Overview In the early 1920s, Mongolia became part of the Soviet coalition. As a result, the Soviet Union heavily supported Mongolia’s health system—not only by building infrastructure, but also by providing services and covering budget deficits. This support continued for decades until the Soviet Union collapsed in 1990, cutting off assistance almost overnight. The sudden loss of support severely disrupted Mongolia’s health system and limited its ability to provide widespread access to basic health care. However, this crisis also created an opportunity to address the system’s long-standing weaknesses: low efficiency, poor quality, and limited responsiveness to patient needs, despite having a high number of hospital beds and medical staff. In response, Mongolia began a long and ongoing process of health system reform. To rebuild and modernize its health system, Mongolia introduced a compulsory national health insurance scheme, strengthened primary health care, and invested in district-level capacity and infrastructure. The country implemented a series of health sector development programs focused on improving service quality, aligning financing incentives, and expanding access, especially in underserved urban and rural areas. Context Mongolia adopted the Soviet Union’s Semashko model for its health system—one of the most influential frameworks for organizing, managing, and financing health care globally. This model placed full responsibility for health care financing and delivery on the state, emphasized strong central planning, and guaranteed free and universal access to care, with a focus on controlling communicable diseases. It operated as a single-payer system funded by the national budget, measuring success through inputs, such as the number of doctors, nurses, and hospital beds per capita, rather than improvements in population health outcomes. The Semashko system served Mongolia reasonably well until the 1970s. However, by that time, it struggled to keep pace with advances in medical technology and rising public demand for better services. Hospitals had an excess of acute care beds, yet many admissions lacked medical justification, and patients often stayed longer than necessary. Service delivery failed to align with the actual needs of the population. After Mongolia transitioned to a market economy, the existing health financing model became unsustainable. State health expenditure dropped sharply—from 6.7% of GDP in 1990 to just 4.0% in 1992. As a result, citizens began paying out of pocket for services that were previously free. In response, the Ministry of Health, with support from international partners including the Asian Development Bank (ADB), conducted a comprehensive review of the health sector in 1992. The findings highlighted the urgent need for a major overhaul to improve quality, efficiency, and responsiveness, and to adapt the system to the realities of a market-driven economy across Mongolia’s administrative regions. Challenge At the time, policymakers and health system administrators in Mongolia had limited exposure to how other countries (outside the Semashko model) financed and managed their health care systems. This lack of comparative knowledge made it difficult to identify viable approaches for Mongolia’s post-Soviet political and economic context. In 1994, the Government of Mongolia set out to address two major development challenges: shifting the focus of health care from hospital-based curative services to primary health care, and reforming health care financing to improve efficiency. Although the government had already initiated financing reforms, such as introducing a compulsory national health insurance scheme and passing related legislation, it lacked the technical capacity to implement these changes effectively. Solution The government studied health insurance schemes and policies from other countries, using this knowledge to establish the administrative structures and information systems needed for Mongolia’s own system. It also invested in building the capacity of social and health insurance staff. Technical assistance (TA) from ADB helped Mongolia transition its health insurance scheme into an integrated social insurance system. Subsequent ADB-supported technical assistance projects laid the foundation for a series of ongoing health sector development loans. Mongolia began strengthening primary care in urban areas, while the nomadic rural population continued to benefit from a well-functioning network of “soum” hospitals. The goal was to reduce reliance on expensive hospital care by improving access to primary health services. The country’s first Health Sector Development Program launched a decades-long process of reform. Each of the six health sector development programs to date has contributed to building capacity and driving continuous improvement in the health system. The sixth Health Sector Development Project, which began in 2019 and will run through 2029, is being implemented in three phases and includes a $158.3 million loan. Outcomes Mongolia’s health system reforms have consistently focused on delivering efficient, effective, and sustainable health care for all. Progress is evident across multiple dimensions of the health system. Improved capacity at district level. As part of hospital reform and rationalization, Mongolia upgraded district hospitals to reduce the need for patients to seek care at tertiary-level facilities for simple cases. The Songinokhairkhan District Hospital, serving Ulaanbaatar’s largest district, was expanded and modernized. It now offers specialized services that were previously unavailable at the district level and serves as a model for future hospital upgrades. Stronger laboratories and blood services. Mongolia strengthened its laboratory and blood services by establishing an internationally accredited blood transfusion center and upgrading blood banks in all 21 provinces. The country also improved access to safer medicines by enhancing the national drug control laboratory to meet international standards and supporting pharmaceutical manufacturers in adopting good manufacturing practices. Expanded access and infrastructure. The government built new health facilities and upgraded existing ones, including district and family health centers and provincial general hospitals. It also enhanced information and communication technology to support diagnostic and treatment capabilities, particularly in rural areas. Financing incentives aligned with outcomes. Mongolia now operates a more efficient health financing system with a single purchaser for services. This structure incentivizes hospitals and primary care providers to improve service quality. At the same time, the population has become more aware of its right to demand better care. The country has successfully blended the strengths of the Semashko system (such as fiscal discipline, strong immunization programs, and outreach to remote areas) with market-oriented reforms like social health insurance, public–private partnerships, and performance-based payment models. Lessons Set specific goals within a long-term vision. Each health sector reform project in Mongolia had its own set of deliverables. However, taken together, these projects formed a continuum of support for capacity building and system transformation. The first technical assistance project, which helped establish the social health insurance system, lasted four years. While its scope was limited, its outcomes informed the design and direction of subsequent projects. This iterative approach allowed the government to adapt and course-correct while staying aligned with long-term health system goals. Take a pragmatic, step-wise approach. Although the project-by-project method could be seen as fragmented, it proved to be an advantage in Mongolia’s rapidly changing environment. The country experienced significant urbanization and social and economic shifts, making flexibility essential. In such a dynamic context, implementing a series of short-term, pragmatic projects with achievable goals allowed the health system to evolve steadily and effectively. This approach also enabled various sector stakeholders to engage meaningfully and contribute to reform efforts. Resources A. Jigjidsuren, B. Oyun, and N. Habib. 2021. Supporting Primary Health Care in Mongolia: Experiences, Lessons Learned, and Future Directions. East Asia Working Paper Series No. 035. Manila: Asian Development Bank. A. Jigjidsuren, B. Oyun, and N. Habib. 2021. Rationalizing Mongolia’s Hospital Services: Experiences, Lessons Learned, and Future Directions. East Asia Working Paper Series No. 037. Manila: Asian Development Bank. A. Jigjidsuren and B. Oyun. 2022. Supporting the Regulation of Medicines in Mongolia: Experiences, Lessons Learned, and Future Directions. East Asia Working Paper Series No. 049. Manila: Asian Development Bank. A. Jigjidsuren, B. Oyun, and N. Habib. 2022. Supporting Health-Care Financing Reform in Mongolia: Experiences, Lessons Learned, and Future Directions. East Asia Working Paper Series No. 055. Manila: Asian Development Bank. Ask the Experts Altantuya Jigjidsuren Principal Social Sector Officer, Human and Social Development Sector Office, Sector Department 3, Asian Development Bank Altantuya Jigjidsuren has served as a social sector specialist at ADB’s Mongolia Resident Mission since 2012. Before that, she was director of the Health Policy Planning Department at the Ministry of Health and later served as State Secretary of the Ministry. She earned her medical degree from the Medical University of Mongolia in 1990 and completed a master’s degree in medical science in 1997. She also holds a master’s degree in medical administration from Nagoya University in Japan. Asian Development Bank (ADB) The Asian Development Bank is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—49 from the region. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.