Report No. PID9821 Project Name El Salvador- Earthquake Emergency ... Reconstruction and Health Services Extension Project Region Latin America and The Caribbean Region Sector Population, Health and Nutrition Project ID SVPE67986 Borrower Republic of El Salvador Implementing Agency Ministry of Health (MSPAS) Address:Calle Arce #827 y 15 Av. 15 San Salvador, El Salvador Contact person: Dr. Herbert Betancourt, Vice-Minister of Health Tel. 503 271 0008 - Fax: 503 221 0985 Environment Category B Date and PID prepared September 21, 2001 Projected Appraisal Date September 24, 2001 Projected Board date November 12, 2001 COUNTRY AND SECTOR BACKGROUND 1. Main Sector Issues The health sector suffered extensive damage resulting from the earthquakes of January and February, 2001. Health Ministry (MSPAS) capacity to supply services and to respond to health needs of its population has diminished significantly, particularly in the earthquake-affected central region of the country where many hospitals and ambulatory units have been abandoned or have significantly reduced operations. This situation is compounded by the populations' reduced access to functioning facilities due to the damaged road network. Despite significant progress during the last decade, the performance of the El Salvadoran health system is at risk of losing ground, threatening recent gains in health status. From infrastructure, poverty and health system standpoints, the most relevant sector issues are the following: Emergency Reconstruction of the Public Hospital Network. On January 13 and February 13,2001, El Salvador was rocked by two powerful earthquakes which destroyed 194,000 homes, and killed 1260 inhabitants, with the damage from both quakes estimated at 12 percent of the country's GDP in 2000. Physical infrastructure losses were significant, particularly affecting schools, hospitals and health clinics, cultural heritage sites, and small and medium sized enterprises. The social sectors were the most severely affected, representing about 40 percent ofthe losses. Two MSPAS hospitals suffered severe damage and another six hospitals bore sufficient impact to require full or partial evacuation. The more damaged hospitals continue to operate under large tents, trailers and other provisional structures, while others have reduced operations. Altogether, 113 of the 361 MSPAS health facilities were affected, representing 55% of health care delivery. By the end of the second quake, more than 2000 hospital beds were out of service, reducing capacity 25 percent in a time of crisis. Inequitable access and disparities in health outcomes. Despite recent progress in extending the health infrastructure and personnel in rural areas, t abulations in household data show considerable differences between the health outcomes of low- and high-income groups. Also,poverty is more widespread (prevalent) in rural El Salvador and this is reflected in nearly all health indicators. Government programs have significantly reduced urban-rural disparities regarding immunization coverage and use of oral rehydration solutions to treat diarrhea, but the same cannot be said of other basic services such as pre- and post-natal care, cervical cancer screening, and use of modern contraception. These disparities are likely to increase in the earthquake-affected areas of the Central Zone. 2. Government Strategy The highest priority in the Government's health sector program is the reconstruction of the physical infrastructure in the earthquake damaged areas. It has established a master plan to rebuild or rehabilitate MSPAS facilities, including 23 of 30 national hospitals, 82 health centers, and repairs on miscellaneous structures including departmental offices, labs, etc. GOES has mobilized support for the reconstruction program from multilateral banks and governments.The Government also seeks to take advantage of the reconstruction effort to spearhead broader changes in the organization and delivery of publicly-financed health services. Its strategy here is three-fold: (i) given that many ambulatory facilities have been destroyed or are only partially functional, MSPAS seeks to establish an outreach or more community-based approach to primary care provision while creating more effective targeting mechanisms to reaching poor and vulnerable populations; (ii) support infrastructure activities that will respond to a functional planning approach that specifies, and in some cases, redefines the functions (i.e., projected volume of procedures, equipment requirements, patient flows, service definition, numbers and categories of staff, inter-hospital referrals, etc.) which will take place in the proposed structures,and (iii) establish closer ties between hospitals and primary care providers through decentralizing a subset of management functions, improving the referral system and raising quality of care. 3. Objectives: The proposed project seeks to minimize losses in health status to vulnerable populations residing in the country's earthquake-damaged Central Zone and improve health status of underserved populations residing in the country's poverty stricken Northern Zone. This will be achieved by: (i)rebuilding and improving strengthening essential health infrastructure damaged or destroyed by the earthquakes; (ii) extending coverage of essential health and nutrition services through a community-based outreach approach; and (iii) strengthening the institutional capacity of MSPAS to support coverage extension, to, monitor and evaluate services, and to organize and implement national priority programs such as medical waste management, control of vector borne diseases, and detection and control of HIV/AIDS/STDs. 4. Rationale for Bank's Involvement El Salvador would benefit from the financial and technical assistance of the World Bank to rehabilitate and replace seven damaged public hospitals, some of which are quite old, functionally obsolete and had already suffered - 2 - substantial deterioration from earlier lack of maintenance.Project design drew on substantial and accumulated Bank experience and lessons learned in reconstruction projects in El Salvador (Ln. 2873-ES) and emergency operations elsewhere (OED Precis # 174, 1998). Bank's presence would ensure the application of high standards requiring detailed assessments (environmental, financial, social) and application of building codes). The Bank's technical assistance would also ensure that the rehabilitated and reconstructed facilities would have a high degree of functionality, be built according to international norms, incorporate efficiencies in the designs to reduce operating cost, and assist in organizing programs of preventive maintenance. El Salvador would also benefit from the Bank's technical assistance by supporting the proposed strengthening and extension of essential health and nutrition services. The Bank's technical contribution is in the areas of institutional restructuring; decentralization, public-private partnerships and strengthening of priority public health programs. 1. Project alternatives considered and reasons for rejection: The project preparation process has included discussion and analysis of a number of alternatives.One key dimension was the strategic focus for the project design: prepare a stand -alone emergency operation or include a reconstruction component in the proposed basic health project already under preparation. The latter alternative was selected to avoid de-linking reconstruction from other sector interventions supported by the project. For example, decisions regarding the nature and location of hospital services to be provided will depend on volume and quality of ambulatory services offered in each facility's catchment area. These latter services will be strengthened through project-financed activities. Excluding the primary care network from the functional definition of hospital activities could result in a mismatch between supply and demand for hospital services as well as disintegration of the broader delivery system. 5. Description Component I: Emergency Reconstruction of MSPAS Hospital Network in Earthquake-affected Areas (est. $ 125.8 million). Reconstruction and Rehabilitation of Earthquake-Damaged Hospitals : This project would rehabilitate and/or replace seven of the largest hospitals damaged by the earthquake. Three of the seven hospitals (San Juan de Dios in San Miguel, San Pedro in Usulutan, and Santa Teresa in Zacatecoluca) would be rehabilitated and part of the equipment replaced. Four hospitals (Maternidad Nacional in San Salvador, Santa Gertrudis in San Vicente, Cojutepeque inCuscatlan, and San Rafael Hospital in La Libertad) would be replaced. Corrective and Preventive Maintenance. The project would also finance technical assistance for establishing a preventive maintenance system in the seven hospitals. The system would consist of preparation and implementation maintenance protocols, intervals and remainder system, equipment inventories, and the contracting out of maintenance services for medical equipment. It will also support the preparation of manuals and the training of staff. Component II. Strengthening Essential Health and Nutrition Services in Earthquake-affected and Extremely Poor Areas (est. $16 million): -3 - This component aims to extend essential health and nutrition services to targeted geographical areas through contracting NGO providers and forming partnerships with other government institutions (such as ISSS and municipal governments), strengthening MSPAS providers and developing the planning, contracting, management and evaluation capacity of MSPAS. Access,quality and efficiency of publicly financed essential health and nutrition services will be improved with special emphasis on targeting low-income and underserved populations in El Salvador's Northern Zone as well as vulnerable populations residing in Central Zone municipalities affected by the recent earthquakes. Coverage extension of essential health and nutrition services in impoverished rural areas: The component would finance the per capita cost of providing a set of health and nutrition services to the poorest municipalities in El Salvador's Northern Zone. Total beneficiary population would number about 150,000 and reside in areas where MSPAS providers are not present. NGOs, cooperatives and foundations will contracted to deliver the services. The per capita payment is configured to cover salaries, supplies, minor equipment, pharmaceuticals and transportation. The component will also support provider start-up costs related to training and consultancies. Strengthening MSPAS's primary care delivery in earthquake-affected areas: Through the financing of minor equipment, essential drugs and medical supplies, the project will support strengthening MSPAS care providers to deliver basic care to about 200,000 beneficiaries living inearthquake-affected areas of the Central Zone. Beneficiaries live in 29 municipalities in three Departments (Cojutepeque, La Paz and San Vicente. These populations will receive the same set of services provided to their Northern Zone counterparts, but through a strengthened MSPAS's primary care provider network. Unlike the Northern Zone, MSPAS has a strong presence in the Central Zone. However, service provision has been weakened as the result of earthquake-related damage. Strengthening MSPAS capacity to plan coverage extension, manage contracts and performance agreements, and monitor and evaluate performance: The "downstream" success of the service delivery activities will also depend on "upstream" interventions that reorient MSPAS incentive structure toward results. Through the financing of training and technical assistance the component would support the implementation of a series of activities through a three-pronged strategy: (i) development of planning, purchasing and contract management functions; (ii) testing of a reformulated decentralization strategy and management model; and (iii) strengthening MSPAS's monitoring and evaluation capacity. Component III: MSPAS Institutional Development for Policy Formation, National Priority Programs, and Support Systems (est. $17 million) This component seeks to modernize the institutional capacity of MSPAS to develop and implement policies, programs and systems. This would be achieved through supporting investments linked to the adoption and implementation of an institutional strengthening and decentralization strategy. This component links compliances with two sets of institutional modernization performance benchmarks to the financing of corresponding sets of investments complying with a set of benchmarks, will enable the borrower to access resources for financing subprojects in seven eligible investment areas : (i) environmental health; (ii) hospital medical waste management and disposal; (iii) control of vector-born diseases; (iv) prevention and treatment of HIV/AIDS/STDs; (v) - 4 - management systems; (vi) information technology and (vii)communication strategies. The investments share a common framework with the objectives of theproposed project Investment subprojects to strengthen MSPAS national priority programs: Through financing of technical assistance, laboratory equipment, reagents, training, and vehicles the project will support the following subproject investment areas: 1. Environmental Health Capacity Building: The project would strengthen the institutional capacity of MSPAS's central department for managing environmental health and the central laboratory and assist in decentralizing some functions to the local level. 2. Hospital Medical Waste Management and Disposal: The project would support developing regulations and norms to implement national laws and policies on managing toxic medical waste, assist in maintaining the waste management program currently applied in hospitals in the Metropolitan Area of S an Salvador, and apply similar acceptable procedures in hospitals elsewhere. 3. Detection and Control of Vector Born Diseases with Emphasis on Dengue: The project would help develop a laboratory-based surveillance system as part of a national entomology surveillance and control program, foster community participation in the elimination or control ofthe larval habitats of the mosquito Aedes Aegypti, and train physicians and other health care providers in early recognition of the disease. 4. Prevention and Control of HIV/AIDS/STDs: The project would attempt to reach: (i) the general population to raise awareness and understanding; (ii) pregnant women in order to stress the importance of early diagnosis to prevent mother-to-child transmission; and (iii) high risk groups (such as people with STDs, commercial sex workers, homosexuals, prisons, street gangs). Support will also be provided for counseling and confidential testing centers, and for activities related to installing a national epidemiological surveillance system for HIV/AIDs/STDs.Investments to strengthen MSPAS support systems: Through financing of technical assistance, equipment, training and materials, the project will support the following eligible subproject investment areas: 1. Management Systems: The institutional capacity of MSPAS would require strengthening to support the delivery and purchasing of health care services, decentralized management,monitoring and evaluation and other changes in institutional roles. 2. Communication Strategies: A communication strategy would be designed and implemented using inputs from health promoters and project communities to support coverage extension. National multimedia campaigns on prevention and control of HIV/AIDS/STDs and of dengue would be designed and run and their efficacy periodically evaluated. 3. Information Technology: The project would define the information needs of the managers to make timely decisions, design a management information system accompanied by the necessary communication technology, define the responsibilities of the human resources needed, and develop the corresponding training plan. In support of the seven hospitals being replaced or rebuilt - 5 - under Component I, it proposes computerized patient scheduling system, billing and collection systems and cost accounting systems. Component IV : Project Management (est. $5.9 million): This component would support project management, monitoring, supervision and impact evaluation at the different levels of the system Component I would be managed by a construction management firm contracted by MSPAS. Components II and III would be managed by the Project Coordination Unit (PCU) within MSPAS. The project would finance consultants, facilities and equipment for the maintenance of the PCU and per diem forsupervision in the field. 6. Financing Total Project Cost: est. $164.7 million 7. Implementation Implementation Period: 5 years. Executing Agencies: MSPAS would have the overall responsibility for implementing the proposed component. MSPAS would establish two separate PCUs, one directly responsible for the implementation of Component I, hereafter referred to as the IEU (Infrastructure Executing Unit) to differentiate it from the PCU (as it will be referred to) for Components II through IV. The responsibility for the implementation of Component 1 will fall on the IEU, and for the rest of the project the responsibility will fall on the PCU. 8. Implementation Arrangements Component I will be implemented separately from the rest of the project. A contract management firm (CMF) would function as the implementing entity, leaving decision making on bid awards/contracting, requests for disbursement and payment for contracts to MSPAS. The role of the Infrastructure Executing Unit (IEU) in MSPAS would be to a review of documents prepared by the construction management firm to ensure they are complying with agreed procedures, and would send the necessary documentation for the Bank's no objection and when necessary, to the Office of the Minister for signature. The IOU would also spot check and verify the information provided by the firm in its technical and financial reports. It would also manage the project account for the Component. The contract with the CMF would give it full responsibility for the quality of the construction and the opportune implementation of contract schedules. It would be responsible for contracting the necessary inspectors.For Project Components II through IV, a Project Coordination Unit, located in MSPAS, will coordinate the activity implementation by MSPAS line departments. Implementation will be guided by an Annual Action Plan (POA) agreed with the Bank. The PCU's principal functions would include technical coordination, project supervision, procurement and financial administration, and technical assistance functions to line staff. The PCU would be responsible for preparing progress reports required to support outcomes/results agreed in the PBM 9. Sustainability Overall benefits outweigh investments nearly two to one. Over ten years, the net present value of the project would yield benefits of approximately US$108 million. With the exception of the first several years, the project is expected to generate annual savings to the system that outstrip the investment cost, thereby paying for them. The cost-benefit analysis yields significant - 6 - health benefits and economic benefits for the population of El Salvador primarily through reductions in hospitalization costs, mortality, morbidity and the local resolution of patients needs. Even whenprojected recurrent expenditures generated by the project are considered, the stream of benefits shows that the project would be deemed highly desirable and would be financially sustainable.The project would also be sustainable because it enjoys support at the highest political levels and its formulation is a direct response to requests made by the Government. Major sectoral stakeholders have been involved in project preparation and would participate in project implementation assuring country ownership 10. Lessons learned from past operations in the country /sector Key lessons from a previous earthquake reconstruction project in El Salvador indicate that a strong implementation unit is key to project success (Ln. 2873 -ES). Effective implementation requires a strong coordinating entity with clear authority. Moreover, project design should be kept simple. A review of supervision reports for El Salvador as well as the ICR for the Social Sector Rehabilitation Project (SSRP-1992-96) (Report No. 16774) sheds light on a number of important guidelines to optimize the project's results. Uneven commitment to organizational change under the SSRP led to less than robust results in improving supervision, maintenance and information systems in the MSPAS. It was concluded that future expansion of services required revamping the delivery system including reorganizing financing and management mechanisms that support service delivery. 11. Program of Targeted Intervention (PTI) Yes X No_ 12. Environment Aspects (including any public consultation) Potential environmental impact is expected from this project in two general areas: management and disposal of medical waste, and from the actual process of reconstruction of the hospitals. The first issue is being addressed through the implementation of a waste management program in each of the hospitals.Mechanisms to address the second issue include: (i) the preparation of detailed environmental impact assessments for all hospitals during the detailed design stage; (ii) a plan to ensure proper management of construction activities to minimize air and noise pollution, ensure public safety, and adequate removal of debris; and (iii) if hospital relocation involves involuntary resettlement of people, a resettlement plan satisfactory to the Bank would be prepared as a condition for reception of no objection on bidding documents for the particular hospital involved. 13. Contact Point: Task Managers: Gerard La Forgia/ Sandra Rosenhouse The World Bank 1818 H Street, NW Washington, DC 20433 Tel. 202 458 9730 Fax: 202 522 1202 14. For Information on other project related documents contact: The InfoShop -7- The WorldBank 1818 H Street, NW Washington, DC 20433 Tel. 202 458 5454 Fax: 202 522 1500 Note: This information is on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending October 26,2001 - 8 -