World Bank Document - Documents & Reportsdocuments.worldbank.org/curated/en/741471468052477197/pdf/ICR11270... · MIDAS Integrated Health Care Model (Modelo Integrado de Atención

Document of The World Bank

Report No: ICR00001127

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-70610)

ON A

LOAN

IN THE AMOUNT OF US$350 MILLION TO THE

UNITED MEXICAN STATES

FOR A

THIRD BASIC HEALTH CARE PROJECT (PROCEDES)

June 29, 2010

Human Development Sector Management Unit Colombia and Mexico Country Management Unit Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 29, 2010)

Currency Unit = Mexican Pesos (MXN) 1.00 MXN = US$0.07884 US$1.00 = 12.84 MXN

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

AIDS Acquired Immumodeficiency Syndrome CAUSES Catalogo Único de Servicios Esenciales de Salud COMPRANET Internet Procurement Mechanism CONASIDA National HIV/AIDS Council (Consejo Nacional para Prevención y

Control del SIDA) CONAPO National Population Council (Consejo Nacional de Población) CPS Country Partnership Stragegy DALE Disability-Adjusted Life Expectancy DALYS Disability Adjusted Life Years DGCES Dirección General de Calidad y Educación en Salud DGEC Dirección General de Extensión de Cobertura DGED Dirección General de Evaluación del Desempeño DGEDS Dirección General de Equidad y Desarrollo en Salud DGPLADES Dirección General de Planeación y Desarrollo en Salud DRG Disgnostic – Related Groups EEC Strategy for the Expansion of Health Coverage (Estrategia de Extensión

de Cobertura) ENIGH Mexican Health System Financing (Encuesta Nacional de Ingresos y

Gastos de los Hogares FAEB Basic Education Fund FAETA Technical and Adult Education Fund FAIS Social Infrastructure Fund FAM Multiple Transfer Fund FASP Public Security Fund FASSA Health Services Fund FOROSS Fortalecimiento de la Oferta de Servicios de Salud FORTAMUN Municipal Strengthening Fund (Fondo de Fortalecimeinto Municipal) FUNSALUD Mexican Health Foundation (Fundación Mexicana para la Salud) GOM Government of Mexico HCP Health Care Providers HIV Human Immunodeficiency Virus ICB International Competitive Bidding INEGI National Institute of Statistics, Geography and Data Information (Instituto

Nacional de Estadística y Geografía) INI National Indigenous Institute (Instituto Nacional Indigenista) IMSS Mexican Social Security Institute (Instituto Mexicano del Seguro Social) IMSS-SOL Mexican Social Security Institute-Solidarity Program (Instituto Mexicano

del Seguro Social-Programa de Solidaridad)

ISSSTE Social Security Institute for Public Employees (Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado)

MASPA Health Services Model for the Uninsured Population MCH Maternal and Child Health Services MIS Management Information System MIDAS Integrated Health Care Model (Modelo Integrado de Atención a la Salud) NAFIN National Development Banking Institution (Nacional Financiera) OPD Decentralized Public Agencies (Organismos Públicos Descentralizados) PABSS Package of Essential Health Services PAHO Pan American Health Organization PAC Second Basic Health Care Project (Programa de Ampliación de

Cobertura) PAZI Program for the Support to Indigenous People PCE Mobile Surgery Program PCU Project Coordination Unit PEMEX Mexican Petroleum Company (Petroleos Mexicanos) PIAJA Intersectoral Program for Peasant Workers PMIE Plan Maestro de Infraestructura y Equipamiento PMIFS Plan Maestro de Infraestructura Física en Salud PROCEDES Program for Quality, Equity and Development in Health (Programa de

Calidad Equidad y Desarrollo en Salud) PROGRESA Education, Health and Nutrition Program (Programa de Educación, Salud

y Alimentación) PROMAP Public Administration Modernization Program (Programa de

Modernización de la Administración Pública) PRONAFIDE National Investment Plan for Development 1997-2000 (Programa

Nacional de Financiamiento del Desarrollo 1997-2000) QUEJANET Internet System for Public Complaints about Health Services REDSSA SSA’S Management Information Network (Red Global de

Comunicaciones de Voz y Datos de la Secretaria de Salud) REPSS Regímenes Estatales de Protección Social en Salud SECODAM Federal Secretariat for Control and Administrative Development

(Secretaría de Contraloría y Desarrollo Administrativo) SEMARNAT Federal Secretariat of Environment and Natural Resources (Secretaría de

Medio Ambiente y Recursos Naturales) SES Servicios Estatales de Salud SESA State Health Secretariat (Servicios Estatales de Salud) SHCP Federal Secretariat (Secretaria de Hacienda y Crédito Público) SIA Administrative Information System (Sistema Integral de Administración) SISPA Uninsured Population Health Information System (Sistema de

Información de la Secretaria de Salud para Población Abierta del IMSS) SPSS Social Protection System in Health (Sistema de Protección Social en

Salud) SSA Federal Health Secretariat (Secretaria de Salud) STDs Sexually Transmitted Diseases STIs Sexually Transmitted Infections SUIVE Epidemiological Surveillance System SWAp Sector-Wide Approach TOR Terms of Reference UNEMES Unidades de Especialización Médica Ambulatoria WHO World Health Organization (Organización Mundial de la Salud)

Vice President:Pamela Cox

Country Director:Gloria M. Grandolini

Sector Manager:Keith Hansen

Project Team Leader:Claudia Macias

ICR Team Leader:Claudia Macias

ICR Primary Author:Suzana de Campos Abbott

MEXICO Third Basic Health Care Project (PROCEDES)

CONTENTS Data Sheet A. Basic Information

B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design.........................................................12. Key Factors Affecting Implementation and Outcomes.......................................................163. Assessment of Outcomes.................................................................................................254. Assessment of Risk to Development Outcome..................................................................415. Assessment of Bank and Borrower Performance...............................................................426. Lessons Learned.............................................................................................................467. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........................49Annex 1. Project Costs and Financing..................................................................................50Annex 2. Outputs by Component.........................................................................................51Annex 3. Economic and Financial Analysis..........................................................................68Annex 4. Bank Lending and Implementation Support/Supervision Processes..........................69Annex 5. Beneficiary Survey Results...................................................................................71Annex 6. Stakeholder Workshop Report and Results............................................................72Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR.................................73Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders...................................81Annex 9. List of Supporting Documents..............................................................................82Annex 10: Original Project Components and Project Monitoring Indicators as described and presented in the PAD (Original Project Objectives and Description)......................................83Annex 11: Project Amendments and Restructurings.............................................................91Annex 12: Revised Project Description Following First Project Restructuring.......................92Annex 13: Revised Project Objectives and Description following Second Project Restructuring9Annex 14: Revised Project Monitoring Indicators Following Second Project Restructuring....97Annex 15: Revised Project Monitoring Indicators Following December 18, 2009 Revision....99Annex 16: Chronology of Implementation Experience.......................................................102Annex 17: Calculation for Outcome Rating for Formally Revised Project...........................107Annex 18: Value-Added Activities supported by the World Bank in Mexico’ Health Sector in the context of the Third Basic Health Care Project..............................................................108MAP ...............................................................................................................................112

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A. Basic Information

Country: Mexico Project Name: MX: III BASIC HEALTH CARE PROJECT

Project ID: P066321 L/C/TF Number(s): IBRD-70610

ICR Date: 06/29/2010 ICR Type: Core ICR

Lending Instrument: SIL Borrower: SHCP

Original Total Commitment:

USD 350.0M Disbursed Amount: USD 350.0M

Revised Amount: USD 350.0M

Environmental Category: B

Implementing Agencies: Secretariat of Health

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 03/29/2000 Effectiveness: 11/11/2002

Appraisal: 04/30/2001 Restructuring(s):

09/13/2004 03/18/2005 07/11/2006 12/18/2009

Approval: 06/21/2001 Mid-term Review: 09/15/2006 05/18/2006

Closing: 06/30/2007 12/31/2009 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Low or Negligible

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Unsatisfactory Government: Satisfactory

Quality of Supervision: Moderately SatisfactoryImplementing Agency/Agencies:

Moderately Satisfactory

Overall Bank Performance:

Moderately SatisfactoryOverall Borrower Performance:


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C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:


D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Central government administration 2 2

Health 98 98

Theme Code (as % of total Bank financing)

Access to urban services and housing 13

Decentralization 13 13

Health system performance 25 25

Indigenous peoples 24 24

Rural services and infrastructure 25 38 E. Bank Staff

Positions At ICR At Approval

Vice President: Pamela Cox David de Ferranti

Country Director: David N. Sislen Olivier Lafourcade

Sector Manager: Keith E. Hansen Charles C. Griffin

Project Team Leader: Claudia Macias Patricio V. Marquez

ICR Team Leader: Claudia Macias

ICR Primary Author: Suzana Nagele de Campos Abbott F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) - Achieve equity in health services for the people living in underserved rural and urban areas of Mexico;

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- Increase access, quality, and equity of health services provided to indigenous populations, and quality of health services provided to people living in municipalities with the lowest national welfare indexes; - Support institutional development of the Federal Secretariat of Health (SSA), State Health Secretariats (SESAs), Health Jurisdictions, local health agencies, and service providers; and - Develop innovative health prevention and care models in order to reduce the health gap for underserved and vulnerable populations. Revised Project Development Objectives (as approved by original approving authority) The Project supports the Borrower in the implementation of the Sistema de Proteccion Social en Salud (SPSS), specifically, to improve access of poor people eligible for enrollment or enrolled in the subsidized regime of the Seguro Popular to the insurance's benefit package, restructure and develop State Health Systems, and strengthen the Federal Ministry of Health in its role as the steward of the SPSS. (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Individuals entitled and enrolled in the subsidized regime (RS) of Seguro Popular (SP) as a proportion of all individuals entitled to be enrolled in the RS of SP

Value quantitative or Qualitative)

26% 60% 65% 70%

Date achieved 06/30/2005 06/30/2008 12/31/2009 12/31/2009 Comments (incl. % achievement)

Indicator 2 : Indigenous entitled and enrolled in the RS of SP as a proportion of all indigenous entitled to be enrolled in the RS of SP


6.1% 30% 30.6% 21.3%


Affiliation of indigenous achieved at the end of the project was lower than target for the end of the project

Indicator 3 : Health facilities accredited with the SPSS Value quantitative or Qualitative)

10.7% 40% 60% 62.4%


The number of health facilities accredited surpassed revised target for the end of the project

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Indicator 4 : No. of federal entities that have established a REPSS that operates with a financial management system that allows the strategic purchase of hospital care


0 16 16 1


Progress towards the objectives of the restructuring of health services was the weakest overall

Indicator 5 : Progress in restructuring SES is monitored in all states and an annual report prepared and disseminated


Information not systematically collected

Annual report disseminated

Partially achieved

Date achieved 06/30/2005 12/31/2008 12/31/2009 Comments (incl. % achievement)

Balance score card to monitor progress in organizational restructuring towards the separation of functions was developed and questionnaire applied in 2008

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Staff recruited and contracted under innovative HR management models in Highly Specialized Hospitals as a proportion of the total number of staff contracted in Highly Specialized Hospitals

Value (quantitative or Qualitative)

0% 100% Partially achieved


Models were developed but were not implemented due to organizational restructuring of the Federal Secretariat of Health

Indicator 2 : Number of states that report the health status of their population by ethnicity and native language


6 States 15 States Partially achieved


As of December 2009, the Ministry of Health has the information systems in place that captures this information

Indicator 3 : Monitoring and assessment of the efficiency and effectiveness of the FOROSS strategy through the evaluation of the Master Plan for Infrastructure

Value (quantitative

Evaluation completed

Partially achieved

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or Qualitative) before the project's closing date

Date achieved 12/31/2009 12/31/2009 Comments (incl. % achievement)

Desk review with limited scope was carried out

Indicator 4 : Number of patients with prescriptions fully and timely filled Value (quantitative or Qualitative)

85% 88% 89% 91%


Project ambitious target for the end of the project was met and slightly surpassed

Indicator 5 : Medicines supplied to individuals enrolled in the SR of SP as a proportion of all medicines prescribed for individuals enrolled in the RS of SP.


85% 92%

Date achieved 06/30/2005 12/31/2008 Comments (incl. % achievement)

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 12/19/2001 Satisfactory Satisfactory 0.00 2 06/12/2002 Satisfactory Satisfactory 0.00 3 12/11/2002 Satisfactory Satisfactory 13.50 4 06/16/2003 Satisfactory Unsatisfactory 22.27 5 12/09/2003 Satisfactory Unsatisfactory 22.27 6 06/03/2004 Satisfactory Unsatisfactory 28.83 7 06/23/2004 Satisfactory Unsatisfactory 29.51 8 08/25/2004 Satisfactory Unsatisfactory 29.51 9 10/08/2004 Satisfactory Unsatisfactory 30.78

10 12/09/2004 Satisfactory Unsatisfactory 30.78 11 04/17/2005 Unsatisfactory Unsatisfactory 31.93 12 05/29/2006 Unsatisfactory Unsatisfactory 83.98 13 06/29/2006 Unsatisfactory Unsatisfactory 84.26 14 12/19/2006 Moderately Satisfactory Moderately Satisfactory 163.35 15 06/09/2007 Moderately Satisfactory Moderately Satisfactory 173.83 16 12/20/2007 Moderately Satisfactory Moderately Satisfactory 220.05 17 06/26/2008 Moderately Satisfactory Moderately Satisfactory 247.80

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18 12/12/2008 Moderately Satisfactory Moderately Satisfactory 321.72 19 06/23/2009 Moderately Satisfactory Moderately Satisfactory 350.00

20 12/29/2009 Moderately SatisfactoryModerately

Unsatisfactory 350.00

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

09/13/2004 N S U 30.45

Align project activities with changes in the General Health Law expenditures under 1st amendment while 2nd restructuring was being prepared

03/18/2005 N S U 31.93

Allow disbursement of expenditures under 1st amendment while 2nd restructuring prepared

07/11/2006 Y U U 84.26

12/18/2009 MS MS 350.00 Support to address A H1/N1 Pandemic

If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Unsatisfactory Against Formally Revised PDO/Targets Moderately Satisfactory Overall (weighted) rating Moderately Satisfactory

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal In the decades before appraisal of the Third Basic Health Care Project (PROCEDES, the Project), Mexico had witnessed significant improvements in the health status of its population as a result of better access to basic services and public health measures. Typical indicators of health status such as life expectancy, infant mortality, mortality of children under five, mortality from pneumonia and diarrhea, maternal mortality, vaccine preventable diseases and the total fertility rate had all shown dramatic improvement by the year 2000. Like other middle-income countries, Mexico was undergoing an epidemiological transition. While childhood diseases, respiratory diseases and malnutrition continued to be significant causes of illness and death, cardiovascular diseases, cancer and injuries due to accidents and violence were becoming responsible for an increasing number of illnesses and deaths. HIV/AIDS prevalence had increased in recent years, but was still concentrated among those with high-risk behaviors and in marginal urban areas.

The Government of Mexico (GOM) had targeted expanding health services coverage and facilitating access to basic health services among the uninsured poor1 under its 1995-2000 Health Sector Reform Program, supported in part by the Bank-financed Second Basic Health Care Project (PAC).2 During this period, the Government had succeeded in: (i) expanding coverage of basic health services to 10.9 million persons in dispersed rural areas—the PAC alone expanded coverage to 8.1 million persons in 874 municipalities, 96 health jurisdictions and 42,900 rural localities in 19 states; (ii) decentralizing health services delivery for the uninsured population by creating 32 decentralized public agencies (OPDs), which were autonomous, had their own assets, and managed the resources needed to operate the services under the policies set and regulated by the Federal Health Secretariat (SSA); and (iii) targeting women and children under the PAC which resulted in near universal vaccination rates for children, a reduction of childhood morbidity and preventable mortality, and of maternal and peri-natal mortality. Under this Plan, the Government had also: (i) designed and adapted a health care and delivery model for the uninsured population (MASPA) in each participating state according to its local characteristics; (ii) designed a package of Essential Health Services (PABSS) as a universal, minimum, irreducible set of 13 low-cost, high-impact health interventions in response to the health needs in rural areas identified in a national epidemiological survey; (iii) developed a micro-regionalization methodology as a

1 The major pillar of Mexico’s healthcare system is a mandatory social insurance program funded out of contributions from formal sector employees, employers, and the government. The main institutions are the Mexican Social Security Institute (IMSS) and the Social Security Institute for Public Employees (ISSSTE), but the Mexican Petroleum Company (PEMEX), the Federal District Government, the armed forces, the police and others also have their own systems. The remainder of the population, the uninsured, receive healthcare services primarily from a health system under the auspices of the Federal Secretariat of Health. 2 Second Basic Health Care Project, Loan No. 3943-ME for $310.0 million equivalent, approved on September 26, 1995.

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planning and targeting tool for PAC; and (iv) implemented a dual strategy to expand health service coverage: (a) a functional expansion strengthening the existing supply of services by rehabilitating and equipping health units, hiring and training personnel, providing drugs, and reorganizing the delivery of services; and (b) a geographic expansion augmenting the network of services by using mobile units, involving community personnel, and providing radio-communications equipment and logistical support. Despite this progress, however, at the time the Project was appraised, Mexico still faced the following important challenges to improving the quality, equity and efficiency in the delivery of health care services to its population: • Unequal Access to Quality Health Care. While health care coverage had

improved significantly –only 500,000 people living in scattered and rural communities with less than 100 inhabitants remained without access to basic health care services– the accessibility, quality, completeness and regularity of health services varied greatly in practice. This was due in part to: (i) a population distribution in which about 24 million Mexicans lived in 201,138 localities with fewer than 500 people, and more than 151,000 localities with fewer than 100 people; (ii) cultural, ethnic and linguistic barriers, especially in remote areas; (iii) difficulties in attracting health personnel to remote areas; and (iv) the irregular distribution of pharmaceuticals and medical supplies.

• Differences in Health Status. Mexico’s health status indicators masked large variations in health status indicators throughout the country, where the economically better-off groups had health status indicators similar to those of developed countries, while most of the indigenous communities had indicators closer to or even lower than those of low-income countries.

• The Ongoing Challenge of Decentralization. Mexico had been moving toward more autonomy and fiscal responsibility at sub-national levels of government, transferring authority, responsibility, and resources from the Federal Government to the 31 states, the Federal District and thousands of municipalities across the country. The Ramo 33 legislation issued in 1997 transfers resources for supporting social expenditures and for administrative and supervisory responsibilities to state and local governments; for health, Ramo 33 provided resources for the decentralization of health services and helped finance investment and recurrent cost such as salaries of medical personnel and pharmaceutical products. The Social Infrastructure Fund (FAIS) was established to finance the construction and maintenance of basic health infrastructure and of institutional development programs. Important objectives of the 1995-2000 Health Sector Reform Program were to strengthen the SSA’s role in regulating the health sector and establishing national health policies and to decentralize health budgets and delegate authority for service provision and quality of care to the 32 federal entities. States had begun to deconcentrate service provision to sanitary districts and health facilities. Another objective was to introduce the use of a resource-allocation formula that included infant mortality and poverty indicators, although the replacement of

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historical budgets and negotiating ability with the states was limited given the large share of salaries and benefits of personnel within the health budget. The states were not yet benefiting from decentralization as they needed to strengthen the organizational, managerial and operational capacity of their state health secretariats, health districts and service providers.

• Inequitable Distribution of Healthcare Spending. The distribution of health care resources and outcomes varied considerably across delivery institutions (see footnote 1) and states. Per capita health care spending for the uninsured population varied between $19 and $28 per capita, considerably less than the estimated $500 per capita that PEMEX was estimated to spend for its workers. The poorest states, which happened to have the highest burden of disease, receive considerably less resources per capita than the national average, exacerbating the overall inequity in the system. Remote areas continued to be underserved compared with the national average in spite of previous increases in rural health facilities. With an increasing proportion of the working population (covered by IMSS, ISSSTE, PEMEX and other mandatory social insurance programs), and an aging population with a shifting epidemiological profile requiring higher-cost care, inequities in the health care system were expected to increase.

• Inefficiency and Low Quality in Public Health Services. The Government had made progress in improving access, efficiency and quality of public health services and in closing the gap in access to basic health care in rural areas, yet much more needed to be done to achieve better quality and higher levels of efficiency and continue removing operational deficiencies that constrained quality and effectiveness of public health care. Besides the inefficiencies that existed across the public system, a survey taken at the time revealed that approximately 62 percent of the users of the public health system reported low satisfaction with the services provided.

• Weaknesses in Management and Stewardship of the Health System. In spite of previous improvements, the SSA’s role in defining health sector priorities, formulating policies and norms, and regulating health care activity within a decentralized and deconcentrated context required further strengthening. Most state level health institutions, health districts and health care providers lacked the management systems to administer their resources and services effectively; managers were not trained to plan the strategic use of their resources, to use budgets as tools for planning and control, to train and develop their workforce, to manage and use clinical and management information systems and to measure outcomes. A Management Information Network (REDSSA) integrated 32 federal entities and 23 departments providing on-line access to health information systems, but it did not yet reach ambulatory facilities and most of the public hospitals.

Government Strategy for 2001-2006. The Government’s strategy for the health sector prioritized decreasing social and regional inequities and creating an equitable healthcare delivery system with comparable results for all population groups, through the following strategies:

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1) Equity: to decrease social and regional inequities by reducing differences in health status among the Mexican population;

2) Quality: to provide quality health care services to the poor, the disenfranchised and the indigenous populations through improved technical and interpersonal medical care; and

3) Financial Protection: to decrease the financial burden incurred through catastrophic illnesses that exacerbated poverty.

To carry this out, the Government aimed to deepen the decentralization process, delegating more decision-making authority to the states, who would in turn deconcentrate functional and financial authority to health districts and to municipal health authorities and promote collaboration between public and private health providers. It also prioritized modernizing, simplifying and structuring with more transparency the policy-making and regulatory roles of the SSA. Rationale for Bank Assistance. The Project was fully consistent with the World Bank’s Country Assistance Strategy3 which stated that continued support would be provided to the Government for increasing health care access among the poor while reforming and strengthening public health care institutions. It was the logical next step in Bank assistance, following two previous projects in support of Mexico’s program of improving the delivery of basic health care services. At the time of the Project’s appraisal the second project, the PAC was still under implementation and was performing above expectations. In fact, in the end, the PAC’s outcome was rated Highly Satisfactory. The Project also complemented other Bank assistance to Mexico’s health sector4, and more importantly, in support of Mexico’s decentralization efforts under an adjustment operation5 which included a one-time grant to finance training, monitoring, reporting and institutional development to improve the delivery of the basic package of health services.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)Achieve equity in health services for the people living in undeserved rural and urban areas of Mexico; Increase access, quality, and equity of health services provided to indigenous populations, and quality of health services provided to people living in municipalities with the lowest national welfare indexes; Support institutional development of the Federal Secretariat of Health (SSA), State Health Secretariats (SESAs), Health Jurisdictions, local health agencies, and service providers; and Develop innovative health prevention and care models in order to reduce the health gap for underserved and vulnerable populations. The Project’s Development Objectives as presented in the PAD were to: (i) achieve equity in health services for the people living in underserved rural and urban areas of Mexico; (ii) increase access, quality and equity of health services provided to indigenous

3 World Bank Mexico Country Assistance Strategy, Report No. 19289-ME dated May 13, 1999. 4 Health System Reform Technical Assistance Loan, Loan No. 4367-ME for $25 million approved on June 30,1998, and Health System Reform Structural Adjustment Loan, Loan No. 4364-ME for $700 million approved on June 30,1999. 5 Decentralization Adjustment Loan, Loan No. 7002-ME for $600 million approved on December 14, 1999.

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populations, and quality of health services provided to people living in municipalities with the lowest national welfare indexes; (iii) support institutional development of the Federal Secretariat of Health (SSA), State Health Secretariats (SESAs), Health Jurisdictions (Jurisdicciones Sanitarias), local health agencies and service providers; and (iv) develop innovative health prevention and care models in order to reduce the health gap for underserved and vulnerable populations.

The impact of the Project was to be measured according to an extensive list of input, output and outcome indicators as follows (See Annex 10):

• Input Indicators. Improvements in physical structures, equipment, and stocks of medical supplies; development of management information systems; number, quality and presence of appropriately trained health staff; sustainable budgetary allocations.

• Output Indicators. Number of underserved rural and urban poor receiving appropriate, comprehensive and quality health care services provided by trained and motivated health staff on a planned and continuous basis; number of indigenous children (aged 6-24 months) and pregnant women receiving micronutrient supplementation; number of cities receiving HIV/AIDS prevention messages via radio on a regular basis.

• Outcome Indicators. Increased accessibility to quality health care by indigenous populations; increased awareness among the population of HIV/AIDS prevention; and in the medium term, improvement in the health status of the beneficiary population through decreases in morbidity and mortality from vaccine-preventable diseases, respiratory infections, diarrheal diseases, sexually transmitted infections and reproductive health related causes, resulting in an increase life expectancy with less disease and disabilities.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The Project supports the Borrower in the implementation of the Sistema de ProtecciónSocial en Salud (SPSS), specifically, to improve access of poor people eligible for enrollment or enrolled in the subsidized regime of the Seguro Popular to the insurance’s benefit package, restructure and develop State Health Systems, and strengthen the Federal Ministry of Health in its role as the steward of the SPSS. The Seguro Popular is the public health insurance, named after a first pilot Seguro Popular. It constitutes the key pillar of Mexico’s Sistema de Protección Social en Salud serving people without contributory social security. It is the largest health insurance both in terms of coverage and benefits for people lacking contributory social security in Latin America.It is administered by State Health Systems. The Project had three restructurings with loan amendments, one simple loan amendment, and one separate closing date extension (See Annex 11 for a summary of these

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restructurings/amendments). Of these, only the second restructuring (which resulted in the third amendment to the Loan Agreement) modified the Project’s Development Objectives and Key Indicators, as described below. The other restructurings and the loan amendment are described in detail in Sections 1.6 and 2.2.

The first restructuring , a first-order restructuring, was approved by the Bank’s Board on an absence-of-objection basis on September 9, 2004 and resulted in the first amendment to the Loan Agreement, dated September 13, 2004. Although this restructuring contained a significant modification of the Project’s description, it did not change formally the Project’s objectives or revise its key indicators. However, the Loan Amendment did modify the wording of the Project’s first objectives to read: (a) increase the provision and quality of health services for the population of the Borrower living in underserved rural and urban areas; (b) increase the access and quality of health services provided to indigenous populations; (c) support the institutional strengthening of the SSA, the SESA, the Health Jurisdictions, municipal and community health entities and local health service providers; and (d) develop innovative prevention and health care models for the populations mentioned in (a) and (b) above.

The second restructuring, also a first order restructuring, was approved by the Bank’s Board on an absence-of-objection basis on June 29, 2006 and resulted in the third amendment to the Loan Agreement, dated July 11, 2006. This was the most significant of the Project’s restructurings which included comprehensive changes to the Project’s Development Objectives, components, activities and outputs to align the Project fully with the Government’s new reform agenda of the federal and state governments that had been launched in 2002, roughly at the same time the loan had become effective.

Upon assuming office in December 2000, a new Administration had designed and initiated an ambitious reform with the key objective of providing social protection in health for the poor. In 2001 Seguro Popular was piloted in 5 states: Aguascalientes, Campeche, Colima, Jalisco y Tabasco. A number of surveys and studies accompanied the Seguro Popular’s pilot phase and the evidence gathered was an essential element in designing the reform and developing consensus. The legal framework for this reform, the Social Protection System in Health (Sistema de Proteccion Social en Salud, SPSS) was introduced into the General Law in 2003. A central feature of this SPSS reform was the creation of the Seguro Popular, an insurance mechanism for the non-formally employed that was to remove the financial barriers to access a catalog of initially 72, later 76 essential health services.6 The implementation of the SPSS required a fundamental restructuring of the State Health Systems, with core health system functions separately assigned to distinct organizations. The separation of these functions introduced market

6 The catalog of essential health services was increased to 266 interventions at present covering 95 percent of the main illnesses and 100 percent of illnesses treated at the primary level.

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mechanisms into the system with what were expected to be efficiency gains. The ambitious reform program departed fundamentally from past sector priorities; moreover, the reform and the Project’s objectives became incongruent. Consequently, budget allocations for activities eligible for financing under the Project decreased substantially. The first restructuring had attempted to modify the Project’s components to reflect the Government’s new reform priorities and adapt the loan’s design into one of a Sector-Wide Approach designed around the SPSS, but for reasons described in detail in Section 2.2, that restructuring fell short of what would have been required to support fully the Government’s new program through better project implementation.

The revised Project Development Objectives after the second restructuring were to support the Borrower in the implementation of the SPSS, specifically, to improve access of poor people eligible for enrollment or enrolled in the Seguro Popular to the insurance’s benefit package, restructure and develop State Health Systems, and strengthen the Federal Ministry of Health’s role as the steward of the SPSS. This restructuring also modified the Project’s description as presented in Annex 13. Revised Project monitoring indicators and targets were developed jointly by the SSA and the Bank, and presented in a revised Implementation Letter. The indicators agreed for Part A of the Project also served to measure the contribution of the activities financed by the Project prior to the proposed amendment towards the achievement of project objectives. The revised project monitoring indicators after the second restructuring are presented in Annex 14. The Project’s third restructuring (described in Section 1.6) did not modify its Development Objectives or its monitoring indicators, although it did expand the scope of project activities through a new component and expenditure category aimed at supporting the Government’s response to the A/H1N1 influenza pandemic in early 2009.

Finally, on December 18, 2009, the Bank agreed to a modified Implementation Letter for the Project aimed at refining the Project’s Monitoring Matrix7. The changes were aimed at correcting numerators, denominators and baseline values of some indicators as better information had become available. The modifications did not imply the substitution or elimination of any of the original indicators, nor a weakening of the targets. They did, however, include the introduction of a few additional indicators to capture better progress in project implementation. The revised indicators are presented in Annex 15.

1.4 Main Beneficiaries, The Project’s main beneficiaries were expected to be 13.1 million uninsured and underserved poor living in Mexico’s rural and marginal urban areas. Of these, the Project expected to provide services to 10.5 million poor rural residents, (including 7.5 million

7 The Government has not yet countersigned this modified Implementation Letter.

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rural indigenous people) and 2.6 million urban poor residents8. The rural population was considered ethnically, linguistically and culturally diverse, and geographically dispersed, which presented organization, cultural and linguistic challenges. The urban poor were concentrated in marginalized areas where the delivery and financing of service presented different challenges associated with the safety of health facilities and of health personnel and patients, and the intersectoral nature of risk factors such as alcohol abuse, drug addiction and domestic violence that were associated with the rising incidence of non-communicable diseases, injuries, violence and mental disorders9.

The actual selection of states and communities that would be eligible for assistance under the Project was to be made on the basis of criteria that reflected the degree of marginalization, urban deprivation and welfare of those state and communities using different indices based on the national census, and that took into consideration the health needs and the supply of health and other social services in each area, following eligibility criteria established for inclusion under the Project.

By supporting the decentralization of the SSA and its policies and practices of transferring resources and delegating authority to state governments, deconcentrating management authority from the state level to sanitary jurisdictions and assigning more decision making authority to the point of service, the Project was also expected to result in a more efficient system capable of delivering a sustainable and enhanced basic health care package to all of Mexico’s population.

After the Project’s restructurings described above, its beneficiaries became the Seguro Popular’s target beneficiaries, that is the entirety of the Mexican population without contributory social security, i.e., IMSS and ISSSTE. This was expected to represent an approximate 48 million people.

1.5 Original Components (as approved)The Project was to meet its objectives through the implementation of three components, summarized below and described in detail in Annex 10:

Component I: Quality and Equity for Rural and Marginal Urban Areas ($430.9 million project cost, $220.38 loan financing)

8 The Project’s rural areas were to be the PAC project area located in 19 states and expanded geographically to include additional municipalities selected according to welfare indicators located in five new states for a total of 908 municipalities. 9 The Project was to first pilot test a basic urban health services delivery model involving public and private providers in the marginal urban areas of three cities: Tijuana, Acapulco and Valle del Chaco. Continuous monitoring and rapid assessments of these pilot experiences was to allow adjustments before replicating it in the marginal urban areas of an initial set of 50 selected cities.

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Component I aimed to help improve equity and quality of health services by providing rural and marginal urban poor with access to a package of cost-effective health interventions and basic hospital care, including emergency medical services closer to their place of residence. The Project aimed to provide expanded and improved services to those communities for which the PAC program had not yet provided regular access to essential clinical care (functional expansion) and to expand coverage to those that had not yet received any regular services under the PAC program (geographical expansion).

The Project was designed to finance subprojects prepared by health jurisdictions at the state level that met eligibility criteria that included: (i) local level in scope in selected rural and marginal urban areas; (ii) targeting following socio-economic criteria (e.g. unmet social needs); (iii) use of a plan involving existing organizations, including state, health jurisdictions, and non-governmental organizations, as well as existing facilities; (iv) financial and administrative capacity to carry out the subproject; (v) agreement to implement package of essential health services, including public health interventions and basis clinical care, as defined by SSA; (vi) establishment of separate project accounts, accounting and audits; (vii) agreement to assign required resources, including annual funding allocations and for incremental expenditures; and (viii) agreement to monitor implementation according to the Project’s monitoring indicators, and evaluate its impact.

The Project would finance these subprojects prepared by health jurisdictions at the state level that would include: (i) construction, upgrading, expansion and maintenance of health centers and basic community hospitals, following a detailed diagnostic infrastructure review and an assessment of alternative ways of delivering health services (e.g., contracting with other public and non-government health care providers); (ii) basic medical equipment; (iii) essential office equipment; (iv) essential medical supplies, including access to an essential package of pharmaceuticals and micronutrient supplementation for the indigenous children and pregnant women; (v) laboratory equipment; (vi) radio and other communication equipment to improve referrals; (vii) ambulances; (viii) training and supervision; and (ix) on a declining basis, the purchase of health services under agreements and contracts with third party providers.

These subprojects were to focus on: (i) service delivery in rural areas; (ii) service delivery in marginal urban areas; (iii) HIV/AIDS prevention and control; (iv) organization of health care networks; and (v) social communications.

Component II: Efficiency, Institutional Development and Decentralization($70.0 million project cost, $59.47 loan financing)

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Component II of the Project was to support The National Crusade for Improving the Quality of Health Services, launched by SSA in February 2001, through the implementation of strategies and models geared to the development of structures, processes, and skills required to provide quality care, ensure user satisfaction, and support effective organizational performance. It was to focus on leadership, strategic planning and management, clinical and managerial processes, human resources management and management information systems. Specifically, this component was designed to:

(i) Support the modernization and transparency of the decentralized organizational and operational structure by strengthening the managerial capacity of the OPDs;10

(ii) Support the OPDs in deconcentrating managerial functions to the health jurisdictions;

(iii) Strengthen the management capacity of the health jurisdictions; (iv) Improve the management of the inpatient and outpatient services at the

primary and secondary levels of the health care delivery system; (v) Train central and state level personnel in order to achieve efficiency in their

financial and budgetary functions; (vi) Create an indigenous health monitoring system; (vii) Certify the quality of laboratory procedures and HIV testing; and (viii) Support central areas of the SSA in order to achieve transparency and

excellence in their administrative procedures.

Component III: Innovation, Pilot Models, Policy Studies and Impact Evaluation($76.8 million project cost, $66.65 loan financing)

Component III of the Project was designed to test innovative proposals and alternative health care models, carry out policy studies, evaluate the impact of the Project and finance project management, through the implementation of activities in support of: (i) the National Crusade for Improving the Quality of Health Services; (ii) an increase in the quality and equity of health services provided to Indigenous populations; (iii) financial protection initiative the would protect families against financial losses due to illness; and (iv) initiatives to decrease social and regional inequities.

1.6 Revised Components

10 Under the PAC, the authority for managing health care organization and delivery for the uninsured population at the state level was transferred from the SSA to OPDs in the 31 states and the Federal District. The OPDs, which were run by a Board of Directors, were responsible for physical, human, financial and material resources. The Executive Director of the OPDs was the SESA. Health programs were implemented by the 231 health jurisdictions in the country, with the number of jurisdictions in each state varying according to population density and geographical extension.

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The Project’s components were revised through the three restructurings and one loan amendment that were processed throughout implementation.

The Project’s first restructuring and the corresponding amendment to the Loan Agreement aimed to better align the Project’s activities with the provision of the 2003 General Health Law, particularly to support the states in restructuring the organization, financing, and delivery of their health care systems to provide quality services to the beneficiary population under the SPSS. Following a SWAp (Sector-Wide Approach), the restructured project would be geared to support the country-led sector-wide program whose scale was to be greater than that of a traditional project. The key features of the proposed approach were: (i) country ownership –development partners such as the Bank support the government’s own nationwide program and there is a high level of consultation between the government and its partners for program implementation; (ii) a comprehensive sector/program policy framework (i.e., SPSS) that partners agreed with; and (iii) harmonization around country systems as the goal was to help strengthen government institutions at different levels of the system, procedures and staff, rather than establishing parallel systems. The restructuring and corresponding amendment consisted of:

• Adjusting the Project Description and its components as described in Schedule 2 of the Loan Agreement to fully align the Project with the SPSS initiative resulted in the following three components that are spelled out in detail in Annex 12:

¾ Part A: Essential Health Care Services and Institutional Development at the State Level

¾ Part B: Essential Health Care Services and Institutional Development at the National Level

¾ Part C: Pilot Models, Policy Studies, Impact Evaluation and Project Management

• Reallocating loan proceeds to assign $241.3 million to a new disbursement category (Transfers) that would permit the financing of the inputs and activities associated with Health Subprojects implemented by state governments. Although such subprojects were to be financed under the original project as well, they would now receive increased emphasis under the Government’s new strategy as an instrument to support the reorganization and the strengthening of state level health care delivery networks in accordance with the SPSS initiative under mutually-agreed Participation Agreements. This shift reflected the new decentralized approach and a de-emphasis on direct federal interventions. To streamline implementation, this new disbursement category allowed for loan

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financing to reimburse 80 percent of the transfers from the Federal Government to the state for health subprojects. This level of financing was based on reviews which determined that at least 80 percent of the transfers would be expected to be used for items eligible for funding under the restructured project.

• Financing of recurrent expenditures including drugs, vaccines, and other medical supplies, was proposed to promote the comprehensiveness of the Participating Agreements with the states and to streamline implementation. Since the policy on Country Financing Parameters was not in place at the time this restructuring was approved, the financing of recurrent of expenditures that were not “incremental”, on a flat (as opposed to declining) basis required a waiver of the provisions of OMS 1.21. Typical concerns about financing recurrent expenditures at the time (i.e., that the financing would not be sustained when external financing ceased to exist), did not apply in the case of the Project especially in view of the reliability and levels of transfers to finance the Participating Agreements, the small increment in recurrent expenditures relative to the sector budget, along with activities to support enhanced spending efficiency, and a recent concrete example of incremental recurrent spending being sustained following completion of a previous Bank-financed operation in the sector, the PAC.

• Supporting the Government in scaling up the treatment program for HIV/AIDS by financing the purchase of anti-retroviral drugs. As had been shown by international experience, more widespread access to care and treatment in Mexico was seen to offer the potential to attract hundreds of people into health care settings, in which HIV prevention messages could be delivered and reinforced. The availability of HIV treatment would also provide new incentives for HIV testing, which in turn would increase opportunities for counseling on HIV prevention, and help reduce stigma and discrimination that is widespread in most of the Latin American and Caribbean countries.

• Extending the Loan’s Closing Date by 18 months to December 31, 2008 to allow sufficient time for successful project implementation and full disbursement of loan proceeds. The Borrower and the Bank agreed to a specific action plan and aschedule to complete the Project within the requested extension period.

• Increasing procurement prior review thresholds and rules for no-objections, with the redefinition based on the level of risk and procurement capacity of implementing agencies. The Procurement Capacity Assessment of the units that carried out procurement activities concluded that the risk was average. This

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modification would result in fewer prior-reviews for the Project and more post-review to expedite implementation. New thresholds for the Project were to be: works, $5 million; goods, $500,000; consultants (firms), $350,000 and consultants (individuals), $100,000.

• Modifying the administrative and financial arrangements under the Project to reflect disbursements against transfers from the Federal Government to the States. Transfers to the States to strengthen their health care delivery systems would be agreed under Participation Agreements between the SSA and the Governors of the participating States that would detail the type of activities that would be supported, the goods and services that would be financed, and the expected outputs and outcomes. Withdrawals from the Loan Account were to be made on the basis of Statements of Transfer (SOT) to co-finance with the Participating States the works, goods, services and operating costs required for the implementation of State Health Development Subprojects. The new Category 5 of Schedule 1 of the Loan Agreement was to permit payments for such works, goods, services and operating costs incurred by the Participating States on or after March 31, 2003. This was expected to facilitate the potential disbursement of about $80 million as reimbursement for project-related activities under eligible State Health Development Subprojects financed under the SSA budget.

The second amendment to the Loan Agreement, which did not involve a restructuring to the Project, was dated March 18, 2005. It was approved to introduce adjustments that would permit disbursement of retroactive expenditures that were to be eligible for financing under the Project’s first restructuring and loan amendment. The amendment provided for: (i) reallocating among categories in Schedule 1 to reflect expenditures with pharmaceuticals; (ii) changing the disbursement percentages against pharmaceuticals from 86 percent to 100 percent, after the originally allocated $9.0 million were disbursed; (iii) adjusting the aggregate limits for procurement under NCB for goods, works and Shopping for goods, works; and (iv) extending the retroactivity of the financing for the purchase of pharmaceuticals to March 1, 2003. The second restructuring (and third amendment to the Loan Agreement) resulted in comprehensive changes to the Project’s description (and objectives) that resulted in revised components, activities and outputs to align fully the Project with the sector reform agenda of the federal and state government (see Annex 13). Specifically, to help achieve the revised Development Objectives described in Section 1.3, the Project’s Components were modified as follows:

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Component I (Part A)11: Improve access of poor people eligible for enrollment or enrolled in the subsidized regime of the Seguro Popular to the insurance’s benefit package (US$220 million)

The impact of the SPSS on health and out-of-pocket expenditures was seen as depending critically on geographical access of individuals enrolled into the Seguro Popular to services included in the insurance’s benefit package. To address this, in 2004 the Government had launched a strategy, Fortalecimiento de los Servicios de Salud (FOROSS) to strengthen the service delivery capacity of decentralized public health services delivering the benefit package of the Seguro Popular. This strategy spelled out ten dimensions that corresponded to the criteria for accreditation of health service providers with the SPSS. A key element of the strategy was the Investment Plan for Infrastructure and Equipment (Plan Maestro de Infraestructura en Salud, PMIFS) that would ensure universal access of poor people eligible for enrollment in the Seguro Popular to the insurance’s benefit package by 2010. The restructured Project would support the implementation of the FOROSS strategy as it related to health centers, to hospitals up to 120 beds and to specialized ambulatory care units identified in the PMIFS. The scope of the activities supporting implementation of the FOROSS strategy would also differ substantially form those of the original Project: Seguro Popular’s benefit package at the time included 76 interventions (currently 266) delivered at primary and secondary care facilities whereas that of the original Project included on 13, mainly preventive essential services delivered at the primary care level or by mobile services. Under this restructured component, the Project would only finance investments in health service delivery capacity, excluding the reimbursement of recurrent costs that had been included in the original project description (i.e., pharmaceuticals and vaccines). Component II (Part B): Restructure and develop State Health Systems (US$27 million)

The SPSS aimed to introduce new market mechanisms into the State Health Systems, and efficiency gains were considered dependent on a fundamental restructuring of these systems. Before the Health Reform, the State Ministries of Health were responsible for health system financing, service provision and stewardship. The introduction of the SPSS envisioned that distinct organizations, some of which were to be created, would assume the different functions of the health system. The Ministries of Health were expected to assume the role of the systems’ steward. The State Regimes for Social Protection in Health would manage finances and purchase services included in the service catalog of the Seguro Popular from decentralized health service provider units and networks. The restructured Project would support the organizational and institutional restructuring of the State Health Systems, the strengthening of administrative and management functions of decentralized state health service provider units and networks, and the strengthening of the information technology infrastructure,

11 The Project Restructuring dated July 11, 2006 renames Components I, II and III as Parts A, B, and C, respectively. In order to avoid confusion between the Components in the original project, and those in the restructured project, those of the latter will be referred to as Parts A, B and C.

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including telemedicine networks, of organizations and decentralized health service providers of State Health Systems. Component III (Part C): Strengthen the Federal Ministry of Health’s role as thesteward of the SPSS (US$16 million)

In the reform process, the Federal Ministry of Health assumed the role of the steward of the SPSS. The restructured Project would help the Federal Ministry of Health to enhance its capacity in critical stewardship functions, mainly, coordinating, supporting and monitoring: (i) the implementation of the FOROSS strategy; (ii) the restructuring of the State Health Systems; and (iii) the strengthening of decentralized state health provider units and networks. Activities to strengthen the capacity of the Federal Ministry of Health in these stewardship functions would form the third component of the restructured Project. The Project’s monitoring indicators were also revised, an additional $60 million was transferred to the Transfers disbursement category, aggregate thresholds for procurement procedures other than ICB were eliminated and adjustments were required to the Project’s safeguards framework (which required adjustment, as described in Section 2.4) by requiring the incorporation of safeguards plans into the Operational Manual (OM), and a dated covenant in the Loan Agreement requiring a social and environmental safeguards audit to assess compliance with the relevant safeguard policies in the past and ongoing project activities. The Project’s third restructuring , a second order restructuring, was approved by the Regional Vice President and resulted in a fourth amendment to the Loan Agreement, dated December 18, 2009. This restructuring was processed to provide support to the Government in its response to the national public health emergency due to the A/H1N1 Influenza emergency (consistent with OP/BP 8.00, Rapid Response to Crises and Emergencies). An influenza pandemic had originated in Mexico in mid-March 2009. By the end of June 2009, a first wave of infections with a new strain of A/H1N1 had caused more than 9,200 episodes of severe illnesses and 119 deaths in Mexico. The spread of A/H1N1 in Mexico further weakened macro-economic conditions in the country. The Secretariat of Finance projected a contraction of Mexico’s GDP by 8 percent for 2009 with five to 10 percent of this decline attributable to revenues lost due to reduced demand results from social distancing and a severe drop in tourism following the outbreak of A/H1N1. The Government acted quickly to reduce the spread of the new virus and to minimize morbidity. In accordance with the National Plan for Preparedness and Response to an Influenza Pandemic (which was developed in view of World Health Organization Guidelines), the Government heightened epidemiological surveillance, upgraded laboratories, executed a massive communications campaign encouraging preventive behaviors, expanded and strengthened the provision of health services and replenished

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stocks of medicines and vaccines. The Government estimated that the direct cost of these measures had surpassed $600 million. Responding to the Government’s request for assistance, the Project’s third restructuring expanded the scope of project activities and included a new component, Part D, to provide for: supporting SS’s response to the influenza epidemic through the financing of goods, including pharmaceuticals and consumable medical supplies. The restructuring and loan amendment also: (i) introduced a new expenditure category under Schedule 1 to the Loan Agreement for Goods, including Pharmaceutical and Consumable Medical Supplies (including the distribution thereof) and allocated $25.7 million to that category; (ii) modified procurement procedures for those goods to allow procurement by direct contracting; and (iii) provided for financing for those goods retroactive to March 18, 2009, the date when the SSA implemented the first measures to respond to an unusual level of influenza-like illnesses.

The Government was to continue financing activities that were considered critical to advance towards Project objectives that had yet to be fully achieved and the activities included under the third restructuring fell within the Project Development Objective of strengthening the quality of public health services for the poor. While the Project would continue to target the poor, proposed additional activities would focus on vulnerable and infected people.

1.7 Other significant changes An additional one year loan Closing Date extension was approved by the Regional Vice President on December 12, 2008.12

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry The Project was a follow-up to the Second Basic Health Care Project that had been rated Highly Satisfactory. It followed the same basic health care delivery model, utilized mostly the same fiduciary and other systems, and basically provided continued financing for a model that had been successful, adjusting the model and the Project on the basis of lessons of experience. These lessons included those with respect to: (i) targeting; (ii) the role of health jurisdictions; (iii) staffing in hardship areas; (iv) building ownership and sustainability in the states; (v) decentralization, deconcentration and resource allocation; and (vi) monitoring and evaluation. By providing support for increasing health care access among the poor while reforming and strengthening public health care institutions, the Project was consistent with the Bank’s Country Assistance Strategy that had been considered by the Bank’s Board on June 8, 1999 (Report No. 19289-MX), and with the Progress Report that was scheduled for consideration in June 2001 (Report No. 22147-MX).

12 The Closing Date extension required approval by the Regional Vice President since it would extend the implementation period beyond seven years. It was justified for the same reasons that justified the waiver of commitment fee payments in 2006.

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Although the General Health Law that provided the framework for the SPSS was approved only in 2003, health system reform, especially the fairness of finance and financial protection had been under discussion for quite some time before then (since the late nineties). In fact, President Fox and his transition team had already identified health sector priorities, including a proposal for universal health insurance, since coming to office in 2000. Preparation of the Health Sector Reform and the Seguro Popular began as soon as the new Administration came to office. As mentioned in Section 1.3, by 2001 the Seguro Popular was already being piloted in five states. In fact, the incorporation of Seguro Popular as a strategy was included in the Government’s National Health Program 2001-2006. Yet, the Project’s PAD made no reference to the new Government’s plans to reform the health sector. It mentioned only the Government’s strategic objectives of improving equity and quality, and providing financial protection. Specifically, the PAD mentioned that to implement the strategic goals of increased equity, improved quality and financial protection, the Government aimed to “link improvement in health status to social and economic development, to prioritize emerging health problems, to offer financial protection to the whole population, and to increase freedom of choice and community participation. A national crusade for improving the quality of health services has already been launched whereby decentralization will be deepened and more decision-making authority will be passed to states. In turn, states will deconcentrate functional and financial authority to the health districts and to the municipal health authorities and promote collaboration between public and private health care providers….”. Although the Project was classified as a Category B for environmental purposes, the Environmental Assessment (or Annex in the PAD) dealt only with the issue of medical wastes, although investments under the original Component I would finance subprojects that included construction, upgrading, expansion and maintenance of health centers and basic community hospitals. A review of indigenous health issues was prepared, but was based mostly on early work that had been prepared and disclosed by the Government. More importantly, the Project’s Operational Manual did not include requirements to follow the Bank’s environmental, Indigenous Peoples’ or Pesticides safeguard policies. While recognizing that Bank standards on the analysis and presentation of risks, and the design of a project’s monitoring and evaluation framework have become more stringent, the Project’s treatment of both of these in the PAD appeared superficial. The risk analysis didn’t address the possible risk that the new administration might opt to follow another course in the health sector, and the only risk that was rated above “modest” was that of weak NGO institutional capacity to develop HIV/AIDS prevention proposals. Similarly, the original Project’s monitoring framework was a long list of different types of indicators that would have been difficult to monitor, and, even if that would have been possible, would have not provided a tight, objective, basis on which to measure the Project’s achievements.

2.2 Implementation

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The Third Basic Health Care Project was approved by the Board on June 21, 2001, signed on March 10, 2002 and became effective on November 11, 2002. Its objectives and design built upon on successful predecessor project. However, since becoming effective, the Project suffered implementation delays until its second restructuring on July 11, 2006. Given its several restructurings and amendments, a complete chronology of events to facilitate understanding the various factors and circumstances that affected the Project’s implementation is provided in Annex 16. A summary of the issues that affected the Project implementation follows.

Project Objectives. The ambitious reform program that the Government introduced in 2002/2003 departed fundamentally from past sector priorities; moreover, the reform and the Project’s objectives became incongruent. Consequently, the Project lost its relevance practically before implementation began, and budget allocations for activities eligible for financing under the Project decreased substantially. It was not until the Project was restructured for the second time that its objectives became fully aligned with the Government’s program and the associated Health Reform Law.

Incomplete Preparation. The Project was affected by incomplete preparation in two instances. First, during preparation, the Bank’s safeguard policies and requirements were not incorporated into the Project’s framework and Operational Manual. As a result, in the context of the Project’s second restructuring, significant effort was devoted to address this issue, and to carry out a safeguards audit of the activities that had until then been financed (Section 2.4). When the Bank realized that the Project’s objectives were no longer compatible with the Government’s priorities, a first attempt to restructure the Project to get implementation underway fell short of aligning its objectives with those of the SPSS reform. The preparation of this first restructuring also failed to find a common ground among the Government’s and the Bank’s fiduciary requirements, which was required for a SWAp mechanism. Furthermore, the loan was signed without assurances that the SSA would have the required budget to carry out the Project. This was considered especially important since unlike the earlier II Basic Health Care Project, loan funds were not incremental to the SSA’s budget.

Government Commitment. Although Government commitment to the appraised project quickly faded, once the second restructuring was approved, the Government demonstrated unwavering commitment to the Project and its objectives, and more importantly to its SPSS and the Seguro Popular that the Project supported. It has continuously provided the necessary budgetary allocations to the program, and has decided to expand the Seguro Popular in the midst of a difficult economic climate.

Complexity of the Program and Project. The introduction of the SPSS and the Seguro Popular was unquestionably an ambitious and complex undertaking that involved a

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major redirection of the process of ensuring universal access to basic health care services. It was all the more complex in that its implementation required not only putting in place the structures and processes at the federal level, but also a restructuring of health systems in 32 Federal Entities. These Federal Entities, of course, face different realities ranging from the status of their health service delivery infrastructure and capacity, their physical and social realities, and more importantly, the institutional capabilities of their health system institutions.

Procurement. Issues with respect to the Bank’s procurement framework affected the Project’s implementation practically from the very start until the closing of the loan. These are described in detail in Section 2.4, but involved mostly the incompatibility of the Government’s procurement procedures with those of the Bank’s Guidelines, the use (or non-use) of the unified bidding documents, and finally, the Bank’s inability to finance the purchase of pharmaceuticals and medical equipment that had been acquired under direct contracting procedures to respond to the AH1/N1 Influenza Epidemic, as provided under the Project’s third restructuring.

Structure of Financing. As an exception to Mexico’s general policy, loan proceeds of the earlier PAC Project had been incremental to general budget transfers from the Federal Government to the states. However, this exception was not granted for the Project with the result that loan resources became available only to reimburse budgeted items earmarked for external, loan, funding. Thus, state governments faced weaker incentives to participate under the Project and none to comply with the Bank’s fiduciary requirements that presented requirements over and above the national norms.

Staffing. There was a high turnover of staff in the Undersecretariat of Innovation and Quality and particularly in DGPLADES throughout implementation. In all, since approval, the Project was assigned to nine different Director Generals in DGPLADES. Moreover, the turnover of staff also affected the level of Project Coordinator---there were four different Project Coordinators throughout implementation and staff of the various units within DGPLADES. This turnover invariably lead to some delays and at times led to a lack of continuity in following up on agreed actions. Some of DGPLADES’ units are still understaffed, such as the Direction of Infrastructure (Dirección de Espacios para la Salud) that plays a key role in developing the PMIFS and reviewing all the technical infrastructure proposals for their inclusion in the PMIFS.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Design. As appraised, the Project was to take advantage of the monitoring and evaluation system that had been used for the Second Basic Health Care Project. The Project’s PAD stated that “the proposed project would ensure adequate financial and technical support for developing appropriate indicators for monitoring and evaluation project processes, results and impact. During project preparation, baseline data has been collected and an

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ex-ante economic and financial evaluation of the project has been conducted on the basis of this information”. The Project’s Results Framework presented in Annex 1 of the PAD was an extensive list of input, process, outcome and impact indicators that in retrospect would have been almost impossible to monitor.

In the context of the Project’s first restructuring the Bank provided technical support for SSA to develop a monitoring and evaluation system that could measure the impact of the Project in helping reorganize and improve the delivery of health care services at the state level (the supply aspect of the SPSS). The conceptual framework distinguished clearly between the monitoring of processes to measure and report on inputs (including procurement and disbursement actions) and on outputs/products, and the evaluation of outcomes/results and impact with a feedback loop to annual work plans that were an integral part of the Participation Agreements signed between the federal government and each of the states.

The activities related mainly to monitoring processes of financing and procuring inputs would be done internally by the government and an external, independent, non-government institution would be contracted to evaluate outcomes and impact under monitoring and control of the SSA. In the context of the Project’s second restructuring, a comprehensive framework for monitoring its progress towards revised development objectives was developed (Annex 14). Implementation and Utilization. For the closely monitoring of the Project, DGPLADES consolidated the information gathered through the SSA information systems as well as its own information systems. The data produced is reliable given that SSA information systems provide timely and consistent data on the health sector. Progress on Project indicators was reported to the Bank by the PCU during supervision missions and in the semi-annual project reports. The project monitoring extracted information mainly from the National Health Information System (SINAIS), the CNPSS monitoring system and DGPLADES own system. SINAIS collects gathers information on basic health statistics, demographic, economic, social and environmental factors linked to health and physical, human and financial resources available in the Health System. SINAIS is managed by the General Directorate of Information in Health and is regulated by the National Health Law and the Statistical and Geographic Information Law. Information was also pulled out from the Commission’s integrated supervision system that tracks and consolidates information on affiliation including data on the number of beneficiary families and their characteristics (for example, number of family members, indigenous, female or male head of household, income decile). Finally information on infrastructure and equipment was retrieved from DGPLADES’own data bases as it is responsible for the management of PMIFS and PME. It should be noted that the SSA was not able to report progress, in a comprehensive way, in the monitoring of progress of health status of indigenous populations. Even though the SINAIS collects information on some indicators on basic health statistics of the indigenous groups, there is not a system in place that allows for the closely monitoring of their health status. As of 2009 the SSA is able to obtain more

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disaggregated information by ethnic group through the hospital discharge registries which constitutes advancement in the monitoring of indigenous health.

2.4 Safeguard and Fiduciary Compliance Safefuards. The appraised project was classified as Environmental Category B due to the construction of health units and hospitals up to 120 beds; potential issues of medical waste management in participating health units; and the potential use of loan proceeds to finance the acquisition, use and handling of pesticides. Environmental construction norms, internal waste management in health facilities, personnel health and safety provision for the handling and disposal of bio-medical waste and equipment operation were to be included as part of the Project’s Operations Manual. Similarly, the Operations Manual was to restrict the financing of certain pesticides unless proper procedures were in place to oversee their distribution, handling and use. Given Mexico’s large indigenous population, and their overrepresentation among those without access to health care, the Project was to target the improvement of health conditions in municipalities with the highest concentration of indigenous population groups. A review of the health status of Mexico’s indigenous population and a proposal for how the Project was to address their needs, including through consultation and community participation, was included in the Project’s PAD. Its preparation and consultation was based on earlier country-wide work that had been prepared on indigenous health issues, and that was adapted for the Project.

During the preparation of the Project’s second restructuring, the review of the original loan agreement and Operations Manual revealed that those legal documents inadequately reflected the Borrower’s obligation to comply with the Bank’s safeguard policies. Therefore, the Bank agreed to proceed with the second loan restructuring, as follows: before submitting the restructuring proposal to the Board, the Government, with support from the Bank would prepare an Operations Manual that laid out implementation procedures that were fully compliant with Bank safeguard policies. The Bank’s safeguard team was also concerned that the construction of health units could have caused physical displacements or losses of assets or other means of support in the process of acquiring land for the construction or expansion of health facilities. Therefore, the Government would also prepare terms-of-reference for: (i) an audit of past and ongoing Project activities to assess their compliance with Bank safeguard policies; and (ii) the development of an action plan to remedy eventual harm. However, the implementation of that audit and action plan would not be a condition for the submission of the restructuring proposal to the Board, mainly to avoid further delays in project implementation, but the loan agreement would provide a covenant with a firm deadline for the audit and action plan

The Government submitted the revised Operations Manual and the terms-of-reference on May 31, 2005, and the SSA carried out the safeguard audit of project activities implemented in 2004 and 2005. The Bank reviewed the findings of the audit in January 2007 and concluded that: (i) the audit had been carried out according to standards acceptable to the Bank, and (ii) its findings suggested that no harm had been done that

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would require remedial action. Based on the audit’s finding, the Bank drafted recommendations to strengthen federal safeguard oversight with respect to all federal investments in sector infrastructure and shared these with the Government to help them develop an action plan for their implementation. Supervision of the implementation of actions plans for indigenous health and medical waste management in December 2008 found that these had been followed closely, progress was adequate and milestones were being achieved.

Fiduciary. As appraised, the Project was to utilize, by and large, the financial management and procurement arrangements and processes that had been utilized for the predecessor Second Basic Health Care Project. With a redefinition of the Project’s components, starting with the first restructuring, and later its objectives and components with the second restructuring, the Bank needed to reappraise continuously the Project’s fiduciary arrangements. For the purpose of adopting a transfer approach under the Project to disburse loan proceeds allocated in the new Category 5 of Schedule 1 of the Loan Agreement, the program was re-assessed in terms of procurement and financial management arrangements, including the capacity of the states to procure goods and services required for the implementation of project activities, and to ensure proper financial management and reporting. With the redesign of the Project under a SWAp mechanism, the Project’s administrative and financial arrangements were modified in accordance with a transfer approach to finance transfers to the states to strengthen their health care delivery systems as specified in the Participation Agreements signed between the SSA and the Governors of the participating states (i.e., the type of activities that would be supported under the Project, the goods and services that would be financed to implement those activities, and the expected outputs and outcomes). The Bank would require withdrawals from the Loan Account to be made on the basis of Statements of Transfers to co-finance with the Participating states the works, goods, services and incremental operating costs required for the implementation of the State Health Development Subprojects. Government financial management systems were utilized for purposed of budgeting, accounting, internal control, auditing and reporting to the extent possible, adding additional mechanisms as needed to ensure effective implementation and appropriate use of funds. For procurement, Mexican laws forbade the use of state legislation and procedures to procure goods and works when federal money was involved. For this reason, all the state delegations of SSA would have to use procedures under the federal legislation. The staff of the state units was evaluated satisfactorily during preparation, and they remained satisfactory. These units were part of the Bank’s e-Procurement Pilot Project and had been monitored very closely showing a satisfactory performance. The procurement of consultants’ services was only to be done at the federal level. As a result, no changes were expected in procurement procedures after the Project’s first restructuring.

The requirements for procurement, including thresholds, aggregate limits, limits for prior review, etc., were adjusted throughout implementation in order to accommodate the Project’s changing objectives, components, and design as a SWAp. In addition, the Bank

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approved new procedures to set prior-review thresholds based on the level of risk and procurement capacity of implementing agencies. During the Project’s first restructuring, a Procurement Capacity Assessment of the units that carried out procurement activities under the Project had been carried out and concluded that the procurement risk was average. As a result, the procurement prior-review thresholds and rules for no-objection for the Project were adjusted resulting in less prior-review and more post-review to expedite implementation. Nevertheless, the Loan Agreement as amended by the first restructuring resulted in some inconsistencies with Mexican legislation; i.e prior review thresholds established in the Loan Agreement were below the thresholds in Mexican legislation. This went against the spirit of the SWAP. In addition, the Loan Agreement was ambiguous with respect to whether a Procurement Plan was needed.

However, a subsequent ex-post procurement review carried out in 2006 showed that the federal procurement norms originally adopted under the Project were insufficient to guarantee procedures acceptable to the Bank. In the Project’s second restructuring the Loan Agreement required the use of unified bidding documents for both national and international competitive bidding procedures. The Government felt that this change would increase the risk of non-compliance with procurement procedures, in particular under subprojects carried out by states, and thus, the risk that expenditures might not be fully eligible for reimbursement. To mitigate this risk, it was agreed that: (i) the threshold for prior review of civil works was to remain at US$5 million (thus below the US$10 million threshold for ICB); (ii) the Bank would consider on a case by case basis State requests to use procurement procedures other than those approved by the Bank, and (iii) the Bank would consider on a case by case basis the possibility to substitute subprojects that did not fully comply with Bank norms by other eligible activities. Also, the Bank carried out a series of procurement-related training events with state governments, and developed guidelines for the use of unified bidding documents.

Then, an ex-post procurement review carried out in mid-2007 identified several processes carried out in early 2006 that did not meet Bank standards; these processes followed federal procurement rules but did not make use of the agreed standard bidding documents. Subject to a procurement review, the Bank agreed to substitute other activities under Part A (structured as a SWAp) to compensate for approximately US$30 million in ineligible expenditures that had not followed procurement processes that met Bank standards. With this, the Bank considered that the procurement issues that had plagued project implementation were largely resolved.

As described in Section 1.6, one of the objectives of the Project’s first restructuring, was to support the harmonization of the requirements of Bank assistance with the Government’s own internal systems. By restructuring the Project to support the entirety of the Government’s program, and with strong institution and capacity building objectives, this harmonization was seen to be a more effective mechanism to strengthen

24

government institutions at different levels of the health system, improve procedures including monitoring and evaluation, and provide technical support to staff throughout the system than establishing parallel systems. As implementation progressed, there was some regression on this harmonization, and the use of harmonized bidding documents became required

Yet another ex-post review carried out in 2008 found that while procurement procedures carried out at the state level were by and large acceptable to the Bank, the annual budgeting process mandated by federal law resulted in the fragmentation of processes for larger civil works, leading to delays, impeding the quality of works, and increasing costs. The Borrower committed to address this not only for activities financed by the Project, but also for all health infrastructure investment financed with federal funds.

Finally, the Project’s third restructuring was to have allowed retroactive financing for the purchase of pharmaceuticals and medical equipment. As described in Section 2.2, although the restructuring was approved, the Bank did not authorize loan financing of goods acquired under direct contracting procedures, and alternative, eligible, expenditures in the amount of approximately US$25 million were substituted for those purchases to allow for the loan’s full disbursement.

2.5 Post-completion Operation/Next Phase The Seguro Popular is in its seventh year of operation, and is firmly established and with its financing guaranteed by law. The Government has reconfirmed the goal of providing universal health insurance coverage to all Mexicans by 2012. In response to the economic effects of the global financial and economic crisis, which have affected Mexico more than any other Latin American country, the Government has taken bold steps to expand substantially the Seguro Popular, and to adjust the premium levels so as to allow the enrollment of more than 10 million additional beneficiaries within current state health system budgets. At the same time, the Government is focusing on addressing challenges facing Seguro Popular, that include the need to: (i) administer effectively its entitlements; (ii) deepen the changes to the organization and management of state health systems, including the development of critical health insurance functions; (iii) refine and strengthen performance management arrangements between the National Commission for Social Protection in Health and state health systems; (iv) improve beneficiaries’ understanding of their entitlements; and (v) stimulate beneficiaries’ demand for health promotion and disease prevention.

The Mexican Government requested Bank support in tackling the above challenges facing the Seguro Popular. On March 25, 2010, the Bank’s Board approved a US$1.25 billion loan in support of a Social Protection System in Health Project (Report 52142-MX) whose objective is to support the Borrower in initially preserving and later expanding the coverage as well as strengthening the capacity of the National Commission

25

for Social Protection in Health and the state health systems to effectively administer the entitlements of the Seguro Popular. This project is comprised of two components, as follows: (a) Component 1: Initially preserving and later expanding the Seguro Popular’s coverage of people without contributory social security (US$1.24 billion); and (b) Component 2: Strengthening the capacity of the National Commission for Social Protection in Health and state health systems to administer the Seguro Popular entitlements (US$10 million). This last component will continue efforts started by PROCEDES.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation The objectives, components and design of the Project as originally approved lost their relevance in 2003 when the Mexican Government approved the General Health Law introducing the SPSS. The Project’s second restructuring described in Sections 1.3 and 1.6 modified it to become the central pillar of the Government’s strategy to remove supply side constraints for the enrollment of the poor living in most marginalized municipalities into the Seguro Popular. The Project financed activities to promote the reorganization of the State Health Systems for them to assume their new role in the insurance scheme. As such, the restructured Project’s objectives and design became, and remains to this day, fully relevant to Mexico’s current development priorities and the Bank’s Country Assistance Strategy.

Specifically, through the Bank’s implementation assistance, the Project was responsive to the Government’s changing priorities over time. It became fully consistent with the Government’s National Health Sector Program (Programa Sectorial de Salud, PROSESA) 2007-2012 and aligned with the health-related MDGs and the Government’s National Development Plan 2007-2012. It supported directly three of the ten strategies outlined in PROSESA: (i) consolidating the financing reform for effective, universal access to essential health care interventions; (ii) improving the planning, organization, development and accountability mechanisms of the health system; and (iii) developing systems, technologies and processes that improve the efficiency and promote the integration of the sector. Furthermore, it contributed to central objectives of the PROSESA, including increases in health service utilization and reductions of mortality and out-of-pocket expenditures. Figures 1 and 2 below show that out of pocket expenditures are lower for families in the lowest income quintiles affiliated to Seguro Popular compared to those not affiliated. As such, it helped to sustain and accelerate progress towards the health-related MDGs in the context of the economic crisis, particularly reducing infant and maternal mortality. Finally, the Project contributed to the goals and principals of the NDP, specifically, the goal of creating equal opportunities and the principle of targeting resources to programs that have demonstrated their effectiveness in reaching the poor.

Figure 1. Per capita out-of pocket health expenditures by income quintiles (2008, real pesos)

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Source: World Bank Report (draft), Mexican Health System Financing, using data from ENIGH (2008).

Figure 2. Per capita out-of pocket health expenditure as a share of disposable income by income quintiles (2008, real pesos)

Source: World Bank Report (draft), Mexican Health System Financing, using data from ENIGH (2008).

The Project, through restructuring, also maintained its relevance to the Bank’s Country Partnership Strategy (CPS).13 The Project is closely aligned with two of the strategic development challenges identified in the CPS: sustainable growth through investment in human capital and strengthening institutions which it supported by helping to remove

13 World Bank Group Country Partnership Strategy for Mexico (Report No. 42846-MX, dated March 4, 2008).

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barriers to access health services and strengthening financial protection for people, and establishing and strengthening the organizational and institutional arrangements and performance of the Seguro Popular.

3.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2) As a formally restructured project, whose project objectives (as encompassed by the stated Project Development Objectives and key associated outcome targets) were formally revised through a Board-approved restructuring on June 29, 2006, the Project’s outcome is assessed against both the original and revised project objectives. Separate outcome ratings, against original and revised objectives approved in the Project’s second restructuring, were weighed in proportion to the share of actual loan/credit disbursements made in the periods before and after approval of the restructuring (Annex 17), and are discussed below.

The achievement of the Project’s original Development Objectives during the period from approval until the Board-approved second restructuring is considered unsatisfactory. Almost immediately, with the passage of the General Law introducing the SPSS the Project had lost its relevance. It was not until the Project’s second restructuring that its Development Objectives became aligned fully with those of the Government’s Health Sector Program. The first restructuring, supported by the second loan amendment, eventually permitted loan financing to reimburse a total of US$160 million retroactively, that was used to finance initial activities in support of the supply-side of the SPSS, through transfers to states to finance infrastructure and recurrent costs needed to improve access to the Seguro Popular, and technical assistance for SSA’s institutional development. These activities were all roughly in line with the Project’s original Development Objectives while also in line of those of the eventually restructured Project.

The Project made considerable progress towards the achievement of its revised Development Objectives following the second restructuring. This progress was to be measured against key associated outcome targets that were revised in that restructuring (Annex 14). As mentioned in Section 1.3, these associated outcome targets were adjusted slightly (inter alia, to extend targets to the new December 31, 2009 Closing Date), and the precise definition of the indicators themselves improved and refined, to better measure the Project’s progress towards the achievement of its Development Objectives.14 However, the modifications made in no way represented a slackening of the original targets, and only served to update the targets to actual experience (when progress was

14 These adjustments were not approved formally by the Bank’s Board.

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faster than expected, e.g., for enrollment), and to measure more precisely the Project’s achievements (e.g., the new outcome target on enrollment of indigenous people enrolled in the subsidized regime of Seguro Popular with respect to entitled individuals that measures increased equity towards indigenous individuals). The specific outputs and activities financed by the restructured Project are described in Annex 2.

The 2003 health sector reform, through the General Health Law, aimed to focus on the health system through the horizontal integration of three basic functions: stewardship, financing and service delivery. The reform sought to reinforce the SSA’s stewardship role through instruments designed to prioritize financial flows by linking supply side allocations to demand side incentives. The SSA assumed the role of steward of the SPSS. The Project supported a strengthening of the SSA in its critical stewardship functions, mainly those of coordinating, supporting and monitoring: (i) the implementation of the FOROSS strategy; (ii) activities to advance the restructuring of the SESs; and (iii) the strengthening of decentralized state health provider units and networks.

Part A: Improve access of poor people eligible for enrollment or enrolled in the subsidized regime of the Seguro Popular to the insurance’s benefit package

The reform to the General Health Law with regard to social protection provided a strategic opportunity for development and strengthening the supply of health services. In addition to the mechanisms of health insurance, implementation of Seguro Popular required an expansion in the supply of personal health interventions and organizational changes required to ensure an adequate provision of services. The Project contributed significantly to this expansion.

The FOROSS strategy was developed with a view to strengthen the supply of high quality health services that would facilitate beneficiaries’ affiliation and re-affiliation to the Seguro Popular. The FOROSS strategy contemplates: management, supply of medicines, infrastructure, evaluation, information systems, human resources and organizational design, which together would provide the inputs needed to deliver quality health services. The Project supported some of the core elements of the FOROSS strategy such as the implementation of the PMIFS and PME, which together contributed to the accreditation of health units that offer services to Seguro Popular beneficiaries.

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Construction, rehabilitation and equipping of health units. Between 2002 and 2009, the Project financed the construction, rehabilitation and equipping of 205 health units, including health centers, hospitals (up to 120 beds) and specialized ambulatory care units identified in the PMIFS. The PMIFS was developed to guide the decision-making process with regard to the development of physical infrastructure, determine the appropriate infrastructure for meeting the demand for health services, make optimal use of the existing infrastructure, identify the criteria to prioritize the requirements of physical infrastructure in relation to the health profile of the population and the percentage of coverage, and promote the coordination and amount of resources needed, eliminating duplications and inefficiencies.

The PMIFS represents a starting point for reorganization of existing infrastructure through a prioritized plan that will guarantee universal access. It involved the establishment of 18 regions at the national level, which became the development axis for health services. Each of these regions, or Health Services Networks (RESS), were structured to provide the most effective and efficient health service delivery to their populations. The PMIFS also includes new prototypes of health units for the Integrating Model of Care to Health (MIDAS) that break the paradigm of delivery based on level of care by delivering services through a group of health establishments of differing degrees of complexity. Together, these two innovations were designed to achieve greater responsiveness, connectivity and problem-solving capacity to address beneficiaries’ health care needs.

The Project also financed the purchase of equipment included in the PME, a complement to the PMIFS that followed roughly the same procedure for prioritization. The PME also strengthens the maintenance procedures for medical equipment and rationalizes the adoption of new technology through evidence-based assessment.

Seguro Popular. The introduction of the Seguro Popular brought three fundamental changes to Mexico’s health systems that were expected to contribute to the achievement of this objective. It: (i) replaced budgets with premiums; (ii) eliminated user fees by introducing beneficiary contributions; and (iii) introduced explicitly defined entitlements. By replacing budgets with premiums, the SSA bases its budget envelope and allocations to states on an actuarially-calculated premium that is a statistically determined payment based on the expected costs of ensuring, providing, and overseeing a wide range of services and supporting activities for the enrolled population (as opposed to allocations to states based on the payroll and infrastructure of each state health system). The federal budget finances 83 percent of the premium, with the states financing the balance. State health systems, as administrators of the insurance, guarantee explicitly defined benefits, free of charge, to those enrolled. This has already made some progress in reducing funding disparities across states. By eliminating user fees and introducing beneficiary contributions, the Government aims to increase health service utilization among

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beneficiaries, while reducing their out-of-pocket expenses. Whereas before uninsured Mexicans paid fees to access health services, the Seguro Popular provides free access at the time of use, but with annual beneficiary contributions, proportional to each family’s ability to pay, that states reinvest in health services or use to build reserves for the insurance.15 By introducing explicitly defined entitlements, the Government aimed to expand access, whose provision in any event depended largely on the availability of financial resources. The Seguro Popular explicitly defined beneficiary entitlements, introduced an accreditation system for health facilities and established mechanisms such as mediation and arbitration systems for beneficiaries to enforce their rights.

Since its establishment in 2004, coverage of the Seguro Popular has expanded rapidly. At the end of 2009, there were close to 30.7 million individuals enrolled in the system, representing approximately 70 percent of the population eligible to be enrolled. At the same time, the benefits covered increased significantly from 76 health interventions at the time the Seguro Popular was introduced to 266 interventions today. Progress towards reaching and enrolling indigenous beneficiaries was less than expected, in part due to the significant cultural, geographic and other challenges that the Project faced in reaching out to these individuals.16 While the original outcome target was to enroll 30 percent of the indigenous population or 4.2 million entitled to be enrolled by 2008, the Project was only able to enroll 21.3 percent (2.9 million) of the indigenous entitled to be enrolled by the end of 2009. The enrollment of indigenous with respect to that of all entitled individuals also fell short of the target set when the outcome targets were adjusted: enrollment of indigenous as a proportion of those indigenous entitled represented only 30 percent of the total enrollment as a proportion of all entitled to be enrolled.

Accreditation. The improvement of health service quality is one of the central issues of the Health Sector Reform. Before, few public or private facilities were subject to a formal accreditation process. The drive to improve quality involved establishing an accreditation process, and the consequent requirement that only certified providers are allowed to participate in the Seguro Popular. The Project made significant progress in increasing the number of health facilities accredited with the SPSS that guaranteed the access of people entitled to be enrolled into the subsidized regime of the Seguro Popular to the insurance’s benefit package. Of the total of health facilities in all states, 62.4 percent had been accredited to the Seguro Popular by the end of 2009, i.e. above the

15 Beneficiary households pay an annual contribution that is proportional to each family’s ability to pay, according to an income assessment. Families belonging to the two lowest income deciles are exempted from contributing, as are families of low- and middle-income families with children younger than five years. 16 Indigenous peoples have a limited understanding of the concept of insurance, which in part explains less-than-expected demand for enrollment. Also, the indigenous reside commonly in remote areas with little or no access to formal health care services. Finally, state face a major financial disincentive to enroll indigenous peoples who are eligible to participate in other Government safety net programs, i.e., Oportunidades. See the Mexico Social Protection System in Health Project PAD (Report No. 52142-MX, dated February 23,2010) for further details.

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target for the end of the project (60%). Of the health centers, hospitals with up to 120 beds and specialized ambulatory care units under the PMIFS that received financing under the Project, a total of 38.6 percent had obtained accreditation by the end of 2009, surpassing project target of 38% for the end of the project. Figure 4 below shows progress in accreditation between PROCEDES financed Health Units and non-PROCEDES. Figure 5 shows the significant efforts of some states in the accreditation of health units during 2009.

Figure 4. Percentage of SESA accredited units compared to percentage of PROCEDES accredited units by federal entity (2008).

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Figure 5 Accreditation achievements of some federal entities in 2008 and 2009.

45.7% 45.5%43.0% 42.2%

33.9% 33.5%

26.8%24.1%

18.4%

9.9%

59.0%

65.3%

92.7%

71.5%

45.0%

54.5%

32.9%

38.1%

32.6%

27.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

% Accreditation 2008 % Accreditation 2009 S D G C E S DGCES

Part B: Restructure and Develop State Health Systems

The implementation of the Seguro Popular in the states requires a fundamental restructuring of state health systems, with core health system functions separately assigned to distinct organizations. It also requires the organizational restructuring of the SESAs to be able to meet their responsibilities as head of sector and to allow the managerial and administrative separation between a responsible entity directly in charge of the delivery of services and another one that performs the function of financing and results-based budgeting. It also implies that at the state level each one of the entities must understand and carry out efficiently, depending on its responsibility, the functions of stewardship, service provider, financier or generator of resources.

The Project made some progress in changing the organization and management of the State Health Systems, including the development of health insurance functions, but its progress towards its objectives in this area was perhaps the weakest overall. The introduction of the Seguro Popular called for an organizational separation of the functions of oversight, financing and service provision, and the creation of insurance agencies, or Regimenes Estatales de Protección Social en Salud (REPSS). This separation of functions was expected to eventually lead to stronger accountability

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mechanisms between the REPSS and service providers, including the possibility of establishing performance-based payment systems, and pave the way for the possible purchase of services from all existing provider networks in Mexico. As targeted, 30 out of 32 federal entities have established Ministries of Health operating as stewards of their states’ health systems. To date, all states have established REPSS, eighteen have joined forces under the Commission for the Organizational Restructuring of State Health Systems to further advance the organizational and institutional reforms and two have adopted the strategic purchasing of hospital care services (against an originally ambitious target of 16).

Technical assistance activities for organizational restructuring only got underway in 2008, most of the efforts have concentrated in carrying out the legal analysis in 14 of the country’s the Federal Entities that is necessary to implement the required organizational restructuring. A significant effort was dedicated to developing a shared vision of the separation of responsibilities in the long term, and in the developing and understanding of the rationale for the needed organizational restructuring.

The Seguro Popular faces many challenges. One of them consists, as universal coverage nears, of shifting towards the effective administration of its entitlements. To promote this shift, further changes to the organization and management of the State Health Systems are necessary; most importantly, further autonomy of the REPSS and the strengthening of its functions. In the meantime, refined and stronger performance management arrangements between the Commission and State Health Systems have to be put in place. Enhancing the effective administration of Popular Health Insurance entitlements will also hinge on improvements in the understanding of entitlements under the Popular Health Insurance by beneficiaries as well as on fostering demand for health promotion and disease prevention.

Pharmaceuticals. The Project supported several activities aimed at increasing the efficiency and effectiveness in the supply of pharmaceuticals, and made significant progress in this area. A 2002 study had identified two problems related to shortages of pharmaceuticals: budgetary and, especially, efficiency with respect to planning, purchasing, distributing and prescribing. These findings gave rise to a strategy to improve access to pharmaceuticals in the SESA that included: (i) distance education for SESA staff in planning inventories, demand and administration; (ii) monitoring and the dissemination of information on suppliers and prices of pharmaceuticals; (iii) training for the adequate management of the hospital pharmacies; (iv) promotion of outsourcing, and (v) monitoring the quality and timeliness of access to pharmaceuticals by SESA users.

Significant progress was also made in the distribution of essential medicines included in the Essential Health Services Catalogue (Catalogo Unico de Servicios Esenciales de

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Salud, CAUSES) to beneficiaries of the Seguro Popular: by project completion, 87.7% of the patients surveyed reported that their prescriptions were filled in a timely manner17.Some progress was made in adopting innovative models for human resource management and innovative information systems in highly specialized hospitals. The responsibility to develop these was transferred to another area of the SSA, and the implementation of this work is still ongoing.

Figure 3: Percentage of fully delivered prescriptions in SESA’s ambulatory units

Source: DGED

Part C: Strengthening the Federal Ministry of Health’s role as steward of the SPSS

The Project supported the strengthening of the SSA to carry out its stewardship function of the SPSS. For this, the Project assisted in developing and formalizing various processes for affiliation of beneficiaries, accreditation of health units that provide services to beneficiaries, ensuring the adequate supply of high quality medical services to the beneficiaries of the Seguro Popular through provision of infrastructure and equipment, and monitoring and evaluation. Specifically, the SSA developed guidelines for the affiliation processthat establish the criteria for affiliation, the operation of the

17 The original indicator that was to be used to measure progress with distribution of essential medicines was “the number of medicines prescribed and supplied to individuals enrolled in Seguro Popular/number of medicines prescribed to individuals enrolled in Seguro Popular”, and the target was 100 percent. This indicator was modified to reflect progress on the basis of a survey of beneficiaries.

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process, the integration of the national list of Seguro Popular beneficiaries and the determination of the level of the family contribution. Under the Project, the SSA designed the accreditation processbased on an initial audit of the capacity, security and quality of the health units that are pursuing accreditation, as a means of guaranteeing the quality of services in accordance with the Catalogo Universal de Servicios de Salud (CAUSES) and the Fondo de Protección Contra Gastos Catastróficos. Federal and state level staff is responsible for collecting and comparing information on checklists that were developed specifically for the accreditation process. For a health unit to be included in the network of Seguro Popular providers, it must count on a formal approval of accreditation based on an audit as defined in the Manual para la Acreditación y Garantía de la Calidad en Establecimientos para la Prestación de Servicios de Salud (Manual for Accreditation and Quality Assurance in Units Delivering Health Services).

Under the Project, the SSA conceptualized, designed and put into practice two processes aimed at ensuring the adequate supply of high quality medical servicesto the beneficiaries of the Seguro Popular: the Plan Maestro de Infraestructura en Salud (PMIFS) and the Plan Maestro de Equipamiento en Salud. The PMIFS aims to: (i) guide the process of decision-making and prioritizing infrastructure development; (ii) determine the supply of infrastructure necessary to respond to the demand for health services, under a real and virtual supply network that includes the entire territory; (iii) provide proposals and recommendations to optimize and strengthen existing infrastructure; and (iv) identify criteria to prioritize infrastructure investments on the basis of the population’s health profile. The PMIFS includes a definition of the different models of health units, and architectural plans, and a process for the design of different models of new health units. The SSA developed the Certificado de Necesidad (Certificate of Need) for infrastructure (new works, replacement works, expansion, strengthening and relocation) to function as a planning instrument that would determine the infrastructure needs of the various Federal Entities for their incorporation in the PMIFS. DGPLADES is responsible for reviewing and approving the requests for Certificado de Necesidad that are prepared and forwarded by the SESAs, using criteria that were developed specifically for this purpose. Like the PMIFS, the Plan Maestro de Equipamiento (PME) aims to ensure that the health units can count on the necessary equipment to deliver the health services demanded by the beneficiaries of the Seguro Popular, while promoting the optimal use of that medical equipment. The PME has helped to reassign medical equipment to the optimal locations in the country, and to carry out and update the medical equipment requirements of the Federal Entities. The Certificado de Necesidad for medical equipment is a planning instrument, developed under the Project, that promotes a more rational use of technological resources for health and helps coordinate the provision of both infrastructure and equipment in the Modelo Integrador de Atención a la Salud (MIDAS, Integrator Model of Health Service Provision). It permits the carrying out of an evaluation of investing in a given equipment for medical attention at a specific place and time, applying criteria relating to medical and epidemiological needs, installed capacity in the region, perceived demand, cost-effectiveness, operational and financial feasibility for use, and expected impacts for the target population.

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The General Health Law mandates the use of the Certificado de Necesidad as a prerequisite for requesting the establishment of new health service units and the acquisition of new technologies, as well as for inclusion in the PMIFS and PME, for participating as service providers, for receiving financing from the SSA. The process for the putting in place the system of the Certificado de Necesidad for infrastructure and medical equipment has brought important benefits to the Federal Entitites. It has contributed to strengthening the strategic planning capabilities of the health units, to the development of their capacity for project evaluation and appraisal, to permit them to see the individual health unit within a larger network of health service delivery, and facilitated the management of financial resources. All of the infrastructure and medical equipment financed under the Project had as a prerequisite that it be included in the PME. The SSA through CENETEC provided invaluable support to the Federal Entities by disseminating technical information regarding medical equipment, that has supported their decision-making with respect to the acquisition and use of different equipment, and the integration of health service networks to promote accessibility, quality service and optimization of resources. All medical equipment financed under the Project was required to adopt the technical specifications for purchase disseminated by CENETEC. This requirement, in addition, made the procurement of these items more transparent and efficient.

Under the Project, the SSA carried out several evaluationsof the Seguro Popular, and developed a monitoring system for the program. A broad evaluation of the Seguro Popular was carried out in 2006. It was conducted by researchers from Harvard University working together with specialists from the Instituto Nacional de Salud Pública. The SSA also carried out an external evaluation of Sistema de Protección Social en Salud focussed on the Regímenes Estatales de Protección Social en Salud (REPSS). This evaluation provided a more definitive analysis of the progress in the separation of normative, financing and service provision functions among the Federal Entities, and measure progress in the strategic purchasing of health care services. Also, since 2002 the SSA has published the annual Informe para la Rendición de Cuentas that provides information on over 50 pre-defined health indicators.

Overall, the restructured Project’s achievement of its Development Outcomes is considered Moderately Satisfactory. By supporting the states in expanding and improving the infrastructure needed to provide health care services to the rapidly expanding beneficiaries of the Seguro Popular, by strengthening and improving the provision of medicines, and by ensuring that health units counted on the equipment needed to deliver quality service, all of which represented by far the largest share of Bank financing under the restructured Project, the Project addressed supply side constraints that would have restricted the provision of services to the program’s beneficiaries had they not been in place. Progress on the institutional side under Parts B and C of the restructured Project, was slower than had been anticipated, but no less important, since the basic structure for the Seguro Popular is now in place, and will continue to be supported and strengthened by the Government, with Bank assistance under the recently-approved Social Protection System in Health Project.

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3.3 Efficiency An ex-post economic analysis was not prepared for the ICR. Still, the restructured Project’s efficiency can be evaluated on the basis of early indications of improved efficiency of the health system, efficiency in implementing the PMIFS, and efficiency gains in the distribution of medicines and pharmaceuticals to the Seguro Popular’s beneficiary population. With respect to the health system in general, there are several findings based mostly on internal and external evaluations of the Seguro Popular that bode well for its contribution towards improving the efficiency of the delivery of health care services in Mexico. These findings include: (i) increases in the spending on the health of people without contributory social security (under IMSS and ISSSTE); (ii) the removal of financial barriers to access health services; and (iii) reductions in the likelihood of suffering from catastrophic and impoverishing health expenditures.

Since the establishment of the Seguro Popular yearly health care spending on individuals without contributory social security has increased from US$52 per capita in 2001 to US$154 per capita in 2004, thereby beginning to address the inequities in public health spending across the different systems. The ratios of public health expenditures for IMSS and ISSSTE in relation to the previous public health system for uninsured individuals were 5:1 and 6:1, respectively. With the introduction of the Seguro Popular, those ratios have dropped to 3:1 and 4:1, respectively. Inequities in public expenditures across federal entities have also narrowed.

There is evidence that affiliation to Seguro Popular has removed financial barriers to access health services, resulting in the higher utilization of inpatient and outpatient services than for the uninsured, which in turn is expected to translate into better health outcomes in the future. The utilization of services by those who perceived that they needed health care attention increased from 61 percent in 2005 to 64 percent in 2006. Utilization was higher for Seguro Popular beneficiaries (63.6 percent) compared to those that were not enrolled and insured (58.3 percent).

Affiliation with Seguro Popular has also been shown to reduce the likelihood of suffering from catastrophic and impoverishing health expenditures, as compared to those that are not insured. Between 2005 and 2006, affiliation with Seguro Popular was shown to reduce the proportion of individuals suffering catastrophic expenditures by 23 percent, and the probability of incurring catastrophic health expenditures was estimated as eight percent less for households with Seguro Popular beneficiaries than for uninsured households.

As the Seguro Popular has only been in place since 2003, it is still too soon to see its full effects on increased health system efficiency and, eventually, improved health outcomes. For the Project, which financed the supply-side through improvements in service

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provision and institutional strengthening of systems to support the Government in the roll-out and scale-up of the SPSS by improving access of the poor people that are eligible for enrollment or enrolled in the Seguro Popular, it is even more difficult to quantify its impact on efficiency in such a short period of time. Still, experience from other countries that have implemented similar non-contributory health insurance systems confirm that those systems have played a major role in achieving universal health insurance coverage, and improving health system performance through improved utilization and financial access to health care services and a reduction in catastrophic health expenditures.

The separation of functions of service delivery and financing at the state level is expected to result in increased health sector efficiency, through introduction of market mechanisms such as great choice of health care providers, cost-effective purchasing, devolution of budget and some degree of public-private provider mix. Furthermore, these changes will prepare the SSA for a future functional integration of health service provision.

As described earlier, the PMIFS was designed to optimize and rationalize installed capacity, while promoting greater interaction and coordination among the institutions and units to make the most efficient use of installed capacity. The process for including proposed physical infrastructure activities in the PMIFS was evaluated and later decided upon based on information provided in an instrument called the Certificado de Necesidad (Certificate of Need). The PMIFS prioritized marginalized areas, defined on the basis of the Mexican National Population Council’s Municipal Marginality Index, that includes criteria such as poverty levels and distance from urban areas. Among Mexico’s 2444 municipalities, 2200 municipalities considered of high and medium marginality were targeted by the Project.18 Overall, 52 percent of the infrastructure and equipment activities financed by the Project were targeted at municipalities of high and medium marginality, and accounted for 27 percent of resources allocated for these purposes under the Project. This is because the infrastructure for health units in these areas involved mostly smaller, less costly health units. Larger investments supported in 18 municipalities with low marginality indices represented slightly over half of loan resources allocated to infrastructure and equipment activities. These larger investments financed the construction and equipping of regional referral hospitals of up to 120 beds that constitute the cornerstone of the service delivery networks under the new integrated health care model (MIDAS), and serve Seguro Popular beneficiaries living in near by municipalities that are part of the respective delivery network.

3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory The Project’s Overall Outcome Rating is considered to be Moderately Satisfactory. This composite is based on the following considerations. The Project almost immediately

18 Of these, 125 are identified as being of very high marginality, and receive funding from a targeted 100 X 100 program that aims to improve service delivery through large investments in those areas. As a result, these 125 municipalities were not prioritized under the Project.

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after effectiveness lost its relevance, and accomplished few, if any, of its expected outputs or outcomes. Its outcome rating for this early period would be considered unsatisfactory. However, through the second restructuring, the Project regained its relevance, to the extent that it supported the Government’s flagship social protection in health policy—it is hard to imagine how the Project could have become more relevant. The accomplishment of the restructured Project’s Development Objectives fell short in some areas--not in the establishment, but in selected aspects of the strengthening of institutions that it had helped establish. On the other hand, the Project exceeded its targets in other areas, such as enrollment of uninsured individuals, and increasing the number of health institutions that were accredited with the SPSS that furthers the Federal Entities’ capacity to deliver ever more quality and timely health service in the future. Furthermore, there is every reason to believe that what were in retrospect overly ambitious institutional strengthening targets will most certainly be met, and with the Bank’s support and assistance under the Social Protection System in Health Project. Finally, there are promising indications that the Project supported the initial scale-up of a program that will lead to increased efficiency in the delivery of health care services to Mexicans, and the activities it financed were carried out efficiently.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development During the first phases of scaling-up of the Seguro Popular, families in the first and second income deciles, which include the indigenous population, were given priority for enrollment. However, affiliation rates of indigenous peoples have lagged behind total affiliation rates. For example, between 2006 and 2009, while the number of affiliates to the Seguro Popular increased 88.2 percent, the number of indigenous affiliates increased only 83.6 percent. Moreover, there is still a large portion of the indigenous population that needs to be reached by the Seguro Popular. For example, the insurance has reached only 68.8 percent of the localities with greater than 40 percent of indigenous population. This equals 16,571 localities with approximately 4 million inhabitants out of a total of 24,090 localities with 6.5 million inhabitants. Furthermore, in general, only 27.5 percent of the indigenous population has declared that it is enrolled in any type of health insurance; 38 percent of which are enrolled with the Seguro Popular. (b) Institutional Change/Strengthening The Project, as appraised, was to support an improvement of the delivery of basic health care services, the responsibility for which had been decentralized to the Federal Entities in the 1980s and 1990s. It relied upon a vertically integrated organizational model where

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the functions of oversight (stewardship), financing and service provision were centralized in state ministries of health.

By supporting the implementation of the SPSS, governed by the General Health Law approved in 2003 and its regulations, the restructured Project had a major impact on the institutional structure for the delivery of basic health care services to the uninsured population in Mexico. This law also created the Seguro Popular, the health insurance component of the health reform and regulated the National Commission for Social Protection in Health (the Commission), a unit within the SSA with technical, administrative and operational autonomy that is responsible for the implementation of the SPSS, which was indirectly supported under the restructured Project, along with activities that helped the SSA to develop, coordinate, monitor and evaluate and regulate the health system that is under the responsibility of the federal entities. The SPSS is in place, fully functioning, and institutionalized, although its expansion and strengthening is a continuous process involving challenges that the Government will continue to address in the future. Multi-year Coordination Agreements between the SSA and each of the Federal Entities specify the commitments of both parties regarding affiliation targets and estimates of the annual flow of financial resources in accordance with the General Health Law.

With the introduction of the Seguro Popular, the implementation of which the restructured Project supported, the regulatory framework for the state health systems stipulated an organizational separation of those functions, and the creation of REPSS (which all Federal Entities have now established and functioning). The REPSS are charged with guaranteeing the social protection actions in health through the financing, and timely and systematic coordination of the delivery of health services. The REPSS perform the following responsibilities: (i) ensuring the coverage of health services provided by the insurance; (ii) promoting the separation of functions at the state level; (iii) providing the timely supply of medicines; (iv) carrying out the affiliation process; (v) disseminating beneficiary rights and obligations; (vi) protecting the rights of beneficiaries; (vii) budgeting based on results; (viii) channeling resources to the service providers through agreements; (ix) verifying that the providers of services fulfill the requirements of the General Health Law; and (x) managing payments to providers and accountability. This separation of functions at the state level is expected to lead to stronger accountability mechanisms between the insurance agencies and service providers, and, as mentioned previously, to the possibility for those agencies to purchase health services from all existing provider networks (including the networks of IMSS and ISSSTE), which would in turn enhance access to services, make the use of existing service infrastructure more efficient, and facilitate the portability of insurance coverage across state health systems, thereby beginning to address the fragmentation of the Mexican health system. (c) Other Unintended Outcomes and Impacts (positive or negative) N/A

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3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Opinion surveys show that the Seguro Popular beneficiaries are satisfied with the program. According to the two surveys carried out in 2008, as mandated by Congress, more than 95 percent of beneficiaries were “very satisfied” or “relatively satisfied” with Seguro Popular, and 95 percent of health service users were “very satisfied” or “somewhat satisfied” with the health services provided. More than nine out of ten beneficiaries responded that they would return to the same health clinic when needed. In December 2008, 99 percent of beneficiaries responded that it was “very probable” or “probable” that they would continue affiliated with the Seguro Popular. The surveys show improvements in waiting times at health service facilities over time, with users waiting an average of 59 minutes (September 2009) to receive medical attention. A survey carried out in 2009, broke down levels of satisfaction, by component of the Seguro Popular. The average satisfaction rating was 95.9 percent, broken down as follows: (i) enrollment process, 96.3 percent satisfied; (ii) attention in general, 96.5 percent satisfied; (iii) medical attention, 96.4 percent satisfied; (iv) performance of the medical doctor, 96.4 percent satisfied; (v) services received, 94.9 percent satisfied; (v) satisfaction in general, 94.9 percent satisfied. As part of the preparation of the loan in support to the SPSS an indigenous consultation was carried out (December 2009 – January 2010). The results of the consultation indicated that Seguro Popular is highly accepted among indigenous. From the total on indigenous interviewed and that are already Seguro Popular affiliates, 91% would recommend other people to join the insurance and none of them said that it would not recommend it.

4. Assessment of Risk to Development Outcome Rating: Negligible The Risk to Development Outcome of the restructured Project is considered Negligible.The SPSS, the Seguro Popular, and its financing are grounded in the General Health Law and widely supported by all stakeholders and political parties. As such, Seguro Popular is a national policy, whose financing is grounded in law, as opposed to a program, whose allocations could be adjusted on the basis of Government priorities. The Seguro Popular,which counts on infrastructure and other institutional streamlining and strengthening activities financed under the Project, is fully functional, and has expanded rapidly to an enrollment of over 30 million individuals, covering 266 interventions. As such, it is the largest health insurance system both in terms of coverage and benefits for an uninsured population in Latin America, where experience confirms the significant role that such non-contributory health insurance schemes can play in achieving universal health coverage. The greatest challenge to the SPSS could be the current economic crisis which has led to an increase in informal employment and unemployment, and consequently and increase in the number of persons without access to contributory social security systems that depend on public health care. However, recent actions by the Government to expand substantially the Seguro Popular during an economic crisis through Congressionally approved modifications to the General Health Law bode well for the Government’s

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determination to achieving its goal of providing health insurance to all Mexicans by 2012. Alone, the modification to the Law resulted in a reduction of premiums that will allow the enrollment of more than 10 million additional beneficiaries within current state health system budgets.19

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Unsatisfactory The Bank’s Performance in Ensuring Quality at Entry is considered Unsatisfactory. As mentioned in Section 2.1, the Project was a follow-up to the Second Basic Health Care Project that had been rated Highly Satisfactory, and incorporated relevant lessons learned during implementation of that Project. However, the health care delivery model that the earlier Project supported was no longer consistent with the Government’s strategy and priorities for the health sector. Increased financing through a model that was no longer relevant--satisfactory as its implementation may have been under the earlier project--was doomed to failure when the Government changed fundamentally its service delivery model. Also as mentioned in Section 2.1, although the General Health Law that provided the framework for the SPSS was approved only in 2003, the incorporation of Seguro Popular as a strategy was included in the Government’s National Health Program 2001-2006. It is difficult to understand, therefore, how the Bank, with a history of successful assistance to Mexico’s health sector and a strong sector dialogue, was not aware at the time the Bank’s financing for the Project approved in mid-2001, that the new Administration was considering a major redirection in the service delivery model for providing universal access to basic health care. At the very least, the Bank team should have established a dialogue with the incoming Administration in order to confirm whether the Project’s objectives were still relevant. There were other problems with the Bank’s Performance in Ensuring Quality at Entry, as described in Section 2.1. The preparation team’s handling of the Bank’s safeguards framework was deficient. Although the Project was classified as a Category B for environmental purposes, the Environmental Assessment (or Annex in the PAD) dealt only with the issue of medical wastes, and the Project’s Operational Manual did not include requirements to follow the Bank’s environmental, Indigenous Peoples’ or Pesticides safeguard policies. The Project’s treatment of risks, and the design of its monitoring and evaluation were also superficial. In retrospect few of the risks that came to affect the Project’s implementation had been identified during preparation, and the Project’s early implementation was potentially threatened by a variety of these unidentified risks, not the least of which related to the Bank’s inability to enforce its safeguard policies, if any issues had arisen. The Project’s monitoring framework and

19 The reduction in premium levels rectified a discrepancy between the information on family size that fed into the original calculation of the premium (based on 4.3 members per family based on census data) and the actual average size of beneficiary families (3.1 members per family).

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indicators, as originally designed, would have been extremely difficult to track and follow, at best. (b) Quality of Supervision Rating: Moderately Satisfactory The Quality of the Bank’s Supervision needs to be divided into two distinct phases: from loan approval until about mid-2005, the first phase, and from then until project completion, the second phase. During the first phase, the Quality of Supervision was Unsatisfactory. Early supervision focused mainly on following up on compliance with effectiveness conditions, budget allocation, restructuring in the SSA, and procurement issues and process streamlining. By mid-2003, the Implementation Status Report mentioned the new General Health Law, but, by and large, appeared to view the Project as still very relevant as an instrument to support the implementation of the SPSS, albeit with the need for a minor loan amendment. The Bank began working with the Government to redesign the Project as a SWAp, and preparatory work towards this was started. Work towards the Project’s first restructuring intensified in mid-2004, especially towards helping the Government establish a system of monitoring and evaluation that could measure the then soon-to-be restructured Project’s impact at the state level. At about that time, Bank technical supervision also intensified, and became very results-oriented, assisting the Government to put into place the information, monitoring and other systems that it needed to implement its new health care delivery model. When the Government found that the first restructuring would not allow for a retroactive disbursement of expenditures it had incurred in the earlier two years, the dialogue began to suffer. An ISR dated April 2005, reports that this was due to: “(i) the first amendment was insufficient to reflect actual government implementation arrangements for the project; (ii) during 2003 and 2004 (18 month preparation of the first amendment) the government did not follow procedures and did not document activities as later specified in the first amendment; (iii) the Bank team has been unable to find substantive supporting documentation about Bank-government agreements reached during the preparation of the first amendment that would have facilitated disbursements; and (iv) the government has had expectations about the first amendment (it assumed it is a full SWAp) that are not fully supported by the first amendment.” Basically, the Bank had sought a rapid solution to get the Project in line with the Government’s new General Health Law, but somewhere along the line there had been an issue in communications and in understanding what sort of restructuring this would have entailed. With a large undisbursed balance, the Government requesting support for a new, ambitious health program, the Bank had been slow in identifying the need to restructure the Project, and when it did had not been able to restructure it in a manner that responded to the Government’s program. Shortly thereafter, the Quality of Bank Supervision made a huge turnaround, and is rated Highly Satisfactory. An intensified supervision and mission effort, including a change in the Bank’s Task Manager, a thorough review of the Project, the Government’s program, and the assistance it requested from the Bank resulted in the two-step process that eventually culminated in the Project’s second restructuring. The Bank’s responsiveness improved dramatically, even though in the process of restructuring the Bank’s team had

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to address relatively delicate issues such as addressing the Project’s retrofitting to the Bank’s safeguard policies, and the auditing of already financed expenditures for purposes of safeguard compliance. The amount of coordination, time and effort that was involved in bringing the Project into compliance with the Bank’s safeguard policies was enormous, yet the Bank’s supervision team was determined to start from scratch in making the Project fully responsive to the Government’s needs and fully compliant with the Bank’s policies. The Bank’s supervision during this second phase was intensive, results-focused (so much so that refinements to the Project’s monitoring matrix were still being made in the Project’s final month of implementation), responsive to the Government’s needs and priorities (e.g., the restructuring to respond to the A/H1N1 Virus), and technically strong. It was complemented by several parallel advisory or general supervision activities aimed at furthering the reform process at the level of the Federal Entities and of promoting a greater understanding of Bank fiduciary requirements for the Project (Annex 18). Supervision during this phase succeeded in turning around what had become a somewhat cautious dialogue into one where the Government continues to seek the Bank’s technical and financial support for the next stage in implementation of the SPSS. Weighing the Quality of the Bank’s Supervision during both of these phases, especially in view of the important contribution that its assistance during the final phase made to the Project’s overall outcome, a overall rating of ModeratelySatisfactory appears justified. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory Overall Bank Performance is considered Moderately Satisfactory. This rating is weighted based on a rating of Unsatisfactory for Quality at Entry and Moderately Satisfactory for Quality of Supervision, and an overall rating of Moderately Satisfactory for the Project’s Achievement of its Development Objectives. Despite early loss of relevance, significant issues with preparation and early supervision, the Bank was able to overcome these initial setbacks and to support and work closely with the Government in partnership not only to achieve important results under the Project as described earlier, but to develop a true partnership with the Government in the implementation of the Seguro Popular.

5.2 Borrower Performance (a) Government Performance Rating: Satisfactory It is difficult to rate the Government’s performance from the time of preparation until the time of the Project’s first restructuring. In effect, the Government’s priorities had changed, and the Project as then designed no longer responded to its priorities. From the moment the Government enacted the General Health Law, its priorities were clear, and it worked closely with the Bank to ensure that the Project could be adjusted to be responsive to its sector priorities. The Government embraced the challenge of launching a very ambitious and comprehensive reform process, understanding the need to strengthen the supply of quality services in order to improve access of the poor people to the Seguro Popular in a very short period in order to reach universal coverage by 2012. Budgetary authorities were responsive to what this represented in terms of budgetary allocation, and provided the necessary budgetary resources. The Government was

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successful in putting in place major changes in its internal financial mechanisms to allow for the expansion of the Seguro Popular, and as a result, the implementation of the Project’s activities received broad support. The participation of Nacional Financiera (NAFIN), the Borrower, was consistently supportive throughout implementation. NAFIN, as the Government’s financial agent, provided a high degree of continuity and an adequate transfer of knowledge, implementation support and oversight based on its many years of experience with Bank-financed projects, maintaining adequate records and accounts to reflect the Project’s operations and financial status. Overall, the performance of the Government was highly supportive of the Project, and is considered Satisfactory.

(b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory The SSA through its General Directorate of Planning and Health Development (DGPLADES) was responsible for the Project’s overall implementation, working as appropriate with the state health secretariats and other implementing units. Project implementation performance was generally unsatisfactory until the Project’s second restructuring. Upon approval of the Project’s third restructuring, DGPLADES began to assume a critical role in the implementation of the restructured Project, maintaining close coordination with other of the SSA’s General Directorates, as required, and with the many state health service planning units. Obviously, the SSA was driving the Project’s second restructuring in an effort to make the Project compatible with the Government’s priorities. Its technical personnel worked on the conceptualization of the restructured Project and in the development of the Project’s indicators. The SSA was very supportive of the Bank’s need to “get things right” and DGPLADES staff participated very actively when was requested by the Bank to carry out a special safeguards audit and develop appropriate environmental and social frameworks for the Project. DGPLADES had the ability to promote innovative initiatives and to mobilize state and federal support for carrying them out, and in the process developed strong capacity to design and execute the Project’s technical assistance activities. It developed innovative planning tools such as the PMIFS and PME which has been used as the basis for developing the Health Sector Master Sector Plan for Infrastructure (Plan Maestro de Infraestructura Sectorial) expected to become the health needs diagnostic for the entire country (public and private), and which has already been replicated in other countries in the region. The SSA implemented and coordinated the Project with high technical standards and was successful in institutionalizing the changes it designed such as the PMIFS and PME, the Sistema de Información de Gerencia Hospitalaria (SIGHO, Hospital Mangement Information System), the Certificate of Needs (works and equipment) that feeds the PMIES, the development of health centers and community hospitals with intercultural

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focus, managements tools in hospitals, and the development of innovative models of ambulatory surgery care units (UNEMES).20 DGPLADES was able to manage well a large construction and equipping program (around 205 infrastructure and equipment projects) that involved complex procurement and that ultimately supported the increase in service utilization by Seguro Popular beneficiaries. DGPLADES demonstrated good capacity to process information in a timely manner, as necessary to monitor project activities. It established a process of consultation and dialogue with all of the relevant actors, particularly at the state level, and intensified efforts to promote an interchange of new experiences, problems and ideas between different states, incorporating or adjusting their program as required addressing the findings. DGPLADES handled daily administration, the coordinated with the different technical groups of the SSA and state authorities, and managed fiduciary issues in close coordination with NAFIN. Overall decision-making remained the responsibility of the Undersecretary of Innovation and Quality upon which DGPLADES depends directly. On a less positive side, there was a high turnover of staff in the Undersecretariat of Innovation and Quality, and particularly in DGPLADES throughout implementation, as described in Section 2.2. Overall, the Implementing Agencies’ performance is considered Moderately Satisfactory. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory Overall, the Borrower’s performance is considered Moderately Satisfactory. This takes into account performance during the Project’s early phase of implementation, but especially after the second restructuring, and is based on the Government’s and the Implementing Agencies’: (i) ownership and commitment to the preparation of the Project’s second restructuring and its implementation thereafter; (ii) commitment to the Project’s development objectives; (iii) ability to increase substantially the amount of budgetary resources allocated to health services through Seguro Popular; (iv) commitment to “retrofit” the Project to bring it into compliance with the Bank’s safeguard policies; (v) provide counterpart funding throughout implementation despite the severe fiscal constraints the country is facing; (vi) periodic turnover of staff and staffing shortages in DGPLADES; (vii) a perceived lack of commitment to advance the process of organizational restructuring at the state level; and (viii) occasional fiduciary issues as described in Section 2.4.

6. Lessons Learned (both project-specific and of wide general application) The Project and its implementation offer several lessons, both respect to the implementation of health projects, and to the delivery of Bank assistance.

20 UNEMES are Specialized Ambulatory Units. There are different types of UNEMES by specialization: oncology, ambulatory surgery, hemodialisis.

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With respect to the delivery of Bank assistance, the following lessons are relevant:

¾ Follow-up operations, even if scaling up Bank assistance to what had been highly successful predecessor projects, are not guaranteed to perform well, especially if realities and more importantly, the government’s priorities or programs change implementation modalities. The Project followed on the earlier PAC that had been rated Highly Satisfactory for outcome, yet the Government’s Health Reform resulted in a major redirection in its sectoral priorities.

¾ The pressure to move towards loan approval, especially in the immediate aftermath of a change in Government administration, may lead to supporting a project that no longer responds to the new administration’s priorities.

¾ The Sector-Wide Approach (SWAp) mechanism offers an important modality for supporting the entirety of a Government program, and for scaling up the impact of Bank assistance. It also serves to elevate the level of the Bank’s dialogue to almost the entirety of a sector, as opposed to an individual project. However, for a SWAp to be an effective vehicle for Bank assistance, it is important to understand the Government’s internal financial management arrangements and incentives, and agree upon the loan’s fiduciary requirements so that they are compatible with those of the Government.

¾ When a major preparation issue is uncovered, it is best to address that issue straight on, and correct the problem. What can be considered minor preparation problems, often become bigger ones, and it is best to invest the additional time and effort to get things “right” as soon as an issue surfaces. For example, when the Bank’s supervision team found that the Bank’s safeguard policies had not properly been incorporated in the Operational Manual, it made the effort to go back, incorporate the required provisions, and carry out an audit to ensure that the expenditures that had already been financed complied fully with the Bank’s policies.

¾ When a project is not performing, sometimes a “quick fix” is not sufficient. Often it is worth stepping back and starting from scratch to redesign the Bank-financed Project (which was the case with the Project’s second restructuring). And sometimes, given unfulfilled expectations from the client, it may make sense to agree upon a two-step process for full restructuring. However, the two-step process followed under this Project impacted the “weighting” in the calculation of the Outcome Rating for Formally Revised Projects, as per the ICR Guidelines.

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Given problems with the first restructuring, and client expectations of disbursements, the two-step process amended the loan to facilitate a large disbursement that the client had expected with the first restructuring while carrying out a comprehensive restructuring. But the large disbursement increased the weight assigned to unsatisfactory performance before the Project’s second restructuring.

¾ Financing large operations in federal states pose unique challenges, especially given the different institutional capacities and social realities of the various federal entities. Targets for activities addressing institutional capacity strengthening, for example, should be conservative to take into account the challenges of working with various levels of government with a wide range of capabilities.

¾ Intensive supervision of what is a “problem project”, coupled with other complementary assistance activities on the part of the Bank, can turn a project around. More importantly, a tense relationship with a client, due to expectations of Bank assistance that does not materialize, can be strengthened and improved, but it requires hands-on assistance and support. When the Project’s implementation had not improved after the first restructuring, the Government’s expectations in terms of disbursements were not met. This led to a somewhat difficult relationship with the client. In order to respond to those expectations, the Bank adopted the two-pronged approach of processing a quick amendment that permitted expected loan disbursements, while processing a detailed restructuring to adjust definitively the Project to the Government’s program. This approach responded to the client’s needs, but involved intensive hands-on assistance and supervision resources on the Bank’s part.

With respect to the implementation of health projects, the following lessons are relevant:

¾ In highly decentralized systems, successful implementation of comprehensive health sector reforms hinges on the effective use of incentive and support systems and, yet, tend to require ample time (often up to two decades).

¾ Because of the importance of strong monitoring and evaluation systems for large government programs such as this one, the Project's results framework, which should be similar to the Government's program monitoring framework, should be included among the legal agreements for the project, with the requirement that the

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monitoring of progress against that framework should begin immediately upon start of project implementation, readjusted as necessary throughout implementation.

¾ Projects should also have in place agreed, reliable and efficient information systems that support the project’s monitoring and evaluation, from the start of implementation. The adequacy of these systems should be reviewed periodically by the Bank in the course of routine supervision.

¾ The experience with non-contributory health insurance programs reveals the following with respect to inequality in financing and benefits: (i) the level of financing is generally higher and more stable, but lower in comparison with contributory health insurance; (ii) benefits are defined, but limited; (iii) fiscal limitations often constrain their rapid expansion; (iv) factors such as access, and knowledge of benefits affect demand for services; (v) contributory programs are not as effective in providing coverage for a target population; and (vi) on the negative side, weaknesses in information systems reduce the efficiency and progressiveness of subsidies.

¾ For non-contributory health insurance programs to function effectively, the following are needed: (i) regulatory systems to guide the contracting process; (ii) strong institutional capacity in the financing agencies for strategic contracting; (iii) service providers with sufficient autonomy and human resource capacity to respond to financial incentives; and (iv) elimination of public financing, outside the framework of the health insurance system, to respond to supply incentives.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies Not applicable (b) Cofinanciers Not applicable (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) Not applicable

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components

Total cost at Second

Restructuring Estimate (US$

millions)

Total IBRD cost at Second

Restructuring (US$ millions)

Actual IBRD financing (US$

millions)

Actual IBRD as Percentage of

Appraisal

1. Improve access of the poor to services included in the SP benefit package

542.30 320.90 320.90 100%

2. Restructure State Health Systems

2.40 1.90 1.90 100%

3. Strengthen SSA in its role as the health systems steward

33.00 23.70 23.70 100%

Total Baseline Cost 577.70 346.50 346.50 100% Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00

Total Project Costs 577.70 346.50 346.50 100% Front-end fee PPF 0.00 0.00 0.00 Front-end fee IBRD 3.50 3.50 3.50 100% Total Financing Required 581.20 350.00 350.00 100%

(b) Project’s costs by Category Disbursement Category Government

(US$m) Bank

(US$m) Total

(US$m) 1. Civil Works 0.128 0.298 0.426 2. Goods 0.634 3.895 4.529 3. Pharmaceuticals 47.790 47.790 4. Services 0.666 4.088 4.754 5. Financing of State Programs 221.400 264.322 485.722 6. Operational Costs 8.372 26.106 34.478 8. Laboratory Equipment and Supplement under Part D of the Project

0.00

Front-end Fee 3.500 3.500 TOTAL 231.200 350.00 581.200

(c) Financing

Source of Funds Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of

Appraisal Borrower 231.20 231.20 100% International Bank for Reconstruction and Development

350.00 350.00 100%

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Annex 2. Outputs by Component The outputs, by component, of the Project as restructured under the second project restructuring were as follows: Part A: Improving Access of the Poor People that are Eligible for Enrollment or Enrolled in the Subsidized Regime of the Seguro Popular to the Seguro Popular’sHealth Service Benefit Package

The Project played an important role in supporting the development of a strategy to strengthen the supply of health services, linking the financing that it provided with the strengthening of the State Health Systems (SESAs) and with the Seguro Popular’s objectives of providing a pre-defined target number of benefiaries with a package of pre-defined services. The objective of strengthening the supply of health care services was designed to include a set of activities, including: (i) management of health service delivery; (ii) supply of pharmaceuticals; (iii) infrastructure; (iv) evaluation; (v) medical supplies and equipment; (vi) information systems; (vii) human resources; and (viii) organizational structures.

¾ Affiliation The Government’s targets are that the Seguro Popular will achieve universal health coverage for all Mexicans by the year 2012 —enrolling around 44 million of individuals in the subsidized regime of Seguro Popular. Enrollment in the Seguro Popular has grown from 11.4 million individual affiliates in 2005 to 30.7 million at the end of 2009. Figure 1 below presents the progress of enrollment in the Seguro Popular by year, in comparison with the Government’s targets. The percentage of affiliation to the subsidized regime of Seguro Popular reached 69.8% exceeding the 65% that was the target for at the end of the project. Starting in 2008, the Government has made significant progress in enrolling more vulnerable groups such as pregnant women, infants, the population living in areas with the lowest Human Development Index, and others. Figure: 1 Affiliates of the Seguro Popular 2006-2009

Source: Project report prepared by the General Directorate of Planning and Health Development (DGPLADES), 2010

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Enrollment of indigenous people in the Seguro Popular. The pace of enrolling indigenous people in the Seguro Popular has been slower than expected, especially in comparison with the pace in enrolling the population as a whole. In the first phases of scaling up affiliation, the Seguro Popular prioritized families in the first and second income deciles. Despite this, the total affiliation of the indigenous peoples21 still lagged behind that of the general population. For example, in 2008, 60 percent of the total eligible population as compared to only 30 percent of the indigenous population was affiliated. Moreover, there is still a large eligible indigenous population that lacks Seguro Popular insurance. For example, the Seguro Popular has reached only 68.8 percent of the localities that have an indigenous population of at least 40 percent. This equals 16,571 localities with approximately 4 million inhabitants out of a total of 24,090 localities with 6.5 million inhabitants. Furthermore, only 27.5 percent of the indigenous population has declared that it is enrolled in any type of health insurance at all (public or private), 38 percent of whom are enrolled with the Seguro Popular.22 Table 1 below shows that to date, from the 10.5 million families affiliated to the Seguro Popular,only about 8.6 percent are indigenous families. While there has been some progress in extending coverage to these groups, further actions will be needed to achieve universal coverage. Table 1: Coverage of the Seguro Popular in indigenous areas, by federal entity and by family

Federal Entity Families enrolledFamilies enrolled

in indigenous areas /1

% of families enrolled in indigenous areas

1 Aguascalientes 126,070 0 0.0%

2 Baja California 246,872 4 0.0%

3Baja California Sur 42,545 5 0.0%

4 Campeche 119,281 19,380 16.2%

5 Coahuila 161,955 0 0.0%

6 Colima 90,270 0 0.0%

7 Chiapas 681,711 163,555 24.0%

8 Chihuahua 246,155 5,160 2.1%

9 Distrito Federal 417,834 1 0.0%

10 Durango 122,133 3,016 2.5%

11 Guanajuato 676,987 3 0.0%

12 Guerrero 356,840 71,230 20.0%

13 Hidalgo 335,729 57,522 17.1%

21 Seguro Popular does not identify their beneficiaries by their specific ethnicity but by whether or not they consider themselves to be indigenous. 22 Of the rest of the 27.5 percent, 44 percent are enrolled in IMSS-Oportunidades and 18 percent in other institutions. CDI-UNDP study.

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Federal Entity Families enrolledFamilies enrolled

in indigenous areas /1

% of families enrolled in indigenous areas

14 Jalisco 577,856 1,030 0.2%

15 México 1,069,509 30,291 2.8%

16 Michoacán 385,906 9,003 2.3%

17 Morelos 218,286 795 0.4%

18 Nayarit 140,160 7,096 5.1%

19 Nuevo León 223,682 0 0.0%

20 Oaxaca 562,692 161,494 28.7%

21 Puebla 533,985 87,199 16.3%

22 Querétaro 163,407 4,809 2.9%

23 Quintana Roo 108,683 22,114 20.3%

24 San Luis Potosí 282,282 43,590 15.4%

25 Sinaloa 243,386 1,133 0.5%

26 Sonora 186,385 7,378 4.0%

27 Tabasco 445,920 7,514 1.7%

28 Tamaulipas 335,759 0 0.0%

29 Tlaxcala 179,147 1,939 1.1%

30 Veracruz 833,966 102,898 12.3%

31 Yucatán 202,097 98,892 48.9%

32 Zacatecas 196,835 2 0.0%Mexico National 10,514,325 907,053 8.6%

1/Classification of areas in México according to the degree of indigenous people residing, 2000 : The locations with more than 40% of persons speaking indigenous languages with a marginalization rate of high or very high are reported, based on publications in CONAPO’s website.

¾ Physical Infrastructure and Equipment

The SSA agreed with the 32 Federal Entities on the establishment of a Plan Maestro de Infraestructura Física de Salud (PMIFS, Master Plan of Physical Infrastructure for Health) that includes specific physical infrastructure and equipment needs required to strengthen and improve the supply of health services. The PMIFS has been developed through 18 (as of now) service networks aimed at providing the infrastructure and equipment needed to deliver services through the Seguro Popular. (A description of the PMIFS is provided under the description of Component III below.) The Project financed about 205 different activities related to development of infrastructure and provision of equipment that were included in the PMIFS and PME23. Table 2 below provides a summary of the health facilities, by type, that were either constructed/rehabilitated and/or equipped under the Project.

23 These activities benefited 174 health units.

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Table 2: Infrastructure and equipment carried out with PROCEDES resources. Cumulative data 2005-2008

Health Centers

Blood banks Hospitals

Specialized ambulatory

units (UNEMES)

Total

Equipment and construction 33 0 15 3 51

Construction 7 1 62 2 72

Equipment 1 0 13 0 14

Expansion 23 0 39 0 62

Not Specified 2 0 3 1 6

Total 66 1 132 6 205 Beneficiaries 255,000 400,000 7,100,000 1,500,000 955,000 Infrastructure in Health (SSA) 4201 n.a. 438 13 4472

PROCEDES Units 1.60% n.a. 23.50% 38.50% 3.90%

Source: DGPLADES, Presidencia de la República, Tercer Informe de Gobierno, 2009

As can be observed in table above, the Project contributed approximately 4 percent of the works of carried out infrastructure and equipment in the SPSS between 2005 and 2008. However, the relative weight of its contribution was considerably greater in the case of the hospital units (23.5 percent) and the medical specialized ambulatory units (UNEMES) (38.5 percent).

¾ Accreditation of health units The establishment of the Seguro Popular required that the Government be prepared to offer its beneficiaries quality health services, with dignity and security. To achieve this, the SSA developed standards for health sector facilities (accreditation process), to ensure that every facility in the delivery networks reached quality service standards with adequate provisión of infrastructure, equipment, human resources and organization management. The Project, by supporting an improvement in services, contributed helping health units achieve their accreditation. The process of accrediting the health units began in 2004 with the preparation of an Accreditation Manual and the training by the Dirección General de Calidad y Educación en Salud (DGCES, General Directorate of Quality and Education in Health of the SSA) of staff that would be performing the evaluation and accreditation process. As of December 31, 2009, 8,168 health units, representing 66.3 percent of the total 12,321 health units had been accredited to provide services to beneficiaries of the Seguro Popular, slightly exceeding the Government’s targets for 2009. Furthermore, the increase of health facilities financed, concluded and accredited with PROCEDES (38.6 percent) slightly surpassed the target established for achievement by completion of the Project (38 percent). Still, the accreditation process has lagged behind the pace of affiliation of new beneficiaries.

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Also, the progress in accreditation of health units has varied by each of the Federal Entities, as shown in Figure 2 below. In broad terms, there has been a push to expand the supply in areas of easier access, with less progress in the more marginalized areas where the accreditation process would require stronger efforts to bring the health units up to required standards. Only 16 percent of health units have been accredited in the 125 municipalities with indigenous people that have the lowest Human Development Index. The principle concerns that the SSA has identified with respect to the accreditation process are: (i) the fact that in many states the gap in provision for health services was so inadequate prior to the implementation of Seguro Popular that its transformation requires more time; (ii) the fact that most of the health units accredited to date are in urban areas; and (iii) the de-linking of the financing for the Seguro Popular with the process of accreditation. Figure 2: Accredited Health Facilities, by Federal Entity, in Relation to the Total of Health Facilities (Universe=12,321; National Average=56.9%).

¾ Consultant’s Services and Training to Build Management Capacity

In order to strengthen the delivery of health services, DGPLADES developed a training program to build management capacity for responding to the increase in demand for health services. The objectives of this training were to strengthen the capacity to respond to an increased demand in health services by the newly enrolled beneficiaries, improve the efficiency in the use of financial resources, and improve the quality of services delivered. Of great importance within the training program was the planning of the demand and administration of inventories of medicines. The SSA collected information from the 32 Federal Entities on the background and experience of their health sector staff and following a diagnosis of the information, designed training programs that responded to identified needs. A summary of training programs financed by the Project is provided in Table 3 below.

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Table 3: Training Financed by the Project

Type of Event Number of Events Number of Persons Trained

Workshop on Leadership in Health

3 170

Induction and Refresher Course for High-Level Officials

1 60

Masters in Public Health 2 47 Diploma in Leadership in Health Management

10 419

Diploma in Strategic Management and Organizational Development

1 27

Diploma in Health Services Planning

1 40

Telemedicine Workshops 3 91 Workshops in Health Services Extensions (Caravanas)

5 219

Refresher courses for Medical Doctors and Nurses

2 150

Induction Courses for High Level Officials

8 228

TOTAL 36 1451

¾ Development of Management Tools

The Project financed the development of management tools for the management of health units. These tools were aimed at enabling the health teams to identify the beneficiaries’ needs, establish management teams and manage priority processes in health service delivery. The tools developed include clinical tools, statistical for monitoring purposes, strategic, operational, quality enhancement, learning, human resource management and material resource management. DGPLADES prepared a catalog of Management Tools, which includes around 90 different tools, and has made it available to all health units through dissemination on its web page.

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¾ Development of Alternative Forms of Service Delivery

The Project financed several activities aimed at developing alternative forms of service delivery, including Inter-Cultural service delivery models.

Models for Health Units. The Project provided technical assistance for designing architectural plans for inter-cultural health units. These plans have been incorporated in the Manual de Modelos de Unidades Medicas (Manual of Models for Health Units), and will be incorporated in the PMIFS. Consultative Process. Under the Project, DGPLADES developed and published guidelines for carrying out inter-cultural consultation processes, Metodologia Intercultural para la Realización de Consultas Informadas (Inter-cultural Methodology for Carrying Out Informed Consultations), and distributed these to the Federal Entities with instructions on how these should be followed. Accreditation of Health Units in Indigenous Areas.Under the Project, the checklist for accreditation of health units was expanded to include inter-cultural aspects for use in accrediting health units in areas with indigenous population. This involved the inclusion of additional items in the checklist to reflect the inter-cultural aspects of these areas, including for example the need to have staff that were familiar with inter-cultural issues, the availability of bilingual facilitators, and specifics regarding health care issues of indigenous people. Dissemination of the Involuntary Resettlement Policy.In order to comply with the Bank’s Involuntary Resettlement Policy, the Certificate of Needs was modified to incorporate relevant questions on the checklist. Questions relating to the need to acquire land, how they would be acquired (donation, purchase, expropriation), present use of the land, were incorporated, as well as a question as to whether any involuntary resettlement would be involved.

¾ Design, Piloting and Implementation of Monitoring and Evaluation Systems

Due to the complexity of the FOROSS, it was not possible to make an evaluation of this strategy. However, some assessment studies of specific components of FOROSS were conducted. This is the case of the surveys in ambulatory health units in order to measure the level of prescriptions fully and timely filled in 2004, 2005, and 2006. The SSA through one of its units (DGCES) established a monitoring system for the accreditation of health units. This system has been very useful for establishing accreditation plans, together with the SESAs.

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Part B: Restructuring and Developing State Health Systems within the framework of the SPSS.

¾ Technical Assistance and workshops for organizational and institutional restructuring of State Health Systems

The Project provided technical assistance to 14 Federal Entities to support the process of institutional and organizational restructuring of their State Health Systems, to separate the normative, financing and service delivery functions. The objective was to standardize the organizational structure of the SESAs. The principal activities that the consultancy firms were contracted to develop were to: (i) identify the macro-processes of the SESAs; (ii) prepare proposals of organizational and functional restructuring; (iii) validate the restructuring proposal based on the current state standardization; (iv) prepare manuals on organization and on procedures based on quality criteria adhered to the standards of the ISOS; (v) design a matrix of indicators of evaluation of processes, and vi) prepare a dissemination program of all the proposal of restructuring. As these activities only got underway in 2008, most of the efforts have concentrated on carrying out the legal analysis of each of the Federal Entities that is necessary to implement the required organizational restructuring. A significant effort was dedicated to developing a shared vision of the separation of responsibilities in the long term, and in the developing and understanding of the rationale for the needed organizational restructuring. A total of 30 federal entities out of the 32 count on a State Health Secretariat (SESA) that responds to the State’s executive branch, and that is the agency at the state level that is responsible for normative functions, the design of public policy in health and sectoral coordination. Still, in many cases the SESAs are weak and understaffed, or inexistant, and as a result rely on Organismos Públicos Descentralizados (OPD, Decentralized Public Organizations) to fulfill their normative functions. The OPDs are, in general terms, the state-level organizations that are responsible for delivering health care services to individuals and the communities. The Federal Entities’ degree of progress in creating and strengthening the SESAs, can be classified as follows: Group One: Federal Entities that still do not count on a SESA, and as a result show a marked dependence and concentration of responsibilities on their OPDs, that depend on the State’s Executive and assume normative, financing and service delivery functions. The Federal Entities of Aguascalientes, Chihuahua y Zacatecas are in this group. Group Two: Federal Entities where the SESA and the OPDs coexist, and the responsibility is shared among them. Twenty-six Federal Entities are in this group: Baja California, Baja California Sur, Campeche, Coahuila, Colima, Chiapas, Durango, Guanajuato, Guerrero, Hidalgo, Jalisco, Michoacán, Nayarit, Nuevo León, Oaxaca,

59

Puebla, Querétaro, Quintana Roo, San Luis Potosí, Sinaloa, Sonora, Tabasco, Tamaulipas, Tlaxcala, Veracruz, Yucatán and the Distrito Federal. Group Three: Federal Entities that have both an SESA and an OPD that is a service provider, and where the responsibility among them is clearly split. Two Federal Entities are in this group: México y Morelos. Table 5 shows the status of the federal entities with regard to its new administrative structure. Table 5: Administrative Structure of the federal entities.

Federal Entity24 Has a SESA25

Has an OPD26

Responsibility for the SESA and the OPD are the same

AGUASCALIENTES NO YES YES BAJA CALIFORNIA YES YES YES BAJA CALIFORNIA SUR

YES YES YES

CAMPECHE YES YES YES COAHUILA YES YES YES COLIMA YES YES YES CHIAPAS YES YES YES CHIHUAHUA NO YES NO DISTRITO FEDERAL

YES YES YES

DURANGO YES YES YES GUANAJUATO YES YES YES GUERRERO YES YES YES HIDALGO YES YES YES JALISCO YES YES YES EDO. DE MÉXICO YES YES NO MICHOACAN YES YES YES MORELOS YES YES NO NAYARIT YES YES YES NUEVO LEÓN YES YES YES OAXACA YES YES YES PUEBLA YES YES YES QUERETARO YES YES YES QUINTANA ROO YES YES YES SAN LUIS POTOSI YES YES YES SINALOA YES YES YES SONORA YES YES YES TABASCO YES YES YES

24 Entidad Federativa. 25 SESA Secretaría de Salud Estatal. 26 OPD Organismo Público Descentralizado.

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Federal Entity24 Has a SESA25

Has an OPD26

Responsibility for the SESA and the OPD are the same

TAMAULIPAS YES YES YES TLAXCALA YES YES YES VERACRUZ YES YES YES YUCATAN YES YES YES ZACATECAS NO YES NO

¾ State-level seminars and workshops

Since 2005, several workshops were held in Baja California Sur, Guanajuato, Veracruz, Nayarit, Guerrero and Oaxaca to start the process of restructuring of State Health Systems. To provide technical assistance in carrying out these workshops, DGPLADES contracted the Consorcio Hospitalario de Cataluña. These workshops focused on establishing working groups that focussed on: (i) normative functions; (ii) service delivery; (iii) financing; and (iv) resource generation. They also promoted the design of technical assistance activites for the legal restructuring in some states, for the elaboration of internal regulations, and the formation of REPSS. Finally, the workshops led to the creation of the Comisión de Reestructuración Organizativa de los Servicios Estatales de Salud (ROSES, Commission for the Organizational Restructuring of State Health Systems), a discussion forum that succeeded in putting organizational restructuring of health systems on the agenda of the Consejo Nacional de Salud.

¾ Distribution of Pharmaceuticals

The Government has been increasing concerned about access to pharmaceuticals by health care beneficiaries. In 2002, it estimated that shortages of pharmaceuticals (i.e., prescribed medications that were not delivered) was estimated at between 25 and 30 percent. These shortages were due mainly to lack of budgetary resources, inefficiency in the pharmaceutical supply chain, and lack of transparency in the distribution process. Under the Project, the SSA addressed this issue by implementing activities geared to improve, regulate, transform and innovate by increasing transparency in the distribution process and controlling demand. Activities carried out under the Project can be grouped into the following categories: (i) preparation of studies on the process of supply of drugs (planning, purchase and distribution) to detect areas susceptible to improvement; (ii) training of the SESA staff in planning activities, purchase (outsourcing, purchase consolidated, purchase fast), distribution, and management of drug inventories; (iii) design of sites on the Internet with relevant information for the purchase of drugs (suppliers, market prices), and (iv) periodic monitoring of the levels of prescriptions filled fully in a timely manner, especially in ambulatory units of the SESAs.

Improvement in the distribution of prescribed pharmaceuticals is reflected in several surveys, which reveal an increase from 85 to levels above 90 percent of prescribed pharmaceuticals being delivered in full and on time. Figure 3 shows the achievements reached with regard to prescriptions fully and timely filled in SESA’s ambulatory units

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during Project implementation. This achievement surpassed the Project’s target (89 percent) for the end of the project.

Figure 3 Percentage of prescriptions fully and timely filled in SESAs ambulatory units

Source: DGED and DGPLADES

62

Table 4: Achievements in the supply of complete and fully delivered prescriptions by federal entity.

FE

GRO NAY YUC CAMP COA JAL OAX TAMPS BCS SIN NL TAB QROO QRO GTO ZACS TLAX SLP SON CHIS NAL DGO MEX COL VER AGS CHIH HGO BC PUE MICH MOR DF

63

Part C: Strengthen the Secretaria de Salud in its role as the steward of the SPSS.

¾ Design of the Affiliation Process

Under the Project, the SSA developed guidelines for the affiliation process that establish the criteria for affiliation, the operation of the process, the integration of the national list of Seguro Popular beneficiaries and the determination of the level of the family contribution. Each year, the Commission and State Health Systems agree on affiliation targets commensurate with the overall budget envelope for the Seguro Popular. Targets have given priority to families in the lower income deciles and those enrolled into social assistance programs (such as the conditional cash transfer program, Oportunidades, and the food supplementation program, Diconsa). Moreover, since December 2006, pregnant women, sick children and newborns can enroll with Seguro Popular through the Health Insurance for a New Generation at any time. Affiliation is subject only to proof of citizenship and a lack of contributory social security. A birth certificate or an official document including the national identification number can be presented as the proof of citizenship. The lack of contributory social security is assessed through a survey applied at the point of affiliation27. To identify the closest health center that will serve as an entry point to the health care delivery system, a document confirming the beneficiary family’s address is required (usually a utility bill is sufficient). In addition, during the affiliation process, the family member present at affiliation has to complete a proxy means test to determine the family contribution level. All data collected in this process are submitted and confirmed at the federal level. Upon confirmation, the State Health Systems issue an insurance policy to the beneficiary family along with a letter describing their rights and obligations (Carta de Derechos and Obligaciones). Finally, the Federal Government carries out annual audits of the affiliation processes.

¾ Design of Accreditation Process

The General Health Law established that health units that become a part of the network of service providers for the Seguro Popular must be accredited. SSA designed the accreditation process under the Project as a means of guaranteeing the quality of services in accordance with the Catalogo Universal de Servicios de Salud (CAUSES) and the Fondo de Protección Contra Gastos Catastróficos. The accreditation process begins with an initial audit of the capacity, security and quality of the health units that are pursuing accreditation. The process counts on federal and state level staff to collect and compare information on checklists that were developed specifically for the accreditation process. For a health unit to be included in the network, it must count on a formal approval of accreditation based on an audit as defined in the Manual para la Acreditación y Garantía de la Calidad en Establecimientos para la Prestación de Servicios de Salud (Manual for Accreditation and Quality Assurance in Units Delivering Health Services).

27 CECASOEH. Cédula de Características Socioeconómicas del Hogar. A standardized instrument developed by the SSA that is used by the REPSS to determine the socio-economic status of families.

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¾ Design of the Master Plan of Infrastructure and Master Plan of Equipment

Under the Project, the SSA conceptualized and designed two processes aimed at ensuring the adequate supply of high quality medical services to the beneficiaries of the Seguro Popular. These include the Plan Maestro de Infraestructura en Salud (PMIFS) and the Plan Maestro de Equipamiento en Salud. Both of these were designed by multi-disciplinary teams with representatives from SSA’s Direccion General de Información en Salud (DGIA), DGPLADES and the Centro Nacional de Excelencia Tecnológica en Salud (CENETEC.)

¾ Monitoring and Evaluation

Under the Project, the SSA carried out several evaluations of the Seguro Popular, and developed a monitoring system for the program.

A broad evaluation of the Seguro Popular was carried out in 2006. It was conducted by researchers from Harvard University working together with specialists from the Instituto Nacional de Salud Pública. This evaluation had three components: (i) financial evaluation; ii) operational/process evaluation; and (iii) an experimental impact evaluation based on information collected from 40 thousand households. Initial data reveals that the existence of the Seguro Popular is reducing the frequency of catastrophic health expenses among its beneficiaries. The results were published in Lancet in 2009, with very favorable editorial comments28.

The SSA also carried out an external evaluation of Sistema de Protección Social en Salud focussed on the Regímenes Estatales de Protección Social en Salud (REPSS). This evaluation provided a more definitive analysis of the progress in the separation of normative, financing and service provision functions among the Federal Entities, and measure progress in the strategic purchasing of health care services. An evaluation for the PMIFS had been planned in order to assess the efficiency and effectiveness of the FOROS strategy. Nevertheless, DGPLADES only carried out a desk review with a very limited scope that did not allow to meet the original objective. Monitoring The Bank supported DGPLADES in developing a set of indicators and baselines to monitor the implementation of the SPSS and the organization of states regarding the new responsibilities that came with the health reform. The Bank provided hands-on assistance to develop a Rapid Assessment Tool to evaluate progress in the implementation of the SPSS and the restructuring of the State Health Systems (SES). The tool was presented to the staff of State Health Systems and REPSS (Regimenes Estatales de Protección Social en Salud) during a workshop hosted by the Bank. The workshop helped to refine indicators and databases developed and encouraged the discussion between the SSA and

28 King G, Gakidou E, Imai K et al. Public policy for the poor? A randomised assessment of the Mexican universal health insurance programme. Lancet 2009;373(9673):1447-54.

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State Health authorities on the main existing obstacles for monitoring the implementation of the Social Protection System for Health (SPSS). Through this meeting staff from states was able to identify existing gaps and obstacles for the implementation and monitoring of the SPSS. A questionnaire applied in 2008 to the states helped to finalize the tool (Balance Score Card). The tool although finalized has not been implemented. It will be implemented in the context of the new operation in support of the Social Protection System in Health.

Also, since 2002 the SSA has published the annual Informe para la Rendición de Cuentas that provides information on over 50 pre-defined health indicators, disaggregated by Federal Entity. This report is widely disseminated, both published in hard copy and made available electronically.

Master Plan of infrastructure

The SSA developed a planning instrument to rationalize and prioritize investment in physical infrastructure known as Plan Maestro de Infraestructura. The PMIFS aims to: (i) guide the process of decision-making and prioritizing infrastructure development; (ii) determine the supply of infrastructure necessary to respond to the demand for health services, under a real and virtual supply network that includes the entire territory; (iii) provide proposals and recommendations to optimize and strengthen existing infrastructure; and (iv) identify criteria to prioritize infrastructure investments on the basis of the population’s health profile. The PMIFS includes a definition of the different models of health units, and arquitectural plans, and a process for the design of different models of new health units.

To be in a position to respond to the Seguro Popular’s demand for health care services, the PMIFS considers the following:

a) Socio-demographic information; b) Epidemiological information; c) Information on health infrastructure (existing infrastructure of the SESA,

location, characteristics, percentage occupation, availability of human resources and equipment, and number of units operating by both the public and private sectors, and infrastructure development/expansion in progress);

d) Geographic information; and e) Other aspects, such as hospital occupancy rates, accessibility to health services,

population flows, physical terrain, development programs in the area, and specific proposals/requests put forward by the Federal Entity.

The PMIFS has served as a basis for the development of a sectoral master plan that aims to promote coordination of various sources of funding and efforts, thereby minimizing overlaps and inefficiencies, and prioritizing investments to ensure supply of physical infrastructure for health services. Specific works related to new construction or rehabilitation of health units had to be included in the PMIFS as a precondition for financing under the Project. The SSA plans to carry out an impact evaluation of the PMIFS in 2010-2011.

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¾ Design of the Needs Certificate for infrastructure

The SSA developed the Certificado de Necesidad (Certificate of Need) for infrastructure to function as a planning instrument that would enable Federal Entities to determine their infrastructure needs for their incorporation in the PMIFS. A request for a Certificado de Necesidad must be presented for new works, replacement works, expansion, strengthening and relocation. The Certificado de Necesidad is mandated in the General Health Lawi and as a result, the Federal Entities are required to prepare a technical study as background for obtaining the Certificado de Necesidad for infrastructure to guarantee their inclusion in the PMIFS. The Federal Entities must have a current Certificado de Necesidad as a precondition for the SSA to transfer resources for infrastructure works for a health unit. DGPLADES is responsible for reviewing and approving the requests for Certificado de Necesidad that are prepared and forwarded by the SESAs, using criteria that were developed specifically for this purpose.

¾ Plan Maestro de Equipamiento

Like the PMIFS, the Plan Maestro de Equipamiento (PME) aims to ensure that the health units can count on the necessary equipment to deliver the health services demanded by the beneficiaries of the Seguro Popular, while promoting the optimal use of that medical equipment. The PME has helped to reassign medical equipment to the optimal locations in the country, and to carry out and update the medical equipment requirements of the Federal Entities.

¾ Design of the Needs Certificate for Equipment

The Certificado de Necesidad for medical equipment is a planning instrument that promotes a more rational use of technological resources for health and the coordination of the provision of both infrastructure and equipment in the Modelo Integrador de Atención a la Salud (MIDAS, Integrator Model of Health Service Provision). It permits the carrying out of an evaluation of investing in a given equipment for medical attention at a specific place and time, applying criteria relating to medical and epidemiological needs, installed capacity in the region, perceived demand, cost-effectiveness, operational and financial feasibility for use, and expected impacts for the target population. The application of the Certificado de Necesidad for medical equipment was designed to optimize and rationalize installed capacity, while promoting greater interaction and coordination among the institutions and units to make the most efficient use of installed capacity.

The General Health Law mandates the use of the Certificado de Necesidad as a prerequisite for requesting the establishment of new health service units and the acquisition of new technologies, as well as for inclusion in the PME, for participating as service providers, for receiving financing from the SSA.

The process for the putting in place the system of Certificación de Necesidad for medical equipment has brought important benefits to the Federal Entities. It has contributed to

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strengthening the strategic planning capabilities of the health units, to the development of their capacity for project evaluation and appraisal, to permit them to see the individual health unit within a larger network of health service delivery, and facilitated the management of financial resources. All of the medical equipment financed under the Project had as a prerequisite that it be included in the PME.

¾ Development of Technical Specifications for Medical Equipment

The SSA through CENETEC provided relevant technical assistance to the Federal Entities for promoting the use of appropriate technology and the integration of health service networks to promote accessibility, quality service and optimization of resources. The CENETEC provided invaluable support to the Federal Entities by disseminating technical information regarding medical equipment that has supported their decision-making with respect to the acquisition and use of different equipments. All medical equipment financed under the Project was required to adopt the technical specifications for purchase disseminated by CENETEC. This requirement, in addition, made the procurement of these items more transparent and efficient.

¾ Development of Information Systems The SSA has promoted a national strategy for the use of the electronic registries with the objective of improving and optimizing the quality and access to health care services, promoting an information systems culture in the sector and advancing toward the functional integration of the health system in Mexico. Under the Project, support was given to the development and installation of the Hospital Management Information System (SIGHO) in 23 hospitals and in more than 1,200 health centers and the Administration Hospital System (SAHO) in eight hospitals. These developments constitute a basis for the implementation of the file electronic clinical file at the national level. The electronic clinical file is being tested in the states of Baja California Sur and Sinaloa.

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Annex 3. Economic and Financial Analysis (including assumptions in the analysis)

Not applicable

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Patricio Marquez Principal Health Specialist LCSHD Task Team Leader Eduardo Velez Sector Manager LCSHD Management Willy de Geyndt Consultant LCSHD Health Specialist Alberto Gonima Consultant LCSHD Health Specialist Oscar Echeverri Consultant LCSHD Health Specialist Claudia Macias Operations Officer LCSHD Operations Specialist Victor Ordonez Financial Management SpecialistLCOAA Financial Management Lea Braslavsky Country Procurement Specialist LCOPR Procurement Mariangeles Sabella Legal Counsel LEGOP Legal Counsel

Dorris Herrera-Pol Manager Marketing and Client Outreach

FPS Financial Services

Issam Abousleiman Disbursements Officer LOA Disbursement Karina Kashiwamoto Project Assistant LCC1C Team Assistant

Supervision/ICR Christoph Kurowski Sector Leader LCSHD Task Team Leader Juan Carlos Alvarez Sr Counsel LEGLA Legal

Mary A. Dowling Language Program Assistant LCSHS-DPTOperational and Administrative Support

Leanne Farrell Junior Professional Associate LCSSA Operational Support

Alina Garduno Lozano Temporary LCSHD Operational and Administrative Support

Efraim Jimenez Consultant EAPCO Procurement

Claudia Macias Operations Officer LCSHH Operations / ICR Task Team Leader

Suzana de Campos Abbott Consultant LCSHD ICR Author Fernando Montenegro Torres Economist (Health) LCSHH Health Silvia Moran-Porche Procurement Asst. LCSPT Procurement Victor Manuel Ordonez Conde Financial Management SpecialistCTRLP Financial Management Gabriel Penaloza Procurement Analyst LCSPT Procurement Gunars H. Platais Sr Environmental Econ. LCSEN Environment issues Ximena B. Traa-Valarezo E T Consultant LCSSO Social Scientist

Maria E. Colchao Senior Program Assistant LCSHE Operational and Administrative Support

Felix Prieto Arbelaez Senior Procurement Specialist LCSPT Procurement

Veronica Yolanda Jarrin Senior Program Assistant LCSHH Operational and Administrative Support

Alejandra Gonzalez Language Program Assistant LCSHH Operational and Administrative Support

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(b) Staff Time and Cost (automatically generated by the system until FY08. Please revise FY09 and FY10 when the ICR is being finalized)

Staff Time and Cost (Bank Budget Only) Stage of Project Cycle

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY00 29 111.90 FY01 32 253.21 FY02 1 2.70

Total: 62 367.81 Supervision/ICR

FY00 2.42 FY01 1.53 FY02 9 71.88FY03 17 69.95 FY04 36 114.11 FY05 48 177.93 FY06 41 150.56 FY07 61 233.75 FY08 42 169.59 FY09 57 149.20 FY10 38 98.51

Total: 349 1,239.43

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Annex 5. Beneficiary Survey Results (if any)

Not applicable

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Annex 6. Stakeholder Workshop Report and Results (if any) Not applicable

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Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR

UNOFFICIAL TRANSLATION COMMENTS ON THE PROCEDES EXECUTION

Most problems faced through the PROCEDES Project execution are a manifestation, with several expressions, of the challenges at the beginning of the Program. The creation of SPSS did not mean a re-statement of the central objective of PROCEDES as the tool to make quality health services available to the populations with huge social deprivations. However, the creation of the SPSS and of Seguro Popular as an operative instrument translated into a deep change in the development strategy and health service rendering for the population that is not covered by the Mexican social security system, and the reorganization of resources and instruments at its service; therefore, the restructuring of PROCEDES was necessary. From delays in the interpretation of this need and lack of institutional flexibility and adaptation capacity derive the different difficulties and other delays throughout the Project. Initially PROCEDES was designed at the end of one Federal Executive administration, as a program to consolidate the coverage objectives and care through the granting of services, which had offered experience and successes through the Coverage Extension Program (PAC – in Spanish). The new federal administration successfully promoted the amendment to the Law that originated the SPS, and approved in 2003; the discussion of the amendment to PROCEDES began since that same year and up to the end of 2004 when changes began to realize. The inability to quickly respond to such changes was not due to the lack of capacities of the World Bank responsible individuals of the project, but to the complicated processes followed within the institution; even in cases derived from such obvious transformations, as that which fully changed the strategic context of the development of health services in Mexico. From this, we learned the following lessons:

• The design of a project as significant as PROCEDES that is developed under the assumption that it will be executed by a different administration, compels to consider the feasibility of mayor changes in the policies that affect the program, and therefore, the identification and establishment, ex ante, of the negotiation and adaptation mechanisms, to be used at the time the changes occur.

• In the absence of this mechanism, the change of administration should have forced an earlier dynamic and exhaustive revision of contents and loan processing schedules.

• The monitoring system, as well as the evaluation mechanisms and instruments, must be part of documents that are attached to loan contracts and shall be activated immediately on the date the program starts operations, to guarantee the careful and punctual follow-up of the project, as well as timely changes – if needed.

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• In a project similar to that of PROCEDES, which is executed with the participation of several entities and administration levels, the training of local players is critical to assure compliance with the objectives, both with respect to the contents and objectives of the Program as with respect to the management and operative aspects and the strategic implications. Also critical is the diffusion of the achieved successful experiences during the implementation of several elements of the program.

• When the Program implies strategic reorganization tasks, whenever possible, the implementation shall be gradual, ideally, as from pilot experiences that allow to define the know-how and to understand the financial, operative and strategic implications of the proposed changes.

• The documented midterm evaluations, as well as the Project’s feedback and follow-up consultation mechanisms should be part of the expressed obligations of the responsible persons for the execution of the Program and should count on labeled resources for its execution. The results of these evaluations must include recommendations and should be discussed with the corresponding authorities, establishing commitments and deadlines for solution.

• Likewise, throughout a complex and extensive project it is important to count on a reliable and efficient information system and capable of full integration for follow-up and assessment.

Project achievements

The program’s beneficiary population for component I and II amounted to little more of 9 million individuals in 28 states. The states with the highest number of beneficiaries were Campeche (1,420,000 persons), Baja California Sur and Querétaro (610,000 persons) and Chiapas (600,000 persons).

Infrastructure and Equipment. Between 2005 and 2008, PROCEDES executed 205 work and equipping projects in 28 states that benefitted 174 health units.* Of these 205 projects, 66 were for health centers, 132 to hospitals, 6 to UNEMES and for the construction of a blood bank. Out of the 174 benefitted units, 65 were health centers, 103 hospitals, 5 UNEMES and the blood bank.

If we only consider the construction of the new work, PROCEDES developed 105 projects that represented 15.6% of total new works executed within the country between 2005 and 2008: 39 new health centers; 62 hospitals and 4 UNEMES.

* The same unit can be benefitted by more than one work and/or equipping project.

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Per state, 28 health centers, equivalent to 71.8% of all the health centers built with PROCEDES resources and to 5% of the total centers built in the country, were built in Oaxaca.

Hospital works. - 40% of the new hospitals (25 hospital units) were built in the States of Michoacán, Campeche, Chiapas and Sinaloa, and represented 20% of the total number of hospitals built in the country during the program’s period.

Strengthening of the medicine offer.- The main activities developed within this area refer to the development of studies regarding the studies on the medicine supply process to detect improvement areas; to train SESA personnel in relation to planning, purchasing, distribution and management of medicine inventories; and periodical monitoring of prescriptions full supply. Thus, in 2002 a study was developed on the causes for the lack of medicines in SESAs that allowed the identification of two main problems: budget and efficiency. Thereafter we developed a strategy to improve access to medicine in SESAs with activities such as distance training in demand planning and management of medicine inventories (CADIPDAI); monitoring of information concerning medicine prices and training for the management of hospital pharmacy. However, there are still challenges; again, in 2008, problems were identified one more time in the efficiency of medicine handling.

Regarding training, the main strategy was the offer of several courses in two important areas: demand planning and medicine inventories management. Between 2005 and 2008, in cooperation with Universidad Nacional Autónoma de México (UNAM) we developed courses and 370 students from 30 different states participated.

Impact of PROCEDES in Access to Medicines

In mid decade, with Seguro Popular (Peoples’ Insurance) already working and several monitoring and follow-up actions, the percentages of full prescription supply in SESA ambulatory units increased to more than 70%, and it may achieve similar figures to those in the main social security institutions, over 90%.

Measurements made with PROCEDES resources allowed to identify the efficiency of SESA operations concerning the medicine supply. We measured the relation that existed in 2005 between the per capita health public expenditure in the population without social security and the full supply of prescriptions in SESA ambulatory units; the states (BC, Nuevo León, Querétaro, SLP, Tlaxcala and Guanajuato) that with a relatively low per capita health expenditure achieved high levels of full supply of prescriptions. In contrast, we identified the states (BCS, Aguascalientes, Distrito Federal and Sonora) that with a relatively high health per capita expenditure showed lower levels in the supply of prescriptions.

The relationship between satisfaction levels with medicine supply and percentage of full prescription supply was also studied. In general terms, we can say that the full supply of

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prescriptions in SESA ambulatory units has significantly improved in the last five years in practically all states, achieving similar percentages as those of the social security area.

Performance of the PROCEDES units.- In 2009, the Instituto Nacional de Salud Pública (INSP – its Spanish acronym for National Institute of Public Health) was contracted to assess the performance of public hospitals in matters such as availability of resources, quality and efficiency of service rendering, treatment received by hospitalized patients and satisfaction levels of users concerning the furnished services. 126 hospitals in the entire nation were visited, equivalent to an average of four hospitals per entity (Satisfaction and Treatment Survey 2009, ENSATA 2009).

With the results from this study, the performance of units that received PROCEDES resources and performance of units that did not receive resources from this program were compared.

Waiting time in emergency cases. - Prompt service considers that waiting times shall not sum-up additional discomforts to those generated by the condition or to aggravate the health condition. Under ENSATA 2009 the percentage of patients that waited less than 15 minutes to be taken care of in emergency services was higher in hospitals that received resources from PROCEDES (69.9%) than in those hospitals that did not receive resources from the program (59.5%).

Waiting time to receive bed or to enter the operating room.- Users of hospitals that received resources from PROCEDES reported shorter waiting times to receive bed or to enter the operating room, than users of hospitals that did not received resources from the program.

Postponed surgeries. - The percentage of patients with postponed surgeries was, in the aggregate, lower in users of hospital services that received resources from PROCEDES (1.5%) than in users of hospitals that received resources from this program (3.1%). Only in Sinaloa and Guerrero the percentage of postponed surgeries was higher in units benefitted by the PROCEDES resources.

Satisfaction of users with health services.- Satisfaction under ENSATA 2009 as the percentage of patients that would use the same hospitals where they were taken care of, in addition to recommend it to family members and friends, was higher in hospital units that received resources from PROCEDES (95.8%) than in hospitals that did not receive resources from the program (92.6%).

Proper Treatment. - The variable, proper treatment considers non medical aspects of users’ interaction with health services. The percentage of patients that rated as “good” or “very good” the treatment received, in the aggregate, is a little bit higher in hospitals that received resources from PROCEDES (96.3%) than in hospitals that did not receive the support of this program (94.9%). In brief, the analysis of performance of PROCEDES and non PROCEDES hospitals showed that hospital units supported by the program featured better results concerning satisfaction and treatment than those that were not supported by the program. However, it is necessary to specify two situations. Firstly, the

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PROCEDES factor cannot explain per se these results, because there are several variables in the operation of services that affect these indicators and that are not necessarily linked to the strategy of the program’s offer strengthening. Second, the differences found in practically all the selected indicators were not statistically significant, but what this not statistically significance shows in that PROCEDES hospitals feature the same performance than non PROCEDES hospitals, which can be interpreted as a success of the program.

Certification of Health Units Linked to SPS. Certification is a process that verifies that health units to be affiliated to the SPS do count on the necessary requirements to offer the medical processes that are covered under the Health Services Universal Catalogue (CAUSES). In this sense PROCEDES was able to contribute with financial resources to support health units to achieve certification.

At national level, the percentage of certified SESA units between 2005 and 2008 increased to 42.3%. This percentage represents 5,523 certified health units from a universe of 13,047 units. The certification percentage of PROCEDES units was of 46.6%, equivalent to 81 health units from a total of 174 health units that are benefitted with the program resources.

Affiliation to Seguro Popular de Salud. - The main purpose of PROCEDES was to strengthen the offer of services by SESA to promote affiliation to SPS. Between 2006 and 2009, the number of persons affiliated to SPS went from 15.5 to 30.7 million persons, practically an increase of 100%.

Between 2006 and 2009, the percentage of persons affiliated to the SPS subsidized regime, as percentage of the total went from 35.2% to 69.8%, a little bit higher than the percentage programmed by PROCEDES.

While the native population affiliated to the SPS increased from 3.7 to 4.2 million persons in that same period, representing an increase of little less than 14%. Native population affiliated to the SPS, measured as a percentage of the total affiliated population, consistently increase between 2006 and 2009, from 10.8% to 21.3%; without reaching the goal of 31%, that was established for this last year.

In most states the PROCEDES SPS affiliation goals were achieved, in 60% or more.

Unfortunately, on the date of this report we failed to include information concerning the evolution of affiliation in the municipalities where PROCEDES intervenes. However, we can say that at national level, around 35% of families living in areas of high or very high poverty are affiliated to the SPS, percentage that is equivalent to more than 2.5 million persons. Per state, in Chiapas, Guerrero, Yucatán, Oaxaca, Puebla, San Luis Potosí and Veracruz, more than 50% of the population that resides in areas of high or very high poverty is affiliated to the SPS.

On the other hand, regarding the Program for the Development of Priority Zones (PDZP – in Spanish), developed by SEDESOL, that integrally takes care of marginalization

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associated to the basic community infrastructure (such as health units) and of basic services in households located in municipalities of high or very high poverty, with a coverage of more than 800 locations, it is logical to suppose that these localities represent asub-set of the PROCEDES localities.

As we can see in figure 26, little less than the third part of target families of PDZP is affiliated to SPS. Such percentage is equivalent to almost 3 million persons. In the state of Baja California, Baja California Sur and Coahuila there is no affiliation of families in priority zones in spite of the reception of resources from PROCEDES. On the contrary, in the states of Chiapas, Guerrero, Yucatán and Oaxaca more than 60% of families that receive resources from the program are affiliated to the SPS. Outstanding in this sense is the State of Chiapas, where almost all the population that benefitted from the resources of PROCEDES is affiliated to the SPS.

Strengthening of the Stewardship function.- One of the main functions of the stewardship is the planning, whose central purpose is to anticipate the future challenges in order to move forward and to organize the necessary resources to face said challenges in a rational way; In this sense PROCEDES promoted the design and used three fundamental instruments with respect to planning: The Infrastructure Master Plan (PMI – in Spanish), Equipping Master Plan (PME – in Spanish) and the Integrated Model of Health Care (MIDAS – its Spanish acronym).

Infrastructure Master Plan. The PMI is the driving instrument for the promotion, development and reordering of the SESA infrastructure. Starting with this Plan, the PROCEDES works’ construction, replacement, extension and refurbishing tasks were planned; focusing efforts in the creation of health service networks and not in individual health units, towards the population health needs; the optimum use of infrastructure and existing resources; making services available to the population, articulation and coordination between the medical units and institutions and perspectives for 2010.

In its preparation we used social-demographical and epidemiological information, data concerning the existing health infrastructure, rates of hospital occupation, health services availability for the population, population flow patterns and development poles and programs. Thus, the proposal of the creation of service networks headed by regional hospitals of high specialty (HRAE) was made, for cities with more than 500,000 inhabitants featuring proper education, commercial infrastructure as well as with maintenance service offer. Thereafter, for each network we identified the hospital services (general and community hospitals) and UNEMES that would be required to make them self sufficient, generating a proposal based on 18 Health Care Service Networks.

Support to Monitoring and Assessment Activities. Concerning assessment and monitoring, PROCEDES was linked to the External Assessment of SPS, the evaluations of the National Crusade for Health Service Quality, the monitoring of medicine supply and the annual publication of the report Health: Mexico (2001-2005), known in this present administration as “Rendición de Cuentas” (Submittal of Results) (2007-2008).

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Other Activities. - The second component of PROCEDES financed the SESA organization re-structuring bound to the separation of functions.

In practical terms, what this component made was to hire the services of a consulting firm to design integral projects of organizational strengthening of SESA and its administrative units based on the separation of functions. The idea was to homologate the organization structure of SESA’s. The program financed projects for the organization re-structuring in 14 federal entities (Baja California Sur, Chiapas, Chihuahua, Colima, Distrito Federal, Durango, Hidalgo, Jalisco, Nayarit, Nuevo León, Oaxaca, Sinaloa, Tlaxcala and Zacatecas). One of the conclusions of activities in this matter is that there were some doubts in some entities regarding the meaning and significance of separation of functions, which called for the organization of a workshop on this matter. At the end of 2009, only two states –Baja California Sur and Zacatecas – where the consulting firms had begun and developed a re-structuring project.

Actions to improve indigenous groups access to health services

One of the original objectives of PROCEDES was to improve access of indigenous groups to quality health services, tearing down cultural barriers that cause fears and resistance, and cause abuses and disrespect to people’s beliefs and finally causing deprivation of health services. In 2009, 4.7 million persons benefitted by PROCEDES were indigenous individuals, a figure that represents 30% of the total native population of the country. PROCEDES developed an inter-cultural focus frame to work with the indigenous population through the preparation of documents and materials regarding health care of native peoples, including subjects on traditional medicine, direction and operative personnel training on inter-cultural service matters and modification of infrastructure of health units according to the cultural needs of the native population. PROCEDES organized shops with health personnel, both at direction and operative service levels regarding awareness to improve the health care of native populations. These shops have been carried out also in medicine and nursery schools, as well as the incorporation of inter-cultural elements in certification cards of health units rendering services to the SPS. Included among the main elements: (i) health personnel should pass the awareness and cultural competencies shop; (ii) personnel and promoters should speak the language spoken in the localities; (iii) health units should have general guidelines regarding inter-cultural treatment, and the staff should know said general guidelines, duly designed by the area of traditional medicine; (iv) the necessary conditions so the midwife can accompany the patient during the delivery process in the health unit; and (v) to count on broadcasting or publication means to furnish relevant information to the population in the local language.

Support to control the A H1N1 influenza epidemic. - In April 2009 Mexico suffered an outbreak of porcine influenza that eventually received the name of A H1N1 flu. The World Health Organization (WHO) classified it as an international public health emergency and in June the organization raised the flu at level 6 of pandemics alert, which presumes the virus transmission in more than one region.

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Given that these flu combat actions were not among the objectives of the contract, some necessary procedures took place to prepare and sign a fourth amendment to said contract which was signed, as mentioned before, in December 18, 2009. It is in January 2010, that the World Bank informs that contracts corresponding to influenza expenses, that were previously submitted are to be modified and re-signed, otherwise the Mexican government should reintegrate those 25.7 million dollars, because contracts failed to comply with the contract standards of the World Bank, as the expenditure – based on Presidential Decree – was considered as an emergency. With this scenario, DGPLADES was not able to request figure changes in financing sources through budgetary modifications, and thus the negotiation of acknowledgment by the World Bank was possible for the verification of resources with similar expenses, mainly of FOROSS (strengthening of health care services offer), through request 65 submitted by the Financial Agent.

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

Not applicable

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Annex 9. List of Supporting Documents Comisión del Sistema de Protección Social en Salud (2009). Informe de Resultados : Primer

Semestre. World Bank (2010). Indigenous Peoples Plan (Plan de Pueblos Indígenas or IPP): Proyecto

de apoyo al Sistema de Protección Social en Salud. - - - - (2010). Mexico: Social Protection System in Health Project. --(Project Appraisal

Document ; Report No. 52142-MX). - - - - (2002). Mexico: II Basic Health Project. --(Implementation Completion Report ; Report

No. 25240). - - - - (2001). Mexico: III Basic Health Care Project (PROCEDES). --(Project Appraisal

Document ; Report No. 22186-ME). Secretaria de Salud (2010). Programa de Calidad, Equidad y Desarrollo en Salud. : Informe

de Cierre. -- Mexico: SSA, Dirección General de Planeación y Desarrollo en Salud. : Subsecretaría de Integración y Desarrollo del Sector Salud Secretaría de Salud.

Secretaria de Salud (2006). Sistema de Protección Social en Salud. : Evaluación Financiera. Ipsos Marketing. (2008). Resultados de la Encuesta del Nivel de Satisfacción de los Usuarios

del Sistema de Protección Social en Salud. – (Junio-Diciembre). Project supervision documents

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Annex 10: Original Project Components and Project Monitoring Indicators as described and presented in the PAD (Original Project Objectives and Description)

The Project was to meet its objectives through the implementation of three components, as follows:

Component I: Quality and Equity for Rural and Marginal Urban Areas ($430.9 million project cost, $220.38 loan financing)

Component I aimed to help improve equity and quality of health services by providing rural and marginal urban poor with access to a package of cost-effective health interventions and basic hospital care, including emergency medical services closer to their place of residence. The Project aimed to provide expanded and improved services to those communities for which the PAC program had not yet provided regular access to essential clinical care (functional expansion) and to expand coverage to those that had not yet received any regular services under the PAC program (geographical expansion).

The Project was designed to finance subprojects prepared by health jurisdictions at the state level that met eligibility criteria that included: (i) local level in scope in selected rural and marginal urban areas; (ii) targeting following socio-economic criteria (e.g. unmet social needs); (iii) use of a plan involving existing organizations, including state, health jurisdictions, and non-governmental organizations, as well as existing facilities; (iv) financial and administrative capacity to carry out the subproject; (v) agreement to implement package of essential health services, including public health interventions and basis clinical care, as defined by SSA; (vi) establishment of separate project accounts, accounting and audits; (vii) agreement to assign required resources, including annual funding allocations and for incremental expenditures; and (viii) agreement to monitor implementation according to the Project’s monitoring indicators, and evaluate its impact.

The Project would finance these subprojects prepared by health jurisdictions at the state level that would include: (i) construction, upgrading, expansion and maintenance of health centers and basic community hospitals, following a detailed diagnostic infrastructure review and an assessment of alternative ways of delivering health services (e.g., contracting with other public and non-government health care providers); (ii) basic medical equipment; (iii) essential office equipment; (iv) essential medical supplies, including access to an essential package of pharmaceuticals and micronutrient supplementation for the indigenous children and pregnant women; (v) laboratory equipment; (vi) radio and other communication equipment to improve referrals; (vii)

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ambulances; (viii) training and supervision; and (ix) on a declining basis, the purchase of health services under agreements and contracts with third party providers.

These subprojects were to focus on:

• Service Delivery in Rural Areas was to support the improvement of the clinical problem solving capacity at the local level, by adding new cost-effective interventions complements with hospital services. Operational costs (pharmaceuticals, micronutrient supplements and other medical supplies) were to be financed on a declining basis, while health care personnel were to be financed by the participating states (and not under the Project)

• Service Delivery in Marginal Urban Areas was to support mainly preventive interventions to address specific urban pathology (e.g., alcohol abuse and drug addiction, violence, HIV/AIDS) through the development of new strategies as the health teams needed additional skills and safe working environments, and solving health problems in these areas required close inter-sectoral and multi-disciplinary coordination.

• HIV/AIDS Prevention and Control was to support interventions aimed at reducing the incidence of infection in groups of people with high-risk practices: commercial sex workers, men having sex with men, injection drug users, and other patients with sexually transmitted infections (STI), living in marginal urban areas. The National AIDS Council (CONASIDA) was to provide technical assistance and evaluate program execution by state health secretariats in 50 priority cities with the most accumulated HIV/AIDS cases. Training was to be offered to civil society organizations to allow them to compete for participating in programs that delivered priority health promotion and prevention activities and education by peers.

• Organizing Health Care Networks was included to support an improved network of mobile teams, health centers, basic community hospitals, radio communication and emergency medical care services, as well as pilot experiences with tele-medicine that would link general health care practitioners with specialist in hard to reach, dispersed communities. Public and non-government facilities were to be organized into virtual networks at the state level and universities were to be involved to better adapt academic curricula according to the characteristics of the health service delivery model.

• Social Communications, through the development of a social communications strategy, was to support the achievement of the Project’s goals including, indigenous population health issues, HIV/AIDS prevention, and reduction HIVAIDS stigmatization.

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Component II: Efficiency, Institutional Development and Decentralization($70.0 million project cost, $59.47 loan financing)

Component II of the Project was to support The National Crusade for Improving the Quality of Health Services, launched by SSA in February 2001, through the implementation of strategies and models geared to the development of structures, processes, and skills required to provide quality care, ensure user satisfaction, and support effective organizational performance. It was to focus on leadership, strategic planning and management, clinical and managerial processes, human resources management and management information systems. Specifically, this component was designed to:

(i) Support the modernization and transparency of the decentralized organizational and operational structure by strengthening the managerial capacity of the OPDs;29

(ii) Support the OPDs in deconcentrating managerial functions to the health jurisdictions;

(iii) Strengthen the management capacity of the health jurisdictions;

(iv) Improve the management of the inpatient and outpatient services at the primary and secondary levels of the health care delivery system;

(v) Train central and state level personnel in order to achieve efficiency in their financial and budgetary functions;

(vi) Create an indigenous health monitoring system;

(vii) Certify the quality of laboratory procedures and HIV testing; and

(viii) Support central areas of the SSA in order to achieve transparency and excellence in their administrative procedures.

Component II was to achieve these institutional development objectives through activities that were to:

29 Under the PAC, the authority for managing health care organization and delivery for the uninsured population at the state level was transferred from the SSA to OPDs in the 31 states and the Federal District. The OPDs, which were run by a Board of Directors, were responsible for physical, human, financial and material resources. The Executive Director of the OPDs was the SESA. Health programs were implemented by the 231 health jurisdictions in the country, with the number of jurisdictions in each state varying according to population density and geographical extension.

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(i) Strengthen the organizational and management structure at the state level, at the health jurisdiction level, and at the service delivery level by supporting it with the appropriate legal framework, by training health staff, by assuring social participation and by improving the organization and the management of the services, including the revision and adaptation of the Health Services Model for the Uninsured Population (MASPA) into an integrated health care model (MIDAS) for the uninsured population;

(ii) Improve financial management and resource allocation processes by generalizing the use of uniform accounts, implementing cost accounting, improving programming and budgeting of financial, human and material resources, reallocating resources based on the results of productivity indicators, and diversifying revenue sources by charging public and private institutions for services provided; and

(iii) Continuously improving the quality of services provided to the rural and urban poor by providing incentives to health workers for quality work, by promoting efficiency in services delivered by mobile and facility-based health teams, by developing appropriate information systems to plan and control performance, by developing and encouraging the use of clinical protocols, by providing opportunities for continuing medical education, and by accrediting facilities and certifying health workers.

Component III: Innovation, Pilot Models, Policy Studies and Impact Evaluation($76.8 million project cost, $66.65 loan financing)

Component III of the Project was designed to test innovative proposals and alternative health care models, carry out policy studies, evaluate the impact of the Project and finance project management, through the implementation of the following activities:

1. In support of the National Crusade for Improving the Quality of Health Services, the Project was to:

a) Adapt quality of care models and instruments to the provision of health services in rural areas, including develop models according to indigenous culture and beliefs;

b) Structure and test valid indicators to measure the quality of care provided to indigenous people;

c) Evaluate changes in the health status of the rural population;

d) Evaluate the HIV/AIDS subcomponent;

87

e) Review and improve regulations to enhance the quality of care provided in the private sector;

f) Test and evaluate the efficiency and quality of outsourcing public health services;

g) Assess the environmental impact of providing basic health services; and

h) Automate a simplified Epidemiological Surveillance System.

2. To support an increase in the quality and equity of health services provided to Indigenous populations, the Project was to:

a) Monitor mortality and morbidity changes in Indigenous populations;

b) Pilot test a micronutrient program for Indigenous populations; and

c) Evaluate the Indigenous Health Program and MIDAS.

3. To support financial protection initiatives, the Project was to design and develop prepayment schemes that would protect families against financial losses due to illness.

4. To decrease social and regional inequities, the Project was to:

a) Evaluate, adapt and implement recent experiences in paying providers using diagnostic-related groups (DRG);

b) Evaluate alternatives for providing emergency health services in rural areas; and

c) Evaluate equity changes in providing health services, including the evaluation of the progress of the indigenous health program relative to the overall project.

Activities included under this component were also to evaluate project achievements during implementation and through and ex-post evaluation, drawing upon indicators developed by the World Health Organization in a 2000 report and on base-line data that was to be collected before implementation began, and to finance project management activities.

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PROJECT MONITORING INDICATORS IN THE PAD OF THE MEXICO THIRD BASIC HEALTH CARE PROJECT (ORIGINAL PROJECT OBJECTIVES AND DESCRIPTION)

Hierarchy of Objectives Key Indicators Project Development Objective:

1. Achieve equity in the delivery of health services for about 13.1 million uninsured people living in underserved rural and urban areas of Mexico

2. Increase access, quality and equity of health services provided to indigenous populations, and quality of health services provided to people living in municipalities with the lowest national welfare indexes

3. Support institutional development of the SSA, SESAs, Health Jurisdictions, local health agencies and services

4. Develop innovative health prevention and care models in order to lower the health gap for underserved and vulnerable populations

Input Indicators: MIDAS model designed and approved by national Health Council; presence/absence of clear lines of authority, written policies, strategic planning, budgetary and financial structures and processes; number and quality of facilities, number and quality of health staff; volume/adequacy of material resources; fully developed management information systems; indigenous communities with nutrition supplements Process Indicators: use and monitoring of inputs: human resource turnover, mobile units fully equipped and working, timely supply of drugs and other inputs, equipment maintenance, adequacy of time schedules for users; health care networks organized; new resource allocation mechanisms for the uninsured population developed; management information systems in use. Basic community hospitals fully equipped, increase on the number of Basic Community Hospitals receiving referrals from rural marginal areas Outcome Indicators: reorganization of service provision for the uninsured population according to the MIDAS model; changes in type, number, and location of uninsured rural and urban poor receiving basic health care services; degree of compliance with quality standards, criteria, and protocols; proportion of beneficiaries covered with basic maternal and child care services; proportion of children under two who are fully immunized; average number of health worker contacts per beneficiary, hospitalization per year and type, proportion of at risk people screened and followed up for cervical and breast cancer, hypertension, diabetes, and HIV/AIDS. Proportion of selected cities radio-broadcasting HIV/AIDS prevention messages on a regular basis. Proportion of pregnant indigenous women receiving nutritional supplements, proportion of indigenous children aged 6 to 24 months receiving nutritional supplements; New policymaking and regulatory structures and processes at SSA. Impact Indicators: in 5-7 year period, changes in health status measured through mortality and morbidity rates; changes in frequency and severity of specific infections and chronic diseases; and changes in beneficiary and provider satisfaction. Changes in patient satisfaction with MIDAS model in project area.

Component I: Quality and Equity for Rural and Marginal Urban AreasHealth care networks delivering public health programs and a package of essential clinical services to uninsured and underserved poor in rural and marginal urban areas;

Output Indicators: Health jurisdictions, municipalities and micro regions in participating states selected.

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Hierarchy of Objectives Key Indicators 1. Increase quality of basic services in 24 states,

incorporating basic secondary hospital care to rural primary health care.

2. Health care delivery model (MASPA) adapted and developed in rural and marginal urban areas for delivering public health programs and a package of essential clinical service to open population: a. Redesigned public health programs and package of

essential clinical services, based on epidemiological and health services studies assessing: (i) burden of disease; (ii) cost and effectiveness of health care services and potential new interventions, i.e., STI treatment and HIV/AIDS prevention, according to disease patterns and risk factors; and (iii) use results, supplemented with studies and experiences elsewhere, to inform policy debate for health sector reform, particularly priority setting and contents review of essential package of services for rural and marginal peri-urban settings.

b. Health care delivery networks operating under contracting arrangements and/or inter-institutional coordination arrangements: (i) basic health package delivered through community participation and out-reach strategies; (ii) effective referral arrangements between rural and urban ambulatory centers and secondary, general and regional hospitals; (iii) emergency medical care networks for rural and marginal urban areas, operating with trained medical and paramedic staff, communication equipment and transport systems, NGOs involvement in delivering prevention programs for the population with the highest risk of HIV infection.

c. Rehabilitated and upgraded existing health infrastructure and equipment, and redeployed staff.

d. New health facilities staffed and operating with qualified clinical and managerial personnel

e. Micronutrient supplementation available in indigenous municipalities

f. Materials, drugs and medical supplies available in ambulatory and basic inpatient facilities

g. Equipment and procedures in place for management of medical waste in network facilities

h. Workshops for capacity building and training of HIV/AIDS NGOs

i. Complaint system available through internet, in basic community hospitals and sanitary jurisdictions.

Number of sanitary jurisdictions, municipalities and micro regions operating with the new health care delivery model, including primary and secondary levels. Signed contracts organizing networks and agreements ensuring inter-institutional coordination for delivering basic health care services. Signed contracts with NGOs and universities or research institutes ensuring their participation in HIV prevention programs in selected urban settings. % of project population with access to public health programs and package of essential clinical services, and secondary hospital care. Quality standards met in public health programs and package of essential clinical services. Number of facilities that meet medical waste management standards in participating states. % of pregnant women with four prenatal visits before delivery. % of pregnant women delivering in network facilities. % of children under 2 years of age with complete immunizations. % of families with periodic parasite treatment. % reduction in hospitalizations by dehydration and pneumonia % of pregnant indigenous women receiving multiple vitamins % of indigenous children under 2 years receiving multiple vitamins Average number of health worker contacts per beneficiary. Proportion of at risk people screened and followed up for cancer of cervix, and breast, hypertension, diabetes, and HIV/AIDS, etc. Number of HIV/AIDS NGOs involved in delivering HIV/AIDS prevention programs. Number of HIV/AIDS NGOs trained in capacity building workshops. % of patients with referrals to higher levels of care according to medical condition. User satisfaction with accessibility and quality of health services.

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Hierarchy of Objectives Key Indicators Component II: Efficiency, Institutional Development and DecentralizationImproved organization, management, logistics and information systems for health care delivery networks at state, sanitary jurisdiction, municipal and micro regional levels for the delivery of basic health services to underserved and uninsured rural and marginal urban populations: 1. Redefined organizational and managerial structure:

a. Decision-making framework in place with greater financial autonomy in the delivery of health care services.

b. New governance models in place allowing health authorities and communities to share greater responsibility for managing health care networks

c. Improved information systems, management structures and decision-making processes

d. Trained leaders and managers 2. Newly developed budgetary allocation criteria and

mechanisms in place, for strengthened financial management at state, sanitary jurisdiction, municipal and facility levels: a. Formal accounting systems and financial statements

implemented at jurisdictional, municipal and micro regional levels integrated to PAC’s administrative information system (SIA) and other states’ developed applications

b. Performance reporting syst4ems, cost accounting, budgetary, contracting, billing and collection systems in place

c. Mechanisms to increase funding sources, including revised user fee structures, in place

3. Human resource development plans implemented to strengthen strategic planning, management capacity and clinical performance at different levels of the system.

4. Clinical and management information systems (MIS) implemented to support decision-making based on those already developed by the SSA for REDSSA, and other budgeting and management tools developed under PAC, PROGRESA and other programs.

5. Total quality management processes implemented including: reengineering of central level, state level, jurisdictional and municipal agencies’ structures and processes, facilities organization and processes; clinical and managerial protocols and human resources devt.

Number of governance boards/foundations established in project areas. Number of states, jurisdictions and municipalities with resource allocation mechanisms implemented. Number of directors, managers, technical and administrative personnel trained. Number of health care networks and facilities with community participation in governance. Number of General Directorates at the Central SSA with certification of quality. Functioning modular and scalable clinical and managerial IS modules acquired from the market or adapted from REDSSA, Internet Service for Presenting Complaints about Health Services (QUEJANET), PAC, PROGRESA and other hospitals or programs including: installed hardware and software for: information management, health statistics, indigenous health monitoring and epidemiological surveillance; budgeting and cost accounting; medical and drug supply management, integrated clinical records and ambulatory and hospital information systems; billing and collection; human resources management. Number of managers, clinicians, administrators and network operators and data base administrators trained in the IT platform and mission critical applications. Number of certified laboratories for HIV and other tests.

Component III: Innovation, Policy Studies, Pilot Models and Impact Evaluation1. Policy Studies and Strategic Projects:

a. Terms of reference of studies developed b. IEC strategy developed

2. Consolidation of PAC monitoring and evaluation system to assess project performance a. Federal, state, jurisdictional, municipal and micro

regional level coordination and supervision mechanisms implemented and operational

b. Target indicators for the measurement of coverage, outcomes and impact in primary and secondary levels of care developed

c. Managerial control, monitoring and impact evaluation processes and operational

Proposals developed by DGEDS/SSA (PAC) adapted and implemented according to project requirements.

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Annex 11: Project Amendments and Restructurings

Amendment No.

Restructuring No./

Order

Date Objectives Changed?

Project DescriptionChanged?

Justification

1st 1st

Restructuring/ 1st order

September 13, 2004

No Yes

Align project activities with 2003 General Health Law

2nd None Marzo 18,

2005 No No

Allow disbursement of expenditures under 1st amendment while 2nd restructuring prepared

3rd 2nd

Restructuring/ 1st order

July 11, 2006

Yes Yes

Comprehensive changes to description and objectives to align fully project with Government’s sector reform agenda

4th

3rd

Restructuring/

2nd order

December 18, 2009

No Yes

Support to address A H1/N1 Pandemic

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Annex 12: Revised Project Description Following First Project Restructuring

Upon approval of the first restructuring to the Project, its description was amended to read as follows:

Part A: Essential Health Care Services and Institutional Development at the State Level

1. Delivery, through public or private health care providers, of a set of essential health services to the Target Population30 of the States consisting of, inter alia: (i) preventive services (including immunizations, and early detection and prevention of illnesses), (ii) health counseling and promotion services, (iii) ambulatory medical services, (iv) community mental health services, (v) reproductive health services, (vi) basic injuries and rehabilitation services, (vii) oral health services, (viii) emergency, hospitalization and surgery services (emergency medical care, hospitalization, pre-natal care, child delivery, post-natal care of mother and children, and surgical services), and (ix) provision of basic drugs.

2. Implementation of pilot subprojects to test and validate new approaches for the delivery of health services to Target Population in marginal urban areas.

3. Development of an inter-institutional emergency medical care network by, inter alia:

refurbishing emergency units in Project areas; developing an emergency telephone service for the pre-hospital care service and a tracking radio system for connecting the pre-hospital care service with emergency care units in referral hospitals; developing an ambulance network to transport patients; and basic and advanced life support training for paramedics, nurses and medical personnel.

4. Development of a pilot telemedicine program aimed at linking hospitals and regional

medical centers with remote area medical centers. 5. Improvement of the delivery of health care services for the Target Population by

strengthening public and private health care providers through, inter alia, the construction and rehabilitation of health facilities, the acquisition of medical equipment, and the provision of training on medical and management issues to staff.

6. Provision of support for the consolidation of the Borrower’s health decentralized

organizational and institutional structure by: (1) strengthening the managerial capacity of SESAs (including the provision of training in health care planning); (2) supporting SESAs in delegating managerial functions to the Health Jurisdictions; (3) strengthening the management capacity of the Health Jurisdictions; (4) improving the management and quality of the inpatient and outpatient services at the primary and secondary levels of the

30 Target Population was defined as the population not insured under any private or public health insurance scheme and the population insured under the Health Insurance Program.

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health care delivery system; and (5) strengthening SESAs’ logistics and distribution systems for medicines and other medical supplies.

Part B: Essential Health Care Services and Institutional Development at the National Level

1. Carrying out of activities for the prevention, diagnosis and treatment of HIV/AIDS and other sexually transmitted infections.

2. Strengthening the managerial capacity of SSA (including the provision of training in health care planning) and SSA’s logistics and distribution systems for medicines and other medical supplies.

Part C: Pilot Models, Policy Studies, Impact Evaluation and Project Management

1. Carrying out studies and assessments as well as development and testing of models, instruments and indicators to support the Borrower’s initiatives to improve the quality of health services.

2. Carrying out: (a) monitoring activities to evaluate: (1) mortality and morbidity changes in indigenous populations; and (ii) the Borrower’s indigenous health program; and (b) a pilot test of the micronutrient program for indigenous populations.

3. Design and development of health services prepayment schemes. 4. Carrying out assessments of: (a) diagnostically-related groups of payment providers; (b)

alternatives in emergency health services; and (c) changes to the provision of health services for purposes of achieving a more equitable health system.

5. (a) Coordination and supervision of project implementation; and (b) evaluation of the

impact of the Project. 6. Design and implementation of a national integrated health care delivery system to, inter

alia, support the separation of health services financing and provision of health services, promote hospital autonomy, integrate the operation of health care providers at the different levels of the health care system, promote the efficient and rational use of resources in the health care system, operate on the basis of performance agreements, improve the technical capacity to deliver health services at the primary health care levels and facilitate the access to specialized health services, and promote self-care and the participation of the community and local authorities in the decision-making and provision of health services.

7. Carrying out of: (i) medical technological assessments to facilitate decisions regarding

investments in technology at the federal and state levels, (ii) studies to evaluate the performance, equity and quality of services under the Health Insurance Program, and (iii) studies to evaluate the sustainability of health service delivery under the national integrated

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health care delivery system referred under Part C.6 above and reduction of risks for patients and staff at health care facilities.

8. Carrying out a media information campaign for the Project. 9. Design, development, and evaluation of pilot subprojects to test and validate new

approaches for the delivery of health services under Part A of the Project to target population in marginal urban areas.

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Annex 13: Revised Project Objectives and Description following Second Project Restructuring Upon approval of the second restructuring to the Project, its objectives and description were amended to read as follows: The objectives of the Project is to support the Borrower in implementing its SPSS through improving access of the poor people that are eligible for enrollment or enrolled in the subsidized regime of Seguro Popular to the Seguro Popular’s health service benefit package, restructuring and developing State health systems and strengthening the Secretaria de Salud in its role as steward of SPSS. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Improving Access of the Poor People that are Eligible for Enrollment or Enrolled in the Subsidized Regime of Seguro Popular to the Seguro Popular’s Health Service Benefit Package

Supporting the implementation of the Borrower’s FOROSS31 strategy as it relates to health centers, hospitals of up to 120 beds and specialized medical ambulatory units, all identified in the Infrastructure and Equipment Investment Plan of the Ministry of Health, through the carrying out of civil works, the acquisition of goods and equipment, the provision of technical advisory services and the carrying out of capacity building activities and training in relation to:

1. The construction, expansion, rehabilitation, equipping and refurbishment of health facilities;

2. The building of management capacity, including the management of human resources and the strengthening of financial management;

3. The design, piloting, evaluation and implementation of tools: (a) to improve the quality of service provision; (b) to plan, purchase and distribute pharmaceuticals; and (c) to develop alternative forms of service delivery;

4. The design, piloting and implementation of monitoring and evaluation systems for all aspects of the FOROSS strategy

Part B: Restructuring and Developing SES32 Within the Framework of SPSS

Supporting the States in the restructuring and development of their health systems, through the acquisition of goods and installation of equipment, the provision of technical advisory services and the carrying out of training and capacity building in relation to:

31 FOROSS means Fortalecimiento de los Servicios de la Salud, the Borrower’s strategy for the strengthening of health service delivery according to the provisions of the General Health Lae. 32 SES means the Sistema Estatal de Salud, the Borrower’s State Health System.

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1. The institutional and organizational restructuring and the operational strengthening of SES through the analysis of socio-economic and political feasibility, strategic planning, design and implementation of instruments to foster change, the development of innovative models and the building of capacity with respect to the enrollment of target populations into SPSS, the purchase of health services, financial management, the management of human resources, the purchase, distribution and monitoring of pharmaceuticals and medical supplies, meeting health service needs of indigenous populations, the planning and design of telemedicine networks and the monitoring and evaluation of service performance.

2. The institutional and operational strengthening of decentralized State health service provider units and networks including the building of relevant capacity with respect to administration, planning, financial management, quality management, human resource management, the purchase and distribution of pharmaceuticals and medical supplies, traditional medicine, service delivery to indigenous people and the development and implementation of health management and information systems.

3. The strengthening of information technology infrastructure for organizations and providers constituting SES including, inter alia, telemedicine and as further required under parts B.1 and B.2 above.

Part C: Strengthening SS33 in its Role as Steward of SPSS

Supporting under the Project SS in its role as steward of SPSS through the acquisition of goods and equipment, the provision of technical advisory services and the carrying out of capacity building activities and training towards:

1. Supporting SES in all aspects of the FOROSS strategy as described under Part A above and the coordination and planning of investments in infrastructure and equipment, the development of a communication strategy and the design and implementation of a monitoring and evaluation system for the FOROSS strategy;

2. Supporting SES and health service provider units and networks in carrying out the

activities considered under Part B above, and the development of a monitoring and evaluation system for the restructuring of State Health Systems; and

3. The administration of the Project, including the financial management, the

procurement and the monitoring and evaluation thereof.

33 SS means Secretaria de Salud, the Federal Ministry of Health, referred to as SSA or MOH elsewhere in this ICR.

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Annex 14: Revised Project Monitoring Indicators Following Second Project Restructuring

OBJECTIVES INDICATORS TARGETS

Part A Increase the enrollment of individuals entitled to be enrolled in the subsidized regime of Seguro Popular

No. of individuals entitled and enrolled in the subsidized regime of Seguro Popular/No. of individuals entitle to be enrolled in the subsidized regime of Seguro Popular

2005 = 10% 2006 = 20.5% 2007 = 23.3% 2008 = 26.6%

Increase the enrollment of indigenous people entitled to be enrolled in the subsidized regime of Seguro Popular

No. of indigenous entitled and enrolled in the subsidized regime of Seguro Popular/No. of indigenous entitle to be enrolled in the subsidized regime of Seguro Popular

2005 = 3,500,000/13,851,503 = 25% 2006 = 3,700,000/13,851,503 = 27% 2007 = 4,000,000/13,851,503 = 29% 2008 = 4,200,000/13,851,503 = 30%

Increase the number of health facilities accredited with SPSS that guarantee the access of people entitled to be enrolled into the subsidized regime of Seguro Popular to the insurance’s benefit package

No. of health facilities (by type of facility) included in the PMIE and accredited with the SPSS/No. of facilities (by type of facility) included in the PMIE34

2005 = 915/5000 = 18.3% 2006 = 1200/5000 = 24% 2007 = 1500/5000 = 30% 2008 = 1800/5000 = 35%

No. of health facilities (by type of facility) included in the PMIE and evaluated for accreditation with the SPSS/No. of health facilities (by type of facility) included in the PMIE

2004 = 620/5000 = 12.4% 2005 = 1527/5000 = 30.5% 2006 = 2000/5000 = 40% 2007 = 2800/5000 = 56% 2008 = 3200/5000 = 64%

Part B Increase the number of federal entities35 that have a established REPSS that operate with a financial management system that allows the strategic purchase of hospital care

No. of federal entities that have a established REPSS that operate with a financial management system that allows the strategic purchase of hospital care

2005 = 3 2006 = 7

2007 = 12 2008 = 16

Increase the proportion of staff that is recruited and contracted under innovative models for human resource management in Highly Specialized Hospitals

No. of staff recruited and contracted under innovative HR management models in Highly Specialized Hospitals/Total number of staff contracted in Highly Specialized Hospitals

2005 = 0%

2006 = 58% 2007 = 90% 2008 = 100%

Adoption of innovative information systems in the five Highly Specialized Hospitals

Average number of modules implemented in the five Highly Specialized Hospitals/Total number of modules to be implemented in Highly Specialized Hospitals (20)

2005 = 0% 2006 = 0%

2007 = 20% 2008 = 80%

Improve access of individuals Number of medicines prescribed

34 PMIE: Investment Plan for Infrastructure and Equipment to ensure universal access of poor people enrolled or to be enrolled in the subsidized regime of Seguro Popular to the insurance’s benefit package by 2010. 35 There are 31 federal states in the country plus the Federal District.

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OBJECTIVES INDICATORS TARGETS enrolled in the subsidized regime of Seguro Popular to essential medicines

and supplied to individuals enrolled in the subsidized regime of Seguro Popular/Number of medicines prescribed to individuals enrolled in the subsidized regime of Seguro Popular

2005 = 85% 2006 = 90% 2007 = 95% 2008 = 100%

Part C SSA monitors progress in the structural reforms of the State Health Systems

Progress in restructuring SES is monitored in all states and an annual report prepared and disseminated

2005 = NO 2006 = YES or NO 2007 = YES or NO 2008 = YES or NO

SSA monitors and evaluates the efficiency, effectiveness of FOROSS including impact on access of priority populations to services of Seguro Popular’s benefit package

• System designed by June 2007 • M&E system populated by

December 2007 • First M&E report disseminated

by June 2008

June 2007: YES or NO

December 2007: YES or NO June 2008: YES or NO

SS monitors the health status of indigenous populations

Number of states that report the health status of their population by ethnicity and native language

2007 = 6 states report 2008 = 15 states report

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Annex 15: Revised Project Monitoring Indicators Following December 18, 2009 Revision

36

OBJECTIVES INDICATORS TARGETS Achieved Part A

Increase the enrollment of individuals entitled to be enrolled in the subsidized regime of Seguro Popular

No. of individuals entitled and enrolled in the subsidized regime of Seguro Popular/No. of individuals entitled to be enrolled in the subsidized regime of Seguro Popular

2005 = 26% 2006 = 32% 2007 = 46% 2008 = 60% 2009 = 65%

2005 = 26% 2006 = 35.19% 2007 = 49.32% 2008 = 61.68% 2009 = 69.80

Increase the enrollment of indigenous people entitled to be enrolled in the subsidized regime of Seguro Popular

No. of indigenous entitled and enrolled in the subsidized regime of Seguro Popular/No. of indigenous people

2005 = 6.1% 2006 = 27% 2007 = 29% 2008 = 30%

2009 = 30.6%

2005 = 6.1% 2006 = 10.8% 2007 = 15.0% 2008 = 17.9% 2009 = 21.3%

Increase the enrollment of indigenous people enrolled in the subsidized regime of Seguro Popular with respect to entitled individuals

No. of indigenous entitled and enrolled in the subsidized regime of Seguro Popular/No. of indigenous people / No. of individuals entitled and enrolled in the subsidized regime of Seguro Popular/No. of individuals entitled to be enrolled in the subsidized regime of Seguro Popular

2005=>0.3 2006=>1.0 2007=>1.0 2008=>1.0 2009=>1.0

2005 = 0.30 2006 = 0.31 2007 = 0.30 2008 = 0.29 2009 = 0.30

No. of health facilities accredited with the SPSS/No. of facilities X 100

2005 = 10.7% 2006 = 15.0% 2007 = 25.0% 2008 = 40.0% 2009 = 60.0%

2005 = 10.7% 2006 = 16.8% 2007 = 35.2% 2008 = 51.1% 2009 = 62.4

Increase the number of health facilities accredited with SPSS that guarantee the access of people entitled to be enrolled into the subsidized regime of Seguro Popular to the insurance’s benefit package

No. of health facilities financed, concluded and accredited with PROCEDES/No. of health facilities financed and concluded with PROCEDESX100

2005 = 0% 2006 = 10% 2007 = 15% 2008 = 20% 2009 = 38%

2005 = 0% 2006 = 13.8% 2007 = 26.2% 2008 = 35.1% 2009 = 38.6%

Part B Increase the number of federal entities37 that have a established REPSS that

No. of federal entities that have a established REPSS that operate with a financial management system that allows the

2005 = 0/32 2006 = 7/32

2007 = 12/32

2005 = 0/32 2006 = 0/32 2007 = 1/32

36 Objectives, Indicators or Targets modified by this are shown in bold. 37 There are 31 federal states in the country plus the Federal District.

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OBJECTIVES INDICATORS TARGETS Achieved operate with a financial management system that allows the strategic purchase

strategic purchase of hospital care/No. of federal entities

2008 = 16/32 2009 = 16/32

2008 = 1/32 2009 = 1/32

Increase the number of deconcentrated or decentralized and REPSS

Number of deconcentrated or decentralized or REPSS dependent of the State MoH and independent of the OPD SESAS/No. of federal entities

2005 = 4/32 2006 = 5/32 2007 = 6/32 2008 = 7/32 2009 = 8/32

2005 = 4/32 2006 = 5/32 2007 = 8/32 2008 = 8.32 2009 = 8/32

Increase the number of constituted state MoHs

Number of state MoHs/Number of federal entities

2005 = 27/32 2006 = 28/32 2007 = 29/32 2008 = 30/32 2009 = 30/32

2005 = 27/32 2006 = 28/32 2007 = 29/32 2008 = 29/32 2009 = 30/32

Increase the proportion of staff that is recruited and contracted under innovative models for human resource management in Highly Specialized Hospitals

No. of staff recruited and contracted under innovative HR management models in Highly Specialized Hospitals/Total number of staff contracted in Highly Specialized Hospitals

2005 = 0% 2006 = 58% 2007 = 90% 2008 = 100%

2005 = 0% 2006 = 0% 2007 = 0% 2008 = 0%

Adoption of innovative information systems in the five Highly Specialized Hospitals

Average number of modules implemented in the five Highly Specialized Hospitals/Total number of modules to be implemented in Highly Specialized Hospitals (20)

2005 = 0% 2006 = 0% 2007 = 20% 2008 = 80%

2005 = 0% 2006 = 0% 2007 = 0% 2008 = 0%

Improve access of individuals enrolled in the subsidized regime of Seguro Popular to essential medicines included in the CAUSES38

Number of patients with prescriptions fully and timely filled/Total number of patients surveyed

2005 = 85% 2006 = 86%2007 = 87%2008 = 88% 2009 = 89%

2005 = 85% 2006 = 82.4% 2007 = 87.5% 2008 = 87.2% 2009 = 87.7%

Part C SSA monitors progress in the structural reforms of the State Health Systems

Progress in restructuring SES is monitored in all states and an annual report prepared and disseminated

2005 = NO 2006 = YES or NO 2007 = YES or NO 2008 = YES or NO 2009 = YES or NO

2005 = NO 2006 = NO 2007 = NO 2008 = NO

2009 = Partially achieved* SSA monitors and evaluates the efficiency,

Evaluation should be completed before the closing date of the

December 2009: YES or NO

38 Essential Health Services Catalogue (Catalogo Unico de Servicios Esenciales de Salud).

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OBJECTIVES INDICATORS TARGETS Achieved effectiveness of FOROSS through the evaluation of the Master Plan for Infrastructure (PMI)

Project

SS monitors the health status of indigenous populations

General Directorate of Health Information subsystems implemented that compile disaggregated information on indigenous population/Total number of General Directorates of Health Information subsystems implemented

2005 = 2/10 2006 = 3/10 2007 = 4/10 2008 = 8/10 2009 = 10/10

• Balance score card to monitor progress in organizational restructuring towards the separation of functions was developed and questionnaire applied in 2008.

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Annex 16: Chronology of Implementation Experience

The Third Basic Health Care Project was approved by the Board on June 21, 2001, signed on March 10, 2002 and became effective on November 11, 2002. Its objectives and design built upon on successful predecessor project. However, since becoming effective, the Project suffered implementation delays for two main reasons.

First, the ambitious reform program that the Government introduced in 2002/2003 departed fundamentally from past sector priorities; moreover, the reform and the Project’s objectives became incongruent. Consequently, budget allocations for activities eligible for financing under the Project decreased substantially.

Second, as an exception to Mexico’s general policy, loan proceeds of the earlier PAC Project had been incremental to general budget transfers from the Federal Government to the states. However, this exception had not been granted for the Project with the result that loan resources became available only to reimburse budgeted items earmarked for external, loan, funding. Thus, state governments faced weaker incentives to participate under the Project and none to comply with the Bank’s fiduciary requirements that presented requirements over and above the national norms. As a result, by June 2003, less than six months after becoming effective, the Project’s Implementation Progress was already rated as Unsatisfactory, only US$9 million had been disbursed from the loan account, and the possibility of a loan amendment was already being discussed.

On September 13, 2004, the Government and the Bank signed a first amendment of the Loan Agreement that restructured the Project, modified the its Project Description (see Annex 12), retrofitted financial and administrative procedures under a Sector Wide Approach (SWAp) and provided for the retroactive disbursement for state level health subprojects. Under the SWAp, Government, State and Bank funds were to be commingled to finance subprojects executed according to unified standards that reflected, with few exceptions, the Government’s norms and laws. However, the first amendment did not succeed in facilitating or accelerating implementation. The amended procurement provisions inadvertently impeded the execution of sub-projects as they did not successfully unify Government and Bank requirements. Moreover, while an attempt had been made to modify the Project’s description to embrace the new SPSS reform, the amendment did not adequately align the Project’s objectives with reform priorities.

In April 2005, more than two years after the loan became effective, the loan had disbursed only about $32 million and the Project was then rated Unsatisfactory for Implementation Progress, and also for its prospects for achieving its Development Objectives. The Government had assigned budgets of approximately $80 million and

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$300 million in FY2004 and FY2005, respectively, for the implementation of subprojects, under the assumption that these would be eligible for financing once the Loan Agreement amendment became effective. These amounts were transferred to the states, and subprojects were carried out; however, the Bank in the end was unable to reimburse the related expenditures since the Loan Amendment had not introduced the necessary changes to the Project’s objectives and procurement provisions. In part as a result of its co-responsibility for delays in preparing the first project restructuring, which in the end did not permit Bank disbursement against project expenditures, the Bank agreed to waive commitment fees under the Loan during FY06.

In an untiring effort to get the Project on track, the Government and the Bank agreed on a two-step process: the Bank would process a quick amendment that would permit disbursement of expenditures that were to become eligible under the Project’s first restructuring, and at the same time, work with the Government on a comprehensive restructuring to the Project which would make its design fully compatible with the Government new sector priorities centering on the SPSS. As a result, the second amendment to the Loan Agreement was prepared to resolve legal barriers that were impeding the reimbursement of eligible expenditures incurred by the Government between March 1, 2003 and December 31, 2004. This second amendment became effective on June 16, 2005, and allowed the reimbursement of approximately $50 million.

At the same time, the Bank began intensive efforts to prepare the Project’s second restructuring that would align its objectives and activities with the SPSS reform priorities and resolve barriers to execute the majority of the Project’s activities under SWAp arrangements.

In the process of appraising the restructuring, it became apparent that the Project’s original design and preparation had not complied fully with the Bank’s safeguard policies. The original Project was classified as environmental category B and the Bank had concluded that the changes that were being proposed would not result in a change of the environmental classification. However, the supplemental assessment prepared in the context of the Project’s restructuring revealed that the Project’s Operational Manual was missing the required provisions to ensure compliance with the safeguard policies triggered by the Project. The Government therefore prepared an Environmental Management Framework, an Indigenous Peoples’ Development Plan39, and Resettlement Framework and successfully integrated these Frameworks and Plans into the Operational Manual. Since the approval of subprojects executed by states under Components 1 and 2 of the restructured Project required compliance with the procedures set out in the Operational Manual, compliance with all safeguard policies would be ensured for future activities under the restructured project. However, it was not clear, at the time, that activities already implemented had followed those procedures, and hence complied with Bank safeguard policies. To address this, as part of the restructuring, the Government prepared Terms of Reference for a social and environmental safeguards audit to assess

39 The Project was approved in June 2001, hence OP 4.20 applied.

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compliance with the relevant safeguard policies in past and ongoing project activities and the loan amendment processed to reflect the Project’s second restructuring included a dated covenant that both required completion of this audit by November 15, 2006 and committed the Government to develop and implement a remedial plan, based on the findings and recommendations of the safeguards audit, to repair and compensate for any damage that may have resulted from safeguards-related omissions in the Project’s original Operational Manual.

The loan amendment reflecting the Project’s second restructuring was signed on August 15, 2006 and project implementation began improving. The restructuring permitted the reimbursement of approximately US$160 million of expenditures that had been incurred in 2005 and 2006 to accelerate the use of loan funds and balance the SSA’s virtual budget deficit. Reimbursed activities fell mostly under the restructure Project’s Part A, and the corresponding development objective of improving the access of poor people to the Seguro Popular’s benefit package was then considered satisfactory. Ratings for both Development Objectives and Implementation Performance were finally upgraded to Moderately Satisfactory. Bank supervision was working with SSA to foster state demand for activities under Part B, and had provided direct technical assistance for the development of a system for monitoring and evaluation for institutional reforms at the state level.

Following national elections in 2006, the Administration that took office in December of that year reconfirmed the priority it assigned to the Health Sector Program. By mid-2007, Bank supervision was reporting that the Project was likely to achieve most of its Development Objectives, with shortcomings limited to Parts A and B, and therefore agreed to expand the scope of activities to ensure that progress was made under all of the Project’s components. Loan disbursements had picked up considerably---by mid-December 2007 US$220 had been disbursed---but were still slower than expected given the challenges with procurement described in Section 2.4. They were also affected by delays in signing Coordination Agreements between the federal and state governments due to the need for ratification of these pre-negotiated agreements by the new Administration.

The Bank intensified supervision dramatically. Several supervision missions took place between January and April 2008, to carry out an in-depth review of the Project, and found that progress towards its Development Objectives, including the majority of project indicators and project implementation were Moderately Satisfactory. Shortcomings were reported for Part B as progress was being hampered by substantial weaknesses in the regulatory framework, as well as the lack of incentives. Despite this, there had been promising developments, supported by the Project. Some ten states formed the National Commission for the Restructuring of State Health Services and had started to cooperate in the reform efforts. Some states had developed critical pathways for reform and launched system-wide campaigns to sensitize and train stakeholders. Two states had

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already created autonomous purchasing agencies. The Project had taken on a central role in sustaining the momentum in the Government’s Health Reform Program. As a result, with almost US$250 of the loan disbursed and almost the entirety of the loan amount committed, the Government requested that the Bank extend the Loan’s Closing Date by one year to December 31, 2009 in order to continue financing technical assistance to the states with the small uncommitted loan amount remaining (less than US$10 million).

The reorganization of the state health systems was critical for advancing the implementation of Seguro Popular and hence for the integration and efficiency of the health system. The Government also requested that the Bank begin preparing a follow-on operation in support of the Seguro Popular. At around the same time, the Bank was proposing to introduce some modifications to the project indicators that would reflect changes in policy priorities following the change in Administration and correct some minor problems that had been overlooked in the second restructuring. Important improvements had been made to the health management information system and the SSA and Bank prepared a proposal to refine and enhance the monitoring indicators that would allow a more profound evaluation of the program and provide baseline information for a proposed follow-on project (Annex 15).

In April 2009, the Bank agreed to support Mexico in responding to the influenza epidemic both through a proposed new stand-alone operation and through a restructuring of the Project to provide the then remaining loan funds (approximately US$25 million remaining in the Designated Account) as an immediate financial assistance to purchase vaccines, pharmaceuticals and medical equipment and supplies. The second order project restructuring was agreed and the SSA presented the respective procurement plan that would require higher management approval since the procurement involved retroactive financing of goods purchased under direct contracting. In the end, the Bank did not approve procurement by direct contracting, and the Bank worked with the SSA to identify alternative expenditures under the Project that would be eligible for financing under the Loan, which had been fully disbursed by its Closing Date.

In all, important targets for Part A of the restructured Project had been surpassed, and the component’s performance rating was upgraded to Satisfactory. The rating for Part B remained as Moderately Unsatisfactory since several targets originally established, that in retrospect were overly ambitious, were expected to be missed. The rating for Part C was maintained as Moderately Satisfactory. In any event, the reform momentum was being sustained and many states were by project completion in the process of developing goals and critical pathways to advance the decentralization process, separate financing from service provision, introduce new financing mechanisms and strengthen the states’ Ministries of Health as stewards of health systems. More importantly, the Bank had agreed to continue to support the Seguro Popular under a new project, with financing under a loan approved by the Bank’s Board in January 2010 that would continue the

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cooperation in supporting states, and the Government in general, with this important reform effort.

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Annex 17: Calculation for Outcome Rating for Formally Revised Project (As per ICR Guidelines, Appendix A)

Calculation for Outcome Rating for Formally Revised Projects40

Against Original

PDOs

Against Revised PDOs

Overall Comments

1. Rating Unsatisfactory Moderately Satisfactory

Moderate Improvement after Formal Restructuring on July 11,

2006 2. Rating

Value41 2 4

3. Weight (% disbursed before/after PDO change)

$84.25m

24%

$265.75m

76%

100%

This reflects disbursement cutoff as of July 11, 2006

4. Weighted value (2X3)

0.48 3.04 3.52

5. Final Value (rounded)


The rating of 3.52, rounded, comes out as MS

40 See Appendix B to ICR Guidelines for Instructions and Examples. 41 HS=6; S=5; MS=4; MU=3; U=2; HU=1.

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Annex 18: Value-Added Activities supported by the World Bank in Mexico’ Health Sector in the context of the Third Basic Health Care Project

AREA VALUE ADDED

Functional integration of the health system

Technical cooperation (ongoing since 2007)

The Bank has developed a tool to assess the readiness of health systems to effectively separate the financing and health service delivery functions. It has also carried out diagnostics for IMSS, SSA and ISSSTE. As a result of this there are standardized diagnostics that will help define common areas for functional integration. IMSS diagnostic ISSSTE diagnostic SSA diagnostic (State of Mexico and Nuevo León) Health Leadership Forum (13-14 December, 2007)

The Bank co-hosted the organization of a Leadership Forum that served to gather and sensitize staff from the State Health Systems (SES), IMSS, ISSSTE and other public and private institutions on the advancement on the functional integration of the Mexican health system. Support was given through the recruitment and financing of an international consultant with extensive experience in functional integration who led the forum presenting international experience as options for the way forward for the functional integration of the health sector in Mexico. This forum has led the way for the creation of the Commission for Organization Restructuring of the State Health Systems (SES) that has been essential to bringing the topic to the General Health Council for greater visibility.

Separation of functions Meeting of the Commission for Organization Restructuring of the State Health Systems, SES (23 and 24 June 2008). The Bank has provided financial support and provided inputs for the agenda of the meeting. In addition the Bank presented, drawing on its international experience, the main challenges and the pathway of the process of separation of functions. The presentation covered the following topics: objectives of the separation of functions, conceptual framework, horizontal and vertical institutional arrangements, regulation and obstacles. The meeting created a space for technical discussions of the separation of functions.

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AREA VALUE ADDED

Workshop for the development of TORs for advancing in the restructuring of health services February 12, 2009)

The Bank hosted and led a workshop that enabled staff from the State Health Systems (SES) to understand better the phases and sequence of the process of separation of functions and have a clear idea of how to develop good TORs for TA related to the restructuring process. The people enabled staff from States Health Systems to have a clearer idea of how to materialize their ideas of separation of functions in concrete technical assistance.

RAPID ASSESSMENT TOOL TO EVALUATE PROGRESS IN THE IMPLEMENTATION OF THE SPSS (ONGOING SINCE 2007)

The Bank developed a Rapid Assessment Tool to evaluate progress in the implementation of the SPSS and the restructuring of the State Health Systems (SES). The tool was presented to the staff of State Health Systems and REPSS (Regimenes Estatales de Protección Social en Salud) during a workshop hosted by the Bank. The workshop helped to refine indicators and databases developed and encouraged the discussion between the federal Ministry of State Health authorities on the main existing obstacles for monitoring the implementation of the Social Protection System for Health (SPSS). Through this meeting staff from states was able to identify existing gaps and obstacles for the implementation and monitoring of the SPSS. Hospital management workshop(June 2006) The Bank financed and led a workshop on hospital management. The workshop exposed staff from the Ministry of Health and state health authorities to various international models and experiences of management of tertiary level hospitals (Brazil, Canada, France, Spain and Brazil). The topics covered included: hospital governance, management of quality, strategic purchasing of equipment, pharmaceuticals, biological products, integration with other components of the health care system and human resources management. The workshop raised awareness among participants in the efficient use of available resources and of the challenges of managing hospitals delivering high complex services.

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AREA VALUE ADDED

Social and environmental safeguards

Safeguards audit (ongoing progress review)

The Bank carried out a social and environmental safeguards audit for PROCEDES. The audit has made it possible to enhance the inclusion of environmental considerations, and particularly that of health care waste management, into health care facilities in the states. It has also prompted closer coordination of the different Federal agencies responsible for health care waste management. The Bank’s safeguards team has provided specific social, indigenous and environmental guidelines to the Needs Certificate and Technical File, both required for any medical infrastructure construction. These inputs are also being considered for the development of the sector wide Infrastructure Master Plan. The safeguards audit, through the setting of common objectives was able to convene important actors to establish an integrated work strategy.

Strengthening of procurement process

Technical cooperation (ongoing)

The Bank through PROCEDES has promoted the adoption of technical specifications for medical equipment developed by the SSA (CENETEC) in the procurement of medical equipment. This practice has led to more transparency in the procurement process and better acquisition of medical equipment in terms of quality and pertinence. Procurement Workshops ( 2007-2008)

The Bank organized a series of workshops (6) attended by health staff from all the 32 Mexican states. The workshops had the objectives to train state officials on the use of standard bidding documents agreed upon by the Secretaría de Función Pública, IDB and WB and the promotion of good procurement practices. These events stimulated procurement process practices in terms of transparency, efficiency and economy in the procurement process. Procurement ex-post reviews (2005-2008)

The Bank commissioned ex-post reviews of the project procurement processes. Among other things, the results of the post reviews showed that the annual budgeting process mandated by federal law results in the fragmentation of processes for larger civil works that leads to delays, impedes the quality of civil works, and increases costs. These findings encouraged the discussions between Ministries of Administrative Development (Función Publica), SSA and Finance to find a solution not only for the

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AREA VALUE ADDED

Project but all health infrastructure investment financed with federal funds. Special procurement reviews ( 2006-2007)

The Bank commissioned two special reviews with the objective to determine the compatibility between the Bank and country’s procurement guidelines in order to establish a list of processes subject for Bank disbursements. These exercises allowed the government to increase the level of project disbursements.