Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 4973 l-DO PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$30.5 MILLION TO THE DOMINICAN REPUBLIC FOR A HEALTH SECTOR REFORM APL 2 (PARSS2) PROJECT Public Disclosure Authorized August 20,2009 This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective: 06/17/2009 -Appraisal stage) Currency Unit = Dominican Pesos RD$35.85 = US$1 US$O.O28 = RD$1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AAA Analytic and Advisory Activities ADOPEM Dominican Association for Women Development (Asociacidn Dominicana para el Desarrollo de la Mujer) AIDS Acquired Immune Deficiency Syndrome APL Adaptable Program Loan ARCS Audit Report Compliance System BCG Bacillus Calmette-GuCrin (or Bacille Calmette-GuCrin, BCG) Tuberculosis Vaccine BCRD Central Bank of the Dominican Republic BHD Banco Hipotecario Dominicano BMT Monthly Based Transfer CCT Conditional Cash Transfer CERSS Executive Commission for Health Sector Reform (Comisidn Ejecutivapara la Reforma del Sector Salud) CESDEM Center for Social and Demographic Studies (Centro de Estudios Sociales y Demogrdficos) CMU Country Management Unit COPRESIDA Presidential Commission for Fight Against HIV/AIDS (Consejo Presidencial del SIDA) CPIA Country Policy and Institutional Assessment CPS Country Partnership Strategy CR Contributory Regime cv Curriculum Vitae DA Disbursement Arrangements DDEI Directorate of Institutional Strategic Development (Direccidn de Desarrollo Estratbgico Institucional -DDEI) at SESPAS DGA General Directorate of Customs (Direccidn General de Aduanas) DGII General Directorate of Internal Taxes (Direccidn General de Impuestos Internos) DHS Demographic Health Survey DIGECITSS General Directorate for the Control of Sexually Transmitted Infections and AIDS (Direccidn General de Control de Infecciones de Transmisidn Sexual) DPL ' Development Programmatic Loan DPT Diphtheria, pertussis, tetanus ENDESA National Demographic and Health Survey (Encuesta Nacional de Demografia y Salud) FHF Family Health File (Ficha Familiar de Salud) FHI Family Health Insurance (Seguro Familiar de Salud - SFS) FM Financial Management FMA Financial Management Assessment FY Fiscal Year GAIN Global Alliance for Improved Nutrition FOR OFFICIAL USE ONLY GDP Gross Domestic Product GEF Global Environment Facility GODR Government of Dominican Republic HIV/AIDS Human Immunodeficiency VirudAcquired Immunodeficiency Syndrome HMMIS Health Management Monitoring and Information System HRS Human Resources Strategy IADB Inter-American Development Bank IBRD International Bank for Reconstructionand Development (World Bank) ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IEG Independent Evaluation Group IFC International Finance Corporation IFMIS Country Integrated Financial Management System IFRs Interim Unaudited Financial Reports IMF International Monetary Fund IP ImplementationProgress IRR Internal Rate ofReturn IS Information System ISAs International Standards on Auditing ISDS Integrated Safeguards Datasheet ISR Implementation Status and Results IT Information technology IUFR Interim Unaudited Financial Reports JICA Japanese International Cooperation Agency LCSFM Financial Management, Latin American and Caribbean Region LCSHE Unit of Education, Latin American and the Caribbean Division LCSHH Unit of Health, Nutrition and Population of the Latin American and the Caribbean Region LCSHS Unit of Social Protection of the Latin America and the Caribbean Region LCSPT Procurement Unit ofthe Latin America and the Caribbean Region LEGLA Legal Department for the Latin American and the Caribbean Division M&E Monitoring and Evaluation M&I Monitoring and Information MD Medical doctor MFT Monthly Fixed Tranche MFTm Fixed based transfer for the “m” month MOEPD Ministry ofEconomy, Planning and Development (Secretaria de Estado de Economia, P1anifkacid.n y Desarrollo - SEEPyD) MOF Ministry of Finance MOH Ministry of Health (Secretaria de Estado de Salud Pziblica y Asistencia Socia-SESPAS) MS Moderately Satisfactory Mu Moderately Unsatisfactory NCB National Competitive Bidding NCI Number of Complied Indicators NGOs Non-Governmental Organization NHI National Health Insurance (Seguro Nacional de Salud - SENASA) NHIA National Health Insurance Agency NPV Net present value NSSC National Social Security Council OM Operational Manual OP Operational Policies OPBP Operational PoliciesBank Procedures PAD Project Appraisal Document PAHO Pan American Health Organization PARSS Health Sector Reform Project (Proyecto de Apoyo a la Reforma del Sector Salud - PARSS PARSS 1 Phase 1 -Health Sector Reform Project (Proyecto de Apoyo a la Reforma del Sector Salud) This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PARSS2 Phase 2 - Health Sector Reform Project (Proyecto de Apoyo a la Reforma del Sector Salud) PASS First Performance and Accountability of Social Sectors DPL PCN Project Concept Note PCU Project Coordination Unit PD Provincial Health Directorates PDO Project Development Objective PEFA Project Expenditures and Financial Accountability PFM Public Financial Management PIC Project Implementation Committee PID Project Information Document PIU Project Implementation Unit PMTISS Multi-phase program ofinstitutional transformation in the health sector (Programa Multifase de Transformacidn Institucional del Sector Salud) (IDB Project) POA Annual Operational Plan (Plan Operativo Anual) P-Q Prequalification PREM Poverty Reduction and Economic Management PRIMA Portfolio and Risk Management PROMESE Program for the Supply ofEssential Medications (Programa de Medicamentos Esenciales) PROMESEKAL Program for the Supply ofEssential Medications and Office for Logistical Support (Programa de Medicamentos Esenciales y Central de Abastecimiento y Logistica) PSR Partially Subsidized Regime QCBS Quality- and Cost-Based Selection RACM Results-adjusted Capitation Module RBFC Results Based Financing Committee (Comite' de Financiamiento por Resultados) RHS Regional Health Services. The public sector networks ofhealth care providers that currently belong to the MOHbut are in the process ofdecentralization. RMI Results Monitoring Indicator SESPAS Ministry of Health (Secretaria de Estado de SaIud Pliblica y Asistencia Social) SHLR Superintendence for Health and Labor Risks (SISALRIL) SIFMUN Municipal Financial-Administrative Integrated System (Sistema Integrado de Finanzas Municipales) SIGEF Integrated Financial Management System (Sistema Integrado de Gestidn Financiera) SIL Specific Investment Loan SIUBEN Information System and Beneficiaries Registry ofthe Cabinet of Socio-Policy Coordination (Sistema de Informacidn y Registro Unico de Benejkiarios) SOE Statements ofExpenditure SR Subsidized Regime SST Social Security Treasury TA Technical Assistance UEPEX External Project Execution Units (Unidades Ejecutoras de Pre'stamos Externos) UNIPAGO Firm processing the Database ofthe Dominican Social Security System WB World Bank or IBRD - International Bank for Reconstruction and Development Vice President: Pamela Cox Country Director: Yvonne Tsikata Country Manager Roberto Senderowitsch Sector Manager: Keith Hansen Task Team Leader: Fernando Montenegro Torres DOMINICAN REPUBLIC Health Sector Reform APL 2 (PARSS2) CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE .............................................................................. 1 A . Country and sector issues .................................................................................................................... 1 B. Rationale for Bank involvement .......................................................................................................... 2 C . Higher level objectives to which the project contributes .................................................................... 4 I1. PROJECT DESCRIPTION.............................................................................................................. 4 A . Lending instrument ............................................................................................................................. 4 B. Program objective and Phases ............................................................................................................. 5 C . Project development objective and key indicator ............................................................................... -5 D. Project components ............................................................................................................................ -6 E. Lessons learned and reflected in the project design .......................................................................... 12 F. Alternatives considered and reasons for rejection ............................................................................. 13 I11. IMPLEMENTATION..................................................................................................... ;............... 13 A . Institutional endorsement for introducing results-based financing mechanisms ............................... 13 B. Institutional and implementation