PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5690 Project Name. STRENGTHENING THE PUBLIC HEALTH CARE SYSTEM PROJECT Region

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5690 Project Name STRENGTHENING THE PUBLIC HEALTH CARE SYSTEM PROJECT Region LATIN AMERICA AND CARIBBEAN Sector Health (100%) Project ID P Borrower(s) REPUBLIC OF EL SALVADOR Implementing Agency Ministry of Health Ministerio de Salud y Asistencia Social (MSPAS) San Salvador El Salvador Tel: (503-2) Fax: (503-2) Environment Category [ ] A [ ] B [] C [ ] FI [ ] TBD (to be determined) Date PID Prepared July 29, 2010 Estimated Date of October 18, 2010 Appraisal Authorization Estimated Date of Board February 15, 2010 Approval 1. Key development issues and rationale for Bank involvement Country context 1. Prior to 2008, the Government of El Salvador passed important economic reforms, which contributed to notable economic growth. Since the signing of the 1992 Peace Agreements that ended the 12-year civil war, El Salvador s economy grew steadily at a moderate pace. In the late 1990s, the Government of El Salvador (GoES) passed key economic reforms, geared to strengthen the economy. 1 Indeed, the reforms contributed to growth in subsequent years. From 2000 to 2005, the Salvadorian economy grew at an average of 2.3 percent annually and accelerated to approximately 4.5 percent in the later two years. In addition, during this time, inflation was steady at an average of 3.5 percent. 2. El Salvador also undertook significant social sector reforms towards the turn of the century, which led to improvements in human development. It increased its Human Development Index (HDI) which aggregates measures of life expectancy, adult literacy and school enrollment, and income per capita from in 1990 to in 2007 (on a scale of 0 to 1). 2 According to HDI rankings, this means 1 Much of the improvement in El Salvador s economy was a result of the privatization of the Banking system, telecommunications, public pensions, electrical distribution and some electrical generation; reduction of import duties; elimination of price controls; and improved enforcement of intellectual property rights. Capping these reforms, on January 1, 2001, the U.S. dollar became legal tender in El Salvador. 2 UNDP HDR 2010, data for

2 that El Salvador has a medium ( ) 3 level of human development as compared with other countries. Moreover, the reforms contributed to an over-18 percent reduction in overall poverty (from 43.6 to 35.5 percent) from 2001 to 2007 the equivalent to bringing almost half a million Salvadorians out of poverty. 3. However, since 2008, the country s economy has been facing several challenges. Despite improvements, the Salvadorian economy has been hit hard by the global financial crisis (which originated in the United States) as well as the food and fuel crises. As a result, its growth decelerated to an average of 2.5 percent annually and the average rate of inflation almost doubled to 7.3 percent. 4 Moreover, exports decreased by 16.3 percent in 2009, contributing to decreasing job growth and increasing unemployment rates. Furthermore, in the same year, remittances 5 declined by more than 12 percent to 16.1 percent of the GDP, further straining household consumption. 4. Such economic challenges also have had a dramatic effect on the social sectors, halting and even reversing the improvements attained previously. While HDI data for 2008 and later years are not available, poverty rate data preempt their story. In 2008, the overall rate of poverty increased by almost 20 percent to 42.3 percent its highest point since Moreover, rural areas have been affected the most. In 2008, the rural poverty rate increased by over 35 percent, affecting almost half of the populations (49 percent) in these areas. These dramatic effects demonstrate the fragility of social sector gains in El Salvador. 5. In an attempt to counteract these unfavorable effects, the GoES has placed social policies at the top of its political agenda. In May of 2009, Mauricio Funes of the Farabundo Martí National Liberation Front (Frente Farabundo Martí para la Liberación Nacional or FMLN) won the country s presidential election. In addition, just two months prior, the FMLN also won the majority of the mayoralties in the country and a large number of National Assembly seats (35 out of 84) in elections. Since, the Funes Administration has promoted a clear social policy agenda focused on the provision of basic health care and education services as well as social protection for the poor. 6 It has also promised more efficient public spending, greater social participation and stronger economic and institutional mechanisms. Furthermore, it supports more efficient, integrated, and universal social policies. Sector and Institutional Context 6. Since the 1990s, El Salvador has significantly improved its health outcomes. As part of the 2000 Millennium Development Goals (MDGs), El Salvador agreed to improve specific health outcomes in its population by, for example, reducing under-5 child mortality and infant mortality (MDG 4) by two-thirds and reducing maternal 3 And almost high level ( ) Accounting for 18.4 percent of GDP and a large share of household incomes in In addition to the promotion of employment and job creation. 2

3 mortality (MDG 5) by three-quarters between 1990 and Today 7, El Salvador has reduced its child mortality to 19 deaths per 1,000 live births, nearly reaching its goal of 17 deaths per 1,000 live births already. Similarly, it has reduced its infant mortality rate by 56 percent 8 to 16 deaths per 1,000 infants (under the age of 1 year old). It has done this, in part, through increasing the proportion of infants that are vaccinated against polio, Bacille Calmette Guzrin (BCG) and the measles to near universal coverage (98, 99 and 95 percent, respectively). Despite a decline in the maternal mortality rate, it still remains high at 57.1 deaths per 100,000 live births) 9. Finally, El Salvador s average life expectancy at birth has increased from 67.1 years in 1992 to 71.5 years in Although it reports a relatively high maternal mortality rate, El Salvador has made great strides to reduce maternal health risk factors. It has done so by introducing pre-natal and post-partum controls as well as institutionalizing births. It has, for example, increased the proportion of prenatal care coverage from 73.6 to 82.1 percent in urban areas and from 59.5 to 72.1 percent in rural areas (2002 to 2008). During the same period, it has also increased the proportion of health personnelassisted births from 87.3 to 98.2 percent in urban areas and from 54.1 percent to 75.3 percent in rural areas. See Table Despite these efforts, El Salvador continues to exhibit a high rate of teenage pregnancy. In addition to the interventions to reduce maternal health risk factors during pregnancy, it has also made efforts to improve contraception use among its population, mostly to guard against unwanted pregnancies. Today, 72 percent of women between the ages of 15 and 49 years use contraceptives. 10 Nevertheless, in 2008, teenage pregnancy rates are still high among the poor, with women between 10 to 19 years old delivering almost a third of all babies born in public health care facilities. 9. El Salvador is entering into a epidemiological transition, where it is facing the challenges of a dual burden of disease. While the poor and other marginalized groups continue to be plagued by communicable diseases, non-communicable diseases are gaining in their share of the country s mortality. In 2004, communicable diseases held only 26 percent of all deaths in El Salvador, while non-communicable diseases taking credit for the remaining 74 percent. On the one hand, El Salvador has struggled to lower its high rates of some communicable diseases, such as tuberculosis, and to halt the increasing epidemic of dengue hemorrhagic fever. On the other hand, it faces the new challenge of providing health care to a large volume of its adult population that has the leading causes of non-communicable death, including circulatory diseases, external causes (mainly violence), tumors and respiratory diseases. To address the challenge of a dual burden of disease, large-scale health promotion and disease prevention interventions are required as well as the modernization of practices, 7 Child and maternal health data from UNDP Without Excuses Let us Achieve the Objectives of the Millennium in 2015: A Plan for Action and for Life expectancy data from Data from World Bank World Development Indicators. 8 Earliest data available (1992) and latest data available (2006). 9 Data for 1990 are not available. 10 Data from UNDP Without Excuses Let us Achieve the Objectives of the Millennium in 2015: A Plan for Action and for

4 processes, and resources in order to ensure that health services are available in good quality to users. 10. In addition, despite solid efforts to reduce child malnutrition, El Salvador is facing the challenge of a dual burden of malnutrition. With a focus on improving nutrition through its Mother s Integral Health Care program (Atención Integral de la Madre or AIM-C) in the poorest rural and urban communities, El Salvador has increased its delivery of micronutrient supplements and nutrition counseling (including feeding practices, hygiene and treatment of common illnesses), strengthened its monitoring and promotion of growth and, ultimately, reduced child malnutrition 11 from 10.3 percent in 2000 to 8.6 in Despite these efforts, the country continues to battle the combination of a high prevalence of low birth weight (7 percent) 12, chronic malnutrition and micronutrient deficiencies. At the same time, it faces a rising prevalence of obesity and nutrition-related chronic diseases, such as type-ii diabetes, cardiovascular diseases and some cancers. When these two sides of malnutrition co-exist, they are referred to as a dual burden of malnutrition. For example, 1 in 5 13 Salvadorian children under the age of 5 suffers from growth retardation and almost a third of them are stunted 14 ; while, at the same time, up to 10 percent of the same group of children are overweight. The latter is even more marked in adults with 54 and 43.5 percent of females and males (respectively), above their recommended healthy weight range; moreover, 17.8 and 7.4 percent of them are obese. If not curbed now, this nutrition transition will result in high human and economic costs to the country. 11. The Salvadorian health sector is fragmented into several parallel and vertical subsystems that serve separate and specific target populations. The Salvadorian health sector has both a public and private health sector. The public sector includes four social health insurance subsystems that are administered by the Salvadorian Social Security Institute or ISSS (20.0 percent of the population), the Salvadorian Institute of Welfare for Teachers (1.2 percent), the Military Health Institute (0.6 percent) and the Salvadorian Institute of Comprehensive Rehabilitation or ISRI (N/A). It also includes a national health service or NHS system (78 percent) administered by the MSPAS. Each institution serves its own target population, respectively: formerly-employed public and private sector workers and their families, teachers, military personnel, the disabled, and, finally, the uninsured. The private sector includes private companies that offer private health insurance to, mainly, the wealthier populations (0.3 percent) 15. Furthermore, some for-profit private entities sell their services to the ISSS and other public sector entities, and non-governmental organizations (NGOs) are the main providers of health care in rural and remote areas. 12. Such fragmentation contributes to health system-wide inefficiencies, coverage gaps, and inequalities in service provision. While the ISSS should be covering the majority of the population in theory, it is the NHS that does so in practice. 11 Measured as a percent of underweight children (under 5 years). 12 UNICEF, States of the World s Children, percent, according to the new WHO growth standards. 14 In some areas of the country. 15 Using a combination of their own funds, donor resources, and public financing. 4

5 The ISSS s target population includes formally-employed public and private sector workers and their spouses and under-12 year old children as well as ISSS retirees. However, actual coverage is very low, with only 27 percent of the economically active population 16 is covered by this system. This is because, legally, the ISSS does not cover the self-employed, unpaid family members and the majority of domestic, agricultural and small-business workers. As a result, the NHS provides health care services to almost the entire population, in spite of the fact that it should be targeting the low-income population lacking health insurance coverage. Moreover, over 70 percent of these who have the economic means to afford health insurance do not have coverage. At the same time, the poor and most vulnerable populations have the most difficulty accessing both health services and insurance. 17 This raises equity and efficiency concerns in the overall functioning of the health system and, in particular, concerning its access, quality and financial protection. 13. Moreover, significant inequalities in health care financing exist between the different subsystems, with the NHS being persistently underfunded. Over the years, the NHS has been persistently underfunded in comparison to the ISSS (See Table 3). While it delivers health services to four-fifths of the population, NHS 18 expenditures constituted only 1.5 percent of GDP in In the same year, the ISSS spent 1.4 percent of GDP to cover only one-fifth of the population. 14. Persistently high out-of-pocket spending on health care has dissuaded Salvadorians from seeking health care. Overall, private health expenditures in El Salvador have declined from 4.3 percent of GDP in 2000 to 2.5 percent of GDP in Despite this, out-of-pocket expenditures on health continue to constitute 37 percent of total health expenditures (or 2.4 percent of GDP) in the country 20. Such persistently high rates of out-of-pocket health expenditures have created a serious barrier for financial access to health services. According to the 2008 Household Survey of Multiple Purposes, only 51 percent of people who became ill or injured sought medical assistance through private doctors or health facilities in the country, while the remaining choose to self-medicate or avoid assistance altogether. Of those who sought assistance, the overwhelming majority (65.7 percent) utilized services from the NHS, while 16.9 percent used services from private hospital or clinic, 12.5 percent from the ISSS, and 4.9 percent from the Military Hospital, NGO health facilities or pharmacies. 15. At the same time, the total health expenditure has decreased as a share of GDP, while public health expenditure has increased. Between 2000 and 2006, total spending on health decreased from 8.0 to 6.6 percent of GDP. During the same period, the public sector has augmented its participation in Salvadorian health sector, 16 Only 55 percent of the urban population is economically active. (CEPAL estimates, UNDP 2008, page 196.) 17 In the past, this was due to user fees in public sector institutions; however, the Funes Administration has recently eliminated these fees. 18 MSPAS and National Hospitals. 19 WHO World Health Statistics Data for

6 increasing its spending as a proportion of total health expenditures from 3.6 to 4.1 percent of the GDP In accordance with the Funes Administration s National Development Plan for , which emphasizes strengthening social sectors, the MSPAS has prepared a National Health Policy strategy, which seeks to build a unified health sector that recognizes health care as a basic human right. As a Part of its National Development Plan, the GoES is committed to strengthening the social sector. As such, through the Plan, it projects to increase the allocation of the GDP to the social sectors by 2 percentage points 22. The MSPAS s National Health Policy strategy, which was agreed on with key health sector stakeholders, seeks to build a unified health sector that is led by the MSPAS 23 and that recognizes health care as a basic human right guaranteed by the government. And, as such, it has the health sector objectives of universal coverage, improved access to quality health services and improved equity and efficiency. 17. The National Health Policy strategy aims to achieve its health sector objectives through reducing system fragmentation and strengthening intra-sectoral collaboration through the implementation of its Integrated Public Health Care Network, with a focus on the first level of care. The Integrated Public Health Care Network (Red Pública Integral de Salud) would provide services through four levels of health care (See Figure 1): The primary level includes family and community health units, family health units and health promoters and centers. These institutions are located in municipalities and cantons. The secondary level includes basic and general hospitals, which are located respectively located in the departments and some municipalities. The third level of care includes the specialized hospitals, which are located at the regional level. The fourth level includes highly-specialized and specialized hospitals, which are located at the national level. The primary and secondary levels of care are administered by 17 Basic Health Care Provider Networks (Sistemas Básicos de Salud Integral or SIBASIs) 24. The tertiary care level and the SIBASI are managed by the Heath Regions. Finally, the fourth level of care is managed by the MSPAS, which also stewards the Health Regions and SIBASI. Rationale for Bank involvement 18. The proposed Project is consistent with the priorities outlined in the FY Country Partnership Strategy (CPS) for El Salvador. Strengthening the delivery of social services was identified as a central priority of the CPS. Under this priority, falls its objective of improving the quality and coverage of primary health care services. The Bank Project supports this priority of the CPS through its objectives to increase the access of basic health services by the Salvadorian population through an Integrated Primary Health Care Model and to strengthen the management of the 21 WHO World Health Statistics Total public expenditure on the social sectors represented 9.6 percent of the GDP in It would unite health service providers from both the public and private sectors (including the MSPAS, the ISSS, the Military Health Institute, and private sector providers). 24 There are 17 SIBASIs, one in each department except for the department of San Salvador, which has four. 6

7 Integrated Public Health Care Network as well as to improve the performance of the system through strengthening the MSPAS s capacity to plan strategically, manage information and monitor results for the health system. 19. The Project will build on the progress achieved by the Bank s current health sector operation, the Hospital Reconstruction and Health Service Extension Project or RHESSA Project, which will close in October 31, In particular, it will focus on maintaining and improving the extension of health care service coverage and the capacity of the Integrated Public Health Network to deliver quality hospital services. The RHESSA Project has been successful in meeting its service delivery targets for priority disease programs (e.g. programs regarding dengue and malaria). With support from the RHESSA Project, the MSPAS has increased the population s access to health care services and improved the health of affected populations in 104 municipalities and 591 cantons. Over 635,805 inhabitants 75 percent of whom were living in extreme poverty gained access to basic health care services. The RHESSA project further supported contracts between the MSPAS and the private sector for extension of this coverage to rural areas. A total of 77 NGO mobile teams were contracted. Over US$8.4 million were invested in health care supplies, medications, equipment, staff training seminars, and other services. More importantly, as a result of the extension of health care service coverage, 95.3 percent of children were immunized with the six most essential vaccines and 95.5 percent received a critical health check-up before turning 28 days old; and 76.6 percent of pregnant women received at least five pre-natal checkups to ensure better health for themselves and their future children. Furthermore, the majority of Project objectives surpassed their planned goals. 2. Proposed objective(s) 20. The proposed Project Development Objectives (PDOs) are to: (i) to expand the coverage of priority health care services with special focus to the rural population, using the Integrated Primary Health Care Model and (ii) strengthen the capacity of the MSPAS, Health Regions and SIBASI to steward, manage and deliver health care services. 3. Preliminary description 21. Description: To achieve the PDOs, the proposed Project would support the MSPAS in its strategy to improve the overall health and well-being of the Salvadorian population by extending priority primary health care services with special focus to the rural population (targeting those in Departments that are to be determined, financing of these health services through a results-based financing scheme, strengthening the institutional capacity of the public health care system (e.g. MSPAS, Health Regions, Departments, SIBASI) and assisting the MSPAS in its preparation for a public health emergency. The Project would be implemented by the MSPAS and its primary target population would be mothers, children, youth and other vulnerable groups residing mainly in rural areas, including indigenous peoples. The project is divided up into the following components: 7

8 22. Component I: Expanding the coverage of priority primary health care services within the Integral and Integrated Health Care Service Networks through financing for results. This component is considered to be the backbone of the MSPAS s general health strategy. In particular, it supports the GoES s Model for Integrated Primary Health Care within Integral and Integrated Health Care Service Networks. Its objective is to expand the coverage of primary health care services to the target population. 23. Funds allocated to this component would help to close the gap in the current public budget for health. They would target the extension of coverage of an agreed upon set of priority health care services to the target population, mostly the poor. It would use incentives as part of a results-based financing scheme to enhance the quality and accountability of this coverage. The incentive system would potentially involve three actors the MSPAS, the Health Regions and the SIBASIs and the two main relationships among them between the MSPAS and the Health Regions and between the Health Regions and the SIBASIs. These funds would be transferred gradually, depending on the GoES capacity to implement the expansion of services. The final institutional arrangements for the implementation of this Component will be agreed upon with the GoES during project preparation. 24. Component II: Institutional Strengthening. The aim of this component is to strengthen the capacity of the MSPAS, Health Regions and SIBASI to steward, manage and deliver the priority primary health care services. In addition, it will strengthen the Project Coordination Unit s ability to manage, monitor and carry out an impact evaluation of the Project. In general terms, this component would finance the marginal cost of improving the quality and access of services. It would finance training, goods and services including, but not limited, the following menu of activities: The delivery of priority public health programs, including those addressing teenage pregnancy, chronic kidney disease, dengue control, mental health disorders and chronic malnutrition (it would not finance any activities related to pest management, such as fumigation of houses or the buying of pesticides); The articulation, management and support of the overall functioning of the Integrated Public Health Care Networks; The strengthening of the implementation of the National Trauma Care System; The development of the Unique Health Information System (Sistema Único de Información en Salud, SUIS); The development of a national health institute (not including construction), including the training of both clinicians and lab technicians in health waste management; The development of innovative approaches to improve access to quality medicines in the health system; 8

9 The implementation of new pharmaceutical policies (not laws) and interventions to ensure access to quality medicines for the entire population with an emphasis on poor and vulnerable populations, including the efficient and transparent national and international procurement of pharmaceuticals and other medical commodities (i.e. laboratory reagents) and inputs; The monitoring and evaluation of the impact of Component I through bi-annual, external technical and/or social audits (to verify the target population and the achievement of delivery targets for each tracer), a baseline project, and an impact evaluation; The development of a communication strategy to increase awareness of the GoES s strategy for strengthening the public health care system, including increasing awareness of the strategy, and improving internal communication; and, The support of the PCU in carrying out the management, monitoring and supervision activities of the Project, with special attention to strengthening the MSPAS units that will carry out the Project s fiduciary activities. 25. Component III. Emergency/Contingency fund. The aim of this component would be to support the MSPAS in its preparation for a public health emergency (e.g. influenza, dengue, or those following natural disasters) at the national or sub-national level as well as to provide financing for the recovery efforts in the event of such an emergency. This component would finance the preparation of a public health emergency plan for the most likely public health emergencies and in coordination with other relevant sectors. In the event of a public health emergency, and the GoES s subsequent declaration 25 of it, this component would also finance the immediate purchase of medical equipment, medical and non-medical supplies, operational costs, and other necessary expenses related to recovery efforts and defined in the preparation plan. It would not finance any activities related to construction or pest management (e.g. fumigation of houses or the buying of pesticides). After two-thirds of the loan has been disbursed or four years of project implementation have passed (whichever comes first), the GoES may request that any remaining funds for this component be re-allocated to the other Project components. 4. Safeguard policies that might apply [Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?] Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) The proposed Project currently is considered Environmental Category C. It, however, triggers the environmental safeguard policy (OP/BP 4.01). The MSPAS s Environmental 25 The definition of the specific conditions for declaring a public health emergency will be agreed on between the Bank and the GoES in a later stage of the Project s preparation. 9

10 Safeguard Policies Triggered Yes No TBD Unit has been rated by the Bank as solid, relevant, and comprised of capable staff able to support environmental protection and conservation. Nonetheless, an environmental assessment of the potential impacts of the project will be conducted and an environmental plan with mitigation measures will be prepared by MSPAS before the appraisal mission. The potential environmental impacts are related to (i) health waste management of the SIBASIs and the national institute of health laboratories and (ii) hospital refurbishments (related with the installation of equipment) that will be financed under component II of the project. Then, the Bank team will follow up with the preparation of the Environmental Management Action Plan (EMP) to be sure it meets Bank standards. If required, the Bank team will seek to build capacity amongst the designated counterpart staff. Field visits will be conducted and a review of the EMP will be carried out. Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) The proposed Project is expected to have a positive impact on indigenous people and, therefore, triggers the indigenous peoples safeguard policy (OP/BP 4.10). The proposed project intends to expand basic health services to the population, including indigenous peoples (to a larger extent than previous health projects in El Salvador). OP 4.10 (Indigenous Peoples) is triggered because the rural population in El Salvador is to a fairly large extent indigenous. Previous projects in the health sector have not prepared safeguard documentation but there nevertheless exist valuable wealth of documentation on indigenous people and basic health services. In compliance with OP 4.10 (Indigenous Peoples) requirements, the current project has begun to prepare an Indigenous Peoples Planning Framework (IPPF), which includes a stakeholder analysis, description of the demographic profile of indigenous populations in El Salvador, including their social, political and cultural systems, it describes the project components and beneficial impacts, principles and results of the consultation process, the legal framework, institutional capacity and how to strengthen it, especially with a focus on traditional medicine. Most importantly, the recommendations in the IPPF will build on already existing indigenous health care models, which have been elaborated through extensive consultations with indigenous peoples. Once the final version has been discussed and approved through such additional consultations with the indigenous community and associations, it will be disclosed in country and in the Bank s Infoshop. Involuntary Resettlement (OP/BP 4.12) The Project will not involve any kind of land-acquisitions or major construction and therefore will not trigger the Bank s involuntary resettlement safeguard policy (OP/BP 4.12). Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) 10

11 Environmental Category: C Tentative financing Source: ($m.) Borrower 0 International Bank for Reconstruction and Development 80 Total Contact point Contact: Rafael A. Cortez Title: Sr Economist (Health) Tel: (202) rcortez@worldbank.org 11