Document of

The World Bank

FOR OFFICIAL USE ONLY

Report 25809-DO

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN IN THE AMOUNT OF

US$30.0 MILLION

TO THE DOMINICAN REPUBLIC

FOR THE HEALTH REFORM SUPPORT PROJECT

IN SUPPORT OF THE FIRST PHASE OF THE

HEALTH REFORM SUPPORT PROGRAM

JUNE 5, 2003

Caribbean Country Management Unit Human Development Sector Management Unit Latin America and the Caribbean Regional Office

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

CURRENCY EQUIVALENTS

(Exchange Rate Effective 05/20/2003)

Currency Unit = Dominican Pesos US$1=DOP25.8

FISCAL YEAR January 1 - December 31

Abbreviations and Acronyms

AIDS Acquired Immune Deficiency Syndrome APL Adaptable Program Lending ARS Health Risk Administrators BHP Basic Health Plan CAL Logistic Support Center CAS Country Assistance Strategy CAASD Santo Domingo Aqueduct & Sewer Corporation CERSS Executive Commission of Health Sector Reform CORAASAN The Santo Domingo Aqueduct & Sewer Corportion of the Province of

Santiago COPRESIDA The Presidential Commission for HIV/AIDS CQ Selection Based on Consultants' Qualifications CSW Commercial Sex Workers DIDA Affiliates Information and Advocacy Bureau (Direction de

Information y Defensa de Afiliados) DR Dominican Republic EA Environmental Assessment EMP Environmental Management Plan EU European Union FMR Financial Management Reports GDP Gross Domestic Product GODR Government of Dominican Republic HIV Human Immune-Deficiency Virus IADB Inter-American Development Bank IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association IDSS Social Security Institute IMR Infant Mortality Rate INAPA National Institute of Water Supply INSALUD National Health Institute ISSFAPOL Social Security Institute for the Armed Forces and the National Police IT Information Technology LAN Local Area Networks LCS Least-Cost Selection LGS General Health Law M&E Monitoring and Evaluation MDG Millennium Development Goals MIS Management Information System MMR Maternal Mortality Rate NCB National Competitive Bidding NGO Non-Governmental Organizations NHC National Health Council

FOR OFFICIAL USE ONLY

PAD Project Appraisal Document PAHO Pan American Health Organization PARSS Health Sector Reform Support Program (Programa de Apoyo al Sector

Salud) PCD Project Concept Document PCU Project Coordination Unit PEU Project Executing Agencies PHSP Provincial Health Services Project PSS Health Services Providers PLWA Persons Living with HIV/AIDS PPs Private Health Providers PROMESE Essential Drugs Program POA Annual Operations Plan QCBS Quality and Cost-Based Selection SBD Standard Bidding Documents SDSS Dominican Social Security System SEN AS A National Health Insurance SESPAS Secretariat of Public Health and Social Assistance SFS Universal Family Insurance System SIAP Automated Financial Management System SIPEN Superintendence of Pensions SISALRIL Health and Labor Risks Superintendence SOE Statement of Expenditures SRS Regional Health Services STI Sexually Transmitted Infections TB Tuberculosis TFR Total Fertility Rate TORs Terms of Reference UMDI Modernization and Institutional Development Unit UNAIDS United Nations AIDS Program UNDP United Nations Development Program UNICEF United Nations Children's Fund USAID US Agency for International Development USD US Dollars WAN Wide Area Networks WB World Bank WHO World Health Organization

Vice President: Country Manager/Director: Sector Director: Sector Manager: Sector Leader: Team Leader:

David De Ferranti Caroline D. Anstey Ana-Maria Arriagada Evangeline Javier William Experton Patricio Marquez

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

Dominican Republic Health Reform Support Program

CONTENTS

A. Program Purpose, Project Development Objective 3 1. Program purpose and program phasing................................................................................................ 3 2. Project development objective ............................................................................................................ 7 3. Key performance indicators ................................................................................................................. 8

B. Strategic Context ........................................................................................................................ 9 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project ............................. 9 2. Main sector issues and Government strategy................................................................................... 9 3. Sector issues to be addressed by the project and strategic choices ...................................................... 15 4. Program description and performance triggers for subsequent loans................................................. 16

C. Program and Project Description Summary............................................................................... 16 1. Project components............................................................................................................................. 16 2. Key policy and institutional reforms supported by the project .......................................................... 19 3. Benefits and target population ....................................................................................................... 19 4. Institutional and implementation arrangements .............................................................................. 20

D. Project Rationale ........................................................................................................................ 22 1. Project alternatives considered and reasons for rejection ................................................................. 22 2. Major related project financed by the Bank and/or other development agencies .............................. 23 3. Lessons learned and reflected in the project design ............................................................................. 23 4. Indications of borrower commitment and ownership........................................................................ 24 5. Value added of Bank support in this project ........................................................................................ 25

E. Summary Project Analysis .......................................................................................................... 25 1. Economic ............................................................................................................................................. 25 2. Financial .............................................................................................................................................. 25 3. Technical....................................................................................................................................... 25 4. Institutional.................................................................................................................................... 26 5. Environmental...................................................................................................................................... 27 6. Social..................................................................................................................................................... 29 7. Safeguard Policies............................................................................................................................... 30

F. Sustainability and Risks.............................................................................................................. 30 1. Sustainability....................................................................................................................................... 30 2. Critical risks................................................................................................................................... 31 3. Possible controversial aspects......................................................................................................... 31

G. Main Loan Conditions................................................................................................................ 31

H. Readiness for Implementation..................................................................................................... 32

I. Compliance with Bank Policies.................................................................................................... 32

Annexes

Annex 1a: Project Design Summary Annex 1b: Linking Outputs, Outcomes and Impact Annex 1c: Government Policy Letter Annex 2a: Detailed Project Description Annex 2b: Medical Waste Management Assessment in the Dora. Rep. Annex 2c: Donor's Assistance in the Health Sector Annex 3: Estimated Project Costs Annex 4: Economic Analysis Annex 5: Financial Summary Annex 6(A) Procurement Arrangements Annex 6(B) Financial Management and Disbursement Agreements Annex 7: Project Processing Budget and Schedule Annex 8: Documents in the Project File Annex 9: Statement of Loans and Credits Annex 10: Country at a Glance

Map: IBRD 19599R

Dominican Republic Health Reform Support Program

Project Appraisal Document Latin America and the Caribbean Regional Office

Caribbean Country Management Unit

Date: June 5,2003 Country Manager/Director: Caroline D. Anstey Project ID: P076802 Lending Instrument: Adaptable Program Loan (APL)

Team Leader: Patricio Marquez Sector Manager/Director: Ana Maria Arriagada Sector: Health Theme(s): Health/Nutrition/Population Poverty Targeted Intervention [x] Yes [] No

Program Financing Data APL Indicative Financing Plan Estimated Implementation

Period (Bank FY) Borrower

IBRD US$ m %

Others US$m

Total US$m

Commitment Closing Date Date

APL l Loan 30.0 70 12.71 42.71 June 2003 December 2007

Government of the Dominican Republic

APL 2 Loan 30.0 70 12.00 42.00 June 2007 December 2011

APL 3 Loan 30.0 70 12.00 42.00 June 2011 December 2015

[x] Loan [] Credit [] Grant [] Guarantee [] Other [Specify] For Loans/Credits/Others; Total Project Cost (US$m): 42.71 Cofinancing: Total Bank Financing (US$m): 30.0 Has there been a discussion of the IBRD financial product with the Borrower? [x] Yes [ ] No Borrower Rationale for Choice of Loan Terms available on File: [x] Yes Proposed terms (IBRD): Fixed-Spread Loan (FSL) Commitment fee: 0.85 % for the first four years, Front-end fee (FEF) on Bank loan: 1 % and 0.75 thereafter Initial choice of Interest-rate basis: Automatic Rate Fixing (ARF) by period

Type of repayment schedule: [x] Fixed at Commitment, with the following repayment method (choose one): final maturity of 17 years, including a grace period of 5 years with level repayment of principal [ ] Linked to Disbursement

Financing Plan: Source Local Foreign Total Government 12.71 12.71 IBRD 14.80 15.20 30.00

Total: 27.51 15.20 42.71

Borrower: Government of the Dominican Republic

Estimated Disbursements (Bank FY/US$M) FY 2004 2005 2006 2007 Annual 5.90 8.53 9.50 6.07 Cumulative 5.90 14.43 23.93 30.0

Expected Effectiveness Date: September 2003 Expected closing date: December 31,2007 Implementing Agency: Executive Commission for Health Reform (CERSS), with the participation of SESPAS, SISARIL, and SENASA ________________________________________________________ Contact Person: Dr. Jose Rodriguez Soldevilla, Secretary of Public Health and Social Assistance; Dr. Jesus Feris Iglesias, Executive Director, CERSS, Dr. Bernardo Defillo, Superintendent, SISARIL; and Dra. Alma Bobadilla, Executive Director, SENASA ________________________________________________________ Address; Edif. F.J. Montalvo, Calle Gustavo Mejía Ricart No. 141, Santo Domingo, Rep. Pom. ____________ Phone: (809) 547-2509 Fax: (809) 565-2768 E-mail: reformasalud@cerss.gob.do

Dominican Republic Health Reform Support Program

A. Program Purpose and Project Development Objective

The proposed Adaptable Program Loan (APL) aims at:

a) Contributing to achieve by the year 2015 the Millennium Development Goals (MDG) agreed to by the Government of the Dominican Republic at the Millennium Summit in September 2000. Specifically, the APL would address three MDG goals: reduce child mortality, improve maternal health, and contribute to eradicate extreme poverty by protecting the poorest from financial loss due to ill health and disability;

b) Supporting implementation of the new legal framework for the health sector, particularly the institutional strengthening of SESPAS in its new stewardship role, the development of insurance mechanisms, and the configuration of regional health networks; and

c) Supporting preparation, validation and dissemination of supplementary norms and regulations to the General Health Law (42-01) and the Social Security Law (87 -01).

1. Program Purpose and Program Phasing

1.1 Health Sector Context Today. The Dominican Republic's health system consists of multiple public and private providers operating with loose guidelines, minimum regulations, overlapping functions and with scarce coordination to guarantee universal access to quality and efficient health services. With the promulgation of the new reform laws, the Secretariat of Public Health and Social Assistance (SESPAS) in its stewardship role is responsible for setting health policies, enforcing the separation of provision from financing public health care, and ensuring quality and effective health care. Existing financing and resource allocation mechanisms are being modified with support of ongoing projects financed by the World Bank, IDE, USAID, EU, among others, following criteria and mechanisms to channel funds according to health needs and other socio-economic variables.

Several entities finance and provide health services in the public sector: SESPAS, the Dominican Social Security Institute (IDSS), the Social Security Institutes for the Armed Forces and the National Police, and other decentralized institutions and NGOs receiving state subsidies. SESPAS' mandate is to provide health care to meet the health needs of the poor and the indigents, which presently are estimated at 64 percent of the population or 5.4 million people. The IDSS provides health services to 530,000 regular beneficiaries and to about 100,000 temporary workers or at most to 7.5 percent of the population.

Most private hospitals tend to be small. About 80% of the private hospitals have fewer than 20 beds. Almost all private sector activity is concentrated in the two largest cities: Santo Domingo and Santiago. No statistical data are available on the number, size, and composition of the private sector, which is largely unregulated and unsupervised. Non-Governmental Organizations (NGOs) have grown throughout the country and are active in health promotion and reproductive health services. The current and the past two governments have been very much aware of the inequitable access to health services by all Dominicans, the inefficiency and the low quality in the health sector, the dissatisfaction of the population with public services, and therefore prepared a vast health sector reform program.

1.2 The Health Sector Reform Laws of 2001 and the Country's Vision. The executive and legislative work spanning a ten year time period culminated in 2001 with the approval by Congress and the Presidential signature of two laws that reshape the financing, the organization, the management and the delivery of health services in the Dominican Republic (DR). The first one is the General Health Law approved in March 2001 that authorizes, inter alia, deconcentrating and decentralizing the management of health care services from the central SESPAS level to local administrative units (regional, provincial) and to health care institutions. SESPAS would transfer technical, managerial and administrative tasks to local levels and to SESPAS health facilities within ten years. The General Health Law also defines seven fundamental principles: universality, solidarity, equity, efficiency, efficacy, comprehensiveness, and cooperation (art. 11), and creates the National Health Council (NHC) as the institution responsible for formulating, follow up, and evaluation of health policy.

The second Law that created the Dominican Social Security System, was approved by Congress and signed by the President in May 2001. This law mandates specifically to:

a) Separate the functions of: (i) stewardship of the health sector, (ii) financing services, and (iii) service provision. Stewardship would be the responsibility of SESPAS. Health care would be financed through a family insurance system consisting of an autonomous national agency for the public sector (SENASA) and for the private sector (Health Risk Administrators or ARS). Health care provision would be the responsibility of regional health network providers contracting with SENASA and ARS to provide the basic health plan. SISARIL is the regulatory body of the new systems;

b) Define a basic health plan;

c) Set up private (ARS) and public insurance companies (SENASA);

d) Gradually move from a supply-driven health care delivery system to a demand-driven system;

e) Organize Health Service Providers (PSS). Regional Health Service Management Units (SRS) would be created to manage the regional health networks and their respective hospitals, diagnostic centers, health centers, rural clinics and Primary Health Care Units. Regulations would define management and delivery models including the role and functions of governing bodies and organizational structures within a framework of decentralized decision-making and management agreements. It is expected that within a ten-year period a number of PSS would be accredited as Autonomous Regional Health Network Providers integrating autonomous hospitals and health centers. Asset ownership, labor contracts and payroll, and pension benefits and liabilities would have been transferred to these Autonomous Regional Provider Networks;

f) Change the remuneration of individual service providers from a salary to a combination of a basic salary and payments for results and performance while ensuring satisfaction of human resources;

g) Promote social participation; and

h) Assure quality of care by introducing accreditation and licensing public and private providers, blood banks and transfusion services, and clinical laboratories. Accreditation and licensure would be granted by SESPAS and would be a requirement to contract as a PSS.

A key objective of this APL is to support the implementation of the mandates contained in these two health sector reform laws.

The Social Security Law classifies the population into three groups:

a) The first group consists of workers in the public and formal private sectors; employers and workers would pay contributions.

b) The second group is semi-subsidized and includes all independent technical and professional workers as well as those self-employed who earn more than the minimum wage. It is expected to be financed by workers and by government subsidies.

c) The third group is independent workers who earn irregular wages below the minimum wage and include the poor, the unemployed and the handicapped. The government would pay their contribution.

As of May 2003 four sets of norms and regulations to implement the General Health Law and three sets of norms and regulations to implement the Social Security Law have been approved. They are:

For the General Health Law: a) Stewardship and separation of functions in the health system b) Licensing of health facilities c) Health provision networks: affiliation and delivery of services d) Human resources regulations (in the final review stage)

For the Social Security System: a) Family health insurance and basic health plan b) Control of medicines in the basic health plan c) Organization and regulation of Health Risks Administrators (ARS)

Details of the contents for each of the above regulatory provisions are given in Annex 2. A key objective of the proposed APL is to help the Government of the Dominican Republic (GODR) achieve three Millennium Development Goals (MDGs) by promoting affiliation of above-mentioned third population group to the national health insurance, and making the primary health care services and the hospitals at the secondary and tertiary levels more attractive to the potential users and able to solve the medical problems of the patients. This would ensure the poor to have access to a regular source of quality health services and not to incur financial hardship for medical reasons.

1.3 Relation of the APL to Ongoing Bank Projects. The proposed APL builds upon and complements the ongoing Provincial Health Services Project (Lon. 4272-DO) and the HIV/AIDS Prevention and Control Project (Lon. 7065-DO). Since 1998, the Provincial Health Services Project has supported significant advances in policy and institutional reforms, developed reform instruments, trained personnel, and improved physical and technological infrastructure in the poorest regions of the country, particularly with a major redistribute impact in the border areas with Haiti. The project's mid-term review of October 2001 documented the accomplishments in helping put in place a new legal framework for reforming health care organization and financing by supporting the preparation, consensus building, and approval of the General Health and Social Security Laws. The provincial subprojects have supported the development of new health care organizations, financing and managerial models to create provincial integrated delivery systems

and signing management agreements between provincial units and health care providers. The project also supported the development of a multi-module information system for improving management at the central and provincial levels and hospitals. The regional hospital Jaime Mota (Region IV) has entered into management performance agreements with SESPAS for financing health services delivery.

The HIV/AIDS Prevention and Control Project is supporting the implementation of a multisectoral strategy with broad participation of different segments of the society to reduce the spread of the HIV/AIDS/TB/STI epidemic. Therefore, the health-related MDG for combating HIV/AIDS, malaria and other diseases has not been included in this APL.

1.4 The Program's Components (Annex 2.a). Program components are geared to help: (i) achieve by the year 2015 the three MDGs of reducing child mortality, improving maternal health, and contributing to the eradication of extreme poverty by protecting the poorest from financial loss due to ill health and disability; and (ii) supporting the implementation of the health sector reform legislation that provides the legal, financial, organizational and managerial enabling environment to achieve the MDGs. The three program components are:

a) Supporting health services extension to achieve universal coverage. The Program aims to improve the health status of the economically disadvantaged population groups, especially by reducing child and maternal mortality. It would contribute to eradicate poverty by making the already approved Basic Health Plan (BHP) accessible to the poorest and most vulnerable population. The main mechanism for providing access of the poor to the BHP would be through Government partially subsidizing their health insurance premium, thereby providing an incentive to enroll in the national health insurance scheme and thus removing financial barriers to access and protecting beneficiaries from financial loss due to ill health and disability. The APL would strengthen primary health services and hospitals at the secondary and tertiary care levels in order to assist the GODR to reach universal coverage by improving their capacity to provide quality health services, especially maternal and child services to the target population, providing a physical and technological supportive environment and improving staff performance.

b) Supporting implementation of the health sector reform legislation. The Program would assist in implementing the mandates of the reform laws by supporting the development of innovative approaches; testing new models; and funding policy studies in the areas of financing and organizing health care, paying providers and remunerating personnel. It would support implementation of mandated decentralization policies that provide more autonomy and decision-making authority to lower administrative levels and to service providing institutions. These tested models and studies would provide the financial, managerial and institutional tools and the legal underpinning for achieving universal health service coverage. They would be implemented jointly with the activities under the first component.

c) Improving Selected Essential Public Health Functions to promote and protect the health of the population. In addition to supporting the health sector development addressed by components one and two, the Program would support SESPAS in improving two essential public health functions: (i) surveillance and control of public health risks, follow up on disease outbreaks and risk factors to implement protection and prevention measures, and ensure the safety of water, air, food, waste disposal and Pharmaceuticals; and (ii) development of policies, plans and management capacity for assuring SESPAS stewardship in the process of sector capacity building and coverage of the national health insurance system.

These activities would benefit the health of the whole population and would have a direct impact on many sectors of the economy.

1.5 Program's Phasing. The proposed APL program will achieve the stated development objectives in three phases over a period of twelve years. Each phase would have three components plus a component for project management, monitoring and evaluating the results of each phase and - in the case of the first two phases - appraising the next phase of the program. Table 1 presents the summary data on the APL phases.

Table 1. Phasing of APL

Phase I (US$42 million; IBRD, US$30 million)

Phase II (US$ 42 million; IBRD, US$30 million)

Phase HI (US$ 42 million; EBRD, US$30 million)

Implementation Period FY 2004-2008 FY 2008-2012 FY 2012-2016Periodic Monitoring (IBRD)

Twice a year Twice a year Twice a year

Triggers' Assessment March 2007 March 20 11 Appraisal next phase June 2007 June 20 11

Performance Evaluation by Phase. Trigger indicators for moving from Phase 1 (APL1) to Phase 2 (APL2) and from Phase 2 to Phase 3 (APL3) are listed in Table 3 of Annex 2.a. These triggers would be assessed prior to and reviewed during appraisal of Phase II and Phase III APLs.

Trigger indicators would account for the GODR's readiness to: i) expand the geographic coverage of the reformed insurance system; ii) scale up the provision of quality care through certified and licensed providers; iii) assign health system management to new regional authorities; iv) expand deconcentration and decentralization process to additional regions/provinces; and v) scale up the provision of improved public health services reflecting lessons learned in previous phases. The triggers would be assessed and measured as part of the monitoring and evaluation of the program and should be based on evidence that institutional capacity building and legal conditions were sufficient to allow to move to a new phase with minimum risk; they would be "measures of success" when moving on to the next phase.

Compliance with disbursement schedules made as per legal agreements would also be taken into account for moving from one phase to the other.

2. Project development objectives (see Annex l.a)

The project would: a) contribute to eradicate extreme poverty by protecting the poorest from financial loss due to ill health and disability through enrollment of the target population (people living below the relative poverty line in regions III, IV, VI, VII and VIII) in the Government health insurance plan and to make available and promote the use of basic health services of high quality standards; and b) support the implementation of the health sector reform legislation that provides the legal, financial, organizational and managerial enabling environment to achieve the MDGs related to health.

3. Key performance indicators (see Annex l.a & Annex 2.a)

3.1 Performance Indicators directly linked to MDGs. Project performance for three MDGs will be guided by targets and measured by indicators as shown below and described in Annexes l.a and 2.a for Phase 1. A fourth MDG also related to health is the control of HIV/AIDS, malaria and other diseases. This MDG is not considered under this program as it is supported by a freestanding HIV/AIDS project currently under implementation.

• Reduce Extreme Poverty and Hunger: Target: by 2015, protect the poorest from financial loss due to ill health. Indicators: % families with health insurance; prevalence of underweight children (under five years of age), low birth weight, nutritional status.

• Improve Child Health: Target: by 2015, reduce under-five deaths by two thirds. Indicators: % underweight newborns; % children aged 12-23 months fully immunized; infant mortality rate; under-five mortality rate; mortality and morbidity from upper respiratory infections, diarrheal disease, measles.

• Improve Maternal Health: Target: by 2015, reduce by three quarters the maternal mortality rate. Indicators: % pregnant women with 4 prenatal visits; % of births attended by skilled health personnel; maternal mortality rate; contraceptive prevalence rate, total fertility rate, percentage of cesarean sections.

3.2 Performance Indicators indirectly linked to but supportive of MDGs

• Anchoring MOH's Stewardship Role: national health policies issued, consistent communication strategies and public information campaigns organized, monitoring and evaluation of sector performance;

• Promoting the Decentralization and Autonomy Process: degree of transferred decision making to regional management levels and to service providers as measured by autonomy of service providers for managing financial and human resources; number of management contracts signed with providers and under implementation; number of Boards of Directors functioning acceptably; number of institutions with changed staff remuneration arrangements and associated productivity measures.

• Improving secondary and tertiary care facilities: physical structure rehabilitated, electro mechanical and biomedical waste management equipment with adequate maintenance, productivity incentives developed, staff trained and performing, information systems operating, patient satisfaction and other quality measures implemented, referral patterns and fee schedules operating; and

• Consolidating National Essential Public Health Functions: complete and accurate epidemiological surveillance information produced, improved coverage and quality of public laboratory network, environmental friendly medical waste management systems operating, coordinated disaster preparedness facility installed; blood banks and cold storage facilities properly operating, and emergency vaccines available for timely provision in case of need.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1a)

Document number: 19393-DO Date of latest CAS discussion: June 9, 1999

The CAS discusses a number of prerequisites for poverty reduction and sustained growth in the Dominican Republic. Among them is the need to continue supporting social development and -stated explicitly - increasing access by poor people to the benefits of social development and economic growth. These key points of the World Bank's assistance strategy are the essence of the development objectives of the proposed program.

The design of the proposed program also takes into account the findings and recommendations of the 2001 Dominican Republic Poverty Report and the 2003 Dominican Republic Public Expenditures Review prepared by World Bank's teams.

2. Main sector issues and Government strategy

Main Sector Issues

Low but Improving Health Status. The Dominican Republic, with 8.4 million people in 1999 growing at a projected average annual rate of 1.3 percent, is one of the more densely populated countries in the Americas. Rural to urban migration and urbanization of rural areas is progressing quickly with 36% of the population living in rural areas in 1999 compared to 45% five years earlier. Unequal distribution of wealth results in widespread poverty. Health indicators do not compare favorably with countries of similar per capita income (US$1,910 in 1999). Infant mortality has decreased form 42 deaths per 1,000 live births during the period 1990-95 to 34 deaths per 1,000 live births for the period 1995-2000. Still, the 2002 ENDESA survey puts the infant mortality rate (MR) at 31. This average MR is still too high compared to Chile (10), Costa Rica (12) or Jamaica and Panama (both at 20) and hides the large variation between urban and rural areas and between income levels. The MR for the poorest quintile is 67 whereas the MR for the richest quintile is 23. Underreporting confounds the analysis and comparisons over time. For example, the infant mortality rate for 1998 based on reporting would be 10.6 deaths per 1,000 live births (LB) whereas the estimated average for the period 1995-2000 is 34 deaths per 1,000 LB or an underreporting factor of 69%. The management information systems contemplated and under implementation are addressing the underreporting issue.

The decrease in infant mortality should be applauded as a positive event. However, when taking a historical perspective in an international context, the apparent positive event turns negative. During the five-year period 1960-65, the MR for the DR was 118 per 1,000 live births and the reducible gap with other Latin American and Caribbean countries was 49%. The MR of 42 for the five-year period 1990-95 is a sharp reduction compared to 118 in 1960-65 but the reducible gap with other Latin American and Caribbean countries increased to 75% leaving the DR farther behind in a comparison with other countries.

The death of a newborn during the first year of life can occur during the first 28 days after birth (neonatal death) or between the 29th day and the first birthday (post-neonatal death). The distinction is important. Neonatal deaths tend to be due to immaturity or certain inherent congenital conditions of birth, while post-neonatal deaths tend to result from deficiencies in

10

nutrition or from infectious diseases. The ratio of neonatal deaths to post-neonatal deaths in the DR's infant mortality has improved significantly in the past decade. Internationally, this ratio is about 75/25 and the DR is approaching this ratio with 70/30. The decrease in the post-neonatal death rate indicates more favorable environmental conditions for the infants but the neonatal death rate has remained stable at 22 for the past decade. Reducing the EVIR therefore requires initiatives to reduce the neonatal death rate and to manage its close clinical relationship with the high maternal mortality ratio (see below).

A distinction between neonatal and post-neonatal deaths is necessary for two reasons: (i) to better target actions for reducing the DVIR; and (ii) health workers have a greater degree of direct control over health outcomes during the perinatal and the neonatal periods than during the post neonatal period when the environment plays a larger role in causing disease and unnecessary deaths. The six clinical causes of infant deaths that account for 70 percent of all infant deaths are: intestinal infections, respiratory problems during the perinatal period, nutritional deficiencies and anemia, delayed intrauterine growth and immature fetus, and acute respiratory infections. Improving the quality of prenatal checkups, of the delivery process and of postpartum care would directly impact half of the causes of infant deaths. Programs should therefore target the perinatal and neonatal periods while simultaneously sustaining the effort to provide infants with a safe nurturing environment that reduces intestinal and respiratory infections, and nutritional deficiencies.

The under-five mortality rate in 1999 was 47 deaths per 1,000 children under five, which is double the rate of Jamaica and Panama, three times the rate of Costa Rica and four times the rate of Chile. The ENDESA 2002 survey reports a lower figure: 38 deaths for children aged 0 - 4 or disaggregated 31 for IMR and 7 for the 1 to 4 age group. Life expectancy at birth is a satisfactory 71 years (1999), but still lower than the four comparator countries used here where rates range from 74 in Panama to 77 in Costa Rica. The illiteracy rate in the population aged more than 15 years is high at 17%, contributing to poor health status and levels of extreme poverty.

Slowly Decreasing Poverty. The World Bank 2001 Poverty Assessment report states that 33.8 percent of the population lives on less than U$$2 a day adjusted for purchasing power parity. Percentages for earlier years are 54.9 percent in 1986 and 53.5 percent in 1992 indicating slowly decreasing poverty. Social indicators of poverty in the 1996 ENDESA survey showed an inequitable variation between the lowest and highest income quintiles for infant mortality rates by a factor of three, for child immunization rates by a factor of two, and for the prevalence of child malnutrition by a factor of thirteen.

Still, protecting the poorest from financial loss due to ill health is an unfulfilled promise in the country. A large segment of the population does not have any type of health insurance and out of pocket expenditures represent more than one half of total spending in health. The richer contribute as a percentage of their total income much less than the poor to health care financing and a high proportion of families get poorer when they have to get care.

Preventable Maternal Mortality. The ratio of maternal deaths (MMR) per 100,000 live births as reported by SESPAS was 122 in 1999 and PAHO/WHO lists the most recent reported MMR statistic as 80. In either case the MMR is unacceptably high as it is ten to fifteen times higher than ratios in developed countries. The total fertility rate (TFR) in 1999 was 2.8 births per woman, which is close to the TFR for the four-comparator countries. However 1996 data show a variation in the TFR from 5.1 in the poorest quintile to 2.1 in the richest quintile. The MMR for Chile and Costa Rica was one third of the figure for the DR (33 and 35 respectively) but the MMR of the DR was close to the one in Panama (100) and in Jamaica (120). A retrospective

11

study of obstetrical deaths in the DR concluded that 93 percent of these deaths were preventable1. These are surprising results given that internationally the DR is positioned very well in terms of prenatal care (99% of all deliveries), giving birth in a health establishment (95%) and births attended by skilled health staff (97%). Risk factors documented in the study are the quality of obstetrical care in public hospitals, the behavior of attending personnel, and multiparity. The leading cause of maternal death is toxemia (43% in 1997), a manageable condition during the last trimester of pregnancy. Design and implementation of incentives to change the behavior of providers must be a key strategy in the success of reducing unnecessary maternal deaths.

HIV Prevalence. The Dominican Republic and Haiti account for 85% of all reported HIV/AIDS cases in the Caribbean Region. The estimated percentage of people aged 15-49 who are infected with HIV in the DR is 2.8 percent, which is among the highest prevalence rates in the Latin American and Caribbean region. This problem is being addressed frontally by World Bank- and USAID financed HIV/AIDS Prevention and Control projects currently under implementation.

Low Health Care Spending. Total spending on health was estimated by the Central Bank in May 1996 as 6.5% of the gross domestic product (GDP), which is similar to the average percentage of GDP spending in LAC countries during the period 1990-98. Total spending was distributed as follows: public sector 26.5 percent, private sector 72.5 percent and outside country sources 1.0 percent. The disaggregated public sector spending share was 16 percent for SESPAS, 6.8 percent for IDSS, 1.4 percent for the Presidency and 2.3 percent for other public sector entities such as other ministries and the Red Cross. Disaggregated private sector spending shows: private hospitals, clinics, and diagnostic facilities with 36 percent, households with 18.5 percent, private insurance with 10.3 percent, and NGOs with 7.7%.

According to preliminary results from a study by the Central Bank, the average public sector spending on health for the period 1996-1999 was 2.0% of GDP. This is a low percentage compared with the average public spending in the LAC Region (3.2%), or in countries of similar per capita income such as Costa Rica (5.2%), Panama (4.9%) or Jamaica (3.2%).

The average percentage of health spending in total public spending for 1996-99 was 12.5%, and health spending is almost one third (31.6%) of total spending for social services. The 2002 budget proposes 13.6% of total public spending for the public health sector.

Sources and Uses of Public Sector Funds. The national budget is the most important source financing, on average 64.9%, followed by the private sector with 31.4% and the balance (3.7%) from external sources, mainly loans and donations. The budget of SESPAS comes from the National Treasury (77.2%), households (11.2%), the Presidency (5.8%) and other external sources (5.8%). The expenditure of IDSS is financed by payroll taxes (94.8%) as a percentage of salaries and wages: 7.0% from the employer and 2.5% from the employee.

In terms of program spending, almost half of the funds were spent on curative care and another one fourth on the purchase of pharmaceuticals and medical supplies. Spending on health promotion and preventive care represented only 1.1% of total public spending. Hospitals received 60% of SESPAS funds and rural clinics and health centers about 20%.

By expenditure category, about 70% of average public spending was for salaries and wages, followed by medical supplies and pharmaceuticals (12.1%), materials and non-medical supplies (6.5%) and medical equipment (5.9%).

Dr. Roberto Cerda Torres: "Realidad de la Mortalidad Materna en Republica Dominicana", 2001

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Intrasectoral Fragmentation and Lack of Monitoring of the Private Health Sector. Three entities finance and provide health services in the public sector: SESPAS, IDSS, and the Social Security Institute for the Armed Forces and the National Police (ISSFAPOL). SESPAS' mandate is to meet the health needs of the poor and the medical indigents estimated at about 64 percent of the population or 5.4 million people. SESPAS provides services through 152 hospitals, 448 rural health centers and 236 urban health centers across the eight regions of the country. The IDSS provides health services to 530,000 regular beneficiaries and to about 100,000 temporary workers (with contracts for less than three months) or at most 7.5 percent of the population. The IDSS has 18 hospitals, 27 policlinics and 157 physician offices. ISSFAPOL covers about two percent of the population.

The budget of the Presidency finances most investment in plant and equipment of public health facilities. It also operates the Essential Drugs Program (PROMESE) that initially was created to finance and manage 410 Popular Pharmacies (Boticas Populares) that sell generic and essential drugs at a reduced price to poor people. PROMESE has expanded its original mandate and now procures pharmaceuticals for all public health facilities. PROMESE supplied an annual average of US$16 million in pharmaceuticals and medical supplies between 1997 and 1999. A little more than half of the purchases were for public hospitals, 43 percent for Popular Pharmacies, and six percent for rural health clinics. PROMESE has come under heavy criticism for lack of transparency in its procurement procedures, for high administrative cost (31 percent of its purchase cost), and for lack of quality control of products purchased. CERSS is leading the analysis and requesting a full-fledged review with corresponding corrective actions by the Presidency.

Almost all private sector activity is concentrated in the two largest cities: Santo Domingo and Santiago. No reliable data are available on the number, size, composition, production or expenditures of the private sector. For example, the telephone directory for the National District of Santo Domingo lists 119 private clinics and hospitals. This number excludes the separately listed 1,115 private physician offices and 730 dental offices that are also most likely understated. The National Association of Private Clinics and Hospitals stated that the number of private clinics in Santo Domingo in 2001 is more than 300. There is no reliable central source of information to confirm or modify these numbers. Some data are available on spending for private health care services from national household surveys as mentioned above in the section on health care financing.

An accurate description of the number, size, activities and contributions of NGOs to improving the health status of the population suffers from two idiosyncratic problems: the very broad definition of what is an NGO and the existence of a large number of ghost NGOs. First, an NGO in the Dominican Republic is an organization that is private, not for profit and is not owned by the government. Essentially, an NGO is equivalent to a nonprofit organization. They include service providers, research institutes, educational establishments, church organizations, social action groups, etc. Illustrating the definitional complexity is the case of the Plaza de la Salud, a large tertiary care medical complex in central Santo Domingo built with government funds, which is classified in the National Health Accounts of the Central Bank as an NGO. Second, ghost NGOs exist for the purpose of money transfers and tax evasion and provide no services except financial benefits to the organizing members. The proposed 2002 budget includes a US$45 million subsidy for 2,051 NGOs but only about 1,000 NGOs are legally registered. The health sector is listed with 208 NGOs and the education sector with 270. Almost half (916) of the NGOs are included in the budget of the Presidency. The 1999 report of the Central Bank writes that in 1996 there were 265 NGOs dedicated to health related activities of which 180 or 68 %

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received subsidies from SESPAS. Most health NGOs are active in health promotion and reproductive and sexual health. This number would not include NGOs with activities in the broader social welfare area or in environmental sanitation. The one reliable source of information on health related NGOs is the National Health Institute (BSTSALUD), which is an umbrella organization with 76 institutional members that are formally approved and recognized by SESPAS.

Inequitable Access to Health Care. Access to health care is inequitable with people in the lower income quintiles and in rural areas facing financial and geographic barriers. As a result of these barriers, the poor seek care less often. This is more pronounced for chronic illness for which the poor are less likely to seek care on a regular basis. The infant mortality rate for the poorest quintile is 67 infant deaths per 1,000 live births versus 23 infant deaths per 1,000 LB in the richest quintile. The poor have more children: the total fertility rate for the lowest income quintile is 5.1 and it is 2.1 for the highest income quintile. Social indicators of poverty in the 1996 ENDESA survey showed an inequitable variation between the lowest and highest income quintiles for infant mortality rates by a factor of three, for child immunization rates by a factor of two, and for the prevalence of child malnutrition by a factor of thirteen.

The beneficiaries of IDSS have an average of five medical visits per year whereas for the SESPAS population this number is 1.2 visits. The low number for SESPAS may be due to underreporting, to lack of access to ambulatory services for geographic or financial reasons, to patients going to a private doctor's office or to a private clinic. The number of admissions to hospitals is 68 per 1,000 people for SESPAS and 72 per 1,000 for IDSS beneficiaries. These are normal hospital admission rates for a middle-income country. SESPAS hospitals are a major source of emergency care as one third of all medical visits are to emergency rooms of hospitals. This is not the case for IDSS where emergency room visits account for a normal one tenth of all visits.

Inequitable Health Care Spending. Public sector health spending at 2% of GDP is among the lowest in the LAC Region yet the public sector is the largest provider of health services. Not only are resources insufficient but also they are spent inequitably. SESPAS is assumed to provide health services to 64 percent of the population or to 5.4 million people. Based on its average budget for the years 1996-99, it had available US$36.67 per capita. IDSS, on the other hand, for the same time period, spent US$106.67 per beneficiary. Health services provided by the two largest public sector providers account for less than a quarter of total health care spending. Out of pocket payments at 18.5% were higher than the SESPAS expenditures at 16% as percentages of total health spending.

The geographic distributional inequity of public spending on health is illustrated by the fact that more than 70 percent of the population in the three poorest health regions (IV, VI and VII) is classified as poor but these three regions together receive less than ten percent of the public health budget.

Inefficient Allocation of Resources. Resources are allocated inefficiently. More than 70% of public funds are spent on curative care and on the purchase of pharmaceuticals and medical supplies. Spending on health promotion and preventive care represented only 1.1% of public spending. Administration received 14% in 1999. Allocation of public funds is also heavily skewed towards the National District that received an average of 43.5% during the 1996-99 period versus about 20 provinces that each received less than 2% each.

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Inefficient Use of Human Resources. Human resources management is not efficient. First, both SESPAS and IDSS have a large number of administrative workers, 35% and 43% respectively. This may be partly explained by the patronage system of rewarding members of the victorious political party. Second is the high percentage of physicians: about one in five workers are doctors. However this number is misleading as physicians hold more than one job and are double and even triple counted. There are more physicians in the IDSS than nurses and barely more nurses than doctors in SESPAS. Fewer nurses than physicians indicate inefficiency and lower quality care: higher paid physicians carry out tasks that should be done by lower paid nurses, and a shortage of nurses indicates insufficient time for direct patient care activities. Third, the ratio of SESPAS staff to population served is one worker for 127 people and for IDSS it is one to 55.

Too many Hospital Beds. Only one third of the hospital beds of SESPAS are occupied on the average but the average length of stay (3.2 days) is favorable. Only half of the IDSS hospital beds are occupied in spite of an average length of stay of five to six days that is considered high taking into account that 30 percent of hospital admissions are in obstetrics. These are averages for the whole country.

A Need to Improve the Quality of Health Services. The population is not satisfied with the quality of services offered in public facilities. The well to do patroni/e the private sector and the 1996 ENDESA survey showed that 26.6% percent of private sector hospital patients come from the two lowest income quintiles. This means that some poor are willing to pay for private services and/or that some may be treated at lower charges.

Quality in the atomized private sector is undocumented. Private hospitals tend to be small. The largest private hospital (owned by a private university) has about 100 beds and about 80% of the private clinics have fewer than 20 beds. This raises serious concerns about technical quality because of low volume for some procedures in small facilities. A correlation between volume and quality has been empirically demonstrated. The complete lack of registration, of accreditation, of regulation, of accountability, of quality oversight, and the prevalence of solo practice lead to a presumption of less than adequate clinical quality. Air-conditioned rooms, user-friendly reception and waiting areas, cleanliness, smiling staff and courteous physicians are associated with good quality by the general public.

A high caesarian section rate: 23% of deliveries in SESPAS facilities were managed surgically abdominally in 2000. The IDSS caesarian section rate is between 25 and 30 percent. WHO guidelines state that surgical deliveries should not be more than fifteen percent of all deliveries. Physician behavior and the practice of physicians rushing from one job to another are a major explanatory variable. A normal delivery takes much longer than a surgical delivery. The latter can be scheduled and done in one hour.

Deficient quality in the public sector is well documented and recognized by the government as a major problem. Staff behavior and motivation, insufficient financial resources, irregular supply of pharmaceuticals and medical supplies, poorly maintained physical plant and equipment, water supply and electricity interruptions are impediments to improving quality. Good physical amenities and good interpersonal relations offset the presumptive low clinical quality in the private sector.

The Challenge of Implementing the Decentralization Policy. The President signed the General Health Law No 42-01 (LGS) on March 8, 2001 and the law No 87-01 that creates the Dominican Social Security System (SDSS) on May 18, 2001. Both laws authorize deep and far

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reaching reforms in organizing, financing, and managing the health sector and the social security system. Of special importance to the health sector in general and to the proposed project in particular are the provisions allowing the transfer of technical and administrative tasks from the central SESPAS level to lower SESPAS levels and to SESPAS health facilities. Increased managerial autonomy at lower levels of the service delivery system and decentralized decision-making would address more directly the issues faced by the operating units in carrying out their mission to provide quality medical services. The challenge is to: (i) write the norms and regulations for implementing these policies to complete the legal framework; (ii) make the norms and regulations operational; (iii) transfer financial and human resources to the decentralized levels and institutions; and (iv) break up the historical centralized power and control structure. This will require political will, administrative expertise and a large investment in time and effort to create and/or to strengthen the institutions to which authority has been delegated. These institutions have heretofore been managed centrally, have not been allowed to make any important decision and must now change their ways of conducting their business. This drastic change in organizational culture and attitudes at all levels will take time, will happen one step at a time and will need the patience and the long term support of all donor agencies.

Government Strategy and Challenges

The GODR has declared health a priority. Through its Health Sector Reform Program formulated in the second half of the 1990s, the GODR is seeking to improve health and nutrition status of the population, particularly the poor, by facilitating access to quality health services in an efficient and sustainable way. The strategic thrust of the reform program is the gradual introduction into the health sector of elements of political, administrative and financial decentralization.

Since 1997, the World Bank has financed a project2 in support of the reform program. Projects funded by the IDE, EU, and USAID complement the World Bank-financed project. Technical assistance is also being provided by UN specialized agencies such as PAHO/WHO, UNDP, UNICEF, among others.

3. Sector issues to be addressed by the project and strategic choices

Consistent with the recommendations in the CAS and with GODR policy, the proposed program would assist in meeting MDGs, reforming the health system, promoting integration of public and private services within a decentralized context, and reallocating health expenditures to basic health care for the poor. It would do so building upon the initial work carried out with the support of the World Bank-financed Provincial Health Services Project and with projects supported by the IDB, EU and USAID. The GODR has embarked on a long-term process of health reforms that require substantial political and financial support to bring it to fruition.

More specifically, the proposed project would address the following sector issues frontally:

a) Improve the quality of maternal and child services to help reduce the infant mortality rate, the under five mortality rate and the maternal mortality ratio;

b) Reduce the impoverishment effects of ill health and disability by supporting the affiliation of the poor to the health insurance system;

c) Develop and implement integrated health delivery networks as mandated by law by

Provincial Health Services Project (Report No. 17199 DO).

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strengthening decentralized regional and provincial levels for coordinating and supervising service delivery as a means to reach universal coverage of primary health care services;

d) Assist in deconcentrating and decentralizing technical and management decision making to lower levels of government and to service delivery institutions. This assistance will require training managers, providing them with information for decision making, devising monetary and non-monetary incentives for punctuality, courtesy, timely, and quality service;

e) Strengthen the stewardship role of SESPAS ensuring that human and financial resources are effectively decentralized, that national policy is formulated with executing parties being held accountable for implementing it, that essential public health functions that affect the whole Dominican population are in place and are being executed, that programmatic inter- and intrasectoral coordination takes place, and that results are monitored and deviations are acted upon; changing the physical and management environment of service provision that causes preventable maternal and infant deaths;

f) Develop new remuneration modalities for physicians - and mainly for specialists - from a straight salary to a basic salary plus performance linked payments. This is a key incentive payment issue that is supported by the two new reform laws. Its implementation may be slow because it will meet with resistance from many professionals who are comfortable drawing a salary for minimal time on the job giving them the opportunity to attend to their private practice; and

g) Support innovative pilot projects and disseminate their results to the legislative and executive levels of government and to professional associations and service providing institutions.

4. Program Description and Performance Triggers for subsequent loans

Performance triggers for financing subsequent phases

The complex nature of the health sector reform agenda would be supported through a sustained, multi-phase effort. The APL approach will allow the flexibility needed during the implementation of the Dominican Republic health sector reform and for the incorporation of lessons learned during implementation.

Trigger indicators would account for the GODR's readiness to: i) expand the geographic coverage of the reformed insurance system; ii) scale up the provision of quality care through certified and licensed providers; iii) assign health system management to new regional authorities; iv) to expand deconcentration and decentralization process to additional regions/provinces; and v) scale up the provision of improved public health services reflecting lessons learned in previous phases. The triggers would be assessed and measured as part of the monitoring and evaluation of the program and should be based on evidence that institutional capacity building and legal conditions were successful to allow to move to a new phase with minimum risk; they would be "measures of success" when moving on to the next phase.

C. Program and Project Description Summary

1. Project Components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown)

The APL would implement three components in three phases. A fourth component would

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manage implementation, monitoring and evaluation, and assess changes that would trigger the decision to continue to the next phase or to change action for improving performance, or in the last resort, to cancel the operation. The four components that would be implemented during the three phases of the APL were presented earlier in Section 1.4. Activities for the first phase project are summarized here. A detailed description of the first phase project and a general description of the second and third phase projects are presented in Annex 2.

Component 1: Health Services Coverage Extension

The earlier Provincial Health Services Project supported the provision of primary care services to the poorest population with emphasis on maternal and child health (MCH) in three regions (III, IV, and VII), in one province of Region VIII (Sanchez Ramirez), and in one Health Area of the National District (Santo Domingo Centre). Phase I of this program would: (i) complete coverage of the poor population with a basic health plan, emphasizing MCH care; (ii) add Region VI with the provinces of San Juan de la Maguana and Elfas Pina; and (iii) add the provinces of La Vega and Monsenor Nouel to complete the coverage of Region VITL All these regions carry the largest proportion of poor in the country. The total population covered under Phase I would therefore be 2.3 million of which about 1.7 million are under the poverty line.

A minimum of four essential criteria were used for selecting priority areas to be included under Phase I of the Program: 1) high proportion of poorest families; 2) health care networks in operation or about to be completed for operation; 3) health management information systems in place or about to be implemented; and 4) management agreements between SENASA and providers signed. This targeting approach is fully consistent with the strategy adopted by the GODR to begin the implementation of the health and social security reforms over the next 10-years in a gradual and incremental manner.

Activities that would contribute to achieve the component's objective are: (a) support extending health care coverage in three priority regions using the national health insurance financing mechanism to deliver a basic health plan of essential health services, particularly MCH services; (b) strengthen the clinical problem solving capabilities of the primary health care units (UNAPS), the hospitals at the secondary and tertiary care levels in five regions, improve the quality of medical services provided, and ensure a functioning referral system among levels of care and among networks; (c) apply national norms to improve that physical infrastructure of Regions VI and VIII that was not covered under the first project, i.e. equipping, rehabilitation and expansion of health centers and hospitals at the primary, secondary and tertiary levels, including investments to strengthen the biomedical waste management systems in each facility; and (d) develop integrated and decentralized health care networks at the regional levels as authorized by the health sector reform legislation.

Component 2: Implementation of the health sector reform legislation

This component has two objectives: (a) assist in building the institutions to implement the health sector reform legislation by supporting the development of regulatory frameworks, organizational structures, financial instruments, training programs and management information systems; and (b) assist in providing the legal and financial enabling environment for achieving the objective of Component I. The legislature approved a General Health Law (LGS-42-01) and a Social Security System Law (SDSS-87-01) that contains key policy changes. A listing of the most important changes is presented in Annex 2. Implementing these policy changes requires a large investment in building and/or strengthening institutions that heretofore have been managed centrally and/or have not been allowed to make any important decision.

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To accelerate the decentralization process the project would strengthen national, provincial and local institutions, support budgetary transfers to provincial directorates, grant autonomy to key health facilities and train sector leaders and health care managers. To support the implementation of sector reforms, the project will fund technical assistance to strengthen the stewardship role of SESPAS and the insurance management capability of SISALRIL, to transfer gradually demand driven subsidies to the poorest population group, and to develop and implement health management information systems.

Component 3: Improving Selected Essential Public Health Functions to promote and protect the health of the population

This component would improve two essential public health functions that would benefit the health of the whole population and would have a direct impact on many sectors of the economy: a) epidemiological health surveillance and control of risks in public health by strengthening the information system for epidemiological surveillance, the capacity and quality control of the National Public Health Laboratory, the cold storage facilities (cold chain), establishing a national pharmacological surveillance system; and relocation and strengthening of the Forensic Pathology Department; and b) development of policies, plans and management capacity for assuring SESPAS stewardship by supporting the design of a 10-Year National Strategic Plan for ensuring a gradual build up and consolidation of the National Health System and the Social Security System. This Plan would become a navigation chart for the National Health Council (NHC) for the next 10 years, and is expected to define coordination mechanisms for managing international donor support. Support would also be provided for carrying out policy and operational studies, including one focusing of the training of physicians, nurses, and other health personnel.

Component 4: Project Management and Impact Appraisal of Next Phases

This component would support project management, including the strengthening of the monitoring and impact evaluation system to measure the results achieved during implementation. Trigger indicators would used to decide on recommending financing each one of the next two phases of the program, and appraise the technical, financial and institutional aspects of each phase.

Monitoring and Evaluation Arrangements. The project would finance all efforts required to appropriately monitor and evaluate project outputs, outcomes and impact. Project monitoring would depend to a large extent on the envisaged Health Management and Information System (HMIS). Hence, priority would be given to the implementation of the HMIS during the early stages of the project with the goal of completing the implementation and test phase within the first year of the project. In Phases I and II of the project, efforts would concentrate on regions and provinces characterized by high levels of poverty and poor health outcomes. In order to ensure that the project is achieving the objective of closing the nation-wide poverty and health gaps, the project would finance national demographic and health surveys in each of the project phases. The annual evaluation of the project would be outsourced to a non-governmental organization or academic institution.

Investment Financing. In each phase, the Program would finance health facilities rehabilitation and expansion, electro-mechanical and biomedical waste management equipment, medical supplies, vehicles, systems development (e.g., management and financial information systems, quality assurance systems), training and technical assistance.

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Table 2: Estimated Phase 1 Project Costs by Component

Component Sector Indicative

Costs (US$M)

% O f Total

Bank-financing (US$M)

% O f Bank-

financing Component 1 : Extending Health Services Coverage

25.97 60.8% 17.70 59.0%

Component 2: Implementation of the health sector reform legislation

7.20 16.9% 5.15 17.2%

Component 3: Improving selected Public Health Functions

2.66 6.2% 2.10 7.0%

Component 4: Project Management and Impact Appraisal of Next Phase

6.58 15.4% 4.75 15.8%

Total Project Costs 42.41 99.3% 29.70 99.0% Front-end fee 0.30 0.7% 0.30 1% Total Financing Required 42.71 100.0% 30.0 100.0%

2. Key policy and institutional reforms supported by the project

The development objectives of the proposed project are in line with health sector reform principles and health policies enunciated in the health and social security laws. Major reforms sought include:

• Stronger stewardship role of the central level SESPAS with delegated technical and administrative functions to the regions, provinces, municipalities and service providers;

• Attitudinal and behavioral changes in managers and service providing personnel by fostering performance based incentives and pride in caring for the disenfranchised and poor;

• Deconcentrated and decentralized regional and provincial levels with more autonomy for decision making at the service provider level;

• Redirecting the flow of resources to support decentralizing decisions on financial and human resources;

• Well-defined organizational structures with clearly understood functions.

3. Benefits and target population

Target Population. The proposed program would unwaveringly and insistently focus on gains in the health status of the poorest population groups located in the poorest regions of the country (most of them bordering Haiti): more accessible quality services, reducing preventable child and maternal deaths, and more courteous and humane treatment with less waiting time in clean and more comfortable waiting areas. The population covered under the Phase I Project would be 2.3 million (28% of the total population) of which about 1.7 million are under the poverty line.

Expected systemic benefits over the medium term are:

• Increased degree of accountability and financial responsibility by shifting from hierarchical inspection to a supervision approach that is based on monitoring and economic incentives embedded in results-based management agreements;

• Changing health care delivery from a supply driven model to a demand driven model; • Well defined regulatory frameworks that support management contracts for managing

and supervising health services delivery by institutions with a larger degree of managerial autonomy; and

• A public sector health network that remunerates its personnel partly with financial

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incentives for performance and results and that separates the functions of regulating and monitoring from the functions of providing health care services.

4. Institutional and implementation arrangements Project Implementation Period: 4 years

Executing agencies: Responsibility for project implementation would rest in CERSS, with the participation of SESPAS as the sector steward, SISALRIL, as the regulatory and supervisory entity of the insurance and provision of health services, and SENASA as the Public National Health Insurance agency. The CERSS's Project Coordination Unit (CERSS/PCU) would provide technical, administrative and financial support to the implementing agencies and entities.

CERSS/PCU. Headed by a Coordinator and staffed with professional and support personnel, would be responsible for providing technical, administrative and financial support to all project activities, including the maintenance of accounting records, processing disbursements, maintaining administrative records, processing procurement contracts for goods and services, and the carrying out of related activities. This unit would review all contracts and make payments for activities related to the project.

SESPAS. The Modernization and Institutional Development Unit (UMDI) of SESPAS, composed of high level officials, has the mission of coordinating efforts and resources from different sources to enable SESPAS to meet its new role in the health system, as mandated by the new legal framework of the health sector. UMDI with CERSS/PCU technical and administrative and financial support would prepare annual operations plans (POA) to strengthen capacity building and effective institutional development of SESPAS so it can perform as steward, supervisor and evaluator of the new health system. SESPAS would assign high level officers to plan and execute with CERSS/PCU support, day to day activities of project components for the strengthening of health care networks and in particular for the carrying out its essential public health functions: epidemiological surveillance, national network of laboratories, disaster preparedness and its related functions of cold storage facilities and blood banks.

With CERSS/PCU administrative support and project resources, UMDI/SESPAS would strengthen the organizational structures and the stewardship role of SESPAS as defined in the regulatory guidelines on stewardship and separation of functions (see annex 2). Also UMDI/SESAPAS would support improving managerial functions of the regional, provincial and municipal levels to implement regulations on organization, structure and functioning of the health network (see annex 2). UMDI/SESPAS would help to redirect the flows of human and financial resources as well as management information to ensure autonomous management of public service networks. As the deconcentration and the separation of the stewardship and financing roles from the provision of health services evolves, UMDI, with project support would strengthen SESPAS institutional capacity to monitor and supervise policies and regulations as implemented through Components 1 and 2.

SISALRIL. As mandated under the Social Security Law (L87-01), SISALRBL was established in 2002 as an autonomous entity representing GODR interests and is responsible for the protection of affiliates, licensing and supervision of ARS, payments to the PSS and monitoring the financial solvency of SENASA and the ARS. As such, SISALRIL would have a direct participation and responsibility in the execution of Components 1 and 2, for the formulation and implementation of health policies and regulations, and in the instrumentation and pilot testing of new insurance and financing models developed with project support.

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This would strengthen the supervisory and regulatory role of SISALRIL, supporting at the same time the implementation at the national level of managerial instruments developed under the Provincial Health Services Project, including management and clinical information systems. CERSS/PCU would assist SISALRIL in the transferring of the know-how developed and pilot tested under the Provincial Health Services Project.

SENASA. This recently created institution is the public ensure responsible for, inter alia, administering the health risks of its affiliates with efficiency, equity and effectiveness, ensuring that services are provided with quality, opportunity and satisfaction, and contracting and paying new health providers according to conditions established in the Social Security Law. As such, SENASA, under the supervision of SISALRIL, and with CERSS/PCU support, would participate in implementing components 1 and 2 and developing pilot tests on insurance and financing models.

Phase I- Project Implementation Agreements. For the implementation of project activities, the Borrower will cause inter institutional participation and performance agreements to be signed between CERSS and all participating agencies (SESPAS) and entities (SISALRIL, SENASA) on terms and conditions satisfactory to the World Bank. The purpose of these inter-institutional participation agreements and arrangements is to guarantee the allocation and disbursement of project funds from the CERSS/PCU to the participating agencies and entities upon proof of compliance with obligations and conditionalities that are critical to the health care services coverage extension and the appropriate implementation of the reform legislation. These participation agreements and arrangements would also specify the legal authority of the persons signing, the scope and duration of the agreement, responsibilities agreed as part of approved project operational plans, the total amount of financing, the allocation of funds on the basis of meeting accepted obligations, correspondence with the investment plan and on the appropriate supervisory and monitoring means to evaluate performance. Agreements and arrangements would also specify objectives to be met, indicators to verify that objectives are met, and means of verification. Also specified would be the duration, review periods, possible future modifications or changes, reasons for termination or suspension, conflict resolution methods and penalties for not complying with the signed agreement.

Particular attention would be placed during implementation to streamlining and close coordination between CERSS/PCU and the participating agencies and entities in staying with World Bank's procedures on the use of funds from the Special Account.

The Borrower would use management agreements to be subscribed between the SENASA and other ARSs and the Regional Health Services Networks or the PSS according to valid and current rules and regulations. Under these agreements, the service providers would commit to provide quality health care services to the beneficiary population in a timely, effective and efficient manner according to specifications contained in the social security law and its regulatory guidelines.

Donor Coordination. The five largest donor agencies operating in the Dominican health sector are USAED, IDE, EU, specialized UN Agencies, and the World Bank (See Table 1 in Annex 2.C), The PCU of CERSS manages the implementation of World Bank and IDB financed projects. In addition PCU, as part of its coordinating role for health sector reform, shares methodologies and experiences with the coordinating units of the USAID and EU projects that are administered by SESPAS with assistance from international management consultancy firms. UN agencies (UNDP and PAHO/WHO) participate in the implementation of the ongoing Provincial Health Services Project and the HIV/AIDS Prevention and Control Project and will also participate in the

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implementation of this project. Nonetheless concerns have been expressed by some of the donor agencies that donor coordination should be strengthened within and among regions of the country and that all donors should align their support behind the ambitious health sector reform program especially because the major donors tend to focus their main activities in different geographic areas. Therefore the government - following the example of the education sector - is preparing a 10-year Development Plan for Health Sector Reform as a management tool to coordinate donor strategies and resources and to reduce duplication of efforts. The 10-year Plan would spell out the respective areas of responsibility for each donor, the willingness of each donor to accept that responsibility, for how long, under what conditions, with what kind and size of financial support (with or without cost sharing), and the commitment to coordinate with other donors.

D: Program Rationale

1. Project alternatives considered and reasons for rejection

No project alternative. The 2001 reform laws challenge the health sector to implement organizational, financial, and health care delivery reforms, while at the same time extending the coverage and raising the quality of health services for the poor. World Bank financial participation in supporting the reform process is important but not a critical factor. The GODR and the World Bank agree that the value added of the loan and the World Bank involvement would be to assist in operationalizing the different aspects of the reform laws, setting in place a new institutional framework, and in developing the needed instruments such as implementing rules and regulations and monitoring systems. The proposed APL is using the experience from the ongoing Provincial Health Services Project in order to ensure the timely availability of the needed technical and financial support to implement the complex reforms in the medium term and to improve the health status of the poor.

Standard investment operation alternative. The GODR and the World Bank team discussed the most appropriate lending instrument for supporting the health sector reforms. The standard investment lending approach was discarded in favor of utilizing the APL approach to support the proposed project for the following reasons: (i) the long term horizon for meeting the reform program's objectives; (ii) the existence of a sound sector reform program developed by the GODR and the a 10-year Development Plan under preparation; and (iii) the GODR's decision to pilot test new institutional arrangements and instruments not yet fully developed and evaluated because of the level of complexity of the contemplated reforms. The APL would support the GODR's incremental approach to the reform of the health sector, while developing the long-term political and institutional commitment to the reform process.

A project with a national scope for the provision of health services. This alternative was rejected because it would limit the potential to have a positive impact on the poorest population group living the regions bordering Haiti that have limited access to quality health services. Selection of areas other than the ones selected for the Phase I of the program would have created multiple demands and dissipate the efforts and resources that could be otherwise be allocated to the selected regions. In addition, the approach selected is fully consistent with the gradual and incremental strategy adopted by the GODR for implementing the health and social security reforms over the next 10-years.

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2. Major related projects financed by the Bank and/or other development agencies: (completed, ongoing and planned)

Sector issue Project Latest Supervision (Form 590) Ratings (Bank-financed projects only)

Bank-financed

Health status improvement

Provincial Health Services Project (Ln.4272-DO)

Implementation Progress (IP)

Development Objective (DO)

The objectives of the Provincial Health Services Project are to: (I) assist in the expansion of health care coverage to reach the poorest population groups, focusing on mother and child health care; (ii) assist in improving the quality of health care services already provided to the poor; (iii) assist in strengthening policy-making and management capacity of provincial health units; and (iv) assist in fostering community participation in the health system.

HIV/AIDS HIV/AIDS Prevention and Control (Ln.7065-DO)

This project is assisting the Government of the Dominican Republic (GODR) in curbing the spread of the Human Immune-deficiency (HIV) epidemic through the scaling up of programs and activities targeted to high-risk groups; expanding awareness about HIV/Acquired Immune-deficiency Syndrome (AIDS) among the general population; and strengthening institutional capacity to ensure the effectiveness and sustainability of the effort.

Other development agencies

or Program

USAID, IDE and EU are the other three large donor agencies (See Annex 2.C)

The Government is preparing a 10-year Development Plan for Health Sector Reform as a management tool to align the support of each development agency and to minimize duplication of resources and efforts.

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3.

Lessons learned and reflected in proposed Program design:

Program design and content are benefiting from the experience with ongoing operations financed by the WB (Provincial Health Services Project) and other donor agencies (e.g., IDE, USAEDS, EU). Key lessons incorporated in project design are: (i) project objectives and scope are linked to a clear legal and policy framework; (ii) strong government and stakeholder commitment at different levels of the sector has been obtained; (iii) financing of critical investments to improve the quality and effectiveness of health services are linked to the implementation of policy and institutional reforms; (iv) the project would support systems and human resources development to

Health SectRed Salud EuropeaUSAID n Union

IDE ProjectHealth Sector Modernization

24

improve decision-making and management capacity of sectoral institutions; (v) adequate project monitoring and impact evaluation arrangements have been developed to allow adjustments to be made in project design and implementation arrangements during the life of the project; and (vi) strong national teams need to established to ensure the long-term sustainability of the reform effort.

During its first three years of implementation the ongoing World Bank project did not have the legislative support that now exists for this proposed project. Major reform initiatives were therefore slowed down as the executive level was hamstrung by outdated health policies and the lack of a strong legal foundation. In the early years of implementing the ongoing World Bank project - and the difficulties faced by the EDB project in modernizing the health sector - it became evident that substantial progress needed to be made on the policy and legal levels. This support became a reality in 2001 with the enactment of the General Health Law and of the Social Security Law. The new legal environment created by these two laws provides the legal support enabling sector and institutional reforms. The proposed program is taking full advantage of the reform principles in the new health law and social security law. The emphasis of the two laws on decentralized decision making, deconcentrating technical and administrative functions, and gradually moving from a supply-driven health care delivery system to a demand-driven system supports the health services delivery strategy of creating integrated health networks that target the poorest segments of the population.

The two new laws are also an encouraging sign that the GODR is committed both to protecting the environment and to reducing the risks posed by the improper management of medical waste. The laws provide a new framework for managing infectious and other medical waste that poses health risks to patients and health care staff, as well as to people who are exposed to such waste outside health facilities. The proposed support activities related to the handling of medical waste build on the WB-financed Provincial Health Services Project, and the recommendations in the assessment of medical care waste handling and disposal conducted under the HIV/AIDS Prevention and Control Project (See Annex 2.B).

4. Indications of borrower commitment and ownership

There is strong and convincing evidence of borrower commitment and ownership, as follows:

a) A letter was sent by the GODR to Mr. James W. Wolfensohn, President, World Bank, dated April 2, 2003 defining the policy framework for the proposed APL.

b) A letter was sent by the Technical Secretary of the Presidency and by the Health Secretary in October 2001 requesting follow up support for implementing the health sector reform activities.

c) The two laws passed in March and May 2001 provide the legal underpinnings for the proposed sector reforms.

d) Firm and satisfactory agreements were reached during the preparation missions held in June, 2002, November 2002, and March 2003; i.e. agreement with the Government on an outline of the design of a health sector reform support program; agreement on the preferred lending instrument to be an APL confirming the PCD review meeting decision held in April 2002; agreement on a program that would consist of three four-year phases over the period 2003-2016; agreement on a set of performance triggers, including MDGs, to be evaluated at the end of the first and second phases and that achieving the agreed upon performance would be a condition of financing the next phase.

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5. Value added of Bank support to this APL Program

The World Bank's value-added to the proposed program includes experience with APL Programs, performance-based, and investment lending, as well as international experience and expertise on health reform program design and implementation. World Bank involvement in the Dominican Republic has already been a major conduit for exchange of regional and global experience and exposure to international best practices that have helped shape the reform process. In addition, World Bank involvement would provide oversight on the use of funds, consistent with its procurement and disbursement norms and guidelines. Moreover, the World Bank team and specialized consultants would provide technical assistance during program implementation and facilitate the identification of adjustments to the design of the program design if necessary.

E. Summary Project Analysis

1. Economic (See Annex 4):

[ x] Cost benefit NPV=US$; ERR=% [x] Cost effectiveness [ ] Other (specify)

The GODR has placed improving individual health services and the protection of public health as a high priority relative to other aspects of its development agenda. Having done so, the economic return to the design and level of interventions proposed under the project are demonstrably high; with cost-benefit ratios under a "most likely" scenario of national income growth, population growth, reduction in mortality among selected target groups (mothers and infants) estimated at 1: 6.6 if only the costs of interventions in the APL1 Regions are accounted for; and 1: 4.0 if the entire cost of APL1 is accounted for. (Annex 4).

2. Financial (see Annex 4 and Annex5)

NPV=US$ million; FRR=%

The improvements introduced through the project appear to be financially sustainable. Overall, incremental non-personnel post project costs would represent 1.6% of the 2003 health sector budget and 5.5% of the 2003 non personnel health sector budget. The Regions being targeted for the initial phase of the APL are among the poorest and worst served in the country at present. Incremental non-personnel costs would represent 5% of the 2003 budget for these regions and 17% of the non-personnel budget fort he regions. This large increase would represent a needed re-allocation of resources towards the poor, and would still, from a macro point of view, be sustainable.

3. Technical

Project design builds upon the achievements of the ongoing Provincial Health Services and the HIV/AIDS Prevention and Control Projects and other projects supported by other donor agencies, as well as on the findings and recommendations of technical studies and evaluations of the current health sector reform process. As a result, the proposed design fit local conditions, needs, priorities and respond to sustainability issues. In addition, recent studies and ENDESA data were used as the basis for identifying key health problems (e.g., maternal and child health), and recommended approaches to solve them.

Overall, the project is technically justified on the basis of the importance of the problems it

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addresses, the cost-effectiveness of the interventions to be delivered in project areas, their affordability, and the political consensus on the need for fully implementing the mandates of the health and social security laws in order to reform health care organization and financing in the country.

4. Institutional

4.1 Executing Agencies. The CERSS/PCU as well as the participating agencies and entities have been involved and managed projects financed by international donors, including the World Bank, since the mid-1990s. Lessons learned from the experience have been incorporated in project design. Strong and experienced technical and administrative teams in the participating agencies and entities would be responsible for managing project implementation.

4.2 Project Management. Recent assessments carried out during project preparation found administrative and financial management of the ongoing Provincial Health Services Project satisfactory. The same technical and administrative teams would be in charge of supporting project implementation.

4.3 Procurement Issues. Procurement under the project would be centered in the CERSS/PCU, for equipment, goods, works and consultants services financed out of World Bank loan proceeds. The most recent Procurement Capacity Assessment Review rated the PCU as Average Risk; therefore the CERSS/PCU will observe the proposed thresholds for the project. The CERSS/PCU would be responsible for upstream, procurement-related activities, including preparing and reviewing procurement plans, coordinating procurement reviews, and preparing reports on compliance and prior review activities. Specific guidelines for the solicitation, evaluation, awards, and contracting processes for the acquisition of goods and services are contained in the Operations Manual.

Procurement would be managed on the basis of annual procurement plans that would correspond to the annual work program. The World Bank would approve both the annual work program and the corresponding procurement plan. The first year's work program and procurement plan were agreed at appraisal.

The country's Essential Drugs Program (Programa de Medicamentos Esenciales-PROMESE) has been transformed into a Logistic Support Center (Central de Apoyo Logistico-CAL). As a result of recent legislation, all purchase of medical supplies and Pharmaceuticals for the public sector institutions must be made through CAL. However, bidding procedures for any procurement financed with bilateral and multilateral institutions would be carried out according to the norms of those institutions.

The United Nations Development Program (UNDP) will assist the project in procurement activities as it has done so for the Provincial Health Services Project (Loan 4272-DO). The government will assume the costs of the administrative fees charged by UNDP from its own resources. In addition, GODR is exploring with UNDP a bridge financing arrangement for project startup activities prior to loan effectiveness (as informed by the GODR team during negotiations, the possible bridge financing would be reimbursed by Borrower with its own funds). PAHO/WHO would continue to support the GODR in planning, procuring vaccines and other medical supplies, and in undertaking immunization campaigns under the project

Key elements of the procurement assessment made for the project are included in Annex 6.

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4.4 Financial Management Issues. Accounting and financial management for the project would be the responsibility of the CERSS/PCU. This unit would also be the repository for all other project recording, accounting and reporting. Retroactive financing for eligible expenditures up to US$3.0 million would be provided from appraisal to loan signing. Procurement audits would be performed at the same time as financial audits.

Due to the experience of the CERSS/PCU with SOE-based disbursement procedures under the Provincial Health Services Project and the HIV/AIDS Prevention and Control Project, traditional disbursement methods would be used to draw down funds from the loan and Financial Management Reports (FMRs) would be used to monitor project implementation on a quarterly basis.

The CERSS/PCU will be in-charge of maintaining, operating and reporting on the Special Account. The CERSS/PCU will also operate a Program Account for the purpose of receiving counterpart funds from the government as well as a transitory account for funds disbursed from the Special Account for the Bank's share of eligible expenditures for which the CERSS/PCU is responsible. Similarly each Program Implementation Units (PIU) at participating agencies and entities would also operate their own Program Accounts for the purpose of receiving counterpart funds, and Special Account funds as payment to supplier come due for the World Bank's share of eligible expenditures. All Program Accounts would be opened at the Banco de Reservas.

Special Account. The PCU would establish a Special Account in US$, at the GORD's Central Bank. The Special Account is only to be used for eligible expenditures under the loan agreement. Under no circumstances may funds in the Special Account be used to cover the share of expenditures corresponding to the counterpart funds. Transfers from the Special Account to other project bank accounts would only be permitted to meet eligible expenditures for a limited period of no more than 30 days.

Audit compliance. According to World Bank records for the Provincial Health Services Project, 2000 and 2001, audit reports have usually come on time and are acceptable. However, the audit reports have both had qualified opinions due to issues regarding the commingling of counterpart, loan funds, and IDE funds. This issue has been discussed at length with the CERSS/PCU and they have agreed to implement measures to ensure that all funds are accounted for and maintained separately.

5. Environmental Environmental Category: B (Partial Assessment)

5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The ongoing Provincial Health Services have contributed to the improvement in healthcare waste management in the country, including: (a) assessments of medical waste management practices in health facilities; (b) purchase of incinerators and other equipment in the largest hospitals of the country; (c) training of health facilities staff in biomedical waste management; and (d) design and updating of environmental norms and guidelines. The proposed project would build upon and expand the scope of activities supported under ongoing projects in order to improve biomedical waste management processes and practices in the health systems.

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As done with the support of the ongoing Provincial Health Services Project, resources would be allocated under Component I to assist participating health facilities in project areas, as needed, in the: (i) undertaking of assessment of medical care waste handling and disposal; (ii) updating of manual to address proper handling and disposal of medical wastes; (iii) rehabilitation of infrastructure and the installation of equipment in the main local hospitals for the disposal of medical wastes; and (iv) training of health personnel in the application of standards to protect patients, health workers, and the community.

5.2 What are the main features of the BMP and are they adequate? The project would have a beneficial impact on the environment in several ways. The project would support substantial improvements in the handling of biomedical waste in participating health facilities. To this end, the project under Component I would finance related civil works, equipment, materials, training and operating costs. The project would also have a favorable environmental impact through the rehabilitation of health facilities, where malfunctioning or inoperative basic systems for water, electricity and air conditioning will be repaired and/or replaced. This is expected to improve water quality and sanitation, and reduce environmental pollution. Technical assistance will be provided to the local governments of each participating locality in order to improve the disposal of residual waste, without any risk to their staff or to the environment. Environmental construction and management norms for health facilities, including internal waste management, personnel health and safety provisions for the handling and disposal of biological waste and operation of equipment will be part of the Operations Manual for the project.

5.3 For Category A and B projects, timeline and status of EA:

Date of receipt of final draft: May 7, 2003

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted?

Project objectives, scope and proposed investments, including those related to improvements in biomedical waste management have been discussed among the different stakeholders who are part of the National Health Council. This includes key public, private and non-governmental agencies and institutions operating in the health sector of the Dominican Republic.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? The Operations Manual for the proposed project would include environmental guidelines for the construction of health facilities, guidelines and framework in the event of any resettlement caused by the project, and norms and guidelines for the proper biomedical waste management in the participating health units. Bidding documents for civil works would also include related provisions. The compliance with these provisions would be monitored as part of supervision activities in the selected facilities.

The environmental guidelines in the Operations Manual would refer to: (a) biomedical waste management and disposal, including segregation of waste; (b) personnel health and safety provisions for the handling and disposal of hazardous wastes; and (c) environmental guidelines to be included in the bidding documents for civil works. It would also include World Bank

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guidelines and framework in the event of any resettlement caused by the project, alongside with guidelines for small construction works.

6. Social;

6.1 Summarize key social issues relevant to project objectives, and specify the project's social development outcomes The main social development issues related to the proposed project refer to the inequality in access to health services, inequality of health status among different population groups and between urban and rural regions, high child and maternal mortality rates for the country as a whole, and the impoverishment impact of ill health and disability among the poor uninsured population. The main sector issues section flagged the low but improving health status, the slowly decreasing poverty, the preventable maternal mortality, HIV prevalence, inequitable access to health care, low and inequitable health care spending, and the need to improve the quality of health services.

To help address the above issues, project design is geared to: i) expand the population and geographic coverage of the reformed insurance system; ii) scale up the provision of quality care through certified and licensed providers, particularly to improve child and maternal health; iii) assign health system management to new regional authorities; iv) to expand deconcentration and decentralization process to additional regions/provinces; and v) scale up the provision of improved public health services reflecting lessons learned in previous phases.

6.2 Participatory Approach: How are key stakeholders participating in the project?

a. Primary beneficiaries and other affected groups:

Different public, private and non-governmental stakeholders who are part of the National Health Council actively participated in the design of project related activities, as well as in the design of macro-sectoral reform and processes. As such, key stakeholders were consulted regarding both the pertinence of the program and the willingness to participate during all the stages of the project with positive responses.

b. Other key stakeholders:

Regional and provincial health authorities in selected areas to be covered under Phase I of the APL were also consulted and involved in the preparation of the project. The participatory activities initiated during preparation would continue during implementation, particularly to inform and mobilize the beneficiaries and their representatives at the national, regional and provincial levels, in participating health facilities, and with the Presidential and Congressional candidates for the elections to be held in 2004.

As noted above, special emphasis would be placed during project implementation to develop mechanisms to strengthen international donor coordination.

6.3 How does the project involve consultations or collaborations with NGOs or other civil society organizations? The National Health Council is the forum where all the key stakeholders in the Dominican health sector participate, discuss and agree on the major decisions related to the health sector reform process.

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6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The proposed project is building upon existing arrangements that had been put in place since 1996 with the support of the ongoing Provincial Health Services Project and more recently with the support of the HIV/AIDS Prevention and Control Project. This allows active participation under the National Health Council of key sectoral stakeholders.

6.5 How will project monitor performance in terms of social development outcomes? As defined in Tables 3 and 4 of Annex 2, specific triggers and performance indicators would allow monitoring in terms of social development outcomes. Triggers and performance indicators would respectively be assessed by December 2007 and by December 2012.

7. Safeguard Policies;

7.1 Are any of the safeguard policies triggered by the project? _________________________ X Environmental Assessment (OD 4.Q1)

Natural Habitats (OP/BP/GP 4.04) Forestry (OP 4.36) Pest Management (OP 4.09) Cultural Property (OPN 11.03) Indigenous Peoples (OD 4.20) Involuntary Resettlement (OP 4.30) Safety of Dams (OP 4.37) Projects on International Waterways (OP 7.50) Projects in Disputed Areas (OP 7.60) ________

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies:

As has been done on the ongoing projects, resources have been allocated under the project to finance improvements in the biomedical waste management in the different participating institutions, including equipment purchase, training of personnel and development of guidelines and internal norms. Also, please see 5.5 above.

F: Sustainability and Risks 1. Sustainability

The project would be sustainable because it is anchored in the new laws for reforming the health sector and therefore has the support at the highest political levels. These laws were prepared, reviewed, and approved after an extensive participatory process in the health sector. Major sectoral stakeholders have been involved in project preparation and would participate in project implementation assuring country ownership.

GORD has demonstrated strong and increasing budgetary commitment to the reform process. The GODR top priority in the health sector is to extend health insurance coverage over a 10-year period. World Bank financial participation represents only a fraction of the health reform effort. In addition, as the implementation of the health insurance reform proceeds in the upcoming years, the GODR envisions the gradual conversion of budgetary transfers to health facilities on the basis of historical budgets into transfers for financing the affiliation of the subsidized population. This conversion, along with the allocation of additional resources, would help ensure the long-term

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sustainability of the reform effort. Productivity and efficiency gains expected to be achieved through the project would contribute in the medium term to reduce the modest fiscal impact of project investments. Also, the strengthening and consolidation of sectoral institutions (e.g., SESPAS, SISALREL, SENASA) would ensure a sustainable health insurance system in the Dominican Republic.

2. Critical Risks:

Risk From Outputs to Objective Insufficient capacity to implement complex technical and politically difficult reforms, particularly at the regional and provincial level.

Political and budgetary commitment to the program not preserved over time, particularly during changes of Administration and due to fiscal problems.

Rating Risk Minimizing Measures

Technical assistance will be part of the package of services financed under the project. Local agencies will be prepared for the transition to the new system. Information, communication and education campaigns, as well as consensus building initiatives, would be supported involving key sectoral stakeholders. The adoption of the reform laws was based on a strong commitment from different stakeholders and political authorities from different parties. Support would be provided to develop new health care financing and resource allocation mechanisms to gradually move from financing the supply of health services to financing demand.

From Components to Outputs Limited progress in advancing the decentralization of the entire public sector apparatus, delaying the reforms in the public health sector. Insufficient capacity at the provincial level to meet fiduciary requirements regarding procurement and financial management.

Worked closely with political and economicauthorities to ensure that health sector reforms are supported by public sector reforms. Conduct workshops and seminars to developlocal capacity.

Overall Risk Rating: ____________

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 3.

Possible Controversial Aspects

G. Main Loan Conditions

1.1 Negotiation Conditions

The Government provided by appraisal the following documents: • Normative Guidelines for Regulating the General Health Law. • Copy of the Rules Governing the National Social Security Council • Copy of the Rules Governing the National Health Council

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• Copy of the Rules and Regulations governing the Stewardship os SESPAS and the Separation of Functions of the National Health System

• Copy of the Rules and Regulations for Provision of Health Services Network; • Copy of the Rules and Regulations governing the Family Health Insurance Scheme. • • Alternative Basic Health Plans and their associated costs. • General Guidelines for Licensing Health Care Facilities and Services • Letter of Development Policy drafted by GODR. • Model Management Agreement to be signed between SENASA and the Health Services

Network, approved by the relevant national authorities (the first agreement was signed on May 9, 2003 between SENASA and the health providers in Region IV).

• Submission of the FMR format to be used by PCU for reporting purposes.

1.2 Effectiveness Conditions

Loan effectiveness conditions are: (i) adoption by the Government of an Operations Manual satisfactory to the World Band; and (ii) submission of a model Inter-Institutional Participation Agreements.

The following Financial Management actions are also conditions for project effectiveness: (i) open Special Account at the Central Bank, and (ii) the first deposit to the Program Account of counterpart funds in the amount of US$1.5 million has been made.

2. Other • Implementation of the project in conformance with an Operations Manual • Maintenance of the PCU acceptable to the Bank • Timely allocation of counterpart funds

H. Readiness for Implementation [ ] 1. a) the engineering design documents for the first year's activities are complete and ready for the start of project implementation, [x] 1. b) Not applicable

[x] 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. [x] 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [ ] 4. The following items are lacking and are discussed under loan conditions (Section G):

I. Compliance with Bank Policies 1 The project is expected to comply with all applicable Bank policies. .

Vna-Maria Arriagada, SMU Dii Patricio Marquez, Task Team Ileader Caroline D. Anstey, CMU Director

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Annex la Dominican Health Sector Reform Support Program

Project Design Summary Note: if not otherwise indicated:

• Indicators refer to the target population of Phase I of the Program, the people living in regions III, IV, VI, VII and VIII;

• Baseline information refers to the year 2002 and targets to the year 2007 • "*" Indicates baseline data that are either outdated and/or of questionable quality; efforts will

be taken by the GODR to update information within the first year of project implementation • "**" Indicates targets that are professional judgments but do not reflect a broader national

consensus and/or build on weak baseline data. In either case, a review of the target is envisaged within the first year of project implementation

• For some indicators, no information was available regarding baseline data (N.A.) and/or discussions concerning targets not concluded. These information gaps will be closed during the first year of project implementation.

Hierarachy of Objectives Indicators Baseline and targets

Means of verification

Critical Assumptions

CAS Goal Poverty Reduction; increased share of the poor receiving the benefits of social development and economic growth

See progress towards health related Millennium Development Goals

(from goals to Bank mission) Other macroeconomic and social variables within and beyond the control of the government of the Dominican Republic are neutral or favorable

Progress towards health related Millennium Development Goals A. Improve maternal health

Maternal Mortality rate Total fertility rate

Unit: maternal deaths per 100,000 live births Baseline: 122 [1999]* Target: -20% (98)** Unit: Total number of children that would be born to a woman during her productive years Baseline: (target) III: 2.8 (2.5)** IV: 3.9 (3.5)** VI: 4.3 (3.9)** VII: 2.8(2.5)**

SESPAS Health statistics ENDESA survey

See above

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Hierarachy of Objectives

Indicators Baseline and targets

Means of verification

Critical Assumptions

Percentage of underweight newborns

VIII: 2.8 (2.5)** Baseline: 5.9 [1999] Target: 4.1

B. Improve child health

Under 5 mortality rate Infant Mortality rate Neonatal mortality rate

Unit: under 5 deaths per 1000 live births Baseline: (target) III: 30 (24)** IV: 66 (53)** VI: 68 (54)** VII: 28 (22)** VIII : 43(34)** Unit : infant deaths per 1,000 live births Baseline: (target) III: 25(20)** IV: 44(35)** VI: 50(40)** VII: 25(20)** VIII : 34(27)** Unit : neonatal deaths per 1,000 live births III:17 (14)** IV:21 (18)** VI: 28(24)** VII : 15(13)** VIII : 22(19)**

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Project Development Objectives (2003 to 2006) I. Increase the Percentage of pregnant Baseline (Target): SESPAS (From objectivesproportion of women with at least 4 III: 92.4 (98) health to goals) the target antenatal care visits IV: 90.2 (98) statistics population VI: 90.3 (98) Determinants of utilizing VII: 95.5 (98) ENDESA maternal and services VIII: 9 1.3 (98) Survey child health provided under outside the the Basic Health Percentage of births Baseline (Target): Health Service control of the Plan attended by skilled III: 98.2 (98) Statistics project remain personnel IV: 91.5 (98) resulting from neutral or VI: 93.7 (98) the to be favorable VII: 96.8 (98) established VIII: 97.6 (98) electronic Interventions Health included in the Percentage of women in Baseline (Target): Management Basic Health reproductive age that III: 67.9 (73)** and Plan are use modern family IV: 6 1.0 (66)** Information effective in planning methods VI: 65. 1(70)** System reducing VII: 70.4 (76)** maternal and VIII: 69.4 (75)** Special studies child mortality and surveys Percentage of children Baseline (Target): aged 12 to 23 months 111:42.1(54)** fully immunized (DPT, IV: 26.0 (41)** Polio, Measles) VI: 35.3 (48)** VII: 33.8 (47)** VIII: 33.0 (46)** Percentage of children Baseline (Target):

under 5 with diarrhea 111:41.4(53)** that are medically IV: 47.6 (58)** diagnosed and treated VI: 4 1.0 (53)** VII: 34.0 (47)** VIII: 37.2 (50)**

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II. Improve the quality of services provided under the BPH to the target population

Percentage of women receiving antenatal care that are immunized against tetanus (at least two injections) Percentage of women diagnosed with severe pre-eclampsia or eclampsia referred to tertiary care facilities % of staff in facilities incorporated in PSSs present during working hours % of target population satisfied with the quality of BPH services

Baseline (target): III: 92.7(100) IV: 89.6(100) VI:92.6(100) VII: 94.4(100) VIII : 93.1(100) Baseline : N.A Target : 100% Baseline : N.A Target : 95% Baseline : N.A Target : 75%

III. Remove Financial barriers to access and protect the target population of financial consequences of ill-health

% of population eligible to government subsidies under the Social Security Law enrolled in National Health Insurance Plan Private expenditure as % of total health expenditure

Target: 80% Baseline: 73% [2000] Target: Pending

IV. Improve efficiency of health system

% of SENASA’s financial resources allocated to primary care level services Nurse/midwife per doctor ratio in PSSs (excluding auxiliary nurses) Hospital beds per 1,000 population in PSSs % of administrative and managerial positions created in the reform process at the regional, provincial and municipal level of SENASA that are filled with SENASA employees

Baseline: N/A Target: > 30%** Target: 0.8:1.0** Target 1/1,000** Target: >90%

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Project Outputs 1 . Public Health x SRS are established at Target Project (From outputs toService the regional and Regional: 5 monitoring PDOs) Management provincial level Provincial: 18 and Units (SRS) are evaluation The current andestablished at Legislation is enacted Target year: 2003 future the regional, that transfers and Progress governments ofprovincial and regulates reports the Dominican municipal level responsibilities and Republic remainand operate authorities of SRS committed to thebased on clearly project and defined % of managers and Target: 100% continue the responsibilities, administrators of SRS institutional andauthority, and received training health system with sufficiently reforms trained staff See also: 6 Capacity building 2. The National Number of National Target: 5 Project activities are Health Health Insurance bodies monitoring sufficient that Insurance (SNSs) that reimburse and institutions are System is contracted PSSs timely evaluation able to implement established and and according to the reform agenda operational contractual Progress under the arrangements reports Administrative, supervision of management andSISALRIL Financial resources Target: 25% Special health staff are flowing from SENASA surveys committed to on the basis of service make the reforms production as a % of Health work total financial resources Service allocated to project Statistics Counterpart regions resulting funding will be from the to available Regional SNSs are Target year: be solvent and financial from 2004 onwards established The institutional management is electronic reforms will result continuously monitored Health in improved by SISALRIL Management accountability and and transparency and Information thus improve the System responsiveness of

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3. Autonomous Number of regional Target: 3 Project the health system networks of PSSs established monitoring to the health needspublic and and of the target private Number of primary care Target evaluation population providers (PSS) facilities participating Primary: min. 1 per are created at in each regional PSS 2,500 population** Progress Autonomous the regional, reports multi-sectoral provincial and Number of PSS and Target: provider networksmunicipal level hospitals integrated in Hospitals: 1/3 Special will be effective and operate PSSs that assumed full PSS: 2 surveys in removing autonomously responsibility and geographical with sufficiently authority to manage barriers to access trained human resources managerial and The health administrative % of managers and Target: 100% ** insurance system staff administrators of PSS will remove the that job specific most significant received training financial barriers to access See also 1, 5, 6 The improved medical quality of4. PSs, SNSs % of SNS that Target: 100% Project services and and SRSs contracted all existing monitoring behavioral reached and PSS for service and changes of staffimplemented provision evaluation will encourage the contractual target populationarrangements % of the contracts Target: 100% Progress to utilize basic that govern signed between SNS reports health services performance- and PSS that include based performance elements Special reimbursement (e.g. quality, consumer surveys procedures satisfaction)

5. SRSs % of providers Target: 100% Project developed and participating in PSSs monitoring implemented a that are registered under and quality the corresponding evaluation assurance regional licensing program that scheme Progress includes reports provider x regional Target: 3 licensing and administrative bodies Special accreditation (SRS) operate provider surveys accreditation schemes

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6. The BMP is % of nurses and Baseline: 100% Project delivered physicians affiliated monitoring through PSs with PSS that received and with an additional training in evaluation infrastructure the provision of the meeting BHP Progress nationally reports defined x PSS facilities with Target: 311 standards and insufficient Special sufficiently infrastructure (capital & surveys trained staff that equipment) makes rehabilitated and/or appropriate use expanded of well functioning % of PSS facilities that Target: 100% medical have essential drugs equipment and available at any time supplies and take advantage % of PSS health Baseline: 70%** of internet professionals trained in based medical IT technology and use information internet based resources sources in daily work

7. Staff makes SRS, SNS and PSS are Target year: 2004 Project appropriate use linked by an electronic monitoring of an electronic HMI system and health evaluation management % of administrative, Target: 100% and information managerial and Progress system that professional health staff reports links SNS, SRS trained in the use of the and PSS. HMIS networks, national x regional SNS and Target: insurance PSS use HMIS for systems and budget planning and administrative control bodies

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8. A network of x types of test are Baseline: N.A. Project public health routinely provided by Target: Pending monitoring laboratories public health and provides laboratories evaluation services todiagnose % of test results are Target: Pending Progress communicable available to providers reports and non- through the HMIS communicable within x days Special diseases and surveys communicate % of test results are Baseline: N.A. results to a centrally collected Target: Pending central public through the HMIS and health service reported in annual that monitors epidemiological reports and reports the epidemiology of diseases, develops control strategies. 9. The central x staff of central drug Target: Pending Project drug administration receive monitoring administration additional training in and licenses new pharmacoepidemiology evaluation drugs, monitors and the drug market pharmacosurveillance Progress and ensures the reports availability and A continuous education Target: Pending the rational use program for Special of drugs pharmacists, physicians surveys and nurses is designed and implemented with x graduates per year A drug licensing Target year: 2004** scheme is designed and all new drugs approved before entering the market See also: 5

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10. The Program Management Unit is

The PCU is staffed with appropriately skilled and experienced technical,

Target year: 2003 Project monitoring and evaluation

established and administrative and operational financial professionals Progress % of supervision and

financial requirements met by the PCU

Target: 100% reports

% of implementation milestones (outputs) achieved in time

Target: 90%

% of performance indicators tracked and

Target: 100%

reported to decision makers

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Annex 1b Dominican Health Sector Reform Support Program

Linking outputs, outcomes and impact

Annex 1 summarizes project outputs and expected outcomes (development objectives) and impacts (MDGs) with corresponding indicators to monitor project progress. The purpose of this section is to describe key causal links between outputs, outcomes and impacts.

The CAS, as well as the 2001 Poverty Report and the 2003 Public Expenditures Report, identify the increased share of the poor in the benefits of social development and economic growth as a sine qua non for poverty reduction. This objective of World Bank support is coherent with the commitment to achieve the Millennium Development Goals - development objectives that the government and civil society of the Dominican Republic endorsed at the Millennium Summit in September 2002. The MDGs stipulate significant improvements in maternal health and substantial reductions in child mortality. Mortality and morbidity among pregnant women and children results from a small set of diseases and conditions. Effective and cheap interventions exist to prevent the fatal consequences and are included in the Basic Health Plan of the Dominican Republic. Key for progress towards the MDGs is therefore achieving universal coverage of the Basic Health Plan (Project Development Objective I) and ensuring the quality and effectiveness of the services provided under the Basic Health Plan (Project Development Objective II). Increased coverage of the Basic Health Plan results from removing not only geographical but financial barriers to access (Development Objective III). Removing financial barriers through a National Health Insurance Plan that reaches beyond enrollees formally employed would also protect the target population from financial consequences of ill health. Thus, Development Objective III will also contribute to the Millennium Development Goal of reducing poverty and hunger. However, the reduction of poverty and hunger depends on too many determinants that the impact of Development Objective III could be monitored at the level of generic poverty indicators.

The following project outputs would result from effective project implementation: 1. Public Health Service Management Units are established at the regional, provincial and municipal

level and operate based on clearly defined responsibilities, authority, and with sufficiently trained staff.

2. The National Health Insurance Plan is established and operational under the supervision of SISALREL

3. Autonomous networks of licensed public and private providers are created at the regional, provincial and municipal level and operate autonomously with sufficiently trained administrative and managerial staff.

4. Autonomous provider networks, Public Health System Management Units and National Insurance Plan Secretariats reached and implemented contractual arrangements that govern performance- based reimbursement procedures.

5. Public Health Management Units developed and implemented a quality assurance program that includes provider licensing and accreditation.

6. The Basic Health Plan is delivered through public and private provider facilities with an infrastructure meeting nationally defined standards and sufficiently trained staff that make appropriate use of well functioning medical equipment and supplies and take advantage of internet based medical information sources

7. Staff makes appropriate use of an electronic health management and information system that links public and private provider networks, the National Insurance Plan secretariats and Public Health Management Units.

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1. A network of public health laboratories provides services to diagnose communicable and non-communicable diseases and communicate results to a central public health service that monitors and reports the epidemiology of diseases and develops control strategies.

2. The central drug administration licenses new drugs, monitors the drug market and ensures the availability and rational use of drags.

Replacing a highly segmented with an integrated, cross-sectoral delivery system (PO1) is expected to remove geographical barriers to access. Implementation of the National Health Insurance Plan (P02) would remove financial barriers to access. The establishment of Public Health Service Management Units (PO3) would primarily oversee and ensure the effectiveness of the provider networks and the National Insurance Plan (PO 1&2). Thus, Project Output 1 to 3 will contribute to Development Objective I, the increased utilization of the Basic Health Plan. The decentralized nature of project outputs 1 to 3 is expected to contribute to the effectiveness of the envisaged financing and service delivery system by improving accountability and transparency.

Project outputs 4 to 6 and 8 and 9 are expected to improve the quality of the services provided under the Basic Health Plan and thus would contribute and ensure progress towards Development Objective II (improvement of the quality of services providing the BHP). The implementation of the National Health Insurance Plan would ensure progress towards Development Objective III (removing financial barriers to access and protecting from financial consequences of ill-health). The implementation of a comprehensive and effective Health Management Information System is expected to improve the effectiveness of the system as a whole (including the financing, delivery, stewardship and surveillance function).

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Annex l.C Dominican Republic Health Reform Support Program

Government Policy Letter

s D.N. 2m3

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Annex 2.a

Dominican Republic Health Reform Support Program

Detailed Project Description

The proposed Adaptable Program Loan (APL) aims at:

a) Contributing by the year 2015 to achieve the Millennium Development Goals (MDG) agreed to by the Government of Dominican Republic at the Millennium Summit in September 2000. Specifically, the Program would address three MDG goals: reduce child mortality, improve maternal health, and contribute to eradicate extreme poverty by protecting the poorest from financial loss due to ill health and disability;

b) Supporting implementation of the new legal framework for the health sector, particularly the institutional strengthening of SESPAS in its new stewardship role, the development of insurance mechanisms, and the configuration of regional health networks; and

c) Supporting preparation, validation and dissemination of supplementary norms to the General Health Law (42-01) and the Social Security Law (87 -01).

The APL builds upon and complements the ongoing Provincial Health Services Project and the HIV/AIDS Prevention and Control Project. The main legal framework is built upon the General Health Law and the Social Security Law, both approved in 2001 and a set of regulatory provisions derived from these laws. The most important ones are the following:

"Regulatory Guidelines on Stewardship and Separation of Functions of the National Health System": They enable SESPAS to convert the public health network into one or several "prestadoras de servicios de salud"(PSS) (art. 160) and promote the creation of regional health services.

" Regulatory Guidelines for Licensing Health Facilities ". They establish minimum operational procedures and requirements for operation in order to obtain clearance for providing health services. The aim is to ensure safety and quality in health care delivered by public, private national and international providers in the country. These requirements have to be met before starting service delivery.

The National Health Council approved other rules and regulations for operating blood banks and clinical laboratories, and a reagents list.

" Regulatory Guidelines for Health Care Networks ": Affiliation and provision. They allow SESPAS to differentiate personal health care from preventive services and provisions for affiliating beneficiaries.

" Human Resources Regulatory Guidelines ": They regulate contracting and remuneration of human resources according to the Civil Service and Administrative Career Law No. 14-91 of 1991 and the Labor code for private workers. It looks especially for stability in performing functions in the health system.

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Regulatory Guidelines to the Social Security System:

" Regulations on the Family Health Insurance and the Basic Health Plan": These by-laws approved by the National Health Council in 2002, regulate the benefits contained in the Social Security System, and conditions, limitations and exclusions of the Family Health Insurance, and compel all private and public entities to participate in the system by delivering one or several components of the family health insurance scheme. " Regulatory Guidelines for the Control of Drugs for the Basic Health Plan": the National Social Security Council approved these by-laws in 2002. They regulate the incorporation and use of drugs in the Basic Health Plan defined by a Basic chart of essential drugs and therapies. Also, they entitle SESPAS to design therapeutical guidelines to assist health providers in drug prescription.

Three components in each one of three phases of four years address the above three goals of the Program. The three program components aligned with the three development objectives are:

Supporting health services extension to achieve universal coverage. The Program would contribute to improving the health status of the economically disadvantaged population groups, especially by reducing child and maternal mortality. It would contribute to reduce poverty by making the already approved Basic Health Plan (BHP) accessible to the poorest and most vulnerable population. The main mechanism for providing access by the poor to the BHP would be through government subsidies of their health insurance premium, thereby removing financial barriers to access and protecting them from financial loss due to ill health and disability. The APL would promote affiliation by strengthening primary health services and hospitals at the secondary and tertiary care levels. It would improve their capacity to provide quality medical services, especially MCH care to the target population, providing a physical and technologically supportive environment and improving staff performance1.

Supporting implementation of the health sector reform legislation. The Program would assist in implementing the mandates of the reform laws by supporting the development of innovative approaches, testing new models, and funding policy studies in the areas of financing and organizing health care, paying providers and remunerating personnel. It would support implementation of mandated decentralization policies that provide more autonomy and decision-making authority to lower administrative levels and to service providing institutions. These tested models and studies would provide the financial, managerial and institutional tools and the legal underpinning for achieving universal health service coverage. They would be implemented jointly with the activities under the first component.

Improving Selected Essential Public Health Functions to promote and protect the health of the population. The Program would support SESPAS in improving two essential public health functions that would benefit the health of the whole population and would have a direct impact on many sectors of the economy:

a) Epidemiological health surveillance and control of risks in public health: The following activities would be implemented: (a) strengthening the information system for epidemiological surveillance to monitor incidence and prevalence of communicable and non-communicable diseases and to decide on control measures. Coordination with the HIV/AIDS/STIs

1 Consejo Nacional de Salud: Reglamento de Estructura, organization y funcionamieuto de las redes piiblicas de provision de servicios de atencion a las personas. Marzo 2003. R.D.

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surveillance system would be established; (b) Strengthening the capacity and quality control of laboratory and blood bank practices, including further development in extenso of the Norms for Good Practices in Public Health Laboratories2; (c) Better equipping and staffing the National Public Health Laboratory to perform virologic, bacteriologic and chemical analyses for food and water safety, air pollution control, vector disease diagnosis and control, and other analyses related to sanitation; (d) strengthening the cold storage facilities for vaccines and other biomedical products, and blood banks; (e) establishing a national pharmacological surveillance system to ensure that the pharmaceutical market fulfils the basic criteria of efficacy, safety and a reasonable costs of the authorized medical, nutritional and cosmetic substances; and (f) relocation and strengthening of the Forensic Pathology Department.

b) Development of policies, plans and management capacity for assuring SESPAS stewardship: Under component 2, SESPAS would be substantially strengthened to ensure effective policy formulation and management. This component would support the design of a 10-Year National Strategic Plan for ensuring a gradual build up and consolidation of the National Health System enacted by the General Health Law approved in March 2001, and the Social Security System enacted by the Social Security Law approved in May 2001. Partial implementation of this 10-year Strategic Plan would allow for field testing of implementation arrangements for both systems as proposed in components 1 and 2. Coordination arrangements for bilateral and multilateral cooperation to help consolidating the health sector reforms nation-wide would be an essential part of this Strategic Plan. This Plan, therefore, would become a navigation chart for the National Health Council (NHC) for the next 10 years, and is expected to define coordination mechanisms for managing international donor support3. Support would also be provided for carrying out policy and operational studies, including one focusing of the training of physicians, nurses, and other health personnel.

Program Phasing

The proposed Program will achieve the stated development objectives in three phases over a period of twelve years. Each phase would have three components plus a component for project management, monitoring and evaluating the results of each phase and - in the case of the first two phases -appraising the next phase of the program.

Phase I Components

Component 1: Support Health Services Coverage Extension

Geographic Definition. The earlier Provincial Health Services Project supported the provision of primary care services to the poorest population with emphasis on maternal and child health in three regions (III, IV, and VII), in one province of Region VIII (Sanchez Ramirez), and in one Health Area of the National District (Santo Domingo Centre). Phase I of this program would promote: (i) completing and deepening coverage of the poor population with a basic health plan, emphasizing MCH care; (ii) adding Region VI with the provinces of San Juan de la Maguana and Elias Pina; and (iii) adding the provinces of La Vega and Monsignor Nouel to complete the coverage of Region VIII. All these regions carry the largest proportion of poor in the country. A minimum of four essential criteria were used for selecting priority areas to be included under the Program: (a) high proportion of poorest families; (b) health care networks in operation or about to be completed for operation; (c)

" SESPAS: Normas para las Buenas Prdcticas de Laboratorios de Salud. R.D., 1999. 3 Consejo Nacional de Salad: Reglamento de Recotia y separation de Funclones del Sistema National de Salud.Capitulo IV. Diciembre 17. 2002.

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health management information systems in place or about to be implemented; and (d) management agreements between SENASA and providers signed.

The three priority regions border Haiti and have the highest percentage of poor: about one million people live in Regions IV, VI and VII and about 76 percent of this population qualifies for the subsidized scheme under the family insurance system. Two more adjacent regions (III and VIII) equally poor would be supported for their incorporation into the strategy of gradual expansion of the universal family insurance system. About 1.3 million people live in these two regions of which about 70 percent are under the poverty line. The total population covered under Phase I would therefore be 2.3 million of which about 1.7 million are under the poverty line.

The following activities would contribute to achieve the component's objective:

• Support extending health care coverage in three priority regions using the national health insurance financing mechanism to deliver a basic health plan of essential health services, emphasizing MCH services.

• Strengthen the clinical problem solving capabilities of the UNAPS, the hospitals at the secondary and tertiary care levels in five regions, improve the quality of medical services provided, and ensure a functioning referral system among levels and among networks;

• Applying national norms to improve that physical infrastructure of Regions VI and VIII that was not covered under the first project, i.e. equipping, rehabilitate, and expand health centers and hospitals at the primary, secondary and tertiary levels, including the financing of investments needed to strengthen the biomedical waste management systems in each facility; and

• Develop integrated and deconcentrated health care networks at the regional levels as authorized by the health sector reform legislation.

Strengthening the provision of MCH Services. The highest priority would be assigned to ensure the delivery of MCH services included in the Basic Health Plan of the National Social Security System (see Table 1 below). This Plan includes prenatal, partum and postpartum care, including hospital care for normal deliveries and surgical deliveries (cesarean section) when necessary, and premature baby care. It also includes medical care for pregnant women with clinical pathology, emergency and hospital care, and family planning. For children, the Plan includes comprehensive care for children (immunizations, growth and development, pediatric care, and school health). (See table 1 below). It is expected that 80% of MCH care would be delivered in NUAPS, 10-15% in secondary care hospitals, and 5-10% in tertiary care hospitals. The NUAPS are the Primary Health Care Units with a catchment population size of 2,500, capable (in theory) of providing most of primary health care. Presently, the outstanding issue is precisely its meager capacity to address effectively the health problems of the population under its catchment area, especially due to constraints of staff quality and lab support.

The Program would finance the strengthening of the infrastructure of 359 primary health care units (UNAPS) to ensure an efficient and effective response capacity (capacidad resolutiva) for delivering the above maternal and child services. Specifically, the project would finance physical facilities, laboratory and medical equipment, training, information systems, drug and other medical supplies. It would also support a study and its implementation to modify the incentive system.

In addition to financing these inputs, the project would support the establishment of Maternal and

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Child Mortality Committees to study each maternal and child death for identifying human errors, malpractice, technical deficiencies, negligence and ethical issues. The Committee would take appropriate actions to correct the identified issues and possible factors explaining maternal and child deaths. Among options for addressing the issues identified, the project would support a) workshops on medical education, obstetrics and gynecology, and medical ethics to improve medical and nursing skills; b) workshops on how to improve the clinical response capacity (capacidad resolutiva) of the health network to address technical deficiencies (e.g., lack of laboratory, drugs, and other medical inputs for obstetric and pediatric care); and c) sanctions to staff found responsible for negligence, malpractice and ethical misconduct. These committees have been established by a Government decree in March 2001 but still need to be operational (SESPAS: Comite Nacional de Prevencion, Estudio, y Seguimiento de la Mortalidad Materno Perinatal. March 2, 2001)

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Table 1. Basic Health Plan and Costs

Presidencia de la Republica

SUPERINTENDENCE DE SALUD Y RIESGOS LABORALES

COSTOS PERCAPITA DEL CATALOGO DE PRESTACIONES DEL PLAN BASICO DE SALUD

Version 1.4 aprobada por el CNSS el 30 de octubre del 2002

TIPO DE SERVICIO

Prevención y Promoción

FRECUENCIA

0,551884

DEMANDA

4.906.435

COSTO

300,45

Asistencia Prenatal 21 0,028300 251.597 34,95 Prevención Fiebre Reumática 0,044900 399.176 17,27 Tratamiento Integral Niños y Niñas 0,098279 873.730 42,34 Enfermedades de Transmisión Sexual 0,002546 22.631 1,43 Planificación Familiar 0,077587 689.777 43,54 Malaria 0,008106 72.063 4,69 Programa Ampliado de Inmunizaciones (PAI) 3/ 0,028300 251.597 9,14 Salud Escolar 0,097472 866.559 4,65 Tratamiento Hipertensión Arterial 0,054200 481.857 97,15 Prevención Cáncer Cérvico-Uterino 0,001758 15.627 13,48 Prevención y Tratamiento Tuberculosis 0,000437 3.884 2,32 Prevención y Trat. Diabetes Tipo 1 - Insulino-Dependiente 0,018150 161.360 22,87 Prevenci6n y Trat. Diabetes Tipo II - No Dependiente 0,091850 816.578 6,61 2,140000 19.025.334 257,00 Consulta Medicina General 1 ,280000 11.379.639 128,00 Consulta Medica Nivel 2 0,430000 3.822.847 64,50 Consulta Medica Nivel 3 0,430000 3.822.847 64,50 Odontología 5 0,298500 2.653.767 91,25 Aplicación de cariostaticos 0,040000 355.614 14,00 Consulta de urgencia 0,040000 355.614 14,00 Consulta preventiva, terapia fluorada 0,040000 355.614 8,00 Consulta, diagnostico, fichado y plan de tratamiento 0,060000 533.421 21,00 Detec., control de placa bacteriana y enseñanza higiene bucal

0,050000 444.517 10,00

Extracción de cuerpo extraño 0,002300 20.448 0,81 Extracción dentaria 0,020000 177.807 7,00 Incisión y drenaje de absceso 0,030000 266.710 7,50 Tratamiento de la Gingivitis 0,015000 133.355 7,50 Tratamiento de la Osteomielitis 0,001200 10.668 1,44 Emergencia 0,302288 2.687.446 134,16 Emergencia 0,302288 2.687.446 134,16 Hospitalización 0,104985 933.353 226,20 Hospitalización general y especialidades básicas 6/ 0,104985 933.353 226,20 Partos 0,030370 270.000 168,75 Atención de parto normal 0,019741 175.500 75,66 Atención de parto por cesárea 0,010630 94.500 93,09

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TIPO DE SERVICIO FRECUENCIADEMANDA COSTO

Cirugía 0,008616 76.601 48,22

Cirugía General 0,008616 76.601 48,22 Apoyo Dx 1,924251 17.107.252 325,78

Laboratorio 1,361001 12.099.769 65,20 Rayos X 0,219224 1.948.976 65,17 Ecografías 0,117560 1.045.153 46,97 Otros Medios Dx 0,198242 1.762.437 92,28 Biopsias 0,000637 5.666 0,45 TAG 0,019310 171.676 30,90 RNM 0,008276 73.575 24,83

Atenciones de alto costo y de máximo nivel de complejidad 0,005124 45.545 178,17 Cirugía de Corazón Abierto para By Pass 0,000012 110 1,92 Angiosplastía 0,000028 250 2,11 Valvulopatía Mitral 0,000012 110 1,16 Trasplante de Cornea 0,000018 157 0,70 Hemodiálisis Renal 0,000067 595 22,50 Diálisis Peritoneal 0,000012 105 3,21 trasplante Renal 0,000006 50 1,14 Reemplazo Articular Cadera 0,000028 250 1,18 Reemplazo Articular Rodilla 0,000014 125 0,73 Reemplazo Articular Hombro 0,000001 10 0,05 Columna: Cirugía Escoliosis 0,000003 25 0,22 Columna: Espondilolistesis Total 0,000006 50 0,30 Atención Prematuros 0,001811 16.101 111,33

Atención en Unidad de Cuidados Intensivos 0,002871 25.522 21,53

Tratamiento del Cáncer Adultos 0,000225 2.000 9,45

Tratamiento del Cáncer Pediátrico 0,00001 1 85 0,65

0,185795 1.651.780 18,84

Consultas Rehabilitación 0,015971 141.986 3,99 Terapias rehabilitación 0,049824 442.953 9,04

Aparatos y Prótesis 0,120000 1.066.841 5,81 0,020000 177.807 13,46 1,000000 8.890.343 216,00

Component 2: Support implementation of the health sector reform legislation

This component has two objectives: (i) assist in building the institutions to implement the health sector reform legislation by supporting the development of regulatory frameworks, organizational structures, financial instruments, training programs and information systems; and (ii) provide the legal and financial enabling environment for achieving the objective of Component I. The legislature approved a

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General Health Law (LGS-42-01) and a Social Security System Law (SDSS-87-01) that contains key policy changes. The most important changes are:

a) Developing a universal family insurance system (SFS) consisting of two parts: SENASA in charge of the public sector, and Health Risk Administrators (ARS) in the private sector. The SFS covers the whole family members and includes health promotion, prevention, care, and rehabilitation benefits, as well as pregnancy and delivery care. It does not include care for traffic accidents;

b) Organizing providers into legally sanctioned Health Services Providers (PSS) that can be public, private, or mixed public/private;

c) Separating financing health care from providing health care; d) Gradually introducing a comprehensive basic health plan for all Dominicans irrespective of their

socio-economic conditions and of their insurance status (see table 2 below); the law sets a transition period of 10 years for allowing the separation of functions in SESPAS (financing and provision of services), the conversion of the Dominican Institute of Social Security -DISS- into an ARS while terminating its service provider function. All financial resources for service provision from SESPAS and DISS would be transferred to the Treasury of the National Council of Social Security;

e) Changing how providers are reimbursed and personnel are paid; and f) Deconcentrating decision-making by transferring technical and administrative tasks from the

central MOH level to lower MOH levels and to MOH health facilities. The 10-year National Strategic Plan for supporting the implementation of the National Health System and the National Social Security Plan would include the mechanisms and partial financial support provided through this Program and complementary financial support needed from other sources (see component 3).

Implementing these policy changes requires a large investment in building and/or strengthening institutions that heretofore have been managed centrally and/or have not been allowed to make any important decision. Key programs in developing these institutions would require:

a) Implementing the organizational structures, defining the stewardship and normative roles and the regulatory functions of SESPAS, SENASA, SISALRIL, Social Security Treasury, and regional and provincial levels, and redirect the flows of human and financial resources and of information to manage networks and to give the supervisory capacity to the deconcentrated technical and managerial levels.

b) Developing regulatory and contractual frameworks for managing and supervising deconcentrated networks, and creating governing Boards;

c) Ensuring that the basic health plan reaches all poor;(see table 2 below)

d) Applying financial instruments for modifying the behavior of providers such as: (i) mechanisms for paying providers: per capita, per diagnostic procedure, and for achieving coverage targets; (ii) developing transparent fee schedules the efficacy of the national network of public health laboratories in detecting and controlling diseases affecting large population groups; at facilitate cost recovery through contracting with other providers and charging for services provided to the insured population; and (iii) increasing productivity by paying staff a basic salary or professional honoraria plus incentives for achieving goals at specified levels of quality, for results obtained and for performance according to approved standards;

e) Developing training programs to train/retrain and to increase the management capacity of the managers of the network facilities and regulatory levels: central, regional and provincial;

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Implementing and consolidating management information systems already developed under the first project; and

f) Developing and implementing quality assurance systems and institution-specific quality enhancement plans, and introducing accreditation and licensing of health care providers to raise the quality of services provided.

Advances have been made in building networks and in granting more autonomy to hospitals and lessons have been learned in Region IV under the Provincial Health Services Project. Now that there is the legal support of the two new laws the work initiated in Region IV can be completed. The experience from Region IV would be extended to Regions III, VI, VII and VIII. The managerial, financial and service delivery tools legally authorized by the new laws (e.g. contract management, provider behavior modification incentives, quality improvement) would be in place in five regions at the end of the first phase. Phase I would also try out innovative approaches to manage the health sector; test new models for financing health care, for paying providers and for managing personnel; and carry out supporting policy studies with a view of mainstreaming and extending these seminal health sector reform actions during the second phase.

In order to accelerate the decentralization process, the project would give priority to support management in order to strengthen provincial and local institutions, through installation and operation of health management information systems, budgetary transfers to provincial directorates, and legal autonomy to provincial and local health facilities for human resources management. The employee payroll would be managed locally with discretion for directors to introduce incentives for good performance. Intensive management training programs, health management information systems and national and international technical assistance drawing upon experiences from other countries would be financed.

The Program would provide technical assistance to SESPAS in the strengthening of its stewardship role and its planning and managerial capacity at central level; the reengineering and instrumentation of regulatory and licensing responsibilities at central, regional and provincial level including the development and implementation of new governing and managerial structures and the separation of the provision of services through the development of regional integrated health delivery networks.

Technical assistance will be provided to SISALRIL in the development of insurance management applications to standardize ARS billing, utilization review and medical auditing processes, risk management and actuarial studies, including the installation of the information technology platform in at least 41 regional and provincial levels (Intendencias). The infrastructure provided will also assist SISALRIL and the Social Security Treasury in the establishment of efficient and equitable price structures for the Basic Health Plan, standard billing mechanisms to implement transparent electronic banking transactions and reimbursement processes.

The allocation of financial resources through SENASA will gradually allow the transfer of demand driven subsidies to the poorest population, introducing efficiencies through the implementation of quality and performance based incentives. The Project will support the establishment of SENAS A's national and regional capacity to manage affiliation and beneficiary databases; the purchase of services through management agreements with regional network providers; the utilization review, medical auditing and reimbursement through automated insurance management applications and respective information technology platform.

The Program would allocate resources trough the executing agencies for the training of sector leaders, health managers, ARS, health service providers (PPS) and other actors in the new health insurance

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products, the use of standard applications and the pricing and reimbursement mechanisms; health sector reforms, laws and regulations; strategic planning and management; quality clinical and managerial processes and protocols; the use of information technology and clinical and management information systems in decision making processes.

To support the implementation of sector reforms in participating institutions, the project will fund technical assistance, the selection, acquisition, development and implementation of health management information systems and required IT platform (hardware and software) for the installation and operation of voice, data and video local area networks (LAN) and communication and voice IP systems for wide area networks (WAN); the training of sector leaders, clinical, management and administrative staff; the procurement and installation of office and medical equipment and the rehabilitation of health facilities required for licensing and delivery of quality care.

Component 3: Improving selected essential public health functions to promote and protect the health of the population

This component would start with the establishment of the epidemiological surveillance system and IT platform at SESPAS central level and two project regions, and carrying out the following studies and action programs in support of activities under this component. Implementation of these studies and action programs would take place in Phases II and III:

• During the first year of Phase I, a 10-Year National Strategic Plan proposal for gradual build up and consolidation of the National Health System would be developed. Initial implementation of the 10-Year National Strategy Plan would be financed under components 1 and 2. This Plan would become the navigation chart of the National Health Council for the next 10 years, and would help it in coordinating national and international technical and financial cooperation.

• In the third and fourth year of Phase I, diagnostic studies and action programs would be carried for a) strengthening the National Public Health Laboratory, the Laboratory Department and Blood Banks, and lab facilities for surveillance of food and water safety and clean air standards; b) strengthening the national cold storage facilities (cold chain); c) establishing the pharmaceutical surveillance system, including processes of approving and registering new drugs, surveillance of the drug market, marketing, pricing and distribution of drugs, and the rational use of drugs by assuring compliance behavior by prescriber and patients. The study would make recommendations on how best to support and strengthen the Drug Regulatory Authorities, and Pharmacy Faculties at public and private universities, over what time period, at what cost and under what financing conditions. The action program would also propose and cost programs to train in pharmaco- epidemiology, pharmaco-surveillance as well as programs of continuous education for physicians, pharmacists and nurses; and d) relocation of the National Forensic Pathology Institute. Support would also be provided for carrying out policy and operational studies, including one focusing of the training of physicians, nurses, and other health personnel.

All these studies and preparation of action plans would be financed under Phase I of the Program

Component 4: Phase I Management and Appraisal Next Phase

This component would support project management, and use of performance indicators for monitoring and evaluation in terms of impact achieved with implementation. Also it would use trigger indicators to decide on recommending financing the next phase of the program, and appraise the technical, financial and institutional aspects of the next phase.

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Investment Financing. Phase I would finance health facilities rehabilitation and expansion, electro-mechanical and biomedical waste management equipment, medical supplies, vehicles, systems development (e.g., management and financial information systems, quality assurance systems), training and technical assistance.

Monitoring and Evaluation. The project would finance all efforts required to appropriately monitor and evaluate project outputs, outcomes and impact. Project monitoring would depend to a large extent on the envisaged Health Management and Information System. Hence, priority would be given to the implementation of the HMIS during the early stages of the project with the goal of completing the implementation and test phase within the first year of the project. In Phase I and II of the project, efforts would concentrate on regions and provinces characterized by high levels of poverty and poor health outcomes. In order to ensure that the project is achieving the objective of closing the nation-wide poverty and health gaps, the project would finance national demographic and health surveys in each of the project phases. The annual evaluation of the project would be outsourced to a non-governmental organization or academic institution, which would directly report to the presidential office.

Phase II Components

Phase II would consist of the same four components as Phase I, one component for each of the three development objectives and one component for project management, evaluating the results of Phase II and appraising the third phase of the program.

Component 1: Support Health Services Coverage Extension

Under Phase II this component would continue to assist the extension of the provision of the basic health plan in program terms and in geographic terms. It would critically review the health services offered under the basic health plan and add cost effective services guided by a financial sustainability analysis. Programmatic and geographic extension would take into account three criteria: (i) it must benefit the poorest and most vulnerable population groups; (ii) priority would be given to women and children; and (iii) it must implement the mandates of the health sector reform legislation.

Component 2: Support implementation of the health sector reform legislation

The 10-Year National Strategy Plan would specify the mechanisms for expanding health sector reforms achieved during the first four years of the Program (see triggers) and would specific funding sources for this expansion. Under Phase II this component would continue and extend the activities proposed and detailed under the Phase I component earlier. Specific activities for supporting the implementation of the laws would be the result of the evaluation of the Phase I implementation and of the triggers for deciding on the appropriateness of financing Phase III. Pilots and experiments carried out under Phase I would be evaluated, corrections made to those activities that performed below expectations, and mainstreaming the programs that are judged to be efficient, effective and sustainable. Prior to initiating Phase II the results of applying the health sector reform principles to three regions would be evaluated. After making the required corrections two more regions would be selected to expand and deepen the health sector reform.

Component 3: Improving selected Essential Public Health Functions to promote and protect the health of the population

The second phase would implement action programs prepared during Phase I for strengthening the National Health Laboratory, the Department of Laboratories and Blood Banks, and the cold storage

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facilities for vaccines and other biomedical products. Options for establishing regional capacity to perform some public health laboratory functions would be explored in this phase (e.g. quality control of water, air, food standards; confirmatory testing for suspected disease outbreaks). Investment would be made in equipment and supplies and in ongoing technical skills training programs. The pharmaceutical system improvement, including the rational use of drugs, would be in full operation and would continue with training programs for consolidating the national pharmaco-surveillance system integrated in the WHO International Monitoring Program (WHO MC- Uppsala).

By the end of Phase II, the studies and action programs done in Phase I would have been implemented, including the strengthening the National Public Health Laboratory, the Department of Laboratories and Blood Banks, and the epidemiological surveillance system. These activities would ensure reliably and timely reporting of any disease outbreaks and report communicable diseases and changes in the prevalence of non-communicable diseases. They would also monitor the pharmaceutical market to ensure that it meets the basic criteria of efficacy, safety and reasonable costs of authorized drugs. The relocation of the National Forensic Pathology Institute would have been implemented.

Component 4: Phase II Management and Appraisal Next Phase

Similar to the fourth component under Phase I, this phase would also support project management, monitor the progress of implementation at the hand of performance indicators, use trigger indicators to decide on recommending financing the third phase of the program, and appraise the technical, financial and institutional aspects of the next phase.

To a lesser degree than under Phase I, Phase II would also finance health facilities rehabilitation and expansion, electro-mechanical and biomedical equipment, medical supplies, vehicles, systems development (e.g., management and financial information systems, quality assurance systems), training and technical assistance. Exact needs and costs would be determined during Phase II preparation activities.

Phase III Components

Analogous to the first two phases, Phase III would also consist of four components, one component for each of the three development objectives and one component for project management, evaluating the results of Phase II as part of designing Phase III, and a rigorous evaluation of the whole health sector reform program. Providing a detailed blueprint anticipating the contents of the four components for Phase III at this early stage is not advisable. The contents would be strongly guided by the lessons learned from the first two phases, by an evaluation of the political environment, and by a financial sustainability analysis within the context of the macro economic environment. A major objective of Phase III would be consolidating the gains of the first two phases with a shifting emphasis towards assuring quality of health services provided.

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Component 1: Support Health Services Coverage Extension

The emphasis under Phase III would be consolidating the universal provision of the basic health plan achieving equitable health services coverage. An evaluation of the impact of the first two phases may reveal: (i) population groups with limited or insufficient access to the basic health plan causing unacceptable rates of neonatal and post neonatal mortality, of avoidable maternal deaths, of preventable child deaths, and of premature deaths; (ii) health services that should be provided but that are not routinely part of the basic health plan and that are justified on cost effective and humane grounds; and (iii) geographic areas (municipalities, provinces, regions) that require more intensive support for managing and developing their human resources and their institutional capacity. The first two phases should have enabled achieving an acceptable degree of equity in the availability and accessibility of the basic health plan. A key objective of Phase III would be to assure that equitable services are of similar quality for all recipients and that discrepancies are corrected.

Component 2: Support implementation of the health sector reform legislation

Phase III would continue and extend the activities proposed and detailed under the second component of the first two phases. The results of the evaluation of the first two phases and of all trigger indicators would guide the specific activities for continuously supporting the implementation of the laws and the successful implementation of the coverage extension component. Prior to initiating Phase III the results of applying the health sector reform principles to three regions and its impact on the equity and the quality of essential health services would be carefully evaluated. After making the required corrections the remaining regions would be included in the health sector reform program. This component therefore would simultaneously expand activities and consolidate gains.

Component 3: Improving selected Essential Public Health Functions to promote and protect the health of the population

Phase III would remedy any deficiencies or shortcomings observed during the evaluation of Phase II to ensure that the National Public Health Laboratory and the epidemiological surveillance system are monitoring health status, particularly of mothers and children, and that related health indicators to MDG are achieved.

Component 4: Phase III Management and Impact Evaluation. Similar to the fourth component under Phases I and II, this phase would also support project management, monitor the progress of implementation at the hand of performance indicators and appraise the technical, financial and institutional aspects of the health reform program. A major objective would be assessing and evaluating the successes and failures of the health reform program, carrying out a financial analysis, recommending appropriate changes and modifications, and documenting the lessons learned.

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Table 2 presents the summary data on the APL:

Table 1. Phasing of APL

Phase I (US$ 42 million; IBRD, US$30 million)

Phase II (US$ 42 million; IBRD, US$ 30 million)

Phase III (US$ 42 million; IBRD, US$ 30 million)

Implementation Period FY 2004-2008 FY 2008-2012 FY 2012-2016Periodic Monitoring (IBRD)

Twice a year Twice a year Twice a year

Triggers' Assessment March 2007 March 20 11 Appraisal next phase June 2007 June 20 11

Performance Evaluation by Phase. Trigger indicators for moving from Phase 1 (APL1) to Phase 2 (APL2) and from Phase 2 to Phase 3 (APL3) are listed in Table 3 of Annex 2. These triggers would be assessed prior to and reviewed during appraisal of Phase II and Phase III APLs.

Trigger indicators would account for the GODR's readiness to: i) expand the geographic coverage of the reformed insurance system; ii) scale up the provision of quality care through certified and licensed providers; iii) assign health system management to new regional authorities; and iv) scale up the provision of improved public health services reflecting lessons learned in previous phases. The triggers would be assessed and measured as part of the monitoring and evaluation of the program and should be based on evidence that institutional capacity building and legal conditions were successful to allow to move to a new phase with minimum risk; they would be "measures of success" when moving on to the next phase.

Compliance with disbursement schedules made as per legal agreements would also be taken into account for moving from a phase to the other.

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Performance Indicators indirectly linked to but supportive of MDGs:

• Anchoring MOH's Stewardship Role: national health policies issued, consistent communication strategies and public information campaigns organized, monitoring and evaluation of sector performance;

• Promoting the Decentralization and Autonomy Process: degree of transferred decision making to regional management levels and to service providing institutions; management contracts signed with providers and under implementation; number of Boards of Directors functioning acceptably; number of institutions with changed staff remuneration arrangements and associated productivity measures.

• Improving secondary, and tertiary care facilities: physical structure rehabilitated, electro-mechanical and biomedical equipment with adequate maintenance, productivity incentives established, staff trained and performing, information systems operating, patient satisfaction and other quality measures implemented, referral patterns and fee schedules operating; and

• Solidifying National Essential Public Health Functions: complete and accurate epidemiological surveillance information produced, coverage and quality of public laboratory network, environmental friendly medical waste management operating, coordinated disaster preparedness facility installed; blood banks and cold storage facilities properly operating, and emergency vaccines available for timely provision in case of need.

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Annex 2.b Dominican Republic Health Reform

Support Program

Medical Waste Management Assessment in the Dominican Republic

The recent enactment of new General Health and Social Security Laws are an encouraging sign that the GODR is committed both to protecting the environment and to reducing the risks posed by the improper management of medical waste. These laws provide a new framework for managing infectious and other medical waste that poses health risks to patients and health care staff, as well as to people who are exposed to such waste outside health facilities. The solid waste produced in health facilities is potentially hazardous, infectious, contagious, or toxic, producing the risk of the spread of diseases. The proposed Program, building on the ongoing Provincial Health Services Project, and the recommendations in the assessment of medical care waste handling and disposal conducted under the HIV/AIDS Prevention and Control Project, would support activities related to the handling of medical waste in the Dominican Republic. Specifically, it would support (1) necessary investments under Component I to strengthen biomedical waste management systems and processes in participating facilities; and (2) related training of health personnel associated with these activities. The following sections of this document:

• Describe what constitutes medical waste and discusses the management of medical waste;

• Provide an overview of the new legal and institutional framework for addressing the problem of medical waste in the Dominican Republic;

• Discuss investments financed under the ongoing WB-financed Provincial Health Services and the HIV/AIDS Prevention and Control Projects in the Dominican Republic; and

• Identify how the proposed Program would contribute to addressing the problem of medical waste in the Dominican Republic.

A. What Constitutes Medical Waste

Medical waste is defined as any material disposed of by a health facility, whether it is in solid, liquid, or gaseous state. Health facilities are understood to be public hospitals, private centers, clinical laboratories, pharmacies, etc. According to the international standards dictated by the WHO, medical waste falls into the following categories: General medical waste. This category includes paper and byproducts, plastic and glass products, and non-infectious materials. Special biomedical waste. This is infectious or other waste produced by a health facility that poses health risks both within the health facility and beyond it. Infectious biomedical waste. This includes blood, secretions, needles, syringes, vaccines, and pointed or sharp materials that may have been contaminated with infectious agents. Preventive measures in handling and final disposal of such waste are important. Chemical waste. This includes disinfectants and other chemicals used for examinations, research, cleaning, etc. Special regulations are required for the handling and final disposal of such chemical waste.

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Radioactive waste. This is waste contaminated with radioactive substances used in diagnostic examinations or special therapeutic procedures. The elimination of radioactive waste requires specialized procedures because of its hazardous nature. Anatomical waste. This consists of corpses or human remains from births, abortions, mutilations, or surgical operations. Anatomical waste poses a great risk spreading infection. Both forensic medicine regulations and ethical considerations are important in the handling of such waste. Internationally accepted standards establish a total production of medical waste between 3.3 and 1.1 pounds per bed per day. Eighty percent of this consists of general medical waste and the remaining 20% consists of special biomedical waste, approximately 14% of which corresponds to infectious waste. A study performed in 1992 by the Universidad Autonoma de Santo Domingo, based on the analysis of a sample of 29 public and private health facilities in the DR, found that the production of medical waste per bed per day was 5.5 pounds.

Internationally accepted standards for the percentages of waste produced by various components of health facilities are as follows: food service (50%); hospitalization service (18%); maternity service (8%); emergency service and orthopedics (8%); surgery (5%); and administrative, diagnostic and other services (11%). The 1992 study of 29 public and private health facilities in the Dominican Republic found the following distribution of waste production by type of service: (25.6%); kitchen (20.8%); surgery (11%), and outside consultation (9.2%).

B. Approaches to the Management of Medical Waste

The management of medical waste requires special care, including the provision of information and training to the staff of a health facility that are involved in the various aspects of waste production and management. The waste management process has several phases, which control waste from the point of production to its final disposal, as detailed below:

• Classification. Classification of waste at the point of production (i.e., separating infectious and hazardous waste from the conventional waste stream with the goal of reducing the amount of waste that needs to be specially treated) makes it possible to reduce the volume of infectious waste and minimize treatment costs.

• Internal collection. Internal collection refers to the use of special containers, designed for the type of waste to be handled, placed near where the waste is produced and used only once.

• Internal transfer. The shortest route between the point of production and intermediate storage of waste should be selected for the internal transfer of waste. Waste containers should be checked to ensure that they are closed. Special measures should be taken to protect the staff involved in transfers.

• Storage. The storage place where the containers with waste are held before the treatment and/or final disposal of the waste should be equipped with hermetically sealed containers.

• External transport. The transport of waste from the point of intermediate storage to the waste treatment point should be done using special vehicles that can be disinfected.

• Treatment. Waste treatment includes methods, techniques, or procedures that change the characteristics of waste, reducing or eliminating the possibility that the waste will affect people's health or the environment.

• The WHO has identified several procedures for medical waste treatment:

• Incineration. Incineration involves burning waste in a medium under controlled conditions to oxidize the carbon and hydrogen present in the waste. This method reduces the volume of solid waste by 80-95%. Although incineration can produce environmental toxins such as dioxin if

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adequate controls are not adopted, it is often recommended because it is the only waste treatment method applicable to all types of biomedical waste.

• Steam sterilization. This method involves submitting the waste to steam inside an Autoclave, at an adequate temperature and pressure and for a determined time.

• Gas sterilization. This method consists of destroying pathogens present in waste by placing them in a compressed air chamber in which sterilizing agents are introduced, such as ethylene oxide or formaldehyde.

• Chemical disinfection. This process involves treating waste with liquid chemical disinfectants.

• Other methods of sterilization. Other methods of waste treatment that are less commonly used are including exposure to ultraviolet radiation or microwaves.

C. The Dominican Republic's New Legal and Institutional Framework for Handling Medical Waste

The enactment of the General Law on the Environment and Natural Resources in August 2000 and the enactment of the General Health Law on March 8, 2001, that was prepared with support of the Provincial Health Services Project, are an auspicious development in the Dominican Republic. The enactment of these laws indicates that environmental protection and the improving the management of medical waste have become priorities for the GODR. As discussed below, the laws also provide a clear legal and institutional framework for addressing the management of potentially hazardous, infectious, contagious, or toxic waste produced in health facilities.

General Law on the Environment and Natural Resources The purpose of the General Law on the Environment and Natural Resources was to establish guidelines for the conservation, protection, improvement, and restoration of the environment and natural resources, thus assuring their sustainable use and to create institutions to take the lead in addressing issues related to the protection of the environment and natural resources. The General Law on the Environment and Natural Resources created the State Secretariat of Environment and Natural Resources as the lead agency for environmental management. In addition, it designated the National Council for the Environment and Natural Resources as the body responsible for programming and evaluating policies and for a biodiversity conservation strategy. This council is composed of the State Secretariats of Environment and Natural Resources, of Agriculture and Livestock, of Public Health and Social Assistance, Education, Public Works, Armed Forces, Tourism, Industry and Commerce, Foreign Affairs, Labor, along with the Municipal League, the Natural Resources Institute, and regional representatives of NGOs, peasant organizations, universities (public and private), and the national business sector.

Responsibility for the handling and disposal of waste water is distributed by territoriality: the Santo Domingo Aqueduct and Sewer Corporation (CASAD) of the National District; the Santiago Aqueduct and Sewer (CORAASAN) of the province of Santiago; and the National Institute of Drinking Water and Sewers (TNAPA) in the country's other provinces. Several special offices and commissions created by decree also have objectives related to environmental preservation, including the Commission for the Study of Causes of Environmental Pollution (Decree 2596-72); National Council of Radiology Protection (Decree 413-91); National Commission to Monitor Agreements of the United Nations Conference on the Environment and the development of the "Land Summit" (Decree 340-92); Office for the Reform and Modernization of the Drinking Water and

4 Prior to the enactment of the General Law on the Environment and Natural Resources in August 2000. the responsibility for environmental protection in the Dominican Republic was shared by several institutions. They included the State Secretariat of Public Health and Social Assistance (SESPAS): the Dominican Social Security Institute (IDSS): city councils: the State Secretariat of the Armed Forces; and the General Bureau of Forestry.

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Sanitation Sector (Decree 203-98); National Institute of Environmental Protection (Decree 216-98); and the Coordinating Commission of the Natural Resources and Environment Sector, created by Decree 152-98,

General Health Law

The General Health Law enacted on March 8, 2001, incorporates major changes in the Dominican Republic's health care organization and financing. Provisions of the General Health Law pertaining to the management of medical waste, which supersede provision of previous laws dealing with this topic,5

are summarized below.

SECTION IV—Solid Waste

Art. 46. The State Secretariat of Public Health and Social Assistance (SESPAS), in coordination with the State Secretariat of Environment and Natural Resources and other relevant institutions, shall prepare the official regulations that govern the disposal and management of solid waste whose use, collection, treatment, holding, recon version, industrialization, transport, storage, elimination, or final disposal may be hazardous to the population's health. Art. 47. The institutions of the health system and all those health facilities which, due to their operations, utilize toxic or radioactive materials or substances, contaminants or other substances that may spread elements which are pathogenic or harmful to health, should have waste elimination systems developed in terms of the pertinent regulation prepared by the SESPAS, in coordination with the State Secretariat of Environment and Natural Resources and other relevant institutions. Medical waste shall be stored separately, technically treated in the establishment of origin and/or delivered to the corresponding municipality or institution, as the case may be, for transport and proper final disposal. Art. 48. Health authorities must inform the State Secretariat of Environment and Natural Resources about those establishments or places which constitute a hazard to the health or life of the population due to undue, unhygienic accumulation of solid waste, so that said Secretariat may order them to be cleaned and may execute the corresponding administrative and safety measures. SECTION V—Disinfection and other Measures Art. 67. Those substances or objects that, by favoring the spread of diseases and causing harm to people's health, are considered hazardous shall be handled, sterilized, or destroyed by their owners or those in charge, or by the health authority itself, following the instructions and regulations that are prepared for this purpose by the health authority, in coordination with the relevant environmental authority and without jeopardizing compliance with prevailing environmental regulations and measures. SESPAS shall collaborate with the State Secretariat of Environment and Natural Resources on the preparation of a list of hazardous substances and products, on the constant updating of this list, and on the preparation of regulations governing the waste management of these substances. Art. 68. The owners, directors or heads of health or medical care facilities and other places where human groups stay or pass through, should avoid the spread of transmissible diseases within their establishment or towards the community, and shall be responsible for ensuring that the establishment has the necessary elements to avoid such spread, and that the staff of their agency carry out prophylactic practices in a timely and proper manner. Art. 100. SESPAS is responsible for equipping the institutions or health establishments and, together with the advisory unit of the National Commission for the Accreditation of Clinics and Private Hospitals, for

""'Prior to the enactment of the General Health Law. medical waste problems were addressed by a diversity of codes and laws, including the National Public Health Code (1956) and general health care guidelines contained in Health Law 456-38: Law 1459-38 on Health Procedures; the 1956 Labor Code: and Law 1896-62 on Social Security and General Hospital Regulations (Decree 351-99).

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accrediting these institutions, ensuring the application of rules related to the minimum requirements which, according to their classification, said institutions should meet, with regard to physical installations, equipment, personnel, organization and operation, to ensure that the user receives a proper level of care, even in the case of disasters. Paragraph I. In coordination with the corresponding institutions of the national health system, SESPAS shall regulate, by resolution, the equipping, operation and accreditation of health establishments and promote quality assurance, which shall be carried out through the assessment of public and private establishments, by rules and mandatory minimum criteria, and of their staff. Paragraph II. SESPAS shall establish the general regulatory guidelines based upon which the duties assigned in this article shall be complied with. Art. 101. The professionals or technical directors of health establishments in which natural or artificial radioactive material, or equipment designed for the emission of ionized radiation for diagnostic, medical therapy or dental purposes or for scientific research, is used should seek a permit from SESPAS that endorses their activities, without jeopardizing the duties of the State Secretariat of Environment and Natural Resources in this regard. Art. 102. The boards of directors and the administration of health establishments shall be responsible for ensuring that staff correctly and properly performs their duties, so as not to expose the health or life of patients to unnecessary risk due to the lack of technical or therapeutic elements for reasons of unhealthy environmental conditions. Art. 106. Health laboratories shall be directed by an expert in the subject who is duly accredited in the corresponding discipline and who shall be responsible for the establishment's progress, compliance with biosafety regulations, suitability of operations, and precision and quality in reports issued on the results of analyses. Paragraph. Authorized staff who perform analyses or special testing in public, private, civilian, military, and other laboratories, should adjust their work to the technical regulations stipulated by the Laboratory and Blood Bank Divisions of SESPAS. Said staff shall be subject to technical control of the quality of their analyses of the aforementioned divisions.

SECTION VI - Blood Banks, Blood Transfusion Services, And Serology Control Art. 107. The drawing of human blood, the fractionating and industrial transformation of human blood, and the practice of any of the activities mentioned in this article, may only be performed in blood banks and in blood derivative plants authorized SESPAS, which shall define, through the corresponding regulation, the rules for the installation, operation and control of these establishments, in coordination with pertinent institutions. Paragraph I. The supply and transfusion of blood and its derivatives constitutes an act of legal and ethical responsibility. Doctors shall be the health professionals trained and authorized to therapeutically prescribe human blood, its components and derivatives, in accordance with the disease to be treated. Paragraph II. The institutions of the National Health System shall ensure that their blood banks perform mandatory testing of blood and its derivatives, according to the prevailing international regulations of WHO, as well as pre-transfusion compatibility testing. No product may be transfused without the respective quality certification. SESPAS shall ensure compliance with this provision. Paragraph III. A duly accredited staff member in terms of the nature of such banks and centers shall direct blood banks and hemotherapy centers. Paragraph IV. The technique of aphaeresis, as a means of fractionating to obtain blood derivatives, may only be used by blood banks that are qualified and expressly authorized by authority of SESPAS. This

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should correspond to a concrete program, associated with the country's needs, in accordance with the regulation prepared by SESPAS, and in coordination with institutions specialized in this subject.

D. Related investments financed under the WB Provincial Health Systems Project in the Dominican Republic

In 1999, SESPAS, requested that CERSS, through the Provincial Health Systems Project and a parallel project financed by the IDE, support the provision of technology for the treatment and final disposal of waste in the main health facilities around the country. As a result, the Provincial Health Systems Project has invested nearly US$1 million to date to strengthen the medical waste management capacity of some of the main SESPAS' health care facilities. The vast majority of the resources (apart from about US$50,000 devoted to civil works) has been used to helped several hospitals purchase incinerators to treat medical waste and to support training of staff in the operating of this equipment and the management of medical waste:

• Purchase of incinerators by hospitals for the purpose of treating medical waste. Incinerators, along with peripheral equipment (identified containers) and services related to training in the operation and maintenance of equipment, have already been purchased and installed in several hospitals. They include the San Vicente de Paul Hospital in Duarte Province, Luis Bogaert Hospital in Valverde Province, Pascasio Toribio Piantini Hospital in Salcedo, Jaime Mota Hospital in Barahona, as well as the Armed Forces Central Hospital, Nuestra Senora de la Altagracia Maternity Hospital, Los Minas Maternity Hospital, Moscoso Puello Hospital, Robert Reid Cabral Children's Hospital, and the Luis E. Aybar Complex in the city of Santo Domingo. Of the incinerators installed, most of them are operating at full capacity.

• Training. Training courses in the operation and maintenance of the medical waste incinerators and in managing medical waste within the hospital were carried out successfully in all hospitals:

Training in the operation and maintenance of the medical waste incinerators was provided to at least three people per hospital. It included training relate to the features of the equipment (e.g., electrical installation, gas-oil connection, ash removal) and the operation of the equipment (e.g., startup, shutdown of the installation, operating regulations, safety checks),

Training in the management of medical waste within the hospital was provided to hospital staff (20 per establishment). This course was generally well accepted, both in terms of attendance and participation, and it has raised expectations about improving the way in which medical waste is managed. At most hospitals, attendance was complete, with between 25 and 30 people, including mid-level and higher level staff, on average per course. The exception was Los Minas Hospital, where only about 10 people (mostly maintenance staff) attended. At Luis E. Aybar Hospital, about 50 people attended, including nursing students who were very interested in the subject. In some cases, technical staff, especially from central services departments attended the course at different hospitals. At several hospitals, the instructors were asked to repeat the talks at another time so that staff that was not able to attend the first time could then do so.

A key challenge in the Dominican Republic's health facilities is to devise mechanisms to keep the trained personnel who work in the waste collection and storage process. Furthermore, it was confirmed during the training process that the problem of handling such waste in health facilities is considered a housekeeping problem—so medical and paramedical staff does not participate in the waste management process.

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Hospitals' Strong and Weak Points in Addressing the Problem of Medical Waste

The Provincial Health Systems Project assessment team reported prior to the installation of the incinerators in 2001 that there is no management of medical waste in most of the Dominican hospitals, with the exception of Robert Reid Children's Hospital, where waste selection is performed and some clear criteria exist. In general, hospitals exhibit the same strengths and weaknesses in addressing the problem of medical waste:

Weak points in addressing the problem:

• All waste at the hospital is treated in the same way.

• There is no differentiation of medical waste by types, based on their danger and/or the social alarm produced, except for the separation of needles and sharp objects in some hospitals.

• The only type of waste that is treated differently is a placenta, which in some centers is washed manually to keep fluids from dripping (La Altagracia Maternity Hospital) and in others ends up in septic tanks (Pascasio Toribio Hospital).

• Where bags are used for waste, they are only one color;

• Where bags are used, they are not as thick as is advisable (>55 m.), so they often break.

• In most cases, sufficient means for possible waste separation are lacking. There are no proper trash containers.

• There are no special containers for sharp or pointed objects.

• The staffs that generate waste lack proper training in the elements of correct management. The bags are so overfilled that they cannot be closed. Capped and uncapped needles are thrown in the bags. In some emergency units, needles can be observed on the floor.

• Waste collection personnel are unaware of minimum safety standards for waste management. In some cases, they do not use gloves or they use inadequate ones, and they do not wear specific clothing for the task. Bags are not handled correctly (e.g., bags are sometimes carried on the shoulders).

• The transport of waste from the units to the waste dump is sometimes done in vehicles, sometimes not.

• In waste dumps, it is common to find a large quantity of waste that has been thrown out without use of plastic bags.

• With the exception of centers whose installations have a municipal storage container, waste storage sites are in poor conditions. They lack doors and allow the access of children and animals. They lack cleaning hoses and/or fire extinguishers.

Strong points in addressing the problem:

• There is awareness in hospitals of the issue of waste, both by personnel and management. Awareness is not as strong among janitorial and trash collection staff, especially because they are unaware of the risk.

• There is an important potential among persons interested in participating in and doing something about waste management.

• There is external awareness about the current way in which waste is eliminated, both among the public and authorities.

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• A credible process has begun, aimed at improving waste management. The installation of incineration plants in the seven hospitals is a sign of this.

• A draft plan for Hospital Hygiene Standards developed by SESPAS has been put in place.

Conclusions

The Provincial Health Systems Project assessment team concluded that implementation of a waste policy for any hospital would come up against two essential difficulties: (i) material means, and (ii) the awareness and preparation of staff. The assessment team made the following recommendations currently under implementation with respect to improving the preparation of staff:

• Create a Waste Management Commission in each hospital. Each hospital's Waste Management Commission should include staff from different occupations who participate in the hospital's daily operations or in that environment—i.e., an epidemiologist, a nurse, a janitor, and an engineer—and should be charged with preparing a Waste Plan for the hospital that establishes waste generation points, collection routes, storage points, and waste management responsibilities for various parties.

• Offer hospital staff training in waste management. Staff should be offered a three to four hours training course on waste management that is tailored to their particular needs. For example, maintenance and janitorial staff are at special risk in handling waste. Nursing staff and nursing students (very important) could benefit from training related to the generation of medical waste.

• Involve outside consultants. Outside consultants should be involved in the presentation of training courses and subsequently to provide support to the Waste Management Commission in: (i) the establishment of an initial work plan, (ii) follow-up/correction, and (iii) final evaluation.

E. Related Investments financed under the HIV/AIDS Prevention and Control Project As suggested earlier, public health problems generated by the management of medical waste affect the hospital population—that is, medical and paramedical staff, patients (and visitors), and service employees—but also affect the population outside the hospital. One of the main concerns regarding medical waste in the DR is the possible transmission of diseases such as HP//AIDS or hepatitis B through wounds caused by contaminated needles. The population groups at greatest risk from this are: (i) patients and health personnel; (ii) staff of hospital support services (trash collectors, treatment plant operators, etc.); and (iii) patients at high risk of contracting infections (e.g., people with diabetes, people with AIDS; drug addicts). The HIV/AIDS Prevention and Control Project, building upon and complementing the activities supported under the Provincial Health Services Project, contemplates interventions under Component 2 to reduce HIV/AIDS transmission, aimed at protecting high-risk human groups such as patients and health staff within and outside hospitals, preserving the environment by establishing proper systems and processes for the management and treatment of contaminated hospital waste. Specifically, it is supporting: (i) an assessment of medical care waste handling and disposal related to HIV/AIDS programs and activities under the project; (ii) the revision and updating by COPRESIDA (the Presidential Commission for HIV/AIDS), through the SESPAS' General Directorate of Sexually Transmitted Infections and AIDS (DIGECITSS) and other specialized institutions, of the existing manual for medical waste handling and disposal; and (iii) the training of health personnel associated with HIV/AIDS programs and activities under the project in the application of these standards to protect high-risk human groups such as patients as well as health staff in the participating facilities.

The manual addresses procedures for health center staff with regard to the handling, transport, treatment, and final disposal of medical waste, as well as the provision of required equipment and inputs, with special attention to the handling of sharp and pointed objects (the main risk of viral contamination inside

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hospitals), beginning at the point where the waste is generated, through the use of receptacles for the collection, storage, and disposal of sharp and pointed objects. The receptacles for sharp objects should be synthetic fiber containers, with a hermetically scalable translucent cover to keep liquids from spilling. They should have rounded edges to avoid cuts to staff involved in handling and should be identified with international coding for biohazard us waste. Differentiated routes within the health establishment are being defined to transport the special containers, physical identification of routes, as well as inputs and training for the staff responsible.

F. The Proposed Health Reform Support APL

The proposed project would complement the provision of hospital waste treatment equipment financed under the Provincial Health Services and the HIV/AIDS Prevention and Control Projects, and the parallel IDE project, as well as the training of staff assigned to do this work. Technical assistance would be provided to the local governments of each participating locality in order to improve the disposal of residual waste, without any risk to their staff or to the environment. More specifically, to strengthen the biomedical waste management system in the participating health facilities, the proposed project will support under Component I the following activities:

• Create a Waste Management Commission in each hospital. Each hospital's Waste Management Commission should include staff from different occupations who participate in the hospital's daily operations or in that environment—i.e., an epidemiologist, a nurse, a janitor, and an engineer—and should be charged with preparing a Waste Plan for the hospital that establishes waste generation points, collection routes, storage points, and waste management responsibilities for various parties.

• Purchase of incinerators by hospitals for the purpose of treating medical waste. Incinerators, along with peripheral equipment (identified containers) and services related to training in the operation and maintenance of equipment, would be purchased and installed in the hospitals according to the findings of investment needs assessments. To this end, the project's Operations Manual will include the World Bank guidelines for such investments.

• Offer hospital staff training in waste management. Staff should be offered a three to four hours training course on waste management that is tailored to their particular needs. For example, maintenance and janitorial staff are at special risk in handling waste. Nursing staff and nursing students (very important) could benefit from training related to the generation of medical waste.

• Involve outside consultants. Outside consultants should be involved in the presentation of training courses and subsequently to provide support to the Waste Management Commission in: (i) the establishment of an initial work plan, (ii) follow-up/correction, and (iii) final evaluation.

G. Bibliography

Informe Ambiental and Social-BID-D-0078 1997 [IADB Environmental and Social Report] Marco Regulador Jurfdico SESPAS. [Legal Regulatory Framework]

Consideraciones Sobre Manejo de Residues Sanitarios en America Latina. OPS/OMS, 1992 [Considerations on Medical Waste Management in Latin America] Manejo de los Residues Solidos Hospitalarios en la Republica Dominicana. UASD. 1992 [Management of Hospitals' Solid Waste]

Managing Medical Wastes in Developing Countries. OMS, 1994.

Proyecto Ley General de Salud [Draft of General Health Law] Ley General de Medio Ambiente y Recursos Naturales [General Law on Environment and Natural Resources] Analisis Comparativo Proyecto Ley General de Salud and Ley General. Sobre Medio Ambiente y Recursos Naturales. PCU 2001 [Comparative Analysis of Draft of General Health Law and General Law on Environment and Natural Resources] Descriptivo Técnico Incinerador Saunier Duval Setri Espanola, SA [Technical Description of Saunier Duval Setri Espanola Incinerator]

WHO Information, Fact Sheets. Backgrounder No. 1. WHO 2000. Boletín

Estadístico Año 1, No.l-SESPAS 2001 [Statistical Bulletin year 1]

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Current Legislation on Management of Environmental Risks of Civil Works in the Dominican Republic

Until the year 2000 when the Ministry of the Environment and Natural Resources was created through the passing of Law 64-00, the Dominican Republic did not have a set of environmental standards and regulations except for a series of codes and laws that dealt generally on certain environmental aspects.

In this portfolio a series of environmental standards and regulations are designed, discussed, and approved and, as of today, the following have been designed and approved: "Air Quality Standards and Control of Atmospheric Issues" establishing the maximum allowable pollutant values in the air aimed at protecting the health of the general population, with special emphasis on the most vulnerable groups; "Noise Protection Standards" establishing the maximum allowable levels as well as the general requirements for protection against environmental noises produced by fixed and mobile sources; "Solid Waste and Radioactive Waste Standards" establishing the guidelines for solid waste management and the sanitary and management requirements to be met in the storage, collection, transportation and final disposal of the same; "Water Quality and Discharge Control Standards" that classify surface and coastal waters in accordance with their prevalent use, aimed at protecting the quality of these bodies of water through the control of liquid effluents, both industrial and municipal, public and private, produced by different human activities. On the subject of forests, the following standards have been prepared: "Technical Standards for the Establishment and Certification of Forest Plantations," "Technical Standards for Forest Management Plans," "National Transportation Route of Forest Products", "Standards and Procedures for Forest Permits", "Regulations for Environmental Permits and Licenses Systems," "Forest Regulations" and "Operational Regulations for the Wood Processing Forest Industry in the Dominican Republic."

The Ministry of the Environment and Natural Resources has not issued specific regulations with regard to restrictions on building materials; on the other hand, the sector's regulatory entity, the Ministry of Public Works and Communications (SEOPC) has issued 22 (twenty-two) regulatory manuals of which only one, the M-20 "Environmental Manual for the Design and Construction of Road Works," deals with specific aspects on environment preservation, that is, the construction aspect which is not part of the investments of our project.

Environmental Guidelines to be used by Contractors for the Civil Works Components of the Project

The conditionalities established in the technical specifications of the bidding documents for the public works to be financed through the Health Sector Reform Support Project with regard to the materials to be used in public works are based on the regulations contained in M-009 "General Specifications for the Construction of Buildings" issued by the Ministry of Public Works; these are the current regulations that establish the nature, origin and composition of materials, aggregates and inputs used in construction works.

This standard specifies the manner in which the construction of structures should be carried out, from clearing the land up to the conclusion of the works. Certain environmental aspects are included in the regulations, such as procedures for land clearing indicating the need to "conserve and protect trees, shrubs or decorative plants located within the construction area;" indicating also the need to have the corresponding permits for final disposal of waste products derived from clearing of land for the works. With respect to building materials to be used in the works, both for the composition of land fillings, as well as for coarse and fine aggregates, it establishes the need that the latter be free from "organic

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matter, organic rubble, or other harmful materials'" and, in the specific case of water, that it be "free from excessive quantities of organic matter, oils, colloids, alkalis, acid salts and other impurities.''''

In addition to what has been formally established, there are certain restrictions observed through use and custom in the use of construction materials as is the case of roofing plates made with asbestos-cement, now in disuse since the public became aware of their polluting potential and the danger they represent to health.

In regard to management of waste products derived from public works, the Environmental Standards for Solid Waste and Radioactive Waste of the Ministry of the Environment and Natural Resources, in its Article 5 "Technical Specifications", paragraph 5.1 "Prohibitions and General Requirements", subparagraph 5.1.1, states: "The deposit or disposal of any type of solid waste on roads or public areas, lots, vacant properties, sewerage systems, wells, and in any type of open or closed space on state, municipal or private lands that has not been duly authorized for this purpose in accordance with the Environmental Law and Standards, is hereby prohibited."

Likewise, the Standards designate the Municipal Councils of the different localities in the country responsible for managing the final disposal of solid wastes.

In this regard, the section on technical specifications of the standard documents for the rehabilitation, expansion, and substitution of physical infrastructure financed with Project funds states that: "The Contractor will be equally responsible for obtaining the permits from the responsible authorities for forest felling, as well as for the disposal of waste materials in the sites authorized for these purposes." This is a priority aspect in the supervision of works and one that is vigorously monitored by the local authorities in our country.

Compliance with current legislation by contractors is mandatory in the Dominican Republic, and is thus specified in the bidding documents for works under Section 3 "Conditions of the Contract", paragraph 3.3 "Language and Applicable Law" and its provision in Section 4 of the "Special Conditions of the Contract."

With respect to the safety of construction workers, the Dominican Republic ratified Agreement C-167 "On Safety and Health in Construction" approved at the session of the 75th Conference of the International Labor Organization in Geneva on June 20, 1988, that became effective on January 11, 1991. This agreement includes recommendations on prevention and protection measures for the safety of workers, and covers safety aspects of hand ladders and scaffolding; elevators and hoisting devices; transportation vehicles and earth movement and manipulation of materials machinery; installations, machines, equipment, and manual tools; works in heights, including roofs; excavations, wells, ramparts, underground works, and tunnels; cofferdams and caissons; frames and casings; works above water surface; demolition works; electricity and management of explosives.

This agreement sets conditionalities to diminish the health risk to workers "exposed to any chemical, physical or biological hazard to such extent that it may be dangerous to their health" and recommends measures to prevent exposure. It also makes recommendations on precautions against fires, on clothes and equipment for personal protection, first aid and declarations on accidents and diseases.

The recommendations in this agreement have been included in Dominican legislation, such as in the following resolutions of the Secretariat of Labor:

• Resolution No. 34-91, which defines the content of first aid emergency kits in the work place.

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• Resolution No. 02-93, which defines dangerous and unhealthful jobs in the work place and establishes the responsibility of the contracting party in providing workers with adequate means of personal protection to alleviate the existing danger or unhealthful conditions.

• Resolution No. 03-93, which defines dangerous and unhealthful jobs for children.

With respect to those aspects concerning social protection of workers, the Dominican Social Security System was created through Law 87-01, which was drafted with support from the Provincial Health Systems Development Project, co financed by the World Bank, which establishes and regulates the mutual rights and duties of the State and of citizens with regard to the financing of protection against the risks of old age, disability, pension due to old age, protection of surviving dependents, disease, maternity, infancy and occupational risks.

The responsibility of the Contractor regarding occupational risks is established in the bidding documents for public works to be financed by the project, Section 3 "Conditions of the Contract", paragraph 11, "Risks of the Contracting Party," and insurance obligations on behalf of workers is also established in the same section, paragraph 13 and its provision in Section 4 of the "Special Conditions of the Contract."

These regulations will be included as an Annex to the Operating Manual of the Project (effectiveness condition), as well as part of the bidding documents for public works.

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Site screening criteria capable of detecting the possibility of environmental or social impacts from the rehabilitation or construction of health facilities such as involuntary resettlement, presence of historical monuments, cemeteries or other physical cultural aspects, and critical natural habitats.

Health facilities to be covered under the proposed project. The implementation of the Support to the Health Sector Reform Project (PARSS, in Spanish) will encompass 17 (seventeen) provinces in the III, IV, VI, VII and VII Health Regions, which include 311 (three hundred eleven) Health Ministry facilities, 57 (fifty-seven) of which have hospitalization services and the remaining 254 (two hundred fifty-four) are ambulatory, distributed as follows:

Health Region Province Facilities with beds Ambulatory facilities Maria Trinidad Sánchez 5 16 Samaná 3 12 Salcedo 3 7

III

Duarte 4 38 Bahoruco 3 8 Barahona 5 16 Pedernales 1 3

rv

Independencia 3 13 San Juan de la Maguana 4 25 VI Comendador 3 7 Dajabón 3 17 Montecristi 5 18 Valverde 2 12

VII

Santiago Rodríguez 3 9 La Vega 4 33 Monsenor Nouel 3 9

VIII

Sanchez Ramirez 3 11 TOTAL 57 254

Civil works financed under ongoing Provincial Health Services Project. The geographical scope of the Provincial Health Systems Development Project, was comprised by the III, IV and VII health regions, giving priority among them to region IV formed by the Barahona, Bahoruco, Independencia and Pedernales provinces, and as a result of the integral development of the implementation strategies of the project, this region has been the entry point of the new Dominican social security system.

The objective of the interventions to improve the infrastructure within the framework of the Provincial Health Systems was to enhance the response capacity of health facilities that faced physical plant and equipment problems, after determining the level of complexity of the facility according to the role it will fulfill in the delivery network. In this regard, the first stage of the execution of the component included a preliminary diagnosis and the activities leading to the creation of a planimetric file of the health facilities.

Subsequently, field visits were undertaken to ascertain the basic intervention needs, which determined the prevalence of the following problems: ceiling leaks, deficiencies in sanitary and electric systems, inoperability in Emergency area, as well as in the Obstetrics area and waste disposal in facilities with bed; also, general rehabilitation needs in rural ambulatory centers.

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As a result of the PDSPS, there is now a Planimetric file in CAD platform containing all the ambulatory centers in the III, IV and VII Health Regions, totaling 169 (one hundred sixty-nine), as well as 26 (twenty-six) facilities with bed.

In this regard, fifty-one (51) interventions were carried out through shopping processes and twelve (12) through Local Competitive Bidding processes, aimed at improving serious problems such as ceiling leaks in nine (9) facilities with bed; improvement of water supplies, drainage, and electrical installations in eleven (11) facilities with beds; functional rehabilitation in Emergency and Gynecology/Obstetrics areas in nine (9) facilities with beds; expansions and general rehabilitation in eleven (11) rural ambulatory facilities; substitution of one (1) provincial hospital and four (4) ambulatory facilities; rehabilitation and/or expansion works in four (4) Provincial Health Departments; conversions for the implementation of MIS and VE in eleven (11) facilities with beds; functional conversions in seven (7) operational units at the SESPAS central level; in addition to installation of solid waste management system in ten (10) facilities with beds.

With respect to interventions for the improvement of solid waste management, double chamber pyrolytic-static type incinerators were acquired, with standards required by the World Health Organization. This equipment decomposes the waste in the first chamber through a thermal combustion process in an oxygen-poor environment, a process that reduces waste volumes between 85 and 95% without need of prior treatment to its incineration and processes waste containing 40-60% moisture; in a second reaction chamber, these unburned gases are forced to circulate in close union to a large input of secondary air, i.e. in a very oxidant atmosphere, they post-combust, all this with the assistance of a burner that maintains a minimum temperature of 1000°C at all times. This burner regulates its operation through a thermocouple-regulator, which is programmed at the adequate temperature in the process.

Complementing the acquisition of the equipment, within the incidental services included with the acquisition of the incinerators, was the training of at least three (3) persons per hospital in the operation and maintenance of the equipment, as well as in the identification and solution of low complexity operational problems; training of hospital personnel (20 per facility) in hospital management of sanitary waste; recommendations per facility for packaging instead of production of sanitary wastes, including the supply of color-coded containers for the first year of operation.

Civil works investments contemplated under the proposed project. The interventions to be carried out within the scope of the PARSS will include similar aspects to those of the PHSP. To date, the interventions pending implementation in the III, IV and VII health regions have been identified, where waterproofing will be carried out in three (3) facilities with bed; general functional rehabilitation works that will include expansions in the Emergency and Gynecology/Obstetrics areas in at least thirteen (13) facilities with bed; substitution of two (2) facilities with bed and general rehabilitation works in approximately twelve (12) ambulatory facilities. In the rest of the regions of the new project, that is, regions VI and VIII, interventions are planned in seventeen (17) facilities with bed and thirty (30) ambulatory facilities.

It is important to point out that, as observed during the implementation of the Provincial Health Services Project and based on recent evaluations made by the Project team, it is expected that the environmental and social impacts resulting from the execution of public works during the implementation of the new project will be minimal, in view of the following: for the most part health system facilities are located in rural centers with low population density; the vast majority of the interventions are rehabilitation works within the interior of the facilities, thus they will not affect the activities nor the traffic in the neighborhoods; substitution of facilities is carried out prior to the

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demolition of those existing in the same location, thus acquisition of new land implying resettlements or new environmental impact assessments are not foreseen. The project's Operations Manual will include World Bank guidelines and framework in the event of any resettlement caused by the project, alongside guidelines for small construction works and for improving biomedical waste management and disposal in the participating institutions.

As indicated previously, programming of works for the new project includes the updating of procedures for supervision of works with the inclusion of the regulations in force, and in detail in the bidding and contracting documents for the protection of the environment and occupational safety.

Investments Proposed under the Project to Improve Medical Waste Management

As done with the support of the ongoing Provincial Health Services Project, resources would be allocated under Component I to assist participating health facilities in project areas, as needed, in the: (i) undertaking of assessment of medical care waste handling and disposal; (ii) updating of manual to address proper handling and disposal of medical wastes; (iii) rehabilitation of infrastructure and the installation of equipment in the main local hospitals for the disposal of medical wastes; and (iv) training of health personnel in the application of standards to protect patients, health workers, and the community.

Public Consultation

The Project PCU's has held several meetings during project preparation with public, private and nongovernmental sectoral stakeholders grouped under the National Health Council to discuss and obtain feedback on project objectives, components, assessments (including technical, environmental, and economic and financial assessments), and implementation strategies. The consultation program has involved both formal and informal presentations and meetings with the target groups. More recently, in a National Health Council meeting held on May 2, 2003, presided by the Secretary of Health, the latest version of the PAD was reviewed and the proposed standards and guidelines for project implementation and required investments were endorsed.

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Annex 2.c. Dominican Republic Health Reform Support Program

Donor's Assistance in the Health Sector

On average, public sector spending on health for the period 1996-1999 was 2.0% of GDP. This is a low percentage compared with the average public spending in the LAC Region (3.2%), or in countries of similar per capita income such as Costa Rica (5.2%), Panama (4.9%) or Jamaica (3.2%)6.

Health expenditure is financed by a mix of national budget allocations (65%), private funding (31.4%) and external sources (3.70%)7. Although low in absolute terms, external funding has increased over time. According to the preliminary results provided by the 2002 DR Red Book, in 2002, the country could count on approximately US$364.25 million in current and projected loan and grant commitments, that is almost 9% of external funds made available to the country by multilateral and bilateral cooperation agencies (See table 1).

Table 1: Health Assistance provided by external donors

Sector Total Loan and

Grants

Indicative Loan Com

Indicative grant

commitments

Undisbursed amount as of 31/12/2000

Expensed To Be Expensed

Calendar Year 2001

Calendar Year 2002

Calendar Year 2003

Calendar Year 2004

Calendar Year 2005

Brazil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00Canada 3.13 0.00 3.13 0.00 0.00 0.06 1.08 1.03 1.03France 0.68 0.00 0.68 0.00 0.00 0.00 0.09 0.23 0.18Germany 4.42 2.82 1.60 0.36 0.49 0.33 0,40 0.40 0.40Japan 0.00 0.00 0.00 33.77 7.66 4.90 2,90 2.90 2.90Mexico 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Spain 9.58 0.00 9,58 9.58 0.50 3.06 1.10 0.00 0.00China/Taiwa 15.00 0.00 15.00 0.00 3.00 3.00 3.00 300 300USA 1 15.40 0.00 115,40 57.45 5.80 7.00 17.30 17.60 20.70Venezuela 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00European Union

38.59 0.00 38.59 38.29 0.35 1.80 8.33 8.03 5.99

IBRD 90.05 90,00 0.05 10.50 6.51 8.40 18.03 13.86 0.00IDB 61.20 61.20 0.00 45.86 9.32 11.29 10,50 14.75 0.00UN org 26.21 0.00 26.21 4.30 5.30 3.83 10,26 9.04 2.22 Others 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0.00

Total .<M.2S 151.82 20(1.11 :'s.w J.l.M 72.S>8 70.S4 .16.42Source: 2002 DR Redbook (preliminary results -validation in process)

All the major donor agencies (USAID, IDB, EU, and the World Bank) are supporting the government's modernization sector of the health sector with complex reform projects8 calling for separation of functions, decentralization and deconcentration, institutional strengthening at central and local level, and incentives to link salaries and budget to performance.

Although sharing common objectives, and advocating for a common approach to reform, coordination among said projects has often been difficult to achieve, thus hampering the pace of a coherent health

6 Source: Central Bank (2002) 7 Source: Central Bank (1996) 8 More precisely: USAID committed USD115.14 million through their Health Strategy and Health Programs, while IBRD's commitments amount to USD90.05 million through the ongoing 4272-DO Provincial Health and 70650-DO HIV-AIDS Prevention and Control Program, in addition to the proposed Health Reform Program APL1 presented in this PAD. Finally, IDE's presence is limited to a USD61.20 million Health Sector Modernization and Restructuring Project, while EU's grant commitments are currently at USD38.59 million, out of which USD 12.90 million refer to the Health Modernization Reform Project.

modernization process. To reduce duplication of efforts and resources, the donors agreed to deepen their coordination, at least at the policy level, by means of periodic sector roundtables chaired by the European Union.

Although at a very preliminary stage, dialogue seems to have improved and a clear awareness to promote a common stance towards reform has been emerging. Donors have recently agreed on a common platform of indicators to monitor advances towards achieving the MDGs, an initiative that has been welcomed by the Technical Secretary of the Presidency as a first, though important, step towards the elaboration of national MDG strategy. Yet, the Government wants to strengthen the coordination among donors and - following the example of the education sector - is preparing a 10-year Development Plan for Health Sector Reform as a management tool to coordinate donor strategies and resources and to reduce duplication of efforts. The 10-year Plan would spell out the respective areas of responsibility for each donor, the willingness of each donor to accept that responsibility, for how long, under what conditions, with what kind and size of financial support (with or without cost sharing), and the commitment to coordinate with other donors.

Annex 3

Dominican Republic Health Reform Support Program

Estimated Project Costs

ANNEX 3A: ESTIMATED PROJECT COSTS BY COMPONENT

Dominican Republic, Health Reform Support APL

US$ Million

Component Local US$ M

Foreign US$ M

Total US$ M

1 . EXTENSION OF HEALTH SERVICES COVERAGE 15.34 10.63 25.97 2. IMPLEMENTATION OF HEALTH SECTOR REFORM LEGISLATION 4.76 2.44 7.20 3. IMPROVEMENT OF SELECTED PUBLIC HEALTH FUNCTIONS 2.06 0.60 2.664. PROJECT MANAGEMENT AND IMPACT APPRAISAL NEXT PHASE 5.35 1.23 6.58

TOTAL PROJECT COSTS 27.51 14.90 42.41

FRONT-END FEE 0.30 0.30 TOTAL FINANCING REQUIRED 27.51 15.20 42.71

ANNEX 3B: ESTIMATED PROJECT COSTS BY CATEGORY US$ Million

Estimated Source of funding

Project Costs per Category Cost Loan Counter part

Average Loan Financing %

Works 9.46 5.68 3.78 60 Goods:

Hardware / Software 3.11 2.02 1.09 65 Medical/Biomedical Equip 6.82 4.43 2.39 65 Vaccines/Med supplies 0.60 0.39 0.21 65 Furniture 1.21 0.78 0.42 65 Materials 0.47 0.30 0.16 65

Consulting Services: Firms 4.48 3.58 0.89 80 Individuals 7.10 5.68 1.42 80

Training 7.91 6.33 1.58 80

Incremental Operational Costs 1.25 0.50 0.75 40

Front-End Fee 0.30 0.30 0.00 100 TOTAL PROJECT COSTS 42.71 30.00 12.71

70% 30%

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Annex 4

Dominican Republic Health Reform Support Program

Economic and Financial Analysis

The first phase of the project is expected to produce significant reductions in maternal and child mortality and morbidity in the target population in regions III, IV, VI, VII and VIII, accounting for about 2.2 million persons. The principal means of accomplishing this would be through an extension of the basic health package, focused on the disadvantaged segment of the population. This would be reflected in the number of deaths prevented by the availability of the first phase extension of the program. Table 1 shows the number of prevented deaths by year, in the project area. It is assumed that the benefit lags by one year behind the provision of the health service.

Numbers of deaths prevented have been calculated as the reduction in the mortality rates assumed for the project, multiplied by the population in Regions III, IV, VI, VII, and VIII, in the respective group, for the project years, 2003-2007. These are crude rates and do not account for accidental deaths or morbidity reductions short of death.

Table 1 Prevented Deaths Source 2003 2004 2005 2006 2007 Total Maternal 0 14 28 43 52 137 Infant 0 479 972 1,478 1,784 4714 Child 1-5 0 57 116 176 212 561 Total 0 550 1116 1697 2049 5412

Estimating the monetary valuation of this result builds on the human capital approach. It is assumed that benefits would not occur before the second year of project implementation (2004) and those economic gains of the life that is preserved extend over 30 years. Current GDP per capita, adjusted for the average annual growth over the period 1982 to 2001 is used as the basis for the monetary weights for future life years saved. As the targeted population is among the poorer segments of society, however, only 90% of this average is assumed in the calculation. Future earnings are discounted in order to assess the value of the project in terms of its present value. Monetary values are assigned to saved, productive adult life years only (that is when the individual reached the ages 15 to 55). The estimated present values of the prevented deaths by project year are given in Table 2. Overall, the Dominican economy may be considered to gain a minimum of about US$ 167 million in discounted present value terms as a result of the project.

These results reflect reductions in under-5 and maternal mortality only and do not account for the likely mortality reductions in the rest of the population, which would also benefit from abatement in the disease burden, generated by improved access to health care.

In addition, these benefits account only for the direct and short term effects on mortality of program activities, and do not account for the longer term benefits accruing to improved public health services, nor improvements in heath system efficiency and efficacy also supported under phase 1.

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Table 2. Benefits from Prevented Deaths (US$ OOOs; 2003 base)

Source 2003 2004 2005 2007 2007 Total Maternal 0 934 1824 2668 3094 8520 Infants 0 16260 30795 43533 48618 139205

Child 1-5 0 2194 4187 5968 6729 19078 Total 0 19388 36806 52168 58440 166803

Alternative Scenarios Two additional scenarios have been examined; one (pessimistic) assuming that productive life would be significantly shorter for the lives saved, leading to a higher discount rate on future earnings; a lower than projected impact on maternal mortality, and a lower monetary value to the life-years saved. A second (optimistic) scenario assumes infinite productive life, the full achievement of project outcomes and monetary value of productive lives equal to the projected national average. The aggregate net present value of these scenarios are compared to the base case in Table 3

Table 3 Sensitivity of Project Benefits

Scenario Likely Pessimistic OptimisticDiscount rate (inversely related to life expectancy) 3% 7.6% * 0%

Project impact [infant, child and maternal mortality reduction] 20% 15% 20%

Monetary value [proportion of average GDP per capita per adult productive life year saved]

90% 80% 100%

Net Present Benefit [2003 M USD] 166.8 38.9 369.3

Note: * reflects average GDP deflator over the period 1992 to 2001

Cost/Benefit Assessment

The estimated cost for the first phase of the pro gram (APL1) is US$ 42 million, including contingencies. Of this amount, US$25.2 million would be for the expansion of health care services in the targeted area, focused on the provision of the basic package for the disadvantaged.

Table 4. Cost-Benefits Ratios (calculated as benefit, Table 3, divided by cost)

Assumptions Likely case benefit Pessimistic case benefit Optimistic case benefitBenefit in Targeted Regions related costs in targeted region (US$25.2 million)

1:6.6 1:1.5 1:14.6

Benefit in Targeted Regions related to full cost of APL I (US$42 million)

1:4.0 1:0.9 1:8.8

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The "likely case" scenario would produce a benefit that significantly exceeded the cost of the provision of the services in the targeted area (CB ratio of 1:6.6) as well as the cost of the full first phase program (CB ratio of 1:4.0). Compared to the "optimistic" scenario, these cost-benefit rations would be much smaller. Lastly, in the case of the "pessimistic" scenario, the cost benefit ration of the direct benefit and the direct service cost would be distinctly favorable (CB ratio of 1:1.5) while the ratio with respect to the full phase cost would be only marginally unfavorable (CB ratio of 0.9:1).

Financial Sustainability

Recurrent incremental annual post project costs of the project are estimated to be US$3.7 million, net of personnel costs, and excluding project specific administrative costs assuming replacements and/or maintenance of:

a. Works; 10%of investment per annum (pa) (US$946,OOOpa) b. Hardware and software; 10%of investment pa (US$324,OOOpa) c. Medical equipment; 20% of investment pa (US$l,338,OOOpa) d. Materials; 20% of costs pa (US$309,OOOpa) and e. Training, 10% of project costs pa (US$814,OOOpa).

Post project incremental costs in regions covered by the project (III, IV, VI, VII, VIII), net of national personnel and project administration costs, are estimated to be about US$3.0 million assuming replacements and/or maintenance of

f. Works; 10%of investment pa (US$767,OOOpa) g. Hardware and software; 10%of investment pa (US$245,OOOpa) h. Medical equipment; 20% of investment pa (US$l,337,OOOpa) i. Materials; 20% of costs pa (US$70,OOOpa) and j. Training, 10% of project costs pa (US$485,OOOpa).

The 2003 budget of SESPAS is about US$225 million, of which about US$ 158 million would be national personnel costs and US$67 million is for non-personnel costs. The annual incremental post project cost of the project would be about 1.6% increase in the total budget and a 5.5% of this non-personnel budget, which would be financially sustainable.

The 2003 budget of the 5 regions included in the project is US$ 60 million, of which US$ 42 million is estimated to be personnel and US$18 million, non-personnel costs. The annual post project incremental cost would represent an increase of 5% increase in the total budget and 17% in the non-personnel budget or these regions. Considering the priority being given to poor regions, GODR should be able to accommodate the cost increases created by the project.

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Annex 5

Dominican Republic Health Reform Support Program

Financial Summary

Project Financing for Years of First Phase (US$ Million)

Implementation Period

Yearl Year 2 Year 3 Year 4

TOTAL %

PROJECT COSTS

Investment Costs 7.41 11.51 13.07 8.56 40.55

Recurrent Costs 0.40 0.46 0.52 0.48 1.86

TOTAL PROJECT COSTS 7.81 11.97 13.59 9.04 42.41

0.30 0.30 Front-end Fee TOTAL FINANCING REQUIRED

8.11 11.97 13.59 9.04 42.71

19% 28% 32% 21%

Financing Sources

IBRD/IDA Government of the Dominican Republic

Total Project Financing

30.00 12.71 42.71

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Annex 6.a

Dominican Republic Health Reform Support Program

Procurement Arrangements

A. Procurement

Procurement for the proposed project would be carried out in accordance with World Bank "Guidelines: Procurement Under IBRD Loans and IDA Credits", published in January 1995 (revised January/August 1996, September 1997 and January 1999); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" published in January 1997 (revised in September 1999, January 1999 and May 2002), and the provisions stipulated in the Loan Agreement.

Procurement Responsibility: The CERSS'PCU would be responsible for the overall procurement regulation and supervision activities, in compliance with procedures agreed with the World Bank as stated in the Loan Agreement and the Operations Manual, The CERSS'PCU has successfully coordinated the implementation of the Provincial Health Services Project and has supported the startup implementation of the HIV/AIDS Prevention and Control Project. The Project's participating agencies and entities—SESPAS, SISARIL, and SENASA—would present to the CERSS'PCU yearly action and procurement plans, satisfactory to the World Bank, although the administrative, financial management and procurement responsibilities for the implementation of the project would remain in the CERSS'PCU. Specifics of the solicitation, evaluation and awards, and contracting processes are contained in the Operations Manual. The CERSS' PCU will also coordinate with the participating agencies and entities the implementation of several project component activities.

UNDP would assist the project in major procurement activities as it has been supporting the Provincial Health Services Project (Loan 4272-DO). The government would assume the costs of the administrative fees charged by UNDP from its own resources. In addition, the GODR is exploring with UNDP the possibility of bridge financing to support startup implementation after loan signing and before effectiveness.

Procurement of vaccines and other medical supplies needed for immunization campaigns may be procured through direct contracting with PAHO and should comply with para. 3.9 of the World Bank Guidelines. PAHO would submit the current market surveys for World Bank review as means of providing evidence of using competitive market prices. Although Cuba is a PAHO member country, it is not an eligible country for provision of vaccines or any other goods/services financed out of the loan proceeds. PAHO would sign an agreement with the Government acceptable in advance to the World Bank and would submit to the World Bank for its review the plan for distribution of the drugs and medical supplies purchased.

B. Procurement methods

A procurement plan would be prepared along with the annual work plan. The procurement plan for each year would be submitted by the Government to the World Bank for approval, not later than October of the previous year and would use a pre-defined standard format which would list as a minimum: (i) goods and services to be procured for the year; (ii) their value; (iii) the method of procurement; and (iv) the timetable for carrying out the procurement.

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The tentative methods to be used for the procurement described below, and the estimated amounts for each method, are summarized in Table A. The threshold contract values for the use of each method are fixed in Table B.

a) Procurement of Works

Works procured under the Project would include the construction and refurbishing of some selected health facilities totaling $9.5 million. Civil works totaling over US$3 million will be procured through International Competitive Bidding using World Bank-issued Standard Bidding Documents (SBDs). Civil works contracts totaling over US$250,000 but less than US$3 million may be procured using National Competitive (NCB) procedures up to an aggregate amount of US$4.4 million using standard bidding documents agreed in advance with the World Bank. Small works costing less than US$250,000 up to an aggregate amount of US$5.1 million may be procured on the basis of at least three quotations, received in response to a written invitation to qualified contractors, which will consist of a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to the World Bank, and relevant drawings, when applicable.

b) Procurement of Goods

Goods procured under this Program would include medicines and vaccines, laboratory and medical equipment and supplies, computer and office equipment, and educational and campaign publications totaling US$11.6 million equivalent. To the extent possible, contracts for goods (except for vaccines and related medical supplies for immunization campaigns) will be grouped into bidding packages of more than US$250,000 equivalent and procured following International Competitive Bidding (ICB) procedures, using Bank-issued Standard Bidding Documents (SBDs). Goods (except for vaccines and vaccine campaign supplies) with estimated values below this threshold per contract may be procured using National Competitive Bidding (NCB) procedures up to an aggregate amount of US$6.9 million, using standard bidding documents agreed in advance with the Bank. Contracts for goods (except for vaccines and vaccine campaign supplies) which cannot be grouped into larger bidding packages and estimated to cost less than US$100,000 per contract, up to an aggregate amount of US$2.3 million, may be procured using National /International shopping procedures based on at least three quotations received in response to a model request for quotations which will include detailed technical specifications, required delivery date, guarantees and conditions and a basic form of agreement satisfactory to the World Bank.

Procurement of vaccines and vaccine related supplies would be procured through direct contracting through PAHO up to an aggregate amount of US$0.6 million.

c) Selection of Consultants Consulting services would be contracted under this project in the following areas of expertise: studies, IEC campaigns, surveys, technical assistance and training, monitoring and impact evaluation, development and maintenance of information systems and workshops. These services are estimated to cost US$11.6 million equivalent and would be procured using World Bank Standard Request for Proposals and mutually agreed documents.

Firms, All contracts for firms estimated to cost US$100,000 or more, and NGOs would be selected using Quality and Cost-based Selection (QCBS); all contracts estimated to cost US$200,000 or less may be selected from all national candidates, other smaller and simple contracts estimated to cost less than US$100,000 would be selected based on the Qualification of the Consultants or Least Cost Selection (LC).

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Individuals. Specialized advisory services would be provided by individual consultants selected by comparison of qualifications of three candidates and hired in accordance with the provisions of paragraphs 5.1 through 5.5 of the Consultant Guidelines, up to an aggregate amount of US$7.1 million.

d) Training.

Training activities to be financed under the project would include (a) developing training programs to train/retrain and to increase the management capacity of the managers of the network facilities and regulatory levels: central, regional and provincial; (b) implementing and consolidating management information systems already developed under the first project; (c) strengthening SESPAS' information systems, (d) developing and implementing quality assurance systems and institution-specific quality enhancement plans, and (e) introducing accreditation and licensing of health care providers to raise the quality of services provided. These services are estimated to cost us$7.9 million, equivalent to be delivered both by firms and individuals in accordance with the provisions of the World Bank Guidelines.

e) Operational Costs

Sundry items, utilities and general operating costs would be procured by the CERSS'PCU using World Bank procedures up to an aggregate amount of US$1.5 million equivalent.

Prior review thresholds. The proposed thresholds for prior review are based on the procurement capacity assessment of the PCU and are summarized in Table B.

C. Assessment of the Agency's Capacity to Implement Procurement

The implementation of the Program would be coordinated by the CERSS'PCU, currently in charge of managing implementation of on-going World Bank- and IDE- financed projects. Its Financial and Administrative team also supervises and oversees all the procurement and financial activities of the HIV/AIDS Prevention and Control Project.

The Operations Manual would include among others, the terms of reference for each staff of the CERSS'PCU, procurement procedures for goods and works, selection of consultants, and filing and monitoring system. Standard Bidding Documents to be used for each procurement procedure, Consultant Selection methods, as well as a description of responsibilities and flow of authority between the CERSS'PCU and the participating agencies and entities.

The Regional Procurement Advisor approved the Procurement Capacity Assessment on May 12, 2003.

Most of the issues concerning the CERSS'PCU have been considered and implemented by negotiations. They included: (i) need to appoint additional procurement support staff; and (ii) the need to clearly outline in the Operations Manual the flow of interaction and responsibilities between the CERSS'PCU and the participating agencies and entities. The Operations Manual also specifies the procurement documents to be filed, the CERSS'PCU staff that would have access to the files, and the internal security measures for record keeping.

The overall project risk for procurement is AVERAGE given the proven transparency, capacity and knowledge of the procurement team.

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D. Procurement Plan, Monitoring and Filing

The Borrower has presented a general tentative procurement plan for the four years of the project and a detailed one for the first year implementation on the basis of aggregate amounts for the procurement methods (Table A). At the beginning of each calendar year, the Borrower would update the Procurement Plan with a detailed procurement schedule for the corning year. The Operations Manual describes the procurement monitoring and filing systems that should be available to supervision missions from the World Bank and auditors upon request.

E. Frequency of Procurement Supervision

In addition to the prior review supervision to be carried out from World Bank offices, the capacity assessment of the CERSS'PCU has recommended one full supervision mission to visit the field to carry out post review of procurement actions once every 12 months. Based on the overall risk assessment (AVERAGE) the post-review field analysis should cover a sample of not less than 1 in 20 contracts signed.

F. Procurement Audits

A procurement audit would be performed in conjunction with the financial audit annual audit of the Project.

Table A: Project Costs by Procurement Arrangements (in US$ million equivalent)

Expenditure Category Procurement Method ICB NCB Other N.B.F.

Total Cost

1. Works 4.4 (2.5)

5.1a' (3.2)

9.5 (5.7)

2. Goods - Computers hardware/ software, Medical/ biomedical Equipment, furniture & materials

2A (1.6)

6.9 (4.5)

2.3 (1.4)

11.6 (7.5)

3. Vaccines and related supplies

0.6 d (0.4)

0.6 (0.4)

4. Consultant Services - 11.6 (9.3)

11.6 (9.3)

5 Training 7.9 (6.3)

7.9 (6.3)

6. Operating Costs 1.2 (0.5)

1.2 (0.5)

7. Front-end Fee 0.3 (0.3)

0.3 (0.3)

Total 2.4 (1.6)

11.3 (7.0)

29.0 (21.4)

42.7 (30.0)

Note: N.B.F. = Not Bank-financed (includes elements procured under parallel co-financing procedures, consultancies under trust funds, any reserved procurement, and any other miscellaneous items). Figures in parenthesis are the amounts to be financed by the Bank loan/IDA credit

Footnotes: a. Three quotations b. Shopping (National and International) c. Direct purchase of vaccines from PAHO d. Consultants Services: Details provided in Table A-l e. Training includes Consultants and Logistics through the applicable competitive process.

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Annex 6, Table Al: Consultant Selection Arrangements (optional) (in US$million equivalent)

Consultant Services Expenditure Category)

Selection Method Total Cost (including contingencies

QCBS QBS SFB LCS CQ Other N.B.F. A. Firms 2.2

(1.8) 0 0 1.0 (0.8)

1.3 (1.0) 0 0

4.5 (3.6)

B. Individuals () 0 0 0 0

7.1 (5-7) 0

7.1 (5.7)

1.2 1.0 2.3 7.1 11.6 (1.0) () () (0.8) (1.8) (5.5) () (9.3)

Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications

Other = Selection of individual consultants (per Section V of Consultants Guidelines), N.B.F. = Not Bank-financed. Figures in parenthesis are the amounts to be financed by the Bank loan.

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Annex 6, Table B: Thresholds for Procurement Methods and Prior Review^ Expenditure

Category Contract Value

(Threshold) Procurement

Method Contracts Subjecl

Prior Review US $ thousands US $ millions1. Works >3.0 ICB All <3.0->.250 NCB First 2 contracts >. 250 Three Quotations None 2. Goods >250 ICB All

>50 < 250 NCB First 2 contracts <50 Shopping None 3. Consultants Firms >100 QCBS All <100 QCBS, Qualification of

Consultants, Least CostNone (post review)

Individuals >50 See Section V of

Guidelines All (TOR, contract, CV)

<50 See Section V of Guidelines

None (Post Review)

Overall Procurement Risk Assessment: High Average Low

Frequency of procurement post-review supervision missions proposed: One every 12 months, reviewing a sample of 1 in 20 contracts signed.

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Table C. Allocation of Loan Proceeds

Expenditure Category Amount in US$million Financing Percentage Works 5,680,000 60%

Goods: 7,770,000 65%(a) Hardware and software (b) Medical/Biomedical Equipment (c) Furniture, materials

(d) Vaccines/and related supplies 390,000 80% until total expenditures under this subcategory have reached an amount equivalent to US$120,000, and 60% thereafter.

Consultants' Services and training (including

15,580,000 80%

audits)

Incremental Operating Costs 500,000 50% until total expenditures under this category have reached an amount equivalent to US$300,000, and 30% thereafter. Premia for Interest Rate Caps and 0 Amount due under Section Interest Rate Collars 2.09(c) of this Agreement

Front-end fee 300,000 Amount under Section 2.04 of this Agreement Total 30,000.00

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Annex 6.b

Financial Management and Disbursement Arrangements

A financial management assessment was carried out on February 11-14, 2003, to assess the adequacy of the financial management arrangements in place at the CERSS'PCU. The assessment was performed in accordance with World Bank requirements under OP/BP 10.02 and the Guidelines for Financial Management Assessments issued by the Financial Management Board in September 2001.

On the basis of the assessment performed, the financial management team concludes that, upon completion of the proposed action plan, the financial management arrangements of the PCU would satisfy the World Bank's minimum financial management requirements. Therefore, the team would advise that the conditions listed in the assessment be considered as conditions of effectiveness in the Legal Agreement to be prepared and signed with the Borrower.

Funds Flow

Procedures for the flow of funds from the loan and the required counterpart contribution should be implemented with due regard to safeguarding the project's resources and ensuring timely execution of payments.

Due to the experience of the CERSS'PCU with SOE-based disbursement procedures under the Provincial Health Services Project and the HIV/AIDS Prevention and Control Project, the SOE method would be used to replenish funds to the Special Account. Traditional disbursement methods would be used to drawn funds from the loan and Financial Management Reports (FMR) will be used to monitor project implementation on a quarterly basis.

The CERSS'PCU would be in-charge of maintaining, operating and reporting on the Special Account. The CERSS'PCU would also operate a Program Account for the purpose of receiving counterpart funds from the government as well as a transitory account for funds disbursed from the Special Account for the Bank's share of eligible expenditures for which the PCU is responsible. Similarly each participating agency and entity would also operate its own Program Account for the purpose of receiving counterpart funds and from the Special Account as payments to suppliers come due for the World Bank's share of eligible expenditure. All Program Accounts will be opened at the Banco de Reservas.

As eligible expenditures are incurred in accordance with agreed annual work plans for each participating agency and entity, as well as for the PCU. The CERSS'PCU would withdraw the amount to be financed by loan funds from the Special Account, and initiate a transfer from the SA to the Treasury. Once the funds are cleared, the Treasury would inform the CERSS'PCU that a check in Dominican Pesos is available for pick up. The PCU then picks up the check at Treasury and deposits it into the corresponding Program Account.

Counterpart funding would be provided by the GODR. The amount of counterpart funds anticipated for the first four years of the APL is US$12.71 million.

In order to obtain counterpart funds, the CERSS'PCU submits its annual budget request and the approved funding levels are included in the annual budget. In the past, projects in the Dominican Republic have experienced problems obtaining their allocation for counterpart funds. Therefore it is recommended that prior to effectiveness, the government deposit in a separate project account, the

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counterpart funds corresponding to the first 6 months of the first year of implementation of the Program.

Staffing

The CERSS' PCU includes the following staff members:

• Program Coordinator, • Financial Management Director • Procurement Manager • Accountant • Accounting Clerk " Administrative Assistant " Secretary

The Project Coordinator, the Financial Management Director and the Procurement Manager have all have extensive experience with World Bank policies and procedures. Therefore the staff assigned to the CERSS'PCU is considered to be qualified and capable of handling all financial management aspects of the Program.

Accounting Policies and Procedures

Accounting and administrative procedures would be in place as sections of the Operations Manual to ensure that financial transactions are made with consideration to safeguarding project assets and ensuring proper entry in the accounting/monitoring systems. The CERSS'PCU's accounting system has the capacity to record assets, liabilities and financial transactions in accordance with World Bank recommended procedures and it can produce financial statements useful to for management and that meet the World Bank's fiduciary requirements.

Project Operations Manual. Policies and procedures defined in an Operational Manual should aim to control project activities and ensure staff accountability. The CERSS'PCU intends to use the same policies and procedures used for the Provincial Health Services Project and the HIV/AIDS Control and Prevention Project.

The Financial Management section of the Operations Manual was in draft form at the date of the assessment and appeared to include all Bank recommended procedures. The participating agencies and entities would be required to prepare operations and accounting manuals with the same policies and procedures where applicable.

Segregation of duties. The CERSS'PCU organizational structure and established procedures support an adequate segregation of procurement, accounting and recording activities. The authorization to execute a transaction is the main responsibility of the Program Coordinator. The recording of the transaction and monthly reconciliation are the main responsibility of the Accountant and are supervised by the Financial Management Coordinator.

Annual Work Plans/Budgeting. The loan agreement, the procurement plan, the implementation plan and the cost tables would provide the main input for the annual work plans. The PCU would prepare an annual budget and work plan. It is anticipated that the participating agencies and entities would also prepare annual work plans with the assistance of the CERSS'PCU. The annual work plans will serve as the basis for transferring funds from the SA to each participating agency and entity's Program Account. The work plans will include:

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• An annual execution plan classified by major goal/objectives, including physical and financial programs. It is important to note that these goals and objectives must be measurable and quantifiable within a reasonable period of time (i.e., one to three months).

• A budget proposal (broken down at least quarterly) specifying the detailed expenditures by major component, category and sources of funds.

Each quarter, the CERSS'PCU would produce monitoring reports (FMRs) to assess progress against financial and physical goals to be shared with the Program Coordinator. These reports would also be presented to the World Bank on a quarterly basis.

Payments and operation of bank accounts. Before payments for acquisition of goods, services or civil works are processed by the PCU, a purchase order and/or contract must exist. On the basis of these documents, payment requests are prepared and after approval has been obtained payment is issued, provided that there is available funds.

After the Accountant has prepared the payment requests, the authorized signatories would sign the bank draft or check. The PCU would initiate payment by sending a check issued from the CERSS'PCU's Program Account or by send a direct payment request to the Bank in the case of international vendors.

Bank account reconciliation would be prepared on a monthly basis by the Accountant and reviewed by the Financial Management Director.

The participating agencies and entities would be required to follow the same accounting and reporting procedures.

Accounting. The CERSS'PCU would maintain the Program's records and accounts using the cash basis of accounting and following Generally Accepted Accounting Practices and those recommended by the Bank. Bank loan funds and counterpart funds will be accounted for separately. It is anticipated that each participating agency and entity would manage its own accounts using the same automated system and practices as the CERSS'PCU.

The proposed chart of accounts was reviewed and found satisfactory.

The participating agencies and entities would be required to adopt a similar chart of accounts and follow the same accounting and reporting procedures.

Safeguard over assets. The CERSS'PCU would maintain a detailed asset register. The amounts in the register would be reconciled against a physical inventory performed twice a year. Each asset would have a code assigned to it and this code will be maintained using an automated asset register that would include the following information:

• Date of Purchase • Physical Description • Supplier • Form of Payment and Reference Number (i.e., check number) " Physical Location • Asset Custodian

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The automated asset register had been previewed already during a supervision mission of the HIV/AIDS project. The system was found to be capable of safeguarding all Program assets.

The CERSS'PCU would also ensure that adequate insurance is obtained for all assets.

Internal Audit

The CERSS'PCU has its own internal audit function. There is an internal auditor who would review both the operational and financial aspects of the Program with the objectives of ensuring compliance with applicable norms and regulations.

External Audit

The CERSS'PCU intends to hire the same external audit firm used to audit the Provincial Health Services Project and the HIV/AIDS Prevention and Control Project.

Audit compliance. According to World Bank records for the Provincial Health Services Project, 2000 and 2001, audit reports have usually come on time and are acceptable. However, the audit reports have both had qualified opinions due to issues regarding the commingling of counterpart, loan funds and IDE funds. This issue has been discussed at length with the PCU and they have agreed to implement measures to ensure that all funds are accounted for and maintained separately.

Audit arrangements. Annual project financial statements would be audited in accordance with International Audit Standards, by an independent firm and in accordance with terms of reference (Torso) acceptable to the World Bank. Auditors should provide audit opinions on project financial statements, Special Account and Statement of Expenditures (Sues), a report on internal controls and a report on compliance with the terms of the loan agreement and applicable laws and regulations.

In order to relieve some of the administrative burden of hiring the auditors on an annual basis, the CERSS'PCU was informed that it could issue a multi-year contract. However, the contract will need to stipulate that as each participating agency and entity begin to assume its own accounting and reporting responsibilities, the scope of the audit will need to include the review of the their accounts and records.

The CERSS'PCU, and eventually the participating agencies and entities, would prepare, if needed, a plan to address any issues and recommendations contained in the audit reports. The action plan and follow-up activities would be communicated promptly to the World Bank.

The table below summarizes audit requirements:

Audit Report Due DateProject financial statements 4 months after fiscal year end (April 30)SOE same as aboveSpecial Accounts same as aboveSpecial purpose same as above (internal control and compliance)

Reporting and Monitoring

Financial statements and reports would be prepared in formats satisfying both the Government and the World Bank's monitoring and fiduciary purposes.

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The CERSS'PCU would be responsible for producing quarterly Financial Monitoring Reports (FMRs) to be submitted to the Bank 45 days after the end of each quarter. The FMRs would include a narrative outlining the Program's major achievements for the quarter, the sources and uses of funds, a detailed analysis of expenditures by sub-component, a physical progress report, and a procurement report. FMRs should be submitted to the World Bank no later than 45 days after the end of the reporting period.

The FMR format was agreed to by negotiations, after the PCU submitted a draft format for review and comment to the World Bank.

The annual financial statements would include the Program's sources and uses of funds, a detailed analysis of expenditure by sub-component, the schedule of SOEs presented during the year and a reconciliation of the Special Account. These reports would be made available to the auditors after the end of the fiscal year.

Information Systems

The CERSS'PCU would use an automated financial management system - SLAP (Spanish acronym). The system allows for expenditures to be segregated by project component/activity, major disbursement category and financing source, which is compatible with the Bank's recommended practices for project accounting. In addition, many financial reports required by the Bank for monitoring purposes can be produced directly from this system.

Disbursement Arrangements

The proposed loan would be disbursed over an implementation period of about four years. Disbursements would be made in accordance with guidelines set out in the World Bank's Disbursements Handbook (i.e., traditional disbursement procedures).

Special Account. The CERSS' PCU would establish a Special Account in US$ at the Central Bank. The Special Account is only to be used for eligible expenditures under the loan agreement. Under no circumstances may funds in the Special Account be used to cover the share of expenditures corresponding to the counterpart funds. Transfers from the Special Account to other project bank accounts would only be permitted to meet eligible expenditures for a limited period of no more than 30 days.

Total advances to the Special Account at any given time would not exceed the authorized allocation amount to be determined at loan negotiations.

For replenishment of the Special Account, the CERSS'PCU would submit monthly requests for reimbursement of expenditures made.

Use of statements of expenditures (SOEs). Loan withdrawal applications would be supported by SOEs for expenditures relating to contracts that are not subject to the World Bank's prior review. Reimbursement of other expenditures would require submittal to the Bank of full supporting documentation.

Documents in support of SOEs must be maintained by the CERSS' PCU or the participating agencies and entities at least until one year after the World Bank has received the audit report for the last

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withdrawal from the loan account. Such documents must be available to review by external auditors and World Bank staff.

The World Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure (under such terms and conditions as the World Bank shall specify by notice to the Borrower) for:

a) works under contracts which are not subject to prior review costing less than US$3.0 million with the exception of the first two contracts;

b) goods under contracts which are not subject to prior review costing less than US$250,000 with the exception of the first two contracts;

c) consulting firms under contracts costing less than $100.000 equivalent; d) individual consultants under contracts costing less than $50,000 equivalent; e) training; and f) operating costs.

Other procedures. Upon request from the Borrower and subject to the World Bank's approval, payments may be made: (i) directly to a third party (supplier or consultant) for goods, works and services; (ii) to a procurement agent; or (iii) to a commercial bank for expenditures against a World Bank Special Commitment covering a commercial bank's letter of credit.

Financial Management Action Plan

Area /Action Expected date

PCU The SIAP financial management system would be implemented and become operational at the PCU

By effectiveness

Flow of funds Open the Special Account in US Dollars in the bank selected, and the project account for counterpart funds.

By effectiveness

Request the initial deposit of counterpart funds in the Project Account. By effectiveness

PCU Staffing As part of the obligations of the participating agencies and entities, once they sign/define participation agreements/arrangements, project executing units' role and functions would be determined as part of the agreements.

By effectiveness

None. However, PCU will need to review job descriptions and CVs for participating agencies and entities' staff before funds are transferred to their responsibility.

Accounting and internal control Submit to the Bank a sample format of the FMR to be used for reporting purposes.

Submitted at negotiations

External audit Prepare the audit TORs and short list of firms and submit to the World Bank for review and clearance.

Prior to effectiveness

Once the World Bank clears the TOR and short list of auditor firms, proceed with bidding process and the appointment of the auditors.

By effectiveness

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Financial Covenants

Section 4.01 "Standard" wording: audit reports to be furnished to IBRD no later than four months after the end of each fiscal year.

Section 4.02 "Standard" wording: the due date for the first FMRs is 45 days after the end of the quarter in which effectiveness takes place.

Supervision Plan

After effectiveness, a FM Specialist must review the annual audit reports and should perform at least one supervision mission per year or more often as needed.

Conditions

The following Financial Management actions are also conditions for project effectiveness: (i) open Special Account at the Central Bank, and (ii) the first deposit to the Program Account of counterpart funds in the amount of US$1.5 million has been made.

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Annex 7 Project Processing Schedule

Dominican Republic Health Reform Support Program

Project Schedule Planned Actual

Time taken to prepare the project (months) 12 12 First Bank mission (identification) June 2002 June, 2002 Appraisal mission departure May 5, 2003 May 5, 2003 Negotiations May 13, 2003 May 13, 2003Planned Date of Effectiveness September 2003 September 2003

Prepared by: the Government of the Dominican Republic Dominican

Republic government officers who worked on the project Name Position Jose Rodriguez Soldevilla Secretario de Estado de Salud Publica y

Asistencia SocialSESPAS

Jose E. Malkun Secretario de Estado de Finanzas/Gerente del Banco Central

Secretaría de Finanzas

Jesus Feris Iglesias Coordinador Ejecutivo CERSS Bernardo Defillo Martinez Superintendente SISALRIL Alma Bobadilla Directora Ejecutiva SENASA Alberto Fiallo Billini Coordinador UMDI SESPAS Gisela Quiterio B. Coordinadora Tecnica CERSS Amarilis Sanchez Coordinadora Financiera CERSS Yima Gonzalez Asistente Tecnica CERSS Sabrina Hil Hued Asesora Legal LCERSS Miguel Geraldino Coordinador Infraestructura y Equipamiento CERSS Vicente Ruiz Coordinador Sistema de Information

GerencialCERSS

Roberto Cerda Coordinador Garantia de Calidad CERSS Kenia Mejia Consultora CERSS Zoila Guerra Asistente administrativa CERSS Kerima Marra Consultora Legal Banco Central

Roberto Blondet Director Tecnico SISALRIL Julio Estrella Asesor, STP STP Angelina Guillen Especialista Financiera, STP STP Jose Colon Subsecretario, SESPAS SESPAS Eusebio Garrido Subsecretario, SESPAS SESPAS Chanel Rosa Directora Afiliacion SENASA Sarah Estrella Consultora Juridica SENASA Jeffrey Lizardo Director, Dept. Estudios Economicos Secretaria de Finanzas Wilfredo Ruiz Gerente Financiero CERSS Eric Raful Consultor Legal CERSS Fernando Morales Asistente Tecnico del Coordinador Ejecutivo CERSS

110

Bank staff who worked on the project: Name Specialty

Patricio Marquez Task Team LeaderChristoph Kurowski YP/Health Policy SpecialistMarta Ospina Procurement AnalystMaria Colchao Program AssistantJuan Carlos Alvarez Legal Counsel, LEGLAPatricia De la Fuente-Hoyes Financial Management Specialist, LOCAGuido Paulucci Senior Procurement SpecialistJoseph Paul Formoso Senior Finance OfficerCecilia Balchun Financial AnalystRobert Crown Consultant, Institutional Development & Operations Oscar Echeverri Consultant, Public Health SpecialistAlberto Gonima Consultant, Health Management and Information Systems SpecialistAracelly Woodall Financial Specialist/CostsEvelyn Pesantes Institutional Development SpecialistWilly de Geyndt Institutional Development SpecialistCatherine Abreu-Rojas Operations SpecialistMassimiliano Paulucci DR Country OfficerMarco Mantovanelli Country ManagerWilliam Experton Sector Leader, LCC3CMartha Vargas Team Assistant

Peer Reviewers: Khundavi Kadiresan, LCOQE; Christian Baeza, LCSHH; Willy De Geyndt, Former World Bank Principal Health Specialist and now Assistant Professor George Washington University

QER . The panel met on February 12, 2003 and discussed the program proposal with the task team, the country team as well as other staff. The panel also provided a report with its main findings and recommendations soon after completion of the review. Panel members included:

Armin Fidler : Cristian Baeza/ Pablo Gottret: Diana Weil Robert Crown : Bob Saum : Tawhid Nawaz /Kundhavi Kadiresan:

Chairperson (Strategy, Design and Approach) Sector issues and Health Insurance System MDGs APL Triggers and Phasing Fiduciary Arrangements Quality

Annex 8

Documents in the Project File

Dominican Republic Health Reform Support Program

A. Project Implementation Plan Project Implementation and Procurement Plan.

Draft Operational Manual.

B. Bank Staff Assessments Back -to-Office-Report, Preparation Mission, June 13-20,2002 Back-to-Office Report, Preparation Mission, November 2-9, 2002 Back to Office Report, Preparation Mission, March 10-15, 2003

C. Other

1. Ambientey Recursos Naturales-PCU 2001 2. Analisis de Situacion de Salud de la Republica Dominicana, Secretaria de Estado de Salud

Publica y Asistencia Social, 2000 (Documento preliminar) 3. Boletin Estadistico Ano 1, No.l-SESPAS 2001 4. Caceres, Francisco. Mortalidad Materna en Republica Dominicana, el caso del Distrito

Nacional, 1998. 5. Cerda, Robero. Analisis de los Principales factores de la Mortalidad Materna en Republica

Dominicana, 1999. 6. Codigo de Proteccion Ninos, ninas y adolescentes, Ley 14-94 7. Comunicacion especial de la Direccion Oral, de Epidemiologia de la SESPAS, febrero 23 de

1998 8. Consideraciones sobre manejo de residues sanitarios en America Latina- OPS/OMS 1992 9. Desarrollo Humano en la Republica Dominicana 2000. PNUD 10. Descriptivo Técnico Incinerador Saunier Duval Setri Espanola, SA 11. En Defensa de la vida de la ninez y de la mujer 1997-2000. UNICEF-ONAPLAN 12. Encuesta Demografica y de Salud 1996 y 2002 (ENDESA 1996 y 2002).

CESDEM/PROFAMILIA/AID/MACRO-INTERNACIONAL. 13. Encuesta Nacional de ingresos y gastos de la familia. Banco Central de la Rep. Dom. 1998. 14. Estado Mundial de la Infancia 2000. Fondo de las Naciones Unidas para la Infancia

(UNICEF). 15. Estudio piloto Encuesta Demográfica y Salud 1999, CESDEM / PROFAMILIA. (Documento

preliminar). 16. Indicadores Básicos de Salud, Republica Dominicana, 1999. SESPAS - OPS 17. Indicadores sociales y económicos en América Latina y el Caribe. Instituto Interamericano

para el Desarrollo Social (INDES/BID). 2000 18. Informe Ambiental y Social-BID-D-0078 1997 19. Informe Programa Nacional de salud Integral de los y las adolescentes, Secretaria de Estado

de Salud Publica y Asistencia Social, 2000 20. La Situación de Salud de la Republica Dominicana, 1996. Secretaria de Estado de Salud

Publica y Asistencia Social (SESPAS).

112

21. Ley 24-97, No Violencia contra la Mujer. 22. Ley 8-95 de Promoción de la Lactancia Materna. 23. Ley General de Medio Ambiente y Recursos Naturales 24. Ley General de Salud (42-01) 25. Ley que crea el Sistema Dominicano de Seguridad Social (87-01) 26. Línea de base de la mortalidad materna en la Republica Dominicana. Secretaria de Estado de

Salud Publica y Asistencia Social. 2000 27. Managing Medical Wastes in Developing Countries -OMS 1994 28. Manejo de los Residuos Sólidos Hospitalarios en la Republica Dominicana-UASD 1992 29. Marco Regulador Jurídico SESPAS. 30. Normas Ambientales Sobre la Calidad de Aguas y Control de Descarga, SEMARN, 2002 31. Normas Ambientales Sobre la Calidad del Aire y Control de Emisiones Atmosféricas,

SEMARN, 2002 32. Normas Ambientales Sobre Residuos Sólidos y Desechos Radioactivos, SEMARN, 2002 33. Normas de Atención a la Mujer durante el Embarazo, Parto, Puerperio y Recien Nacido,

SESPAS, 1999. 34. Normas de Atención a las Principales Urgencias Obstetricias, SESPAS, 1999. 35. Normas Nacionales para la Vigilancia Epidemiológica de la Mortalidad Materna. SESPAS,

1998. 36. Normas Técnico-Administrativas del Programa Nacional de Atención Integral a la salud de los

y las adolescentes. SESPAS, 1999 37. Oficina Nacional de Presupuesto. Ingresos Fiscales del Gobierno Central, Rep. Dom. 1994 -

1998. 38. Plan de Movilización Nacional Para la Reducción de la Mortalidad Materna e Infantil,

Republica Dominicana, 1997-2000 39. Programa de Educación Sexual Integral y Familiar, Secretaria de Estado de Educación y

Cultura. Orden Departamental y Documentos de trabajo. 1996 40. Proyecciones Nacionales de Población por Sexo y Grupo de edad, 1990 - 2025. Oficina

Nacional de Planificación, ONAPLAN, REP. DOM, 1999. 41. Republica Dominicana: Perfiles básicos de salud de los países, Resúmenes 1999.

Organización Panamericana de la Salud. OPS/OMS. 42. Sistema de Vigilancia Epidemiológica de la Mortalidad Materna, Dirección General de

Epidemiología. SESPAS. Informes 1998 y 1999. 43. Sistema dominicano de seguridad social (Ley 87-01) 44. Situación Enfermedades del PAI, Enero-Junio 1999. SESPAS 45. Sobre las tendencias de la mortalidad infantil en la Republica Dominicana. Secretaria de

Estado de Salud Publica y Asistencia Social. 2000 46. WHO Information, Fact Sheets- Backgrounder Nol- WHO 2000 47. USAID/SESPAS/Population Council. Strategic Assessment of Reproductive Health in the

Dominican Republic. 2002. 48. PAHO/WHO. RICC Task Force on Maternal Mortality. Latin America and the Caribbean

Regional Strategy for the Reduction of Maternal Mortality -2002-2010. Sept. 2002. 49. Berg, C., Danel I., Mora, G. Guidelines for Maternal Mortality Epidemiological Surveillance.

PAHO/CDC/UNFPA, 1998. 50. World Bank. Dominican Republic Poverty Report. 2001. 51. World Bank. Dominican Republic Public Expenditures Report 2003.

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Domin ican Republic at a glance

i”- 96 97 98 99 00 01

-GO1 - O ’ G D P

911 6102

POVERTY and SOCIAL

2001 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)

Average annual growth, 1995-01

Population (“A) Labor force (%)

Most recent estimate (latest year available, 1995-01) Poverty (“A of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (?A of children under5) Access to an improved water source (“A ofpopulation) Illiteracy (‘A of population age I.%) Gross primary enrollment (% of school-age population)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

GDP (US$ billions) Gross domestic investmenffGDP Exports of goods and services/GDP Gross domestic savingsiGDP Gross national savings/GDP

Current account balance/GDP Interest payments/GDP Total debUGDP Total debt service/exports Present value of debUGDP Present value of debuexports

(average annual growth) GDP GDP per capita Exports of goods and services

1981

7.3 23.6 20.8 19.4 18.0

-5.6 2.0

31.6 26.0

1981-91 1991-01

2.8 6.3 0.7 4.5

10.2 6.7

Dominican Republic

8.5 2,230

19.0

1.7 2.6

66 67 39 6

79 16

133 136 130

1991

7.6 21.7 28.2 14.5 20.7

-1.1 1.1

59.2 10.3

2000

7.3 5.5 7.3

Latin America &Carib.

524 3,560 1,862

1.5 2.2

76 70 29 9

85 11

130 131 128

2000

19.6 24.0 27.8 14.4 18.8

-5.2 1.1

23.5 6.6

22.2 55.0

2001

2.7 1.1

-7.9

Lower- middle- income

2,164 1,240 2,677

1 .o 1.2

46 69 33 11 80 15

107 107 107

2001

21.2 23.4 23.9 15.2 19.5

-4.0 0.9

24.0 8.2

2001 -05

I Development diamond‘

Life expectancy

T

GNI Gross per - pnmaiy capita enrollment

Access to improved water source

I Dominican Republic __ Lower-middle-income group

1 Economic ratios*

I Trade

I T

Investment Domestic savings

Indebtedness

-Dominican Republic - Lower-middle-income orom

STRUCTURE of the ECONOMY 1981 1991 2000 2001 1 Growth of investment and GDP (%) i

(% of GDP) Agriculture Industry

Services

Private consumption General government consumption Imports of goods and services

Manufacturing

(average annual growth) Agriculture Industry

Services

Private consumption General government consumption Gross domestic investment Imports of goods and services

Manufacturing

18.6 13.9 27.6 30.6 15.6 18.5 53.8 55.5

30

20

10

0

2ooo 2o01 1 Growth of exports and imports (%) I 1981-91 1991-01

-0.6 3.9 5.0 5.1 3.8 7.3 7.1 0.0 2.9 4.8 7.5 -1.3 3.2 6.2 7.9 3.9

3.8 5.6 8.2 3.1

20 - j

1 0 4 A - I 7

-54 158 -1 4 147 ! - l o 1 4 7 6 5 1 1 “---Exports +Imports 5 2 1 10 7 6 4 6 9 -4 9 I

Note: 2001 data are preliminary estimates

” The diamonds show four key indicators in the countn, (in boid) compared with its income-group average. If data are missing, the diamond will be incomoiete.

116

Dominican Reuublic

PRICES and GOVERNMENT FINANCE

Domestic prices (“7 change) Consumer prices Implicit GDP deflator

Government finance (% of GDP. includes current grants) Current revenue Current budget balance Overall surpluddeflcit

TRADE

(US$ millions) Total exports (fob)

Raw sugar Raw cocoa Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (1995=100) Import price index (1995=100) Terms of trade (1995=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, local/lJS$)

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IERD IDA

Total debt service IBRD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity

World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

1981

16.8 5.3

1981

1981

1,512 1,818 -306

-293 193

-406

296 110

1 .o

1981

2,293 93 22

396 8 0

13 195 -32 80 0

34 2

32 6

25

1991

59.4 58.2

13.3 6.5 0.7

1991

1,103 115 31

578 2,188

52 507 367

1991

2,154 2,706 -551

-360 829

-82

439 -358

426 12.7

1991

4,491 254 20

264 54

1

18 22 -15 145

0

42 31 11 23

-12

2000

7.7 7.9

16.0 2.1

-2.1

2000

2,674 71 22

1,708 6,416

403 1,507 1,197

2000

5,902 7,789 -1,888

-1,041 1,902

-1,027

957 70

818 16.4

2000

4,592 292

14

52 1 43

1

44 -84 115 953 74

8 39 22 17 22 -5

2001

8.9 8.9

16.7 3.8

-1.7

2001

2,486 65 38

1,691 5,937

356 1,240 1,285

2001

5,485 7,232

-1,747

-1,119 2,028

-839

1,357 -519

1,341 17.0

2001

5,083 317

13

62 1 46

1

-55 530

25 49 24 25 23 2

96 97 98 99 00

-GDP deflator b C P I

Export and import levels (USS mill.)

/8.000 , 95 96 97 98 99 00 01

Exporls m Imparts

1 Current account balance to GDP (%)

Composition of 2001 debt (USS mill.)

1 317 I 13 ..

1295 ~

E - Bilateral

G - Shod-term ~ i: D - Other multilateral F - Private 1 C . IMF

Development Economics 911 6102