The World Bank Health and Nutrition Services Access Project Phase II (P178957) @#&OPS~Doctype~OPS^blank@pidaprcoverpage#doctemplate Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 30-Oct-2023 | Report No: PIDA0080 Oct 30, 2023 Page 1 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) @#&OPS~Doctype~OPS^dynamics@pidaprbasicinformation#doctemplate BASIC INFORMATION A. Basic Project Data Project Beneficiary(ies) Region Operation ID Operation Name Health and Nutrition Lao People's Democratic EAST ASIA AND PACIFIC P178957 Services Access Project Republic Phase II Financing Instrument Estimated Appraisal Date Estimated Approval Date Practice Area (Lead) Investment Project Health, Nutrition & 05-Oct-2023 15-Dec-2023 Financing (IPF) Population Borrower(s) Implementing Agency Lao People's Democratic Ministry of Health Republic Proposed Development Objective(s) To improve equitable access, utilization, and quality of health and nutrition services in target areas and provide immediate response in case of an eligible health emergency or crisis. Components Component 1: Financing for primary health care services using National Health Insurance Payments Component 2: Integrated Primary Health Care Service Delivery Component 3: Adaptive Learning and Project Management Component 4: Contingency Emergency Response Component @#&OPS~Doctype~OPS^dynamics@pidprojectfinancing#doctemplate PROJECT FINANCING DATA (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? No Is this project Private Capital Enabling (PCE)? No SUMMARY Total Operation Cost 58.00 Total Financing 58.00 of which IBRD/IDA 35.00 Financing Gap 0.00 Oct 30, 2023 Page 2 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) DETAILS World Bank Group Financing International Development Association (IDA) 35.00 of which IDA Recommitted 4.00 IDA Credit 35.00 Non-World Bank Group Financing Trust Funds 6.00 Free-standing TFs for Bank 2.00 Integrating Donor-Financed Health Programs 4.00 Other Sources 17.00 The Global Fund to Fight AIDS, Tuberculosis & Malaria 17.00 @#&OPS~Doctype~OPS^dynamics@envsocriskdecision#doctemplate Environmental And Social Risk Classification Substantial Decision The review did authorize the team to appraise and negotiate B. Introduction and Context Country Context 1. Despite being among the fastest-growing economies in the world before COVID-19, Lao PDR’s growth model was already showing its limitations. Economic growth averaged about 7 percent over the two decades to 2019, but the economy’s growth pattern was capital-intensive, resource-driven, and debt-fueled. Economic growth had been steadily decelerating from 8 percent in 2013 to 5.5 percent in 2019. Growth was predominantly driven by large foreign investments in hydropower, mining, and construction (of transport infrastructure), which provided few job opportunities. The domestic private sector has been hampered by an unfavorable business environment, particularly by limited competition and transparency. The financial sector is dominated by state-owned banks, and limited credit has flowed to the private sector. 2. Economic growth was severely affected by the COVID-19 pandemic but is starting to recover gradually. Real GDP growth declined sharply from 5.5 percent in 2019 to 0.5 percent in 20201, owing to the wide-ranging economic impacts of COVID-19 – including the collapse of international tourism. The economy is expected to grow at 3.9 percent in 2023 and 4.3 percent on average in the medium term, driven by ongoing growth in services and exports2. Transport has 1 Bank Staff estimates. The Lao authorities have estimated GDP growth in 2020 at 3.3 percent. 2 Lao Economic Monitor, May 2023: Addressing Economic Uncertainty - Key Findings. Oct 30, 2023 Page 3 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) started to benefit from the operation of the Lao-China railway and a dry port. The post-pandemic recovery offers an opportunity to increase the share of public revenue in GDP. However, the recovery has been undermined by macroeconomic instability with high inflation and a rapid currency depreciation, weakening real incomes, consumption, and investment. 3. The World Bank assesses Lao PDR to be in debt distress with an unsustainable outlook under the Low-Income Countries Debt Sustainability Framework (LIC-DSF).3 High public debt levels have contributed to persistent macroeconomic instability, which is undermining development prospects. Lao PDR is facing both solvency and liquidity challenges, owing to significant financing needs, limited financing options, low foreign exchange reserves, and considerable depreciation pressures. Public and publicly guaranteed (PPG) debt amounted to 112 percent of GDP at the end of 2022, rising to 125 percent of GDP if domestic expenditure arrears and a swap arrangement are included. A single bilateral creditor accounts for about half of the external public debt stock and repayments scheduled for 2023-2026. The energy sector, mostly represented by Electricité du Laos (EDL), has played an important role in public debt accumulation, accounting for about 40 percent of total PPG debt in 2022. There are also substantial contingent liabilities associated with public-private partnerships (PPPs) and non-guaranteed borrowing of state-owned enterprises (SOE), but these fiscal risks have not been adequately quantified yet. The ratio of debt service (i.e., principal and interest) to domestic revenue increased from 35 percent in 2017 to 43 percent in 2022 with deferral (it would have been 72 percent without deferral). Meanwhile, the combined public spending on education and health declined from 4.9 percent of GDP in 2013 to an estimated 2.6 percent in 2022. In the absence of debt service deferrals, which have provided temporary relief since 2020, interest payments would have overtaken social spending levels in 2022. Debt sustainability is contingent on the outcome of ongoing debt negotiation with key creditors. 4. The Lao kip has weakened significantly since mid-2021, driving consumer price inflation to record levels. The kip depreciated by 104 percent against the US dollar between August 2021 and August 2023. A weakened kip has fueled domestic inflation and exacerbated external debt service costs, since most debt is denominated in US dollars. Inflation reached 41 percent in the year to February 2023, although it has eased to 26 percent in August 2023. High inflation has significantly undermined household purchasing power. The Bank of Lao PDR tightened monetary policy and introduced administrative measures to manage the exchange rate in early 2023, but the exchange rate has continued to depreciate. Limited foreign exchange liquidity and low foreign reserves contribute to foreign exchange rationing by banks and a parallel exchange rate market premium. 5. The parallel market exchange rate premium is large, which is a symptom and cause of macroeconomic imbalances. Limited foreign exchange liquidity and low official reserves contribute to foreign exchange rationing by banks and a large exchange rate premium. The gap between parallel market and commercial bank rates for the US dollar was above 15 percent during July-October 2021, May-September 2022, and September 2023. Although the Bank of the Lao PDR widened the US dollar exchange rate band from ±0.25 percent in 2021 to ±7.50 percent in 2023, a persistently large premium indicates that the official market is still unable to meet the demand for foreign exchange. The World Bank has been advocating for greater exchange rate flexibility and structural reforms to boost the supply of foreign exchange. 6. Poverty has not fallen as quickly as in other countries, and inequality has widened between rural and urban areas. The poverty rate in Lao PDR declined from 40.5 percent in 2012 to 32.5 percent in 2018. However, progress in poverty reduction has stagnated, with the estimated rate of poverty at around 31.7 percent in 2022. Nearly two-thirds of households have reduced education and health spending to cope with inflation. Poverty remains high among non-Lao Thai groups and among less educated households. The COVID-19 pandemic and the 2022-2023 inflation have likely reversed 3 See the 2023 Debt Sustainability Analysis, jointly conducted by the IMF and the World Bank. Oct 30, 2023 Page 4 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) some of the gains in poverty reduction. 7. Climate change and disasters threaten access to quality health and nutrition services to vulnerable groups and underserved areas. Lao PDR is among the most vulnerable countries to projected climate change trends 4, with an ND- GAIN index5 of 43.8, ranking 121 with a high vulnerability score (69) and low readiness score (136). In 2019, 46 percent of the villages in the country (approximately 3 million people) have been exposed to at least one hazard6. Evidence suggests that the impacts of climate-related disasters are likely to fall disproportionately on the poorer and more marginalized communities. Flooding, storms, landslides, and drought are the top four occurring hazards in the country, with increasing heat and air pollution events that have led to water and food insecurity, exacerbating the proliferation of disease-carrying vectors. Current annual expected losses from flood events in Lao PDR range between 2.8 percent and 3.6 percent of GDP7. B. Sectoral and Institutional Context 8. From 2000 to 2020, Lao PDR recorded a significant improvement in overall health outcomes such as life expectancy, maternal mortality, and infant and under-five mortality rates. Despite these improvements, the country still has the highest child mortality rate in Southeast Asia. While substantial progress has been made in the reduction of vaccine-preventable diseases, the COVID-19 pandemic disrupted essential health services and routine immunization, leading to a reversal of gains. The rate of full immunization among children dropped from 76.3 percent in 2019 to 68.6 percent in 2022, and the stunting rate is expected to have increased from 33 percent in 2017 to 37 percent in 20238. Each year, more than 7,000 children die before reaching their fifth birthday. Most of these deaths occur among the poor and are due to preventable and treatable conditions such as diarrheal diseases, measles, and neonatal preterm birth resulting from the limited access to quality essential primary health care (PHC) services. Malaria is projected to affect over 400,000 people (approximately 5.4% of the total population) with rising temperature and climate change induced floods in Lao PDR. Dengue fever, bacteria-induced leptospirosis, and the increased incidence of diarrheal disease in a country where diarrheal disease is the cause of 11 percent of all under-5 deaths all exacerbate the undernutrition status of women and children9. 9. Despite improvements in national averages, there are persistent and high disparities in health outcomes and service coverage across socioeconomic groups by ethnicity and locations, and not all population groups are benefiting equally from improvements. The infant mortality rate was almost five times higher in Khammouane, a rural province (131 per 1,000), compared to the Vientiane capital (27 per 1,000). Only 37.3 percent of women in Phongsaly, a remote, rural province, were assisted by skilled attendant during delivery, compared to 97.6 percent in Vientiane Capital. There are also wide disparities across wealth quintiles, with 32.6 percent of the women in the poorest quintile receiving skilled birth attendance (SBA) compared to 96.8 percent in the richest quintile. Only 36.1 percent of children aged 12-23 months in Phongsaly received three doses of Pentavalent vaccine compared to 84.1 percent in Borikhamxay and 43.1 percent of children from the poorest quintile compared to 76.5 percent from the richest quintile. Ethnic minorities lag behind the Lao-Tai ethnic majority in several dimensions of health and nutrition outcomes. 4 Climate Risk Country Profile: Lao PDR (2021), The World Bank Group and the Asian Development Bank. 5 Notre Dame Global Initiative: Index for 2021 https://gain.nd.edu/our-work/country-index/rankings/ 6 UNHABITAT (2021) Lao PDR National Climate Change Vulnerability Assessment. 7 Recovery and Resilience in Lao PDR, The World Bank Group, Feature Story, April 9, 2019. https://www.worldbank.org/en/news/feature/2019/04/09/recovery-and- resilience-in-lao-pdr 8 DHIS2, MOH and National Nutrition Sentinel Surveillance 2023. 9 WHO (2015). Climate and Health Country Profile: Lao People’s Democratic Republic. Geneva: World Health Organization. Geneva; Lau, C. L., Smythe, L. D., Craig, S. B., & Weinstein, P. (2010). Climate change, flooding, urbanization and leptospirosis: Fueling the fire? Transactions of the Royal Society of Tropical Medicine and Hygiene, 104(10), 631–638; WHO (2018). Maternal and Child Epidemiology Estimation Group (MCEE). Data Estimates 2018. Oct 30, 2023 Page 5 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) 10. Disparities in access to health services and outcomes are also reflected in high levels of undernutrition. In 2017, 21 percent of children aged under five were underweight, and 33 percent were stunted. According to the Knowledge- Attitude-Practice (KAP) survey conducted in March 2023, 45.2 percent of under five in the four Nutrition Convergence Provinces10 (with a high proportion of non-Lao Tai households) were stunted, and 22.3 percent were underweight. Differences across socioeconomic groups remain pronounced. Stunting affects several groups disproportionately: the poor, non-Lao Tai households, rural children, and upland areas of the country. Stunting and underweight rates among children in the poorest wealth quintile are over three times the rates of children in the richest quintile and ten times higher for children of rural adolescent mothers with less education, reinforcing an intergenerational cycle of chronic malnutrition11. The high birth rate in adolescents, gaps in antenatal care (ANC), poor maternal diet and feeding practices, limited institutional deliveries and access to emergency obstetric care, the unmet need for family planning, limited access to water and sanitation, and persistent poverty are all contributing to high malnutrition in the country. 11. While HIV/AIDS prevalence in Lao PDR is low, HIV infections are increasing among key populations, and gaps in service availability result in disparities in access to essential HIV treatment. According to the latest UNAIDS estimates, there were an estimated 15,000 people living with HIV (PLHIV) in 2021, corresponding to an adult HIV prevalence rate of around 0.3 percent. The need for antiretroviral treatment (ART) is projected to rise due to increasing numbers of new infections after 2025 and lower HIV-related mortality due to increasing ART coverage. There are significant differences between and within provinces, with the highest number of HIV-positive cases registered in Vientiane Capital, Vientiane province, Champassak, and Luang Prabang. Viral load suppression is reported to be above 95 percent among patients on ART who have received a viral load test. However, approximately 39 percent of patients on ART have no access to viral load testing due to the limited number of testing sites. Achieving the 95-95-95 goals12 by 2025 will require the adoption and expansion of innovative and differentiated service delivery models13, including community-led approaches. 12. Tuberculosis (TB) detection and treatment are suboptimal at the health center level and in hospitals and not reaching the hard-to-reach population. The number of TB notifications has increased consistently, alongside a gradual increase in the TB case detection rate and a reduction in the number of cases missed by the health system. WHO estimates that more than 43 percent of TB cases in Lao PDR are either undiagnosed or unnotified. The TB program suffers from general low use of PHC services at public health facilities. There are clear links between malnutrition in children and childhood TB, demonstrating the opportunity to integrate TB screening of children as part of growth monitoring. 13. There are severe gaps in service availability and readiness across health facilities in Lao PDR, including the low or non-availability of essential medicines, diagnostics capacity, and functioning facilities. About one-quarter of health centers and more than one-half of district hospitals have no access to a safe water supply, and only 13 percent of ANC rooms at health centers have adequate hand washing facilities. The availability of essential medicines and diagnostics is low. The recent price hike of medicines and supplies, especially those imported, has resulted in stock-outs of essential medicines and supplies in health centers. 14. A shortage and maldistribution of skilled health workers also impair service quality and access. In 2021, the density of health workers stood at 2.85 per 1,000 population, far below the WHO indicative aggregate density of 4.45 health workers per 1,000 population to meet population health care needs. Health centers usually have low staff numbers, and staff needs are often filled by volunteers. Volunteers and contractual staff with limited training account for 18.7 10 Phase 1 of Nutrition Convergence program is implemented in 12 districts in 4 provinces (Phongsaly, Oudomxay, Xiengkhouang and Huaphanh). 11 UNICEF 2020. 12 Ninety-five percent of PLHIV know their status; 95 percent of those are put on treatment; 95 percent of those on treatment are virally suppressed. 13 Differentiated service delivery is a responsive, client/people-centered approach that simplifies and adapts HIV services to better serve individual needs and reduce unnecessary burdens on the health system. Oct 30, 2023 Page 6 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) percent of the health workforce. The language barrier hinders access to quality services by non-Lao Tai ethnic groups. Nurses and midwives, representing 70 percent of health center staff and more than 85 percent being ethnic Lao-Tai, are not trained to provide ANC and often cannot communicate in local ethnic languages. The shortage of skilled health staff is further compounded by an uneven distribution of health workers and low quality clinical training. The health facility readiness assessment in 2023 found substantial gaps in the clinical abilities of frontline health workers to manage routine clinical situations. 15. Overall, public health spending in Lao PDR remains low, resulting in high out-of-pocket payments (OOP). In 2020, the country spent 1.2 percent of GDP or US$ 29.3 per capita on health from public sources, lower than its regional comparators such as Cambodia (US$ 32.1) and Vietnam (US$ 75.0), the regional average (US$ 244.5), and lower-middle income countries’ average (US$ 39.1) generally. Even before the COVID-19 pandemic, government spending on health was low, and the country remains highly reliant on OOP expenditure (41.8 percent of current health expenditure in 2020) and external financing (15.4 percent). The government has initiated reforms to decrease OOP spending and improve financial protection through the introduction of a National Health Insurance (NHI) system. However, the still high level of OOP spending deters health service use by the poor and frequently impoverishes households. Priority programs (immunization, HIV, TB, malaria) rely heavily on external funding, raising concerns about sustaining essential services in a time of declining donor funding. 16. The underfunding of the NHI and the delay in fund transfers have been raised as a major challenge for health facilities’ ability to provide essential medicines and quality health services. Since its establishment in 2017, NHI has been severely underfunded, with expenditure per beneficiary at LAK51,923 (US$5.9), however, NHI funds have become one of the main sources for public health facilities to finance drug and medical supply purchases. The current NHI payment mechanism uses capitation payments for fund transfers to health centers, which are often delayed and are not linked with facility performance or quality. Furthermore, health facilities have limited autonomy to use these resources, and public financial management and accountability systems remain weak. 17. In addressing these challenges, the Government of Lao PDR has been implementing its Health Sector Reform Strategy 2020–2025 to build a people-centered health system that provides equitable access to quality services . The strategy defines priorities for achieving universal health coverage (UHC) by 2025, with five priority areas of reform: (i) human resources for health; (ii) service delivery; (iii) health financing; (iv) governance, organization and management; and (v) health information systems. The current Phase 3 of the strategy (2021–2025) aims to achieve UHC with an adequate benefit package delivered in quality and appropriate financial protection by 2025. 18. The World Bank approved the Health and Nutrition Services Access Project (HANSA) in 2020 to improve access to health and nutrition services in targeted areas following a phased multisectoral approach.14 The key achievements of HANSA are: (i) the Quality and Performance Scorecard (QPS; see box in Project Description section) introduced under HANSA has helped to improve readiness and quality of services at PHC level using performance-linked payments; (ii) the Disbursement Linked Indicators (DLIs) used under HANSA have supported and accelerated the implementation of key reforms to achieve better health outcomes by focusing on achieving outcomes and targets, transferring ownership as well as financial and human resources to the priority provinces; and (iii) the District Health Information System, version 2 (DHIS2) has helped lay the groundwork for using data disaggregated by sex, age, ethnicity, and locations for better planning, monitoring, and evidence-based decision making. 14 In coordination with the government, in 2018 the World Bank developed a multisectoral long-term strategy to support the government in operationalizing the National Nutrition Convergence approach. Oct 30, 2023 Page 7 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) 19. Health and Nutrition Services Access Project 2 (HANSA2) will consolidate HANSA’s investments and expand service coverage to reach hard to reach populations by addressing key bottlenecks identified during project implementation. It will address service delivery and demand-side constraints that enhance disparities among different groups in Lao PDR. The following bottlenecks in the health sector identified in HANSA will be addressed under HANSA2: (i) inequitable access to essential health and nutrition services; (ii) low quality of care; (iii) continued siloed vertical programs and fragmented financing and service delivery; (iv) weak capacity for planning, budgeting, and poor financial reporting; (v) delays of fund transfer from the central level to districts and health facilities; (vi) gaps in the capacity of health workforce at health center and community levels; (vii) inadequate efforts to address gender inequality and equity gaps in access and use of services; and (viii) limited use of disaggregated data for planning, budgeting and the integration of gender and climate change into project implementation. C. Proposed Development Objective(s) Development Objective(s) 19. The PDO is to improve equitable access, utilization, and quality of health and nutrition services in target areas and provide immediate response in case of an eligible health emergency or crisis. Key Results 20. The following indicators reflect the key result areas at PDO level and will be disaggregated by sex and ethnicity. a) Percentage of deliveries attended by a skilled birth attendant in target districts; b) Percentage of infant children who received Penta3 vaccine in target districts; c) Percentage of children under five years old who received growth monitoring and updated growth chart in Nutrition Convergence Districts; and d) Number of health centers scoring above 80% on a nationwide standard quality assessment system D. Project Description 21. Component 1: Financing primary health care services using the NHI system (US$18.80 million): This component comprises three activities: (i) financing quality and performance-linked payments to health centers; (ii) implementation of QPS assessment using the revised QPS tools and vignettes; and (iii) capacity building for QPS implementation and verification. A mixed modality of performance-based and input-based financing will be applied. Performance-based financing will be used to make payments to health centers based on the results of QPS assessment scores and the District Health Office (DHO) performance. These mechanisms will ensure quality of services at health centers, which are verified by a third-party verification agency then approved by the quality of health care (QHC) subcommittee. The system also provides feedback support and coaching to health centers. Input-based financing will be used for all other activities under Component 1. This activity was introduced under HANSA and will be scaled up and implemented nationwide under HANSA2. Oct 30, 2023 Page 8 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) Box 1: The Quality and Performance Scorecard The QPS is designed to improve the quality of primary health care services at health centers and is aligned with the Ministry of Health (MOH) Quality of Health Care strategy (the 5-Goods and 1-Satisfaction policy), aiming to enhance the quality of service delivery. It includes the following components: • An assessment tool that measures critical components of quality health services at health center level, including indicators that measure the quality of Mother and Child Health, immunization, TB, HIV, nutrition services, community health services, and gender equity inclusion, plus clinical knowledge and skills using customized clinical vignettes and client satisfaction scores. • Half-yearly assessment of health centers using the QPS followed by structured coaching from District Health Office staff, followed by verification from an independent agency. • Funds directly transferred to health centers. The QPS score is linked to the flexible transfer of funds directly to health centers proportionate to their QPS scores to incentivize health workers to improve performance and service quality. 22. Subcomponent 1.1: Financing quality- and performance-linked payments to health centers. This subcomponent will finance QPS payments twice a year, channeled through the National Health Insurance Bureau (NHIB) to form an added performance layer to the capitation payment made to health centers. Up to 15 percent of QPS funds is distributed as incentives based on staff performance evaluations, while the remaining 85 percent of QPS funds goes toward health facility readiness and quality improvement, including for basic climate-sensitive facility readiness such as structural improvements, for periodic maintenance, infectious waste management, and procurement of additional medicines, and supplies to address emergencies. The maximum QPS payment per facility will be adjusted periodically based on inflation, the foreign currency exchange rate, and lessons learned from implementation. 23. Subcomponent 1.2: Implementing QPS assessments using the revised QPS tool and vignettes. This finances the implementation of QPS assessments every six months by certified assessors from the District Health Office (DHO) and verification of the QPS assessment results by an external verification agency under the NHIB. The QPS indicators will be revised to strengthen existing tools to enhance gender equality and social inclusion, and to integrate HIV, TB, and nutrition activities. Climate change indicators will be included to monitor climate-smart facility standards. Additional clinical vignettes on climate-change induced diseases, such as diarrhea, dengue, and malaria will be added. Interpersonal skills are critical for behavioral change communication interventions and to effectively respond to the needs of diverse and marginalized populations, and will be incorporated into the revised clinical vignettes. 24. Subcomponent 1.3: Capacity building for QPS implementation and verification. This subcomponent supports training and certification of QPS assessors by the Department of Healthcare and Rehabilitation (DHR), which assumes overall operational responsibility for QPS assessment. It also supports capacity building for the NHIB to enhance its role as an external quality assurance agency, which includes verifying QPS assessment scores. The improvement of NHIB’s capacity will be assessed in due course during the project’s implementation and the verification function will be gradually taken over by the NHIB according to the results. The QHC subcommittee will oversee the QPS implementation and be a key decision-making body, ratifying QPS assessment tool revision, endorsing the QPS scores, and approving payments to health centers. 25. Component 2: Integrated PHC Service Delivery (US$34.46 million): This component aims to strengthen the PHC system so that it can deliver integrated services and to reduce equity gaps in access to quality PHC services. It builds on Oct 30, 2023 Page 9 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) successful activities supported by HANSA and will scale up key interventions to expand the coverage and reach in target areas. 26. Subcomponent 2.1: Strengthening the primary health care system for delivering integrated services. This subcomponent finances two Performance-Based Conditions (PBCs) and input-based activities to strengthen the system for PHC service delivery: (i) PBC 1: improve integrated planning, budgeting, and financial reporting for integrated PHC services, and (ii) PBC 2: increase health center availability and readiness in providing quality integrated PHC services through ensuring the availability of proper mix of staff. The proposed PBC indicators are: Proposed PBC Indicators Total PBC Value (US$) PBC 1 Improve Integrated planning, budgeting, and financial reporting for integrated PHC services 1,962,470 PBC 2 Increase availability and readiness of health centers in providing integrated PHC services 1,849,643 27. Through input-based financing, this subcomponent will (i) procure medicines, vaccines and supplies, including family planning, nutrition commodities, HIV and TB drugs and monitor the availability of stocks to ensure delivery of essential health and nutrition services at the PHC level; (ii) invest in capacity in laboratory systems, in the national health surveillance and response system, which can also monitor climate-sensitive diseases, and in pandemic preparedness and response to build a resilient health system; and (iii) enhance the DHIS2 system to (a) provide disaggregated data to track equity and service inclusiveness; (b) capture key HIV population data, monitor TB cases for equity results, and support data-based planning and monitoring; and (c) develop data standards and registries for interoperability between program applications and general use of data within and between DHIS2 and other electronic health records. 28. Subcomponent 2.2: Delivering Integrated Services. This subcomponent finances five PBCs and input-based activities to improve equitable access to integrated PHC services in target areas (reproductive, maternal, newborn and child health (RMNCH); nutrition; HIV; and TB). It aims to strengthen delivery platforms at community and village levels and coordinate with other convergence projects to leverage their engagement with pregnant women, mothers, and children under five. It provides incentives for using maternal and child health and nutrition services in high-stunting burden areas through the Conditional Cash Transfers program. It also supports activities to incentivize health providers to deliver PHC service packages for beneficiaries. This subcomponent focuses on establishing links across communities and outreach and health facilities with a functional referral system, and it will mainstream climate change and health adaptation and mitigation measures. Through input-based financing, it will (i) improve access by the poor to PHC services by raising awareness of the benefits under the NHI policy and by reducing financial barriers; and (ii) improve access to and use of SBA by covering food and transport costs to health facilities. 29. This subcomponent supports five PBCs: (i) incentivizing health providers to deliver integrated primary health care service packages for pregnant women, mothers, children under 5, and poor, ethnic, and vulnerable groups through integrated outreach (PBC 3); (ii) increasing quality maternal and child health and nutrition services, including growth monitoring, nutrition, and health promotion; particularly improving integrated service delivery through integrated SBCC at the village level (PBC 4) by establishing links across communities, outreach, and health facilities; (iii) increasing equitable access to immunization services in the 50 target districts (PBC 5); (iv) increasing health center capacity for adequate TB, HIV, and general STI screening, and for notification, referral and follow up on treatment; (v) enhancing access to and coverage of HIV services (counseling, screening, HIV testing, viral load testing), and initiation of ART and Pre-Exposure Prophylaxis (PrEP) in high incidence areas; improving awareness and knowledge of HIV and other STIs; and strengthening referral systems for quality diagnosis and treatment (PBC 6); (vi) improving TB case finding, testing, and referral systems and increased initiation of preventive TB treatment (PBC 7). Oct 30, 2023 Page 10 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) Proposed PBC Indicators Total PBC Value (US$) PBC 3 Improve integrated service delivery through integrated outreach 3,000,500 PBC 4 Strengthen the delivery of integrated SBCC at the village level 3,990,600 PBC 5 Percentage of infants who received Penta3 vaccine in target districts 1,163,500 PBC 6 Increase access to HIV services among key populations and people living with HIV/AIDS 2,870,632 PBC 7 Increase TB Prevention and treatment coverage to the hard-to-reach populations 2,969,621 30. Component 3: Adaptive Learning and Project Management (US$4.74 million): This component will finance project management, external verification, research, monitoring, evaluation, and learning (MEAL) activities, providing technical assistance, gender and equity mainstreaming, and institutional capacity building for environmental health and safety. Nationwide surveys and research are proposed to establish baselines for adequate coverage of prioritized public health interventions are proposed. This component aims to ensure that (i) incurred PBC expenditure is recorded, monitored, and reported using the health sector accounting system; (ii) key gender actions to enhance women’s participation in decision-making and the Gender Equity and Innovation Fund are supported; and (iii) results-based project management is strengthened through a functioning MEAL system and research. 31. Component 4: Contingency Emergency Response Component (US$0 m): This component, with a provisional zero allocation, is to allow for the reallocation of financing in accordance with the Immediate Response Mechanism and to provide an immediate response to an eligible crisis or emergency as needed, including in areas strongly affected by climate change effects. In such events, the project will also apply the Emergency Response Manual, detailing streamlined financial management procurement, safeguards, and other necessary implementation arrangements. @#&OPS~Doctype~OPS^dynamics@pidaprlegalpolicy#doctemplate Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts 32. The project is classified as Substantial risk from environmental perspective, largely due to the widespread generation of hazardous healthcare waste and the limited capacity of the client in the application of the Bank's Environmental and Social Framework (ESF) and relevant Standards. The main adverse environmental risks and impacts would involve hazardous waste generated from healthcare activities such as sharps, infectious wastes, anatomical waste (placenta), and pharmaceutical waste. The generation of hazardous healthcare waste at PHC facilities is small, just 0.1 – 0.12 kg/bed/day or 0.5 – 1 kg/day, given the nature and scale of primary healthcare and community-based services. Considering a thousand small and scattered health centers nationwide, risks and impacts relating to hazardous healthcare waste are likely substantial, however, are site-specific and manageable. The project will not finance any new construction of new infrastructure but will include repair or rehabilitation of small assets in health centers. These activities may cause limited adverse environmental impacts due to generated dust, noise, vibration, waste, and asbestos-containing materials Oct 30, 2023 Page 11 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) (ACM). Environmental risks and impacts due to civil works in the project are minor, site-specific, and manageable. The project is not considered to be a major consumer of energy, water, or other natural resources and its risks for GHG emissions are not significant. 33. Social risk rating is currently considered as Moderate. The project is expected to bring about a range of positive impacts and benefits to different segments of the population nationwide, including mothers and children under 1,000 days, through improved access to quality health and nutrition services while ensuring financial protection, and other groups of people infected with Sexual Transmitted Diseases (STDs), and Tuberculosis diseases. However, there are potential social risks anticipated from the project investments and implementation. The risks and impacts are not likely to be significant and can be mitigated and managed in a predictable manner based on experience from the HANSA implementation. These include (i) risks of social exclusion of vulnerable and ethnic groups, especially those from remote area or hard-to-reach villages due to their socio-economic circumstances, cultural norms and practice, and risks of possible discrimination which is gender based, (ii) risk of occupational health and safety that may be encountered by project personnel and health workers while working in health facilities (HFs) and visiting local communities to provide medical services to patients and visitors who may be infected with COVID-19 and other types of communicable diseases, risk of road accidents during their travel to hard-to-reach villages, and potential exposure to Sexual Exploitation and Abuse/Sexual Harassment (SEA/SH) and Gender-Based Violence (GBV) incidents during the field visits, (iii) community health and safety (CHS) risk and impacts on local people and patients such as risk of infection with communicable diseases from health personnel and outside visitors as well as risks related to SEA/AH, GBV and Violence Against Children (VAC) that may occur in health facilities. 34. There are also potential risks related to providing project financed services to especially vulnerable populations, including the provision of STD awareness raising and medical services to service women (SW) , some of whom may be underage, who may provide or engage in sexual services for male clients. This requires (i) careful vetting and training of the health workers involved in providing health awareness and medical services, (ii) further discussions and collaboration with concerned government agencies including the Lao Women Union (LWU), one of the government mass organizations with local presence nationwide and development projects financed by the Bank and development partners (UNICEF, UNWomen, UNFPA and CSOs) for prevention and addressing the SEA/SH particularly child sex and for their support that this vulnerable group may need, and (iii) recruitment of SEA/SH specialist as part of the project team early in the project implementation and development of detailed SEA/SH action plan in coordination with GBV service providers and relevant government agencies. Risk of resettlement and land acquisition is not anticipated under the HANSA2 since the project will not finance the construction of new facilities and infrastructure of large scale, but may selectively support renovation of existing health care facilities located in the same plots of land and premises. The project has undertaken a Rapid Environment and Social Assessment (RESA) with key stakeholders and disseminated findings in a public consultation in April 2023. 35. Given that the nature and potential risks anticipated under the project are mainly related with challenge in access to health services and difficulty in understanding official Lao language faced by ethnic people, elements of an Ethnic Group Development Plan (EGDP) have been integrated into the Stakeholder Engagement Plan (SEP) rather than a stand-alone EGDP. E. Implementation Institutional and Implementation Arrangements 36. The MOH will implement HANSA2 through the Department of Planning and Finance (DPF), MOH technical departments, centers, Provincial Health Offices (PHOs), and District Health Offices (DHOs). The National Project Oct 30, 2023 Page 12 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) Coordination Office (NPCO) that has been implementing HANSA report to DPF will be responsible for (i) overall project administration, including the preparation of annual work plans and budgets and approval of the Project Operations Manual; (ii) implementation of project activities and achievement of Performance Based Conditions (PBCs) at the national level with the support of MOH technical departments and those PHO and DHOs participating in the project; (iii) administration of financial management, procurement, environmental and social safeguards management, and communication of all project activities; (iv) project monitoring, evaluation and reporting; and (v) reporting to the MOH’s Technical Working Groups on the implementation of project activities and the achievement of PBCs. 37. At the national level, departments and centers will continue to lead the technical support and play a critical role in supervising and implementing activities in their areas of expertise. Each department has nominated a focal point for project implementation. For cross-cutting and system-strengthening activities, the existing national coordinating mechanism will be leveraged. At the sub-national level, PHOs and DHOs will continue to monitor and supervise health centers, especially in the implementation of PBCs and quality supervisory checklists. PHOs will be responsible for (i) implementing project activities at the provincial level; (ii) monitoring and reporting to the MOH on project activities at the provincial level; and (iii) providing technical support to DHOs implementing Project activities and achievement of PBCs at district, health center and community levels. DHOs will continue to be responsible for (i) implementing project activities at the district and village level and reporting to PHOs; and (ii) supervising and providing technical support to health facilities. @#&OPS~Doctype~OPS^dynamics@contactpoint#doctemplate CONTACT POINT World Bank Emiko Masaki Senior Economist, Health Borrower/Client/Recipient Lao People's Democratic Republic Mr. Angkhansada Mouangkham, Deputy Director, amouangkham@gmail.com Implementing Agencies Ministry of Health Dr. Chansaly Phommavong, Deputy Director General, hsipchansaly@etllao.com FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects @#&OPS~Doctype~OPS^dynamics@approval#doctemplate Oct 30, 2023 Page 13 of 14 The World Bank Health and Nutrition Services Access Project Phase II (P178957) APPROVAL Task Team Leader(s): Emiko Masaki Approved By Practice Manager/Manager: Country Director: Alexander Kremer 30-Oct-2023 Oct 30, 2023 Page 14 of 14