9 15. In addition to benefitting from direct project support, capacity building and policy reform also occurs as an outcome of the process of sector dialogue and project implementation. For example, the Morocco Health Sector Investment Project is building on studies of financing and hospital administration, which were financed under the first Health Development Project. Follow-up by the government includes a major decentralization of hospital administration, financial control and fee collection, and wide-ranging reforms of the entire sector. These will be discussed at the government's second annual National Conference on Health Financing, where the potential reforms to be discussed are expected to include greater use of private sector health insurance, changes in the role of the social security system and that of the public health services in the provision of care, and modification of the investment code (linked to the Bank's economic work) to facilitate investments in private sector practice. Successful policy reform, which may occur as a result of this process, will provide a useful model for other countries and regions in the world.

# Management/lnstitutional Development

16. Recent Bank investments reflect an increasing appreciation of the unequivocal importance of developing institutional capacity and sound management skills and practices in achieving PHN sector objectives. Virtually all PHN projects approved in FY90 include some provision for improving efficiency of programs and services through management strengthening interventions. Accompanied by the program approach described above (paras. 13-15), there has been a further and much-needed evolution towards a program (vs. project) management approach in Bank investments in the PHN sectors. In other words, Bank-financed management interventions are less concentrated than in the past on ensuring the effective implementation of a Bank-financed project in isolation, and more concentrated on the effective and efficient implementation of major policies and programs, whether Bank-supported or not. Virtually aU projects have taken great care to ensure that the overall responsibility for project management and implementation rests with the appropriate line Ministry. The Yemen Health II SAR emphasizes this point by noting the very difficult and problem-ridden implementation of the Yemen Health I Project, which was attributable in part to the isolation from the Health Ministry of that project's management unit. Responsibility for oversight and coordination of the Morocco Health Sector Development Project is placed under the Planning Division in the Ministry of Health.

17. Key management/institutional development issues in the PHN sectors are numerous and complex and are crucial to achieving improvements in PHN sector performance. Salient management topics which should be addressed through Bank's project and sector work include: policy implementation and management; implementation of decentralized policies within the health sector, management and organization of services of the MOH; use and maintenance of MIS; management capacity building; inter-ministerial/inter-agency coordination; cofinancing and aid coordination; budgeting and financial management; management and delivery of services at the periphery, supervision; management and coordination of private sector and NGO activities. The list is not exhaustive, but iUustrates the complexity of needs analysis work and of the design and implementation of appropriate interventions in this area. There is some variance in the degree to which Bank interventions have attempted to address these issues. A number of interventions to strengthen the management of an institution or part of an institution are limited to the provision of training, technical assistance, additional staff and equipment, and have not rigorously addressed more difficult and sensitive issues such as: the organizational structure of ministries and of the programs and service delivery systems; the extent to which such organizational structures respond to decentralization policies; problems of inter-agency coordination and territorial issues. There are, however, notable examples of projects which have addressed these issues fully and squarely. The Nigeria Essential Drugs Project is supporting O!ic restructuring and consolidation of institutions responsible for the pharmaceutical sector at the