Mexico - Basic Health Care Project

Document of The World Bank FOR OFFICIAL USE ONLY AAJ S27Z_Aif Report No. 8927-ME STAFF APPRAISAL REPORT MEXICO BASIC HEALTH CARE PROJECT November 8, 1990 Human Resources Operations Division Country Department II Latin America and the Caribbean Regional Office Thbi document has a restriced distributloG and may be used by recipients only in the perrormance of their ofdkia duties. Its contents may not otherwise be disclosed without World Bank waubori2stion.  CURRENCY EQUIVALENTS Currency Unit Peso (X6X$) US$1.00 = 2,894 Pesos (October 1990' FISCAL YEAR January 1 - December 31 UNITS OF WEIGHTS AND MEASURES Metric British/US Equivalent 1 meter (m) 2 3.28 feet 1 kilometer (km) 0.62 mile (mi) 1 kilogram (kg) = 2.20 pounds (lb) 1 metric ton (m ton) = 2,250 pounds 1 liter (1) = 0.26 gallons (gal) 1 cubic meter (m3) = 1,000 liters ACRONYMS CECADE Training and Development Center of the SSA CONALEP National College for Professional and Technical Traintng COPLADE State Planning and Development Committee CSRC Concentrated Rcral Health Center CSRD Dispersed Rural Health Center CSU Urban Health Center DIP Family Social Welfare Agency GDP Gross Domestic Product IMSS Social Security Institute for Private Sector Employees IMSS/COMPLAMAR Special Basic Health Program f r the Uninsured Population IMSS/SOLIDARIDAD Program that Replaced IMSS/COMPLAMAR INI National Institute for Indigenous 'opulation ISSSTE Social Security Institute for Public Sector Employees ISSSTECH Social Security Institute of State Employees of Chiapas LICONSA Subsidized Milk Distribution Program MIS Management Information System NAFIN National Financing Company PASSPA Health Care Program for the Uninsured Populatio SSA/National Solidarity Program PCU Project Coordination Unit PEMEX Mexican Petroleum Company PIDER Integrated Rural Development Program PRONASOL National Solidarity Program SCSP SSA's Coordinated Health Services at State Leve (for states not yet decentraiized) SHCP Federal Secretariat of Finance SIC State and International Coordination of SSA SPP Federal Secretariat of Programming and Budgetin SSA Federal Secretariat of Health UIHIM Research Unit of the Hospital Infantil de Mexic  FOR OMCLL USE ONLY MEXICO BASIC HEALTH CARE PROJECT Table of Contents Paae LOAN SUMMARY .................... *iii BASIC DATA ............ vi DEFINITIONS ....................... ..............vii I . INTRODUCTION ............ II. SECTOR ORGANIZATION, ISSUES, AND STRATEGY ........2 .2 A. Sector Organization ............................ 2 B. Sector Issues ..................3 C. Government Strategy .......................... 10 D. Project Areas ............................. ...12 E. Rationale for Bank Involvement .................13 III. THE PROJECT ............4... 1 A. Project Concept and objectives ................14 B. Project Components ............................ 14 C. Project Description ........................... 15 IV. PROJECT COSTS, PROCUREMENT, DISBURSEMENT, AMX AUDITS 2 A. Project Costs and Financing ...................24 B. Procurement .................................. 26 C. Disbursements ........................ ....... D. Accounts and Audits ..........................29 This report is based on the findings of an appraisal mission that visited Mexico in June 1990. The mission was composed of Ms. C. Hamann (mission leader), Ms. Ana Maria Arriagada (economist), Ms. Maria Elena Anderson (operations assistant), Mr. Ferenc Molnar (counsel), and Mr. Alberto Zuniga (architect, consultant). Mr. William McGreevey (unit chief) and Mr. Kye Woo Lee (projects advisor), participated in part of the mission. Mr. Darren Dorkin provided editorial and preparation assistance. 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.  - ii - V. PROJECT IMPLEMENTATION .................... . .. ....30 A. Status of Project Preparation ................30 B. Project Organization, Implementation, and Management .................................. 31 C. Planning and Reporting ........................ 33 D. Project Monitoring and Evaluation ............ 34 E. Annual Project Implementation and Mid-Term Review .............................. . 35 VI. PROJECT BENEFITS AND RISKS ........................ 36 A. Project Benefits ............................ . 36 B. Impact on Women .............................. 36 C. Environmental Impact ........................37 D. Project Risks ................................ 37 VII. AGREEMENTS REACHED AND RECOMMENDATIONS ........ 37 ANNEXES 1 - Country and States Health Status 2 - P"blic Health Expenditures and Financing 3 - F jctor Organization and Coverage 4 - Sector Strategy - Programa de Apoyo a los Servicios de Salud para la Poblaci6n Abierta (PASSPA) 5 - The Project Areas 6 - Project Description 7 - Project Costs and Disbursement 8 - Disbursement 9 - Implementation Schedule 10 - Selected Documents and Data Available in the Project File MAP IBRD - 22425R: Mexico: Project States and Priority Jurisdictions  - iii - MEXICO BASIC HEALTH CARE PROJECT LOAN SUMMARY Borrower: Nacional Financiera, S.N.C. (NAFIN) Guarantor: United Mexican States Executing Secretariat of Health (Secre7qria de Salud - SSA) Acwencies: and State Health Authorities-' Amount: US$180.0 million equivalent Terms: Repayment in 17 years, including 5 years of grace at the standard variable interest rate. Proiect The project would: (a) strengthen and extend basic Objectives: health care services and targeted nutrition assistance to about 13 million uninsured poor in 47 health jurisdictions in Oaxaca, Chiapas, Hidalgo, and Guerrero and in the Federal District (Project States); (b) support institutional improvements to strengthen management capability to enhance the efficiency and effectiveness of the health care system; and (c) strengthen the implementation of sectoral reforms to decentralize budgetary, management, and operational responsibilities from the federal level to the states. Attainment of these objectives would support a broader government policy for poverty alleviation and contribute to improved health and nutritional status of low-income residents in Mexico's poorest states. Proiect The project consists of two major components: (a) Description:Health Services Component (89 percent of total project cost including contingencies), which would focus on improving and extending delivery of basic health care and nutrition assistance (PASSPA program) for.13 million uninsured people. Specific actions include: (i) rehabilitating, upgrading, and expanding the health network and developing a maintenance program for facilities and biomedical equipment; (ii) providing equipment, furniture, vehicles, and basic 1/ State Health Authorities include: SSA's Coordinated Health Services of the States of oaxaca, Chiapas, and Hidalgo (Servicios Coordinados de Salud Publica); Secretariat of Health of the State of Guerrero (Servicios Estatal de Salud); and Public Health Services of the Federal District (Direcci6n General de Servicios de Salud Publica en el Distrito Federal).  - iv - medical supplies; (iii) hiring, reassigning, and regrading personnel to fit the PASSPA program; (iv) improving the supervision system and technical training for professional and auxiliary health staff; and (v) producing and distributing operational manuals and materials; and (b) Institutional Development Component (11 percent of total project cost). At the federal level, it would: (i) provide assistance to facilitate the decentralization process; (ii) conduct operational research to improve services delivery, to set policies and priorities, to mobilize additional resources for basic health care, and to carry out operational research and impact evaluation; and (iii) strengthen management information systems to improve planning, analysis, aihd management capacities. At the state level, this component would assist in improving: (i) the management, administration, and planning capacities of the State Health Authorities; (ii) personnel policies and management; and (iii) training opportunities in management and administration for managers and administrative staff. Project Benefits of the project would include: improved health Benefits: among the 13 million uninsured poor in the project states, and reduction in the prevalence of infectious and communicable diseases and malnutrition, particularly among the three million women of childbearing age, and 1.7 million infants and children under age five. The project would alBo contribute to improvements in the management, administration, client responsiveness, and overall efficiency of public health services in the project states, partly as a result of system decentralization. The project would increase the proportion of overall public health resources going to preventiv.. health care and nutrition assistance for vulnerable groups in the poorest states. Proiect Main project risks are associated with: (a) weak Risks: capacity of State Health Authorities to manage this expanded program of health services delivery; and (b) uncertainty about the government's fiscal capacity to assign sufficient resources to sustain the project's recurrent spending. These risks have been reduced, however, by: the high priority of project objectives in government social policy; the experience gained by the states during project preparation; the concentration of the project efforts on key service elements; the provision of Bank loan funds on a declining basis so that each state would have time to increase user fees, state revenues, and federal contributions; establishment of data gathering and monitoring mechanisms; annual implementation and work plan reviews with the Bank; and the better prospects for renewed growth of the Mexican economy.  l ~~~~~~~~- v - ESTIMATED PROJECT COST a/ Proie(t Components Local Foreign Total - US$million------- Health Services Development 163.0 28.9 191.9 Health Network Improvement and Expansion 75.2 27.5 102.7 Health Network Operation and Management 81.9 - 81.9 Human Resources Development 5.9 1.4 7.3 Institutional Development 20.9 3.7 24.6 Strengthening Organization and 16.4 2.4 18.8 Management Management Information System 2.3 0.8 3.1 Operational Research and Studies 2.2 0.5 2.7 TOTAL BASE COST 183.9 32.6 216.5 Physical Contingencies 4.7 1.5 6.2 Price contingencies 23.3 3.8 27.1 TOTAL PROJECT COST 211.9 37.9 249.8 Financing Plau Local Foreign Total -------US$million------- Federal Government 69.8 - 69.8 IBRD 142.1 37.9 180.0 TOTAL 211.9 37.9 249.8 Estimated Disbursements Bank Fiscal Year 1991 1992 1993 1994 1995 1996 ------------US$million------------ Annual 13.0 b/26.5 44.0 46.0 32.0 18.5 Cumulative 13.0 39.5 83.5 129.5 161.5 180.0 a/: Excludes taxes and duties (estimated at US$37.0 million). b/: Includes Special Account deposit of US$10.0 million to cover retroactive financing of US$8.0 million, for expenditures incurred after June 15, 1990.  - vi - MEXICO BASIC HEALTH CARE PROJECT BASIC DATA SHEET Mexico Year A. General Country Data GNP Per Capita (US$) 1,830 1987 Area (Thousand Square Kilometers) 1,973 Population Estimate (Millions) 82 1987 Urban Population (% of Total) 72 1987 Population Projection (Millions) Population for Year 2000 107 1989 Stationary Population 170 1989 Assuming that in Year 2000 a Net Production Rate of One is Reached B. Social Indicators Crude Birth Rate (per 1,000) 29 1987 Crude Death Rate (per 1,000) 6 1987 Annual Rate of Population Growth (%) 2.2 1987 Total Fertility Rate 3.6 1987 Infant Mortality Rate (per 1,000) 48 1986 Maternal Mortality Rate (per 100,000 live births) 92 1980-87 Babies with Low Birth Weights (%) 15 1985 Life Expectancy at Birth (years) 68 1986 Population Age Structure (%) 0-14 years 44.7 1981 15-64 years 51.8 1981 65+ years 3.4 1981 Adult Illiteracy Rate (% of persons 15 and over) 17 1982 Primary Enrollment Rate (%) 114 1986 C. Health Sector Resources Population per Physician 1,240 1984 Population per Nursing person 880 1984 Population per Hospital Bed 870 1981 D. Coverage Population with Access to Health Services (%) 45 1985 Population with Access to Drinking water (%) 75 1985 Fertile Women Using Contraception (%) 53 1985 Sources: World Development Report, 1989, World Tables (Third edition); The State of the World's Children, 1988.  - vii - DEFINITIONS Crude Birth Rate : Number of births per 1,000 population in a given year. Crude Death Rate : Number of deaths per 1,000 population in a given year. Infant Mortality Rate : The number of deaths of infants under one year of age in a given year per 1,000 live births in that year. Life Expectancy at Birth : The average number of years an infant would live if the current age/sex- specific mortality trends prevailing at the time of birth were to continue. Naternal Mortality Rate : The nu.nber of deaths to women due to pregnancy and childbearing complications in a given year per 100,000 live births in that year. Rate of Natural Increase : The rate at which a population is increasing (or decreasing) in a given year due to a surplus (or deficit) of births over deaths, erpressed as a percentage of the total population. Total Fertility Rate : The average number of children who would be born alive to a woman during her lifetime if she were to pass through her childbearing years conforming to the age-specific fertility rates of a given year.  1. INTRODUCTION 1.01 Between 1960 and 1986, life expectancy at birth increased from 58 to 68 years, infant mortality declined by a third (from 74 to 48 per 1,000 live !,irths), and maternal deaths fell by almost half (from 140 tc 80 per 100,000 births). Among the rural poor, however, the diseases of underdevelopment (gastroenteritis, acute respiratory disease, and immuno-preventable diseases), which are linked to undernutrition and poor sanitary conditions, remained the major causes of death (see Annex 1, Tables 1 and 2). About 53 percent of fertile women use some contraceptive method. Among the rural poor, however, a third of reproductive-age women have their two most recent pregnancies less than 24 months apart. Such short intervals are linked to anemia, undernutrition, and high rates of maternal and infant mortality. 1.02 In the 1980s, progress in public health services stagnated. Mexico's National Health Survey of 1988 showed that 13 million of the country's 82 million people missed work or school because of illness, in the two-week reference period prior to being interviewed. Anot.er aix million suffer from chronic diseases, and 1.6 million have chronic disabilities. The same survey found that one-third of pregnant women and nursing mothe=s are underweight, and 17 percent of newborns weigh less than the minimum safe weight of 2.5 kilos. About 14 percent of children under age five suffer from moderate or severe malnutrition, as measured by low weight for age. 1.03 In recent years, inequality in health conditions, between regions and income groups, has grown markedly. Today, life expectancy is 55 years in rural areas versus 71 years in urban areas; and it is 53 years among the poor compared with 73 years among the wealthy. The infant mortality rate varies widely between states, ranging from less than 20 per 1,000 in Zacatecas, Veracruz, and Quintana Roo, to over 50 per 1,000 in Chiapas, Guerrero, Guanajuato, Mexico City (squatters), Oaxaca, and Tlaxcala. The incidence of undernutrition is particularly high among the poor living in rural southern Mexico, where measured undernutrition is nearly four times higher than it is in the north of Mexico. In the States of Chiapas and Oaxaca, about 70 percent of pre-school-age children suffer from some degree of malnutrition. 1.04 One reason for the inequality in health conditions is that health services are virtually inaccessible to many of the 40 million Mexicans who lack health care insurance and cannot afford private providers. About a third of the uninsured poor live in four states, Chiapas, Guerrero, Hidalgo, Oaxaca, and the Federal District (referred to hereafter as the project states) (see Annex 1, Table 3 for current population and projections for the project states). These 13 million uninsured persons, especially the women and children, are the main target group of the proposed project.  - 2 - 1.05 With the collapse of oil prices in 1982, Mexico began an austerity program that included severe reductions in expenditures for health, educa*ion, and social security. Mexicans spend about US$60 per capita, or 3.4 percent of GDP, on public and private health care, which is somewhat less than that spent in other countries with comparable levels of development (see Annex 2, Table 1). Public health expenditures peaked in 1982 at 2.3 percent of GDP, then declined in 1984 to 1.8 percent of GDP (see Annex 2, Table 2). Per capita resources are still far below pre- crisis levels; few resources are now being allocated to investments and essential supplies (see Annex 2, Table 3). Salaries of health service employees in 1988 were down 22 percent in real terms compared to their 1980 level, causing a high turnover in staff. In 1989, public expenditures in the project states on the uninsured population totalled US$150.0 million (see Annex 2, Table 4 for details by state). Available public resources were about US$13 per capita in these states, compared with a national average af US$20 per capita for the uninsured population (see Annex 2, Table 5). 1.06 As part of its poverty alleviation policy, the government has developed a strategy to provide basic health care services to low-income groups. This objective has been pursued through increasing the coverage of the social security system, strengthening the mandate of the Secretariat of Health to determine sector priorities, shifting resources from curative to basic health care, and transferring decision making power from the federal to the State Health Authorities (see paras. 2.22 to 2.29). II. SECTOR ORGANIZATION, ISSUES, AND STRATEGY A. Sector Organization 2.01 The 1988 National Health Survey found that 15.4 million people sought formal health care from the following sources: private-sector providers (5.6 million); Social Security Institute for Private Sector (IMSS) (4.7 million); the Secretariat of Health (SSA) (1.9 million); Social Security Institute for Government Workers (ISSSTE) (1.1 million); IMSS/Solidaridad (0.4 million); and others (1.7 million). 2.02 Principal Institutions. The Secretariat of Health (SSA), which sets overall sectoral norms, provides some services, especially in high-quality teaching hospitals, and coordinates the work of specialized health organizations. These include: (a) IMSS and ISSSTE, the social security institutes that provide health care services to their affiliates and the families of private and public sector employees, respectively, which together constitute about half the population; (b) the state health services that have responsibility for coordinating and providing  - 3 - services to the uninsured in their states; (c) IMSS/Solidaridad, a unit of the Mexican Social Security Institute that provides basic health care in rural areas of 17 states; (d) INI, which provides services to selected indigenous populations; and (e) DIF, a welfare organization providing some health care to selected families of the urban poor. 2.03 Facilities and Staff. There are 9,352 health centers and hospitals in Mexico, providing a total of 28,211 ambulatory services and 57,487 hospital beds; the private sector has some 20,000 beds. These facilities are used for coordinated deliverl of family planning, health, and, in selected cases, nutrition services. Overall, Mexico has one hospital bed per 1,000 people, but the distribution is inequitable: only 0.3 public hospital beds per 1,000 are available to the uninsured poor in the project states (see Annex 3, Table 1 for data on health facilities in the project area). Mexico has a sufficient number of doctors (one for every 1,200 persons), but too few less-skilled health professionals; the ratio of nurses to population (about one nurse per 900 people), for example, is half that of the average for middle income countries. 2.04 Some 70,000 physicians, 3,000 dentists, and 100,000 nurses and auxiliary nurses work for government institutions; about 70 percent are employees of IMSS end ISSSTE and serve the half of the Mexican population that ie insured by these institutes. The other 30 percent of health workers are employed by the SSA and State Health Authorities; these workers provide fewer services per capita to the uninsured population than are available to social security affiliates. The main providers of health services and their coverage are presented in Annex 3, Table 2, and are summarized as follows: Table 2.1: MEXICO: PRINCIPAL PROVIDERS AND HEALTH CARE COVERAGE (Percentages) (1988) Social security affiliates (IMSS, ISSSTE, others) 6S.1 Pr1voto sector providers 4.2 IMSS/Sol iderldad 12.6 Federal and Stat. Hoalth Authorities, DIF, INI 22.9 Noncovered population 6.2 TOTAL POPULATION iU.0 Source: Mission Estimates, April 1989. B. Sector Issues 2.05 Seven factors pose obstacles to achieving the government's objectives of reducing mortality, morbidity, and malnutrition in the project states: (a) many Mexicans lack access to basic health care; (b) the quality of services in rural areas fails to provide an adequate response to client needs; (c) management constraints hamper delivery of services; (d) the health network  - 4 - is deteriorating; (e) personnel and human resources available to the State Health Authorities are inadequate in number and lack the skills to deliver expanded basic health care services; (f) financial resources for the sector are neither allocated equitably nor efficiently and depend too much on federal budgets; and (g) the severe nutritional deficiencies among the poor need to be addressed and made an integral part of maternal and child health care service delivery. 2.06 Access. In principle, public health care services are available to all Mexicans. However, only half the population is guaranteed access to services through the social security institutes, and private health insurance schemes cover only a tiny share of the population (see Annex 3, Table 2). For the uninsured half of the population, which depends on public health care, access to services is blocked for either or both of two reasons: (1) people are geographically isolated from the nearest point of service; and (2) health centers are prevented from providing services because of limited financial and human resources. Geographic isolation is typical of the remote rural parts of the project states, and the Federal District and urban areas frequently lack financial and human resources. 2.07 Some 10 percent of the population of Mexico lacks effective access to public health care because they live in isolated rural areas hours away from a health center or hospital. (Effective access is defined as living within 90 minutes by foot, bus, or car, of a functioning public health facility.) Over 70 percent of the people in the project states live in rural communities of less than 2,500 inhabitants where there are traditional healers and birth attendants, but few have modern health services. The proposed project would address this problem through expansion of the basic health care network, particularly in the rural areas. 2.08 Quality of Services. The quality of public health care is generally poor in rural Mexico, and thus it is often unused by potential clients. A study in the State of Mexico, the only study of its kind in Mexico, found that most of the rural poor were bypassing local health centers and seeking care in Toluca, the state capital, or in Mexico CWty. The centers that were studied were operating at less tl.an 20 percent of capacity. As rural health center budgets eroded in the 1980s, and the number of medical school graduates who are required to provide one year of rural service declined, people discovered that public health centers had neither adequate personnel nor medical supplies, and thus turned elsewhere, usually to private-sector providers for health care, or suffered without medical care. Today, even urban health centers often lack staff and supplies, creating ineffective access for the uninsured, particularly in the project states. To address this problem requires that existing facilities must be made to function properly, through  -5- rehabilitation, adequate staffing and medical supplies, and an effective outreach program to inform the community of the availability of basic health care services. 2.09 Health center consultations per hour varied in a recent year between 1.2 in Zacatecas and 5.3 in Sinalo. and discharges per bed-year ranged from eight in Michoacan to L. in San Luis Potosi. Hospital occupancy rates were below 65 percent in all states except one, compared with 75 to 85 percent in well managed systems. Ambulatory consultations per capita varied from 0.2 in Chiapas, and 0.3 in Guerrero, Hidalgo, and Oaxaca, to 2.0 in Baja California Sur y Nuevo Le6n; the range of hospital utilization rates was even wider: 4.4 to 82 discharges per 1,000 population. These differences, which were particularly notable during the crisis in the mid-1980s, were linked to the absence of key complementary inputs, especially pharmaceuticals and medical supplies. Although procurement and distribution of medicines have improved, some areas still lack enough pharmaceuticals to satisfy demand. These variations offer substantial opportunities for efficiency gains with more effective mnanagement of resources. 2.10 Managaement Constraints. It is now widely believed that the poor quality of services is partially due to overcentralization of health services management. Critical management staff at the federal level often have not been aware of local needs or have been limited in their ability to act, due to bureaucratic requirements and processes. Moreover, geographical distance and several levels of administration delayed the implementation of remedial actions at the local level. A decentralization plan was formulated in the early 19808 and is gradually transferring service delivery responsibilities to State Health Authorities. To date, 14 states have followed this plan. Within the scope of the proposed project, only Guerrero has been decentralized; in the other three states and the Federal District, public health services are provided through centrally funded and centrally managed programs. As a result, the system does not easily respond to local needs, which hinders efforts to introduce mechanisms aimed at more efficient uses of facilities and services. At the same time, administrative practices are archaic in many respects and characterized by redundancy and duplication. The Federal ziealth Secretariat is aware of the advantages of decentralizing management, budgeting, and planning responsibilities, and a program to gradually delegate such tasks is underway. However, this would require: additional training to ensure the availability of personnel with appropriate managerial ability and professional skills; and information systems that would allow staff to effectively use the resources at their disposal and to monitor and evaluate the effects of their interventions. Such skills are scarce at the state level, and the proposed project would address this problem within the context of the Institutional Development Component.  - 6 - 2.11 Another management issue that hinders the decentralization program is the division of responsibility for public health care services between SSA and IMSS/Solidaridad. Although the health services offered by the two agerncies are similar and their operational programs have been increasingly better coordinated at the state level, health services of IMSS/Solidaridad have been better financed and staffed, and have generally been of higher quality. In the project states, especially Chiapas and Oaxaca, programs managed by IMSS/Solidaridad account for 75 and 64 percent, respectively, of the statewide basic health services network (see Annex 3, Table 1). Merging such a health services network with the basic health care of the SSA or the State Health Authorities, once the health program has been decentralized to the states, would require additional federal and state health funding, which is not readily available because of the government's austere fiscal policy. 2.12 Deterioration of Health Network. Because of a lack of funding and managerial constraints, deficiencies in the delivery of health care at all levels have developed. Pressure on hospitals to provide routine preventive and curative care has increased because of the deficiencies at lower levels in the system. Also, hospitals and medical equipment have not been maintained, and the use of budgeting resources to new infrastructure (mainly to serve the growing population, which has increased by about 25 percent in the project states since the early 1980s) has resulted in the deterioration of existing facilities. Only very limited funds have been made available for major repairs, renovations, operations, and extension and improvement of the ambulatory care network. In the project states, basic services are inadequate in most but the largest hospitals, because of the lack of proper care and maintenance of biomedical equipment, and failure to replace obsolete and damaged equipment on a regular basis. The effort to keep hospitals operating, even with lower levels of productivity has, in turn, drained resources from primary health care services. 2.13 The SSA is aware of the immediate need to rehabilitate the existing facilities and to rationalize services within the health system. Plans for the rehabilitation of health infrastructure on a priority basis have been developed, and rationalization of health services with the dual objectives of improving efficiency and effectiveness in service delivery would be a critical feature of administrative reforms in the project states. Furthermore, under the project, the State Health Authorities would develop a comprehensive maintenance plan and would allocate resources to assure that buildings and equipment would be kept in good working condition. 2.14 Human Resources: Personnel and Training. As in most other countries of the Latin American and Caribbean region that suffered through the crisis of the 1980s, cuts in Mexico's social  services were achieved by reducing expenditures on salaries, maintenance, new investment, and supplies. The Secretariat of Health did not reduce its staff but rather reduced salaries, investment, and maintenance. In doing so, the number of personnel has remained constant, or even increased, due to political or unauthorized appointments. In reviewing its staffing pattern in the project states, the Secretariat of Health found that it employs about 22,400 persons, 2,400 of which have been appointed outside the norms of the federal civil service system. The current functions and tasks to be performed by the occupants of many positions often differ considerably from the tasks required for the delivery of the basic health care package, and these, in turn, are from the skills and abilities of the current occupants of these positions. The SSA has implemented measures to solve this problem by retraining and redeploying existing staff outside the civil service system, or allowing them to retire. An estimated 6,800 additional staff would be needed to deliver basic health services in the project states as a result of the project. The new staff would receive essential training and supervision in basic health care services as part of this project. The influx of health technicians (to be trained by CONALEP (see para. 3.17) would change the skills mix within the State Health Authorities: In the future, once basic positions are filled, there would be relatively fewer medical doctors and more auxiliaries, technicians, and promoters delivering basic health care services in rural and periurban areas. 2.15 Malnutrition. Nutrition programs fail to reach the most needy, the rural poor, who do not benefit from either the general food subsidy implicit in food price controls or from the Tortibono or Liconsa programs. Experience has shown that it is not %asy to target nutrition assistance to the poorest groups, because they are dispersed in the countryside and are hard to reach. About 97 percent of the localities have less than 2,500 people. Moreover, the rural poor have little political power compared to urban groups. The 1988 nutrition survey found that Secretariat of Health nutrition assistance reaches only about 55,000 families, or less than 2 percent of the families that need to consume more food. Two percent of mothers and young children take iron supplements; only 27 percent of children and 13 percent of women receive basic health care; and only 18 percent receive any food assistance at all. Two urban-oriented food subsidy programs operated by another secretariat, Tortibonos, which provides tortillas to low-income families, and Liconsa, which provides whole milk, have considerable utility, but they do not reach the poorest groups, those living in rural southern Mexico. In recent years, the only food assistance available to these groups has come through rural stores of CONASUPO, a government food-marketing chain that distributes basic food at prices that offer a savings of up to US$24 per annum per family, or the equivalent of 1 percent their income. This amount is probably too small to have any real impact on undernutrition, especially  among young children who are often the least protected members of a ru.al family. Had the rural poor, which constitute one-fifth of the population, received adequate food assistance in 1989, the cost would have been one-tenth of the US$500.0 million spent on the Tortibono and Liconsa programs that year, and malnutrition among the rural poor -in the project states would have been considerably reduced. 2.16 The Secretariat of Health, through its maternal and child health service, has developed a new plan for delivery of a basic basket of food, twice a month, to the needy client population, and has implemented the plan on a pilot basis in the State of San Luis Potosi. Beneficiaries of food distribution are selected by the health network according to biological and nutritional risk, and receive a ration card redeemable for a basic basket of food available through CONASUPO/DICONSA stores. This basket amounts to an annual subsidy of about US$75 for each family that includes an undernourished mother or child; when fully implemented in the project states, the plan would cost about US$30.0 million annually. It would be targeted on, and should reach, the most vulnerable members of the poor rural families (see Annex 4, Attachment 2). The implementation of this food/nutrition program, or a variation, would be done through the project in the project states. The Bank, in the context of the Agricultural sector loan (AGSAL II), is currently conducting a policy dialogue with the government on the need to launch targeted nutrition and food assistance programs on a broader scale. To test targeted food/nutrition interventions a pilot nutrition program would be implemented by the health network in the project states. 2.17 Financing Issues. Health spending in Mexico is below that of other middle-income countries of comparable levels of development (see Annex 2, Table 1). These comparisons suggest that the Government of Mexico may be under-spending on health care. The government's ability to increase health spending is constrained, however, by the requirements of its adjustment program, which implies tight control over public spending. It is therefore essential for the government to: (i) improve equity and efficiency in the allocation of health spending; and (ii) seek alternative sources of finance for health care, including the possibility of privatizing health sector acti.vities such as curative services. 2.18 Misallocation of health 8p-nding constrains adequate quantity and quality of health services for the uninsured population and prevents improvements in health indicators. The Mexican health sector is strongly biased towards the least cost- effective interventions to reduce mortality and morbidity: spending on curative care represents 85 percent of total public spending on health, and less than 2 percent of families that need nutrition assistance receive it. To improve the health status of the poor, allocation of resources to the neglected areas must be  - 9 - increased and past trends must be reversed. IMSS, by far the larger of the social security institutes, experienced a decline in its real income by 32 percent between 1982 and 1987, yet was able to provide 25 percent more medical consultations, 9 percent more deliveries, and 23 percent more hospital operations, thus demonstrating a capacity to respond to a crisis by improving efficiency. 2.19 There is an increased awareness in the government that additional ways must be found to generate greater revenues through user charges, improved service efficiency, and the mobilization of community resources in support of local health care services. There is also awareness within SSA that sector financing depends heavily on the central government budget. Most investment and operational resources for health care of the uninsured population come from federal funding. In 1989, federal funds financed between an estimated 90 and 100 percent of SSA and IMSS/Solidaridad overall health care spending on the uninsured population in the project states (see Annex 2, Table 4). State and municipal governments do not contribute significantly to the health sector. The SSA recognizes that mobilization of additional resources would be critical, not only to ensure the operation of the existing health network, but also to expand the system in the future. 2.20 Increased user fees, or recovery of costs from the beneficiaries of health care services, may be an attractive option for such commodities and services as hospital care, pharmaceuticals, _.nd curative attention. About a third of all health consultations identified in the 1988 national health survey were offered by private providers to persons who paid for this service. Because the quality of public health care is inhibited by a lack of funds, many people seek private care even if they are insured or have access to free services. This suggests that, if the quality of public services can be enhanced, there is considerable opportunity for cost recovery from patients and their families for the use of hospital rooms, medicines, and supplies. Charges for such items could be imposed on social security beneficiaries to restrain unnecessary use of services. The Secretariat of Health does receive payments (cuotas de recuperaci6n), but they constitute only about 5 percent of public health finance at the national level. Among the beneficiaries of the proposed project, however, cost recovery has limited applicability because of their poverty. In the project states, payments for health care represent less than 3 percent of public health sector expenditures. Fees might inhibit the poor from seeking health care and thus hamper efforts to improve health conditions, and price elasticity of demand for various health services among different beneficiaries. Charging fees might enrdnce user's confidence in the public health services. Alternatively, health objectives might best be served by providing free basic health care to the uninsured population in  - 10 - the project states financed in part from recovery of costs from beneficiaries in the richer parts of Mexico. 2.21 The above considerations suggest the need for a study (to be conducted under the project) of resource mobilization alternatives, in order to identify specific recommendations, and take into account the need to improve the efficiency, equity, and effectiveness of health care finance. C. Government Strateqy 2.22 The Government of Mexico is working to promote the spread of basic health care services to low-income groups as part of a strategy to assure health for all by the year 2000, an internationally accepted goal of the World Health Organization. This objective has been pursued through increasing the coverage of the social security system and expanding services for the uninsured poor. In this framework, the government has strengthened the mandate of the Secretariat of Health to determine sector priorities and coordinate programs; shifted resources from curative to basic health care; transferred resources and decision-making powers from Federal to State Health Authorities; and consolidated services of the Health Secretariat and IMSS/Solidaridad for the uninsured in some states. 2.23 The government has charged the Secretariat of Health with the responsibility for coordinating and rationalizing resource use and for expanding coverage to the needy. To discharge its expanded responsibilities, the Secretariat of Health undertook a major reorganization, which included: (a) reducing from 52 to 21 the number of its headquarters' units based on programmatic areas; and (b) relieving headquarters' units of their direct operational roles, giving them instead policy, supervision, and technical support responsibilities. The most important responsibilities were entrusted to the Planning Under- Secretariat, which was made responsible for planning, programming, budgeting, monitoring, and evaluation. 2.24 As a result of the rationalization and decentralization process, a streamlined SSA, divested of operational responsibilities, would focus on overall policy and planning issues and would be able to provide technical, managerial, and logistical support to the State Health Authorities. In fact, the SSA, in addition to enhancing its planning capabilities, has begun preparing protocols for the operation of the health services delivery system, and improving the health information system, the sector's human resource development, and logistics and procurement procedures. 2.25 Consistent with current government priorities for the social sectors, the Secretariat of Health has developed PASSPA (Programa de Apoyo de Servicios de Salud para la Poblaci6n  - 11 - Abierta) (see Annex 4), a targeted approach to the delivery of basic health services for the uninsured poor, that would rationalize basic health care within a framework of strengthened social programs as a whole. PASSPA has become the basic health services model of the government's National Solidarity Program and would coordinate all basic health care services delivered through or by State Health Authorities and IMSS/Solidaridad. The National Solidarity Program is the poverty alleviation program that was launched by the new government in 1989; it emphasizes community participation projects aimed at improving the living conditions of the poor. The government spent US$640.0 million (MEX$1,600 billion) in 1989 on Solidarity programs, and is expected to spend double in 1990. 2.26 PASSPA is an integrated approach to basic health care; it aims to reduce infant, child, and maternal mortality, and the prevalence and severity of diseases common among the poor. PASSPA seeks to improve children's growth and development, and to reduce the incidence of diarrheal and respiratory diseases, through health education, immunization, growth monitoring, and oral rehydration therapy. Efforts to improve women's health are heavily focused on their reproductive health, and include education activities on sexually transmitted diseases, prenatal care, family planning, and screening of breast and cervical cancer. To reduce maternal mortality, the PASSPA package includes prenatal, delivery, and postpartum care, and provision of a variety of contraceptive methods. PASSPA also includes screening and treatment, and referral for other common diseases (diabetes mellitus, hypertension, and alcoholism) in the target population. Health and nutrition education programs are carried out with mothers and communities through meetings, campaigns, and demonstration programs, using mass media, group, and interpersonal contact methodology. In addition, PASSPA would also deliver basic nutrition activities: monitor the nutritional status of pregnant and lactating women and growth monitoring for children under age five; promote food production to increase and diversify the family diet; and identify undernourished or vulnerable groups for food distribution programs. 2.27 PASSPA is organized to deliver its services at three levels: (1) Basic, which includes the health promoter, rural ambulatory medical units, and health posts and centers without hospital beds; (2) Secondary, which includes hospitals with 30 to. 180 beds offering general medicine, surgery, obstetrics/gynecology, and pediatrics; and (3) Tertiary, which includes the national institutes of health and specialized hospitals for oncology, cardiology, neurology and neurosurgery, nutrition, pediatrics, and perinatology. Referral between levels is the key to sector efficiency (see Annex 4, Matrix 1). Facilities in each jurisdiction are organized in a modular and hierarchical design that includes health posts, health centers, and a regional hospital, with all offering basic medical  - 12 - treatment, and health prevention and promotion services (see Annex 4, Figure 1). staffing norms, work schedules, operational manuals, procedures, and equipment lists have been developed for each type and size of health facility. 2.28 Effective operation of health centers is a critical factor in community health and cost containment. The community health worker who would staff the health center could be expected to have up to 100 consultations weekly and to resolve 80 percent of those consaltations without need for referral to higher, more expensive levels of service (see Annex 4, Attachment 1). The greater the capacity of the community health worker to anticipate, identify, prevent, and resolve health problems, the more efficient and effective the health services would be. 2.29 Although PASSPA is a nationwide program, the government's strategy is to focus its application on the southern states, where the poorest groups are concentrated. In these states, pro ject priority is being given to rehabilitation of the existing basic level health network in the rural areas by providing adequate equipment, trained staff, and operating expenditures for facilities, maintenance, pharmaceuticals, medical and office supplies, and supervision, to ensure daily operation of PASSPA. Construction of new health centers would be held to a minimum. The project would also place emphasis on strengthening the planning, managerial, and administrative capacity of State Health Authorities, so that decentralization of public health services can be accelerated for the provision of quality, basic health services. The project would leave some issues on health sector financing to be implemented. However, the government would conduct a study on health care financing options during the first year of the project (see para. 3.29). D. Proiect Areas 2.30 The project would be implemented in the States of Oaxaca, Chiapas, Guerrero, and Hidalgo and in low-5ncome areas of the Federal District, inhabited by a total of about 22.6 million people. Some 13 million, of more than 20 million Mexicans with incomes below the poverty line (US$220 per annum), live in the project areas and most are uninsured. The project is expected to directly benefit about 400,000 pregnant and lactating women and 1.7 million infants and children under five years of age. Given the low levels of health services utilization among these groups, extension of services through the proposed project would have a profound impact on the health status of the rural poor. 2.31 The four states and the Federal District are divided for administrative purposes into 47 health jurisdictions. For example, each jurisdiction covers an average of 630 and 755 localities in the States of Guerrero and Oaxaca, respectively, and is responsible for providing health care services to 485,000  - 13 - and 433,000 people in the States of Guerrero and oaxaca, respectively, and to 670,000 people in the Federal District. Over 70 percent of the population in the four states live in localities with less than 2,500 inhabitants, meaning the target population is widely dispersed (see Annex 5, Table 1). The proposed project wculd concentrate most of its civil works, especially in the early years of project execution, in the fifteen poorest health jurisdictions (see Annex 5, Table 2). Institutional development and training, as well as statewide planning, budgeting and supervision, would benefit uninsured populations throughout each of the states. The map highlights the priority jurisdictions and Annex 5, Table 2 presents the estimated target population by state and the number of priority health jurisdictions. The project would be implemented by the State Health Authorities in each of the states and in the Federal Distr ct. !E E. Rationale for Bank Involvement 2.32 Bank assistance to the Mexican health sector has been provided through health components of rural development projects (PIDER), as well as through the social security (IMSS) health care component in the ongoing EarthquaWq Reconstruction, and Rehabilitation Project (Loan 2665-ME).- 2.33 The Bank's involvement in the proposed project is justified on three grounds: First, the proposed project is an integral part of Bank assistance strategy for Mexico in support of structural adjustment and poverty alleviation. Together with Low Income Housing loan, and the Water, Women, and Development loan, the proposed Regional Decentralization and Development loan and Basic Education loan that would all focus on the same poor states, the proposed project would address the basic health and nutrition needs of the poor in the most disadvantaged states, and thus support the government's poverty alleviation program (solidarity). Second, the proposed project would help the 2/ State Health Authorities include: SSA's Coordinated Health Services of the States of Oaxaca, Chiapas, and Hidalgo (Servicios Coordinador de Salud Publica); and the Secretariat of Health of the State of Guerrero, and Public Health Services of the Federal District. 3/ Several sector analyses provide background information used in preparation of this project: "Population and Health Sector Strategy Report," 1987; "Mexico Health Sector Expenditures and Financing," Report No. 7802-ME, May 1989; and "Nutrition Sector Memorandum," July 1990. A report on Mexican social security and health care was prepared as part of background to an economic report. These reports are available in the project file.  - 14 - government reallocate public expenditure towards basic and preventive health expenditures and away from curative care. Third, the proposed project would facilitate implementation of the government's constitutionally mandated decentralization program and strengthen the institutional and administrative capacity of state and local governments, to improve equity and efficiency of health service delivery. At present, there are no other external aid agencies involved in the policy and institutional reform areas; the Inter-American Development Bank is financing a health project, but it focuses mainly on health infrastructure. III . THE PROJECT A. Project Concept and objectives 3.01 Obiectives. The project would assist the Government of Mexico in improving health status of urban and rural poor families by providing the basic health care and nutrition services to about 13 million uninsured people in four states and the Federal District. More specifically, the proposed project would: (a) strengthen and extend basic health care and nutrition services to the uninsured poor; (b) support institutional improvements to strengthen management capability and enhance the efficiency and effectiveness of the basic health care system; and (c) facilitate the implementation of sectoral reforms and the decentralization process from the federal level to the states. B. Proiect Components 3.02 The project consists of two major components: (a) The Health Services Development Component (89 percent of the total cost including contingencies) would improve and extend delivery of basic health care and nutrition assistance to 13 million uninsured persons, through the PASSPA model (Programa de Apoyo a los Servicios de Salud para la Poblaci6n Abierta) (see Annex 4). The project would: (i) rehabilitate, upgrade and expand the health network and develop a maintenance program for facilities and equipment; (ii) provide equipment, furniture, vehicles and basic medical and office supplies; (iii) hire, reassign and regrade personnel according to PASSPA needs; (iv) improve the supervision system and training of health care personnel; and (v) produce and distribute operational manuals and materials. (b) The Institutional Development Component (11 percent of the total cost). At the federal level, it would: (i) assist in the decentralization process; (ii) conduct operational research to improve service delivery, set policies and  - 15 - priorities, find ways to mobilize additional resources for health care and carry out project impact evaluation; and (iii) complement resources (software and technical assistance) needed by the existing management information system to improve planning and management capacities. At the state level, this component would: (i) improve the management, administration and technical capacity of the State Health Authorities to deliver PASSPA basic health care and nutrition services; (ii) strengthen and implement an improved management information system to enhance planning, analysis and management capacities; (iii) improve personnel policies and management; and (iv) provide training opportunities for managerial and administrative staff. C. Project Description 1. Health Services Development Component (US$222.4 million) 3.03 The project would provide the resources required to implement the PASSPA model in the States of Oaxaca, Chiapas, Guerrero, and Hidalgo and in the Federal District. The model's organization and staffing pattern and the population to be served are defined in Annexes 4 and 5. To optimize the use of resources, particularly infrastructure and the operating budget, emphasis would be placed on improving services and outreach coverage through renovation, repairing, and rriquipping existing facilities rather than on expansion of the service delivery network through construction of additional facilities. An inventory of health facilities, which was reviewed by the Bank, provided the basis for the investment plans. Building and medical equipment maintenance systems would be reinforced as part ot the effort to improve and sustain the productivity of the health services. 3.04 The project would strengthen the operation of the health network by: designing measures aimed at increasing state and jurisdictional responsibility for health services planning, personnel management and training; improving the use of budgetary resources; and defining a supervision system to adjust to the needs and conditions of each state. (a) Health Network Improvement and Expansion 3.05 The project would provide financing and technical assistance for the improvement and expansion of physical facilities, maintenance, vehicles, and staff in for basic health care network. The number of facilities to be built or renovated was determined by: (a) the size of the local population; (b) observed health demand; and (c) the quantity, quality, and capacity of existing facilities. Facilities in the project area  - 16 - would also be equipped or reequipped, as necessary, to permit health workers to carry out PASSPA activities. 3.06 PhysicU,l Facilities. The project would provide funding to rehabilitate and upgrade 1,169 existing facilities and to construct 267 new facilities. The civil works program (see Annex 6, Table 1) is summarized in Table 3.1: Table 3.1: SUMMARY OF CIVIL WORKS BY STATES AND BY FACILITY TYPE URBAN a/ RURAL b/ STATES HOSPITALS CENTERS CENTERS TTL CHIAPAS 7 8~ ~ ~~~~~~~4 12816 Ow - 12 s6 6o Rehab. or Upgrading 7 22 72 101 D.P. 221 - 22 NM - a a Rhabb. or Upgrading 6 218 224 _0ERRE a 87 410 460 Now ~ ~ ~~ ~~~~~7 76 es Rehab. or Upgrading a a0 U42 876 ID^ALOO 6 26 01 81 Nw - 4 48 47 Rehab. or Upgrading 6 21 258 284 OWXCA 7 7 27 25 NOW - 4 62 PA Rehb. or Upgrading 7 8 175 185 POC TTAL 28 824 1,084 1,43J New - 80 237 26? Reheb, or Upgrading 28 294 847 1,169 a7: Includes urban honith centers and other support facilities, such as warehouses, maintenance shops, end one antirabic center. b/: Includes concentrated and dispersed health centers, auxillary health unite, and rural medical units. 3.07 All new facilities would follow prototype designs that have been reviewed and accepted during appraisal, and final working drawings would take into account regional climatic and topographic conditions. In addition, the project would rehabilitate and refurbish about 18 hospitals and upgrade, furnish, and equip 10 additional hospitals. These hospitals are strategically located in localities within the jurisdictions and are part of an efficient referral system for the primary health care service. Funds have been included for technical assistance to design a new prototype for a predominantly rural, highly space-efficient hospital, with 30 fixed beds. Other support facilities include about 15 local warehouses for storage of essential drugs, and medical and office supplies, with office space for administrative purposes. The acquisition of new furniture and equipment under the project would follow prototype lists per facility type which have been reviewed aad accepted by the Bank. The upgrading program would repair, substitute, and/or expand the existing stock to comply with the approved lists. 3.08 The SSA has provided evidence that all sites for new construction for the first year of project implementation (1991)  - 17 - have been donated or acquired by SSA or by state governments. For the subsequent years, evidence regarding donation or purchase of land for new construction would be part of the annual work plan reviews (see para. 5.01). 3.09 Vehicles. The project would provide about 250 vehicles, including 20 trucks and pick-ups for distributing drugs and other medical supplies: about 25 pick-ups adapted as mobile shops for the maintenance program; 20 ambulances; and 185 vehicles for supervision and administrative activities at the state, jurisdictional, and local levels. Most of these vehicles would replace or complement the old fleet. Because of government policy on procurement of vehicles, only ambulances and all terrain, four-wheel drive vehicles would be financed with proceeds of the loan (see Annex 6, Table 2). 3.10 Maintenance Program. The maintenance program to be funded by the project for facilities, furniture, and biomedical equipment would consist of: the construction and equipping of 15 workshops mainly located in strategic points within the jurisdictions; repair of equipment; vehicles (see para. 3.09); and training of staff for the workshops. In addition to maintenance workshops, annual allocations for a permanent preventive and corrective program, estimated at about 1 percent per year for infrastructure costs and about 4 percent per year for equipment costs, have been included in project costs. The project would provide financing for the incremental maintenance cost on a declining basis. Wherever possible, specialized maintena,nce work would be done by private contractors; a specially trained driver ("polivalente") with a mobile shop would carry out routine maintenance of electrical and plumbing systems and minor equipment repairs during regular supervision visits (see para. 3.15). 3.11 As a condition for loan effectiveness, at least three project states would present an infrastructure and biomedical equipment maintenance plan (includina routine maintenance activities). The remaining statee vo' ld present the plan by June 30, 1991 (see para. 7.02 (a)). 3.12 Druqs and Supplies. In addition to warehouses, equipment, and logistical support (see paras. 3.07 and 3.09), the project would finance about 40 percent of the incremental costs of the acquisition of basic drugs and medical and office supplies, as well as their distribution, to ensure their availability, especially in the facilities that are rehabilitated or new constructed under the project. The SSA would review the efficiency and adequacy of the purchase and distribution of drugs and supplies by the SSA and each of the Project State Health Authorities, and submit to the Bank, for comments, the results, including the action plan to be carried out by the SSA and the  - 18 - State Health Authorities in the project states, by no later than July 30, 1992 (see para. 7.01 (a)). (b) Health Network Operation and Management 3.13 Staffins. The project would cLver the cost of approximately 6,800 new staff to fill current vacancies and upgrade and expand the health network and its local or jurisdictional administration. Approximately 2,700 new higher- level health professionals (doctors and nurses), about 1,700 mid- level staff (tdcnicos de salud, laboratory technicians, auxiliary nurses, and health promoters), and 2,400 administrative staff (office support staff, maintenance program, warehouse management, and general services) would be employed under the Health Services Development Component (see Annex 6, Table 3).4' About 40 to 50 percent of approximately 2,400 people currently employed in the State Health Authorities have qualifications, categories, or functions that have not been approved or incorporated by the federal civil service, because of mismatches between job requirements and their qualifications; these staff members would be retrained, upgraded, or redeployed in the PASSPA program. Assurances were obtained at negotiations that the SSA would carry out the measures referred to in the Staffing Normalization Letter (September 21, 1991), with regard to SSA personnel including such personnel working in the State Health Authorities in the project states. Health workers for community health posts (casas de salud) would be jointly selected by the community and health services and paid, in the future, by local or municipal health committees. Initially, these personnel would be financed by National Solidarity's Program through the Municipal Solidarity Fund, by the State Health Authorities, or by the municipalities as an interim measure to allow time for the State Health Authorities to organize local payment mechanisms. 3.14 The SSA and the State Government of Guerrero would: (i) annually employ additional staff for project operation as required by the results of the annual implementation review; (ii) restructure or retrain the personnel outside the approved staffing plan according to the staffing normalization letter; and (iii) take action for salary costs of new personnel annually hired under the project. 3.15 Supervision. Current supervision systems differ among the project states and are constrained by lack of resources (staff, transport, and allowances). To improve the supervision system, the project would finance incremental staff, transport, travel 4/ This new staff added over five years would represent an increase of about 30 percent over the existing work force of 22,600 in the project areas and would redress the imbalance in availability of health manpower in the poorest states.  - 19 - allowances, and materials. Supervision visits would be scheduled on a fortnightly or monthly basis to community health posts, and on a morn_.hly basis to health units and centers, and would be carried out by "multidisciplinary teams" including health personnel and a "polivalente" driver (see para. 3.10). Guidelines and procedure manuals would be reviewed or prepared jointly by specialized staff from SSA, State Health Authorities, and IMSS/Solidaridad, with assistance from consultants, during the first year of project implementation. Educational activities, incentive plans, and feedback from staff would be included in the supervision plan. Training or continuing education opportunities for supervisory teams would be provided according to staff training needs. Travel allowances, to enable supervisory teams from the federal level to visit the states, would also be financed by the project with funds allocated under the Project Coordination Unit (PCU). The project would provide about 30 person/months of technical assistance to State Health Authorities to improve the supervision system. Human Resources Development 3.16 The project would finance development and training of existing and new staff, technical assistance, (about 70 person/months) travel and allowances for participants and trainers, equipment, and training materials. The training program would consist of: (a) irluction training for about 100 senior staff from central, state, and jurisdictional levels on project objectives, procedures, and implementation of PASSPA; (b) pre-service trainina for about 3,300 health professionals (doctors and nurses) and auxiliary health workers; (c) in-service training for about 3,400 auxiliary health workers, and maintenance program staff; (d) continuing education workshops for about 900 health professionals, supervisory staff, and trainers; (e) trainina for about 23,000 community health workers, community leaders, volunteers, and midwives to carry out the promotional and educational activities on basic health care, and to ensure correct referral of high-risk pregnancies to properly equipped units; and (f) fellowships for M Sc. degree for five doctors and special courses for about 170 health professionals on epidemiology, health statistics, nutrition, and other courses related to PASSPA.  - 20 - 3.17 Due to the scarcity of newly graduated medical doctors or interns to work at centers in remote rural areas, about 240 mid- level rural health technicians would be trained by CONALEP to carry out basic health care activities. The candidates would be selected from rural communities by the State Health Authorities and would receive a scholarship financed by the project, with their commitment to work in their communities after the training. This approach is functioning adequately in the State of Guerrero and would be adopted by the other states. 3.18 Most of the training program would be carried out at the state and jurisdictional or local levels to ensure relevance to local conditions. The SSA's Centro de Capacitaci6n y Desarrollo (CECADE) would provide assistance to each state in curricula development, preparation of teaching materials and manuals, and delivery of training courses, particularly trainers of State Health Services. An indicative five-year training program was prepared by the SSA/CECADE in collaboration with the states. However, this training program would need fine-tuning to adjust it to the PASSPA objectives and individual health workers training needs. 3.19 For loan effectiveness, at least three project states would present a Human Resources and Training Plan, satisfactory to the Bank, according to identified staff training needs and PASSPA requirements (Other project states would comply with these conditions by June 30, 1991.) Such Human Resources and Training Plans would specify actions and regommendations to be implemented through SSA, CONALEP and CECADE, over a five-year term beginning in January 1991 to meet the professional training needs of SSA staff in each of those project states (see para. 7.02 (b)). 2. Institutional Development Component (US$27.4 million) (a) Strengthening of Organization and Management SVstems 3.20 Institutional development activities would be financed for both SSA and the State Health Authorities. The project would support the federal government in its effort to speed up the decentralization of health services in the states of Hidalgo, Oaxaca, and Chiapas and in the Federal District according to the "Decentralization Action Plan" contained in the September 21, 1990 letter to the Bank, by: (i) implementing further decentralization of planning, management, financing, and personnel responsibilities to the states and jurisdictions; (ii) providing support for the preparation by State Health Authorities of operational manuals, the implementation of improved supervision schemes, training programs, and the proposed civil works and maintenance program; (iii) carrying out studies needed to recommend policies and programs to improve the delivery of basic health care services, to monitor, and evaluate project impact and to support decentralization efforts; (iv) reviewing  - 21 - and improving the Management Information System (MIS); and (v) providing legal support to the states to implement the decentralization process. (b) Strengtbening Management of State Organization and Administration 3.21 At the state level, the project would strengthen the existing organization, management, and administrative systems of the health network. This would include improvement of organization and management processes; improvement of management of financial and physical resources; and training of managerial and administrative staff. 3.22 Improvement of Management Processes. The SSA and state staff, assisted by consultants (about 270 person/months during five years), would prepare an action plan for strengthening the organization, management, and operations of each of the State Health Authorities for: (i) improvinq organizational structure and managerial capabilities by preparing policy guidelines on health services delivery, manpower development, health infrastructure, and technology development; strengthening the planning process with efficient planning methodologies; reviewing present state, jurisdictional, and local organization and recommending required modifications; streamlining clearance procedures; and improving communications at different organizational levels; (ii) improving management of human resources by reviewing job descriptions and salary structures; updating staff selection and recruitment criteria; improving manuals on supervision and training of personnel; training staff in the appropriate use of these manuals; assessing staff performance on assigned jobs; and proposing training activities for improving job performance and promotion mechanisms; (iii) preparing or updating administrative and operational manuals for management staff (using existing manuals for Wealth centers and health posts), and for maintenance of facilities and equipment; (iv) improving manaaement of financial and physical resources by streamlining and implementing improved budgetary, accounting and control systems at state, jurisdictional, and local levels; and preparing an improved inventory control system to monitor stocks, purchases, and distribution of drugs; medical and office supplies; and provide training in accounting, finance, and in  - 22 - appropriate computer software to those staff directly involved in accounting, budgeting, and control activities; and (v) strenathenina the legal basis for administrative decentralization by preparing specific recommendations on legislation required for the decentralization process related to health services, inter-institutional arrangements, and patient referral in project states. (c) Improvement of Staff Management, Knowledge, and Skills 3.23 About 1,400 service, administrative, and managerial staff (including directors of health centers and hospitals) in the four states and the Federal District would be trained in planning methodologies, administration and management of services and personnel, and the delivery of the PASSPA package. The training programs (curricula, methodologies, and types of training) would be jointly developed by the SSA, the states, and specialized management and public administration institutions, taking into account the specific training needs in each state and the Federal District identified during the institutional analysis review (see paras. 3.22 (i) and (ii)). Improvement of management processes and management of financial and physical resources would start with an institutional analysis review of existing organizational and administrative structure, norms and procedures in the project states. 3.24 As a condition for loan effectiveness, the SSA would submit to the Bank the draft contracts and a short list of consultants and terms of reference, satisfactory to the Bank, for preparation of Institutional Developmeni Plans, for each of the project states (see para. 7.02 (c)). 3.25 At neqotiations, assurances were obtained that the SSA would, no later than March 31, 1991, enter into contracts, satisfactory to the Bank, with consultants for the preparation of Institutional Development Plans, satisfactory to the Bank for each of the project states. Such Plans would be presented to the Bank no later than December 31, 1991. The Plans would specify actions and recommendations to be implemented to ensure that SSA develop sound administration, planning, budgeting and inventory control procedures in each of the project states. The SSA would carry out the Institutional Development Plans with regard to all those project states and assist the State of Guerrero to implement the Plan (see para. 7.01 (b)). 3.26 Health Management Information System (MIS). In 1986, the SSA implemented a management information system to standardize health statistics and to generate information needed to manage the national health system. This system has suffered from a lack of resources, high staff turnover, and unreliable data. The SSA  - 23 - is revitalizing the existing system to standardize essential health and epidemiological statistics and measurements of production and productivity. The project would finance some additional equipment and about six person/months of technical assistance to improve the SSA MIS. 3.27 The strengthening of the MIS in the project states, which would be part of the Institutional Development ComDonent, would be reviewed by consultants to adjust the system to the information requirements of the individual state Health Authorities, jurisdictions, and the centers or units at the local level. By the end of the project, the system would be capable of producing the required information for continuous programming and monitoring of the PASSPA program at the state level. The flow of information from the health posts and centers up to the State Health Authorities and to the SSA would be complemented by a feedback mechanism that would provide analyzed data to state, jurisdictional, and local staff. A nutrition growth monitoring system would also be an integral part of this management information system. About 18 person/months of technical assistance would be provided to the State Health Authorities to improve the MIS. 3.28 At negotiations, assurances were obtained that each of the project states and the Federal District would review the operation of the management information system (MIS) with the assistance of consultants, prepare plans for its improvement, satisfactory to the Bank, and deliver such MIS plans no later than December 31, 1991, and carry out the MIS plans throughout project execution, including the gathering of data for monitoring and evaluating indicators (see para. 7.01 (c)). 3.29 Operational Research and Studies. The proposed project would finance operational research and studies to be carried out jointly by the Research Unit of the Hospital Infantil de Mexico (UIHIM), the states and other research institutions. Research would be aimed at improving health delivery systems, management of services, and monitoring and impact evaluation. The following topics have been jointly selected by the SSA and the Bank for project preparation: (a) health resources allocation and mobilization study, including cost recovery mechanisms and privatization of some health sector activities; (b) evaluation of new and innovative health care and nutrition interventions being tested in several states throughout the country; (c) demand and supply of health sector human resources and their quality; (d) the epidemiological transition in Mexico; and (e) efficient use of information, education and communication system (IEC). The selection of additional studies to be conducted each year and the research institutions responsible to carry out the studies would be agreed upon with the Bank during the annual work plan and project implementation review. The UIHIM would be responsible for preparing, and submitting to the Bank for approval, the terms  - 24 - of reference for the studies to be conducted each year, including objectives, the time table for initiating and completing the studies, the estimated costs, and the proposed executing agency. IV. PROJECT COSTS, PROCUREMENT, DISBURSEMENT, AND AUDITS A. Project Costs and Financinq 4.01 Proiect Costs. The total project cost, including physical and price contingencies and excluding taxes (approximately US$37.0 million), is estimated at about US$250.0 million equivalent, of which about US$38.0 million would be foreign exchange. Investment costs amount to 48 percent of base costs and incremental recurrent costs amount to 52 percent of batse costs (see Table 4.1 below and Annex 7, Tables 1-4). Project costs were estimated at June 1990 price levels and include physical contingencies of 10 percent for civil works and 5 percent for equipment, furniture, and vehicles. Price contingencies assume: (i) that the exchange rate of the Mexican peso versus the US$ dollar would be periodically adjusted for the difference in internal and external inflation; and (ii) a projected inflation rate of 4.4 percent per year for 1990-1995. Table 4.1: SUMMARY OF PROJECT COSTS BY COMPONENT (USlS MILLION) YOTAL 9 X FOREIGN BASE LOCAL FORE1GN TOTAL EXCHANGE COSTS A. Wealth Services Developament Hoalth Network Improvemt 76.2 27.5 102.7 27 47 and Expanalon aoith Network Opemration 01.9 0.0 81.9 0 88 and Management Human Roeourcas Dovelopment 6.9 1.4 7.8 19 a Sub-Total 168.9 28.9 191.9 15 89 3. ZmtItotIaol Development 18.4 2.4 18.8 18 9 Strongt*ining Orgonizotion and Mnagement 2.8 .0. 8.1 28 1 Oporottonal Research end Studioe 2.2 0.6 2.7 20 1 Sub-Total 20.9 8.7 24.0 16 11 TOTAL BASELVE COSTS 13.9 82.0 210.6 16 103 Phycical Contingonceoo 4.7 1.6 0.2 24 8 Price Contingencleo 28.8 8.8 27.1 14 18 TOTAL PROCT COSTS 211.9 87.9 249.8 15 118 4.02 Estimated construction costs for the project area are based on unit prices derived from current contracts and cost analyses for similar standards of construction in equivalent facilities. Estimated health center rehabilitation costs are based on unit costs presented by CEPADIS. Estimated costs of  - 25 - equipment, furniture, and vehicles are based on current c.i.f. unit prices, adjusted to include local transportation costs. Estimates for technical assistance and studies are based on current rates for local and foreign experts. Cost estimates for training, salaries, and operating costs are based on current unit costs or costing standards used by SSA (see unit costs in project file). 4.03 Incremental Recurrent Costs. During the implemenitation period, the project would add an average of about US$26.0 million per year to the recurrent expenditures budgets of the SSA and the State and the Federal District Health Authorities. Incremental operating costs in the first year are estimated at US$9.1 million. In 1989, the sum of operating costs for basic health care by the Federal and State Health Authorities, and by IMSS/Solidaridad in the project states, was US$126.0 million in 1990 prices. Therefore, average annual incremental recurrent costs generated by the project would amount to 20 percent of total operating expenditures in the project states in 1989 prices, and the first-year costs would be 7 percent of the total. The federal government is already increasing overall budgetary allocations for the health sector (by 16 percent in 1990 in real terms). It is expected that part of these and future additional resources would be used to finance the proposed project and that they would suffice to cover estimated recurrent expenditures, without addiig an unmanageable burden to the government's budget. 4.04 Incremental recurrent costs under the project are estimated as follows: Calendar Year 1990/91 1992 1993 1994 1995 ----------in US$ million 1/---------- 9.1 20.3 27.2 33.0 39.0 1/: In 1990 prices. These incremental operating costs would be generated by salaries for incremental staff (74.5 percent of total incremeAtal recurrent costs); operation and maintenance of infrastructure, equipment, and vehicles; procurement of pharmaceuticals, medical and office supplies; travel and subsistence costs for supervision; and outreach activities. For the first year of project implementation, the federal government has already committed funding for the additional recurrent costs. For the subsequor.t years, the availability of budgetary funds for rclirrent costs would be examined during the annual reviews.  - 26 - 4.05 Proiect Financing. The proposed loan of US$180.0 million would finance 73 percent of project costs (net of taxes, duties, and the amount of reserved procurement), which represent 100 percent of foreign exchange expenditures and 67 percent of local expenditures. The remaining US$70.0 million would be financed by the Mexican government. Retroactive financing of up to US$8.0 million equivalent has been approved to help cover eligible start-up expenditures made on or after June 15, 1990, the date of end of appraisal. 4.06 Counterpart financing for the proposed project would come from the following sources: (i) Ramo 26 for investments. These funds originate at the SPP federal level; and (ii) Ramo 12 for recurrent expenditures. These funds originate almost entirely at the federal level from SSA budget. It is estimated that the proposed project would represent an average increase of US$26.0 million in annual recurrent health expenditures. This increase is considered reasonable because: (i) counterpart financing from Ramo 26 has already been secured with SPP/Solidarity and the COPLADE in each of the project states; (ii) government strategy to redress overall rural-urban imbalances in welfare support is resulting in a shift of expenditures towards the poorest states; and (iii) the government's policy is to increase the contribution of state governments in the financing of social sectors. This would be done gradually during the life of the project in concurrence with advances in the decentralization process. It is expected that resource mobilization and cost-recovery studies which would be undertaken during the first year of project implementation would provide specific recommendations to increase state-level funding for the health sector. B. Procurement 4.07 The project would include procurement of new construction, and rehabilitation or upgrading of existing health facilities, biomedical equipment, furniture, drugs, medical supplies, ambulances and all-terrain, four-wheel drive vehicles, as well as studies and consultancy services. Standard bidding documents for Mexico agreed with bv the Mexican authorities and the Bank in Cuernavaca in April 1990, will be used during project execution. All ICB and the first LCB contracts per state, both for acquisition of goods and for civil works, would be subject to prior review by the Bank. All other procurement documentation would be subject to selective ex-post review; the SSA/CEPADIS and State Health Authorities would retain documentation for these contracts for periodic supervision by Bank staff. 4.08 All contracts that can be packaged to exceed the equivalent of US$5.0 million for civil works, and US$250,000 for equipment or materials would be procured on the basis of ICB following the Bank's procurement procedures. In the case of procurement of goods through ICB, Mexican firms would be provided  - 27 - a preference margin equal to 15 percent or the prevailing duty, whichever is lower. 4.09 The Bank has reviewed and found acceptable local procurement procedures. These LCB procedures would be used to award contacts with estimated cost below US$5.0 million and above US$50,000 for civil works, and below US$250,000 and above US$25,000 for goods. Local shopping based on price quotations from at least three suppliers would be used for contracts with estimated cost of US$50,000 or less for works and US$25,000 or less for goods. 4.10 Civil works related to rehabilitation or upgrading of hospitals, costing an average of US$0.5 million per unit, and totalling approximately US$14.0 million, would be packaged and contracted centrally by the SSA/CEPADIS through ICB procedures. The construction of new or rehabilitation and upgrading of existing health facilities, totalling about US$35.7 million, would be carried out by the individual states or by the State's Department of Works. About US$27.6 million of these works would be carried out through LCB procedures, and up to an aggregate amount of US$3.0 million, through local shopping with price quotations from at least three suppliers. The works under LCB are scattered over about 1,300 localities; the average cost ranges from slightly over US$10,000 to US$200,000 equivalent. These works would most likely not be of interest to foreign bidders, although they would not be excluded from participating in the bidding process. Packaging of works would be done whenever possible. About US$3.0 million, representing roughly 10 percent of new construction in rural areas and less than 20 percent of rural rehabilitation works, would be implemented through force account, with the Bank financing construction materials only. The cost of these works range from less than US$10,000 to US$40,000 equivalent. They would be performed in remote and dispersed rural areas where mobilization costs for local contractors would be unreasonably high. 4.11 Goods, furniture, and equipment amounting to about US$53.7 million would be procured by CEPADIS through ICB procedures (about US$42.0 million in contracts over US$250,000) and up to an aggregate of US$8.7 million equivalent through LCB. Up to an aggregate amount of about US$3.0 million would be procured in small contracts under US$25,000 by the individual states through local quotations from at least three suppliers. Essential drugs and other medical supplies, which amount to approximately US$21.8 million, would be procured by the General Directorate of Material Resources rt SSA, with about US$17.5 million equivalent in contracts of over US$250,00 through ICB and some US$4.3 million through LCB procedures. At the state level, procurement, up to an aggregate amount of US$1.0 million, would be permitted for urgent and small purchases through price quotations from at least three suppliers. The total cost of vehicles needed for the  - 28 - project would be about US$4.8 million, out of which the ambulances and four-wheel drive vehicles, totalling some US$500,000, would be acquired through ICB procedures; about US$4.3 million, corresponding to the procurement of vehicles other than ambulances and four-wheel drive vehicles, would be reserved procurement and has not been included in the project cost, for purposes of defining the loan amount. 4.12 The selection and appointment of consultants for studies and technical assistance would be consistent with the August 1981 Bank Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as ExecutinQ 4-encY. 4.13 Table 4.2 showing project cost breakdown by procurement method is presented below: Table 4.2: PROCUREMENT METHODS (US$ Million) FORCE u/ CATEGORY ice LCB ACCOUNT OTHER TOTAL CiVI Iworke 14.0 27.6 308 bf 47.0 (10.5) (20.7) (1.8) (2.3) (85.8) Furniture and Equipment 42.0 6.7 - 8.0 b/ 6B87 (87.6) (7.4) (2.6) (47.6) Vehicles 0.5 - - 4.8 4.8 (0.6) - - (0.0) (0.5) Tr=ining, Suporvision - - 15.1 16.1 Studies, TTchnical - - (16.1) (15.1) Assisance and Coneultancy Services Drugs and medical 17.6 4.8 - 1.0 b/ 22.6 Supplies (16) (8.7) (0.6) (20.1) Otber Operating Costs - 106.8 1S6.8 (61.4) (81.4) 74.0 40.6 3.0 182.2 249.8 (64.4) (81.8) (1.8) (02.0) (189.0) Note: Figures in paren-these are th amounte financed by the 8ank. s/: Forco Accounts to be used In some cases whore works are small and scattered or In rmoto are. The Bank would only finnce the procurement of materials using the appropriate procurement ethods for purchasing goods. b/t Works Goods and drugs to be procured through price quotations from at least threo suppliers or contractors. C. Disbursements 4.14 The proceeds of the loan would be disbursed during a six- year period as follows: (a) civil works, 75 percent of expenditures for new construction and rehabilitation and maintenance of existing infrastructure; (b) equipment and furniture, 100 percent of foreign expenditures, 100 percent of  - 29 - local expenditures (ex-factory cost), and 85 perrent of local expenditures for other items procured annually (,xcluding taxes); (c) training, technical assistance, consultancy services, and studies, 100 percent of total expenditures; and (d) incremental salaries and operating costs, at a rate of 100 percent until an aggregate amount of US$9.0 million has been reached; thereafter, disbursements for this category would be made at a rate of 90 percent until the aggregate amount of US$25.0 million has been reached; thereafter, disbursements for this category would be made at a rate of 75 percent until the aggregate amount of Us$43.0 million has been reached; thereafter, the disbursement rate would be 50 percent until an aggregate amount of US$58.0 m.Llion has been reached; and the remaining funds wold be disbursed at a rate of 25 percent of expenditures. Disbursement for vehicles would be made for ambulances and all-terrain vehicles. The remaining vehicles are reserved procurement. 4.15 Proceeds of the proposed loan would be disbursed against expenditures that would be submitted to the Bank and fully documented for contracts valued at more than US$250,000 equivalent. Claims for expenditures of lesser amounts would be disbursed against presentation of Statements of Expenditure (SOEs), for which the supporting documentation would be retained by the SSA and each of the State Health Authorities for periodic inspection by the Bank and by external auditors. All expenditures and SOEs would be transmitted to the Bank through NAFIN. The government would set up a Special Account in U.S. dollars with an initial deposit of US$10.0 million. Withdrawals from the Special Account would be supported by the required documentation at the exchange rate prevailing on the date of expenditure. Separate project accounts would be established and monitored by Project Coordinating Units (PCUs) in the SSA and each of the four states and the Federal District. The Bank, in consultation with the government, may suspend disbursement to a project state which is non-performing under its legal obligations (including its obligation to provide appropriate funding for health sector recurrent costs, new staff for health facilities built or improved under the project, and salaries for health sector staff), and may transfer the loan funds allocated to such project state to other project states (see para 7.01 (d)). D. Accounts and Audits 4.16 The Guarantor would maintain five sets of separate records and accounts adequate to reflect, in accordance with sound accounting practices, the resources and expenditures in connection with the execution of the Project. One set would be maintained by the SSA/Federal PCU which would reflect the resources and expenditures in connection with its execution of the entire Project. The other sets, one for each of the Federal District and the States of Chiapas, Hidalgo and Oaxaca, would be maintained through the respective Project State PCUs, under 4.  - 30 - supervision by the Federal PCU and with assistance from the SPP delegation in each of those Project states, and would each reflect the resources and expenditures in connection with its execution of the Project in or for the respective Project State. The Guarantor would: (i) have the records and accounts for each fiscal year audited, in accordance with generally accepted auditing standards and procedures, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each year, a certified copy of the audit reports of such scope and in such detail as the Bank would have reasonably requested; (iii) furnish to the Bank such other information concerning the records and accounts as well as the audit as the Bank would from time to time reasonably request; and (iv) cause SECOGEF to comply with its obligations set forth in the October 12, 1990 document on auditing agreed upon during negotiations (see para. 7.01 (e)). For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, and for all expenditures with respect to which withdrawals were made from the Special Account, the Guarantor would provide to NAPIN all records and accounts necessary to allow the SSA to perform its obligations punctually. As a condition for loan effectiveness, SSA and SPP would have entered into Participation Agreements, satisfactory to the Bank, with each of the project states (see para. 7.02 (d)). V. PROJECT IMPLEMENTATION A. Status of Project Implementation 5.01 The project was jointly prepared by the SSA, the State Health Authorities, and the Federal District Health Department, with periodic inputs from Bank missions. The SSA, the states, and the Federal District have the key staff to initiate project implementation. The PASSPA program package is already being implemented in all the states and the Federal District. Prototype designs for new health facilities have been reviewed and accepted by the Bank. Consultants would be hired to prepare working drawings for all facilities included in the first year of project implementation. The appraisal mission has reviewed: (a) sample bidding documents; (b) building and biomedical equipment maintenance plans; and (c) terms of reference for consultants to prepare working drawings (documents in project file). The SSA has created the Project Coordination Unit and appointed the core staff. Site selection, and the donation or acquisition of land for the first year (1991) has been completed (evidence in project file) (see para. 3.08). The government, particularly SSA, SPP, through the National Solidarity Program, and state governments have given full support to the project.  - 31 - 5.02 The SSA and the State Health Authorities have prepared a project proposal satisfactory to the Bank. Individual state proposals are in the project file. The proposed training program would be reviewed and adjusted to the training needs of health staff in the states and the Federal District (see paras. 3.18 and 3.23). During the March 1990 mission, it was agreed that rural health centers located in remote areas would be staffed by rural health technicians rather than by newly graduated medical doctors in their year of social service, since few physicians are available to fill such positions. About 240 rural health technicians would be required for the four states during the project period (see para. 3.17). B. Prolect Organization, Implementation, and Management 5.03 The SSA is responsible for overall coordination and implementation of project objectives. The annual investment plans financed under Ramo 26 would be reviewed by SPP/Solidarity for coordination with State Investment Plans. At the state level, the state government, and its equivalent in the Federal District, through its designated State Health Authorities, would be responsible for coordinating and carrying out the project. 5.04 The proposed project would be implemented over a period of five years, and is expected to be completed by December 31, 1995. The implementation schedule (see Annex 9, Table 1) would serve as a basis for project implemi .ation and would be updated annually by the SSA, the four states, and the Federal District, in preparation for the annual progress and work plin reviews (see para. 5.16). A mid-term review would focus on the equity, effectiveness, and efficiency of service delivery; adjustments needed to improve implementation, including operational research and studies, and progress achieved by SSA in the decentralization process (see para. 5.17). 5.05 The project would be implemented within the existing organizational structure of the SSA and the State Health Authorities. At the SSA, however, the Project Coordination Unit (PCU) has been created at a level equivalent to that of a SSA Direcci6n General and staffed on a full-time basis with a project director, a health planning specialist, an infrastructure specialist, a human resources specialist and a financial controller. All higher-level "core" staff have the qualifications and recognized experience in his/her field of competence to provide technical support to the different departments of the SSA. The curriculum vitae of each of the staff has been submitted to the Bank for comments. During negotiations, assurances were obtained that the SSA would maintain a Federal PCU within the SSA, at a level equivalent to that of an SSA Direcci6n General for the general purpose of coordinating execution of the project. Such Federal PCU would have the characteristics specified in the October 11, 1990 letter  - 32 - regarding the Federal PCU and Project States' PCUs furnished to the Bank by the SSA. As far as possible, the SSA would not change the ucore" staff of the PCUs during the first year of project implementation (see para 7.01 (f)). 5.06 The staff hired by the PCU would: be well known in the health field; have planning and project implementation experience in health programs; and knowledge of and experience in supervision, technical assistance, training, and evaluation of health services. In addition to these qualifications, the project director would have demonstrated experience in planning and administration of health programs, particularly in implementation of health care models and decentralization schemes, and the ability to provide leadership in discussions of project implementation with State Health Authorities and governments. The project director would serve as the liaison between the project and other SSA departments responsible for technical programs, including maternal and child health care, family planning, infectious disease control, health and nutritio. education activities, human resource development, and infrastructure. The project director would also be the liaison with IMSS/Solidaridad, PRONASOL, the Research Unit of the Hospital Infantil de Mexico and other research institutions, nutrition institutions, and others, to ensure inter-agency coordination of health and nutrition programs. The project director would be responsible for ensuring that the decentralization process, the Institutional Development Component, and the PASSPA program package would be implemented as planned, or adjusted in light of experience with project implementation. Because of the Mexican health sector's lack of experience with Bank projects, a project launch seminar would be conducted prior to loan effectiveness, and frequent supervision by the Bank would be required, especially during the first year of project implementation. 5.07 To ensure timely project implementation, the PCU would: (a) provide support to the states and the Federal District in the preparation and implementation of annual work and investment plans; (b) monitor project implementation and expenditures and arrange for audits of project accounts; and (c) prepare annual progress reports on the status of project implementation, including quantitative analysis of annual targets. The PCU would coordinate the provision of assistance to the states and the Federal District for the implementation of the Institutional Development Component and state training programs, by identifying, selecting, and hiring consultants. For the PCUs for each of the states, the SSA/PCU would: (a) prepare the terms of reference and assist in the selection of the PCU staff; and (b) assist the states through (CEPADIS) in managing procurement of civil works and equipment and review civil works contracts prepared by the individual states and the Federal District.  - 33 - 5.08 State Level. The State Health Authorities would be responsible for coordinating and carrying out the project, within their existing structure and in cooperation with other existing health units and agencies under the supervision of the federal PCU. In each of the states a Project Coordination Unit (PCU) would be organized with similar functions as the PCU in the SSA. The SSA, each of the State Health Authorities and the Federal District, would appoint a project director whose qualifications and experience would be similar to those of the project director of the SSA Project Coordination Unit. The project director would report directly to the head of the State Health Authorities in the States of Hidalgo, Chiapas, Oaxaca and Guerrero and the Federal District. The project director would coordinate the implementation of the project ;nd the preparation of annual work and investment plans, which would include: the civil works maintenance program, drugs and supplies, and training, supervision, and technical assistance requirements. The project director would be assisted by a health planning specialist and a financial controller with procurement knowledge whose terms of reference, qualifications, and experience would be acceptable to the SSA. Other incremental staff would be provided by the State Health Authority or by the SSA. Each of the State Health Authorities have created the PCU and appointed the director and the two specialists (curriculum vitae for each of the PCU staff are in project file). 5.09 Each of the states and the Federal District has the capacity to implement the project at the central level and their ability to do so would be further strengthened through the Institutional Development Component. The project would also strengthen the implementation capacity at the jurisdictional level to enable them to fully implement PASSPA. With the evolution of the decentralization process, program coordination, planning, budgeting, training, and personnel management would be gradually transferred to the jurisdictional level. C. Planning and Reporting 5.10 The UIHIM and other research institutions and each project state PCU director would, by August 30 of each year, beginning in 1991, deliver to the Federal PCU draft annual research and studies containing targets and description of activities proposed for the subsequent calendar year (see para 7.01 (g)). The plans would be jointly reviewed by the SSA and the Bank in September of each year, beginning in 1991. The draft annual work plan prepared by the State PCUs would provide detailed information regarding past and proposed future implementation and budgeting of the project and each of the Maintenance Plans, Human Resources Training Plans, Staffing Normalization Letter, Institutional Development Plans, Decentralization Action Plans, MIS Plans and Procurement Plans. Plans for civil works would contain a detailed schedule of works proposed for the forthcoming year,  - 34 - specifying the type and timing of construction, the estimated cost, and evidence of ownership or donation of the land. 5.11 For operational research and special studies (see para. 3.29), the SSA, jointly with the states, would enter into contractual arrangements, on terms and conditions acceptable to the Bank, with the Research Unit of the Hospital Infantil de Mexico or other research institutions. The SSA has already submitted to the Bank a signed convenio with the Research Unit of the Hospital Infantil de Mexico and the terms of reference for the health sector resource mobilization and cost recovery study. 5.12 During negotiations, agreement was reached that the SSA would, no later than June 30, 1992, complete the health sector resource allocation and mobilization study, present its results to the Bank and exchange views with the Bank regarding such results. On the basis of the results of the study and such exchange of views, the SSA would, by December 31, 1992, prepare an action plan satisfactory to the Bank. The SSA would implement the action plan in accordance with the implementation schedule in the action plan (see para. 7.01 (h)). 5.13 As part of the annual reviews procedures, the Federal PCU Director, the State PCU Directors and the UIHIM would, by June 30 of each year, starting in 1993, prepare annual progress reports on the implementation of the project in accordance with targets established in the annual work and investment plans. The report would cover the period of January 1 to December 31 of each year. This report, in addition to providing a quantitative update of project progress during the year, would analyze the program and budget performance of each state, progress in the decentralization process, problems encountered, and solutions or measures taken, as well as updates regarding each of the maintenance plans, Human Resources Plans, Staffing Normalization Letter, Institutional Development Plans, Decentralization Plan and MIS plan (see para. 7.01 (i)). D. Project Monitoring and Evaluation 5.14 Regular monitoring and evaluation would be based on comparisons with the first year of project operations and changes in indicators prepared by the SSA for review and approval by the Bank prior to Board presentation. Physical and financial progress would be monitored by the federal and state PCUs by comparing the established targets with annual reports. By providing systematic and timely data about project activities in the states and the Federal District, the MIS would promote the speedy identification and correction of problems. The MIS would rely on activity, performance, and impact indicators compiled monthly by health staff. Feedback to jurisdictions and local levels would be provided regarding their performance in delivering services.  - 35 - 5.15 The MIS would also collect and analyze data on recurrent costs (including cost recovery) of the health system in priority jurisdictions in order to disaggregate the budget to permit specific provision for financing the services. These data would also make it possible to assess unit costs for various services provided by the jurisdictions and would be used to improve efficiency. Data collected by health staff would be reviewed by the supervisory staff who would check registers periodically for completeness and at random for accuracy. About 24 person/months of consultancy services (6 person/months for the SSA and 18 person/months to the states) would be used to review and implement an improved MIS in the project areas. E. Annual Project Implementation and Mid-Term Review 5.16 Annual Progress and Work Plan Review Process. During negotiations, assurances were obtained that the SSA and the states, beginning in September 1991 and again during each month of September throughout project implementation, would conduct annual reviews jointly with the Bank, SHCP, and NAFIN in collaboration with IMSS/Solidaridad, SPP/National Solidarity Program, COPLADE and the UIHIM and other research institutions, of overall project implementation, including technical assistance and training, adherence to the schedules of decentralization, and the adequacy of the delivery of health services and expenditure levels. The review would: (a) analyze the previous year's performance based on the annual report and recurrent budget allocation; (b) analyze the proposed work plan and budget for the following year, with particular attention to each of the Maintenance Plans, Human Resources Training Plans, Staffing Normalization Letter, Institutional Development Plans, Decentralization Action Plans, MIS plans and civil works, including environmental impact analyses; and (c) the annual plans submitted by UIHIM, or other research institutions, would refer to planned research studies and terms of reference thereof, all of which would need to be approved by the Bank in order to proceed (see para 7.01 (j)). The SSA would also participate in the annual review process of the Decentralization and Regional Development Project. 5.17 Mid-Term Review. A mid-term review would be conducted by the SSA and the states, jointly with the Bank, with the assistance of consultants after 2 1/2 years of project implementation (see para. 7.01 (k)). The review would assess project impact and performance in light of project objectives, SSA policies, and long-term goals and implementation of the decentralization process. The mid-term review would also assess project organization, coordination, monitoring, equity, effectiveness, and efficiency. The PCU would be responsible for hiring consultants and preparing the terms of reference, which would be submitted to the Bank for comments, to coordinate the  - 36 - mid-tei.m review and to prepare the report with findings and recommendations. VI. PROJECT BENEFITS AND RISKS A. Project Benefits 6.01 The proposed project would support the government's attack on poverty and inequities in health status and access to health care by increasing the proportion of overall public health resources going to basic health care and nutrition in the poorest states of Mexico. In the project area, per capita expenditures on health care for the uninsured population 1989 were an estimated US$12.9. Accounting for population growth, it is estimated that the proposed project would increase annual expenditures by 24 percent, on average, or to about US$16.0 per capita. The provision of health services to about 13 million uninsured poor would reduce the prevalence of gastrointestinal, infectious, and communicable diseases, complications of pregnancy, and malnutrition, all of which are associated with high rates of infant, child, and maternal mortality. Institutional development would contribute to improved planning, personnel, and financial management; increased service delivery capacity; and higher productivity in the sector. Improvements in the maintenance and repair capabilities of the health network would safeguard investments in infrastructure and equipment. The decentralization process would focus the delivery of services on the demands of the population in each state and improve the efficiency and effectiveness of health services and would substantially increase the demand for services at the first level. These client-centered approaches should then make it possible for basic health care providers to focus on the task of promoting good health and nutrition practices in the community, the only certain way to reduce the incidence of the diseases of underdevelopment. B. Impact on Women 6.02 About 75 percent of the population using the health services provided by PASSPA would be women and children under the age of five. The services would aim to improve health status and curb maternal and infant and child malnutrition, morbidity, and mortality. Women would also participate actively in nutrition education and assistance, health and environmental education programs. In addition, the project would provide training for midwives and community health promoters. Most health care providers at the health centers - auxiliary nurses, nurses, social workers, health educators, and supervisors - are women who would receive training to enhance their performance and provide opportunities for career advancement. In the project states, there are already several women medical doctors who actively  - 37 - participate in the decision-making process and management of the delivery of health services. The project would provide refresher courses and continuing education programs to enable them to assume their full professional role. C. Environmental Impact 6.03 The rehabilitation of health facilities to be financed by the project does not involve major structural changes or siting problems. No civil works for new health centers would be undertaken without taking into account the results of an environmental impact study, satisfactory to the Bank, regarding such works. For civil works, involving expansion or rehabilitation of already existing hospitals the SSA must first determine, to the Bank's satisfaction, that increased waste disposal generated by these facilities would not have negative environmental impact. For environmental impact studies and waste disposal analyses for civil works program, the SSA would prepare guidelines, satisfactory to the Bank, no later than March 31, 1991, and the results of such studies and analyses would be examined jointly with the annual civil works plans during the annual reviews (see paras. 5.16 and 7.01 (1)). D. Project Risks 6.04 The main risk would be the lack of capacity of State Health Authorities to manage this expanded program of health services delivery. Some uncertainty remains as to government's ability to provide resources, including counterpart funds, at a level sufficient to sustain the project. New and rehabilitated infrastructure may become inoperative for lack of qualified personnel, due to restrictive government hiring policies, recruitment procedures, and low salaries for health professionals. Legal and political constraints to speed up the decentralization process may hamper the implementation capability in the states. These risks have been reduced, however, by the high priority given to project objectives in government social policy, the experience gained by the states during project preparation, the concentration of efforts on key service elements, the establishment of data gathering and monitoring mechanisms, the annual implementation and work plan review, and the expectation of renewed growth of the Mexican economy. VII. AGREEMENTS REACHED AND RECOMMENDATIONS 7.01 During negotiations, assurances were obtained that: (a) The SSA would review the efficiency and adequacy of the purchase and distribution of drugs and supplies by the SSA and each of the Project State Health Authorities, and submit to the Bank, for comments, the results, including  - 38 - the action plan to be carried out by the SSA and the State Health Authorities in the project states, by no later than July 30, 1992 (see para. 3.12); (b) The SSA would, no later than March 31, 1991, enter into contracts, satisfactory to the Bank, with consultants for the preparation of Institutional Development Plans, satisfactory to the Bank, for each of the project states. Such Plans would be presented to the Bank no later than December 31, 1991. The Plans would specify actions and recommendations to be implemented to ensure that SSA develop sound administration, planning, budgeting and inventory control procedures in each of the project states. The SSA would carry out the Institutional Development Plans with regard to all those project states and assist the State of Guerrero to implement the Plan (see para. 3.25); (c) Each of the project states and the Federal District would review the operation of the management information system (MIS) with the assistance of consultants, prepare plans for its improvement, satisfactory to the Bank, and deliver such MIS plans no later than December 31, 1991, and carry out the MIS plans throughout project execution, including the gathering of data for monitoring and evaluating indicators (see paras. 3.26 to 3.28); (d) The Bank, in consultation with the government, may suspend disburse"ent to a project state which is non-performing under its legal obligations (including its obligation to provide appropriate funding for health sector recurrent costs, new staff for health facilities built or improved under the project, and salaries for health sector staff), and may transfer the loan funds allocated to such project state to other project states (see paras. 4.15 and 5.16); (e) The Guarantor would: (i) have the records and accounts for each fiscal year audited, in accordance with generally accepted auditing standards and pro-edures, by independent and qualified auditors; (ii) furnisu, to the Bank as soon as available, but in any case not later than six months after the end of each year, a certified copy of the audit reports of such scope and in such detail as the Bank would have reasonably requested; (iii) furnish to the Bank such other information concerning the records and accounts as well as the audit as the Bank would from time to time reasonably request; and (iv) cause SECOGEF to comply with its obligations set forth in the October 12, 1990 documenlt on auditing agreed upon during negotiations (see para. 4.16);  - 39 - (f) The SSA would maintain a Federal PCU within the SSA, at a level equivalent to that of an SSA Direcci6n General for the general purpose of coordinating execution of the project. Such Federal PCU would have the characteristics specified in the October 11, 1990 letter regarding the Federal PCU and Project States' PCUs furnished to the Bank by the SSA. As far as possible, the SSA would not change the ncorew staff of the PCUs during the first year of project implementation (see para 5.05); (g) The UIHIM and other research institutions and each project state PCU director would, by August 30 of each year, beginning in 1991, deliver to the Federal PCU draft annual research and studies containing targets and description of activities proposed for the subsequent calendar year (see para 5.10); (h) The SSA would, no later than June 30, 1992, complete the health sector resource allocation and mobilization study, present its results to the Bank and exchange views with the Bank regarding such results. On the basis of the results of the study and such exchange of views, the SSA would, by December 31, 1992, prepare an action plan satisfactory to the Bank. The SSA would implement the action plan in accordance with the implementation schedule in the action plan (see para. 5.12); (i) The Federal PCU Director, the State PCU Directors and the UIHIM would, by June 30 of each year, starting in 1993, prepare annual progress reports on the implementation of the project in accordance with targets established in the annual work and investment plans (see para. 5.13); (j) The SSA and the states, beginning in September 1991 and again during each month of September throughout project implementation, would conduct annual reviews jointly with the Bank, SHCP, and NAFIN in collaboration with IMSS/Solidarity, SPP/National Solidarity Program, COPLADE and the UIHIM and other research institutions regarding past and proposed future implementation and budgeting of the Project. The review would analyze each of the Maintenance Plans, Human Resources Training Plans, Staffing Normalization Letter, Institutional Development Plans, Decentralization Action Plan and MIS Plan. The Annual Research and Studies Plan would include the terms of reference which would need to be approved by the Bank in order to proceed (see para. 5.16); (k) A mid-term review would be conducted by the SSA and the states, jointly with the Bank, with the assistance of consultants after 2 1/2 years of project implementation (see para. 5.17); and  - 40 - (1) For environmental impact studies and waste disposal analyses for civil works program, the SSA would prepare guidelines, satisfactory to the Bank, no later than March 31, 1991, and the results of such studies and analyses would be examined jointly with the annual civil works plans during the annual reviews (see para. 6.03). 7.02 The following would be conditions for loan Effectiveness: (a) At least three project states would present an infrastructure and biomedical equipment maintenance plan. The remaining states would present the plan by June 30, 1991 (see para. 3.11); (b) At least three project states would present a Human Resources and Training Plan, satisfactory to the Bank, according to identified staff training needs and PASSPA requirements (Other project states would comply with these conditions by June 30, 1991.) Such Human Resources and Training Plans would specify actions and recommendations to be implemented through SSA, CONALfEP and CECADE, over a five-year term beginning in Janu4ry 1991 to meet the professional training needs of SSA staff in each of those project states (see para. 3.19); (C) The SSA would submit to the Bank the draft contracts and a short list of consultants and terms of reference, satisfactory to the Bank, for preparation of Institutional Development Plans, for each of the project states (see para. 3.24); and (d) The SSA and SPP would have entered into Participation Agreements, satisfactory to the Bank, with each of the project states (see para. 4.16). 7.03 With the above conditions and assurances, the project constitutes a suitable basis for a Bank loan of US$180.0 million equivalent to the United Mexican States, to be repaid over a period of 17 years, including five years of grace.  - 41 - MEXICO BASIC HEALTH CARE PROJECT ANNEX LIST Annex 1: Country and States Health Status Table 1: Main Causes of Death - National Table 2: Main Causes of Death by State Table 3: Population Projections by State Annex 2: Public Health Expenditures and Financing Table 1: Health Care Expenditures in Selected Countries Table 2: Public Health Care Expenditures in Latin America Table 3: Allocation of Public Health Expenditures Table 4: Health Expenditures on the Uninsured Population by State Table 5: Health Expenditures Per Capita on the Uninsured Population by State Annex 3: Sector Oraanization and Coverage Table 1: Existing Health Facilities by State Table 2: Principal Providers and Health Care Coverage Annex 4: Sector Strategy - Programa de Apoyo a los Servicios de Salud Para la Poblaci6n Abierta (PASSPA) Programa de Apoyo a los Servicios de Salud para la Poblaci6n Abierta (PASSPA) Matrix 1: Basic Health Care Model, Levels, Functions, Staffing and Supervision Patterns Figure 1: Type of Health Unit by Level and Population Attach. 1: Epidemiological Assessment for Organizing Basic Health Services Attach. 2: Nutrition Program Table 1: Estimated Target Population for Nutrition Program by State and by Year Chart 1: Implementation of Nutrition Program Annex 5: The Proiect Areas Table 1: Project Areas Table 2: Target Population and Priority Jurisdictions by State Annex 6: Project Description Table 1: Construction Requirements and Facility Type by State and by Year Table 2: Vehicles: Consolidated by Year and by State Table 3: Human Resources by Year and by State Annex 7: Project costs and Disbursement Table 1: Project Components by Year Table 2: Summary Accounts Cost Summary Table 3: Summary Accounts by Year (Including Contingencies) Table 4: Summary Account by Project Component (US$ Million) Table 74a: Summary Account by Project Component (MEX$ Million) Annex w: Disbursement Table 1: Estimated Schedule of Disbursements Annex 9: Implementation Schedule Table 1: Implementation Schedule Annex 10: Selected Documents and Data Available in the Proiect File  MEXICO BASIC HEALTH CARE PROJECT Ta7 1: MAIN CAUSES OF DEATH - NATIONAL a/ (Rate per 100,000) CAUSES 1970 1981 1983 IMPORTANCE DEATHS RATE % IMPORTANCE DEATHS RATE % IMPORtTANCE. DEATHS RATE % TOTAL) 4-5,6 991.2 1%000 ;tM-8 424,274 S87,6 100.0 : 41D,40 553.9 100.0 Pneumonias & Flu 1 83,676 170.8 17.2 3 33,919 47.1 1.0 5 27,246 36.5 6.6 Diarrhea 2 69,410 141.7 14.3 4 32,392 45.0 7.6 3 38,282 51.3 9.3 Gastrointestinal 3 34,784 71.0 7.2 1 69,S66 96.6 16.4 1 60,259 80.7 14.6 Diseases Accidents & 4 33,488 68.3 6.9 2 51,M 70.5 12.2 2 49,921 66.9 12.1 Violent Causes Heart Diseases ' S 25,222 S.5 5.2 6 26,310 36.5 6.2 6 25,864 34.7 6.3 Malignant Tumors 6 18,415 37.6 3.8 S 28,000 31.9 6.6 4 30,678 41.1 7.4 Vascular Diseases 7 12,107 24.7 2.5 7 15,637 21.7 3.7 8 16,668 22.3 4.0 Measles 8 11,891 24.3 2.4 - 824 1.1 0.2 - 318 OA 0.1 Cirrhosis 9 11,182 22.8 2.3 9 14,902 20.7 3.5 9 16,609 22.3 4.0 Tuberculosis 10 9,737 19.9 2.0 10 6,721 9.3 1.6 10 7,002 9.4 1.7 Diabetes Mellitus - - - - 8 15,430 21.4 3.6 7 18,880 25.3 4.6 Other Causes - 175,744 358.7 36.2 - 128,801 178.8 30.4 - - - - Sources: Programa Nacionat de Salud 1984-1988, Mexico, 1984. SPP, INEGI, Direccion de Estadistica Demografica y Social, Tabulacion 12, Mexico, 1983. SPP, INEGI, Direccion de Estadistica Demografica y Social, Tabulacion 6, Defunciones Generates por Entidad Federativa do residencia habitual del fallecido segun lista basica do cause do muerb, Mexico, 1983. Note: 1970 based on the VII International Classification of Diseases. 1981 and 1983 based on the IX International Classificaton of Diseases. Differences due to rounding. at: Main causes of death ranked by importance.  MEXICO BASIC HEALTH CARE PROJECT Table 2: MAIN CAUSES OF DEATH BY STATE a/ (Rate per 100,000) (1985) CAUSES CHIAPAS GUERRERO HIDALGO OAXACA FEDERAL DISTRICT Cause# Rate Cause# Rate Cause# Rate Cause# Rate Cawe # Rate Intestinal & Infectious 1 85.92 2 37.55 3 42.40 1 125.12 6 18.15 Diseases Pneumonias & Flu 2 24.70 5 14.85 2 46.52 3 29.75 2 29.78 Homicides & Violeoce 3 23.53 1 45.22 - - 2 51.70 9 9.94 Tuberculosis 4 18.68 - - - - 9 17.78 - - Traffic Accidents 5 16.22 3 18.53 6 18.96 8 18.63 10 9.76 Cirrhosis & Liver 6 14.25 8 12.25 1 47.21 4 24.50 3 29.53 Diseases Bronchitis & Related 7 12.91 10 9.16 7 17.19 5 20.64 8 11.89 Diseases Diabetes Mellitus 8 12.79 6 13.37 5 19.14 7 18.90 1 36.06 Heart Attacks 9 12.58 7 12.63 9 15.87 10 14.49 4 21.1S IRAs 10 12.04 - - 4 21.14 - - 5 18.26 Heart Diseases - - 4 17.00 8 17.02 - - Measles - - 9 10.89 - - - - Malnutrition - - - - 10 15.53 6 19.86 - - Nefritis & Related - - - - 7 12.99 Diseases Source: SSA, Statistical Reports. V al: Main causes of death ranked by importae.nc iiX  - 44 - ANNEX I Page 3 of 3 MEXCO BASIC HEALTH CARE PROJECT Table 3: POPULATION PROJECTIONS By Stae (1989- 1994) YEAR OAXACA CHL4PAS GUERRERO HDALGO FEDERAL PROJECr DISTRICT AREA 1989 2,669,120 3,537,337 3,418,121 2,208,412 10,732,407 22,565,397 1990 2,686,968 3,633,552 3,514,589 2,263,463 10,979,252 23,077,824 1991 2,703,748 3,732,387 3,612,763 2,319,888 11,231,755 23,600,561 1992 2,719,451 3,833,908 3,712,661 2,377,719 11,490,106 24,133,845 1993 2,734,014 3,938,199 3,814,273 2,436,993 11,754,378 24,677,857 1994 2,747,353 4,045,307 3,917,640 2,497,744 12,024,729 25,232,773 1989 SSA UnhIsured (745(84)7.)(7.)32) Population (% Source: SSA, State Health Authorities, November 1989. Note: Figures in parentheses are SSA estimates.  - 45 - ANNEX 2 Page 1 of 5 MEXICO BASIC HEALTH CARE PROJECT Table 1: HEALTH CARE EXPENDITURES IN SELECTED COUNTRIES Share of GDP and Per Capita (1980s) HEALTH CARE EXPENDITURES COUNTRY Share of Per Capita GDP(%) US$,1984 Prices LATIN COUNTRA' Colombia 5.0 70 Costa Rica 8.0 104 Mexico 3.4 60 Brazil 5.6 96 Uruguay 5.0 85 Panama 5.0 105 Argentina 7.1 160 gAVR E ORJ C.:TIE ;: : .: . 0-'t >A'. UK 6.2 531 USA 10.7 1,646 Source: The World Bank, Health Sector Expenditures and Financing, May 1989.  - 46 - AN1NEX 2 Page 2 of 5 MEXICO BASIC HEALTH CARE PROJECT Table 2: PUBLIC HEALTH CARE EXPENDITURES IN LIATIN AMERICA (1977-1980*) Health Care as X Percent Per Capita Cost H.elth Care of Governuent Countries Population of Medical Care as X of ODP Expenditures (In order of Covered by under per capita Social Social Security Social Public Social Public income) Security (USS) Security Health Security Health Higher-Income Countries Venezuela 80 69 0.7 2.2 2.8 7.3 Argentina 80 n.a. n.a. n.s. n.a. n.a. Uruguay s0 14 0.6 0.9 2.2 2.0 B1razil 8s 28 1.4 0.7 7.4 8.1 Panama 47 74 8.1 4.8 10.8 14.6 Costs Rica 82 61 8.8 0.6 19.4 3.2 Mexico so 40 1.6 0.7 0.8 1.6 AVERAGE 71 44 Lower-Income Countries Dominican Republic 4 78 0.4 1.2 2.6 6.5 Ecuador 6 89 0.7 1.8 5.0 9.9 Quatemla 14 25 0.6 0.8 6.0 7.8 Colombia 10 49 0.9 0.8 8.0 8.8 Peru 12 86 0.8 1.4 4.8 6.9 Paraguay 18 n.s. n.s. n.s. n.a. n.a. Bolivia 18 62 1.8 1.0 10.4 8.0 El Salvador 6 62 0.6 1.4 8.9 9.8 Honduras 7 48 0.8 1.8 3.8 8.6 AVERAGE 11 5a * Mexico, data 1988. Source: The World Blank, Health Sector Expenditures and Financing, May 1989. n.a.: Not available.  -47- ANNEX 2 Page 3 of 5 mgm2CO BASIC HEALTH CARE PROJECT Table 3: ALLOCATION OF PUBLIC HEALTH EXPENDITURES (1982- 1986) PUBLIC EXPENDITURES 1982 1983 1984 1985 1986 In Health 87.1 84.9 86.0 88.5 91.5 (MEX$ 1980) 1/ Inotents%) -- - 1-.:2.1 -;Z 41. 4.6 ~: J' : : R ~~~~~~~~~~ ~~~~. *7. -. . *. -6K. himmisditures (% ... Source: The World Bank, Health Sector Expenditures and Fmancing, May 1989. 11: Billions of Mexican pesos.  -48 - ANNEX 2 Page 4 of 5 MEXICO BASIC HEALTH CARE PROJECT Table 4: HEALTH EXPENDlTURES ON THE UNINSURED POPULATION BY STATE (1989) (US$ Millions) CHIAPAS GUERRERO HIDALGO OAXACA FEDERAL PROJECT DISTRICT AREA 1. Recurrent 26.6 2i. .6 21.9 . 44.2: 125.8 a) Federal 25.7 20.8 11.5 21.7 44.2 123.9 b) State 0.9 0.7 0.1 0.2 n.a. 1.9 2.. Investmnent -7.5 6.6 23.9 a) Federal 7.5 5.3 1.2 8.3 0.1 22.4 b) State 0.0 1.3 0.2 0.0 n.a. 1.5 3. User Fees 0. 0.7 0.2 0 1.1 2.6 .4. TOTAL 34.1 28.1 13. 30.2 4.3 149.7 a) Federal 33.0 25.4 12.5 29.7 44.3 144.9 b) State 1.1 2.7 0.5 0.5 n.a. 4.8 n.a.: Not applicable. Source: SSA, IMSS/Solidaridad statistics, June 1990.  -49 - ANNEX 2 Page 5 of 5 MEXICO BASIC HEALTH CARE PROJECT Table 5: HEALTH EXPENDITURES ON THE UNINSURED POPULATION By State (1989) CHIAPAS GUERRERO HIDALGO OAXACA FEDERAL PROJECT DISTRICT AREA UNINSURED POPULATION a/ 1.9 X0 x1.6 .6 3.4 10.6 EXPENDITURES b/ Total c/ 34.1 28.1 13.0 30.2 44.3 149.7 Per Capita 11.3 12.5 7.7 15.1 16.7 12.9 AVERAGE ANNUAL EXPENDffURES WIrH EP&PA Total c/ 42.0 34.6 19.0 36.4 56.0 189.0 Per Capita d/ 13.6 15.0 11.5 18.0 20.6 16.0 a!: In Millions. Includes population covered by SSA and by IMSS/Solidaridad. b9: Includes SSA and IMSS/Solidaridad resources. ci: In US$ Millions. dt: Assumes 2.2 percent rate of population growth per year. Source: SSA, State Priorities Proposals, November 1989  MEXICO BASIC -HEALTH CARE PROJECT Table 1: EXISTING HEALTH FACILMIES BY STATE Number of First and Second Level Units a/ STATES INSTITUTION CHIAPAS GUERRERO HIDALGO OAXACA F.D. PROJECT AREA 1st 2nd Ist 2nd 1st 2nd 1st 2nd 1st 2nd Ist 2nd level level level level level level level level level level level level IMSS 49 4 20 2 11 S 24 3 33 14 137 28 ISSSTE 17 3 35 1 24 2 38 4 34 10 148 20 Sub-Total 66 7 S5 3 35 7 62 7 67 24 285 48 IMSS/Solidlridad 463 6 b/ b/ 149 4 326 7 - - 938 17 SSA 138 7 bl bl 220 2 209 S 229 3 1273 25 State Sectariat - - 477 8 - - - - - - - ISSSTECH 2 1 - - - - - - - - 2 1 INI - - - - 70 2 S7 n.a. - - 127 2 DIP - - - - - - 14 n.a. - - 14 n.a. DDP - - - - - - - 9S 27 95 27 Odtor - - 3 2 - I - - 3 3 Sub-Total 603 14 480 6 439 9 606 12 324 30 2452 75 Source: SSA and IMSSlSolidaridad, Mexico City, June 1990. al: First Level Unit = Rural and Urban Health Centers; Second Level Unit = General Hospital. 0) bl: SSA and IMSS/Solidaridad umits were transferred to dhe State Health Secretariat as part of the decentralization. n.a.: Not available. 0  MEXICO BASIC HEALTH CARE PROJECT Table 2: PRINCIPAL PROVIDERS AND HEALTH CARE COVERAGE STATES FEDERAL PROJECT MEXICO INSTITUTION CHIAPAS GUERRERO al HIDALGO OAXACA DISTRICT AREA TOTAL TarALP L 3. 3.4 PO2: , i,7 10 '; 22.6 843 IMSS 7.6 13.9 16.0 16.5 47.0 29.2 43.3 ISSSTE 5.3 9.2 5.2 6.4 17.0 11.6 9.2 Other 1.4 2.1 2.0 1.3 20.1 10.9 2.6 Private Provdr 1.5 9.0 n.a. 5.0 1.9 3.1 4.2 SSA 25.8 59.0 49.1 27.0 22.4 31.6 22.0 cl IMSS/Solidaridad 26.1 at 21.8 31.1 - 10.1 12.5 INI/FVG - 0.7 - - - 0.1 n.a. Patrimobio - - 2.5 - - 0.2 b digenista Other 3.3 - - 0.6 - 0.6 n.a. Source: SSA, State Priorities Proposals, November 1989. a/: Since Guerrero consolidated its institutions, all health services for the uninsured population are carried out by the State Health Secretariat. bl: In millions. ci: This figure overestimates SSA coverage since it includes services provided by other institutions for which information is not available. p n.a.: Not available. Note: Differences due to rounding.  - 52 - ANNEX 4 Page 1 of 8 MEXICO BASIC HEALTH CARE PROJECT Proqrama de ApoYo a los Servicios de Salud para la Poblaci6n Abierta, PASSPA 1. In the framework of the National Health System, the SSA has designed a Basic Health Care (BHC) model called the Programa de Apoyo a los Servicios de Salud para la Poblaci6n Abierta - PASSPA. PASSPA has been designed based on the lessons learned from prior programs (PRODIAPS and IMSS/COPLAMAR). It defines three levels of services. The first level, or entry point of the PASSPA consists of rural ambulatory units, rural medical units, and urban health centers without hospital beds. Those requiring more complex care are referred to the second level, comprised of hospitals ranging in size from 30 to 180 beds, which provide about 15 percent of the ambulatory services, and in-patient care for specialties: general medicine, surgery, obstetrics/gynecology (including family planning) and pediatrics. The third level includes the national institutes of health and the specialized hospitals for oncology, cardiology, neurology and neurosurgery, nutrition, pediatrics, and perinatology. Referral between levels is the key to the effective delivery of services. Organization of Health Services 2. Health services are organized and managed by jurisdictions in the states and in the Federal District, and are coordinated at the central level in each state and the Federal District. In the project areas, there are 47 jurisdictions that are responsible for coordinating health services of 855 municipalities and 2,737 health centers. In each jurisdiction, the network of facilities, including staff and services, are organized in a modular and hierarchical design corresponding to the three levels of service. Organization and delivery of services are determined by the following criteria: (a) basic health needs according to perceived morbidity in the population; (b) selection of program packages of interventions and staffing requirements; (c) assignment of functions to the health personnel; and (d) organization of physical facilities and personnel into modules of health care. Organization, staffing norms, working schedules and procedures, equipment and supply lists have been developed by SSA for each module. Type and size of health facility and staffing patterns are adjusted by the states, according to population criteria and local conditions (see Matrix 1 and Figure 1).  - 53 - ANNEX 4 Page 2 of 8 Selection of Program Packages 3. The selection of health activities to be included in the program package depends on the epidemiological assessment for organizing basic health program package services at different levels: (a) identification of the most important health problems in each age-population group; (b) listing of actions to solve the problem; and (c) selection of actions according to safety, effectiveness, and possibilities of standardization, which, in turn determines the type of personnel that will carry them out (see Epidemiological Assessment for Organizing Basic Health Services in Mexico, Annex 4, Attachment 1). Organization of Health Network 4. First Level of Services Community Health Post: Serves a catchment area with a population up to 2,500 people; staffed by community health worker backed up by the nearest health center staff; provides simple curative care, maternal and child care, family planning, immunizations, oral rehydration therapy, health and nutrition education, and environmental sanitation, and refers more complicated cases to higher levels of service. Rural Health Center: Serves rural population of 2500 to 15,000 in catchment area; staffed by MD, nurse, and social worker or health promoter; provides health post services plus, in some cases, dental treatment, X-rays, laboratory and pharmacy services, and screening for optical and pulmonary problems, among others, wit 1 referral to higher levels of service. 1/ There are two types of rural centers: (i) for scarcely populated areas (Centro de Salud Rural Disperso - CSRD); and (ii) for densely populated areas (Centro de S,alud Rural Concentrado - CSRC); and one type of urban center (Centro de Salud Urbano - CSU). Each type is designed in modules to allow for variations related to the size of the population served. For each type of center there is a prototype drawing of the health facilities, a staffing (continued...)  - 54 - ANNEX 4 Page 3 of 8 The centers are also responsible for the supervision and support of community health workers yd outreach services to isolated areas.- They provide nutrition, health, and basic sanitation education at the center. Urban Health Center; Serves urban population of 3,000 to 36,000. Is organized by modules with a basic team for about 3,000 people (medical doctor, nurse, health promoter, dentist and specialties). There are 1 - 12 teams in urban centers. They provide services similar to those above. They serve as referral points for both community health posts and rural health centers and, in turn, refer patients to second and third levels of services. 5. Second Level of Services: Hospital: Referral apex of the module, 30 to 180 beds serve a population of 15,000 to 100,000; hospital staffed according to coefficients: 3 - 4 consultations per MD/hour; an average of six days a week; 3.5 staff employed per bed; health professionals comprise 12 - 17 percent of staff, auxiliary staff 50 - 55 percent, and administrative staff 25 - 35 percent. Provides in-patient care, maternity deliveries and care, gynecology, radiological examinations; ambulatory specialist services, chest X- rays, laboratories, etc. Coefficients of health professionals, auxiliary and administrative staff, vary according to number of population in the area of .(. continued) pattern and a list of supplies which is adjusted to local conditions. 2/ WHO norms provide for two MD consultations per person per annum. Assuming a quarter-hour per consultation, 1,500 hours of ND services, and a 30 hour work week, is required to serve about 3,000 people.  - 55 - ANNEX 4 Page 4 of 8 catchment and demand of referral system from lower units. 6. Criteria to define the type of service to be provided are based on population density and access to services (distance to provider by most commonly used means of transportation). Matrix 1 and Figure 1 present a summary of types of health facility included in the PASSPA by population size, main packages of health activities, basic staffing pattern, and supervision. The tasks and services to be delivered are specified on the basis of expected patient demand at each level or source. Models of the First Level Health Facility 7. PASSPA establishes the following prototype first-level health facilities, which are the basis for standardizing existing and new facilities (see Figure 1). Their physical infrastructure consists of: (a) Rural ambulatory unit: building provided by the community consisting of a consultation room, a waiting room, a multiple-uses room, and a sanitary; (b) Health unit: a consultation room, a waiting room and a sanitary; (c) Disperse rural health center: a consultation room, a first aid and immunizations room, an observation room, a waiting room, quarters for the doctor (room and bathroom), a sanitary, and a kitchenette; and (d) Concentrated rural health center: same physical infrastructure as (c) but could have more consultation rooms according to the number of medical teams and a dental consultation room if dental services are provided; Urban health center: 1 to 6 consultation rooms, a control room, a first aid room, an immunizations room, a waiting room, a storage room, a multiple-uses room, two sanitaries for personnel and public use, a pharmacy, an administration area, and a dental consultation room, a laboratory, and an x-ray room if these services are provided.  -56 - ANNEX 4 Page 5 of 8 MEXICO BASIC HEALTH CARE PROJECT Matrix 1: MATRIX OF BASIC HEALTH CARE MODEL, LEVELS, FUNCTIONS, AND STAFFING AND SUPERVISION PATTERNS TYPE OF HEALTH FUNCTIONS BASIC STAFFING RESPONSI8LE FOR FREQUENCY OF FACILITY/POPULATION (Act)vitles) PATTERN SUPERVISION SUPERVISION Flrst Level Community Health -Community Assessment 1 trained comr- Health Center Two monthly Posts (Cases de of health A nutrition munity health Intern MD Salud) status worker Auxiliary nurse Health Units -Medical Consultations 1 Intern MD Jurisdiction 12 x year (Unidad de Auxiliary -Health Promotion or health Health professionals de Salud, UAS) -Medical Treatment technician or closest health (ambulatory) center Pop:< 8,000 -Maternal and Child Care (family planning, sex education, pre-post natal care, growth mon- ltoring, Immunizations) -Communicable Disease Control -Other Diseases Detection and Control -Health A Nutrition Education -Basic Sanitation -Community Organization -Referral to higher level Rural -"edical Consultations 1 MD or Intern Jurisdiction 2-3 x year Health Center -Medical Treatment 1 Nurse or supervision team (Centro de Salud (ambulatory) auxiliory or urban health Rural Disperso, -Maternal and Child Care nurse center CSRD) (family planning, sex education, pre-post Pop: 1,000- natal care, growth mon- 2,600 itoring, lmunizations) -Communicable Disease Control -Other Diseases Detection and Control -Health Promotion -Emergencies -Health/Nutrition Education -Basic Sanitation -Community Organization -Referrals from lower levels and to oecond level or urban Health Center  - 57 - ANNEX 4 Page 6 of 8 tYPE OF HEALTH FUNCTIONS BASIC STAFFING RESPONSIBLE FOR FREQUENCY OF FACILITY/POPULATION (Activities) PATTERN SUPERVISION SUPERVISION Concentrated Rural -Emergencies 1-8 Physicians Jurisdiction or 2-a x year Health Center -Medical Consultations 1-8 Nurses regional supervision (Centro de Salud -Medical Tresa'ment 1-S Hoalth team, or urban Rural Concentrado (ambulatory) promoters health center staff -Maternal and Child 1 entomatology Pop, 2,601- Care (family planning, Intern 14,999 sex education, pre- post-natal care, growth monitoring, Immunizations) -Communicable Diseae Control -Other Diseases Detection and Control -Pharmacy Services -Health Promotion -Health/Nutrition Education -Basic Sanitation -Community Organization -Referrals from lower levels and to second level Urban Health -Emergencies 1 Director Jurisdiction 2-3 x year Center (Centro -Medical Consultations 1-12 MD's (general) health team de Salud Urbano -Medical Treatment 1-12 Nurse. Central state CSU) (ambulatory) 1-12 Health level -Maternal and Child Care promoters Pop:) 3,000- (family planning, sex 1-19 Administrators 86,000 education, pre-post a guards natal care, growth mon- itoring, Immunizations) -CLomunicable Dises-e Control -Other Disease. Detection and Control -Community Organization -Referrals from lower levels to second level Urban Health -Hybrid CSO type 1 6-12 MDWs Health professionals 2-8 x year Center (Centro plus: Dental Care (general/spec), at state level de Salud Urbane clinical labs 6-12 Nurse. CSU)* x-ray exms 6-12 Health Pro. 1a Dentists Pop: sae as above 2-4 Auxiliary dentists 1-4 Lab Personnel * Additional 1-2 X-ray personnel Infrastructure 1-19 Administrative and Personnel 1-3 Maintenance 3 Guards  -58- AN?NEX 4 Page 7 of 8 TYPE OF HEALTH FUNCTIONS BASIC STAFFING RESPONSIBLE FOR FREqUENCY OF FACILITY/POPULATION (Activities) PATTERN SUPERVISION SUPERVISION Second Level General -Emergencies 1 Director Health professionals a x year Hospital (Hospital -Short-stay MD's at state level Oeneral) hospitalized -Nurses 30-180 Beds care for pediatric -Aux. nurses obstetrical, gyneco- -Dentist Pop: over logical, A surgical -lab personnel 20,000 problems -X-ray personnel -Clinical lob A -social workers X-ray exams -MD's (specialists) -Ambulatory spectaltieos -Adamn personnel (ophthalmology, chest, gynecology) -Dental Care -Pharmacy Sciences -Maternal and Child Care (family planning, sex education, pre-post natal care, growth mon- itoring, immunizations) -Communicable Disease Control -Other Diseases Detection and Control Third Level Specialized -Diagnostices Hospitals & Inst. -Specialized Treatment Public Health Labs Specialized Public Health Units Pop: 1.5-S.0 Million Note: The supervision team would be comprised of: technical health personnel, plus a opolivalente.a Source: SSA Judicadores de las Unidadades de Salud del Primer nivel segun el PASSPA.  Figure 1. Type of Health Unit by Level and Population Diagnosis & Specialized Units 3 Specil Unfts (Mental Health, Specialized Specialized Public Health RetabMation. Hospitals Instiutes Laboratories Social Assistance) L E E Jurisdictional General ______________________________ _ _______ _ .Center Hospita ., ' Rural Health Health Health Heahth Center Center Center Center Type I Typ 2 Type 3 -~. ,. .,__ _ _ .'-_ _ _ _ _ _ _ _ _ _ _ _ _ ' . 3,000 3,000 6.000 18,000 Population to to to to 10 o 440,000 1,5000,000 to 3,000.000 6,000 6,000 18,000 36.000 ___o_ Location Rua ra 1 Udn & I Uan& Ubn&SbuanUrban Loca Disperse Sub-urban Sub-urban Sub-urban co &n Disperse Ulban & Urban & Sub-urban~~~~~~~~~~~~~~~~~~~~~~  - 60 - ANNEX 4 Attachment 1 Page 1 of 4 MEXICO BASIC HEALTH CARE PROJECT Epidemiological Assessment for Organizing Basic Health Services Assessment of Basic Health Needs 1. Identifying the population's basic health needs is one of the critical elements in defining what health care should be necessary; to whom should it be addressed as a priority; who can deliver it; where (home, health facility) can it be delivered; and when should it be delivered. 2. The following summary of Mexico's basic health needs may be used for defining the critical elements described above. Also, a summary of the procedure for selecting "packages" of health activities i.s described to help to define who can deliver what type of care (thus providing elements for defining job descriptions and possible training contents), and where can it be delivered. 3. The Mexico's National Health Survey (1988) showed that: A. Out of 82 million Mexicans: 12.9 million experience acute diseases in a period of tta weeks; 6.1 million suffer chronic diseases; and 1.6 million have disabilities (65 percent partial and 35 percent total interference of daily activities) TOTAL: 20.6 million Mexicans have health problems requiring some type of health care (from simple to complex). B. 0'it of 20.6 million Mexicans with health problems: 15.4 million demanded some type of "formal" health care and were cared for by certified health personnel (e.g., auxiliaries, doctors) at the follnwing places: 0.23 million cared for at home; 0.49 million cared for in "casa de salud" or dispensary;  - 61 - ANNEX 4 Attachment 1 Page 2 of 4 5.3 million cared for in "Consultorios" or official clinics; 1.0 million cared for in official health centers; 4.6 million cared for in private "consultorios"; 3.2 million cared for in hospitals or rehabilitation centers; and 0.2 million cared for in other places. C. By Provider, the 20.6 million Mexicans were cared for as follows: 5.6 million by the private sector; 4.7 million by IMSS; 1.9 million by SSA; 1.1 million by ISSSTE; 0.4 million by IMSS/COPLAMAR; and 1.7 million by others (PEMEX, military, etc.) 4. Different studies around the world, and in countries similar to Mexico, have shown a pattern of perceived health needs and possible ways to meet them. In the Mexican case, and based on the above information, we may say that: Out of 1,000 Mexicans: 250 h.ave health problems requiring some type of care: about 188 sought (and obtained) some type of care; about 160 can be cared for a health auxiliary; about 50 can be cared for a nurse; about 40 require care by a medical doctor; and about 2 need to be hospitalized 5. The 188 persons, present with problems that can be easily identified, can be cared for by health auxiliaries for which there are safe, effective and standardizable actions, i.e., that can be performed by well trained health auxiliaries. Examples: diagnosis of diarrhea and administration of oral rehydration; and diagnosis of scabiosis and administration of benzyl benzoate together with recommendations on personal hygiene, clothes washing, bed, and house cleaning. 6. The !0 persons, present with health problems requiring greater diagnostic judgement, can be cared for by a nurse for which there are applications of safe, effective, but not standardizable actions, i.e., professional knowledge is needed to decide what should be the best course of action among several  - 62 - ANNEX 4 Attachment 1 Page 3 of 4 alternatives. Example: a person with a respiratory infection that did not improve after three days of home care with plenty of liquids, aspirin and adequate rest. The nurse might decide to administer an antibiotic and monitor the person's temperature, respiratory frequency, etc., for two or three days, and then decide whether to continue home care or refer the person to a physician. 7. The 40 persons, present with health problems requiring more complex differentiation (differential diagnosis) and thus, greater clinical skills, lab examinations, drugs, diets, or additional procedures, need to be cared for by a doctor. These are non-delegable interventions because they are not always safe nor effective, and require professional expertise and responsibility. 8. The 2 persons, who need to be admitted to a hospital, require constant bedside care (observation, clinical, surgical procedures) that can only be applied in a hospital setting. These interventions also require professional judgment to reduce and monitor risks of secondary effects, and to increase the probability of returning the person to an optimal health status. Selection of "Packages" of Basic Health Activities 9. A "package" of basic health activities must contain the most essential interventions that can be defined through the following procedure: (a) identifying the 5-10 most important health problems (highest prevalence or incidence) in each of the following population age groups: children under 6 years of age; children 6-14 years of age; adults 15 and more years old; and pregnant women (b) listing the core actions for solving each one of the h.ealth problems identified as the most important; (c) selecting and classifying actions according to criteria of safety, effectiveness, and standardization; (d) Grouping the classified actions into th-to categories: category I: those safe, effective, and standardizable;  - 63 - ANNEX 4 Attachment 1 Page 4 of 4 category II: those safe, effective but not standardizable; and category III: the remaining ones; and (e) each category forms a "package" of health activities that will be the core of health services to be delivered at home, in ambulatory or inpatient facilities for each population group defined in 9 (a) above. 10. The following example shows the actions proposed and selected according to criteria of safety (s), effectiveness (e), and standardization (st): MEASLES: Morbidity rate of 11 x 10,000 per year. ACTIONS: Vaccination (s, e, st) isolation (s, e, st) bed rest (s, e, st) aspirin administration (s, e, st) liquids administration (s, e, st) calamine lotion or starch applications (s, e, St) antibiotics for bacterial complications (s, e) steroids for neurological complications (e) sedatives for neurologic complications (e) tracheotomy for savere respiratory impairment (e) referral (s, e, st) 11. All (s, e, st) actions can be done at home by a health auxiliary, whereas those with other combinations (s, e), (e) etc., can only be done at health facilities (health post, center, hospital) by nurses and/or doctors. 12. The group of (s, e, st) actions, whether promotive, protective, preventive, curative or rehabilitative, form a "package" of home health activities. The group (s, e) actions form a "package" for delivery at health posts, and the rest form a package for health center or hospital delivery.  - 64 - ANNEX 4 Attachment 2 Page 1 of 6 MEXICO BASIC HEALTH CARE PROJECT 1. The primary purpose of PASSPA is to improve the quality and quantity of basic health care services offered to uninsured populations. Nutrition is an integral part of these services and would be conducted within the structure of the health network and food assistance program. The nutrition program within PASSPA would include: growth monitoring, nutrition education, micronutrient distribution, and community activities. Food assistance would be financed by PRONASOL and delivered through CONASUPO/DICCOJSA stores. Beneficiaries of food distribution would be selected by the health network according to biological and nutritional risk, and would receive a ration card, or any other mechanism, redeemable for a basic basket of food, available through CONASUPO/DICCONSA stores and/or private retail outlets. 2. To achieve PASSPA objectives, food assistance would target pregnant and lactating women, and children under age five who show signs of first-degree malnutrition or who are not thriving. The nutrition program would attempt to identify, correct, and prevent malnutrition among the poor. As the majority of nutritional needs surface at the community level, this component would focus on the needs of the community and on the concept of preventing malnutrition. The attached chart (see Chart 1), Implementation of Nutrition Program, provides more detailed information on the nutrition activities and operational mechanisms to take place. As these nutrition interventions would be an integral part of the basic health care program, supervision and evaluation would be done as part of this program. Supervision teams would receive training in nutrition to enable them to effectively supervise the nutrition program. 3. A series of six basic tasks would be carried out by the "Auxiliares Rurales de Salvd" and health staff located in rural health posts, health units, or health centers: (a) Monitoring of nutrition status of pregnant and lactating women and growth monitoring for children under five years of age; (b) Provision of nutrition, infant feeding, and sanitary education; (c) Promotion of food production to increase and diversify the family diet;  - 65 - ANNEX 4 Attachment 2 Page 2 of 6 (d) Promotion of community activities such as improvements of basic sanitation, housing, and community services; (e) Distribution of micronutrients to pregnant and lactating women and to children; and (f) Food assistance for beneficiaries identified by the health structure in the form of coupons, vouchers, or ration cards redeemable for a basic basket available through 35ONASUPO/DICCONSA stores and/or private retail outlets- . 4. Mechanisms for Food Supplementation: Ration cards or food coupons would be redeemable for a defined basket of foods (according to regional preference and food availability) at Dicconsa rural stores or private retail outlets. The exact mechanism for distribution and the items to be subsidized are currently under discussion. Likewise, descriptions and drafts of agreements between the participating agencies, (i.e., SSA, CONASUPO/DICCONSA, SPP/PRONASOL, and the state governments) would be reviewed jointly with the Bank by December 31, 1990. 5. The Ration: The SSA-Maternal Child Health Department has suggested that a Basic Food Basket be distributed twice monthly, which is designed to provide about 25 percent of the calorie-protein needs for a family of five: Food Amt Cost (Mex Ps) Corn Flour 6 kgs 3990 Frijol 3 kgs 2550 Rice 1 kg 800 Oil 1/2 ltr 1115 8455 ps 3.13 (US$)X2= US$6.26/mo. US$75.12 per year 6. Food Costs The cost of providing this basket every 15 days to pregnant or lactating women and children under age five 3/ Both the mechanism and the ration could vary from state to state and would be analyzed in pilot programs during to course of the project. Likewise, targeted supplementation to MCH beneficiaries, e.g., weaning food, would be piloted to determine the extent of its impact.  - 66 - ANNEX 4 Attachment 2 Page 3 of 6 in nutritional risk is estimated US$96 million between 1990 and 1994. Of an estimated 13 million persons in the basic health target population in the four states and the Federal District, nutrition assistance in the first year would target 452,000 familits with malnourished mothers or children. The crude birth rate (CBR) of 30/1000 was used to calculate pregnant women, and the figure for malnourished children was arrived at by assuming 12 percent of the target population to be children under the age of five. The malnutrition rate is estimated to be 40 percent, and it is assumed that the prevalence of malnutrition would decline in proportion to the percentage of people who improve their nutritional status though this food assistance. Families are assumed to have 1.7 members eligible for this assistance. 7. Of the total potential cost of feeding 452,000 families the first year, only 20 percent would be realized, at a cost of US$6.7 million. Each year, a recovery rate of 50 percent is expected, as the estimated time per beneficiary in the program is 12 months. In 1991, 430,000 families would be targeted, and 40 percent of those would be reached at a cost of US$16 million. In 1992, target population would be 410,000 families with a coverage rate of 60% and a cost of US$23 million. In 1993, target population would be 354,000 families, and the coverage rate would be estimated an 80 percent, at a cost of US$22.5 million. The final year of the project 100 percent coverage is expected for a total of 362,000 families costing about US$27 million. Project total cost would be near US$96 million. 8. Financing: The current nutrition program receives food donations, which would be expected to continue throughout the life of the project. Nevertheless, to ensure the availability of food, PRONASOL has agreed to finance food delivery through rural Dicconsa stores for access by the beneficiaries in rural areas. 9. Community Participation: Although there is no cost recovery for food aid, women's participation would be required for nutrition education sessions, the establishment of family gardens, and other community activities developed by the health network. 10. Pilot Programs: Possible alternative mechanisms for food supply, such as coupons redeemable for an assortment of food rather than a defined basket, would be tried on a pilot basis in each of the four states. In Oaxaca, the use of soya-based products would be introduced. The possibility of providing weaning food supplements would also be analyzed. Because infants often do not receive, and cannot sufficiently benefit from, the  - 67 - ANNEX 4 Attacjge~nt I Page 4 of 6 calories provided from excessively bulky foods such as corn and beans, a possible weaning ration could consist of: Cost/kg Weaning Food (Pre-packaged) 1280 Nilk Powder 1000 Sugar 1155 3435 ps 1.27 US$/1o. 11. The alternative to providing this package would be to promote the preparation of weaning food by participating mothers, supervised by the health peraonnel, and using raw materials available in the community. In such a pilot program, organizations, such as DIF, which are currently involved in similar community activities could play strong roles. Each state would develop a plan on the pilot nutrition activities with the SSA-Maternal and Child Health Department and present it to the Bank by December 31, 1990.  -68 - ANNEX4 Attachment 2 Page 5 of 6 MEXICO BASIC HEALTH CAURE PROJECT Table 1: ESTIMATED TARGET POPULATION FOR NUTRMTION PROGRAM By Stafe and by Year YEAR OAXACA CHAPIAS GUERRERO IDALGO FEDERAL TOTAL DISTRICT 1989 119,310 181,253 160,583 101,764 206,062 768,972 1990 120,107 186,183 165,115 104,300 210,802 786,507 1991 120,858 191,248 169,728 106,900 215,650 804,384 1992 121,5S9 196,449 174,421 109,565 220,610 822,604 1993 122,210 201,793 179,195 112,297 225,684 841,179 1994 122,807 207,282 184,051 115,096 230,875 860,111  MEXICO BASIC HEALTH CARE PROJECT Chart 1: IMPLEMENTATION OF NUTRITION PROGRAM ACTIVITY MECHANISli PERSON PLACE FREQENCY TARGET EQUIPMENT ACTION OR RESPONSIBLE POPULATION NEEDS REFERRAL 1. Nutrition *Meetings a. Volunteer Case de Salud 2 X Mo. - Women of * Educational Distribute Education e Demonstrations b. Social Worker C.S.R.D./C. Fertile Age Materials Ration Cards *Outreach c. Nurse C.S.U. * Food distribution 2. Growth e Weighing and a. Volunteer Casa do Salud 1 X Mo. - Children < 6 * Scales Date to be Monitoring Measuring b. Social Worker C.S.R.D./C. - Pregnant & * Tape Mess. Incorporated o Outreach c. Nurse C.S.U. Lactating * Arm Bands into MIS HP * Compiling Data women * Info.syst. Info syst. e Directing Data forms I to C.S.R./U. 3. Distribution e Req. Clinic a. Volunteer Casa de Salud 2 X Mo. - Pregnant & * Micronutrient of Micro- Visits b. Social Worker C.S.R.D./C. Lactating Packets nutrients c. Nurse C.S.U. Womn - Preschoolers 4. Selection of * Some degree of a. Volunteer Case do Salud 1 x Mo. - Children < 6 * MClH Cards redeemed MC"I 8enefic. malnutrition b. Social Worker C.S.R.D./C. During - Pregnant & Ration Card at stores for Food or weight loss c. Nurse C.S.U. Superv. Lactating * Referral to Assistance d. MD/Pasante visitS Women MD when severe S. Promotion of * Planting a. Volunteer Casa de Salud Seasonal - All families * Seeds Fatmly garden b. Community C.S.R.D./C. Monthly in community Gardens * Talks C.S.U. 6. Organization e Selection of a. Volunteer Casa de Salud Monthly - All falbilies * Raw materials of Community Members b. Community C.S.R.D./C. In coamunity Committees e Plan. Act. C.S.U. Note: CSRD = Entro do Salud Rural Disperso **ort CSRC = Entro de Salud Rural Concentrado Al rt CSU = Entro do Salud Urbana t g (DC OI-%c 0* t-irtX  -70- ANNEX S Page 1 of 2 MECo BASIC HEALTH CARE PROJECT Table 1: PROJECT AREAS Total Population, Target Population, Juisdictions, Municipalities, and Localities OAXACA CHIAPAS GUERRERO HIDALGO FEDERAL PROJECT DISTRICT AREA p . ....... .' . '. Target Population 2.0 3.0 2.6 1.7 3.4 12.7 (million) Jurisdictions 6 8 7 10 16 47 Priority Jurisdictions 3 3 3 3 3 15 Municipalities 570 110 75 84 16 855 Localities 4,529 15,494 4,409 2,418 n.a. 26,850 under 2,500 HAB. 4,428 15,352 4,290 2,303 na. 26,373 2,500 - 15,000 HAB. 70 120 112 96 n.a. 398 under 15,000 HAB. 31 22 7 19 n.a. 79 Urba Population(%) 40 43 42 21 100 - Rural Ppulation(%) 60 57 58 79 0 - Source: SSA and State Health Services, November 1989. Note: Differences due to rounding.  -71- AN=E f Page 2 of 2 MEXICO BASIC HEALTH CARE P_AOJECT Table 2: TARGET POPULATION AND Plj'.PrTt JURISDICTIONS By State STATE TARGET POPULATION HATi jPRISDICTIONS a/ (minlion) CHIAPAS 3.0 8 (3) GUERRERO 2.6 7 (3) HDALGO 1.7 10 (3) OAXACA 2.0 6 (3) FEDERAL DISTRICr 3.4 16 (3) Source: SSA and mission estimats, April 1990. ai: Figues in p refer to the number of priority jurisdictions.  - 72 - ANNEX 6 uvaco Page 1 of 3 BASIC HEALTH CARE PROJECT Table 1: CONSTRUCTION REQUIREMENTS AND FACiLIY TYPE By State and By Year (US$ Mion) ---- COSTS ---- PROF YEAR I YEAR 2 YEAR 3 YEAR 4 YEAR S No. TOT WKS EQP SERV No. Cost No. Cost No. Cost No. Cost TOTAL 1436. 784 ,** 22.1 5.3 439 219 5.W 25.6 346