The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) REPORT NO.: RES46965 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ANDHRA PRADESH HEALTH SYSTEMS STRENGTHENING PROJECT APPROVED ON MAY 15, 2019 TO REPUBLIC OF INDIA HEALTH, NUTRITION & POPULATION SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: Lynne D. Sherburne-Benz Practice Manager/Manager: Trina S. Haque Task Team Leader(s): Amith Nagaraj Bathula -1- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) ABBREVIATIONS AND ACRONYMS ANM Auxiliary Nurse Midwife AP Andra Pradesh APVVP Andhra Pradesh Vaidya Vidhan Parishad ASHA Accredited Social Health Activist CHC Community Health Center CHFW Commissioner of Health and Family Welfare COVID-19 Coronavirus Disease 2019 DEA Department of Economic Affairs DLI Disbursement Linked Indicators DLR Disbursement Linked Results DFIL Disbursement and Financial Information Letter DoHFW Department of Health and Family Welfare EE Underlying Eligible Expenditure GoI Government of India GoAP Government of Andhra Pradesh IDA International Development Association IBRD International Bank for Reconstruction and Development ICU Intensive Care Unit IDA International Development Association IUFR Interim Unaudited Financial Report MoF Ministry of Finance MoH Ministry of Health MTR Mid-term Review NQAS National Quality Assurance Standards PDO Project Development Objective PPE Personal Protective Equipment PIT Project Implementation Team QA Quality Assurance RF Results Framework RT-PCR Reverse Transcription-Polymerase Chain Reaction TPRM Tripartite Project Review Meeting UN United Nations UNOPS United Nations Office for Project Services -2- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) BASIC DATA Product Information Project ID Financing Instrument P167581 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 15-May-2019 30-Sep-2024 Organizations Borrower Responsible Agency Department of Health, Medical and Family Welfare, Republic of India Govt. of Andhra Pradesh Project Development Objective (PDO) Original PDO The Project Development Objectives are to improve the quality and responsiveness of public health services and increase access of the population to an expanded package of primary health services. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-89450 15-May-2019 27-Jun-2019 09-Sep-2019 30-Sep-2024 328.00 66.90 261.10 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No -3- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This Project Paper seeks the Country Director’s approval to restructure the Andhra Pradesh Health System Strengthening Project (P167581; Loan No. 8945-IN) to support the state of Andhra Pradesh respond to the COVID-19 surge. 2. Background: The US$328 million Andhra Pradesh Health System Strengthening Project (AP HSSP) was approved by the World Bank Board of Executive Directors on May 15, 2019 with the estimated total cost of US$344.98 million. The Loan Agreement was signed on June 27, 2019 and effectiveness declared on September 9, 2019 with a closing date of September 30, 2024. The project aims to improve the quality and responsiveness of public health services and increase access of the population to an expanded package of primary health services. 3. Based on the request of Department of Economic Affairs (DEA), Ministry of Finance (MoF), Government of India (GoI), the project was restructured on May 5, 2020. The restructuring introduced (i) changes in components scope and costs to take into account the Department of Health and Family Welfare (DoHFW) ’s decision to limit its strategy for purchasing clinical and non-clinical services from the private sector, (ii) change in Disbursement Linked Indicators (DLIs) and Disbursement Linked Results (DLRs) to restate those affected by an enhanced focus on quality of care of public health facilities and a more streamlined approach to private sector purchasing, (c) change in the results framework to refine some Project Development Objectives (PDO) and intermediate indicators to reflect the revised approach, (d) change in implementation arrangements to reflect a new functional organization chart for DoHFW and a Government’s request to create a Project Coordination Cell, and Change in the Technical, Economic and Financial, Environment and Social Analysis to account for the above changes. 4. Project performance: Progress in achieving the Project Development Objectives (PDOs) is rated as satisfactory and implementation progress as moderately satisfactory. The project has made significant progress under component 1 (Improve Quality of Care) with more than 70 percent of health facilities achieving quality accreditation and 28 receiving National Quality Assurance Standards certification. On the other end, strengthening the delivery of some core clinical and non-clinical services has shown mixed progress and progress towards pharmaceutical inventory management system has faced delays. Limited progress has been made under component 2 (Improve Responsiveness of Public Health Services) but actions have been initiated and should contribute to achievement of results by December 2021. An online patient management system has been identified for roll out across the State. The implementation for the system for measuring and reporting on patient experience has been slow due to COVID and deployment of human resource and equipment. Progress under this component 3 (Increase Access to an Expanded Package of Primary Health Services) has been slower than planned but should pick up as the clinical protocols for screening and risk stratification of non-communicable disease (NCD) patients are finalized and rolled out. The transition to Wellness Centres (HWCs) has made significant progress, except for availability of necessary equipment for NCD screening and lag in the roll out of an adequate NCD information system. Positive achievement is noted in strengthening maternal and child health services, despite of COVID, with at least 90% pregnant women received full -4- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) ante-natal care. Currently, the project has disbursed US$59.69 million. However, there has been visible improvement in status for achievement of DLIs that will translate into in improved disbursement by December 2021. The State have timely submitted the audits and IFRs and safeguards performance is satisfactory. 5. Progress on key outcomes: Of the four PDO indicators, targets for the indicator related to maternal and child health has been achieved, while the one related to NCD patients managed at the primary care level is on track to be achieved. There are lags in the achievement of two PDO indicators linked to quality certification and patient reported experience. However, targets for these are expected to be achieved albeit with some delay. Of the fifteen intermediate results indicators, Year 2 targets for three have been achieved, four are on track as per planned timelines, while eight are expected to be achieved with some delay. 6. Rationale for Restructuring: This restructuring responds to a request by the DEA in the MoF of GoI to support the state of Andhra Pradesh to respond to the COVID-19 surge and to use funds under existing World Bank funded projects for immediate purchase of emergency supplies and medical equipment and broader health systems strengthening in relation to COVID-19. 7. India is experiencing a devastating and unprecedented COVID-19 wave, with profound national and global impacts. Figure 1 shows the sharp upward trend in deaths between March 2020 and May 22, 2021.1 The country approaches 350,000 deaths on June 8, with a growing concern that the disease is spreading into rural areas where the majority of the 1.3 billion population lives and health facilities is poor. India has the third highest number of COVID-19 cases in the world. Daily testing hit a record 2 million a day in recent FIGURE 1: COVID-19 DEATHS days, but the country still lacks testing, particularly in rural areas. The India health system has been completely overwhelmed with patients, leading to shortages in critical health resources, including tests, oxygen supplies, critical drugs, trained medical staff, and hospital beds, in many parts of the country. To mitigate the impacts of the COVID-19 surge, states have reached out to the World Bank to request support for procurement and deployment of essential supplies, like oxygen concentrators and treatment drugs, and essential medical equipment. 8. In response to the COVID-19 surge, and the urgent need for procurement of emergency supplies and medical equipment, and cognizant of current highly volatile and constrained global supply chains, the World Bank acted swiftly to support the state of Andhra Pradesh, through its APHSSP with Hands-on Expanded Implementation Support (HEIS) and Bank-Facilitated Procurement (BFP) of emergency medical equipment and supplies (including for oxygen concentrators), for immediate COVID-19 treatment. BFP was critical in identifying supplies of sufficient quantities, facilitating direct payment modalities, and ensuring prompt payment of contract advances. 1 JHU CSSE COVID-19 data, https://github.com/CSSEGISandData/COVID-19. -5- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) 9. The proposed restructuring will support both the ongoing COVID-19 wave and also broader health systems strengthening. The latter will improve the resilience of the health system to disruptions caused by, inter alia, further COVID-19 waves. II. DESCRIPTION OF PROPOSED CHANGES 10. The Project is a results-based investment project financing operation, disbursing against the achievement of 10 DLIs, measured by milestones of progress or Disbursement Linked Results (DLRs). The proposed restructuring introduces the following changes:  Add a new sub-component and sub-component costs to include in the project description the provision of COVID- 19 activities  Add a new disbursement category for the COVID-19 expenditures to be financed up to 100% retroactively to the date of the BFP letter  Change relevant DLIs to reduce funds allocated to DLRs and reallocate to a new category for emergency COVID- 19 response  Reallocate financing between disbursement categories to accommodate the new disbursement category  Update/change to the safeguards instruments to reflect new activities 11. Project components and component costs and disbursement categories: It is proposed that a new sub-component 1.5 be created which includes activities related to the COVID-19 Emergency Response of the state and supports activities related to the provision of emergency COVID-19 care. 12. The package of emergency COVID-19 activities includes: a) Oxygen therapy: oxygen concentrators, oxygen cylinders and other oxygen-related supplies; PSA plant enhancement 13. To accommodate the above, it is proposed to introduce a new disbursement category (Category 4) for the COVID-19 expenditures to be financed up to 100% retroactively to the date of the BFP. In addition, it is proposed that IBRD financing allocated for sub-components 1.1, 1.3 and 2.2 be reduced by US$15 million and the amount be allocated to the new sub-component 1.5 (Emergency COVID-19 Care). As discussed above, the proposed changes new category to finance COVID-19 activities, includes adjustments to DLI allocations and unit prices (Category 1. Eligible Expenditure Program (EEP) under the Project) to allocate US$ 15 million under new category (4) that will finance COVID-19 activities. 14. Disbursement Linked Indicators: To accommodate the provision of emergency COVID-19 support, funds allocated to following DLRs will be reduced by US$15 million from existing Sub-components under Component 1 and from Component 2 and reallocated to the new Sub-component 1.5 for the emergency COVID-19 response: a. DLR 1.2: Increase in the number of CHCs and PHCs with quality certification will be reduced from US$19.22 million to US$11.72 million b. DLR 2.1: Number of CHCs that are providing a core package of services contributing to quality of care will be reduced from US$12.95 million to US$9.20 million c. DLR 5.1: System designed and operational in the health facilities will be reduced from US$28.00 million to US$24.25 million -6- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) 15. Accordingly, a reallocation between disbursement categories will be necessary. Table 1 below summarizes the proposed Government Contribution, IDA/IBRD Financing and total project cost for each of the components and sub- components. Total project cost is also reflected for each component under Section IV on Detailed Changes. Table 2 reflects the proposed revised withdrawal table. Table 1: Proposed Revisions in Component Costs Current Component Cost Proposed Revised Component Cost IDA/IBRD Total, Government IDA/IBRD Total, US$, Government Project Components US$, US$, US$, million US$, million million US$, million million million 1. Improve Quality of Care 1,194.00 104.12 1,298.12 1,194.00 107.87 1,301.87 1.1. CHCs and PHCs certified achieving 704.34 61.42 765.76 704.34 53.92 758.26 and maintaining quality standards 1.2. Quality tracking dash board 73.97 6.45 80.42 73.97 6.45 80.42 1.3. Performance-based private sector 344.03 30 374.03 344.03 26.25 370.28 service contracts 1.4. Drug stock management system at 71.67 6.25 77.92 71.67 6.25 77.92 the PHCs and CHCs 1.5. Covid response 0 15 15 2. Improve Responsiveness of Public 83.23 74 157.23 83.23 70.25 153.48 Health Services 2.1. Operational integrated online 47.24 42 89.24 47.24 42 89.24 patient management system 2.2. Policy for free drugs 7.31 6.5 13.81 7.31 2.75 10.06 2.3. Measuring and reporting on 28.68 25.5 54.18 28.68 25.5 54.18 patient experience 3. Increase Access to an Expanded 1,718.82 149.06 1,867.88 1,718.82 149.06 1,867.88 Package of Primary Health Services 3.1. Functional e-SCs 774.89 67.2 842.09 774.89 67.2 842.09 3.2. NCD screening and managed at 566.18 49.1 615.28 566.18 49.1 615.28 the SC or the PHC 3.4. antenatal care 377.76 32.76 410.52 377.76 32.76 410.52 Grand TOTAL 2,996.05 327.18 3,323.23 2,996.05 327.18 3,323.23 Table 2: Proposed Revised Withdrawal Table Category Original Amount of Revised Amount of Percentage of Expenditures the Credit/Loan the Credit/Loan to be Financed Allocated Allocated (inclusive of Taxes) (expressed in USD) (expressed in USD) (1) Eligible Expenditure Program (EEP) 327,180,000 312,180,000 100% under the Project -7- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) (2) Front-end Fee 820,000 820,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (3) Interest Rate Cap or Interest Rate 0 0 Amount due pursuant to Collar premium Section 4.05 (c) of the General Conditions (4) Goods, works, consulting services, N/A 15,000,000 Up to 100% retroactive to non- consulting services, Training and May 11, 2021 Incremental Operating Costs under Part A.5 of the Project for Provision of emergency COVID-19 Care TOTAL AMOUNT 328,000,000 16. Procurement: As the nature of the COVID-19 pandemic continues to evolve, required medical items and treatment protocols are constantly changing. Current second wave in India is characterized by rapid surge in number of infections creating huge demand for oxygen generation, transport and storage. This compounded with disruptions in international supply chain is posing enormous challenges for federal and state governments in India. While timely availability of adequate supplies is paramount, aspects like quality and affordability are also important. Under the circumstances, BFP (as part of Hands-on Expanded Implementation Support or HEIS) and procurement from UN agencies (mainly UNOPS) have emerged as two options to help governments in quickly acquiring required items to respond to the current crisis. Furthermore, the Bank will allow additional flexibilities (e.g. higher thresholds for Shopping/RFQ, use of direct selection, shorter bidding period etc.) for the COVID Response Component. The current implementing agency, DoHFW, Andhra Pradesh, will be responsible for handling procurement process, signing contracts, contract implementation (with or without help of other agencies like state health department), making payments to the suppliers and claiming the reimbursement from the Bank under the new component/sub-component (Provision of emergency COVID-19 care). For other project components, there is no change in procurement arrangements. 17. Implementation arrangements: The implementation arrangements will remain the same and there will be no new implementing entity. The Bank will enable direct payment for the emergency COVID-19 response related contracts. If UN Agencies are used, they will provide the estimated cost of intended expenditures to document the advance to be provided by the Bank, for the equivalent to the full amount of the contract, invoice, proforma, or MOU, depending on the form of the arrangement. A UN Commitment will not be needed. For long-term contracts with different delivery schedule, funds will be transferred as needed. 18. Safeguards: Given the nature of the restructuring and the small amount of investments involved as described in paragraph 12, environment or social risks are not likely to be significant or substantial. The risks are also not likely to undermine the sustainability of the project objectives. There is no change in the safeguard policy triggers on account of proposed project restructuring. To cover new activities related to the proposed project restructuring, the existing -8- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) environmental and social safeguard instruments will be amended and re-disclosed by June 30, 2021 or such later date as may be agreed in writing between the Borrower and the Bank. with special emphasis on: (i) the implementation of effective fire safety measures when enhancing PSA plants and/or dealing with oxygen therapy, equipment, and supplies; (ii) adequate hospitals /healthcare facilities solid, hazardous, and potentially infectious waste management and disposal, including safe disposal of autoclaved refuse and/or incinerators emission control, and (iii) equity and prevention of Sexual Harassment/Gender-Based Violence in the distribution, deployment, and access to essential pharmaceuticals, testing, medical and oxygen therapy equipment and services as relevant to the COVID-19 activities described in paragraph 12. III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ -9- The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Improve Quality of Care 1298.12 Revised Improve Quality of Care 1301.87 Improve Responsiveness of Improve Responsiveness of 157.23 Revised 153.48 Public Health Services Public Health Services Increase Access to an Expanded Increase Access to an Package of Primary Health 1867.88 Revised Expanded Package of Primary 1867.88 Services Health Services TOTAL 3,323.23 3,323.23 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-89450-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: EEP 327,180,000.00 66,082,400.00 312,180,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Gds, Wks,Ncs,Cs,Trng,IOC 0.00 0.00 15,000,000.00 100 - 10 - The World Bank Andhra Pradesh Health Systems Strengthening Project (P167581) Total 327,180,000.00 66,082,400.00 327,180,000.00 . - 11 -