Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT TO THE REPUBLIC OF INDIA FOR THE

Transcription

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 Report No: IN IN THE AMOUNT OF SDR 61.O MILLION (US$89.0 MILLION EQUIVALENT) Human Development Unit - SASHD South Asia Regional Office TO THE REPUBLIC OF INDIA FOR THE RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT February 9,2004 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 3 1,2003) Currency Unit = Rupee (Rs.) Rs = US$l.OO US$0.02 = Rs FISCAL YEAR July 1 -- June 30 ANC ANM BCC BPHC BPL C&AG CAS CBHI CBO CEO CHC CMHO DEA DGS&D DMHS DOMHFW DPMC DPT ECG EMP EPC EPMC FMR GF & AR GO GO1 GOR GSDP HMIS IDA IEC IIHMR IMR IPD M&E MOHFW MRS ABBREVIATIONS AND ACRONYMS Ante Natal Care Auxiliary Nurse Midwife Behavior Change Communication Block Primary Health Center Below-the-Poverty Line Comptroler and Auditor General Country Assistance Strategy Community-based Health Insurance Schemes Community Based Organization Chief Executive Officer Community Health Centers Chief Medical and Health Officer Department of Economics Affairs Directorate General Supplies and Disposables Directorate of Medical and Health Services Department of Medical, Health and Family Welfare District Project Management Cells Diphtheria, Polio and Tetanus Electro Cardiogram Environment Management Plan Engineering and Procurement Cell Equipment Procurement and Maintenance Cell Financial Management Report General Financing and Accounting Rules Government Order Government of India Government of Rajasthan Gross State Domestic Product Health Management Information System Intemational Development Association Information, Education and Communications Indian Institute of Health Management and Research Infant Mortality Rate In Patient Department Monitoring and Evaluation Ministry of Health and Family Welfare Medicare Relief Society

3 FOR OFFICIAL USE ONLY MSS NFHS NGO NSSO OPD PCMC PD PHC PIP PMU PNC PRI PSC QER QIIS RCH-RHS RMRS SA sc SDH SEC SHSD SIHFW SOE SPC ST STI TBA TOR TOT UNFPA UNICEF Mahila Shasthya Sangha National Family Health Survey Non-Governmental Organization National Sample Survey Organization Out Patient Department Project Coordinator and Monitoring Committee Personal Deposit Primary Health Center Project Implementation Plan Project Management Unit Post Natal Care Panchayati Raj Institution Project Steering Committee Quality Enhancement Review Quality Improvement and Information System Cell Reproductive and Child Health-Rapid Household Survey Rajasthan Medicare Relief Society Social Assessment Scheduled Caste Sub Divisional Hospital State Empowered Committee India State Health Systems Development State Institute for Health and Family Welfare Statement of Expenditures Strategic Planning Cell Scheduled Tribe Sexually Transmitted Illness Trained Birth Attendant Terms of Reference Training of Trainers United Nations Population Fund United Nations Children s Fund Vice President: Country ManagedDirector: Sector ManagedDirector: Task Team Leader/Task Manager: Praful Pate1 Michael F. Carter Anabela Abreu Sadia Afroze Chowdhury 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.

4

5 INDIA RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT CONTENTS A. Project Development Objective 1. Project development objective 2. Key performance indicators Page 2 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2. Main sector issues and Government strategy 3. Sector issues to be addressed by the project and strategic choices C. Project Description Summary 1. Project components 2. Key policy and institutional reforms supported by the project 3. Benefits and target population 4. Institutional and implementation arrangements D. Project Rationale 1. Project alternatives considered and reasons for rejection 2. Major related projects financed by the Bank and/or other development agencies 3. Lessons learned and reflected in the project design 4. Indications of borrower commitment and ownership 5. Value added of Bank support in this project E. Summary Project Analysis 1. Economic 2. Financial 3. Technical 4. Institutional 5. Environmental 6. Social 7. Safeguard Policies F. Sustainability and Risks 1, Sustainability 24

6 2. Critical risks 3. Possible controversial aspects G. Main Loan Conditions 1. Effectiveness Condition 2. Other H. Readiness for Implementation I. Compliance with Bank Policies Annexes Annex 1: Project Design Summary Annex 2: Detailed Project Description Annex 3: Estimated Project Costs Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary Annex 6: (A) Procurement Arrangements (B) Financial Management and Disbursement Arrangements Annex 7: Project Processing Schedule Annex 8: Documents in the Project File Annex 9: Statement of Loans and Credits Annex 10: Country at a Glance Annex 11 : Inequities in Rajasthan Annex 12: Activity Matrix

7 INDIA RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Date: February 9,2004 Sector Manager/Director: Anabela Abreu Country ManagedDirector: Michael F. Carter Project ID: PO50655 Lending Instrument: Specific Investment Loan (SIL) Project Appraisal Document South Asia Regional Office SASHD Project Financing Data [ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ ]Other: For LoanslCreditslOthers: Amount (US$m): ProDosed Terms IIDAI: Standard Credit Team Leader: Sadia Afroze Chowdhury Sector(s): Health (100%) Theme(s): Health system performance (P), Population and reproductive health (P) BORROWER IDA Total: I 0.05 I P Estimated Disbursements ( Bank FY/US$m): FY I 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I Annuall 4.40 I I I I I 3.60 I I I Project implementation period: FY 04-FY 10 Expected effectiveness date: Expected closing date: 'CS PA? rdlm Iu UU/n ilm -,

8 A. Project Development Objective 1. Project development objective: (see Annex 1) The project would assist Rajasthan in improving the health status of its population, in particular the poor and underserved population. Specifically, the project would have the following two project development objectives (PDO): PDOl: Increase access of poor [Le., below the poverty line (BPL)] and underserved population to health care. PD02: Improve the effectiveness of health care through institutional development and increase in the quality of health care. The project would assist the state in achieving the outcomes targeted in the draft Health Vision for Rajasthan These include: reducing Infant Mortality Rate (IMR) to less than 30 per 1,000 live births by 2025; reducing Maternal Mortality Rate (MMR) to less than 100 per 100,000 live births by 2025; increasing assistance at delivery by qualified attendants to 85 percent by 2010; increasing full immunization coverage of children under 1 to 90 percent by 2010; and increasing the percentage of Tuberculosis (TB) cases treated to 85 percent by Key performance indicators: (see Annex 1) The following Key Performance Indicators would be used to assess progress towards the achievement of the two project development objectives: For PDO 1 : Increased utilization of government health services by poor (BPL) and Scheduled Tribes (ST) households. Increased proportion of BPL/Scheduled Tribe patients among those attended at government health facilities at various levels. Increased number of BPL/Scheduled Tribe patients exempted from user fees at government health facilities. Increased awareness of poor and tribal households of health services offered by different levels of government health facilities. For PD02: Constant or rising expenditure on primary and secondary levels of care. Increased proportion of non-wage expenditure in total health expenditure. Increased proportion of government health care facilities staffed according to agreed norms. Decreased irrational use of drugs in government health care facilities. Increased patient and community satisfaction with primary and secondary levels of health care services. Increased number of appropriate referrals at Community Health Centers (CHCs), District and sub-divisional hospitals from Primary Health Centers (PHCs) and Sub-centers. Increased health care utilization in terms of number of outpatient visits, hospital admissions, and deliveries. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R [IDA/R [IFC/R Date of latest CAS discussion: December 5, 2002 The proposed project is consistent with the Bank Group Country Assistance Strategy (CAS) progress -2-

9 report for India, discussed by the Executive Directors on December 5,2002. The project would support the CAS objective of developing more efficient and effective health prevention and care systems at the state level, that would better serve the needs of the poor. Additional CAS objectives of enhancing the role of the private sector in achieving important public health goals; improving governance; and enhancing community participation and empowerment would also be supported by the project. 2. Main sector issues and Government strategy: HNP Sector Issues in Rajasthan The major generic health sector issues in India are: wide disparities in health status among regions and between poor and non-poor households; inadequate institutional arrangements and weak program management; low quality of services in both the public and private sectors; ineffective targeting of public funds to the poor; inadequate framework for engaging the private sector; low efficiency and limited financial resources. These problems exist within a general institutional environment of poor oversight and inadequate measurement of health system performance. The Health Sector in Rajasthan Rajasthan is the eighth most populous state in India with a population of over 56 million. It is characterized by immense regional disparities, adverse climatic conditions, and scarcity of water. Forty percent of the population lives in the remote, western desert areas that are subject to seasonal migration and nomadic movements of people. According to Survey of Cause of Death data, communicable diseases and peri-natal and maternal causes account for about 50 percent of deaths in the state. With an IMR of 85, MMR of approximately 670 per 100,000 live births and a total fertility rate of 4.4 children per woman, Rajasthan is below the national average in terms o f basic health outcomes. A consistent observation across almost all indicators is that the poor have worse health status relative to the rich and are less likely to use health services. These results are not unexpected or peculiar to Rajasthan; however, the extent of disparities in the state i s glaring. All of this poses special challenges to providing accessible health care of good quality. Major issues in the health sector include: Weak Institutional Arrangements and Program Management: Rajasthan i s one o f the lowest performing states in India, with a weak health care management system and limited institutional capacity. The complex and fragmented management structure has created a public health system characterized by insufficient integration of health, family welfare and disease control programs, inadequate coordination and integration at different service delivery levels, and overlapping functions. Weak management of human resources is of particular concern in tribal and hard-to-reach areas. Declining Financial Resources: The share of health in total state government expenditure has been declining for the past two decades. From over 8 percent of the total revenue budget in , the health share declined to less than 6 percent in Futher details are given in Section E. 1. Lack of Synergy Between the Public and Private Sectors: Private providers of health services in the state are heterogeneous. Informal practitioners, practitioners o f traditional medicine, and not-for-profit and for-profit allopathic providers coexist offering varying quality of services. The most recent data on utilization of services ( ) showed that 59 percent o f ambulatory care in rural areas was provided by the private sector, compared to 82 percent for all India; the corresponding figures for urban areas are 58-3-

10 percent and 83 percent. These figures indicate that, while the private sector in the state plays a dominant role in the provision of individual curative care, the public sector i s much more important than is generally the case in India. The private health sector i s poorly organized and has limited contact with the public sector. Opportunities for public-private partnerships remain largely neglected in the government's policy formulation and program implementation. There is no formal system for regulation of the private sector, and though the informal providers are often the first point of contact for the patients, there is very little information on their activities. Quality of Health Care: The quality of health services in both the public and private sectors is low and few mechanisms exist to hold providers accountable. There i s currently no regulatory framework in place to monitor the quality of care and to protect consumers. In the public sector, health facilities at the primary and secondary levels are often poorly equipped and in disrepair. Other constraints include: inappropriate skill-mix, shortage of drugs and supplies, lack of attention to supervision and maintenance, and staffing limitations, especially in the remote and hard-to-reach areas. The main issues in the private sector are poor quality of care, lack of accountability of the provider, and limited linkages with the public sector including poor referral mechanisms. Access and Equity of Health Care: The distribution of government health expenditure by household income in Rajasthan is the second most regressive (after Bihar), with a concentration index of There are also important intra-state disparities in the allocation'of government resources for health care, and consequent regional disparities in access. Governance: The major issues in governance that have affected the performance of the public sector include lack of staff motivation, staff absenteeism, the lack of transparency with regard to the appointment and transfer of staff, and weak procurement arrangements. Strategy of the Government of Rajasthan The Government of Rajasthan (GOR) is committed to the overall development o f the health sector. This is to be achieved through appropriate policies and programs based on the principles of equity, gender equality and partnership with the private sector. It has recently re-formulated its population policy (Population Policy of Rajasthan, 2003) in line with the recommendations of the National Population Policy, identified priorities for the health sector, and is preparing a private sector health policy. The Health Vision Rajasthan, has also been prepared. In addition, during this project, the state would develop a more comprehensive health sector development policy which could eventually result in important system-wide changes. 3. Sector issues to be addressed by the project and strategic choices: The project would address the six major issues identified in the preceding section. Institutional Arrangements and Program Management: The project would support capacity building to improve management, implementation and monitoring of programs; procurement; financial management; equipment management; referral practices; health information systems; and health care waste management. The project would coordinate inputs with the proposed national disease surveillance project, expected to be supported by International Development Association (IDA), in order to strengthen disease surveillance in the state. -4-

11 Financial Resources: Within the overall budgetary and fiscal constraints faced by the state, the project would assist in strengthening the capacity of the Department of Medical, Health and Family Welfare (DOMHFW) to use its resources more efficiently and equitably. It is expected that GOR would maintain the share of the health budget allocated to the primary and secondary levels, and ensure increased resources to non-salary recurrent costs as a percentage of the overall health budget. The project would support the efforts of the Medical Relief Societies set up at the facility level to raise supplementary funds through user charges or other mechanisms, and retain such revenue for use at the facility. Mechanisms for ensuring fee exemptions for the poor would be strengthened. Under the project, a Health Care Fund or any similar mechanisms that would be used to suplement the income of Medical Relief Societies in the poorest areas would be established. The goal of this find would be having the amount of money available for spending per BPL patient (i.e. total revenues/bpl population in target area) be roughly equal across the state. Synergy Between the Public and Private Sectors: The project would support consultations, analytical studies and pilots on public-private partnerships. The main focus would be on experimenting with the contracting out of selected clinical and non-clinical services. Quality of Health Services: The project would include interventions to improve quality of government health services. Supply side interventions would include upgrading primary and secondary health care facilities, rationalizing service norms, addressing manpower gaps and skills mismatches, and strengthening partnerships with private providers. Demand side interventions would include providing households with information that would improve their decision-making in choosing health services, as well as their health related practices within the household itself. Access and Equity of Health Care: The project would support interventions to strengthen the provision of health services in those regions and communities that have the poorest health outcomes. A public expenditure review and benefit incidence analysis conducted during project preparation have helped to identify priorities for resource allocation that would improve equity. Criteria for selecting facilities for upgrading have taken into account regional, gender and other disparities. A Tribal Development Plan (TDP) has been formulated to ensure that appropriate interventions are in place to increase access to health care in tribal areas. The focus of the TDP is on empowerment of tribal populations to demand better health services; community driven interventions in conformity with local conditions; and targeting of remote, hard-to-reach areas through innovative schemes such as contracting of Non-Government Organizations (NGOs) for service delivery. Information gathering instruments would be put in place to measure access to and utilization of health services by the poor and general patient satisfaction. Information would be made public on these issues, as well as on the performance of health facilities. Information, Education and Communication (IEC) activities would be directed at behavior change that result in: (i) those who are underserved demanding better services and being better able to manage their own health care; and (ii) more responsive behavior on the part of service providers. Governance: Governance problems in the public sector such as absenteeism and poor personnel management are difficult to tackle (and not limited to health staff). The project would support the establishment and operation of a Strategic Planning Cell (SPC) to lead health policy development in the state. Issues related to health manpower would be an important topic for the SPC and may result in new approaches to personnel management in the government s health activities. It should also be noted that the Government of Rajasthan s interest in developing contracting with private providers of health services i s partly motivated by reluctance of staff in the public sector to work with difficult areas-the expectation being that contracted private sector staff would not consider their employment to be immune to poor performance and thus be better motivated. -5-

12 Recent analysis of the health sector in India: Better Health Systems for India s Poor: Findings, Analysis and Options, classifies the Indian states into three broad categories based on commitment to improving the performance of the health sector, institutional capacity, and stage of epidemiological transition. Rajasthan represents a lower tier Indian state, in the early stages of the epidemiological transition, with weak health systems capacity. The strategy followed by the proposed project conforms to the recommendations of the report, and includes: increasing health system oversight by empowering people with information to demand better health services and fostering public-private partnerships on common interests; focusing on improving the implementation of existing public health programs that tackle the conditions of the unfinished agenda ; encouraging private sector provision of ambulatory care, while prioritizing public facilities in disadvantaged areas; and improving the quality of existing first referral hospitals in a selective manner that would promote more equitable distribution of public resources. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project would have three main components. While the first two components would benefit the entire population of the state, the third component would mainly focus on the poor and tribal population. I. Project Management, Policy Development and Capacity Building (US% million). This component would support the improvement of the state s institutional capacity for health policy development and planning through the establishment of the Strategic Planning Cell (SPC). The SPC would focus on the following areas: (a) designing and implementing strategies for public-private partnership in the health sector, including organizing a series of consultative workshops with major stakeholders to guide the development of such partnership, developing contracting mechanisms of health services to be undertaken by the private sector, and carrying out a diagnostic assessment of the role of private providers in the health sector; and (b) designing a regulatory framework relating to the provision of quality health care services by the private sector. Secondly, the component would support the improvement of the health management information systemof Rajasthan. Thirdly, the component would support a variety of training activities on health management, clinical aspects, waste management, equipment maintenance and behavior change communication. Training would be imparted to a wide range of government staff, as well as community leaders, Panchayati Raj Institution (PRI) members, and NGO personnel. Fourthly, the component would support management of the implementation of the project itself, through the establishment and operation of a State Empowered Committee, a Project Steering Committee and a Project Management Unit at the State level, and Project Coordination and Monitoring Committees and District Project Management Cells at the district level. This component would finance professional services and workshops, studies, training, vehicles, and operational expenses and salaries of incremental staff on a declining basis. 11. Development of Primary and Secondary Health Care Services in the Public Sector (US% million). This component would include: (a) the physical renovation and upgrading of 28 district hospitals, 23 sub-divisional hospitals, 185 Community Health Centers, and two Block Community Health Centers; (b) the development and implementation of an efficient and sustainable health care waste management system (including the preparation and implementation of a Health Care Waste Management Action Plan for all renovated and upgraded facilities under the project; the establishment of an institutional framework; training of staff and workers of health care facilities; and the establishment o f monitoring and reporting systems); (c) improving the quality of clinical services at district and sub-division hospitals and community -6-

13 health centers through, inter alia, the development and implementation of clinical norms and quality improvement guidelines, and norms for improving drug prescribing and drug use practices; and (d) strengthening the current referral system in Rajasthan by linking different tiers of the health care delivery system through an appropriate referral mechanism, the strengthening of referral linkages with the ongoing reproductive and child health, malaria and tuberculosis programs, and the application of continuous and intensive monitoring measures. The component would finance civil works, furniture, equipment, vehicles, drugs and medical supplies, Health Management Information System and IEC materials, training, services, professional services and salaries of incremental staff on a declining basis Health Care Innovations for the Disadvantaged (US$33.31 million). This component would support interventions to improve access to health care among disadvantaged populations, in particular the tribal population and those households below the poverty line (BPL households). Specifically, it would include: (a) the carrying out of an Information, Education and Communication (IEC) strategy consisting inter alia of: health care facility based activities targeted at the providers and patients; inter-personal activities targeted at the tribal and poor population; and outreach activities targeted at the tribal and poor population; (b) the development and implementation of a new strategy to improve health services among the tribal population of Rajasthan, focusing inter alia on strengthening service delivery, the organization and operation of health camps, introducing a package of non-financial incentives for medical professionals to serve in tribal areas, contracting of local private doctors, and integrating the tribal medical system in the provision of essential medical services; and (c) the development and implementation of innovative mechanisms to diminish financial barriers to health care by disadvantaged population including improving the existing schemes, establishing a health care fund, and piloting the development of sustainable community-based health insurance schemes. This component would finance professional services, training, IEC, workshops, piloting of innovations, studies, surveys, operational expenses, and salaries of incremental staff on a declining basis. 2. Development of Primary and Secondary Health Care Services in the Public Sector 3. Health Care Innovations for the Disadvantaged Total Project Costs Total Financing Required Key policy and institutional reforms supported by the project: The main policy reforms supported by the project are: (i) a redefinition of the state government s policy towards the private health sector, which would be made more of a partner, initially through the development of contracting out schemes; (ii) the assignment of a higher priority within the state s health-related programs to tribal and BPL populations; and (iii) the assignment of a higher priority to demand-side interventions, initially through behavior change communications efforts with households as the target audience. In terms of institutional reforms, the establishment of a state-level Strategic Planning Cell is potentially a key development for the evolution of the health sector policy in the state. -7-

14 3. Benefits and target population: The project would result in a more efficient and equitable health system to better address the health needs of the people of Rajasthan. Improvements in health policy and planning capacity, management effectiveness, allocation of public resources (e.g., the envisaged increase in the non-salary recurrent budget), and enhanced role of the private sector would increase the efficiency of the health sector. Equity would improve with the planned greater attention to tribal and BPL populations. Access to improved health services by the population at large, and the disadvantaged populations in particular, would in turn lead to better productivity and earnings -in addition to the intrinsic value that society attaches to improvements in health status. Environmental benefits would also result from the implementation of the health care waste management plan. Beneficiaries of the project would include the state population at large, but as noted the project would place a special emphasis in improving the health status of tribal and poor households. The project would support an expected expansion in the provision of government health services (including contracted out services) to an estimated three million out-patients and 34 thousand in-patients annually. Those outpatients who are already using government health facilities (which currently account for about 10 million outpatient contacts per year and about 300 thousand inpatients) would benefit from the expected improvement in the quality of services which the project would made possible. 4. Institutional and implementation arrangements: The project would be implemented over a period of five years. The proposed institutional and implementation arrangements have been based on the experience of similar health system development projects in other states with administrative capacity similar to that of Rajasthan. Implementation of the project would be managed by a Project Implementation Unit (PMU) located in the state s Department of Medical, Health and Family Welfare (DOMHFW). The PMU, which would be headed by the Project Director (a senior officer from the Indian Administrative Service), would be responsible for overall project coordination and day to day implementation. It would comprise o f a central body linked to seven cells, each having specific responsibilities in project implementation. In addition, the project management structure would incorporate: (i) The State Empowered Committee, headed by the Chief Secretary, GOR, and including senior members of government, which would provide overall direction, approve the annual budget, undertake periodic review of project progress and facilitate inter-departmental coordination; (ii) The Project Steering Committee (PSC), headed by the Principal Secretary of DOMHFW, and composed of senior managers of the DOMHFW, including the Project Director. The PSC would supervise and guide the PMU, monitor fund flows, and facilitate smooth implementation of the project; and (iii) The Project Coordination and Monitoring Committee (PCMC) at the district level, headed by the District Collector, which would monitor and coordinate implementation of project activities at the district level, as well as ensure community participation with the inclusion of representatives of PRIs, NGOs and social workers in the committee. Financial management arrangements are described in section E 4.4 and annex 6 (b). -8-

15 D. Project Rationale 1. Project alternatives considered and reasons for rejection: The major alternatives considered include: (a) Reduce the role of the public sector in the provision of health services. Rajasthan ranks lowest among all states in terms of private spending on health care and it ranks among the top in terms of utilization rates of public health facilities. Given the limited availability of private sector services of adequate quality in remote and rural areas, there is a continued need for public provisiodfinancing of such services: for example, health service utilization data show a very high dependence on public health care (up to 96 percent) in desert and tribal districts. Additionally, the National Sample Survey Organization (NSSO) data show that despite gradual reduction in its share for ambulatory care, the public sector i s still the dominant player in the provision of ambulatory care in Rajasthan, and this is more so for inpatient care. Only three other states report higher utilization of public hospitals for inpatient care. This points to a continued need for supporting these services, and expanding good quality health services, where possible, into remote and rural areas. (b) Implement project only in selected parts of the state. While there is a special need to focus on increasing access and effectiveness of health services in underserved areas of the state, and for underserved populations, implementing the project exclusively in selected parts of the state would miss an important opportunity to address key state- and sector-wide policy issues, such as the current weak capacity for policy development and planning, insufficient non-salary budget, ineffective referral mechanisms, and the insufficient capacity for the surveillance of major diseases. Varying needs of different parts of the state would be addressed through decentralized planning and management at the district level. (c) Support to the provision of either primary or secondary health services only. Given that Rajasthan falls in the category of states in the early stage o f the epidemiological transition, to bring about changes in health outcomes of the population, especially the poor, scheduled caste and scheduled tribes (SCISTs), it would be important to institute changes across both the primary and secondary levels of care. A sustainable health system would need to combine elements of public health and basic clinical services. Investments at the primary level would require supporting investments at the first referral level in order to confer credibility to the health system. (d) Placing the focus on emerging and neglected problems such as mental health, care of the elderly, and non-communicable diseases. Given the constraint on availability of resources, GOR needs to make some strategic choices, and focus on those interventions that would have more wide-ranging health outcomes, which at this point in time are basically those related to maternal and child health and control of communicable diseases. (e) Program Lending. A Quality Enhancement Review conducted in July 2002 for India State Health Systems Development projects noted that all these projects to date have been traditional investment projects; and that for some states the Bank and state governments could consider program lending operations encompassing the entire state health sector. However, given the current low institutional and management capacity of the GOR, program lending would not be appropriate. -9-

16 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Sector Issue Bank-financed Poverty-related health problems, with maternal and child health indicators below average for the country's stage of development and income level. Project India Population Project VI11 (Cr.23944" closed on June ) India Population Project IX (Cr.26304" closed on December 3 1,200 1) Latest Supervision (PSRI Ratings (Ban k-finance projects only) Implementation Progress (IP) S S Development Objective (DO) S S Strengthening institutional capacity; improving quality, coverage and effectiveness of existing FW services, increasing access in selected disadvantaged districts and cities Reproductive and Child Health (Cr.N-01 %IN, ongoing) S S Implementation capacity of the public health and the immunization program. Immunization Strengthening (Cr.3340-IN, ongoing) S S System performance of health care, improvements in quality, effectiveness and coverage of health services at the first referral or secondary level to better I serve the neediest section of society. Andhra Pradesh First Referral Health System (Cr.26634" closed on March 31, 2002) Second State Health Systems Development, (Cr.2833-IN, ongoing) S S HS S Lack of a coherent health system with well-defmed public-private division of responsibility, and under-funding of primary health care Orissa Health Systems Development (Cr.N-041 -IN, ongoing) Maharashtra Health Systems Development (Cr " ongoing) U S S S Uttar Pradesh Health Systems Development (Cr " ongoing) S S Second National HIV/AIDS Control Project, Cr.32424" S S -10-

17 ongoing) General health, Prescription pattems, and patient compliance for the treatment of communicable diseases 3ther development agencies UNFPA UNICEF UNICEF Malaria Control (Cr.2964-IN, ongoing) Tuberculosis Control (Cr " ongoing) Integrated Population and Development Project (ongoing ) Border District Cluster Project (ongoing ) Women's Right to Life and Health Project (ongoing ) S S European Union Health and Family Welfare Sector Investment Project (ongoing ) 3. Lessons learned and reflected in the project design: I (Highly Unsatisfactory) A Quality Enhancement Review ( QER) was carried out in July 2002 to review the Bank's experience with the India State Health Systems Development (SHSD) projects, which have been under implementation since 1995, and to consider possible hture directions for the next generation of these projects. The panel supported the idea of ordered change in adapting the project design, rather than a completely new approach. The QER concluded that much had been achieved by these projects and that it was important to build on this success and to move forward. The QER also noted that the projects had steadily evolved away from a focus on secondary hospitals to a more integrated approach. The appropriate approach now would be to reinforce this trend, take it to the next level by incorporating both public and private sectors, and seek to develop genuinely integrated health systems. Some of the key lessons leamed from the implementation experience of the SHSD projects are as follows: Sector Planning and Program Management. It was found that capacity for sector planning and management in SHSD states continued to be weak and required special attention. Management strengthening at all levels would need to be stressed, particularly with regard to providing more autonomy in management and enhancing supervision. Moreover, convergence with centrally sponsored disease control and reproductive health programs would need to be strengthened. The implementation of these schemes was not well integrated at the state level, leading to tensions and inefficiencies. The proposed project would ensure that the Strategic Planning Cell be constituted early in the project's implementation so as to function effectively as an advisory body to the DOMHFW as a whole. The project would develop a health management information system to provide regular and accurate information that would facilitate policy formulation and management decision-making. Quality of Care. Independent rating of health facilities, such as that undertaken by the Andhra Pradesh First Referral project, introduced healthy competition and independent monitoring, and provided incentives for improved performance. This project would employ a similar rating system at the primary and secondary

18 health care facilities Targeting of the Poor. Findings from the recently completed sector work indicate that special efforts need to be made to reach the poorest households. The project would facilitate enhanced access to health services by the poor, tribal, nomadic and remote populations by: (i) focusing inputs in those regions and communities that are the poorest and have the poorest health outcomes; and (ii) giving priority to diseases of the poor (i.e,, communicable diseases and health problems related to matemal and child health). Involvement of the Private Sector. SHSD projects so far have explored public-private sector partnerships mainly in ancillary activities of hospitals, such as cleaning, laundry, kitchen services and minor maintenance of building and grounds. The proposed project would go further, by contracting NGOs to deliver services in remote communities and pilot innovative schemes involving private providers including the traditional health care providers. 4. Indications of borrower commitment and ownership: GOR has expressed a strong commitment to the proposed project at the highest levels. The GOR had approached the Bank several years ago seeking support for a project at the secondary level of health care. In light of the findings of the recent sector work on health in India, which highlights the need for low capacity states such as Rajasthan to strengthen health systems, as well as address the unfinished health agenda, GOR has adapted its initial project proposal to include systems development at the primary as well as secondary level. Additionally, GOR has acknowledged the need to work with the private sector, especially in underserved areas, and wishes to expand its activities in this area, building on its experience of work with NGOs and the Medical Relief Societies. It has participated in several State Health Systems Development Workshops, and has also financed and carried out a number of preparatory studies for the proposed project. 5. Value added of Bank support in this project: The policy and institutional strengthening aspects of the project are where the value added of Bank support lies. The Bank has maintained an active policy dialogue with the Government of India and those of several states for the past several years on the subject of how to develop more effective state health systems, and the ideas are continuously evolving. The proposed project would build on the experience of preceding Bank-supported Health Systems Development Projects and integrate lessons learned in the process. Bank support for the proposed project would also help in ensuring that sufficient attention and priority are given to those project interventions which specifically address the needs of the poor and tribal populations. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): NPV-US$ million; ERR = % (see Annex 4) 0 Cost benefit 0 Cost effectiveness 0 Other (specify) Economic growth in Rajasthan is currently not as steady as it was during the 1980s. However, a substantial investment in infrastructure which is taking place in the state is likely to boost economic growth in the coming years. The fiscal situation of the state has been grim since the early 1990s and the state s fiscal deficit has grown to about 7 percent

19 It has already been noted in section B.2. that the share of health in total state government expenditure has been declining for the past two decades. From over 8 percent of the total revenue budget in , the health share declined to less than 6 percent in More recently, four consecutive years of drought accompanied by famine, the resulting freeze on public expenditures, and the rapid deterioration in the fiscal position of the state have resulted in a hrther decrease in the already insufficient funds available for health. The proportion of salaries in the total health budget is too high at about 80 percent, leaving little for drugs and other complementary inputs. The allocation to secondary health care services has witnessed a substantial decline both in terms of per-capita allocation as well as in terms of share of the total health budget. This is an issue because the secondary care service is a crucial link between primary and tertiary services and the provision of services would be more cost effective at this level than at the tertiary level, to which public resources flow disproportionately. On the positive side, the National Health Policy 2002 envisages a doubling of Central grants to the states health sector. However, in order to make effective use of the additional grants, Rajasthan would have to enhance its own budgetary allocation to health. The establishment o f Medicare Relief Societies (MRS) at major hospitals during in the state has increased the resources available to these hospitals to improve the delivery of health services. Informal discussions with the officials at MRS suggest that the revenues raised through user charges at major facilities could in due course be adequate to meet the recurrent non-salary costs of the health facilities. However, caution should be exercised on the degree of dependence on user charges to raise revenues, since such charges are a regressive modality of raising resources for health. The 52nd round of the NSSO reveals that, in proportion to their income, the loss of income to the household due to hospitalization is the highest (Rs. 1,235) for the bottom quintile of the household income distribution. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = Yo (see Annex 4) Fiscal Impact: The proposed project s budget would average only about 8-9 percent of the state s annual combined Plan and Non-plan budgets for the health sector during the project period (FY2004/05 to FY2008/09). However, the project would constitute a large share of the health sector s Plan budget during those years. The additional annual recurrent expenditure due to the project would be below 5 percent of the state Non-plan budget when the project comes to an end. 3. Technical: The experience of implementing several State Health Systems Development projects in India and the detailed economic and sector work highlight several technical issues that have been addressed during project preparation. A series of workshops and consultations have been held to clarify these issues. The technical aspects of the project have been developed as follows: Clinical Sewice Norms: A detailed mapping exercise has been undertaken to identify the types of services to be provided at different levels of facilities, and separate norms have been agreed for 300-bed and 150-bed district hospitals; likewise, different norms for 100-bed and 50-bed sub-district hospitals. Staff, equipment and hnctional space norms consistent with the redrafted clinical norms have also been developed. -13-

20 Rational use of Drugs: Availability and access to good quality drugs at project facilities, along with improvements in prescribing practices would be an important element in improving the quality and effectiveness of the health care delivered, particularly to poor and presently underserved populations. An essential drugs list would be adopted by the state for different levels of facility, and would provide the generic drugs templates against which drugs can be procured through the project. The issue of rational drug prescribing by providers and drug use by patients would be addressed through a combination of background research, workshops, training and IEC. Health Management Information System (HMIS)-: A detailed HMIS would be developed for the project that would report on activity and efficiency indicators along with selected indicators for key resources such as staff, financial status, essential equipment and drugs vital for service delivery and waste disposal. Comprehensive hospital activity information that was collected as part of the facility surveys would be analyzed to supplement the currently available baseline data. During Year 1, as part of the implementation of the HMIS system, a study would be undertaken to provide a complete set of appropriate baseline data. Training: The training component has been prepared based on a training needs assessment, including clinical and management training. Training would also be undertaken to enhance management and clinical skills, health care waste management, and in other areas of health systems, such as referral, HMIS, etc. A plan for timely extemal evaluation o f the different trainings and modification of the ongoing training programs based on recommendations of the evaluation would be included in the overall training plan. Referral: The logistics to enable a referral system to hction have been outlined. Experience from other state health systems development projects indicates the critical element of a referral system is feedback and completion of the referral loop. Initially, the project would focus on feedback for selected disease conditions, and from tribal camps. Referral linkages with the on-going reproductive and child health, malaria and tuberculosis programs would be strengthened by the end of the project period. Continuous and intensive monitoring would be incorporated into the system to ensure that referral protocols are followed and the reports are complete. Quality Improvement: The quality improvement program would focus on two important aspects of quality: (i) defining a core set of quality indicators which would include quality of clinical services being provided at facilities, and measurement of client satisfaction; and (ii) improving quality of processes and procedures at facility level. These would be incorporated into the regular HMIS, and monitored at regular intervals. Over a period of time, the project would move towards grading of facilities, and possibly motivating better performance. The existing disease surveillance system in the districts would be strengthened, and extended to the secondary level, to effectively track and reduce morbidity and mortality due to communicable diseases. Inputs to this area, including the implementation and monitoring, would be provided through the proposed National Disease Surveillance Project

21 4. Institutional: A comprehensive institutional assessment was undertaken during project preparation and based on its recommendations, plus the lessons learned from implementation of previous projects in the state, specific measures would be taken at the state, divisional and district levels to strengthen institutional capacity to implement the project. These measures include: (i) setting up a State Empowered Committee to support the Project Implementation Unit in policy matters; (ii) creating capacity within the PMU for strategic planning, analysis and policy formulation ;(iii) setting up a mechanism to ensure adequate and timely flow of funds, and empowering the Project Director to incur project-related expenditures; (iv) setting up a computer-based financial management system capable of providing timely and reliable feedback on fmancial matters to facilitate monitoring of the project s financial performance; (v) transferring responsibility to the PMU for the implementation of the civil works program, equipment, and procurement; (vi) decentralizing project implementation activities selectively to the district level to facilitate responsiveness to local needs; (vii) promoting private sector involvement to increase service delivery and outreach to remote rural areas; and (viii) setting-up a project monitoring and evaluation system to provide timely feedback to project management and assess processes, outputs and impact of project performance. 4.1 Executing agencies: The project would be implemented and managed by the Department of Health, Medical and Family Welfare, Government of Rajasthan through the Project Management Unit (PMU) established for the project. 4.2 Project management: The project would be implemented through a four-tier management structure to ensure smooth project implementation and coordination among ongoing projects within the Department of Medical, Health and Family Welfare. A State Empowered Committee (SEC) and a Project Steering Committee (PSC) at the state level and Project Coordination and Monitoring Committees (PCMC) at the district level would be established for govemance of the project. The Project Management Unit (PMU) at the state level and District Project Management Cells (DPMC) would be responsible for implementation of the Project. The PMU would consist of the following seven cells: 1. Strategic Planning Cell Equipment Procurement and Maintenance Cell Engineering (Civil Works) Cell 4. Financial Management Cell Quality and Systems Improvement Cell Human Resources Cell 7. Community Access and Equity Initiatives Cell To promote teamwork and joint decision making, the PMU would have a Project Implementation Board consisting of the Project Director (also representing the Strategic Planning Cell) and heads of the other six cells. Creating an enabling and supportive environment for health systems development i s critical for the success of the Project. Therefore, the Project Implementation Unit and the District Project Management Cells would hold annual consultations with major stakeholders (senior government officials, leading professional, community leaders, private sector, NGOs, Women s Groups and others) to share the vision, and plans and progress o f the Project. -15-

22 The Strategic Planning Cell would support the state in strengthening planning and problem solving functions. In addition, it would focus on two areas: promoting an appropriate role for the private sector and resource allocation within the public sector. It would identify key strategic issues in each of these areas through consultations with major stakeholders, commission necessary diagnostic studies and analysis to identify ways to address these issues, and carry out necessary policy advocacy to accelerate progress in addressing them. The terms of reference for diagnostic to determine potential for public-private partnership as well as for a study on regulation of private sector have been developed, while the terms of reference for studies and analysis of the resource allocation in the public sector would be developed during the second year of the project after a consultative process with key stakeholders. These would be carried out in the third year of the project. The Equipment Procurement and Maintenance Cell would oversee the procurement o f equipment and other goods under the various project sub-components. It would also manage the maintenance of the equipment. The Engineering (Civil Works) Cell would oversee the execution of all civil works proposed under the Project. The responsibilities of the Cell would be to manage the contracting out of design and construction of civil works to private sector architects I consultants and contractors to check, coordinate and supervise their work. The Financial Management Cell would be responsible for establishment of the agreed financial management arrangements, providing timely financial reports to the stakeholders including the Bank, ensuring smooth and timely flow of funds and providing overall guidance in respect of the financial management of the Project. Several actions are envisaged in the project to improve quality including setting up clinical care standards and protocols for implementation of standards, information system for monitoring quality, and hospital waste management. Four critical systems need to be in place for effective functioning of the institutions to be strengthened in the project - logistics, health management information system, monitoring and evaluation, and referral linkages. The Quality and Systems Improvement cell would ensure implementation of the activities proposed under the project for upgrading the quality of services provided through the public and private health systems and strengthening the above four systems. Considerable experience is available in other states, which have implemented health systems development projects. To benefit from these experiences and to rapidly strengthen necessary skills in the PMU, a process of intensive collaboration between relevant personnel in other states needs to be implemented. Several workshops have been held to initiate this process. These need to be followed up by study tours and exchange of experiences as well as seeking hands-on assistance. Enhancing necessary staff competencies is critical for improving performance. Therefore, staff would be assisted in assessing their own competency development needs and accessing necessary training programs planned under the project. In the third year a second round of competency assessments would be carried out which would help monitor the progress made and in strengthening the capacity building activities. The Human Resources Cell of the PMU would provide guidance and the District Project Management Cell would implement the process. The Community Access and Equity Initiatives Cell would ensure implementation o f community information education and communication activities to improve health seelung behavior as well as - 16-

23 advocacy with key stakeholders to create a favourable social and political environment to improve access by the disadvantaged. As many interventions to enhance access and equity are new and there are considerable knowledge gaps, the Cell would commission necessary studies as well as collaborate with relevant institutions/organizations to ensure implementation of pilots. Its work would lead to (a) strengthening government's schemes to reduce financial barriers for the poor; (b) supporting enhanced public-private partnership; and (c) pilot testing community-based health insurance schemes. The District Project Coordination and Monitoring Committee would ensure the coordination among jarious departments for timely completion of the project activities, review project progress and remove bottlenecks, and approve the annual action plans for the district. A District Project Management Cell would be set up in each district in the office of the Chief Medical and Health Officer (CMHO). The Cell would assist the CMHO and the Principal Medical Officer of the district hospital in effective implementation of the project activities at the district level. For this purpose, it would prepare annual plans and get them approved by the District Project Coordination and Monitoring Committee, prepare the progress reports for submission to the PMU, and coordinate implementation of the activities among various agencies. It would assist the PMU (a) in local procurement; (b) by facilitating and monitoring the provision of project inputs at the district level; (c) through supporting implementation of systems for logistics, health management information, monitoring and evaluation, and referral linkages in the project supported institutions; (d) preparing competency assessment and training plans for the staff; and (e) by coordinating the implementation of the activities of the Component 3 at the district level. 4.3 Procurement issues: The "Guidelines for Procurement for IBRD Loans and IDA Credits (January 1995, revised in January and August 1996 and in September 1997 and January 1999)" shall apply to all Goods and Works financed under the project. The "Guidelines for Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised in September 1997 and January 1999)" shall apply to all Consultants' services financed under the project. Procurement will be implemented by the Project Management Unit (PMU) through the Equipment Procurement & Maintenance Cell for gooddequipment and the Engineering (Civil Works) Cell for civil works at the state level and by District Project Management Cells (DPMC) at district level. Existing procurement capacity, systems and procedures o f the executing agencies have been assessed and suitable changes which had been agreed with GOR have been completed. Project procurement schedules/plans for the entire project period of five years have been prepared and are attached to the Borrower's Project Implementation Plan (PIP). Implementation of these procurement schedules/plans will be reviewed every six months whereas the schedules themselves will be reviewed every year to make necessary changes as may be required. Procurement processing for the first year of the project is at an advance stage, so that disbursements could start immediately upon project effectiveness. The lessons learned from other similar projects have been considered while developing the procurement arrangements for this project along with key procurement staff appointed during project preparation. 4.4 Financial management issues: The project would have a financial management system which would be adequately able to account for project resources and expenditures. (See annex 6(b) for detailed information on budgeting, accounting policies and procedures, information systems, disbursement and auditing arrangements). Funds Flow: the main challenge to satisfactory financial management arrangements of the project relate to the GOR's fiscal ability to make timely release of counterpart funds for the project. The following funds - 17-

24 flow mechanism has been agreed which would mitigate the potential risk of delays in funds flow to the project : GOR would establish a separate Personal Deposit (PD) account for the project and make funds available (credit) in the PD account of the project quarterly in advance. For this, necessary budget provisions on both receipts and expenditures would be made annually in the State budget and the PMU would provide the funds forecast on a quarterly basis to the Finance Department. The Project Director and the Financial Controller of the project would jointly withdraw, on a periodic (monthly) basis, the funds from the PD account and deposit them in a separate bank account of the project (to be established in a nationalized bank outside the treasury system of the government). The funds would be withdrawn in a manner to ensure that there is sufficient funds at any point in time to meet the cash requirement of the project both at the PMU and DPMU. a The Districts spending under the project would be given periodical advances (every month) by the State PMU to meet their forecasted cash requirements through the banking channels. Bank accounts would be established by all the District Project Management Cells (DPMC) in a nationalized bank (if possible in the same bank as that of the state PMU). Subsequent funds flows to districts would be based on performance of key indicators, projected funds requirement for the next period and evidence of utilization of funds. Staf$ng: The PMU would include finance personnel under the supervision of a Finance Advisor & Chief Accounts Officer (FA & CAO). The FA & CAO would be assisted by a qualified chartered accountant as a Finance Manager, one Accounts Officer and other accounts support staff. One accounts person would be exclusively deployed at the DPMC who would be responsible for accounting, reporting and maintaining the books of accounts. A finance manual laying down the financial policies and procedures, budgeting and flow of funds, quarterly and annual reporting formats including financial statements, flow of information and methodology of compilation, chart of accounts, information systems, disbursement arrangements, external and internal audit for the project and operation of the Financial Management System (FMS) has been prepared for guiding the project personnel. The project would ensure that sufficient training is provided to the finance staff at the State PMU and districts on disbursement policies and procedures (of IDA) and the financial reporting requirements. External audit: The audit arrangements under the project would include, (i) a comprehensive audit report (including consolidated project financial statements with sources and uses of funds by categories and components) in respect of the entire project (PMU and the participating districts) by the office of the Comptroler and Auditor General (C&AG), which is acceptable to IDA as an independent auditor. The audit would be conducted by the C&AG as per the terms of reference approved by IDA and consented to by the C& AG. 5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Biomedical waste, if improperly handled and managed, can have adverse impact on the environment and on public health through air, land and water pollution. However, only about percent of waste -18-

25 generated from average health care facilities i s regarded as hazardous, whose potential negative impacts can be mitigated through systematic management from source to disposal. Within the scope of this project, it is proposed that an efficient and sustainable health care waste management system (including segregation, storage, treatment and final disposal) would be formulated and implemented at all the project facilities. The GORs project preparation team undertook a survey of 50 health facilities of various sizes in 11 districts to quantify waste generation patterns and assess existing waste management practices. The main findings of the survey were that there is little knowledge or understanding of the environmental and public health implications resulting from inadequate waste management practices. In many facilities, unsegregated hospital waste, including anatomical waste is disposed into the municipal dump or burnt on the premises. Used (and untreated) plastic and glass bottles and syringes are sold to the local rag-pickers, who are unaware of the high risk involved. Untreated waste water is discarded into the municipal sewer system or directly onto the grounds around the facilities. The Government of India s Bio-Medical Rules (2000) have been disseminated to all health facilities in the state but the survey revealed that many of the facilities remain unaware of these new legislation and operational and monitoring systems are not yet in place to ensure that good practices are followed. To address these critical issues, the State Government has formulated an Action Plan for Health Care Waste Management, which would be developed into a Health Care Waste Management Program to be implemented under this project. 5.2 What are the main features of the EMP and are they adequate? As this is a Category B project, a separate Environment Management Plan (EMP) is not required. The GOR has prepared a Health Care Waste Management (HCWM) Action Plan. The key activity to be carried out under the Action Plan would be the finalization of the HCWM program, including outlining the overall framework, the process for development of facility specific HCWM plans, the roles and responsibilities of various parties and estimates of the costs (investment and operating). Other activities include establishment of institutional frameworks at the various levels, formulating a training program for staff and workers of health care facilities and establishing monitoring and reporting systems. These systems are expected to be put in place in Year 1 of project implementation. Other activities detailed in the Action Plan include support to the implementation of facility specific HCWM Plans, (in phases as appropriate) and provision of basic infrastructure, in accordance with the wider system enhancement activities under the project. The Action Plan distinguishes between the needs of facilities of different sizes, and proposes technical guidance to be provided for preparation of full HCWM plans for major urban hospitals and simplified systems which would be appropriate for small rural facilities. The Action Plan also includes a basic outline of a simplified HCWM plan and a schedule of initial HCWM activities for facilities (grouped according to size) to be implemented in Year 1 where project works are to be undertaken. The Quality Improvement and Information System Cell (QIIS), in close collaboration with the Project Director, would be responsible for the timely and effective implementation of the Action Plan and the subsequent HCWM Program. 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: February 26, How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Key stakeholders were consulted during the initial assessment of health care facilities and waste -19-

26 management practices. These included department officials at various levels, health care providers, rag-pickers and NGOs. The critical feedback that was received was that there is very little awareness with regard to the high risk related to handling of health care waste and the existing systems for implementing good practices are weak. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? Monitoring and evaluation systems would be established for reviewing (i) the overall progress of the HCWM program and (ii) performance of facilities in implementation of their individual HCWM Plans. Indicators to monitor and evaluate effectiveness of the HCWM program would be incorporated into the regular project HMIS. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project s social development outcomes. A Social Assessment (SA) study was carried out in Rajasthan during preparation to gain operationally relevant understanding of the social underpinnings and incentives determining behavior and needs of various actors, especially the poor communities, vulnerable groups, ST, NGOs, government and the private sector. The SA is based on several background studies: (i) a detailed situation analvsis, describing the socio-economic, demographic, epidemiological and health sector situation in the state; (ii) a burden of disease study; (iii) an analysis of hospital activity indicators, providing information on the levels of utilization of public facilities for different health conditions; (iv) a beneficiary assessment study which identifies the health care needs of the poor, including ST and underserved communities, and women, and the constraints on addressing these needs; (v) an NGO assessment, which maps the geographic coverage and scope of work of NGOs working with vulnerable groups, particularly ST, and assesses the representation, sustainability and capacity of such NGOs to partner with the govemment in implementing the project; and (vi) an institutional assessment of government health service delivery capacity at the primary and secondary level. The following details the status and constraints faced by vulnerable groups: Poor: Data indicate that below-poverty line (BPL) populations comprise 2.3 million households, which is about 25 percent of Rajasthan s population (3 1 percent of the rural and 1 1 percent of urban). ST and SC constitute a disproportionate share o f the rural poor. Data from the National Sample Survey Organization (NSSO) 52nd Round show that rates of hospitalization are much higher among the wealthy than the poor, despite higher burden of illness among the poor. Rates of hospitalization are as much as 18 times higher among the wealthiest compared to the poorest quintile in rural areas and six times higher in urban areas. Government has a pro-poor program under which BPL card is provided to the poor for accessing subsidized public service, however, consultations revealed that because of poor implementation of BPL scheme as well as lack of awareness about the benefits of the scheme, about 23 percent of the targeted population, Le., BPL patients, could not access free health care at public hospitals. A majority of the BPL cardholders did not have the knowledge regarding the benefits and usage o f this card. Women: Status of women is low in Rajasthan as indicated by various socio-economic indicators. The state has a feudal culture and patriarchy is institutionalized, resources and power are mostly held by men, and problems such as purdah (seclusion of women), and child marriage exist. An alarming trend is the steady decline in the ratio of women to men in the state. In 1981, the sex ratio was 919 females per 1000 males, which declined to 913 in 1991 and 909 in Women s literacy at percent is low compared to an all-india average of percent. and rural women s literacy is much lower. National Family Health Survey (NFHS)-2 survey data indicate that majority of women have reproductive health and pregnancy related problems, but only 48 percent of all mothers received Ante Natal Care (ANC), 22 percent of all

27 deliveries took place in institutions, and only 10 percent received (Post Natal Care (PNC); and there are wide variations between urbadrural, ST/SC and mainstream population, as well as among economic groups. Women's health risks increase with early marriages, frequent pregnancies, unsafe abortions and sexually transmitted diseases. Health problems and discrimination that begins in childhood and adolescence affect the health status of women during their reproductive years (thus determining the health of the children) and continues thereafter. Consultations reveal that choices regarding marriage, childbearing and contraception are denied to poor and vulnerable women, and they lack access to functional reproductive health services and contraception, contributing to high maternal mortality. Women's access and control over health care is severely limited due to the existing gender gaps in society. Though women experience more episodes of illness than males they are less likely to receive treatment before the illness is well advanced. Greater priority is given to men in the allocation of household resources for health care seeking. A Gender Action Plan has been finalised during the project preparation to address the above mentioned concerns. Children: According to the 2001 Census, per cent of the total population is in the age-group 0-6 years (19.53 percent in rural and percent in urban). The children are vulnerable because of various social, health, and economic reasons. In Rajasthan, malnutrition, particularly severe malnutrition is substantially higher in m al areas than in urban areas. According to NFHS-2, the proportion of children with severe malnutrition is at least fifty per cent higher in rural than in urban areas, 82 percent of the children have some level of anaemia, and children belonging to SCiST have a higher level of malnutrition than others. The Reproductive and Child Health-Rapid Household (RCH-RHS) survey indicates that 57 percent of children received the Bacille Calmete Guerin (BCG) vaccine; 48 percent received the three doses of Diphtheria, Polio and Tetanus (DPT) vaccine; 50 percent received the polio vaccine; and 42 percent received the measles vaccine. The complete schedule of immunization including BCG, three doses of DPT and polio each and measles was received by 37 percent of the children whereas 34 percent of the children did not receive a single shot of any of the vaccines. About 22 percent of the children received supplementation of at least one dose of vitamin A and only 2 percent children received Iron Folic Acid tabletdliquid for iron supplementation. The immunization coverage i s lower in rural areas and for SC/ST population. Scheduled Tribes (ST) and Scheduled Caste (SC): About 12.4 percent and 17.3 percent o f the population belong to ST and SC respectively. Data indicate that ST and SC have high disease burden, which is mostly infectious e.g. TB, leprosy, cholera, skin ailments and malaria. The major factors behind high disease burden are illiteracy, poverty, malnutrition, poor sanitation and access to safe water. Also modem health care utilization by ST and SC i s low due to physical, economic and social constraints. About 48 percent scheduled tribe and 47 percent scheduled caste women have reproductive health problem, which is higher than other women (40 percent). Consultations revealed that on an average a person who is from a SC or ST waited more for services compared to a non-scist person. Data indicate that there is delay of 4.4 days between acute illness and health care contact. ST usually are superstitious and believe that diseases are caused by hostile spirits, ghosts or taboo and their health seeking behavior has not changed due to lack of health workers for awareness raising, motivation and promotion of modem health care. The hilly terrain and dense forests also make the delivery of health care services difficult. There are few government health facilities in tribal areas, and these also are unable to ensure adequate and reliable availability of medical personnel and drugs. The project includes a Tribal Development Plan (TDP) for targeting health services to the ST. Nomadic Population: There are four groups o f nomads who migrate through Rajasthan - (a) pastoral, (b) trader, (c) artisan, and (d) miscellaneous group. Animal husbandry is the main occupation o f the nomads. Most of the pastoral families are engaged in agriculture during the four months of monsoon. After monsoon -21 -

28 they get involved in animal husbandry related activities and generally migrate along with their herds and flocks to other areas till the on-set of next monsoon. The health behaviour of these groups and consequently their health care needs, are different from those of the general population- they have low health status, especially of the women and children. These special groups have their own beliefs and value systems. Due to their migration pattern, they lack access to awareness, immunization and reproductive health services - and are highly vulnerable to Sexually Transmitted Illness (STI) and Human Immunodeficiency VirudAcquired Immune Deficiency Syndrome (HIV/AIDS). The proposed project includes specific interventions e.g. mobile health camps at festivals, fairs, migration routes, and a Behavior Change Communication (BCC) strategy for meeting the needs of nomadic population. The social development outcomes of the project are expected to be: 0 Increased access to information and quality health care for women, poor, ST, SC, and other vulnerable groups; 0 Increased social mobilization and community participation in the health system, overcoming socio-cultural, ethnic barriers and gender differentials; 0 Improved surveillance of the health of the poor, and vulnerable groups; 0 Improved social capital. 6.2 Participatory Approach: How are key stakeholders participating in the project? The social assessment included focus group discussions, exit interviews, in-depth interviews and workshops with the vulnerable group population (i.e., women, scheduled caste, scheduled tribe, poor and under-served population), government service providers (at zonal, district, and facility levels, and para-medical workers such as Lady Health Visitors, Auxiliary Nurse Midwife (ANM) and the male health workers), traditional medical practitioners, representatives from PRIs, NGOs, women's organizations and private sector, to identify health needs and barriers to obtaining quality care and expanding access, and to define outcomes and plans for monitoring and evaluation during the course of the project. Furthermore, a LogFrame workshop was conducted with government officials for developing components as well as monitoring indicators. A decentralized mechanism has been planned as a part of the project structure, which would allow for involvement of stakeholders in the planning, implementation and monitoring of programs. At the state level, a steering committee with representatives from different government departments, PRI and reputed NGOs would be formed. This committee would suggest policy guidelines, review, monitor and evaluate the program at the state level. A district level coordination committee would be formed, under the chairmanship of the District Collector. This committee would consist of representatives of different government departments, PRI and reputed NGOs, and would approve the micro-plans developed at the village level and review the implementation of the plans. Block level coordination committees would be set up, with representation of block level staff of related departments, PRI, NGOs/CBOs. At the Sub-centrehillage level, a village health teamicommittee would be formed consisting of ANM, village midwife (SahayikdSevika), and Anganwadi Worker (AWW), Trained Birth Attendant (TBA), NGO, Mahila Shasthya Sangha (MSS) and village Panchayat member. Need assessment, community organization and facilitation would be the responsibility of the village health tedcommittee. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? As detailed above, a decentralized mechanism would be established, and committees at different levels would include NGOs and other civil society organizations, for facilitation of further consultations and collaboration. NGOs would be contracted in remote, rural and tribal areas, and with appropriate training and capacity building, to implement BCC strategy, provide limited curative care and preventive care, as

29 well as for training of traditional healers for referral and linkage with essential services. In addition, it is proposed that NGOs would facilitate recruitment, training and management of village level volunteers(sevika)/community Health Volunteers for health promotion and awareness campaign and to fill the gap between the Auxiliary Nurse Mid-wife and Traditional Birth Attendant. The Social Assessment also found that some NGOs are already assisting the Scheduled Tribes and poor women to act as pressure groups for improved quality and accountability of public services. This project would expand the participatory monitoring by end beneficiaries, which would be facilitated by NGOs. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? A decentralized mechanism, with participation of key stakeholder groups in the planning, implementation and monitoring has been designed as a part of the overall project structure, to achieve the social development objectives of the project. The Project Steering Committee would coordinate and work closely with the existing State Steering Committee on Tribal Health in Rajasthan in the implementation of the project's Tribal Development Plan. This State Steering Committee consists of representatives from the department of Tribal Welfare, Directorate of Women and Child Development, Health and Family Welfare, Education, Rural Development, Panchayati Raj and reputed NGOs. The PMU would have a designated officer who would be responsible for implementation and monitoring of the Tribal Development Plan. The PMU would also have another officer responsible for gender issues and for monitoring the implementation of the proposed Gender Action Plan. One designated officer under the District Chief Medical Officer would be responsible for monitoring the progress of tribal, and gender plans. Similarly, there would also be designated persons in the Block and village health committees for this purpose. Furthermore, participatory monitoring and evaluation would be undertaken by the PRI, facilitated by NGOs. The project would also develop and implement communication strategies, aiming at informing providers and enabling beneficiaries to demand improved health care and better manage their own health care needs. 6.5 How will the project monitor performance in terms of social development outcomes? The existing State Health Service Utilization and Patient survey would be used for periodic monitoring of health services accessibility, quality of services and patients satisfaction with the delivery of services. Data would be collected for vulnerable groups in order to track the social development outcomes, together with health outcomes. These indicators would be incorporated into the regular HMIS being planned under the project, and tracked regularly. Furthermore, participatory monitoring would be included at different levels for improving transparency and accountability of health system. 7. Safeguard Policies:

30 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. (i) A Tribal Development Plan (TDP) focusing on meeting the specific health needs of ST has been developed by GOR after detailed consultations with ST and NGOs. The TDP aims to ensure the following: a. Strengthening service delivery at district, sub-district and CHC hospitals located in tribal areas, and strengthening linkages between primary and secondary health care levels; b. Developing an incentive package and training for doctors and other medical staff, from public and private sectors, to encourage them to work in these areas; c. Improving non-tribal medical systems through appropriate BCC and training; and; d. Reducing the cost of services to ST through strengthening or adjusting the existing user fees exemption schemes of the government. The health and social development outcomes of TDP would be monitored within HMIS. (ii) A Health Care Waste Mwagement Action Plan has been developed which details the project actions to be taken for the finalization of a HCWM program for Rajasthan. (iii) The project would strictly follow engineering and civil construction codes that exist for the state during planning and implementation of new health care facilities. Particular attention would be given to water, sewerage and construction-related debris. This project would carry out extension andor renovation of district and sub-divisional hospitals, and Community Health Centers. No land acquisition would be required as health facilities would be built only where land is already in actual possession o f the government and where encroachers' and squatters' issues do not exist. The resettlement policy, therefore, does not apply. All civil works contracts would need to include a statement that all new constructions and extensions are on government land, without any displacement of people or their livelihood. If private land is donated, proper documentation would be required. F. Sustainability and Risks 1. Sustainability: Financial, institutional, technical, and social sustainability has been addressed in the design and preparation of the project. Financial sustainabilitv: The additional annual recurrent expenditure due to the project is expected to be below five percent of the state Non-plan budget when the project comes to an end, so that continuation of the activities initiated under the project operation and maintenance of civil works and equipment provided under the project are not expected to be curtailed because of lack of funds. Financial sustainability would be also aided by the fact that cost recovery would be enhanced at health care institutions, while ensuring that a mechanism is in place to exempt the poor. Such funds are to be retained at the institution and used for non-salary recurrent costs. It is expected, from the successful experience of other state health systems projects, that cost recovery could defray up to 15 percent of non-salary recurrent expenditures

31 Institutional sustainabilitv: The management of the project would be institutionalized at both state and district levels. As has been the case with other health systems development projects, these institutional arrangements would be expected to impact positively on the working of the DOHFW as a whole, as has been the case with the systems set up for the procurement of drugs and consumables. In addition, the computerized HMIS, and M&E mechanisms, as well as the health care waste management system and disease surveillance system would be intemalized into the overall state system over time. These tools would be vital to focusing program inputs and maintaining the momentum of the program. Technical Sustainability: Updating the technical paradigms, streamlining services and integrating the referral chain, working with the private sector, and focusing on clinical and management training would be steps taken to ensure a system that i s technically and managerially more sustainable than before the project. Social Sustainabilitv: Sustainability and efficiency would be both enhanced by actively involving beneficiaries in the design, implementation and monitoring of the project. Effective partnerships with the private/ngo sectors would be developed in the course of project implementation that would continue beyond the project period. The project would develop and implement Behavior Change Communication (BCC) strategies at different levels to raise provider awareness on providing services to the vulnerable groups and raise awareness and motivation of women, BPL, ST, SC and other vulnerable groups to demand quality services at public health care institutions. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk :Tom Outputs to Objective 'he overall financial status o f the state is, risk. This may have implications for llocations of funds to the health sector Risk Rating 1 Risk Mitigation Measure M The Project Agreement states that starting from FY and until FY , Rejasthan will: (a) make non-plan budget allocations for the health and family welfare sector in each annual budget in a manner so as to maintain such allocation at least at the level obtained in FY ; (b) increase the non-plan expenditures in each fiscal year for the primary and secondary levels of health care within the total resources allocated to the health and family welfare sector; and (c) within the budgetary framework as set out in (a) above, ensure that adequate allocations are established and maintained for drugs, essential supplies and maintenance of equipment and buildings at primary and secondary level health care facilities in accordance with norms set out in the Project Implementation Plan; and (d) ensure full utilization of the resources allocated in accordance with (a) and (c) above. The financial status of the health sector will be assessed as part of the mid-term review. institutional arrangements are not S Specific plans are in place to bring about

32 effective in carrying out systemic improvements, and in integrating centrally sponsored health and family welfare and state health concerns Productive institutional linkages with the private sector are not established (G,M) Provider behavior cannot be changed. H M systemic improvements, based on a common understanding developed through a participatory approach. Seminars, workshops and other informal collaboration would occur between Rajasthan and other states implementing state health systems projects to share and learn from experience Specific norms and regulations would be defined and agreed upon. Information sharing, pilot studies would be encouraged. A mechanism is in place to involve stakeholders in implementation and monitoring. Patient Satisfaction Surveys would be regularly conducted to monitor provider behavior. Training and capacity building programs aimed at changing provider attitudes and behavior would be carried out. Non-salary incentives would be offered to providers in remote and rural areas to prevent absenteeism and other provider problems BCC strategy focusing on both providers to provide user oriented services and users to be able to demand quality services. Monitoring of the Tribal Development Plan and Gender Action Plan developed for the project, by the PMU, district and village level designatec officers will identify further input. Flow of funds from GOR to Implementing Units Delays in implementation due to slow procurement and recruitment of key staff. S S The government has set up an administrative mechanism to ensure adequate financial management, including flow of funds The first year procurement packages are in place. Start-up o f construction activities and procurement of equipment is being planned well in advance and would be undertaken by specialized agencies for the first year of the project

33 knds are not made available for ion-wage recurrent expenditures, :specially drugs, medical supplies, and nobility allowances. lelays in putting project management ;taff in place Siven the tight fiscal condition of the state here is a risk of delay in flow of funds to he project in a timely manner. M M S The government has undertaken in the Policy Letter to: make adequate budgetary allocations for recurrent expenditures, including drugs and essential supplies; and continue the implementation of a user charge policy to supplement budgetary resources. The core project management staff are in place. A suitable risk mitigating measure which would provide for a quarterly credit in the PD account and the separate bank account for the project (at the PMU and districts) outside the treasury system has been agreed. It was also confirmed by the Additional Chief Secretary (Finance) that government. contribution in EAP where the government s share is not more than percent would not be a constraint and further that externally aided projects are not subject to any embargo on the release of funds for the project The accountants at the districts may not )e exposed to double entry accounting and.eporting. This could cause delays in inancial reporting and audit. herall Risk Rating :isk Rating - H (High Risk), S (Substantial Ris M S I, M (Modest Risk), P PMU would closely monitor the financial aspects and would be adequately staffed with experienced personnel for this purpose. Formats for monthly reporting of expenditures and funds transfers to the districts would be a part of the reporting system and included in the financial manual. Training will be provided to all accounting staff at the inception of the project. Also as most of the expenditures would be incurred and accounted at the PMU (over 70 percent of the project cost), the financial involvement at each district would be minimal. Negligible or Low Risk) 3. Possible Controversial Aspects: Development of a regulatory framework for the private sector may be opposed by those whose business is affected. G. Main Conditions 1. Effectiveness Condition There are no special conditions of effectiveness other than the standard legal opinions

34 2. Other [classify according to covenant types used in the Legal Agreements.] Other coven ants : At negotiations, GOR provided the following assurances: 1. For the purpose of managing the implementation of the Project, Rajasthan shall (a) establish an institutional structure consisting of (i) a Strategic Planning Cell at the State level, (ii) a State Empowered Committee at the State level, (iii) a Project Steering Committee at the State level, (iv) a Project Management Unit at the State level, (v) Project Coordination and monitoring committees at the District level, and (vi) District Project Management Cells at the District level, all with composition, powers, functions, and resources satisfactory to the Association; (b) no later than 30 days after the Effective Date, make these institutions fully functional and operational including the completion of recruitment of all required personnel; (c) maintain these institutions with composition, powers, functions, and resources satisfactory to the Association. 2. Rajasthan shall implement the Health Care Waste Management Action Plan in accordance with the objectives, policies, procedures, time schedules and other provisions set forth in such Plan. 3. Rajasthan shall implement the Tribal Development Plan in accordance with the objectives, policies, procedures, time schedules and other provisions set forth in such Plan. 4. Rajasthan shall employ qualified consultants to complete not later than March 3 1,2008 an independent impact evaluation report with respect to the implementation of the Health Care Waste Management Action Plan and the Tribal Development Plan, and the outcomes thereof. 5. Rajasthan shall appoint in accordance with TORS satisfactory to the Association (IDA)(i) a financial advisor and chief accounts officer, and (ii) a finance manager, both having qualification and experience satisfactory to the Association no later than 30 days after the Effective Date; and ensure that these positions remain filled throughout the implementation of the Project. 6. Rajasthan shall starting from FY and until FY shall (a) make non-plan budget allocations for the health and family welfare sector in each annual budget in a manner so as to maintain such allocation at least at the level FY ; (b) increase the non-plan expenditures in each fiscal year for the primary and secondary levels of health care within the total resources allocated to the health and family welfare sector in accordance with the above; (c) within the budgetary framework as set out above, ensure that adequate allocations are established and maintained for drugs, essential supplies and maintenance of equipment and buildings at primary and secondary level health care facilities in accordance with norms set out in the Project Implementation Plan. 7. Rajasthan shall (a) carry out assessments of the current functioning of Medical Relief Societies and Below-the-Poverty-Line Medical Card Schemes, as well as for the design of community-based health insurance schemes; (b) based on such assessments prepare action plans containing a package of interventions to strengthen access and provide financial protection to the poor including a timetable for implementation no later than October 3 1, 2006; and (c) implement such action plans in a manner satisfactory to IDA

35 8. Rajasthan shall (a) Develop and implement thereafter (i) clinical norms focusing on staffing, equipment and drug management for district and sub-divisional hospitals, (ii) guidelines to improve the quality of services at government health facilities including monitoring indicators, and (iii) a referral mechanism defining the norms of service and improving the linkages among different tiers of the health care delivery system no later than September 30,2004; (b) ensure the continuous provision of quality services in the hospitals up-graded or renovated under the Project, and take all action to bring into operation, no later than six months after the upgrading or renovation of a hospital, the clinical norms, the quality improvement guidelines, and the referral mechanism referred above. 9. Rajasthan shall bring into operation a computerized financial management system at the PMU, which can adequately record the resources of, and expenditures incurred or made, under the Project, no later than December 3 1, Rajasthan shall ensure that no civil works shall be camed out under the Project that will require the acquisition of land in any form and that may result in the involuntary resettlement of people Rajasthan shall (a) Complete under terms of reference cleared by IDA, an assessment of the role of the private sector in delivering health services and strategies for monitoring such services by March 3 1, 2005; (b) design different models of public-private collaboration by September 30, 2005; and (c) implement such models in accordance with arrangements and timetable satisfactory to IDA. 12. Rajasthan shall design a regulatory framework, satisfactory to IDA, for improving the quality of health services provided by the private sector by December 3 1, Rajasthan shall review with IDA by April 30 of each Fiscal Year, during the implementation of the Project, the progress made to date on implementing the Project and shall furnish to IDA an annual plan covering the range of activities to be undertaken under the Project during that Fiscal Year. 14. Rajasthan shall: (a) Maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Association, the carrying out of the Project and the achievement of the objectives thereof; (b) Under terms of reference satisfactory to the Association, and provided to IDA no later than October 3 1,2006 a report integrating the results of the monitoring and evaluation activities on the progress achieved in implementing the Project during the period preceding the date of report, and setting out the recommendtions to ensure efficient project implementation and the achievement of the objectives during the period following this date; (c) Carry out jointly with IDA a Mid Term Review of the progress made by the project, no later than January

36 H. Readiness for Implementation [xi 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation b) Not applicable. IXI 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. El 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [? 4. The following items are lacking and are discussed under loan conditions (Section G): None. Note- The engineering design documents and procurement documents for the first year's activities are expected to be completed and ready for project implementation prior to project effectiveness. 1. Compliance with Bank Policies IXI 1. This project complies with all applicable Bank policies The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Sadia Afioze Chodhury Team Leader Sector ManagerlDirector () -- ' Country ManagerlDirector

37 Annex 1: Project Design Summary INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Hierarchy of Objectives iector-related CAS Goal: Key Performance Indicators iector Indicators: Data Collection Strategy iectorl country reports: Critical Assumptions rom Goal to Bank Mission) -0 improve the health status if the population of Lajasthan, especially the poor.nd tribal population, in line vith the Millennium levelopment Goals nfant and child mortality ates; maternal mortality rate s proxied by the proportion f safe deliveries [target for lese three indicators is to chieve an improvement of at :ast 25% over the baseline igures in the five-year period The indicators will e measured separately for the eneral population, lelow-the-poverty-line ouseholds, and tribal groups -Baseline and end-of-project tudies -NFHS and RCH household urveys road-based improvements in ie health of the population of ajasthan would contribute to icreased productivity and ltimately to poverty :duction 'roject Development lbjective: htcome I Impact ndicators: 'roject reports:?om Objective to Goal) 'DO1 : Increase access to iealth care of poor (BPL) and inderserved population Increased utilization of government health services by the poor (BPL households) and Scheduled Tribes population. Increased proportion of BPLlScheduled Tribe patients at different levels of government health care facilities. Increased number of BPLlScheduled Tribe patients exempted from user fees at government health care facilities Increased awareness of poor and tribal households of health services offered at different levels of government services -Department of Medical, lealth and Family Welfare )regress reports -HMIS reports from the iospitals and other levels of iealth care facilities -Patient satisfaction surveys -Periodic project evaluation eports (including mid-term eport) -Periodic RCH District Surveys (households and kilities) Government health services are of high enough quality to ensure that utilization of these services does lead to improved health status (reduced morbidity and premature mortality) The Government of Rajasthan would ensure special assistance is given to the poor and tribal population in case of drought-induced famine. 'D02: Improve the :ffectiveness of health care hrough institutional levelopment and increase in he quality of health care. 0 Constant or rising (relative to the FY levels) expenditure on primary and secondary levels of care. -Annual State budget -Treasury/Finance Iepartment (for actual xpenditures) 0 The populati n of Rajasthan will continue to utilize government health services in the same or larger proportion

38 0 Increased proportion of non-wage health expenditure. [baseline is 20% in FY Increased proportion of facilities staffed according to agreed norms. 0 Decreased irrational use of drugs in health care facilities 0 Increased patient and community satisfaction with primary and secondary levels of health care services. 0 Increased number of appropriate referrals at CHCs, District and Sub Divisional hospitals from PHCs and Sub-centers. 0 Increased health care utilization in terms of number of outpatient visits; hospital admissions; and deliveries. --Department of Medical, Health and Family Welfare Finance Unit (for actual health expenditures) --Prescription Audits --Health Management --Information System (facility-based) --Patient satisfaction surveys (exit interviews) --Department of Medical, Health, and Family Welfare Annual and Six- monthly progress reports. --Periodic project evaluation reports (including mid-term report) 0 The incidence of consumption poverty in Rajasthan remains the same or declines. Output from each Component: htput Indicators: Project reports: from Outputs to Objective) Component 1 : Policy Development and Project Management Improving the Institutional Framework for Policy Development (i) Establishment and operation of a Strategic Planning Cell (ii) Development of a strategy for Public-Private Partnerships (iii) Implementation of Public-Private Partnerships strategy i) The Strategic Planning ;ell is established and unctioning satisfactorily by vlarch ii) Strategy developed and greed. iii) Indicators to be developed )rice strategy is agreed jeptember 2005 Quarterly project progress and disbursement reports Supervision mission reports Annual project reports Health Management Information Systems Audits for HMIS data

39 (iv) Carrying out of private sector diagnostidassessment (v) Design of a regulatory framework blueprint for private health services (Iv) Private sector diagnostidassessment completed by March 2005 (v) Blueprint completed by December 2005 validation. Strengthening Man agemen t and implementation capacity (i) Establishment and operation of the state and District level project management and oversight structures Strengthening Human Resources: Training and Capacity Building (i) Establishment of Hospital Training Complexes in 32 District Hospitals (ii) Provision of trainer s training for 576 staff (i)the State Empowered Committee, the Project Steering Committee, the Project Implementation Unit, and the District Project Management Cells established and functioning satisfactorily by March 2004 (i) Number of Hospital Training Complexes establishedby March 2005 (ii) Number of trainers trained. (iii) Provision of management training for 2,788 staff (iv) Provision of clinical/technical training for 8,837 staff (v) Provision of health systems training for 8,698 staff [training in HMIS, IEC, drug management, equipment management] (iii) Number provided management training annually from March 2005 [iv) Number provided :linical/technical training annually from March 2005 :v) Number provided health systems training annually From March 2005 Strengthening the Health Management and Information System (i) Establishment and operation of a Quality and Systems Improvement Cell in the Project Implementation Unit :i) Cell established and imctioning satisfactorily by \/Iarch Managers utilize the data from the HMIS for decision making

40 (ii) Development and implementation of an improved HMIS (iii) Validation of HMIS data and training (ii) Number of govemment health facilities with strengthened HMIS operating. Number of facilities providing reports in the agreed formats annually from September 2005 (iii) Degree of discrepancy between HMIS data and the corresponding data from validation surveys by March 2007 Component 2: Development of primary and secondary health care services in the public sector Physical Renovation and Upgrading of Health Facilities (i) Renovatiodupgrading of 28 district hospitals, 23 sub-divisional hospitals, 185 CHCs, and 2 BPHCs (ii) Provision to the upgraded facilities of new equipment and furniture (i) Number of health facilities renovatedupgraded by type of facility annually by March 2005 (ii) Number of facilities equipped with appropriate equipment and furniture annually from March 2005 Quarterly project progress and disbursement reports Supervision mission reports Annual project reports Health Management Information Systems 0 Staffin the renovatedupgraded facilities are motivated to utilize these facilities for improved services. (iii) Implementation of the Health Care Waste Management Plan Improvements in the Quality of Clinical Management and Support services Improved drugs and hospital supplies. (iii) Number of facilities (by type) with a Health Care Waste Management Plan annually from September 2005 (iv) Number of facilities implementing their Health Care Waste Management Plan. Proportion of drugs available at facilities that are included in the Essential Drugs List. Monthly average number of Audits for HMIS data validation. Hospital performance rating surveys Quarterly project progress and disbursement reports Supervision mission reports Annual project reports

41 Development and implementation of Quality [mprovement Guidelines Development of guidelines and capacity in equipment use md maintenance Establishment of monitoring systems for: Use and maintenance of Squipment quality of clinical care Patient satisfaction Hospital performance HCWM practices at upgraded facilities ;tockouts of essential drugs by ype of facility. :i)development of guidelines :ompleted by September, ) Number of Equipment VIaintenance Units :stablished. lealth Management nformation Systems iudits for HMIS data Falidation. lospital performance rating urveys itatus reports on mplementation of tribal trategy. lmprovement of Referral Mechanisms (i) Development and implementation of referral guidelinesiprotocols including training :i) Guidelinesiprotocols :ompleted by September 2004 (ii) Review of the effectiveness of referral systems ji) Number of women with ibstetric emergencies referred o FRUs, Sub-district and listrict Hospitals. Component 3: Health Care Innovations for the Disadvantaged lmproving Health-Seeking Behavior (i) Development of IEC strategy and materials for (a) facility-based IEC activities (for the general population) and (b) for BPLiSCT population. (ii) Implementation of IEC strategy for BPLiSCT population. :i) IEC strategy and materials leveloped for (a) and (b). ii) Number of NGOs :ontracted for awareness ;eneration concerning key ispects of women and child iealth annually from March!004 0 The implementation of the IEC activities impact! household health-seeking behavior significantly

42 Enhancing access to care (i) Implementation of tribal strategy (ii) Renovatiodupgrading of 138 CHCs/BPHCs in tribal and poor districts including the provision of required equipment, furniture and drugs (iii) Studies of: (a) existing schemes for user fee exemption of the poor in the state and possible alternatives; and (b) community-based health insurance. :i) A set of indicators is included in the Tribal Development Plan. :ii) Number of CHCdBPHCs :enovated/upgraded.,... jn) Studies completed by March 2005 (iv) Agreement on package of interventions for user fee exemption and community-based health insurance. (v) Piloting of innovations for improving existing user fee exemption schemes for the poor (vi) Piloting of community-based health insurance schemes :iv) Package of interventions :ompleted by March 2005 :v) Number of Medical Relief Societies piloting innovations.o start September 2005 :vi) Number of districts with iilots in community-based iealth insurance. (vii) Evaluation of innovative schemes and formulation of plans for scaling up Development of mblic-private partnerships (i) Design and implementation of public-private partnership models for the provision of health care: a. Contracting NGOs for :ribal and poor population, for?revision of services and Jemand generation through interpersonal IEC. b. Contracting with the for-profit private sector for ion-clinical/support services i) Number of models mplemented. I I

43 at government health care facilities. c. On a pilot basis, contracting with for-profit private sector for diagnostic and pharmacy services. (ii) Independent assessment 0: public-private partnership models (as implementation proceeds) Project Components I Sub-components: nputs: (budget for each :omponent) Project reports: from Components to 2utputs) Component 1 : Policy Development and Program Management US$19.97 million) Quarterly progress and disbursement reports 0 Adequate and timely flow of funds from the GOR to the State Government and from GOR to the PMU. 0 Timely appointment of staff and consultants. 0 Continuity ofkey staff at the State and District level implementation Cell Component 2: Development of Primary and Secondary Health Care (US$ million) Supervision mission reports Mid-term review and evaluation mission reports Timely completion of all planned procurement Adequate funds for non-wage recurrent expenditures such as drugs, medical supplies, maintenance, and mobility allowances. Component 3: Health Care Innovations for Poor and Tribal Households (US$ million) Project audits 0 Private providers interested in working with the GOR. 0 GOR has good capacity to identify, design and monitor the different public-private models,

44 By Component: Annex 2: Detailed Project Description INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Project Component 1 - US$19.97 million Project Management, Policy Development and Capacity Building 1.1 Project Management Project management will be the joint responsibility of a number of entities at both the state and district level. For the governance of the project, the GOR will establish a State Empowered Committee and a Project Steering Committee at the state level, and Project Coordination and Monitoring Committees at the district level. For the actual implementation of the project, a Project Management Unit (PMU) will be created within the Directorate of Health, at the state level, and District Project Management Cells will be created at district level. Details about the roles of these various entities are given below. State Empowered Committee (SEC) At the top of the management structure there will be a State Empowered Committee (SEC), headed by the Chief Secretary, Government of Rajasthan and comprising high-level representation from all the concerned departments of the State Government. The SEC will consist of the following members: Principal Secretary, Medical, Health and Family Welfare; Secretaries of the Departments of Finance, Planning, PWD, and Tribal Welfare; Special Secretary, Medical, Health and Family Welfare; Project Director; and representatives from the Government of India. This body will solve inter-departmental coordination problems, approve the project s annual action plans, review project implementation progress, and issue directions for more effective implementation. The committee would meet at least twice a year. Project Steering Committee (PSC) The second tier of project management will be a Project Steering Committee (PSC), headed by the Principal Secretary, Medical, Health and Family Welfare. The committee will have as its members the Chief Engineer, Public Works Department (PWD); Special Secretaries of Health and Finance; the Project Director; and the Directors of Public Health, Family Welfare, IEC, AIDS Control Program and the State Institute of Health and Family Welfare. The committee will supervise and guide the Project Implementation Unit, seek coordination with centrally-assisted disease control and reproductive health program, reduce overlap/duplication between projects, monitor funds flow, and facilitate smooth implementation of the project. The PSC will meet every month. Project Management Unit (PMU) A Project Management Unit (PMU) will be set up within the Department of Medical, Health and Family Welfare, in order to implement and coordinate project activities. The PMU will have the following functions: (i) plan, implement and supervise all activities and components of the project directly or through various agencies, i.e., PWD, Directorate of Medical and Health Services (DMHS), State Institute for Health and Family Welfare (SIHFW); (ii) supervise and monitor the project; (iii) submit progress and financial reports to the Project Steering Committee, Government of India and the Bank; (iv) regulate and facilitate funds flow to implementing agencies; (v) ensure adherence to Bank procurement guidelines for all

45 procurement supported through project funds; (vi) maintain appropriate accounts and their timely audit as per Bank requirements; (vii) ensure quality in implementation of project activities; and (viii) maintain close liaison with Government of India and the Bank for smooth implementation of the project. The P MU will be headed by a Project Director, who will be an Indian Administrative Service (IAS) officer. The Project Director will report directly to the Principal Secretary, Medical, Health and Family Welfare, Government of Rajasthan and will have full financial authority as Head of Department. The PMU will consist of the following seven cells: 1. Strategic Planning Cell Equipment Procurement and Maintenance Cell Engineering (Civil Works) Cell 4. Financial Management Cell Quality and Systems Improvement Cell Human Resources Cell 7. Community Access and Equity Initiatives Cell To promote teamwork and joint decision making, the PMU will have a Project Implementation Board consisting of the Project Director (also representing the Strategic Planning Cell) and heads of the other six cells. The role of the Strategic Planning Cell is described in detail in the section (1.2) below. The Equipment Procurement and Maintenance Cell will oversee the procurement of equipment and other goods under the various project sub-components. It will also manage the maintenance of the equipment. The Engineering (Civil Works) Cell will oversee the execution of all civil works proposed under the Project. The responsibilities of the Engineering Cell will be to manage the contracting out of design and construction o f civil works to private sector architects I consultants and contractors, and to coordinate and supervise their work. The Financial Management Cell will be responsible for establishment of the agreed financial management arrangements, providing timely financial reports to the stakeholders including the Bank, ensuring smooth and timely flow of funds and providing overall guidance in respect of the financial management issues for the project. Several activities are envisaged in the project to improve quality of government health services, including the establishment of clinical care standards and protocols for implementation of these standards, an improved information system for monitoring quality, and a hospital waste management program. The Quality and Systems Improvement cell will ensure implementation of these activities. Considerable experience is available in other states which are implementing projects to strengthen health systems. To benefit from these experiences and also to rapidly strengthen necessary skills in the PMU, a process of intensive collaboration with relevant personnel in other states needs to be implemented. Several workshops have been held to initiate this process. The GOR will follow up this initiative with study tours and exchange of experiences, as well as seeking hands-on assistance. Enhancing necessary staff competencies is critical for improving performance. Therefore, staff will be

46 assisted in assessing their own competency development needs and accessing necessary training programs planned under the project. In the third year a second round of competency assessments will be carried out which will help monitor the progress made and make corrections as needed. The Human Resources Cell of the P MU will provide guidance for staff training and the District Project Management Cells will implement the training activities. The Community Access and Equity Initiatives Cell will ensure implementation of community IEC and communication activities to improve health-seeking behavior, as well as advocacy activities with key stakeholders in order to create a social and political environment favorable to the improvement of access to health services by the disadvantaged. As several interventions to enhance access and equity will be new and there are considerable knowledge gaps, the Cell will commission necessary studies, as well as collaborate with relevant institutions/organizations to ensure implementation of the innovative activities. Its work will lead to (a) strengthening of the existing government scheme to enhance access for the poor by exempting them from paying user fees; (b) enhanced public-private partnership in health care; and (c) pilot testing of community-based health insurance schemes. District Project Coordination and Monitoring Committees A District Project Coordination and Monitoring Committee will be set up in each district in order to ensure coordination among various departments within the district for timely completion of the project activities, review project progress and remove bottlenecks, and approve the annual action plans for the district. In each district, the Committee will be merged with the existing District Health Society to make integration with other sectors and programs easier. District Project Management Cell A District Project Management Cell will be set up in each district in the office of the Chief Medical and Health Officer (CMHO). The Cell will assist the CMHO and the Principal Medical Officer (PMO) of the district hospital in effective implementation of the project activities at the district level. For this purpose, it will prepare annual plans and get them approved by the District Project Coordination and Monitoring Committee, prepare the progress reports for submission to the PMU, and coordinate implementation of the activities among various agencies. It will assist the PMU in: (a) local procurement; (b) facilitation and monitoring the provision of project inputs at the district level; (c) implementation of the systems for logistics, health management information, monitoring and evaluation, and referral linkages; and (d) competency assessment and training plans for the staff. It will also assist the Community Access and Equity Initiatives Cell to implement project activities at district level within Project Component 3. Staff selection for project management will be made through a special selection process. Efforts will be made to select the staff from the government, on deputation for the duration of the project. Professionals will be engaged on a contractual basis as consultants where government staff are not be available Policy Development The capacity for health policy development and planning in Rajasthan will be strengthened through the establishment of a Strategic Planning Cell (SPC) in the PMU. The SPC will have a special focus on two areas: exploring the possibility and potential of expanded public-private collaboration in the context of the health sector; and resource allocation within the public sector including manpower issues

47 Design and Implementation of Strategies for Public-Private Partnership Private providers potentially represent an important component of GOR s strategy to increase access of the poor to basic health services of adequate quality. NGOs already have a record in Rajasthan of developing innovative approaches to reaching the poor and underserved populations. Also, over the past two years the GOR has developed a policy framework that seeks to promote greater collaboration with private (for profit) providers of health care services. To develop public-private collaborative models that can be brought to scale in line with the GOR s health priorities, the project will support the following initiatives: (i) develop the initial regulatory and policy framework to guide development and implementation of different modalities of public-private collaboration, (ii) test different models of public-private collaboration, with a view to scaling up successful models over the medium term, (iii) fill information gaps regarding the scope and nature of private health services, and (iv) build the requisite capacity of GOR to design, negotiate, monitor and evaluate the different public-private models. Consultative Worhxhops The PMU will initiate these efforts through a series of consultative workshops with major stakeholders (senior government officials, leading professionals, community leaders, and representatives of major NGOs, women s groups, and other private sector entities). The workshops are expected to expand the dialogue with the private sector and create support for an expanded private-public partnership in the state s health sector. They will allow state policy makers to have a better understanding of the extent and quality of services provided by private sector providers, including the small scalehformal health care providers. Workshop participants will be encouraged to share their views and concerns regarding private sector participation in health service delivery. Expected outcomes of the first consultative workshop will include: (i) enhanced understanding by GOR and local stakeholders of the different options and design and implementation issues to be addressed in developing public-private partnerships; and (ii) increased communication and information exchange between the different public and private stakeholders. During the workshops, experiences from India, South Asia and outside the region would be shared with local stakeholders. Presenters of these experiences would include parties actively involved in the design, implementation, monitoring and evaluation of such initiatives. The first workshop will take place within the first six months of credit effectiveness. Private Sector Diagnosis Though the GOR is interested in developing pilot contracting approaches to test the efficiency and effectiveness of private providers, it faces important information gaps related to (i) the type, of services, their quality, location, profile of clients served, and costs of private health care providers Rajasthan; (ii) policy, legal, regulatory, and other constraints that impair the ability or diminish the interest of private providers in serving low-income populations; and (iii) potential public-private models that private providers would be interested in developing with the Government. Without this baseline information, the Government is significantly constrained in its ability to develop a systematic and effective approach to working and contracting with private providers. The GOR will undertake a Private Sector Diagnosis/Assessment to secure the necessary information to develop partnership initiatives with private providers. The Diagnosis will be expected to generate sufficient information to support and expedite the GOR s activities to develop pilot initiatives. The Diagnosis is also -41 -

48 expected to further the dialogue with the private sector. More specifically the key issues to be addressed through the Diagnosis will include information on the groups of private providers which are relevant given the GOR s health priorities; their location and constraints; the general cost and quality of their services; their general level of interest in working with the GOR; the factors that negatively affect the cost and quality of services offered by them to the poor; the aspects of their behavior which need to change in order to ensure that the GOR s health priorities are achieved; the prevalence of undesirable practices undertaken by them such as fee splitting, over-prescription of drugs and diagnostic tests, inadequate fulfillment of standards, inadequate information given to patients, inappropriate use of medical technology and inadequate sterilization or waste disposal methods; the monetary or non-monetary incentives that would increase their efficiency and quality of services to the poor; their interest in working under contractual arrangements where payments are conditional upon the actual delivery of services or achievement of certain health outcomes; their degree of awareness and their perception of the effectiveness of government regulations (related to (i) manufacturing, sale and prescription of pharmaceutical drugs; (ii) medical and clinical practices including licensing, basic code of conduct, negligence and consumer complaints; and (iii) service facilities, technology and manpower. In order to focus the results of the Diagnosis, it will be targeted to a set of specific services, type of providers (for-profit vs. non-profit) and geographic location. In addition to the workshops, a study tour of actual contracting experiences will be arranged for key local stakeholders. Design a Regulatory Framework The project will support the development of a regulatory framework under which the GOR will be able to formulate the arrangements to support the development of contracting mechanisms. It is anticipated that the arrangements initially developed will evolve, perhaps significantly, based on the initial results of implementing contracting. The regulatory framework will initially be aimed at a selected set of critical services and providers rather than attempt to address all services and all provider types. Key topics to be addressed in designing the regulatory framework will include: what regulatory approaches will best meet GOR s policy objectives; what are the governance, institutional, operational and funding arrangements for implementing the initial regulatory framework; what are the service cost, access and quality indicators that the regulatory framework will focus upon and how will these indicators be measured; the activities, budget and timetable to roll-out and sustain the regulatory framework through the first five years; and the necessary supporting information dissemination and stakeholder consultations and feedback mechanisms. This work will start shortly after the conclusion of the Private Sector Diagnosis and will take approximately one year to complete. Resource Allocation Within the Public Sector In addition to its work on public-private partnerships, the SPC will have a focus on improving resource allocation within the public sector, with a view to increasing both the efficiency and equity of govemment expenditure on health. A detailed agenda for this work will be developed during the second year of the project after a consultative process with key stakeholders

49 1.3 Health Management Information System The existing HMIS in the state will be strengthened. The present HMIS is limited to collecting information on services provided (number of outpatient contacts, number of inpatients, etc.). The strengthened HMIS will report on activity and efficiency indicators; selected indicators for key resources such as staff, financial status, essential equipment and drugs vital for service delivery; and waste disposal. The source of these data will be facility surveys. Detailed data on service utilization will be available from the NFHS and the RCH district based surveys. The project will: (i) develop standard formats for hospital record-keeping, improve storage facilities for medical records, and provide training for medical records personnel; (ii) strengthen district level capacity for data analysis by providing training to HMIS staff in data analysis and computer use, and providing appropriate equipment and supplies; and (iii) train state level personnel in data analysis. The Quality and Systems Improvement Cell in the PMU will be responsible for this sub-component, under the guidance of the Project Director. The existing disease surveillance system will also be strengthened and extended to the secondary level. The scope and content of this will be in accordance with, and be implemented with support from, the proposed National Disease Surveillance Project. The Quality and Systems Improvement Cell will also be responsible for setting up and operating the information system to track project inputs, activities, and outputs. 1.4 Training and Capacity Building A training needs assessment was completed during project preparation, and a detailed training plan for the entire project is provided in the PIP, As a part of the first year activities in this sub-component, a Hospital Training Complex will be created at all district hospitals; training materials developed, and Training of Trainers (TOT) provided. The State Institute for Health and Family Welfare (SIHFW) will be responsible for coordinating all the training activities in the project. However, given the mammoth task of the extensive training requirements, and the limited capacity within the public sector, the GOR has identified both public and private training institutions, including some outside Rajasthan, especially to conduct the management training. The training program proposed under the project can be categorized as follows: (i) management training, aimed at improving the management competency of state, district and local level health managers in areas such as district health planning, hospital management and administration, monitoring and evaluation, leadership and planning, and program implementation; (ii) clinical/ technical traininq, aimed at providing specialized and quality health care at primary and secondary levels through upgrading the skills of doctors, nurses and paramedical personnel; and (iii) health systems training, aimed at developing capacity in health information, quality assurance, health care waste management, equipment maintenance, and behavior change communication. Training will be imparted to a wide range of personnel including: administrators, district officials, specialists, general physicians, nurses, paramedical staff, technicians and non- technical staff/attendants (lower level staff such as ward boyiclass IV - for health care waste management), community and PRI members, and NGOs. Given the importance of measuring the output and impact of the training, monitoring and evaluation of the training activities will be conducted, both intemally as well through periodic extemal reviews. An extensive extemal evaluation of the training activities will be conducted at mid-term

50 Project Component 2 - US$52.70 million Development of Primary and Secondary Health Care Services in the Public Sector 2.1 Physical Renovation and Upgrading of Health Facilities This sub-component will be implemented statewide. It will consist of the physical renovation and upgrading of 28 district hospitals, 23 sub-divisional hospitals, 185 Community Health Centers (CHCs) and 2 Block Community Health Centers (BPHCs). The selection of the facilities for physical renovatiodupgrading has been made on the basis of a scoring system which took account of the following: (i) strategic location; (ii) access by disadvantaged groups; (iii) utilization rates; (iv) remoteness from district headquarter hospital; and, (v) the Planning Commission's norms for beds at the first referral level. A prerequisite for any facility to be included in the list was the guaranteed availability of water and power supplies. The poverty index of districts has been used to rank and prioritize the selection of the facilities to receive project support in the first year. No new hospitals will be built under the project, and the state government has confirmed that all premises slated for renovatiodextension have available land. Under this sub-component, the project will finance civil works, professional services, furniture, equipment, vehicles, building, vehicle and equipment maintenance and operational expenses. As part of the project preparation activities, a detailed exercise was undertaken for District and Sub-divisional hospitals and CHCs to define the types of clinical services to be provided at different levels of facilities, treatment guidelines, and the staffing norms appropriate for the identified services. Equipment and fimctional space norms consistent with the revised clinical norms have also been specified. Within six months of physical renovation of each facility, staff and equipment in line with the agreed norms will be put in place. Management of Health Care Waste The management of health care waste is an important element in providing quality health care. Improper treatment and disposal of biomedical, infectious and hazardous waste can have adverse impact on the environment and on public health through air, land and water pollution. However, since only about percent of waste generated from health care facilities is regarded as hazardous, its potential negative impacts can be adequately mitigated through systematic management of waste from source to disposal. The hazards posed by improper management of hospital waste is recognized by the government. Additionally the State Government i s responsible for complying with Government of India's Biomedical Rules. Therefore, the GOR has decided to develop and implement an efficient and sustainable health care waste management system (including segregation, storage, treatment and final disposal) at its facilities. As a first step, the GOR has prepared a detailed Health Care Waste Management Action Plan (HCWMP) for all renovatedupgraded facilities under the project, including the requirements in terms of civil works, equipment, and training and preliminary cost estimates. The key activity upon project effectiveness will be the further refining of the Plan, outlining the process for development of facility-specific HCWM plans, the roles and responsibilities of various parties, and detailed estimates of the costs per facility including the operating costs. Other activities will include establishment of institutional frameworks at the various levels, imparting training for staff and workers of health care facilities, and establishing monitoring and reporting systems. It is recognized that different sized facilities will have different requirements and it is envisaged that technical guidance will be provided for preparation o f "full" HCWM plans for district hospitals and "simplified" systems which would be more appropriate for small rural facilities. The Quality and Systems Improvement Cell will be responsible for the timely and effective implementation of the Action

51 Plan and the subsequent H CWM Program. 2.2 CHCs Improvements in the Quality of Clinical Services at District and Sub-divisional Hospitals and As explained above, the physical upgrading of health care facilities will be guided by the agreed revised clinical norms, and within six months of the physical renovation of each facility, staff and equipment in line with the agreed norms will be put in place. These inputs are expected to enable an improved quality of services. In addition, the project will support improvements in drug management and the development and implementation of Quality Improvement Guidelines. Drug Management Better availability of drugs at project facilities, along with improvements in drug prescribing practices, will be an important element in improving the quality of the health care delivered. An essential drugs list will be adopted by the state for different levels of facility, and will provide the templates for the procurement of drugs through the project. The prescribing patterns of service providers and drug use by patients would be addressed through a combination of background research, workshops, training and IEC, and assessed through follow up studies. Introduction of Quality Improvement Guidelines This sub-component would consist of the development and implementation of guidelines to improve the quality of services at government health facilities. This would entail first of all the definition of a core set of health service quality indicators, including such elements as the provision to patients of appropriate drugs, the good maintenance of equipment, and the degree of client satisfaction. The quality assurance indicators will be monitored periodically by senior staff of the state s Department of Medical, Health and Family Welfare andor independent inspectors hired for the purpose. Over a period of time, the quality improvement program would move towards grading of individual facilities, generating a competition between facilities and motivating them towards better performance (a system of incentives to this effect will have to be introduced). The quality improvement work will be spearheaded and monitored by the Quality and Systems Improvement Cell of the PMU. The cell would establish a working group to: (i) develop guidelines of quality improvement and assurance, and establish standard procedures, guidelines, registers, and task assignments at various levels; (ii) assess the data on the quality of clinical care at CHC, district hospitals and sub-divisional hospitals; (iii) identify suitable indicators for assessment of quality of care; (iv) set acceptable standards; (v) test methods of data collection on a pilot basis; and (vi) conduct and review pilots. Appropriate training programs for all levels of staff in quality assurance will be developed prior to launching the program state-wide. 2.3 Improvement of Referral Mechanisms A referral system is an institutional mechanism through which patients with health problems that cannot be managed at one level are identified in a timely manner, investigated and relatively promptly referred to an appropriate health care facility for appropriate treatment and follow-up. At present, the system in Rajasthan, as is the case in many other states, does not function adequately. It is estimated that about one third of all cases which are currently treated at the tertiary facilities in the state could be treated at lower costs at first referral facilities if those facilities received adequate inputs. Also, many of the cases treated at the district hospital could be treated at CHCs or PHCs

52 The project will support better linking of different tiers of the government s health care delivery system through a referral mechanism in which the norms of service have been clearly defined. Experience from other state health systems development projects indicates that the critical element of a referral system is feedback and completion of the referral loop. Initially, the project will focus on feedback for TB and emergency obstetric care (and also the mobile service camps in the tribal areas). This will help to strengthen referral linkages with the on-going Reproductive and Child Health and TB programs. Continuous monitoring will be incorporated into the system to ensure that referral protocols are followed and the reports are complete. The project will support the provision of greater access to Emergency Obstetric Care through the deployment of more skilled attendants during delivery in government facilities and the provision of transportation to referral facilities when necessary. These interventions will be of particular relevance to the Millennium Development Goals of improving maternal health and reducing child mortality. Project Component 3 - US$ million Health Care Innovations for the Disadvantaged The objective of this component is to improve access to health care among disadvantaged populations, in particular the tribal population and those households below the poverty line (BPL). Currently, the poor seek health care largely from unqualified informal providers, who provide generally low quality of care. A smaller proportion of the poor avail themselves of health care through formal public or private health care facilities. Here too, the quality of care is uncertain; and, as data indicate, results in significant out-of-pocket expenditures for them. The approach supported by the project will aim at: (i) improving health-seeking behavior of households; (ii) improving access to health care by the poor and tribal population by making their access to govemment health facilities easier; and (iii) further improving access to health care by the poor and tribal population through the development of public-private partnerships Improving Health Seeking Behavior The project will only support inter-personal IEC activities. The state s Department of Medical, Health and Family Welfare already has an ongoing mass-media program, which will continue during the duration of the project. The inter-personal IEC activities to be introduced with project support will be of two types: (i) Health care facility-based activities, which will aim at the behaviors of both providers and patients. These activities will take place in government health care facilities of various levels across Rajasthan, and will benefit the general population of the state. (ii) Inter-personal IEC activities carried out through NGOs contracted by the GOR to that effect. These activities will be targeted at the tribal and poor population. Facility-Based IEC Activities This sub-component will aim at promoting an improved understanding of the health care needs of the population among govemment service providers; provide the population with better information about the services available at various levels of government health care facilities; and motivate households to

53 effectively utilize these services. More specifically, this will include (a) providing appropriate information to the community, and to patients and their attendants, about the range of services available, drugs, other facilities, and the referral system through brochures, pamphlets and billboards (e.g. patient s charters); (b) implement an inter-personal communication campaign targeting the medical, paramedical, and other staff at the facilities to improve the quality of their communication with the patients and their attendants. Outreach IEC Activities This sub-component will be specifically targeted to the poor and tribal populations-- who are less able to access appropriate health care. Activities will be primarily implemented through NGOs that already have links to the targeted populations, using inter-personal communication techniques. The objective of this sub-component will be to influence the health-seeking behavior of households belonging to the targeted groups and orient them towards seeking safer health care. The focus will be on the community, empowering households to identify their health needs, seeking appropriate health care solutions, and improving basic hygiene and nutrition practices within the households themselves. The above inter-personal communication strategy will be further refined and,developed in the second year of the project. To achieve this, a consultant (IEC agency) will be appointed by the end of Year 1 in order to: (i) convert the strategy into a detailed action plan; (ii) produce the corresponding IEC materials; and (iii) pre-test the materials. At that point implementation of the IEC activities on the ground will start. 3.2 Improving Access of the Poor and Tribal Population to Government Health Care Facilities This part of the project comprises the implementation of a new tribal health care strategy; interventions to improve the existing schemes for user fee exemptions for those before the poverty line; and the piloting of community-health insurance schemes. Implementation of the Tribal Strategy The project will support the implementation of a new strategy to improve health services among the tribal populations of the state. The tribal strategy will comprise several elements as described below. (t) Strengthening service delivery at district and sub-divisional hospitals and Community Health Centers located in tribal areas: Selective strengthening of district and sub-divisional hospitals, and Community Health Centers (CHCs) in tribal areas will be carried out under the project. This will include improvements in infrastructure and equipment, staffing, and improved provision of drugs and supplies. The Department of Medical, Health and Family Welfare will set the following goals, to be met during the project period: (a) in each of the hospitals, deploy specialistkrained doctors in the following specialties: medicine, surgery, obstetrics, pediatrics and anesthesia; (b) reduce the number of vacancies in these facilities for all categories of staff; and (c) establish procedures to ensure that patients requiring emergency care receive the initial stabilizing treatment and are then referred to the next level of facility for appropriate care, and also ensure follow up. The project will support the upgrading of bedded CHCs and Block Primary Health Centers (BPHCs) in tribal areas, including improvement of facilities, equipment, drugs and trained manpower in accordance with agreed norms. The inputs of the project will be as described earlier under Component 11. (ii) Strengthening Service Delivery at the level of First Referral Units, Primary Health Centers, Sub-centers, and Villages: The Department of Medical, Health and Family Welfare project inputs will set

54 the following goals, to be met during the project period: (a) the services of specialistltrained doctors in the following specialties: medicine, surgery, obstetrics, pediatrics and anesthesia are available at Block PHCs and the First Referral Units; (b) reduce the number of vacancies in these facilities for all categories of staff (if necessary by providing for part time appointments). Where doctors are not in place in the PHCs, paramedical staff (namely male nurses and ANMs) will be provided additional training around the provision of an essential package of interventions. These cadres (particularly the ANMs) will receive additional supervision and support. Training will also be provided to staff to identify patients with emergencies for referral to the next level facility. (iii) Strengthening health camps in tribal areas: The project inputs will support strengthening of the Reproductive and Child Health Camps in tribal areas through: (i) training of outreach workers in the provision of an essential package of RCH services; (ii) strengthening of the referral network between the camps and public health facilities (PHCs and CHCs) and ensuring adequate follow-up; and, (iii) enhanced management and supervision of the quality of clinical services provided at such camps. (iv) Staff incentive package: GOR is considering introducing an incentive package to encourage government doctors to serve in tribal and other difficult areas. Ideas for incentives include preference for post-graduate education and giving a posting of choice after a certain number of years of service in tribal areas. All incentives would be non-cash incentives; the Strategic Planning Cell of the P MU will assist the GOR to reach a decision in this regard through an analysis of options, and their cost and management implications. (v) Contracting of local private doctors: Another strategy to be supported under the project for increasing access to health care services in tribal areas, is the contracting of local doctors to provide services in government facilities, particularly in areas where the government has difficulty in placing their own doctors. The GOR will identify those areas where the shortage of medical personnel i s most acute to implement this program. Private doctors will be contracted for one or two days every week at a fked honorarium. (vi) Integrating the tribal medical systems in the provision of essential services: As has been piloted in other state health systems states, it is proposed that traditional healers and unqualified service providers be involved in the provision of basic services at the community level. As an action research, the project will initiate the training of such service providers in one tribal district in the provision of the essential package and referral as part of their menu of services. The initiative would be evaluated at the end of a year, and after incorporating the feedback, would be implemented in the remaining tribal blocks. Implementation of Innovations for Strengthening Existing Government Schemes for Exemption to those Below Poverty Line Under the existing Below-the-Poverty-Line (BPL) Medical Card Scheme, those households identified as BPL (which are currently one-quarter of the total population of Rajasthan) are exempted from paying user fees at the government health care facilities allowed to charge them (i.e. CHC level and above). This scheme is administered at the facilities by an autonomous society, the Medical Relief Society (MRS). However, the initial review during project preparation showed that the poor are often prevented from benefiting from this scheme due to a variety of demand-side constraints (e.g. lack of knowledge about the scheme, cost of travel to the nearest public provider, perceived low quality of public health services) and supply-side constraints (e.g. failure of the Medical Relief Societies to identify and provide exemption to all BPL Card holders)

55 Data collected as a part of the review suggest that only a small percentage of all episodes of public health sector utilization by BPL households are provided for free under the BPL card scheme. BPL individuals often lack information about their rights and the facilities available under the scheme; there is no effective mechanism at facilities (with MRSs) to ensure that BPL individuals avail themselves of benefits under the scheme; the Management Information System for the MRSs is poorly organized - the information available is limited and of questionable reliability, which restricts its utility as a basis for managing the scheme; there is also no mechanism for ensuring that the MRSs spend the mandated 25 percent of total revenues on BPL patients; some MRSs carry over large balances from one year to the next, thus limiting their impact (in terms of quality improvement at the facility, or financial protection of the BPL populations). This sub-component aims to improve access to health care among the BPL by addressing these demand- and supply-side constraints. During the first year of the project, research will be carried out with two primary aims. First, assessing the current functioning of Medical Relief Societies and the BPL Medical Card scheme. Second, developing a package of interventions that can be implemented under this project in order to improve access to (and equity of) public health care facilities among the very poor, by enhancing utilization of this scheme. It has been agreed that the package of interventions will include IEC that targets BPL households, aimed at strengthening knowledge of, and demand for, the serviceshenefits available under the scheme; provide technical assistance to MRSs, to ensure that they have in place systems for evaluating the BPL status of all facility users, and exempting those who hold the BPL Medical Card; develop an HMIS so that the percentage of all outpatient and inpatient cases charged and exempted by the MRSs can be monitored; training of health care providers so that they are aware of the BPL Medical Card Scheme, and they are sensitive to the needs of the poor; improved quality of health care at secondary-level facilities (which will be addressed under Component 11); placing a patient advocate or social worker at all sub-divisional and district hospitals, to assist BPL individuals in accessing benefits under the scheme. Under the project, a Health Care Fund that would be used to subsidize the MRSs in the poorest areas will be established. The goal of this fund is to ensure that the amount of money available for spending per BPL total revenueshotal BPL population in target area) is roughly equal across the state. Ultimately, the facilities made available by the MRS should be similar across the state; essential services should be available at all facilities. The criteria of eligibility for the MRSs to receive these funds will be based on performance outcomes of agreed upon health and coverage indicators. These will be developed during the planned consultations with stakeholders. The package of interventions will first be implemented in three districts, during the second year of the project. It will then be scaled up, on a district-wise basis, until all 32 districts are covered in the final year of the project. Implementation of Innovations for Community-based Health Insurance Schemes (CBHI) In India, as in other developing countries, out-of-pocket spending on health care is burdensome, particularly among the poor. The high costs of care, particularly inpatient care, pose a barrier to health care seeking among the poor. Out-of-pocket payments on health care can push households into poverty, and can be particularly catastrophic for households that are already below the poverty line. Community-based health insurance (CBHI) is a mechanism that allows for pooling of resources of the households in a given locality in order to cover the costs of future, unpredictable health-related events. It may offer individuals and households protection against the uncertain risk of catastrophic medical expenses in exchange for the regular payment of premiums. The GOR expressed that any CBHI scheme designed for the State should be broad in scope. Unlike most CBHI schemes in India, they should cover not only the cost of hospitalization, but also the costs of

56 outpatient care, disability and possibly even death -perhaps an insurance package that includes some component of health, life and disability insurance. Furthermore, with respect to the hospital insurance component, CBHI in Rajasthan should avoid the exclusions common to most insurance schemes in India (e.g. exclusions of inpatient delivery and chronic conditions, exclusion of infants/ children and the elderly), as such exclusions would certainly limit the potential benefit of CBHI among the poor. While the intentions of the GOR are laudable, it should be noted that the broader the coverage of the insurance schemes the higher the premium to be paid periodically by participating households will be --unless the GOR decided to subsidize a large share of the costs from general revenues. During the first year of the project, research will be carried out, with the primary aim of designing Community-Based Health Insurance schemes that will ensure access and financial protection among the poor, and that will address the concems voiced by GOR as feasible. First, at the beginning of the year, a workshop will be held bringing together experts in CBHI, including key people from existing CBHI schemes from all over India. Second, during the course of the first year, research will be conducted in Rajasthan to assess the willingness to participate in, and pay for, community based health insurance. Simultaneously, several key personnel from the Project Implementation Unit will participate in a study tour to witness first-hand the functioning of several Indian CBHI schemes. Towards the end of the year, a meeting will be held in Rajasthan. This meeting will bring together key stakeholders from within the state, to summarize the findings of the prior activities (workshop, research and study-tour) and to decide on the site, design and management of CBHI schemes to be implemented under the project. During the second year of the project, three district-based, pilot CBHI schemes will be implemented. Three diverse districts will be selected by GOR, and the insurance package/premium offered will be similar in the three districts. The agency responsible for marketing the insurance, and thus the exact nature of the target population, may vary from one district to another - for example, possible implementing agencies include: NGOs, dairy cooperatives, NABARD and PRIs. At the end of the second year of the Project, these pilots will be carefully evaluated, and a decision taken as to whether they should be scaled-up, and if so, to how many districts. The Ministry of Health and Family Welfare (MOHFW) of the GO1 will, separate from this project, also be providing support to the GOR for the implementation of two pilot, district-based CBHI schemes. It is expected that the exploratory studies described above will also assist in the development of these pilots to be supported by the GOI. 3.3 Public- Private Partnership The previous section described the project-supported initiatives which aim at improving access of the poor (BPL households) and tribal population to health services provided out of government facilities (though the pilot community health insurance schemes are likely to include private health care providers on the supply side). The present section i s concerned with another type of project-supported initiative aimed at improving access of the poor and tribal population to essential health services. In this initiative, the GOR will contract with private health care providers (both for-profit and NGOs) for the provision of health services to the poor and tribal population. In other words, these will be services which are financed by the GOR but not provided out of GORs health facilities. A broad description of the preparatory work that will need to be carried out in order to launch contracting pilots has already been given in Section 1.2. (Policy Development). The present section elaborates on some aspects of the contracting initiative

57 Design and Implementation of Public -Private Partnership Models for Contracting Provision of Services In order for the contracting initiative to be implemented on the ground, it will be first be necessary to design the pilot contracting scheme(s). Design is planned to start within six months of project effectiveness, so that by the end of the first year, the GOR will be in a position to contract private providers of primary and essential referral services who are well suited to the provision of services to the poor and tribal population. Therefore the PMU, working in close cooperation with the Strategic Planning Cell, will devote the first year to: (i) develop the model service contracts to be entered into with private providers, (ii) identify those sites and activities for which they would enter into such service agreements; (iii) negotiate the basic terms and conditions of the service contracts with the private providers; and (iv) define the flow of funds arrangements to make sure that providers get paid in a timely manner. A consultant! agency will be contracted to provide technical assistance for these tasks. As currently envisioned the initial set of Targeted Health Services will focus on Reproductive and Child Health services, and communicable disease prevention and treatment. These services will be provided through NGOs, except for certain diagnostic services which may be provided directly by private for-profit providers. Pilot contracting will first be implemented in the tribal areas. Based on the results from an independent assessment planned for the end of the second year, the schemes will be replicated in other appropriate areas. The GOR is interested in assessing whether a performance-based contracting approach could be developed, where payments by the GOR to the NGOs would be linked to the achievement of certain health output or outcome indicators (e.g. TB cure rates, improvements in birth spacing, etc.). The specific activities necessary to develop the pilot contracting initiative include the following: (i) Hiring of technical staff with experience in needs assessment and costing analysis, contract administration, and operations and maintenance of MIS and related reporting systems. In addition, the PMU will employ consultants on an as-needed basis to assist with specialized tasks (Le., legal support in negotiating contracts, development of MIS, etc.). (ii) Development of a contract strategy that would address issues o f (a) how contracts are to be awarded (competitive bidding or non-competitive), (b) what criteria will be utilized to identify and select providers, (c) how payments will be determined, adjusted and potentially be tied to performance indicators, (d) support system requirements (e.g., MIS), (e) what type of training and technical assistance those responsible for contracting within the PMU may require to implement the different functions (design and award of contracts, monitoring and evaluation, administration of the contract, etc.), and (f) indicators to assess the success of the contracting pilots. (iii) Development of a contract template to be used as the basis for contracts issued under the project. (iv) Development of the management information system (and related user manual) to assist with the monitoring and evaluation of the contracting pilots. (v) Development of operating manual to assist staff in executing the required implementation activities. (vi) Design and execution of competitive tendering process and required documentation (RFP, -51 -

58 advertisement of RFP, award notices, rejection letters, etc.). (vii) Train staff regarding the design, award, negotiation, monitoring and funding of these agreements. (viii) Develop payment reimbursement mechanisms to compensate private providers. (ix) Execute contract award process and negotiate specific agreements. (x) Develop and implement information dissemination campaign, including stakeholder consultations, throughout the design and initial implementation process. The Franchiser Model of Contracting The above model of contracting, where the GOR would enter into contracts with NGOs who will themselves provide the contracted services, is suitable for large NGOs. It would not, however, be suitable for small-scale NGOs and other more informal private providers who might nevertheless have valuable potential contributions to make in this context. This is because the administrative burden on the PMU would be overwhelming if they had to contract directly with a large number of small-scale providers. To circumvent this problem, the project will pilot a "franchiser" modality of contracting. In this modality, the GOR will enter a contract for provision of services with a large NGO who will in turn enter into contractual relationships with a number of small-scale providers as appropriate, The "franchiser" NGO would effectively become the purchasing agent for a defined package of primary and secondary health care services for a defined population or catchment area. The franchiser would be responsible for selecting the providers and operating the business relationship with each one. In addition, the franchiser will provide a range of support services that would be key to the successful operation of the scheme, including: (i) initial and periodic certification of the providers, (ii) provision to providers of technical assistance and training, (iii) assist in securing pharmaceuticals or other required inputs on behalf of the providers, (iv) monitor and evaluate provider performance, and (v) brand marketing and possibly even demand generation efforts to assist the providers in increasing their client base. The GOR would enter into an arms-length contractual arrangement with the franchiser. Under this agreement, a portion of the payments made by GOR to the franchiser would be tied to the latter's ability to achieve certain goals in terms of (for example) the following types of indicators: 0 0 Output indicators ( percent of children aged months fully immunized, percent of women with a delivery in the past year who received two or more tetanus toxoid doses, at least one of which was during pregnancy, percent of women who received two or more antenatal checks during which blood pressure was measured at least once, percent o f BPL children aged 6-60 months who had received high-dose Vitamin A twice in the past 12 months, etc.). Outcome indicators ( percent of women who gave birth in the past 24 months who knew four or more modem methods of family planning and locations to receive these services, improvements in birth spacing, TB cure rates, etc.) Process or input indicators (BPL population facility utilization, patient waiting times, satisfaction levels, number of appropriate referrals, guidelines compliance, etc.). The contractual framework between GOR and the franchiser should strive to allow the franchiser to have sufficient operational autonomy to determine how best to select and organize its provider network, as well as its own management, procurement and service delivery strategy. One of the key learning processes of

59 this initial pilot phase will be striking the balance between the GOR's perceived need to define service delivery requirements rigorously versus the franchiser's need to have sufficient flexibility to meet the various health targets and operate in a cost-effective, flexible manner. In addition to this, monitorable performance targets and a system of checks and balances that protects against abuses and budget overruns will also need to be formulated. The project will use the services of a consultant in determining the strategy most suited for the state, taking into account its policy priorities, local resource constraints, and nature of the services to be contracted out. It is envisioned that the process for selecting the franchiser would be conducted via some type of competitive tender. The PMU, assisted by consultants, would develop the Request for Proposals (RFP), template of the performance agreement, and other supporting documentation. The franchiser would be selected on its technical, management, and financial merits

60 Annex 3: Estimated Project Costs INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT 2. Improving Service Quality at Primary and Secondary levels of the public health care services 3. Improving health care services for the poor and disadvantaged population Total Baseline Cost Physical Contingencies Price Contingencies 1 Total Project Costs Total Financing Required Local S $million Foreign US $million Total US $million Goods Works Services Training & Workshops NGO Services Recurrent costs al illion oo Foreign US $million Total US $million Total Proiect Cost: 1 105, I I Total Financing Required I I 0.72 I I Identifiable taxes and duties are 0 (US$ni) and the total project cost, net of taxes, is (US$m). Therefore, the project cost sharing ratio is 83.98% of total project cost net of taxes

61 Annex 4 Economic Analysis INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Health Sector Financing of Rajasthan: A Review Government of Rajasthan has been undertaking various measures to improve the hctioning of the health sector and to improve the delivery of health services to achieve better health outcomes. As a result, the infant mortality rate (IMR) has declined substantially from 107 in 1986 to 85 in 1996 (Table 1). In spite of this decline, the State ranks the second highest in IMR which is a cause of major concern for policy makers. This phenomenon i s often interpreted as cause and effect relationship effect between health status and income, i.e, the higher the level of income, the higher will be the capacity to spend on health improving activities and hence better health status. States India The overall economic growth in terms of gross state domestic product (GSDP) of the state during the 1990s has slowed down to about 5 percent from about 10 percent during the late 1980s due to the droughts in and also in On the fiscal front, the State has been experiencing the growing burden of fiscal deficit since From about 3 percent of GSDP in , the fiscal deficit rose to 5.4 percent in and further to 7.1 percent in placing the fiscal health of the state in a precarious position. Irrespective of the pace of overall economic growth, the State s budgetary allocation to health sector witnessed a deceleration since as in many other major states. From about 8 percent of the total revenue budget in , the share of health budget in Rajasthan declined to less than 6 per cent in Substantial improvements in the IMR during the same period suggest that budgetary spending on health alone does not influence health status to any significant extent. Given this, an attempt is made in this annex to critically review the structure of budgetary spending on health with the following broad objectives

62 1. Analyze the trends in the health spending by the Government of Rajasthan over a period of two decades. 2. Analyze the functional composition of spending on health in Rajasthan during the 1990s. 3, Estimate the public spending on salary and non-salary components and also the Central share in the state budget on health. 4. Assess the extent of utilization, cost recovery and budgetary subsidies in public health facilities. 5. Examine the role of existing health insurance mechanisms in the overall health sector of the State. 6. Assess the budgetary implications for the State in achieving higher levels of health status indicators. Trends in Public Spending on Health in Rajasthan: The budgetary allocation to health has been declining in most of the states in India during the 1990s both in terms of its share in state domestic product and also in total revenue budget of the states (Tables 2 and 3). The decline is more pronounced between and , a phase when most states experienced severe fiscal stress. The fiscal adjustment programs initiated at the Centre during the early 1990s and consequent squeeze in the Central grants to states, constrained the states from bringing their budget allocation to the health sector to the levels that had prevailed during early 1980s. Rajasthan is no exception to this. The implementation of Fiflh Pay Commission recommendations raised the health sector share in the State budget, however marginally, to meet the increased salary component. States Karnataka 7 Kerala 8 Maharashtra 9 Madhya Pradesh 10 Orissa 11 Punjab Rajasthan 13 Tamil Nadu 14 Uttar Pradesh West Bengal All States The allocation of health budget to various heads of expenditures like medical, public health and family welfare does affect the performance of health sector and health outcomes. For instance, substantial investments on primary care services in the initial years and a slow strengthening of allocations to secondary care services appear to have improved the health outcomes of Kerala. On the other hand, continuously increasing allocation to primary care services at the cost of secondary care services in Tamil Nadu, resulted in significant improvements in health outcomes in the initial phase but the health outcomes

63 stagnated during the latter years. Therefore, it is important to maintain an appropriate balance in the budgetary allocations to various levels of health services. States 1 Andhra Pradesh 2 Assam 3 Bihar 4 Gujarat 5 Havana 6 Karnataka 7 Kerala 8 Maharashtra 9 Madhya Pradesh 10 Orissa 11 Punjab 12 Rajasthan 13 Tamil Nadu 14 Uttar Pradesh na na na mal All States During the 1980s and also 1990s, the share of medical and public health remained around 80 percent and family welfare programs accounted for around 20 percent of the total health budget in Rajasthan. However, the proportional allocations to various components within the medical and public health budget have undergone a major change during this period. The trends in the shares of the three major components namely, urban health services, rural health services and public health services have been depicted in Chart

64 20 10 o! #! f #!4, f,,,,,,,,,,,,,, I A Urban Health Services -a- Rural Health Services +Public Health 1 The share of urban health services in total medical budget has been declining since and the share of rural health services has been steadily increasing. Being predominantly a rural economy, the increasing share of rural health services in the budget would not only help reduce the inequalities but also provide the poor and underserved improved access to relatively better public health services. However, the continuously declining share of public health services in the budget is a major cause of concem. A major share of the budget of the public health programs is spent on disease control programs, such as control of malaria, cholera, blindness and other important programs. Many of these programs have large positive extemalities. The non-salary recurrent cost budget has been shrinking and the share of salaries of staff has increased in recent years. An analysis of the structure of government health expenditure reveals that the share of salaries has increased substantially in most states after the implementation of the Fifth Pay Commission's recommendations (Chart 3)

65 Chart 3 Salaries, Drugs and Central Grants in Total Health Spending: Rajsathan (in %) % of 60 He :It 50 SP en 40 di ng I I j *salaries -@" Drugs* +Central 1 In the case of Rajasthan, salaries accounted for about 50 per cent during and increased to about 70 per cent in During , the share of salaries was about 80 per cent, suggesting that the impact of pay revisions was not very severe on the health sector of Rajasthan, as often claimed. However, the growing share o f salaries in health budget is a concern because of its adverse impact on the spending on items like drugs, medicines, etc. In addition, budget spending on drugs, which was around 14 per cent in , declined to around 10 per cent during the late 1990s. Trends in the share of spending on salaries and drugs during the period under review suggest that allocations to other items like travel, office expenses, purchase and maintenance of minor equipment have been adversely affected due to the growing salary component. The spending on these items is as important as on drugs, for better functioning and delivery of health services. Therefore, there i s a need to rebalance the structure of budgetary allocation within health sector. Functional Composition of Government Health Expenditure Both in terms of share o f total health budget and in terms of per-capita spending, allocations to primary care services recorded a significant increase from to in Rajasthan. Thereafter, there has been a near stagnation in the allocations to primary care services in the State as revealed by Tables 3 and

66 Levels of Health Services Levels of Health Services The extent of allocations to secondary care services declined in the first phase ( to ) and recorded a significant growth in recent years (second phase). The improvements in the IMR of the State can well be attributed to the increased allocations to primary health care services during the first phase. Levels of Health Services The allocations to drugs, medicines, materials and supplies also depict a similar picture as revealed by Table

67 Levels of Health Services Primary Care Services Emerging challenges in the health sector will warrant measures to improve resource management as well as augmentation o f budgetary allocations. The Health Policy 2002 of the Government of India has taken note of the deteriorating financial situation of the states and has proposed to enhance the Central allocations to states and at the same time looks forward to states to augment their resources for the health sector. Achieving the Millennium Development Goals of the UN would also need improved resource allocation to the sector. Cost Recovery and Subsidies With public financing already under severe fiscal strain, alternate ways to financing need to be explored. The present level of cost recovery in the health sector i s abysmally low at around 2 percent in most states in India. Attempts are being made by various states, including Rajasthan, to improve the cost recovery rates through various mechanisms. Cost recovery has emerged as a major policy issue ever since the Ministry of Finance issued the Discussion Paper on Government Subsidies in India in The Paper points out that cost recovery has been less than 2 per cent in the health sector and the subsidies on non-merit health services need to be phased out over time. Cost recovery declined to near zero level since as evident from Table 7. Year Cost Recovery (%) Per-Capita Budgetary Subsidy (Rs) Merit Non-Merit Merit Non-Merit Services Services Services Services na- -na At the same time, the levels of subsidy, in per-capita rupee terms, recorded an increase for both merit and non-merit services. The extent of subsidies is much higher for non-merit services as compared to merit -61 -

68 services. Government of Rajasthan has implemented an important cost recovery initiative at the facility level through the Medicare Relief Societies. Despite its critical situation, the State has initiated certain initiatives to revamp its health sector. One such initiative is the establishment of such societies at tertiary care level hospitals, at district level in the beginning and at sub-district levels at later stages. A brief review of this initiative is presented in the following section. Economic Review of Medicare Relief Society In , the Government of Rajasthan allowed district hospitals and hospitals attached to teaching institutions to form a society namely Rajasthan Medicare Relief Society (RMRS) in order to improve the functioning and financing of these hospitals. The Society is an autonomous body that collects and retains revenue. Government provided seed money to create the Society and the decisions relating to the management of the society were left to the Board of Trustees. The trustees decide the modalities to raise revenues of the hospitals through user charges and also to utilize the funds so raised. The Society is also allowed to receive contributions and donations as well as to raise loans. The premise on which MRS was created was to provide autonomy to hospitals to raise revenue out of user charges, donations, etc., in order improve the delivery of services which were otherwise suffering due to lack of adequate funds. The revenue generated from the Society eases the pressure on the general budgetary resources for maintenance, purchase of minor equipment, etc. During 1999, it was made mandatory that 25 percent of the revenues generated by the societies would be earmarked to provide free services to the patients of population BPL. The society charges for various services rendered by the hospital, such as, X-Ray, laboratory test, etc. The charges are nominal and are below the rates prevailing in the open market. The Society exempts Below Poverty Line (BPL) patients from the user charges. The Society also runs a life-line fluid store in many of the hospitals which caters to the needs of the patients. The revenue generated through user charges, donations and grants from the Government of Rajasthan by the RMRSs have increased sharply from Rs lakhs in to lakhs in The resources generated through the RMRSs are spent primarily on the working capital needs of the hospitals to improve the quality of the services. Budgetary allocation to the hospitals continues to flow-in from the State. Establishment o f the Society is an attempt to levy user charges for health services on those who can pay for the services. The revenue generated from the Society also eases the pressure on the general budgetary resources for maintenance of facility and equipment and purchase of minor equipment. An attempt was made to analyze the financial strengths and weakness of these societies and to assess their role in the overall health sector of the State. Due to lack of adequate information the review is restricted to a few of the societies namely SMS Hospital, Jaipur; District Hospital, Sikar; District Hospital Tonk; and Taluk level (sub-district) hospitals, Sikar). Salient features of the review are presented below. 1, User charges account for a substantial portion of revenue of societies mainly in major hospitals where diagnostic, laboratory, X-ray, etc. facilities are available. In the hospitals located at district headquarters like Tonk and Sikar, the revenue out of user charges to the society is between percent whereas the same is about per cent in SMS hospital, Jaipur. Interests receipts on accumulated bank deposits, membership fees, etc., account for a substantial share. 2. Donations from public and subsidies from the State were expected to meet the initial capital investment requirements of the societies. These expectations have been met at district level hospitals to some extent, particularly in well-off districts. At many of the sub-district level hospitals, donations have been less substantial. As a result, capital investment did not take place to the degree needed to improve the services. The proposed project will help to fill up this resource

69 3. Even at facilities where a fair level of services are being provided, patients tend to use the private sector more, due to lack of faith in the public system, possible credit facilities extended by the private providers, connivance of private providers through touts - especially drug store operators as existing in Sikar, etc. This i s in spite of the fact that private facilities are 3-4 times more expensive than the services organized through MRS. This issue could be addressed to a large extent by effective BCC ( Behavior Change Communication) providing the public with accurate information regarding the types of services provided at different levels of facilities and the associated charges. But at the present state of public health/mrs services, BCC should be locatiod district/ facility specific because the type of facilities provided vary widely from one facility to another. But BCC by locatioddistricb facility would be uneconomical because of the scale. Therefore, a common BCC at the state/ regional level would not only be economical but also be more effective. For a strategy like this, a common level of services needs to be established at a defined level of facilities unlike the present situation. 4. The possibility of creating a fund from the accumulated reserves of the societies which can be used to subsidize the poorer regionslpatients i s often debated. A glance at the available information suggests that reserves do exist but only at the major hospitals like SMS, Jaipur. What really happens with the societies located at backward districts and at sub-district levels is that the initial margin money, donations and membership fees received are too meager to be effectively invested in upgrading the facility. Further, drawing on accumulated reserves from better-off societies to create the fund as a redistributive measure would act as a disincentive to the better performing societies to effectively collect the user charges, donations, etc. Also, the process of redistribution may counter the very purpose for which MRS was established - the issue of autonomy. Above all, the reserves existing in few major hospitals may not really be adequate to cross subsidize all the other societies spread across the State. 5. A crude estimate of Fund The population below poverty line is estimated to be at percent in in the State, implying that there are more than 121 lakh persons (12.1 million) below poverty line who need medical care from the Society. At the rate of 53 persons seeking OP services and 14 seeking IP services per 1000 persons from 0-20 expenditure group as per 52nd round of NSS, provides an estimate as below: Persons possibly needing OPD Services (No): Persons possibly needing IPD Services (No): Expenditure per OP treatment at Govt facility (Rs): Expenditure per IP treatment at Govt facility (Rs): Funds needed for OP treatment (Rs): 111,236,150 Funds needed for IP treatment (Rs): 437,200,769 Total Funds required (Rs): 548,436,919 Above calculation is based on the following assumptions: a. Bottom 20 percent of the population needs to be covered by the Fund b. Treatment seeking behavior remains at level ( percent of patients availing treatment) c. Treatment costs, coverage and prevalence rate remains at level

70 As per the above estimate nearly Rs.548 million is needed to treat the BPL patients for both inpatient and outpatient treatment annually. In other words, the bottom 20 percent of the population is incurring about Rs.548 million annually on treatments as out of pocket expenditure. 6. Based on the above, two options emerge: (i) create a fund of this amount from public sources to provide services to the poor; or (ii) try to mobilize some portion of this resource from the very same population, like a premium on health insurance. The second option is more optimistic in the sense that this section of population is already spending on medical care while availing the service at present. If an effective BCC is carried out explaining the situation, this section is likely to get convinced to contribute to the fund at a convenient time when they get income rather than paying at one time, to avail services when they need. This in effect meets the principles laid out in the insurance mechanism, risk pooling and sharing. 7. In those areas where donations are not forthcoming andor the revenues o f MRS are inadequate, the State can help those societies to raise loans by providing guarantee. In doing so, the concerned hospitals should be made/mandated to function on a more commercial basis. Attempts can also be made to include value adding services like running a full fledged drug stores, ambulances on rental basis, contractingaeasing out certain areas to private providers for running medical stores, and related activities to augment resources for the facility. Cost recovery andor insurance through pooling mechanisms are known to have their adverse impact on the access and equity of the poor. Data on the utilization of health facilities in Rajasthan indicates that people depend largely on public facilities for in-patient care while both public and other facilities are used near equally for out-patient care services. The extent of utilization of health services by different expenditure groups as reported in the NSSO surveys reveals that the poorest 20 percent account for less than 20 percent of the treatments availed and indicates the unequal access to health facilities by the poorest. The other dimension of the NSSO surveys is the increasing vulnerability of the children and elderly to the illnesses. Children (below 14 years) account for a substantial proportion of cases treated for minorhhort duration ailments whereas the elderly (60 years & above) account for a larger share of cases treated for major illness. Financial Sustainability The State currently spends about Rs. 12,000 million annually on health. Of which, the spending on capital account is about Rs.350 million only and the rest being recurrent expenditures. The project finding will be about Rs.4530 million spread over a period of five years covering largely the capital investments. In the total health spending of the State, the project will supplement the state budget on health and family welfare to the extent o f 8.37 and 8.99 percent in years 1 and 2 (Table 8). Year Projected Project Fund State Outlay Project fund as YO of State Outlay

71 Subsequently the shares decline to 6.94,2.39 and 2.04 percent in years 3,4 and 5 both on account of increasing state spending in nominal terms as well as by the very nature of the project design. As the proposed civil works of the project will be over by the end of the project period, the state will not have any financial liability on account of this after the project is over except for the recurrent cost. The recurrent cost of the project will be about 0.7 percent (Rs million) of the state s recurrent health budget (Rs million - projected) at the end year of the project period. Since the recurrent health budget of the state recorded an average growth rate of about 15 percent per annum during to , the additional financial liability of 0.7 percent due to recurrent project cost will not impact the state s health budget to any significant level. Summary and Implications The declining trend in the allocations to public health programs needs an immediate reversal, particularly in a state like Rajasthan where the cost of provision of these services will be larger. The prevailing socio-economic and demographic conditions of the State reinforce the fact that investment spending by the State on public health programs i s crucial. The performance and functioning of the Medical Relief Societies can further be improved by conferring them with more autonomy, power and institutionalization. This would also ensure the sustainability of these societies in the long run. Since the revenues generated in these societies ease the pressure on general budgetary resources, State funds may be reallocated to improve other essential health services to improve the delivery and quality of services. Functioning of the societies could be strengthened by adding certain services, operating a full fledged medical store, ambulance, canteedcatering facility, telephone, etc., to augment resources. Extensive BCC would help both the patients and the societies in improving the quality of services and also the scale of operation of the society. Fund pooling mechanism could be tried out as the poor are already incurring substantial out-of-pocket expenses for health care. Through effective BCC, an attempt could be made to solicit the active involvement of poor households in the fimd pooling mechanism. Capital expenditures in the health sector have been abysmally low in Rajasthan during the 1980s as well as 1990s. They account for less than three per cent of the total health sector expenditure. This implies no new investments or expansion of health facilities in the State. The growing population and the consequent demands on services requires an expansion in the facilities available. If facilities are not expanded, there will be over crowding leading to deterioration in quality, Therefore, attempts should be made to enhance the spending under capital account of the budget

72 ~~~ Annexure 1 Constituents of P Primary Care Services 1 Primary Health Centres 2 Health Sub-centres 3 Other Health Services 4 School Health Schemes 5 Tuberculosis Institutions 6 Ayurveda - Other Systerms 7 Homeopathy - Other Systems 8 Unani -Other Systems 9 Sidha - Other Systems 10 Other Systems 11 Public Health 12 Family welfare mary, Secondary and Tertiary Care Services Secondary Care Servics 1 Employees State Insurance Scheme 2 Central Government Health Scheme 3 Hospital and Dispensaries 4 Community Health Centres Tertiary Care Services 1 Attached to Teaching Institutions 2 Major Hospitals 3 Allopathy - Med.Edn, Tr,Research General 1 Direction and Administration 2 Health Stat, Research, Evaluation & Trng 3 Medi.Stores Depot & DeptLDrug Mfgrs 4 Tribal Area Sub-Plan 5 Other Expenditures 6 Assist.to local bodies, corporates, etc. States *

73 States Primary Secondary Tertiary General Total

74 States Primary Secondary Tertiary General Total

75 Annex 5: Financial Summary INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Years Ending June 30 (FY) Total Financing Required Project Costs Investment Costs Recurrent Costs Total Project Costs Total Financing IMPLEMENTATION PERIOD 1 Year1 I Year2 I Year3 I year4 1 Year5 1 Year6 I Year Financing IBRDllDA Government Central Provincial Co-financiers User FeeslBeneficiaries Other Total Project Financing Main assumptions:

76 Procurement 1. Procurement: An n ex 6 (A) : Procurement Arrange m en t s INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT The procurement arrangements to be undertaken in the project will be the responsibility mainly of the implementing agency - Project Management Unit (PMU) in the Department of Medical Health and Family Welfare, Government of Rajasthan, Jaipur in accordance with the Bank Procurement / Consultancy Guidelines and procedures. The project would be for a period of five years and would address key policy issues at the primary and secondary levels of health care in Rajasthan with special focus on enhancing the performance of the health systems and improving outcomes for the poor and vulnerable. To meet these objectives the project envisages renovations and extensions of 23 8 hospital buildings, procurement of medical equipment, office and other equipment, furniture, vehicles, medicines, hospital / Information, Education and Communication (IEC) materials and supplies, consultancy services, training and workshops, IEC services, etc. Procurement of Works, Goods and Services would be done mainly at State Level by PMU, through Equipment Procurement & Maintenance Cell (EPMC) and Engineering (Civil Works) Cell. Procurement of works and small value items will be undertaken by the District Project Management Cells (DPMC). Major procurement of goods/equipment/drugs will be at State level through procurement consultant-ws. Hindustan Latex Limited (HLL), selected on single source basis for year 1-3. For preparation of structural drawings and bidding documents of civil works for year 1 of the project, Ws. Indian Institute of Health Management and Research (IIHMR), Jaipur has been selected on single source basis. For civil works for years 2-4, procurement consultant would be selected through competitive process under quality and cost based selection (QCBS) following the World Bank Consultancy Guidelines. Contracts equivalent of Indian Rupees 50 million (US $1.066 million approximately) each or less will be awarded by PMU through its procurement committee comprising of Project Director (Chairman), Additional Project Director (Member), Financial Advisor & Chief Accounts Officer (Member), Technical Officer - WorkdEquipment etc. (Member), and Head of EPMC (Member Secretary). Procurement plan of all five years of the project are in place and its implementation would be reviewed every six months with review of procurement schedule every year. Bidding documents for procurement of goodslequipmentlworks are under preparation by the consultant firms and are expected to be ready by effectiveness of the project. A. Civil Works: Civil works under the project will be implemented by the Engineering (Civil Works) Cell, under the project implementation unit. Mainly renovation, extension and repair of 238 hospital facilities (28 district hospitals, 23 sub-divisional hospitals, 1 13 community health centers at sub-divisional level, 72 community health centers within the blocks and 2 block primary health centers) and civil works relating to Health Care Waste Management Program (HCWMP) of the hospitals are envisaged in the project. Although there i s no new major hospital construction under the project, one PMU Office Building is to be constructed. Total value of civil works is $28.80 million. Civil works will be carried out in four phases i.e. 27 hospital facilities and PMU office building in the first year, 42 hospital facilities in the second year, 89 facilities in third year and remaining 80 facilities in the

77 fourth year of the project. All these works (total estimated cost: $27.63 million), in the range of $0.03 million to $0.76 million, will be procured following National Competitive Bidding (NCB) procedures. Renovation of existing PMU office and civil works for health care waste management for 40 1 health facilities estimated to cost $1.17 million, in the range of $2 million to $0.028 million, will be undertaken in the first year of the project following National Shopping (NS) procedures. B. Goods: The Equipment Procurement and Maintenance Cell (EPMC) in PMU will manage the procurement of goods, equipment under the various sub-project components. Procurement of goods (Medical /Office and Other Equipment, Furniture, Vehicles, Medicines, Hospital Supplies and MIS / IEC Materials) would be phased on an annual basis to synchronize with the project / construction activities. (i) Medical Equipment: There are 105 items to be procured during year 2-4 of the project. Some of these include :- X-Ray machines; Ultrasound Scanners; ECG Machine; Operation Table; Autoclaves; Blood Gas Sterilizer; Microscopes; Incubators; Centrifuges; Weighing Machines etc. Total value of medical equipment would be $10.43 million. In all there will be 136 packages consisting o f 13 ICB packages (total estimated cost: $6.16 million) in the range of $0.10 million to $3.41 million, 47 NCB packages (total estimated cost: $3.38 million) in the range of $0.01 million to $0.20 million, and the remaining 76 National Shopping packages (total estimated cost: $0.89 million) in the range of $04 million to $0.029 million. (ii) Office & Other Equipment: In all 50 items are to be procured during the first three years of the project. These are computers, printers, air-conditioners, refrigerators, fax machines, typewriters, photocopier, desert coolers, EPABX, LCD/Overhead Projectors, generators and weighing machines etc. Total estimated cost is US $2.21 million. There will be 50 packages consisting of 18 NCB packages (total estimated cost: $1.95 million) in the range of $0.03 million to $0.25 million and 32 NS packages (total estimated cost: $0.26 million) in the range of $04 million to $0.03 million. (iii) Office & Hospital Furniture: (iv) Vehicles: Furniture consisting of chairs, tables, metal shelving cabinets, side racks, computer tables, mattresses and pillows, galvanized buckets, bed pans etc. for PMU and strengthening and upgrading of health facilities at a total cost of $2.33 million will be procured under the project. There will be 88 packages comprising of 22 NCB packages (total estimated cost: $1.77 million) in the range of $0.03 million to $0.21 million and 66 N S packages (total estimated cost : $0.56 million) in the range of $02 million to $0.029 million. Only two vehicles in the first year of the project costing $0.02 million are to be procured for use in PMU following NS procedures or under Directorate General Supplies and Disposals (DGS&D) rate contract. (v) Medicines:

78 Medicines would be procured by PMU under NCB procedures and by each of the 238 hospitals following NS procedures during the five years of the project at a total cost of $8.48 million. About 34 medicines would be procured and there will be 98 NCB packages (total estimated cost: $4.35 million) in the range of $13 million to $0.13 million and 72 N S packages (total estimated cost: $0.63 million) in the range of $085 million to $0.027 million. The hospitals will be given a budget depending upon its bed strength for procurement of day to day requirements of essential I emergency drugs by three quotations method (per month budget of hospitals would be- $80 for 50 bedded, $320 for 100 bedded and $800 for 150 bedded & above. Total budget will be US $3.50 million for entire five years period of the project.) (vi) Hospital Supplies: In all 49 items consisting of IV Cannula sets, disposable syringes & needles, bandages, bed sheets, caps, masks, aprons, gloves, rubber sheets, dental materials, Intra ocular lenses, plastic bins I bags of various colors, protective gloves / boots etc., at a total cost of $8.18 million, are to be procured under the project. There will be 63 NCB packages (total estimated cost: $4.69 million) in the range of $14 to $0.17 million and N S packages (total estimated cost: $3.49 million) in the range of $17 million to $0.029 million. (vii) Management Information System (MIS) & Information, Education & Communication (IEC) Materials: C. Services: MIS I IEC material to be procured includes MIS formats, operation manuals / guidelines for MIS I hospital waste management I maintenance of equipment, referral and feedback cards, signboards I posters, hoardings and leaflets etc. at a total cost of US $2.04 million. There would be 10 NCB packages (total estimated cost: $1.24 million) in the range of $0.034 million to $0.21 million and 1182 NS packages (total estimated cost: $0.80 million) in the range of $06 million to $16 million. Procurement of Services planned for a range of project activities which include hiring of professional services, personnel on contractual basis for the project implementation unit as well as for DPMCs, training and workshops, Information, Education and Communication (IEC), studies and evaluations and other consultancy services. (i) Professional Services: Professional services would be hired for preparation of design (structural) drawings, preparation of bidding documents, evaluation of bids and award of contracts, procurement management and field supervision of civil works, inspection of goods I equipment, and management of training programs (total estimated cost : $5.23 million). These services will be hired following single source (estimated cost: US $0.04 million) and quality and cost based selection (QCBS) method of selection (estimated cost: $5.19 million). (ii) Contractual Services:

79 (iii) Training: Services of professionals (Health Specialist, Public Health Specialist, Chartered Accountant, Financial Consultant, Consultant Training and Human Resources, Data Entry Operators etc. - total 5 1 numbers) would be hired on contractual basis for all the five years of the project for the PMU as well as DPMCs. Total number of packages would be 255 (total estimated cost : $0.66 million) in the range of $1 8 million to $77 million. To improve the quality and effectiveness of clinical services in the project hospitals, regular periodic in-service training has been planned for all categories of staff. The training includes training of trainers, clinical and managerial training, training for health management information system (HMIS) I health care waste management (HCWM) / equipment maintenance I rational use of drugs and behavioral change communication (BCC). There will be total 19 packages covering 11 programs (total estimated cost: $5.73 million) in the range of $0.016 million to $1 3 2 million. In all 22,300 personnel will be trained in-house and / or in the professional institutions to be hired under single source method of selection being specialized trainings. (iv) Workshops: Workshops under the project will be held for annual consultations at the state and district level and for developing various guidelined protocols, for sensitization and meetings etc. These workshops will be arranged either in-house with technical assistance from the consultants or by hiring professional consultant firms. A total of 15,806 workshops I meetings are proposed to be arranged during the entire project period (total estimated cost : $3.61 million). Total cost of in-house workshops I meetings would be $3.24 million and those to be arranged by the consultant firms and individuals would cost $0.37 million: under single source ($0.1 1 million), QCBS ($0.24 million), and by individuals ($0.017 million). (v) Information, Education and Communication (IEC): To make the people at large knowledgeable about the changes that have taken place in the project hospitals I centers, messages through leaflets, radio, T.V., and street folk plays have to be relayed. In addition, to improve health seeking behavior in the community, IEC services will be hired at the district level as well as state level. These services will be hired under single source and the total number of packages would be 330 (total estimated cost : $0.53 million) in the range of $0.01 million to $0.02 million. (vi) Studies and Evaluations: The scope under the project includes base line and policy research studies, mid-term and end term evaluations and various reviews, patient satisfaction survey, study on rationale use of drugs etc. A total of 75 studies I evaluations (8 under QCBS at a cost o f $0.17 million, 25 under QBS at a cost of $0.87 million, and 42 by individuals at a cost o f $0.43 million) will be carried out during the entire project period (total estimated cost : $1.47 million) in the range of $5 million to $0.053 million. (vii) Fellowships:

80 For upgrading the skills of Specialists and to broaden their perspective to recognize the health care needs of the community, provision has been made in the project for fellowships in specialized institutions. The total estimated cost is $0.43 million for about 100 fellowships on single source basis in the range of $2 million to $0.017 million. (viii) Other Consultancy Services: Various consultant services are required for technical assistance to the project implementation unit. These include designing, developing and implementing hospital management information system, external revalidation of data, technical assistance for health care waste management, development of guidelines for maintenance of equipment and referral protocols, appointment of NGOs for implementing IECBCC activities, developing and implementing CBHI pilot scheme, contracting local private doctors, and operating the contracting program and pilot contracting implementation. Total estimated cost of these services is expected to be $4.70 million. Services of 448 individuals (total estimated cost: $0.82 million) and 143 consultant funs { 130 under QBS at an estimated cost of $2.84 million (NGOs - $2.37 million, and Others - $0.47 million), 11 under QCBS at an estimated cost of $1.04 million and 2 under single source at an estimated cost of $4 million} will be hired under the project. D. Miscellaneous: This involves operational expenses for all the components of the project and would include office operations and consumables ($5.10 million), operationi hiring / maintenance o f vehicles ($0.93 million), maintenance of buildings ($1.77 million), maintenance of equipment ($3.35 million), maintenance of furniture ($1.50 million), and hiring of common hospital waste treatment facilities ($0.48 million). Contracts for consumables, hiring of vehicles and hospital waste facilities, and maintenance of vehicles/ buildings/ equipmenu furniture would be procured on the basis of direct contracting or national shopping (three quotations) depending upon the situation. Value of each contract i s estimated below US $10,000 equivalent. E. Bidding Documents: Contracts for ICB and NCB will be awarded by the Procurement Agents while procurement under National ShoppingDirect Contracting will be done by the hospitals. Standard Bidding Documents, as finalized by the Government o f India Task Force and agreed with the Bank would be used for all ICB and NCB contracts. These are D-1 (new), E-1, E-4, E-6 and W-9. Contracts for National Shopping i.e. by obtaining at three quotations would be concluded based on the formats developed by New Delhi Office (NDO) Procurement Unit and approved by the Bank. These are E-5, W-5 and W-6. Similarly, Request for Proposals (FWP) for consultancy services for different assignments which are based on Bank s Standard FWP and available with NDO Procurement Unit of the Bank shall be adopted. Formats of letter of agreements for short term / long term assignments of individual consultants as well as RFP for small assignments for f m s as per Bank s New Delhi Office model documents shall be adopted. These are C-8 (Lump Sum), C-9, C-10, C-13, C-l3/PFC. F. For the itemdworks to be procured under national shopping procedures, direct contracting, andlor by three quotations, the norms for such procurement i.e. procedure to be followed, range of prices and

81 acceptable I preferable brand names etc. shall be clearly indicated in the guidelines to be issued by PMU to the DPMCs for following them while procuring the itemslworks. The auditors appointed under the project, apart from the usual financial aspects, should also audit the procurement and comment whether stipulated national shoppinglthree quotations procedures were followed. G. Cost estimates of the civil works, items to be procured, estimates of bid packages for procurement of works I goods I equipment & consultancy services, details of value of works I goods I equipment I consultancy services for each year of the project and procurement schedules of works1 goods1 equipment & consultancy services for all the five years of the project are attached with the Project Implementation Plan (PIP) of the borrower (Government of Rajasthan). H. Post Award Review: Because of the nature of this operation, a large number of contracts would be below prior review limits. It is expected that the project will have about 40,150 contracts over a five year period. Except a few contracts, all other contracts will be in the range of US $200 to $30,000. The project itself provides for a self audit to be conducted by independent auditors hired by the Borrower for expenditures as well as procurement reviews for contracts under national shopping procedures. The normal Bank's requirement of ex-post review of 1 in 5 contracts for a high risk project, can not be achieved in this project due to resource constraints, since annual budget allocations only allow for a total of roughly 1,000 ex-post contract reviews for the entire India Portfolio. Given the sheer numbers of contracts envisioned in this project, the Bank's resource constraints, the mitigating effect of the self audit and technical audits mentioned above, we consider the "benchmark" review level of 1 in 5 contracts to be excessively large for this type of operation. In addition to a review of the independent self-audit reports called for in this project, Bank staff will also conduct post award reviews during supervision missions. These reviews will be periodically supplemented by an appropriate allocation of random ex-post reviews conducted by consultant firms engaged by the Region for post award review coverage on the India portfolio as a whole. Procurement methods (Table A) IDA Financed Works and Goods will be procured in accordance with Bank Guidelines - Procurement under IBRD Loans and IDA credits [January 1995, revised January and August 1996, September 1997 and January IDA Financed services will be procured using Bank Guidelines - Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised September 1997, January 1999 and May 2002). Attachment 1 to this Annex summarizes the procedures for undertaking procurement on the basis of National Competitive Bidding (NCB). Specific Procurement Arrangements summarized in Table 'A' are as follows : 0 Each contract for works valued US $30,000 equivalent or less may be procured through direct contracting or calling at least three quotations or force account. 0 Each contract for works valued more than US $30,000 equivalent may be procured through National Competitive Bidding

82 Contracts for the procurement of goods I equipment valued more than US $250,000 equivalent each may be procured through International Competitive Bidding (ICB). Contracts for the procurement of goods I equipment valued more than US $30,000 equivalent but equivalent of US $250,000 or less may be procured on the basis of NCB procedures acceptable to IDA. Items or groups o f items valued US $30,000 equivalent or less per contract may be procured on the basis of National Shopping procedures. Other items or small groups of items such as furniture, equipment, materials and other supplies valued at less than US $30,000 equivalent per contract may be procured through direct contracting. Contracts estimated to cost an equivalent of US $10,000 or less per contract for maintenance of buildings / equipment I vehicles / furniture, hiring of vehicles/ hospital waste treatment facilities and office consumables may be awarded through : - Direct Contracting; or - National Shopping for equipment etc, and - Three quotations for buildings Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Total (6.53) (39.14) (43.33) () (89.00) Includes civil works and goods to be procured through three quotations, and goods through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units

83 Table AI : Consultant Selection Arrangements (optional) (US$ million equivalent) I" Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Contractual Services, Single Source Selection, and Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parentheses are the amounts to be financed by the Bank Credit

84 Prior review thresholds (Table B) 0 All contracts for works with an estimated value of more than US $500,000 equivalent All contracts for goods /equipment with an estimated value of more than U S $250,000 equivalent. Two NCB year 1 contracts for works valued more than US $30,000 equivalent but less than US $100,000 equivalent. Three NCB contracts (two in year 1 and one in year 2) for works valued more than US $100,000 equivalent but less than US $500,000 equivalent. Two NCB contract for goods and eleven contracts for pharmaceuticals valued more than US $30,000 but less than US $250,000 equivalent. Consultant s contracts with an estimated value of US $100,000 equivalent or more for firms and US $50,000 equivalent or more for individuals. Table B: Thresholds for Procurement Methods and Prior Review Expenditure Category I. Works 3vil Works Contract Value Thresh old (US$ thousands) Each Contract of US$30,000 equivalent or less may be executed by: ect to W s) (i) direct contracting; or (ii) on the basis of comparison of price quotations obtained from at least three qualified contractors eligible under the guidelines; or (iii) by Force Account, as a last resort, in a manner satisfactory to the association Civil Works estimated to cost the equivalent of more than US$30,000 per contract. Direct Contracting Solicitation of three bids Force Account National Competitive Bidding (NCB) Post review only Post review only Post review only Medical/Office Equipment, Furniture, MIS/IEC materials, Medicines, and Hospital Supplies Prior review of five contracts below US $500,000 and all contracts above U S $500,000 equivalent. - 78

85 Value of 6 prior review contracts : US $2.40 million.. All others by post review. MedicaVOffice Equipment, Furniture, MIS/IEC materials, Medicines, and Hospital Supplies :ontracts estimated to cost the equivalent of US $30,000 or less per contract may be executed by: National Shopping (NS) procedures. National Shopping (NS) Procedures or Directorate General of Supplies & Disposals (DGS&D) Rate Contracts. Post review only US $250,000 or less per sontract but more than US $30,000 equivalent. National Competitive Bidding (NCB) Prior review of certain contracts below US$250,000 but above US$30,000, value of prior reviewed contracts of US$0.65 million. All others by post review. More than US $250,000 per contract International Competitive Bidding (ICB) Prior review of all :ontracts costing more thar US $250,000 each. Value of 13 ICB prior review :ontracts US$.6.15 million All others by post review Prior review of 13 contracts valued at US $6.15 million. All others by post review Professional Services, Consultancy Services and IEC Services For firms; US $200,000 equivalent or more per contract Quality & Cost Based Selection Prior review of 13 contracts valued at U S $4.96 million Training & workshops, IEC services, Studies and Evaluations, Contractual services and other consultancy services US$200,000 equivalent or less per contract QCBS method of selection with short list (may :omprise of entirely national All others by post review Prior review of all contracts above US

86 consultants) $100,000 equivalent for f m s and above US $50,000 equivalent for individuals Prior review of one (1) contract valued at US $0.12 million.. Training & Workshops, IEC Services, Studies and Evaluations, Contractual Services and other consultancy services US$lOO,OOO equivalent or less per contract for firms md US $50,000 equivalent and less per contract for individuals (i) QCBS method of ;election with short list (may comprise of entirely national consultants) (ii) Quality Based Selection (QBS) as per paragraph 3.2 of Bank s Consultant s Guidelines. (iii) Consultant s Qualifications as per paragraph 3.7 of Bank Consultants Guidelines. All others by post review Prior review of all contracts above US $100,000 equivalent for f m s and above US $50,000 equivalent for Individuals. Value of Prior review NIL. All others by post review (iv) Single Source Selection IS per paragraph 3.8 to of Bank s Consultants Guidelines. (v) Service of Delivery Contractors as per paragraph 3.19 of Bank s Consultants Guidelines. (vi) Individual Consultants as per Section V of Bank s Consultants Guidelines 4. Miscellaneous Incremental operating costs Each contract for hiring of vehicles/hospital waste treatment facility, maintenance of buildings I equipmend vehicles/ furniture and supply of consumables estimated to cost the equivalent of US$lO,OOO or less per

87 5. Miscellaneous contract may be awarded by: (i) direct contracting; or (ii) on the basis of comparison of price quotations obtained from at least three qualified contractorsisuppliers eligible under the guidelines; or (iii) Force Account, as a last resort Total value of contracts subject to prior review: Overall Procurement Risk Assessment: Frequency of procurement supervision missions proposed: ATTACHMENT-1 Direct contracting Solicitation of three quotations. Force Account (Departmental Work) Post review only Post review only Post review only m US$14.28 million High One every 6 months (includes special procurement supervision for post-reviewiaudits) If needed, frequency of procurement supervision can be increased. IDA Financed Works and Goods will be procured in accordance with Bank Guidelines - Procurement under IBRD Loans and IDA credits [January 1995, revised January and August 1996, September 1997 and January IDA Financed services will be procured using Bank Guidelines - Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised September 1997, January 1999 and May 2002). All National Competitive Bidding (NCB) contracts to be financed from the credit under the project would follow procedures satisfactory to the IDA, which are: [ 11 Only the model bidding documents for NCB, agreed with the Government of India Task Force (and as amended from time to time), shall be used for bidding. [2] Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, at least 30 days prior to the deadline for the submission o f bids. [3] No special preference will be accorded to any bidder when competing with foreign bidders, state-owned enterprises, small-scale enterprises or enterprises from any given State. [4] Except with the prior concurrence of the Association, there shall be no negotiation of price with the bidders, even with the lowest evaluated bidder

88 [5] Except in cases of force majeure and/or situations beyond control of Government of Rajasthan, extension of bid validity shall not be allowed without the prior concurrence of the Association (i) for the first request for extension if it is longer than eight weeks; and (ii) for all subsequent requests for extension irrespective of the period. [6] Re-bidding shall not be carried out without the prior concurrence of the Association. The system of rejecting bids outside a pre-determined margin or "bracket" of prices shall not be used. [7] Rate contracts entered into by Directorate General of Supplies & Disposals (DGS&D), a Central Purchase Organization of Government o f India, will not be acceptable as a substitute for NCB procedures. Such contracts will be acceptable for any procurement under National Shopping procedures. "Thresholds generally differ by country and project. Consult "Assessment of Agency's Capacity to Implement Procurement" and contact the Regional Procurement Adviser for guidance

89 Annex 6(B): Financial Management and Disbursement Arrangements INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Financial Management 1. Summary of the Financial Management Assessment The project would have a financial management system which would be able to adequately account for and report the project resources and expenditures. Country Specific Issues Generic country level issues and specific resolutions under the project are discussed below. (a) GOR s existing accounting system concentrates mainly on book keeping and transactional control over expenditures and there is little by way of a concept of financial management information being used for decision making. However, a separate project financial management system has been designed for the project to address this issue which will enable generation of reliable & timelyfinancial reports for enabling managerial decision making. The issue of availability of funds on a timely basis to the project implementing entity. A separate PD account for the project would be opened in which credit for three months requirement of funds would be given in advance every quarter and separate bank account would be opened for the implementing agency( both at the PMU and in the DPMC s) and one months fund requirement would be available in the project bank account at any point in time. It was also confirmed by Additional Chief Secretary (Finance) that govt. contribution in Externally Aided Projects (EAP) where the govt s share is not more than 20-25% would not be a constraint and further that externally aidedprojects are not subject to any embargo on the release of funds for the project. (c) Quality and timeliness of audit reports as the audit: It has been agreed with the C & AG that the project financial statements generated /prepared by the project would be audited in accordance with the TOR agreed with IDA and consented to by the C & AG s ofice. (d) The following country issue with respect to non-availability of the project financial statements does not apply: The project would prepare project financial statements- sources and uses of funds, initially manually using an off the shelfpackage at the PMU and manual records at the districts and subsequently using the computerized Financial Management System. Strengths and Weaknesses Strengths The project has the following strengths in the area of financial management: 0 It is proposed that PMU of the project (where over 70% of the project expenditure would be incurred) would be staffed with personnel who have been exposed to Bank financed projects in the health & family welfare divisions. 0 a project finance manual has been prepared which details the accounting policies, procedures &

90 processes, operation of the project financial management system, reporting arrangements etc. and will serve as a guide to the project accounting staff. Signijkant weaknesses Significant weaknesses Staffing: Staffing for finance function at PMU needs to strengthened. An existing accounting system which primarily focuses on book keeping, and not on financial management Implementing Entitv Mitigation A full time FA & CAO has been appointed for the PMU and he would be supported by a full time qualified accountant as Finance Manager. Initially a simple FMS with required levels of computerization at the PMU and manual system at the districts will be developed under the project to capture the fmancial information and generate periodic financial reports. A CFMS will be designed and developed for the project in the fist year of the project. A Finance Manual which focuses on financial reporting and monitoring has been fmalised for the m-oiect. Refer to Section E: 4.1 and 4.2 of the main text of the PAD ( Institutional Arrangements) for detailed description. Funds Flow Refer to Section E: 4.4 of the main text of the PAD ( Financial Management issues) for detailed description. Finance Staffing & traininp Refer to Section E: 4.4 of the main text of the PAD ( Financial Management issues) for detailed description. Budpeting The project would be budgeted under identifiable budget head items (established specifically for the project) through the DOMHFW s (GOR) budget which would suitably designed in link the with components /activities of the project. This will facilitate in monitoring and controlling the project expenditures. The annual budget would be based on the annual work program at the State PMU and the requirements of the districts in respect of their specific annual work plans. Based on the costs and details available,the majority of the project costs are expected to be incurred (about 70% of the project costs) at the State level by the Project Management Unit (PMU) set up within DOMHFW under the project. This would include a majority of the expenditures in respect of procurement of goods and equipment required under the project and all the major civil works. The civil works is proposed to be carried out by a in house Engineering (Civil Works) Cell who would engage contractors to design and execute the civil works. The procurement would be carried through a combination of in-house cell (Engineering and Procurement Cell- EPC) and procurement agent. All the 32 districts in the state (by way of District Project Management Cells- DPMC s also within the DOMHFW) would participate under the project. The procurements agents would send the certified copy of the invoices/ running bills and other relevant supporting documents to the PMU for approval and payment/ settlement of advance. The expenses incurred at the district level would include part of the training & workshops, minor equipment supplies, small civil works and other incremental operating expenses

91 Books of accounts and Accountiw Policies & Procedures The project costs incurred at the PMU and those incurred by the Procurement AgentJs for civil works and equipment would be recorded in the books of the PMU at DoHFW in accordance with procedures and policies prescribed in the Finance manual. The accounting policies & procedures and the formats for existing financial reports for GOR are captured in the various accounting forms ( Books of Forms ), cash book, the reports, the public works account code, the PWD manual and General Financial & Accounting Rules (GF& AR) as issued from time to time. These policies and procedures are exhaustive and capture the requirements of the A.G., Department o f Finance and other stakeholders requiring financial information. These guidelines also lay down the internal control procedures and the formats of the reports and books of accounts. In spite of an well established system of accounting and reporting the expenditures, this system, however, has no established method for capturing physical information and integrating / linking it with the financial information. A Financial Management System (FMS), for the project has been designed to accurately record and timely report the project expenditures at the aggregate project level within the overall reporting system as required within the government. Expenses would be recorded on a cash basis and would broadly follow the government classifications, project components and activities for ease in reporting to various stakeholders. An off the shelf accounting software (TALLY ) has been installed at the PMU to facilitate maintenance of the books of the accounts and preparation of financial statements. Standard books of accounts on a double entry basis (cash and bank books, journals, fixed assets register, ledgers, work registers, contractor registers etc.) will be maintained under the project by the PMU and DPMC s. A finance manual laying down the financial policies and procedures, periodic & annual reporting formats including financial statements, flow of information and methodology of compilation, budgeting & flow of funds, format of books of accounts, chart of accounts, information systems, disbursement arrangements, external & internal audit for the project and operation of the Financial Management System (FMS) has been prepared for guiding the project personnel A chart of Accounts has been developed for the project as part of the Finance Manual to enable data to be captured and classified by expenditure center, budget heads, project components, activities and disbursement categories. This would match closely with the classification o f expenditures and sources of funds indicated in the project documents (Project Cost Tables). Reportinv and Monitoring PMU will prepare the FMR s (on cash basis) in the prescribed format and also a part of the Financial Manual), for the project every quarter after consolidating the information received from the participating district level implementing agencies and forward it to the Bank with in 45 days o f the end of the quarter. FMR s will be used for disbursement at the option of the GO1 and the GOR, after the project has demonstrated the capability of producing consistent, timely and accurate FMRs. The Quarterly Financial Management Reports will include: 0 comparison of budgeted and actual expenditures and analysis of major variances, including on aspects such as sources of funds and application of funds (classified by components, sub-components, summarized expenditure categories); 0 comparison of budgeted and actual expenditure and analysis of major variances on key physical

92 0 0 parameters and unit rates for selected key items; forecast for next two quarters; and information for procurement management of major contracts. FMR s would meet the information needs and requirements of (i) DOHFW; (ii) IDA; and (iii) the project management and would also be the basis/format of the annual financial statement to be prepared by the PMU. Physical attributes indicating projects progress on various activities/ components and procurement status would be captured in pre-designed format on a manual basis. Initially the districts would be required to report in pre-designed excel sheets for ease in comparison. Information Systems The project has a two stage arrangement: (i) Initially the project will have a hybrid system; an off the shelf accounting package at the PMU (TALLY accounting package has been installed) and manual accounting records at the DPMC s. Pre-designed manual reporting formats have been developed as part of the financial management manual on the basis of which the DPMC s would be required to report to the PMU. Data can be exported from the TALLY system to excel spreadsheets which would facilitate preparation of FMR s, while the physical progress will be captured manually. (ii) A CFMS will be developed during the first year of project implementation and implemented both at the PMU and the DPMC s. It is proposed that an existing CFMS developed for another bank funded health project and which is running well will be customized to meet the requirements of this project. A TOR has been approved for the development of the CFMS. It has been agreed that the CFMS would be installed by September 30, The CFMS will have the capability to generate FMR s. ImDact of Procurement Arranpements The procurement of works will be managed by the in house Engineering (Civil Works) Cell and the equipment under the project will be managed by a combination of the Engineering Procurement Cell and a procurement agent. The procurement agent will receive the advance funds for this project for making payments to the suppliers. All the invoices and other supporting documents would be certified by the procurement agent and submitted to the PMU for liquidation of advances and accounting for the expenditure. 2. Audit Arrangements External audit: The audit arrangements under the project would include, (i) a comprehensive audit report (including consolidated project financial statements- sources and uses of funds by categories and components) in respect of the entire project (PMU and the participating districts) by the office of C&AG, who shall be acceptable to IDA as an independent auditor. The C & AG carries out the audit in line with the INTOSAI standards and this has been accepted by the bank. The audit would be conducted by C&AG as per the terms of reference approved by IDA and consented to the C & AG, wherein an opinion on the financial statements (prepared by the project) will be given by the C & AG. In addition, an audit report for special account held at Go1 would also be submitted in usual manner. The annual project financial statements duly audited would be submitted within 6 months of the close of GoI s fiscal year. Thus the following audit reports will be monitored in Audit Reports Compliance System (ARCS):

93 Implementing Agency Audit Auditors I Audit Date Consolidated Audit I SOEI I Comptroller & Auditor I March 3 1, each Report, PMU and the DPMU s DEA I GO1 Project Audit General of India year; report to be submitted latest by Sept. 30. March 31, each year; report to be submitted latest by I Sept. 30. InternaZAudit: The internal audit would be carried out by the Directorate o f Inspection -DO1 (an independent Department under the Finance Dept. headed by a Financial advisor) as per the TOR for internal audit approved by IDA and consented to by the DOI. The internal auditor is required under the project to assess the operation of the project financial management system, including review of internal control mechanisms and procurement process. 3. Disbursement Arrangements GO1 would open a special account with RBI to receive the disbursements under the project from the Bank. Disbursements from the IDA credit would initially be made in the traditional system (reimbursement with full documentation and against statement of expenditure) and could be converted to the Financial Management Report (FMR) based disbursement at the option of GO1 and the GOR after the project successfully demonstrating capacity to generate quality FMRs. Allocation of credit proceeds (Table C) Table C: Allocation of Credit Proceeds Goods, materials and supplies Consultant Services Training, Workshops and NGO Services Incremental Operating Costs Unallocated Total Project Costs with Bank Financing Total of foreign expenditures; 100 of local expenditures (ex-factory cost); and 80 of local expenditures for other items procured locally through September 30,2006; 70 from October 1,2006 through September 30, 2008; and 40 thereafter

94 Use of statements of expenditures (SOEs): Use of Statement of Expenditure (SOE) : Disbursement will be made on the basis of statement of expenditure for (a) civil works for contracts not exceeding US$SOO,OOO ; (b) Goods for contracts not exceeding US $250,000; (c) consultants for contracts not exceeding US $100,000 for firms and US$50,000 for individuals and for (d) training, workshops and studies. Retroactive Financing: Retroactive financing will be provided for project preparation and project expenditures incurred after July 3 1, 2003 up to a maximum of SDR 3 million. This will cover goods, services and operating expenditures such as salaries, equipments and other expenditures for setting up the PMU. However, as expenditure on project preparation activities till the date of negotiations have been financed out of funds provided from the Reproductive and Child Health (RCH) Project, the retroactive claim would not include expenditures already met out of RCH funds. Special account: A Special Account would be maintained in the Reserve Bank of India; and would be operated by the Department of Economic Affairs (DEA) of Government of India (GOI). The authorized allocation of the Special Account would be USD 8.0 million that represent about 4 months of initial estimated disbursements from the IDA Credit. The Special Account would be operated in accordance with the Bank s operational policies. The project will submit withdrawal applications on a quarterly basis to Controller of Aid, Accounts and Audit (CAA&A) in DEA for onward submission to the Bank for replenishment of the special account or reimbursement. Supervision Plan The project would require an in-depth supervision in the initial year especially for ensuring successful implementation of the state level FM and fund flow arrangements and ensuring timely audit of the financial statements generated by the project. Mid term review would be conducted after two and a half years of the project to comprehensively review the FM performance of the project

95 Annex 7: Project Processing Schedule INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Prepared by: Department of Medical, Health and Family Welfare, Government of Rajasthan Preparation assistance: Savings of the Rajasthan component of the Reproductive and Child Health Project (Cr.N-018) were used for preparation support. Name Sadia Chowdhury Tawhid Nawaz Preeti Kudesia G. N. V. Ramana Abdo Yazbeck Mam Chand Manoj Jain Nilufar Ahmad Jeff Ruster Chiaki Yamamoto Ruma Tavorath Syed Ahmed Venkatachalam Selvaraju Laura Kiang Jay Satia ~David Porter Shreelata Rao-Seshadri Vijay Rewal Pradeep Kakkar Mohan Gopalakrishnan Michael Ranson Nina hand Katia Visconti Speciality Sr. Public Health Specialist Lead Implementation Specialist Sr. Public Health Specialist Sr. Public Health Specialist Lead Economist Sr. Procurement Specialist Sr. Financial Management Specialist Sr. Social Scientist Lead Private Sector Development Specialist Private Sector Development Specialist Environmental Specialist Sr. Counsel Economist Operations Officer Consultant on Mangement and Institutional Assessment Consultant on Biomedical Engineering Consultant on Tribal Health Care Consultant on Civil Works Consultant on Communications Management Financial Management Specialist Consultant on Health Care Financing Program Assistant Program Assistant

96 Annex 8: Documents in the Project File* INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT A. Project Implementation Plan Department of Medical, Health, and Family Welfare, Govemment of Rajasthan. April Draft Project Implementation Plan. Department of Medical and Health, Government of Rajasthan. November Updated Version 01: Project Proposal for Rajasthan Health Systems Development Project. Department of Health & Family Welfare, Government of Rajasthan and Indian Institute of Health Management Research. March Project Proposal (Version-IV). Department of Medical & Health, Government of Rajasthan. May 1998: Project Implementation Plan. Department of Health and Family Welfare and Indain Institute of Health Management Research, Govemment of Rajasthan. Special Studies. B. Bank Staff Assessments Onursal, B., Setlur B. Environmental Review of the Health Sector Portfolio in the South Asia Region. World Bank Discussion Paper. Washington, D.C. Onursal, B., Setlur B. Environmental Review of the Health Sector Portfolio in the South Asia Region. Second Part. World Bank Discussion Paper. Washington, D.C. World Bank. June Country Assistance Strategy of the World Bank for India. Washington, D.C. World Bank. June India: Rajasthan: Averting Fiscal Crisis and Accelerating Growth. Report No IN. Washington, D. C. Peters, H. P., Abdo S. Yazbeck, Rashmi S. Sharma, G. N. V. Ramana, Lant H. Pritchett, and Adam Wagstaff Better Health for India's Poor. Washington, D. C.: World Bank. World Bank. March Project Appraisal Document for Rajasthan District Poverty Initiatives Project. Report No IN. Washington, D.C. C. Other Department of Family Welfare, Government of India, European Commission. AugusVSeptember, ECTA Working Papers. Department of Health & Family Welfare, Government of Rajasthan Population Policy of Raj asthan. Department of Family Welfare, Ministry of Health & Family Welfare, Government of India. January Manual on Community Needs Assessment Approach in Family Welfare Programme. Department of Health and Family Welfare, Government of Rajasthan. July Rajiv Gandhi Population Mission. Department of Medical & Health, Government of Rajasthan. February Health Vision-2025 Rajasthan. Department of Medical & Health, Government of Rajasthan. October Tribal Development Plan. Department of Medical & Health, Government of Rajasthan. October Institutional Assessment. Department of Medical & Health, Government of Rajasthan. October Social Assessment. Department of Medical, Health & Family Welfare Services, Government of Rajasthan. September Policy to Encourage Private Investment in Hospitals, Diagnostic Centres and Nursing Homes. Department of Medical, Health, and Family Welfare, Government of Orissa. May Project Implementation Plan. Indian Institute of Health Management Research and Policy Project. Issues in Reproductive and Child

97 Health Financing in Rajasthan. India-Rajasthan District Poverty Initiatives Project-I (DPIP). Tribal Development Plan. International Institute for Population Sciences National Family Health Survey. International Labour Office Women Organizing for Social Protection Operations Research Group Baroda Beneficiary Assessment Study of the Migratory Population of Western Rajasthan. Project Management Cell, MHSDP Public Health Department, Government of Maharashtra. November Project Implementation Plan. Sharma S., David R. Hotchkiss Developing Financial Autonomy in Public Hospitals in India: Rajasthan's Model. Health Policy 55: Society for Education, Research & Voluntary Efforts. Maternal Health Surveillance Survey (MHSS) at Sangad Block of the Jaisalmer District in Rajasthan. Tribal Area Development Department, Udaipur, Rajasthan Annual Plan for Tribal Development in Rajasthan. UNICEF Rajasthan State Office The Progress of Districts in Rajasthan. Department of Family Welfare, Government of India. March, Reproductive and Child Health (World Bank Component), Project Proposal and Implementation Plan, Volume-11, State Project Implementation Plan. Sodani P. R., S. D. Gupta. 0ct.-Dec Health Care Expenditure: Results from a Study in Tribal Areas of Rajasthan. MARGIN Vol. 3 1, No. 1. Indian Institute of Health Management Research. January Strengthening Reproductive & Child Health Finance in Rajasthan. Indian Institute of Health Management Research. March End Line Evaluation of Ninth India Population Project: Rajasthan. Indian Institute of Health Management Research. April End Line Evaluation of Ninth India Population Project: Rajasthan. Indian Institute of Health Management Research A Demographic and Health Survey of Desert Districts of Rajasthan. *Including electronic files

98 Annex 9: Statement of Loans and Credits INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT 03-Feb-2004 Original Amount in US$ Millions Difference between expected and actual disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd P MAHAR RWSS PO73776 PO79865 PO50649 PO72123 PO71272 PO67606 P P PO75056 PO50653 PO50668 PO50647 PO40610 PO69889 PO71033 PO72539 PO74018 PO67216 PO38334 PO59242 PO55455 PO35173 P PO50658 PO70421 PO71244 PO10566 PO67543 PO09972 PO10505 PO35172 PO55456 PO59501 P PO45049 P P PO50657 PO45050 PO41264 PO45051 PO50637 PO50646 PO50651 PO10496 PO10561 PO49385 PO35827 PO35824 PO38021 P PO ALLAHABAD BYPASS 2004 GEF Biosafety Project 2003 TN ROADS 2003 TechiEngg Quality Improvement Project 2003 AP RURAL POV REDUCTION 2003 UPROADS 2003 AP COMM FOREST MANG 2003 Chatt DRPP 2003 Food & Drugs Capacity Building Project 2002 KARNATAKA RWSS II 2002 MUMBAI URBAN TRANSPORT PROJECT 2002 UTTAR PRADESH WATER SECTOR RESTRUCTU 2002 RAJ WSRP 2002 MIZORAM ROADS 2002 KARN TANK MGMT 2002 KERALA STATE TRANSPORT 2002 Gujarat Emergency Earthquake Reconstruct 2001 KAR WSHD DEVELOPMENT 2001 RAJ POWER I 2001 MP DPlP 2001 RAJ DPEP II 2001 POWERGRID II 2001 KERALA RWSS 2001 TECHN EDUC KARN HWYS 2001 Grand Trunk Road Improvement Project 2001 GUJARAT HWYS 2001 LEPROSY II 2000 NATIONAL HIGHWAYS 111 PROJECT 2000 RAJASTHAN DPlP 2000 UP POWER SECTOR RESTRUCTURING PROJEC 2000 IN-Telecommunications Sector Reform TA 2000 IN-TA for Econ Reform Project 2000 IMMUNIZATION STRENGTHENING PROJECT 2000 AP DPlP 2000 REN EGY II 2000 UP DPEP UP Health Systems Development Project 1999 RAJASTHAN DPEP 1999 WTRSHD MGMT HILLS II ND NATL HIV/AIDS CO 1999 TN URBAN DEV II 1999 UP SODIC LANDS II 1999 MAHARASH HEALTH SYS 1998 ORISSA HEALTH SYS 1998 NATL AGR TECHNOLOGY 1998 AP ECON RESTRUCTURIN 1998 WOMEN CHILD DEVLPM 1998 DIV AGRC SUPPORT 1998 DPEP 111 (BIHAR) 1997 ECODEVELOPMENT 1997 MALARIA CONTROL OO

99 Original Amount in US$ Millions Difference between expected and actual disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO ECODEVELOPMENT PO TUBERCULOSIS CONTROL PO STATE HIGHWAYS I(AP) PO AP IRRIGATION PO RURAL WOMEN'S DEVELOPMENT PO ENV CAPACIW BLDG TA PO REPRODUCTIVE HEALTH PO ORISSA POWER SECTOR PO ORISSA WRCP PO STATE HEALTH SYS II PO MADRAS WAT SUP II PO TAMIL NADU WRCP PO ASSAM RURAL INFRA Total: I

100 INDIA STATEMENT OF IFC's Held and Disbursed Portfolio June In Millions US Dollars IFC Committed IFC Disbursed FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic NewPath Niko Resources Orchid Owens Coming Prism Cement RCIHL RTL Rain Calcining SmL SREiI Sara Fund Spryance Sundaram Home TCFC Finance Ltd TCWACICI TDICI-VECAUS I1 TELCO TISCO Tanflora Park Tata Electric Titan Industries UCAL United Riceland Usha Martin VARLJN Vysya Bank WIV WTI Walden-Mgt India W ebdunia AEC ATL Alok Ambuja Cement Arvind Mills Asian Electronic BTVL. Balrampur Basix Ltd. Bihar Sponge CCIL CEAT CESC COSMO Total Portfolio: oo oo

101 Approvals Pending Commitment FY Approval Company APCL BHF CIFCO Dataquest Mgmt. Escorts Telecom GI Wind Farms HDFC - Loan Niko Resources SPL TELCO 1 LJPL Vysya Bank Loan Equity 0.01 Quasi 0.02 Partic Total Pending Commitment:

102 Annex IO: Country at a Glance INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT POVERTY and SOCIAL 2002 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions) India 1, South Asia 1, Lowincome 2, ,072 Development diamond* Life expectancy l- Average annual growth, Population (%) Labor force (%) Most recent estimate (latest year available, ) Poverty (% of population below national povetty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% ofchildren under5j Access to an improved water source (% ofpopulation) Illiteracy (% of population age 15+) Gross primary enrollment (% of school-age population) Male Female GNI Gross per + + primary capita enrollment 1 Access to improved water source India Low-income group KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 GDP (US$ billions) Gross domestic InvestmenffGDP 21.7 Exports of goods and servicesigdp 6.1 Gross domestic savingslgdp 18.3 Gross national savingsigdp Economic ratios' Trade Current account balancelgdp Interest paymentsigdp Total debugdp Total debt servicelexports Present value of debffgdp Present value of debffexports Indebtedness (average annual growth) GDP GDP per capita India STRUCTURE of the ECONOMY (% of GDP) Agriculture Industry Manufacturing Services [ Growth of investment and GDP (Oh) t0 5 Private consumption General government consumption Imports of goods and services (average annual growth) Agriculture Industry Manufacturing Services Private consumption General government consumption Gross domestic investment Imports of goods and services , ,~ , Growth of exports and Imports (%) 30 T, *.., * ,

103 India PRICES and GOVERNMENT FiNANCE Domestic prices (% change) Consumer prices Implicit GDP deflator Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surplus/deficit Inflation (%) 1 1 "1 O ' 97 i GDP deflator -bcpi TRADE (US$ millions) Total exports (fob) Marine products Ores and minerals Manufactures Total imports (cia Food Fuel and energy Capital goods Export price index (1995=100) Import price index (1995=100) Terms of trade (1995=100) ,490 18, ,109 14,039 16,468 24,316 1, ,957 6,100 2,662 4, ,915 1,237 1,262 33,370 57,618 2,043 14,000 9, ,000 1,381 1,900 38,353 65,474 2,368 17,640 12, Export and Import levels (US$ mill.) 80'ooo T I O Exports Imports I BALANCE of PAYMENTS (US$ millions) Exports of goods and services Imports of goods and services Resource balance ,377 23,599 18,352 27,917-5,975 4, ,580 73,706-8, ,986 84,254-6,268 Current account balance to GDP (%) I Net income Net current transfers ,423 2,510 3,852-3,601 12,125-4,882 14,448 Current account balance -3,800-3, ,298 Financing items (net) Changes in net reserves 3,101 4, , ,757 13,682-16,980 Memo: Reserves including gold (US$ millions) Conversion rate (DEC, /oca/lus$) 4,896 9, , , EXTERNAL DEBT and RESOURCE FLOWS (US$ millions) Total debt outstanding and disbursed ibrd IDA ,546 90,264 1,395 9,326 6,983 15, ,516 7, ,210 5,141 21,642 I Composition of 2002 debt (US$ mill.) G: 4,093 A: 5,141 I Total debt service IBRD IDA 2,054 7, , ,327 1, ,042 3, Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity ,352 2,543 1,180 1, ,569 4,741 1, ,657-1,861 3, F 51,061 World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers 1,889 2,678 1,397 1, ,300 1, , ,190 2,089 1, ,523 1,465 3,196-1, ,200 A. IBRD E - Bilateral B IDA D -Other multilateral F - Private C. IMF G - Short-term uevelopment tconomics Z/Y/U4-97 -

104 Additional Annex 1 I : Inequities in Rajasthan INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Rajasthan - Inequities in health status and utilization of health services The Population Policy of Rajasthan reflects state s strong commitment to improve health status of its population, particularly the poor and vulnerable groups including women, children, and those belonging to scheduled tribes, castes and nomadic groups. The goals set by Rajasthan are similar to the internationally committed Millennium Development Goals (Box 1) Reduce Infant Mortality Rate from 85 per 1000 live births in 1995 to 68 by 2007 Increase Institutional Deliveries from 12% in 1995 to 50% by 2016 Increase deliveries conduced by trained personnel from 33% in 1995 to 100% by 2005 While these goals are very relevant, they are also challenging, especially in case of the poor. Poverty and health are intimately related, and poverty is both a cause and consequence of ill health (The World Bank 2001a). The objective of the current analysis is to study the inequities in health status and utilization of health services in Rajasthan using household level data (National Family Health Survey ) and techniques developed by Gwatkin et al. (2000). This is followed by a discussion on policy and program options for making health services pro-poor and improving health outcomes among the poor based on international experiences. The findings are summarized through a series of questions. I. Are health outcomes equitable in Rajasthan? Health Outcomes -Ratio between Richest and Poorest 20% CNR IhlR UnderH eight Stunting B\lI <18.S TFR The analysis suggests that like most developing countries, the health outcomes in Rajasthan are much worse among the poorest 20% compared to the richest 20%. This observation holds good for infant mortality (107 vs. 55/1000 live births), under five mortality (162 vs. 69/1000), total fertility (5.1 vs. 3.3) and prevalence of malnutrition among children < 3years (stunting: 59% vs.36%, underweight: 61~~33%) as well as among adults (BMK18.5: 38 vs. 23%). Ratios between richest and poorest households are presented in Figure 1 highlight these inequities. II. Do poor have equal access to basic health services?

105 The results suggest that poor tend to have less access to basic reproductive and child health services (Table 2). This difference was found to be most pronounced for childhood immunization. A child born in poorest household is 10 times less likely to be fully immunized compared to its richest household (4% vs. 43%). This was followed by place of delivery (facility delivery (8 vs. 60%) and medically trained person attending delivery (1 6 vs. 79%). Among different services included in the analysis, poor seem to give higher priority to getting childhood illness treated. Nearly half (45%) of the children with acute respiratory infection belonging to poorest quintile received medical attention. However, the corresponding proportion among those belonging to the richest quintile was 87%. Figure 2. Access to Basic Health Services - Ratio between Richest and Poorest 20% %Women delivered at a health facility % Women delivered by a Medidy Trained person % Eqectant women received antenatd Care from a medieauy trained person YO Married females using modern contraception %Chi!drenHimARIseenmedidy * DI I I III. Do poor equally use the public health services? Two important health services - one each from maternal and child health areas -were analyzed (Table 3). The results suggest that the utilization of maternal health services is pro rich (deliveries in public sector facilities: 3 vs. 35%). However, the rich poor differentials were less marked in case of receiving treatment for sick children. About 24% of children belonging to poorest quintile received treatment at public facility compared to 35% among the richest quintile. Other Benefit Incidence studies also suggest similar trends (A Mahal at a1 2001). IV. Do rich have access to better quality services? Figure 3. Access to Safe motherhood Services -Ratio between Richest and Poorest 20% I I I I Received AN rare from P Doctor

106 This analysis is limited to antenatal and delivery services and also limited by the fact that seeking care from higher level provider does not necessarily mean better quality. The results (Table 4) suggest that women from richest quintiles had nearly 6 times higher probability of receiving antenatal care from a doctor, 3 or more antenatal visits as well as being delivered by a doctor. V Are the poor adequately informed about key health issues? Inequities in two key health related behaviors were analyzed. Generally, awareness about sexual mode of HIV/AIDS transmission was low. Only about a quarter of the women (27%) belonging to poorest income quintile were aware that HIV/AIDS get transmitted through sex compared 45% among the richest quintile. The real challenge is how to translate the knowledge to practice. The results suggests that only 0.3% of the mothers whose children had diarrhea during the past 2 weeks used oral re-hydration treatment compared to 40% among the richest quintile (Table 4). VI. Do youth also experience similar inequities? Less than 1% of adolescent girls belonging to poorest quintile in Rajasthan are aware about sexual transmission of HIV AIDS. Even among the richest quintile, only a third of the young women knew about this. Women in Rajasthan tend to get married earlier. More than 80% of women in years were married and 48% have had a child by age 18. Women belonging to poorest quintile are around 1.5 times more likely to get married and bear children before 18 years compared to those belonging to richest quintile. In general, adolescent boys belonging to poorest quintile were more vulnerable to risk factors such as tobacco smoking (12 vs. 1%) and alcohol consumption (4 vs. 0.2%). What are the policy and program options? 1. There is urgent need to improve economic access to basic health services by better targeting public subsidies to poor such as health cards, vouchers including direct cash transfers. Examples include national insurance programs for women an children in Peru and Bolivia (World Bank 1999), health card scheme in Indonesia (Saadah et. A1 2001). Direct cash transfers to poor women in Mexico (PROGRESA) improved their status and decision making power in the household (Gertler, 2000). 2. Increasing physical access to basic heath services i s also important. Though intra-district variation has not been analyzed in this paper, the problems in physical access are well known in sparsely populated dessert districts of Rajasthan. Strategic partnerships with non govemment sector is an important policy option in such areas. Other cross sector options include investing in transport and road connectivity as done in Vietnam and Malaysia (Van De Walle & Cratty 2002; World Bank forth coming). 3. Enhancing service quality is critical. In addition to clinical quality, enhancing provider responsiveness to client, especially to those from poorer sections, is important. 4. It is evident from the analysis that there i s considerable gap in public awareness and practices about the key health issues. Informing about health issues is a an important public oversight function. The key areas for behavior change include age at marriage, conception and HIV/AIDS transmission. 5. Scaling of adolescent reproductive health services is critical for Rajasthan to fully exploit the

107 benefit of temporary demographic bulge due to relative increase in working age population by This provides an unique opportunity for the state to enhance human capital by investing in education, job creation and youth services. Table 2. Utilization of basic health services in Rajasthan by Income Quintiles Indicator I Poorest I Next 20% I Middle I Next 20% I Richest % Expectant women received antenatal Care from a medically trained person % Women delivered by a Medically Trained person % Women delivered at a health facility % Children (12-23 months) 20% 20% 20% % Children with AN seen medically % Married females using modem contraception Table 3. Use of Public Health Services by Income Quintiles Indicator I Poorest I Next 20% I Middle I Next 20% I Richest 20% 20% 20% % Women delivered at a 3.O public health facility % Children with ARI treated at Public facilitv YO eligible beneficiaries Received AN care from a Doctor Received 3 or more Antenatal visits Delivered by a Doctor Poorest Next 20% Middle Next 20% Richest 20% 20% 20%

108 Indicator % Women aware of sexual transmission of HIViAIDs % Mothers used ORT when their children had diarrhea Poorest Next 20% Middle Next 20% Richest 20% 20% 20% Indicator % adolescent girls (1 5-19) receiving iron folate supplements % Women (20-24 Yrs) 88.6 married by age 18 % women (20-24 yrs.) who 53.8 had a child by age 18 % adolescent women ( yrs.) aware about sexual transmission of HIV AIDS % of adolescent boys Smoking % of adolescent boys (( 15-19) who drink alcohol Table 6. Inequities among Adolescents Poorest Next 20% Middle 20% % Next 20% Richest 20%

109 Additional Annex 12: Rajasthan- Activity Matrix INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Sub- Component 1.1. Improving the Institutional Framework for Policy Development Zomponent I : Policy Development and Program R Activities Strengthening strategic planning capacity through establishing and operationalizing the strategic Planning Cell Develop and Implementation of Stratew for Public Private "I Partnerships (a) Consultations; (b) Studies and surveys; and (c) Design and implementation lnap Yr. V ment Responsibility PSC and PIU PIU, SPC 1.2. Strengthening management and implementation capacity Establishment and operation of the state and District level project management and oversight structures. PSU, PIU 1.3. Strengthening Human Resources: Training and Capacity Building Establishment of Hospital Training Complex at District Hosuitals Provision of Trainers Training for Provision of Training (a) Management Training for 2788 (b) ClinicaliTechnical training for 8837 (c) Health systems training for 8698 DoMHFW, PIU POU, SIHFW PIU, SIHFW 1.4. Strengthening Health Management Information System Establishing Quality Assurance and Information Cell in PIU Development and implementation of HMIS including formats and guidelines and training Validation of HMIS data and training PSC, DoMHFW PIU, SPC PSC, PIU, External Consultants

110 Component I1 : Improving Quality and Efficiency of public health care services at Primary and Secondary levels Sub- Component 2.1. Physical renovation and upgradation of district hospitals, CHCs and BPHCs Activities Responsibility PIU, CW cell, Consultant for CW Base cost 2.3 Upgrading Quality of Clinical Management and Support services 2.4. Improving Referral mechanisms Renovation/ upgradation of 28 district hospitals, 23 subdivisional hospitals, 185 CHCs, 2 BPHCs Iimplementation of the Health Care Waste Management Provision of equipment and furniture to the upgraded facilities Procurement of drugs and hospitals supplies Development and implementation of Quality Improvement guidelines including training- - v Development of guidelines and capacity in equipment use and maintenance; Establishment of Monitoring systems for (a) useand maintenance of equipment; (b) quality of clinical care; (c) patient satisfaction ; (d) hospital performance; and (e) HCWM practices at upgraded facilities Development and implementation of referral guidelinesiprotocols including training Review effectiveness of referral systems PIU, DPMCs, each PMO, CMHO PIU, Procurement Cell PIU, Quality Cell, HR Cell PIU, Quality Cell, HR Cell PIU, SPC, Quality Cell PIU, SPC Quality Cell PIU, SPC Quality Cell PIU, CI Cell DPMC

111 Sub- Component 1, Improving health :eking behavior 2. Enhancing access I care 3 Public Private irtnership Component I11 Health Care for the Disadvantaged Activities Development of IEC strategy and material Implementation of IEC strategy Implementation of Tribal Strategy Renovation/ upgradation of 138 CHCs/ BPHCs in tribal and poor districts including provision of required equipment, furniture and drugs Study of existing schemes for exemption to the poor in the State including review of national and intemational best practices for community based insurance Implementation of innovations for (a) strengthening existing exemption schemes for the poor and (b) community based health insurance schemes Analysis of coverage and utilization of the schemes, and scaling up of successful interventions Design and implementation of public private partnerships models for provision of health care Independent assessmentbf public private partnership models. Responsibility PIU, CI Cell DPMC PIU, CI Cell DPMC PIU, CW Cell Proc Cell, CI Cell, DPMC PIU, CI Cell DPMC PIU, CI Cell DPMC PIU, SPC. CI Cell DPMC PIU, CI Cell DPMC PIU, CI Cell DPMC PIU, SPC, CI Cell Base cost