Public Health System: On the Death Bed

First of three parts

“Health is wealth” is an old adage usually drummed by teachers on pre-schoolers during lessons on proper grooming and hygiene. But under the health agenda of the government, the adage now has a new meaning – transforming the public health system to make it less dependent on national government and generate its funds for operations, and even produce income for the perpetually cash-strapped Macapagal-Arroyo government.


The Macapagal-Arroyo government is at present pushing several programs that would make the health sector more “independent”, among them the corporatization of public hospitals, rationalization of medical services and medical tourism.

According to the Department of Health (DoH), corporatization is a strategy whereby hospitals will be made financially and fiscally autonomous by making them generate funds for its operation and maintenance. The corporatization of public hospitals is the government’s response to the demand for higher budget allocation for health care.

But for health activists, the government, by corporatizing, is just shifting the responsibility for hospital care from the government to the individual. Thus, it is not so different from privatization where the shift is from the government to the individual through the new private owner, they said.

“Corporatization of DoH hospitals is no different from privatization in terms of impact,” said Remigio D. Mercado, MD, a convenor of the Network Opposed to Privatization (No To Privatization). “Corporate interest logically is divided between the desire to serve and the desire to earn.”

Privatization of hospitals is not a new government policy though. During the Ramos administration, four specialty hospitals in Quezon City were announced to be privatized. But due to opposition to the plan, privatization was concealed under “corporatization.” This term referred to hospitals that were transformed into government-owned and-controlled corporations (GOCC), which have fiscal and managerial autonomy.

Emma Manuel, president of the Alliance of Health Workers (AHW), said in an interview with Bulatlat that “Considering the decreasing budget allocation for health services by the government, public hospitals could not in anyway be dependent on the government.”

“Kung merong dependent, military budget yun,” she quipped. “Yearly tumataas pero di naman napagbubuti ang national security.”

Data obtained by Bulatlat showed that from 1986 to 2004, government spending for health has dropped significantly. In 1997, health appropriation was 2.9% of the national budget. It was reduced to a mere 1.5% in 2004. This year, national budget for health dropped further to 1.3%.

The bigger chunk of the national budget goes to paying off foreign debts (up to 40 percent of the budget in the past, and more than 60% this year) and funding military spending (15-20 percent).

But even with the already deteriorating condition of the country’s public health system, new projects of the DoH are still aimed at attracting foreign and well-off Filipino patients.

Medical tourism

The Philippine Medical Tourism Program (PMTP), as described in the DoH website, “is a private-public initiative aimed at attracting international patients to the Philippines for needed medical care as well as health and wellness services coupled with sightseeing tours, vacation, and shopping packages.”

Although the term medical tourism was used and adopted as a formal program only just recently, the Philippine Heart Center (PHC) has already been doing it since its inception, said Reganit, MD, of the Office for Special Concerns of the Department of Health (DoH).

In an interview with Bulatlat, Reganit said the program means “revenue for the physicians and for our hospitals.”

Reganit said the PMTP is basically services that will be offered mainly to foreign patients. “Filipino patients, who can afford, who would be more than willing to pay for what hospitals has catered/alloted for them (foreign), would be more than welcome to join, ” he said.

Based on a paper presentation by Office for Special Concerns Undersecretary Jade del Mundo, MD, the program will be composed of the advisory panel, medical, tourism-business, and accreditation and licensing clusters.

However, there were names in the list comprising these clusters and panel that have raised the eye brows of health activists. These included the popular Vicky Belo, MD and Manny Calayan, MD of the Belo Medical Group and Cosmetiderm, respectively. While in the tourism-business cluster, the controversials were the names of SM’s Henry Sy, Robinson’s Lance Gokongwei, Rustan’s Bienvenido Tantoco, KarenReina of the SPA Association of the Philippines, and Humphrey O’Leary of the Hotel and Restaurant Association.

These people are part of the whole program, Reganit said.

In medical tourism, Reganit said that spa and massage services have been offered in Thailand, Malaysia, and South Africa where foreigners, like the Americans, preferred to have their medical services as a cost-effective procedure that saves them dollars and at the same time go to a nice exotic place.

He added that aside from shopping in the malls, a foreign patient, after recovering from a minor operation for three or four days, could be arranged by tourist operators for a trip to Boracay.

Health activists, however, argue that poor Filipino patients would not benefit from this.

“For us, the government has long abandoned its state responsibility to promote and protect the people’s rights to health,” Manuel said. “Mas lalo lang inilalayo ng mga proyektong ganito ang mga tao sa health services na kailangan nila. Kung tutuusin, dapat ‘yung ibinabayad na tax, napupunta na sa social services tulad ng health at education.”

And with the presence of business tycoons, they fear that the services to charity patients would be greatly affected.

The standard DoH restriction on pay bed capacity was 10 percent for retained DoH hospitals and local government units developed hospitals. With this program, Reganit said the hospitals which are going to participate in the medical tourism program would be asked to give at least 10 % of their bed capacity to service or charity patients.

“This is clearly sort of a bonus. Ten percent of the bed capacity for charity patients is good,” he said.

Also in the same paper, the PMTP will offer diagnostic, medical, and surgical services, health wellness, traditional and alternative care services, and women’s and children’s healthcare.

But unlike the ordinary practice to ordinary patients, it offers spa, massage, and “state-of-the-art” diagnostic services like high resolution CT scan.

The first phase, with five government and five private hospitals participating, will have its soft launch on December 14.

State hospitals participating are the PHC, the National Kidney and Transplant Institute (NKTI), the Lung Center of the Philippines (LCP), the Philippine Children’s Medical Center (PCMC) and the East Avenue Medical Center (EAMC). The private hospitals are the St. Luke’s Medical Center, the Asian Hospital, Medical City, the Makati Medical Center, and the Capitol Medical Center.

The government also plans to put up medical centers in tourist destinations like Boracay where simpler medical procedures can be performed.


While it is feared that medical tourism will hamper even more the poor’s access to health services, another program that is causing alarm is the rationalization of medical services. It is under this program that the New Women’s Medical Center has been created, combining the services of the Jose Fabella Memorial Hospital in Sta. Cruz, Manila and the EAMC Obstetrics and Gynecology Department.

The women’s center will be set up at the Lung Center, leading to fears that the LCP would be abolished. Health Secretary Francisco Duque however, in a letter dated Oct. 17 to LCP administrators, doctors and employees, denied that the LCP would be abolished. “Only a similar act of Legislation, a Law, could do this as the LCP was founded by virtue of a presidential decree,” he said.

Although the physical structure of the LCP would be retained, based on the project’s implementation plan dated July 21, the Women’s Center will occupy the second to fourth floors of the LCP building, leaving only the ground floor or about 20 percent for respiratory patients.

At present, a full house LCP can accommodate around 190 patients. Not included are the out patients whose number doubled from 50 to 100 per day.

Lorna dela Cruz, president of the LCP Employees Association and head nurse of the St. Therese Isolation Unit, said that the proposed merging of the OB-Gyne and respiratory patients in one building would be very risky.

“TB is air borne and the newborns could acquire this disease easily, even the Center’s other patients,” she said.

Aside from health hazards, dela Cruz charged that the merging is profit-driven project.

In the implementation plan, the Gleneagles Medical development Corp., the company commissioned to study the Center’s creation, said the LCP already has a “gross deficit” of P60 million. Given this, it projected that “the current LCP will be short of funds to meet their operating costs inclusive of DoH subsidy for 2005.” It also said that ‘the equipment budget of 2005-2006 which is equivalent to P109,687,000 is unattainable from corporate earnings based on current income generations.”

It also noted the uncollected fees amounting to P21 million.

Dela Cruz however belied the report. She said that when the study was made, they had just moved to their new building after a fire that disrupted hospital operation. As a result, the study showed LCP was not earning.

But most importantly, she said, “it (making profit) is not really the objective of the LCP.” She said around 60 percent of their patients are indigents.

But with only a floor now for its services, the “LCP Wing” would eventually have only 60 charity and 28 private beds. Twenty to 25 percent of its patients are tuberculosis (TB) patients.

With Fabella Hospital’s transfer, the current charity status of almost all the 900 patients per day would have to compete for only 344 charity beds with the full implementation of the Center.

Meanwhile, TB patients can be transferred to the EAMC while outpatient TB cases may receive medical attention at designated Directly Observed Treatment Short (DOTS) Centers, the implementation plan said.

Meanwhile, the NKTI is supposed to undertake both the laboratory and radiology services of the LCP.

Eighty percent of the LCP building burned down in May 1998, killing 25 people. Dela Cruz recalled that LCP doctors were allowed to occupy offices at NKTI for pay patients. Charity patients were accommodated at the unburned part of the LCP building. Until now, there are still some LCP doctors in NKTI, she said.

After corporatization

Under the Health Sector Reform Agenda, the government’s blueprint for undertaking reforms in health, government hospitals are to be converted into corporate hospitals by upgrading the hospitals’ capabilities, ensuring fiscal viability and legally converting the hospital into a corporate organization.

To do these, Mercado said hospitals were allowed to collect, retain and allocate revenues from socialized user fees through the following mechanisms:

· Revenue enhancement through increased number of pay wards, private rooms and outpatient clinics, and expanded hospital services for ambulatory surgical and domiciliary care;
· Review and implement the appropriate hospital fees and charges. DOH has issued Executive Order 197 (March 10, 2000) authorizing increase of fees by 20 percent;
· Stricter collection of fees through voucher system and other effective means;
· Reduce the turn-around time for the return of hospital income from the Bureau of Treasury to the Department of Budget and Finance and back to the DOH;
· Upgrade hospital pharmacies to make them more competitive in order to earn more income;
· Expand the health insurance coverage.

Once the hospitals are financially stable and viable, Mercado said the government will convert the hospitals into corporations. He said that the first to be corporatized would be the overloaded hospitals with a reasonable number of private rooms and pay wards with high potential for increased income-generation. Next will be overloaded hospitals with high percentage of indigent patients. And finally, the overloaded hospitals with 95 percent indigent patients and negative budget follows.

Manuel cited the case of Quirino Memorial Medical Center in Quezon City. After it was corporatized in 2003 and able to make profit, new buildings were constructed but more people have been unable to pay for the increasing rates of medical services.

Unfortunately, the same is expected to take place to the 38 hospitals in the country the government will be corporatized by year 2010. (

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