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Issue No. 29                        September 2-8,  2001                    Quezon City, Philippines

Corporatization of Philippine Hospitals:
A Cause for National Concern

BY REMIGIO D. MERCADO, MD, MPH
Bulatlat.com

The Philippine health situation is totally dismal.  Consider the following: 132 Filipinos die of TB daily while some 100,000 Filipinos contract the disease every year.  The top five leading causes of morbidity are influenza, pneumonia, tuberculosis and bronchitis.  Non-communicable diseases are on the rise.  According to the Philippine Heart Association, every minute 9 Filipinos die of cardio-vascular illnesses.  Every 9 minutes, a child below the age of 15 dies of heart disease.  For every 1,000 children born, 8-10 have a congenital heart disease.  Cancer is on the rise.  According to the Philippine Cancer Facts and estimate, there is an estimated 71,526 new cancer cases occurring yearly.  More than 2 million Filipinos are suffering from diabetes.  The Department of Health (DOH) and UP-PGH estimate that about 1 million Filipinos will be blind this year.

What is being done in the light of this dismal health situation? The national government has chosen to reduce its budget for health and to corporatize ( not privatize it insists)  government hospitals. According to DOH, corporatization is nothing but a scheme whereby hospitals will be made financially and fiscally autonomous by allowing them to earn the funds for its operation and maintenance. In reality, by corporatizing, the government is shifting the responsibility for hospital care from the government to the individual.  It is thus not so different from privatization where the shift is form the government to the individuals through the new private owner.

There is only one reason why DOH is corporatizing the government hospitals.  The government does not want to allocate money anymore to retained hospitals on the ground that there is very little money to spare and whatever maybe available could be used more efficiently and effectively.  Health is a basic human right.  However, according to the World Bank, health is a matter of individual responsibility.  World Bank says that developing countries like the Philippines can turn its economy and must reduce its expenditures on social services, concentrate on income generating activities and pave the way for the free entry of foreign products by the process of deregulation, import  liberalization and privatization.  These are the pillars of the new International Economic Order which is nothing but the conversion of the whole world into one big free market under the aegis of globalization.

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

The step in doing the above is to allow the hospitals to collect, retain and allocate revenues from socialized user fees.  This is done 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, then the government will convert the hospitals into corporations.  The government will corporatize 38 hospitals nationwide by year 2010. First to be corporatized are 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.

In all official documents of the DOH, especially the Health Sector Reform Agenda, very little is said about reducing the cost of health care services.  There is a marked predominance on income generation and removal of government subsidy.  It cannot be denied that the real objective is the reduction and eventual elimination of government financial support to hospitals, which is keeping with the recommendation of the World Bank.

Take a look at the hospital budgets in 12 DOH hospitals in Metro Manila

Despite the budget cuts, the performance of the hospitals seem to be the same, which can only mean an overworked and exploited staff working under very stressful conditions and patients shouldering more and more expenditures.

Corporatization of DOH hospitals is no different from privatization in terms of impact.  Corporate interest logically is divided between the desire to serve and the desire to earn.  Incomes will never be able to catch up with expenditure, even without factoring in the changes in disease pattern that will result in more demands for more expensive care.

One may argue that charges to patients will be covered by Philhealth.  But how many indigents can actually be covered and how much expenses will be covered by PHIC? 

Dr. Remigio D. Mercado is a convenor of the Network Opposed to Privatization (NO TO PRIVATIZATION) and Professorial Lecturer of the UP College of Public Health.

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