Working in Health: Financing and Managing the Public Sector Health Workforce Chapter 4 – Background Country Study for Dominican Republic Marko Vujicic, Kelechi Ohiri, Susan Sparkes with Christoph Kurowski and Claudia Rozas The World Bank, Washington, DC

Outline  Country macroeconomic and fiscal context  Impact of government wage bill policy on the health workforce Wage bill budgeting process Budget for overall wage bill Budget for health sector wage bill Impact on staffing  Human resource management policies and practices in the health sector Creating funded posts Recruiting health workers Tenure (types of contracts) Paying health workers Promotions and sanctions  Key Messages

Macroeconomic and Fiscal Context  2002: Recession following government bail out of the country’s third-largest bank.  2003: Inflation reaches 42%, unemployment stood at 16.5% and Dominican peso lost more than half its value.  As a response to crisis government implemented significant expenditure controls. Hiring freeze in the public sector. Despite nominal wages increased, central government employees real wages decreased due to inflation. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Macroeconomic and Fiscal Context  A key development priority of the government of Dominican Republic is to cut non-priority administrative expenditure and use this savings to increase spending on health and education.  2001: General Health Law and the Social Security Law proposes separation of financing from service provision. Ministry of Public Health and Social Assistance (SESPAS) would move to a stewardship role National Insurance Agency (NIA) would be responsible for purchasing services from autonomous, regional health service networks.  Implications for health workforce SESPAS has to develop a robust regulatory framework for HRH. HRH management has to be transferred from SESPAS to regional health services. Regional health services have to build managerial capacity to effectively respond to changes in demand for services.  During time of study, these reforms were under way but not fully implemented. SESPAS is still major employer of health workers.

Impact of Government Wage Bill Policy on the Health Workforce

Wage bill budgeting process 1. In times of economic crisis, the government sets a target for overall wage bill. In recent years, with no crisis, there is no explicit target. 2. SESPAS prepares overall budget based on budgetary ceiling set by Ministry of Finance (MoF). SESPAS estimates the wage bill requirement for sector and includes it as a line item in the budget. 3. Sector budgets are consolidated and negotiated between MoF and SESPAS, including the wage bill budget for health. Health worker staffing levels are adequate and therefore increases in health wage bill are primarily for wage increases or staff for new infrastructure. 4. Congress approves final budget, including ceilings for SESPAS and the health wage bill. Congress often adjusts ceilings. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Budget for overall wage bill  : Government implements significant expenditure controls as a result of financial crisis, including a hiring freeze in the public sector. Public sector wage bill as share of GDP decreases.  2005: Government increases nominal wages of government employees by 30%, in order to somewhat keep pace with inflation.  2006: Congress approves a budget with a zero deficit requirement. Keeps nominal wages constant, except for doctors and teachers. Measures meant to offset increases in social spending associated with reaching the MDGs. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Budget for health sector wage bill  Health and education prioritized with in overall public sector wage bill – 2005: Overall government hiring freeze, no exemptions for health and education. Health sector seems to have been insulated from reductions in overall wage bill. 2006: Doctors and teachers exempted from the wage freeze. 2006: As a result of labor conflict and union agreements, an increase of incentives for night shifts, distance and years at work was implemented. 2007: 20% increase in wages agreed upon with unions.  Staffing levels are viewed as sufficient. Pressure on wage bill resources to increase salaries. Health worker salaries are negotiated separately from administrative workers. Unions and organized professional associations are very powerful Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Impact on staffing Hiring Trends  Health worker employment: SESPAS employs 64.6% of health workers Social Security Institute employs 25% of health workers Private sector employs 8.3% of health workers Army employs 0.8% of health workers NGOs employ 1.0% of health workers  Net recruitment has fallen. But recruitment is not a major priority Budget Execution  High for salaries in SESPAS. Close to 100%  Scattered and unreliable for allowances and other remuneration Ranges from 292% - 85% Negotiations with unions on allowances takes place throughout the year. SESPAS is allowed to reallocate funds from other areas throughout the year. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Human Resource Management Policies and Practices in the Health Sector

Creating funded posts  Most new health posts are created as a result of construction of a new facility or the departure of a current health worker.  Any new positions have to be approved by Office of Personnel Management for overall civil service and then by the Ministry of Finance.  General Health Law and the Social Security Law places emphasis on primary health care. Efforts are underway to strengthen primary care services, and their staff base.  Initiative underway to reform Office of Personnel Management to address inefficiencies in creating new positions. Four distinct HR policies for education, health, judiciary and foreign affairs will be independent from the law for civil service. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Recruiting health workers  Supposed to be managed regionally, but in practice most selection and recruitment is conducted centrally.  Not strategic, not public, not advertised and not transparent.  SESPAS makes final selection of candidates, but many times regions provide a short list of candidates.  Recruitment system provides a high level of discretion in selection process and in negotiating salaries and benefits.  Poor geographic distribution. Health workers concentrated in a few provinces. Movements to Santo Domingo are prohibited.  To be transferred a health worker has to enter into an entirely new recruitment process.  SESPAS has initiated a mapping study to address these problems. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Tenure  Two types of contracts : Short-term – annual and renewable Used more than policy allows Employs medical residents who are not covered by SESPAS employment regulations Used to cope with inflexible hiring arrangements Used to pay for extra time Ordinary – permanent and pensionable 2006: 76% of health wage bill  Legal required hours of work has fallen Maximum number of hours of work per week = 20, which is down from 30 hours per week previously Result of health worker’s strike and negotiations with unions Allows for greater dual practice. Health care workers are able to increase their take- home pay by devoting more hours to private practice.  National Insurance Scheme (NIS) Will increase demand for health services Unions are now focused on increasing fee schedule under NIS Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Remuneration  Three types or remuneration Salaries Allowances Incentives  Health worker salary scale different from overall civil service salary scale  Salaries vary widely from region to region and individual to individual  No formal relationship between salary and job characteristic  Unions play a large role in setting salaries. Negotiate annually to determine salary levels of health workers. Strikes are common.  2001 – 2005: Real wages increased by 45%. Salary increases are seen across civil service and are not unique to health. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Remuneration  Allowances 2006: account for 14% of overall health wage bill Allowances and incentives are not paid according to SESPAS policy. Lack transparency and equality.  Fixed allowances Remote areas Supposed to be tied to position. However, once a worker is transferred becomes a permanent part of salary and distorts objectives of allowance. Not enough to motivate workers to work outside of Santo Domingo. Years of service – Only after 14 year of service, and then every 5 years after  Variable Incentives are intended for good performance and working extra hours. No clear regulations. No specific budget line item and SESPAS has to reallocate funds away from other activities through special transfers. Performance-based incentive scheme is not implemented Extra hours allowance increasing after implementation of 20 hour work week

Promotion and Sanctioning  Promotion Performance evaluation system never implemented 9 steps of approval listed in HRH regulation Based primarily on seniority and political favoritism  Termination and sanctioning Despite stated policy, there is no evidence of termination or sanctioning. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.

Key Messages  In response to an economic crisis and in line with recommendations of the IMF, the government significantly reduced the size of the public sector wage bill.  The health sector accounted for a steadily increasing share of the overall wage bill and was protected  In the absence of an explicit HRH strategy, wage bill resources have been used primarily to ensure that facilities are appropriately staffed.  The government has had no explicit, comprehensive government strategy for HRH.  As a result of roll out of NHI, negotiations between the government and labor unions have shifted to focusing on reduced hours worked (20 hrs per week).  The low-level equilibrium of pay and working hours has led to an increase in the use of temporary contracts.  There is scope to improve the recruitment process.  Allowances can be used more strategically.  Sanctioning, promotion, and transfer practices are not carried out according to policy. Source: Vujicic, Ohiri and Sparkes (2009), Working in Health: Financing and Managing the Public Sector Health Workforce, Washington, DC: World Bank.