FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 11.7 MILLION (US$18.5 MILLION EQUIVALENT) TO THE REPUBLIC OF BOLIVIA FOR A EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I11 (HEALTH SECTOR REFORM PROJECT, THIRD PHASE) December 20,2007 Human Development Sector Management Unit Bolivia, Ecuador, Peru and Venezuela Country Management Unit Latin America and the Caribbean Region Report No: BO This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective December 1 1,2007) Currency Unit = Bolivian Bolivianos (Bs) 1 Bs = US$O.13 US$ 1.00 = 7.65 Bs FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS APL BMI CAIS CAS CIDOB CONAPES DA DGAA DHS DILOS DPT DUF EDA EFPH ENDSA EPI EXTENSA FA0 FM FPS GAIN GDP GOB HB HIPC HNP IBRD ICB IDA IDH IFR IMR IRR MAR MDG MMR MSD Adaptable Program Loan Body Mass Index Health Information Analysis Committees - Comite' de Andlisis de Informacidn en Salud Country Assistance Strategy Center for Indigenous Peoples of Eastern Bolivia - Central de Pueblos Indigenas del Oriente de Bolivia National Council of Social and Economic Policies - Consejo Nacional de Politicas Sociales y Econdmicas Designated Account Directorate of General Administrative Affairs - Direccidn General de Asuntos Administrativos Demographic and Health Survey Local Health Boards - Directorios Locales de Salud Diphtheria, Pertussis and Tetanus Vaccine Directorio Unico de Fondos Acute Diarrhea Essential Functions in Public Health National Demographics and Health Survey - Encuesta Nacional de Demografia y Salud Expanded Program on Immunization - Programa Ampliado de Inmunizaciones (PA0 National Program for the Expansion of Coverage of the SBSISUMI United Nations Food and Agriculture Organization Financial Management Productivity and Social Fund - Fondo Productivo y Social Global Alliance For Improved Nutrition Gross Domestic Product Government of Bolivia Hepatitis B Vaccine The Enhanced Heavily Indebted Poor Countries Initiative Health Nutrition and Population International Bank for Reconstruction and Development International Competitive Bidding International Development Association Direct Tax on Hydrocarbons - Impuesto Direct0 a 10s Hidrocarburos Interim Financial Reports Infant Mortality Rate Internal Rate of Return Mechanism of Assignment of Resources Millennium Development Goals Maternal Mortality Ratio Ministry of Health and Sports - Ministerio de Salud y Deportes

3 NBI NGO PAD PAHO PDCR PDO PDS PFM PHC PIU PNC POA PRONACS SAFCI SBD SBS SEDES SIGMA SNIS SP SU SALUD SUM1 SVE TGN USMR UDAPE UCOFI UGTFD UGTFN UNDP UNICEF UNFPA USD VIPFE VOH VSP VTM WB WBG WFP FOR OFFICIAL USE ONLY Unmet Basic Needs Non Governmental Organization Project Appraisal Document Pan American Health Organization Second Participatory Rural Investment Project Project Development Objectives Sectoral Development Program - Programa de Desarrollo Sectorial Public Financial Management Primary Health Care Project Implementation Unit Policy of National Compensation Annual Operational Plan National Program Supporting Culture - Programa Nacional de Apoyo a la Cultura Intercultural, Family and Community Health - Salud Familiar, Comunitaria e Intercultural Standard Bidding Documents Basic Health Insurance - Seguro Bcisico de Salud Departmental Health Service - Sewicio Departamental de Salud Government of Bolivia s integrated financial management system National Health Information System -Sisternu Nacional de Informacidn en Salud Social Protection Universal Health Insurance - Seguro Universal en Salud Maternity and Childhood Health Insurance - Seguro de Salud Materno Infantil Epidemiological Surveillance System National Budget Under Five-Year-Old Mortality Rate Economic and Social Policy Analysis Unit - Unidad de Ancilisis de Politicas Sociales y Econdmicas Unit for External Financing - Unidad de Coordinacidn Financiera de Programas y Proyectos Departamental Unit for Technical and Financial Management - Unidades de Gestidn Te cnica y Financiera Departamental National Unit for Technical and Financial Management - Unidades de Gestidn Ticnica y Financiera Nacional United Nations Development Program United Nations Children s Fund United Nations Population Fund United States Dollar Vice-Ministry of Public Investment and External Financing - Viceministerio de Inversidn Pliblica y Financiamiento Extern0 Vice Ministry of Health Public Health Surveillance Vice-Ministry of Traditional Medicine World Bank World Bank Group United Nations World Food Program Vice President: Country Director: Sector Director: Sector Manager: Sector Leader: Task Team Leader: Pamela Cox Carlos Felipe Jaramillo Evangeline Javier Keith Hansen Daniel Cotlear Marcel0 Bortman 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.

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5 I. A. B. C. I1. A. B. C. D. E. F. I11. A. B. C. D. E. F. IV. A. B. C. D. E. F. G. BOLIVIA EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES. APL 111 CONTENTS Page STRATEGIC CONTEXT AND RATIONALE... 1 Country and sector issues... 1 Rationale for Bank involvement... 2 Higher level objectives to which the project contributes... 4 PROJECT DESCRIPTION... 4 Lending instrument... 4 Program objective and Phases... 5 Project development objective and key indicators... 5 Project components... 7 Lessons learned and reflected in the project design... 8 Alternatives considered and reasons for rejection IMPLEMENTATION Partnership arrangements Institutional and implementation arrangements Monitoring and evaluation of outcomes/results Sustainability Critical risks and possible controversial aspects., Loadcredit conditions and covenants APPRAISAL SUMMARY Economic and financial analyses Technical Fiduciary Social Environment Safeguard policies Policy Exceptions and Readiness... 19

6 Annex 1: Country and Sector or Program Background Annex 2: Major Related Projects Financed by the Bank and/or other Agencies Annex 3: Results Framework and Monitoring Annex 4: Detailed Project Description Annex 5: Project Costs Annex 6: Implementation Arrangements Annex 7: Financial Management and Disbursement Arrangements Annex 8: Procurement Arrangements Annex 9: Economic and Financial Analysis Annex 10: Safeguard Policy Issues Annex 11: Project Preparation and Supervision Annex 12: Documents in the Project File Annex 13: Statement of Loans and Credits Annex 14: Country at a Glance Annex 15: Map IBRD

7 BOLIVIA EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I11 PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSHH Date: December 20,2007 Country Director: Carlos Felipe Jaramillo Sector ManagedDirector: Keith E. Hansen Project ID: P Lending Instrument: Adaptable Program Loan Team Leader: Carlos Marcel0 Bortman Sectors: Health (80%); Sub-national government administration (20%) Themes: Health system performance (P);Child health (P) Environmental screening category: Partial Assessment [ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): Proposed terms: Standard, with 35 years maturity, including 10 years grace period. Borrower: REPUBLIC OF BOLIVIA Bolivia Responsible Agency: MINISTRY OF HEALTH AND SPORTS (MSD) Bolivia Attn.: Dra. Nila Heredia, Minister. Dra. Marcia Ramirez, Project Coordinator, and Dr. German Crespo, Planning Director, MoHMSD I Does the project depart from the CAS in content or other significant respects? Re$ [ ]yes [XINO I

8 1 PADA.3 Does the project require any exceptions from Bank policies? ReJ PAD D. 7 Have these been approved by Bank management? Is approval for any policy exception sought from the Board? Does the project include any critical risks rated substantial or high? ReJ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7 [ ]Yes [XINO [ ]Yes [XINO [ ]Yes [XINO [ ]Yes [XINO [XIYes [ ]No Project development objective Re$ PAD B.2, Technical Annex 3 The Project Development Objectives for APL I11 are four: i) to reduce occurrence of critical risk factors affecting maternal and infant health in the targeted areas so that current gaps between regions are reduced; ii) to reduce chronic malnutrition among children under 2 years of age in the targeted areas; iii) to increase health insurance coverage in the targeted areas; and iv) to upgrade the National Health Information System (Sistema Nacional de Informacidn en Salud -SNIS) so that it will be integrated with Bolivia s new health insurance program. Project description [one-sentence summary of each component] Re$ PAD B.3.a, Technical Annex 4 This APL 111 is being designed and proposed as the last phase of a 12-year Health Sector Reform Program. This third phase would have two scopes of intervention: first, nation-wide; and second, targeted on 82 of the most vulnerable rural municipalities and 6 peri-urban areas surrounding three cities. APL 111 would include the following components: Component 1. Stewardship Role of Health Authorities - Essential Functions in Public Health This component would strengthen the capacity o f national, regional and local health authorities so all can effectively perform the critical EFPH. Component 2. Family, Community and Intercultural Health This component would improve access to materna1 and infant health services in the project s target areas. Activities would support the development of Intercultural Maternal and Infant Health Referral Networks, complementing &e existing EXTENSA health brigade program. Component 3. Health Insurance Component Three would support the GOB S implementation of the new SU SALUD health insurance program through three project subcomponents, focusing on strengthening implementation capacity: a) Strengthening of the enrollment system; b) Strengthening management practices; and c) Development of SU SALUD s monitoring and evaluation system. Component 4. Project Administration The fourth component would support project administration with equipment, technical assistance, training, and operating costs to finance the administration of the project, and financial and procurement audits. Which safeguard policies are triggered, if any? Re$ PAD 0.6, TechnicalAnnex 10 Environmental Assessment (OP/BP 4.0 1) Indigenous Peoples (OB/BP 4.10)

9 Significant, non-standard conditions, if any, for: Re$ PAD C. 7 Board presentation: None. Loadcredit effectiveness: (a) (b) The FPS Subsidiary Agreement, the MSD Subsidiary Agreement and the Inter-Institutional Agreement have been executed on behalf of the Recipient, FPS and MSD. The Operational Manual has been adopted in a manner satisfactory to the Association. Covenants applicable to project implementation: None.

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11 A. Country and sector issues I. STRATEGIC CONTEXT AND RATIONALE 1. In spite of recent progress, Bolivia s human development indicators remain among the lowest in Latin America. Bolivia stands at the bottom of regional rankings on a wide range of health conditions (scoring above only one country, Haiti) such as life expectancy at birth. A sizable proportion of Bolivia s population endures difficult living conditions, malnutrition and chronic poverty -- formidable challenges which are compounded by large inequities in access to health care. Some of the poorest Bolivians have little or no access to basic health services. The result is a widespread vulnerability to premature mortality from infectious diseases and other avoidable health-related causes. In addition to this delay in the epidemiological transition, critical and ongoing health issues in Bolivia include high mortality rates for infants and children under five years of age, and very high mortality rates for women related to pregnancy, childbirth or puerperium (the time period immediately following childbirth). This proposed Health Sector Reform Project, the third phase of a multi-year commitment, continues to address these issues by enhancing capacity in the public health system, further improving maternal and child health services, and expanding insurance coverage for the poorest Bolivians. It would be implemented at a time of positive momentum in the health sector and strong commitment on the part of the Bolivian government for improving health outcomes. 2. Bolivia s low human development indicators reflect the challenges of the country s complex social structure and recent history. Bolivia has historically been divided geographically and ethnically, with wide income gaps between the poorer highlands and the wealthier lowlands. Many indigenous groups have been subject to social and economic exclusion for decades. The effects of these divisions persist, reflected in dramatic variances in health indicators in different areas of the country, and very substantial variations in health care among income quintiles. Bolivia: Regional Variations in Health Indicators Source: INE, 2003 and The Health Sector Reform Project is addressing several persistent challenges of the Bolivian health care system. Low coverage of services has been a chronic issue in Bolivia, caused by a combination of supply and demand factors. Many areas remained underserved for years, exacerbated Epidemiological transition refers to the change in the pattern of diseases away from infectious and preventable diseases towards degenerative/chronic diseases. This transition is usually correlated with improved life conditions, better access to health services, and progress in economic development. 1

12 by the ethnic and cultural differences in Bolivian society. High costs for services and medicines also discouraged large numbers o f Bolivians to stay away from health care institutions. Quality of care was also a longstanding issue, as was the lack of appropriate and robust referral networks. 4. In spite of the challenges, some progress is being made. Both the infant mortality rate (IMR) and the maternal mortality ratio (MMR) have seen significant reductions over the last ten years. The IMR indicator is well on track to reach the project goal of 48 per 1,000 live births in 2008 and to meet the corresponding MDG by APL I and I1 contributed significantly to these advancements since commencing activities in Additional intervention, planned under this APL I11 project, is required to achieve the MDG for the MMR. 5. Most significantly, the current Bolivian political situation also holds potential for progress on health reform, since the government is strongly committed to improving the quality and availability of health care for all citizens. The Morales administration won the 2005 election by an absolute majority and its political party holds a majority of seats in the lower house of Congress. The Government of Bolivia (GOB) is in the midst of an ambitious process of reform that seeks to transform the some of most fundamental relationships in society, including the Constitution and the relationship between the central Government and the regions. 6. The decentralization measures envisioned by the Morales administration require greater stewardship capacity on the part of all levels of the health sector, including national, regional and local authorities. Regional officials will be required to exercise additional authority to ensure that departmental level standards and policies are applied in each region. For their part, local health officials will be required to provide some services to local populations that were previously provided by the Ministry of Health and Sports (Ministerio de Salud y Deportes - MSD) or its extension services. Training and capacity-building will be necessary to ensure that the decentralized functions will be implemented effectively. At the same time, capacity must be increased at the central government level, so that MSD officials can effectively supervise, monitor and evaluate regional and local health authorities. B. Rationale for Bank involvement 7. The proposed Project, the third phase of a 12-year Adaptable Program Loan (APL), aims to consolidate progress achieved during the previous two Project phases and build on the impressive commitment to improved health evidenced by the actions of the Morales administration. IDA has supported Bolivia s health sector improvements for the past 10 years, and has been an important partner in the sector s development. IDA funds provided technical assistance, donor coordination, and training and financing to Bolivia s mobile health teams under the APL Program. To date, the APL Program has achieved significant results in expanding health insurance coverage and in increasing access to health services for previously underserved populations. It is expected that with the Morales administration s commitment to ambitious public health goals, combined with a more narrowly-defined focus of interventions in this final phase, APL I11 will consolidate past progress, achieve the original objectives, move toward additional objectives defined in this third phase, and ensure sustainability of the program. The project team is confident that the Morales administration has designed a robust reform package for the health sector that will result in increased participation in the health system by all ethnic groups, better management and transparency, better gathering and tracking of critical data, and, most importantly, better health outcomes for the most vulnerable Bolivians. 2

13 8. The proposed APL I11 would also be a key player in an innovative partnership whose joint resources would be focused on improving the health of the country s most vulnerable populations. APL I11 would join a potential IDA Social Protection (SP) Project (currently under preparation on a schedule approximately 30 days behind this project), and the GOB S Zero Malnutrition Program in closely coordinated and mutually reinforcing activities designed to battle chronic malnutrition in locations where food insecurity is the highest. The GOB has identified 88 locations (82 municipalities and 6 peri-urban areas - 20% of total population) throughout the country with the most severe food insecurity and resulting low malnutrition indicators. APL 111, the SP program and Zero Malnutrition (supported by WFP, UNICEF, PAHO and others) plan to initially join forces in the 37 most vulnerable locations of the 88. Zero Malnutrition will support families in the target locations through activities such as providing fortified complementary foods for young children and pregnant and lactating women. The SP program will support the same families with conditional cash transfers for utilizing basic health services like ante- and post-natal checkups. APL I11 would increase the supply and quality of health services in the 37 target areas. The proposed Project also plans to coordinate its activities with the Global Alliance for Improved Nutrition (GAIN). 9. As further described in paragraphs 22-24, under APL 11, continuation of the program into the third phase was contingent upon completion of six triggers. Five of the six have been achieved. The sixth has been partially achieved. The sixth trigger was a matrix of eight indicators, some of which were fully achieved, while others proved to be either affected by factors beyond the Project s control, or else so imprecisely defined that final analysis was impossible. 10. The proposed APL I11 maintains the Program s overall development objectives. It is in line with main sector strategies defined by the Morales administration, and is consistent with: (a) reducing further the IMR and MMR and their risk factors, (b) increasing access to and financial coverage for maternal and infant health care services, and (c) strengthening the capacity of the MSD, the departments and local authorities to perform critical Essential Functions in Public Health (EFPH). 11. While the process of Bolivian political reform continues, the Bank and GOB agreed in a 2006 Interim Strategy Note to move forward on projects and discussions that conform to three objectives: enhancing good governance and transparency, fostering jobs through growth, and providing better services to the poor. The Morales administration s commitment to improving the health of the poor is impressive and is worthy of Bank support. The GOB has collaborated fully in project design, and the Bank and the GOB agree on both methods and goals for APL 111. In addition, this project complements and supports the GOB S drive to decentralize government services and increase technical capacity in regional and local health service providers. 12. The proposed APL I11 is also aligned with three of the four tenets of the new World Bank Strategy for Health, Nutrition, and Population Results, approved on April 22, 2007.* Specifically, this APL I11 would aim to improve the level and distribution of key HNP outcomes, outputs and system performances (Strategic Objective 1); reduce and prevent poverty due to illness by improving financial protection (Strategic Objective 2); and improve governance, accountability and transparency in the health sector (Strategic Objective 4). World Bank Strategy for Health, Nutrition, and Population Results, Approved April 22,2007: STRATEGIC OBJECTIVE 1. Improve the level and distribution of key HNP outcomes, outputs, and system performance at country and global levels to improve living conditions, particularly for the poor and the vulnerable STRATEGIC OBJECTIVE 2. Prevent poverty due to illness (by improving financial protection) STRATEGIC OBJECTIVE 3. Improve financial sustainability in the HNP sector and its contribution to sound macroeconomic and fiscal policy and country competitiveness STRATEGIC OBJECTIVE 4. Improve governance, accountability, and transparency in the health sector 3

14 C. Higher level objectives to which the project contributes 13. The proposed project coordinates closely with the development and poverty-reduction objectives of the Morales government. Through the National Development Plan (Plan Nacional de Desarrollo), the Sector Development Plan (Plan de Desarrollo Sectorial), and the recently launched Zero Malnutrition Program, the GOB has launched an ambitious strategy to improve the health status of all Bolivians and to reduce gaps in health indicators. The GOB plans encompass a variety of activities, including strengthening the health system networks; increasing the coverage of, access to and demand for health services, especially in high vulnerability areas; increasing the scope and reach of public services messages encouraging healthy behaviors; promoting intercultural health; preventing chronic malnutrition; upgrading the health insurance system; and strengthening the MSD s capacity to implement the EFPH. The WB project team believes that these plans together constitute a cohesive strategy to tackle the most critical and entrenched challenges that face the Bolivian health system. The APL I11 program was designed in collaboration with the GOB, and project activities such as the proposed Maternal and Infant Referral Network, the strengthening of the insurance system, and the planned enhancement of MSD s capacity and regulatory capability align exactly with GOB priorities. 14. The proposed project will also assist Bolivia in moving toward its Millennium Development Goals in health. The health sector showed some improvements during the 1990s which improved the sector s MDG indicators (See Annex 1). These advances have been credited to improved policies and increased services, especially in the following three areas: (i) services aimed at reducing maternal and child mortality; (ii) services aimed at controlling communicable diseases more rigorously (especially Chagas Disease, Tuberculosis and Malaria); and (iii) services designed to enhance local incentives to improve health outcomes. Some of these activities received support under APL I and 11. However, in spite of achievements in these areas, there exists room for improvement which this APL I11 project addresses. 11. PROJECT DESCRIPTION A. Lending instrument 15. The proposed lending instrument is the third phase of a 12-year Adjustable Program Loan (APL), initiated in This third and final phase of the Health Sector Reform Project will consolidate progress achieved during the first two phases: the first phase (US$25 million APL I Credit) was implemented from 1999 to 2003 and the second (US$35 million APL I1 Credit) is expected to close on February 28, During the first two phases, the Government of Bolivia has achieved significant progress in its health sector, and APL I and APL I1 have been the main vehicles of IDA S support to the Government for this sector. Important intermediate and outcome indicators have experienced significant improvements during this time period. The current government is strongly committed to further improving the health of its citizens, especially those who are most vulnerable and who face multiple challenges with access to health care. APL TI1 would thus consolidate progress achieved to date, build on the positive momentum in the Morales administration toward the health sector, undertake important service and capacity-building expansions, and plan for sustainability of project activities after the termination of the project. 4

15 B. Program objective and Phases 16. Program Objective. The objective of this third and final phase conforms to the objective originally described in APL I and APL 11: to continue a successful, results-driven approach to reducing Bolivia s infant mortality rate. Since inception, the Health Sector Reform program has evolved in both geographic area covered and the complexity of the projects implemented. 17. Program Phases. In order to strengthen the health sector, the Health Sector Reform Program was launched in 1999, supported by an Adaptable Program Loan. The program envisioned a series of three APL s with financing of approximately US$25M in each phase. The first phase successfully created and implemented two health insurance programs directed at mothers and children: the Insurance of Maternity and Childhood (Seguro UniversuZ Materno-Zn~until-SUMI), and the Basic Health Insurance (Seguro Bdsico de SuZud - SBS). This phase also strengthened Bolivia s Immunization Program, and implemented performance agreements between the central government and the nine regional departments in order to base health policy on clearly-defined objectives and results. Health services were also improved by upgrading the infrastructure and equipment of health units (health centers and hospitals) with a special focus on prioritizing resources and interventions for the greatest impact on maternal and child health. During this first APL I phase, human resources were also trained, standards and protocols were designed, and a process for monitoring quality of care was developed. Under APL I the goals defined by the project were fully met with the total execution of the project resources. 18. The second phase (APL 11) launched in February of 2002 with US$35 million as a credit resource. APL I1 initially estimated closing in June 2006; however, due to implementation delays caused by Bolivian political developments surrounding the prior administration, the project has been extended to February The activities in APL I1 were aimed at the same project development objectives as APL I: To increase coverage and quality of health services and related programs that would improve the health of the population, to empower communities to improve their health status; and to strengthen local capacity to respond to health needs. An emphasis was placed on expanding health insurance programs, launching the National Program for the Expansion of Coverage of the SB S/SUMI (EXTENSA). APL I1 also focused on supporting the national immunization program, implementing a national program to improve the quality of health services, and supporting new strategies and tools to improve management practices at departmental and local levels, as well as improving the leadership and steering role of the MSD. C. Project development objective and key indicators 19. The original purpose of the Health Sector Reform Program was to help reduce the infant mortality rate and the maternal mortality ratio by introducing several key sector reforms, including: i) the design and implementation of a basic health insurance program targeting the poor (SBS) that later was upgraded to become the SUM1 program; ii) strengthening the immunization program and introducing new vaccines in the national schedule of vaccines that are now being fully financed by the Government; iii) introducing new management and implementation instruments such as performance agreements, investment mechanisms to promote maternal and child health interventions, an equitable system to finance municipal investments, and treatment protocols for mothers, babies and children under five years old; iv) a National Program for the Expansion of Coverage of the SBS/SUMI (EXTENSA); and many other sector interventions. In parallel, the Health Sector Reform Program was designed to be complemented by many other interventions in education, rural 5

16 productivity, and water and sanitation included in the equity pillar of the Bolivia 1998 CAS, and later in the 2001 CAS Update, and Bolivia s Poverty Reduction Strategy. This phase of the project would be implemented during a time when the policy environment in Bolivia remains fluid, and thus relies on a two-year Interim Strategy Note published in December 2006 in place of a new CAS. 20. As in the previous two phases, the activities of APL I11 would have two primary PDOs: a) to increase coverage and quality of health services and related programs that would improve the health of the population (specifically, mothers and children) and to empower communities to improve their health status; and b) to strengthen national, regional and local capacities to respond to health needs. In addition, this phase would introduce a multi-actor targeting strategy to focus critical interventions on Bolivia s most vulnerable populations. 21. As a program objective, the APL series pursued the reduction of the infant and maternal mortality rates by one-third, as per the proposed indicators for the Program. Progress is being made, as indicated in the table below: Baseline: Progress at Progress at RPfnrP Before End of End of APL APL I ** APL I1 1.1 I I Year 1998 I Year 2001 Year2006 Infant mortality mortplh rate (IMR) /TMR\ 67 I 54 CA Under five iilurwly mortality I~LC rate ~ujlvln~ (U5MR) I 92 7L I 75 IJ I 72 I L Maternal Mortality ratio (MMR) 390* Goal: End of APL I11 I Year JI I While the use of IMR/USMR/MMR as PDOs seems the rational way to measure the final impact of any health program focusing on maternal and child health, later analysis identified a critical problem. These indicators are affected by a number of issues which are outside the control and scope of the project, making it nearly impossible to attribute changes in the indicators directly to project activities. This is compounded in Bolivia by the lack of accurate vital statistics systems (or difficulties obtaining precise and timely data from DHS/surveys) which would make it easier to identify precise origins of change. Finally, focusing on IMR/USMR/MMR can distract stakeholders from focusing on mid-level indicators and goals that are very much within their control. 23. Accordingly, the Project Development Objectives for APL 111 are four: i) to reduce occurrence of critical risk factors affecting maternal and infant health in the targeted areas so that current gaps between regions are reduced; ii) to reduce chronic malnutrition among children under 2 years of age in the targeted areas; iii) to increase health insurance coverage in the targeted areas; iv) to upgrade the National Health Information System (Sistema Nacional de Informacidn en Salud - SNIS) so that it will be integrated with Bolivia s new health insurance program. 24. The following indicators will be used as key performance indicators (for quantitative targets and definitions, see Annex 3): Ratio between the percentage of pregnant women receiving four pre-natal care check-ups in the target areas and the rest of the country Ratio between the percentage of institutional deliveries in the target areas and the rest of the country Percentage of children receiving exclusive breast feeding at 6 months in the target areas 6

17 0 0 0 Percentage of children 2 years old taller than -22 scores in the target areas3 Percentage of population enrolled in health insurance in target areas Health insurance reports generated by software system include information about production of services Additional intermediate outcomes for each component and intermediate outcomes indicators are defined in Annex 3. D. Project components 25. This APL I11 is being designed and proposed as the last phase of a 12-year Health Sector Reform Program. This third phase would have two scopes of intervention: first, nation-wide; and second, targeted on 82 of the most vulnerable municipalities and 6 peri-urban areas surrounding three cities. APL I11 would include the following four components: Component 1. Stewardship Role of Health Authorities - Essential Functions in Public Health (UX47.7 million: US$4 million IDA + US$3.7 million Government) 26. This component would strengthen the capacity of national, regional and local health authorities so all can effectively perform the critical EFPH. Component One will focus on the need for robust information systems to improve the health sector s response, the need to increase disease prevention and good health promotion as key elements of reducing the disease burden among the poor, the need to strengthen capacity, regulation and monitoring to improve the quality of the health services, and measures to promote accountability of both providers (accountability for quality services) and users (awareness of their right to receive services) of the health system. 27. Activities under this component would focus on making the SNIS more robust, efficient and relevant. On the human resources side, management tools and processes would be upgraded, including extensive management training for health authorities at central, regional and local institutions. Donor coordination will also be a priority, as well as public outreach to local populations regarding health issues. Finally, a national program of quality for the health sector will be continued and improved. Component 2. Family, Community and Intercultural Health (US$ll. 6 million: US$9.9 million IDA + US$l. 7 million Government) 28. This component would improve access to maternal and infant health services in the project s target areas. Activities would support the development of Intercultural Maternal and Infant Health Referral Networks, complementing the existing EXTENSA health program. These networks would promote the demand for maternal and infant health care by focusing on the following three goals: 1) increasing the number of safe institutional childbirths; 2) increasing the numbers of referral of obstetric emergencies directly from the community; and 3) providing access to a referral system for children with acute respiratory and digestive diseases. The health challenges addressed by these goals disproportionately affect vulnerable communities. The component s activities would also focus on -22 scores are two standard deviations less than the median for the age and height. A child who measures more than two standard deviations shorter than the median is considered to be chronically malnourished. 7

18 increasing community participation in health issues, and on increasing the management capacity of departmental and local health institutions. 29. Activities under this component would also focus on strengthening the referral networks that already exist in the project s target areas. Activities would build human resource capacities and physical infrastructure in the networks institutions, including upgrading or purchasing equipment. Community participation in health issues would be encouraged under this component, via solicitation of participation in the planning phase of local activities, and via a coordinated public awareness campaign on disease prevention and good health practices. Component 3. Health Insurance (US$4.2 million: US$3.2 million IDA + US$I million Government) 30. Component Three would support the GOB S implementation of the new SU SALUD health insurance program through three project subcomponents. The components would focus on strengthening implementation capacity: a) Strengthening of the enrollment system; b) Strengthening management practices; and c) Development of SU SALUD s monitoring and evaluation system. Component 4. Project Administration (USS2.2 million: US$O. 9 million IDA + US$1.3 million Government) 3 1. The fourth component would support project administration with equipment, technical assistance, training, and operating costs to finance the administration of the project, and financial and procurement audits. E. Lessons learned and reflected in the project design 32. Lessons learned from international research and past moiects: The most vulnerable populations respond more slowly to health interventions. Experience in similar health projects has shown that sectors of the population who are not at the very bottom of the economic scale will improve rapidly with intervention and support; however, those at the bottom (the poorest and most vulnerable) will not respond as rapidly. Thus an intervention applied equally to all socioeconomic levels will cause some groups to improve more quickly, widening the gap in health status. Accordingly, APL I11 will narrow its focus to those locations which are home to the poorest and most vulnerable Bolivians: 82 municipalities and 6 peri-urban areas. Pastprojects andprograms failed to target the poorest. Past projects have focused on the supply side of health reform measures, which often do not sufficiently address the health needs of the poor. Even under an improved health system, the poor often continue to have difficulty accessing care. As mentioned above, APL proposes to target project activities to the poorest and most vulnerable in Bolivia. Public information systems are crucial. Lessons from Colombia s insurance program reveal the centrality of robust public information systems. After the successful program was implemented, it was discovered that one-third of the eligible population was not covered by insurance solely due to a lack of basic information about how to obtain coverage. APL I11 proposes an integrated public information program that takes into account the unique cultural and linguistic characteristics of Bolivia, as well as issues such as geographic isolation and literacy rates. 8

19 33. Lessons Learned in APL I and 11: A results-driven approach and focus on accountability facilitate project implementation and monitoring, provided a specijc and an appropriate set of indicators is defined in advance. The project s results-driven approach has proven to be key. During the prior phases of the project, the MSD realized that it did not have sufficient funding to increase activities to a sufficient level to reach the specific targets for vaccinations. The MSD then approached Bolivia s Ministry of Finance and, referring to the specific numerical results that were the goal of the project, was able to secure additional funding and achieve the target for vaccinations. Without the numerical goal, the MSD s argument for increased funding may not have been successful. Selecting appropriate indicators has also proven to be a critical lesson. Under APL 11, eight indicators were selected and together defined to be one of the six triggers that, if achieved, would initiate preparations for APL 111. During the execution of APL 11, it was discovered that a number of indicators were not precisely defined, or were defined assuming data existed that in reality did not. This lesson was taken into account in designing APL I11 and clear, unambiguous indicators and sources of data are defined. The defined set of indicators requires commitment and actions beyond the specijc project objectives and activities, and involve key actors across the health sector. Some projects define activities so narrowly that it is possible to successfully complete the activities while losing sight of the overall objective. It was found during prior phases of this project that having a defined set of indicators helped to keep the focus on the final results. For example, focus on the number of vaccinations kept project staff committed to achieving their specific project goals (whether those be in such areas as procurement or reporting) with the final outcome in mind. 0 Close supervision by WB/IDA, complemented by staff in the Country Office, has been important to maintain the pace of project implementation. The project team kept a vigorous schedule of consultations and meetings with the MSD, in spite of the protracted political instability and numerous changes in administrations that characterized the early years of the project. In contrast to some projects that schedule twice yearly progress meetings, the project team held monthly meetings with their Bolivian counterparts. They were thus able to keep the project moving forward and attain remarkable results during a period of extreme fluidity in Bolivian politics and society. 9

20 F. Alternatives considered and reasons for rejection 34. Some key aspects of the project under APL I and APL I1 were evaluated and areas for change have been identified that will increase the impact of the third phase. APL I11 would expand on or depart from the previous two project phases in these areas: 35. Targeting specijic locations for project activities. As described above, this project will focus activities on 88 locations (82 municipalities and 6 peri-urban areas) in Bolivia that the GOB has identified as being the most vulnerable. An alternative would have been to roll out project activities nation-wide, without considering variations in socio-economic status, geographical remoteness or access to health care. Targeting will more efficiently use project resources and will produce more impact in the populations with the greatest need. 36. Adding intermediate indicators. This phase of the APL will introduce several intermediate indicators that are closely linked to infant, child and maternal health. These are indicators that are under the immediate control of Bolivian health institutions and are also easily measured, especially since they will be tracked only in the project s target areas. Intermediate indicators that will be introduced are listed in Section C above, and include indicators such as percentage of pregnant women receiving four pre-natal care visits, percentage of institutional deliveries, percentage of children receiving exclusive breast feeding at 6 months, percentage of target population enrolled in health insurance, and others. An alternative would have been to keep the original indicators of reducing infant and maternal mortality, but as discussed above, these indicators are affected by numerous issues that are outside of the project s control. 37. Integrating project activities into the regular activities of the MSD. The Project Implementation Unit (PIU) inside the MSD, which managed project activities during APL I and 11, will be eliminated. Instead, project activities will be integrated into the regular activities and responsibilities of MSD staff. An alternative would have been to keep the PIU in place, but stakeholders felt it kept project activities isolated and therefore less effective as parallel activities instead of regular programs within the Ministry. Integration within the MSD will also contribute to the sustainability of project activities, since they will be seamless with GOB programs IMPLEMENTATION A. Partnership arrangements 38. There are no partnership arrangements envisioned for this phase of the project. Instead, project activities will focus on integrating project components into GOB policies and procedures to ensure sustainability. B. Institutional and implementation arrangements 39. The Project is to be implemented primarily by the MSD with the support of the Social Productivity Fund (Fondo Productivo y Social - FPS) on activities related to health investments at the municipal level. For this purpose, Inter-institutional Agreements will be signed between the MSD and the municipalities. 40. The organization structure defined for project implementation is being designed based on the structure of the MSD and the FPS, without the establishment of a specific Project Implementation 10

21 Unit. Both institutions will be working independently from one another, but in a closely coordinated manner. The MSD through the Vice-Ministry of Health (VoH) will have responsibility for overall project results. The VoH will have a small Technical Coordination Area to keep track of and coordinate with the Vice-Ministry of Traditional Medicine and technical units responsible for project implementation components and activities. The monitoring and evaluation system will be developed through a new Monitoring and Evaluation Unit to be created in the MSD, which will include the research and evaluation areas and the SNIS. 41. The project s administrative aspects will be the responsibility of the Directorate of General Administrative Affairs (Direccihn General de Asuntos Administrativos - DGAA) in the MSD through the Unit for External Financing (UCOFI) to be created, whose specific responsibilities and operational procedures will be detailed in the Project s Operational Manual. The MSD s manual also will describe the flow of project coordination processes between the technical and administrative units inside the MSD. In the case of the FPS, project activities will be managed through its own administrative structure, taking into account the action plan previously agreed between FPS and IDA (see paragraph 60.). 42. Since the Project will no longer have an independent implementation unit, an underlying objective of this effort is to build the MSD s capacity to efficiently implement and administer its health programs and strategies, providing specific technical support where needed. However, it is expected that many of the staff who have worked in the PIU will be converted to MSD employees, and will continue to work on project activities, Thus, the institutional memory of APL I and APL I1 will not be lost, and MSD will not be starting from zero in terms of implementation capacity. 43, At the regional and local levels, the MSD, through the Health Insurance Management Office, will create specific management insurance units, which will be responsible for the supervision and compliance of Project indicators. These units will work in close coordination with the SEDES, dependant on the prefectures and with the health networks. For detailed activities of the actors implementing the project, please see Annex 6. C. Monitoring and evaluation of outcomeshesults 44. As mentioned, unlike the previous two phases of this program, the execution of APL I11 will not be carried out by an independent implementation unit within MSD. Instead, all activities related to the execution, supervision, monitoring, and evaluation of the project will be integrated into the regular activities of the MSD (see institutional arrangements paragraph above). The Vice-Ministry of Health s UCOFI will be responsible for general project coordination and supervising project monitoring and evaluation. 45. SNIS has been designated as the key player for basic data collection, systematic processing and preparation of the indicators. Through Component 1, this project would support the development of the SNIS in order to increase its capacity to gather, analyze and manipulate data. This upgrade of the system is crucially needed, so that robust and accurate health data will be available for a wide range of reporting, including results monitoring. Finally, the project design includes an impact assessment which will be done with the participation of an external consulting firm. 11

22 D. Sustainability 46. This third and final phase of the Health Sector Reform Project incorporates several key activities that are designed to ensure sustainability after the end of project activities. Key objectives include continued funding and institutional capacity to carry out the EFPH, continued service outreach in and physical facilities supporting ongoing improvements in maternal and child health, and continued functioning of the SU SALUD system. 47. Sustained Funding. Over the life of APL 111, IDA funding for human resources will be progressively reduced and replaced by GOB funding so that at the end of the project cycle the GOB will be fully funding all human resources expenses established under the project. This is the same arrangement utilized under APL I and 11. This third phase of the project will not finance activities for which GOB assumed full responsibility during prior phases. 48. Full Integration into MSD. APL I & I1 relied on a Project Implementation Unit within the MSD that managed program activities. Under APL 111, all project activities will be integrated into existing MSD programs and staff responsibilities. An internal management unit will direct and coordinate all activities across the MSD, ensuring that the project s activities are incorporated into the regular activities of Ministry staff and into MSD policies and standard operating procedures. 49. Enhanced Medical Training to Encourage Retention of Quality Stafli APL will expand training opportunities for young doctors and nurses, affording them professional development opportunities that will encourage them to stay within the Bolivian public health system. The training will take the form of 3-year SAFCI residencies in the referral networks, and will include training at the networks primary hospitals. 50. EfJiciencies and Coordination in Medical Equipment Purchase and Repair. Under Component 2, the project will build new or remodel existing health centers, including purchase of new medical equipment. The project activities envision the establishment of regional equipment maintenance centers, which will contribute to the sustainability of the project by reducing inefficiencies in acquiring new or repairing existing machines. These regional centers will define and disseminate standards for equipment purchases throughout the region, ensuring efficient repair and replacement part availability Robust Public Information Systems. The project activities will design and implement robust public information systems, both to inform local communities about public health programs and insurance systems, and to encourage public feedback. This will encourage grassroots support by beneficiaries and communities, further strengthening the sustainability prospects of all of the project s programs and activities. E. Critical risks and possible controversial aspects The Project team has identified several potential risks to the effectiveness and sustainability of the operation as well as feasible mitigation options. The risks fall into two broad categories: Country-wide and Project-specific. 12

23 Risk factors Description of risk Rating4 Mitigation measures Ratinga of risk of residual risk I. Country and/or Sub-National Level Risks Macroeconomic Macroeconomic deterioration due M The Bank is working with the M framework to failure to control path of external and internal debt Government s economic team to chart a projected path of fiscal discipline that is economically, socially and politically feasible. Governance There is a conflict of roles between the National and local administration. Slow process of decentralization H Efforts are being made to clarify roles, responsibilities and fiscal regulations among different actors and measures are being taken to strengthen local governments. M Systemic corruption Other Patronage and corruption persist despite National and local elections Donor community doesn t respond as expected H M Strengthen oversight capacity of civil society participation and other institutions such as the FPS The Project s catalytic approach promotes the participation of other M M donors. Critical to the success of the Project is the Government s commitment to lead the agenda. 1I.Operation-si TechnicaV Design Implementation capacity and sustainability cific Risks The proposed Project would suppoi an increase of the supply of health services in the target areas. Experience shows that improvement in the supply side is not suficient to produce expected outcomes. The Project would need to be complemented by the actions to promote the demand of health service. The MSD s capacity for systematic planning, information collection, monitoring and evaluation, all of which are necessary for management results, are weak or inadequate Implementation of the project by the MSD without a PIU could add new responsibilities and the need for additional, new skills to the MSD s existing units andlor relegate the project s priorities to other MSD Units priorities M M The project was designed to match other projects and programs intervention areas and the Government is committed to target its resources in the more vulnerable areas, Specifically, the Government is preparing a project, with Bank assistance that would promote the demand for health services in these same priority areas. Component 1 of the project is specifically designed to address these weaknesses. Component 4 of the project includes resources to support the MSD units that would implement the project; possible implementation by the MSD itself, instead of through a PIU, would contribute to the sustainability of project interventions. It is expected that some staff of the PIU will convert to regular MSD staff and will continue to work on project activities, thus maintaining L M 4Risks are rated on a four-point scale (high, substantial, moderate, and low) according to the probability of occurrence and magnitude of adverse impact. 13

24 Financial management Procurement Financial management for APLI and APLII were considered satisfactory. However, because new institutional arrangements are being implemented for this phase with the creation of a unit UCOFIDGAA within the MSD, additional risks are involved related to adequate financial management of project resources, including the adequacy of FM systems, staffing and internal control arrangements. In addition, the involvement of FPS in the implementation of the inftastructure activities adds additional risk to project implementation. The main risks are: (i) procurement implementation delays; (ii) cost overruns due to poor capacity of FPS and MSD; (iii) uncertain responsibility and accountability of FPS and MSD for project activities, and (iv) poor regulation. institutional memory and implementation capacity. Institutional arrangements to implement the project by the MSD were designed. A WB team evaluated the financial management arrangements for the project, within the broader context of the institutional arrangements for project implementation, and mitigating measures have been incorporated into project design to address the identified risks at the project level. These measures are summarized in paragraphs 55 to 62 and detailed in Annex 7. Subsidiary Agreement, operation manual, training, and close Bank supervision. Procurement for APLI and APLII were considered satisfactorily handled by PIU. However, there have been concerns about the role of FPS as an accountable institution and the decision to work with the Administrative Unit of the MSD instead of a PIU. Mitigation measures are summarized in paragraphs 55 to 62. M M F. Loadcredit conditions and covenants Effectiveness conditions (a) (b) The FPS Subsidiary Agreement, the MSD Subsidiary Agreement and the Inter-Institutional Agreement have been executed on behalf of the Recipient, FPS and MSD. The Operational Manual has been adopted in a manner satisfactory to the Association. 14

25 Other Covenants (a) (b) (c) (d) (e) Not later than one year after the Effective Date, the Republic of Bolivia and the Association shall carry out a comprehensive review of the Project focused on Project performance. After said review is completed, the Republic of Bolivia shall take, if necessary, any actions recommended as a result of the review to remedy any problems identified during the review. The Republic of Bolivia shall cause FPS to maintain throughout the implementation of the Project, to the satisfaction of the Association: (i) the control and monitoring unit under FPS s executive office; (ii) the environmental unit; and (iii) the procurement monitoring unit. Not later than 90 days after the Effective Date, the Republic of Bolivia shall ensure that the UCOFI the Technical Area are fully staffed and operational, and shall maintain them thereafter throughout the implementation of the Project. Not later than 6 months after the Effective Date, the Republic of Bolivia shall establish and operate MSD s integrated financial management system. Before carrying out any civil works under the Project, FPS shall have entered into a Municipal Agreement with each Municipality within the Target Area. Other withdrawal Conditions; (a). (b). No withdrawals shall be made for payments under categories 2 (b) and (c) of the table in paragraph A section IV schedule 2 of the Financial Agreement (categories executed by FPS), until FPS has established to the satisfaction of the Association: (i) the control and monitoring unit under FPS s executive office; (ii) the environmental unit; and (iii) the procurement monitoring unit. No withdrawals shall be made for payments under Categories (l), 2(a), (3) and (4) of the table in paragraph A section IV schedule 2 of the Financial Agreement, until MSD has signed the contracts of: (i) the UCOFI s financial management specialist and procurement specialist; and (ii) the Technical Area s technical coordinator. 15

26 IV. APPRAISAL SUMMARY A. Economic and financial analyses Economic analysis 52. The project will generate economic and social benefits due to its impact on morbidity, mortality and nutrition as well as in the improvement of health sector managerial capacities to implement the EFPH and SU SALUD programs. An evaluation was undertaken that included all project costs, but considered only the benefits from the Familiar, Community and Intercultural Health Component (Component 2) in targeted areas, which account for a fifth of total Bolivian population. Benefits from components 1, 3 and 4 were not taken into account due mainly to insufficient information regarding public health surveillance, budgetary planning, intervention gaps and performance indicators. In addition to clear social benefits including reducing mortality, morbidity and malnutrition, the project s Internal Rate of Return (IRR) is projected to be 13 percent. The IRR would be higher if the benefits from components 1,3 and 4 were included. Financial Analysis 53. Financial Analysis and Fiscal Impact: Tax revenues increased from 26 percent of GDP in 2005 to 33 percent of GDP in 2006, mainly due to the new hydrocarbon policy, but also because of an increase in tax collection efficiency. Public expenditures were contained, generating a fiscal surplus of approximately 4.5 percent in 2006 coupled with an important current account surplus of 11 percent of GDP. In 2007, a fiscal as well as a current account surplus are still expected. In addition, Bolivia benefited from the MDRI, reducing its external debt to close to 20 percent of GDP. Recently, S&P has revised its outlook on Bolivia s B minus rating to stable from negative. In this context, the Central Government will have enough resources to cover the new obligations triggered by this project. Moreover, the total recurrent cost represents a small fraction of the total cost linked to this project. The most important recurrent cost triggered by the project is the stipend given to approximately 70 health professionals for working in the targeted areas which amounts to less than $USO. 1 million per year. B. Technical 54. The project is proposed as the last phase of a 12-year Health Sector Reform Program, and includes two scopes of intervention: nation-wide, as well as interventions targeted on 82 of the most vulnerable municipalities and 6 peri-urban areas surrounding three cities. APL I11 would include the following four components covering several technical issues: Component 1 focuses on the stewardship role of the public health authorities and their ability to carry out the EFPH. This component will focus on upgrading health information systems, methods to increase disease prevention and good health promotion in order to reduce the disease burden among the poor, strengthening capacity, regulation and monitoring of and in health services, and measures to promote accountability. Component 2 focuses on improving access to maternal and infant health services in the project s target areas. Activities would support the development of Intercultural Maternal and Infant Health Referral Networks, increasing community participation in health issues, increasing the management capacity of departmental and local health institutions, and upgrading human resources and physical infrastructure. Component 3 would support the GOB S implementation of the new SU SALUD health insurance program through project activities covering implementation capacity, the enrollment system; management practices; and SU SALUD s monitoring and evaluation system. Component 4 is comprised of project administration activities. 16

27 C. Fiduciary Financial Management 55. A Financial Management (FM) Assessment of the arrangements for the proposed Project has been carried out in accordance with OP.BP and in line with the Financial Management Practices in World Bank-financed investment operations. The assessment was conducted for both MSD and FPS. It concluded that FM arrangements for the Project are overall sound and acceptable to the Bank, subject to the strengthening measures to which both institutions, MSD and FPS, have demonstrated commitment in terms of completing the key actions under their respective strengthening action plans agreed during preparation. The remaining actions are expected to be implemented before project implementation starts. Details of the assessment and strengthening action plans are included in Annex The assessment of FPS was based on the results of the Operational Review that was conducted with the support of an international consulting firm contracted by the Bank at the end of FY As a result of the review, a time-bound action plan, including mitigating measures to address identified external and internal risks was agreed with FPS to strengthen its operational FM and procurement performance, with particular emphasis on strengthening its internal control environment and capacity both within FPS and at the municipal level. Financing for the implementation of this action plan is being provided by IDA under the recently approved Second Participatory Rural Investment Project. 57. Within the action plan, FPS is to implement the following key actions: strengthening the information system, with an emphasis on the internal control environment by enhancing programming and budgeting and assisting the regional offices to prepare programs and budgets; establishment of a monitoring and control unit in FPS; a streamlined sub-project cycle for the activities executed by the FPS; processes and procedures in the framework of local requirements that reflect better the roles and responsibilities of different actors (e.g. municipal governments), and the design and implementation of punctual internal control mechanisms training of FPS staff in Bank procurement and FM procedures; delivery of capacity building at the municipal level and development of a supervision plan for the procurement of works and goods carried out by the municipalities; automatic generation of FPS financial reports, specifying sources and uses of project funds by component; and strengthened audit arrangements, including separate audits for FPS and MSD. 58. To date, FPS Executive Committee has approved a new Internal Operations Manual including: i) a redesign of the sub-project cycle for the activities executed by the FPS; ii) establishment of a monitoring, evaluation, environmental impact and procurement units; iii) reductions of administration costs, including units costs; and iv) design of accountability policies for social oversight. 59. In addition to the broad measures under the action plan financed under the Second Participatory Rural Investment Project, the Operational Manual of this Project, the Inter-institutional agreement between the FPS and MSD, and the Subsidiary agreement between the Republic of Bolivia and the FPS, all of which were discussed during negotiations and will be approvedsigned by effectiveness will include requirements specifically for this Project. 17

28 60. Financial Management Risk: The project's inherent risk is rated as substantial and the control risk as moderate. Consequently, the project's overall residual FM risk is considered as moderate, after the successful implementation of the mitigating measures included in the project design for MSD and the completion of key actions of the action plan agreed with FPS and being monitored through the PDCR. The Bank will carry out semi-annual FM missions to monitor the risk. Procurement 6 1. The project will be implemented by MSD with the assistance of FPS. MSD's "Direccion General Administrativa (DGAA)", through its "Unidad de Coordinacion Financiera - UCOFI", will retain overall responsibility for project implementation acting as a permanent link with the Association. FPS will be mainly responsible for implementing with the municipalities, the renovation of public health facilities. 62. A procurement capacity assessment of the MSD and the FPS was carried out during project preparation to review their current capacity and the envisaged interaction between their relevant units for the project implementation. The procurement assessment of FPS integrated also the results of the Operational Review mentioned in paragraphs The key issues and risks concerning procurement have been identified and include delays and cost overruns in the project implementation mainly due to: (i) poor capacity of MDS and FPS; (ii) uncertainty regarding the responsibility and accountability of MDS and FPS for project activities; and (iii) a poor regulatory framework. D. Social 63. With respect to Indigenous Peoples, given the focus on intercultural health for the maternal and infant population, as well as the fact that most beneficiaries are self-identified as autochthonous, this Project is being considered an Indigenous project, and therefore that a separate Indigenous People's Plan is not necessary. The Social Assessment is in its final stages of execution. Preliminary information was considered in the Project design. E. Environment 64. In preparation of this project, an Environmental Assessment was undertaken. The assessment found that Bolivia's existing laws and regulations regarding the environment were comprehensive and robust, and that the laws mandate that MSD has responsibility for environmental issues that are related to public health. The assessment made an important recommendation: the MSD should identify an internal unit that will be responsible for establishing environmental norms and standards, as well as supervising the application of such norms and standards in MSD activities. See Annex 10 for more details on the environmental issues related to the project. 18

29 F. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OP/BP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OP/BP 4.10) [XI [I Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60). [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI G. Policy Exceptions and Readiness 65. This project does not require policy exceptions. Once the project is declared effective, activities are ready to commence. * By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of the parties claims on the disputed areas 19

30 Annex 1 : Country and Sector or Program Background BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I In spite of recent progress, Bolivia s human development indicators remain among the lowest in Latin America. Bolivia stands at the bottom of regional rankings on a wide range of health conditions (scoring above only one country, Haiti) such as life expectancy at birth. A sizable proportion of Bolivia s population lives in poverty, without access to safe water or adequate food supplies, and with little or no access to basic health services. As a result, many Bolivians are vulnerable to premature mortality from avoidable causes. Shortfalls include: delays in the epidemiological transition with high mortality from infectious diseases; high mortality rates for infants and children less than 5 years of age; and a very high mortality rate related to pregnancy, childbirth or puerperium (the time period following childbirth). Low income levels cannot be the sole cause of these woes: the other two IDA countries in the region, Honduras and Nicaragua, show a comparative higher life expectancy in spite of very similar GDP per capita figures (Graphic 1). Graphic 1. Correlation between Adjusted GDP per capita and Life Expectancy at Birth (Countries with adjusted GDP per capita below US$25,000) 0 dor South Africa Eq. Guinea 0 Botswana Source: UNDP Human Development Report, 2006 Gross Domestic Product US$ PPP per capita, 2004 Epidemiological transition refers to the change in the pattern o f diseases away from infectious and preventable diseases towards degenerative/chronic diseases. This transition is usually linked to improving life conditions, better access to health services, and progress in economic development. 20

31 67. During the 1990s and the start of the current decade, the Government of Bolivia engaged in concerted efforts to improve the health sector. Some progress was made in maternal and infant health indicators. If current trends continue, Bolivia could meet MDG s 4 and 5 (Table 1). Table 1: Bolivia s Progress towards the Millennium Development 1 Goals 1 Starting Numerical Progress Expected by Bolivia s Goal (most MDG Indicator Point for 2015 (1990) 2015 for recent (estimated) 2015 MDG 4: Reduce Child Mortality MDG 5: Improve Maternal Health Sources: UDAP Mortality rate for children under age 5 Infant mortality rate (per 1,000 live births) Maternal mortality ratio (per 100,000 live births) :, MSD, 2( Reduce the 1990 mortality rate by twothirds Reduce the 1990 mortality ratio by threefourths (1 989) 416 (1 989) I 54 I (2006) I I 235 I I The aggregated data presented in the Table 2 shows the recent improvements in some of Bolivia s MDG-related indicators. Advances have been credited to improved policies and increased coverage concentrated on: (i) services for reducing maternal and child mortality; (ii) reducing mortality due to some communicable diseases; and (iii) enhancing local incentives to improve health outcomes. However, in spite of impressive achievements, there is still room for improvements. In addition, the progress of some of these risk factors indicators over recent years reveals a decelerating rate of improvement or excessively slow progress. Table 2: Progress in Selected Health Services Indicators Indicator BirthsattendedbySkilledHealth 36% 47% 52% 51% 58% 59% 60% 62% 65% Staff (%) * 4th prenatal check-up coverage ** 28% 31% 33% 35% 34% 37% 40% 50% 56% 3rd dose Pentavalen; and DPT vaccines in children under 1 vear 75% 85% 89% 92% 88% 81% 85% 84% 83% Women using some family planning method 48% 58% Percentage of children with chronic malnutrition 27% 27% (*) For the period the indicator is in-hospital births coverage PA) (**) For the period it was calculated as: # 4th prenatal check-up/ #Ist prenatal check-up. Since 2005 the denominator was changed to expected number of births Source: MSD. 21

32 69. Movement toward controlling communicable diseases has not shown significant improvement. Chagas is endemic in Bolivia, and malaria continues to be present, even though the malaria rate has diminished somewhat due to anti-malaria programs. The incidence of yellow fever has diminished, but this disease continues to affect the departments of Santa Cruz and Pando. Among emerging and reemerging diseases, most notable is the reappearance of dengue fever (serotypes I and II), especially in the departments of Beni and Pando. 70. Malnutrition among Bolivian children has not improved at all. The two most recent national surveys (1999 and 2003) show a stagnant malnutrition rate in children. (Table 2) 7 1. National figures dilute the countrywide differences. Troubling inequities in indicators persist, with large differences in health conditions in different areas of country. For example, according to a survey completed after the 2002 Census, the total number of maternal mortalities was 320 per 100,000 live births in the Highlands, 147 in the Valleys and 206 in the Plains (Table 3). Further, there are very substantial inequities in health care spending among income quintiles (Table 4). Table 3: Regional Variation in Health Indicators Source: INE, 2003 and As for the coverage of the health insurance system, 27 percent of the total population was affiliated with the social security health system in 2004 and about 10 percent of the population has private health insurance to supplement government coverage. 73. Inequality affects not only access, but also health insurance protection. Only 3 percent of those receiving social security healthcare belong to Q 1 (the poorest), while 15 percent belong to Q2, 10 percent to Q3, 29 percent to 44, and 43 percent to Q5 (the richest quintile) (Table 4). Many of the most vulnerable are not currently receiving coverage. Table 4. Expenditures in Health by Quintile, 1999 (in bolivianos per capita) Income Quintiles (poorest = 91) Source of spending: Public Social Security Private Q Q Q Q Source: World Bank,

33 74. The MSD and the public health sector provide services to approximately 70 percent of population. The remainder use the social security health system, and some use private providers. Despite its relatively high level of coverage, the public sector accounts for only 25 to 28 percent of national expenditures on health. Between 37 and 40 percent of expenditures is covered by social security funding, 5 to 10 percent by the private insurance sector, and the rest directly by families. At the aggregate level, this is not much different from what is observed in the other Andean countries, Health expenses in Bolivia amount to around 7 percent of GDP (approximately US$550 million) and have been growing due to increasing costs of medication (based on spending groups), in the social security system and the private sector (which includes family expenses). Public spending on health is estimated to represent approximately 1.4 percent of GDP, part of which is covered by funds received through the Highly Indebted Poor Countries Initiative (HIPC) (Table 5). Table 5. Trends in Health Expenses as a Percentage of GDP Health Spending Indicators (% of GDP) I I 1995 I 1996 I 1997 I 1998 I 1999 I2000 I 2001 I2002 I Total National Spending Public Spending Social Security Private Spending Organization of the Sector. 75. Bolivia s health sector functions through different institutions at the national, regional (departmental) and local (municipality) level, and via formal working agreements made among them. The national Ministry of Health and Sports (Ministerio de Saludy Deportes - MSD) is responsible for the general supervision of the country s public and private healthcare system and for implementing public health policies on a national level. The MSD is ultimately responsible for carrying out the Essential Functions in Public Health, discussed in detail in the description o f project activities later in this document. The MSD is financed exclusively by the fiscal budget, which includes grants and projects that receive multilateral financing. The MSD controls close to 25 percent o f the public budget for health. The majority of these funds are earmarked for public health activities and for staff salaries at the central level. 76. The MSD works closely with the nine regional Departments (equivalent to states) via its regional offices known as SEDES (Sewicio Depurtumentul de Sulud). There is one SEDES in each Department, and they work closely with the Departmental government to manage Department-wide health issues. The MSD has partial control over the public system funds earmarked for the Departmental provision of services, but in practice, there is sometimes some overlap in jurisdiction. A significant part of the operating budget for financing the human resources payroll has been transferred to the departmental governments. 77. Based on the budget they receive from MSD for human resources expenses, the Departments are responsible for paying health personnel. In addition, based on a mutual agreement with the municipalities, the Departments are responsible for selecting the locations and evaluating the performance of health services within their borders. In practice, the Departments activities are limited to payment of personnel salaries, since to date they do not have authority to hire or fire personnel or reallocate funds 23

34 received from the MSD. The Departmental governments collaborate with the SEDES on public health campaigns and epidemiological control, facilitate some logistical resources, and cooperate on the maintenance of certain establishments such as the national institutes. The departments also have another significant role of co-financing investments on approved projects or loans for the municipalities. 78. The Municipalities are the owners and managers of the health service units, and are responsible for investment, maintenance, and administration. However, since municipalities lack the personnel and funds for these tasks, they must negotiate operating agreements with the Departments on the assignment of staff. These negotiations are accomplished through an institutional agreement known as Local Health Boards (Directorios Locales de Salud-DILOS). The municipalities are represented on and preside over the DILOS. Also represented on the DILOS are the SEDES and the local towns and neighborhoods (the latter via community leaders). This DILOS mechanism both plans healthcare services and evaluates their delivery. To make investments, the municipalities must use their own funds or request funds from the central level, which requires support from the Departments. This makes the Departments de facto guarantors of credit for investment, whether through the Productivity and Social Fund (Fondo Productivo y Social-FPS) or any other fund. The municipalities can also use funds from revenue sharing for health, allocated to SUMI. 79. In recent years, the MSD has received support from several international initiatives and multilateral entities, including the HIPC program. Because of this, new target indicators and goals are being monitored across the country by the health system for reporting purposes. The SNIS has been strengthened to monitor progress on these new indicators in addition to its regular activities. Formal management agreements have been implemented between the MSD and each of the nine SEDES. In addition, the use of basic follow-up indicators has been promoted in different health sector support projects (for example, indicators of coverage for institutionalized childbirth, vaccinations, prenatal care, etc.). The APL Program and the APL I Triggers 80. During Bolivia s process of health sector reform, along with the GOB S structural and other reforms (such as the law of Popular Participation), municipalities have become important new actors in the government. Bolivian law now confers management autonomy on municipalities, providing increased potential to strengthen democracy and economic development in local communities. This legal shift, while encouraging local empowerment, has also had the effect of decreasing the responsibility and functions of central government. This is especially true in the central government s responsibilities regarding the guarantee of equal access to health care for the entire Bolivian nation. One result is that the health sector has become somewhat fragmented and now requires the kind of sector-wide management and leadership training envisioned as part of this APL I11 project In order to strengthen the health sector, the Health Sector Reform Program was launched in 1999, supported by an Adaptable Program Loan (APL). The program envisioned a series of three APL s with financing of approximately US$25M in each phase. The first phase successfully created and implemented two health insurance programs directed at mothers and children: the Insurance of Maternity and Childhood (Seguro Universal Materno-lnfantil-SUMI), and the Basic Health Insurance (Seguro Bbsico de Salud - SBS). This phase also strengthened Bolivia s Immunization Program, and implemented performance agreements between the central government and the nine departments in order to base health policy on clearly-defined objectives and results. Health services were also strengthened by upgrading the infrastructure and equipment of health units (health centers and hospitals) with a special focus of prioritizing resources and interventions for greatest impact on maternal and child health. During 24

35 this first APL I phase, health personnel were also trained, standards and protocols were designed, and a process of monitoring quality of care was developed. Under APL I the goals defined by the project were fully met with the total execution of the project resources. 83. The second phase (APL 11) launched in February of 2002 with US$35M as a credit resource. APL I1 initially estimated closing in June 2006; however, due to implementation delays caused by Bolivian political developments surrounding the prior administration, the project has been extended to February The activities in APL I1 were aimed at the same development objectives as APLI: To increase coverage and quality of health services and related programs that would improve the health of the population, and to empower communities to improve their health status; and to strengthen local capacity to respond to health needs. An emphasis was placed on expanding health insurance programs and to launch the National Program for the Expansion of Coverage of the SBS/SUMI (EXTENSA). APL I1 also focused on supporting the national immunization program, implementing a national program to improve the quality of health services, and supporting new strategies and tools to improve management practices at departmental and local levels, as well as improving the leadership and steering role of the MSD. 84. At the beginning of the APL I1 program, six triggers were identified that would be used to evaluate the success of APL I1 and that would, if met, initiate negotiations for APL 111. The following six APL I1 triggers were chosen to measure the project s impact in health service coverage, quality and equity: Performance Agreements will continue to be signed and monitored for all regions and at least three large municipalities; The SBS will continue to be utilized as an instrument to finance basic health care for the poor. Within the framework of decentralization, it will continue to be implemented by municipalities and regulated by MSD. Financial controls and audits will have been strengthened. EXTENSA (the National Program for the Expansion of Coverage of the SBS and SUMI) will have deployed no less than 150 health teams combining indigenous community agents and health professionals in underserved locations and financing of the new teams will become absorbed into national budgets in a fashion consistent with the process of decentralization; New vaccines would be incorporated into the national schedule of vaccines with nationwide coverage and would be fully financed by the government; An equitable system to finance municipal investments in basic health will be put in place, along with clearly defined financing mechanisms; and The sixth trigger requires that five of eight indicators included in the matrix of Performance Benchmarks reach their target. Status of the triggers at pre-appraisal of the APL 111: 1. Annual Performance Agreements. This trigger was achieved. The performance agreements and their performance indicators are considered of vital importance. The indicators were carefully and collaboratively selected to measure the progress achieved in coverage, quality, and equity in health services. Annual performance agreements are now signed at the Departmental level, and included all key sector stakeholders: SEDES, Departmental Prefectures, and municipal governments. During 2006 there were some difficulties in negotiating the agreements with the departments of La Paz and Santa Cruz. In 2007, the methodology of creating the agreements, and of the agreements themselves, was changed. The MSD s Direction of Planning became responsible for the signing of the performance agreements with the Departments. The methodology of the 25

36 agreements was revised and can be summarized in four points: 1) a set of indicators will be carefully defined that are closely related to current health policies, 2) matrices will be developed to consolidate data on the indicators; 3) workshops and departmental trainings are held to explain the definition of the indicators and how they will be verified; and 4) the departments establish internal mechanisms to set goals and track progress towards the indicators. In 2007 performance agreements were signed with the following departments: Oruro, La Paz, Potosi, Tarija, Beni, and Santa Cruz. The signing with the remaining three departments (Cochabamba, Pando and Sucre) is planned after the completion of the National Constitutional Assembly. All the 2008 performance agreements are scheduled to be finalized and signed after the Constitutional Assembly finishes its work in December Basic Health Insurance. This trigger was achieved. APL I1 focused considerable effort on expanding health insurance coverage for economically disadvantaged mothers and children. The SBS program was expanded under APL I1 to become SUMI which, after the initial launch, expanded services for women up to 60 years of age. Financing of the SUMI program was guaranteed by law during APL 11, by allocating a percentage (initially 7% and currently 10%) of the municipalities share of federal tax revenue (Cuentus de Coparticipacidn Tributaria). 3. The National Program for the Expansion of Coverage of the SBS and SUMI (EXTENSA). This trigger was achieved. The objective of MSD s EXTENSA program (the National Program for the Expansion of Coverage of the SBS/SUMI) is to provide direct basic health services to populations in remote areas of the country. EXTENSA deploys multidisciplinary health teams (a doctor, nurse, dentist, and assistant) for preventive care actions and health control, especially for infant and maternal health. Each brigade provides services in a series of 40 to 50 locations, which are covered every two months in rounds lasting 20 to 25 days. In 2004, EXTENSA is reported to have reached over 300,000 people, mostly indigenous, in more than 2,600 villages in Bolivia s nine departments. At first, all of EXTENSA s financing came from the Reform Project, but gradually, this financing was complemented with human resources and inputs from existing healthcare systems in the municipalities and departments. The modus operandi of the brigades has also been evolving. Originally, the teams were organized at the central level. Now, new brigades are being created locally with personnel from existing healthcare systems, with the result that 76 EXTENSA teams are currently being financed by municipalities. At one point, Municipalities financed up to 120 teams, but some target areas were aggregated and some teams discontinued because of relatively easy access to the health centers. EXTENSA has contributed to improved health access by incorporating an inclusive intercultural approach, and it has been identified for the Government as a key program for the implementation of its family, community and intercultural health policies. 4. The new vaccines. This trigger was achieved The new vaccines, Haemophilus influenzae type b (Hib) and Hepatitis B (HB), have been introduced into the basic series of the Expanded Program on Immunization (EPI - PA1 in Spanish) 26

37 since In 2006, the amount allocated by the National Budget (TGN) for immunizations was US$l 1 million, nearly double the US$6 million established as a goal for APL 11. For 2007, the total amount allocated is US$11.7 million. Of this amount, US$5.8 million was used by mid-october and the remainder was added to the unused balance from the previous year. The available stock of vaccines is enough to complete the needs of this calendar year. 5. An equitable system to finance municipal investments in basic health. This trigger was achieved. The Health Reform Project in APL I launched MAR I, the Mechanism of Assignment of Resources (Mecanisrno de asignacidn de recursos). This mechanism allocated resources for investments in infrastructure and equipment based on a needs analysis of five departments. In APL I1 (MAR II), these assignments of resources are framed in the Policy of National Compensation (PNC), that allocates resources to the municipalities on the basis of an analysis of unmet basic needs (NBI). Studies and later analyses showed that the prioritization based on this indicator did not guarantee equity in health services. As a result, a new assessment was implemented to classify municipalities on the basis of a vulnerability index. This made it possible to identify with greater clarity the most vulnerable municipalities in the country which could then become targets of focused interventions. The mechanism for the assignment of municipal matching funds is defined in the CONAPES (National Council of Social and Economic Policies - Consejo Nacional de Politicas Sociales y Econdmicas). It divides the hnds according to a sliding scale based on vulnerability. For example, 45% of funds will go to the most vulnerable municipalities (those receiving a score of 5 on the 1-5 vulnerability scale) and 15% to the least vulnerable municipalities (those receiving a score of 1). 6. The Matrix of Performance Benchmarks. This trigger was partially achieved. To monitor progress on the project s activities, a matrix of eight indicators was created. The trigger stated that five out of the eight indicators should be achieved by the end of APL 11. Three triggers were fully achieved, one was nearly achieved, one was not achieved, and three had significant problems with the definition of indicators and/or interpretation of results, which makes final determination of the indicator status impossible. In spite of this partial success, the appraisal team feels strongly that significant progress was made and that APL I11 should go forward. The activities in APL I11 specifically target the country s most vulnerable areas, and the team is confident that the Bank and GOB have together designed a robust project that will address the issues where progress on indicators was stalled or thwarted. Table 6: Performance Benchmarks for APL I1 Type of Indicator Coverage Coverage Coverage Specific Indicator Status 12/31/06 i. Births attended by trained health personnel ii. Pneumonia cases of children attended in health services iii. Immunization coverage with pentavalent vaccine Fully Achieved Unclear - indicator problematical Not Achieved 27

38 Type of Indicator Coverage Quality Quality Equity Specific Indicator iv. Children under 5 with third dose of iron v. Complete prenatal care attendance vi. Early neonatal hospital mortality Status 12/31/06 Partially achieved, with the percentage of coverage increasing fiom 2% to 37%, very close to the goal of 41%. Fully Achieved Unclear - indicator Problematical vii. Number of municipalities with pentavalent coverage of Indicator problematical less than 80% Sustainability viii. Annual targets for the domestic financing of vaccines (This indicator is also consider in trigger 4) Fully Achieved These indicators were very similar to those comprising the performance matrix utilized for APL I, where incidence of pneumonia replaced the number of acute diarrheas (EDAs), and the monitoring of early neonatal mortality was focused in 15 selected hospitals. Indicators i, v and viii were fully achieved. While indicators i and v achieved the percentages stated as the goals, indicator viii also included as a separate trigger (trigger 4) was achieved. Indicator iv showed significant and important improvement. The proportion children below 5 years old receiving 3 annual doses of iron increased from less than 2% to 37%, which is very close to the 41% stated as a goal. i. Births attended by trained health personnel later defined as deliveries in health services. ~ - Year Observed number 138, , , , , ,605 51% 58% 59% 60% 62% 65% Goal 117, , , , , ,753 43% 54% 58% 61% 65% 65% v. Number of uremant women with complete prenatal care attendance (4 prenatal controls) - Year 2001* 2002" 2003* 2004" 2005** 2006** Observed number 117, % 34% 37% 40% 50% 56% Goal 121, , , , , , % 3 8% 41% 44% 53% 55% * 4 prenatal controls / at least one control ** 4 prenatal controls / estimated births. Since 2005 the indicator chance its denominator to estimated live births 28

39 iv. Number of children bellow 5 year old with 3 doses of iron. - Year Observed number 18,414 75, , , , ,090 2% 8% 15% 20% 3 1% 37% Goal 19,435 98, , , , ,614 2% 10% 15% 25% 35% 41% Three other indicators (ii, vi and vii) turned out to be quite problematical once project activities were underway. One indicator was ambiguous: the number of child pneumonia cases seen in health services. While the number increased (from 124,849 to 157,953) this could be interpreted as reflecting an increase of access by the infant population to health services. However, an opposite interpretation may also be true: improvements in the capacity and quality of diagnosis increase the specificity of the diagnosis, and therefore may reduce the number of illness cases reported as pneumonias. The early neonatal hospital mortality rate is also a difficult indicator to be evaluated. While better treatment should reduce this mortality rate, a better health service referral network will increase the proportion of severe cases accessing to the 15 selected hospitals, thus increasing the early neonatal mortality rate. The neonatal mortality rate was reduced from 17 per thousand to 12 per thousand, a significant achievement, but did not achieve the goal as originally defined. Indicator vii, the number of municipalities with pentavalent coverage of less than SO%, could not be evaluated due to the lack of accurate data to determine denominators at municipal levels. ii. Pneumonia cases of children attended in health services - Year Observed number 124, , , , , ,973 Goal 122, , , , , ,262 vi. Early neonatal hospital mortality rate in 15 selected hosditals. Year Observed number Live births 32,970 49,479 49,287 49,335 48,392 47,764 Observed mortality rate Goal

40 Finally, immunization coverage with pentavalent vaccine remained below the stated goal. iii. Immunization coverage with pentavalent vaccine (3rd dose in 1 year old children) - Year Observed number 228, , , , , ,099 92% 88% 81% 85% 84% 83% Goal 185, , , , , , % 85% 87% 90% 90% 90% The Government and Sector Priorities 85. For the first time in more than 40 years, Bolivia has a government elected by an absolute majority that also enjoys a majority in the lower house of Congress. Since the Morales administration took office at the beginning of 2006, the political instability surrounding the previous government has improved. The new administration has promised sweeping changes, including Constitutional reform and re-negotiating governance relationships between the central Government and the regions. An elected assembly, aimed at negotiating and proposing a new Constitution within a year, began working on this task in August 2006 and recently extended its mandate through December The Morales administration s policies aim for national political reform, but the efforts underway imply significant changes at the sector level as well. 86. Through the National Development Plan (Plan Nacional de Desarrollo), the Sector Development Plan (Plan de Desarrollo Sectorial), and the recently launched Zero Malnutrition Program, the Government has clearly articulated its commitment to improving the health status of the population and to reduce health inequity gaps. In these national plan documents, the Morales Government identifies five key objectives: i) a unique, intercultural and community-based health system; ii) the steering and leadership role of health authorities; iii) social participation; iv) promotion of good health practices; and v) social solidarity. 87. The GOB plans to approach these objectives by strengthening health system networks; increasing coverage, access to and demand for health services, especially in the most vulnerable populations; increasing the focus on the promotion of good health practices and of disease prevention; increasing intercultural health practices and preventing chronic malnutrition; upgrading the health insurance system; and strengthening the MSD s capacity to implement the EFPH. In this context, the Government s priorities are focused on achieving better heath results in MMR, IMR and nutrition by developing a demand-oriented Maternal and Infant Referral Network in targeted areas, strengthening the insurance system, and reinforcing the regulatory role of the MSD. The latter may be the most critical activity since the decentralization process that is underway in Bolivia requires a stronger MSD that is able to implement the EFPH to regulate and support regional and local authorities. 88. The demand-oriented Maternal and Infant Referral Network in target areas will be built on the experience and success of the EXTENSA program. 30

41 89. The public insurance system in Bolivia has undergone a rapid evolution since its inception, continually increasing scope and services covered. Public insurance was established in in Bolivia in 1996, with the launching of the Maternity and Childhood Insurance program, which offered 39 health benefits for women and children under 5 years old. In 1998 the Basic Health Insurance program was launched, which expanded the number of benefits offered to 92. In January 2003, under APL I1 the Maternal and Child Universal Insurance program was implemented, which grants nearly 600 benefits to pregnant women from the beginning of pregnancy until 6 months after delivery, and to children from birth to 5 years old. The insurance is accepted by all three levels of care in Bolivian public health facilities, the short-term social security insurance and in those private, nonprofit and for-profit institutions that are assigned provider status by GOB agreement. In March 2006, benefits were expanded into a new program -- SUMI -- with 27 new benefits in sexual and reproductive health and cervical cancer for women from 15 to 59 years old. 90. The creation of SUMI was a remarkable step forward. The implementation of the insurance and of the SUMI in particular has managed to partially overcome economic barriers for the access to health services by children under 5 and pregnant women. SUMI is a positive innovation of the Bolivian healthcare system. SUMI provides financial protection around a package of services to mothers and infants. The services, which are available to the entire potential beneficiary population, are provided through public and private systems. SUMI is financed through the following mechanism: the municipalities receive revenue sharing funds earmarked for SUMI. The percentage of funds from this source has been 10 percent since However, in order to obtain these funds, the recipient establishment must provide an accounting of the services provided. Furthermore, the establishment s prices are set by a central 31

42 91. In spite of the considerable expansion of services and coverage, a significant number of Bolivians remained without insurance coverage. Because of this continuing lack of access to services, the GOB has recently created a Universal Health Insurance system (Seguro Universal de Salud - SU SALUD), which was launched in SU SALUD will be financed by the following: a) b) c) 10% of federal tax revenue administered by the Municipal Governments. 10% of the HIPC funds administered by the MSD. 14% of the Direct Hydrocarbon Taxes (Impuestos Directos a 10s Hidrocarburos - IDH) administered by the Departmental Governments. 93. SU SALUD will be managed at the national level by the MSD, which will be responsible for monitoring and evaluation of operations. The SU SALUD Collective National Council (Consejo Nacional Solidario SU SALUD), headed by the Minister of Health and Sports and departmental and municipal representatives, will regulate and plan the use of resources, procurement and distribution of drugs, medical supplies and reagents. At the Departmental and Municipal levels, the SU SALUD program will be managed by a departmental council and the DILOS. The operational entities of SU SALUD are the responsibility of the Networks of Health Facilities. 32

43 94. To fight the problem of chronic malnutrition in children, the GOB launched its Zero Malnutrition Program in The program s objective is to eradicate malnutrition by meeting the nutritional needs of children under five (with special focus on children under two) and pregnant and lactating women. Its success is an important priority of the Morales government. The Zero Malnutrition Program is supported by PAHO and several U.N. agencies, including WFP, UNICEF, UNFPA, and FAO. The launch of the Zero Malnutrition Program triggered the reactivation of the inter-institutional National Council on Food and Nutrition, which will oversee the program and which reports directly to President Morales. The Zero Malnutrition Program will be managed by MSD. 95. As described below and more fully in Annex 4, the Zero Malnutrition program will partner with this APL I11 program as well as a SP program which is currently being developed in parallel. The SP program will seek Board approval in FebruaryMarch All three programs share the objective of reducing or eradicating malnutrition. Joint activities will be closely coordinated to target initial interventions in the 37 most vulnerable municipalities in the country, according to a recent GOB survey of food insecurity. A second phase will roll out activities in additional locations. 33

44 34

45 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I The Bolivia Health Sector Reform Project, Third Phase, is one of several initiatives supported by the Bank to address the persistent challenges of the Bolivian health care system: Low coverage of services, high costs for services and medicines, quality of care and lack of appropriate and robust referral networks. The APL I11 aims to consolidate progress achieved during the previous two Project phases. In fact, the APL Program has achieved significant results in expanding health insurance coverage and in increasing access to health services for previously underserved populations. In addition, other Bank projects address complementary areas, such as education. The Bolivia Health Sector Reform Project, Third Phase is part of an agenda that also includes projects such as: Related Projects Project Name BO-Secondary Education Transformation Project (P083965) (Cr BO) supported by the World Bank are: I I Amount US$lOM Financier IDA I Ratings Do 1P Not rated yet. Sector Issue Support the Municipal Government s education strategy by: (i) increasing access to secondary education for adolescents and young people and improving their permanence in the education system; (ii) improving quality and relevance of primary and secondary education; and (iii) strengthening the decentralized education management capacity of the Municipality of La Paz. Related projects b Agencies and Programs Hygiene and Basic Health Care Program (PROHISABA) Spanish Agency of International Cooperation (Agencia EspaAola de Cooperacidn Internacional) Canadian Agency for Internacional Development (Agencia Canadiense de Desarrollo Internacional) United Nations Populations Funds (UNFPA) (Fondo de Poblacidn de las Naciones Unidas) other international agencies include the following programs listed below: Approval Amount I Date 1 Sector Issues I Nov I Institutional strengthening focusing on the linkage between the Eu. to March innovation processes at a regional level and the development of I2008 health policies at a national level $USD. Feb to March M Mar can. ~ ~ 1 to March $USD. Ongoing Strengthening of Public Health and the capacity to integrate and administered the MSD; sector decentralization processes and management strengthening including attention to health networks, DILOS and SNIS. Strengthening the rectoria and the regulatory function of MSD and the SEDES of Oruro, Beni and Pando. BOL3R202 o Strengthening the formulation, implementation, monitoring and evaluation capacity of health policies and sexual and reproductive rights to promote equitable access to sexual and reproductive health. o Strengthening the quality of services for sexual and reproductive health. o Increase capacity to ensure sustainable provision of 35

46 United Nations Populations Funds (UNFPA) (Fondo de Poblacidn de las Naciones Unidas) I Ongoing $USD I contraceptives and other sexual and reproductive health materials. o Information and specific sexual and reproductive health services for adults and teenagers. BOL3R205- PG0003 o Prevention Plan for pregnancy in adolescence. o Available health services for teenagers, youth, and women in the context of SU SALUD. o Accredited differential services in placed and running. o Appropriate age registry for specific health care provision of services applying the SNIS tools. 36

47 Annex 3: Results Framework and Monitoring BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I The project development objectives for APL I11 include the same as those of the previous two phases: increasing access to good quality and culturally appropriate health services to improve the health of the population in general and to mothers and children in particular. As a program objective, the APL series pursues reducing the infant and maternal mortality rates by one-third, as per the proposed indicators. In addition this phase include as PDO some risk factors indicators in direct relation to the original PDOs. Results Framework m Reduction of the gap of maternal and infant health critical risk factors between the people living in the municipalities prioritized by maternal and infant health indicators and the rest of the Bolivian population Ratio between the percentage of pregnant women receiving four pre-natal care in the areas of project intervention and the rest of the country Ratio between the percentage of institutional deliveries6 in the areas of project intervention and the rest of the country * To reduce chronic malnutrition among children younger than 2 years of age in the rural areas of the 82 municipalities targeted by the project. m Overall increased coverage of the health insurance in the target population Percentage of 2 year old children with a height over - 22 scores in the intervention areas of the project' Percentage of children receiving exclusive breast feeding at 6 months in the project areas Percentage of target population enrolled in health insurance in the project areas Lessons for strengthening health and nutrition services and for scaling strategies m The SNIS incorporated a new information strategy and information about production in the intervention area is generated from the health insurance management module Health insurance management module reports include information about production Institutional delivery is defined as births attended in formal health institutions by skilled health personnel ' -22 scores is two standard deviations less than the median for the age and height. A child who measures more than two standard deviations shorter than the median is considered to be chronically malnourished. 37

48 ~ ~~~ ~~ Intermediate Outcomes Intermediate Outcome Indicators Use of Outcome Information 1 The Ministry of Health and Sports (MSD), the departments and local authorities improved their capacity to perform critical Essential Functions in Public Health (EFPH), Monitoring and evaluation, Sector policy and investment coordination, and quality control (habilitationlaccreditation) Component Two: 1 Design and strengthening of the Maternal and Infant Health Network in the Project target areas Component Three: 1 Increase the health insurance coverage and the quality of the health services provided through the health insurance 0 The SNIS includes the new information modules 0 The modules included in the SNIS are fully implemented in the 9 SEDES, the 9 Department and all the heads of the referral networks in the intervention areas. 0 The health units apply the sector regulation norms and the PRONACS norms. 0 Monitoring and Evaluation of the project done with regular reports from the information system providing the data (reports should have the data disaggregated by area, region, municipality, indigenous and non-indigenous, rural and urban) % of referral networks evaluated as satisfactory in the yearly quality assessment. % of pregnant women receiving pre-natal care within the first 20 weeks of pregnancy in the areas of intervention % mothers receiving post-natal care within 10 days of delivery in the areas of intervention 0 Percentage of children under 2 years old who participate in the growing monitoring sessions in the areas of intervention Percentage Indigenous people satisfied with the delivery services received Percentage of target population enrolled at the national level Percentage of municipalities achieving 80% of the management performance tracers at the national level Percentage of population receiving services satisfied with the quality of the services Monitor implementation of interventions in the project areas Monitor implementation of interventions in the project areas Monitor implementation of interventions in the project areas Arrangements for results monitoring 98. Unlike the previous two phases of this program, the execution of APL I11 will not be carried out by an independent implementation unit. Instead, all activities related to the execution, supervision, monitoring, and evaluation of the project will be integrated into the regular activities of the MSD (see institutional arrangements paragraph above). The Vice-Ministry of Health s Unit of Coordination of Projects with External Financing will be responsible for general project coordination and supervising project monitoring and evaluation. 99. SNIS has been designated as the key player for basic data collection, systematic processing and preparation of the indicators. Through Component 1, the project will support the development of the SNIS in order to increase its capacity to gather, analyze and manipulate data. This upgrade of the system is crucially needed, so that robust and accurate health data will be available for a wide range of reporting, 38

49 including results monitoring. Finally, the project design includes an impact assessment which will be done with the participation of an external consulting firm. Outcome indicator - Arrangements for results monitoring Data Cc Frequency Ratio between the percentage of pregnant women receiving four prenatal care in the areas of project intervention and the rest of the country Ratio between the percentage of institutional deliveries in the areas of project intervention and the rest of the country Percentage of 2 year old children with a height over - 22 scores in the intervention areas of the project 0 Percentage of children receiving exclusive breast feeding at 6 months in the project areas Percentage of target population enrolled in the project areas Health insurance management module, reports include information about production Yearly Yearly Yearly Yearly 80 I I Yearly Quarterly and yearly SNIS SNIS SNIS SNIS SNIS SNIS Health institutions and SNIS Health institutions and SNIS Health institutions and SNIS Health institutions and SNIS Health institutions and UGTFN Health institutions and UGTFN 39

50 Targets Outcomeindicator Baseline YR1 YR2 YR3 YR4 YRS Data Collection and Reporting Frequency Data Responsibility and Collection for Data Reports Instruments Col~ection 1 Outputs Indicators for Each Component mponent One : The SNIS includes the new information modules 30% Quarterly and yearly SNIS Reports and forms SNIS The modules included in the SNIS are fully implemented in the 9 SEDES, the 9 Department and all the heads of the referral networks in the intervention areas. 0% Quarterly and yearly SNIS Reports and forms SNIS Epimediolog ical Unit Investigation And H. Economics Unit The health units apply the sector regulation norms and the PRONACS norms. 0% Quarterly and yearly SNIS Reports and forms Planning Quality Unit Health Environment Unit Monitoring and Evaluation of the project done with regular reports from the information system providing the data (reports should have the data disaggregated by area, region, municipality, indigenous and nonindigenous, rural and urban 0% Quarterly and yearly M&E Reports HH and Facility Surveys, Impact Evaluation Planning Unit 40

51 Target values Outcomelndicators Baseline YR1 YR2 YR3 YR4 YR5 Data Collection and Reporting Frequency Data Responsibility and Collection for Data Reports Instruments Collection I Outputs Indicators for Each Component Component Two : % of referral networks evaluated as satisfactory in the yearly quality assessment. oyo 0% 20% 40% l- Quarterly 60% 80% Yearly Network managers, SEDES SNIS % of pregnant women receiving pre-natal care within the first 20 weeks of pregnancy in the areas of intervention % mothers receiving postnatal care within 7 days of delivery in the areas of intervention Percentage of children under 2 years old who participate in the growing monitoring sessions in the areas of intervention 55% 0% 66 56% 0% 70% 57 20% 75% 58% 40% 80% 59% 50% 80% 60% 70% 80% 1 1 Quw LWI 'J managers, SNIS SEDES I 1 1 I Network Quarterly managers, SNIS Yearly SEDES Yearly Network managers, SEDES Percentage Indigenous people satisfied with the delivery services received 0% 0% 10% 20% 40% 60% I qualitative I Every other survey, Survey Year Focus Percentage of target population enrolled at the national level 0 32% 54% 74% 80% 1 SALUD I Database SU DGSS Percentage of municipalities achieving 80% of the management performance tracers at the national level Percentage of population receiving services satisfied with the quality of the services % 10% 30% 40% 20% 30% Quarterly I Surveys Report on tracer indicators 1 Satisfaction UGDs UGDs I I 41

52 Annex 4: Detailed Project Description BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I11 This APL I11 is being designed and proposed as the last phase of a 12 year Health Reform Program. This third and final phase seeks to consolidate and build on the three main achievements of phases I and 11, namely: i) a focus on performance agreements and results which is increasing accountability across the sector; ii) the expansion of the health insurance system to reach more of the poor; and iii) the implementation of a National Program for the Expansion of Coverage (EXTENSA) which is providing health care to Bolivians in geographically remote areas. In addition, the project would build on the energy and momentum evident in the Morales administration s commitment to improving the health of the most vulnerable citizens. This final phase would be implemented over a period of five years, and the estimated total project cost would be SDR 11,700,000 (US$ 18.5 million equivalent) including US$0.5 million, unallocated) The Project would have two scopes of intervention. Some activities would be implemented nationally and would impact the entire Bolivian health sector, while other critical interventions would be more narrowly focused where intervention is most needed and where impact is likely to be highest. This second set of activities would target the 82 of the most vulnerable municipalities and the 6 most vulnerable peri-urban areas in Bolivia, as identified by the GOB. A national assessment analyzed food insecurity and other risks across the country on a scale from 1 (most secure) to 5 (most vulnerable). All of the locations targeted under these activities were rated 4 or 5 on this scale APL I11 would focus on three primary activities: i. Strengthening capacity in the national, regional and local health institutions to perform the Essential Functions in Public Health (EFPH). Improving capacity in regional health institutions is a critical issue because of Bolivia s ongoing process of political decentralization. More responsibility is being devolved to local and regional health officials, which requires increased capacity at all levels to perform, supervise and evaluate the execution of the EFPH; ii. Stimulating both the supply side and the demand side for health services by encouraging the development of maternal and infant referral networks in the poorest areas (the targeted 82 municipalities and 6 peri-urban areas), and by closely coordinating activities with the WB Social Protection program and the GOB S Zero Malnutrition program, which will stimulate demand in the same areas. This work is critical for reducing the inequity gaps in the Project s Development Objective indicators; and iii. Supporting the implementation of an expanded health insurance system that upgrades the current SUM1 to a Universal Health Insurance (SU SALUD). This new insurance program expands the age groups covered, improves the range of services covered and increases the focus of the health insurance system on promotion of good health as well as disease prevention methods. APL I11 would include the following four components: The vulnerability levels were calculated by the Bolivian Government, using a combined index of 16 indicators including risk of food insecurity, number of institutional births, access to drinking water, literacy, connection to sewer system, school attendance, and availability of electric power. 42

53 Component I. Stewardship Role of Health Authorities - Essential Functions in Public Health (US$7.7 million: US$4 million IDA + US$3.7 million Government) 102. The objective of this component would be to strengthen the resources and the capacity of national, regional and local health authorities so all can more effectively perform the critical Essential Functions in Public Health (EFPH). EFPH refer to core elements of public health policy which apply across all activities, independent of specific diseases or levels of interventions. These functions are the ultimate responsibility of the national government, and range from surveillance and disease control, to social participation, regulation, and monitoring and evaluation Component One will focus on updating and improving the health sector s information and data systems, improving management skills and results-based management in the health sector, designing and implementing a national program improve quality across the sector, and developing expertise within the MSD to identify existing and emerging environmental issues that affect health and that may be incorporated into future policies. Component 1 would include the following subcomponents: a. Strengthening the National Health Information System (Sistema Nacional de Informacibn en Salud - SNIS) in the areas of data gathering, analysis, reporting, monitoring, supervision, evaluation, management and research. The SNIS would be enhanced to support the new MSD priorities (Health Insurance; Zero Malnutrition Program; Family, Community and Intercultural Health Program) with appropriate data analysis and reporting. Bolivia s health information system was established in 1976 with the implementation of a paperbased form system for the reporting of data regarding epidemiological surveillance and production of services. In 1990, the MSD began migrating data to a computer-based system and changed the system name to SNIS. Although the SNIS encompasses Bolivia s 3194 health facilities, data collection at health facilities is incomplete and fragmented. Current systems collect and input information for discrete reporting of narrowly-defined data sets, and do not allow manipulation, analysis or reporting of the data in different formats. In addition, the reliability of the information produced by SNIS is limited because reports are completed or revised using data that is incomplete. The planned expansion of the SNIS under APL I11 includes a structural change in the way data will be captured. The proposed improvements to SNIS include new software modules which will manage the health insurance system, featuring clinic-level software programs that would become the entry portals for patient data. The software will also include databases and other programs to generate a wide array of reports and analyses that are currently non-existent or incomplete. The new data modules to be incorporated in the SNIS include systems to manage the following types of data: patient affiliation with insurance, medical-administrator-financial, human resources, medical equipment, infrastructure, admissions, pharmacy, purchases, monitoring of the annual operating plan (Plan Operativo Anual- POA), management of hospital medical waste, vital statistics, laboratory tests, patient demographic information and expansion of the database of epidemiological surveillance. This new stage of development of the SNIS will maintain the same strategy as the previous stages of the system. The design, and the programming and implementation will be based within the resources of the MSD s in-house software development team. This has proven to be a successful strategy. This subcomponent would finance: equipment, technical assistance, software tools, training, and communication services, to develop and implement the new modules of the SNIS at National, regional and local levels in the targeted municipalities. 43

54 The main activities of this sub-component include: J Technical Standards. Design and adaptation of the technical standards, processes, procedures and standards of the SNIS-in Public Health and Epidemiological Surveillance (VSP and SVE) including: i) Identification and evaluation of new sectoral and intersectoral information needs caused by implementation of new health policies; ii) Development of instruments for the capture and validation of the data from primary and secondary sources of information, securing flows of information, frequency, quality control, and definition of levels of information; and iii) Development of complementary computer tools and software for implementation and operation at the national, departmental and project-targeted municipalities level. J Monitoring and Evaluation. Implementation of the Monitoring, Evaluation, and Feedback System of the GOB S Sector Development Plan for (Plan de Desarrollo Sectorial - PDS), at national, departmental, and local health institutions including: i) Integrated design (production of services, administrators, financial, etc) of the System of Monitoring, Evaluation, and Feedback and its implementation at the national level; ii) Training of staff at all levels of management for the analysis, processing, and use of M&E information; iii) Reorientation of the methodologies for the Committees of Information Analysis (CAI) in the different levels of management; iv) Dissemination of M&E results at all levels of management. J National System of Health Research. A new national system for health research would be developed, to include: i) Support for the design, development, and implementation of a national system of health research; ii) Research of impact of projects and health programs. (impact-cost, benefit-cost, effectiveness, etc); iii) Design of mechanisms to select priority lines of research; iv) Design of a virtual library for the national network of information (including digitizing and cataloging past research, and providing research information for policy-making and decisionmaking in health). J National Health Survey Financial support to implement Bolivia s next Demographic and Health National Survey, Encuesta Nacional de Demografia y Salud 2011 and strengthening of the vital statistics service in coordination with all actors and institutions involved in the system including the link with the SNIS. b. Regulation, - Results-based Management and Culture of Accountability. This sub-component will focus on strengthening the capacity of the MSD and of the departmental and local health authorities in order to apply modern management methodologies and instruments, and to design programming based on priority and goal selection. The main activities of this sub-component include: J Management Tools. Support in development and implementation of standard practices and management tools: i) Preparation and validation of norms, processes, methodologies, and management tools; and ii) Training for national and departmental level public health staff in the use of new standard practices, processes, methodologies and management tools, monitoring, project and programs evaluations. J Donor Coordination. Strengthen the coordination of international and multilateral donors and generate a coordinated process of planning, including: i) Harmonization of cycles of projects, processes, administrative and financial procedures and the harmonization of the national standards and of international cooperation; ii) Advocacy for the support for the implementation of 44

55 the GOB S Sector Approach in Health; iii) Collaboration of donors in preparation and monitoring of the Institutional Strategic Plan of the MSD and decentralized institutions; iv) Collaboration of donors in monitoring the implementation of departmental health plans; v) Regulation of the operation of NGOs in Bolivia for the assessment of the outcomes of their health projects; vi) Updating of the information on interventions in health of NGOs and assessment of its outcomes at the national level and departmental; vii) Updating of the information on the health interventions of cooperative agencies and assessment of program outcomes; viii) Evaluation and systematization of impact of projects, health programs and the design of new strategies; and ix) Diffusion and feedback of the advantages and disadvantages of the strategies, programs and projects. J Impact Evaluation of the APL I11 Proiect. As part of this sub-component, the evaluation of APL I11 activities would be incorporated at the national level. Evaluations will be coordinated by MSD as part of the regular exercise of its responsibilities. The assessment of impact of the interventions on the targeted areas will be made jointly with the impact evaluation of the component of conditional cash transfers of the IDA Social Protection Project. It is anticipated that the MSD will hire an outside firm to conduct the evaluations. The preliminary design of this impact assessment is centered on evaluation of changes in health indicators in the project s targeted areas compared to areas that were not covered by the project. In view of the fact that many of the most vulnerable areas (those assessed at levels 4 or 5) will be targeted by the program, the idea of using a second phase group as a control group is under discussion. In order to compare the global effect of both phases of APL 111, the study will also compare indicators in all the targeted municipalities with a randomized sample of municipalities which were assessed at level 3 vulnerability. This latter comparison will make it possible to demonstrate impact if, as is expected, the initial gaps in the indicators among vulnerability levels are reduced at the end of the Project. J Social Communication. Under this activity, the Ministry, the departments, the municipalities and the local health authorities will communicate to their constituent communities the health results achieved (or not achieved) during each management period. These communications and reports will use the executive reports of the SNIS as a basis. Dissemination will be achieved via community meetings, workshops and publications financed by the project. J Human Resources. Strengthening of MSD s human resources policy. Activities would be designed to upgrade the human resources data captured by SNIS in order to identify gaps, limitations of training, evaluation of performance, etc. The project will support the updating of regulatory framework for the management of human resources of the sector. c. Development and Implementation of a National Promam of Quality. This sub-component would support the process of licensing, certification and monitoring of Bolivia s health facilities to assure the delivery of quality health care services. Institutions covered include hospitals, ambulatory health centers, clinical laboratories, blood banks, clinics and rehabilitative services, and other heath service units. The main activities of this sub-component include: J Capacitv development in aualitv management concepts: i) Incorporation of Quality Managers into the MSD, SEDES, and referral networks of the target area; and ii) Training and diffusion in the use of quality standards for SEDES health workers. 45

56 J Support the development and implementation of standards and instruments of quality manapement in the provision of health services: i) Preparation and validation of standards, processes, methodologies, and tools; ii) Promotion and Diffusion of a culture of quality; and iii) Monitoring, evaluation and feedback of the application and control of the standards, processes, methodologies and tools of the National Program of Quality for licensing and certification activities. Component 2. Family, Community and Intercultural Health (US$ll. 6 million: US$9.9 million IDA + USS1.7 million Government) 104. The objective of this component would be to improve access to maternal and infant health referral networks in the target areas. This component would support the development of an Intercultural Maternal and Infant Health Referral Network in the Project s target areas, complementing the existing EXTENSA program. These networks would also promote the demand for maternal and infant health care, and contribute to the following three health challenges, which disproportionately affect vulnerable communities: 1) increasing the number of safe institutional childbirths; 2) increasing the numbers of referral of obstetric emergencies directly from the community; and 3) providing access to a referral system for children with acute respiratory and digestive diseases Since 1985, Primary Health Care (PHC) has been promoted in Bolivia as the primary strategy to reduce morbidity and mortality of the maternal and infant populations. For a few years following inception, this strategy achieved marked improvements in maternal and child health indicators. However, progress reached a plateau and for many years further advances were not achieved. Although primary care units were organized in networks, these networks were not connected with referral systems and many of them did not have a secondary level of care. Lack of secondary care means that higher-risk health problems do not have access to institutions with technical capacity to identify and resolve such issues. Sometimes a lack of secondary care facilities can also mean that health issues are referred directly from primary care to tertiary care. This can result in inefficient use of resources, since tertiary care facilities should receive only the most complex cases and not those that could be resolved with secondary care. As an additional consequence, if patients drop out of the system because of inability to access the appropriate level of care, then the benefits of primary health care are lost along with the potential impact of the strategy There are approximately 300 primary care health facilities and 17 secondary care hospitals in the 88 high-vulnerability municipalities as defined by this project. These health units are divided into 17 networks totally included within the target areas and other networks partially included within the target areas. But these networks do not adequately reflect the health needs of the local population, nor are they organized to be mutually referring (i.e. from lower to higher complexity care, and vice-versa). In addition, in the 6 peri-urban areas that are part of the project s target areas, urban migration has greatly increased the population. Current health service networks do not serve these areas Component 2 would include two subcomponents: a) Development and strengthening of Intercultural Maternal and Infant Health Referral Network, and b) Strengthening the local management in health, and community participation. a. Development and Strengthening of Intercultural Maternal and Infant Health Referral Network. This subcomponent would include the following activities: analysis and redesign of the existing referral networks; definitions of the standards and regulations governing the networks; analysis of medical equipment needs of the networks health facilities, including repair or purchase where necessary; analysis of communication systems and transportation systems (ambulances) of the networks health facilities, including repair or purchase recommendation where necessary; implementation of new 46

57 health brigades (from the EXTENSA program) for expansion of coverage in remote populations; incorporation of human resources, technical training and management training for the networks; support for epidemiological research in response to suspected outbreaks; and the creation of three regional centers for medical equipment maintenance and repair. In addition, MSD will explore the possibility of establishing a program of incentives for increasing management quality within the networks. (Initially, these would be non-monetary incentives for performance, primarily training opportunities, with the possibility of using local funds at a subsequent stage for monetary incentives.) For example, if a network reaches its annual performance goals, the professional members of the network would be eligible to receive professional training within the country (either in their area of expertise or in a new technical area). This activity would serve the dual purpose of stimulating quality management practices as well as increasing the training and capacity of health workers network-wide The main activities of this sub-component include: J J J J Analvsis of Current Referral Networks. This activity includes a consultancy to analyze and determine the status of resources and existing capacities of the health networks in the target areas. The activity will undertake a collaborative process of redesign with the local communities, the DILOS and the SEDES. As a result, it is expected the current 51 unconnected networks become 24 structured networks with increased capacity to resolve health concerns of the local populations. Renovation of Health Facilities. Public Housing and Purchase of Medical Equipment: Of the 1200 existing primary health care centers in the project s target areas, some 200 were rehabilitated and equipped through FPS and some 250 through other projects. This subcomponent proposes to renovate or rehabilitate the remaining 300 establishments that require minor repairs, new primary care equipment, culturally appropriate infrastructure, and, construction or rehabilitation of public housing for the health workers. In addition, the 10 secondary care hospitals that are the lead hospitals in the networks require physical rehabilitation, including the space for the integrated nutritional unit, and additional equipment. Finally, seven primary care centers would be converted into secondary care hospitals, including creating office space for the network management office. Financing Expanded Human Resources. The financing of human resources within this component is necessary in order to support four critical areas of the project: i) creation of 34 new EXTENSA brigades (average two per rural network) with a team of 5 members in each brigade; ii) support for the SAFCI medical residence. This 3-year residency will locate a new medical resident in each network every year (1 7 residents will be in place in the first year, 34 in the second and 5 1 from the third year onwards); iii) completion of formal training in the four basic medical specialties (pediatrics, internal medicine, obstetrics/gynecology and surgery) for enough specialists so that each of the main hospitals in the network system will have one doctor in each specialty (it is estimated that about 51 additional specialists will be needed to complement those already in place); and iv) incorporating a nutritionist and a social worker into each network (1 7 professionals). The financing of this human resources component will be carried out on the basis of a shared financing and with progressively lower contributions by the project, not exceeding 20% in the final year. This component will also finance a rotation system for specialized personnel in which they will live and work temporarily in rural areas. Professional Training. This activity would design a program of regular continuing education for each referral network. This innovative program proposes that the main hospital in each network set aside one day every week or every two weeks as a network training day. On these days, 47

58 doctors from the community health centers would travel to the primary network hospital together with the patients they are referring on for more specialized care. The patient would be attended by the secondary-care doctor together with his or her local doctor from the primary care community health center. This system will serve the dual purpose of training the community doctors in higher level care and reinforcing professional relationships among doctors, as well as providing a higher level of comfort for patients unfamiliar with the environment within the main hospitals. In addition, the medical residents working in the main hospitals would organize and present a formal seminar on a topic of medical research or practice for the doctors that are visiting on that day from the outlying institutions. Similar programs would be structured for network managers and medical equipment technicians. J Operational Research. The Project would help to finance the operating expenses of operational research of outbreaks or suspected outbreaks. This research will utilize existing equipment of the SEDES and of the Networks. J Regional Equipment Maintenance Centers. This activity would assist in the creation of three regional centers for medical equipment repair and maintenance. These centers will depend directly on three departmental capital cities. The centers maintain and repair the equipment of the hospitals of in these three cities, and would sell services to the health units of the remaining municipalities, whose costs should be financed by the municipalities. The project would finance training and would purchase the required tools to establish the centers. The resulting sale of services outside the immediate locale will ensure sustainability of the centers operations. b. Strengthening of Local Management and Community Participation. This sub-component would focus on strengthening community participation in the management of local health activities, including promotion of healthy lifestyles, and the demand for maternal and child health services. The main activities of this sub-component include: J Particiuatow planning. The Project will promote community participation in the process of planning local health-related activities through a series of workshops. Focus will be on community participation in the development of local epidemiological profiles and local disease surveillance, with special emphasis on issues affecting maternal and child mortality, and chronic malnutrition. Activities will also support any necessary training for local social organizations and community leaders J Support for the CAIS (Health Information Analysis Committees) including training for health workers, organizations and community leaders in the methodology gathering and analyzing health data. J Public Awareness. Dissemination of community and inter-sectoral health strategies and results, in meetings of social organizations and other spaces. Accountability will be improved by regular dissemination of the results of the CAIS. The health workers and community authorities will provide information to the population on the results and cost of the health plans. J Health Promotion Materials. Collaborative preparation of Health Promotion materials with community participation. Printing and dissemination of the Promotion materials in the local communities. J Training of the DILOS for increased capacity to manage local health issues. 48

59 J Suuuort for the DILOS for monitoring the municipal management commitments and with the health networks. Target Municipalities 49

60 I Total 41 municipalities I I Total 41 municipalities I I 108. Coordination with Social Protection Promam and Zero Malnutrition Program. Working in the same areas, the SP program entitled Enhancing Human Capital of Children and Youth, currently under preparation, will provide conditional cash transfers to families with infants for health and nutritional care, as well as for improving consumption, The program will pay transfers to families who seek health care services that will prevent maternal and child malnutrition, such as regular pre- and post-natal checkups, monitoring of children s height and weight, and counseling about feeding practices, exclusive breastfeeding, hygiene practices, and the warning signs of illness Both the APL I11 and the SP program will coordinate closely with the GOB S Zero Malnutrition Program, which aims to meet the nutritional needs of children under five (with special emphasis on children under two) and pregnant and lactating women. The Zero Malnutrition program will encourage consumption of fortified complementary foods (FCF) and will promote the participation of local agricultural producers and SME s in the production of these FCF. It will also undertake public outreach activities to local families in the target areas, to improve households knowledge and practices regarding nutrition. Zero Malnutrition will also coordinate with the health networks to develop complementary Rural Integral Nutrition Networks, which will focus on preventing malnutrition. Finally, Zero Malnutrition will expand access to clean drinking water and improved sanitation All three programs will initially work in up to 10 municipalities as a first stage, to refine the approach and structure the joint activities to be optimally effective. The activities will then scale up to serve an additional 24 of the most vulnerable municipalities. This coordinated set of programs will serve to stimulate the supply of health services in the targeted areas, via the conditional transfers to health networks. Demand for health services will also be stimulated, by the SP s programs conditional cash transfers and the educational and prevention activities of Malnutrition Zero. With the activities of three robust programs focused on reducing malnutrition in a limited number of areas, a significant impact can be expected. Component 3. Health Insurance Program - (US$4.2 million: US$3.2 million IDA + US$l million Government) As described in Annex 1, the Government is implementing a new universal health insurance program known by its Spanish acronym SU SALUD. The SU SALUD program was launched in 2007 and dramatically expands coverage from its predecessor program SUMI. A description of services offered and populations covered by SU SALUD can be found in Annex 1 of this document. 50

61 112. Component 3 would support the implementation of SU SALUD through three project subcomponents. These components would focus on strengthening capacity for implementation of the new insurance: a) Strengthening of the System of Enrollment; b) Strengthening the Management; and c) Development of the system of monitoring and evaluation of the insurance. All subcomponents are discussed in detail below: a. Strengthening of the SU SALUD enrollment svstem. This subcomponent will support the rollout of a national SU SALUD record system for the enrollment of families and individuals. This system will permit the classification of members and coverage according to geographical areas, urbadrural areas, levels of poverty and other demographic characteristics. Under APL 11, SU SALUD s enrollment system was designed, developed and tested in two pilot programs (one in a rural area, and other in an urban area). These pilots allowed a dry-run test of the system, and as a result of issues identified during this process, minor adjustments were made. Currently the software is ready to be implemented in the entire country. The main activities of this sub-component include: J Training in use of the enrollment system for key personnel, operational personnel, and community leaders. J Implementation of a communication and social marketing stratem to promote enrollment throughout the country, including: production of materials, and dissemination at the national level. Intrasectoral and intersectoral activities for coordination and consensus-building. Training for local media. Meetings and community workshops. J Printing and distribution of enrollment forms nation-wide. J Design and implementation of a mass enrollment campaign in the project s target areas. b. Development and Strengthening of M&E Management Capacitv in the National Unit for Technical and Financed Management (Unidades de Gestibn Te cnica Y Financiera Nacional - UGTFN) and Departmental units (UGTFDs). This subcomponent will strengthen capacity to plan, manage, and carry out monitoring and evaluation of SU SALUD at the national, departmental and municipal levels. The main activities of this subcomponent include: J Strengthening professional capabilitv. The subcomponent will support the incorporation of 19 new professional positions (one statistician for the central office, and one Public Health specialist and one economist for each UGTFD). These positions will initially be partially financed by the project, but over the life of APL 111 will be progressively financed with GOB resources. J Provision to the UGTFD of computer equipment, office equipment, and supplies for operational activities. J Technical assistance for audit analysis, control of fraud, and management of incentives. Part of the budget will be reserved in order to pay for two additional programs of technical assistance, the subject of which will be determined as the project progresses and currently unknown needs emerge. 51

62 J Preparation, printing, and distribution of forms, standards, and operational guides. Training on the use of these materials. J Monitoring and supervision by the MSD of departmental level health institutions and activities, and by the departmental authorities of municipal institutions and activities. This activity requires financing so that the members of the UGTFN can regularly carry out supervisory visits to the UGTFDs and the referral networks. J Coordination meetings at the national level with the participation of the prefectures, SEDES, presidents of the municipal associations, representatives of civil societies, UGTFN, UGTFDs, and Ministry of Health. c. Development of a Monitoring and Evaluation System for SU SALUD. This sub-component will support the processes of evaluating SU SALUD s public policies, transparency, and accountability. It will also support an analysis of SU SALUD s local and departmental effectiveness. The main activities of this subcomponent include: J Determine the baseline. Establishing baseline indicators will provide an understanding of the initial environment into which SU SALUD is being launched. J Implementation of the medical-administration-financial software for SU SALUD. This software is being developed by APL I1 and maintains links with the SNIS. The implementation will be carried out in the 88 locations targeted by APL 111, and is planned to finance, computer equipment, to carry out the installation of the software and to train the data-entry personnel, network managers, members of the SEDES, and medical, administrative and financial staff. The computer equipment included in this subcomponent will also be used to extend the utilization of the SNIS. J Expansion of the SU SALUD software for the incorporation of special reports for decisionmakers and for the wider community. This tool is an application that will be developed once the software has been implemented, and will make it easy to generate unique for specific audiences. This process will include the collaborative participation by community actors in the design phase of the software tool, in order to ensure its ease of use. J Measurement of the qualitv of care and user satisfaction in the target areas. Audits on achievement of performance indicators and satisfaction surveys regarding SU SALUD s activities on disease prevention and health promotion. J Suuuort for meetings for evaluation of the health insurance at local level in the target areas. J Implementation of the local mass communication strategy to guarantee transparency in management (accountability). 52

63 Component 4. Project Administration (US$2.2 million: US$0.9 million IDA + UW.3 million Government) 113. The objective of this component would be to support project administration with equipment, technical assistance, training, and operating costs to finance the administration of the project, and financial and procurement audits As previously mentioned, the project would be executed through MSD s existing staff and structure, eliminating the PIU from earlier phases. The objective of this component would be to support the project s coordination and administration within the MSD. Specifically, this component would finance the following: J J J J Human resources to strengthen the MSD. Fourteen new professional positions will be filled, financed under declining contributions from the project (APL I11 would finance loo%, the first year, and 80%, 60% 40% and 20% respectively in the subsequent years. (US$ ) Office equipment. software and training (US$91.OOO) Operating cost (US$61.OOO) Financial audits (US$ ); procurement audits (US$75.000); and other consultancies (US$50.000) 53

64 Annex 5: Project Costs BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I11 Project Cost By Component andor Activity Project Cost By Component and/or Activity IDA Government Total us $ us $ us $ 1. Stewardship Role of Health Authorities - Essential Functions in Public Health a Family, Community and Intercultural Health executed by MSD b Family, Community and Intercultural Health executed by FPS c FPS Operating Cost Health Insurance OOO 4. Project Administration Total Baseline Cost Unallocated Total Project Costs

65 Annex 6: Implementation Arrangements BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL 111 Partnership arrangements 115. There are no partnership arrangements envisioned for this phase of the project. Instead, project activities will focus on integrating procedures as well as project components into GOB policies in order to ensure sustainability. Institutional and implementation arrangements 116. The project implementation will be carried out based on centralized planning (Assessment and determination of needs) and for the most part civil works and procurement of medical equipment under component 2 will be implemented in a decentralized process under the responsibility of the municipalities and MSD-SEDES. MSD will be responsible for general coordination and planning of the project, and FPS will assist the municipalities in carrying out procurement activities The Project is to be implemented primarily by the MSD with the support of the FPS on activities related to health investments at the municipal level. For this purpose, there will be a subsidiary agreement among VIPFEMSDRPS and an inter-institutional agreement between MSD and FPS The organization structure defined for project implementation is being designed based on the structure of the MSD and the FPS, without the establishment of a specific Project Implementation Unit. Both institutions will be working independently from one another, but in a closely coordinated manner. Ministry of Health and Sports (MSD) 119. The MSD through the Vice-Ministry of Health (Vow will have responsibility for the project s overall results. The VoH will have a small Technical Coordination Area to coordinate with the Vice- Ministry of Traditional Medicine and the technical units, which are responsible for the implementation of all components and activities. The monitoring and evaluation system will be developed through a new Monitoring and Evaluation Unit to be created within the MSD. This Unit will embrace research and evaluation activities as well as the SNIS The project s administrative aspects will be responsibility of the Directorate of General Administrative Affairs in the MSD through the Unit for External Financing (UCOFI) to be created. The UCOFI s specific responsibilities and operational procedures will be detailed in the Project s Operational Manual. The Manual also will describe the flow of project coordination processes among the technical and administrative units within the MSD and FPS. In the case of the FPS, all project activities will be managed through its own technical and administrative structure, taking into account the project implementation plan as well as the FPS own institutional action plan agreed with IDA Since the Project will not have an independent unit, an underlying objective of this effort is to build the MSD s capacity to efficiently implement and administer its health programs and strategies, providing specific technical support when needed. 55

66 122. At the regional and local levels, the MSD, through the Health Insurance Management Office, will strengthen its existing specific management insurance units, responsible for the supervision and compliance of Project indicators. These units will work in close coordination with health networks and the SEDES, which depend on the prefectures The MSD will undertake procurement capacity assessments o f the municipalities. Productive and Social Investment Fund - (Fdwdo de Inversibn Productiva v Social -FPS) 124. The MSD will identify the institutions which require civil works and medical equipment depending on the initial baseline analysis undertaken for the restructuring of the referral networks and will prioritize their implementation 125. The municipalities will be the agencies in charge of implementing investments for civil works, equipment and the supervision of both. The FPS will coordinate and supervise with the municipalities on the execution of investments. The municipalities will request financing for pre-investment or investment projects. Once the project investment is approved by FPS, the municipalities will be in charge of processing the bidding and procurement activities or delegating them to FPS. FPS main role is ensuring that all activities meet technical quality standards and comply with safeguards and fiduciary requirements. In the case of medical equipment procurement, the MSD will be consulted to ensure compliance with its technical standards. FPS will also manage a dedicated account for the investments component and will receive a percentage of the project investment amount, including municipalities counterparts, to cover their operating costs. The percentage amount is included in the FPS-subsidiary agreement between the Government and FPS The Bank carried out an Operational Review of FPS with the aid of an international consulting firm. This review resulted in an action plan, which forms the basis for strengthening FPS administrative and operational capacity and adjusting FPS Operational Manual. FPS will operate under an Interinstitutional Agreement to be signed by MSD, which establishes, in addition to its legal obligations, clear performance indicators FPS Regional Offices. The FPS regional offices (at least one in each department) will undertake project ex-ante evaluations, monitor contractual integrity, conduct field supervision, and order payments to contractors in close coordination with the MSD-SEDES. Municipal Governments 128. Local governments are key Project actors. They are legally in charge of either providing or coordinating the provision of infrastructure, equipment, services and assets, which the project intends to deliver. They will also co-finance the investments through agreements to be defined with the sector. 56

67 Ministry of Health and Sports (MSD) Productive and Social Investment Fund (FPS) Unit for External Financing (UCOFI) Insurance Units , ,...,...,,,, ,,,,.....,,..,..., ,.....,,,,.....,, ,,,,,,......,,,,,,.....,,,,, Within the MSD and FPS, day-to-day project implementation will be as follows Component 1- Stewardship Role of Health Authorities - Essential Functions in Public Health, will be carried out by different bodies: General Health Services Office; National Health Information System Unit, Social Productive and Investment Fund. Component 2 - Familiar, Community and Intercultural Health, activities that will be developed through the General Health Services Office; Health General Insurance Office and the Vice-Minister of Traditional Medicine. Component 3 - Health Insurance, under the responsibility of the General Management Insurance Office and the public insurance units of the MSD. Component 4 - Project Administration; MSD s General Administrative Office, FPS Administrative Office Monitoring and evaluation of outcomesh-esults 129. Unlike the previous two phases of this program, the execution of APL I11 will not be carried out by an independent executing unit within MSD. Instead, all activities related to the execution, supervision, monitoring, and evaluation of the project will be integrated into the regular activities of the MSD (see institutional arrangements paragraph above). The Vice-Ministry of Health s Unit of Coordination of 57

68 Projects with External Financing will be responsible for general project coordination and supervising project monitoring and evaluation SNIS has been designated as the key player for basic data collection, systematic processing and preparation of indicators. Through Component 1, the project will support the development of the SNIS in order to increase its capacity to gather, analyze and manipulate data. This upgrade of the system is crucially needed, so that robust and accurate health data will be available for a wide range of reporting, including result monitoring. This will require a systematic collection of data, as well as periodic audits. Finally, the project design includes an impact assessment, which will be done with the participation of an external consulting firm Monitoring and Evaluation (M&E) for the activities include an M&E system in the Ministry of Health and an Investment Administrative System (SAI) in FPS. Both systems will collect data to measure project impacts and verify the intermediate outcome and impact indicators. Monitoring the project progress will be done by assessing progress in: (i) institutional strengthening (ii) activity implementation, and (iv) overall project implementation. Evaluation will focus on the achievement of the outcome indicators, including the measuring of the impact of the project on the lives of the beneficiaries. 58

69 Annex 7: Financial Management and Disbursement Arrangements BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I11 Executive Summary 132. As part of the preparation process of the Health Sector Reform Project, Third Phase (APL 111), a financial management assessment was performed to determine the adequacy of the Ministry of Health and Sports (Ministerio de Sulud y Deportes, MSD) financial management arrangements to support project implementation. The assessment was performed in accordance with OP/BP and the Manual Financial Management Practices in World Bank Financed Investment Operations. The objective of the assessment was to determine the adequacy of the MSD s capacity to properly manage and account for all project proceeds and to produce timely, accurate and reliable financial statements for general and Bank special purposes. As a result, an action plan was agreed with the MSD to mitigate the risks identified during the assessment In addition, a financial management capacity assessment was conducted for the Fund for Social and Productive Investment (FPS), the entity that will implement the renovation of health facilities, public housing and purchase of medical equipment activities under subcomponent 2 (a) of Component 2 of the project. This assessment is based on the results of the Operational Review of FPS which was conducted with the support of an international consulting firm contracted by the Bank at the end of FY07. As a result of the review, a time-bound action plan including mitigating measures to address identified external and internal risks was agreed with FPS to strengthen its operational performance, including the internal control environment. The agreed action plan with FPS is being followed through the recently negotiated Second Participatory Rural Investment Project (PDCR). Within the strengthening action plan agreed with FPS the following key actions are contemplated: i) strengthening of the information system by enhancing programming and budgeting and assist the regional offices to prepare program and budgets; ii) establishment of a monitoring and control unit; iii) a streamlined sub-project cycle, and (iv) processes and procedures in the framework of local requirements including the design and implementation of punctual internal control mechanisms. Overall Conclusion 134. Bolivia s country Public Financial Management (PFM) risk rating is substantial, according to the CFAA published in January The advances reached towards improving the PFM, have been offset by several weaknesses found in the uneven application of the legal framework, particularly with regard to financial reporting and internal control environment. The situation at sub-national level is not different Project design and implementation arrangements require that robust financial management systems are in place, so as to ensure that associated risks are adequately being addressed and that the implementing entities will be able to provide the Bank, the Borrower and other interested parties with accurate and timely information regarding project resources, expenditures and activities. To the extent possible, for the implementation of the project activities, existing arrangements within both entities have been used, strengthening them as needed in order to guarantee their adequacy to ensure project funds are used economically, efficiently and for the intended purposes In the case of the MSD given that, unlike the previous two phases of this program, the implementation of APL I11 will not be carried out by an independent project implementation unit within the MSD, but rather based on the organizational structure of the MSD, the project s administrative aspects will be the responsibility of the Directorate of General Administrative Affairs (DGAA) in the MSD. 59

70 Taking into consideration that this will be the first Bank operation managed directly by the DGAA several mitigation measures have been proposed to address identified risks which are described in the Risk section below. Actions pending completion are detailed in an action plan (presented in this annex). Regarding FPS, the action plan agreed with the Bank (as mentioned above) is being followed through the implementation of the recently negotiated PDCR project As of the date of this document, both institutions, MSD and FPS, have demonstrated commitment in terms of completing the key actions agreed under their respective action plans The project inherent risk is rated as substantial and the control risk as moderate. Consequently, the project overall residual FM risk rating is considered as moderate, after the successful implementation of the mitigating measures included in the project design for MSD and the completion of key actions of the strengthening plan agreed with FPS and being monitored through the PDCR project. However, the risk profile of the project can be adversely affected if implementing entities are not able to maintain the proposed arrangements, including qualified staff, throughout the project's life On the basis of the review performed and expected implementation of the respective action plans, the financial management team concludes that the proposed FM arrangements -as designed - can be considered acceptable to the Bank, subject to their effective and successful implementation. SUMMARY OF FINANCIAL MANAGEMENT ASSESSMENT 140. The following sections summarize the results of the assessment of the proposed financial management arrangements of the MSD, and the agreements reached for the implementation of WE3 projects under FPS, following the recommendations of the Operational Review of FPS'. Risk Assessment and Mitigation 141. The risk assessment presented below, constitutes a summary of the issues related to the project as a whole, as of the date of the capacity assessment and on the basis of the Bank's knowledge of both proposed implementing entities, the MSD and FPS. INHERENT RISK Country level Country's PFM risk rating (including sub-national level) is substantial." Residual Rating S Risk Mitigating Measure Incorporated into Project Design The project implementation arrangements under the different components have been reviewed and evaluated, making sure clear roles and responsibilities are defined and will be included in the Operational Manual. Agreements, Condition of Negotiations, Board or Effectiveness (ym) Draft Ministerial Resolution creating the UCOFI within DGAA issued by Negotiations. MSD's creation of a unit for the financial management of the project (UCOFI) and reporting Operational Review of FPS, June 29,2007 (Draft Report) Bolivia Country Financial Accountability Assessment lo 60

71 to the DGAA will be supported with qualified staff. A project component also includes management capacity development for the MSD, SEDES and referral networks. MSD will also create technical coordinating and monitoring units at central level. In the case of FPS, a strengthening Action Plan is under implementation and will be followed through the PDCR project. Inadequate salaries in the public sector, due to wage reductions, limit the capacity to attract and maintain qualified staff Entity level M Regarding FPS, key FM experienced staff -at Central Office- have been maintained during the last year. The strengthening FPS action plan includes specific training on Bank processes and procedures. The MSD has committed to establish a unit, (UCOFI), within the DGAA for the financial management and procurement aspects of the project. UCOFI will be staffed with qualified professionals to be selected following Bank procedures; therefore the TORS of key staff will be approved by the Bank. Although the salary levels will be similar to the ones applied for the rest of the public sector, the staff will be financed with project funds. Key FM staff selected prior to disbursements Disbursement (Y) UCOFI operating effectively Dated Covenant:90 days after effectiveness Cy) FPS: Several weaknesses in the internal control environment and other deficiencies on FPS performance were identified as part of supervision of Bank projects and other specialized reviews conducted within the last year S An Operational Review of FPS was carried out with the support of external consultants, financed and directly contracted by the Bank. As result of such review, an integral strengthening action plan has been agreed with FPS. Key issues and mitigating measures have been incorporated into the Action Plan which includes streamlined subproject cycle, better defined roles and responsibilities of different actors (e.g. municipal governments), establishment of a monitoring & control unit, and a strengthened information system, with emphasis on control environment. Compliance with key actions of Action Plan is being followed through the PDCR project. MSD: This will be the first Bank project where financial management will be institutionalized within the Ministry, as previous phases of the APL program have been managed through a PIU MSD is being supported in the project preparation through the PIU of the APLII. Support includes the development of an Operational Manual that will incorporate the definition of roles and responsibilities of the different actors as well as appropriate internal control procedures. The unit being created (UCOFI) is expected to undertake the implementation of fiduciary aspects of future donor or multilateral financed-project. As such it is expected that some human capacity will be absorbed &om the unit currently implementing the APL 11. In addition, the selection of key FM staff will follow Bank procedures and therefore TORS MSD Draft Operational manual completed by Negotiations and final version approved by effectiveness. Effectiveness (Y) Functions and draft TORS of key staff approved by the Bank 61

72 will be approved by the Bank. by Negotiations. Project level Project implementation includes activities to be implemented at a decentralized level by both the MSD and FPS. The project involved different regional and local levels of government, as well as the involvement of the SEDES, and medical brigades within the referral networks covering mainly rural areas. S In addition to the creation of UCOFI within DGAA, a monitoring and evaluation unit will be created within MSD. The DGAA will assign administrative coordinators in 5 regional areas within the project focused area. Clear definition of roles and responsibilities, and coordination among the units will be defined and documented in the Operational Manual. Internal controls and procedures for payments to medical brigades and training are documented in the Operational Manual MSD to issue internal ministerial resolutions approving the creation and structures of UCOFI and technical and coordinating units by negotiations. Draft Operational manual completed by Negotiations and final version approved prior by effectiveness Effectiveness Cy) FPS will implement the renovation of health facilities, public housing and purchase of medical equipment activities under subcomponent 2 (a) of the project FPS will implement this subcomponent through its own administrative and operational structure and in accordance with its Operational Manual. The selection of the renovation of health facilities, public housing and purchase of medical equipment activities will be based on a diagnostic conducted by the MSD. The roles and responsibilities of the FPS will be included in the MSD Operational Manual and the inter-institutional agreement between MSD and FPS. Draft interinstitutional agreements between FPS and MSD reviewed by the Bank before Negotiations and signed before effectiveness Effectiveness (Y) CONTROL RISK 62

73 Budget: FPS current budget procedures establish that budget modifications be approved by DUF. Experience has demonstrated that such process may considerably delay the implementation of sub-projects, when a budget modification is required. M FPS has prepared specific procedures for the preparation of operational and financial programming. Those procedures will be assisted with a customized programming module to be included in SAP (FPS information system), that will allow Regional Offices to prepare detailed program and budget allocation at sub-project level. This enhanced programming process, if properly implemented, should diminish considerably the number of budget modifications required for the Project. Budget for the subcomponent to be implemented by FPS will be part of FPS institutional budget, based on the annual operating plan of the activities to be implemented by FPS and approved by MSD Compliance with the required actions ins being followed through the PDCR project. Draft Subsidiary agreement between the Republic of Bolivia and the FPS reviewed by the Bank by Negotiations, and signed by effectiveness. Effectiveness (Y Inter-institutional agreement between FPS and MSD signed by effectiveness. Effectiveness (Y ). Budget (other than modifications) Accounting Internal Control M FPS has worked on specific streamlined budgeting, and accounting, processes and procedures in the framework of existing local requirements and strengthening them as needed, including the design and implementation of punctual internal control mechanisms. The strengthening of the budget module is included in the FPS strengthening of the information system. Strengthening Action Plan for the FPS information system being followed through the PDCR project. In the past, the MSD s budgets have been overestimated, and implementation has been delayed due to reprogramming. Reviews from the MSD s legal counsel have resulted in the delays of the processing of modifications or amendments to the budget. A computerized accounting system that complements SIGMA will be implemented, to assist the MSD with the accounting and budget programming and monitoring. The accounting system of APLII will be used temporarily until the new system is implemented. To ensure compliance with procedures agreed, the UCOFI reporting to DGAA will coordinate with the MSD s planning office and the technical :oordinating unit the opportune and realistic preparation of annual operating plans and its respective budget. MSD Integrated financial management system is implemented within 6 months of effectiveness. Dated covenant (Y) A legal counsel will be contracted and dedicated to APLIII. 63

74 Funds Flow The project involves different regional and local levels of government, as well as the involvement of the SEDES, and medical brigades within the referral networks covering mainly rural areas M In the framework of the procedures set by SIGMA and the Single Treasury Account, funds flow arrangements have been defined for FPS and MSD. Those procedures avoid unnecessary layers. As the specific regulations for the operation of the Single Treasury Account in US dollars are issued by the Government, the flow of funds would need to be slightly adjusted. The regional administrative officers will manage reasonable revolving funds (up to $25,000) to cover operating expenses of the medical brigades and local trainings, based on the activities approved in the annual operating plan. Management of the funds for the brigades operating expenses and training are documented in the Operational Manual. Draf? Operational manual completed by Negotiations and final version approved by effectiveness. Effectiveness Financial Reporting M Format and content of Interim Financial Reports and Financial Statements have been agreed with the Bank for both entities. In the case of FPS the strengthening Action Plan of the information system (SAP) includes the generation of the financial reports automatically from the system. Reports issued automatically l?om corresponding system. The information system to be implemented by MSD to complement SIGMA will require generating the IFRs directly from the system. Auditing M Audit scope for financial audits will require interim visits aimed at evaluating internal control for both implementing entities to ensure, among Draft Audit ToRs reviewed by the Bank before Negotiations. 64

75 linkages between physical and financial progress. It will also require on site visits, in the case of FPS to Regional Offices, and in the case of MSD to decentralized MSD UGTFD units. Separate audits will be contracted for the respective part(s) of the project implemented by each entity, and consequently separate audit reports for FPS and MSD will be issued. Acceptable audit f m s selected six month after effectiveness. Weaknesses and Action Plan 142. All actions related to FPS institutional strengthening action plan are being addressed through the PDCR project in the framework of the strengthening action plan agreed with FPS. In the case of MSD an action plan to strengthen the UCOFI s capabilities for the financial management of the project has been agreed, as follows: Action 1. New integrated accounting system implemented and effectively operating 2. Chart of account finalized and automated in the integrated accounting system 3. Final version of the operational manual adopted 4. Establishment of UCOFI and technical and monitoring coordinating units effectively functioning 5. Inter-institutional agreement between MSD and FPS. 6. Appointment of external auditors Financial Management Implementation Arrangements Implementing Entity, Organization Structure and Staffing Responsible MSDDGAA MSDDGAA MSDDGAA MSDDGAA MSDDGAA MSDDGAA Deadline for Implementation 6 months after effectiveness Prior to disbursements Prior to project effectiveness 90 days after effectiveness Prior to pro-ject effectiveness Within the next 6 months after project effectiveness 143. The MSD has overall responsibility for project implementation and will work in coordination with FPS on the activities related to health investments at the municipal level, which are defined under sub-component 2 (a) of the project Following the implementation arrangements defined in section 1II.B of this PAD, it has been agreed that the financial management tasks will be undertaken by: a) the DGAA in the MSD through the creation of a Unit for External Financing (Unidad de Coordinacion Operativa Financiera de Programas 65

76 y Proyectos - UCOFI); and b) FPS for the Renovation of Health Facilities, Public Housing and Purchase of Medical Equipment under the activities in the subcomponent (a) of Component 2. UCOFI s specific responsibilities and operational procedures will be detailed in the Project s Operational Manual. The MSD s manual also will describe the flow of project coordination processes between the technical and administrative units inside the MSD FPS project activities will be managed through its own administrative structure, taking into account the institutional implementation plan agreed between the FPS and the Bank The following sections describe the financial management arrangements for each entity, identifying, as appropriate, the required additional actions to complete the design of fully acceptable financial management arrangements. Ministry of Health and Sports (MSD) 147. The UCOFI reporting to the DGAA, to be created, will be integrated by a coordinator supported by three officers in charge of budgeting and accounting, treasury, and procurement, and assistants, as well as administrative officers, in at least 5 regions of the project focused area. The latter will be located at the SEDES but reporting to UCOFI. To support project implementation and establishment of the UCOFI the positions will be funded under the project. The terms of reference of the new positions will be reviewed and approved by the Bank. As the rest of the positions under the UCOFI, key FM staff will be selected through a competitive process In compliance with local requirements, some specific administrative and financial tasks -annual budget recording- need to be coordinated with the DGAA. As appropriate, those requirements will be reflected in the project s Operational Manual. Programming and Budget 149. The preparation of the annual program and budget will follow local regulations established by the Ministry of Finance1 1, and specific regulations and instructions that may be issued by the Ministry of Health and Sports, through its General Administrative Unit. However, those general procedures will be complemented by additional guidelines, as documented in the operational manual, to clearly identify the budgetary items under which project specific activities need to be recorded, in accordance with their nature. In defining those procedures, the following issues will need to be considered in order to allow adequate budget control: 1) timely preparation of programming, budget and procurement plan, establishing a clear relation among them; 2) proper recording of the approved budget in the financial management system, not only following Government required classification (partidas por objeto del gusto), but also a classification by project component and cost category (as needed); and 3) timely recording of commitments and payments, to allow an adequate budget monitoring and also provide accurate information on project commitments for programming purposes. Accounting - Information System 150. The MSD has to comply with the Governmental Accounting Standards. Therefore, the project will use the Chart of Accounts established by the Accountant s General Office, followed by SIGMA (Government s integrated financial management system). This chart of accounts will need to be complemented with a more functional classification including project components/sub-components and 11 Law No. 2042, Supreme Decree No dated November 12,2004 -Regulations for Budgetary Modification. 66

77 cost categories. Project transactions and preparation of financial statements will follow the cash basis of accounting The project will benefit from the use of SIGMA, and the Single Treasury Account (CUT) to process payments. However, in order to ensure adequate monitoring of project activities, SIGMA will be complemented by an integrated ring-fenced system (budget, accounting and procurement) that will be designed and implemented to meet project needs. To start implementation of phase I11 and until this new system is efficiently functioning, the project will use the system currently used by the APLII project, the latter although meet minimum requirements, has some shortcomings due to the fact that is outdated and is not user friendly. The design of the new system will allow the use of a customized classification of project expenditures and the subsequent preparation of project financial reports and withdrawal applications of credit proceeds. Arrangements are being made to ensure that the new system meets project specific needs, including its accounting manual, chart of accounts and format and content of financial reports, and allows migration of information from the APLII accounting system. Internal controls 152. Specific processes and procedures, for administrative and financial tasks will be documented in the operational manual, including the definition of roles and responsibilities of different levels, segregation of duties and relevant internal controls, especially for payment purposes at UCOFI and the revolving funds management by the regional administrative officers. These procedures will also reflect the internal control mechanisms in terms of authorization and approval, reviews and approvals by the technical coordinating unit, and specific documentation required in each step. Financial reporting 153. The interim financial reports (IFRs) will specify sources and applications of project resources and a statement of investment by project component, reporting the current semester and the accumulated operations against on-going plans. The reports would include credit proceeds and local funds provided by the GOB, so as to provide information on the project as a whole. The design of the new accounting system will incorporate the preparation of the IFRs directly from the integrated system. These reports will be prepared on a semi-annual basis and submitted to the Bank within 30 days after the end of the semester.. The reports will be prepared in local currency and US dollars, and in compliance with the accounting principles in Bolivia. The specific details of the Interim Financial Reports have been discussed and agreed before negotiations. Audit 154. Annual audit reports on project financial statements, including management letter will be submitted to the Bank, within six months of the end of the Borrower s fiscal year (December 31). The audit should be conducted by an independent audit firm acceptable to the Bank and under terms of reference approved by the Bank. Audit cost would be financed out of credit proceeds and selection would follow standard Bank procedures. The scope of the fiscal year audit would be defined by MSD s team in agreement with the Bank based on project specific requirements and responding, as appropriate to identified risks. Audit Report 11 Proiect snecific financial statements SOE Due Date June 30 June 30 67

78 FUND FOR SOCIAL AND PRODUCTIVE INVESTMENT (FOND0 NACIONAL DE INVERSION PRODUCTIVA Y SOCIAL- FPS) 155. Likewise the rest of the projects for which FPS undertakes the municipal infrastructure component, FPS subproject cycle will rely on municipalities for execution of subprojects. Under such arrangements, FPS role will focus on ensuring technical quality of the renovation of health facilities, public housing and purchase of medical equipment, activities under subcomponent 2.(a) and compliance with fiduciary requirements. These tasks will be performed through FPS existing institutional and financial management arrangements, both at central and regional level Within the FPS structure, the Finance Management Unit will assume overall responsibility for financial management tasks, through specialized staff, both at central and regional offices. Although FPS has gained sufficient experience in external financed projects, under different sources of financing -WB, IDB, and others- additional guidance will be required especially at Regional Offices, given staff rotation, and more important the changes that are taking place in terms of policies and procedures. FPS strengthening action plan provides for staff training and other capacity building efforts As a result of the Operational Review conducted with support of an international consulting firm contracted by the Bank, a time-bound action plan has been agreed to strengthen FPS operational performance, including the internal control environment and mitigating measures to address identified external and internal risks. Key financial managements arrangements are detailed below, indicating, as appropriate, the specific arrangements agreed with the Bank. Programming and Budget 158. The preparation of the annual program and budget will follow local regulations established by the Ministry of Finance12, and specific regulations and instructions issued by VIPFE for public investment, and Ministry of Finance and Directorio Unico de Fondos (DUF), as applicable. In addition to the requirements and tools available in SIGMA and SISIN for the recording and control of municipal subprojects; a customized programming module is being developed as part of FPS information system (SAP). This tool will assist FPS in preparing a detailed program and budget allocation at the subproject level, which will also be used for monitoring purposes. On the basis of its former experience, FPS will have to issue specific procedures and guidance for Regional Offices to ensure an efficient and smooth administration of sub-project budget and an adequate control and monitoring of budget execution. While defining those procedures, the following issues will need to be considered in order to allow an adequate budget control: 1) timely preparation of programming, budget and procurement plan, establishing a clear relation among them; 2) proper recording of the approved budget in the financial management system, not only following Government required classification (partidus por objeto del gusto), but also a classification by project component and cost category (as needed); and 3) timely recording of commitments, payments and accruals to allow an adequate budget monitoring and also provide accurate information on project commitments for programming purposes A key issue to be defined by FPS is the specific procedures and requirement related to budget modifications at the subproject level, and the interaction with VIPFE, the DUF. Once this is finalized, the Bank would evaluate the proposed arrangements within the framework of Bank-financed projects. * Law No. 2042, Supreme Decree No dated November 12, Regulations for Budgetary Modification. 68

79 Accounting 160. In compliance with Government Accounting Standards, FPS uses the Chart of Accounts established by the Accountant s General Office, followed by SIGMA (Government s integrated financial management system). Being a decentralized entity, FPS is able to issue consolidated general purpose financial statements (balance sheet, and statement of income and expenditures). However, and although SIGMA allows registration at sub-project level, such chart of accounts will need to be complemented with a more functional classification including project componentshb-components and cost categories, as needed. Given the nature of the entity and its information needs, FPS has developed an information system (SAP for its name in Spanish) that allows the recording of every single subproject through out its subproject cycle. The interface developed between SAP and SIGMA allows that each advance certificate (plunillu) approved in SAP, automatically generates a record in SIGMA. Following the procedures established in SIGMA, upon completing the required approval and authorization process, payments are executed through the Single Treasury Account (CUT) in local currency. Project transactions are therefore recorded in both systems, SIGMA following the accounting and budgeting classification used by the Government and in SAP, following a more functional classification of project activities by components/subcomponents On the basis of the recommendations emerging from the Operational Review, FPS is currently working in strengthening its information system (SAP), to ensure that it meets the requirements in terms of internal controls, programming, and financial reporting. Internal control and internal audit 162. Following the recommendations of the Operational Review, FPS is in the process of reviewing and adjusting, as appropriate, its operational processes and procedures, including fiduciary arrangements -both financial management and procurement- with the main purpose of strengthening the internal control environment and, at the same time, ensuring an efficient and smooth implementation of subprojects. As part of such process, the sub-project cycle has been streamlined, and roles and responsibilities of different parties involved in the implementation of subprojects -municipalities, sectors, Prefectures -throughout subproject cycle have been clarified and better defined towards avoiding duplication, and enhancing accountability Key internal control mechanisms and additional mitigating measures to address identified risks have also been discussed and agreed as part of FPS institutional strengthening action plan (resulting from the Operational Review). Interim progress of the implementation of key actions will be followed-up through the implementation of the PDCR project In accordance with local regulations, the project is also subject to FPS Internal Audit Unit, as per the annual audit program defined by this unit approved by the Comptroller s General Office. Financial Reporting 165. Taking into account the considerations made in the accounting section, it has been agreed that SAP will also be adjusted to allow the direct issuance of specific interim financial reports and financial statements. Those interim financial reports should specify sources and applications of project resources and a statement of investment by project component, reporting the current quarter and the accumulated operations against ongoing plans. The reports will include credit proceeds, and counterpart contributions -municipal and prefecture s- and other sources as required. Although core content of financial reports has been agreed, specific content and format still need to be defined, reviewed and finally developed in the information system. The final format and content of Interim Financial Reports have been agreed with the 69

80 ~ ~~ Bank. Those reports would be prepared on a semi-annual basis and submitted to the Bank within 30 days of end of semester. Auditing and External Oversight 166. Annual audit reports on specific project financial statements -including all sources of financingand corresponding management letter should be submitted to the Bank, within six months of the end of the Borrower s fiscal year (December 31). The audit will be conducted by an independent audit firm acceptable to the Bank and under terms of reference approved by the Bank. Project audit cost will be financed out of credit proceeds and selection would follow standard Bank procedures. It has been agreed that scope of the audit would include interim visits to review the operation of specific internal control arrangements, as appropriate, especially at the regional level, including on-site visits to sub-projects on a sample basis. I Audit ReDort I DueDate I 1) Continuing entity financial statements 2) Project specific financial statements 3) Special opinions SOE June 30 June 30 June 30 Compliance with Operational Manual I June FPS has agreed to publish on its website all contract awards, including the name of the project, name of the company and amount. This is being followed through the Second Participatory Rural Investment Project. FUNDS FLOW AND DISBURSEMENT ARRANGEMENTS 168. Considering the results of the assessments, the following disbursement methods may be used to withdraw funds from the credit: (a) reimbursement, (b) advance, and (c) direct payment Under the advance method and to facilitate project implementation, a segregated Designated Account (DA) in US dollars would be opened and maintained in the Central Bank of Bolivia in the name of the project, for each implementing entity - MSD and FPS. These accounts would be managed by the UCOFI reporting to the DGAA within the MSD and, by FPS, respectively. Therefore, they will have direct access to funds advanced by the Bank to these DAs. Funds deposited into the DAs as advances, would follow Bank s disbursement policies and procedures, as described in the Disbursement Letter and Disbursement Guidelines Currently the Designated Accounts in the Central Bank of Bolivia are segregated for each operation (i.e credit or Trust Fund) financed with multilateral or donor funds. However, the Bolivian Government has issued a Supreme DecreeI3 that establishes the operation of a Single Treasury Account in US dollars (CUT-ME) in the Central Bank of Bolivia. With the establishment of the CUT-ME, the proposal is that credit proceeds are directly deposited in this account, and similar to the CUT in Bolivianos, the CUT-ME would allow the opening of individual Libretas under the name of the project from which they will have direct access to funds advanced by the Bank to be used for project eligible expenditures. l3 Supreme Decree No dated August 22,

81 171. Under the arrangement described above for the CUT-ME, it is expected that implementing entities will be able to process payments in US dollars from the Libreta in the CUT-ME when required; however, to process payments in local currency, funds would still need to be transferred from the CUT- ME to the corresponding Libreta in Bolivianos, following the procedure described above As of the time of this assessment, specific regulations for the operation of the CUT-ME are still being worked out by the Vice Ministry of Treasury and have not been issued yet by the Ministry of Finance. Therefore, any changes to current arrangements regarding the Designated Account for each implementing entity will be reflected through an amendment to the Disbursement Letter as appropriate in the near future Taking into consideration that both implementing entities use SIGMA and the Single Treasury Account (CUT) in compliance with local regulations, a specific Libretas within the CUT would be exclusively opened for credit funds and it would be used to process payments in local currency, following the established mechanism, which has proved to function efficiently for other projects. Disbursements from the WB and supporting documentation for withdrawal applications Ministry of Health and Sports - MSD 174. The ceiling for advances to be made into the DA would be USD1,500,000. The reporting period to document eligible expenditures paid out of the DA is expected to be on a monthly basis Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies of receipts, invoices) for payments for consultant services against contracts valued at USDlO0,OOO or more for firms, and USD25,OOO or more for individuals; for payments for goods against contracts valued at USD200,OOO. For all other expenditures below these thresholds, including operating costs, supporting documentation for documenting project expenditures will be Statements of Expenditures (SOEs) Documentation for all consolidated SOEs will be maintained for post-review and audit purposes for up to one year after the final withdrawal from the credit account Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursements will be USDlO0,OOO. FPS 178. The ceiling for advances to be made into the DA would be USD 1,000,000. The reporting period to document eligible expenditures paid out of the DA is expected to be on a quarterly basis Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies of receipts, invoices) for payments for consultant services against contracts valued at USD100,OOO or more for firms, and USD25,OOO or more for individuals; for payments for goods against contracts valued at USD200,OOO or more, for payments for civil works against contracts valued at USD3,000,000 or more. For all other expenditures below these thresholds, supporting documentation for documenting project expenditures will be Statements of Expenditures (SOEs). Customized SOEs would be used for reporting FPS operating costs. 71

82 180. All consolidated SOEs documentation will be maintained for post-review and audit purposes for up to one year after the final withdrawal from the credit account Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursements will be USDlO0,OOO. Disbursement of FPS operating costs 182. Following the recommendations of the Operational Review, FPS administrative costs will be disbursed following an output-based disbursement mechanism, which consists of disbursing on the basis of outputs up to 5% of the total cost of the subproject for activities implemented at municipal level. In the past, a similar mechanism was followed, except that disbursements were based only on payments. However, this mechanism was distorted creating a negative incentive, which would affect the quality of the sub-projects. The 5% is subject to review within one year of negotiation, based on the results of the evaluation of the FPS costs. 183, The term subproject in this section refers to the activities undertaken by FPS for the renovation of health facilities, public housing and purchase of medical equipment, activities under subcomponent 2.(a). The subprojects implemented by FPS will be based on the diagnostic to be conducted by the MSD through request channeled by the municipalities This 5% will be disbursed as follows: i) 2.25% when the sub-project contract has been signed; ii) 2.25% during sub-project execution and on the basis of financial execution; and iii) 0.5% when the subproject has been completed and administratively closed To this end, FPS will prepare customized SOE report detailing: i) the list of sub-projects with contracts signed; ii) the amounts disbursed for each subproject under execution for a defined period of time; iii) the list of sub-projects completed with administrative closing. These reports will be submitted periodically to the MSD, which would express conformity on the outputs completed by FPS, per an agreed upon procedure. 72

83 Allocation of Credit Proceeds Catepoty Amount of the Credit Allocated (exwessed in SDR) Percentage of Expenditures to be Financed (inclusive of Taxes) (1) Good, Consulting Services, Training and MSD Operating Costs for Part 1 of the Project. 2,500, % (2) (a) Good, works, consulting Services, and audits under FPS (b) FPS Operating Costs (c) Good, consultant services, training and MSD Operating Costs for Part 2 of the Project; 6,100, , % 5% of the total cost of the works and goods under the Project paid in tranches as set forth in the Operational Manual (3) Good, consultant services, Training and MSD Operating Costs for Part 3 of the Project 2,000, % I (4) Good, consultant services (including audits) and MSD Operating Costs for Part 4 of the Project (5) Unallocated TOTAL AMOUNT 600, , ,700, % SUPERVISION PLAN 186. On the basis of the results of the assessments, identified risks and recommendations of the financial management assessment, project supervision will include desk review of IFRs, and annual audited financial statements, and on site visits to be performed on a semi-annual basis during the first two years of the project, both for MSD and FPS. From the third year, supervision would be performed on an annual basis, unless otherwise required. 73

84 Annex 8: Procurement Arrangements BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I11 A. General 187. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, both versions updated in October 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame, are agreed between the Recipient and the Association in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity Procurement of Works: Works procured under this project would include improvement and rehabilitation of health facilities, such as hospitals, ambulatory health centers, clinical laboratories and blood banks. All procurement of works will be carry out by the municipalities under the supervision of FPS. As part of the project, MSD will define the needs and location of civil works. Preliminary estimates done for preparing the Procurement Plan indicate that most of the civil works are small in scope and that no ICB would be required. In any event, the Procurement Plan will be updated after completion of the MSD assessment Procurement of works will be done using the Bank's Standard Bidding Documents (SBD) in case of International Competitive Bidding (ICB) procurement. For National Competitive Bidding (NCB) or Price Comparison (PC) methods, documents agreed with or satisfactory to the Bank will be used Procurement of Goods: Goods procured under this project would include medical equipment for health facilities and office equipment following MSD specifications. Procurement of goods will be done using the Bank's SBD for all ICB procurement. For NCB or Shopping (S) methods, documents agreed with or satisfactory to the Bank will be used Procurement of non-consulting services: The project will include logistics for training activities to provide education to the users of the National Health Information System, and for mass communication on health promotion and prevention. No other non-consulting services are to be procured under the project. All non-consulting services would be procured in accordance with the Bank's Procurement Guidelines, as appropriate. This procurement would also be carried out using Bank's SBDs or National SBDs agreed with or satisfactory to the Bank All procurement notices shall be advertised in the project website, the government website, and at least in one local newspaper of national circulation. ICB notices and contract award information shall be advertised in the UN Development Business online (UNDB online) and in the Development Gateway's dgmarket, in accordance with provisions of paragraph 2.60 of the Procurement Guidelines Selection of Consultants: Consulting Firms services will be contracted under this project in the following main areas of expertise: (i) Health Information Systems; (ii) Public Health Issues; (iii) Familiar, Community and Intercultural Health; (iv) Management training activities; (v) design of communication campaign; (vi) Health Insurance; (vii) Supervision of works contracts; and (viii) MSD assessment of the municipalities needs. The procurement of consulting firms will be carried out using Bank's standard 74

85 Request for Proposals (RFP). International firms will have the opportunity to participate in about all concourses above $100, Selection of Individual Consultant Services: Individual consultant services will be contracted mostly for Project Management A project website, a government website, and a national newspaper shall be used to advertise expressions of interest as the basis for developing short lists of consulting firms and individual consultants, and to publish information on awarded contracts in accordance with provisions of paragraph 2.28 of the Consultants Guidelines and as mandated by local legislation. Contracts expected to cost more than $100,000 shall be advertised in the UNDB online and in dgmarket. Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines Operating Costs: Component 4 of the project will finance expenses for Project Administration. These expenses will include equipment, technical assistance, training, project procurement audits, MSD financial audits, and the UCOFI project operating costs. These operating costs would be in accordance with the Bank s Procurement Guidelines, as appropriate. This procurement would also be carried out using Bank s SBDs or National SBDs agreed with or satisfactory to the Bank Others: None B. Assessment of the agency s capacity to implement procurement: 198. This section presents an assessment of the MSD and the FPS regarding the implementation of the procurement to be carried out under the proposed project, and an action plan to enhance their procurement activities. The assessment was carried out in April 2007 and finalized in October It reviewed the organizational structure of: (i) the MSD General Financial Management Directorate, and (ii) the FPS proposed structure for implementing the project. It also reviewed the interaction between the procurement officers and implementing units within the MSD and the FPS. The assessment concluded that both institutions have weak procurement units. Particularly, they lack enough people with the right skills to implement a program of radical improvement in their procurement functions. To ensure proper coordination among the two institutions and effective involvement of their staff in the procurement activities, the project provides for: (i) subsidiary agreements between VIPFE and MSD, and VIPFE and FPS, as well as un inter-institutional agreement between MSD and FPS with respect to the role and responsibilities of MSD and FPS under the project. These agreements should be executed as a condition of effectiveness of the Financial Agreement; (ii) a project operational manual, detailing the procedures and guidelines for carrying out the project, to be adopted in a manner satisfactory to the Association, as a condition of effectiveness of the Financial Agreement; (iii) FPS to enter into agreement with each municipality within the project area, with respect to the role and responsibilities of the municipality, for the carrying out of its responsibilities under the project; (iv) UCOFI and the Technical Area under MSD to be fully staffed and operational no later than 90 days after the effectiveness date of the Financial Agreement; and (v) FPS to establish its procurement monitoring unit and MSD to sign contracts for UCOFI s technical coordination of the project, as a withdrawal condition of the financing proceeds for the civil works component The Project is to be implemented primarily by the MSD with the support of the FPS on activities related to health investments at the municipal level. MSD and FPS will be working independently from one another, but in a closely coordinated manner. The MSD s VoH will have a small Technical Coordination Unit to keep track of and coordinate with the Vice ministry of Traditional Medicine (VTM) 75

86 and other technical units responsible for project implementation components and activities. The figure below synthesizes the arrangements: PROJECT PROCUREMENT ARRANGEMENTS Recipient Financing Agreement Procurement Guidelines Consultant Guidelines Antt-Carruption Guidelines Operational Manual Procurement Plan Procurement Audit Special Provisions FPS Inker~InstitutIoneI Agreement HSD 200. The project s administrative aspects will be responsibility of the MSD General Financial Management Office through the recently created UCOFI, whose specific responsibilities and operational procedures will be detailed in the Project s Operational Manual. The manual will also describe the flow of project coordination processes among the technical and administrative units inside the MSD and FPS. In the case of the FPS, project activities will be managed through its own administrative structure, taking 76

87 into account the project implementation plan as well as the FPS own institutional action plan agreed with IDA Legal Aspects. The law that rules the Public Sector Procurement (Normas Bbsicas del Sistema de Administracidn de Bienes y Sewicios, SABS), was established by Decreto Supremo No , dated July 11, 2007, and its Reglamento del Subsistema de Contratacidn de Bienes y Sewicios, dated August 27, 2007, the law has been recently revised, and it applies to all government institutions The main shortcomings of the Procurement Law includes: (i) multiple exceptions for specific cases involved in the various procurement methods, and efforts to avoid open competition through ICB / NCB; (ii) authorization for government agencies to contract with other government agencies; (iii) an explanation of domestic preference that is in conflict with the text of Annex I1 of Bank Guidelines; (iv) open competition for the selection of consulting firms instead of short listing; (v) request of bid and performance guarantees for consultants; (vi) inadequate time to prepare bids; (vii) lack of an independent agency to review and resolve disputes. This means that bidders will have to go to the Administrative Court, meaning long delays and unknown results In view of the deficiencies of the national legal framework for procurement and lack of procurement experience in the agencies, all project procurement should be made following Bank Guidelines and agreed procedures, including the Special Provisions detailed further down Organization and Staffing: (a) the MSD Directorate of General Administrative Affairs through the UCOFI, whose specific responsibilities and operational procedures will be detailed in the POM will nominate a procurement specialist under TOR agreed or satisfactory to the Bank, and (b) FPS will confirm before the withdrawal of funds for civil works, the proposed structure at the central and departmental levels to be responsible of the supervision and/or implementation of procurement, that will be executed mostly by the municipalities. At the time of the procurement capacity assessment, FPS had only one procurement specialist, with experience in Bank procurement procedures at the central office and none at the departmental offices. In previous projects, procurement at the departmental offices was carried out by technical staff or consultants hired according to the needs The responsibilities for implementing project procurement by the UCOFI unit include: (i) prepare and execute its own procurement, coordinate implementation within MSD and with FPS, follow-up the implementation of the work carried out by FPS through the municipalities or by itself, follow-up the updating and implementation of the Procurement Plan, and in the case of medical equipment procurement the MSD will be consulted to ensure compliance with its technical standards; (ii) prepare bidding documents and coordinate preparation of terms of reference and technical specifications; (iii) participate in the Evaluation Committees, prepare bid evaluation reports, coordinate contract awards and coordinate the preparation of contracts; (iv) establish and keep up-to-date the contract administration system to include contracts from all executing agencies; (v) design a filing system to keep procurement records; (vi) prepare requests to the Bank for no objection; (vii) prepare and deliver a training action plan; and finally (viii) keep an information system for complaints and their resolutions FPS will carry out a procurement assessment o f the municipalities involved in the project to identify their capacity and will define its own organizational structure to ensure assistance to the municipalities at the operational level. At the central level, FPS will propose the structure to carry out certain procurement activities related to goods as required by municipalities. Based on the results of the assessment, FPS will prepare and deliver a training plan, and a supervision plan for the procurement of works and goods carried out by the municipalities. FPS will incorporate in its financial system a module for contract administration that will start with the procurement plan and supervision at different stages of 77

88 the contracts. The system will be functioning before procurement starts. It will also establish, monitor, and supervise the filing system at all levels. Finally, FPS will send information to MSD on the assigned dates and other matters related to the procurement plan and its implementation, to be consolidated by MSD and included in the implementation reports to be sent to the Bank 207. The key issues and risks concerning procurement for implementation of the project have been identified and include delays and cost overruns in the project implementation mainly due to: (i) poor capacity of MDS and FPS; (ii) uncertainty regarding the responsibility and accountability of MDS and FPS for project activities; and; (iii) a poor regulatory framework. In particular, the risk assessment identified the following likely causes of said risks: (i) GFMO staff lack experience in implementing substantive procurement following Bank s procedures, and has poor procurement planning and internal controls; (ii) the fractioning of contracts, late payments to contractors, and inefficient practices, fostered by the regulatory weaknesses; (iii) the likely large number of project procurement processes that will make effective supervision of the procurement procedures difficult; (iv) lack of a Control System within the MSD and FPS to monitor project implementation, and of an adequate system and procedures for filing procurement documents; and (v) in FPS neither the procurement structure to supervise procurement activities that will be carried out by municipalities, nor to carry out some procurement as requested by municipalities is in place The overall project risk for procurement is HIGH. The corrective measures that have been considered or implemented to mitigated the above mentioned risks include: (i) a number of inter-agency agreements have been devised to facilitate the carrying out of the project and ensure clarity in the responsibilities and accountabilities of the different actors (VIPFE, MDS, FPS, and the municipalities); (ii) a project operational manual under preparation, including, inter alia, procurement and contracting procedures, will be adopted as a condition of effectiveness of the Financing Agreement; (iii) FPS to strengthen its procurement unit and MSD to contract key staff for UCOFI, including a senior procurement specialist as a withdrawal condition of the Financing proceeds; (iv) the Financing Agreement to include additional provisions relating to Particular Methods of Procurement; (v) close monitoring by the Association, particularly during the first year of project implementation. The following table presents a detailed plan to mitigate the risks and to improve the agencies implementation capacity. Action To have the UCOFI established and properly staffed and the FPS structure and functions to supervise I execute procurement. Define functions, organization, and relationship among UCOFI, technical staff, and FPS. FPS to evaluate the capacity of each municipality included in the project. To define the procurement work flow including approvers and timetable (mapping of all steps), MSD and FPS. FPS to submit training plan for municipalities. By whom MSD I FPS MSD I FPS FPS MSD I FPS FPS Bywhen I Bank to review and 90 days after comment I NO to TORS for key effectiveness staff F.A effectiveness Before carrying out any civil works F.A effectiveness Two months after completion of MSD s assessment of Inter-institutional Agreement Assessment criteria Procurement processes and functions to be included in POM Plan and schedule 78

89 Finalize the procurement section of the POM, with detailed instruction on: (i) responsibilities and relationships between the various units involved in project procurement (ii) individual responsibilities for approval and processing of key procurement actions under the project; (iii) definition of a plan for a periodic supervision and prior review by: FPS of the procurement processes carried out by municipalities, including a model for the supervision reports, procurement ex-post review; and (iv) specific section to include instructions and details of the process and responsibilities for procurement files. Prepare a General Procurement Plan (For the first 18 months) and updating as necessary. Prepare the General Procurement Notice. MSD I FPS MSD MSD needs F.A effectiveness Negotiations and during project implementation End of December 2007 Draft of the POM Plan and updating Proposed Notice Prepare standard bidding documents for NCB, Shopping and selection of consultants, and Standard formats for bid evaluation. To design / include procurement module in the current MDS and FPS project MIS system, to monitor procurement plans, contract implementation and produce reports. Include in the Procurement part of the Financing Agreement: (i) the Special Provisions agreed for Bolivia; (ii) a requirement for the use of standard bidding documents agreed in advance with the Bank, (iii) all project procurement will be made following Bank Guidelines and agreed procedures Invitations for all contracts, expressions of interest and contract award will be advertised through a government and project web page, and in a local newspaper. For consultant services above $100,000, the call for bids, the expressions of interest and contract award information should be also published in the UNDB and dgmarket. Submit to the Bank Procurement Audit reports carried out by Independent Auditors. MSD MSD I FPS Bank MSD I FPS (municipalities) MSD F.A effectiveness Mid - June 2008 Negotiations During project implementation Each March 3 1 starting in 2009 Documents as part of the draft POM Draft of the proposed system Final Text Invitations should follow the Bank s Standard format Report 209. Special Provisions A. In addition to and without limitation on any other provision set forth in this Schedule or the Procurement Guidelines, the following rules shall govern all procurement of goods and works under NCB: 1. A merit point system shall not be used in the pre-qualification of bidders. 79

90 , The award of goods and works contracts shall be based exclusively on price and, whenever appropriate, shall also take into account factors similar to those referred to in paragraph of the Guidelines, provided, however, that the bid evaluation shall always be based on factors that can be quantified objectively, and the procedure for such quantification shall be disclosed in the invitation to bid. The Borrower shall open all bids at the stipulated time and place in accordance with a procedure satisfactory to the Bank The Borrower shall use a single envelope procedure. Whenever there is a discrepancy between the amounts in figures and in words of a bid, the amounts in words shall govern. There will be no prescribed minimum number of bids submitted for a contract to be subsequently awarded. Foreign bidders shall be allowed to participate. Foreign bidders shall not be required to legalize any documentation related to their bids with Bolivian authorities as a prerequisite for bidding. No margin of preference shall be granted for any particular category of bidders In the event that a bidder whose bid was evaluated as the bid with the lowest evaluated price withdraws its bid, the contract may be awarded to the second lowest responsive evaluated bid. 11. Foreign bidders shall not, as a condition for submitting bids, be required to enter into a joint venture agreement with local bidders. 12. No other procurement rules or regulations of the Borrower's agencies or of any state-owned entity shall apply without the prior review and consent of the Association. 13. Government-owned enterprises may participle in bids only if they follow paragraph 1.8 (c) of the Guidelines. B. In addition to and without limitation on any other provisions set forth in this Schedule or the Consultant Guidelines, the following rules shall govern all procurement of consultant services referred to in this Schedule: 1. As a condition for participating in the selection process, foreign consultants shall not be required to enter into a joint venture agreement with local consultants, unless the conditions stated in paragraph 1.12 of the Consultant Guidelines are met. 2. As a condition for participating in the selection process, foreign consultants shall not be required to legalize their proposals or any documentation related to such proposals with Bolivian authorities. 3. Foreign consultants shall not be required to be registered in the Borrower's National Registry of Consultants (Registro Nacional de Consultoria). 4. Consultants (firms and individuals) shall not be required to present Bid and Performance securities as a condition to present proposals and sign a contract. C. Procurement Plan 210. The MSD has prepared a procurement plan for project implementation, based on the project existing information and envisaged implementation. This plan was discussed and agreed between the Borrower and the Project Team during Negotiations and is available at MSD offices. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated semi-annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 80

91 21 1. The FPS will develop a procurement plan for civil works, medical equipment and supervision of works on the basis of the investments projects to be submitted by the municipalities. Since this component will be implemented on the basis of a MSD assessment of needs to be carried out as part of the project, the initial procurement plan includes only a preliminary estimation of the civil works and medical equipment. FPS will send to MSD when requested its part of the procurement plan to be consolidated and sent to the Bank. D. Frequency of Procurement Supervision 212. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agencies has recommended semi-annually supervision missions, including field visits, to carry out post reviews of procurement actions. E. Details of the Procurement Arrangements Involving International Competition 1. Goods, Works, and Non Consulting Services (a) List of contract packages to be procured following ICB and direct contracting: Ref. Contract Estimated Procurement P-Q Domestic Review Expected No. (Description) Cost Method Preference by Bank Bid- (yesho) (Prior / Post) Opening Date None envisaged 9 Comments Ref. No. Description of Assignment Estimated cost US$ I 6 7 Selection Review Expected Comments Method by Bank Proposals (Prior / Submissio Post) n Date (In formation not available) I I I I (b) Consultancy services estimated to cost above US $100,000 per contract and all single source selection of consultants (fms) will be subject to prior review by the Bank. Individual consultants services to cost US$25,000 or above per contract or single source, regardless of the amount, will be subject to prior review by the Bank. 81

92 (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US $1 00,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. F. THRESHOLDS FOR PROCUREMENT METHODS AND PRIOR REVIEW Expenditure Category 1. Works 2. Goods 3. Consultant Services 4. Individual Consultants Contract Value Procurement (Threshold) 1 Method I (TJS%OOO) I >3,000 I3,000>250 I <250 I > >50 <5 0 I >loo 400 >25 ICB NCB (Price I EEnarisonl I ICB NCB Shopping QCBS, QBS QCBS, QBS, CQ, FBS, LCS (as per Procurement Plan) T n Bank Prior Review All First two each year First two each year ~ All First two each year First two each year All All TORs. Selection Process reviewed twice yearly (Ex Post). All contracts awarded under SSS. All All TORs. Selection Process reviewed twice yearly (Ex Post). All contracts awarded under SSS. Notes: ICB = International Competitive Bidding NCB= National Competitive Bidding QCBS= Quality-Cost Based Selection QBS=Quality Based Selection FBS=Fixed Budget Selection LCS=Least-Cost Selection CQS=Consultant Qualification Based Selection SSS= Sole Source 82

93 Annex 9: Economic and Financial Analysis BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL I This annex summarizes the project's cost-benefit analysis, based upon the project's costs and its measurable economic benefits. The project will generate economic and social benefits due to its impact on morbidity, mortality and nutrition as well as in the improvement of health sector managerial capacities to implement the EFPH and SU SALUD programs. This analysis includes all project costs, but considers only the benefits from the Family, Community and Intercultural Health Component (Component 2) in targeted areas, which account for a fifth of total Bolivian population. Benefits from components 1,3 and 4 have not been taken into account due mainly to insufficient information regarding public health surveillance, budgetary planning, intervention gaps and performance indicators. The project's IRR would be higher if these benefits are included The analysis considers the benefits derived from the projected project outcomes. These outcomes include the reduction in maternal and under-3 children mortality, and childhood malnutrition rates as a result of improved service delivery. Benefits from morbidity reduction are excluded because there are no reliable burden-of-disease analyses to estimate the gained disability-adjusted life years. It is also assumed that decreases in unnecessary hospital stays are marginal because the project is aiming to improve health services in areas where current services are very poor Project outcomes are then converted to number of deaths avoided and children saved from malnutrition applying conservative parameters and assumptions based on international literature (Table 1): it is assumed that children whose mothers received prenatal care were 30 percent less likely to die in the first six months14; 50 percent of child death among 6-24 months are related to malnutrition''; 20 percent of maternal deaths are avoidable through prenatal/community-based interventions; and 50 percent of maternal deaths can be prevented by ensuring access to essential obstetric care16. Maternal Death avoided Infant and child death avoided ,259 3,543 Infantdchildren savedfrom malnutrition 1,211 10,623 19,071 26,440 32,862 90, The next step involves calculating the future income flow received by children and women whose lives are saved by the project as they eventually become part of the working population. Additionally, the benefit of reducing stunting is estimated as the present value of the increased income-earning capacity o f the persons whose nutrition status was improved by the project. In line with international literature, it is assumed that children that avoid stunting will have an earnings premium of 10 percent - also linked to an l4 The World Bank estimated that at least percent of infant deaths are the result of poor care during pregnancy and delivery. Hong and Ruiz-Beltran (2007) showed that Bangladeshi children of mothers who did not receive prenatal care were more than twice as likely to die during infancy as children whose mothers received prenatal care, independent of the child's sex, delivery assistance, birth order; mother's age at child birth, nutritional status, education level; household living conditions, and other factors. Lara and Pullum (2005) found in Egypt that children whose mothers received prenatal care were 36 percent less likely to die in the first year, compared to those whose mothers received no prenatal care. l5 Based on information from 53 developing countries, Pelletier et a1 (1995) estimated that 56 percent of deaths among children a ed 6-59 months in the developing world are due to the underlying effects of malnutrition on disease. ''lowett (2000) estimated that 26 percent of maternal deaths are avoidable through prenatallcommunity-based interventions and 58 percent of maternal deaths can be prevented ensuring access to high quality essential obstetric care in low income countries. 83

94 additional 0.6 years of s~hooling.'~ Economic benefits for those who do not participate - voluntarily or involuntarily - in the labor market are excluded". This is a conservative approach since life has value as a consumption good, and the project could trigger other positives outcomes as well" The economic benefits were estimated using household survey information, under the assumption that earning and working profiles would not change: future cohorts will have the same income opportunities in their productive life years as current ones?' Figures 1 and 2 show the estimated ageearning and age-working profiles in Bolivia. Profiles for overall population have been used to estimate the income generated by avoiding childhood death and chronic malnutrition, and women's profiles have been used to estimate the income generate by avoiding maternal death. Figure 1. Age-earning profiles in rural areas 'Oo0 1 Figure 2. Age-working profiles in rural areas z z z % 2 : 9 G S f i % s -Overall population... Women Source: EDH ,,,,,,,,,,,,~,,,,,,,,,,,,,,,,,II,,II I,,,,, IIIII# r " E z z % 2? 9 G : G % s -Overall populallon......, Women Source: EDH 2005 III 218. The analysis considers three basic elements in terms of the costs: (i) the investment costs of the World Bank-financed project and the government's counterpart which together amount to US$26 million over a four year schedule beginning in 2008 and (ii) The cost to educate children saved from death and the cost to provide additional education to children saved from malnutrition, considering that educating a child costs Bs per year, and assuming that children would have 10 years of education - with those l7 Evidence indicates that young children who suffer from chronic malnutrition earn significantly lower incomes throughout their economically active lives. Empirical studies estimate the negative effects of stunting on worker productivity and adult earnings to be about 10 percent, controlling for other factors (Hoddinott 2003; Quisumbing; Gillespie and Haddad 2003; Alderman, Hoddinott and Kinsey 2002; Ross and Horton 2003). The estimated schooling impacts were calibrated on the findings of a recent impact evaluation of the Progresa program in Mexico which estimated that this program led to an increase of 0.66 years of schooling on average among eligible families (Schultz 2000; IFPRI 2000); this effect could be underestimated because targeted areas in Bolivia are starting at lower levels of educational attainment, than were seen in Mexico at the start of Progresa and thus incremental gains may be accrue more readily. l8 If a woman chooses not to work, we can conclude that she values her time at least as much as what she would be earning if she were working. However, if she is kpffrorn participating in the labor market by cultural, familial or institutional barriers, she would be prevented from enjoying the economic benefits of health. As it is impossible to assign weights to these alternatives, this analysis does not take into account the economic benefits from people who are not working. l9 Malnutrition in children increases the risk of death, inhibits their physical and cognitive development and has lifelong health effects, thus constituting one of the major mechanisms for the intergenerational transmission of poverty and inequality. Maternal mortality and morbidity have a direct negative impact on the welfare of infants and children that are out of the scope of this analysis. The death or illness of a mother also leads to a reduction in household income given the important role commonly layed by women. Maternal death has also a negative impact on child's education, through enrolment and dropout. " It is assumed that income generation capacities will not growth as this improvement would require additional interventions. 84

95 saved from malnutrition receiving 0.6 additional years. It is expected that there will be no additional recurrent cost because existing human and financial resources will be reallocated to the project activities - total SU SALUD and Solitary Fund budgets are exogenously defined and will not be affected by the project activities Table 3 shows the project s costs and benefits, which result in a project s IRR of 13 percent which is higher than the standard discount rate used in Bank s project evaluation of 10 percent. Moreover, it is worth noting that, in accordance with a WHO standard, a 3 percent discount rate is generally used with income streams received by people whose premature death has been averted due to the project (Murray and Lopez, 1994). The breakeven point occurs after 30 years of implementation considering a discount rate of 10 percent. Table 3. Project Costs, Benefits and Internal Rate of Return yr IRR 9.3% 50 yr IRR 12.7% 40 & IRR 12.1% 60 y IRR 12.8% 220. Financial Analysis and Fiscal Impact: Tax revenues increased from 26 percent of GDP in 2005 to 33 percent of GDP in 2006, mainly due to the new hydrocarbon policy, but also because of an increase in tax collection efficiency. Public expenditures were contained, generating a fiscal surplus of approximately 4.5 percent in 2006, coupled with an important current account surplus of 11 percent of GDP. In 2007, a fiscal as well as a current account surplus are still expected. In addition, Bolivia benefited from the MDRT, reducing its external debt to close to 20 percent of GDP. Recently, S&P has revised its outlook on Bolivia s B minus rating to stable from negative. In this context, the Central Government will have enough resources to cover the new obligations triggered by this project. Moreover, the total recurrent cost represents a small fraction of the total cost linked to this project. The most important recurrent cost triggered by the project is the stipend given to approximately 70 health professionals for working in the targeted areas which amounts to less than $USO. 1 million per year. 85

96 Annex 10: Safeguard Policy Issues BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTH INEQUITIES - APL 111 Environmental Safeguards 221. The two most relevant environmental issues resulting from the implementation of this project would be an increase in the production of Health Care Waste (HCW), and the impacts associated with the physical rehabilitation of health centers and other construction activities. As a part of the supervision of the APL I1 Project and the design process of this Project, an environmental assessment was undertaken to review and analyze: (i) Bolivia s public health policies associated with the environment; and (ii) the policies and specific standards related to HCW and its environmental impact. The assessment identified the following needs and recommendations: Need for Strengthening the MSD s LeadershiD on Environmental Health Issues 222. Better control of health hazards associated with the environment requires a strategic repositioning of the MSD. Existing Bolivian law already requires the health sector to establish criteria for defining sanitary policies, norms, and environmental standards. Law No. 1333, the Law of the Environment; recognizes the need to have an entity within the health sector that is responsible for environmental issues, especially those related to the effects of health activities on environmental preservation and conservation. The same Law 22 also recognizes the responsibilities of the MSD to protect and restore the natural environment, where environmental degradation constitutes a potential or actual health hazard. Thus, the need for the MSD s institutional development in the field of 21 Ley Ley del Medio Ambiente. Articulo IOo.- The Ministries, agencies, and all national, departmental, municipal, and local public institutions, in reference to environmental problems, should adapt their organization structures in order to have an entity for the matters related to the environment. Furthermore, in coordination with the Secretariat of the Environment, they will support the execution of programs and projects that have the purpose of preserving and conserving the environment and natural resources. - Los Ministerios, organismos e instituciones pliblicas de cardcter nacional, departamental, municipal y local, relacionados con la problemdtica ambiental, deben adecuar sus estructuras de organizacion a fin de disponer de una instancia para 10s asuntos referidos a1 medio ambiente. Asimismo, en coordinacion con la Secretaria del Medio Ambiente correspondiente apoyardn la ejecucion de programas y proyectos que tengan el proposito de preservar y conservar el medio ambiente y 10s recursos naturales. 22 Ley Ley del Medio Ambiente. Articulo 79O.- The State, through its competent agencies, will carry out actions of prevention, control and evaluation of the degradation of the environment that directly or indirectly threatens human health, and animal and plant life. Also. it will safeguard the restoration of adversely affected areas. The promotion of actions of environmental sanitation, guaranteeing the basic services and others to the urban and rural population in general, are of national priority. Article 80O.- For the Purposes of the previous article the Ministry of Social Welfare and Public Health, the Ministry of Urban Matters, the Ministry of Rural and Livestock Matters and the National Secretariat of the Environment in coordination with the responsible sectors at departmental and local level, will establish the standards, procedures and respective regulations. - El Estado a traves de sus organismos competentes ejecutard acciones de prevention, control y evaluacidn de la degradacion del medio ambiente que en forma directa o indirecta atente contra la salud humana, vida animal y vegetal. lgualmente velard por la restauraci6n de /as zonas afectadas. Es de prioridad nacional, la promoci6n de acciones de saneamiento ambiental, garantizando 10s servicios bdsicos y otros a la poblaci6n urbana y tural en general. Articulo 80O.- Para 10s fines del articulo anterior el Ministerio de Prevision Social y Salud pliblica, el Ministerio de Asuntos Urbanos, el Ministerio de Asuntos Campesinos y Agropecuarios y la Secretaria Nacional del Medio Ambiente en coordinacidn con 10s sectores responsables a nivel departamental y local, establecerdn las notmas, procedimientos y reglamentos respectivos. 86

97 environmental matters is clear: it is required by law to assume leadership on these issues across the health sector Strengthening the MSD s leadership on environmental activities will also encourage a more cohesive environmental policy across the sector. The analysis of legislation undertaken during the environmental analysis, combined with the interaction with the working team in the field, revealed the effects of MSD s institutional weakness in environmental health. Currently, various government agencies are implementing different environmental activities that are not coordinated, reducing the social relevance of the activities and diminishing their development impact. However, public perception of and trust in the MSD s competency in environmental issues remains high. Need for Improved Management of Health Care Waste 224. The project s environmental assessment also evaluated the current state of solid waste management by health facilities. In general, facilities were found to show significant and satisfactory progress in terms of Bolivia s prevailing sanitary standards, although much of the recent progress is due to a specific technical cooperation project.23 The technical project has designed a transition process that will facilitate sustainability of its activities, utilizing the strengthened capabilities of the Comprehensive Health Training Units (Unidades de Capacitacih Integral en Salud - UCIS). Progress on managing HCW was also observed at local levels (local health facilities). Most of this success comes from policy implementation by local bio-safety committees, and by HCW management practices that were evaluated up to the point of final disposal. National studies have been conducted in order to obtain a full overview of current conditions country-wide. This national picture will help to further progress on local-level activities that have been successful. The adoption of stronger environmental health regulatory measures at the Ministry level will permit the consolidation of these achievements, resulting in greater environmental and health security for the Bolivian population With regard to the final disposal of solid waste, especially of hazardous solid waste from health facilities, adequate disposal in safety grid-cells was verified at the Alpacota landfill for the case of La Paz. In addition, both the concessionary company s supervision of operations and its correct application of relevant standards were deemed to be adequate by corresponding entities of the La Paz municipal government. Recommendations. Reduce the Risks of Health Care Waste at the Point of Generation 226. In spite of satisfactory achievements with regard to standardization efforts for environmental and health policies, some further consolidation is necessary with regards to certain policies and standards. Until now, progress has been achieved by managing risk via interventions based on environmental criteria, emphasizing activities surrounding the final disposal of hazardous solid waste in secure landfills. Focus has been placed on handling of waste from its origin up to the final disposal, without attempts to modify its dangerous nature. Contingency measures were not developed, for example, to respond to potential accidents during transportation of hazardous waste to the landfill. Thus, a significant level of risk associated with waste management persists, but the risk can be progressively reduced. The APL I11 project would recommend aiming for the largest possible reduction in risk related to Health Care Waste. 23 Swisscontact. Proyecto Gestion Integral y Bioseguridad de Residuos Solidos Generados en Establecimientos de Salud Cochabamba, La Paz, El Alto y Santa Cruz. 87

98 This would mean changing policies to emphasize reducing the dangers inherent in HCW beginning at the point of generation Once identified, an internal MSD unit will be responsible for establishing environmental norms and standards, as well as supervising the application of such norms and standards in MSD activities. For example, this unit should study the implementation of waste treatment systems in health facilities. Potential activities would include such things as analysis of the use of autoclaves (devices which use steam to sterilize aqueous wastes) which can control the pathogens in infectious or Class A wastes, in order to allow them to be handled together with common waste for disposal in sanitary landfills. The studies results could be used to develop new health policies for comprehensive management plans for this type of waste, based on reduction or elimination of the hazard at the point of waste generation. Ensure Health Center Renovations and Other Construction Activities Comply with Environmental Standards 228. The National Productive and Social Investment Fund have adopted measures to ensure that the development of infrastructure in the health sector complies with relevant environmental standards. The Fund has even established, apriori, a global environmental license for construction, which aims to ensure that health sector construction activities take into account both environmental risk as well as the measures that must be adopted in order to mitigate these risks Social Safeguards. The total population of Bolivia (2001 Census) is 8.27 million people of whom 62% or 5.13 million self-identify as Originary or Indigenous, compared to 38% or 3.14 million of non-indigenous. There are 36 Indigenous and Originary and one Afro-Bolivian group. The largest groups are the Quechua (1.55 million or 25% of the population), Aymara (1.27 million or 25% of the population) and Guarani (81,000 or 1.6% of the population). The three groups account for 58% of the Indigenous, and live mostly in the highlands, Andean valleys and Chaco. The other 34 groups live throughout the country but mostly in the lowlands, Chaco and valleys. The Chiquitano (Bksiro, Napeca, Paunaca, Moncoca) are 112,000 people or 2.22%, and the Mojeiio are 46,300 people or 0.91%. The rest of the groups have 6,200 or less inhabitants. Some 25 different groups inhabit the Amazon region, 5 groups live in the Oriental Region, and 3 groups in the Chaco Region According to the 2005 projections from the Economic and Social Policy Analysis Unit, the estimated population living in poverty in 2006 was 5.9 million people (63%)24 and of this group, 2.0 million (35%) were living in extreme poverty. This population concentrates in municipalities of the high Andean valleys and altiplano and is mainly of Indigenous descent. The plains area, El Chaco region, and the peri-urban areas of the largest Bolivian cities also have significant levels of poverty, due to migration Upon request of the MSD, and consistent with the Operational Policy 4.10 of the World Bank, the Health Reform Project I11 will be treated as an Indigenous Project because (a) The targeted population is mostly Originary25/Indigenous in the 17 health networks in the 82 municipalities and three peri-urban areas of El Alto (La Paz), Santa Cruz and Cochabamba selected for intervention, (b) The project is designed under the Family, Community and Intercultural Health model The project uses an intercultural health approach which aims neither at the integration of both bio-medicine (also called academic or Occidental medicine) and traditional medicine (multi-cultures), nor 24 Bolivia, Unidad de Anhlisis de Politicas Economicas y Sociales. Informe economico y social La Paz: UDAPE The term Originary refer to the autochthonous peoples of the Andean region, while the term Indigenous is used to identify those of the Eastern lowland and valley regions. 88

99 the displacement of one for the other. It requires that both be practiced in an articulated, parallel but complementary manner to obtain best results. This approach takes into account the complementarities between bio-medicine and traditional therapy, and between medical staff and traditional therapists and midwives. Moreover, the project design includes lessons learned from national and international intercultural health practices. It aims at mutual respect and acknowledgement of health practices of both medical-academic staff (kharisiris, in Aymara) and traditional healers (kallahuayas, yatiris, jampiris, male and female midwives, therapists, masseurs, hueseros, rezadores26). It also underscores the respect for the consuetudinary rights of communities, suyus, marcas, ayllus, tentas, capitanias and other territorial organizations in the country In traditional medicine, health is conceived as the equilibrium of a human being and nature. Illness reflects an imbalance between the body and the surrounding environment. When imbalance occurs, health care starts at home with self-medication, next the sick person will seek the help of traditional healers, and lastly the sick person will go to a formal health facility. Bio-medicine, is viewed as merely curative, focused on illness and disease. The intercultural health model, the principal strategy of current health policy, is preventive, focused on a well-balanced life, a healthy diet, and a clean environment Social Assessment. Consistent with Bank O.P. 4.10, the borrower is carrying out free and informed consultations by means of the local multi-disciplinary firm Centro de Estudios y Proyectos. The assessment includes consultations on a sample of 40 rural communities showing low health indicators in the Western highlands, and Eastern lowlands and Chaco region. The objectives of the consultation are to (a) provide a diagnosis of the present state of health care services (preventative and curative) offered to Indigenous and Afro-descendant peoples; (b) to assess the use of intercultural approaches to health at the primary, secondary and tertiary level of care; (c) to assess the cultural access of users to health units and hospitals, cultural barriers, and people's preferences of one health care service over another; (d) to assess the perceptions of good practices (traditional or non-traditional) by public or private providers, individuals or agencies; and (e) the relationship between the official health services (MDs, nurses, auxiliary nurses, promoters) at the traditional network (midwives, and traditional therapists) The results of the social assessment are being used to improve the project design. Annex 10 will articulate the 'intercultural health approach' of this project. It will explain how it is integrated in each one of the components, and the corresponding mechanisms for monitoring and evaluation of this results-based approach The conclusions of the consultations include: (a) A weakness of the present health system is the lack of proactive efforts to strengthen the social health networks. At the community level, there are no active organizations empowered to demand good health services. Social control at the health facility level is very weak. The present health system has not managed to promote strategic community planning. At the municipal level, organizations are stronger but participation of the Indigenous organizations in the DILOS is almost non-existent, except for municipalities with Indigenous majority, where participation is higher. (b) Although coverage of health services by MSD and NGOs has increased in the past decade, the services have not been adapted to respond to the needs of the Indigenous. The field team verified cases of maternal and infant mortality due to preventable causes in isolated communities (Le. in the Departments of Beni and Pando). 26 Hueseros (bonemigament therapy). Rezadores (cure with prayers). 89

100 (c) The most common health problems found are poverty-related: diarrheic and upper respiratory infections, chronic malnutrition in children, rheumatism in adults and the elderly. Some regional diseases found are Chagas, resulting in heart and gastrointestinal problems in El Chaco; and prevalent malaria in the Amazonian communities visited. (d) The most worrisome health issues for adults are those that impede or reduce labor productivity such as osteoporosis, cardiovascular and gastrointestinal diseases. It is recognized by men and women that women bear a double workload, particularly when they are heads of households as men migrate in search of economic opportunities elsewhere. (e) Many health problems are extrinsic. Both old communities and new settlements suffer from lack of basic services such as safe water, sanitation, transport, or housing. Those most affected are children, women in the productive age range, and the elderly. (0 Most prevalent problems among children are chronic malnutrition, diarrheic and respiratory infections, parasites, vector-spread diseases and dermatological problems. (g) Communities visited have access to either permanent or mobile health facilities. The few sampled communities that were completely inaccessible by the team are suspected to lack basic health services. (h) Access limitations are not only geographic but cultural, particularly in relation to women. For example, both men and women disapprove of women having to undress or to be examined by male doctors. Women prefer to be examined by women, in private places (some mobile brigades lack privacy settings). Even for child delivery (standing, kneeling, squatting) women like to keep all their clothes on. All surveyed women demand to be given the placenta which they bury. In some cultures, women give birth in a hole in their land (the Pacha-Mama), where they bury the placenta afterwards. (i) Most communities visited prefer medical contact with brigades than with health posts, as brigades, in their view, provide more humane treatment, are more likely to give a diagnosis in the local language, and services are more acceptable. Informants at large felt more discriminated at health posts, i.e. the Weenhayek and Ayoreo peoples. 6) The brigades implemented by the EXTENSA program are in high demand by users. They are perceived in some cases as external to the MSD system, as it is not evident that the brigades sufficiently plan or coordinate services. (k) There is a general perception that hospitals discriminate against Indigenous peoples, are unwilling to respect their traditions, provide unpleasant treatment and make Indigenous people wait for long periods of time, even if they come from far away. As a result, most Indigenous go to hospitals only as a last resort. Instead, they use natural medicine. (1) In case of emergency, many people bypass the local hospital and go directly to the hospitals located in the capital cities of La Paz or Santa Cruz, because there is no lodging close to the local hospitals. (m) Traditional medicine is utilized across the country. Health-seeking behavior analysis indicates everyone self-medicates and seeks traditional healing first. If traditional medicine does not solve the problem, people will then go to the official MSD health facilities. 90

101 (n) Traditional medicine has been implemented for centuries. Traditional healers feel supported by the communities, but not by the official health system. Most traditional healers are male in the highlands, and female in the lowlands. All were found to be at least 50 years old. About 1/3 of them have some schooling but reached at most 5* grade. Only 12% of those interviewed are fulltime traditional healers. In most cultures, knowledge is transferred from the elders to youths in same family lineage, except for the shamans who may select a pupil to whom they will transfer their knowledge, or some may choose to die with it. (0) The insertion of the Western medicine through SUMI, or SUSAT (Tarija) and the lack of definition of Traditional Medicine have weakened local traditional medicine. Western medicine can not solve cultural diseases such as wrong-doing or witchcraft, according to informants. Only traditional healers know how to deal with them. (p) SUMI is well received in Indigenous communities. 84% of interviewed families have used SUMI services. Dissatisfaction, where it exists, is usually caused by (i) Insufficient services and medication; (ii) the fact that SUMI excludes men, children older than 5 years of age and the elderly. (9) Some deficiencies of the Intercultural health model are: (i) MSD health staff is not duly trained to understand and implement the model; (ii) MSD health staff don t know how to articulate Western and Traditional medicine; (iii) traditional healers don t have enough knowledge of Western medicine. Only 20% of traditional healers know something about first aid. (r) The language of communication is important in health care consultations and interactions. In the lowlands, most health care is conducted in Spanish, although many women and children do not understand it. There are significant populations in Bolivia that are monolingual in Indigenous languages. Brigades have some bilingual staff only for Quechua, Aymara, Guarani and Guarayo languages, (s) The persons interviewed, in addition to caring about aspects such as the color of the walls of a health institution, the material used in the furniture, or other issues, value most highly in a medical consultation the following three issues: the privacy of the consultation, the clear explanation of the illness, and the respect shown to their own cultural customs. (t) The CPS volunteers (many of whom are indigenous, healers or midwives) are some of the most capable health workers to serve as links between Western and traditional healers. Unfortunately, they are not being used by MSD. (u) Many of the communal pharmacies (boticus comunules) failed for lack of volunteers and community preparation to manage and sustain the services. In addition, failure was attributed to the lack of integration of the pharmacies community volunteers into the health networks, because the network health personnel did not professionally recognize nor support the volunteers. 91

102 237. Further recommendations include: (a) The MSD should implement the intercultural policy in health services offered to Indigenous communities who rely primarily on traditional medicine and where MSD services are scarce or non-existent. At the moment, preventive health maintenance depends on traditional medicine. Expedite the use of referrals and counter-referrals between health facilities and traditional healers. (b) Policy-making seeking cultural appropriateness of health services should consider the socioeconomic, geographic and cultural situation of each Indigenous group. For example, health services to fit the reality of Amazonia, Chaco and some Eastern lowlands communities require different strategies (the Araona s health conditions were found to be deplorable). Communitybased facilities such as casus maternas and lodges for the ill and their companions should be explored. Strengthen the mobile health teams in remote communities, where access is difficult, and where establishing a formal health facility may not be justified. These teams would prioritize health promotion and disease prevention, together with education for the community on health issues. (c) Brigades were found to be a must in most communities visited. They should be trained to coordinate with Indigenous Organizations (IO), and strengthened for community training of disease prevention and surveillance, i.e. watershed maintenance. (d) Carry out sensitivity training for MSD staff at the central, departmental, municipal and local level on intercultural health, to train people to provide quality services to the poor and disadvantaged, with special attention focused on respecting the indigenous population. (e) Strengthen the traditional medicine network operating in all communities 365 days of the year. Strengthen the local health committees and empower IO S to participate in DILOS. (f) To reduce maternal and infant mortality, strengthen local networks of midwives by providing them with training and equipment for a more secure birthing assistance, and their connection with the health networks. (g) The implementation of SU SALUD will permit the expansion of services to the majority of the population (men, women, children and the elderly) with highly integrated services. (h) Ensure all MSD facilities and brigades have at least one bilingual person trained in intercultural health, to support medical staff and bilingual/monolingual patients. (i) Reduce inequity between medical staff and traditional healers, in order for SAFCI to succeed. Promote cooperation and dialogue between both groups of health care providers. 6) Promote training of women in medicine, to respond to demand of women practitioners. (k) All promotion and diffusion of materials or dissemination of policies, and training should be bilingual, that is, both languages on the same page, instead of only one or the other. 92

103 238. Other consultations include: (a) (b) (c) (d) (e) In 1999, the Originarydndigenous organizations demanded the following from the basic health system: (i) improve the information dissemination to educate people on services offered; (ii) improve the quality of the interaction between service providers and patients; and (iii) recognize the value of traditional medicine and traditional therapists. In the 2005 Second National Dialogue on Health Issues, people demanded: (i) more and better qualified health care providers for rural areas, Originarydndigenous and isolated communities; (ii) improve communication skills of health staff; and (iii) include traditional therapists and local workers who speak local languages and know the local culture. In August 2006 the Traditional Medicine and Intercultural Health Meetings were held in Potosi2 and attended by over three hundred people including MSD authorities and staff, the main indigenous campesino and originary organizations of Bolivia, i.e. the Confederacidn Sindical Unica de Trabajadores Campesinos de Bolivia (CSUTCB), the Central de Pueblos Indigenas del Oriente de Bolivia (CIDOB) and the Consejo de Ayllus y Marcus del Qollasuyo (CONAMAQ), traditional therapists and midwives, health providers, academics, associations, NGOs and donors (PROHISABA, UNFPA, UNICEF, COOPITAL, OPS/OMS, Save the ChildrenBASICS, Family Care International - PROCOSI and international discussants of intercultural health models from Chile, Venezuela, Ecuador and Peru. The main objectives were (i) to discuss the national and international experience in Intercultural Health; (ii) to integrate the intercultural approach to the existing family and community health model; and (iii) to discuss the issues, risks and responsibilities of adopting the model. Lack of knowledge of intercultural health care is a problem with both groups bio-medical staff and Indigenous peoples. The main recommendations of these consultations were: (i) The Indigenous organizations propose to work side-by-side with MSD, to discuss health plans with traditional therapists who know the communities well. (ii) Establish social controls to empower local organizations to do disease surveillance. (iii) Create a Universal Health Insurance. (iv) Regulate the quality and humane treatment of patients, and install social controls to enforce rules. (v) Sensitize staff working on SUMI, PAI, AIEPI, EXTENSA to work with rural communities. They should preferably speak the local language. (vi) The MSD should acknowledge the traditional therapists (masseurs, hueseros) and midwives, train and certify them to work in primary health care networks. (vii) Prioritize the valuation and legalization of traditional medicine. (viii) Send outreach program to excluded and hard-to-reach communities, where health units or posts do not exist. (ix) Provide scholarships to qualified IndigenodOriginary candidates capable of studying the medical and nursing fields. The Pre-Constitutional Assembly carried out in November 2006 with the participation of all health stakeholders including MSD, private providers, Originarydndigenous organizations, NGOs and civil society, agreed on these points: 27 Ministry of Health, August Jornada Nacional de Medicina Tradicional y Salud Intercultural. Memoria. La Paz, Bolivia. 93

104 The right to health and universal access to health. The Government would guarantee the availability, acceptance and universal access to health services of a universal system, free of charge, decentralized, participatory, intercultural and inter-sectoral. The Government would define norms and administrate the primary health care system. The intercultural approach is characterized by health promotion, disease prevention, integrated health services, with permanent training of human service, and with cultural identity. Social participation and social mobilization for decision-making in health issues. All departments recognize the MSD as the regulatory entity, and accept its authority at all levels, but demand decentralization and autonomy. Financing of health system. The health system would be financed with national resources, which would not be lower than 10% of GDP which represents an 80% increase (adding social security, municipal contributions, donors, etc.) Creation of Originary institutes to train professionals in natural medicine. Implement in the universities Traditional Medicine as an academic field or as a subject. (viii) Promote the industrialization of medicinal plants (coca leaf, ajinko, molle, etc). Protect the intellectual property and control illegal patenting by transnational entities. (ix) Certify and strengthen traditional midwives. (x) Install water and sanitation systems throughout the country An Ex-post Evaluation of EXTENSA is being carried out nation-wide and results should be ready by December, 2007, in time to improve the project implementation planning The Family and Community Intercultural health model This model rests on four pillars: a) Social participation of stakeholders in the decision-making processes for the design of public policy, administration, monitoring and social control of said policy. b) Equity and fair treatment in the access and distribution of federal resources. c) Participation of Indigenous/Originary Peoples in the discussion of social, economic and legal issues of the country, with respect to cultural identity and values. d) An intercultural approach that implies the commitment to promote respect, acknowledgement, and equitable interaction of culturally-different representations of groups and peoples of Bolivia Legal Framework. In 1995, the National Constitution of Bolivia was amended through Law 1585, to recognize the country as a multi-ethnic and pluri-cultural nation (Art. 1) and decrees the protection of the social, economic and cultural rights of Indigenous Peoples (Art 171). It also recognized the common territories of Origin and the right to natural resources, identity, values and institutions, traditions and costumes of the Indigenous and Originary Peoples of Bolivia. The Constitution does not mention the Afro-Bolivians. However, in the past few years the Afro-descendant community presented their case before the Permanent Assembly for Human Rights (May 2006) to be recognized as a separate ethnic group. It is estimated that the Afro-Bolivian community amounts to 35,000 people living mostly in the department of La Paz Bolivia ratified the International Labor Organization s Convention 169 on Indigenous Peoples and Tribal Groups in 1991 (Law 1257). It signed the UN Declaration on the Rights of Indigenous Peoples, September

105 243. The Vice-Ministry of Traditional Medicine and Intercultural Health (VTM&I) was created by Executive Decree (February, 2006). It replaced the Ministry of Indigenous Affairs and Originary Peoples (MAIPO). The mandate of the VTM&I is to oversee (a) the articulation of traditional health systems into public health services, and (b) the revaluation of traditional medicine Main OriginarylIndigenous Organizations nationwide. Each Originaryhndigenous group has its own representative organization(s). Each organization includes a Board, Central Office, Subcentrals and communities. Table 1 : Main Originaryhndigenous Organizations participating in the Constitutional Assembly Organization Confederacidn Sindical Unica de Tra bajadores Campesinos de Bolivia Central de Pueblos Indigenas del Oriente de Bolivia Consejo de Ayllus y Marcas del Qollasuyo Confederacidn Sindical de Colonizadores de Bolivia Acronym CSUTCB CIDOB (represent 8 organizations) CONAMAQ CSCB The organizations are conformed by: Departmental, Regional, Provincial, Central, Sub-central Federations, Union Boards, The National Federation of Campesino Women Bartolina Sisa and its network nationwide. CSUTCB includes the following commissions: Health, Education, Transports & Communication, Land, Human Rights, Natural Resources. Asamblea del Pueblo Guarani (APG), Organizaci6n de Capitanias Weenayek Tapiete (ORCAWETA); Central de Pueblos Indigenas del Beni (CPIB); Central Indigena de Pueblos Originarios de la Amazonia de Pando (CIPOAP); Central de Pueblos Indigenas de La Paz (CPILAP); Central de Pueblos Indigenas del Tr6pico de Cochabamba (CPTICO); Central de Indigenas de la Regi6n Amaz6nica de Bolivia (CIRABO); Central de Pueblos Etnicos de Santa Cruz (CPESC). Headed by the General Assembly Jacha Tantachawi, the organic Assembly Mara Tantachawi, Regional and Conamaq Councils Jisk A Tantachawi; Apu Council Mallkus; and Commissions: Development, Law, Land, International Relations. 24 regional and departmental federations in the Departments of La Paz, Cochabamba, Santa Cruz, Tarija, Beni and Sucre. The Official Indigenous Health Organizations in Bolivia are: National Councils of Indigenous Health, and Regional Councils of Indigenous Health Difference between traditional healers and natural medicine practitioners in Bolivia. The rights and identity of both informal groups of healers are often subjects of dispute, but the difference is clear Traditional healers are male or female and receive their knowledge from their elders, not from formal education. A key principle of traditional practitioners is that of the ayni or reciprocity, responsible for the survival of millenary Bolivian cultures even in most inhospitable situations. Traditional healing is a combination of magic, plant therapy, prayers, cleansing, chants, etc. Traditional healers, as opposed to Natural healers, do not expect monetary remuneration for their services, but reciprocal recognition in the form of respect, prestige, and if the patient can afford it, a small animal (a chicken, a piglet, etc) or agricultural products Practitioners of natural medicine, on the other hand, may have received formal training or may be self-taught entrepreneurs. Similar to bio-medics, they require payment for their services. They usually live and work in urban settings, and often call themselves traditional doctors The National Directorate of Traditional and Natural medicine, under the Vice-Ministry of Traditional Medicine and Intercultural Health, supports both. 95

106 249. Demographic Profile of Bolivia. The difference between Originary, Indigenous and Colonizers is subtle. Originary peoples are those who inhabited the highlands before the Spanish conquest. The Indigenous are those who occupied mostly the lowlands prior to colonization. The colonizers are some 1 million IndigenoudOriginary peoples who migrated from the highlands to the mid and lowlands in 1960s under the US-backed Alliance for Progress, in search of land and better living conditions. They are represented by the CSCB organization Some 62.5% of Bolivians live in urban and 37.5% in rural areas. Annual population growth in urban areas (3.62%) is marked by a strong migration in search of opportunities and services. In contrast, rural areas grow at the rate of 1.42% per year only. The highest concentration of ethnic groups is in La Paz/E1 Alto, Cochabamba and Potosi, but the fastest annual population growth is in Santa Cruz (4.3%), Pando (3.5%), Tarija (3.2%) receiving vast migration. Dept Country Population Non-Originary/ non-indigenous Total Growth Total Urban Rural %* Nation 8,274, ,141,187 3,307, ,299 Chuqui 53 1, , ,237 83,275 Originaryhndigenous Total Urban Rural 4,133,138 1,857,342 2,275, , , ,121 *Population rrrowth Souice: INEcensus The Indigenous population of Bolivia is concentrated in high and cold areas where agricultural productivity is low. Most of the northern part of the Western Andes rises to about 4,000 meters. The adverse geographical environment prompts problems of income-generation and domestic food production. Inadequate and costly transport, a result of the country s rocky terrain and scattered population, severely hinders access to basic services and to the markets of the main cities. The inhabitants of the Andes are familiar with food crises; in the altiplano and the valleys, recurrent cycles of drought, frost and hail affect crops and kill livestock Linguistic profile of beneficiaries. The linguistic profile of Bolivia is important for the delivery of health services in a culturally-acceptable manner. About 75% of the population of Bolivia speaks Spanish, but a large number of OriginaryDndigenous speakers may not be able to understand, read or write it, which puts them in strong disadvantage. As shown on Table 3 Quechua, Aymara and Guarani are the main Indigenous languages. The 2001 census collected the linguistic profile only of children >6 years old, concluding that there are 2.1 million Quechua-speakers, of whom 55% live in rural areas. Likewise, there are 1.46 million Aymara-speakers half of whom live in rural areas. There are 57,000 Guaranispeakers and 44,000 speakers of other languages, living mostly in rural areas. 96

107 Table 3 : Indigenous/Originary Peoples per Department 253. Infant Mortality among Indigenous and Originary peoples. According to the 2001 census, there were high rates of infant mortality in ethnic groups. Some 37% of childbirths were attended by a doctor, 32.7% by a midwife or another person; 21% were unattended childbirths. In 2005, a study was conducted of institutional birth levels by municipality among native monolingual women. Fewer than 7% of all births in the eight municipalities whose female populations were 80%-89% indigenous took place in a health care facility; among the 12 municipalities in which 70%-79% of the female population was native monolingual, this figure was 10%. In contrast, in the 13 8 municipalities where the ercentage of native monolingual women was 9% or under, 45% of all births occurred in a health facility. 2F: 254. Overall infant mortality declined from 67 to 54 per 1,000 live births between 1998 and For mothers without a formal education, however, the figure was 87 per 1,000; it was 73 in the poorest municipalities; 72 among the poorest population quintile and in the country s poorest department (Potosi); 67 in rural areas, and 61 in the altiplano area Mother s education is an important indicator of infant mortality3. Illiteracy is higher among Bolivian women than men, and significantly higher among Originary/ Indigenous women (29%) on average, compared to 9.9% on average for Originary/Indigenous men. The highest rates of illiteracy are found in highland women in Potosi (44.7%) and Chuquisaca (42.5%) followed by Tarija (30.3%) and Beni (29.7%), compared to 25% in La Pas1 Alto and 22% in Santa Cruz women Compatibility between the language of the mother and that of the health workers is critical to positive interaction, rapport, explanation of procedures, explanation of source of illness and satisfaction with service. 28 Calvo A. Equidad en salud. Bolivia. Desigualdad en la poblacih monolingtie nativa, mediciones bksicas. Salud Pdblica Boliviana. 2005; Bolivia, Instituto Nacional de Estadistica. Encuesta Nacional de Demografia y Salud 2003, La Paz Mortality rates include only those that are reported. It is suspected that many more go unreported. 97

108 Dept Infant mortality Child Delivery by Fertility Migration Ratel 1,000 alive Qualified staff % rate Rate /1,000 National Total Chuqui saca La Paz Cocha % Unsatisfied basic needs bamba om Potosf Tarij a SantaCruz Beni Pando Source: NE, Nutrition. Height and Weight. The prevalence of malnutrition in Bolivia is shockingly high, even relative to other developing countries. Studies show that the mother s education, literacy, the presence of a native language different from mainstream, and other geographical and cultural variables are significant determinants of child s health and nutritional status. They also show that the mother s anthropometrical characteristics are substantial determinants of their children s status. (Morales et al, 2005) Some studies on the high prevalence of under-nutrition in Bolivia suggest that factors such as high altitude, hpoxia andor genetics have a negative influence on children s growth (Miller 2001). However, other studies show that good childcare practices can lead to normal growth and development patterns in any child, irrespective of altitude Several studies have pointed out that Quechua-speaking families exhibit poorer nutritional indicators than others, but none have explained why. Relative to their Spanish-speaking or Aymara peers, Quechua mothers exhibit the worst child health indicators, and these differences may be related to the mother s educational level. Studies suggest that altitude and Quechua culture influence child s health Underlying intercultural characterization of the health sector reform project, APL 111. As shown above, targeting is pro-poor and aimed at Originary/Indigenous people and the poor living in isolated areas of the country. The intercultural health approach cuts across most of the project components and activities, as described below. Component 1: Stewardship Role of Health Authorities - Essential Functions in Public Health 1.1 Strengthening of the National Health Information System (SNIS) 261. The Vice-Ministry of Traditional Medicine and Intercultural Health (VTM&I) is in the process of agreeing with SNIS on the inclusion of pertinent intercultural variables including ethnic group and language used in the information systems. The latter is key for the monitoring and impact evaluation of 31 Morales, Roland0 et al Under-nutrition in Bolivia: Geography and Culture Matter. Inter-American Development Bank. 98

109 health programs among the Indigenous population, and for implementing culturally-appropriate adjustments to specific health programs. 1.2 Norms, Results-based management system and information dissemination to the health networks (rendicidn de cuentus) 262. The VTM&I is responsible for setting up and enforcing the norms, procedures and regulation for the management and use of traditional medicine and intercultural health principles in the country. Culturally-adequate protocols for maternal and neonatal health care geared towards mortality reduction of maternal and <5 year old children were published by the MSD in June, 2006 under Ministerial Resolution, however, the norms are not always enforced. Norms for second and third level facilities are still pending. Other norms in preparation are: social communication and social controls; identification and traininghensitivity training of health staff and the traditional network; accreditation and certification of the traditional healers and midwives; intercultural criteria for accreditation of health facilities; stakeholderheneficiary participation in decision-making of health planning and activities; etc. The project will support the Vice-Ministry in the revision andor elaboration of intercultural norms for the provision of the SAFCI package of health services, and the administration of human resources in health facilities and brigades serving ethnic communities Guidelines are needed for the intercultural social communication strategy within the MSD s proposed Management Model (Modelo de Gestidn Social). The bottom-up approach is based on decisions made at community-level Local Health Committee, which in turn are elevated to the DILOS level, and to the Prefectural level Guidelines are also needed for the construction or rehabilitation of infrastructure. The Vice- Ministry will agree with the Social Protection Fund (FPS) on intercultural norms and procedures for community participation in the diagnosis, planning, design, construction and particularly in the utilization and maintenance of health-related facilities. The intercultural approach to infrastructure requires the involvement of key stakeholders and users of the facilities to guarantee cost-effective utilization and to ensure maintenance of all facilities built Many cooperation agencies, i.e. PAHO/WHO, USAID, UNDP, European Union (PROHISABA), CIDOB, etc., have issued intercultural guidelines for health activities. For example, the Intercultural Maternal Strategy in 10 Kechwa Ayllus of the Municipalities of Caiza D and Cotagaita (Potosi) which systematizes procedures (i) to liaise the midwife with health center/ obstetrician to respond to the needs of a pregnant woman or one giving birth; (ii) to identify pregnant women; (iii) to identify signs of risk during pregnancy, labor, birth and post-partum, with instructions; (iv) to apply women s and children s rights to health care Development and Implementation of the Quality-based Program 266. The VTM&I is responsible for reviewing all the norms and instruments for the administration of the National Quality Health Program (PRONACS). 32 Also, the study One OJTWO discusses the involvement of the Aymara husband in prenatal, birth, and postnatal care in Santa Rosa, El Alto. It is traditional to pamper the women during pregnancy, with massages (manteo), not allowing her to carry heavy weights, and ensuring that she eats a proper diet. Helping the wife among the Aymara boosts the husband s self-esteem. 99

110 267. Manuals, posters and graphic materials on SAFCI and SU SALUD, for training as well as for promotional purposes to be displayed in key facilities (health facilities, schools, community rooms) will need to be elaborated with an intercultural focus, for different regions of the country. Component 2: Integrated Health Services Networks. Family, Community and Intercultural Health 268. The SAFCI model seeks to complement bio-medicine and traditional medicine, within a framework of mutual recognition, respect, and willingness to work jointly to improve the health of Indigenous, Afro-Bolivian and campesinos of indigenous descent SAFCI serves the individual, the family and the community with an intercultural health model where the network of health providers is linked to the social control network (gestidn social) and the other sectors which have incidence on the health of the population. 2.1 Development and strengthening of Intercultural Maternal and Infant Health Referral Network Diagnosis of the installed capacity of the health networks in Project areas The diagnosis and geo-referential mapping of facilities, human resources, equipment, infrastructure, and communications resources (radio, telephone, internet, transport and roads) in the network should not only quantify the resources, but also account for intercultural relevance of facilities, that is, not only how many resources, but also whether they are being adequately used by the intended beneficiaries, particularly in multi-cultural contexts. The diagnosis will be used to draw the baseline to measure future impact. The diagnosis should include information systems, epidemiological surveillance, social control systems, health services providers (bio-medical and traditional healers and midwives accredited by their communities as such) Re-design of the health facility networks 271. A renewed agreement with FPS will include guidelines and norms for rehabilitation and new construction of health facilities with an intercultural approach. As agreed with FPS, a study should be carried out, based on a diagnosis and analysis of successful and unsuccessful experiences in intercultural health infrastructures in the country. The study should provide the methodology for working with communities before, during and after the project. It should provide participation schemes for decisionmaking, agreement on financing and maintenance For already existing infrastructure which is not being used to its full potential, as indicated by the diagnosis, the methodology should provide guidelines for community organization to increase proper utilization. The methodology should conclude with a prioritization of the infrastructure that the communities can maintain, an improvement or construction plan, a financial plan, and a maintenance plan with signed commitments by stakeholders (municipalities, churches, NGOs, national and international organizations, and other civil society organizations.) 273. Certain infrastructure such as the birthing home, the short-term lodge, the Traditional Medicine Center, may preferably form a complex facility near the Basic Hospital, to serve the entire health network, as described below Implementation of infrastructure and equipment of the health network with an intercultural focus. Based on the initial diagnosis and baseline, the involved communities may demand the following: 100

111 274. The Birthing home (Casa Materna). A Cum Materna is a house rehabilitated or built next to a hospital in municipalities with high indices of maternal and infant mortality in remote areas. Pregnant women identified by midwives or brigades as high-risk cases may come to the birthing home two weeks before child birth, and stay until fully recuperated. Considerations of the architecture (lights, colors, pictographic signs, furniture height) may be important. Birthing homes should always be located close to a surgical unit in case a surgery is needed. International experience may shed light on the methodology for promotion (to organize the demand), planning, funding, and implementation with sustainability. All the main stakeholders of the health network, including the municipality, churches, NGOs, Associations, businesses, universities, should participate from the beginning, to ensure ownership and commitment with a maintenance plan. The organized stakeholders should form a Committee to oversee the planning and implementation of the birthing home, The Committee, together with the communities, would then elaborate the rules for the utilization of the home, time of stay, duties and responsibilities of pregnant women and their families, and of stakeholders (MSD, base hospital, NGOs, associations, churches, clubs, etc.) The short-term stay lodging Albergue, Alojamiento. Short-term lodging is envisioned as a rehabilitated house close to a hospital, to allow ill persons or relatives accompanying patients to stay for few days (2-3) instead of going back-and-forth to distant homes. The objective of the lodging is to provide a place to stay for patients who are at risk but should not take hospital space/attention, and for relatives who may accompany a patient and need a place to sleep. A Committee selected by the health network (MSD, base hospital, NGOs, associations, churches, clubs, etc.) together with the community will agree on funding, design of the lodge, rules for maintenance, and responsibilities of the guests The Traditional Medicine Center (TMC). One TMC will serve an entire health network. The health network community may decide the composition of the center. It may include: one or more practice rooms for traditional healers and midwives, a room for massages, a lab for preparation of traditional medicine, a room to store herbs and an herb-drier, a training room for Encounters for mutual enrichment, a spiritual corner (Chapel) or other as needed. The purpose of the TMC is to provide a place where the traditional and biomedical health providers can meet, discuss their different approaches, exchange views, learn from each other, and work jointly. The center is also meant to demystify the healing practices of both groups. A Committee selected by the health network should decide its organization, planning and maintenance. An herb garden may be needed outside the facility The First and second level facilities. Intercultural adaptation of health facilities of primary and secondary care should also be decided by the organized community, according to their needs and expectations. The objective is to increase the utilization of facilities and to create links between biomedical staff and the traditional network. The main adaptations include: (a) Intercultural birthing room (purto humunizudo) which may be different in different parts of the country; but for the most part includes: a room or part of a room with a corner dedicated to vertical birth (standing, leaning, kneeling, or squatting) on a small platform (for comfort of the doctor or midwife); a bar, or a ladder-bar, or other for holding onto to push; a sheepskin or mattress on the floor; and culturally-adequate room decoration. Birthing rooms are being customized in the highlands as well as lowlands and valley. The objective is to give the pregnant woman a choice of giving birth in an environment as similar to home as possible, or the conventional medical stretcher, to avoid the trauma of being forced to give birth on a metallic bed. Considerations of room temperature, colors (walls, sheets), lighting (dim lights), no windows, bilingual symbols are important. Some rooms may include a second bed for a companion, midwife or relative The waiting room may also be adapted to attract more people to health facilities, with warm colors, comfortable non-metallic seating, colorful promotional materials and/or video recordings of interesting intercultural experiences in other parts of the country are recommended. 101

112 2.1.4 Management of health staff within the framework of SAFCI 279. The SAFCI model will include a social specialist, a Nutritionist (for Integrated Nutrition Units), GynecologistlObstetrician, Pediatrician, Anesthesiologist, and Surgeon. This health model seeks health workers who speak the local language or are willing to learn to communicate in it. SAFCI staff will undergo sensitivity training to deal with Indigenous peoples and observe agreed intercultural protocols The SAFCI model will seek to involve medical residents in the health network facilities. It will train permanent health staff in situ, under the approaches of learning-by-doing, direct observation, and practical training Operational development of the health facilities networks A value-added feature of bringing both health systems together is to have a referral and counterreferral system that may allow high-risk patients to be quickly identified and referred to a qualified health facility. The referral network system will need to include the traditional health network operating in each community in the country. An effort will be made to identify, train and certify eligible traditional healers and midwives (men and women). Following best practices of culturally-adequate referrals and counterreferrals used by NGOs, the project will elaborate forms that can be easily filled out and understood by healers and midwives who may neither read nor write The traditional healers and midwives (female and male) are an important part of the health network. Mapping of traditional healers and midwives, under VTM&I is being carried out in some of the departments, as a first step. The second step will be the sensitivity training of bio-medical staff and the traditional healer networks in the municipalities targeted by the project. The operational arrangements, particularly for the referrals and counter-referrals will need to be agreed on by the bio-medical staff and traditional healers and midwives in each health network Accreditatiodcertification of health facilities. The following is suggested to be included among the criteria for accreditation under SAFCI: (i) quality standards adapted to serve Indigenous users, (ii) communication with beneficiaries (in both language and empathic actions), (iii) participation of stakeholders in the decision-making processes of the health facility, (iv) a system to monitor users satisfaction with services received Accreditation and Certification of traditional healers & midwives (male and female). Accreditation is done by the community in consensus, based on years of service, acquired prestige, and accomplishment of hisher life-time (believed to be supernatural mandate). Certification is done by the VTM&I, under the following criteria: (i) Accreditation by the community; (ii) Minimum number of years of experience; and (iii) Sensitivity training to approach the conventional system for mutual enrichment activities, and agreement to provide referrals to hospitals, health centers and posts. 2.2 Strengthening of the local health management through the promotion and community participation As a rule-of-thumb, informed consultations with the affected population and inclusion of traditional community authorities should take place before interventions As brigades serve hard-to-reach areas, certain protocols will be observed, such as: (a) contact the traditional authorities first and be introduced by them to the community, (b) engage with Indigenous 102

113 communities, (c) identify culturally-specific behaviors, (d) Show respect for traditional practices, (e) adapt brigade schedule to that of the community, (f) agree on the logistic arrangements (i.e. covered/private place for gynecological exams). It is a best practice to agree with the community on these protocols early on in the brigade vkits. The members of the brigades should preferably speak the local language(s) and show sensitivity for the culture. In case of uncommon languages, the brigade team together with the community should identify community members capable of serving as interpreters Health promotion, disease prevention, creation of healthy environments, and social communication Traditional medicine promotes health surveillance and disease prevention, and creates healthy environments. In hard-to-reach areas, the traditional healers are available 365 days of the year for community surveillance. As they constitute the most immediate source of health advice and medication, the MSD should provide training and quality control simultaneously SAFCI residents are viewed by VTM&I as a new crop of medical residents being trained at the moment to provide intercultural health services to people particularly in rural areas Several types of training are being considered under the SAFCI model, as explained below. Training through direct observation and practice, instead of lectures, is encouraged (a) Sensitivity training on the Intercultural Health Approach within the SAFCI model, to acknowledge, accept and respect both bio-medicine and the traditional practices. The first step should be sensitivity training of: (a) The central MSD staff, (b) SAFCI residents, (c) Directors of health networks, (d) Authorities at the department, prefecture, municipal and local levels, (e) Permanent and itinerant Medical staff including doctors, nurses, auxiliaries, receptionists and other support staff, (f) The traditional health network including healers, midwives (male and female), and traditional authorities. (b) Encounters for mutual enrichment are in-situ training sessions or workshops in non-formal settings, to be done at two levels: (i) between midwives (male and female) and medical staff; and (ii) between MDs and traditional healers. The purpose is to establish rapport, to discuss and learn from each other on how to prevent disease and how to solve health problems. The goal is to allow patients to make informed decisions as to which medicine to use first, Best practices show it is possible for academic and traditional practitioners to complement each other and treat patients jointly or alternatively. Protocols should be established early on as a result of these encounters. Having a traditional medicine center near the basic hospital facilitates this interaction. (c) Studies. The following studies have been included in the project design: (i) Systematization of traditional healing and feeding practices in Originary/Traditional cultures, to support good practices, and discourage unhealthy ones. It has 2 parts: (1) a desk review to assess practices already documented; and (2) systematization of other practices in the field. (ii) Systematization, diagnosis and analysis of successful and unsuccessful experiences in intercultural health infrastructures in the country. The study should provide FPS the methodology for working with communities before, during and after the project. It should include participation schemes to decide on financing, implementation, and maintenance of the facilities Strengthening of shared responsibilities in the administration of health 290. Support to the development of community-based committees for data analysis. Local authorities, health staff, traditional healers will participate in the assessment of the health situation of the community, in order to make decisions and monitor completion. 103

114 291. Follow-up and implementation of community-based pharmacies. A volunteer, accredited by the community, is responsible for the administration of the pharmacy Sensitivity and other training for the DILOS, health teams, leaders and organizations, and the traditional health network on the responsibilities in the administration of community health. Development of a culture of reporting results to the stakeholders and beneficiaries. 3. Universal Health Insurance (SU SALUD) 293. Training at departmental, municipal and local level on promotional and administrative aspects of SU SALUD is being carried out at the national level with an intercultural focus. Promotional workshops include local and traditional authorities who, in turn, disseminate the information in their communities, in the local language. 3.1 Affiliation 294. Mass affiliation through brigades, with the help of local authorities, is being used in rural areas to register everyone in the household. Local staff speaking the local language has been key to reach isolated families. An agreement of the MSD with Civil Registry for mass affiliation allows the provision of birth certificates on-site, which is a value-added product of affiliation. The biographic information in the carnet is in Spanish, but an important note on its usage is also printed in Aymara, Quechua and Guarani, on the back of the form. 3.2 Monitoring and evaluation (technical, administrative and financial) The ethnic group, and language used variables are being added to the information system, baseline, and affiliation forms, in order to be able to disaggregate ethnographic information on affiliation, awareness of benefits, access to the insurance, use of the facilities, and impact on health indicators by ethnic group A strategy to evaluate levels of satisfaction with the services financed by this project will be an annual assessment of a small random sample of users of health services (permanent and mobile). This will allow MSD to make adjustments through implementation. A key project indicator is OriginaryDndigenous users satisfaction with services received (financed by the project) Institutional framework. Assessment of the capacity and commitment of the institutions responsible for implementing and monitoring the agreed plans. The VMT&I sets the norms of intercultural health in the sector. It will work together with the MSD departments on project implementation. Strengthening of the VMT&I will be of keen importance for the successful implementation of the project Description of proposals to strengthen the institutional capacity. MSD will facilitate the transfer of quality intercultural norms to SEDES, municipalities and local levels. Sensitivity training of health staff will be carried out at all levels. For component 1, central and departmental staff will be trained to carry out essential intercultural functions. For component 2, sensitivity training and strengthening of the local level and brigade teams will take place. Under component 3, community leaders and groups will be sensitized and trained for the promotion and organization of massive affiliation of population to SU SALUD, with the participation of municipalities and local networks. 104