year and could be better supported by a more strategic planning
department that can provide information that links planning and budgeting.
Lack of high level monitoring
The stewardship role is not functioning well in terms of accountability for different levels and
in terms of implementing what is planned. No one is systematically assessing the strategies
and implementation. There are no monitoring or review functions in this department and
there is difficulty in accessing monitoring information. The draft Health Sector Strategy
proposes that the Strategic Development and Monitoring Unit carry out monitoring and
evaluation functions. This could be a core role of the Department of Strategic Management.
Under-development health information system
Under-developed HIS with a lack of resources to improve this situation and some lack of role
clarity with the NIPH. Activity data exists for hospitals and other providers but is not up to
date and readily accessible from a central point. Hospitals do not use DRGs and this is a
core element of pricing services if there is a movement to health insurance. Many providers
do not have PCs, internet links or software. Health status data has many problems as noted
in the World Bank report on financing. Work is underway on the HIS strategy which may
result in suggestions about roles and functions for various entities, so suggestions have not
been made about this area.
Poor flows of information within MOH including monitoring information from the
inspectorates. A problem was noted with a culture of some entities reporting to PS not
cooperating with other parts of the MOH and treating information as confidential to them.
Issues were noted with a lack of clarity on roles and responsibilities including job
descriptions not being clear enough, with no requirements to share information and
cooperate with other parts of the Ministry. This may be a MOH wide issue that needs
addressing.
The lack of recent census data makes it very difficult to design some health sector policies
like capitation payments for primary care.
Quality control needs strengthening
There is one person in MOH with quality control and assurance responsibilities at the policy
level. One hospital commented that there is a lack of feedback from this function in the
MOH. There are considerable opportunities to improve quality and productivity in the health
17

sector, but few incentives and poor information to drive this. There is an option to combine
the MOH’s policy role in quality with a policy role in productivity, given the close relationship
of these policy areas and the need to make tradeoffs.
These comments indicate that the Department of Strategic Management is lacking some core
functions, including policy and planning facilitation and coordination. Ideally the parts of the MOH
and its agencies that are knowledgeable about core services such as primary health, public health,
secondary and tertiary health, mental health, pharmaceuticals and health information, would lead
policy development in their areas and provide inputs into the policy making, planning and budgeting
processes. These processes could be facilitated by the Department of Strategic Management, but at
the moment the Department lacks resources assigned to do this.
Similarly, a coordinated approach to the monitoring and review functions is missing from the MOH.
There are two inspectorates reporting to the Minister and one inspectorate reporting to the PS (soon
to move to the Office of the Prime Minister). We have not reviewed the option to combine the
inspection functions as these are complex areas that would require in depth analysis, including fully
understanding the reasons for the recent changes. There are obviously issues they are being used
to address that make the routine application of good practice ideas in this area too superficial.
Distinct from an inspection function is a routine monitoring function. There is no routine monitoring of
providers’ services in terms of output quantities, quality and efficiency measures. There is also no
systematic or targeted pre-planned review of providers’ performance, apart from the work of the
small Health Inspectorate. There is apparently a lack of open sharing of monitoring information within
the MOH making monitoring difficult.
There are options for improving the monitoring arrangements including developing a whole-ofministry
routine monitoring function in the Department of Strategic Management that focuses on the
MOH’s high level reporting and monitoring. This is not an inspection role, rather it would involve the
routine review of periodic performance reports from providers, fed through to this department. The
detailed monitoring could be carried out in the service departments (discussed later) and key
information provided to the Department of Strategic Management to compile and process into
various management reports for the PS and others.
Taking into account the missing functions, the overly segmented structure of the department
particularly given its low staff numbers and vacancies, and the comments from MOH staff on the
issues related to the functions of this department, an option for reorganising the department has
been set out below. This is just one of many options, but it captures some of the key ideas as a
basis for discussion with the MOH.
Policy
planning,
monitoring
and review
unit
Health
information
services
unit
Department of Strategic
Management
HR
development
and regulation
unit
Policy, planning, monitoring and review would include coordinating the strategic and annual
planning processes and coordinating this with the budget work; facilitating major policy making
processes that involve cross ministry and agency inputs; working with staff in MOH and agencies to
18
Productivity
and quality
improvement
services unit
Purchasing
/funding
services
HCCA

improve their planning and policy making work; donor coordination; gender and human rights policy;
and EU integration activities. The monitoring function could include systematic monitoring of the
performance of the MOH against its performance obligations. The detailed monitoring of providers
could be undertaken in the service areas discussed later in this report and there could be close
cooperation between those service areas and this monitoring function. Sometimes the monitoring
and evaluation function is separate from policy and planning but there are probably insufficient
resources to support this for the Department of Strategic Management. Also the same skills used in
facilitating policy and planning can be used for monitoring. A full evaluation function has not been
suggested at this stage as this requires well developed policy, planning, monitoring and supporting
information to be in place before it can deliver much value, however, targeted areas could be
reviewed using methods tailored to the level of information available. There may be changes
required to administrative instructions to permit the placement of the EU integration and the gender
and human rights offices in this unit.
Health information services would include policy and planning for HIS development and
management. A strategy for the HIS is under development so this report does not deal further with
this area.
HR development and regulation would include policy and planning in this area and provision or
funding of training and other related services for health professionals. Given the small size of the
registration and licensing office and the two offices providing HR development services,
consideration could be given to combining the administrative parts of these offices. The professional
development functions in the Department of Health Services need to be considered to assess
opportunities for rationalisation and improvement.
Productivity and quality improvement services could focus on the strategy for improving
productivity in the health sector as well as promoting improvements in quality, including developing
standards, guidelines and clinical protocols. The productivity work is likely to be a significant one at
the strategic level. The policy settings in this sector should be constantly reviewed to look for ways
to improve productivity.
Health Care Commissioning Agency would undertake work to develop and implement the
purchasing/funding role. This role needs to draw on the rest of this department as well as the rest of
the MOH.
Some possible variations on this include:
HIS reporting directly to the PS as one of the key services of the MOH given its critical
importance to supporting many of the reforms and improvements in health services in the
future.
Health Care Commissioning Agency could remain as a separate agency but given the large
demands and the need to draw on the rest of the department this may not be a viable option.
See the discussion in Appendix G.
SECTION VI Secondary and Tertiary Services
Current situation and issues
As noted above, there are currently many corporate services positions reporting to the PS, but only
two positions reporting to the PS that relate to MOH’s role in health services: the Department of
Health Services and the Department of Pharmacy. The Department of Health Services has around
11.5 staff in positions in three divisions spanning primary health, public health, mental health and
secondary and tertiary health and another 13 staff located in two training centres. The three divisions
are: health care (head vacant), private practice (3 staff), and public health (head in place). There are
five offices situated within divisions: Office for Primary Health Care (1 staff), Office for Hospital
Institutions (vacant), Office of Mental Health (half time position), Office for HIV/AIDs (vacant), and
Office for Overseas Treatment Abroad (2 staff). There are two centres: Centre Development Family
Medicine (7 staff) and Centre for Nursing Education (6 staff but 3 may move to the Office for
19

Continuous Professional Development in the Department of Strategic Management). The Centre for
Telemedicine supports the hospitals (15 staff).
Issues identified by staff in the MOH, hospitals and other agencies in relation to secondary and
tertiary services include the following.
Allocation of roles and responsibilities- lack of delegated power
Decision making on technical and routine matters sometimes occurs at the political level that
sidelines the technical level.
There are frequent interactions some staff members with the PS on operational matters.
Overload on PS with hospitals and NIPH reporting directly to the PS while the Office of
Hospital Institutions is vacant and has no active role. This also causes an overload on the
Director of Health Services as this Director analyses the performance reports. Consideration
could be given to clarifying the nature of the reporting to the PS or Minister for health sector
agencies, being in the nature of very high level matters such as signing off accountability
documents (see Appendix G). Regular and ad hoc performance reporting could be provided
to the Office of Hospital Institutions and it could take on the relationship management role
and related tasks.
There may be opportunities to improve the allocation of roles and responsibilities for the
education functions in the Department of Strategic Management and the education functions
in the Department of Health Services. We were advised that a third centre for professional
education may be set up soon which seems unusual given the current number of centres
and the fragmentation of these between two departments.
Health services are not represented well at senior management level
Lack of profile at senior levels for the health services and overload on the Director of Health
Services. As noted earlier, there are many corporate service functions with direct reports to
the PS. There is an opportunity to consider raising the position of the various health
services and providing integrated policy, planning and service monitoring functions for
service areas including secondary and tertiary services. There is no function for
systematically monitoring and reporting on the performance in secondary and tertiary health
care (Division of Health Care head vacant and Office for Hospital Institutions vacant). Policy
making is also very limited.
Process problems
Many staff mentioned issues with delays and wasted effort in getting routine things
processed and approved. The major services and outputs of the MOH could be specified
and then the processes underpinning the production of these services and outputs could be
examined to find ways to streamline them and make them more efficient. This can involve
many changes like removing unnecessary steps, using IT solutions to reduce the need to go
from office to office to get things done, making information more readily available on the
intranet, etc.
Cultural practices affecting performance
Departments and agencies reporting to the PS and minister do not always cooperate well
and freely exchange information, despite weekly meetings for directors and meetings for
wider groups. Examples were given of staff members not being willing to share draft strategy
documents within the MOH and performance reports from agencies not being made
available to the departments that have monitoring roles. There are many ways to address
this problem including requiring cooperation in job descriptions and assessing performance
in relation to this; making information available on the intranet; and treating non cooperation
as a serious performance issue for the director or manager causing problems.
There is a large use of working groups to do core roles like producing strategies and
monitoring these, which may be necessary in the short term, but capability should be
developed in the MOH. Sometimes tasks are given to working groups that they are unlikely
to be able to do given their incentives, such as working on the organisational structure of the
ministry. This involves many personal interests and requires leadership from the top, rather
than placing this task with a group of directors that will include winners and losers from the
changes. Working groups can be advisory, but should not be doing core MOH technical
functions.
20

Structural problems with excessive segmentation
There is a great deal of segmentation of jobs into narrow roles and a lack of generalists able
to take on a range of policy, planning and monitoring work. Many examples were given of
functions that operate well because the person in the role is competent, and examples of
functions that do not operate well because a key person left, or the incumbent is not
performing well. Some basic information that could be expected to be available in some
departments was not accessible because someone left the department. This indicates that
the MOH is relying too much on the work of individuals and not enough on ensuring that
good systems and processes are in place to manage the risk of losing good staff, such as
document and information management and coverage by other staff when people leave
jobs. An examination of the structure in Appendix F illustrates the segmentation in many
areas.
The segmentation of jobs undermines the ability of staff in departments to work as highly
functioning teams where their various skills can be drawn on to target the pressing issues for
the department. This is an effective way of working that requires leadership to create a good
team environment. Even if directors have these leadership skills, they will be impeded in
running highly functioning teams because of the segmentation of jobs in their departments.
Consideration could be given to removing these segmented jobs and developing more
generic policy, planning and monitoring positions that are filled by staff with the range of
skills required.
Skill issues
There is a lack of some types of skills in the MOH, such as health economics, health status
analysis linked to policy analysis, policy analysis including developing robust cost benefit or
cost effectiveness analysis of major changes, health information development and
management, general management, strategic planning linked to medium term budgeting,
and other areas. There appears to be many staff with medical training and people with
administration backgrounds. The MOH could include strategic HR development as part of
the Institutional Development Plan that is intended to follow on from this review.
Management skills are not highly developed. There has been a training course but
graduates from this are not rapidly turning up in management roles. Most managers are
doctors and it is not easy to get other skilled personnel into management positions.
Nursing advisory services not fully utilised
Work of nursing advisers has reduced in impact since the Division of Nursing has been
disestablished. The answer may not be to have such a division as there is too much
segmentation in the MOH, but the restructuring should consider how to ensure that policy
and other work related to the nursing profession is able to be effective.
Hospitals and other agencies indicated many problems:
Information
o lack of information systems and data for patient management, hospital
management, health status analysis including incidences of diseases to forecast
demand, and for funding and budgeting purposes; sometimes this information exists
but in a collection of different databases (some manual) that are not readily
accessible
o need population census to help with demand forecasting
Budget (some of the problems relate to Ministry of Finance requirements and role)
o lack of clear basis for allocating hospital budgets, for example, the budgets are not
linked to output so some hospitals providing more services can be funded at a lower
level than hospitals providing less services
o budgets being cut by the MOF and passed though the MOH to hospitals without full
discussions on options and ways to reduce spending, although note that the
hospitals have representation on the Budget Commission
o capital purchases managed by the MOH being left until the final months of the
financial year despite being required earlier
o no robust and agreed approach to costing and pricing services
o long standing problems accessing necessary drugs (supplied by MOH) including
drugs from the essential list- patients mostly pay for the drugs themselves in the
21

past but there have been recent significant improvements in the supply of drugs to
health institutions
o budget out of line with priorities and demands including maintenance costs- difficult
to keep buildings and equipment maintained
o difficulties in making changes to the budget during the year (virement process is not
easy)
o difficulties in purchasing minor items when required urgently (procurement
procedures not designed to deal with the hospital situation)
o lack of effective effort in locating donors to support the hospital services
o do not always get the revenues earned from fees returned to the agency earning it
which decreases incentives to collect the revenues
o operating costs associated with services that attract fees are not fully compensated
for decreasing the incentives to provide these services
Policy
o lack of progress by MOH on critical health policies, possibly related to the frequent
changes of ministers and PSs
o lack of clarity on the basic health package to be provided to citizens, demand for
services is increasing but funding is falling and there is no limit to the service
entitlement, so rationing happens in an ad hoc way by each hospital and health
facility
o consequent lack of ability to use mix of public and private services as way to cover
budget shortfalls, given that the boundary between the entitlement under the law
and private services is unclear
o lack of policy development on purchaser/provider split and other steps to support
health insurance and a lack of policy work on health insurance
o lack of development of clinical protocols although there has been recent progress in
this area with the engagement of advisers to provide advice on protocols
Operational
o low salaries that are centrally set
o difficulties in removing non performing staff
o lack of feedback from MOH on quality assurance work
Regional hospitals in minority areas
There is a large management challenge in relation to the regional hospitals in minority areas
that are linked to the Serbian health system and are funded from Serbia. The funding is
planned for these areas in the Kosovo budget, but not distributed and no information is
flowing back from Serbian dominated areas for health services.
Reconfiguration of hospital services
A lack of progress with the Master Plan to reconfigure the secondary and tertiary providers
was noted by staff. Key recommendations from the draft Master Plan have been set out in
appendix D.
Options MOH
Consideration could be given to raising the profile of secondary and tertiary services by making it a
Department directly reporting to the PS. It could cover policy, planning (linked to the budget),
monitoring (including monitoring of the hospital providers) and targeted reviews. If the MOH
developed into a funder rather than being an integrated policy, planning, monitoring, and service
provision entity, then this department it could support the funding/purchasing role led by the Health
Care Commissioning Agency. The roles of the department can evolve over time as the health system
changes. If a health insurance fund was set up, the MOH could monitor the access to and adequacy
of the secondary and tertiary services and the impacts of these services. The function of monitoring
the ownership interest in the hospitals and other agencies could be shared with the MOF unit. The
purchase interest is very much a role for the Minister of Health assisted by the MOH.
22

One option for the organisation of a Department of Secondary and Tertiary Services has been set
out below. It is only one of many possible options and needs to be discussed and tested with the
MOH. The primary health, public health and mental health services are dealt with later in this report.
Policy & planning unit
(also support to
funding/purchasing
function)
Detailed policy and planning related to secondary and tertiary services could be carried out by this
Department. Note that the policy and planning role in the Department of Strategic Management is a
facilitation role that helps departments like this one feed into ministry-wide policy, planning and
budgeting processes. The services provided by the Office for Treatment Abroad could be included in
the Policy and Planning Unit or the HCCA.
The monitoring role would include monitoring hospitals. This would involve routine monitoring of the
performance reports, as distinct from the inspection functions if the Health Inspectorate. The idea of
having monitoring units requires more work to assess whether there is sufficient capability able to be
attracted the individual units or whether fewer units are more realistic, although note that the skills to
do policy analysis are similar to the skills used in routine monitoring.
Options agencies
Department of secondary and
tertiary services
Staff members in the MOH and hospitals have commented that the current arrangements of the
MOH having detailed decision making roles with regard to the agencies including the hospitals is not
an efficient and effective way to deliver services. The problems noted above in relation to budgets
are examples of the issues affecting performance. The creation of a robust governance and
accountability framework for the agencies including the hospitals could include the following:
A suitable legal framework that covers all essential components of an agency law, tailored to
the situation in Kosovo. While the Health Law 2004 has many useful provisions it does not
provide a full accountability framework for an agency. If an agency law is not likely any time
soon then amend the Health Law. Chapter VIII of this law could be expanded. Appendix G
has some suggested draft provisions.
Governance arrangements with a separation of governance and management roles, boards
with members with governance skills, good governance practices in the part of the board
including management of conflicts of interest. The Health Law provides for a supervisory
board but hospitals do not tend to have these boards. The suggested provisions for
revisions to the Health Law in Appendix G include the application of the provisions about the
board of directors from the Public Enterprise Law with some modification. That law has many
provisions designed to minimise conflicts of interest and to ensure that the boards can be set
up well to carry out their functions.
Clarity of roles and responsibilities between governance boards, management, MOH
officials, and others. The Health Law 2004 could be expanded to do this as suggested in
Appendix G.
Good ex ante accountability document covering forecast finances and forecast service
performance. The Health Law has high level requirements for the Annual Plan but there are
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Monitoring unit

many areas not covered in order for this to be a suitable accountability document- such as
timing of plan, reporting on plan, external audit of report on plan, etc. Suggestions are made
in Appendix G to expand the specifications for the annual plan and the annual report.
Ex post formal annual reporting of financial and service performance with external audit and
external monitoring, including by MOF of the government’s “ownership” interests related to
the maintenance of the agency’s capability using the POE Policy and Monitoring Unit.
Service agreement with MOH covering detail of services to be provided and funds to be
provided, designed to incentivise good performance. The Health Law can provide for this as
per Appendix G.
Regular reporting on service agreement to MOH, eg, quarterly and a full annual report. The
Health Law can provide for this.
Monitoring of performance by MOH including comparative performance reports to encourage
better performance. The Health Law could define MOH’s role in relation to these agencies.
Readily accessible information on performance for service users, monitors, and others. The
Health Law can provide for this.
Adequate internal controls to support greater flexibilities to manage resources.
Increased flexibilities to manage resources need to be balanced with increased accountability for
performance. The framework outlined above has the basic components required to achieve this, if
implemented well. The barriers to performance need to be addressed such as the very detailed
budget execution method implemented by the MOF. This detailed approach to budget execution is
not appropriate for an agency that has an adequate governance and accountability framework and
internal financial management capabilities. Hospitals would need to develop these capabilities and
the framework for governance and accountability would need to work well.
Policy work on designing an accountability framework for agencies must take account of the situation
in Kosovo, including the level of capability and the risks that need to be managed. It is unrealistic to
expect to be able to rapidly develop a robust governance and accountability framework and to have
all processes relating to this operating very well, given the constraints in Kosovo. A transition path
could be developed with incremental changes that involve the adequate management of risks.
Problems can be expected in moving to an agency model, but this should not justify maintaining the
status quo which is characterised by some notable problems.
Managers in hospitals and other agencies could be trained in management and in future, selected
according to suitable criteria. If they are set up with more flexibility to manage resources, then the
management role becomes more challenging.
MOH could have a funding, purchasing and monitoring role instead of a direct procurement role and
other direct roles in relation to hospitals and agencies, if hospitals and agencies have robust
accountability frameworks. Agencies could report to the PS or Minister for high level matters like
agreement on key strategic and accountability issues. With regard to the provision of services,
reporting and monitoring, the agencies could report to the appropriate part of the MOH and in the
case of the hospitals, this could be to the Department of Secondary and Tertiary Services. The MOH
would need to develop its capabilities to effectively exercise its roles.
SECTION VII: Pharmaceuticals
Current situation and issues
The Department of Pharmacy has two divisions: one for monitoring and one for supply. There is a
director, one person in each division and two assistants serving both divisions (five in total). See
Appendix F.
The Kosovo Medicines Agency regulates drugs and other medical products. It is an agency of
around 38 staff, reporting to the Minister.
There is a separate Pharmacy Inspectorate that used to be part of the Kosovo Medicines Agency,
but has recently been set up as an inspectorate reporting to the Minister. It has a staff of six being a
director, an assistant and four inspectors.
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Some issues raised by staff include:
Options
Problems in providing an adequate service supplying pharmaceuticals to the providers due
to the incompatibility of the Procurement Law with the special conditions in the drugs sector
such as urgent and changing demands, the need to be able to purchase at a price and
adjust the volume rather than purchase set volumes, and other issues. The MOH needs to
proposed changes to the Procurement Law.
The Kosovo Medicines Agency considers that it needs more independence. The reason the
agency is seeking more independence relates to difficulties experienced with the lack of
financing and other input flexibility, and how this impacts on services provided by this
agency. The agency advised that it is proposing a law to become an “independent agency”
under the Constitution (142). Independent agencies reporting to parliament should be
agencies that need to be far removed from government influence such as State Audit,
Courts, Auditor General, and the Ombudsman. These are parliament’s agencies not the
government’s agencies, whereas many of the agencies that exist now do not need full
independence from government. While this agency provides services to external users and
generates revenues about equal to its annual budget, this is not a reason in itself for
increased independence, given that it is exercising a monopoly service that is a core part of
the regulatory framework in the health sector (see Appendix G). A government-wide solution
to the situation with agencies could be addressed in a law for agencies.
The separation of the pharmacy inspectorate from the Kosovo Medicines Agency is causing
some practical problems as they need to work closely together.
Options for this department include:
Removing the divisions as this department is too small to justify these.
Consider the possibility of either including this department as a division of the Department of
Secondary and Tertiary Services or consider options to enlarge the department, however we
do not have sufficient information to make suggestions about options to improve the
arrangements for the pharmacy functions in all the entities (MOH, Kosovo Medicines Agency
and Pharmacy Inspectorate) and further work is required on this area. We are not aware of
the reason why the Pharmacy Inspectorate has been created and why it reports directly to
the Minister and without information on the problems that this structural change is intended
to address, we are not in a position to comment.
There is a proposal to enlarge the pharmacy department by bringing the warehousing and
distribution functions in the MOH rather than continuing the contract to the private sector for
these services. The comparative costs analysis for this proposal needs further development
to take account of the full costs to the government of this proposal including the costs of
owning the building and running the vehicles including depreciation, insurance, maintenance
etc., as well as the opportunity costs. The performance differences between an in house
service and a contracted service should also be considered, as sometimes it is possible to
get a higher quality service through using contracting techniques compared to an in house
service. If the decision is taken to enlarge the department by taking the warehousing and
distribution functions in house then this strengthens the case for keeping the Pharmacy
Department as a department and not making it a division in another department.
SECTION VIII: Public health services
Current situation and issues
The Division of Public Health has a head of the division with three areas: an Office of Mental Health
(0.5 staff); an Office for HIV AIDs (vacant) and programs for mother and child and TB (1 staff and
recruiting 1 assistant that UNICEF will fund). This is an unusual collection of services to associate
with public health. Public health policy, health education and promotion, and health status
monitoring are not well resourced in the MOH.
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There is a National Institute of Public Health (NIPH) with a staff of 297 that covers many areas of
public health including: a school of public health, services related to communicable diseases, non
communicable diseases, public health observation, food control, water quality, laboratory
diagnostics, health education, health promotion, HIS, research, and environmental health services.
The NIPH is planning to set up seven centres to deliver services. This reorganisation is not
expected to result in any staff changes, but is expected to improve the efficiency of services.
The NIPH is not actively involved in public health policy unless invited to contribute by the MOH. It
does not routinely monitor health status, although it does keep databases on aspects of health.
The public health functions managed by the NIPH are decentralised at a regional level and they
report activities to the Director of Finance. The Director of the NIPH is not involved in detail on
regional activities, but considers that the reporting is adequate for this country at this stage.
Issues raised by staff include:
Options
Policy development based on good health status analysis for public health could be
strengthened. There is a lack of resources allocated to this in the MOH and no formal
arrangements with the NIPH to provide inputs to the MOH’s role in doing this. No one is
doing health status analysis in a planned and systematic way. There are possibilities of
using the capacities of the NIPH more effectively to contribute to health status analysis,
public health policy making and planning.
The services of the NIPH and Division of Public Health could be better coordinated to take
advantage of the capacity of the NIPH. A lack of clarity in roles and poor access by the MOH
Division of Public Health to health status information in the NIPH were noted as problems.
The World Bank report on financing noted problems with the quality of health status and
patient activity data. Planning for improvements in data and analysis could be part of the
policy and planning work of the MOH at a high level and undertaken in cooperation with the
NIPH. Work underway on the Health Information Strategy will be considering this.
Duplication with a department of Health Information Systems in the NIPH that collects and
analyses field data. There is also an HIS division in the MOH. Roles are not entirely clear.
Little progress has been made on improving information, however the WHO is supporting
consulting work to improve the Health Information Strategy, beginning in March 2009.
The program for mother and child in MOH is a possible duplication with the NIPH work in this
area. NIPH does monitoring of the referral policy and other matters while MOH does policy,
but sometimes they mix functions. Also reproductive health policy in MOH affects services
provided by University hospital, NIHP and others. There are coordination issues. MOH’s
role in implementation is not clear. This is normally a role for NIPH.
Better clarity on roles and responsibilities is critical to improving performance in public health
services, whatever option for restructuring is chosen. There are several options that could be
considered. One option is to raise the profile of public health services and make it a department
reporting to the PS. The NIPH could be more closely involved in the policy, information, planning
and monitoring work of the MOH. For high level matters it could report to the PS. It could deliver
services to the Director of the Department of Public Health Services, including contributing to the
policy and planning work of that Department.
If the option of having a Department of Public Health Services was to be considered further, the
internal arrangements could be researched to develop the best structure for these. A simple example
has been set out below. It would require clarity on the roles of the MOH and the NIPH. In addition to
its usual services, there is an option to fund the NIPH to provide specified services to the MOH and
an agreement used to clarify the expectations. The public health services in the diagram below are
MOH level services, but they could also cover responsibility for the service agreements with the
NIPH for various public health services.
The monitoring by the MOH envisaged in the diagram below is not the detailed health status
surveillance and other monitoring that NIPH does, rather it would involve routine monitoring of the
26

main providers of services funded by the MOH and monitoring health status for the nation using
NIPH and other data.
A structure for the public health function has been suggested by staff, but it uses current jobs and
adds specific jobs to these (such as a position to deal with drug misuse), resulting in a large degree
of segmentation into narrow roles. The Department could be designed to have generic jobs in policy,
services and monitoring where staff can be flexible in what they undertake, making it possible for this
department to be more responsive to emerging priorities. See section X for a discussion of mental
health services.
The policy and planning box above could have a third area added to it: funding/purchasing public
health services. This could reflect the role of the MOH in forming an agreement with the NIPH on
what services it will provide for the funding it will receive under the Budget. Another option is for the
Health Care Commissioning Agency to undertake the purchasing role. Further analysis would be
required to form a view on the most suitable option.
SECTION IX: Primary health services
Current situation and issues
Department of Public Health
Services
Policy and planning unit Public health promotion
services unit
The Office for Primary Health Care is located in the Department of Health Services under the
Division of Health Care. The Office of Primary Health Care has an acting position and the head of
the Division of Health Care position is vacant. The Office for Primary Health Care has one position
and has two centres reporting to it. The Centre for Family Medicine has seven staff and deals mainly
with education for family medicine doctors. The Centre for Nursing Development has six staff (three
are to move to the Department of Strategic Management) and deals mainly with education for
nurses.
The issues raised by staff and others include the following:
Lack of policy and planning
Lack of active policy and planning for primary health care. The strategy is dated 2004 and
needs revision.
Problems in municipal health authority management
Municipal health authorities are not supporting primary health care providers as fully as they
should. For example if the centrally supplied drugs run out, municipalities do not cover the
gap. Procurement units in municipalities are disconnected from primary health care
providers and this is causing problems with supply of drugs.
Many municipal health authorities lack expertise so implementation suffers. There is a lack
of a management culture in small municipalities and sometimes a lack of basic facilities like
a telephone and computer.
27
Monitoring unit

Lack of information
Lack of primary health care information available to the MOH.
There is a pilot to develop performance based payments in primary health care for 5% of the
grants and while efforts are being made to do the ground work now through the Health Care
Commissioning Agency, this is challenging given the problems with the lack of data and
quality issues with population data, registration data, health status data and patient activity
data. Rolling out this pilot to all regions before solving core information and other problems
was noted as a concern. A stronger policy and planning function in primary health in the
MOH may have been able to better prepare the sector for the movement to performance
based payment
Fragmented monitoring
With regard to monitoring, the Office of Primary Health Care is not expected to have a role in
the performance based payments to municipalities. Municipalities are expected to send data
to the NIPH; the Health Inspectorate will access this and monitor; the Health Care
Commissioning Agency will do ad hoc monitoring; and the Office for Quality of Health
Services will also be involved. Municipalities will do some self assessment of performance
and monitoring. This is a very fragmented approach to monitoring.
Problems in funding approach
There are issues with the approach to funding primary health care as set out in the World
Bank report on financing noted below, indicating the need for policy work at the MOH level. 6
Options
The decentralisation of primary health care does not mean that the MOH should not have a strong
policy, planning and monitoring role. The options for strengthening this include considering creating
a Department of Primary Health with these functions.
6 World Bank, “Kosovo Health Financing Reform Study”, 2008, page 105.
28

Policy and planning
unit
A variation on this option is to add a funding/purchasing function which could involve making an
agreement with each municipality on the minimum level of access to services and quality that each
municipality will provide for the budget funding it receives. This could include requirements relating
to the performance based agreements that are developing. Another option is for the Health Care
Commissioning Agency to undertake the purchasing/funding role. Further analysis would be required
to form a view on the most suitable option.
SECTION X: Mental health services
Current situation and issues
There is an Office of Mental Health with a part time staff member under the Division of Public Health
in the Department of Health Services. The MOH has a budget line for 227 staff located in mental
health centres in nine regional centres, eight integrated houses for 10 patients each providing 24
hour care, and child and adolescent services co-located with the family medicine centres. This
reflects the administrative instruction 01/2005 which sets out the structure for the mental health
services. These instructions require a director for each of the mental health centres who reports to
the Head of the Office of Mental Health in the MOH. Local authorities have a role in monitoring and
coordinating services. There is also a mental health service provided through the Kosovo University
Clinical Hospital and some inpatient services in a few regional hospitals. There is a Mental Health
Board to ensure integration of services and continuity of care.
Some issues noted by staff included:
Options
Department of Primary Health
There is a lack of clarity in roles and responsibilities for the entities in the administrative
instruction and in practice, particularly in relation to who is accountable for policy,
governance and oversight of the entities, and monitoring. MOH has role issues in being the
policy maker, funder and monitor, while also being the provider of services.
There is a need to retrain staff from the institutional approach to delivering services to a
community based approach.
As may be expected with only a half time position in the MOH, there is not a strong policy,
planning and monitoring role. If there were more resources in the MOH, the Head of the
Office noted that he would improve monitoring and conduct surveys on mental health issues
such as suicide levels and the quality of services. Policy work would be undertaken on how
to spread services into rural areas and how to make underserviced areas more functional.
There are many mental health issues in Kosovo related to the war and a lack of capacity to
provide a sufficient level of services. There are large budget issues including the end of
donor funding for many staff positions and an inability to fully staff the regional centres.
If the mental health services are going to be developed and if the MOH is going to take a strong
policy and monitoring role, then consideration could be given to lifting the profile of these services
within the MOH and resourcing this function.
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Monitoring unit

At this stage we do not have enough information on the intentions for the MOH’s role in the future. If
it is going to be increased, then there is an option to lift mental health to a level of reporting to the PS
and set it up as a department, like other service areas with policy, planning and monitoring functions.
The Department could have a policy and planning unit which could also be responsible for the
agreement with mental health centres and other providers on the services they will provide for the
funding they receive from the central government. At the early stages the agreements may be very
general, but as information improved, the agreements could specify minimum levels of service
access and quality. This reflects some elements of a purchaser/provider split, but the centres are still
directly accountable administratively to the MOH and not separate legal and budget entities.
Policy and planning
unit
Department of Mental Health
Mental health services unit
Another option is for the Health Care Commissioning Agency to undertake the purchasing/funding
role. Further analysis would be required to form a view on the most suitable option.
If the role of the MOH is going to remain small in the medium term, then mental health could be a
unit in one of the other service department, such as the Primary Health Department, given that the
bulk of this service is at the primary care level. Its current location with public health appears
unusual as its main synergies would be with primary care services and to a lesser extent, with the
secondary and tertiary services.
SECTION XI: Health information, internal audit, licensing, inspection, special offices and
committees
Health information current situation, issues and options
Many reports have documented issues with health information and many people we interviewed
mentioned health information as a critical issue. It is one of the five priorities of the MOH in its draft
Strategic Plan and in the MTEF, although it does not appear to be well resourced in the proposed
medium term budget (see appendix D). The WHO consultant helping the MOH with the Health
Information Strategy is recommending that a formal national “HIS Assessment” be prepared as a
step towards a national HIS strategy that can be implemented. 7 Stakeholders are being involved in
this work which includes identifying the data needed for management, disease control and response,
strategic decision-making and policy development. This will involve determining what data should be
collected, at which levels of the system and by whom.
7 Rudi Samoszynski, International Consultant, advice from his communications with stakeholders 15 March 2009.
30
Monitoring unit

Health information is part of the Department of Strategic Management but is not resourced. The
NIPH collects patient information data from hospitals using a mix of transmission methods including
paper based records. We have been advised that some records are not up to date and incomplete.
We have not made recommendations on health information given that there is an in-depth study of
this underway.
Internal audit current situation, issues and options
The Office of Internal Audit currently reports to the PS according to the organisation chart, but it also
reports to the Minister. It has a director and two staff members. The Director advised that based on
the law, internal audit should be reporting to an Internal Audit Committee made up of ministerial
appointees, including some from outside the MOH. The Office of Internal Audit sends its reports to
the MOF’s internal auditor.
The issues raised included: the need to establish the Internal Audit Committee; lack of clear
definition over to whom the internal audit function in the University Clinical Hospital reports, issues
with lack of role clarity between the finance, pharmacy and procurement departments; no licensing of
auditors although this is planned; and low salaries making it hard to attract and retain staff.
The forthcoming FRIDOM review of public financial management arrangements notes the need to
set up the internal audit committees in all ministries. If this was done for the MOH it would be more
in line with good practice and would reduce the overload of reports on the PS.
Standards, licensing and registration functions: current situation, issues and options
Standard setting, licensing and registration functions are carried out for various activities,
professionals and products as summarised below. It involves five different entities.
Standard setting and licensing health facilities
The Division of Private Practice in the Department of Health Services has a director and two staff
members involved in private practice regulation, licensing, monitoring, and accreditation, for around
1000 private practices including hospitals, private polyclinics, and laboratories. Their work mainly
focuses on licensing, monitoring of institutions, developing the law, and creating a database. They
are not involved in enforcement. Standards are based on an administrative instruction issued in 2007
for day-care hospitals, ambulatory services and inpatient hospitals (special and general), and
polyclinics.
The Commission for Licenses is a ministerial committee appointed to assess technical and
professional activities that run across the MOH. It contributes to the licensing process by
considering problems with unlicensed hospitals including assessing facilities, and the adequacy of
staffing, space, equipment and other matters. This would appear to be a core MOH function that
could be carried out by staff, but the commission may be a way to solve staffing shortages and other
issues.
The Office for Quality of Health Services in the Department of Strategic Management mainly works
on health quality standards and the strategy for improving the quality of health services for the
private and public health facilities. The scope of the work is supposed to include developing
guidelines, protocols, monitoring, evaluation, working with coordinators for quality for primary,
secondary and tertiary care and the main family medicine centres and while this is done in part, it is
constrained by the size of this office (1 person).
Licensing medical products including drugs
The Kosovo Medicines Agency licences pharmacies, licenses drug warehouses, issues import
licenses for medical products, lists authorised medical products, tests drugs, and licenses
pharmacies.
31

Registration and licensing of health professionals
The Office for Registration and Licensing under the Department of Strategic Management has one
administration staff and a part time head of the Registration and Licensing Board managing the
registration and licensing of health professionals.
Options
There may be opportunities to rationalise and amalgamate some of the standard setting, registration
and licensing functions. If not in terms of combining these, then possibly in terms of the back office
support for their data bases and document management. See the comments later on the boards.
Further work needs to be undertaken before formulating firm suggestions.
Inspection services current situation, issues and options
Pharmacy Inspectorate
The Pharmacy Inspectorate is a recently established inspectorate reporting to the Minister. It was
formerly part of the Kosovo Medicines Agency. It has four inspectors, a director and an assistant. Its
responsibilities including inspecting licensed facilities and professional staff, checking warehouse
licenses, examining import documents, inspecting expiry dates on drugs, and labelling.
As noted earlier, it is unclear why the Pharmacy Inspectorate was recently separated from the
Kosovo Medicines Agency and why it reports directly to the Minister and without further information
on what problems these changes are addressing, we are not in a position to comment.
Health Inspectorate
The Health Inspectorate is organised into three sections: one for inspection; one for implementing
law; and one for information. Staff members work across these areas as they are small in number
(five inspectors and one director). The Inspectorate inspects public and private health institutions
(around 1400 of these but note that this number differs from the number quoted by the licensing
staff). The scope of the Health Inspectorate’s roles under the law is very large. It includes
monitoring health regulations, providing technical and professional advice, promoting best medical
practices and supporting institutions to interpret legal norms and sub legal acts as well as other roles
(see Appendix D).
The Inspectorate is currently working in line with five priorities: gynaecology and obstetrics as it is in
MOH strategy and is related to improving areas related to the millennium development goals
(MDGS); hospital infections; dentistry; the referral system from primary to secondary services and
from secondary to tertiary services; and medical equipment.
This Inspectorate reports directly to the Minister. As noted with regard to the Pharmacy
Inspectorate, we would need further information on what problems this reporting line is solving
before commenting further on this.
With regard to its roles, there is an option for the service departments (secondary and tertiary,
primary health, mental health and public health) to undertake routine monitoring roles including
assessing performance reports from service providers that the MOH has performance contracts or
MOUs with. The Health Inspectorate’s role could be defined more tightly as an inspection role with
access to the necessary powers to do this, rather than the very broad monitoring role it currently has.
Sanitary Inspectorate
Under the recently passed law on food safety, the Sanitary Inspectorate is expected to move to a
new Food Safety Agency reporting to the Office of the Prime Minister.
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Issues raised by staff and others
Options
The new arrangements for the Pharmacy Inspectorate are causing some problems such as
having to report through the Minister to the Kosovo Medicines Agency about regional
inspections and some practical coordination problems.
There are problems with roles and responsibilities and information flows related to the work
for the Health Inspectorate. The Department of Health Services is not routinely provided
with the results of inspections and information can be difficult to access, making it difficult for
this department to fulfil its functions, including the functions related to the Office for Hospital
Institutions (vacant position).
Once the Sanitary Inspectorate moves to the Food Safety Agency, there are remaining
functions, such as inspecting hospitals and educational institutions, which needs to be
assessed in terms of future options.
If the option of having service areas like public health; primary health; secondary and tertiary
services and mental health and pharmaceuticals is accepted, then these departments could
undertake routine monitoring of performance of providers such as quarterly performance reports
against performance expectations in service agreements and the statement of service performance
(see Appendix G). The service auditing and inspection function (inspectorates) could focus more
narrowly on priority issues.
The problems associated with the Pharmacy Inspectorate’s separation could be addressed in a
number of ways ranging from information sharing protocols to structural solutions. Further work could
be done on possible solutions.
With regard to the option to combine inspectorates for pharmacy, health and the sanitary
inspectorate functions remaining after the other functions move to the new food safety agency, as
noted earlier, this would require careful analysis given the gravity of the issues these inspectorates
are dealing with and the reasons the government has for constituting them in their current forms.
Special offices and departments
There are several special offices, often set up under administrative instructions from the PMO such
as:
Office for Gender, Human Rights and Equality
Office for European Integration
Office for Donor Coordination and Capital Investment
Office or Department of Legal Services
Office or Department of Information
Some of the special interest offices appear to be staffed by well qualified people who would be
capable of contributing to policy and planning in much wider areas than the areas they are assigned
to under these offices. There appears to be a large number of special interest positions, for example
the legal office is supposed to have two positions relating to EU integration and law. This appears to
be an overload of legal positions in a ministry that is lacking key health policy and planning positions.
As noted in the section on Strategic Management, consideration should be given to how to free
these staff members up to permit them to work more broadly, including creating a more generic
policy and planning function under the Department of Strategic Management where the gender,
human rights, equality, donor coordination and EU work could be undertaken along with other core
work to facilitate the ministry-wide policy, planning and monitoring processes.
Training issues and options
Staff and others have noted that there is a great need for competent managers in the health sector,
particularly given the increasing management demands being placed on directors of providers to
manage resources more effectively. Problems with management positions being filled by doctors
lacking management skills was noted as an issue, including in the hospitals and family medicine
centres. There are also increasing demands on directors in the MOH to meet a very challenging set
33

of issues within constrained resources. The senior officials in the MOH mainly come from medical
backgrounds and there is a lack of senior level staff from other relevant backgrounds that could
contribute to policy, planning and other areas of work, such as economics, finance, general
management, social science and other areas of expertise.
A DIFD project supported management training in 2005-2007 through the UK National School of
Government for around 100 managers, however apparently not many of these trainees hold
management positions in the health sector. Also few of the 100 or so students who entered the
Masters in Health Management at Prishtina University have management positions in the health
sector. The barriers to this need to be considered.
The World Bank has provided management training in the form of short courses which have been
commented on positively by the staff who attended. The World Bank offered to provide resources for
further management training in the form of short courses but this offer was not taken up.
There may be opportunities for the MOH to make use of the services of the Kosovo Institute of Public
Administration under the Ministry of Public Services. In addition to management training, there are
many other skills that staff could benefit from being trained in, including the skills required for policy
advice, purchasing skills, and monitoring. Developing the human resources through training and
other approaches needs to be a key part of the Institutional Development Plan that follows this
functional review.
Committees and working groups issues and options
There are some formal committees including:
Board for Registration and Licensing
Board for Professional Continual Education
Central Board of Residency
Professional Ethical Board
Commission for Treatment Overseas (2)
Professional Mental Health Services Commission
This review does not cover the roles and functions of these committees in any detail as this could not
be covered within the scope of the review, however some preliminary observations have been made.
There may be opportunities to streamline the boards. The Board for Registration and Licensing has
several sub-committees dealing with various types of medical professionals and under these
subcommittees there are around 50 committees for each sub-speciality. This appears to be a large
apparatus for the registration function.
The Board for Registration and Licensing noted issues with a lack of activity and information on
continuing education, making re-registration of health officials difficult. Previous registrations are
being rolled over.
Consideration could be given to whether there are opportunities to improve the performance of the
boards and use resources better by combining the roles of some boards, such as continuing
education, registration and licensing and ethics boards.
Some issues have been raised about a lack of coordination with MOH departments in some areas.
The Board for Registration and Licensing considers that it does not get sufficient access to
monitoring reports from various inspectorates including the one covering pharmacies. As noted
earlier, there are several ways to address this including information sharing protocols and job
performance expectations that specifically require cooperative sharing of information in a timely way.
There may be an emerging problem with paying members of these commissions due to a recent
instruction from the PMO not to pay commissions or working groups. If this instruction applies to the
boards listed above, then the MOH will have problems as some of these are performing core
functions.
34

The roles and functions of the boards could be considered as part of the Institutional Development
Plan and the issue with the payment of these entities addressed.
SECTION XII: Examples from other countries
Care needs to be taken in using other countries’ examples of arrangements for their MOH as a guide
as the structure and functions of ministries reflect the unique constitution, government arrangements,
culture and history of each country. While there is much to be learned from other countries, the
Kosovo Government needs to interpret examples in the context of what will work well in this country.
Many OECD countries have advanced purchaser/provider splits and many health providers,
sometimes including health insurance arrangements. Some recent EU entrants are still carrying the
legacies of the Soviet health structures that are not functioning well and should not be replicated in
Kosovo. With these reservations in mind about considering country examples in context, some
general observations are set out in this section. Compared to some OECD countries, the unusual
features of the structure of the Kosovo MOH include:
The large number of reporting positions to the PS
The large number of corporate services and the low number of health policy, planning and
monitoring services in the upper levels of the MOH structure
The role of the MOH as a service provider with staff and other costs of many health service
providers under its direct control, including appearing in the MOH’s budget detailed to the
level of economic classifications
The fragmented nature of some of the MOH’s functions with many offices, divisions, centres,
and inspectorates and many specialised positions with few generic policy, planning and
monitoring positions
The large number of doctors holding management positions and the lack of other skills and
background in management positions
Compared to some recent entrants to the EU and countries in this region, the Kosovo MOH is
unusual in some of the areas mentioned above. For example:
They commonly have far fewer direct reports to the equivalent PS position when there is
one.
They commonly have more than one health service as a direct report to the PS, for example
Lithuania has a public health division and a personal health division with high level reporting
positions; Slovenia has a directorate for public health and a directorate for health protection
reporting at a high level; Latvia has public health, heath care and pharmacy reporting at a
high level. The Albanian MOH has concentrated its corporate services and has more health
service areas at the upper levels of the structure (primary health; hospitals;
pharmaceuticals).
Many countries have created semi-autonomous formal structure for the hospitals as
described below. Kosovo has made steps in this direction, but has not established some of
the essential elements to support a semi-autonomous structure as discussed earlier. 8
The table below sets out the organisation of hospitals in some recent EU entrant countries.
8 World Bank, “Kosovo Health Financing Reform Study,” 2008, op cit., page 5.
35

Many countries have some form a government purchaser/funder or health insurance arrangements,
Kosovo is a long way from establishing the basic building blocks for health insurance as discussed
earlier, but can take some practical steps to improve arrangements such as a purchaser/provider
split within the government funded system, as discussed earlier. The box below describes the health
insurance arrangements in some countries. 9
Box 3.1 - Legal Status of Health Insurance in European Countries
Germany has statutory health funds and private health insurance companies that also act as
purchasers of health care. Health funds are corporatist, nongovernmental organizations, operating
on a not-for-profit basis. German law requires professional management of funds.
France has a main health insurance scheme (régime général) with a network of 16 regional offices
that are not for profit organizations with their own boards and a degree of managerial autonomy.
They are supervised by the national fund organization.
Lithuania has a single statutory HIF that is a governmental budgetary institution largely financed by
general taxation.
The Estonia Health Insurance Fund (EHIF) is an autonomous public organization Hungarv’s
National Health Insurance Fund Administration (NHIFA) is a not for profit organization closely
supervised by the MOH In February 2008 the Parliament approved the creation of 22 insurance
companies with 49 percent of stakes owned by private investors.
Health insurers in the Netherlands are private not for profit organizations In Switzerland, insurers
can be incorporated under public oi private law and take various legal forms including associations
not for profit stock company and mutuality.
The Czech Republic has nine HIFs and one national fund (General Fund) Insurers are public not for
profit organizations that have a degree of autonomy from the government.
Slovakia has two public health insurers and four private for profit health insurance companies that
until recently were allowed to pay dividends to their shareholders.
Source a Schweizerisches Bundes esetz fuer die Krankenversischerung 1994 Stand 2005 Art 11 12
9 Ibid., page 23.
36

Some countries have combined health and social functions in one ministry, for example Finland and
many states in Australia. Some countries combine health and disability functions, but not other
social functions. At this stage the option to enlarge the scope of the MOH has not been considered
given the large challenges the MOH faces; weaknesses in key policy, planning and monitoring areas;
the legacy of having had many changes in ministers and PSs; and the considerable capacity
problems. Adding to this ministry’s functions or transporting this ministry’s functions into another
ministry, is likely to create an agenda of issues that would overload any PS and senior management
team.
SECTION XIII: New structure and current structure
The process to develop a new structure reflecting the functions of the MOH needs to be determined.
The Working Group on the Structure has not been able to resolve differences and is not a suitable
forum for this work, given that it is comprised of directors who will be affected by the restructuring. An
alternative process could be to have strong leadership supported by the ministers. A small team
could work with the group to develop and test the proposals before making recommendations to the
PS and ministers. The team could be made up of people skilled in this work with many coming from
outside the MOH. The process should involve gathering the necessary information. This draft report
could be a partial contribution to that work, but it needs to be thoroughly tested. The option that is
most strongly supported by the analysis should be fully costed and refined to make sure it is
financially realistic and sustainable in the medium term.
The main changes suggested for further testing have been set out in the executive summary. Table
4 maps these changes to the current structure. While this table presents one option, note that
variations on this option have been discussed in the report for many areas. Further work should test
the variations in this report and other variations that emerge from the process outlined above. The
mapping table below is not intended to suggest that staff members from the current structure are
automatically transferred to the new structure. The restructuring should involve new job descriptions
with suitable person specifications for all positions and a process for staff selection that might result
in jobs for existing staff, or might involve recruiting new people with the required skills.
37

Table 4 Suggested structure mapped to old structure
New structure
Department of Secondary and Tertiary Services:
Policy and planning unit
Monitoring unit
(option to have service unit given that hospitals report to
MOH or to enlarge the purchasing/funding function relating
to them either in this department or the Health Care
Commissioning Agency)
Department of Primary Health
Policy and planning unit
Monitoring unit
(option for purchasing/funding as noted above if progress is
made on specifying services to be provided for the grants
made to local government)
Department of Public Health
Policy and planning unit
Monitoring unit
(option to have service unit if provide health promotion
services; also option for purchasing/funding as noted
above)
Department of Mental Health
Policy and planning unit
Monitoring unit
Mental health services (MOH currently has
responsibility for staff and resources in the
community MH services)
(option to have this as a division in Department of Primary
Health)
Department of Pharmaceuticals
Policy and planning unit
Monitoring unit (depends on decisions about future
of pharmacy inspectorate)
Pharmaceutical supply unit
Department of Corporate Services
Administration and personnel unit
Budget and finance unit
Procurement unit
Communications unit
Legal unit
Department of strategic management
Ministry wide policy, planning and monitoring unit
Health information unit
Health sector HR regulation and development unit
Productivity and quality improvement unit
HCCA
[option to leave HCCA as a separate agency]
Other:
Office of Internal Audit reporting to Internal Audit
Committee
Executive assistants to PS and other senior staff
reporting directly to the director or other manager
they are assisting
[Could have Health Care Commissioning Agency reporting
to PS or as part of Department of Strategic Management]
38
Current structure
Part of the Department of Health Services including
part of the Division of Health Services, in particular the
Office for Hospital Institutions. The services of the
Office for Treatment Abroad could be included in the
services of the Department of Secondary and Tertiary
Services
Part of the Department of Health Services including
the Office for Primary Health Care under the Division
of Health Services which has the two training centres
(Centre for Family Medicine and Centre for Nursing
Education).
Part of the Department of Public Health in particular
the Office for HIV AIDs and the particular programs for
TB etc.
Part of the Department of Public Health in particular
the office for Mental Health
All divisions in the Department of Pharmacy. The
relationship of the Kosovo Medicines Agency and the
Pharmacy Inspectorate need to be considered in
further work.
Legal Department, Information Officer, Certifying
Officer, all divisions of Department of Administration,
all divisions of Department of Budget and Finance, all
offices of Department of Procurement. May include
Capital Investments position in budget and finance unit
Department of Strategic Management including the
Division of HR, Office for Quality of Health Services,
Division of HMIS, Donor Co-ordination, Office for
European Integration, Office for Health Policy, Office
for Equality, Human Rights and Gender. Possibly also
includes the donor coordination office. Location of
capital investments position needs further work.
Includes HCCA.
Office of Internal Audit
Executive assistants
[Could have separate Health Care Commissioning
Agency]

Appendices Vertical Functional Review Kosovo Ministry of Health
Appendix A: Abbreviations
CFO Chief Financial Officer
DFID Department of International Development
EC Economic Commission for Europe
EU European Union
FRIDOM Functional Review and Institutional Design of Ministries
HCCA Health Care Commissioning Agency
HIMS Health Information Management Services
HIS Health Information System
HR Human Resources
KMA Kosovo Medicines Agency
MOF Ministry of Finance and Economy
MOH Ministry of Health
MTEF Medium Term Expenditure Framework
NIPH National Institute of Public Health
PMO Prime Minister‟s Office
PS Permanent Secretary
SWAp Sector Wide Approach
UNMIK United Nations Interim Administration Mission in Kosovo
WB World Bank
WHO World Health Organisation
1

Appendix B: Review Approach and Methodology
The review has involved three phases.
Phase I: Designing the review and developing the Design Note.
Phase II: Collecting and analysing data, including reviewing reports, budgets, administrative
instructions, plans, interviewing staff from the MOH, agencies, donors and others.
Phase III: Setting out issues and options for MOH feedback in March and April; formulating
recommendations following this feedback and providing a report in May 2009; discussions with the
Minister and others and refining the report; final version produced June 2009.
List of people consulted:
Ministers and advisers
Minister of Health: Professor Dr Alush Gashi
Deputy Minister of Health: Dr. Mybera Mustafa
Ministerial advisers: Flakron Sylejmani and Arianit Jakupi
Ministry of Health
Afrim Sylejmani, Acting Permanent Secretary
Haxhi Kamberi- Acting Permanent Secretary
Qerkin Bytyqui, Acting Director of Budget and Finance
Ukshin Vllasa, Head of Budget Division
Arberesha Turjaka, Donor Coordinator from Office of Donor Coordination and Capital Investments
Din Kastrati, Director, Department of Administration
Curr Gjocaj, Director Department of Health Services
Osman Veliu, Acting Head of Division of Private Practice
Lutfi Mulaku, Director Department of Pharmacy
Sanie Kicmari, Coordinator for Human Rights in the Office for Equality, Human Rights and Gender
Mentor Sadiku, Office for European Integration
Diana Pacolli, Office for European Integration
Xhevat Ukag, Director of the Department of Strategic Management
Asim Qardarbasha, Director, Health Care Commissioning Agency
Ismet Hyseni, Director, Department of Procurement
Iliriana Zymberaj, Director of Sanitary Inspectorate
Zef Komoni, Director of Health Inspectorate
Skender Berisha, Adviser to the Minister
Isa Latifa, Director Internal Audit
Fatime Aliu, Director Legal Office
Gani Shabani, Head of Office for Mental Health
Mentor Bislimi, Acting Head Division of Personnel
Rifat Muriqi, Acting Head, Pharmacy Inspectorate
2

Valdet Hashani, Primary Health Care Coordinator
Pashk Buzhala, Head Public Health Division
Agron Kasumi, Office of Quality for Health Services
Agencies and boards
Naser Ramadani, Director National Institute of Public Health
Arben Grazhdani, Deputy Director for Health, Kosovo University Clinical Hospital
Zehadin Gashi, CEO, Kosovo Medicines Agency
Mr Hysni Bajrami, Head of the Board for Registration and Licensing
Myzafer Kalanderi, Director, Prizren Hospital
Ismet Lecaj, Director, Telemedicine Centre
International organisations
Samir Selimi, European Community
Skender Syla, Head of WHO Office in Kosovo
Flora Kelmendi, Human Development Sector, WB
Lulzim Cela, UNICEF
Others
Naim Jerliu, Adviser to President and Working Group on Health Law
Chair of the Working Group on the Health Strategy, Professor Merita Berisha
3

Appendix C: Legal Framework
Legal framework
The legal framework contains the roles, responsibilities and accountabilities for the various institutions
operating in the health sector. It represents a health system where policy and provision are integrated
and where the MOH has a very broad role. Under the law the MOH has key roles in policy, regulation,
oversight of providers including the hospitals and other health institutions, licensing, monitoring and
control. Municipalties are responsible for primary care and in some limited cases, secondary care
services.
There are insitutions created under the law with various status, reporting lines and decision rights, with
most of them being directly accountable to the MOH, including three reporting directly to the Minister.
Their abilities to manage resources are limited, including many aspects of managing human resources
and other inputs. The staff in the health sector are civil servants and subject to the provisions applying
to the civil service, which is unusual and brings a large number of personnel into the core civil service
(5,878 hospital employees and 227 mental health service employees, as well as other health sector
employees in the 2009 budget).
There are changes being proposed to the Civil Service Law and a Law on Salaries is being prepared.
These proposed laws could have far reaching impacts on the the health sector including:
Removing health sector workers from the designation of civil servants, while MOH staff would
still be civil servants. It is not clear what conditions will apply to the new class of public sector
workers and the impact on the ability to attract and retain staff, remove staff and finance the
payroll.
Creating two categories of positions: “career civil servant positions – that exercise functions on
a permanent basis, for the achievement of general institutional objectives; and non-career civil
servant positions – that exercise functions of a limited duration up to two years, for the
implementation of specific projects, replacement of permanent civil servants and in cases of
work overload.” This impact on the health sector needs to be assessed.
Defining four functional categories of employees: 1. Civil servants, senior-level management;
2. Civil servants, management level; 3. Civil servants, the implementing and professional
level; 4. Civil servants, the administrative level. A consequence of this will be to continue the
incentives for doctors to be managers and to create difficulties in adequately rewarding
technicians and professionals. The draft law provides for special categories to be treated
differently. The impact of this law change on the health sector needs to be assessed.
Creating 15 grades which are combined with the functional categories to derive the pay level.
There are provisions creating automatic entitlements to pay rises based on satisfactory
performance reviews. The latter point is a concern as it means that the MOH cannot control
its wage bill as there will be automatic increases flowing through each year. These impacts
need to be assessed.
A Health Insurance Law was formulated some years ago and is still in the process of development, but
many of the basic building blocks for health insurance are absent, such as the purchaser/provider split.
Other changes are underway including setting up a new agency for food safety reporting to the Prime
Minister under a law that has been recently passed. This would place the services of the Sanitary
Inspectorate currently reporting to the Permanent Secretary (PS) of the MOH, under the Office of the
Prime Minister.
The possibility of developing a general law covering agencies that provides a sound accountability and
governance framework is discussed in this report as a possible tool to assist with a purchaser/provider
4

split proposed in the World Bank report on finances in the health sector. 1 This would be a longer term
solution as there is no work evident on the rpeparation of such as law.
The key laws are summarised below.
Main laws:
1. Health Law 2004/4
The main law regulating the health sector is the Health Law 2004 which provides a policy and
legal framework for the health system by setting out key policies and defining roles,
responsibilities, and powers. It applies to all public and private health service providers. The
policy platform in the law includes principles for the health services; 2 the mix of financing sources
(12, 57); 3 the groups that receive free health care (22); the services that will be provided (22, 23,
27); the arrangements of services in three levels: primary, secondary and tertiary; and defines key
goals (25).
The law refers to compulsory and voluntary health insurance and a Health Insurance Fund (7),
however compulsory insurance and the Fund is not yet operating, with a Health Insurance Law
being reconsidered.
The roles of the MOH are defined (17) and include: policy, law drafting, coordiantion, standards,
supervision, monitoring, infrastructure, licensing, health promotion, education, and food safety
(with Ministry of Agriculture). The law is not specific about the role of the MOH in relation to the
institutions that it oversees, such as the secondary and tertiary hopsitals, but provides for sublegal
acts to cover this (30,31). Some institutions are specially mentioned in the law including: Kosovo
University Clinical Centre (75); General Health Council (100); Health Inspectorate (102); and
Sanitary Inspectorate (100).
The Health Law establishes that municipalities are responsible for primary health care, defines the
range of services (28) and the method of delivery through family medicine teams (29). An
amendment to the Health Law (03/L 124) provides three municipalities with some autonomy in
secondary care including: licensing facilities, hiring, salaries, and training in accordance with
guidelines and law. The MOH provides the procedures for the mid term, strategic and operational
plans to these municipalities and still has power to set licensing and accreditation requirements.
The Health Law provides a policy and legal framework for the health system by setting out key
policies and defining roles, reposinsibilities, and powers. It applies to all health service providers,
public and private. The Health Law 2004 is under review with regard to the requirements for public
and private sector providers. The MOH is considering if there are ways to deal with some
performance issues in the public sector by changing provisions of this law.
The policy platform in the law includes principles for the health services; 4 the mix of financing
sources (12, 57); the groups that receive free health care (22); the services that will be provided
(22, 23, 27); the arrangements of services in three levels: primary, secondary and tertiary; and
defines key goals (25) as noted below.
a) Raise of the average life-expectancy;
b) Decrease of the maternal and infant mortality rate
c) Decrease of the general and specific morbidity;
d) Decrease of the rate of traumas;
e) Decrease of the absenteeism due to the illnesses or injuries
1 World Bank, “Kosovo Health Financing Reform Study,” 2008.
2 Equity, quality, honesty/responsibility, inclusiveness and non-discrimination, sustainable financing, financing
cost/effectiveness, and co-financing (12).
3 Kosovo budget, municipal budgets, contributions of citizens and employers to the Health Insurance Fund and other
insurance agencies, and direct payment.
4 Equity, quality, honesty/responsibility, inclusiveness and non-discrimination, sustainable financing, financing
cost/effectiveness, and co-financing (12).
5

The law refers to compulsory and voluntary health insurance and a Health Insurance Fund (7),
however compulsory insurance and the Fund is not yet operating, with a Health Insurance Law
pending in Parliament.
The roles of the MOH are defined in the following section.
17.1. The Ministry of Health develops and executes the health care policies through creating the
systemic conditions as follows:
a) Develop policies and implement legislation for a non-discriminatory and
accountable health care system;
b) Coordinate activities in the health sector in order to promote coherent
development of health policies;
c) Set up norms and standards and issue guidelines for the health sector with due
regard to relevant international standards;
d) Supervise adherence to such standards, including where appropriate,
conducting inspections and other services;
e) Monitor the health situation and implement appropriate measures to prevent,
identify and control health care problems;
f) Manage the use and development of the infrastructure related to health care
which falls under the responsibility of the Ministry;
g) Promote community participation and the development of citizens initiatives
and activities related to health;
h) Participate in the development and implementation of public information
campaigns and other promotional schemes to increase public awareness and
compliance with health standards;
i) Encouraging development of health education in order to raise knowledge and
competencies in the health field;
j) Supervise, in coordination with the competent Ministries managing
agriculture, forestry and rural development, services for food quality control
and agricultural inputs in order to protect consumers.
The roles and responsibilities of the Ministry of Health are expanded on in other provisions in
relation to supervision (10; 18); primary health care (65, 67, 68); health information standards;
licensing for facilities (71 et seq); regulating health specialisations (92). The law is not specific
about the role of the MOH in relation to the institutions that it oversees, such as the secondary and
tertiary hopsitals but provides for sublegal acts to cover this (30,31. Some institutions are
specially mentioned in the law including: Kosovo University Clinicl Centre (75); General Health
Council (100); Health Inspectorate (102); Sanitary Inspectorate (100). Public health care can also
be covered by sublegal acts (35).
The Health Law establishes that municipalities are responsible for primary health care, defines the
range of services (28) and method of delivery through family medicine teams (29). An amendment
to the Health Law (03/L 124) provides three municipalities with some autonomy in secondary care
including: licensing facilities, hiring, salaries, training in accordance with guidelines and law. The
MOH provides the procedures for the mid term, strategic and operational plans to these
municipalities and still has power to set licensing and accreditation requirements.
A set of plans are prescribed by the Health Law with requirements for the approval of the Kosovo
Assembly for strategic plans; government approval for mid-term plans and operational plans; and
municipal govenrment approval for primary care operations plans (56). Health care insitutions are
required to prepare annual plans.
6

56.2. Implementation of the health care development policy shall be provided through:
a) Operational plans;
b) Mid-term plans; and
c) Strategic plans.
56.3. Operational objectives are defined in operational plan of necessary measures
and activities related to implementation of the mid-term and strategic plan ascertains
including:
a) Health care;
b) Institutional organization;
c) Human resources;
d) Health care financing.
56.4. Mid-term objectives are deined through the health care mid-term plan for Eve (5) years
that include:
a) Structure of the health care system;
b) Organization and management;
c) Human resources;
d) Health care financing.
56.5. Strategic objectives are defined by the strategic plan of health care for 10 (ten) years
that of include:
a) Assessment health care material needs and capabilities;
b) Network Plan of public Health Care Institutions;
c) Plan of education and continual professional development of health care workers;
d) Funds for health care expenditures;
e) Funds for capital investments.
2. Sanitary Inspectorate Law 2003/22 and 2003/39
The law establishes the MOH as the supervising authority for the Sanitary Inspectorate which
also has a relationship with minicipalities (2). The functions of the Sanitary Inpectorate include
health-related border control services, food safety, serviecs for epidemics and natural
disasters, ensuring the implementation of relevant laws, inspection of specified insitutions and
other services (4, 5, et seq).
3. Law for Medical Products and Medical Equipment 2003/26 and 2004/23
MOH issues import licenses for medical products (5); lists authorised medical products (7);
issues guidelines for labs (8); makes pharmceutical policies relating to safety etc in
association with the Kosovo Medicines Agnecy (29); and licenses facilities such as
pharmacies.
4. Law on the Rights and Responsibilities of Citizens 2004/38 and 2004/47
Sets out citizen rights and responsibilities. MOH is required to have a Commission for
Evaluation and Compensation of Damage to Health (27) and to have a Patients„ Insurance
Fund (31).
5. Law on Private Practice 2005/1
Establishes the requirement for licensing of private health care practitioners and facilities and
sets out the MOH roles as follows (8):
7

a) Take care of the health of citizens utilizing health services in private health care sector of
Kosovo;
b) Compile the development policy and strategy of private health sector:
e) Compile necessary and additional norms and standards regarding space, equipments
and staff ofthe Institutions;
d) Cooperate with the General Professional Council on compiling the unique price schedule
of health care services in the Institutions:
e) Cooperate with the Ministry. Municipalities and other Institutions that in a certain way are
involved in development of private health sector;
f) Practice external administrative monitoring on Institutions:
g) Monitor the activity of the licensing Board;
h) Issue operative regulation and respective documentation on the procedure and work of
Committees;
i) Monitor the role of Municipalities on implementation of legislation regarding private health
sector.
Joint committees from MOH, other government insitutions, municipalities and the private
sector have a monitoring role in line with standards set by MOH (18).
6. Health Inspectorate Law 2006/02-L38 and 2006/13
The inspectorate is establised as an administrative authority of MOH with responsibility to
monitor ethical and profesisonal norms and standards; and monitoring of health institutions
regardless of ownership. The functions of the Inspectorate are (2):
1. Monitors implementation of the Health Law and other provisions in conformity with Article
1.5 regulating the health field.
2. Ensures technical and professional advice for health activities in order to implement legal
provisions and standards foreseen with the Health Law.
3. Ensures necessary information regarding methods and techniques for fulfillment of
respective standards in the health field.
4. Informs the Ministry of Health, institutions and competent authorities regarding illegal work in
the health care institutions and undertakes measures foreseen by this law and other laws in
conformity with given authorizations.
5. Ensures information, provides help and promotes the best medical practice for health care
institutions.
6. The duty of the Inspectorate is to provide support to health care institutions in interpretation
of legal norms and all other sub-legal acts issued by the Ministry of Health in order to carry
out their efficient implementation
The MOH sets the internal orgnaisation and fucntioning of the Inspectorate through sublegal
acts (3) and finances the inspectorate (5). Chief Inspector provides monthly and annual
reports to MOH (4).
7. Law on Emergency Health Care 2006/21
Sets out what these services are and requirements relating to them. The MOH is responsible
for policy. The law creates a position of Legal Office for Medical Emergency Services to
provide scrutiny of legal and professional elements (11). Municipalities must cooerate with
MOH on primary emergency care services (16). There are dual reporting lines for Medical
Emergency depts in hospitals to Director of Hopsital and to MOH (26).
8. Law on Tobacco Use 2007/01
8

This law regulates tobacco products and their use and provides for health prevention services.
It assigns monitoring roles to various MOH inspectorates and other ministries„ inspecotrates
(12).
9. Law on Reproductive Health 2007/11
Sets out role of MOH as follows:
Ministry of Health organizes and coordinates activities in these sexual and reproductive health
fields:
1. Reproductive right;
2. Information, education and advice on selmal and reproductive health during all life cycle
3. Safe matemity;
4. Family planning;
5. Prevention and appropriate infertility treatment;
6. Safe pregnancy interruption-stoppage;
7. Preventation services and sexually transmissible treatment such as HIV/AIDS, as well
infections and diseases of the reproductive tract;
8. Preventation early detection-discover and treatment of the malign diseases of the
reproductive system and breast carcinoma
It defines citizen rights, services, and prohibited activities.
10. Law on Public Health 02/L-78 and 2008/6
Sets out the responsibiilties of MOH and the National Insitute of Public Health which is the
MOH‟s agent for public health.
4.1. Ministry of Health compiles-sets forth and supervises application of public health policies
through the National Institute of Public Health of Kosova.
4.2 National Institute for Public Health of Kosovo (NIPHK) is a public institution which
exercises referral actitivities in the area of public health as follows:
a) Planning and health progrannning;
b) Processing, analyzing and publishing of records in the area of health economy.
c) Work quality control;
d) Epidemiological preparedness and responsibility check;
e) Managing and evaluating the epidemiological situation of the infectious disease;
f) Managing the exceeded program of immunization;
g) Managing the hospitalized intra infections;
h) Analyzing and evaluating the Sanitary hygienic situation in public and private facilities;
i) Analyzing and evaluating the quality of the drinking water;
j) Analyzing and evaluating the sanitation;
k) Analyzing and evaluating quality of food and nourishment;
l) Analyzing and evaluating the areolation;
m) Analyzing and evaluating the hygiene in pre school and school facilities;
n) Analyzing and managing of activities regarding the microbiology of the Environment;
o) Evaluating and controlling the labs that exercise activities in the area of public health;
p) Referring center in the area of public health for TB. HIV/AIDS and STI;
9

q) Referring center in public health for zoonozes;
r) Referring center in the area of public health for health and educational promotion;
s) Analyzing, evaluating and managing the health protection of special categories of the
population with social medical importance as well the malignity, cardiovascular, diabetes
diseases and similar:
t) Gathering, processing and analyzing of the records from the System of health
information (SHI) and proposing the measures for advancement and managing of SHI;
u) Gathering, processing and analyzing ofthe records from the System of geographical
Information (SGI) and proposing the measures for advancement and managing of SGI;
The law details the roles and responsibilities of the National Institite of Public Health across a
large range of areas.
11. Law on Blood Tranfusion and Blood Products 02/L-101 and 2008/7
This law gives the MOH the role of regulating blood collection and use via sub legal acts
including ensuring quality requirements for blood donation facilities, conditions for unused
blood products, and record keeping. The National Centre for Blood Transfusion has detailed
responsibilities relating to blood collection, storage, use, educaiton of workers and information
(5).
12. Law on Narcotics, Psychotropic Drugs and Precursers 02/L-128 and 2008/10
MOH licenses entities for importing, exporting, and other activies relating to drugs through the
Kosovo Agency for Medical Products; Committee for Narcotics has some coordination and
strategy roles (6); in copperation with this Committee, MOH is responsible for the action plan
on prevention, treatment and rehabilitiation of dependent illnesses (7); MOH is required to
ensure the National Institute of Publi Health keeps appropriate data (32)
13. Law on Prevention and Fighting Infectious Diseases 02/L-109 and 2008/23
MOH has a very broad mandate (48) that includes the following roles:
Adopts the program and determines measures for prevention and fighting the infectious
diseases which jeopardize the whole country;
Organizes the work for administrative competent authorities, other Ministries that get engaged
in eradication of a specific infectious disease and for application the protection measures from
infectious diseases, in cases of an epidemic which jeopardizes the whole country.
MOH has an overall supervision role in relation to the work of health insitutions on infectious
diseases (4) including via the plans of the National Institute for Public Health (9) which reports
to the MOH on aspects of disease prevention and control (12); and has other roles in
association with the National Insitute of Public Health relating to quarantine. MOH regulates
matters relating to outbreaks and risks (34, 41); receives reports from municipalies (46); and
holds powers to issues mandatory instructions (47).
14. Law on Abortion
Sets out the legal basis for abortion and the services to be provided.
15. Law on Local Self Government
Sets out the inclusion of primary health care and public health as municipality responsibilities
(17) and secondary care for selected municipalities (20).
16. Law on Local Government Finance
10

Provides for a grant for minimum standards of public primary health services (25)
25.5 The Specific Grant tor health shall ba defined and allocated to municipalities
according to the allocation formula established by the Grants Commission; and such formula
shall be based on the normalized population and standards established by the Ministry of
Health. Normalisation shall cosider the age and gender distribution of the population
registered with primary health care providers, and the number of elderly persons and of
persons needing special health care.
Enhanced Competencies in Secondary Health Care
The municipalities of Mitrovicë/Mitrovica North, Graçanice/Gracanica, Shtërpce / Štrpce shall
have the competence for provision of secondary heath care, including registration and
licensing of health care institutions, recruitment, payment of salaries and training of health
care personnel and administrations;
11

Appendix D: Medium term policy, planning and budgeting
MTEF priorities for the health sector
II. First goal - Reduce i morbidity and address mortality of the population (through further
development of health services). Specific objectives include:
1. Improvement of maternal and children‟s health:
a) Renovation and construction of health institutional facilities;
b) Improvement of health institutions facilities;
c) Equipment for the improvement of health institutions;
d) Development of strategies for Women immunization and action for emergency situations, as
well as programs for mother and children health protection and measurement of immunity
against vaccine diseases.
2. Reduction in the number of contagious diseases and mass chronic diseases:
a) Renovation and construction of health institutions facilities;
b) Equipments for the functioning of health institutions;
c) Development of national strategy for hemorrhagic fever, project for natural focuses of
infective diseases.
3. Supply the list of essential medicines - fulfillment of 80% of needs for the list of essential
medicines:
a) Improvement of medicament supply level;
b) Conditions improvements in central pharmacy.
4. Rationalization of the program for Medical treatments abroad:
a) Efficient review of the requests and reduction of waiting period for the treatment abroad.
5. More investments into the quality of care and set up and accreditation system to monitor quality of
care.
III. Second goal – Improved resource management. Specific objectives include:
1. Continuous education and management capacity building:
a) Determination and implementation of mechanisms and programs for continuous professional
education;
b) Development of strategy for health education and implementation of the IHR;
2. Improvements in monitoring and accountability:
a) Review and completion of existing legislation and implementation monitoring;
3. Preparation of the human resource strategy and implementation plan to address issues of staff
miss-allocation across hospitals and improve productivity in hospitals.
IV. Third goal – Creation of a sustainable funding system for the health sector.
Specific objectives include:
1. Examine possibilities for the establishment of health insurance fund:
a) Determination (definition) of the basic package;
b) Determination (definition) of the cost of health services;
c) Determination of a funding mechanism for health services.
2. Institutionalize legal, regulatory and governance framework to implement health financing reforms
12

V. Fourth goal – Functionalize, reorganization and comletation of the existing infrastructure of
health services. Specific objectives include:
1. Reorganization of health services:
a) Master plan development for health institutions facilities;
b) Renovation of health institutions facilities;
c) Equipment for the functioning of health institutions.
Having better equipment in the health institutions will create possibilities for treatment of differenet cases
which currently need treatment abroad, at the same time this will contribute on savings of this funds whish
are spend now on this.
VI. Fifth goal – Develop a Health Information System: Specific objectives include:
1. Progressive development of qualitative information systems for entire health system:
a) Networking of HIS system in three health systems levels;
b) Equipping and maintenance of HIS network.
c) Using the data for policy analysis and decision making
Health Sector Strategy
The MTEF sets out the goals, objectives and proposed interventions for the health sector as noted above.
These are similar although not identical to the draft Strategic Plan 2009-2013. The Health Sector Strategy
is being revised. The draft Health Sector Strategy was reviewed in May and comments provided. A
summary of the comments are set out below.
The Health Sector Strategy 2010-2014 (dated May 2009) is a useful draft that can be further refined. It
identifies strategic objectives and changes that need to occur to achieve these. It is understandably limited
in its analysis by data problems. The ongoing refinement of the Health Sector Strategy could consider
some key areas noted below, and set out in more detail in the following sections:
The health status analysis and analysis of demand drivers could be developed further.
There are some critical strategic changes being anticipated in this sector (e.g., health insurance
and implementation of the master plan). The Health Sector Strategy is still vague in these areas,
but this may be reflecting the situation with these strategies. Is it possible to be more specific
about what is intended?
The financial implications of the Health Sector Strategy and its relation to the MTEF allocations
could be considered.
The presentation of Health Sector Strategy could be adjusted to convey the main issues, strategic
priorities and strategies early in the document, as many people only read the front sections of long
documents.
Accountability for specific strategies could be more clearly defined (tables on this miss out key
institutions and list several institutions together so specific accountabilities are unclear).
The monitoring indicators have design problems that mean that as a set they are not as strong as
they could be for encouraging performance improvements and changes in the health sector.
The suggested institutional arrangements for monitoring the Health Sector Strategy appear to
bypass key accountabilities for MOH departments and instead recommend new arrangements.
The strengthening of the MOH departments to fulfil the monitoring role and provide analysis would
be a better option. The monitoring of the strategy should be put in the content of the wider
monitoring that the MOH should be doing.
Preparing a sector strategy in the circumstances that this one is being prepared in is a very difficult task.
While there are many suggestions for improvements above, these should be read in the context that this
draft strategy offers the potential to be a good quality document if refined further.
At this stage the strategy sets out the following strategic objectives and issues priorities. The strategic
objectives in the draft Health Sector Strategy are:
13

1. Reduce morbidity and mortality of the overall population.
2. Improve management of existing resources and quality of services
3. The reorganisation and the completion of the existing infrastructure of the healthcare system and
the procurement of medical equipment in accordance with European standards
4. Implement and develop the Health Information System
5. Develop a sustainable funding system for the health sector
The issues are summarized as follows:
1. An inability to effectively plan and allocate resources owing to an inadequate health information
system
2. Inadequate management systems to ensure satisfactory performance and quality services
3. Difficulties over accountability arising from a lack of clarity in the roles and responsibilities of
organisations and individuals
4. Serious shortcomings in the supply and distribution of drugs
5. Limited funds available
The Master Plan referred to in 3 above has the following recommendations:
Service improvements through improved planning capital planning linked to recurrent planning
(maintenance)
Improving the capital planning in the sector- problems were noted with not maintaining current
infrastructure and constructing new facilities without ensuring there is sufficient funding for their
operations and maintenance
Restructuring of the University Clinical Hospital to separate secondary and tertiary services
Improving the maintenance of laboratory and radiology equipment; improving access to CT
scanning and MRI scanning (no MRI at present)
Reducing the number of emergency callout centres
Better monitoring of the quality of health services, the maintenance of health facilities and the state
of cleanliness- address lack of use of clinical protocols (sequencing of interventions) and treatment
guidelines (evidenced based best practice treatments) tailored for Kosovo and the “inspection”
focus of monitoring rather than more modern QA approaches
Improvements in inputs
Addressing the issues of low salaries which results in doctors practising privately and a shortage in
areas like pharmacists
Improving primary health services through better provision of essential supplies including drugs
and training for staff; improving supply of drugs to secondary and tertiary services; improving the
procurement process for drugs
Increase in services
Planning for a small increase in tertiary hospital capacity including in speciality areas of oncology,
stroke, burns and cardiac surgery and a small increase in specialists in cardiology, thoracic surgery
and vascular surgery
Using telemedicine to access overseas advice for tertiary and secondary cases
Dealing with problems of access to secondary care in Mitrovice where people in the South cannot
access care in the hospital in the North
Increasing health promotion services including in the areas of food safety, smoking cessation, road
safety, diabetes and heart disease prevention, reducing injuries in the workplace and other areas.
Contracting for some services from the private sector such as laboratory tests, day surgery and
cardiac surgery where there are cost advantages in doing this (will require market development)
and developing the procedures to support this such as sound contracting approaches and timely
and accurate payments
14

Health information
Develop effective HIS (though not dealt with in detail in this study)
Interestingly many of the priorities in the Health Sector Strategy are not well resourced.
With regard to reducing mobility and mortality, the analysis work to do this is not well resourced.
There are issues with the quality of the health status data and no one in the MOH has the role of
analysing the key health status issues. The NIPH has health status data and undertakes policy
work in some areas, but does not have the role of doing the full range of public health policy
development.
With regard to the priority about the HIS, there is little funding for the HIS apart from a pilot project
in one municipality that is funded by donors. There is one staff member in the MOH assigned to
the HIS and he is acting in another management role.
Regarding the priority about improving the management and quality of services, there is one staff
person in the MOH working on quality assurance and the work is still in the early stages of
implementation in providers. There is no work on improving overall productivity of the health sector
by considering the policy settings and other key factors, and no one in the MOH with this as a
specific role.
Regarding the priority about reorganising the infrastructure, the Master Plan is in a draft stage.
The capital planned for hospitals in the medium term budget is falling from 9,543,000 Euros in
2009 to 9,190,330 in 2010. In 2011 the figure is 10,405,847 which is an increase in nominal terms
over 2009, but may not be in real terms once inflation is taken into account.
The MOH costed some activities to support the priorities which were not funded in the 2009 budget. There
do not appear to be any significant changes in the resources in the medium term budget to support these
priorities, although it is difficult to assess this properly as the budget is at an aggregated level.
Budget
Budget figures for the medium term were provided by the Deputy Minister who headed the Budget
Commission in 2009. This shows a 3.69% increase between 2009 to 2010 excluding THV and a 2.16%
decrease if THV is included in 2009 base; and a 6.15% increase between 2010 and 2011. In real terms, the
2009 to 2011 change may be a decrease after taking account of inflation for two years. This indicates that
the MOH has a challenge in providing services on a declining budget.
Table 1 Ministry of Health’s internal medium term budget document
Budget 2009
Total of
Operative
Expenditur
es 2009
53,785,032
Capital
Expenditur
es
9,543,150
Total
2009
63,328,1
82
Plan of
THV
2009
3,753,4
46
Boundaries 2010 Boundaries 2011
Operative
Expenditur
es
56,474,284
15
Capital
Expenditur
es
9,190,330
Operative
Expenditur
es
59,297,998
Total incl
THV 67,081,628 65,664,614 69,703,845
Capital
Expenditur
es
10,405,847
In contrast to the MOH‟s budget figures above, the MTEF figures are higher, but they relate to the entire
health sector so include the grants to municipalities. The MTEF figures indicate an increase in the health
sector funding from 2008 to 2009 of 29%; from 2009 to 2010 of 1.5%; from 2010 to 2011 of 5%. In real

terms the two outer years may be decreases after taking account of inflation. As these figures are not
broken down by central and local government levels, it is not possible to estimate the changes relating to
the budget of the MOH.
Table 2 MTEF for Health
Note that the annual budget provided by the MOH has a total sum of 66,282,033 euros for 2009 which is
below the 67,081,628 euros indicated in the MOH‟s medium term budget figures.
In summary, over the medium term the MOH can expect a flat or declining government budget. The effect
of donor contributions also needs to be considered and a full MTEF projection prepared that takes these
into account. At this stage we have not been able to locate a full projection that takes account of all
sources of funding.
EC policy
As part of the consideration of how to improve the MOH, the EC policy requirements need to be taken into
account. The Government‟s 2008 Action Plan on the Implementation of the European Partnership includes
the following activities that relate to the MOH: 5
5 Health related requirements are assigned to other ministries in relation to environmental matters, safety at work, and other
areas, e.g., MAFRD is responsible for the requirement to adopt the law on food and the consequent implementing legislation, and
establish the relevant agency to implement and enforce the law. MLSW is primarily responsible for strengthening cooperation
with mental health centres.
16

Two projects on Health and Environment: 1) modernization of monitoring equipment for the
Institute for public health, and 2) the review of regulations on standards for the quality of the
drinking water
Improvement of Health Care Information Systems
Continued assessment of health care services provided to all communities, and publishes quarterly
reports
Continued financial and technical support for health care institutions providing services to minority
communities and minority-inhabited municipalities
Continued provision of health care services through mobile teams in minority settlements and to
returnees, through District Health Authorities and Municipal Health Departments
Review complaints and undertake legal and disciplinary measures against ethical, professional and
legal violations, in cases of failure to provide health care services to all communities
Ensure health care policies and programs respond to gender differences and health needs of
women (with PMO)
Work on a sector-wide approach (SWAp) is expected to begin soon with EC support. This will involve: 1.
Understanding the strategy and subsectors, mapping donors and interests 2. Understanding the legal
framework in the health sector considering what other ministries do 3. Health information system and
strategy. 4. Assess the management capacities in MOH and municipalities including the gaps in the
municipalities‟ ability to fulfil their role in primary health in terms of staff, skills, buildings, etc. 5. Awareness
campaign on public health issues. This work has overlaps with this review of the ministry and it would be
good to ensure that the SWAp work can take advantage of the work from this project.
Extent of the strategic management challenges
It is important to consider the extent of the strategic management challenges facing the MOH as this has
implications for its structure and functions. The MoH is dealing with major policy and planning challenges in
financing, information, health insurance, purchaser/provider split and other areas, as set out in appendix D.
Financing
An area of major reform that has been considered in recent work is how to improve the financing of health
services. The current arrangements are set out below:
17

Some issues with this method of financing include:
Information
Lack of an integrated funding approach for health services resulting in poor links between capital
and recurrent funding (a problem identified in the Master Plan), difficulties in linking funding to
performance, difficulties for providers in managing resources when they are controlled by different
entities, and difficulties in creating incentives for performance.
Poor links between primary, secondary and tertiary care with different funders with incentives that
may not always be aligned (e.g., municipalities with incentives to increase resources for their area
at the expenses of others and to cost shift from primary care onto hospitals, including the
University clinic, etc).
Fragmented and inadequate information on health status and services provided in various
institutions, making it difficult to plan, manage and monitor health services.
The challenges noted in the draft Health Sector Strategy include improving the information in the health
sector. A report on health financing in Kosovo noted that: 6
There is a lack of information on health outcomes, including morbidity and mortality statistics that could be
used for international comparison. Kosovo does not collect data on common health indicators, including
bacis demographic indicators; lifestyle- and environment-related indicators; mortality, morbidity, and
disability; and health care resources comprehensive utilization, and expenditure. The existing data on the
population‟s demographic characteristics and health status are highly contradictory, and highlight the need
for investment in better monitoring and evaluation capacity at the MoH. This lack of data prevents analysis
of trends and comparisons of international health statistics that could help to support the formulation and
monitoring of health policyat the national level.
Health insurance
Another challenge is the preparatory work for health insurance. The report by the World Bank on health
financing outlines the considerable work required to establish the foundations for such a development
including: 7
Planning the reforms and providing a structure to manage and monitor them; planning needs to
cover the areas outlined below and set out the transition path for these changes over time, in a
feasible sequence that takes account of critical paths and capacity to undertake the reforms as well
as the finances available for making the changes. Risk management strategies should be included
in the reform plan.
Developing the policy and drafting and putting law in place including law relating to redefined roles
for a purchaser provider split; governance and accountability structure for hospitals, other
providers, and the insurance or purchasing body; financing; licensing and accreditation; definition
of entitlements (health care package); fees and charges; health information requirements relating
to roles, use, transfer, storage, etc; prohibitions including on fees and charges; etc.
Rationalisation and development of providers and other key institutions as discussed in the Master
Plan and in line with requirements for progression to a health purchaser/provider split whether in
the form of a health insurance model or single funder/purchaser.
Capacity building in all institutions including governance of semi-autonomous institutions such as
hospitals and the health insurer or purchaser/funder; developing MOH capability in policy, planning,
regulation, information management, reporting, monitoring, and review; developing the
purchasing/funding role whether in the insurer or MOH or other institution (discussed further
below); improving management including internal financial management, information management,
contracting, and many other capabilities for hospitals and other providers; developing capacity in
6 World Bank, “Kosovo Health Financing Reform Study,” page 10.
7 World Bank, “Kosovo Health Financing Reform Study,” table 7.2 page 120.
18

local government in relation to their roles; and improvements in the scope, quality and flows of
health information in all institutions and between institutions.
If the government proceeds to a full health insurance model, the Health Insurance Fund would require the
following capabilities: planning and budgeting in short, medium and long term including revenue and
expenditure forecasting; health demand analysis related to the entitlements; costing likely exposure to
entitlements including actuarial analysis; financing including investment and debt management; claims
management; risk analysis and management including full recognition of contingent and other liabilities;
contracting including pricing or rate setting, market development, model contracts for classes of providers,
contracting procedures, provider relationship management; monitoring; auditing; review and evaluation of
provider performance and impacts of interventions being purchased or funded; client management;
stakeholder management; and information management.
The World Bank‟s report on health financing notes some barriers to the development of a health insurance
model based on contributions from employers/employees from payroll taxes and private premiums, given
the small size of the working population (15% working in the formal sector). 8 Corruption was also noted as
a possible issue in developing an effective health insurer, given the need to have functioning levels of
governance, transparency, responsibility and accountability for results. 9
Risks to the misuse of resources could impede the successful development of a purchaser/provider
whether this was taken further to full health insurance model or not. A purchaser/provider split includes a
movement from centralised administrative controls to more flexibility for the funding agency and for
providers in the use of resources. This requires incentives for performance and effective inhibiters to the
misuse of resources. Effective reporting, monitoring and auditing functions may be difficult to establish in
8 Ibid., page iii executive summary.
9 Ibid., page 6. The report notes that research indicates that the health sector has particular vulnerabilities to corruption, page 17.
19

an environment where corruption levels are a problem. The World Bank report noted four factors often
associated with successful health insurance systems: 10
The presence of fair competition in the market and an effective regulatory framework
The degree of public trust in public institutions
The effectiveness of political processes
The presence of an organized civil society that demands accountability in society.
These are difficult conditions to establish in developing countries, particularly when the level of income per
capita is low and the population is small. The entry and exit barriers for providers are very large in small
countries, notably for hospital and related clinical support services requiring considerable capital and HR
investments. Not all these conditions are in place in Kosovo and would take considerable resources, time
and other changes to achieve. The capability required to operate a successful health insurance model
spans some very complex areas and requires staff with skills that are in demand in the labour market, such
as governance, management, accounting, financial management, IT, contracting, investment, risk
management, economic analysis and other policy analysis skills. Given that the MOH is in the very early
stages of developing policies, plans and capability related to health insurance, it can be assumed that the
movement to a full health insurance model is unlikely to be achieved in the next three to five years.
Purchaser/provider split
Even if the MOH does not proceed to a full health insurance model in the medium term, there are many
functions and capabilities that could be developed to improve the efficiency and delivery of health services.
If a purchaser/provider split as discussed in the World Bank report is considered feasible, then this
development can be part of the progression to health insurance or an improvement in its own right, whether
or not the health insurance model is adopted.
In a purchaser/provider split the purchaser/funding functions could be undertaken by the Ministry of Health
(see Appendix G for a fuller discussion of this). The Ministry of Health could have the role of contracting for
the basic health package that can be financed from the government budget, through contracting with a mix
of government and private providers, using the health budget provided by the government. It can develop
many of the capabilities required for a health insurer, but tailored to its role as a government
funder/purchaser of health services, rather than a full blown health insurer processing claims and managing
revenues from a variety of sources. 11 The essential difference is that it would fund or purchase services
and providers would manage demand according to the contracts and funding they received, rather than the
insurer managing the demand through direct management of the claims.
The roles of the MOH under a purchaser/provider split would move away from having such direct control
over the providers to one of policy, funding, regulation, and monitoring, including monitoring of health status
and results from the insurer (or similar entity) and aspects of performance of providers where the MOH has
a direct monitoring role such as compliance with licensing requirements. Note that the insurer (or similar
entity) would take on some monitoring functions of providers relating to the performance expected under
the contracts.
Under a purchaser/provider split the hospitals and some other providers that report to the MOH would be
granted more flexibility to manage resources in return for being accountable for their performance as
discussed in Appendix G. Currently the hospitals report directly to the PS of the MOH, and while they have
some autonomy in budget execution, they are part of the MOH budget process. As an example of the
decision rights of the MOH compared to a hospital, the following situation exists for the Kosovo University
Clinical Hospital:
Formal reporting line is to the PS of the MOH
10 Ibid, page 32.
11 Ibid, page 23 provides various examples of health insurance and similar arrangements, including Lithuania which has a similar
model to the purchaser/provider model described in this paragraph. See also page 86 for a discussion of various models in OECD
and transition countries.
20

Hospital prepares its own budget and sends it to MOH; bulk of the budget is salaries which are
fixed due to government wide caps; consulted on proposed budget during the budget process
managed by the Budget Commission of the MOH
Hospital executes the budget; does not request many changes as virements are difficult and limited
in scope
MOH purchases the drugs so a large input to services is not procured by hospital
Hospital hires staff except executive director; can fire but procedures are difficult; limited potential
for promotion except into formal positions in structure; no potential to reward performance; all staff
are civil servants (this will change soon under the changes to the Civil Service Law)
Do internal reporting during the year but no formal in year reporting to MOH on activity data;
prepare budget execution report which is submitted to MOH
Finances- have own bank subaccount in Treasury system; do not retain fees and charges which
are subject to an MOU between MOF and MOH and only 51% revenue earned in health sector is
to be returned to MOH in 2009
Monitoring- some internal audit type monitoring on procurement
The World Bank report on health financing noted that: 12
Health facility managers have little authority over spending, staff levels, staff selection and
performance, and capital; they are unable to take stpes that would improve efficiency of care, for
example, throught strategic staffing or pharmaceutical management. Hospitals are manged
centrally by bureaucratic rules rather than on the basis of efficinet operations.
The formal accountability framework currently in place for the hospitals, the National Institute of Public
Health and other institutions in the health sector is not designed for an institution with some autonomy, as it
lacks features commonly associated with these institutions such as: a governance board; an ex ante plan
of performance linked to the finances that is treated as an accountability document; ex post reporting,
monitoring and external auditing of this; and agreements on services to be produced with funders of
services. These agencies lack internal management functions including financial management and full HR
management functions. Instead they have limited decision rights with regard to HR and finances and
under-developed management capabilities to plan, manage and monitor services, including a serious lack
of management information. Considerable work would need to be undertaken to develop the legal
governance and accountability framework and to put it into operation.
As noted in the Whole of Government Review, the Government could consider an agency law to provide a
robust accountability framework for agencies that are suitable to be moved out from the usual ministry-style
arrangements. The Government would also need to classify the entities into groups that are suitable to be
agencies and those that are not. Some may be commercial State Owned Entities (SOEs) regulated by
private commercial laws and sometimes by a SOE law. Some might be better as a department under a
ministry. Others might be suited to be agencies with varying degrees of freedom, possibly expressed in the
form of requirements tailored to certain classes:
Those that must implement government policies (e.g., suppliers of services like health services,
research council, etc)
Those with independence from government policy and responsibilities under law (e.g., Competition
Commission, Securities Commission, etc)
Both agencies can have similar basic accountability requirements, but the degree of independence can be
reflected in the law through defining the requirement or not to follow government policy. Ministers can be
required to make their directions transparent, by tabling them in parliament. Note that the class of agencies
with greater independence discussed here must not be confused with the independent agencies under the
Constitution which are a very special class of institutions with special protections. The health sector
institutions should not fall into this class of constitutionally independent agencies for the reasons discussed
in Appendix G.
The basic accountability framework would need to consider the governance arrangements, powers in
relation to the use of resources, reporting line, ex ante specification of performance and finances, ex post
12 Ibid, page 11. See also the draft Master Plan page 129 which discussed the lack of flexibility for hospital managers to use inputs
in an efficient way.
21

eporting, monitoring arrangements, external auditing, and internal controls and capabilities (such as
internal audit) 13 to support the greater flexibilities, information to provided and published, etc.
Understandably the agencies are not doing many of these things and it would take time to develop
capabilities in the agencies. The MOH‟s and MOF‟s monitoring roles would also have to be developed.
Public and private sector
The MOH is working on revisions to the Health Law with regard to the roles and regulation of the public and
private sectors. From our brief discussions with the MOH staff we understand that an option that may be
suggested is to prevent medical staff and other staff from working on both sectors. We have suggested
that the MOH should identify the problems it wishes to address and considers the range of options
available. There is a risk that this has not been done to a sufficient degree and that choosing a ban on
working on both sectors may not address the problems and may bring unintended consequences, such as
a loss of staff from the public sector. There are options to have the public and private sector operating
closely and to manage potential conflicts of interest in a variety of ways.
13 Other areas including budget planning, costing, procurement management, budget/funds control, financial and performance
reporting, and asset management.
22

Appendix E: Number of Staff and Budgets
Green shaded (darker shaded) items are controlled MOH; yellow shaded (lighter shaded) items are funded by MOH
Programmes
Ministry of Health
Department of Hospital Services
KUCC, Prishtina
Regional Hospital, Gjilan
Regional Hospital, Prizren
Regional Hospital, Gjakova
Regional Hospital, Peja
Regional Hospital, Mitrovica
Regional Hospital, Vushtri
Staff
numbers
7,393
5,878
2,704
524
759
557
557
309
124
Wages and
salaries
20,272,409
16,138,304
7,409,178
1,466,950
2,049,042
1,550,000
1,600,000
794,404
358,034
Goods and
Services
29,293,131
8,684,896
4,774,415
775,200
807,500
548,000
772,700
375,300
206,316
23
utilities
3,146,073
2,816,554
1,614,520
217,000
262,000
348,799
166,500
46,200
43,100
subv &
trans
1,070,420
-
-
-
-
-
-
-
Capital
Expenditures
12,500,000
9,135,000
4,899,983
279,700
640,000
582,000
1,711,230
547,087
65,000
Total
66,282,033
36,774,754
18,698,096
2,738,850
3,758,542
3,028,799
4,250,430
1,762,991
672,450

Regional Hospital, Ferizaj
Dentistry Clinic
Department of Other Health
Services
Primary Health Care
National Institute of Public Health
Mental Health Services of Kosovo
Pharmaceutical Programme
Labour Medicine Programme
Division of care
Minority Health Programme
Out of country treatment
National Office/Institute for Blood
Transfusion
Telemedicine Centre of Kosovo
218
126
1,399
10
289
227
86
10
195
56
15
590,171
320,525
3,727,249
26,500
683,000
505,771
-
217,242
27,935
492,700
-
171,495
45,900
257,235
168,230
20,265,158
81,607
508,241
689,964
16,100,000
101,800
33,070
270,037
-
468,000
30,000
24
51,935
66,500
299,479
13,200
66,180
94,316
-
40,000
3,000
29,000
-
10,000
5,000
-
-
1,070,420
-
-
-
-
-
-
-
1,070,420
-
-
220,000
190,000
3,340,000
977,150
240,000
65,000
-
110,000
-
-
-
200,000
-
1,119,341
745,255
28,702,306
1,098,457
1,497,421
1,355,051
16,100,000
469,042
64,005
791,737
1,070,420
849,495
80,900

Agency for the control of health care
Kosovo Agency for Medical Products
Other Programmes
Doctors in country
Sanitary Inspectorate
Kosovo Pharmaceutical Inspectorate
Health Inspectorate of Kosovo
Department of Administration
Central Administration
Minister's Office
7
38
13
427
11
9
6
116
108
8
24,235
127,742
30,905
1,283,735
36,352
29,737
24,000
406,856
337,745
69,111
2,129
202,000
1,415,780
305,780
20,000
20,000
16,750
343,077
292,497
50,580
25
1,200
30,200
1,883
-
3,000
1,000
1,500
30,040
23,040
7,000
-
-
-
-
-
-
-
-
1,747,850
-
-
25,000
25,000
-
27,564
359,942
3,196,418
1,589,515
59,352
50,737
42,250
804,973
678,282
126,691

Appendix F Structure
26

Appendix G Additional advice provided in response to requests made in June 2009
Reform implementation
The following steps are recommended to get the reforms underway and to complete them in a timely
way.
Reform proposal and plan
Identify a manager and group of people to consider the recommendations in this review, consult with
relevant people and to prepare: (1) a reform proposal for the government to consider in a format
suitable for the Cabinet; (2) a draft Institutional Development Plan for approval by the Minister before
being annexed to the Cabinet paper. This group of advisers should be selected with the range of
skills needed for this work and should not be dominated by people with personal interests in the
outcome of the results.
The Cabinet paper should cover at a minimum:
Description of issues to be addressed
Proposed changes with rationale for these including expected improvements to health
services
Fiscal costs on the budget for a three year period and other implications compared to the
status quo
Recommendations including legal changes and other actions
Annex Institutional Development Plan
The Institutional Development Plan should cover at a minimum:
Roles and responsibilities for reform work including oversight, management and other roles
Proposed changes and actions required to implement the changes, sequencing of changes,
detailed responsibilities, and a realistic timeframe for the structural and other changes
Budget for reforms
Risks and risk management strategies
Progress reporting arrangements
Some key aspects of the reform
The reform work should include selecting the most suitable structure from the range of options;
calculating the staffing level and types of positions; costing these and ensuring they are realistic.
Once this is done, job descriptions should be designed that include the capability required as well as
the specifications for the position. These descriptions should be of sufficient quality to form the basis
for performance expectations and reviews in the future. They should also be of sufficient quality to
ensure that people with the right skills and experience are selected for the positions.
27

The selection process should be set up to ensure that good quality candidates apply for the positions
and that the best person for the job is likely to be selected. This includes advertising the jobs in
media where good candidates will see the advertisements, personally approaching potential
candidates including people within the MOH and other health institutions who have high potential to
perform in the roles; and ensuring that the interview process and wider selection process will be able
to identify unsuitable from suitable candidates (e.g., use of well designed criteria, suitable selection
panel, thorough reference checking, work testing of key skills, etc.)
There may be legal issues with the proposed reforms. The rights of employees who lose their jobs or
are appointed to other positions of lower status or pay need to be considered. The legal situation
must be thoroughly assessed and well managed. Support should be set up for people who lose their
positions, including counselling, job seeking assistance, retraining and redundancy payments.
Employment contracts should be designed to encourage performance including fixed terms, probation
period, performance reviews with consequences for good performance and poor performance, and a
portion of pay linked to performance.
The communications around the reforms need to be carefully managed as there will be disgruntled
employees who may cause unnecessary media issues. The MOH should be proactive with the media
and present the reforms as an important step to improving health services.
The executive summary sets out suggested sequencing at a broad level for the changes covered by
this review. The information on the current staffing and detailed budgets related to this was not
available, so we have not been able to advance the advice on implementation to include more fully
developed suggestions on the changes and costs. This should be covered in the Institutional
Development Plan.
There are some changes that cannot be implemented at this stage unless the government changes
administrative instructions and some provisions of the law. The Institutional Development Plan can
identify these changes and sequence the reform in line with the likely timing of such changes.
Developing the purchasing/funding function
Appendix D sets out some suggestions about developing the purchasing/funding function in the
context of implementing a split between the purchasing/funding functions and the function of providing
services. The Ministry of Health could start implementing this split through developing the
purchasing/funding function and supporting the changes to improve the arrangements for the
hospitals and other health service providers suggested later in this appendix in relation to changes to
the Health Law.
Note that section 123 of the Health Law provides for the Health Care Commissioning Agency (HCCA)
to carry out functions in the absence of the Health Insurance Fund. This could be modified to say the
Ministry of Health and its agencies and institutions, so there is flexibility to allocate roles as sensible,
rather than doing everything through the HCCA, which at this stage is very under resourced. The
large range of work noted below supports the conclusion that many departments in the MOH would
need to get involved, even if it is led by one part of the MOH such as the HCCA.
The MOH would need to undertake the following work:
Designing and implementing the improved governance and accountability arrangements for
hospitals and other public sector health providers- see later section of this appendix on
possible legal changes
Strengthening the MOH planning, policy, funding, monitoring and regulation roles in all the
health areas including primary health, mental health, secondary and tertiary health services,
public health services and pharmaceuticals
28

Improving the health status analysis and demand analysis to help forecast the demand for
services
Defining the basic health package at an affordable level and in a way that can be contracted
for. Align entitlements to services to this package
Improving health information on provider activity/services
Specifying services into purchase units that can be used in service agreements/contracts with
prices based on costs for an efficient provider (there are methods for doing this that permit
gradual increases in sophistication over time starting from a simple approach tailored to the
available information and skills). Costs should cover the full costs of the services otherwise
this creates distortions in behaviours that can lead to inefficiencies.
Designing contracts and contracting approaches to create good incentives for performance
and mitigate risks such as cost shifting, cream skimming, and driving down quality to increase
profits. This includes using incentive based contracting approaches and using competition
where feasible. Contracting strategies have to be carefully designed as only a portion of
elective services can be removed from a hospital before making its services expensive due to
problems in managing the relationship between acute/elective services. Clinical viability also
has to be considered. The government has to manage its ownership interests in public
hospitals by not unnecessarily undermining their ability to be clinically and financially viable
while also taking advantage of the gains from competition.
Monitoring many aspects of performance including performance on service contracts and
acting on performance issues.
Encouraging improvements in the provider market. This will include changing the
configuration of government owned providers to lift efficiency and effectiveness; making
improvements in governance and accountability arrangements for government service
providers; and market development including encouraging the development of an effective
private sector
The view has been expressed that contracts or service agreements are not required in the health
sector with publicly owned providers, but this overlooks the considerable gains that these agreements
can deliver through clarifying performance expectations linked to funding, setting out service volume
and quality requirements, and creating incentives for performance through their design and
application. They can be a critical part of improving information and incentives. They are also going
to be essential as tools to manage the various flows of funding and performance expectations related
to each of those flows, if the insurance model is implemented and if public health providers supply
services to fee paying patients and groups. Service agreements are also a critical tool for the Minister
of Health and MOH to ensure that providers are being required to deliver appropriate services,
allowing the Minister and MOH to use these agreements (and the annual plan with the statement of
service performance) and formal performance reports as strategic management tools.
The MOH could make progress in all these areas which could bring improvements to the health
services whether or not the system evolved into a model with a central Health Insurance Fund. The
MOH can have the role of contracting for the basic health package that can be financed from the
government budget, through contracting with a mix of government and private providers, using the
health budget provided by the government. It can develop many of the capabilities required for a
health insurer noted above, but tailored to its role as a government funder/purchaser of health
services rather than a full blown health insurer processing claims and managing revenues from a
variety of sources.
The changes recommended in this review for the MOH structure could be implemented to strengthen
the overall capability of the MOH. This would increase its ability to perform the functions set out
above. The Health Sector Strategy and the operational plan, MTEF and budget bid could all be
adjusted to accommodate the development of the work set out above. There will be consequences
29

for the budget as some areas will require increased resources if resources cannot be moved from
lower priority areas.
The Department of Strategic Management could have a key role in leading the work set out above,
particularly if the HCCA was included into this department. It would be risky to load all this work onto
the HCCA even if it was provided with considerable extra resources, as the work set out above is very
broad and requires many inputs from all departments, which the Department of Strategic
Management could have a key role in leading and facilitating.
By placing the lead role with the Department of Strategic Management this reduces the risk of relying
on a very small agency that would need to be rapidly developed and instead can use the resources of
this agency as well as the entire department (if the HCCA is put into the Strategic Management
Department). The success of this approach would depend on getting core skills into the Strategic
Management Department and ensuring that the director of the department is sufficiently skilled and
motivated to undertake this challenging role.
External assistance could be provided to help with the planning of the work and key technical work.
There are examples Kosovo can draw on and avoid the pitfalls that countries make when they start
doing this work, such as buying expensive and useless IT systems when simple approaches are
possible.
Possible changes to Health Law to create an improved governance and accountability framework for
hospitals
Introduction
Several points have been raised about how to improve the performance of hospitals which are noted
below:
How to increase incentives for performance- budgets are not always the problem, for example
cleaning is fully funded but the standards of cleanliness vary between hospitals with some
being less satisfactory than others
How to ensure that service of an adequate quality are provided through-out the country and
that there is reasonable even access to services within the constraints on the health system
How to deal with potential problems of uneven service levels and quality if some hospitals are
under the control of municipalities
How the MOH can exercise its regulatory, standard setting, policy, monitoring and other roles
to provide a positive influence on hospital services, including its role in setting policies to deal
with issues with referral patterns
Some of the performance issues are symptoms of problems with the design of the institutional
arrangements in the health sector. Four key principles are important in ensuring good institutional
design: 14
1. Clarity in objectives, roles, and responsibilities and avoiding conflicts between
them. Objectives, roles and responsibilities need to be clear and non-conflicting so that
each institution has a clear sense of its task(s) and goal(s) and can be held directly
accountability for achieving/not achieving them.
2. Freedom to operate. Boards/managers need to be able to make effective resource
allocation decisions not hampered by inappropriate input controls or detailed ministerial
directions.
14 These were the high level principles that underpinned the New Zealand public sector reforms.
30

3. Accountability. Incentives and sanctions must be in place to induce the right behaviour.
Boards and managers must be accountable for the decisions they make.
4. Performance assessment. Sufficient information needs to be available to effectively
assess performance.
The suggestions for strengthening the governance and accountability arrangements for hospitals in
the Health Law that are set out below are based on the four principles. The suggested arrangements
include setting up hospitals as Health Sector Public Enterprises with an adapted set of governance
and accountability arrangements from those applying to Public Sector Enterprises. The adaptations
reflect the broader requirements on Health Sector Public Enterprises from enterprises that have the
main function of maximising shareholder value. If implemented well, the suggested arrangements
could strengthen the strategic roles of the Minister of Health and Ministry of Health and reduce the
need for intensive operational involvement. There are many safeguards proposed to permit
interventions when necessary, but the focus is on assigning appropriate roles to ministers, boards and
management and using tools to ensure there are incentives for performance including an annual
business plan, service agreement and periodic formal reporting with full external auditing. There are
provisions to reduce conflicts of interest and to help ensure that board members have appropriate
skills to provide good governance.
The Working Group on the Health Law considered whether it was appropriate to classify hospitals as
Public Enterprises and use the provisions of the Law on Public Enterprises, but that law has a focus
on the responsibility to make a return on shareholder assets, whereas the framework for hospitals has
to have a broader focus including the requirement to provide public services. Also the Minister of
Health needs to have a key role in representing the ownership and purchase (service provision)
interests of the government, while the Law on Public Enterprises gives the ownership role to the
Minister of Finance and assumes that consumers will fulfil the purchase role.
It is important to understand the notion of ownership and purchase (service provision interests) in
understanding the draft provisions below. The ownership interest relates to the government‟s interest
in the ongoing financial viability and capability of the institution. This interest with regard to agencies is
commonly monitored for all sector agencies by the MOF. The Public Enterprises Law refers to a unit
in the MOF that will do this. The purchase interest (service provision interest) relates to the
government‟s interest in the services provided by the government institution. Sometimes competition
is used to move services to other government owned or non government owned providers that
provide better value for money.
For mainly commercial agencies, the sector minister may not have a strong ownership interest and
may be content to leave that to the MOF to monitor, but the health sector is different in this regard. If
the providers fail, then essential services fail and the ownership and purchase interests are closely
linked and of great concern to the Minister of Health. For this reason the provisions of the Public
Enterprise Law have been modified to include the Minister of Health and Ministry of Health‟s roles in
exercising responsibilities related to the ownership interest.
In many countries an agency law is used for public institutions that are not mainly commercial but are
not suitable to be ministries or departments. In the absence of a law for agencies, the Health Law can
be used to strengthen the governance and accountability framework by applying the parts of the
Public Enterprises Law that are appropriate and modifying other parts.
The suggestions below have been prepared in a very short time in response to an urgent
request. They need to be thoroughly tested to assess how they may work in practice and they
need to be considered in the context of other laws. Ideally the drafting of these provisions would
be based on a full analysis of the current decision rights for hospitals, the issues, and the solutions
that can be addressed through the law. The table attached to this note provides an approach for
doing this analysis. It can be used to analyse the current situation, identify problems, and to analyse
the proposed solution. The draft provisions in this note should be tested using this table to see if the
allocation of decision rights is appropriate.
31

In the absence of this analysis, some suggestions have been made below, but they must be tested to
ensure that they are likely to provide better arrangements for hospitals with a stronger incentive
environment for lifting performance. This work usually takes several weeks, rather than a day or two,
so it is critical that the draft provisions below are thoroughly tested.
The provisions for the Health Law suggested in this note have been designed with hospitals in mind.
Consideration should be given to whether they can be applied (possibly refined) to cover other
agencies in the health sector such as the NIPH, KMA and others. There has not been sufficient time
to consider this in preparing this note.
The framework
The Public Enterprise Law provides a potentially robust governance and accountability framework that
can be adapted to suit the situation for hospitals. Some key features include:
Clear roles and responsibilities for ministers and local government exercising ownership
responsibilities; monitoring unit for monitoring ownership performance including capability;
and board of directors for overseeing performance.
Mechanisms for specifying performance (business plan) and reporting on this, providing
ministers with a way to influence the performance ex ante via the business plan and to
monitor progress via the reports.
Incentives for performance through clarity of specification of intended performance and the
reporting including publication of these documents; through the influence of the role of the
board of directors monitoring progress and exercising governance functions; through the
influence of internal audit and external audit; through the monitoring of the POE Policy and
Monitoring Unit; and through the increased flexibility to manage resources- note that these
arrangements for hospitals potentially remove many of the issues about the detailed
budget controls and inflexibilities that are impeding hospital management but these
freedoms need to be matched with increased accountability for performance
expectations (financial forecast and statement of service performance expectations),
reporting, and good internal financial controls including internal audit. While these
steps involve modern accounting standards, good quality performance specification and
reporting and service auditing, it is possible to take simple and valuable steps to develop
better information in all these areas, matched to the evolving capability in the health sector
institutions.
Very transparent appointment process for boards of directors designed to avoid conflicts of
interest and to result in the appointment of qualified people.
Requirements to use an accounting approach that would raise the level of transparency about
the finances (full accounts with a balance sheet and P&L rather than the current cash
budgeting- but should still have a cash flow statement) and potentially provide the hospitals
with flexibility to manage resources.
Subjects public sector health entities to the same standards as private sector ones so helps
create a more level playing field for the public and private sector should the health insurance
model be implemented.
Has potentially robust provisions if implemented well that are designed to limit conflicts of
interest which will become increasingly important if Health Sector Public Enterprises develop
service for paying clients (private health insurance companies, Health Insurance Fund,
consumers not covered by insurance, others).
The adjustments that can be made to this framework include the following:
32

While there is clarity of central government ownership of most hospitals, for the minority
regions where the municipalities are intended to have an ownership role, the draft law below
suggests joint ownership given the reality that the central government should have an
ownership responsibility for these hospitals as it ultimately carries the performance and
financial risks (if this is not what is intended then amend this section to give full ownership to
these municipalities).
Addition of role of Minister of Health and roles for MOH in monitoring and other areas.
Addition of requirement to have a statement of service performance and to report on this- also
provision for service agreements with clarity on services to be provided (quantities and
standards) and reporting on these with access to the reports by the public and interest
groups.
Other modifications to broaden the principally commercial focus of the Public Enterprise Law
including addition of requirements to comply with service requirements from the MOH and a
provision for the MOH to act if there is significant service or financial failures.
Matters to consider
In assessing the potential use of the modified framework for Public Sector Enterprises the following
matters should be considered:
How well is this framework working now for Public Enterprises? Are there problems that
could be addressed in the provisions specially tailored for the Health Sector Public
Enterprises?
Will there be a large enough pool of qualified people to fulfil the role of directors on boards?
Do the provisions below appropriately allocate the roles and responsibilities of the Minister of
Finance and the Minister of Health and their ministries? The Minister of Finance‟s role relates
to the ownership interests and the Minister of Health‟s role to ownership and purchase
(service provision) interests. In some countries these ministers can operate effectively but will
this be less likely in Kosovo if these portfolios are allocated to ministers from different parties?
If this is an issue then the provisions below could be much more detailed about the respective
roles.
The allocation of roles and responsibilities to municipalities needs to be carefully considered.
Some provisions have been included as examples below but these need further development.
The law is designed so that the municipalities are specially named and presumably they are
the ones relating to the minority areas where some transfer of responsibility is required by
obligations on the government. This note does not discuss the suitability of these roles and
responsibilities and they need to be designed carefully as this is a very difficult area of policy
development.
Are the arrangements proposed below suitable for the minority areas and compliant with the
government‟s obligations in relation to these areas?
Will hospitals be able to manage the increased freedoms and requirements; are there
sufficient controls under law on asset and debt management and sufficient controls potentially
in practice; what capabilities have to be developed; how long will it take to develop these
capabilities?
Related to this, what are the risks of the changes and how can they be managed?
Can the MOH develop its service specification and monitoring role which is a different sort
role to the one it has now? How long will this take? The draft provisions focus on the MOH
role rather than trying to anticipate the role of the Health Insurance Fund as this is not entirely
clear, some years away and the law can be amended later on to accommodate this.
33

Can the information quality and flows be developed to support this more hands off
arrangement for hospitals?
What are the costs of the changes and can they be accommodated? Fiscal costs include
payments for boards of directors; improved salaries for top management; more accountants
required; staff with other skills required to meet the more sophisticated management and
reporting demands; more workload for the POE Monitoring and Policy Unit; changes to
capability in MOH; information requirements; annual external audit costs; etc. Alongside
these fiscal costs on the budget the social and economic benefits needs to be considered.
Amendments to chapter VIII
Replace section 49 with the provisions below and add a new section 50. There are notes in italics on
points to consider in refining these provisions. Once these provisions are refined then bring the rest
of the Health Law into line with these provisions. For example the provision about the plans in section
56 will need to be aligned with the provision about the business plan below. This note has not
extended to considering what provisions of the Health Law need to be changed as this is premature.
It would be good to get clarity on how to apply the Public Enterprise Law before adapting the rest of
the Health Law. As noted earlier, the suggestions below must be thoroughly tested including
assessing if the new allocation of decision rights is appropriate (see table at the end of this note).
Health sector publicly owned institutions
Section 49
49.1 The institutions named in schedule * [of this law not the Public Enterprise Law] shall be Health
Sector Public Enterprises owned by the Republic of Kosovo with the ownership responsibilities [define
these] exercised on behalf of the government jointly by the Minister of Health and the Minister of
Finance and the purchase (service provision) responsibilities exercised by the Minister of Health. [this
joint allocation of responsibilities can only work if there is a culture of cooperation between ministers
and ministries- if not then it may be better to allocate all the responsibilities to the Minister of Health
BUT keep the role of the MOF monitoring unit for financial monitoring as it should develop expertise in
the financial monitoring that the MOH is unlikely to be able to do]
49.2 The institutions named in schedule* [of this law not the Public Enterprise Law] shall be Health
Sector Public Enterprises 50% owned by Republic of Kosovo and 50% owned by the specified
municipality named in the schedule with the ownership responsibilities exercised on behalf of the
central government jointly by the Minister of Health and Minister of Finance and ownership
responsibilities of the municipality exercised by the municipality council. [need to think about how this
joint ownership would work in practice] The purchase (service provision) responsibilities shall be
exercised by the Minister of Health. [need to have this role exercised by the Minister of Health
otherwise there will be issues with uneven access to and quality of secondary care services]
49.3 The Law on Public Enterprises shall apply to the Health Sector Public Enterprises except as
specified in article 50. [check every provision of the Public Enterprise Law very carefully to see how
applicable it is to the health sector and modify it where necessary. Some modifications have been
suggested below but these are based on a limited knowledge of the Kosovo law and health system
and refinements to these provisions are likely to be required]
Special provisions for Health Sector Public Enterprises
Section 50
50.1 The Law on Public Enterprises shall apply to the health sector institutions named in the
schedules to the Health Law with the modifications specified in this section.
34

50.2 Section 1.2 of the Law on Pubic Enterprises shall not apply with respect to ... [must check all
the laws referred to including the law on Business Organisations and exclude any provisions that
would be inappropriate for Health Sector Public Enterprises- this is VERY important to do as it is
highly likely there are some inappropriate provisions.]
50.3 The definitions in the Law on Public Enterprises shall apply with the following modifications... [go
through the definitions and adjust any that are inappropriate and specifically include them in this
change to the Health Law and say they apply and not the ones in the law on Public Enterprisers- for
example see if the definition of board of directors is OK]
50.4 Sections 3 and 4 of the Law on Pubic Enterprises shall not apply and the Health Law shall
prevail with regard to ownership of Health Sector Public Enterprises. [Need to review company law to
see how relevant the provisions are to health sector institutions and use it if appropriate or exclude it
and have replacement provisions if it is not] The government shall hold 100% of the shares in the
Health Sector Public Enterprises or 50% of the shares as specified in schedule * for enterprises
partially owned by municipalities. The government and municipalities shall not sell shares, use
shares for security, or otherwise deal in the shares of Health Sector Public Enterprises as prohibited
by section 41 of the Law on Public Enterprises except that the government may amalgamate
enterprises, close enterprises and otherwise reorganise them. [must prevent dealing in shares- this
has been a problem in some countries- but need scope to change the configuration of hospitals]
50.5 Section 5 of the Law on Public Enterprises shall apply with the modification that:
(a) The Minister of Health and the Minister of Finance shall jointly exercise the ownership
responsibilities on behalf of the Government and shall be the shareholders of Health Sector Public
Enterprises. The Minister of Finance‟s role shall relate to the ownership interest [define this] and the
Minister of Health‟s role shall relate to the ownership as well as they purchase (service provision)
interest. Define this- the intention is for the Minister of Health to retain the role in policy on services
while Minister of Finance is concerned about the assets, liabilities, fiscal risks from a general point of
view in terms of oversight of these matters for the whole of the government. Another option to have
the Minister of Health alone as the shareholding minister]. For Health Sector Enterprises partially
owned by a municipality the Council of the Municipality shall be the shareholder for the municipality
shares. The Minister of Health and the Minister of Finance shall jointly exercise the ownership
responsibilities in respect of the central Government shares and the purchase (service provision)
responsibilities shall be exercised by the Minister of Health.
(b) The Select Committee shall include the Minister of Health and other ministers nominated by the
Prime Minister but shall not necessarily include the ministers named in section 5.
(c) The decisions of the government shall be implemented by the Minister of Health and other
ministers nominated by the Prime Minister [check the implication of the Law on Business and exclude
the explicit reference to it or modify the reference to it if it is inappropriate]
(d) Section 5.2 shall apply to Health Sector Public Enterprises that are partially owned by
municipalities [check the implication of the Law on Business and exclude the explicit reference to it or
modify the reference to it if it is inappropriate]
50.6 Ownership policies shall be issued as required by section 6 of the Law on Public Enterprises with
the modification that the Minister of Health and Minister of Finance shall jointly approve such policies
for all Health Sector Public Enterprises and the policy shall reflect the special nature of the Health
Sector Public Enterprises including the obligation to deliver public services while maintaining financial
and clinical viability. Section 6.2 shall apply to Health Sector Public Enterprises partially owned by a
municipality with the modification that the Minister of Health and Minister of Finance shall jointly
approve the ownership policy in addition to approval by the Municipality Shareholding Committee.
[note that ownership policy relates to the assets and liabilities of an organisation and the need to
maintain capability- the purchase interest (service provision) can be dealt with in the business plan
and service agreements and is much more in the domain of the Minister of Health while the ownership
interests is commonly a concern of a Ministry of Finance as well as a Ministry of Health- this is a
35

public finance distinction and if it is not well understood and used in Kosovo then it would be important
to clarify exactly how it will be used so the roles of the Minister of Finance and Minister of Health are
very clear and not confused.]
50.7 In addition to the powers and requirements in section 7 the shareholding ministers shall be
entitled to remove any or all members of the Board of Directors at an earlier date than two years if
one or both of the ministers are of the view that performance failures have occurred that relate to the
exercise of the governance role of the Board of Directors.
50.8 The POE Policy and Monitoring Unit shall focus on the ownership interests [define this] and shall
coordinate its monitoring with the Ministry of Health. The Ministry of Health shall have principal
responsibility for monitoring the service performance of Health Sector Public Enterprises and shall
have a joint responsibility with the POE Policy and Monitoring Unit to monitor the ownership interests.
The POE Policy and Monitoring Unit and the Ministry of Health shall proactively exchange information
and analysis to ensure that the monitoring is effective and efficient. [this expression of the roles and
responsibilities of these two entities could be more deeply defined to ensure clarity and how they will
cooperate]
50.9 The Ministry of Health shall have the power to exercise its roles assigned by law and the
restrictions in section 7.6 shall not apply to the proper exercise of such powers. [make sure that the
Ministry of Health has the power to fulfil its regulatory role and also the purchase interest]
50.10 Section 7.7 shall not entitle Health Sector Public Enterprises or the POE Policy and Monitoring
Unit to withhold information that should be in the public domain according to law or a decision of the
Minister of Health or Minister of Finance.
50.11 The reporting required by section 8 shall be included in the periodic and annual reports of the
Health Sector Public Enterprises which shall comply with the requirements pursuant to the Health
Law. [the reporting requirements need to cover the service performance which is not adequately
covered in the Public Enterprise law]
50.12 Section 9 shall not apply to Health Sector Public Enterprises. The government and
municipalities shall not sell shares, use shares for security, or otherwise deal in the shares of Health
Sector Public Enterprises as prohibited by section 41 of the Law on Public Enterprises except that the
government may amalgamate enterprises, close enterprises and otherwise reorganise them.
50.13 Section 10.1 shall not apply to Health Sector Public Enterprises.
50.14 Section 12.1 shall not apply to Health Sector Public Enterprises. The Health Sector Public
Enterprise shall provide services in an effective, economical and efficient way in compliance with its
obligations and shall ensure that it maintains and develops capability in a financially sustainable way.
The Health Sector Public Enterprise shall provide services in accordance with its statement of
forecast service performance in the business plan, any service agreements with the Ministry of Health
and other entities, and its other legal obligations. If the Ministry of Health and the Health Sector
Public Enterprise are unable to reach agreement then the Ministry of Health shall have the power to
impose the service agreement by serving a notice under this section setting out the terms of the
service agreement. Without affecting the status of this service agreement, the Health Sector Public
Enterprise shall be entitled to prepare an analysis of the issues with the service agreement imposed
under this section and proposals for variations to the service agreement for consideration by the
shareholding ministers who shall have the power to jointly require variations to the agreement. [this
provides for service agreements which are a key step towards clarifying what is provided for the funds
used and will be a basis for the future contracting with the Health Insurance Fund and other
purchasers if the health sector evolves in that direction. It can be a very useful tool for driving
performance improvements and can be designed to be very simple in the beginning to match
capabilities and become more sophisticated over time. The last resort power to impose the
agreement is necessary as the government needs this method to close down negotiations that
become unproductive and difficult to resolve as can happen in the early years of specifying and
pricing or costing services]
36

[check if section 13 is OK or are there laws that are unsuitable for Health Sector Public Enterprises?]
[section 14 it would be good to apply modern accounting standards to Health Sector Public
Enterprises but check how long it might take before they could comply as it requires staff with
accounting skills]
50.15 Section 15.2 shall be modified so that the appointment of the Recommendation Committee
shall be undertaken jointly by the permanent secretaries of the Ministry of Health and the Ministry of
Finance with the Permanent Secretary of the Minister of Health being entitled to appoint four
members and the Permanent Secretary of the Ministry of Finance being entitled to appoint three
members. Section 15.11 shall be modified so that the Minister of Health has the power to appoint an
acting chairperson.
[check other provisions of section 15 to test how suitable they are to apply to health Sector Public
Enterprises]
[modify section 16 to provide for Health Sector Public Enterprises that are jointly owned by central
government and municipalities]
[check section 17 to see if it will work for the Health Sector Public Enterprises- will there be enough
people with these requirements to fill all the board positions?- need to at least make the following
change]
50.16 Section 17 (3) b shall be modified to add one more specification for a director that they may
qualify under (i), (ii) or (iii) has experience in the health sector [the other requirements are about
commercial expertise so it would be useful to permit board members that have health sector
expertise]
50.17 Section 18 shall be modified so that the Board of Directors shall have the power to remove a
CEO for any material failure of organisational or personal employment performance or breach of
organisational or personal employment obligations without the limitation of the two year period.
[Modify section 20 to cover Health Sector Public Enterprise owned by central and local government]
[section 21.1 looks unfair as it permits termination of an employment contract without cause]
50.18 Section 29 shall be modified to include a requirement to report to the Ministry of Health on
service performance in the form and on the dates specified by the Ministry of Health. [MOH could
specify the reporting requirements for the statement of service performance in the business plan, the
service agreement and any other reporting requirements. It would be good to consolidate these
reporting requirements into simple templates that can be filled in electronically on commonly available
software like excel]
50.19 Section 30.1 shall be modified to require the approval of the Minister of Health and the Minister
of Finance of the business plan. The Minister of Health in consultation with the Minister of Finance
shall have the power to direct changes to the business plan should the Board of Directors not agree
with the Minister of Health‟s request to change the business plan. All directions from the Minister of
Health to change the Business Plan shall be made in writing and provided to the Kosovo National
Assembly for information. [this is important as Health Sector Public Enterprises are not simply
commercial entities and the Minister of Health needs to have a role in approving the business plan as
it will relate to the provision of essential public health services. Need to have the transparency about
directions. This draft gives the main power to the Minister of Health to give directions after consulting
with Minister of Finance. Need to draft a provision to cover the rights to direct changes to the business
plans of the entities that local government partly own.] Section 30 (1) a shall be modified to include a
requirement that from a date to be specified by the Minister of Finance the requirement for financial
targets will be replaced by a requirement to provide the following information in the form specified by
the Ministry of Finance: [see an example below- this can be adapted to suit Kosovo]
37

Forecast financial statements including the balance sheet; an income and expense
statement (operating statement); and cash flow statement for the forthcoming year and
two further years
A statement of the fiscal risks and risk management strategies
A statement of accounting policies to be used
Other information necessary to fairly reflect the financial operations of the Budgetary
Body for that year and its financial position at the end of the financial year
[phase this in as it will take time for hospitals to be able to do this]
Section 30.1 (e) shall be modified to add the requirement for Health Sector Public Enterprises to
provide a forecast statement of service performance in the form specified by the Ministry of Health.
Section 30.2 shall be modified to add the requirement that Health Sector Public Enterprises shall have
the obligation to disclose information and shall not be permitted to with-hold information on the basis
of commercial confidentiality except for information directly related to an actual competitive service
tender. The Health Sector Public Enterprise shall publish the Business Plan on its website by [date]
and the Ministry of Health shall publish the business plans for all Health Sector Public Enterprises on
the Ministry of Health website by [date]. [New Zealand health sector experienced many problems with
hospitals trying to make core service performance information confidential on the grounds they were
competing when in reality most hospitals are monopolies or near monopolies for the bulk of their
services and they use their dominant market power to prevent competition]
50.20 Section 31 (1) b shall be modified to add the requirement to report service performance in the
format specified by the Ministry of Health and financial performance in the format required by the
Ministry of Finance. [financial reporting should eventually be against the set of forecast financial
statements but this takes time to develop- should show these results compared to the previous 2
years]
Section 31 (2) shall be modified to add the requirement to provide the report to the Minister of Health
and Ministry of Health. Section 31 (3) shall be modified to add the requirement to report on the
statement of service performance comparing the forecast service performance in the annual business
plan to the performance achieved in the format specified by the Ministry of Health.
Section 31 (3) shall be modified to add the requirement to submit the annual report to the Minister of
Health and the Ministry of Health. The Health Sector Public Enterprise shall publish the Annual Report
Plan on its website by [date] and the Ministry of Health shall publish the annual reports for all Health
Sector Public Enterprises on the Ministry of Health website by [date]. Section 31 (4) shall be modified
to add that this requirement includes providing information as required by the Ministry of Health. [align
these provisions to the earlier one about reporting. Cover the reporting to municipalities when they
partly own an entity]
50.21 Section 33 (2) shall be modified to include a requirement to audit service performance as
specified by the Ministry of Health. [service performance auditing can be gradually introduced as
capability for specifying the requirements and doing the work develops- it takes time for auditors to
learn these skills]
50.22 Section 37 (2) shall be modified to include a requirement to provide information to the Minister
of Health and Ministry of Health on the performance of Health Sector Public Enterprises.
50.23 Section 41 shall be modified by adding the requirement that a Health Sector Public Enterprise
shall not create liabilities in the nature of debt without the express written approval of the shareholding
ministers. Such written approval shall be tabled in the Kosovo Assembly for information.[check how
this lines up with restrictions on debt]
50.24 The shareholding ministers shall have the power to suspend the Board of Directors in the case
of a service, financial or other failure that the ministers consider requires immediate intervention and
in such case the Ministry of Health shall take over the governance role of the Board of Directors for a
period determined by the shareholding ministers. The shareholding ministers shall replace some or
38

all of the directors as soon as practicable and return the governance functions to the board of
directors. The exercise of powers under this section shall be by notice in writing to the board of
directors and the notice shall be tabled in the Kosovo Assembly for information.
50.25 The Ministry of Health shall publish on its website all service agreements and contracts in their
entirety, with all health service providers, within 10 days of concluding the service agreements and
contracts.
The transition provisions need to allow of gradual implementation of new structures and requirements.
Consequential amendments
There will be consequential amendments required including the Public Finance Act to deal with the
new class of Health Sector Public Enterprises.
Other changes to the Health Law
Suitable transition provisions should be put in the Health Law. Some of the suggestions above take
time to implement and require capability to be developed.
The provisions drafted above do not provide for the role of the Health Insurance Fund at this stage as
that can be provided for later when its role is clearer.
This note has focused on the provisions relating to setting up Health Sector Public Enterprises and
has not considered other aspects of the Health Law that may need to be refined. Some areas
include:
The intention of the Working Committee to split the Kosovo Clinical Centre into three separate
autonomous clinics (section 75). They would need a clear organisational status with a
governance and accountability framework with clear roles and responsibilities which is
unclear from the current draft.
The Health Law is not clear enough about the role of the Ministry of Health in policy, strategy,
and monitoring in primary care and other sectors and the proposed changes to the law does
not improve this situation.
Primary health care centres appear to be expanding into secondary care under the proposed
changes to section 29. Has this been carefully assessed to ensure it is likely to improve the
efficiency and effectiveness of service?
The Working Group discussed the issues relating to public and private practice including
various proposals to deal with the current conflicts of interest. It is suggested that the
conflicts of interest be assessed in detail and various possible solutions to dealing with them
be considered. Some may require changes to laws but some will have contract, managerial,
information provision, monitoring, auditing and other solutions.
The Working Group has suggested a 2010 date for commencing the Health Insurance Fund‟s
operations. This appears a highly unlikely target date.
A suggested change to the Health Law involves exempting a large group of people from copayments.
Co-payments can be very useful in modifying behaviour and should not be
excluded in such a broad way. For example higher copayments for casual visits for
treatments in secondary care can be set at a higher level than copayments for the treatment
in primary care.
There is a proposed provision that uninsured people will pay for services at “economic
prices.” What does this mean? It would be better to simply say they will pay and not to put
other requirements in the law (like economic price). The Ministry of Health and providers will
39

need to work out the pricing policies which are likely to vary according to provider and
services and change over time.
The permission in the law for health institutions to provide additional service under contract
makes it very important that the institutions are put into a more robust governance and
accountability framework as discussed in Appendix G to increase the controls and incentives
for good management of their operations to meet their obligations and use resources as
appropriate. There will be increased revenue flows and increased risks of not using these
well unless many of the suggested improvements in Appendix G are made.
The Working Group has added requirements for master‟s qualifications for pharmacists. Is
this realistic and necessary? Is this an unnecessary restriction of the market?
40

Template for examining decision rights of various agencies
The current allocation of decision rights for hospitals and other health sector public institutions could be analysed to identify problems. The changes to the law
should reflect solutions to those problems. The draft legal provisions in this report should also be analysed in this template to see if they represent a workable
arrangement of decision rights. This is particularly important given that the provisions represent some significant changes to decision rights and given that the
provisions were prepared in a very short period of time without being able to discuss the implications with the Working Committee on the Health Law.
Name of agency
Personnel
Hire CEO and others
Pay and conditions CEO &
others
Promote
Discipline
Dismissal
Train
Change positions and structure
of organisation
National
Assembly
Cabinet
President
(Office of
President )
41
Ministers
(specify
which ones)
Ministry of
Health (PS or
other
managers)
Board of
agency
Head (CEO)
of agency or
other
managers
Others
(specify such
as MOF
roles)

Name of agency
Procurement
Minor items
Major capital
Contract out work
Finances
Approve budget
Manage cash
Raise revenue and use it
Use of surplus
Obtain grants
Borrow
National
Assembly
Cabinet
President
(Office of
President )
42
Ministers
(specify
which ones)
Ministry of
Health (PS or
other
managers)
Board of
agency
Head (CEO)
of agency or
other
managers
Others
(specify such
as MOF
roles)

Name of agency
Invest
Give loans
buy assets
Sell assets
Set internal accounting and
reporting conditions
Set external accounting and
reporting conditions
Set internal audit conditions
Set external audit conditions
Service standards and quantities
Set service volumes
National
Assembly
Cabinet
President
(Office of
President )
43
Ministers
(specify
which ones)
Ministry of
Health (PS or
other
managers)
Board of
agency
Head (CEO)
of agency or
other
managers
Others
(specify such
as MOF
roles)

Name of agency
Set service standards
Review
Review performance
Deal with performance issues
of entity
Policy decisions
Major policy changes
Operational policy
Grant a property right
Grant licence, lease or other
property right
Remove property right
National
Assembly
Cabinet
President
(Office of
President )
44
Ministers
(specify
which ones)
Ministry of
Health (PS or
other
managers)
Board of
agency
Head (CEO)
of agency or
other
managers
Others
(specify such
as MOF
roles)

Name of agency
Modify a license
Cancel a license
Apply fee or charge
Apply a fee or charge for a
license or service or other
reason
National
Assembly
Waive tax, duty, charge, fee, debt, requirement
Waive or reduce a charge or
fee (specify)
Waive a debt
Waive a condition of a license
Enforcement
Seize property
Cabinet
President
(Office of
President )
45
Ministers
(specify
which ones)
Ministry of
Health (PS or
other
managers)
Board of
agency
Head (CEO)
of agency or
other
managers
Others
(specify such
as MOF
roles)

Name of agency
Suspend or cancel license
Other enforcement (specify)
Waive enforcement
Waive other penalty due e.g.
interest on debt
Waive prosecution or laying of
complaint
Waive other type of
enforcement (specify)
National
Assembly
Regulations, rules, instruction making powers
Make regulations, rules,
instructions that bind other legal
entities, public or groups
Cabinet
President
(Office of
President )
46
Ministers
(specify
which ones)
Ministry of
Health (PS or
other
managers)
Board of
agency
Head (CEO)
of agency or
other
managers
Others
(specify such
as MOF
roles)

The issues raised at the start of this section can be reviewed to see if the provisions suggested above
would resolve these issues. Notes are made on this below in italics.
Increasing incentives for performance- budgets are not always the problem, for example cleaning
is fully funded but the standards of cleanliness vary between hospitals with some being less
satisfactory than others. Service quality can be poor in some hospitals. There would be greater
transparency about the level and quality of service provided if there was a systematic approach to
specifying services in the Statement of Service Performance, service agreements, and the reports
on performance. The Minister of Health would have power to influence the business plan. The
Ministry of Health would have power to set requirements for volumes and standards in the service
agreements and to monitor their achievement. Payment could be tied to performance to
incentivises hospitals to comply although this needs to be carefully implemented.
Ensuring that services of an adequate quality are provided though-out the country and that there is
reasonable even access to services within the constraints on the health system. See the comments
above as the same tools can be used.
How the MOH can exercise its regulatory, standard setting, policy, monitoring and other roles to
provide a positive influence on hospital services, including its role in setting policies to deal with
issues with referral patterns. As above- the service agreements can be used to create
requirements, incentives and sanctions to change referral behaviours. For example hospital
contracts in New Zealand were designed to create incentives for hospitals to refer patients who
presented at accident and emergency services with minor complaints back to primary care by
allowing hospitals to retain a portion of the savings and to apply these to agreed projects including
staff education and improved equipment.
How to deal with potential problems of uneven service levels and quality if some hospitals are
under the control of municipalities. The changes to the Health Law suggested above retain key
ownership and purchase roles for central government in hospitals where municipalities have a joint
ownership interest in minority areas. Kosovo is a very small country in terms of geography and
population and devolution to local government of hospitals would be likely to result in considerable
efficiency and effectiveness issues. This is a particular risk given the possible capability issues with
municipalities taking on this role given the complex nature of the ownership role for hospitals and
the lack of skilled staff. A critical mass of staff with the required skills would be very difficult to
develop at the municipality level. Another problem that can occur is that local governments can
have interests in these hospitals that are aligned to their desire to retain jobs and expand services
that are out of line with national interests and taxpayer interests in having an efficient and effective
health service. It can be very hard to restructure and downsize hospital services once they are
devolved to local government. These are some obvious points to consider and a fuller analysis
should be undertaken to fully assess this matter.
Kosovo Medicines Agency
There is a suggestion that the Kosovo Medicines Agency should have set up as an independent body
under the Constitution. There are reasons that this would not be appropriate as discussed below.
Constitutional bodies that have special status are bodies that serve interests that are aligned to the
Parliament and the public that it is inappropriate for government to influence. These are a narrow range of
bodies including the courts which may have to rule against the government, the Ombudsmen who has to
investigate government, the Auditor General who provides assurance to Parliament on the proposer use of
resources by government, the Electoral Commission which must be free of government influence in
undertaking its duties, the Central Bank which has to exercise its monetary policy role free of government
influence, and in the case of Kosovo, the Independent Media Commission which has a role of protecting
media freedom. The independence of these entities is reinforced by provisions in the Public Finance Act
which restricts the ability of the government to interfere with these institutions by providing insufficient
budget funds. While the Constitution provides for the creation of other independent institutions these should
only be institutions in the same class as the other institutions, being institutions that can significantly affect
the government and that may require protection from the government.
The Kosovo Medicines Agency is not in this class of institutions. It is performing functions on behalf of
government in regulating and licensing drugs and medical products as well as other functions. While it is
performing regulatory functions, it is regulating the private sector and public sector providers, and not
47

assessing or making decisions on the activities of the Government in the sense of the cabinet and MPs,
unlike many of the constitutional independent bodies which can be required to do this.
It would be possible to improve the governance and accountability arrangements for the KMA by applying
the arrangements proposed for hospitals, discussed above. A similar institution in New Zealand (Pharmac)
is set up under arrangements like those proposed for hospitals and it is classified as an agency that must
give effect to government policy, rather than an agency with a degree of autonomy.
Linking planning, budgeting, reporting and monitoring
The government as a whole can operate an integrated management cycle as illustrated below. This links
planning, budgeting reporting, monitoring and auditing at an aggregate level for the government.
Figure 1: Cycle of planning, budgeting, management, reporting
1. Strategic public financial
resource management: Policy
formation; resource envelopes;
strategies for revenue,
expenditure, assets, liabilities, &
risks for the medium term
6. Monitoring, reviews, external
audit and scrutiny-Monitoring by
various institutions; reviews
including joint donor/government
reviews; audit by Supreme Audit
Authority and scrutiny by
Parliamentary Committees
2. Short term financial planning
(annual budget) Allocations to
budget institutions, local
government, civil society &
citizens; financial and non
financial specifications for
budget institutions and
agencies- financial and
ownership performance
requirements for SOEs
5. Accounting and reporting
Internal and external quarterly
and annual reports on financial
and non financial performance
48
3. Execution of revenue and
expenditure policies,
implementation and management-
Management of performance of
budget institutions and agencies
including service delivery,
procurement, personnel, information,
cash management, fixed assets, risks,
raising and managing debt, managing
SOE financial performance
4. Internal control,
internal audit and
internal monitoring
for all government
institutions during
the year
Box 1 is often reflected in the fiscal strategy document preceding the annual budget. Box 2 is reflected in
the annual budget and related accountability documents like a formal plan for each ministry and other
budgetary body. Box 3 is the budget execution. Box 4 shows the internal control for ministries and
budgetary bodies. Box 5 shows the internal and external reporting. Box 6 shows the monitoring, reviews
and audits that provide assurance on the performance data (audit) and reviews of performance to help
provide information on how to make improvements in the future.
The integrated management cycle provides the environment for performance based management to
operate. It involves good performance specification, reporting on that performance, management to deliver
the performance and review of the performance.
This cycle can be reflected at the level of every ministry and other health institution with the preparation of
the institutional plans and budget, delivery of services, preparation of performance reports, monitoring and
auditing as shown in the figure below.

Figure 2: Integrated management cycle at institutional level
At the moment some health institutions are not preparing operating plans as required by the Health Law.
There is an opportunity to reinforce this cycle through the use of institutional level plans that are linked to
the higher level plans and budget requirements. The suggestions above relating to the hospitals include
key aspects of this cycle. As systems, processes, information and skills developed, this cycle could be
used to increasingly lift performance by creating performance expectations and revealing performance
results in a more systematic and informative way.
If the Department of Strategic Management in the MOH is strengthened it could formulate guidelines and
templates for the plans and reports and take a key role in facilitating the planning, budgeting, reporting and
monitoring work in the MOH. While the detail of this work can be undertaken in the relevant departments,
the Department of Strategic Management would take a leading facilitation role.
Ministry of Finance role in policy and finances
Introduction
Four issues were raised about the role of the Ministry of Finance in affecting the policy and finances of the
health sector: insufficient funding and some health sector priorities not being funded; difficulties in changing
funding allocations during the year; revenues not returned to institutions earning them and rigid caps on
employee numbers. Comments are made about possible improvements in these areas.
Insufficient funding
Comments were made that the health sector budget is low as a % of GDP and as a % of the State Budget
and that it is not receiving a sizable share of the budget increase each year. The MOH has not been
successful with all its budget bids despite being recognised as producing budget bids that are well aligned
49

to its priorities. A suggestion was made that a certain % of the budget should be ring fenced for the health
sector.
The MOF noted that the MOH prepared a good budget bid and that the MOF forwarded its proposals for
consideration to the government rather than rejecting them, so it appears that the decision not to fund the
proposals was made at the political level. To strengthen the MOH‟s arguments for a larger share of the
expenditure in future budgets it could present information on the trend in expenditure on health compared
to other areas as a % of GDP, as a % of the State budget and in comparison to other countries. The draft
Health Sector Strategy lacks this analysis and leaves the MOH in a weak position to argue its case for
increased funding.
Ring fencing budget shares for a sector is often argued against as poor practice in public finances as it
prevents a full consideration of relative priorities between sectors, particularly as the ring fencing if adopted
for one sector can spread to ring fencing for other sectors. Some countries have operated poverty
reduction ring fencing for some sectors and as a result have neglected investment in other areas that
promoted economic growth, such as infrastructure investment. There can be other problems with ring
fencing, for example in Vietnam the rings fencing of 20% of the budget for education caused problems for
provinces with rapidly growing revenues that they were unable to apply effectively to education and
prevented them from investing in other priority areas. It was also difficult to apply the ring fencing through
the local government and central government spending as local governments had some autonomy over
expenditure and did not always spend the amount of the transfer from central government calculated for a
sector on that particular sector. Any proposal for ring fencing should consider these and other issues.
A more effective approach would be to present well justified proposals for expenditure including the
analysis of the budget shares and to demonstrate results from the use of the budget funds.
Changing the use of funds during the year from the appropriations in the budget
The comment was made that it can be difficult to fund emerging priorities during the year and to move
expenditure.
While the Public Finance Law has reasonably generous virement provisions, in practice they can be
laborious to implement as the budget is executed at a detailed level. There are four larger groups of
expenditure: capital, salaries and wages, goods and service and other recurrent expenditure, with more
detailed categories below these classifications such as types of utility expenditures. This arrangement for
the budget is common when countries are focused on control of expenditure and cash management. As
budget systems evolve, larger classifications of expenditure are used and greater flexibilities are provided
to budget organisations to move expenditures, but these flexibilities are accompanied by increased
accountability for performance and greater internal financial management controls. Taking this stage of
evolution into account, the MOH could explore options to accelerate their flexibilities to manage funds by
offering to pilot aspects of performance based budgeting which is commonly accompanied by greater
flexibilities in the management of resources, in return for greater demonstration of service and financial
performance. The suggestions relating to the statement of service performance and the use of service
agreements discussed in this appendix in relation to hospitals are examples of some elements of
performance based budgeting that can be used to support an argument for greater flexibility in the use of
resources.
Revenue earned by institutions are not fully returned to institutions
The comment was made that the arrangement of concluding an MOU each year with the MOF on the
percentage of earned revenues to be allocated to the health sector is an unnecessary process as the
revenues should be 100% allocated to the institutions. This would improve the incentives to collect the
revenue and provide resources for projects to improve services and working conditions.
The MOH could develop a policy proposal to government to support this proposition for the health sector.
The proposal could set out:
Description of the issues with the current arrangements
Proposal for change and description of benefits of the change. The MOH may wish to present
various options such as retention of revenue for some institutions only rather than all institutions
particularly if there are particular risks with conflicts of interest as with regulatory and licensing
50

fees. The proposal could exclude these institutions and focus on service provision institutions
where there are no regulatory elements involved in the services.
Risks involved in the proposed new arrangements and how these will be managed
Full description of the revenues involved, past levels of collection and the forward projects for the
next 3 years assuming current conditions and comparing this to forecast revenues if institutions
could use these revenues
Actions required to implement the MOH proposal.
In developing this proposal the MOH should ensure that it deals with the risks and risk management very
well, as this will be an area of concern to the MOF, the government and its advisers. The risks would
include: excessive charges being levied on customers; mismanagement of cash; and the use of funds on
low priority expenditures. The MOH should also think through the risk that the retained revenues will simply
be offset in the budgeting process by reducing the allocations in the budget to the institutions earning the
revenues.
The proposal could be developed alongside the work to set up hospitals in the Health Sector Public
Enterprise framework as that framework implies the development of better financial management
arrangements. This issue of earned revenues must be sorted out for hospitals if the proposal proceeds to
have them provide services to various payers (Health Insurance Fund, private insurance companies,
service uses without coverage, etc). Some countries have very strict rules for setting fee levels to ensure
they are set at the cost of providing the service and are not cross subsidising other services or set at levels
exceeding the costs, otherwise they are in the nature of a tax and not a fee. Only the Parliament should
create tax obligations on citizens and this breaches a fundamental principle about no taxation without
representation which applies in many countries. For examples of rules about fee setting see the
documents in the footnote. 15
Rigid caps on employee numbers and expenditure
The caps on the employee numbers and expenditure levels were noted as an issue particularly when it
prevented the implementation of key policies like the methadone services and the continuation of the
mental health services formerly funded by donors.
These caps are likely to remain until the economy is more robust and less influenced by conditions agreed
with international institutions. There may be some possibility of making robust arguments to modify the
application of these caps to some health sector entities if it can be demonstrated that the positions can be
funded within the overall budget and are linked to demonstrated service performance. For example, if the
Health Sector Public Enterprise framework is set up for hospitals and other health sector institutions and
they demonstrate performance related to the efficient use of resources, the argument for applying the caps
on employee numbers in a more flexible way to these institutions could be made. It is difficult to do this
while these institutions are under their current governance and accountability frameworks which involve the
detailed input budgets in the central government format. The movement to better accounting arrangements
and more flexible use of resources requires institutions to develop new capabilities and demonstrate their
ability to manage effectively in order to earn the greater flexibilities.
15 See for example Australian Commonwealth Cost Recovery Guidelines for Regulatory Agencies www.dofa.gov.au,; OECD Best
Practice Guidelines for User Charging for Government Services, March 1998. www.oecd.org; NZ Treasury Guidelines for Setting
Charges in the Public Sector 2002 www.treasury.govt.nz; Ministry of Agriculture and Forestry New Zealand, “An Approach to
Recovering the Costs of Services Provided by MAF,” a report prepared for MAF by Mary Clarke, NZIER, March 2000, ISBN 0-478-
20062; NZ Audit Office Guidelines on Charging for Public Sector Goods and Services 1989. Other examples from Europe could also
be reviewed. The scope of this report did not expend to doing this.
51