‘Corporatizing’ public hospitals isn’t privatization?

By Satur C. Ocampo
At Ground Level | The Philippine Star

Reacting to my March 24 column piece, titled “Stop privatizing public health services, facilities!” Health Secretary Enrique Ona e-mailed me this note:

“I may agree with you in some points, but let me assure you that PPP is not privatization but simply a strategy to bring more resources to the health sector using private investments and practices under a government overarching authority. Can we sit down on this and discuss it more?”

I had anticipated Secretary Ona’s reaction, expecting him to fully back the P-Noy government’s centerpiece Public-Private Partnership or PPP program with regard to health services and facilities. Yet I wanted to listen to him explain how “PPP is not privatization.” Promptly I emailed back, accepting his offer to discuss the issue. It was also a matter of fairness to hear him out.

In our talk, held at the PPP-DOH office of the spanking new diagnostic building of the National Kidney Transplant Institute in Quezon City, Ona gave me a historical overview of the enormity and breadth of the problems of the public health care system that have bugged government through the years. So huge is the funding requirement, he pointed out, that government resources alone cannot undertake the costs.

Ona then dwelt on how the DoH, under his watch, plans to upgrade 72 public hospitals and regional medical centers in the country’s 16 regions to ensure adequate and quality health care services.

The strategy, he stressed, is not to cede, or sell, the government-owned-and-controlled hospitals to the private sector (as Manuel V. Pangilinan has publicly hoped to happen); it is to enable private investors to supply and install much-needed up-to-date medical facilities and equipment, and get a share in the hospital management via the corporate system while government retains control.

This means that, instead of having hospital directors (who are doctors) at the helm as at present, corporate boards that include private investors or their representatives will take over management. This corporate set-up, Ona said, will ensure efficient management because the private investors look after their investments and the returns from them.

So it is “corporatizing” — not “privatizing” — public health facilities and services, which critics deplore raises health care costs beyond the reach of the poor. How does it work?

Take the first PPP project under the DoH, recently submitted for approval by the inter-agency committee: the P900-million Vaccine Self-Sufficiency Project, to be implemented through the Research Institute for Tropical Medicine. It aims to establish facilities for formulating, packaging and labeling various vaccines to reduce their procurement costs by 20-30 percent.

The project calls for the private sector to construct the physical facilities, procure and install the equipment, and operate and maintain them for 10 years. After that, what?

Slides prepared by Dr. Nemesio T. Gako, DoH assistant secretary, show a five-stage broad strategy, thus:

1. Increase resources for health from 3.3 percent of GDP in 2010 to 4 percent in 2014 and 5 percent (the standard share set by the World Health Organization) in 2020. Goal: reduce the 47-48 percent out-of-pocket share (paid by patients) of total health expenditures since 1987 to 2005 to 30 percent by 2020.

2. Sustain PhilHealth membership for those in the informal sector through partial LGU subsidy and fees from administrative licenses, permits and other documents by 2014; through partial LGU subsidy for some and full payment for other members by 2020. For indigent members: full subsidy by the national government in 2014-2020.

3. DoH subsidies for salaries of retained hospitals and for public health services in provinces without PhilHealth universal membership by 2014; DoH as main funder of capital outlay for tertiary hospitals, but limited role in public health funding, by 2020.

4. Shift to “new provider payment mechanisms” the capitalization of outpatient benefits for sponsored-program beneficiaries in 2010-2014; capitalization as major tool to pay for health-care services to all Filipinos by 2020. PhilHealth spending: P40 B in 2014, P162-234 B in 2020.

5. Secure financial autonomy of DoH-retained hospitals: salaries paid out of DoH budget in 2014; “fully corporatized and autonomous” by 2020. No more government subsidy. (This last stage is where the Network Opposed to Privatization of Public Hospitals and Health Services say public hospital MOOE and personal services allocations will be removed from the DoH budget.)

To accomplish this strategy, where does Secretary Ona hope to get the needed funding?

He pins his hope on the passage of House Bill 5727, or the “sin tax” reform bill, which would impose a unitary tax for cigarettes, distilled spirits and liquor that is expected to raise initially P60.63 B. The projected revenues would progressively rise to P84.28 B in 2013 and to P139.33 B in 2016.

However, critics of the bill question these projections.

President P-Noy has promised to certify HB 5727 for urgent legislation, and had committed, Ona said, to channel the revenues to health care.

He provided me with slide printouts showing the comparative estimated shares of 16 beneficiary provinces producing tobacco products under the present law (RA 9334), totaling P3.84 B, and those of 61 LGUs which would receive the P60.7 B expected revenue under HB 5727 — if it’s enacted into law.

Wish Secretary Ona good luck.

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E-mail: satur.ocampo@gmail.com
April 14, 2012

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  1. The side is Dr. Ona regarding PPP is an absolute denial of direct services to health by public sectors. Since PPP is also known as Corporatization which is previously known as Privatization, the policies of which is indeed a must to look at. lots of PEOPLE today can barely afford a single medicine to purchase. this is because of the price hike. lots of diagnostic centers are not giving away their services for free. With the advent of Corporatization which is Privatization, the Private Investors sit in as the member of the management team. they are there to secure their investment get a best return. much more alarming is that Ona said a hospital could be led by a non-medical entity that might come from the investors’ group. This is clearly not public service. this is a big business that will benefit the Investors not co-equal to the given benefit for the Public.

    the lack of budget for Health is not the Problem of the People rather a problem of Allocation within the realm of Politicians. Taxes are left in the Projects hardly felt by the People not it helps advance the Economics of the Populace. If Ona admits that DoH can not barely manage Public Hospitals and its Fiscal Management is leaking around somebody’s pocket, it should be our Executive Branch’s call to clearly outline a good governance. the problem is, with Butch Abad’s claim of lots of savings, people in the poverly line and below can’t see the actual help from them!

    Budgets are being hoarded. why? If only the BUDGETS from ALL POLITICIANS are spent for the BENEFITS of the PEOPLE, Health services are not the PROBLEM. IT IS THE PEOPLE BEHIND THE HEALTH CARE SYSTEM that brought down it. They brought Fiscal Crisis to Hospitals with project transactions not exactly sustainable to the Institution.

    Sadly, Our People are already witness how far the Health Care Policies are affecting them. Dying in the wards without a dialysis due to the reason that they have to purchase the materials for the said procedure. Increasing infections due to their lack of fund in purchasing Antibiotics not available in the Hospital.. No CT scan because they have to pay haft of it prior to its accommodation..

    OUR HEALTH CARE SYSTEM is CORRUPTED. ITS LEADERS ARE GETTING RICHIER. THE ORDINARY EMPLOYEES ARE LEFT BEHIND. PAY PATIENTS ARE GIVEN THE BEST SHOT WHILE SERVICE PATIENTS ARE HARDLY SEEN BY THE CONSULTANTS, GOT THE LAST STAND ON THE ROW.

    if only POLICY MAKERS DO HAVE EARS TO HEAR THE VERY VOICE OF THE PEOPLE… AND COME TO THEIR SENSES THAT PEOPLE ARE DYING IN THE OPD SERVICE AREA… OUR HEALTH CARE SYSTEM, with its pool of expert healthcare team, WILL BRING THE BEST TO ITS CONSTITUENTS THE 1ST CLASS CARE THE WORLD DO ADMIRED..

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