Research Paper - Dr. Stephen Zuellig Center for Asian

Transcription

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HEALTH IN THE PHILIPPINES AT THE
TURN OF THE MILLENIUM
LESSONS FROM THE LEADERSHIP OF
ALBERTO G. ROMUALDEZ, JR.
SECRETARY OF HEALTH, 1998-2001
It was the dawn of the administration of President Joseph
Ejercito “Erap” Estrada and the Philippine Government was at its usual
day-to-day activities. The public offices were exuding the appointed ones’
thrill in exercising their newfound power, a power gained through the
president’s
favor but gone as
soon as
the head of state can say
“Congratulations, successor.” In one of the governmental agencies however,
a medical doctor (who used to be the director of the largest hospital in the
country and was the Cabinet Secretary of the Department of Health or DOH)
suddenly resigned. Shortly after he resigned, people who were close to Erap
asked another doctor if the latter was willing to consider the DOH portfolio. It
came as no surprise as this doctor also helped during the campaign for Erap’s
presidency. He did not pay much attention to it until Erap himself called him.
At that time, he had a live contract with the World Health Organization
(WHO) on a short-term consultancy with almost three weeks left before that
stint ends. Being familiar with the doctor as he was his schoolmate back in
high school, Erap got the doctor there at the WHO Western Pacific Regional
Office, saying: "Can I talk to you?" "Sure," the doctor said as he immediately
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This case was written by Kevin Paul Ferraris under the supervision of Dr. Kenneth Hartigan-Go, Asian
Institute of Management – Dr. Stephen Zuellig Center for Asian Business Transformation. All case
materials are prepared solely for the purpose of class discussion. They are neither designed nor intended
to illustrate the correct or incorrect management of problems or issues contained in the case.
Copyright 2011, Asian Institute of Management – Dr. Stephen Zuellig Center for Asian Business
Transformation, Makati City, Philippines, http://www.aim.edu. No part of this publication may be
reproduced, stored in a retrieval system, used in a report or spreadsheet, or transmitted in any form or by
any means - electronic, mechanical, photocopying, recording, or otherwise - without the consent of the
Asian Institute of Management - Stephen Zuellig Center for Asian Business Transformation. To order
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Health in the Philippines at the Turn of the Millenium
rushed to Malacañang Palace on a lazy Friday. Upon arriving, Erap shook the
doctor’s hands and asked: "Do you want to be health secretary?" The doctor
replied: "If you want." Without delay, the Executive Secretary was
summoned and appointment papers were signed. Before long, there was
press release and the doctor was sworn in the same day as he was asked. At
the next office day on a more industrious Monday of 1998, the top leadership
of the DOH was turned over to Dr. Alberto G. Romualdez, Jr., fondly called
“Quasi.”
Background
Born in Manila, the capital of the Republic of the Philippines, Dr.
Romualdez studied medicine in the state subsidized University of the
Philippines (UP) College of Medicine. After further fellowship in the U.S. for
four years, he became a Professor of physiology in his alma mater,
eventually becoming Dean. His contributing competencies as former teacher
and dean allowed him to work in the WHO as Regional Adviser for human
resources for health. In this capacity, he gave assistance to the WHO
programs that had to do with schools that produce human resources for
health. At some point, he has also been WHO Representative to the DOH. He
was also a first-mover in Government by becoming the first Director of
the Research Institute for Tropical Medicine (RITM), a facility under the DOH,
as well as being the first Executive Director of the Philippine Council for
Health Research and Development (PCHRD), under a different agency which
is the Department of Science and Technology (DOST). As leader of
the latter, his most important contribution was having been instrumental
in increasing whichever agency desires most—the budget. He quipped:
“From zero, from small budget, it became one of the biggest-funded councils
by the time I left in 1997.”
Dr. Romualdez also served as Assistant Secretary in the DOH. The
DOH is the agency of the Philippine Government vested with governance for
health. The people running this bureaucracy are in charge of policy-making,
implementation of programs, and a host of other responsibilities that
effectively safeguard the health of the Filipinos (see Exhibit 1 for
organizational structure). It supervises all other stakeholders of the health
system particularly entities of the national government, local government
service providers and their private sector counterparts.
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Vignette 1. The President Who Appointed
When Estrada served as the president, he spearheaded for the poor
and underprivileged an integrated program which involves food
security, employment, social housing for the urban poor, primary
health care, maternal and child health, education, and basic services
such as water, drainage, garbage, and sanitation. Aside from these,
he also prioritized the development of manufacturing and
investments in industry, especially in regional communities, through
special economic zones and export processing zones.
Estrada’s image in his presidential campaign is that of a pro-poor,
pro-masses politician, riding on his presidential campaign platform,
“Erap para sa mahirap.” Announcing pro-poor programs, he
garnered the support of progressive and intellectual groups who
advocated the same thrust. His populist ideology is drawn from his
movie scripts as a former action star, rather than from the reality of
his affluent and intellectual family background.
In 2000, a provincial governor revealed Estrada’s close involvement
in jueteng, an illegal numbers game. The two Congress chambers
initiated and conducted Estrada’s impeachment trial, presided by
the Chief Justice of the Supreme Court. In 2001, when majority of
the Senate, most of whom are pro-Estrada, decided against opening
an envelope containing compelling evidence against Estrada, the
pro-impeachment senators walked out of the session. This event
started a repeat of people power, now known as EDSA II, where
many sectors called for Estrada’s resignation, backed by the Church,
military officials, cabinet members, and government officials who
resigned out of contempt. Supposed to have ended in 2004,
Estrada’s term was promptly cut short and he was charged and
detained for plunder.
Source: Morada NM and TS Encarnacion-Tadem, Eds. Philippine
Politics and Governance: An Introduction. Quezon City:
Department of Political Science, University of the Philippines
Diliman Press. 2006.
The societal inequity
People Power Revolution in 2001 forced President Erap to step down of
Malacañang and relinquish the highest position of the land. This force
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majeure cut the term of Secretary Romualdez when he immediately filed a
leave. Six weeks later, his replacement in the DOH came.
By virtue of his appointment to the top post of the DOH, Dr.
Romualdez held the helm in actualizing in terms of health his appointer’s
campaign slogan—“Erap para sa mahirap (Erap for the poor)”—the statement
that caught the fervor of the mass electorate and directed much of what the
government ought to do. “The poor should be equal in treatment with the
rich when it comes to health care,” he added, “therefore our objective was to
do away with inequity.” By this philosophy and by the demands of the
position, the first major effort on his part was to clearly identify what the
problems in the health sector were, especially concerning inequity.
The truth is that this ‘inequity’ is but a derived problem of the
underlying socioeconomic conditions besetting the Filipinos. The metropolis is
home to numerous wealthy families and professionals belonging to the
middle-class while the rural areas are an abode for most of the population
who are generally below the poverty line. The social disparity between the
rich and the poor pervades many aspects: livelihood, housing, access to
credit, education and health. The problem of poverty is a problem of health,
and although one reinforces the other in a vicious cycle, addressing the
problems of the health system is the arena by which people like Dr.
Romualdez have taken on.
The imperfect health system
The demand side of the health system—the beneficiaries or the
patients—are those whose stakes are their very lives. Dr. Romualdez
comments: “People who have the greatest stake, i.e., the greatest need, are
the weakest players.” Filipino patients especially from the masses are never
assembled as an organization. They have become accustomed to the misery
of sickness. The pervading mindset is that each family with sick member(s)
has to fend for themselves. The vast majority have no concept of health care
as a right which is enshrined in the highest law of the land. The social
disparities in income levels and health status are further exacerbated by the
lack of a more nationalistic concept of solidarity. The sense of community is
on a small scale; to be somehow expected of a country whose geography is
an archipelago of 7,107 islands.
On the other hand, the supply side of the health system is a panoply of
numerous stakeholders. Health care in the country is as much a business as
it is public good. Providers of care such as clinics and hospitals are either
public or private. For either, a social health insurance system helps pay the
bills for every service provided. The private providers of health care are
generally robust while their public counterparts are overrun by skyrocketing
costs. The two generally differ in quality of service such that the poor will
have to contend themselves in charity wards and district hospitals that are
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almost devoid of supplies and facilities (see Exhibit 2). “The problem with
private sector-provided care is that it cherry-picks,” Dr Romualdez claimed.
“It provides services only when it is profitable.” The provision of health care
by various facilities is ideally two-pronged: on one end of the spectrum, there
should be primary health care that prevents people from getting sick and on
the other end, higher-level secondary or tertiary care that intervenes, cures,
and rehabilitates. What happens is that primary care is a burden only by the
public providers. He said: “when it's not profitable [private providers] would
leave it to government. If you want to build the health sector you'd want to
provide the whole range of services from preventive all the way to
rehabilitative.”
In all its complexities and intricacies, this was the environment that
people who run the frontiers of the health system had to deal with. With the
apparent problems in the health system, it was high time for reform.
The planning of the reform
At that time, defining the problem did not come with ease. Baseline
data and relevant information needed to be gathered. According to Dr.
Romualdez, the Statistics Office of the Government used to be notorious for
not releasing data unless granted with “blessing” from the heads of agencies
who might be displeased with the numbers. A most coveted data source is
the Philippine National Health Accounts, a compendium of data on the
country’s health expenditures, the kind of services, and correspondingly, who
pays for it and for how much. “A few months after I became Health
Secretary, my attention was called to the 1997 PNHA, which was not yet
official.” Dr. Romualdez stated: “I got a copy, and I said I'm going to use it.
Whether or not you're going to authorize it we will use it.”
With a booming voice indicative of confidence and strong leadership,
Dr. Romualdez remains balanced in his ways and democratic in his
processes. "One of my theories in management: you meet as frequently as
you can even if you do not have an agenda. Maybe for a cup of coffee.”
When he was head of PCHRD and of DOH, he maintained a “Thursday
morning group” who would discuss over breakfast any topic under the sun
with regards to the goals of the organization. He says of its composition:
“Young and old alike would meet and discuss. We always had one in the
group who had the memory and who would moderate our eagerness for
change. [sic] Or sometimes remind us that these are not really new, that
these have been tried before.” The group is composed of health economists,
professors, doctors and civil servants who once worked for previous health
secretaries.
The premium he places in the opinion of other experts was matched
only by his comprehensiveness in planning. Analyses of the status quo had to
be done. The health system was not isolated from the political scenarios and
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existing structures of society. “When I first came into office, my working staff
and I identified these inequities. We all realized that solving this inequity is
what ‘Erap para sa mahirap’ means,” Dr. Romualdez said. Huge discrepancies
existed in the health status of Filipinos among various groups and regions in
the country.
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Vignette 2. Romualdez’ Battlecry: Inequity is the Problem
“We took three most important indicators of the health status of a
population and these are life expectancy at birth, maternal mortality
rate, and infant mortality rate. As a country we have not done very
badly. The life expectancy at birth has been growing/increasing and
maternal and infant mortality have been going down. However the
rates were not changing as fast as the other countries near us. And
the difference was not so much in terms of economic development,
we're all about the same. So something was wrong. What we did was
we disaggregated the data first according to region. We found that
well-developed regions have good numbers while poor regions such as
Bicol, Samar, Mindanao, bad numbers [sic]. So we knew that there
was inequity in terms of geography. And the common denominator of
regions with bad numbers was poor economic development. Then we
broke it down into socioeconomic groups. And it was very clear. The
richer you are, the closer to the developed countries' your health
status indicators are. The worst off you are economically, the closer to
least developed countries’. So that was the inequity, but still only in
outcomes.”
“And then we ask ourselves why are there inequities in outcomes? And
you look at the services available. And again we did the same process-to tuberculosis (TB) treatment, to immunization, to vitamin
supplementation. In women, we looked at Caesarean section (CS)
rate. C-section is a very interesting statistic to look at. In public
health, globally, the OB-Gyns (Obstetrician-Gynecologists) have
agreed on the percentage of C-sections given all pregnancies
worldwide, as the gold standard. That means if a population has 15%
of their pregnancies ending in C-section—that’s about normal. That's
the gold standard, 15% of women who give birth end up in CS. That's
the agreed upon norm globally. In the Philippines, if you break it down
according to socioeconomic groups, the richest women have a CS rate
of 30%—double the norm. That means among the rich, even if they
don't need it, they're exposed to the risk of surgery. If you look at the
poorest quintile, only 2% get C-section. It means that even if they are
about to die already, they still won't get C-section. There is inequity in
access to a service. The same goes with the whole gamut of services—
immunization, treatment for heart disease, everything. One could see
the difference. If you're rich you get treated, sometimes overtreated.
But if you're poor, even if you're dying, you may not get service.”
Source: Romualdez, AG Jr. Personal Interview. 2011.
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The health-reform strategy
It was apparent that the poor are deprived of health services. These
disparities indicated the need for reform. The reform had to consider and
work with the current realities of inequity in the demand side of the health
system as well as the complex setup of the supply side.
In 1999, the DOH launched the Health Sector Reform Agenda (HSRA)
as the overarching policy framework and strategy to improve the health
system. The planning for the HSRA was not some big-time seminar but more
of an iterative process that was tested and presented over and over again,
refined, added upon, and subtracted as time goes. “Our [Thursday morning]
group still continues discussing.” Dr. Romualdez added: “we'll get ideas from
them then it'll go through the leadership of the Department, then eventually
it will go to the executive committee and all the bureau directors.”
The DOH built on the existing organizational structure and added a
feature akin to a matrix organization. The leadership and the second-level
managers together with their ranks were divided into technical working
groups. Dr. Romualdez issued an administrative order (A.O.) to have this
finalized. A.O. number 51 series of 1999 started with the phrase “in order to
improve the performance of the Philippine health sector…” and mentioned the
implementing mechanism. This mechanism was the creation of an overseeing
Executive Committee or ‘Execom,’ the Technical Secretariat who are the
undersecretaries and a technical support staff to complement both. Asked if
whose idea was the HSRA, he replied: “Essentially it was probably a
synthesis of the different groups of which the ideas percolated. By the time
they were finalized, they were owned by the Execom of the DOH: myself and
all the second-layer people of the Department; we were all owners of the
health-sector reform ideas.”
The agency also published a 71-page monograph (“Health Sector
Reforms”) that detailed all the plans, budget, rationale and strategies of
HSRA. The monograph identified and explained the five areas of the HSRA
namely: public health programs, public hospitals, local health systems,
health regulation, and health financing. A.O. 51 also arranged and organized
the rank-and-file of the agency into five task forces with jurisdiction over
each of the five reform areas. This did not mean that existing structures had
been revamped, rather, maintained and given more directive. Dr. Romualdez
said: “For example, for pharmaceutical regulation, I relied basically on the
Bureau of Food and Drugs (BFAD) and I met with them every week. For
hospitals, I met with [the hospital chiefs] as frequently as I could; I met with
them every other week.” The reform priorities were chosen by majority of
the leadership in the agency. He elaborated: “we'll get ideas from them then
it'll go through the technical working groups (TWGs) of the Department, then
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eventually it will go to the executive committee and all the bureau chiefs.”
Applying systems thinking, these areas were seen not only in terms of their
components but also of their interrelationships—each area proposed strategic
directions that will have effect on other areas. The same A.O. also mandated
‘reengineering’ within the Department, so that the agency will be most
capable of executing the reform.
The three major areas of reform were identified to be: health
financing, health service delivery, and health regulation. After all,
these seemed to be the most malleable areas as the DOH possesses the
corresponding sets of instruments for the foregoing.
Health financing
Sickness is tragic. It is a life shock and therefore implies an economic
cost to those paying for the cure of it. Many Filipinos pay most of the costs
from their own finances. In general, the masses have become accustomed to
the high out-of-pocket expenses. The 1997 PNHA revealed that the
Government was only second in rank when it comes to spending for health.
“That means that all those expenditures (by the Government) were available
only to the rich,” claimed Dr. Romualdez. “That was becoming clearer and
clearer as we analyzed where money in health was going. Money was going
to very sophisticated care for the rich, sometimes unnecessary care like
cosmetic surgeries and unnecessary medicines.” The first-ranking spender
was the people themselves: out-of-pocket payments constitute 46% of
overall sources of financing. This poses a major problem to the
underprivileged. In the words of Dr. Romualdez, “the poor don’t even have
pockets.”
If the Constitution proclaims that health is a right of every Filipino,
then it ought to protect the people from impoverishment and other untoward
externalities brought about by spending. In 1995, a landmark law was
passed to upscale the social insurance program. In the past, only the
formally-employed citizens were insured. With the new law, it was hoped
that coverage for Filipinos would be universal, so that the state can protect
the people from the financial risk of sickness based on need and not on
capacity-to-pay. The letter of the law established a government owned and
controlled corporation (GOCC) with the name Philippine Health Insurance
Corporation (PHIC) or PhilHealth, tasked to administer the National Health
Insurance Program (NHIP) for the benefit of every Filipino. The spirit of the
law primarily rests on the twin concepts of risk pooling and universal
[compulsory] coverage—that everybody in society is to incur less risk of
financial instability when illnesses come, and that all citizens are ideally
required for membership in order to avoid adverse selection and social
inequity. Sitting in the board of directors as chairman ex officio, Dr.
Romualdez inherited the oversight of this social health insurance scheme.
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Under the banner of HSRA, the main agenda of PhilHealth was to
expand coverage of the population especially the indigents and the informal
sector consisting mostly of the self-employed. Despite bearing the benefit of
starting anew, PhilHealth was not beset without challenges. For one, the
corporation was still its infancy stage; it still had to iron out remaining tasks
before it could fully carry out its mandate.
Give us (y)our money
There was a time when the landscape of health financing was
fragmented. Various insurance systems for health abounded: Social Security
System (SSS) had its own for its private clients, a different scheme for civil
servants by the Government Service Insurance System (GSIS), a still
different one for the migrant workers by the Overseas Workers Welfare
Administration (OWWA), but none for the indigents and self-employed. There
was a need for the top management of PhilHealth to consolidate the health
appropriations from these entities and pool the money into a single fund. Up
until the start of Dr. Romualdez’ term, the DOH and PhilHealth had to wrestle
with other agencies for responsibility over the money-for-health. This
necessary step proved to be an ordeal because the other entities resisted the
request of PhilHealth. Dr. Romualdez remarked nonchalantly: “That’s how
government offices work. You never carve anything without resistance.”
Although the law was clear that the money had to be handed over, the letter
of the law did not state until when is the time they needed to turn over
whatever sum they have for their respective constituents’ health. “SSS,
GSIS, OWWA—All of these entities resisted the integration because they're
going to lose part of their money. Most of this integration happened during
my administration. Except OWWA, it was able to resist up to Secretary
Duque's time. All of the funds were put together mostly during my time.”
The consolidation of the fund and the collection of premiums served to
finance the benefits which the members are entitled to. The Management
created the policies establishing the benefits and the rubrics thereof. As part
of the strategy to increase membership, PhilHealth’s division on corporate
planning expanded the benefits to make them more attractive. Balancing
prudent spending of money and solvency, PhilHealth equalized benefit levels
for all member types in 1999 and in the next year, introduced an
unprecedented program for indigents, including an outpatient benefit
package for them.
The social corporation
For all its functions and importance, PhilHealth needed a truly effective
and efficient workforce. But Dr. Romualdez remarked: “They have a tendency
to look at themselves as an exclusive organization, like a club. They're not
convinced that they are part of the health system.” Furthermore, he has a
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comment on the size of the organization: “I also think PhilHealth is
overstaffed.” This gives a glimpse of the operational efficiency of the
corporation somehow. PhilHealth also has regional offices that oversee the
reach of health insurance and regulatory functions.
Since the birth of PhilHealth, coverage of the indigents and the
informal sector has grown gradually. The most rapid growth in enrolment of
indigents happened from 1999 to 2000, when the membership expanded to
more than 1.7 million from the previous half a million. According to the 2008
National Demographic and Health Survey (NDHS) administered by the
National Statistics Office (NSO), overall health insurance coverage is only
42% of the population. Dr. Romualdez commented: “The results from the
NDHS appear to be more important because it was done using a survey
asking people. This is a highly-disputed figure in that PhilHealth itself had
claimed coverage to be around 70% based on enrolment figures. Now if it is
true that almost 70% of people are enrolled, but only around 40% know that
they’re enrolled, that's a major deficiency. This is worse than not having
coverage because somebody's paying for you but you’re not aware of it and
you're not taking advantage of it.” There are many reasons that account for
this discrepancy, foremost of which is political. The ones enrolled are not
really the ‘indigents’ in the true sense of the word but the ‘political poor’—the
ones identified and listed in the field are the only ones close to the barangay
officials by blood, favor, or convenience. An internal reason for the
discrepancy however is the lack of infrastructure for information technology
that is capable enough to amass the growing volume of data on a national
scale. This aforementioned lack is a problem that causes enough problems of
its own, such as alleged fraud in the filing of claims as well as escalating
administrative costs.
The result of its performance in the goal of universal coverage
revealed that there is still much work to be done. However, universal
coverage is but one of the performance goals of PhilHealth. It should also be
able to adequately provide enough financial risk protection. While this
measure is highly contingent on the breadth and comprehensiveness of the
benefits, analyses of the annual reports provide tools for gauge and
interpretation. The annual report (“Annual Report 2004”)1 showed that
around 75% of the income from collections was enough to cover the total
expense of benefits and subsidies (see Exhibit 3). Analyzing the balance
sheet of the corporation shows its admirable liquidity (current assets to total
assets ratio of 34.6%) and an even more formidable solvency (debt-to-equity
ratio of 1.53% and debt ratio of 1.50%). Trends also show that collections
continue to compensate the increasing cost of benefit payments.
Furthermore, its investments portfolio continually grows. However, 11.7% of
its total expenses are eaten by expenses other than benefit payments. The
ratio of claims (benefit payments) to investments is 38.0%. It also has
receivables amounting to 3 billion pesos, much of which is from the national
government (approximately 649 million).
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Dr. Romualdez said: “During my time, PhilHealth has a reserve of 104
billion pesos but that the law mandates a lower value [sic]. It should be
operating as close to bankruptcy as possible in order to become truly
responsive to the needs of the poor.” PhilHealth has a ceiling when it comes
to reimbursements of its benefits. Therefore, there is always a co-pay or an
out-of-pocket payment on the part of the beneficiary—poor and rich alike.
Dr. Romualdez revealed the drama behind the catch: “The poor who cannot
pay the out-of-pocket expenses would rather not use the benefit and would
rather not go to the hospital, opting to die. These are people who know they
are members, but they cannot use the benefits because they cannot afford
the co-pay. The co-pay is large, ranging from 30-80% of the usual total
cost.” As a solution, premium contribution was tweaked to become more
progressive from a salary cap of 5,000 to 30,000 pesos. Otherwise, this is
the worst version of the scandal wherein the poor are the ones subsidizing
the rich.
The desire of PhilHealth’s Chairman of the Board to operate on nearbankruptcy may actually be more feasible than thought. As a quasiautonomous GOCC, the people comprising its leadership run it like a
corporation, but part of government nonetheless. Although largely insulated
from politics and currents of the moment, it owes its existence and ways of
proceedings to the rules made for it by Congress, and is supposed to be the
financially-savvy younger sibling of the DOH. The reserve fund and other
funds of PhilHealth are not really a ‘fund’ in the accounting sense of the word
because according to the law, their use for whichever organizational goals is
at the discretion of its top managers. “When near bankruptcy, Congress may
even be compelled to provide it with funds,” added Dr. Romualdez. PhilHealth
need not even use its money to leverage the goals of health vis-à-vis other
stakeholders. It is vested with quasi-judicial powers and also exerts
regulatory powers over hospitals and other health-care providers by way of
accreditation. While always effecting central decisions on health financing, it
is also affecting health-related pursuits of local government units (LGUs)
through the various functions of its local offices including the politicallylucrative capitation fund for outpatient services started in 2000.
Gleaning the givens of PhilHealth, the corporation truly had a huge
potential in bringing about the success of health reform. Dr. Romualdez
however, had both ease and difficulty mustering this strength inherent in
PhilHealth. In its top management, doctors number less than the fingers of a
hand. Therefore he felt that he needed to be “a very hands-on chairman of
the board” according to his own words. The board is a body of 11 members,
seven of which are from government agencies and the rest are
representatives of civil society. “The trick in PhilHealth was the majority of
the Board were Cabinet members. So the Cabinet members will follow the
President [of the Philippines]. I met frequently with them and I have full
support from the President,” he confessed. “If your president effectively
gives you authority to do things, then support of the other Cabinet members
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are automatic. That was one major advantage. It made the board effective.”
Monetary incentives were also not a problem; the Board of Directors is free
to set its own salary scales within certain limits. Dr. Romualdez however,
lamented: “Unfortunately, we were not able to change the character of the
people within PhilHealth enough to be able to instill in them the idea of social
responsibility. They weren’t even convinced that the Secretary of Health is
their boss.” True enough, with a highly-diversified workforce composed less
of people trained in public health and more of people versed in accounting,
actuary, and the law of the land, this perfunctory organizational culture
should bring no astonishment. “They were used to thinking of the funds
whose main objective was to grow, that the fund was to grow. They did not
have the objective of spending money to help people. This is a cultural
problem; a way of looking at their jobs.” In effect, Dr. Romualdez channeled
much of his effort in precluding PhilHealth’s operations from becoming like a
private insurance company, and whatever was left was for improving benefits
and going for equity. He said with much regret that PhilHealth was bent in
the objective of gaining surplus at the end of the year. “Maybe to a certain
extent, they were right because they were able to build up a huge fund which
is now what we're saying that ‘we should now spend this money’,” he said
with a hint of sour grapes. But he was downright honest to a fault when he
said straight: “As a private firm that accumulates reserves, they've done
a good job. But as a social health insurance company whose job is to
advance equity, they have not been successful at all.”
Health service delivery
It will be recalled that there are two providers of care: the private
sector and its public counterparts. Secondary and tertiary care is provided by
allied health professionals in clinics and hospitals, either public or private in
nature. The free enterprise and profit-driven providers appear to have the
most efficient way of providing health care that is of quality. Unfortunately,
they prefer to be situated in large towns and cities only. As population
ballooned and the gap between the higher-income and the lower-income
groups increased, public providers gained the role of increasing access for
the geographically underserved (see Exhibit 4). The public side therefore was
the only one left with the task of primary health care and public health
programs.
It was in this context that the HSRA pursued reforms in both hospitals
and public health programs. Dr. Romualdez opined: “Hospitals are becoming
isolated; they behave like little kingdoms without much concern for what's
going on in the rest of the country… no link to communities, no thought of
primary health care as a basis for their operations [sic].” The blame is not
just to hospitals, however. He added: “Public health programs needed to
change to make sure that they were feeding in to the rest of the system. We
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wanted hospitals to do public health, and we wanted public health-people to
look at themselves in relation to hospitals.”
The central office caught off guard
However, the reform had to operate in the greater milieu of how the
law dictated the way health providers have to be organized. In 1983, the
head of state passed an executive order that effectively integrated public
health and hospital services. Eight years after, the same integration was not
only separated, but further fragmented. This change was better known as the
Devolution of health services to LGUs, mandated by the Local Government
Code of 1991. This landmark law transferred the management of public
health facilities to the LGUs. As part of the change, the governors now have
the provincial and district hospitals as part of their portfolio while the mayors
of cities and municipalities were now in-charge of their respective city or
municipal hospitals, rural health units (RHUs), barangay health stations, and
almost all of the public health programs.
“Although done without much consultation from the health sector, I
don’t have disdain for Devolution,” Dr. Romualdez professed. “It’s because I
personally think it allowed the delivery of results.” The decentralization of
health afforded by the Local Government Code also democratized policymaking by way of instituting Local Health Boards. These provincial-level
Boards comprise representatives from the communities themselves. An
official from the so-called Center for Health Development (CHD) sits in this
board. The CHD serves as the last bastion of direct power from the DOH
central office. “The CHD is actually just the same as the former regional
office of the DOH that the Local Government Code has dissolved,” Dr.
Romualdez revealed. “We just changed the name to comply with the law.”
The CHDs are the last hope of DOH through which they can effectively guide
the administration of devolved hospitals and steer local implementation of
programs towards the supposed right direction. He added: “When used
effectively, Local Health Boards hold the potential of revealing the great
advantages of Devolution for the goals of health.”
The decentralization woke up the ire of all central office employees and
almost all of the doctors in the public sector. The powers that be were no
longer the civil servants but the elected officials in the local arena. Much of
the credit and most of the burden of stewarding health in the regions now
belonged to politicians who generally find investing in health as something
that’s not as attractive as infrastructure projects. Between health projects
and infrastructure projects, the outcomes of the former are intangible while
that of the latter are concrete. The latter are more likely to make the voters
remember the politicians’ deeds come election season. Additionally, doctors
who serve in the district hospitals suddenly found that their boss is no longer
the Secretary of Health but their provincial governor. On the other hand, this
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new setup was arguably more beneficial in that the politicians were made
more accountable of their constituents’ health. As a result, there were public
hospitals that dramatically improved; although generally these were the
hospitals now operated by cities enjoying much tax or much budget from the
national government. Conversely, hospitals in resource-poor settings were
struggling to survive. In some other places, health outcomes suffered when
their politicians’ way of providing health services were through the arguably
unsustainable medical missions or the dole-out of unnecessary medicines.
Interregional variations of governmental support for health were partly
evidenced by bed capacity of public hospitals vis-à-vis the number of
population served (see Exhibit 5).
Another problem concerning decentralization was that it was not tied
to a financing mechanism that could have redistributed or pooled the
resources among hospitals respectively belonging to provinces, cities or
municipalities. This was not something that could have been expediently
solved by the DOH because after all, those hospitals were no longer theirs
very soon after the crafting and implementation of the said landmark law.
Besides, the central office now had fewer staff owing to the mandatory
downsizing. Furthermore, Dr. Romualdez also observed that the Local Health
Boards were amateurs in health policy and puppets to several vested
interests. “With a few exceptions, the Local Health Boards were ineffective in
delivering reforms.” With a hint of frustration, he added, “in those Boards,
the CHD official gets only one vote.”
Irreversible momentum
Reforms in health-care delivery were the most tangible part of the
HSRA, on top of being laborious. In light of the HSRA, the Execom and
working groups implemented all five reform areas starting with 16 provinces.
“We have identified them and the idea was we were going to roll them out
geometrically [sic], doubling every year. We started with 16, the following
year 32, then 64, then the whole country [sic]. Within four years, all of the
country will have been covered,” Dr. Romualdez said. But as if Devolution
were not enough, another change in the political scenario loomed at the
approach of the new millennium. President Erap was increasingly becoming
unpopular due to allegations of plunder. Impeachment moves were being
filed in the Lower House of Congress therefore the administration had to look
short of the long-term. On top of that, Dr. Romualdez claimed that the DOH
had to wrestle with budget constraints. With this, Dr. Romualdez together
with the Execom decided to choose the provinces that had the high likelihood
of success. He explained: “You'd want to demonstrate success so that the
succeeding provinces will follow suit. The idea was to create models, not
pilot, that could be emulated by other provinces.” They reasoned that the
gains of the reform will be attractive to neighboring provinces without the
HSRA implementation yet. In turn, politicians of these provinces will find it
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desirable to eventually join the reform, creating an “irreversible momentum”
in the words of Dr. Romualdez.
An evaluation done by a group of economics professors from the
UP (see Exhibit 6) found that there were gains and successes in the
16 provinces, albeit incomplete. However, the “irreversible
momentum” so claimed may not be that irreversible. For one,
performance of the reform hinged much on availability of funds. “Most
of the money were government money. But foreign funding was used
in areas where either there was no money allocated from our budget
or there was difficulty in spending Philippine money in time for what
we have projected as the timetable.” Dr. Romualdez clarified: “Either
it’s just slow or has a problem with the Commission on Audit, so we
use these to supplement or to get things started. But the idea was that
eventually it was all going to be from DOH.” This clarified that
government budgets were rather sensitive to political pressures. Other
sources of funds were sought. “We in fact called a meeting of all of the
countries and all of the agencies, bilateral and multilateral, to present
our idea of health reform. All of them without exception designed their
programs for health care based on HSRA.” Financiers chiefly the
World Bank had funded projects that provided technical assistance
serving to further the implementation of HSRA. “Funding from them is
only small, around 10% of total budget of the organization. We could
do away with it.” He further revealed: “I don't like to talk to the World
Bank [representatives] because they’re suggesting ways to make us
borrow money. I told them to talk to the finance secretary, and then
we will talk.” This statement was never meant as a disparagement but
more of a proclamation of Dr. Romualdez’ views—government money
is something to be depleted and debt never grants a high leverage.
The little kingdom of hospitals
In spite of the Devolution of services, the DOH retained a network of
hospitals under its direct funding and oversight (see Exhibit 7). These were
select regional hospitals and specialty-care hospitals. According to Dr.
Romualdez, a certain politician clamored why national money from general
taxation was being used to finance a regional hospital which technically
services only a province (owing to the archipelagic nature), when its
catchment area ought to be the group of provinces in the region. This was
but one of the problems concerning public hospitals. The hospital reforms
were designed to meet the bigger problems besetting the public hospital
system, chief of which were “corporatizing the regional and national hospitals
and including the private sector into the existing government networking and
patient referral system for an integrated hospital system.”
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Despite the Devolution, the retained hospitals ate a big chunk of the
budget of the DOH. These hospitals were known for their high maintenance
and operating expenses. This was a fact that the DOH continually had to deal
with even if it gave statements about higher priority to public health
programs. Expenditures on hospitals meant reductions in budget for public
health programs.
Health facility planning for the country remained the responsibility of
the DOH. Funding of hospitals came from national appropriations and the
retained income of the agency. Pursuant to the stipulations of HSRA,
interlocal health zones (ILHZs) were created. The district hospitals were to
thrive in these zones. However, the growth of the zones was slow at best.
Studies commissioned by the WHO and Management Sciences for Health
(MSH) provided the technical basis for selecting 15 facilities to be prioritized
for hospital reforms from 2002 to 2004. From these facilities, a further five
were selected to be transformed into GOCCs by the end of 2002.
In the end, only two hospitals have been pegged to be transformed:
Quirino Memorial Medical Center in Quezon City, Metro Manila, and the other
was Ilocos Training and Regional Medical Center at the northern part of the
country. This transformation was actually termed corporatization—a process
of replicating the structure and efficiency of private organizations without
compromising social goals through continued public ownership. This was
hoped to turn the hospital into a self-sustaining venture, so that limited
resources can be channeled to public health programs. Additionally, the DOH
Execom rationalized that public “natural monopoly” for the longest time had
not improved quality and access to care. They also wished to expose the
reformed public hospitals to competition with private counterparts. The DOH
Execom granted the quasi-market hospital with some freedom to set its own
financial targets whether it is profit, rate of return on assets or equity,
dividends, or investments, along hard budget constraints. The newly-formed
organizational structure will have made the hospital’s board of trustees
accountable to the Secretary of Health on top of its duty to whichever
financiers.
The medium-term evaluation of the implementation of corporatization
showed certain gaps. There were humongous policies that needed to be in
place in order for the transition to be seamless. One was the need to have
clinical practice guidelines (CPGs), controversial standardized procedures of
care which gives the economic benefits of potentially containing the costs
through guidance of procurement and rule-setting of cost-effective treatment
protocols. The CPG-formulation required an integrated participation among
the DOH, PhilHealth, and associations or societies of specialist-doctors. This
additional task was something that was not anticipated and which caught the
implementers of HSRA off guard. Details of the ceilings on revenue retention
were policies that also required inter-agency involvement, particularly
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between the DOH and the Department of Budget and Management (DBM). It
appeared that to get minor things done, a lot of prerequisite steps had to be
accomplished.
Partly due to these prerequisites or for some other reason, most
hospital chiefs were not inclined to undergo corporatization. They were not
convinced that the benefit of corporatization will outweigh the risks entailing
change management. Furthermore, misconceptions about corporatization
floated around public hospital administrators. Corporatization and
privatization were equated when in truth, the latter is more radical.
Privatization will remove all control by the government although not
necessarily becoming for-profit. For one or two chiefs, corporatization
became attractive because the added collections will finance staff incentives
and critical medical supplies.
It was the DOH Execom and the TWGs who drafted the transition
scheme and business plan for the two hospitals. With some involvement of
financial experts working at the hospitals, they laid out a detailed rollout that
took into consideration the “facility’s governance structure, socialized feesetting policy, revenue forecasts, estimate operating and capital expenditures
as well as requirements for direct public subsidy for the first five years of
operation.” According to the same aforementioned evaluation of UP
economics professors , the primary gain of the attempt at corporatization
was the upgrading of the involved hospitals. They added that these
improvements cannot be immediately attributed to corporatization nor the
introduction of CPGs (however limited), because “they are the top referral
hospitals for a convergence site.”
When it comes to the loftier goal of integrating hospitals and primary
care, it was argued that primary health care is generally at odds with
hospitals' interest. There was no incentive for the private hospitals to
promote preventive care; besides, the object of this integration appeared to
center only on public hospitals. Even on the part of the public hospitals, the
call for corporatization and integration may be theoretically incompatible
because a corporatized hospital may inadvertently have a tendency to let the
people get sick. This tendency is qualified as a disincentive to keep them
healthy because having patients translates to a little more income. An
effective referral system was even more unlikely because of the lack of an
infrastructure for information technology. It was also argued that if only the
reforms for both hospitals and primary care were liberalized along a
bottomline principle, then the objects of implementation could have operated
around existing realities and striven to improve the inherent system
incrementally. The plans for reform in this area of the HSRA can be
considered noble, but the problem came in the communication of the tenets
to the regional managers at the CHD and the hospital chiefs.
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The primary problems of primary health care
Public health programs are not only categorized by what-provideswhich (RHUs administering vaccination) but also by beneficiaries (various
population groups: mothers and infants, children and adolescents, adults and
older persons), and by specific diseases (tuberculosis, malaria, cardiovascular
diseases, cancer). Quite against the stipulations of Devolution, the DOH
retained certain programs in its portfolio. Dr. Romualdez explained: “We had
to identify what are those that exactly required national effort. This would be
the big campaigns like for poliomyelitis. We had to streamline everything that
we do in the DOH, make sure that we do only those that we could do well,
like public health campaigns, television programs, immunization, and family
planning.” He reasoned: “These are things that local government, at least
from our perspective, cannot do well.”
The DOH retained control of programs which required lots of money
and integrated effort. An example would be the program for tuberculosis
(TB). “We decided we'll implement it to local people, they provide manpower,
the health clinic and so forth, and the DOH will provide the logistics for
diagnosis and treatment including medicines [sic]. All the medicines were to
be provided for free. That in turn increases compliance. If not free, people
who cannot afford will not get.” It maintained responsibility for the
procurement of drugs for public health commodities like vaccines and antituberculosis drugs in order to take advantage of economies of scale, i.e.,
buying by bulk so that there is bargaining power in negotiating for lower
prices thereby lowering costs. Their retention of these programs were also
justified by the need to have steady supply which they think only
government can provide. They also found it necessary to own family planning
because according to Dr. Romualdez, “local government would not do this
because they are afraid of their priests.”
The DOH-National Center for Diseases Prevention and Control (NCDPC)
provides standards and guidelines on TB control. It is responsible for
supervision and monitoring of the treatment protocol for TB up to the
region’s bastion, the CHD, but it is still the LGUs that administer the program
down to the grassroots. The trend of detection of new TB patients showed an
increasing trend, indicating either the disease was getting more widespread
or that the program managers were doing their job well. When the
Government said that this retained function for the TB Program “increased
detection rates,” what it actually meant is that the program expanded
gradually to reach 90% coverage in 2000 and eventually, nationwide
coverage.
As for any other reform area, reforms in public health did not happen
in a vacuum. They were affected by preexisting situations wherein both the
DOH and LGUs needed to be partners. Particularly, the broader politico-legal
environment exerted certain difficulties in allocating enough budget for public
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health. The annual budget cycle in the Government begins when the Cabinet
secretaries of the agencies submit their departmental budget proposal to the
President of the Republic of the Philippines. The President then either fully
approves or modifies the proposal. He then submits the consolidated, final
proposal to the Congress for deliberation, resulting to even much more
modifications. The Congress then approves the budget, which is often at a
deficit. Never has it been that the actual appropriations exceeded
expectations. On top of the constraints from budget cuts, the secretary often
negotiates with other Cabinet members about how much money his or her
department will receive. The Health Secretary often deals with the Secretary
of the DBM. Dr. Romualdez added: “I also find myself always talking with the
Finance Secretary for certain foreign-funded projects and the Secretary of
National Economic and Development Authority (NEDA) because NEDA is
chiefly responsible of how government money will be used in the long-term.”
Dealing with fellow secretaries is not the only detour before the destination.
Once, Dr. Romualdez had to personally go to the Department of Finance in
order to have something done for a health-related World Bank project. He
talked to two different civil servants, one a lawyer and the other a manager.
The two spoke of this and that Republic Act and so many other laws if only to
coax and prevent the Health Secretary from giving them additional work. Dr.
Romualdez replied to them with the confidence and tact reminiscent of a
professor saying: “I trust that both of you already know how to go about
those things, so I want this done by tomorrow, okay?” Such pedantry of the
bureaucracy often precludes tasks from being accomplished in a timely
manner. This incident is evidence for departmentalism and silo culture that
has pervaded the Government since time immemorial. While some civil
servants use the law or whichever rule to justify their deterrence or delay of
needed actions, a law can also be in place that could counteract eventualities
like these. When a law is present to protect the budget from the instability
brought about by political bickering, the DOH can have the enabling
environment to expediently and efficiently implement public health programs.
When this fails, there may very well be other ways like judicious play with
power or legit political maneuvers. These strategies are not unfounded but
are part of a growing body of knowledge rallying the so-called whole-ofgovernment approach.
The political instability due to the ouster stalled the implementation of
HSRA. Cabinet posts are generally criticized for their high turnover rate; the
leadership of the health agency then left crippled more often than not with
every political overhaul. Times like this usually disrupt the bureaucracy when
the secretary and a few of the top civil servants are changed. The programs
on public health have surely continued but with the loss of the leaders who
championed the reform, those programs may have diminished in terms of
the HSRA brand equity.
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The reckoning in the field
As an overall evaluation of service delivery reforms, the plans and
processes were deemed laudable. However, the implementers appeared to
have a shortcoming in terms of their alignment with the object of
implementation. The DOH human resources are both the agent and object of
implementation themselves. As agents, the technocrats of the DOH needed
to proceed out into the field where the actual plans will have to be carried
out. But this duty posed an incompatibility between their rationality, which is
to minimize effort and maximize gains, and the aim of reengineering, which
makes them the very object of the changes.
Reengineering is the redesign of organizational structures and systems
in the hope of achieving dramatic improvements in performance. The very
program started by Dr. Romualdez—the National TB Program administered
by the NCDPC—was the foremost example of reengineering. Its staff of 22
was found to duplicate many of the jobs that were already in the
bureaucracy. With much political will to make this hard decision, Dr.
Romualdez let go of twenty, effectively reducing the staff of the whole
nationwide program into two. In the main body of the bureaucracy however,
downsizing is a rarity. These bureaucrats were hardly given a real dose of
this reform, save for being laterally transferred. Owing to the security of
tenure that is due government workers as enshrined in the law, the best that
the secretary can do is to transfer the civil servant to a different position but
of the same rank still. Dr. Romualdez expounded: “The new position is
somewhere he can no longer have influence or power to do as he wishes, or
some new office which expanded his job description without the
corresponding increase in remuneration.” Such moves—downsizing and
lateral transfers—created an atmosphere of tension for majority of the civil
servants, if not downright contempt. It met the resistance of the bureaucrats
and eventually, reengineering had to be put on hold. Human resources were
therefore not redirected to where they ought to be. One result of this was the
organizational incompatibility within the DOH wherein there was the lack of a
counterpart unit of NCDPC at the regional level. The two personnel of the
NCDPC, tasked with safeguarding the detection and treatment of all Filipinos
with TB, were never given additional co-workers. In the end, the DOH was
not able to institute effective collaboration at the regional level for the
devolved health programs, while the integration of primary and higher-level
care remained a dream.
Regulation of medicines
Drugs are an essential component of health care. Drugs, as a product,
often have two names: a generic one, which is the one true name written in
neutral literature understood worldwide, and a brand name, which is the
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more specific marketable name granted by the pharmaceutical company that
manufactured them. To add confusion, the duality of names is also a “duality
of product” when there were drug firms that started manufacturing cheaper
drugs without granting them brand names, the kind now known since then as
“generics.” Generic drugs are ideally similar to their branded counterparts in
all things except price. Drug companies both multinational and local, supply
majority of the world’s drugs to the general public. As a method of checkand-balance, governments worldwide exert the rule of law in assuring the
quality, safety, and effectiveness of the manufactured products. This is the
power of regulation. The Philippine health department is actually parent to an
attached agency that regulates the pharmaceutical industry and all their
products entering the market. During the time of Dr. Romualdez, the name
of that agency was the Bureau of Food and Drugs or BFAD. This agency had
a breadth of regulatory scope in addition to drugs, which include other nondrug health-related products, health equipment and devices, vaccines,
processed food, cosmetics, nutriceuticals and herbal supplements, hazardous
household chemicals, and even toys.
Regulatory capture is not that simple
All manufactured drugs are never perfect; experts generally hold that
without effective regulation, the dark side of medicines is bound to surface. A
drug is considered violative if it is found with the slightest impotence or lack
of efficacy. Likewise, a drug is substandard if it has impurities or if it does not
meet labeling specifications. The ever-lauded legislation, the Generics Act of
1988, hailed generics as the ideal kind of drugs to be distributed and used
not only by public providers but by the whole health sector. The law
encouraged doctors to write generic names of drugs in their prescription
pads. It had a simple flaw however. The same law did not bar doctors from
writing the brand nor ban them from cajoling their patients in choosing to
buy the branded drugs (see Exhibit 8). But it did encourage the local industry
since it sort of lowered barriers to entry. Local pharmaceutical companies
sprouted and grew almost overnight until such a time that Dr. Romualdez
and the DOH felt the need to limit the number of products in the market. He
confessed such an unfortunate spoiler: “That’s something we were not able
to do. We just were not able to catch up.”
What happened was, reports of substandard drugs barraged the DOH
during the start of Dr. Romualdez’ term. A local pharmaceutical company
distributed in the market certain batches of purportedly substandard drugs
for the treatment of postpartum hemorrhage. Sixteen physicians attested to
the lack of potency of this batch of injectable drugs after they observed that
the medicine did not result to its expected therapeutic effects. According to
Dr. Romualdez, those batches of drugs allegedly caused 11 mothers to bleed
to death after giving birth. The injectables were but a few of the many other
drugs that actually did not escape BFAD’s notice. The regulatory agency
found certain irregularities in the quality of drugs scrutinized scientifically.
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The enormous batches of drugs that were examined were sent by 16
different local drug firms from their very own warehouses. In this issue, it
takes two to tango. Pharmaceutical companies are as much a liable party as
the very bureau tasked to rectify them. Many of the firms in the local drug
industry needed to adhere to stricter good manufacturing practices or GMP as
their contribution to a problem-free drug supply.
As one of the vanguards of public safety, the BFAD was not
unconcerned about the issue. Despite the fact that commercial interests are
subordinate to the interest of safety and health of the public, civil servants of
the bureau were still divided into two camps. There were regulators who
believed that regulation must be seen in light of the other goal of protecting
the local drug industries. They discerned it better to have a lenient hand on
them initially based on the following train of thought: the ‘liberal’ regulation
will encourage local pharmaceutical companies, make the local drug industry
grow in order to compete with multinationals, increase supply of medicines
therefore bringing the prices down. Furthermore, they were convinced that it
was not the fault of the local industries but of their suppliers of raw
materials, which were from other countries. They believed that the measure
to be taken was to issue these companies only some warning. They thought
that withdrawals of licenses or of registration were never warranted because
defective medicines were found only sparingly but not in all the batches of
examined drug supplies.
On the other hand, there were regulators who were ready to make the
hard decision of cracking down on the 16 pharmaceutical companies. Likeminded officials concurred based on the consistency of this action with the
bureau’s mission of “ensuring the safety, efficacy, purity, and quality of
drugs [etc.], as well as the scientific soundness and truthfulness of product
information for the protection of public health.” Other forward-thinking
regulators even believed that the alternative of leniency towards the sixteen
would create a general impression from the market that all generic medicines
are inferior in quality. They were quick to add that first impressions in the
market are often difficult to recant. Ethics aside therefore, counterfeit and
substandard drugs (whether alleged or proven) inadvertently advance the
interests of some of the world’s most powerful corporations—the very foreign
competitors of the local drug firms—because they trade off long-term
advantage with short-term gains. They opined that in terms of legalities, any
death due to substandard drugs can be thought of negligence akin to
“reckless imprudence resulting to multiple homicide.” In the future,
everybody will find that the question “Which is better, generics or branded?”
can only be asked only after another question is asked: “Does the
government faithfully ensure the quality of generic drugs?”
In the end, what the BFAD did was to issue to the twelve (out of the
sixteen) several show-cause orders for violation of BFAD guidelines. They
were to submit explanations in 15 days. Two firms settled the issue with the
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bureau and agreed to pay the fine of 21,000 pesos each. Additionally, the
BFAD suspended the certificate of product registration for one drug that was
distributed by one of the two that acceded. One of the sixteen stirred a
controversy when it sued a handful of the BFAD officials. While the
government cannot be sued without its consent, the bureau officials were
arraigned not in their capacity as regulators but as persons for alleged tort.
The ones sued were a number of indomitable regulators who really wanted to
remove the accreditation of some companies. “They did their job very well
and they were brave to stick their necks out; it’s just that they fought
powerful enemies,” quoted Dr. Romualdez. The sued regulators, for their
part, reasoned that in times when public health is at stake, it is justified that
regulation should always err on the side of caution, however inconclusive the
courts may find the evidence. They added that the burden of producing the
evidence should rest on the regulated and not on the regulators.
“The supply side—the regulated institutions—were in effect in control
of the regulatory agency. Big pharmaceutical companies were dictating to the
BFAD which policies were better off not implemented,” said Dr. Romualdez.
In moments like this, the scandalous phenomenon of regulatory capture is
made manifest. This is the burden of regulation. He commented on the
potential solutions: “One thing is to make sure that the BFAD is insulated
from influence… make sure that when making the policy, that you don’t make
it to favor industry [sic].” The bureau had no quasi-judicial power during the
time of Dr. Romualdez yet. Its regulators also did not have official
immunity—an absolute shield from common-law tort liability for any act done
in the perimeter of one’s duty. The rationale behind granting protection to
the regulators is that they should feel free to make decisions in upholding
public interest without having to bear threats, damages, or monetary loss if
any of them is injured in the process. Dr. Romualdez believed however that
immunity is so radical a solution because it can lead to abuse of power.
During his term, there was no law to strengthen the bureau nor protect its
regulators. “But there were many things that could be done to strengthen
BFAD without the requirement of law. For example, creating new positions or
tasks. In fact we did it, except it wasn’t carried on. My DOH did not fully
control the BFAD development,” Dr. Romualdez humbly confessed.
When government officials have cases filed against them, their first
recourse is the public attorney’s office. The Office of the Solicitor General
also wields functions which serve to assist the aggrieved. “I was friends with
the Solicitor General during my term so I have no problem,” professed Dr.
Romualdez. He lamented, however, the arduous process by which the sued
regulators will have to fend for themselves when these resorts fail or prove
to be difficult to access. “What really makes me sad is that agencies and
public offices have no spirit of working together. They sue each other for the
slightest reason as if we’re not part of one government.” The DOH was not
able to include in its budget a portion for lawsuit insurance. Similarly, the
BFAD was not allowed to retain a portion of its earnings for legal expenses
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because it was supposed to remit all of its income. It seemed that all money
was to be given for the health of the public but not for the protectors of the
health of the public. Dr. Romualdez expressed his thoughts on this: “Part and
parcel of being a government worker is to face the risk of the job, especially
regulation. I myself was sued after I stepped down from office. But not
during my term as Health Secretary.” The dearth of inter-agency cooperation
within the government and the embedded ways of proceedings which thwart
legal protection had easily made the regulators “good people trapped in bad
systems.” Such civil servants had earned the right to truly regulate, but had
felt compelled to forfeit it.
To add insult to injury, the BFAD was constantly accused of being
notoriously inefficient. Most policies were rather dependent on the whims of
the top officials when sound management principles dictate stringent rules
and regulations that will ensure reliable observance of regulatory precepts.
Armed only with meager resources, the bureau also had to process
thousands of applications when its qualified inspectors number only less than
twenty. It had no infrastructure by which to effectively manage the huge
amount of information of regulated drugs and companies. While technology
continued to advance and enlarge related business ventures, the public
sector neglected the bureau enough to make it incapable of catching up. But
because of its mandate, the bureau was naturally pegged against
stakeholders with huge vested interests on the status quo. Simply put, the
BFAD was aggrandized in scope of duty but not in depth of power.
Vested interests in pharmaceuticals
In the larger scheme of regulation of medicines, all the previous
hullabaloo concern only the quality of medicines produced by the local firms.
It was a well-known fact among public health practitioners that the prices of
medicines in the Philippines remain to be many times higher than the prices
of the same drugs from other countries. The figure was about three to a
hundred times higher depending on the kind of medicine. Multinational drug
companies argue that such prices are due to production cost, quality, and the
costs of distribution in the archipelagic country. Arguably, the marketing
schemes of these multinationals are an elaborate industry which by itself,
drive up costs. Aside from promotions in various forms of media, they are
generally aggressive in their customized advertising to doctors, in whose
stroke of the pen by way of prescription makes or breaks any brand of
medicine.
Since the local drug industry proved to be problematic anyway, the
DOH and the BFAD thought it best to focus on its other related responsibility.
Besides, the concerned agencies also had oversight over the operations of
multinational pharmaceutical companies especially when it comes to the
prices of their drugs in the Philippine market. Banking on the avalanche
catalyzed by the Generics Law, Dr. Romualdez thought of issuing an
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administrative order that will prevent the multinationals from using their
brand names in whichever form of advertising. If any, the events thereafter
became the cause célèbre of his stint as Health Secretary.
Dr. Romualdez was considering changes in the process of drug
registration. He wanted to require prescription drugs to be sold using the
generic name of the product, effective on the first day of year 2001. Dr.
Romualdez elaborated: “This way, [multinationals] will not be able to use the
gimmicks in marketing their products. When marketing, they are forced only
to use the generic names. So even if they spend money on the doctor, when
the doctor writes the name, it’s still the same name [sic]. If there is no brand
name, or if brand names are not allowed, then everybody is to write generic
names [sic]. It is important for pharmaceutical companies to change their
marketing habits.” His proposed A.O. required all pharmaceutical products to
be marketed without their brand names, with two exceptions: innovator
drugs (i.e., drugs whose patents have not yet expired) and over-the-counter
products (i.e., drugs that can officially be bought without a doctors’
prescription).
Dr. Romualdez took upon himself the hurried, anticipatory reactions of
various groups. These groups were organized associations of pharmaceutical
companies and private health-care institutions. The U.S. Government also
allegedly exerted much pressure through its embassy in the country and the
Department of State. Various personages from these groups issued low-key
appeals to Dr. Romualdez but the Secretary deftly showed his commitment
to the proposed policy. He explained: “The Generics Law did not ensure
widespread availability of these low-priced drugs partly because many
drugstores still continued to sell the more profitable branded medicines.” He
reasoned that it was not his intention to single out the multinationals with
good track records of manufacturing quality products. His main purpose was
to eradicate risky drugs that were being imported from other developing
countries, but were branded nevertheless. The constitutionality of this policy
also cannot be overemphasized. The other camp claimed that restricting the
use of trademarks would be a major trade issue, as brand names are
proprietary. According to Dr. Romualdez, the U.S. officials questioned the
legality of this A.O. in light of another law—the Intellectual Property Code.
They also purportedly argued that the Philippine Government’s equal
commitment to Intellectual Property Rights (IPR) has constitutional basis.
They reasoned that in the Constitution, no person should be deprived of
property and that trademarks constitute this kind of property. They were
allegedly quick to remind of the Philippines’ indebtedness to the U.S. relating
to generalized system of preferences (US GSP) and the Government’s
concordance to the Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS). The bargaining deadlock was rocked when another
government agency posed difficulties for the DOH, and this was the
Department of Trade and Industry or DTI.
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The DTI and its Secretary warned Dr. Romualdez that pursuing the
A.O. would endanger Philippine benefits under the US GSP. The Health
Secretary reiterated his stance that commercial interests should be
subordinate to public interests that especially advance access to health-care
products. He communicated the fact that 60% of total health expenditures in
the country were from the pharmaceutical industry, and that "imposing strict
restrictions on the marketing of pharmaceuticals will adversely affect only a
small segment of industry that has for years behaved contrary to the
interests of Filipinos, especially the poor." He argued that without the
multinationals, drugs would still be available in the country from other
countries or from local drug firms. Furthermore, he attempted to convince
the DTI Secretary that the affected drugs will only be a few of American
goods because innovator drugs and over-the-counter drugs will be
exempted. Dr. Romualdez assured the DTI Secretary that attorneys from the
health agency have already reviewed relevant trade agreements for the
proposed policy, and that the DOH has also explored other possible options
to improve access to Filipinos.
PhilHealth joined the fray when it ruled that it will use the average
price of generic versions of a drug for reimbursements. The social health
insurance hoped of influencing prescribing patterns of doctors in favor of
generic drugs. Dr. Romualdez and his camp were subject to pressure from
many sides, but he confessed one source of his strength: “I never felt any
pressure because all the time I knew President Estrada backed me up.” The
President also publicly expressed his interest in bringing the prices of
medicines down, amidst a background of growing unpopularity.
Despite his hard-line stance, Dr. Romualdez remained a fan of
democratic processes and openness to negotiations. The DOH signed a
memorandum of understanding with PhilHealth, the Pharmaceutical and
Healthcare Association of the Philippines (PHAP), the Chamber of Filipino
Drug Manufacturers and Distributors, and the Philippine Medical Association
(PMA), which is the umbrella organization of all doctors. The Memorandum
bore fruit to the Pharmaceutical Affairs Consultative Committee (PACC) with
representatives from each organization to mediate consultations between the
Government and the pharmaceutical industry. The PACC made its final
decisions based on consensus-building but eventually brought the signing of
the proposed A.O. many steps away from possibility. Thereafter, Dr.
Romualdez continued to speak in Senate hearings and various fora about the
multinational drug firms’ contribution in the high prices of medicines. He
vowed to cut the price of medicines by 30-60% in the succeeding year. The
DOH was still bent on running against trade interests because its agenda was
also the President’s agenda.
The clamors initiated by Dr. Romualdez served to challenge the
multinational pharmaceuticals but it did little in encouraging the participation
of the medical community. Perhaps this proved to be a better course of
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action because the doctors were hardly an ally when it comes to this ‘battle.’
While also quite organized, they are a more variegated group with
heterogeneous opinions and standards in their dealings with the
pharmaceutical industry. Despite running the risk of oversimplifying the
issue, Dr. Romualdez revealed the drug firms’ marketing practices to
doctors: “If they have a favored doctor, they give him lots of money and
send him trips. In return, the doctor always prescribes the brand and that
doctor’s prescription always goes to their branded products.” It must be
remembered that the umbrella organization of doctors that is the PMA did not
take the side of the DOH but partook only in the PACC that served to delay
any progressive advances. If the doctors’ group were sufficiently mobilized
however, they could have been a force to be reckoned with by the
pharmaceutical industry. Because of this unexploited card, the ‘battle’ was
rather unprepared in that no sufficient stakeholder analysis was done. A
stakeholder analysis or any similar political calculation could have afforded a
more nuanced approach in the political struggle against the multinationals.
If Dr. Romualdez’ clamors proved to result into another good, it was
the noise it made and the awareness it built on the consciousness of the
lawmakers. A senator who happens to be a former Health Secretary
continued to hold hearings and compelled the pharmaceutical companies to
come up with explanations for the high prices of their drugs. Two members
of the House of Representatives were intrigued by the issue of drug pricing.
One proposed a bill to expand the Generics Act while the other was
eventually appointed as the new Trade Secretary, giving Dr. Romualdez a
staunch ally. The new Trade Secretary started the parallel import scheme of
medicines. “Parallel importation was developed to put additional pressure on
multinationals to change their marketing behavior and was pursued in 2000,”
Dr. Romualdez explained. The scheme allowed the purchase of quality
medicines at lower costs from a different country and its eventual distribution
in the country. However, the start of parallel importation was met with
limited success. It increased access to medicines and significantly reduced
the prices a further 50%, but only in a few of the first 16 provinces of HSRA
implementation. The program also failed in terms of operations management
as it became impossible to match in real-time the importation of drugs with
utilization patterns and inventory turnover. The suppliers of privatelymanufactured drugs took advantage of this by keeping stock of its own
supplies while waiting for the supply of parallel-imported drugs to run out.
This distorted the market, causing the benefit of parallel importation to be
taken with a grain of salt.
“Unfortunately the efforts to oust Estrada were already mounting at
this time and were eventually successful,” Dr. Romualdez lamented. The
proposed A.O. set to be implemented at the start of 2001 never materialized.
He added: “I think the pharmaceutical companies were relieved that I was no
longer the Health Secretary.”
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The Public-Private Dichotomy
Arguably, Dr. Romualdez’ battle scars from the A.O. controversy
denigrated the private sector in his eyes. When asked what keeps him going
in his public service, he said: “I can’t stand the elitist private sector.” Either
by intention or by randomness, the HSRA actually centered more on the
public sphere than the whole of the health system. An explanation for this
would be the huge stake of the public sector in the success of implementing
any of the five reform areas. However, inclusiveness of many more
significant players that belong to the private sector from inception up to
implementation could have increased compliance, ownership, and
participation in the reform effort.
Trends, hungers and givens
By and large, the primary desire of the private sector is a decrease in
government intervention. In this setting, the government addresses potential
market failures by way of fostering competition. Competition in the health
system is significantly influenced by payment mechanisms primarily forged
by PhilHealth. If inequity places the poor at a disadvantage, how health care
for the poor is paid for will determine attractiveness for competitive providers
to venture in providing such care. The HSRA has put this plan on an even
higher pedestal by envisioning the public providers as capable of competing
with their private counterparts. Since this never truly materialized in full,
shortcomings were obviously apparent. Calling these shortcomings as
outright failures would be an overstatement; however, this begs the question
of what factors contributed to the said deficiency. Reforming the public
hospitals proved to be too great an ordeal due to resistant behaviors on the
part of the hospital chiefs and communication problems on the part of the
DOH. This goes to show that while competition is an almost assured solution,
it relies heavily on effective use of incentivizing and calls for the best of an
organization’s capacity.
Another solution building on a competitive environment would have
been contracting out. This scheme actually sets the stage for the much
hoped-for corporatization of public hospitals. However, the resistance of
hospital chiefs was not only due to misperceptions, but also because of their
differing agenda. Most chiefs wanted to renationalize—to be back under the
direct control of the central health office. Dr. Romualdez regularly found
himself talking with the doctor-managers of the hospitals, but when it came
to their resolve in beating the dead horse of renationalization, he had to
resort to imposing a moratorium on whatever agenda they planned relating
to recentralizing.
Contracting remained to be a lingo only in the sphere of hospitals
when in fact, it was a viable option for other workings of the health agency.
By contracting private providers, HSRA can be implemented without needing
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to bloat the bureaucracy of the DOH, the BFAD, or even PhilHealth. Private
laboratories can be contracted to diminish BFAD workload. Various
subcontractors can aid in the expansion of PhilHealth membership as well as
in doing the required administrative work. Public health programs like the TB
program can deliver more astounding results if partnered with private
providers and other organizations. The possibilities are endless.
However, this solution does not provide complete, foolproof assurance.
As in any effort for change in the public sector, there are the risks of
increasing the alleged corruption and patronage. Despite the presence of
duly-recognized internal auditors in the DOH, the hunger for personal gain by
means of alleged malfeasance is a given. Dr. Romualdez disclosed: “There’s
corruption really. But it’s present everywhere, especially in the private
sector.” This conviction by Dr. Romualdez has perhaps fueled the general
distrust of the agency with the private sector. He added: “I have a problem
with the concept of profit. For me, profit is graft and corruption, because you
take more than you give, and that is what profit is.” When it comes to the
alleged corruption in the bureaucracy, he commented: “I do not provide
much attention to it, as long as I don’t do it myself. I think the concern of all
those international agencies about corruption is overrated.” He did not see
the problem of alleged corruption as ironic with the very task of regulation,
saying: “for me, as long as the decisions are made on the basis of technical
health concerns.”
The gains from entrenched patronage systems, including corruption,
provide a glimpse on the broader reality of incentives for public-sector
managers. A celebrated guidebook for health reform authored by Roberts,
Hsiao, Berman, and Reich touched on this difference. It argued that public
managers come from civil service and are rarely given performance-based
incentives (cf. the clear incentive of profit for private managers). Public
managers also have relatively less freedom to exercise power. For example,
administrators of private hospitals enjoy considerable flexibility in hiring and
firing staff, as well as managing financial resources. On the other hand,
public chiefs of hospitals only have power in hiring but not in firing so easily,
plus they are often bound by time-consuming implementing rules and
regulations. In general, public-sector managers also have little appreciation
of management as a discipline in which they can train. Dr. Romualdez
reacted similarly by saying: “I don’t think management training can solve the
problem of lack of incentives for public employees. The need is to have an
overarching philosophy recognized by all who engage sectoral reform.” While
employees from the public sector are hired due to their commitment to social
goals, their secure yet unexciting jobs tend to make rigid, risk-averse
managers out of them. Private-sector managers on the other hand, while
employed for economic gain, tend to be congenial of whatever opportunity
and ever entrepreneurial in spirit. The understanding of such nuances can set
the course for incentive mechanisms that respond to human nature in order
to ultimately deliver results.
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Out-of-the-box solutions
A growing trend worldwide as well as in Philippine Government
agencies is the scheme of public-private partnerships or PPP. Encompassing
the far less simple terms of privatization or of corporatization, PPPs have
been employed in the transport and energy sector even way before the time
of Dr. Romualdez as Health Secretary. It consists of other schemes that
serve to foster mutual benefit. Some PPP schemes are contracting, leasing,
build-operate-transfer, build-operate-own, and buy-build-operate. When well
executed, these prove to be beneficial in infrastructure projects particularly
hospitals.
On an entirely different note, a noteworthy group of kindred spirits for
health reform aside from those belonging to either public or private sector
would be the nonprofit, non-governmental organizations also known as
NGOs. Even without much regulation or oversight, some NGOs do the humble
work of supplementing existing programs by the Government. A few would
operate efficiently as private firms. Health-related NGOs, though few in
number, often cater to community-based initiatives the likes of which are
health insurance schemes and village pharmacies that provide the indigents
access to medicines. Their existence is a testament to the strength of health
programs that are characterized by local ownership and grassroots
organization. In spite of lack in collective action, they produce tiny ripples of
hope as models of care in any health system.
Organizational strengthening
The evaluation done by the same UP economics professors judged the
HSRA implementation as “giving the impression that no one was on top of
everything” (see Exhibit 6). It must be recalled that reengineering sought to
build the foundation that will sustain the reform efforts. As to its progress,
Dr. Romualdez remarked: “It was never completed. We reengineered the
central office, but the regional offices were not. We also wished the same for
the BFAD.”
Questioning reengineering and streamlining
Exploring the reasons behind this, he spoke of the middle managers.
Dr. Romualdez revealed: “I think for the most part, they’re competent. I
knew most of them. Most of them were cooperative. But I think they were
weak-willed in pushing for reengineering.” The rationale of reengineering was
to transfer the people to where they were needed the most. Because the
reform would slash down the bloated bureaucracy, political will from the
implementers was hard to come by. “Our scheme was not only to reorganize,
but to consolidate [the regional offices]. But when you have the political
motive, then you never abolish or consolidate, you just increase the number
of positions.”
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Dr. Romualdez’ personal reaction was to reassign functions. “They
know that I can do what I want. I will remove them from their positions.” He
never felt the need to go as far as retrenching however. “That’s the wonder
in government, salary is so low that it matters less than whatever position of
power they hold. They are concerned with the territories of these powers.
When I ask them to be laterally-transferred, they know that they should
oblige, else they lose their continued opportunities [for patronage].”
Aside from the aforementioned communication problems, Dr.
Romualdez gleaned pearls of wisdom from the experience of reengineering.
“The most important is that you had to have a committed group immediately
around you and in the field—individuals who understand the main policy and
the reasons for the policy, and people who basically agree with the policy and
implement it according to the agreement. Major and most important, policies
should be shared down the line and until the implementation.”
Some needless tension before work
The people constituting the DOH are truly a most valuable resource.
Salaried by taxpayers’ money, they are accountable to the people and
directly answerable to the appointed secretary. In the same way that a
Cabinet secretary has a term that rests on the whim of the president, middle
managers have much to say about the future career of the rank-and-file.
The complex dynamics among the managers, rank-and-file, and the
secretary reveals that there is no such thing as instant unity with every
change of administration. “There is existing tension,” said Dr. Romualdez,
“such that I found it necessary to muster the support of the managers and
rank-and-file first.” Civil servants, by virtue of their long years of service at
the department, have entrenched views of how the public's health will be
safeguarded. The word ‘reform’ no longer strikes a chord in their hearts as
strongly as they first entered the department. Often, it means more work for
them. There is no incentive for them to perform better and adequately
deliver results because they have the security of tenure anyway. The
secretary, not much in contrast, also has a vision of how to execute this
undertaking but is nevertheless constrained by some rationalities. The
secretary must please the president since he or she serves at the latter’s
pleasure. Likewise, the secretary often must please the public by various
means that also serve to maximize his time and exposure at the department.
The setup of having a new secretary during every new presidential
term appears to be a double-edged sword. The benefit is that the imported
top leadership ideally affords a bringing-up-to-date and a sense of change
that could renew the organization. The caveat is that it is also the top
leadership who gets much of both the credit and the blame for what the civil
servants have done and have not done. This goes without saying that in the
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final works of the agency, the ranks have much collective power inasmuch as
the secretary wields influence. And in a setting where civil servants are
purportedly infamous for being decadent and complacent, the top leader has
more to lose than his or her constituencies.
When Dr. Romualdez said that the reform agenda have already gained
support from the ranks, it may only be a prima facie good. The real measure
of support is when things have truly been done. When the secretary needed
to officially rectify some alleged misfeasance or any untoward behavior as
cited above, his actions had profound implications. Some decisions have to
be made at the cost of one’s unpopularity. When such politically unpopular
decisions are made, it is not farfetched to conclude that the leader is
courageous.
The Implementation and Evaluation of the Reform
Reminiscing the birth of his brainchild, the HSRA, Dr. Romualdez
revealed: “It’s not true that I started it. That started long before me, with
basis on the actions of my predecessors. My concern was making sure that
whatever was planned will be economically feasible and evidence-based.” For
such a comprehensive plan with billions of pesos as budget, the HSRA did not
eat much idle time while staying in the planning stage (see Exhibit 9). “That
time, I never planned this project to death, I just did it.” It is one thing to
formulate policies and it is another thing to implement them. While the
formulated plans were outstanding, the incomplete reengineering posed
serious challenges in the implementation of the HSRA.
When it comes to the overall implementation in the field, Dr.
Romualdez regretted saying: “pilots never expanded beyond pilots.” If the
strong character of Dr. Romualdez were to be hurt by any of the results of
the reform, it must have been the resistance of people to change. “Many
people resisted! Most of the clinicians, they were not convinced of the need
for reform [sic]. They came from a different frame of thinking.” He
elaborated: “There are groups that are still very cooperative but at the other
pole, most of the decisions were conservative in the real sense that they
didn’t want change. And that was the characteristic of establishments,
they’re happy with the situation so they won’t change. Doctors are number
one, but not just them. Businessmen, too, who were profiting from the
situation, chiefly from pharmaceutical companies [sic]. Anyone. The
equipment suppliers—they didn’t want to change the excessive reliance on
technology. Equipment suppliers by nature, may promote change, as long as
the changes result in people buying new technology [sic]. Also you have the
Church! Then of course, bureaucracy has a tendency to complain, especially
those who are not happy. They didn’t want new additional work without
being paid much.” He identified that the major lapse was “the need to
communicate things.” He added: “One needed to convince them that this will
be better for them.” As to his manner of leading the activities, “in the initial
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stages, we imposed, but imposing policy doesn’t mean dictatorial [sic]; we
impose in the hope that they appreciate it eventually, otherwise I have to
communicate it again.”
Dr. Romualdez was cognizant of the fact that policies may not be
completely accomplished in one’s term. The full implementation, as he put it,
happened “not while I was there, but later.” He further reflected: “People
were saying that the reason why HSRA became implementable was because I
imposed it. I don’t think it was true. I think that those who implemented the
policy either became convinced that it was good policy, or knew that it was
actually good [to begin with]. You can’t implement something that’s
unimplementable in the first place [sic].”
Dr. Romualdez believed that the underlying problem lay in how the
reward system is perceived. “Financial advantage is the goal in life of most
people in society. A doctor would want to have modern and big houses when
as a professional, there are things that money can’t buy. Everybody is fooled
by money. Money is a fundamental thing but I don’t know how we can
improve things.” Pragmatically, he opined a suggestion that the salary
between the Health Secretary and the rank-and-file should not differ much.
“But I don’t know when people will accept that.”
The same aforementioned evaluation by economics professors from
the UP Diliman claimed that the novelty of HSRA lay in its packaging as a
whole. There was recognition that reforms were interdependent. This
influenced the way reform was to be carried out which was not in single,
simple steps per area but tackled simultaneously. However, it must be
remembered that reform is judged by performance and not effort, by
outcomes and not inputs. According to a separate evaluation by clinical
epidemiologists from the UP , the considerable gains from the first 16
provinces were largely dependent on a few success factors. These were:
“reform-minded local executives, existing elements of convergence of the
five HSRA areas, collaborative effort between the DOH, PhilHealth, and LGU
staff, and the presence of technical assistance provided by the program of
MSH, largely-funded by the World Bank and the U.S. Agency for International
Development (USAID).” It was said that the implementers were “careful not
to impose implementation” since target provinces reasoned that most reform
efforts (corporatization and ILHZs) were really not suitable in their respective
situations.
The HSRA was quite too ambitious in tackling all problems at the same
time, but was nevertheless justified by the numerous and interrelated
challenges. It was also quite limited by way of its overreliance on the public,
supply-side of health care, with no articulated strategies on how to
specifically deal with resisting stakeholders chiefly from the private sector. In
terms of evaluation, Dr. Romualdez remarked: “I’m not very good on microevaluation. I always look for the final result. My bottomline is that always, I
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want to achieve equity in everything.” As a center-left public servant
believing strongly that health is everyone’s right, he added with tongue
partly in cheek, “I am a communist at heart.”
Lessons Learned
The gargantuan task of health reform was born from the noble intent
of reducing inequity in health outcomes. In the broader picture of the health
system, this goal is but one of a few other desired outcomes. The DOH gave
a framework as to how problems and solutions were to be identified, and this
hatched the HSRA. Another worldwide authority, however, serves to
influence and guide the countries when it comes to health-related matters.
This is the WHO. Having worked at the WHO Regional Office himself, Dr.
Romualdez recognized the guidance that the organization provides in matters
such as health policy. The WHO recommended to all member-countries that
their governments should spend at least 5% of their Gross National Product
(GNP) for health. Asked whether he agreed to this, he said: “Of course, I was
one of those who suggested this in the Philippine setting” (see Exhibit 10).
In 2000, the WHO produced a report that was far less neutral than any
of its previous publications. Its World Health Report ranked all 191 membercountries according to several parameters including the attainment of goals
and performance of their health systems. The WHO ranked the Philippines at
60th in terms of overall health-system performance while 126th in terms of
level of health of the population. The report somehow served to objectively
evaluate from an outsider’s point-of-view the fruits of the first two years of
HSRA implementation on top of the performance of the Philippine health
sector since the decades past. While the DOH called its efforts as “reform,”
the WHO spoke of its raison d’être as “improving the performance of health
systems.”
More than pointing fingers, the greater value of evaluation is the
articulation of lessons learned. These lessons can come from various bodies
or organizations, international and local alike, that provide expert and
objective views of whichever endeavor offered up to their judgment.
Alternatively, lessons can come best from the very people who are
accountable for the reform effort, however successful it may be or otherwise.
A nuanced “fitting into their shoes” and a more empathic analysis of the
reform effort arguably afford greater meaning than any criticism designating
it so.
Let the managers manage
Regarding the overall Philippine health reform, the plans were good
and the policies were sound. However, planning is one thing and
implementation is another. Between planning and implementation, there lie a
number of steps and little goals that are surrogate endpoints. On top of that,
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it takes considerable force to translate implementation into actual
achievement of the goals. Not only that. For health reform to truly succeed,
there needs to be effective bridging of available resources and the desired
performance within an organization or a system as a whole. This sounds a
whole lot like management.
Generally, most politicians and civil servants have long held the belief
that management is a diversion from their “real work,” whatever form it
would be. Formulating policies rests on effective planning in the same way as
implementing entails management. However, as pointed by Roberts et al. ,
most bureaucrats belonging to the public sector are allergic to management.
Bureaucrats think that management belongs only to the profit-driven
enterprises upholding the laissez faire ideal. This is true only in part but not
in whole. Management as a discipline encompasses a more diverse field and
a more colorful set of functions. It provides the tools by which any
organization (public, private, and any in between), can achieve its goals by
strategy formulation, implementation, and evaluation. When any government
agency for that matter, becomes enmeshed in its daily activities and longterm plans, the use of management is warranted tantum quantum there is
contribution to social goals. Therefore, management need not be divorced
from the sights of any government when the science and art of management
also has the subfield of public management. Recent literature even advocate
the trend towards what is called “New Public Management” or NPM. The NPM
philosophy aimed at recreating the usual bureaucrat into a balanced
manager. It stressed greater efficiency and effectiveness because after all,
people judge an organization for its performance and not its effort, its action
and not only intention.
When Devolution continues to pose difficulties in getting the policies
down, strategic management affords liberalizing the plan formulation and
adapting to the change in milieu during implementation. When the varied
views of stakeholders do not help the reform effort, change management
affords a methodical tackling of the problem. When the organizational culture
gets in the way of social orientation, human resource management grants
calculated wins. When programs and projects still have a great room for
improvement, development management gives a grounded and controlled
evaluation process. When the better situation that is envisioned entails costs
and control thereof, managerial and financial accounting provides the
necessary handles. When innovation is in short supply, management of
information systems and technology aids the organization.
It appeared that HSRA required much greater management capacity
than the one afforded by any traditional, budget-driven government agency.
Reform is not as simple as changing for the better; it is a systematic process
that can be prepared for and studied prior. Case in point, whenever a new
employee of the DOH enters the ranks, the impression is that he or she
should know how the agency is run, and not how the agency is supposed to
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be run. Newly-hired public servants feel the need to be part of the system
rather than see how to assume the role of being the system’s agents of
change. Such need not be the case if they are imbued with the managerial
skills of systems thinking, of unlearning and relearning. Additionally,
whenever a new Health Secretary or a middle manager is appointed, he or
she spends a considerable time knowing the complex realities within and
without the organization. This entails the opportunity cost of valuable time
lost that could have been better spent on translatable pursuits. It is good if
the secretary has seasoned experience; otherwise, he or she is left to just
wing it. Training in management or related disciplines can drastically reduce
the steepness of this learning curve inherent in administrative transitions.
There is no theoretical reason explaining why public offices cannot be run in
ways prescribed by the sound principles of management.
Reform is a work better anchored at universality and not on ideology.
Despite running the risk of oversimplification, the former tends to be
inclusive while the latter, divisive. In reforming organizations for the
betterment of health financing, the task ought to be of greater engagement
and not of constant antagonism. Internecine battles may be inevitable in the
task of regulation but if calculatingly negotiated, unprecedented partnerships
can strip the need for coercive power. Reform of public health programs and
of hospitals seems daunting, but with a dedicated group monitoring the
short-term gains, the momentum for change will have been more convincing.
Reform is not a push-button setup giving the results commensurate to
the passion put into it. It may actually get watered down or worse, attached
with a contradicting agenda. It is an intensely human affair, involving people
of differing characteristics, and happens under the very nose of managers
and leaders. For all its originality, reform brings a sense of novelty and
change. For all its past progress, reforms are often thought when leaders
stand on the shoulders of former giants.
Let the leaders lead
“Giants” are but an exaggerated representation of the leadership in
any organization. They are the big men and women who are either compelled
by position or driven by desire to get things going and make them work.
Leadership undergirds and subsists the practice of management, and it is a
critical factor determining the success of any effort, particularly reform.
In the public sector, political mavericks dare think of reforms when
their salaried staff would rather not. Where exceptional performance is hard
to come by, leaders are needed to extract commitment from the employees,
and not just their compliance. By example or by force for personality, leaders
can partly shape others’ behaviors. Personality is a tricky endowment
because there really are persons who are effortlessly magnetic. An effective
leader balances the act of being both sensible and fascinating; therefore it
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helps when useful traits are gained and learned, such as being suave,
cajoling, persuasive, and inspiring. Inspiration is one intangible asset that
may significantly improve organizational performance. The caveat is that,
when used in a negative way, the work will only revolve in the cult of
personality, and therefore, resulting to non-sustainability. Conversely,
inspiration can sustain the long-term labors of reform, when it builds on the
next generation for them to walk the path paved in hopes of a better future.
Leadership is thought to be one person’s burden, when in fact, its
failure or success is largely others’ to bear as well. The leader’s proactivity
builds the esprit de corps of an organization; likewise, the leader’s mediocrity
destroys work ethic and gnaws all moral fiber. It does not help that any
Secretary of Health is almost beyond reproach while he or she is in position;
because no one tells him or her of his or her shortcomings straight in the
face. It would be ideal if he or she practices a great deal of self-awareness,
but the perfect exercise thereof is not often the case. Where much is at
stake, the secretary can put up a position akin to an associate or a socius,
whose sole job is to tell him or her the truth of their craft and the happenings
in every corner of the organization. This keeper or admonitor ought to be
safe from being fired, lest the whole setup will only prove futile.
Leaders are looked up to in upholding high standards of transparency
and accountability. The leader is expected not to be party to a lie; he or she
will ideally not allow himself or herself to be connected to allegations of
malfeasance. Legality is no guarantee. Even with the law, the desired
behavior cannot be immediately expected. The challenge is bringing legality
onto the higher plane of ethics, supported by structures that foster
transparency. Ethics presents several worldviews of a higher standard of
professionalism and allows one to deal with real dilemmas such as conflicts of
interest. As for any other discipline, ethics does not only come from the
heavens, it can be taught and learned. It may be best to teach ethics at the
younger years of a professional’s life when they are more impressionable.
Students who end up in the higher echelons of society and in positions of
power (such as in DOH) started out as ambitious achievers in some medical
school; thus, ethics better be integrated while they are in that learning
phase. Older bureaucrats are no exception because however jaded they may
be, they can still choose to be ethical. The teaching of ethics as a discipline
does not assure changes in behavior, but it can mold the right attitude.
How the future leaders are molded greatly affects how solutions are to
be carried out in the future. Dr. Romualdez identified this shortcoming as
partly reliant on education. “One of the worst things to have happened to
public health is the establishment of ‘schools of public health.’ [This] meant
that the responsibility for public health was abdicated by medical schools
[which say], ‘we don’t need to pay attention to public health, [we’ll all be
about] biomedical medicine.’” Because of this, most doctors find it hard to
appreciate the population-perspective of the practice of public health. “When
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I was professor of physiology, I asked [my students] to do research in the
community on pulmonary physiology. All they did was interview barrio people
about their views on how people breathe, why do they have asthma, and so
on. So when you learn physiology, you also know what people know about
physiology.” This attempt is but a reflection of Dr. Romualdez wanting his
students to value the “epidemiologic basis of medical practice,” which is part
and parcel of public health. He added that this is an educative reform on the
level of medical schools, further emphasizing that “focus should be on public
health, and not only management.”
Let the politicians decide
“I don’t think managerial skills are any different from political skills,”
claimed Dr. Romualdez. He has a keen awareness that health-sector reform
is also dependent on the window of opportunity provided by the political
scenario. The President is head of the country only for so long, and so is the
Health Secretary. He believes that it is better to implement the reforms
quickly without much obsession over the perfection of details but with intent
to amend them incrementally, while the opportunity still presents itself.
Any adjustments in the banner of health reform often do not directly
translate to clear-cut gains. What is the marginal benefit of bloating the
bureaucracy (as in the attempt at the BFAD) versus streamlining the
workforce (as is the case of the National TB Program/NTP)? The answer has
been found to be only a few gains. Gains, however short of the goals, are
positive results nonetheless. Health reform notoriously displeases some
segment, and many a people always complain about it. A little less would go
as far as calling it a complete failure. This is due to the fact that the broader
context within which the reform is situated has quite a lot of unfavorable
elements. These elements are often beyond the sphere of influence of any
health agency, necessitating some political maneuvering.
This is short of saying that workings of the DOH and many other
agencies rest on profoundly political processes. In the government, public
opinion is something, legislation is needed before anything, and the fight for
budget is everything. The budgeting process is largely a matter of who is
strong with whom. Bureaucrats access the congressmen, Cabinet secretaries
woo the president, but then other secretaries also vie for the president’s
favor, and then the whole process starts to get messy. Dr. Romualdez stated
that health is never a priority; “health as a topic is just one paragraph in the
State of the Nation Address (SONA) of the President. I’ve never seen a SONA
with more than two paragraphs on health.” About the politics of budget, he
elaborated: “what will be included in the budget proposal to Congress
depends on who’s stronger among the Health Secretary, the President, and
the economic people. When it is finally approved, it’s about gaining the favor
of the president by any of the Cabinet secretaries.”
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Political skills are therefore needed by any serious reformer. The dark
side of this skill however, is a tool for innuendo or dissembling. If bereft of
malice, political skills are a treasure-trove of power especially in bargaining
or in the words of Dr. Romualdez, “trying to find out what they want so that
they don’t block you.” Recalling the memory of his dean when he was in
medical school, he related: “My old dean, Dr. Herrera, used the term human
engineering. That’s the way to get things done. Of course what could equate
to this is that ability to manipulate people. By ‘manipulate’ I don’t necessarily
mean that in a pejorative sense. It is being able to get them to do what I
want, to accept what I want them to do.”
Dr. Romualdez also believes that your ‘power’ is only as powerful as
when you do not use it yet. The Cabinet-level of government has a lot of
power; he adds: “the only person more powerful than a Cabinet secretary is
the president. It’s because the Cabinet secretary is an extension of the
president.” For Dr. Romualdez, power is like having a revolver. “Your 6
bullets are powerful. Once you fire one shot, it’s minus one; minus some
power. So the best use of power is not having the need to use it while just
communicating to people that you have some ace left.”
Power in the public sector needs political skills for it to show its luster.
Unlike in the private sector where the CEO’s commands are obeyed by all,
the public sector is hardly like any of that. Dr. Romualdez’ revolver analogy
goes to show that the practice of politics takes a toll on the wielder, such that
one’s political clout is like some finite resource. Strategies entail analysis of
one’s political resources, including fame, reputation, and other skills of
persuasion and coaxing. In the context of health reform for example, the
Secretary could have paid close attention to anticipating potential resistance
from managers and professionals alike. ‘Divide and rule’ strategies might
avoid the impression that reform is imposed, and that liberalizing rules and
regulations might seem as negotiating when actually it is not. The balance of
power is also a practice of innovation when one capitalizes on people’s
different desires so as to determine and act based on various interests. For
example, when a hospital chief wants authority, and his fear of
corporatization lies on the reduction of it by the potential board of directors,
why not negotiate to make him the chairman of that board? An applicable
dictum would be—whatever helps.
Before anything gets done by the public sector, very slow intermediate
processes have to take place first. One is in the arena of legislation. Laws
needed to be enacted so that many areas of the HSRA can be fully
implemented. Often, just because there is no law about it does not
immediately mean that it is allowable. For powerful stakeholders with high
level of influence and vested interests, a law needs to be passed first in order
for them to acknowledge the reform. But even this measure is not an
assurance, for loopholes will always be present no matter how perfect the
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law was presumed to have been made. In the issue of the proposed A.O. by
Dr. Romualdez, lawyers from the ranks of Government (through the DTI)
were even the ones who precluded the issuance. Even though the debate
was waged around ideals such as access to medicines rather than on the
commercial implications for the health-care industry, the rule of law does not
draw for certain which has the primacy over the other: IPR or the Generics
Law. After all, the skill of the attorney and the power of the judge rest on the
uncertainty of the law.
It is a well-known fact that health-care reform or its subpoints will
strengthen the economy in the long-run. It has social return on investments
(SROI) which will reduce deficit and expand investments. In spite of this,
SROI and all other related advantages are still hardly attractive to most
politicians. The need for convincing them is but another rationale for the
need for political skills. Everybody has been or will be a patient at some point
in one's life. In the setting of Devolution for example, it is incumbent upon
local chief executives to ask themselves why the rich are getting care while
the poor have to be content with lesser quality care and yet, people from
both classes cast one vote each during elections. Politicians continually
overlook that inequity in health care exists unless there is impetus to mind
the problem. Evidences such as SROI and the like do not often suffice as
convincing reasons or impetus. More often than not, the politicians’ impetus
comes in the form of the desirability from public opinion, for the purpose of
seeking a reelection or gaining popularity for a higher position.
Final Thoughts: What’s needed for Health
One lesson is that improvement of the health system rests too on
political decisions. While the leader is often the point person, the success of
health reform also depends on the people composing the concerned
organization. When organizational challenges ensue, health reform will more
likely succeed if there are simultaneous managerial reforms. Otherwise,
failures occur. Failures however, are still important in ensuring success. But
only if we learn the lessons.
Changing systems provide incentives for stakeholders to become more
responsive, efficient, and above all equitable; however, these will do little
good if not coupled with providing the reformers with the necessary skills,
authority, and protection. The task of health reform requires skill and
perseverance, competence and commitment. The head of the agency
primarily mandated to do this reform is not just any doctor, but is very much
expected to be a refined politician, a dynamic manager, an ethical
technocrat, and above all, a capable leader. These are but a few of a Health
Secretary’s hats, all of which must be directed towards the purpose of
catalyzing social goals.
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People usually view service in the government as a job tainted with
some, if not much wrongdoings. In a world which is often gray but only
seldom black-and-white, public servants who are genuine in their duty and
its exercise thereof find themselves taking the role of a “sheep in wolf’s
clothing.” The boldness of this statement belies the complexity of the task,
however. On the other hand, some people also view government officials,
especially those who wield vast powers, supposedly as the conscience of
whichever field they find themselves practicing. In a manner of speaking
therefore, the Health Secretary is the conscience of health. In this context, it
must be remembered that “health” is such a heavy, meaningful word. It
makes or breaks humanity; it creates fights and invokes miracles. Those who
wanted to enter health as an arena but chose to levy a cause “far greater
than themselves” realized that this mission is a thankless, harsh endeavor.
For all its worth, being the Health Secretary is the single, powerful capacity
that allows any doctor in that position to achieve the distinguished mission—
to cure by the millions.
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List of Acronyms
AO
BFAD
CHD
CPGs
CS
DBM
DOH
DOST
DTI
GMP
GNP
GOCC
GSIS
HSRA
ILHZs
IPR
LGUs
MSH
NCDPC
NDHS
NEDA
NGOs
NHIP
NPM
NSO
NTP
OWWA
PACC
PCHRD
PHAP
PHIC
PMA
PNHA
PPP
RHUs
RITM
SONA
SROI
SSS
Administrative Order
Bureau of Food and Drugs
Center for Health Development
Clinical Practice Guidelines
Caesarean Section
Department of Budget and Management
Department of Health
Department of Science and Technology
Department of Trade and Industry
Good Manufacturing Practices
Gross National Product
Government Owned and Controlled
Corporation
Government Service Insurance System
Health Sector Reform Agenda
Interlocal Health Zones
Intellectual Property Rights
Local Government Units
Management Sciences for Health
National Center for Diseases Prevention and
Control
National Demographic and Health Survey
National Economic and Development
Authority
Non-Governmental Organizations
National Health Insurance Program
New Public Management
National Statistics Office
National Tuberculosis Program
Overseas Workers Welfare Association
Pharmaceutical Affairs Consultative
Committee
Philippine Council for Health Research and
Development
Pharmaceutical and Healthcare Association of
the Philippines
Philippine Health Insurance Corporation
Philippine Medical Association
Philippine National Health Accounts
Public-Private Partnerships
Rural Health Units
Research Institute for Tropical Medicine
State of the Nation Address
Social Return on Investment
Social Security System
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TB
TWGs
UP
USAID
US GSP
TRIPS
WHO
Tuberculosis
Technical Working Groups
University of the Philippines
United States Agency for International
Development
United States Generalized System of
Preferences
Trade Related Aspects of IPR
World Health Organization
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Works Cited
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Christensen, Tom, and Per Lægreid. "Whole-of-Government Approach to
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Gottret, Pablo, and George Schieber. Health Financing: A Practitioner’s
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Jabes, Jak (Ed). "The Role of Public Administration in Alleviating Poverty and
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Morada, Noel, and Teresa Encarnacion-Tadem. Philippine Politics and
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"National Objectives for Health Philippines, 2005-2010." Manila: Office of the
Secretary, DOH 2005. Print.
Norris, Pauline, Andrew Herxheimer , Joel Lexchin , and Peter Mansfield.
"Drug Promotion: what we know, what we have yet to learn. Reviews
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Organisation for Economic Co-operation and Development. “Public Sector
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"Overview of the Philippine Health System and the Implementation
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Philippine Health Insurance Corporation. Annual Report 2004. Web. 12 June
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“Philippine National Drug Formulary: Essential Medicines List” Jan. 2008: n.
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Roberts, Marc, William Hsiao, Peter Berman, and Michael Reich. Getting
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Notes
1
For most of the numerical analyses above, the 2003 data from the 2004
Annual Report was used as this was the earliest report available which was
complete with the balance sheet and the income statement. Only Dr.
Romualdez’ statements and perceptions can be adjudged to be immediately
and fully connected with the financial situation of PhilHealth during his term.
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EXHIBITS
Exhibit 1
Source: Department of Health website. Accessed 12 June 2011.
<http://www.doh.gov.ph/about_doh/doh_org.html&docid=iMLUz9e9IOqqWM&imgu>.
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Exhibit 2
Source: Department of Health. National Objectives for Health 2005-2010.
Exhibit 3
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52
Source: Philippine Health
Insurance Corporation. Annual
Report 2004.
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Exhibit 4
Exhibit 5
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54
Exhibit 6
Source: Solon O,
Panelo C,
Gumafelix E. A
Review of the
Health Sector
Reform Agenda
(HSRA)
Implementation
Progress. 2003.
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Exhibit 7
List of Hospitals Retained by the DOH
Center for Health Development (CHD) I – Ilocos Region
Ilocos Training & Regional Medical Center
Parian, San Fernando City, La Union 2500
Mariano Marcos Memorial Hospital & Medical Center
Batac, Ilocos Norte 2906
Region I Medical Center (Gov. Teofilo Sison Memorial Medical Center)
Arellano St., Dagupan City, Pangasinan 2400
CHD II – Cagayan Valley
Cagayan Valley Medical Center
Carig, Tuguegarao City, Cagayan 3500
Veterans Regional Hospital
Bayombong, Nueva Vizcaya 3700
CHD III – Central Luzon
Bataan General Hospital
Tenejero, Balanga City, Bataan 2100
Dr. Paulino J. Garcia Memorial Research & Medical Center
Mabini St., Cabanatuan City, Nueva Ecija 3100
Jose B. Lingad Memorial General Hospital
Dolores, San Fernando City, Pampanga 2000
Mariveles Mental Hospital
Mariveles, Bataan 2105
Southern Isabela General Hospital
Santiago, Isabela 3311
Talavera Extension Hospital
Talavera, Nueva Ecija 3114
CHD IV-A – CALABARZON
Batangas Regional Hospital
Kumintang Ibaba, Batangas City, Batangas 4200
CHD IV-B – MIMAROPA
Culion Sanitarium & Balala Hospital
Culion, Palawan 5315
Ospital ng Palawan
Puerto Princesa City, Palawan 5300
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CHD V – Bicol Region
Bicol Medical Center (Don Susano Memorial Medical Center)
Naga City, Camarines Sur 4400
Bicol Regional Training & Teaching Hospital (Albay Provincial Hospital)
Rizal St., Legaspi City, Albay 4500
Bicol Sanitarium
Cabusao, Camarines Sur 4406
CHD VI – Western Visayas
Corazon Locsin Montelibano Memorial Regional Hospital
Lacson St., Bacolod City, Negros Occidental 6100
Don Jose S. Monfort Medical Center (Extension Hospital)
Tabucan, Barotac Nuevo, Iloilo 5007
Western Visayas Medical Center
Mandurriao, Iloilo City, Iloilo 5000
Western Visayas Regional Hospital
Lacson St., Bacolod City, Negros Occidental 6100
Western Visayas Sanitarium
Sta. Barbara, Iloilo 5002
CHD VII – Central Visayas
Don Emilio Del Valle Memorial Hospital
Bood, Ubay, Bohol 6316
Eversley Childs Sanitarium
Jagobiao, Mandaue City, Cebu 6014
Gov. Celestino Gallares Memorial Hospital
M. Parras St., Tagbilaran City, Bohol 6300
St. Anthony Mother & Child Hospital
Basac, San Nicolas, Cebu City, Cebu 6000
Talisay District Hospital
San Isidro, Talisay, Cebu 6045
Vicente Sotto Sr. Memorial Medical Center
B. Rodriguez St., Cebu City, Cebu 6000
CHD VIII – Eastern Visayas
Eastern Visayas Regional Medical Center
Magsaysay Blvd., Tacloban City, Leyte 6500
Schistosomiasis Control & Research Hospital
Palo, Leyte 6501
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CHD IX – Zamboanga Peninsula
Basilan General Hospital
Isabela City, Basilan 7300
Dr. Jose Rizal Memorial Hospital
Lawa-an, Dapitan City, Zamboanga del Norte 7101
Labuan Public Hospital (Zamboanga City Medical Center)
Labuan, Zamboanga City, Zamboanga del Sur 7000
Margosatubig Regional Hospital
Margosatubig, Zamboanga del Sur 7035
Mindanao Central Sanitarium
Pasobolong, Zamboanga City, Zamboanga del Sur 7000
Sulu Sanitarium
Jolo, Sulu 7400
Zamboanga City Medical Center
Dr. Evangelista St., Sta. Catalina, Zamboanga City, Zamboanga del Sur 7000
CHD X – Northern Mindanao
Camiguin General Hospital
Mambajao, Camiguin 9100
Mayor Hilarion Ramiro Sr. Regional Training & Teaching Hospital
Mindog, Maningcol, Ozamiz City, Misamis Occidental 7200
Northern Mindanao Medical Center
Capitol Cmpd., Cagayan de Oro City 9000
CHD XI – Davao Region
Davao Medical Center
Bajada, Davao City, Davao del Sur 8000
Davao Regional Hospital
Apokon Road, Tagum City, Davao del Norte 8100
CHD XII – Central Mindanao
Amai Pakpak Medical Center
Marawi City, Lanao del Sur 9700
Cotabato Regional & Medical Center
Sinsuat Ave., Cotabato City, Maguindanao 9600
Cotabato Sanitarium
Pinaring, Sultan Kudarat, Maguindanao Province 9605
CHD ARMM – Autonomous Region of Muslim Mindanao
Buluan District Hospital
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AIM-X-XX-XXXX-XX
Buluan, Maguindanao Province 9616
Dr. Serapio B. Montañer Jr. Al Haj Memorial Hospital
Lumpong, Malabang, Lanao del Sur 9300
Maguindanao Provincial Hospital
Limpongo, Shariff Aguak, Maganoy, Maguindanao Province 9608
CHD CAR – Cordillera Administrative Region
Baguio General Hospital & Medical Center
Governor Pack Road, Baguio City, Benguet 2600
Conner District Hospital
Conner, Kalinga-Apayao 3807
Far North Luzon General Hospital & Training Center
Luna, Apayao 3813
Luis Hora Memorial Regional Hospital
Abatan, Bauko, Mountain Province 2621
CHD – Caraga Administrative Region
Adela Serra Ty Memorial Medical Center
Capitol Hills, Tandag, Surigao del Sur 8300
Caraga Regional Hospital
Surigao City, Surigao del Norte 8400
CHD NCR – National Capital Region of Metro Manila (M.M.)
Amang Rodriguez Medical Center
Sumulong Highway, Marikina, M.M.
Batanes General Hospital
Basco, Batanes 3900
Dr. Jose Fabella Memorial Hospital
Lope De Vega St., Sta. Cruz, Manila, M.M.
Dr. Jose N. Rodriguez Memorial Hospital
Tala, Caloocan City, M.M.
East Avenue Medical Center
East Avenue, Quezon City, M.M.
Jose R. Reyes Memorial Medical Center
Rizal Ave., Sta. Cruz, Manila, M.M.
Las Piñas General Hospital & Satellite Trauma Center
Bernabe Cmpd., Pulang Lupa, Las Piñas City, M.M.
Lung Center of the Philippines
Quezon Avenue, Quezon City, M.M.
___________________________________________________________________________
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AIM-X-XX-XXXX-XX
National Center for Mental Health
Nueve de Pebrero St., Mandaluyong City, M.M.
National Children's Hospital
266 E. Rodriguez Sr. Ave., Quezon City, M.M.
National Kidney & Transplant Institute
Philippine Children's Medical Center
Philippine Orthopedic Hospital
Maria Clara St., Quezon City, M.M.
Philippine Heart Center
East Avenue, Quezon City, M.M.
Quirino Memorial Medical Center
Project 4, Quezon City, M.M.
Research Institute for Tropical Medicine
Filinvest Corporate City, Alabang, Muntinlupa City, M.M.
Rizal Medical Center
Shaw Blvd., Pasig City, M.M.
San Lazaro Hospital
Quiricada St., Sta. Cruz, Manila, M.M.
San Lorenzo Ruiz Women's Hospital
O. Reyes St., Santulan, Malabon, M.M.
Tondo Medical Center
Balut, Tondo, Manila, M.M.
Valenzuela Medical Center
Padrigal St., Karuhatan, Valenzuela City, M.M.
Source: Department of Health. Philippine National Drug Formulary: Essential
Medicines List. Vol. 1, 7th ed. 2008.
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AIM-X-XX-XXXX-XX
Exhibit 8
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61
Exhibit 9
Table 7. Matrix of interrelationships between the areas of reform.
OUTPUT
INPUT
Risk pooling,
reduced
financial
burden on
poor
Effective
primary care
deliver, costsharing by
LGUs
Elimination of
priority
diseases as
public health
problems
Cost-effective
service delivery
access by poor
National
Health
Insurance
Program
Raise
benefit
ceilings,
new
benefits,
cover
indigents,
cover selfemployed
Local systems
as extensions
of NHIP
administrative
arm
Local Health
Systems
Public Health
Programs
Hospital
Systems
Accessible and
affordable
quality health
manpower,
products, and
technology
Health
Regulation
Link LGU and
communitybased
schemes
Help sustain
financing using
new benefits
Help secure
financing via
NHIP
reimbursements
Regulation via
reimbursement,
accreditation,
protocols
Leverage
upgrading
facilities for
LHS
development
Effective
delivery of
priority public
health
programs
Local systems
as enforcement
agents for
regulatory
policies
Develop
effective
delivery
mechanisms,
program
management,
secure
financing
Free-up scarce
health budget
for public
health
Reduced burden
of tertiary
facilities owing
to bypass of
primary
facilities
Reduce burden
on hospital
resources from
preventable
cases
Leverage
upgrading to
change
organization
and
managerial
incentives
Quality
assurance,
appropriate
technology
Act as ballast
against cost
escalation due
to high
technology race
in private
sector
Investment in
key facilities,
information,
competition
promotion,
etc.
Expand
coverage and
benefits
National
Health
Insurance
Program
Forge interLGU
cooperation
and technical
linkages
Local
Health
Systems
Centers for
disease
prevention and
control/multiyear disease
control budget
Public
Health
Programs
Allow NHIP to
cover chronic,
degenerative,
catastrophic
cases
Coordinate
inter LGUCDC
activities,
technical
leadership
Corporatization
and critical
upgrade
Hospital
Systems
Effective
networking
and referrals
Institutional
development,
economic
regulation
Health
Regulation
Accreditation
of
government
facilities to
improve
acess by
indigents
Value for
money from
insurance
benefits
Access to
affordable and
quality
manpower
and material
Availability of
affordable
quality
manpower and
other inputs
Technical
guidelines for
regulation of
products critical
to public health
programs
___________________________________________________________________________
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AIM-X-XX-XXXX-XX
62
Table 12. Estimated Cost of Investment for Health Sector Reforms by Year,
2000-2004 (in million pesos) (p. 21)
Health
Sector
Reform
Component
1. Hospital
Systems
2. Public
Health
Programs
3. Local
Health
Systems
4. Health
Financing
5. Health
Regulation
TOTAL
Year 1
Year 2
Year 3
Year 4
Year 5
TOTAL
9,757
13,407
11,549
6,739
3,932
45,384
8,551
7,097
6,935
6,530
6,471
35,584
926
3,788
5,088
5,673
681
16,156
1,841
2,138.
1,955
2,529
2,983
11,446
1,048
621
549
541
874
3,633
22,124
27,053
26,079
22,016
14,946
112,203
Source: Department of Health. 1999.
Table 13. Estimated Cost of Investment for Health Sector Reforms by
Geographic Area, 2000-2004 (in million pesos)
(p. 21, Table 13)
Health
Sector
Reform
Component
1. Hospital
Systems
2. Public
Health
Programs
3. Local
Health
Systems
4. Health
Financing
5. Health
Regulation
TOTAL
Luzon
Visayas
Mindanao
Metro
Manila
TOTAL
17,408
7,456
10,823
9,697
45,384
10,459
7,556
9,514
8,055
35,584
7,035
4,726
4,125
270
16,156
3,202
1,743
2,029
4,472
11,446
-
-
-
3,633
3,633
37,159
21,481
27,434
26,129
112,203
*Note: All investments for health regulatory agencies amounting to 3.3
billion pesos are at the national level. Investments for Metro Manila include
investment for the central office.
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AIM-X-XX-XXXX-XX
63
Table 14. Estimated Cost of Investment for Health Sector Reforms by Critical
Inputs, 2000-2004 (in million pesos)
(p. 22, Table 14)
Health
Sector
Reform
Component
1. Hospital
Systems
2. Public
Health
Programs
3. Local
Health
Systems
4. Health
Financing
5. Health
Regulation
TOTAL
Civil
Works
Equipment
Training
Staff
Technical
Assistance
29,549
12,773
23
3,387
6,660
1,745
12,170
130
67
4,070
15
528
1,551
381
153
84
45,634
25,184
2,231
163
2,137
Overhead
Research
2,938
100
1,988
10
5
Supplies
Others
TOTAL
1
45,384
1,580
18,572
1,652
35,584
5
2,146
1,595
16,156
240
250
6,811
11,446
474
129
232
101
3,633
3,440
2,054
21,200
10,160
112,203
28
60
Table 15. Health Expenditures by Source of Funds, 1995-1997
(p. 23, Table 15)
Sources of
Amount (in billion pesos)
Percent Share_
Funds
1995
1996
1997
1995
1996
1997
Government
22.19
27.74
34.12
33%
36%
39%
National
11.76
15.26
18.64
18%
20%
21%
Local
10.43
12.48
15.48
16%
16%
18%
Social
6.10
6.59
6.37
9%
8%
7%
Insurance
Medicare/
5.70
6.23
6.09
9%
8%
7%
PhilHealth
Employees’
0.39
0.33
0.26
1%
0%
0%
Compensation
Health
0.01
0.03
0.02
0%
0%
0%
Insurance
Plan
Private
38.33
43.43
47.93
58%
56%
54%
Sources
Out-of-Pocket
32.88
37.12
40.96
49%
48%
46%
Private
1.47
1.63
1.99
2%
2%
2%
Insurance
HMOs
1.30
1.73
2.04
2%
2%
2%
Employer2.04
2.26
2.18
3%
3%
2%
Based Plans
Private
0.64
0.69
0.77
1%
1%
1%
Schools
ALL SOURCES
66.62
77.76
88.42
100%
100%
1005
Source: UP Economics. 1991-1994; NSCB. 1995-1997/
___________________________________________________________________________
Copyright 2011
AIM-X-XX-XXXX-XX
64
Table 19. Investment Plan for Health Financing Reforms by Geographic Area,
2000-2004 (in million pesos)
(p. 29, Table 19)
Health
Luzon
Visayas
Mindanao
Metro
TOTAL
Financing
Manila
Reforms
1. Increased
155
155
benefits
2. Expand
2,306
1,132
1,295
2,328
7,061
membership
3. Secure
155
155
financing
4. Develop
896
611
734
1,834
4,075
administrative
infrastructure
TOTAL
3,202
1,743
2,029
4,472
11,446
*Note: Investments for Metro Manila include investment for the central office.
Source: Department Of Health. 1999.
Table 20. Investment Plan for Health Financing Reforms by Critical Inputs,
Table 27. Investment Plan for Hospital Systems Reforms by Year, 2000-2004
(in million pesos)
(p. 59, Table 27)
Hospital Systems
Reforms
1. Revenue
enhancement in
regional and
medical centers
towards financial
viability and
fiscal autonomy
2. Preparation of
conversion of
hospitals to
government-
Year 1
Year 2
Year 3
Year 4
Year 5
TOTAL
183
183
1
1
___________________________________________________________________________
Copyright 2011
AIM-X-XX-XXXX-XX
owned
corporations
3. Expansion of
10
the government
hospitals
networking,
patient referral
system to
include private
hospitals to form
the Philippine
Hospital System
4. Expansion of
1,200
the Lung Center
of the Philippines
to include
Neuroscience
Center,
Hematology
Diagnostic
Facilities, Bone
Marrow
Transplant Unit
and Blood Center
5. Rationalized
3,879
10,403
upgrading of
DOH hospitals
for
corporatization
6. Upgrading of
4,484
3,004
core
district/provincial
hospitals
TOTAL
9,757
13,407
65
10
1,200
4,440
6,739
3,932
7,109
11,549
29,393
14,597
6,739
3,932
45,384
___________________________________________________________________________
Copyright 2011
AIM-X-XX-XXXX-XX
Table 29. Investment Plan for Hospital System Reforms by Critical Inputs,
(p. 61, Table 29)
___________________________________________________________________________
Copyright 2011
66
AIM-X-XX-XXXX-XX
Table 30. Investment Plan for Health Regulatory Reforms by Year, 20002004 (in million pesos)
(p. 69, Table 30)
*including National Drug Policy
Note: All investments for health regulatory agencies are at the national level,
therefore, no estimates were done by geographic area
Table 31. Investment Plan for Health Regulatory Reforms by Critical Inputs,
(p. 70, Table 31)
*including National Drug Policy
Note: All investments for health regulatory agencies are at the national level,
therefore, no estimates were done by geographic area
Source: Department of Health. 1999. Health Sector Reform Agenda Philippines
1999-2004, HSRA Monograph Series No. 2. Manila: Office of the Secretary, DOH.
___________________________________________________________________________
Copyright 2011
67
AIM-X-XX-XXXX-XX
Exhibit 10
___________________________________________________________________________
Copyright 2011
68

Research Paper - Dr. Stephen Zuellig Center for Asian

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