The World Bank Disease Prevention and Control Project (P128442) REPORT NO.: RES40217 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DISEASE PREVENTION AND CONTROL PROJECT APPROVED ON MARCH 27, 2013 TO REPUBLIC OF ARMENIA HEALTH, NUTRITION & POPULATION EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Sebastian-A Molineus Regional Director: Fadia M. Saadah Practice Manager/Manager: Tania Dmytraczenko Task Team Leader(s): Adanna Chukwuma The World Bank Disease Prevention and Control Project (P128442) ABBREVIATIONS AND ACRONYMS BP Bank Procedures HPIU Health Project Implementation Unit IP Implementation Progress MC Medical Center MCH Maternal and Child Health MOF Ministry of Finance MOH Ministry of Health NCD Non-Communicable Disease PHC Primary Health Care PDO Project Development Objective SDR Special Drawing Rights STEP Systematic Tracking of Exchanges in Procurement The World Bank Disease Prevention and Control Project (P128442) BASIC DATA Product Information Project ID Financing Instrument P128442 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 27-Mar-2013 30-Jun-2021 Organizations Borrower Responsible Agency Republic of Armenia Ministry of Health, HSMP-PIU Project Development Objective (PDO) Original PDO The Project development objective is to improve (i) Maternal and Child Health(MCH) services and the prevention, early detection, and management of selected Non-Communicable Diseases (NCD) at the Primary Health Care (PHC) level; and (ii) the efficiency and qualityof selected hospitals in Armenia. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-52220 27-Mar-2013 17-May-2013 22-Jul-2013 30-Jun-2021 35.00 27.70 4.46 TF-14138 11-Jul-2013 27-Sep-2013 27-Sep-2013 31-Dec-2019 1.80 1.80 0 The World Bank Disease Prevention and Control Project (P128442) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status: 1. The Credit was approved on March 27, 2013, in the amount of SDR 22,800,000 (US$35 million equivalent) and became effective on July 22, 2013. The Project Development Objective (PDO), which remains relevant, is to improve: (i) Maternal and Child Health (MCH) services and the prevention, early detection, and management of selected non-communicable diseases (NCDs) at the Primary Health Care (PHC) level; and (ii) the efficiency and quality of selected hospitals in Armenia. A first Level II restructuring was approved on April 30, 2015, to (a) change the legal covenant requiring independent counter-verification of performance for incentive payments and (b) re- allocate funding from a canceled hospital to other Project activities. A second Level II restructuring was approved on April 19, 2018, to extend the Project closing date from December 15, 2019, to June 30, 2021 because two additional Marz hospitals were included in the project scope for construction and equipment. 2. Progress toward achieving the PDO has been rated no less than moderately satisfactory since effectiveness. The four screening-related PDO indicators have exceeded their end-of-Project target values, while the 2019 target values for the PDO indicator measuring bed occupancy rates in two health facilities have been achieved. The intermediate results indicators have also mainly met or exceeded their 2019 target values. The rating for progress toward achievement of the PDO was assessed as satisfactory in the last Implementation Status Report (ISR) dated October 22, 2019. 3. Implementation progress (IP) has also been rated no less than moderately satisfactory since effectiveness and was assessed as satisfactory in the last ISR dated October 22, 2019. Under Component 1, “Performance-based financing (PBF) scheme to improve MCH and NCD services in primary care facilities,” the Project has financed performance-based incentives and screening test costs, surpassing all end-of-Project target values for the screening-related PDO indicators. Given the success of the intervention, the Government has committed to financing payments for screening test costs through the state budget, from January 1, 2021, allocating an estimated annual amount of US$312,000. Under Component 2, “Improving efficiency and quality of selected hospitals,” over 300 clinical practice guidelines, protocols, and standards have been developed and incorporated into the curricula for training physicians. The Project has successfully financed the construction of Sevan Medical Center (MC), the reconstruction of Artashat MC, design and equipment for Vanadzor MC, and reconstruction of the Hematology center, with establishment of a unit for bone marrow transplants. 4. Project Management is rated satisfactory. The Financial Management arrangements at the Health Project Implementation Unit (HPIU), including planning and budgeting, accounting, financial reporting, external audit, and fund flows are adequate and acceptable to the World Bank. There are no overdue audit reports. Satisfactory The World Bank Disease Prevention and Control Project (P128442) procurement arrangements were confirmed in the regular post-review conducted in December 2019. The HPIU has demonstrated adequate knowledge and experience in procurement under World Bank-funded projects, the application of the Systematic Tracking of Exchanges in Procurement (STEP) system, and the country e- procurement platform. Safeguards compliance remains satisfactory and site-specific environmental and social management plans for the construction of hospitals under the Project have been reviewed and deemed acceptable to the World Bank. B. Rationale for Restructuring 5. The design documents of the last two MCs in Martuni and Vayots Dzor were delayed by a change in licensing regulations in Armenia. All existing licenses for design firms were annulled and firms had to re-apply for licenses through a lengthy process. The updated design documents for the construction of the last two MCs in Martuni and Vayots Dzor were based on a new prototype with one-floor, higher total square meters to accommodate a blood bank and dialysis unit, and with higher than the originally-estimated construction costs. As the prototype was new, they did not significantly draw on the past hospital designs. However, the new prototypes will be used for future hospital construction, reducing preparatory time. 6. The higher costs for construction of the facilities with the new prototype imply that there are only sufficient funds under the Credit to build and equip one of the two hospitals. In addition, the construction, projected to start in April 2020, will take about 27 months, which falls beyond the current closing date. Given these constraints, options for deciding on the approach were discussed with the client, and were made based on their compatibility with the following aims: (a) sustaining financing and gains of the screening program; (b) ensuring that the hospital construction contributes to reducing challenges in geographic access to care; (c) maintaining funding for operating costs of the HPIU; and (d) ensuring adequate equipment for the constructed hospital. 7. The Ministry of Finance (MOF) sent a letter to the World Bank on December 25, 2019, requesting (a) a 15-month extension (from June 30, 2021 to September 30, 2022) of the Project closing date; and (b) reallocation of Credit proceeds from Category 2 (performance-based payments) to Category 1 (goods, works, non-consultant services, operating costs, training and consultants’ services for the Project, including audits) in an amount of SDR 363,000 (US$ 502,400 equivalent) to reflect projected expenditures until the revised Closing Date. In addition to the undisbursed amount of US$ 4.46 million under IDA-52220, there is an undisbursed amount of US$ 2.1 million in the designated account. Government co-financing will cover outstanding costs under Category 1 of the Project. 8. In the letter, the MOF also informed the World Bank that the Armenian government would (a) support screening under Component 1 from January 1, 2021 onwards, using government budget; and (b) seek alternative sources for funding the construction of the Vayots Dzor MC. 9. With the proposed restructuring, the (a) Project objectives continue to be achievable; (b) performance of the Borrower and HPIU is satisfactory; and (c) Borrower has prepared a specific action plan acceptable to the World Bank to complete the Project within the proposed extension period. II. DESCRIPTION OF PROPOSED CHANGES The World Bank Disease Prevention and Control Project (P128442) 10. Extension of the Closing Date. The Project closing date will be extended by 15 months, from June 30, 2021 to September 30, 2022, to allow sufficient time to complete the construction and equipping of the Martuni MC. 11. Reallocation of Credit Proceeds. An reallocation of the Credit proceeds from Category 2 (Performance-Based Payments) to Category 1 (Goods, works, non-consultant services, operating costs, training and consultants’ services for the Project, including audits) in the amount of SDR 363,000 (US$502,400 equivalent) to reflect the projected cost for the construction and equipping of Martuni MC, and Project management. Therefore, the revised allocation for Category 1 and Category 2 will be SDR 19,763,000 and SDR 3,037,000, respectively. 12. Revision of the Results Framework. All the indicators will be revised, adding target values for 2022 to account for the extension of the closing date. Other proposed changes to the intermediate results indicators (IRs) are below: a. IR #3: The end target for the IR measuring the number of health facilities constructed, renovated and/or equipped is reduced from 6 to 5, to reflect the cancellation of Vayots Dzor MC; b. IR #4: The intermediate indicator measuring the treatment of pediatric hematology conditions will be dropped. The Project financed the renovation of the Hematology Center, however, the Center does not receive any direct support from the Project for service delivery or management. Therefore, the Project should not keep tracking the indicator measuring the treatment of pediatric hematology locally as it is not attributable to the Project; and c. IR #6: The intermediate indicator measuring operational health facilities constructed under the Project must be adjusted to reflect the cancellation of Vayots Dzor MC by removing c) “Vayots Dzor Medical Center operational” and changing d) Martuni Medical Center operational to c). In addition, the end target should be revised to “All three Medical Centers operational”. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ The World Bank Disease Prevention and Control Project (P128442) Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Performance-based incentives to Performance-based incentives improve MCH and NCD services 4.70 Revised to improve MCH and NCD 4.20 in primary care faci services in primary care faci Hospital Modernization 38.20 Revised Hospital Modernization 37.74 Project Management 2.10 Revised Project Management 3.06 TOTAL 45.00 45.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2021, 15- IDA-52220 Effective 15-Dec-2019 Dec-2019, 30-Jun- 30-Sep-2022 30-Jan-2023 2021 The World Bank Disease Prevention and Control Project (P128442) 31-Dec-2019, 31- TF-14138 Closed 31-Dec-2018 Dec-2018, 31-Dec- 2019 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-52220-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: G, CW, non-CS, IOC ,TR, CS, AUDIT 19,400,000.00 17,042,165.79 19,763,000.00 80.00 80.00 iLap Category Sequence No: 2 Current Expenditure Category: Perform.based finan.under Part 1(a) 3,400,000.00 837,477.88 3,037,000.00 100.00 100.00 Total 22,800,000.00 17,879,643.67 22,800,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2013 0.00 0.00 2014 4,756,154.80 0.00 2015 1,064,491.96 0.00 2016 6,038,178.00 0.00 2017 7,618,196.00 0.00 2018 5,057,934.00 0.00 2019 6,006,212.00 0.00 2020 3,600,000.00 1,000,000.00 2021 858,833.24 1,000,000.00 The World Bank Disease Prevention and Control Project (P128442) 2022 0.00 2,458,833.24 . The World Bank Disease Prevention and Control Project (P128442) . Results framework COUNTRY: Armenia Disease Prevention and Control Project Project Development Objectives(s) The Project development objective is to improve (i) Maternal and Child Health(MCH) services and the prevention, early detection, and management of selected Non-Communicable Diseases (NCD) at the Primary Health Care (PHC) level; and (ii) the efficiency and qualityof selected hospitals in Armenia. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 8 Improve MCH services and the prevention, early detection & management of selected NCDs at PHC level Percentage of antenatal care (ANC) attendees screened for glycosuria, 0.00 0.00 40.00 60.00 75.00 75.00 85.00 85.00 85.00 85.00 hypertension and proteinuria in at least three antenatal visits (Percentage) Action: This indicator has been Revised Percentage of population aged 35- 68 screened for a)22.5 % b)17.8 a)25% a) 35% a) 40% a) 45% a)72% hypertension at least a)74% b)50% a)76% b)55% a)76% b)55% a) 76% b) 55% % b)20% b) 30% b) 35% b) 40% b)48% once in the last year a) female; b) male (Text) The World Bank Disease Prevention and Control Project (P128442) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 8 Action: This indicator has been Revised Percentage of population aged 35- 68 screened for diabetes mellitus at a)9.8% a) 12% a)22.0% a)32.0% a)42.0% a)44.0% a) 48% a) 48% a) 46% b) 34% a) 48% b) 36% PHC level at least b)7.5% b) 10% b)20.0% b)30.0% b)30.0% b)32.0% b) 36% b) 36% once during the last 3 years a) female; b)male (Text) Action: This indicator has been Revised Percentage of women aged 30-60 screened for cervical cancer at least once during the 8.50 10.00 20.00 20.00 26.00 28.00 32.00 35.00 35.00 35.00 last 3 years and received the results (Percentage) Action: This indicator has been Revised To improve the efficiency and quality of selected hospitals in Armenia Bed occupancy rate at the a) Artashat Civil works Civil works Medical Center; b) a) 64% b) 51% a) 64% b) 51% a) 64% b) 51% a) 64% b) 51% a) 64% b) 51% a) 68% b) 60% a) 70% b)70% a) 70% b) 70% ongoing ongoing Sevan Medical Center (Text) The World Bank Disease Prevention and Control Project (P128442) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 8 Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 8 Performance-based incentives to improve MCH and NCD services in Primary care facilities Proportion of PHC facilities undergoing enhanced verification 0.00 10.00 20.00 30.00 97.00 97.00 97.00 98.00 98.00 of results by the HPIU (Percentage) Action: This indicator has been Revised Level of awareness Male a)45% b) among adults in key Male a) 43% b) 24% c) 55% d) NCD risk factors a) 26% c) 57% d) 65% e) 33%; high blood pressure; 66% e) 28%; Female a)58% b) high cholesterol Female a)60% b)32% c)64% level; c) high salt b)40% c)70% d)64% e)42% intake; d) obesity; e) d)78% e)45% (2012 HSPA high glucose level data) (disaggregated by gender) (Text) Action: This indicator has been Revised The World Bank Disease Prevention and Control Project (P128442) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 8 Improving efficiency and quality of selected hospitals Health facilities constructed, renovated, and/or 0.00 0.00 0.00 1.00 2.00 4.00 4.00 4.00 4.00 5.00 equipped (number) (Number) Rationale: Given the insufficiency of financing under the project to support the construction of both Martuni MC and Vayots Dzor MC, the funds originally allocated to the Action: This indicator construction of Vayots Dzor MC will be utilized to complete Martuni MC, and construction of Vayots Dzor MC will be removed from the project scope. This reduces the has been Revised total number of health facilities constructed, equipped, and/or renovated to 5 (from 6). % of pediatric patients newly diagnosed with onco- hematology conditions by the 50.00 43.40 32.20 31.90 30.00 27.00 26.00 25.00 25.00 Hematology Center who received treatment overseas inthe past year (Percentage) Action: This indicator has been Marked for Deletion Number of hospital health workers 0.00 0.00 0.00 0.00 0.00 0.00 90.00 210.00 300.00 300.00 receiving training in a set of new clinical The World Bank Disease Prevention and Control Project (P128442) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 8 practice guidelines (Number) Action: This indicator has been Revised Medical Centers Functional plan All three Medical operational a) Sevan Civil works Civil works Civil works Civil works No developed and Centers MC; b) Artashat MC; ongoing ongoing ongoing ongoing approved operational c) Martuni MC (Text) Action: This indicator has been Revised IO Table SPACE The World Bank Disease Prevention and Control Project (P128442)