Special Report
Devolution and Corporatization of Health Services
The solution or
the problem?
Second of three parts
According to data gathered by the Health Alliance for Democracy (HEAD),
five out of 10 Filipinos die without receiving medical attention. The
average hospital bill is three times the average monthly income of a
worker. And yet the thrust of the Arroyo administration is to reduce its
budget for health, decentralize and “corporatize” health services
BY AUBREY SC MAKILAN
Bulatlat
Gauging by the
decreasing allocation to health, government seems to be abandoning its
responsibility to protect and respect the people’s right to health.
A pediatric ward at a
hospital in Mindanao, where many of the country's poorest
municipalities are located |
Moreover, with the
devolution of health services to local government units, the role of the
Department of Health (DoH) was reduced to allocating foreign loans,
regulating clinics, hospitals, and the pharmaceutical industry, training
medical professionals, and administering pilot programs. It passed
on the responsibility of delivering the much-needed health services to 77
municipalities, most of which are perpetually cash-strapped.
Since the mid-1980s,
the health budget has never gone beyond four percent of the total national
appropriations. And since 1992, the start of the devolution of health
services and the transfer of formerly-managed DoH hospitals to local
government units (LGUs), the budget for hospital and regional operations
and services had gone down even more.
|
In 2005, the health
budget got a measly 1.1 percent reflecting the low priority given by the
Arroyo administration to health. This is a pittance compared to the
allocation for debt servicing, 33 percent, and the Department of National
Defense (DND), five percent.
For 2006,
the national government proposed a P1.053 trillion budget (US$19.4 billion
at US$ 1:P54.15), an increase of about 14.7 percent. But debt servicing
still got the biggest share at 32 percent. Next is social services at 28
percent, which is to be divided among education, housing, land
distribution, health, etc.
As of 2000, every Filipino paid P1,836
(US$33.9) for debt servicing. This will be increased to P2,968 (US$
54.81) in the proposed 2006 budget. Also in 2000, every Filipino is
earmarked P429 (US$7.92) for defense. But in the proposed budget for next
year, the government will spend P458 (US$8.45) per Filipino per annum for
defense. This computation is based on the budget of the DND, which
excludes the proposed P1.2 billion (US$22.160 million) intelligence fund
and the P3 billion (US$55.401 million) for the counter-insurgency program.
Meanwhile, the budget for health reflects
an opposite trend.
In 2000, the budget of the health sector
was P14.66 billion (US$270.729 million). With that, the government was to
spend a measly P191 (US$3.52) per Filipino per year for health. This was
a mere P0.52 (US$.009) expenditure per Filipino per day. The 2006 budget
for health is even lower by seven percent at P13.66 billion (US$252.262
million).
The proposed 2006 budget, meanwhile, will
allocate a measly 1.3 percent to health. This means that every Filipino is
allocated P119(US$2.19) for the entire year or about P0.33 (US$.006) per
day, even lower than this year's P0.35 centavos.
.
The relatively low level of health
expenditures in the country compared to other middle-income countries had
been affirmed in a 1993 study by no less than the World Bank. Comparing
the health care spending of 10 countries in the Asia-Pacific region, the
study revealed that the Philippines
had the second lowest per capita health expenditure and also ranked as the
second lowest in terms of health expenditure as percentage of gross
domestic product (GDP). The share of health spending to gross national
product (GNP) of the country does not come close to the standard of the
World Health Organization (WHO) of at least 5 percent of GNP for
middle-income countries.
Lack of sources
Insufficient resources for the health
sector continue to be a major concern. From January-September, the Bureau
of the Treasury (BTr) reported that total government revenues amounted to
P589.49 billion, increasing by 14.2 percent compared to the same period in
2004. However, government expenditures estimated at P698.0 billion
(US$12.890 billion) increased by 6.0 percent, resulting in a deficit of
P108.48 billion (US$2.003 billion). The deficit was also higher by P27.7
billion (US$511.542 million) compared to the same period last year.
For the first two months of the year, the
records of the Department of Finance (DoF) showed that the government has
already incurred a budget deficit of P40.1 billion (US$740.535 million).
The bulk of government expenditures during these months went to interest
payments at P56.862 billion (US$1.050 billion), higher than last year’s
P40.776 billion (US$753.019 million)
The chronic government deficit and the
priority it gives to debt servicing dissipate whatever revenues it
generates. The devolution of health services to local government units, in
line with the Local Government Code, even worsened the state of the
government’s health services.
Thus, the health sector has remained
chronically under funded.
Foreign loans
The government is expecting a budget
deficit of P180 billion (US$3.324 billion) this year, comprising 3.4
percent of the country’s expected economic output.
As in the past, the Philippine government
hopes to finance this deficit through foreign loans from multilateral
agencies such as the IMF-World Bank, developed countries such as the
United States and Japan, and commercial banks.
The United States Agency for International
Development (USAID) is one source of loans for health. The thrust of the
USAID in health can be gleaned from a statement posted on its website,
“USAID is developing the private sector as an alternative source of health
services.”
The thrust of most, if not all,
traditional sources of loans is the reduction in government expenditures
and the privatization of social services.
Among the USAID-funded programs was the
Health Sector Reform Technical Assistance Project (HSRTAP) from 2001 to
2002. The (HSRTAP) was organized in June 2000 in response to the DoH
request for technical assistance support in implementing the Health Sector
Reform Agenda (HSRA).
The HSRA aimed to
improve health financing, health regulation, hospital systems, local
health systems, and public health programs.
To achieve these goals, the HSRA followed
five major reform strategies; one of these was to provide fiscal autonomy
to government hospitals. This meant that government hospitals must be
allowed to collect socialized fees so they can reduce dependence on direct
subsidies from government.
To support the exercise of fiscal
autonomy, critical capacities like diagnostic equipment, laboratory
facilities and medical staff capability were to be upgraded. In addition,
the project provided direct technical assistance in implementing the HSRA
in an integrated fashion in 16 provinces/cities. Its start-up activity
included workshops participated by health system stakeholders coming from
the government and private sectors and civil society.
Its other reform initiatives included
addressing the legal basis for
“corporatization” or
privatization of retained hospitals. It pushed
for an enactment of a law that authorizes the DoH to “corporatize”
its hospitals. For local government units, a
Sanggunian Resolution/Ordinance was deemed necessary. In response, the
Department of Justice (DoJ) released in 2002 a concurring opinion on the
validity of an Executive Order of President Macapagal-Arroyo as the legal
basis for converting DoH hospitals into
corporate entities.
Formulation of pre-incorporatization
steps was also planned which included formulation of the Business
Planning Guidelines to guide six priority
hospitals─in Capiz, Pangasinan, La Union, Davao, plus the Fabella
Medical Center and Quirino Medical Center─in
developing their business plans.
After corporatization, government
hospitals would be allowed to collect socialized fees in order reduce
dependence on direct subsidies from government. To facilitate the
corporatization process, the DoH released the “Documentation of Issues and
Concerns on Corporate Restructuring of Government Hospitals.”
Meanwhile, the Asian Development Bank (ADB)
granted last November 2004 the Philippine government’s request for a loan
of $200 million for its Health Sector Development Program.
The goal of the program was “to improve
the health status of the population, especially of the poor, and to
achieve the health-related Millennium Development Goals (MDGs) of the
United Nations.” To access the loan for the program, the Philippine
government had to agree to a 15-year term amortization period, including a
grace period of three years; an interest rate determined in accordance
with ADB’s London interbank offered rate (LIBOR)-based lending facility; a
commitment charge of 0.75 percent per annum; and such other terms and
conditions set forth in the draft loan agreement. The adjustment costs for
the reform program were estimated at $280 million over 3 years
Other loans and grants came from the WHO,
Japanese, Australian, French, Spanish, U.S., Canadian, Belgian, and
Finnish governments.
Access to health
Based on the DoH’s Handbook on Health Care
Financing for Local Health Systems Development, “health care is both a
public welfare good and a market commodity. As a public welfare good, it
is justified that government pays for health care. As a market commodity,
it is deemed more efficient if those directly using or deriving benefits
from the goods or services pay for them.”
Health care financing was described as
“the study and practice of paying for health care and the impact that such
payments can make on the delivery and utilization of health.”
DoH matching grants
were made available if local governments introduced new fee schedules. To
justify the imposition of higher fees, the DoH encouraged local
governments to improve service quality and allocate up-front financing for
facility improvements, personnel training and hiring, and drugs and
medical equipment.
However, the Health Alliance for Democracy
(HEAD), an organization of health workers and professionals, through its
secretary general, Dr. Gene Nisperos, said, “The people’s health should
not be compromised. Nor should the quality and availability of health
services be made contingent on the people’s capacity to pay.”
“This view only reflects the government’s
abandonment of its responsibility to promote and protect the people’s
rights to health,” he said.
Based on the Census of Population and
Housing conducted by the National Statistics Office on May 1, 2000, the
total population of the country is 76.5 million. This is higher by
7,887,541 persons or about 10.31 percent from the 1995 census and is 10
times the Philippine population in 1903 when the first census was
undertaken.
Its expansion reflected a 2.36 percent
average annual growth rate during 1995-2000. If the average annual growth
rate continues, the population of the Philippines is expected to double in
29 years.
Nisperos added that this population growth
also means growth in poverty incidence.
During the decentralization process, LGUs
were given internal revenue allocations commensurate with their income,
pegged at 64 percent of their total revenue. The poorest municipalities,
therefore, receive the lowest allocations. This impacts on the provision
for health and other public services for people who need them most.
Although under the “Social Reform Agenda”
the poorest municipalities were given additional financial assistance,
LGUs continue to accumulate deficits in their annual budget.
The DoH stressed that
devolution, through the HSRA, aims
“to improve the health status of the Filipino
people through greater and more effective
coverage of national and local public health programs, increase access to
health services especially for the poor, and reduce financial burden on
individual families.”
“But with the decreasing budget for
health, the devolution of health services to cash-strapped municipalities,
and the privatization of government hospitals, how can the poor access the
necessary services?”, asked Nisperos.
Increasingly, the public shoulder the
costs of health. Around 43 percent of the total expenditures for health in
the country today came from out-of-pocket payments, based on the World
Health Organization country health information profiles (CHIPS). But still
per capita health expenditure decreased from PhP1484 in 2001 to Php1435 in
2002. This shows the people are spending less and less for health while
the incidence of illnesses do not abate.
Nisperos said that according to the data
that HEAD gathered, more than half of the population has no access to
health care while five out of 10 Filipinos die without getting any medical
attention. The average hospital bill is three times the average monthly
income of a worker.
In remote rural areas of the country,
large numbers of women and children die without seeing a doctor or a
health care provider. Also, 62 percent of infants are born at home,
because of economic and cultural reasons. Bulatlat
SPECIAL REPORT
Public
Health System: On the Death Bed
First of three parts
BY AUBREY SC MAKILAN
Poor Pay, Working Conditions are Driving Health
Professionals Abroad
Last of three
parts
BY AUBREY SC MAKILAN
Related article:
The Price of
Devolution
List of Licensed Government and
Private Hospitals
and Other Health Facilities
As of December 31, 2004 |
Region |
Population
2000 |
No. of hospitals |
Public |
Private |
Ilocos Region |
4,200,478 |
42 |
87 |
Cagayan Valley |
2,813,159 |
36 |
46 |
Central Luzon |
8,030,945 |
57 |
137 |
Southern Luzon |
11,793,655 |
98 |
173 |
Bicol |
4,686,669 |
48 |
75 |
Western Visayas |
6,211,038 |
54 |
20 |
Central Visayas |
5,706,953 |
42 |
47 |
Eastern Visayas |
3,610,355 |
42 |
23 |
Wester Mindanao or Zamboanga Peninsula |
3,091,208 |
30 |
39 |
Northern
Mindanao |
2,747,585 |
30 |
72 |
Southern
Mindanao |
5,189,335 |
20 |
89 |
Central Mindanao |
2,598,210 |
25 |
73 |
Caraga |
2,095,367 |
32 |
22 |
ARMM |
2,412,159 |
10 |
6 |
CAR |
1,365,412 |
36 |
21 |
NCR |
9,932,560 |
49 |
141 |
TOTAL |
76,504,077 |
651 |
1,071 |
Source: Bureau of
Health Facilities and Services, DoH |
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