Health Sector Reform Agenda

HEALTH SECTOR REFORM TECHNICAL ASSISTANCE PROJECT (HSRTAP)
UNITED STATES
AGENCY FOR
INTERNATIONAL
DEVELOPMENT
Health Sector Reform Agenda

Convergence Strategy and Best
Practices
Studies of Eight
Convergence Areas
University of the Philippines National Institutes of Health –

Institute of Clinical Epidemiology (UP NIH-ICE)
September 2002
A publication of Management Sciences for Health–Health Sector Reform Technical

Assistance Project (MSH-HSRTAP). This publication was made possible through the
support provided by the United States Agency for International Development (USAID),
under the terms of Contract No. HRN-1-00-98-00033-00.
TABLE OF CONTENTS Health Sector
Reform Technical
Assistance Project
Foreword ........................................................................................................... 5
I CAPIZ (REGION 6) .................................................................................... 6

1. Socio-Economic Profile ...................................................................... 6
2. Health Status ..................................................................................... 6
3. Background of Health Sector Reform ................................................. 8
4. Gains In Health Financing ................................................................ 10
5. Gains in Hospital Reforms................................................................ 16
6. Gains in Drug Management Systems ............................................... 22
7. Gains in Inter-Local Health Systems ................................................ 28
8. Gains in Public Health Reforms........................................................ 33
9. Best Practices .................................................................................. 35
10. Lessons Learned.............................................................................. 38
11. Conclusion and Recommendations.................................................. 39
Appendix 1. List of Key Informants................................................... 40
II NUEVA VIZCAYA (REGION 2) ............................................................... 41

1. Socio-Economic Profile .................................................................... 41
2. Background of Health Sector Reform ............................................... 42
3. Gains in Health Financing ................................................................ 44
6. Gains in Inter-Local Health Systems ................................................ 55
7. Best Practices .................................................................................. 56
8. Lessons Learned.............................................................................. 57
9. Conclusion ....................................................................................... 57
Appendix 1. List of Key Informants. .................................................. 58
References....................................................................................... 59
III PANGASINAN (REGION 1) .................................................................... 60

1. Socio-Economic and Health Profile .................................................. 60
2. Convergence Experience ................................................................. 60
6. Gains in Local Health Systems......................................................... 79
7. Best Practices .................................................................................. 81
8. Lessons learned............................................................................... 82
9. Conclusion ....................................................................................... 82
Appendix 1. List of Key Informants. .................................................. 83
References....................................................................................... 84
2
IV MISAMIS OCCIDENTAL (REGION 10) ................................................... 85
Health Sector
1. Socio-Economic and Health Profile .................................................. 85 Reform Technical
2. Health Sector Reform....................................................................... 86 Assistance Project

6. Gains in Inter-Local Health Systems .............................................. 103
7. Gains in Public Health Services ..................................................... 109
8. Best Practices and Lessons Learned ............................................. 111
9. Conclusion and Recommendations................................................ 112
Appendix 1. Key Informants and FGD Participants ....................... 113
V BULACAN (REGION 3).......................................................................... 115

1. Socio-Economic and Health Profile ................................................ 115
2. Convergence in Bulacan ................................................................ 117
3. Gains in Health Financing .............................................................. 118
4. Gains in Hospital Reform ............................................................... 119
5. Gains in Drug Management ........................................................... 124
7. Updates on the Bulacan Convergence Initiative ............................. 132
8. Best Practices ................................................................................ 134
9. Convergence Concerns.................................................................. 136
References..................................................................................... 139
VI SOUTH COTABATO (REGION 11)........................................................ 141

2. Convergence In Health Reform ...................................................... 143
3. The Convergence Strategy ............................................................ 145
4. Gains in Health Financing Reforms................................................ 146
5. Gains in Hospital Reforms.............................................................. 150
6. Gains in Drug Management Systems ............................................. 152
7. Gains in Local Health Systems Development................................. 154
8. Best Practices ................................................................................ 157
9. Lessons Learned............................................................................ 157
Appendix 1. Local Health Accounts, 1998, South Cotabato............ 160
Appendix 2. South Cotabato Provincial Hospital, Occupancy Rates
and Budget, 1990-2000.................................................................. 161
Appendix 3. Norala and Sto. Niño Health Budgets, 1998-2001. ..... 162
Appendix 4. List of Interviewees. ................................................... 163
VII NEGROS ORIENTAL (REGION 7)......................................................... 164

2. Health Sector Reform..................................................................... 164
3. Gains in Health Financing .............................................................. 164
5. Gains in Drug Management Systems ............................................. 185
7. Best Practices ................................................................................ 201
3
Appendix 1. Key Informants and FGD Participants........................ 204
Health Sector
Reform Technical
VIII PASAY (NATIONAL CAPITAL REGION) .............................................. 205 Assistance Project

2. Convergence in Pasay ................................................................... 205
3. Gains in Social Health Insurance ................................................... 206
5. Gains in Drug Management Reform ............................................... 210
7. Best Practices ................................................................................ 214
8. Lessons Learned............................................................................ 215
4
FOREWORD Health Sector
Reform Technical
Assistance Project
The convergence strategy initiated by the Management Sciences for Health-

Health Sector Reform Technical Assistance Project (MSH-HSRTAP) with funding
from the United States Agency for International Development (USAID) is the
main strategy of the Philippine Government's Department of Health (DOH) to
address the challenges of health sector reform.
Convergence is an attempt to bring together the local political leadership, the

health sector, and the community to collaborate toward better health. The
convergence approach aims to synchronize and strengthen social insurance,
hospital reform, drug management, inter-local health zone, and public health
networking at the local level. The strategy aims to create synergy among the
health initiatives of LGUs, the DOH, the Philippine Health Insurance Corporation
(PHIC), and the community. The goal is better health service delivery, coverage
and equity, quality, efficiency, and improved private participation.
The strategy is being piloted in strategic LGU sites. MSH-HSRTAP has directly
assisted eight LGUs: Pangasinan, Nueva Vizcaya, Bulacan, Pasay City, Capiz,
Negros Oriental, Misamis Occidental, and South Cotabato. This publication
compiles into one volume eight separate process documentation studies of the
convergence experience in these eight LGUs.
5
I
Health Sector
Reform Technical
Assistance Project
CAPIZ (REGION 6)
1. Socio-Economic Profile
Capiz Province has a population of 624, 469. It consists of 16 municipalities,

472 barangays and 1 city (Roxas). The province has eight government hospitals
(one provincial, four district, and three community). Provincial and district
hospitals are secondary health facilities. In addition to government health
facilities, there are three private hospitals operating in the province. With a
steadily increasing total population and population density, Capiz has the third
largest population in Region 6, although the growth rate has declined considera-
bly over the latter half of the past decade. In 1998, Capiz had the highest
poverty incidence (59.7%) in Western Visayas.
Table 1. Selected Socio-Economic Indicators.

Indicator 1990 1995 2000
Total Population (in ‘000) 584 624 648
Rank in Region 6 3rd largest 3rd largest 3rd largest
Population Growth Rate 1.731 1.262 0.793
Rank in Region 6 2nd fastest 4th fastest 6th or slowest
Population Density 221.8 237.2 258.4
1990 1994 1997
Human Development Index 0.451 0.525 0.543
Rank in Region 6 5th or lowest 4th of 5 5th of 6
Life expectancy at birth Not available 62.6 64.6
Rank in Region 6 4th of 6 4th of 6
School Enrollment Rate Not available 74.35 85.82
Rank in Region 6 5th of 6 1st or highest
Real per capita income (at 1994 prices) Not available 9399 15206
Rank in Region 6 5th of 6 4th of 6
Poverty Incidence* 63.4 (1991) 59.8 Not available
Rank in Region 6 Highest Highest
Source: "Time to Act: Needs, Options, Decisions," in State of the Philippine Population Report 2000, Commission on Population,
January 2001, pp. 83-87; 11980-1990, 2 1990-1995, 3 1995-2000.
*Philippine Human Development Report 1997.
2. Health Status
The mortality rates for infants, young children and birthing women have slightly
decreased over the first half of the past decade. The mortality rates are still high
compared with national rates for the same period.
6
Table 2. Selected Health Indicators.
Health Sector
Indicator 1990 1995 Reform Technical
Infant Mortality Rate* 64.11 57.01 Assistance Project
Rank in Region 6 3rd of 5 3rd of 5
Philippine IMR 56.69 48.93
Under- 5 Mortality Rate* 91.96 80.42
Rank in Region 6 3rd of 5 3rd of 5
Philippine U5MR 79.64 66.79
Maternal Mortality Ratio* 215.07 191.44
Rank in Region 6 3rd of 5 4th of 5
Philippine MMR 209.00 179.74
* Source: "Time to Act: Needs, Options, Decisions," in State of the Philippine Population Report 2000, Commission on Population,
January 2001, p 88.
Some bright spots can be seen in nutrition indicators. In terms of second and
third degree malnutrition among children, the prevalence rates in Capiz are
among the highest in Region 6 and seventh highest nationwide (1998 National
Nutrition Survey). The prevalence of anemia among young children, pregnant
women, and lactating women is lower than the national figures, however. Except
among lactating women, the prevalence of vitamin A deficiency is also lower than
the national rates.
Table 3. Nutritional Status, 1998 (from the 5th National Nutrition Survey).
Indicator Capiz Region 6 (mean) Philippines (mean)
Children under 5 years
Underweight 36.6 39.6 32.0
Wasted 6.6 9.9 6.0
Stunted 41.4 37.1 34.0
Vit. A deficient & low 13.4 40.9 38.0
Anemia Prevalence 21.7 32.1 31.8
Pregnant Women
Vit. A deficient & low 0 21.0 22.2
Lactating Women
The leading causes of morbidity are still infectious diseases, which reflects the
small gains in socio-economic and health development. On the other hand, the
prominence of chronic diseases (such as pneumonia and heart diseases) and
accidents among the leading causes of death suggest that the province has been
also dealing with transition diseases brought about by urbanization and industri-
alization.
A. Leading Causes of Illness, CY 2000, from Provincial Health Office Data
Causes Total Cases

Pneumonia 11,042
Hypertension 8,004
Diarrhea 6,708
URTI 5,524
Cough and colds 4,748
7
Health Sector
B. Leading Causes of Deaths, CY 2000 Reform Technical
Assistance Project
Causes Number
Pneumonia 526
Diseases of the heart 465
Hypertension 275
Cancer 225
Accidents 190
3. Background of Health Sector Reform
In the second half of 1989, the Capiz Provincial Government launched the Capiz
Integrated Health Services Development Program or CIHSDP. This was about
the same time that the Health Sector Reform Agenda (HSRA) was also being
launched by the Department of Health. Following were the processes that led to
the establishment of CIHSDP.
In August 1999, the province organized a Strategic Directions Workshop Integrat-

ing the Health Care Programs and Services in the Province of Capiz and City of
Roxas. This led to the creation of the Capiz Integrated Health Services Council.
The Council is chaired by Capiz Governor Vicente Bermejo. Its members
included then First District Congressman Mar Roxas, Second District Congress-
man Vicente Andaya, Roxas City Mayor Antonio del Rosario, City Board member
Antonio Arciga who chaired the Health Committee, Mayors’ League President
Felipe Barredo, Capiz Medical Society President Cesar Yap, Ms. Judy Araneta
Roxas, representing the NGO sector through the Dinggoy Roxas Health Program
of the GRF, and Rotary Metro Roxas President Angelo Hidrosollo representing
the civic club sector. The Technical Committee was chaired by Dr. Jarvis Pun-
zalan (the Province Chairman) and the members were Dante Bermejo, Mark
Ortiz, Annie Villaruz (GRF), and Dr. Malou Roldan.
The Council approved the creation of an individual health card, which would be
filled up by a barangay health worker (BHW) for each patient referred to a
government physician. It was also envisaged that the mayors and municipal
governments would focus on preventive and promotive health services while the
governor and the provincial government would primarily support the curative and
rehabilitative services. The concept of defining a catchment area for which the
four district hospitals would be responsible for health care delivery was also born
in this meeting.
On November 3, 1999, the Council met with the Management Sciences for
Health, which offered a USAID grant through the DOH-MSH Local Government
Performance Program (LPP). The USAID grant was intended to promote the
Integrated Family Planning and Maternal Health Program. Since sustaining the
DOH programs beyond the life span of the grant was a major concern and the
HSRA was perceived as a major strategy for strengthening local government
capability, grant funds could be used through the DOH-MSH LPP to support the
HSRA programs.
8
MSH proposed to make Capiz a site for the package of interventions that would
Health Sector
consist of the following: health insurance, hospital management or corporatiza- Reform Technical
tion, district health systems and drug management. MSH proposed a cost- Assistance Project
sharing scheme between the Capiz LGUs and PHIC through which the annual
insurance premium of P1,188 per family could be funded. The scheme would
allow LGUs to enroll their constituents’ families at initially low cost, but also
envisaged that as the financial status of LGUs improved their share could be
progressively increased. This scheme gradually would phase out PHIC support.
Table 4. Cost Sharing Scheme of the Indigency Program Premium, Capiz.

Term of insurance LGU share of premium PHIC share of premium
1st and 2nd year 10% 90%
3rd year 20% 80%
4th year 30% 70%
5th year 40% 60%
6th year and onwards 50% 50%
On November 12, 1999, Governor Bermejo announced that PHIC would help
finance a health insurance program for the indigent population and USAID would
“fund organizational activities”. The Governor also announced a budget allot-
ment of P30 million for Roxas Memorial Hospital, P12 million for Bailan District
and P13 million for Mambusao District. This underscored the higher priority
given to these three hospitals over the rest. The district hospitals of Bailan and
Mambusao were quickly included in the first demonstration of the feasibility of the
CIHSDP. Limited funds also dictated the prudence of first channeling whatever
resources were available to these three hospital “showpieces.”
On November 17, 1999, senior managers of PHIC, MSH and GRF met with the
League of Mayors to introduce the “Medicare Para Sa Masa” Program of PHIC
and its critical role in achieving the goals of the CIHSDP and the national HSRA.
In a private meeting later in the day, Ms. Annie Villaruz of the GRF met with Dr.
Berracochea (MSH), Dr. Reverente (MSH), Dr. Valera (PHIC) and Dr. Jazmine
Simon to flesh out the immediate steps needed to operationalize the PHIC-LGU
health insurance program for indigents. Included in the action plan were the
following processes:
• A Memorandum of Agreement to formalize participation in the Program

between Mayors and PHIC would be drafted.
• Mayors would remit their share and PHIC would put in their corresponding
contribution to start the program.
• A Means Test would be developed by January 2000. The test would be used
by mayors to identify and prioritize the Program beneficiaries among their in-
digent constituents.
• Membership cards would be distributed by February 2000 and a general

orientation to the program would be conducted at this time.
9
• BHWs would be provided with training materials for orienting the program
Health Sector
beneficiaries to the terms and benefit coverage of their Insurance plans. Reform Technical
Assistance Project
The Capiz Mayors readily agreed to consider joining the program. Social health
insurance and the local health zones thus became the cornerstones of the
CIHSDP.
On March 22-23, 2001, the Health Sector Reform Convergence Workshop was
held at GRF to implement and strengthen health sector reforms in Capiz through
detailed action plans. The participants planned to achieve all of the activities
within 2001. Subsequently, a Health Needs Assessment and Negotiation Work-
shop was conducted on June 27, 2001. This resulted in the identification of the
priority health needs of the province and a negotiation for funding and support
with the DOH and the provincial government. Some of the programs that were
given top priority were TB control, nutrition and the setting up of mother- and
baby-friendly hospitals.
In a Health Summit held on September 18, 2001, which was attended by Mayors,
representatives from DOH, PHIC, NGOs, POs and the private sector, all stake-
holders signed a MOA pledging support to the strategies, plans and year 2004
targets outlined by the participants of the Health Sector Reform Convergence
Workshop. Moreover, the Provincial Task Force has been active in social
mobilization and advocacy prior and during the health sector reforms.
4. Gains In Health Financing
4.1 Policy development activities
Even before the launching of the HSRA, the provincial government had already
identified PhilHealth as the principal means to support increased health care
expenditures. Under Gov. Bermejo’s administration, the Provincial Government
had allocated funds for the hospitalization of indigent patients enrolled in the
MEDICARE II program of the province. The funds were channeled to main
referral hospitals embedded within hospital networks – the provincial govern-
ment’s version of the inter-local health zone (ILHZ). The Provincial Government
covered the premiums of families who were enrolled in the Indigency Program.
Currently, the Medicare para sa Masa Program has been expanded into the
PhilHealth Plus Program, so called because it seeks to provide universal cover-
age to both paying and non-paying indigent members of participating LGUs. It is
an integrated health package consisting of inpatient and outpatient care and
technical support. The inpatient curative package that will be provided by PHIC-
accredited hospitals consists of the following: room and board, drugs and medi-
cine, X-ray and laboratory, professional fees, operating room fees, and regular
outpatient services.
The outpatient benefit package to be provided by PHIC-accredited hospitals and

RHUs consists of the following: primary consults; and, laboratory fees for chest
X-ray, complete blood count, fecalysis, urinalysis, and sputum microscopy.
10
Currently being developed is an expanded outpatient benefit package that will
Health Sector
include health prevention services, health screening and health counseling are Reform Technical
the following: visual screening with acetic acid for cervical cancer; regular blood Assistance Project
pressure; measurement; annual digital rectal examination; anthropometric

measurements; periodic breast examination in the clinic; smoking cessation
counseling; and, dietary advice.
4.2 Policy implementation activities
Release of PhilHealth Passports. The Indigency Program, re-named the Health

Passport Program was launched on September 15, 2000. The President of the
Philippines and the president of PHIC personally awarded the “health passports”
to the beneficiaries.
Selection of beneficiaries. A Minimum Basic Needs Survey was first conducted

by barangay health workers. The Department of Social Welfare and Develop-
ment (DSWD) screened the candidate families using a Means Test. The list of
indigent families was then endorsed to PhilHealth for further and final screening.
Health service providers in rural health units and hospitals also encouraged other
members of the non-formal sector to be members of PhilHealth.
In other places, barangay health workers were tasked with identifying the poorest
of the poor population in the municipality. However, their methods were un-
documented and not standardized. Some included those community members
who were “active” in supporting barangay activities and who were willing to
continue paying the premiums should the LGU default.
To further document information dissemination activities at the community level,

11 hospital client-respondents at the Roxas Memorial Hospital were interviewed.
Nearly all were aware of the Indigency Program in their local health zones and in
other LHZs. None of the respondents actively sought for PhilHealth membership.
Majority of non-enrollees did not know how to access the Indigency Program. All
of the respondents wanted to be members. Some expressed concern at the
availability of personal money for premiums, while others were willing to pay for
their premiums.
Nine of 11 respondents reported that BHWs, social workers, health service

providers and the LGUs conducted social health insurance advocacy and promo-
tional activities. PhilHealth promotional spots are also aired on radio programs.
Fund sourcing. The Governor identified two major sources of funds against
which the insurance premiums could be charged: the Provincial Development
Fund of P46 million which is 20% of provincial IRA (P979 million) and the munici-
pal IRA which ranges from P24 million to P46 million.
Local government support. The Governor encouraged the Mayors to support the
program by enrolling their constituents using their IRAs to pay for the premiums.
The municipal mayors discovered that enrolling their indigent constituents could
translate into votes and political support during election because enrolled indi-
gent families do not incur out-of-pocket hospitalization expenses. Furthermore,
mayors need not shell out money whenever an indigent constituent needed
11
health care assistance. If the municipality is not enrolled in PhilHealth, the mayor
Health Sector
gets the money to pay the hospital bills of its constituents from his social welfare Reform Technical
fund. Assistance Project
As of this report, only two municipalities – Dao and Pres. Roxas – have contrib-
uted their own funds for the premiums, but the latest update during the feedback
session held at the Provincial Health Office on June 21, 2002 revealed four
municipalities to include Panay and Pontevedra. Dao finances 427 members
while Pres. Roxas funds 385 members. Moreover, DOH representatives already
made follow-ups to Local Chief Executives’ promises to provide counterpart for
the Indigency Program premiums.
Coverage expansion. At present, 526 families per municipality have been

enrolled, with Dau and Pres. Roxas even planning to increase their enrollment to
1000. As of April 2, 2002 there are 8,699 indigent families enrolled by the provin-
cial government and 812 families enrolled by the municipal governments in the
Medicare para sa Masa program. There are 2,402 more families that will be
enrolled this year since the provincial government will increase its annual pre-
mium contributions from P1.2 million to P1.5 million.
Although all 16 municipalities have enrolled members, the roster of participating

LGUs that contribute premiums to augment the provincial government‘s funds
has not increased over the past year.
Interviewed providers voiced out the need to expand social health insurance
coverage to include other members of the non-formal sector of the population
who are unemployed and non-indigents.
The mayor of Pilar was interviewed. Pilar enrolled 900 indigent families in the
first batch of Indigency Program enrollment and 700 families in the second batch.
Table 5. Number of Enrolled IP Members by Municipality and Batch.

Municipality 1st batch 2nd batch 3rd batch Total Provincial budget (in Pesos)
Cuartero 471 56 73 600 71,280
Dao 520 0 130 650 77,220
Dumalag 456 55 89 600 71,280
Dumarao 358 66 276 700 83,160
Ivisan 177 104 319 600 71,280
Jamindan 216 354 80 650 77,220
Maayon 489 19 142 650 77,220
Mambusao 423 82 145 650 77,220
Panay 411 115 174 700 83,160
Panitan 441 83 126 650 77,220
Pilar 496 0 154 650 77,220
Pontevedra 416 100 184 700 83,160
Pres. Roxas 339 187 80 600 71,280
Roxas City 1 308 157 465 276,329
Sapian 446 78 76 600 71,280
Sigma 425 23 152 600 71,280
Tapaz 0 95 45 140 83,160
TOTAL 6,085 1,802 2,402 10,205 1,499,969
12
Release of capitation funds. The first tranche of the capitation fund of P300 per
Health Sector
family was given by PHIC to the participating LGUs on March 30, 2001. It would Reform Technical
be used to pay the RHUs for delivering the PHIC outpatient benefit package. Assistance Project
Savings from the capitation fund could be used to pay salaries and purchase
equipment and supplies.
The quarterly release of the remaining tranches for 2001 have been delayed so
that PHIC now owes the LGUs 3 quarterly releases for 2001 and two quarterly
releases for 2002.
Utilization of health services. Utilization of services has been modest for the first
2 years. Most members were new and were not fully aware of their benefits and
responsibilities. Guidelines in processing their claims were also unclear to them.
The learning impact of the orientation lecture made during health passport
dissemination seems negligible.
Many beneficiaries needed on-site assistance during claims processing prior to

hospital discharge. PHIC regional staff had to be physically present in the hospi-
tal to assist new members, guide them in claims processing and assert their
benefits, particularly when hospitals were indifferent to their insurance status.
The 11 interviewees reported enjoying hospitalization benefits from their social

health insurance. Their benefits included the following: (a) payment of hospital
bills depending on the illness and confinement period (covering medicines,
accommodation, laboratory, x-rays, and other medical supplies); (b) reimburse-
ment of drugs bought outside the hospital. Four of them made co-payments for
charges in excess of PhilHealth coverage.
The development of a monitoring tool to document LGU utilization of the capita-

tion funds has also been delayed. No system is currently in place to routinely
collect data on how much of the capitation funds are being used for health care
and how much excess is spent for which items.
Premium collection from paying members. Participating LGU officials are quite
critical of PhilHealth’s slow pace in promoting social health insurance. This may
be due to the inability to designate sufficient numbers of PhilHealth collection
centers in the municipalities. LGU officials are considering an alternative solution
to address this concern by designating LGU treasurers as collection agents.
Accreditation of RHUs. PHIC has developed accreditation standards for the

RHUs of municipalities that are participating in the PhilHealth Plus program.
Since the PHIC outpatient benefit package includes the provision of laboratory
tests and consults, RHUs must have basic equipment and manpower to deliver
both services. Technical standards have been set in the areas of general
infrastructure, equipment, and clinic staff.
a. General infrastructure
• Large clear sign bearing name of RHU and indicating its participation in
the Medicare para sa Masa program
• Generally clean environment
13
• Adequate lighting
Health Sector
• Adequate water supply Reform Technical
• Covered segregated garbage Assistance Project
• Examination room with provisions for privacy

• Examination table with clean linen
• Cleansing solution for clinical instruments
b. Equipment
• Binocular microscope
• Reagents
• Centrifuge
• Glass slides and cover slips
• Test tubes
• Test strips for quantitative urinalysis
• Applicator sticks
• Heparinized test tubes
• Capillets
• Blood lancets
• Counting chamber
• WBC diluting fluid
• WBC and RBC diluting pipette
• Sucking tube
• Decontamination solutions
• Thermometer
• Stethoscopes
• Sphygmomanometer with adult and pediatric cuff
• Tape measure
• Weighing scale – adult and pediatric
• Disposable gloves
• Vaginal specula
• Lubricating jelly
• Disposable needles and syringes
• Sharps containers
• Sterile cotton swabs
• Covered pan and stove
• Office supplies
• Recording and reporting forms
c. Clinic staff
• Physician
• Nurse
• Midwife
• Medical technologist
Applicant RHUs are visited by the staff of the Accreditation Division of the
Regional Health Insurance Office. Accreditation is good for one year and is
renewable on the anniversary date.
14
Two rural health units (RHUs) were accredited by PhilHealth in April 2001. They
Health Sector
received P29,000 from the PhilHealth capitation fund in February 2002. Problems Reform Technical
in maintaining accreditations have occurred. Accredited RHUs must have a Assistance Project
physician and medical technologist for laboratory services. In the case of Pilar
RHU, it lost its physician in the 1st quarter of this year when he went abroad. A
visiting physician from Roxas Memorial Hospital and the neighboring RHU in
another town within the ILHZ have been substituting for him. The Mayor is still
requesting the Sangguniang Bayan for an item for the medical technologist in the
regular plantilla.
4.3 Current issues and solutions
Need to rapidly increase PHIC coverage. The local PHIC staff and the PHO
have jointly launched advocacy campaigns targeting local chief executives and
have initiated information dissemination activities to promote program enrollment.
They also promoted capitation as an incentive to LGUs to start enrolling their
members. The major hindrance perceived is the lack of financial support from
PHIC. The PHO is meeting difficulties in requesting for financial and technical
assistance from PHIC.
Establish a PHIC desk in Bailan District Hospital to facilitate enrollment. This was
approved by the Zone Action Team. However, PHIC could not provide the
manpower.
Difficulties in premium collection. The setting up of local payment centers has

been suggested to PHIC.
Table 6. Health financing program updates, identified gaps and propositions.

What are the What are the
What has been
Activities Expected output reasons for the recommended next
done so far?
‘gap’? steps?
1. Health Passport Indigent Program: 1st 1st batch Y2: 8699 Not all LGUs have PHIC to do
Program (Y2) batch Y1= 1st batch families provided counterpart something about its'
Y2 funding; most have delayed billing
3 municipalities promised to do so (province not yet fully
Municipal counter- (Dao, President next year for the 2nd billed for Y1.)
part funding to enroll Roxas and Panay) batch.
additional indigents provided counterpart
2. Advocacy on Increase to at least Jan-Aug 2001 claims No funding released DOH reps to follow-
Individual Paying 500 new enrollees paid by PHIC to HPP for advocacy by up promises of
Program (IPP) per month to IPP recipients = P1.27 M DOH. mayors to provide
from the current 200- counterpart.
300 per month. Setting up of PHIC
office at RMPH OPD Nothing from PHIC Full blast advocacy
either. targeting informal
Limited radio sector once PHIC
guestings No PHIC presence fixes its payment
outside of city. scheme involving
postal offices.
Direct release of
funds to province to
avoid delays in
program implementa-
tion.
15
What has been
Activities Expected output reasons for the recommended next Health Sector
done so far? Reform Technical
‘gap’? steps? Assistance Project
3. Out Patient Utilize Capitation CF released 3rd Q of Delayed release for PHIC to improve ID
Benefits (OPB) Fund (CF) to this year to 11 4th Q due to delayed production
implementation implement OPB municipalities = billing and thus, mechanism.
P496,896 delayed payment by
province. PHIC to improve
2nd release by next billing system for
week province.
PHIC to take active

role in monitoring of
CF utilization, OPB
implementation.
Kinks in chest x-ray

benefits should be
ironed out.
PHIC to provide
some incentives for
DSWD personnel,
separate from the
CF.
5. Gains in Hospital Reforms
5.1 The hospital network system of Capiz
The Roxas Memorial Provincial Hospital is a secondary care level hospital with
181 employees, of which 108 are regular employees. It has 100 authorized beds,
80 of which are for non-paying “charity” patients. The hospital is accredited by
PHIC and of the P4 million health care expenditures of the hospital, almost half is
reimbursed by PHIC. This coverage is targeted to reach 84% in the immediate
future.
More than 80% of the hospital's annual budget goes to the salaries and benefits
of its personnel. In year 2001, expenditures exceeded the annual budget, but
were augmented by realignment of funds from trust funds (e.g. medicines,
oxygen, ambulance, lab & x-ray fees, ultra sound fees, etc.). There has been no
significant improvement in financial management, but hospital income has
increased because of PhilHealth reimbursements. For example, patient costs
could still not be calculated although the staff has been trained on costing and
billing because of lack of computerization of hospital accounts.
Mambusao District Hospital (MDH) is a secondary care level hospital with 108
regular and 59 contractual employees. It has 50 authorized beds, 45 of which are
for “charity” patients.
Bailan District Hospital is a secondary care level hospital. Details on this hospital
can be found in the section on Inter-local Health Zones.
16
5.2 Policy development and implementation.
Health Sector
Reform Technical
On hospital doctors and staff. Under the new Provincial Government administra- Assistance Project
tion, most head of offices and other service providers were trained on Quality
Service Improvement Program.
At the MDH, the values orientation workshop was conducted to hospital person-
nel (through the initiative of the Chief of Hospital) and staff meetings were held
twice a month.
Systematization of work and patient flow in the Outpatient Department. Interde-

partmental meetings to standardize work processes, reduce redundancies and
simplify tasks were conducted.
Upgrading of personnel salaries.
Training programs – the local administration is very supportive of conducing

capability building for health service providers.
Networking schemes. NGO volunteers from Gerry Roxas Foundation comple-

menting hospital staff in providing services.
Volunteer consultants and health workers were recruited (partly through the
Gerry Roxas Foundation) and referral networks with other hospitals were formal-
ized to make up for lack of specialists (e.g., Bailan District Hospital refers to
pathologists in other hospitals for autopsy services).
Staff items from the regional and national levels.
Capiz had recommended and requested training for dental/oral surgery in the
Philippine General Hospital.
On hospital facilities. In the case of RMPH, Physical facilities enhancement –

upgrading of radiology and reproductive departments, physical environment is
clean and orderly, adopted the 5S and the Quality assurance program committee
is very active. They started a program to improve the parking area, conducted
quarterly evaluation and gave awards at the end of the year.
In the case of MDH, Rehabilitation program for the hospital buildings, beginning
with the Outpatient Department building in the 2nd quarter of 2000.
Signages were provided to guide patients.
Upgrading of RMPH facilities and equipment (e.g. x-ray equipment from Makati
Medical Center, television sets from St. Lukes Hospital for clients/patients waiting
especially at the OPD). In MDH, old x-ray machines were acquired and rehabili-
tated with financial support from the LGU.
LGU support has increased for the provision of hospital needs, such as labora-
tory equipment, hospital supplies, etc.
17
Formations of mergers or alliances. A complementation program to share
Health Sector
manpower, laboratory and equipment with deficient district hospitals is in prac- Reform Technical
tice. Formations of mergers or alliances. Assistance Project
On hospital finances. The MOOE budget for 2001 was P2,453,900 while salaries
was P13, 635,473. Funds are retained in the hospitals for ambulance, X-rays
and laboratory tests. The PHIC reimbursements for operating room, supplies
and drugs did not go to the hospital, but to the Provincial Governor Office.
Users fee utilization in Capiz is fixed, not graduated.
In Bailan District Hospital, the DOH has been helping them through the Health
Development Fund. For example, Bailan will receive P2 M for the rehabilitation of
their Infectious Disease Building. The Governor also gave them money for the
construction of a chapel and Ms. Roxas gave P2 million for facilities upgrading
and supplies.
On hospital management. Policy directive from the governor, which separated

the Provincial Hospital from the Provincial Health Office in terms of fiscal man-
agement, administration and operations.
Adoption of systematic hospital billing and collection procedures after MSH

HSRA-TAP provided technical assistance.
Innovative financing schemes through PhilHealth Indigency Program, which

increased hospital income. Hospitals can better recover costs of caring for
indigent patients from LGUs.
Systematization of drug procurement, inventory, and distribution processes to

increase the variety and availability of essential drugs. Drug companies were
also approached for donations of drug samples.
Implementation of new policies covering ambulance use, number of patients and

patient flow.
Province-wide policies in drug procurement and distribution were adopted to

facilitate delivery and payment for drugs. Creation of the Provincial Therapeutics
Committee and the Provincial Drug Formulary to standardize drug selection and
ensure appropriateness to local disease burdens. Adoption of parallel drug
importation, and the PHO has been into pooled procurement. At the pharmacy
level, drugs were sold on credit to indigent patients.
Creation of a grievance committee in Bailan District Hospital to accept and act on

hospital service complaints.
5.3 Program outcomes
On hospital doctors and staff. Hospital staff members have better morale with
more compassionate attitudes towards hospital patients.
Less absenteeism among hospital personnel.

18
Health Sector
On hospital patients. More efficient processing of ambulatory care patients led to Reform Technical
shorten waiting times. Assistance Project
Based on the client exit interviews conducted by the quality assurance program
committee, higher satisfaction with the quality of service provided by doctors,
nurses and other health service providers has been reported.
Physicians practicing in Capiz Emmanuel Hospital reported a reduction in the

number of outpatient consults and procedures over the past year and more
importantly, a reduction in the number of indigent patients who are forced to seek
confinement only to abscond later. They attributed this trend to improvement in
the image and performance of RMPH.
On administration of hospital. Increased turnover of drugs in the pharmacy, more

regular replenishment of drug stocks, shorter delivery times and reduced fluctua-
tion in supply through shorter waiting times for drug delivery. The pharmacy now
has wider range of coverage with more stocks of essential drugs
Remedial measures have been instituted by the Bailan District Hospital griev-
ance committee to address complaints
On financial viability of hospital. Cost recovery, although still inadequate, has

been improved by the institution of a better billing and collection system. The
hospital has increased its collection although the new billing and collection
system has not yet been implemented due to lack of computers.
Increased hospital income from PhilHealth; the cost of caring for indigent patients
could be recovered by the Indigency Program so that LGUs can now pay their
bills.
Ninety percent (90%) of hospital income is retained for hospital operations.
Of the programs and schemes in RMPH, the following had the greatest impact on
increasing hospital revenues: upgraded hospital equipment like x-rays and
laboratory services; availability of drugs and medicines in the hospital pharmacy;
improved/better services provided by hospital staff; and, cleanliness of hospital
premises.
Of the programs and schemes in MDH, the following have made the greatest
impact on increasing hospital revenues: laboratory and radiology services;
availability of essential drugs and medicines in the pharmacy; and, the 5S
program.
5.4 Areas for improvement
Service expansion. RMPH is technically a secondary hospital, although it has

some tertiary hospital capability. The governor, though, is reluctant to allow it to
apply for tertiary hospital status, possibly because of the financial burden of
supporting its expanded operations. The district hospitals are just as reluctant to
expand its services, concerned that its facilities could not be improved in the
19
immediate future. For example, only minor surgical procedures are performed in
Health Sector
Bailan District Hospital; although it has operating room facilities for Caesarian Reform Technical
section, most of its deliveries are normal and surgical deliveries are referred in Assistance Project
nearby private hospitals.
There is a general hesitancy to grant hospital privileges to private specialists and

sub-specialists, which can augment its services. This is less marked in RMPH
where ENT surgeons and ophthalmologists can perform surgical procedures than
in the district hospitals.
Governance. Hospital administrators are marked by commitment, compassion

and willingness to innovate and learn. Their abilities to network with potential
providers of technical and financial resources are being honed by the current
administration and some concrete proof of their abilities to raise funds can
already be seen in all of the hospitals. Facilities are being improved, rooms are
being renovated, structures are being added, and the inventory of hospital
devices and drugs is being augmented. More importantly, hospital personnel are
being engaged and challenged to improve the quality of the services they pro-
vide. Morale is high.
However, hospital administrators still need to learn how to base their policies and
decisions on sound administrative, financial and medical information. Quality
assurance programs have not gone beyond 5S and measuring patient satisfac-
tion. The ability to measure individual performance and the bases to reward the
staff is lacking. Systems to track staff load, competencies, and training needs
have not been worked out. Systems to prevent and identify medical errors, to
improve patient and staff safety and to alert the staff on adverse drug reactions
and “near misses” are not in place. Systems to measure the appropriateness of
clinical practice and utilization of hospital resources and then to institute correc-
tive measures and act upon the results of these measurements are still in their
infancy. Perhaps skills in conflict resolution, negotiation and confronting medical
errors need to be developed.
Information management. The level of documentation is poor and even patients’

records are inadequately filled up. Some prescriptions are not in generic form.
There is also scanty documentation of financial performance, which can be used
to track, improve and project hospital sustainability through time. There is a
tendency to equate information management with computerization. While the
latter would certainly facilitate the use of data for decision-making, developing a
culture of evidence surely can begin with paper-based systems in which each
piece of information has a definite contribution to policy making.
Private-public sector partnership. Although the hospital administrators recognize

the potential role of the private sector in improving their financial status and
quality of their services, the issue of partly or completely privatizing the hospital is
still a major sticking point. The governor is hesitant to endorse the corporatization
scheme because in his view it will certainly cause insecurities among health
service providers. Before this is implemented, the question of how much will be
subsidized by the private sector needs to be answered. How much will go to
equipment and other support for hospital operations? Moreover, medical staff
turnover is rapid and tighter control of drug quality.
20
Health Sector
According to one district hospital officer, corporatization of the hospital is an Reform Technical
“irritant”. The informant feels that the private sector will just harvest the goodness Assistance Project
that was sown by the public sector. As he said, “iba ang nagbayo, iba ang
nagsaing at kumain” ["someone else profited from your labor"] thus it would be
unfair. “Why give the money of the people to be handled by a corporation?
Addressing public health needs will just be unduly delayed and immediate
decision further compromised.”
On the other hand, private physicians in Capiz Emmanuel Hospital point out that
the fear of privatization stems from two main features of the culture of govern-
ment service: the lack of accountability and the security of tenure. They pointed
out that once government hospitals are privatized and the staff are no longer
protected by the Civil Service law, many incompetent or lazy hospital personnel
might lose their jobs.
Improvement of financial viability. Several administrators have expressed the

uncertainty of financial survival. “Paano kung iba na ang Governor at mawala na
ang mga Roxas?” ["what if there's a new governor and the Roxas family is no
longer around?"] is a question they ask frequently. Although the Governor
sanguinely reassured us that the culture of excellence and compassionate
service has already been well institutionalized, the possibility of reversing the tide
is still too real to most people.
About 60% to 70 % of the income of RMPH is from PHIC reimbursements,

making it vulnerable to payment policy changes of just one payor of care. For
example, whenever PHIC re-classifies patients’ claims from intensive to ordinary,
the hospital loses money because it cannot recover anymore the exemptions
given to PHIC members.
The other major financial arrangement is with the LGUs using their capitation
funds to pay for the hospitalization of the members of the "Medicare para sa
Masa" (Medicare for the Masses) Program. No increase in budget for the last
three years, experienced deficit but hospital operations sustained with limited and
inadequate allocation.
As mentioned, the trust funds set up for the procurement of drugs under the PDI
scheme and aid from the DOH Hospital Development Program for augmenting
equipment and supplies are also new but small, and still unreliable sources of
funds for hospital operations.
The district hospital directors are not foreseeing a more sustained source of
funds, such as private wards and user fees. For example, there are no immediate
plans to open a private ward in Bailan District Hospital because the concern over
private patients using up government funds and the administrative burden of
seeing to it that this does not happen weighed more than the potential income
that a private ward may yield.
The director of Mambusao District Hospital expressed his wish that the pre-
devolution system (hospitals be back to national DOH) be brought back because
the old system encourages “professional dealings with different levels of health
21
offices, more avenues for capability building and promotions and synchronized
Health Sector
health activities of the entire district.” Likewise, a municipal health officer had Reform Technical
similar misgivings. He prefers the old system, but since “they are already in a Assistance Project
new system which they are trying to improve and live with, going back to the old
system will create another unwanted upheaval.” He pointed out that the most
difficult part is working without resources. The devolution only transferred the
“holder of the purse string” to another actor. If before it was the central office
(DOH) and the “oppressor was the provincial health officer” now it is the governor
and mayors.
5.5 Current issues
Difficulties in obtaining Sentrong Sigla certification. Doctors are having difficulty

obtaining continuing medical education seminars as required by Sentrong Sigla.
The UP-PGH circuit course has been identified as an alternative to DOH-
sponsored CME courses.
Fiscal autonomy. The Governor has allowed hospitals to use their incomes in
spending for their needs, except for food and accommodation. Hospital incomes
go to a trust fund.
Table 7. Hospital Reforms Updates, Identified Gaps and Propositions.

What has been
done so far?
‘gap’? steps?
Quality Assurance All hospitals are RMPH already SS Other hospitals with Attention to be focused
Sentrong Sigla certified equipment, on achieving SS
accredited manpower and accreditation for
QA, 5S training processes hospitals.
deficiencies
CME in connection Follow-up steps should
with UP-PGH Circuit be initiated to
Courses institutionalize referral
system.
Referral system
guidelines already
formulated
Hospital networking
with St. Luke’s and
Makati Medical
Center
6. Gains in Drug Management Systems
The Governor noted that drug purchases account for 65% to 75% of total hospital
procurement. Lowering the costs of drugs while maintaining their quality there-
fore made a lot of sense to him and explains the ready political support, which
drug management reforms have enjoyed in Capiz.
With the politically sensitive issue of maintaining a constant supply of cheap and
effective drugs, several drug management policies were created, including bulk
22
bidding, parallel drug importation, and additional funds from the provincial
Health Sector
government to refund the cost of drugs given to for non paying indigent patients. Reform Technical
Assistance Project
6.1 Creation of drug formularies
The Provincial Drug Formulary was created by the Provincial Therapeutics

Committee (PTC) with the Provincial and District Hospitals. The Formulary was
intended to assemble a list of essential drugs on which the Chiefs of Hospitals
could base their purchase requests to the Provincial LGU for parallel drug
importation and pooled procurement. The essential drugs list for bulk bidding was
finalized in April 2002.
The Provincial Therapeutics Committee is composed of the Provincial Health

Officer and representatives from the four district hospitals. Drug selection is
based on the top 20 conditions managed by the district hospitals. The Hospital
Therapeutics Committee of Zone 1 is composed of the pharmacist, dentist, chief
of district hospital and an internist of the Bailan District Hospital. The district
hospital chief’s functions are purely ministerial and he allows doctors to choose
the drugs based on the Philippine National Drug Formulary (PNDF). The
Committee deleted anti-malarial and anti-schistosomial drugs. It meets once a
month while the ILHZ Board meets quarterly. In case the requested drug is not
available, it is bought through emergency purchase. There is no budget for
drugs; revolving funds are used to pay for drug procurement as well as
laboratory, x-ray supplies, and the ambulance service.
6.2 Parallel drug importation
Policy development. During a meeting between Dr. Jarvis Punzalan and Dr.
John Wong of MSH, the former asked the latter how Capiz could join the parallel
drug importation (PDI) scheme of the government. Dr Punzalan was subse-
quently referred to BFAD Deputy Director, Kenneth Hartigan-Go. The policy of
parallel drug importation was then conceived as a strategy for providing afford-
able drugs to the indigent patients who were enrolled in the Health Passport
Program.
Dr. Punzalan then approached the Governor for funding and promised that PDI
would lower the prices of drugs. He assured the governor of votes in the coming
elections from beneficiaries who are asthmatics and cardiac patients. This was a
clear example of how health development initiatives could be promoted by
framing them in ways that are understandable and useful to political leaders.
The following guidelines governed the sale of parallel imported drugs:
• The maximum mark-up is 30% of purchase price.
• Drug sales were on a strictly cash basis only.
• Valid prescriptions are required for every drug sale.
23
• The maximum number of drugs that can be bought is one month’s supply for
Health Sector
nifedipine, glibenclamide and salbutamol or a week-full course of cotrimoxa- Reform Technical
zole. Assistance Project
• Income from drug sales is deposited in a special trust fund and subsequent
purchases are charged against this fund.
These guidelines ensured that prices were standardized and mark-up was not
excessive, that costs from drug purchases could be recovered, that drugs would
not be resold in other drug outlets or hoarded, and that funds for drug purchases
could be sustained. The drugs selected were those that were used for chronic
diseases or for common acute infections. This assured that patients with com-
mon medical conditions, particularly those who need maintenance supply of
medications would be most benefited by price reduction. Another assurance is
that the drugs selected would have a constant market.
Policy development did not involve much consultation with stakeholders. The
need to capitalize on the political exigencies that were deemed favorable to drug
management reform seemed to have overruled lengthy consensus building. By
and large, however, the technical expertise of the health sector managers,
particularly the Assistant Provincial Health Officer contributed a lot in crafting
drug policies that were feasible, enforceable and encouraged rational drug use.
The provincial government opened a trust fund for parallel drug importation.
Seven drugs were purchased from India.
Four drugs – nifedipine (Adalat), glibenclamide (Daonil), cotrimoxazole (Bactrim)

and salbutamol (Ventolin) – were purchased by the Provincial Office through the
Philippine International Trading Corporation of the Department of Trade and
Industry after drug samples passed testing by the Bureau of Food and Drugs.
The budget came from funds for the operationalization of the inter-local health
zone amounting to P500,000 and another same amount from the 20% develop-
ment fund of the province.
Five drugs are currently available in all District Hospitals located in the center of
the ILHZ and in the Provincial Hospital: Bactrim, Adalat Retard, Ventolin Inhaler,
Daonil and Neobloc 100.
The initial delivery was made to the pharmacies of the central hospitals of the 5
inter-local health zones on March 2001 and was completely sold in less than one
month. Subsequent deliveries showed the same trend. After 3 months, gross
sales reached P200,000 and net profit was P46,000. The table below shows the
marked difference in retail prices at the government hospital pharmacy and a
private pharmacy.
A comparison of retail prices between parallel imported drugs and regularly

sourced drugs (see box) shows the considerable price reduction afforded by PDI.
24
Comparative Drug Price
Health Sector
Drug Name PDI price Regular price Reform Technical
Nifedipine 30 mg tab 5.90 34.15 Assistance Project
glibenclamide 5 mg tab 3.15 7.75

co-trimoxazole 800/160 mg tab 5.20 24.00
salbutamol 1000 mch inhaler 198.00 294.75
At the Bailan District Hospital, PDI drugs are available. A therapeutics committee
consisting of an internist, the Chief of Hospital, pharmacist and dentist has been
set up. There is no budget for drugs, only a revolving fund. If the patient cannot
buy a drug, financial support is asked from the Mayor who gets it from the Social
Welfare fund. About 20% of the IRA goes to health, which covers drug and
salaries.
The Assistant PHO reported that the potential for lowering drug prices is great.
For example, quite serendipitously, he was able to convince a medical represen-
tative of a multinational drug company to sell the provincial government branded
cefuroxime for P150 while it was being regularly sold at P450 elsewhere. Appar-
ently, the quotas of medical representatives are in number of units sold and not
drug sales. Hence, selling drugs at a loss seemed justified if they could win the
provincial purchase. This shows that multinationals are capable of lowering their
drug prices for certain drugs. Other distributors of branded equivalents of PDI
drugs are willing to lower prices, but not as low as the PDI drugs.
Hospital clients’ perspectives. A survey of 106 hospital clients at the Roxas

Memorial Provincial Hospital found that information about the parallel imported
drugs came from doctors (52%), radio (26%) and friends/relatives (21%). The
prescriptions came from government (59%) and private physicians (41%). First
time buyers (49%) and repeat buyers (93%) found the drug effects to be similar
to other locally sold drugs. About 45% had favorable comments about the
scheme.
Drug price effects. Prices have not really gone down because only hospitals can
avail of the scheme. Thus, drug prices outside for the same drugs remained the
same. The Chief of Bailan District Hospital feels that prices have been kept
constant among the municipalities and RHUs in the ILHZ.
Some drugstores simply stop selling the branded equivalents of the PDI drugs
until the supply of the latter is exhausted. This causes a fluctuation in drug supply
and prices, which imperils reliable access to drugs by the indigent population.
Many patients still prefer branded drugs like Neobloc and were forced to buy at
regular prices when the PDI Neobloc ran out of stock.
Sustainability. Cost recovery is also problematic even if drug sales are strictly on
cash basis. This is attributed to the medication needs of indigent patients who
could not even afford to buy the PDI drugs, but should be filled. Although profits
from the sale should augment the fixed P3 million principal, funds for replenishing
drug stocks might be reduced by bad debts incurred by hospitals. This threatens
the constant availability of drugs and the steady demand for them. Since the
drugs under PDI are sold like consignment drugs, they must be paid in cash at
once. This poses a problem for the PHIC patients whose bills are to be reim-
25
bursed and not paid at once. Some hospitals buy their own PDI drugs for the
Health Sector
PHIC patients, so that drug reimbursements from PHIC are then credited back to Reform Technical
the hospital. Assistance Project
Drug supply and availability. Delayed drug delivery is one of the current prob-
lems, although government bureaucratic processes may largely account for this
rather than the lack of money to buy drugs. The Assistant PHO placed great
importance on this critical problem. Delivery is usually delayed for almost three
months and this may be due to the delay in the drug screening procedures of
BFAD.
Private hospitals and pharmacies are also adopting parallel drug importation with
Indian drug companies. This could erase whatever advantage public hospitals
have in terms of drug price competitiveness.
If the market for regularly priced drugs shrinks, private drug companies might
reduce their stocks, thus decreasing the overall range and availability of drugs.
This would adversely affect consumers who do not have access to the parallel
imported drugs. Driving out private drug companies would reduce competition
and encourage the production of poor quality drugs.
Reasons for the inadequacy or undersupply of drugs in hospital pharmacies

include the following: the drug supply is good for only 30 days; and, fast turnover
of drugs since neighboring areas/provinces purchase drugs in Capiz (the prov-
ince is the source of cheaper and quality drugs).
Drug quality concerns. Lack of confidence among providers and the general
public on the quality of government-purchased drugs is a constant source of
concern. BFAD certification requirement delays delivery of parallel imported
drugs. The hospital hopes that BFAD can offer a training workshop to make them
capable of testing the quality of their generic drugs. For example, a rapid test,
such as a dissolution/ disintegration test, physical weight or a bioassay test can
be conducted. Guideline for choosing drugs should also be established. Lack of
facilities and skills for basic drug testing creates persistent doubts about the
quality of parallel imported drugs.
The provincial government has set up a special committee that checks on the
quality of PDI drugs in addition to the routine checking of quantity of drugs
purchased. This is perceived as an important measure to compensate for the
slowness of the BFAD bioassay processes. Hence, the Drug Inspection Commit-
tee was organized and functional in all hospitals to ensure quality of purchased
drugs. As a result, training opportunities are being explored to enable the
hospitals and the province to employ simple quality checks to screen out inferior
drugs. They requested training on basic drug testing.
Two of the 3 municipal health officers in Bailan ILHZ do not have confidence in
the quality of generics. One physician allegedly left a capsule form of a generic
antibiotic together with another branded preparation. The next day, the latter has
dissolved but the generic form was still intact.
26
Safeguards against potential abuse. Although prescriptions are required for
Health Sector
every drug sale, there was no way to ensure that even those who can afford Reform Technical
regularly priced drugs were not availing of the PDI drugs. Worrying too are Assistance Project
unconfirmed reports of PDI drugs being resold in drugstores that are partly
owned or operated by government hospital staff.
Program issues. The support of physicians must be gained through assurance of

high drug quality. Concerns about the quality and safety of Indian drugs persist
and abet the public perception that they are “second-class” medicines.
Physician involvement in drug selection and in other policy matters should be

routinely sought. Unless providers “buy in” to the program, the utilization of these
parallel imported drugs might remain largely limited to inpatients and to a small
proportion of the poor.
Information about the program must be widely disseminated through media to

create client demand.
Constant monitoring of drug supplies and utilization is required to prevent running

out of stocks. Delayed drug delivery is one of the current problems and early
reordering can help provide adequate lead-time, so that drug supplies and costs
do not markedly fluctuate.
6.3 Pooled procurement
Policy development. Policies for pooled bidding and procurement have been
developed for drug purchases by the government hospitals. The Governor was
able to find P3 million for the project as a “single shot” deal, that is, future bulk
purchases should be made from revolving funds set up from the P3 million grant.
The Governor did this by an intricate process, which ran this way: about 20% of
the IRA goes to health. There is a projected IRA and actual IRA. The projected
IRA is usually set higher than the actual. The difference between the two is
provided by the Governor and is given to the municipality, which wants to join
pool procurement. The P3 million grant is estimated to cover 65%–70% of the
total drug requirement of the province. The local PCSO has also offered funds for
bulk purchases of drugs.
Hospitals in each ILHZ can join the bulk bidding by submitting their priority drug
list to the Provincial Office. Only BFAD accredited suppliers are allowed to bid.
Policy implementation activities. As of this report, the provincial government has

not yet made any bulk purchase. Some ILHZ staff worry that bulk purchases
may ruffle the “mayors.” Mayors prefer different drug suppliers. A district hospital
officer feels that drug procurement will just create an irritant for the mayors. He
has decided not to enforce this method in order to avoid losing their cooperation.
Program issues. Differences in drug requirements between RHUs and hospitals.
Questions on efficacy and safety of drugs procured through bulk bidding could
discourage physicians and consumers from using them.
27
The lack of systems to routinely monitor drug safety prevents regular quality
Health Sector
checks on drugs purchased by bulk bidding. The hospitals do not have adverse Reform Technical
drug reaction monitoring systems. However, Dr. Albania, the Officer in charge of Assistance Project
RMPH said that the Therapeutics Committee has an adverse drug reporting
system. Reports are received by the nurse who gives it to the doctors. In turn,
the latter submit it to the Therapeutics Committee and the BFAD representatives.
However, no feedback is given by BFAD. The most recent event they reported
involved cefotaxime, which caused cyanosis in an infant.
Drugs under PDI are considered not essential by the district hospitals.
Table 9. Drug Management Systems Updates, Identified Gaps and Propositions.

What has been done
so far?
‘gap’? steps?
1. Parallel Drug Procurement of Budget: It takes 3 months for PITC to stockpile own
Importation affordable, high P500T - DOH PITC to deliver to stocks of PDI so
quality medicines P500T - LGU province. procurement and
delivery process can be
Two deliveries of 4 There’s a clamor to shortened.
medicines so far this increase choices of
year; third procure- drugs for PDI. Expand program to
ment on the way involve private sector.
Private pharmacy
Guidelines for program outside hospitals. Province to consider
implementation program as an
already formulated. PDI for Medicare economic enterprise.
patients.
2. Pooled Government Annual procurement Funding support to Province to provide an
Procurement hospitals to pool plans already implement program. initial infusion of funds
together annual prepared. to jumpstart the
procurement plans program.
for pharmacies
7. Gains in Inter-Local Health Systems
7.1 The Inter-local Health Zones
The Inter-local Health Zones of Capiz are clusters of LGUs within the catchment
areas of its five major hospitals. Each zone is similar to the district health system
during the pre-devolution era, which the Capiz government wanted to reinstate
as a means of bridging the gap in health care delivery between the provincial
hospital and the rural health units.
Table 10. Identified problems in the local health system.

Identified problems Proposed solutions
Non-functioning ILHZs Organize and formalize ILHZs
Non-functioning local health boards Strengthen advocacy by DOH to local chief executives
Inadequate management information systems Purchase computers
technology
Inadequate infrastructure support Request for LGU and foreign funds
Inadequate manpower training Conduct training on QSIP and computer use
Inadequate financial support to BHWs Allocate funds for BHW year end incentives and
28
honoraria
Inefficient reporting CIHSDP Health Sector
Reform Technical
Partisan politics Organize ILHZs Assistance Project
Inadequate role clarification among ILHZ stakeholders Organize ILHZs and referral system
Plans were developed to address four major strategies, namely:
a. Upgrading of facilities
• Procurement of equipment for hospitals, RHUs and BHSs

• Rehabilitation of hospitals, RHUs and other facilities
• Construction and expansion of facilities for Sentrong Sigla certification
b. Advocacy and networking
• Orientation meetings for LGUs, NGOs and people’s organizations

• Reorientation of Local Health Boards (LHBs)
• Consultative workshops with ILHZ members for planning and policy for-
mulation
c. Capability building and organizational strengthening
• Synchronization of inter-sectoral activities

• Needs assessment
• Continuing computer training
d. Monitoring and evaluation
• Quarterly meetings of ILHZ Board

• Documentation of ILHZ activities
• Multi-sectoral forums and dialogues among stakeholders
7.2 The organization structure of the ILHZ
The ILHZ Management Board is the policy making and coordinating body of the
ILHZ. It is composed of local executives representing the provincial and partici-
pating municipal governments, the Provincial Health Officer, the Municipal Health
Officers of the participating municipalities, the Chief of Hospital, the president of
the Association of Barangay Chairmen and non-voting members from represen-
tatives of PhilHealth, NGO, and the Director of DOH Center for Health Develop-
ment Office VI. The mayor of the municipality where the district hospital is
located chairs the Board.
Within each ILHZ, LGUs collaborate with other government and non-government
organizations in promoting health through sharing of resources and consensus
building. The five inter-local health zones (ILHZs) are Bailan, Roxas City,
Mambusao, Tapaz and Dao. Zone Management Boards oversee and monitor
the implementation of the policies and programs of their respective ILHZ. The
Board takes over the functions of the Local Health Board, which has not met for
29
the past two years. It also liaises with the CIHSC and manages the provision of
Health Sector
local resource to provide counterpart to external resources raised by the Council. Reform Technical
Assistance Project
The ILHZ Action Team implements the inter-zonal activities outlined in the
Integrated Health Work and Financial Plan prepared by the ILHZ Management
Board. It is composed of the Chief of Hospital, the Municipal Health Officers,
medical officer and chief nurse from RHUs and DOH representatives. It assesses
health needs, plans programs, defines clinical services and develops manpower-
pooling systems within the ILHZ.
The Action Team meets every month and the Board meets every three months.
The honorarium for this meeting is P300 per month per day with an additional
P6,000 for the officer-in-charge.
The view from Bailan. The Bailan district is the pilot site of the ILHZ. It is made
up of the municipalities of Pontevedra, President Roxas, Pilar and Maayon. The
total population is pegged at 206,081, which includes part of Panay, Panitan and
Jamidan. The latter has the biggest landmass, but it is mostly uninhabited forest.
The Bailan District Hospital used to be the Capiz Provincial Hospital. It was
established in 1975. A Rural Health Unit in Bailan ILHZ serves 10,000 to 20,000
population. The Baranggay Health Station serves a population of 2,000 to 3,000.
So far, the District Hospital has availed of funds for rehabilitation of facilities.
This is the direct result of implementation of the key strategies of the HSRA
Convergence Workshop in March 2001. Its Medicare ward of 15–20 beds has
increased its occupancy rate to 86% to 90%. It has no budget for drugs. Drug
procurement is based on a revolving fund. The hospital charges minimal fees for
services, mainly to change the “dole out culture” among its clients. Its chief
believes that clients value more of the services when they pay for it, no matter
how small the price. The goals for quality management are based on the Sen-
trong Sigla criteria.
Doctors are now the hospital managers. Unlike before, it was the administrative
officer who acted as “hari-hari” or manager of hospital. The MHO reaches the
clients through a regular radio program of Bombo Radyo. Through the program,
he shares and airs health advice weekly.
The local health board is functional. It facilitates budget allocation, reviews and
endorses policies, guidelines and health related programs. Likewise, a grievance
committee is created for the ILHZ. This body provides the venue where mayors
among themselves can air their concerns and problems. The need for office
space has been communicated to the DOH. A proposal has been prepared and
submitted to the DOH representative.
The activities of the zones are integrated. Mayor Tumlos of Bailan has been very
supportive. The hospital director recognizes the help of NGOs. However, he
feels that NGOs have their own hidden agenda. They are expected to help the
health sector if this would be advantageous to their cause. Religious groups
have also assisted a lot in improving the quality of health services. BHWs are
particularly effective in their roles as frontline service providers at the grassroots
level. They receive some honoraria from the barangay depending on the IRA.
30
Health Sector
Some of the important changes that have been made on health operations are Reform Technical
the following: Assistance Project
• Strengthening of referral system
• Sharing of resources
• Manpower complementation, resources and responsibilities (e.g. now they

have no problem on medico legal)
• Medical doctors have additional honorarium from requesting LGU
• Better working and personal relationships among doctors, local chief execu-
tives (LCEs) and health service providers in the local health zone
• Clearer responsibilities of every unit (e.g. district hospital)
• Reduction of drug price in Provincial and District Hospitals, but not in RHUs
and BHSs
Among the most important achievements of the Bailan ILHZ is the establishment
of a functioning patient referral system. Patients can be properly triaged and
referred at every health care level by clearly delineating the cases that can be
handled by barangay health stations, rural health units, municipal, district and
provincial hospitals. As more primary cases are handled at the community level,
hospitals ultimately would be busy only with patients who really need secondary
and tertiary care. Rapidly falling monthly referrals to RMPH have been docu-
mented for the second half of 2000. Furthermore, patients who bypass secon-
dary hospitals in favor of the provincial hospital can be channeled back to
improve their finances. Medico legal cases are referred to hospitals with appro-
priate personnel. This minimizes complaints. Another example of resource
sharing is the borrowing of the ambulance.
Referral guidelines for the ILHZ have been adopted. The referral system flows
as follows:
Barangay Health Station Æ Rural Health Unit Æ District Hospital Æ Provincial Hospital
A referral slip is issued to the client by the health service provider of the
barangay health station (BHS) for the rural health unit (RHU). District hospitals
(DH) receive referrals from RHUs. From district hospitals clients are referred to
the provincial hospital. After providing the service to the client, the referral slip is
returned to the referring health facility.
The view from Pilar. The mayor of Pilar was also interviewed for validation. Pilar
has been a beneficiary of grants from the United Nations Population Fund
(UNFPA) and the Japanese Organization for International Cooperation in Family
Planning (JOICFP). It is the pilot municipality of the Early Childhood Develop-
ment Program (DSWD). Inclusive of the program are distribution of medicines
and construction of barangay health stations. It was the pet program of the
31
Governor and Ms. Judy Roxas. There is a Medicare Community Hospital, which
Health Sector
is under the provincial LGU (it is not Sentrong Sigla certified). The doctor in- Reform Technical
charge of the hospital has a problem in coordinating with the Mayor. Some Assistance Project
clients are not satisfied with the services provided in said facility.
The LGU also has a program for drugs/medicines assistance in the office of the
Mayor. It has not availed of the pooled procurement of drugs. Mayors disagree
with pooled procurement done at the provincial level because they have their
own drug suppliers.
An LADP scholarship for Mayors sponsored by the DILG has developed the self-
confidence of Pilar Mayor.
Examples of resource sharing abound. The acting Pilar MHO is being “bor-
rowed” from one of the rural health physicians of President Roxas to make up for
the recent departure of the Pilar MHO. Ambulances are also shared. The ILHZ
has also attracted external funding, specifically for the reproductive health and
TB programs of the Zone. Politically, the ILHZ has enhanced cooperation and
coordination among municipalities. It has increased the clout of the Zone Board
in the CIHSC because it now represents a larger constituency.
The mayor also noted that with the initiation of the Bailan ILHZ, the municipalities
have obtained several important benefits:
• The initiation of the PHIC Indigency Program resulted in faster processing

and reimbursement of claims.
• The adoption of parallel drug importation with consequent reduction of drug

prices in hospitals.
• Rehabilitation of small hospital.
• Upgrading of barangay health stations, of which 2 BHSs are Sentrong Sigla

certified.
• Strengthened cooperation and complementation among members. Every-

body cooperates during their local health zone meetings where they level off
issues and concerns.
7.3 Current issues
Role of NGOs. The role of non-government organizations is one of the issues

raised in the inter-local health systems. This has not been clear by health sector
reform advocates and implementers.
Common health fund. The common health fund for the inter-local health zone is
also another identified concern of stakeholders. Like in other convergence sites,
this matter is relative to common health fund management and utilization.
32
Table 11. Inter-local Health Systems Updates, Identified Gaps and Propositions.
Health Sector
What has been Reform Technical
done so far? Assistance Project
‘gap’? steps?
Inter-Local Five (5) ILHZs to be Five (5) ILHZs No doable models for Institutionalize referral
Health Zones organized management sharing of resources system within ILHZ.
Organization structure organized
MOA signing done Collation and analysis

involving all LGUs of of reports and other
the province health data at ILHZ
level for faster action.
Operationalize ILHZ
offices.
8. Gains in Public Health Reforms
Although not a focus of the MSH-HSRTAP activities, public health programs are
expected to improve by strengthening the health system’s performance. In
Capiz, initial plans included activities for the Rabies Program as part of the
Panay Island’s rabies-free campaign. However, not much progress has been
made in this regard, partly because there is lack of manpower to pursue all the
HSRA activities.
Through parallel initiatives, reproductive health with UNFPA, nutrition with the
Early Child Development Program (ECD) and the TB Programs through World
Vision have ongoing interventions that are building upon the strengthened local
health system structures and the cohesive provincial government health pro-
gram.
An important public health intervention is the accreditation of rural health units

with the Sentrong Sigla Program. This has stimulated the upgrading of facilities
and revitalized local health staff. Sixteen SS certified RHUs are geared towards
PhilHealth accreditation to qualify as service providers of the PhilHealth Plus
Program for outpatient benefits. Only Dumarao RHU is not Sentrong Sigla
certified. The next challenge will be the maintenance of standards through
constant monitoring and assessment.
The allocation of funds in the annual budget of Roxas City is typical of most
devolved facilities. More than 80% is budgeted for paying personnel services.
This leaves virtually nothing for capital expenditures and facility expansion. The
annual income in year 2000 was over P3 million and increased to over P4 million
the following year.
In the case of Bailan, personnel services constitute 90% of annual expenditures.

The budgets for 2000 and 2001 had not increased despite heavier client demand
for services.
33
Table 12. Annual budget of Roxas City.
Health Sector
Category Y 2000 Y 2001 Y 2002 Reform Technical
Personnel Services 22,016,100 24,684,347 25,742,011 Assistance Project
MOOE 4,831,400 4,831,400 4,831,400
TOTAL 26,847,500 29,515,747 30,573,411
Table 13. Annual budget of Bailan.

Category Y 2000 Y 2001 Y 2002
Personnel Services 17,058,206.40 17,058,206.40 –
MOOE 3,078,515.82 3,078,515.82 –
TOTAL 20,136,722.22 20,136,721.22 –
Increased funds for health care delivery. The provincial government had P76
million deficit when Governor Bermejo assumed his post. This was addressed
through strict and sound fiscal management of the PLGU administration. After a
year, the Provincial Government then had P33 million excess funds. It also
availed of P12 million in countryside development funds facilitated by Senator
Osmeña.
Networking and alliance building with national stakeholders and partners has
been a strategy to recover LGU deficit. St. Lukes Hospital Board Chair is a good
friend of Secretary Roxas. He was invited to Capiz and his visit resulted to some
sisterhood arrangements with local hospitals.
Enhanced rabies program. Region 6 is high in rabies incidence. This makes

urgent the provincial LGU’s rabies campaign and service delivery program.
Regular vaccination for dogs has been conducted province-wide in collaboration
with the Provincial Veterinarian Office. They conduct regular monitoring and
treatment for dog bites at hospitals and rural health units.
Table 14. Public Health Updates, Identified Gaps and Propositions.

What are the
Expected What has been done What are the reasons
Activities recommended next
output so far? for the ‘gap’?
steps?
Sentrong Sigla All RHUs are 16/17 main RHUs Last RHU is too small Renovation of Dumarao,
Accreditation of SS certified certified and at present state Hipona (RHU2) health
RHU by 2004 cannot be SS certified. center
1/2 RHU2 certified
Start with level 2 SS
CHO SS certified accreditation of RHU.
Start with BHS SS

accreditation.
TB Control TB not Province the World Private and hospital DOTS training of private
Program anymore a Vision learning center physicians are not and hospital physicians
leading for DOTS in the implementing program
cause of country. guidelines. IEC campaign targeting
mortality and these physicians
morbidity in
the province
34
What are the
Expected What has been done What are the reasons
Activities recommended next Health Sector
output so far? for the ‘gap’? Reform Technical
steps? Assistance Project
Bisita sa Baseline 13 municipalities and DOH delayed release of Finish survey this year and
Pamilya survey health city already done with counterpart funding encoding by January 2002
survey of survey and finalizing covering remaining 3
households encoding. municipalities Link survey results to
in the province’s GIS
province
9. Best Practices
9.1 What went right – the benign dynasty
One political color: “One word from the Roxases” is all that is needed for all local
chief executives and their constituents to move and work together. Devolved
health care programs typically have been at the mercy of political shifting sands.
Capiz is no exception. In this instance, health care has benefited from the
support of the old and landed families of the province. The very visible presence
of Ms. Judy Araneta Roxas during the inception meetings of the CIHSDP sent an
unmistakable message to all local government officials. This time around, health
comes first. More important is that her family put their money where their collec-
tive mouth is. They contributed significant amounts of money for hospital opera-
tions and mobilized the GRF and its wide network of NGOs through the Dinggoy
Roxas Health Program. They exploited their political connections to access
foreign and national aid for Capiz.
In all activities that need community mobilization and support, the provincial and
local government units coordinate with the Gerry Roxas Foundation headed by
Ms. Judy Roxas. According to key informants, “all mayors are dependent on Ms.
Judy Roxas for support and networking with NGO to complement for the LGUs
development programs and/or activities.”
9.2 Technology transfer through the nationalistic technocrats
A scion of this political clan is now the Trade Secretary. He is in a position to

access much-needed external grants and investments that would have otherwise
been unavailable to Capiz. Evidence that supports increased access to external
resources includes the yearly P1 M grant for 12 years from Senator John Os-
meña. The St. Lukes Hospital Board Chair helped set up a sister hospital ar-
rangement with RMPH with equipment donations. Access to external experts
has led to acquire skills and competence in managing health care. The quality
assurance program in RMPH is one of the tangible effects of USAID’s GOLD
Project. The other is the operational Geographic Information System through
computer technology and data generated from community surveys. It maps
disease outbreaks and occurrences.
35
9.3 All-out support from Governor Vicente Bermejo and the LGU officials
Health Sector
Reform Technical
The overwhelming votes that re-elected the governor can be partly traced to the Assistance Project
success of CIHSP. It is a clear demonstration that good health care is good

politics.
The most significant enabling factor of the HSRA convergence strategy imple-
mentation is the political will and support of the Provincial Government Admini-
stration to Capiz health development programs. Health is the flagship program of
the current provincial administration, recognizing that good health is essential to
increased economic productivity. Since 95% of incoming transactions at the
Provincial Capitol are health-related business, the provincial government has
also sought to maintain efficiency and transparency in all its business transac-
tions.
The governor said, “he was elected because of the health issues.” Their party
had a workshop (SWOT analysis) when he was asked to run for governor. In
their analysis, the former governor’s strength was his popularity being a doctor
doing medical missions. Then it turned out as his weakness when he was in the
provincial seat because he neglected the health sector. This has been a call and
challenge of the current administration, which the governor shared with the
municipal mayors - to be sensitive to the needs of the health sector.
The governor’s good management could be attributed to his educational and

work background. He is a BS. Biology graduate and used to be a mayor of
Panay. He became a banker because it is the family’s business. He is astute in
choosing people. Complementary to the provincial administration’s good man-
agement is the competence of key staff. The executive assistant has a master’s
degree in Community Development. An information technology expert from the
Gerry Roxas Foundation now works in the Governor’s Office as IT consultant.
He is responsible for the Geographic Information System.
A quote from the Governor for the employees: “I am not asking you to vote for
me, just do your work well and that’s more than campaigning for me.”
The Governor also cited that “he is development oriented but also political in
certain decisions, rating 70:30 of being developmental and political.” His admini-
stration adopts the “integrated goal for development,” whereby initiatives and
interventions are undertaken in a participatory and well-coordinated manner.
The governor emphasized the essence of stakeholders’ ownership in develop-
ment initiatives. “What is important is the sense of ownership of all stakeholders.”
This ensures institutionalization of current development initiatives way beyond
the terms of the present leadership.
9.4 Entrepreneurship and innovation
The provincial government inherited P76 M deficit from the previous administra-
tion. This was addressed through strict and sound fiscal management, network-
ing and alliance building with national stakeholders and partners. After a year,
the Provincial Government was able to have P33 M excess funds. Some of the
36
sources of funds and technical expertise that the provincial government has been
Health Sector
able to access are the following: Reform Technical
Assistance Project
• Medical outreach programs providing surgical missions

• Capizeños, a civic organization that supports Capiz development initiatives
• P12 M grant per year for 12 years from Senator John Osmeña
• AusAID grant of P24 M
• World Bank
• USAID
• Philippine Charity Sweepstakes Organization for indigent patients
• Internal Revenue Allocations
• The PHIC Indigency Program and capitation funds
Administrators of RMPH and district hospitals have also shown great initiative
and long-term commitment in raising resources for their cash-strapped hospitals.
Riding on the influence and political connections of the local government spon-
sors, these physicians and staff have made the transition from clinicians to
entrepreneurs and marketing agents. They build alliances with external donors
and networks with private civic groups and NGOs. Some of the equipment in the
government hospitals are even technically more advanced than those in private
hospitals. This is a success indicator of their efforts to seek out donors, adapt
and refurbish donated health technologies and exploit the unique opportunities
that the current political tide have presented them.
9.5 Technical support
The presence and constant support of the Gerry Roxas Foundation has been a
critical element to the success of the CIHSDP. GRF provides technical resource
in documenting, monitoring and evaluating the interlinked processes of health
sector reform and grassroots involvement. Few convergence areas have had
access to centers, such as these that are involved in both participatory research
and development work. The GRF does not only provide the venue, administrative
staff and technical support in the conduct of the HSRA workshops. It also served
as a portal for policy dissemination and implementation through its extensive
network of grassroots organizations.
The Management Sciences for Health has also been instrumental in catalyzing
some of the health sector reform initiatives. Left on its own, Capiz would have
probably taken longer to mature. After phase-out of the GOLD project, facilitators
who provided technical assistance for USAID funded projects (GOLD and the
LPP with Dr. Jose Rodriguez) provided avenues for linkages with MSH. It paved
them to conceptualization and adoption of the Capiz Integrated Health Services
Program (CIHSP) prior to the Health Sector Reform Agenda interventions.
9.6 Social health financing
The entry of the Philippine Health Insurance Corporation in 1999 created the
impetus that was sufficient to push health sector reform in Capiz. It became the
lynchpin of the entire initiative to improve equitable access to health care, the
carrot that spurred local government involvement and the main purchaser of
health care from hospitals and RHUs. Since most of the municipalities in Capiz
37
are fifth class, those who could not afford it have always felt the need for basic
Health Sector
health care services acutely. This shows that no amount of improvement in the Reform Technical
facilities of the hospitals would impact on health outcomes unless people are Assistance Project
empowered to seek care. Insuring the most indigent segment of the population
through the Medicare para sa Masa program is therefore critical in increasing the
buying power of the masses. However, LGU involvement had to be secured.
Otherwise, PHIC alone could not sustain the program. The scheme of gradual
withdrawal of national government premium support is aimed at painlessly
bringing in more funds from the LGUs. The capitation program further advanced
this idea as LGUs became stewards of public funds from which both health care
and health care facilities can draw financial support. This does not only empow-
ered LGUs to ration care as they saw fit, but also provided incentives for efficient
allocation of funds. Any extra funds after health care purchases are left to the
LGUs to dispose.
10. Lessons Learned
10.1 The neglected private sector
The private health sector in Capiz is still small but nevertheless unregulated. The
potential for variations in care exist. Variations in drug costs and drug supplies
have already been observed across the private-public sector interface. These
observations include the studies in DOTS (directly observed treatment strategy)
for TB and government physicians complying with guidelines while private
physicians do not. The patients needing advanced care are being referred from
district hospitals to some private hospitals also suggest a double standard of care
that prejudices those who can ill-afford to pay for health services. Differences in
costs of procedures, particularly those that are reimbursed by PHIC have also
been noted.
Since much of the health sector reform initiatives did not involve the private
health facilities, their staff has remained largely uninformed and uninvolved. The
lack of opportunities for institutional collaboration between private and govern-
ment facilities has worsened the situation. The mistrust of privatization and the
hesitancy of government hospital administrators to face the challenge of attract-
ing and maintaining private practitioners within their staff are barriers to sectoral
partnerships. This is indeed unfortunate since private-public health sector part-
nerships will likely be crucial in ensuring sustainability and institutionalization of
the gains of HSRA long after the current crop of leaders would have been
changed.
10.2 Unintended effects of health sector reform
Much has already been said about the inadvertently negative effects of the
parallel drug importation program on drug supply, costs and market competition,
the painfully slow administrative processes of PHIC and the way some LGU
officials are capitalizing on the Medicare para sa Masa program to make political
hay. Such adverse effects may have been entirely unforeseen. However, the
health sector and the Capiz government seem to be powerless at this stage to
counteract them. It is possible that in due time, solutions to these problems could
be formulated and tried out. Such solutions will have to confront the forces that
38
generate these ill effects. These will require even more political and economic
Health Sector
management skills than what has been required to institute HSRA in the first Reform Technical
place. Assistance Project
10.3 QA and not QA
The state of understanding and implementation of quality assurance in health

care has not matured since the GOLD days. Very little has happened beyond
inquiring about patient satisfaction and the 5S program. Real quality assurance is
about total quality management. It is about establishing a culture of measure-
ment and evaluation against a set of valid standards. Such a culture necessarily
covers everybody within the health care facility as the performance of both the
leaders and the staff come under scrutiny. Transparency and accountability have
not yet taken root in all levels of the health care team. Policies to safeguard
patients’ rights and to enforce organizational ethics have yet to be enunciated
and implemented. There is hardly any evidence that the habits of evaluating
medical care with an eye for preventing inappropriate management and medical
errors have taken root. Patient referrals are made but probably without any intent
to provide continuity of care across cares settings.
11. Conclusion and Recommendations
Three particularly stand out among the best practices in reforming the health
sector in Capiz: the social health financing program, the drug management
program and the inter-local health zones. These programs are all in their infancy.
Much have to be done to ensure their institutionalization and survival. Learning
from what went right and addressing the problems that beset the programs will
take even more political will once the novelty of HSRA has waned. Three
recommendations stand out from the rest:
• Involve the private health care sector through constant dialogue, collaborative
programs and mutually satisfying institutional partnerships.
• Constantly advocate for the drug management and social health financing
programs among all stakeholders, transfer fiscal and managerial responsibili-
ties to LGUs and further explore external sources of long term financial sup-
port.
• Institute total quality management among the hospitals through constant

training and technical support.
39
Health Sector
Appendix 1. List of Key Informants. Reform Technical
Assistance Project
1. Vicente Bermejo, Governor, Province of Capiz

2. Gideon Patricio, Mayor, Municipality of Pilar
3. Gil Aquino, Pilar Administrative Officer
4. Milagros Balgos, M.D., PHO Consultant on Drug Use and Monitoring/former
Provincial Health Officer
5. Bofil, M.D., Executive Assistant of the Governor for Health
6. Reuben Coñada, Pilar Treasurer
7. Raymundo Oblegar, Pilar Budget Officer
8. Alicia Ocbeña, Admin. Officer of Roxas Memorial Hospital
9. Evelyn T. Albaña, M.D., Chief, Roxas Memorial Hospital
10. Gelson Albaña, M.D., Chief of Mambusao District Hospital
11. Gualberto Bernas, M.D., Chief, Bailan District Hospital
12. Dante Galbines. M.D., Asst. Chief of Roxas Memorial Hospital
13. Jarvis Punzalan. M.D., Asst. PHO, HSRA Advocate
14. Clarita Barogo, Client
15. Marlene Bernales, Client
16. Gina Casidsid, Client
17. Gendel Casipe, Client
18. Candida Catalan, Client
19. Elizabeth Dangan, Client
20. Trinidad del Rosario, Client
21. Armida Jeriza, Client
22. Melinda Martinez, Client
23. Magdalena Matias, Client
24. Merlita Ordas, Client
25. Violeta Bones-Javier, M.D., IM-Pulmo
26. Ricardo Dimayuga, M.D., General Surgeon
27. Pilar Posadas, M.D., visiting physician from the Municipality of Pres. Roxas
28. Maura Rotulo, Service Provider
29. Milagros Sison-Viloria, M.D., IM-Gastro
30. Primo Urquiola, M.D., OB-Gyne
31. Jeannette Uygen, M.D., OB-Gyne
40
II
Health Sector
Reform Technical
Assistance Project
NUEVA VIZCAYA (REGION 2)
1. Socio-Economic Profile
Nueva Vizcaya had a total population of 366,962 in 2000, a household population

of 74,402 and an average household size of 5 persons. About 39% of the
population belong to the younger group (<15 years). A third live in the urban
areas of Bayombong, Solano and Bambang.
Administratively, the province of Nueva Vizcaya belongs to Region 2. It is divided

into 15 municipalities and 275 barangays. It has one lone congressional district.
The economy is basically agricultural with rice, onions, mangoes and vegetables
as the main produce. The province is also known for its rattan products and rare
species of orchids. Nueva Vizcaya is a 2nd class province with an income of
P290,600,076.00 in 2001
Nueva Vizcaya has 1 regional hospital, 1 provincial hospital, 3 district hospitals, 1

municipal hospital, 15 rural health units and 108 barangay health stations. It
maintains 97 doctors, 10 dentists, 118 nurses, 128 midwives, 35 nursing aides,
16 medical technologists, 25 sanitary inspectors and 1,200 barangay health
workers. The province also has 1 private hospital and medical clinics that are
concentrated in the Bambang-Bayombong-Solano towns. The province has
about 333 traditional birth attendants (hilots).
The following were the vital health indicators in 2001:
Life expectancy 66.63 male

69.8 female
Crude birth rate 2.8 per 1,000 population
Crude death rate 20.5 per 1,000 population
Infant mortality rate 7.41 per 1,000 livebirths
Maternal mortality rate 0.26 per 1,000 livebirths
The leading causes of morbidity are communicable diseases (2582.1 per100,000

population), cardiovascular diseases (2488.3 per 100,000 population) and
influenza (1996.43 per 100,000 population). Majority of the people in Nueva
Vizcaya die of cardiovascular diseases (80.97 per 100,000 population), pneumo-
nia (49.4 per 100,000 population) and cancers (31.8 per 100,000 population).
41
2. Background of Health Sector Reform
Health Sector
Reform Technical
2.1 Devolution and Pre-Convergence Assistance Project
The provincial government’s openness to the idea of participatory governance

made Nueva Vizcaya, one of the six pilot sites of GOLD in 1995. This multi-
sectoral program provided assistance to the provincial government during
devolution, particularly on organizational development, planning and budgeting
among others. In 1996, a societal mission-vision was developed for the province.
Each department also had formulated its own specific vision-mission statement,
which are now conspicuously displayed in each provincial office. During the last
year of GOLD (1998), the governor requested for GOLD assistance on health
management owing to the numerous complaints being received by the gover-
nor’s office. GOLD then focused on capacity building, specifically in the training
of trainors on organization development and quality assurance. This later led to
the establishment of the Quality Services Improvement Program (QSIP) in the
hospitals.
2.2 HSRA Convergence Strategy
In 2001, the Management Sciences for Health-Health Sector Reform Technical

Assistance Project (MSH-HSRTAP) came to the province to introduce the
concept of convergence in health sector reform. The key informants surmised
that Nueva Vizcaya was chosen as a convergence site because (a) it was a
Galing Pook awardee in 2000, (b) it was cited for its outstanding local health
board in 1995 and 1996, and (c) it performed well in the GOLD project (e.g.,
pioneered in barangay planning and budgeting; formulated the training modules
for QSIP which was adopted in other sites).
The first convergence workshop was conducted at Villa Margarita Resort,

Bayombong in July 2001. The workshop aimed to:
• Identify health-related problems/issues in Nueva Vizcaya and the actions

taken;
• Orient key technical players on the HSRA, Health Passport Initiative and the
Convergence Strategy;
• Develop targets for Nueva Vizcaya by 2004 in the area of social health
insurance, local health system, hospital reforms, drug management and pub-
lic health;
• Develop a draft convergence plan for Nueva Vizcaya;
• Determine the next steps to sell the program to the LGUs; and
• Organize the Nueva Vizcaya Health Sector Reform Advocates
There were about 95 participants in the workshop, which included the Chiefs of
Hospitals, Provincial Health Officer, Municipal Health Officers, local government
officials, representatives from the Department of Health, Philippine Health
Insurance Corporation, Center for Health Development (Region 2), MSH and
NGOs. The attendance of Health Secretary Manuel Dayrit, M.D., and Philippine
Health Insurance Corporation (PHIC; PhilHealth) President Francisco Duque III.
M.D., made the convergence workshop in Nueva Vizcaya a memorable event.
42
The Health Summit was also held along side the July workshop. The attending
Health Sector
local executives agreed on the targets set earlier by the workshop participants. Reform Technical
Assistance Project
Table 1. Issues Addressed During the First Convergence Workshop in July 2001.
Identified issues/problems Actions taken Vision for 2004
1. Social Health Insurance
Lack of local advocacy Advocacy to municipal officials Full awareness about social health
LGU financial constraints insurance
Regional PhilHealth office conducted
LGU political intervention in the IEC through radio All 15 municipalities enrolled in the
selection of indigents Indigency Program with full LGU
ineligible health facilities for (OPD) Provincial government counterpart of financial support
accreditation PhilHealth premium
Creation of a screening committee
No PhilHealth service office Gave feedback to Provincial and with proper classification of
(province) and service Municipal DSWD indigents/100% of indigents covered
desk(municipality)
Requests for provincial PhilHealth Establishment of PhilHealth
Low benefits provided by PHIC from central office provincial and municipal service
offices
Pilot testing of PhilHealth
Upgrade benefits provided by
PhilHealth
2. Hospital reforms
Hospital budgetary problems Lobbying to local boards Institutionalization of QSIP in all

hospitals
Patient financial resources Strategic planning and annual
budget review All hospitals able to generate and
Weak referral system utilize revenues
Re-designed procurement system
Poor utilization of hospital resources All public hospitals PhilHealth
Utilization of hospital income (NVPH) accredited
External factors affecting hospital
care Increase service fees Budget increase based on needs
identification
Enrolment in the indigency program
Upgrading of NVPH to tertiary level
Advocacy on cost-sharing of
resources
IEC campaign
Outreach activities
Health board agenda

3. Drug management system
High costs Direct purchase Establish a cost-efficient drug

procurement system
Delayed procurement and delivery Creation of special procurement
team Increase allocation for drugs by 50%
Unnecessary and soon-to-expire from 2001 level
drugs Early submission of the annual
procurement plan Integrate 15 RHUs in the Provincial
Inadequate funds for drugs Therapeutic Committee
A.O. empowering departments to
reject donated expiring drugs
43
Identified issues/problems Actions taken Vision for 2004
Increase funds for drugs Health Sector
Reform Technical
Assistance Project
4. Local Health System
Inadequate information education Household teachings, networking, Establish 2 functional ILHZs

campaign tri-media campaign, program
reviews All RHUs Sentrong Sigla and
Low budget for health services PhilHealth accredited
Fund raising, augmentation from
Weak referral system CHD, proposals submitted to Functioning referral and networking
different funding agencies, increase system
Politicized health services in budget through LHB
Poor planning integration at the Development of referral standard

municipal level form, dialogue with hospitals and
RHUs
Provincial health system differently
organized Strengthening LHB, focus on GSIP,
establishment of selection/promotion
board, multisectoral involvement
Strategic LGU planning, setting of

deadlines
In April 2002, the MSH initiated a program called Lakbay Aral. The purpose of
this program was to expose local HSRA advocates to the results and processes
used by other convergence areas in their pursuit of health sector reform. About
20 people from Nueva Vizcaya went to Capiz and saw for themselves the health
developments in this area. Half of the participants were funded by MSH, the
others were sent by the provincial government. The key informants who partici-
pated in the Lakbay Aral were very appreciative of their experiences that they
expressed to have more of these type of learning opportunities. The lessons
learned were in the areas of interpersonal relationships, human resources,
material resources, service delivery, management and social health insurance.
The group has submitted a report to the governor but discussions about which
issues to replicate in Nueva Vizcaya will still be done.
3. Gains in Health Financing
3.1 Status of implementation
As of May 2002, all the 15 municipal LGUs in Nueva Vizcaya have participated in
the PhilHealth Indigency Program. For 2002, PhilHealth has targeted 20% of the
total indigent households, of which 97.7% have actually been enrolled. Some
44
municipalities like Bagabag and Bambang have exceeded their target for 2002.
Health Sector
About 69% of the 18,000 indigent households targeted for 2004 have been Reform Technical
covered. Except for Bayombong, Kasibu, Solano and Villaverde, the rest of the Assistance Project
municipalities are now sharing 20% of the insurance premium.
Four municipalities (Aritao, Bambang, Dupax del Sur, and Bagabag) have signed
a contract with PhilHealth for Phase II OPBP. These municipalities have Phil-
Health-accredited RHUs but PhilHealth is still waiting for the remittance of the
premium payment to qualify them for the capitation scheme.
Table 2.Status of PhilHealth Implementation (as of June 2002).

# of Enrollees Target HHs for 2002
Municipalities Class
(as of July 2002) (Phase I)
1 Alfonso Castaneda 5th 82 164
2 Ambaguio 5th 218 436
3 Aritao 4th 731 1220
4 Bagabag 4th 1158 1244
5 Diadi 5th 429 528
6 Dupax del Sur 4th 984 1000
7 Dupax del Norte 4th 930 930
8 Kayapa 4th 360 720
9 Quezon 5th 430 454
10 Sta Fe 5th 1500 1500
11 Bambang 3rd 1595 1592
12 Bayombong 3rd 1000 845
13 Kasibu 4th 480 480
14 Solano 2nd 731 1,040
15 Villaverde 4th 245 245
16 Barangay Poblacion North, Solano 2nd 50 50
Total number of current members 12,159
Total number of potential members 12,448
In terms of health provider accreditation, the only private polyclinic in Nueva

Vizcaya has already been certified by PhilHealth. Except for the Kasibu Municipal
Hospital, all other government hospitals in the province have received PhilHealth
recognition.
45
Table 3. List of PhilHealth- Accredited Hospitals and Clinics,
Health Sector
Nueva Vizcaya (as of July 2002). Reform Technical
Name of hospital Type of hospital Category Assistance Project
Medical Missions Group Private II

Veterans Regional Hospital Government III
Nueva Vizcaya Provincial Hospital Government II
Kayapa District Hospital Government I
Dupax Sur District Hospital Government I
3.2 Process of implementation
According to the Region 2 PhilHeath manager, it was not easy convincing the
LGUs to participate in the Indigency program. Aside from the financial aspect,
many of the mayors were not aware of the social health insurance. Admittedly,
one reason was PhilHealth’s inability to provide adequate information to the
LGUs owing to the distance between Tuguegarao, where the regional office is,
and Nueva Vizcaya. To make the program more responsive, PhilHealth estab-
lished its provincial service office in Nueva Vizcaya in February 2002. Since then,
massive information on the PhilHealth thrusts and programs were effectively
disseminated to the LGUs.
There were individual visits to the LGUs. The strategy was to identify a point
person who is close to the Mayor, convince this person about the PhilHealth
indigency program, and then approach the Mayor through this contact person
who, in turn, helps in endorsing the program to the local executive.
A plus factor for the Indigency Program was the support provided by the provin-
cial government in terms of office space, moral support, resolutions adopting the
program as well as allocation of funds for the program. Among the barrier factors
were the (a) financial constraints of LGUs, (b) indigency program not being a
priority of the LGU, and (c) identification of indigents.
There were issues in the implementation of the Indigency Program in indigenous

communities. Indigenous households cannot satisfy PhilHealth’s requirements of
a marriage contract and a birth certificate because these practices are not within
the tribal culture. This creates a problem for PhilHealth in Nueva Vizcaya be-
cause of the large proportion of the indigenous population in the province.
There were also issues related to the selection of indigent beneficiaries where
mayors and barangay chairmen tend to select their friends and relatives as
indigent beneficiaries. Based on interviews with the Municipal Social Worker of
Bagabag, the following processes were followed for the selection of indigents:
46
Figure 1. Steps in Selecting Indigent Beneficiaries.
Health Sector
Reform Technical
Assistance Project
Barangay chairman
IEC by PhilHealth to LGU
recommends indigents
MSWD conducts
verification through
a survey using
MBN, observation,
and interviews in
the barangays
Submission to PhilHealth Finalize data submitted for

(PHIC procedures) mayor’s approval
According to the MSWD, an eligible household must have: an annual income of

P8,000 or less; an unemployed family head; a large household size; and, pres-
ence of out-of-school children.
Indigent cardholders interviewed in Bagabag confirmed the conduct of the house-

to-house interview by the MSWD. The beneficiary-respondents also admitted that
they were not initially aware of the benefits and procedures of being PhilHealth
members. A number did not know that they could be reimbursed for medicine
costs. Others learned that they could avail themselves of free health service only
during time of release from the hospital. In such cases, the families have already
spent some amount of money for the hospitalization of their kin.
For Phase II OPBP, the absence of medical technologists in many RHUs, which
should have qualified them to become Sentrong Sigla and PhilHealth, accredited
institutions, served as an impediment. Nevertheless, an arrangement with
PhilHealth was made for neighboring RHUs to share one person in charge of
laboratories.
The PhilHealth office in Nueva Vizcaya will be conducting orientation programs to

NGOs like the Rotary Club for possible sponsorship in the outpatient benefit
package, and to business establishments for the health insurance of their em-
ployees.
3.3 Progress of implementation
A summary of the accomplishments in social health insurance/ health financing

vis-à-vis some indicators of improvement is shown below (as of July 2002):
47
Table 4. Summary of Accomplishments in Social Health Insurance/ Health
Health Sector
Financing vis-à-vis Indicators of Improvement, Nueva Vizcaya, July 2002. Reform Technical
Indicators of Improvement Accomplishment Assistance Project
Percent of indigents currently enrolled 97.7% of targeted indigent households in 2002;

69% of the 18,000 indigent households targeted for 2004
Percent of LGUs participating in the Indigency 100%
Program
Number of PhilHealth -accredited hospitals and 4 of the 5 hospitals/polyclinics (1 private, 4 government)
clinics
Percent of RHUs accredited by PHIC 4 of the 15 RHUs (27%)
Funding of premium (ratio of Prov:Mun:PhilHealth For 11 municipalities: 80:10:10
For 4 municipalities: 90:5:5
Social marketing of PhilHealth Active with the establishment of a provincial service office
Utilization According to the chiefs of hospitals, the PhilHealth Indigency
program is a major source of income for the hospitals.
Percent of RHUs receiving capitation 0% but expects to start as soon as remittance is given by end of
July
Utilization of capitation funds Not applicable
Non-PHIC financing schemes none
3.4 Gaps and problems
As far as the 2004 vision is concerned, about 31% of the targeted indigent
population has still to be covered. Eleven of the RHUs still need to be PhilHealth-
accredited to qualify them for the capitation program. Similarly, one government
hospital needs to be accredited by PhilHealth.
A culture-sensitive policy must be formulated by PhilHealth to ensure that the

indigenous population (“poorest of the poor,” “most marginalized sectors of
society”) is covered by the government health insurance.
Several changes and improvements during devolution were implemented as part

of the hospital reforms. For one, the Bambang District Hospital was designated
as the Nueva Vizcaya Provincial Hospital (NVPH) when the former provincial
hospital based in Bayombong was re-nationalized in 1995. Second, hospitals
were given autonomy in governance since 1995-96. Previously, the provincial
and district hospitals were under the supervision of the Provincial Health Office
(PHO), today, they are accountable to the Office of the Governor. Preventive
health became the major thrust of the PHO, while hospitals took charge of the
curative health services.
48
Another major development in hospital reforms was the establishment of the
Health Sector
Quality Services Improvement Program (QSIP) in 1998. The QSIP has 5 mem- Reform Technical
bers, including the chiefs of hospitals. It formulates the internal policies of each Assistance Project
hospital, takes charge of organizational development and quality assurance,

monitors the implementation of these policies and makes recommendations to
the Provincial Health Board if the policy affects the whole province. Service audit
teams (SAT) in each hospital were also organized.
Aside from the upgrading of hospital equipments and facilities, and cleaning and
beautification of the hospital premises, inter-hospital sharing of manpower and
material resources was also considered a major development in health service
delivery. The provincial hospital shares its facilities, manpower and supplies with
the 3 district hospitals, and vice versa.
MSH has conducted training workshops on 5S and drug management review for
the hospital staff.
4.2 Process of Implementation
The following steps were pursued by the Service Audit Teams to improve the
hospital: From a review of the hospital systems, vision-missions were formulated.
Then, a planning session was conducted to set up the specific objectives and
action plans. The implementation of the plans were monitored and evaluated
through customer satisfaction surveys and public consultations.
Figure 2. Action Steps to Improve Hospital Systems.
Formulate visions /
Review hospital systems
missions
Conduct planning
sessions
Monitor and evaluate Implement plans
In February 2002, mayors and barangay officials were invited to attend a public
consultation meeting. In their situational analysis, the participants perceived
NVPH as “clean”, “accessible”, “with available water and well-kept surroundings”,
“respectful staff” and where “barangay official recommendees were well taken
cared of”. The problematic issues related to the lack of specialists, lack of medi-
cines/selling of medicines by doctors, poor facilities and equipments, non-
implementation of hospital benefits for barangay officials, among others. Some
recommendations were suggested to resolve these issues.
49
\Customer satisfaction surveys (both from staff and patients/watchers) were also
Health Sector
done to identify strong and weak areas in the hospital system. In March 2002, the Reform Technical
hospital staff did an evaluation of the NVPH. The “good” points were the increas- Assistance Project
ing hospital budget, cleanliness and beautification of the hospital. The “bad”
points included: lack of computer training for administrative personnel, poor
dietary program for patients, poor waste management, complaints against some
hospital personnel and complaints against the hospital leadership.
Similarly, the referral system with the Rural Health Units was strengthened. In a
meeting with MHOs, there was an agreement that 2 referral slips will be issued to
the patient by the RHU. The RHU is to pick up from the hospital the feedback
slip. However, the key informants reported that up to the present, this referral
system has not been working as desired.
Hospital income retention scheme is currently being discussed by the QSIP. A

drug supplementation program is also being proposed. A pharmacy cooperative
will be established either within the provincial hospital or outside the premises of
the hospital. The drug supplementation program will provide drugs and medi-
cines that are not sold in the hospital pharmacy. This plan will still be discussed
by the provincial health board.
The chiefs of hospitals expressed excitement about the financial management

training that will be conducted by MSH.
4.3 Progress of Implementation
The QSIP was instrumental in enhancing the image of the hospitals and their
respective personnel through quality standard protocols and customer satisfac-
tion surveys. Developed protocols to remind the personnel of their tasks and
responsibilities were posted in strategic places within the hospital. These proto-
cols include admissions, disease management, supply management, recording
and ER management.
Feedback on the 5S was positive. The key informants claimed that the training
on 5S changed their attitudes about work, aided them in systematizing and
“cleaning up” their tasks and made them “constructively critical” about their
relationships with their co-employees and clients.
As a result of better working conditions, provincial hospital revenues increased

from P2.7 million in 1997, to P3.3 million in 1998, P4.2 million in 1999, P4.6
million in 2000 and P5.5 million in 2001. Hospital income in the district hospitals
has also exceeded their yearly quota in 2001. The key informants attributed the
increase in revenues to the acquisition of new equipments, QSIP, increase in
number of indigents and the campaign made by the province regarding hospital
charges.
50
Table 5. Hospital Revenues of District Hospitals, Nueva Vizcaya, 2001.
Health Sector
Hospital Target for 2001 (PhP) Actual Revenues (PhP) Excess (PhP) Reform Technical
Assistance Project
Kasibu MH 300,000 326,000 26,000
Kayapa DH 500,000 579,000 79,000
Dupax Sur DH 1.4 M 1.7 M 3M
A summary of the accomplishments in hospital reforms vis-à-vis some indicators

of improvement is given below (as of July 2002):
Table 6. Summary of Accomplishments in Hospital Reforms vis-à-vis Indicators of

Improvement, Nueva Vizcaya, July 2002.
Indicators of Improvement Accomplishments
Establishment of financial management 0%
systems
Income generation Provincial hospital revenues increased from 4.2 m in 1999, 4.6 m in
2000 and 5.5 m in 2001. Hospital income in the district hospitals
have exceeded their yearly quota in 2001
Income retention 0%
Income utilization 0%
Fiscal autonomy 0%
Quality assurance Upgrading of facilities, cleaning and beautifying the surroundings,
regular conduct of customer satisfaction surveys and public
consultations, application of 5S
SS/PHIC facility upgrading All 4 government hospitals are SS-accredited. Except for Kasibu, all
other hospitals are PHIC accredited.
Upgrading in hospital classification 0%
Technology transfer Simultaneous training on 5S and drug review in all 4 hospitals
Networking with private sector 0%
From the list of accomplishments, some gaps and problems in implementation

can be identified. Gaps in financial management are obvious as there has been
no training of hospital staff in this aspect. A good financial management system
can improve further the income generating capacity of the hospitals. Upgrading
of the facilities and eventually a better image for the hospital are also dependent
on improved hospital income. Efforts should be made to commence training on
financial management for hospital leaders and staff.
Before 2000, drug purchase in Nueva Vizcaya was included in the procurement
of provincial supplies by the General Supply Office (GSO). This procedure was
regarded as long and arduous. Numerous complaints from the health sector
51
were received especially with regard to the timely delivery and high costs of
Health Sector
drugs and supplies. Reform Technical
Assistance Project
In December 2000, the governor issued Executive Order # 145 creating the
Provincial Committee on Awards (PCOA) to handle the procurement of drugs,
supplies and equipment for the provincial health office and the 4 hospitals. PCOA
is composed of the Provincial Administrator as chairman, and the provincial
treasurer, budget officer, accountant, provincial health officer, chiefs of hospitals,
general services officer and PCOA-Technical Committee (PCOA-TC) head as
members. A representative of BFAD and the Commission on Audit were desig-
nated as observers. A provincial pooled procurement program in Nueva Vizcaya
is therefore in place. Municipal LGUs have not yet availed themselves of the
pooled procurement.
Recently, the Provincial Therapeutics Committee (PTC) composed of chief of

hospitals was re-activated.
The pooled procurement process in Nueva Vizcaya starts with a purchase

request (PR) from the PHO and the 4 government hospitals. The PCOA-TC
provides these units with the Uniform List of Drugs (ULD), a consolidated list of
previously purchased drugs and supplies. The Provincial Health Office (PHO)
and hospital therapeutics committee of each hospital (HTC) go through the list
and notes which of these drugs and supplies will be needed for the next quarter.
The HTC may also indicate which other drugs not found in the ULD may be
needed to be purchased. The PR will then be forwarded to the PCOA-TC for
consolidation.
Once consolidated, the PCOA-C makes a Price Quotation Form. The form is sent
by fax to the drug suppliers in Nueva Vizcaya and Manila to be filled up by the
latter, or the team goes to Manila to do the canvassing of drug prices. Normally,
about 15 drug manufacturers, distributors or retailers are consulted. Once the
prices are in, an Abstract of Price Quotation, which includes the list of drugs to be
procured together with their quoted prices is made. The whole group of PCOA
members then meets to determine adequacy of funds vis-à-vis amount of drugs
to be procured by PHO and the 4 hospitals. They also decide from which supplier
to purchase the drugs. The supplier with the lowest price is taken except if
complaints against the quality of drugs given by this supplier in the past were
previously lodged. In which case, the award is given to the supplier with the
second lowest price.
Once approved by the whole team, the PCOA-TC prepares a Purchase Order
(PO) and a request for Cash Advance, which are then signed by the governor.
The PO is then faxed to the winning supplier to make sure that stocks are ready
once the PCOA team goes back to Manila to pick-up the goods. Back in Nueva
Vizcaya, the boxes of drugs are immediately distributed to PHO and the 4
hospitals.
52
Figure 3. Process Flow of Drug Procurement.
Health Sector
Reform Technical
Assistance Project
PHO & 4 hospitals
PCOA-TC sends a PCOA-TC
assess the list vis-
list of drugs & consolidates
à-vis drug needs &
supplies to PHO requests & makes
submits PR to
and hospitals Price Quotation
PCOA-TC
PCOA-TC team
PCOA-TC sends
meets to discuss PCOA-TC makes
fax to drug
availability of funds an Abstract of
supplier or goes to
& winning drug Quotation
Manila to canvass
supplier
PCOA-TC makes Governor signs PCOA-TC sends

PO; also requests PO & requests for PO to winning
for Cash Advance Cash Advance supplier(s) via fax
PCOA-TC team
PCOA-TC team goes to Manila to
distributes drugs & purchase the
supplies to PHO & drugs & medical
4 hospitals supplies from
winning supplier
An interview with the Chiefs of Hospitals showed a positive regard on the system
of drug procurement by the province. They commented that the present system
has solved the problem of delay in the delivery of drugs and medical supplies
(drugs are delivered in the same quarter unlike before when 1st quarter PRs are
delivered in the 3rd quarter). They had occasional problems with the quality of
some drugs, but according to them the PCOA-TC has shown responsiveness
with regard to their complaints. They hoped that the reactivation of the Provincial
Therapeutic Committee would help solve the problem on the quality of drugs
procured.
Other key informants however expressed concern about the system of procure-
ment because “they are not following COA procedures.” The governor and the
provincial administrator were quick to say that their legal office approved the
present system. Still others worried about the possible loss that may result by
53
having the PCOA team carry a large sum of cash about PhP800,000 per travel
Health Sector
while doing their purchase in Manila. Reform Technical
Assistance Project
The province is hesitant to participate in the parallel drug importation (Pharma

50) since “current costs of drugs and medicines are similarly cheap.” Some key
informants observed a policy conflict between the government’s generic drugs
policy and the parallel drug importation because the latter pushes for branded
drugs. They were questioning its legality in reference to the generics law.
Other developments include: procurement review workshop – November 2001;

Drug Use review - December 2001 until first quarter of 2002; and, Orientation of
PDI – last quarter of 2001.
A decrease of at most 45% in the prices of some drugs was noted between the
2nd and 3rd quarter purchase in 2002. A random sampling of drug prices is shown
below.
nd rd
Table 7. Comparison of Drug Prices, Nueva Vizcaya,- 2 and 3 Quarter, 2002.
Name of Drug 3rd Qtr (Peso) 2nd Qtr (Peso) Decrease in drug price (%)
Salbutamol nebulas 2mg/2.5ml 23.20 23.20 –
Ampicillin 500mg mg vial 11.00 11.00 –
Chloramphenicol 250 cap 1 gm vial 93.00 125.00 (32.00)
Ascorbic acid 500mg tabl 92.00 100.00 (8.00)
Paracetamol 100 mg/ml 9.75 10.50 (0.75)
Penicillin G Na 1 million units 10.50 11.00 (0.50)
Gentamacin sulfate 80 mg vial 10.00 9.20 0.80
Rifampicin 200 mg susp 60 ml 43.50 42.00 1.50
Methylergometrine maleate 200 mg amp 28.00 28.00 –
Hydrocortisone vial 35.00 62.48 (27.48)
ATS 1500U 85.00 85.00 –
Nalbuphine 10 mg amp 88.70 136.00 (47.30)
Cefuroxine 750 mg vial 140.00 140.00 –
Mefenamic acid 500 mg tab 85.00 90.00 (5.00)
Cotrimoxazole 400 mg/80 mg tab 90.00 90.00 –
Amoxicillin 500 mg cap 175.00 185.00 (10.00)
A summary of accomplishments in drug management is given below (as of July

2002).
54
Table 8. Summary of Accomplishments in Drug Management vis-à-vis Indicators
Health Sector
of Improvement, Nueva Vizcaya, July 2002. Reform Technical
Indicators of Improvement Accomplishments Assistance Project
Functioning therapeutics committees With newly reactivated provincial therapeutics committee
With functional hospital therapeutics committee
Pooled drug procurement program With pooled drug procurement program
Reduction in costs of drugs Reduction in costs of drugs by at most 45%% in 3rd quarter
compared to 2nd quarter prices
Assurance of drug quality Training in drug utilization review
End-user complaints are acted upon by PCOA
Timely delivery of drugs Delivered within the quarter
Purchase from accredited suppliers Procures from DOH accredited suppliers
Provincial drug formulary None
Inclusion of municipal LGUs in pooled drug 0%
procurement
To ensure the purchase of quality drugs, the PTC should become fully functional.
A provincial drug formulary should also be created. As in many other provinces,
the inclusion of the municipal LGUs in the pooled procurement program is still
absent.
Nueva Vizcaya maintains a single inter-local health zone (ILHZ) with the Provin-
cial Health Board as the governing body. Stakeholders in Nueva Vizcaya decided
not to organize more than one ILHZ because 1) the present system of having
expanded provincial health board is already effective, 2) referral hospitals are
concentrated in one area, 3) linkages, coordination and communication among
RHUs and the district/community hospitals are functioning and 4) population of
Nueva Vizcaya is small.
The governor stressed that convergence occurs within the Provincial Health
Board (PHB). All health issues are discussed and resolved through the PHB.
The current Provincial Health Board, now called the Expanded Provincial Health
Board (EPHB) is composed of 45 members from different relevant departments
and LGUs. The expansion from the original 5 members as mandated by the
Local Government Code was for the purpose of formulating effective, efficient
and timely health policies and programs. The expansion also made health
decision-making participative and consultative since the inclusion of MHOs from
the 15 municipalities made sure that voices from the grassroots are heard,
thereby making the implementation of the policies more effective at the municipal
and barangay levels. The board has since become the policy making body for
55
health in the province. The Department of Health proclaimed the Nueva Vizcaya
Health Sector
Provincial Health Board as the Most Outstanding Health Board in 1995 and 1996. Reform Technical
Assistance Project
A summary of accomplishments in inter-local health zones is shown below (as of

July 2002):
Table 9. Summary of Accomplishments in Inter-Local Health Zones vis-à-vis

Indicators of Improvement, Nueva Vizcaya, July 2002.
Number of ILHZs established vs. targets One ILHZ out of the 2 ILHZs targeted for 2004
With signing of MOA No MOA
With District Health Board With Expanded Provincial Health Board
Sharing of non-monetary resources Sharing of resources among provincial and district hospitals; no
sharing between hospitals and RHUs, or among RHUs.
Functional referral system Not fully functional
Networking (NGOs, private sector, inter gov’t Exist through the EPHB
agency)
Cost sharing 0%
Common fund 0%
The provincial government seems bent on maintaining only one ILHZ because of
geographical, demographic and administrative reasons. A more formal mecha-
nism like a MOA to cement the relationships may be needed to foster coopera-
tion and sharing among municipal LGUs.
The key informants suggested that a district hospital be established somewhere

in the north. They were eyeing at the DOH building in Diadi. However, the costs
of establishing a district hospital need to be considered.
7. Best Practices
Among the HSRA convergence components in Nueva Vizcaya, best practice can
be seen in the are of social health insurance. All 15 municipalities of the prov-
ince are now participating in the PhilHealth Indigency Program. Eleven are on
their third year; four are in the first year of implementation. Nueva Vizcaya is also
one of the few provinces that have started getting access to PhilHealth’s Out
Patient Benefit Package with the MOA signing between PhilHealth and four
municipalities in May 2002. Actual implementation of the capitation scheme is
expected to commence in early August 2002.
The provincial drug procurement program can also be considered as best

practice since it has solved the problem of delay in the delivery of drugs to the
hospitals. Moreover, the Expanded Provincial Health Board is also recognized
56
as a good example of participatory governance. The present system of local
Health Sector
health governance institutionalized several programs and activities like the QSIP Reform Technical
and PCOA. NGOs and groups like the Association of MHOs, Kabalikat, and Assistance Project
other civil society groups also got the chance to contribute to improving the
health of the people.
8. Lessons Learned
There are several lessons that can be learned from the experience of Nueva
Vizcaya in health sector reform.
One, a dedicated service-conscious political leadership is an essential compo-

nent of any health reform. Nueva Vizcaya has a governor who is pioneering,
committed, transparent and consultative.
Two, the shape and content of HSRA reforms vary in each locality depending on
ecological and social factors as well as felt needs and motivations of the local
governments. Nueva Vizcaya has shown distinctiveness in the way they look at
ILHZs and implement their drug procurement system. The EPHB has also been
proven to be of utmost value in the management of health in the province.
Three, with an expanded PHB, health decision-making has become consultative

and participatory.
Four, sustainability of health reforms should always be factored in. The governor
assured sustainability by creating a system of governance (e.g., EPHB) in the
event of change in political leadership.
9. Conclusion
The selection of Nueva Vizcaya as a convergence site is laudable in the sense

that it can be a model for the implementation of HSRA in small, less populated
areas. Its mechanisms for reform are simple and pragmatic. These include its
system of drug procurement, the expanded provincial health board, and the
format for a province-wide ILHZ.
Overall, the implementation of the various components of the HSRA in Nueva

Vizcaya is improving except perhaps for the establishment of two ILHZs as
envisioned for 2004. The present thinking is focused on making the province-
wide ILHZ more functional through the EPHB.
HSRA Convergence has been very helpful in –
• Emphasizing the integrated, collaborative character of health sector reform;

• Providing direction to the ongoing health reforms in the province; and,
• Systematizing the details for the implementation of health reforms.
In the words of the governor, the HSRA convergence cemented the loose ends
of the reforms that the local government has been endeavoring to put in place.
57
Health Sector
Assistance Project
1. Governor Rodolfo Q. Agbayani

2. Dr Pinky Torralba
3. Provincial Administrator, Nueva Vizcaya
4. Provincial Health Officer, Nueva Vizcaya
5. Head of the Provincial Committee on Awards-Technical Committee
6. Assistant to the Head of the Provincial Committee on Awards-Technical
Committee
7. Manager, PhilHealth Region 2 manager
8. Service Desk Officer, PhilHealth, Nueva Vizcaya
9. Office-in-Charge, Nueva Vizcaya Provincial Hospital
10. Chiefs of District Hospital
11. Selected staff members of Nueva Vizcaya of Provincial hospital
12. Mayor, Bagabag Municipality
13. Municipal Health Officer, Bagabag Municipality
14. MSWD, Bagabag Municipality
15. PhilHealth beneficiaries, Bagabag Municipality
58
Health Sector
References Reform Technical
Assistance Project
Daniel E., Rosario D., Bayle B., Padilla L., Almirol B. Nueva Vizcaya Beckons.
Bayombong, Nueva Vizcaya, 1997.
Lakbay-Aral Terminal Report, n.d.
Nueva Vizcaya Health Sector Reform Convergence Workshop Output (Tulong-

Sulong sa Kalusugan) Management Sciences for Health, 2001.
Site Plan for the Province of Nueva Vizcaya (Update of the HSRA Convergence
Workplan January-June 2002). Management Sciences for Health, 2001.
Participating municipalities for the MOA signing, Province of Nueva Vizcaya,

Philippine Health Insurance Corporation Bayombong Service Office, 2002.
Status of Indigent Program Enrollees, Nueva Vizcaya (as of May 2, 2002),

Philippine Health Insurance Corporation Bayombong Service Office, 2002.
“Medicare para sa Masa” Barangay Sponsor, Nueva Vizcaya. Philippine Health

Insurance Corporation Bayombong Service Office, 2002.
Public Consultation Report, Nueva Vizcaya Provincial Hospital, Feb 27, 2002.
Quality Service Improvement Program Staff Consultation Report, March 1, 2002.
59
III
Health Sector
Reform Technical
Assistance Project
PANGASINAN (REGION 1)
1. Socio-Economic and Health Profile
With a land area of 536,818 hectares, Pangasinan is among the largest prov-
inces in the Philippines. In 2000, the province had a total population of
2,434,086 with 477,819 households, 55% of whom lived in the rural areas. The
population is mostly working age (15-64 years). Thirty-nine percent of the
population belongs to the younger age groups. Pangasinan is classified as a first
class province, with an average family income of P8,371, average family expen-
ditures of P6,758.17 and annual regional per capita poverty threshold of
P11,975.00. The employment rate in 2000 was 88%.
Pangasinan has 51 hospitals, 72% of which are privately owned. It has 6 district
health offices, 68 rural health units, 414 barangay health stations, 52 botika sa
barangay and 486 family planning clinics. Public hospitals are maintained by the
provincial government while rural health centers as well as the city health offices
are under the jurisdiction of the mayors. The district health offices are maintained
by the provincial government.
The following are the vital health indicators in 2001:
Crude birth rate 20.6 per 1,000 population

Crude death rate 4.5 per 1,000 population
Infant mortality rate 12.3 per 1,000 livebirths
Maternal mortality rate 0.18 per 1,000 livebirths
Overall malnutrition rate 5.9% with 95% moderately malnourished
2. Convergence Experience
In 1996, Pangasinan was chosen to become a model for the LGU Performance
Program (LPP) on family planning (Family Planning Technical Assistance Pro-
ject) by the Management Sciences for Health (MSH) under Dr. Jose Rodriguez.
Pangasinan’s successful collaboration with the Catholic church in implementing
the family planning program was replicated in 20 LGUs in the country.
In late 1998, MSH technical assistance branched out to hospital reforms. Then
with the opportunity, Pangasinan preferred to prioritize hospital reforms than
develop inter-local health zones because hospitals are under the control and
management of the provincial government. The provincial hospital in San Carlos
City became the pilot health facility for such interventions and as part of the
60
hospital reforms. A pooled drug procurement program for the hospitals was
Health Sector
developed. Reform Technical
Assistance Project
In 2001, the Health Sector Reform Technical Assistance Program (HSRTAP) of

MSH under Dr. Benito Reverente, continued the health reforms in Pangasinan.
Using a convergence framework, the first orientation workshop was held at the
Star Plaza Hotel in Dagupan City on March 7-8, 2001. The workshop was
attended by 48 people: 27 from the provincial and municipal LGUs, 5 from DOH,
6 from PhilHealth, 2 from the Futures Group Inc., and 8 from MSH. Its purpose
was to disseminate information about the convergence strategy, advocate the
need for health sector reforms, and address various issues and concerns about
the implementation of the HSRA convergence. As outputs, the participants
identified the problems of the health sector, analyzed the actions that have
already been taken, and developed the vision for health for 2004. Benchmarks,
strategies and plans of action were also formulated during the workshop. As a
follow-up activity, a Health Summit, was conducted in October 2001 to orient the
local government executives on HSRA convergence.
Table 1. Issues Addressed during the First Convergence Workshop

in March 2001, Province of Pangasinan.
HSRA
Identified problems Actions taken Vision for 2004
component
Hospital - Dilapidated facilities - Partial repair/request for - All hospitals SS and
Reforms - Sustainability of hospital funds PhilHealth accredited
reforms - Continuous GAC monitoring - Fully autonomous provincial
- Lack of manpower improved billing and collec- hospital
tion procedure - All 5 district hospitals
- Need to increase
utilization of hospitals - Maximized utilization of financially viable
manpower
- Additional MOOE funding
- Partial upgrading of
- Poor quality care equipments
- Automatic 10% increase in
MOOE funds by LGUs
- Implement quality assurance
program
Social - Lack of qualified/ - Identification and communi- - Coverage: 85% indigent
Health accredited health service cation of need to Governor population
Insurance/ providers - PhilHealth presented Indigent - All LGUs with Indigent
Health - Health as low priority of program to SBS/SP Program
Financing local chief executives - Governor’s commitment for - Expand benefit package
- Lack of understanding of 3000 indigent households - Increased awareness
health insurance - Tri-media campaign - 85% of public and private
health service providers
accredited
- Increased share of health
insurance in provincial health
care expenditures
61
HSRA
Identified problems Actions taken Vision for 2004
component Health Sector
Reform Technical
Drug - Irrational drug use - Hospital and Provincial TCS - Cheap, appropriate, safe, Assistance Project
Management - Delivery of drugs not selects and reviews, respec- effective drugs available thru
according to priorities tively, the type of drugs to be Provincial Pooled Procure-
procured by hospitals in ment Program- all 48 cities
- Perception of poor quality accordance with the Provin- and municipalities, provincial
of drugs procured cial Drug Formulary bidding, municipal procure-
- High drug prices in RHUs - Memo to suppliers to deliver ment
- No clear cut PHIC protocol within 10 days after receiving - Computerized procurement
on reimbursements POs. system
- Non-compliance with - Purchase from qualified and - Functional Therapeutic
PHIC rules and regulations accredited drug suppliers Committees in all hospitals
(generic O.R. and incom- - Random sampling testing of
plete diagnosis) drug deliveries
- Tender management at the
provincial level
- Procurement thru bidding
- Development of standard
treatment protocols
- PHIC protocol on payment of
"generic" drugs
Local Health - Fragmentation of health - Orientation of LCEs - 6 ILHZ functional
System services regarding health system - All catchment municipalities
- Inadequate management - Introduction of inter-local with indigent program
system health zone system - With MOA’s signed
- Poor quality of services - Installation of CBHMIS - Management -structure in
- Career pathway disruption - Lobby more funds place
- Availability of computers and - Integrated planning
training of staff on IT - Information system
- Seminar workshop on Total - Referral system
Quality Management
- Human resource program
- Value formation seminars
- QA for health personnel
- Referrals to DBM, CSC re:
salary grades and appoint-
ments
- CME seminars
From key informant interviews, it appeared that not all Mayors were receptive of
the HSRA convergence because of differences in development priorities and
availability of budget. In the case of the pooled drug procurement, their conten-
tions were: (a) inadequate budget, and (b) late deliveries of drugs from the
province. MHOs and other health workers were receptive of the HSRA conver-
gence because they felt that the district health system before devolution is being
revived. It provided a venue where their work-related concerns can be ad-
dressed.
Another HSRA workshop for civil society was subsequently conducted in Febru-
ary 2002. The purpose of the workshop was to disseminate information about the
62
health sector reforms being implemented in Pangasinan and to get the coopera-
Health Sector
tion of the NGOs in implementing these reforms. Reform Technical
Assistance Project
A Provincial Advocate Group (PAG) was organized in May 2002. The group goes
from one municipality to another to sell the concept of HSRA convergence The
PAG is divided into three teams: think tank team (to generate goals and strate-
gies), resource team (to provide relevant information to think tank team as well
as to LGUs) and spokespersons team (to talk to the targeted clients).
Even before convergence, PhilHealth was already lobbying to the Mayors for the
social health insurance of their constituents. It was during the Health Summit in
Pangasinan in October 2001 when PhilHealth introduced the Indigency Program
to the LGUs.
Pangasinan has lagged behind other provinces in Region 1 in the implementation

of the Indigency Program. Out of the 48 municipalities and cities of Pangasinan,
only 7 LGUs had current indigent membership. The latest statistics (as of July
2002) show a total of 8,869 families or approximately 20% of the 35,000 to
50,000 estimated total number of indigent families in Pangasinan have already
been enrolled. Eighteen of the 48 LGUs have signified their intentions to sign a
MOA with PhilHealth and the provincial government in April, 2002. A meeting
with the second batch of 28 LGUs was scheduled for August 2002. Nevertheless,
the Philhealth Manager claimed that Pangasinan has one of the “best of Phil-
Health social health insurance in the Philippines” with Dagupan City having the
highest utilization rates.
The PhilHealth manager emphasized that hospital reforms should go hand in

hand with advocacy for social health insurance. As of July 2002, 44 of the 51
hospitals and clinics in the province have already been accredited by PhilHealth,
which include 12 of the 15 government hospitals (including Region 1 Medical
Center).
Table 2. Status of PhilHealth Implementation (Medicare para sa Masa)

Pangasinan (as of July 2, 2002).
# of targeted Date of
Municipalities Remarks
enrollees (families) effectivity
1 Dagupan City 4,852 0/16/98
490 6/16/00 Current membership
157 3/16/01
2 Sto Tomas 500 10/1/00 Current membership
Current membership for 500 enrollees; 250
3 Asingan 750 1/16/01 enrollees to be shouldered by provincial
government
Current membership for 150 enrollees; 100
4 Bolinao 250 2/16/01 enrollees to be shouldered by provincial
government
5 San Carlos City 1000 3/16/01 Current membership
63
# of targeted Date of
Municipalities Remarks
enrollees (families) effectivity Health Sector
Reform Technical
Current membership ; appropriated
6 Alcala 1000 4/16/02 Assistance Project
P242.513 as per Res No 05-s-2002
7 Laoac 220 Not ascertain Current membership
8 Mapandan 1000
9 Mangaldan 1000 To issue certificate of availability of funds
10 Binmaley 1000 Requesting to enroll 500 more enrollees
11 San Fabian 1000
Appropriated P40,000 as per Res No 10-s-
12 San Manuel 500
2002
13 Bayambang 1000
Appropriated P30,000 as per Res No 198-
14 Basista 500
s-2002
15 Aguilar 500 Requesting to enroll 200 more enrollees
16 Bugallon 500 Requesting to enroll 500 more enrollees
17 Natividad 500
Requesting to enroll 500 enrollees instead
18 Urdaneta City 500
of 1000 because of budgetary constraints
19 Labrador 500
20 Dasol 500
21 Sual 1000
Total number of Approx. 20% of the 35,000-50,000
8,869
current members estimated total indigents in Pangasinan
Table 3. List of PhilHealth-accredited Hospitals and Clinics,

Pangasinan (as of July 2, 2002)
Name of hospital Type of hospital Category
Alaminos Doctors Hospital Private I
Asingan Medicare and Community Hospital Government I
Banez Clinic Private II
Bayambang District Hospital Government II
Bolinao Medical and Community Hospital Government I
Cuison Family Clinic and Hospital Private II
Dagupan Doctor Villaflor Memorial Hospital Private III
Dagupan Orthopedic Center Private II
Del Carmen Medical Clinic and Hospital Private I
Don Amadeo Perez Sr. Memorial Hospital Private II
Don Marcelo Chan Memorial Hospital Private I
Eastern Pangasinan District Hospital Government II
Espinoza-Rosario Hospital Private II
Holy Child General Hospital Private II
Labrador Community Hospital Government I
Lopez Family Clinic and Hospital Private I
Luzon Medical Center Private II
Mangatarem District Hospital Government II
Medical Centrum Dagupan Inc Private II
Nazareth General Hospital Private II
Nuestro Senor Sto Nino Hospital Private II
Pangasinan Center for Family Medicine Inc Private III
Pangasinan Doctors Hospital Private II
Pangasinan Medical Center Private III
Pangasinan Provincial Hospital Government III
Perpetual Help Hospital Private I
Pozurrobio Municipal Hospital Government I
Prudencio Medical Clinic Private I
Ramos Nursery and Children's Hospital Private I
Region 1 Medical Center Government III
64
Name of hospital Type of hospital Category
Rosario-Trino Medical Clinic Private I Health Sector
Reform Technical
Saballa-Rosario Hospital Private I Assistance Project
San Antonio de Padua Hospital Private II
Specialists Group Hospital and Trauma Center Private III
St Lucy’s Cataract and Laser Eye Center Private ASC
Stella Maris Hospital Private II
Sto Nino Hospital Private I
Umingan Medicare and Community Hospital Government I
Urdaneta Sacred Health Hospital Private II
Velasquez medical Clinic Private I
Villasis Polymedic Hospital and Trauma Center Private II
Vigen Milagrosa Medical Center Private III
Western Pangasinan District Hospital Government II
Zaratan-Jimenez Clinic Private I
Lately, PhilHealth has focused on the selling of social health insurance to the
different municipalities. PhilHealth uses 3 types of strategies. The investment
perspective, which states that the premium per month (i.e., P118/ month) can be
applied to the whole family, the political perspective states that the mayor’s
investment can gain for himself/herself political mileage and the vice perspective,
which states that the personal burden of politicians in providing health assistance
to their constituents can be minimized. PhilHealth also applies “psychology” by
sensing the needs of the Mayors (“give them what they want to hear from you.”).
Apparently, all Mayors in Pangasinan are convinced of the importance of the

Indigency Program except for some forms of resistance, which were perceived to
be financial. As an alternative approach, PhilHealth convinced the Mayors and
the Sangguniang Bayan (SB) to realign their budgets allocated for emergency
purposes into social health insurance premium appropriation. However, even
with this strategy, LGUs found it difficult to follow PhilHealth’s suggestion be-
cause of the natural disasters that often visit the province. While some key
informants would like to think that health is not really in the priority agenda of
some LGUs, others believe that the implementation of the Indigency Program
was also delayed by difficulties in identifying the indigent population.
65
Figure 1. Standard Process of Selecting Indigent Beneficiaries, Pangasinan.
Health Sector
Reform Technical
Once LGU agrees, the Assistance Project
Social Welfare Office
local Social Welfare
selects a specified
PhilHealth Office conducts
number of indigents
orients LGUs household survey
based on results of
using Minimum Basic
MBN survey
Needs (MBN)
PhilHealth Social Welfare Office

PhilHealth gives
assessment / endorses the list of
individual forms to
evaluation indigent families to
identified indigents in
based on set PhilHealth for further
the list
criteria screening & matching
PhilHealth submits list LGU enrolls

of qualified indigent selected
families to LGU for indigents &
funding & coverage by pay their
the Indigency Program premiums
Some indigent beneficiaries were found to be personal and political recruits (e.g.,
blood relations, party mates, friends). One of PhilHealth’s limitations was insuffi-
cient manpower to handle huge volume of clients from the region as well as the
unavailability of accredited health providers in eastern and western Pangasinan.
What made these 18 mayors finally decide to join the Indigency Program?
Apparently, the provincial intervention of sharing the premium with the municipal
LGUs “broke the camel’s back”. The total premium per indigent family is P1,188
per annum. For 1st-3rd class LGUs, the said amount is equally shared by Phil-
Health and the LGU at 50:50 sharing arrangement. The 50-percent share of the
LGU is further equally subdivided into provincial and municipal shares.
For 4th to 6th class municipalities, the sharing of premium is graduated: 90:10 for
the first year; 80:20 for the second year; 70:30 for the third year till PhilHealth
and the LGUs have equal shares of 50:50 in the 5th year. Mayors found this
arrangement more viable except that problems may be expected to arise once
premiums are raised in the second to the fifth years. For sustainability purposes,
the provincial government made sure that there is a resolution that (a) authorizes
the governor to enter into an agreement with PhilHealth; (b) authorizes, upon
approval of the Sangguniang Panglalawigan, the appropriation of an annual
allocation of funds for the provincial share of the insurance premium.
There is a view that the involvement of PhilHealth in the HSRA convergence

should not be limited to the Indigency Program. It should be universal coverage
66
catering to all sectors. The convergence should cut across all members, “other-
Health Sector
wise class distinction is being promoted”. Reform Technical
Assistance Project
Another come-on for Mayors is the idea of capitation. The RHU will receive
capitation money from PhilHealth in the amount of P300 x number of enrolled
indigents, given on a quarterly basis. Eighty percent of the capitation fund can be
utilized for medicines, supplies and equipment. Ten percent can be appropriated
as incentive for the health center staff. The remaining 10% can be used for non-
medical services. The RHU should be PhilHealth-accredited in order to qualify for
the capitation scheme. In May-June 2002, 5 RHUs qualified for PhilHealth
accreditation. These RHUs are in Sto. Tomas, Basista, Alcala, Mangaldan and
Laoac. However, these RHUs are not still receiving capitation. As a rule, capita-
tion can be availed three months after the RHUs PhilHealth accreditation. In the
case of Mangaldan, ID distribution shall be done on July 2002.
There seems to be some confusion with regard to capitation. The PhilHealth

manager noted that there are no distinct rules and guidelines regarding capita-
tion. For example, the Central PhilHealth Office says that PhilHealth funds should
be released to the RHUs, but politicians insist that funds should be released to
the LGUs.
A hospital capitation proposal was presented to the governor and the Sang-
guniang Panlalawigan in which hospital budgets will be used to buy insurance
premiums. The capitation payments can then be used for the operations of the
hospital. However, the use of hospital income to buy insurance premiums was
perceived to be “risky” because of concomitant changes in the financial system if
adopted. However, a provincial ordinance for capitation is under study.
So far, the following have been the accomplishments in social health insurance
and health financing (as of July 2002).
Table 4. Summary of Accomplishments in Social Health Insurance/Health

Financing vis-à-vis Indicators of Improvement, Pangasinan, July 2002.
Indicators of Improvement Accomplishment
Percent of indigents currently enrolled 8,869 families or approximately 20% of estimated total number
indigent families in the province
Percent of LGUs participating in the Indigency 7 of the 48 LGUs (12.5%)
Program
Percent of PhilHealth –accredited hospitals and 44 of the 51 hospitals (86.2%) including 12 of the 15 government
clinics hospitals (plus Region 1 Medical Center)
Percent of RHUs accredited by PHIC 5 of the 48 RHUs (12.5%)
Funding of premium (ratio of For 4th-6th class municipalities; 5:5:90
prov:mun:Philhealth
Social marketing of PhilHealth Active: First batch of 18 municipalities have signed MOA; 2nd batch
of 28 municipalities will meet in Aug 2002
Utilization Dagupan City has the highest utilization rate in the entire country.
Percent of RHUs receiving capitation 0%
Utilization of capitation funds Not applicable
Non-PHIC financing schemes 0%
67
Health Sector
Reform Technical
The gaps and problems in the implementation of the social health insurance in Assistance Project
Pangasinan are summarized below.
• 80% of total indigent families still to be covered

• 87.5% of 48 LGUs has still to participate in the Indigency Program
• 14% of 51 hospitals and clinics still to be accredited including 3 government
hospitals
• 90% of 48 RHUs still to be accredited by PhilHealth
Much still needs to be done to increase the coverage of the Indigency Program
and to make it more functional.
3.5 Propositions/suggestions
• Stronger advocacy to LGUs

• Upgrading of district hospitals
• Increase PhilHealth’s human resource capabilities
4.1 Status of Implementation
The Pangasinan Provincial Hospital (PPH), with its 150-bed capacity, was the
target for hospital reforms even during the time of the LPP in Pangasinan. It was
formerly the San Carlos District Hospital but was designated as the provincial
hospital in 1997 after the former provincial hospital based in Dagupan City was
re-nationalized.
An interim committee composed of the Governor, member of the Sangguniang

Panglalawigan, Provincial Health Officer, Population Officer, DOH representative,
Chief of Hospitals, member of the media and NGO representative, was organized
as the consultative body for hospital reforms. This group, many of whom are also
members of the Provincial Health Board, formulated the policies for hospital
reforms. Within the hospital, a Quality Assurance Committee (QAC) was created
to oversee the implementation of the hospital reforms. Similarly, Quality Im-
provement Teams (QITs) were established in each hospital departments and
sections.
The Pangasinan Provincial Hospital has maintained its classification as a tertiary

health facility. It has visiting consultants from Villaflor Hospital (a private hospital
in Dagupan City). It has also links with NGOs such as Rotary club for the polio
campaign and the Engender Health for voluntary sterilization and management of
post-abortion complication cases.
At the beginning of the health initiative, a situation analysis was conducted by the
PPH hospital staff to determine the problems that needed to be addressed. Using
68
the Monitoring, Training and Planning (MTP) modules, the staff identified the
Health Sector
following issues: Reform Technical
Assistance Project
• low morale/motivation of staff and other employees

• need to improve quality of care
• poor income generation
• low cost-efficiency
To address the first issue, 5S technology seminars were conducted in all hospital
departments. The seminar emphasized order and discipline in work. As a result,
the hospital staff and employees developed higher motivation, stronger self-
discipline and better relationships with patients and co-employees. The 5S was
later institutionalized through the “Best Hospital Department Award”.
The creation of the QAC ensured that quality health services are provided by the
hospital. In each department, there is a functional QIT that takes charge of
identifying the problems confronted by the department. The QITs meet monthly
to discuss the issues, make plans and solutions and submit their proposed plans
to the QAC. The QAC also meets monthly to monitor the submission of QIT
reports, and to provide more viable solutions to the issues at hand. For example,
the committee implemented color-coding as a means of controlling visitors and
watchers of patients in the hospital.
Among the various concerns of the hospital, shortening patient waiting time at
the emergency ward was found most tenable. A time and motion study involving
a review of emergency room (ER) policies, physical set-up, flowchart, and
functions of hospital staff was conducted. As a result, the ER was separated
from the OPD and a unidirectional flow of patients was implemented. Treatment
flowcharts and time indicators were adopted while manpower was maximized.
The outcome was the shortening of patient waiting time from 30 minutes to 5 -10
minutes.
Increasing hospital revenues was also a major concern. To generate higher

income, a more efficient system of billing and collection of fee was instituted. The
criteria for the availment of social services were reviewed, new policies on patient
classification and discharge were adopted, and cost analysis was performed in
each hospital cost center. For example, hospital clients were provided with
annual ID cards, which classified them according to their ability to pay. Hospitals
cost centers were given budget ceilings for operations and excess expenditures
were noted. Prescribed drugs were sold at the 24-hour hospital pharmacy.
All these interventions resulted in an increase in hospital revenues from P2.4

million in 1998 to P10.5 million in 2000. Currently, the provincial hospital makes
use of a portion of the income to upgrade its facilities and shares its revenues
with the other 14 hospitals in the province.
To address low cost efficiency, several interventions were established, such as

the development of a formulary. Hospital therapeutic committees were formed to
determine the kinds of drugs to be purchased. Procurement of drugs and
supplies was centralized (i.e., Provincial Pooled Procurement Program) and a
69
constant monitoring of cost centers to ensure the efficient use of drugs and
Health Sector
supplies was observed. Reform Technical
Assistance Project
Figure 2. Average Monthly Collection ('000),
Pangasinan Provincial Hospital, 1999-2002.
2000
1800 1832
1600
1400
1999
1200 1154 1153 1157
1068 1080 1097 2000
1000 1017
942 912 900 927 914 2001
800 846
796 772 755 788 774
738 2002
663 646
600 604
550 559 543
515
400 420
351
301 260
200 190 218 177 224 207
173 175 137
0
ov
ly
ay
n
ch
ug
b
il
ne
ec
ct
pt
Ja
Fe
pr
Ju
D
Se
N
M
ar
Ju
A
A
M
In July 1999, a Big Bang Day for the hospital was conducted resulting in better
image for the hospital, cleaner hospital environment, and satisfaction and better
work ethics among the employees. Other hospital reforms at the provincial
hospital involved physical changes in the hospital environment like fencing,
expansion of the ICU, renovation of the admitting area, putting a covered walk
between admitting area and ER as well as some purchase of equipment and
supplies for the laboratory. Patients who could not afford to pay were given the
option to help in the beautification and cleaning of the hospital. Preventive and
promotive health programs are now also being implemented. Regular customer
satisfaction surveys are conducted to gather important feedback regarding
policies and its implementation.
Recent discussions centered on plans to corporatize the provincial hospital or to

make it a government foundation. There was hesitance on the part of the provin-
cial government for reasons that are legal and political. The province, instead,
proposed a 5-year experimental implementation for the corporatization (fiscal
autonomy is the preferred term) of the hospital. (If the move is successful, then
(it) will be adopted; if not, it will go back to the usual management system). As
part of the move for fiscal autonomy, a hospital income retention scheme was
proposed to the provincial government where 50% of the excess income be
reverted back to the hospital. However, this did not push through because of
budget cuts in the internal revenue allotment (IRA) of the province. Currently, the
province is looking at the way the Negros Oriental HSRA is implementing its
hospital income utilization scheme.
There are other issues related to hospital reform in the provincial hospital:
70
• There is now a resolution that allows hospital doctors to do private practice
Health Sector
after office hours. Reform Technical
Assistance Project
• PPH is preparing the wards for indigent patients under the Indigency Pro-
gram. Pay wards are also being improved.
Currently, district hospitals are being groomed to replicate the success of PPH.
The MSH facilitated the technology transfer in Bayambang and Western Pangas-
inan District Hospitals. PPH staff conducted 5S and QA seminars in the Urdaneta
District Hospital.
Hospital reforms at the Bayambang District Hospital are being implemented. The
hospital created its Vision-Mission statement where the hospital will become a
“center of wellness”. Values formation workshops were conducted to develop
committed and motivated health staff. Transparency was an essential component
of management. The key informant was quick to add that these two reforms were
hospital initiatives.
On the other hand, the MSH provided trainings and assistance to the Bayam-
bang District Hospital with regard to the following:
• Establishment of 5S and Quality Assurance programs

• Creation of a hospital therapeutic committee
• Financial management
• Information management
After the devolution, the Bayambang District Hospital maintains an informal

relationship with the rural health centers. Resources from the district hospital
were shared with the RHUs like kelley pads, cord clamps and Betadine. Dental
chairs were procured through NGO’s and other foundations. In general, there
was no resistance from the MHO’s regarding the maintenance of the pre-
devolution relationship. The resistance came from the Mayors but “it was neces-
sary to play politics with the mayors to win their cooperation”.
At the Western Pangasinan District Hospital in Alaminos, a Quality Assurance

Committee (QAC) has already been established. MSH provided trainings on 5 S,
problem management and financial management. So far, the QAC was able to
accomplish the following: (a) hospital problem identification, prioritization of
identified problems and charting of solutions; (b) efficient system in monitoring
patients and watchers through provision of IDs; (c) improvement of the system of
billing and collection of fees; (d) organization of a Hospital Therapeutics Commit-
tee (although not yet as functional as desired); and, (e) cleaning and beautifica-
tion of surroundings.
There were observations that the reforms at the Bayambang and Western
Pangasinan District Hospitals are “snail-paced” as compared to the develop-
ments at the PPH when it was just starting. A key informant from one of the
targeted districts claimed that it was because “what has been done to the provin-
cial hospital in the past is not being done in the district”, referring to the support
given to the PPH by the province and MSH-USAID. (“There is no regular monitor-
ing from MSH”).
71
Health Sector
In the Urdaneta District Hospital (UDH), a seminar on 5 S was conducted in Reform Technical
September 2001 by MSH and PPH. Immediately after, these nine committees Assistance Project
were organized: Quality Assurance, Therapeutics, Disaster Control, Grievance

and Promotions, Infection Control, Management Staff, Outreach Program,
Voluntary Blood Donation, and Waste Management.
The initial achievements at the UDH include:
• Establishment of hospital cost centers (e.g. OPD services).

• Collection of hospital fees
• Converting unpaid hospital bills of indigent patients into services rendered to
the hospital, mostly in the cleaning and beautification of the facility
The hospital has increased its income – from P700,000 in 1998 to P1.2 M in
2000. The Urdaneta District Hospital has also:
• Allowed the practice of private doctors/specialists in the hospital. The MOA

was signed between the Chief of Hospital and Private Practitioner/Consultant.
• Allowed the regular monthly visit of a surgeon from the Regional Hospital to
provide surgical services to patients.
• Improved the image of hospital (e.g. staff attitude, cleanliness and beautifica-
tion). The Chief of Hospital required all staff to do something for beautification
(e.g. planting) at least five minutes before reporting to their official station.
• Acquired funds from the province for the renovation of some parts of the
hospital.
• Requested the Provincial Government to have their share of the hospital’s
excess income. They were required by the LGU to submit a proposal/plan
indicating the details of fund utilization.
• PhilHealth Indigency Program is still in the MOA signing stage.
The following have been the accomplishments in hospital reforms (as of July
2002).
Table 5. Summary of Accomplishments in Hospital Reforms vis-à-vis Indicators

of Improvement, Pangasinan Provincial Hospital, July 2002.
Establishment of financial management - Training on financial management
systems - Establishment of cost centers
- Improvement of billing and collection
- Review of patient classification
- Systematic record-keeping
Income generation - Increase in hospital income from 2.4 M in 1999 to 10 M in 2000
Income retention - Proposal was approved by the governor but still to be
implemented
Income utilization - Some income were used to 1) upgrade facilities; 2) purchase
drugs 3) as incentives to hospital personnel in the form of
monetization of credit leaves; 4) share funds with 14 other
hospitals
Fiscal autonomy - Under experimentation
72
Table 5. Summary of Accomplishments in Hospital Reforms vis-à-vis Indicators
Health Sector
of Improvement, Pangasinan Provincial Hospital, July 2002. Reform Technical
Indicators of Improvement Accomplishments Assistance Project
Quality assurance - Training on 5S; improved work attitudes
- Establishment of a QAC Committee
- Establishment of QITs in each hospital department
- Establishment of hospital therapeutic committee
- Improvement of operational systems
- Upgrading of facilities
- Improvement of surroundings
- Pooled drug procurement
- Increase in cost-efficiency in all departments
SS/PHIC facility upgrading - PPH is SS and PHIC-accredited; some district hospitals are not
PHIC-accredited
Upgrading in hospital classification - PPH already a tertiary level hospital
Technology transfer - Technology transfer in 3 district hospitals
Networking with private sector - Has work agreement with Villaflor Hospital and NGOs like the
Church, Rotary Club and Engender Health
The major gap in the implementation of hospital reforms in Pangasinan relates to

the establishment of full fiscal autonomy for the provincial hospital. While hospital
income increased five-folds since 1999, much of the money goes back to the
province. Another setback relates to the upgrading of the district hospitals to
make them Sentrong Sigla and PhilHealth accredited.
Implementation of the hospital retention and utilization scheme.
5.1 Status of Implementation
Problems related to limited financial resources, shortages of drugs and supplies

in government hospitals, varied prices of drugs purchased by the health and non-
health sectors in many LGUs, as well as non-compliance to the Philippine
National Drug Formulary (PNDF) prompted the province of Pangasinan to create
and implement a Provincial Pooled Procurement Program (PPPP) in 1998. The
purpose was to ensure quality and procure drugs systematically at lower costs.
With the help of MSH, the provincial government organized a series of meetings
with hospital chiefs, General Services Office (GSO) staff, hospital staff, and
suppliers to draft a provincial pooled procurement system. Hospital (HTC) and
provincial therapeutics committees (PTC) were organized. The HTC reviews the
annual procurement plans of the 14 hospitals and oversees the quality of drugs
delivered to these health facilities. The PTC in turn, reviews the drugs requested
by the hospitals to be purchased and sees to it that drugs procured are in accor-
dance with the provincial drug formulary (PDF), which is a subset of the national
drug formulary (PNDF).
73
Health Sector
Reform Technical
The provincial pooled procurement scheme abides by the following process. The Assistance Project
process starts with hospitals preparing their annual procurement plans using
VEN and ABC value analysis. The hospital staff makes use of their morbid-
ity/mortality statistics to determine common cases treated in the hospital after
which they assess these cases based on standard protocols and clinical practice
guidelines. They, then, use the VEN analysis to classify the drugs according to
their therapeutic value (vital, essential and non-essential). Vital drugs are given
priority in the purchase. The ABC value analysis determines which of the pro-
cured drugs have highest costs. Class A products are those that make up 75%
to 80% of total costs; Class B products represent the middle 10%-15% while
those in the C category represent about 10%. Since Class A items are expen-
sive, highest priority is given to their management.
In July of each year, the hospitals then submit their annual procurement plans to
PTC and GSO. PTC reviews the plans for compliance with PDF, checks specifi-
cations for the bid and forwards the approved plan and specifications to GSO.
The GSO consolidates the plans from 14 hospitals, prepares and processes all
tender documents and undertakes the bidding process. The Provincial Pre-
qualification, Bids and Awards Committee (PBAC) select the winning bids based
on price, lead time, product quality, and past supplier performance. The entire
bidding process is completed by the end of the year. Then the GSO notifies
hospitals about the winning bidder/s.
In the last Mondays of every quarter, purchase requests from each hospital are
submitted to the GSO coordinator where this office prepares purchase order
(PO). Purchase requests are based on the hospital procurement plan, inventory
management spreadsheets and availability of funds as evidenced by a bank
statement or deposit slips. The LGUs provide the funds for medical supplies
(General Fund), which in many cases are dependent on the timely release of the
LGU’s IRA; funds for the purchase of drugs come from the Trust Fund (financed
by the sale of drugs in each hospital). The hospital supply officer, therefore,
prepares two sets of purchase requests: one that is charged to the General
Fund, and the other, to the Trust Fund. The quantity requested for a particular
product follows a formula where the maximum stock level (MSL), stock on hand
and stock on order is taken into consideration.
The GSO consolidates all purchase requests from the 14 hospitals. Each winning
supplier will receive a number of POs depending on the Purchase Request (PRs)
of the 14 hospitals. The GSO issues the POs to the suppliers selected by the
PBAC, and to the second supplier if the first supplier is unable to deliver. Signed
by the Governor, the POs are ready for pick up by the supplier 5 working days
after the PRs are received by the GSO.
74
Figure 3. Process Flow for Hospital Procurement, Pangasinan, 2002.
Health Sector
Reform Technical
Assistance Project
Hospital Supply PREPARES PURCHASE REQUEST (PR) Purchase Requests
Officer (PR)
PTC/General COUNTERCHECKS PR FOR DRUGS, Approved PR

Services Officer SUPPLIES, EQUIPMENTS
Provincial Budget CONTROLS PR, CHECKS ON Approved PR

Office AVAILABILITY OF APPROPRIATION
Prov Accounting OBLIGATES FUNDS (CHARGE TO Obligated PR

Office HOSPITAL ACCOUNTS
General Services PREPARES AND NUMBERS THE Numbered PO

Officer PURCHASE ORDER (PO) BIDDING
Accredited supplier DELIVERS SUPPLIES TO HOSPITALS Stocks and supplies

delivered
Hospital Supply ACCEPTS, INSPECTS DELIVERY, Signed vouchers

Officer PREPARES VOUCHERS (complete attachments)
Prov Accounting PROCESS VOUCHERS FOR PAYMENT Signed vouchers

Office
Prov Treasurer’s PREPARES CHEQUE Prepared cheque

Office
Prov Governor’s Approved cheque for

APPROVES AND SIGNS CHEQUE
Office release
Prov Treasurer’s RELEASES CHEQUE TO SUPPLIERS Payment account

Office
Prov Accounting PREPARES ADVICE OF RELEASE TO

Encashed cheque
Office BANK
75
Health Sector
The supplier then picks up POs within 5 working days. The suppliers are given Reform Technical
up to 7 days to deliver the goods to the hospital. The supply officer and hospital Assistance Project
auditor inspects the medical supplies while the pharmacist and the hospital
auditor inspects the delivered drugs. The Supply Officer prepares the Receiving
and Inspection Report and submits a copy to the GSO within 24 hours from
receipt of deliveries. The Supply Officer also submits the voucher, signed by the
hospital chief, accountant and auditor, to the GSO within 48 hours. Papers are
forwarded to finance section. If the products are unacceptable, the end user
(pharmacist or medical technologist) submits a completed Product Problem
Report Form to the HTC and GSO. The HTC documents and researches the
complaint and informs the GSO of the batch number (Figure 4)
The LGU pays the suppliers on a quarterly basis after having the documents
pass through relevant departments in the LGU.
Fig 4. Action Steps for Suspected Quality Problems, Pangasinan, 2002.
Complaint Hospital Therapeutic Informs GSO of GSO sends

from hospital Committee documents and the Batch samples to
staff researches the complaint number BFAD
GSO informs GSO informs

Informs hospital
other hospitals supplier
pharmacy of the problem/
who received the
identifies batch number
same batch of
stocks
Supplier
replaces batch in
question
With the pooled procurement program in the 14 hospitals, drugs were bought at
much reduced prices, about 46.5% on the average lower in 2001 compared with
2002 prices. It was noted that drug suppliers have dropped their prices in order
to compete with the parallel drug importation.
Quality drugs were assured because only bids of suppliers accredited by DOH
were entertained. Hospital staff learned to prioritize their drugs into vital, essen-
tial and non-essential. There was proper procurement of drugs by the GSO using
a new set of drug supply contract and bidding documents as well as the avoid-
ance of the more expensive emergency purchase of medicines and supplies.
Hospitals learned to make use of a common inventory control system, which aids
in what drugs to order, when to purchase the same and how many of the said
drug should be ordered.
76
Table 6. Comparison of Drug Prices, Pangasinan, 1999-2002.
Health Sector
2001-2002
Name of Drug 1999 2000 2001 2002 Reform Technical
% decrease in drug price Assistance Project
Salbutamol nebulas 2mg/ml 36.00 20.00 25.00 16.62 50%
Ampicillin 500mg mg vial 35.00 14.00 14.40 10.60 36%
Chloramphenicol 1 gm vial 80.00 23.93 21.90 13.75 59%
Ampicillin 1 gm vial 109.00 65.00 30.00 14.50 107%
Paracetamol 30 mg amp 32.00 18.05 23.00 16.50 39%
Oxytocin 10 U amp 78.00 25.20 23.75 18.00 32%
Gentamacin sulfate 80 mg amp 89.00 14.20 12.50 9.50 32%
Hyoscine N-butyl bromide 20 mg amp 47.00 30.00 20.00 13.75 45%
Methylergometrine maleate 200 mg amp 60.00 14.10 22.00 16.50 33%
ATS 1500U 55.00 50.00 117.50 110.00 7%
Nalbuphine 10 mg 79.80 85.00 91.20 60.00 52%
Cefuroxine 750 mg 360.00 128.35 157.00 70.00 124%
Mefenamic acid 500 mg cap 500.00 166.66 124.50 92.00 35%
Cotrimoxazole 400 mg/80 mg cap 634.00 69.00 117.00 92.00 27%
Amoxicillin 500 mg cap 850.00 179.49 222.00 187.00 19%
As expressed by the GSO, there were still delays in the delivery of drugs by the
supplier despite the installation of a systematized procurement system. In many
cases, the winning supplier/s did not have immediate stocks. Delays were also
caused by the inability of the hospitals to submit their requests on time. While the
procurement system was considered “ideal”, district hospitals claimed that (a)
requested drugs and medical supplies are not delivered in full, (b) some drugs
have doubtful quality (although still subject to testing, the results of which takes
time), and (c) procurement is based on lowest bids, not on the quality of drugs.
The Provincial Health Office has thought of ordering their drugs via the parallel
drug importation scheme (PDI). A trial purchase was made in the early part of
2002 but delivery took a longer time ("we ordered in January; the drugs came in
June").
The province has not mainstreamed the LGUs for pooled procurement (“Drug is
the biggest policy of LGUs”). The Governor did not purposely convince the
Mayors to join the provincial pooled procurement because of political reasons.
Mayors have their own suppliers of drugs. Drug procurement has been done
every quarter at the municipal level. RHUs rely on BFAD accreditation of supplier
as their basis for assuring the quality of drugs.
There is a common practice in many LGUs where RHU patients get their drugs
from the Municipal Hall rather than from the RHU. In Bayambang, for example,
the MHO prescribes the drugs to the patients, then the patient goes to the Social
Welfare Office to get an approval of indigency, then proceeds to the Office of the
Sangguniang Bayan – Chair on Health Committee where the drugs are dis-
pensed. To assure safety and regulate the validity of drug dispensing, the patient
is asked to go back to the RHU for further instructions on the intake of medicine.
The risks involved in this practice are 1) when the patient does not go back to the
RHU for final MHO approval and 2) when the wrong, inappropriate drug is given
to the patient. The PHO is trying to suggest a win-win strategy, proposing that all
vitamins will be taken cared of by Mayors while drugs and medicines will be
handled by MHOs.
77
Health Sector
Figure 5. Process Flow of Drug Prescription, Bayambang RHU, 2002. Reform Technical
Assistance Project
SWO gives
Patient MHO prescribes Patient goes
certificate of
consults MHO medicine to SWO
indigency
MHO instructs patient Patient goes to SB

Patient goes back
on proper intake of Chair for Health
to RHU
medicine and get medicine
The following were the accomplishments in drug management as of July 2002.
Table 7. Summary of Accomplishments in Drug Management vis-à-vis Indicators

of Improvement, Pangasinan, July 2002
Functioning therapeutics committees - With functional provincial therapeutics committee
- With functional hospital therapeutics committee
Pooled drug procurement program - With pooled drug procurement program
Reduction in costs of drugs - Reduction in costs of drugs by 46.5% in 2002 compared to
2001 prices
Assurance of drug quality - Training in drug utilization review
- Drugs purchased according to PDF Pharmacists assure quality
of drugs Conducts testing of drugs
Timely delivery of drugs - Still problematic
Purchase from accredited suppliers - Procures from DOH accredited suppliers; procures some drugs
from PDI
Provincial drug formulary - Existing PDF; based on PNDF
Inclusion of municipal LGUs in pooled drug - 0% but there is continuing advocacy
procurement
• Problems related to quality of some drugs

• Delay and non-full delivery of drugs to the hospitals
• Inclusion of municipal LGUs in the provincial drug procurement
• More intensive training on quality control of drugs

• More intensive advocacy of pooled drug procurement to municipal LGUs
• More stringent criteria in the selection of bidders to include adequacy of
stocks
• Thorough study of benefits derived from PDI
78
6. Gains in Local Health Systems
Health Sector
Reform Technical
6.1 Status of Implementation Assistance Project
In Pangasinan, the old district health system is being maintained despite devolu-
tion. Relationships between the district office and member LGUs are present
though informal with no MOA to cement these partnerships. The six district
health systems are sustained mainly through funds from the provincial govern-
ment.
The Bayambang Health District (BHD) is the pilot area for the Interlocal Health
Zone. The Bayambang District Health District includes the following LGUs:
Bayambang, Basista, Alcala, Malasiqui, Sto Tomas and Bautista. It was chosen
because it was able to maintain informal relationships with its catchment munici-
palities. A MOA has already been drafted but is still under study by the provincial
government.
Another consultative meeting with LGUs and health workers will be conducted on
July 2002 to discuss the ILHZ framework for Pangasinan.
Meetings with MHOs and Mayors were done regularly at the Bayambang Health
District (BHD). The District Hospital has continued to share with the RHUs
whatever resources it gets from external donors (e.g. PCSO). The LGUs and the
district hospital have been complementing each other in terms of manpower
resources, medicines and supplies. RHUs refer their patients to the District
Hospital.
Local executives in the district have already discussed the possibility of forming
an ILHZ. A MOA has already been drafted and is still under study by the provin-
cial government. There is a plan to organize a District Health Board with the
District Hospital Chief as Chair and Mayors, MHOs and an NGO as members.
The political dynamics of having two congressmen within the health district was
perceived both as a positive and negative factor for the ILHZ governance.
The RHUs within the district are Sentrong Sigla accredited, but there is still a
need to upgrade their facilities. At the Bayambang RHU, the laboratory is being
improved to get PhilHealth accreditation. RHU 1 sought assistance from the
PCSO for facility upgrading. However, they have difficulty recruiting a medical
technologist because they could only promise P7,000 a month as remuneration
for the medical technologist.
Aside from Sto Tomas, a 4th class municipality who has enrolled its constituents
in PhilHealth way back in 2000, the Mayor of Bayambang was among those who
planned to enroll 1000 families in the PhilHealth Indigency Program with support-
ing Sangguniang Bayan resolution. An NGO was willing to cover the premium for
1,000 indigent families years before but PhilHealth did not agree because of the
absence of guidelines.
Indigents at the Bayambang LGU were identified through the Office of the
Municipal Social Welfare. The Mayor created a committee composed of the
79
MHOs, social welfare workers and Barangay Chairmen to do the selection of
Health Sector
indigents. A Minimum Basic Needs survey was conducted to identify indigent Reform Technical
families based on DSWD criteria, then the list was submitted by the Social Assistance Project
Welfare Officer to the Office of the Mayor and PhilHealth.
The criteria for selecting indigents are based on socio-economic indices, such as,
household income (ultra poor – P5,000 and below monthly family income for a
minimum of 6 children; poor – P5,000 to P6,000/ monthly income); families with
irregular income; and type and physical structure of the house (temporary, small,
and the like).
Based on PhilHealth policy, 20% to 25% of the population represents the target
coverage for the Indigency Program. However, the LGU cannot afford to cover
the premium of about 10,000 indigent families. Instead, the LGU opted to enroll
10 percent of its indigent population (or 1,000 families). So far, about 773
indigent families in Bayambang were identified and additional families are being
recruited to complete the target of 1,000 indigent beneficiaries.
The factors that facilitated LGU involvement in social health insurance were:
• Health was a political promise of the Mayor in the last elections

• Governor’s support to LGUs for the Indigency Program
• Sangguniang Bayan resolution to support the social health insurance imple-
mentation
• Three barangays allocated budget from their IRA for the social health insur-
ance premium of their constituents
• It was a way of minimizing the burden of LGU in assisting indigents for their
hospitalization
• Incentives related to capitation. If the RHUs will be PhilHealth accredited,
they will receive P600,000 capitation fund from PhilHealth out of their
P1,200,000 premiums/investment.
Among the HSRA reforms, the ILHZ was the least developed in Pangasinan. The
key informants felt that the Negros Occidental model was quite difficult to adopt
in Pangasinan. Unlike Negros Occidental, Pangasinan does not have the
financial resources from the DOH Regional Field Office, equivalent of their
premium from the LPP Base Grant and a counterpart from the Provincial Gov-
ernment. The availability of these funds enticed municipal LGUs in Negros
Occidental to invest for their own interlocal health system.
Resistance on the part of the Pangasinan local executives was partly financial
and partly political. Mayors were perceived to have other priorities. They have
their own turf and seemed more interested in developing a health facility that they
could call their own “legacy to the people” (e.g., building a community hospital or
buying their own drugs and supplies). For political reasons, even the Governor
does not want to impose on the mayors the idea of cost sharing. Instead, the
Governor would like to strengthen integrated planning, referral systems as well
as information systems.
80
Health Sector
Reform Technical
The following were the accomplishments with regard to the establishment of Assistance Project
inter-local Health Zones in Pangasinan (as of July 2002).
Table 8. Summary of Accomplishments in Inter-Local Health Zones vis-à-vis

Indicators of Improvement, Pangasinan, July 2002.
Number of ILHZs established vs. targets - Identified 1 out of 6 potential ILHZs; Bayambang District Office
not yet fully functional
With signing of MOA - No MOA signing yet
With District Health Board - Still in the planning
Sharing of non-monetary resources - Sharing of supplies, drugs and manpower among LGUs in the
Bayambang district; other district offices (e.g. Western Pangasi-
nan District Office) claimed to have the same arrangement
Functional referral system - Functional with some feedback mechanisms
Networking (NGOs, private sector, inter gov’t - NGO in the planned District Board; assistance from PCSO
agency)
Cost sharing 0%
Common fund 0%
The establishment of an ILHZ is perhaps the biggest gap in the implementation

of HSRA in Pangasinan. Only one ILHZ has been identified yet it has not started
functioning as desired. The biggest stumbling block relates to the type of ILHZ to
be established in the province. The ongoing deliberations have delayed the
signing of the MOA. As expressed by the governor, integrated health zone
planning will be the main core of the collaboration. The implementation of a cost-
sharing scheme among member LGUs may have to remain in the background.
6.5 Suggestions
• Develop a more relevant ILHZ framework for Pangasinan.
7. Best Practices
Pangasinan’s strengths are its hospital reforms, specifically in terms of quality

assurance and revenue generation. Another strength is its pooled drug procure-
ment program for government hospitals, which resulted in significant cost savings
for the province.
The discretion and prudence being shown by the provincial government in

instituting the health reforms was well noted. While it might have delayed the
implementation of some of the HSRA Convergence components, the circum-
specting attitudes of the provincial officials provided some assurance that the
health initiatives are sustainable and culture-sensitive.
To pursue health reforms in Pangasinan, the following are in the pipeline:
81
• A consultative meeting with LGUs and health workers in July 2002 to discuss
Health Sector
the ILHZ framework for Pangasinan. Reform Technical
Assistance Project
• A meeting with 28 LGUs in August 2002 to discuss participation in the

PhilHealth Indigency Program.
8. Lessons learned
• There should be a prime mover who could motivate people, initiate the
activities and sustain the momentum for reforms. In the case of Pangasinan,
the prime mover is the Governor.
• Even if there is a prime mover, the role of an external body like MSH cannot
be at all ignored. MSH has provided substance and direction to HSRA.
• The motivations and the political will of the local governments to implement
health sector reform is very crucial. Mayors and the local council are the final
decision-makers for any reform that is implemented in their locality.
• Competent and committed technical people and dedicated, reform-oriented

program managers are needed for the successful implementation of reforms.
In Pangasinan, the provincial HSRA advocates served as a major push factor
for the reforms to trickle to the grassroots.
• For reforms to succeed, the approach should be consultative and participa-

tory. The local culture as well as the sentiments of the local people should be
considered. The provincial government and PhilHealth showed sensitivity in
dealing with the mayors and local health workers (e.g., drug procurement,
social health insurance). At the same time, MSH was very careful not to im-
pose any intervention that the locals may not consider suitable to their condi-
tions (e.g., corporatization, ILHZ)
• Patience and a well-thought out strategy can bring about a more positive
impact in the long term. The Governor was restrained and deliberate in his
ways. He made sure that health reforms can be sustained.
9. Conclusion
Great strides have been attained to improve the health system in Pangasinan.
The implementation of the HSRA has brought about quality and cost-efficiency in
the provision of health services at the provincial hospital. While the HSRA
Convergence emphasized the integrated character of the 5 HSRA components,
much has still to be done to make the blueprint work in Pangasinan.
82
Health Sector
Assistance Project
1. Chief Nurse (San Carlos Provincial Hospital)

2. Chief of Bayambang District Hospital
3. Chief of Urdaneta District Hospital
4. Head of GSO
5. Indigent patients (San Carlos Provincial Hospital)
6. Management financial analyst (San Carlos Provincial Hospital)
7. Mayor, Bayambang
8. Medical Social Worker (San Carlos Provincial Hospital)
9. MHOs, Bayambang RHU I and II
10. MSWD, Bayambang
11. PhilHealth Region I manager
12. Provincial Health Officer
13. Provincial Planning Officer
14. Sanggunian for Health Bayambang
15. Supply officer (San Carlos Provincial Hospital)
83
Health Sector
Assistance Project
"Pangasinan Health Sector Reform Convergence Workshop Output." Manage-

ment Sciences for Health, 2001.
"Site Plan for the Province of Pangasinan (Update of the HSRA Convergence
Workplan January-June 2002)." Management Sciences for Health, 2001.
Livebirths, Total Deaths, Infant Deaths and Maternal Deaths, Province of Pan-
gasinan, 2001.
Facts and Figures, CY 2000 Pangasinan.
"Comparative Results Hospital Income January 1999-March 2002." Slide pres-

entation.
"Philippine Health Insurance Corporation Indigent Program Unit Medicare Para

sa Masa. Total Members per Municipality per Effectivity Dates."
"Pooled Pharmaceutical Procurement in Pangasinan." Technical Notes 2, 2001.
84
IV
Health Sector
Reform Technical
Assistance Project
MISAMIS OCCIDENTAL (REGION 10)
Misamis Occidental is one of Mindanao’s 22 provinces. The province had a year-

2000 population of 489,000. It consists of 14 municipalities and three cities. The
leading causes of morbidity in the province are diseases of the respiratory tract,
i.e., acute respiratory infection and bronchitis, tuberculosis, and pneumonia.
Influenza and diarrhea register significantly lower averages for the past five years
compared to respiratory illness. Respiratory problems increased significantly in
2001 from 3,195 per 100,000 from 1996-2000 to 8,867 per 100,000 in 2001. The
influenza rate increased from 1,221 per 100,000 in 1996-2000 to 2,091 per
100,000 in 2001. Overall, morbidity increased significantly in 2001.
Table 1. Ten Leading Cause of Morbidity: Comparison of Five-Year Average

(1996-2000) and Year 2001, Misamis Occidental.
5 Year Average Year 2001
N Rate N Rate
ARI/Bronchitis 8,387 3,195 23,931 8,867
Influenza 3,204 1,221 5,643 2,091
Diarrhea 3,177 1,210 3,584 1,328
Wounds/Injury 4,011 1,528 3,290 1,219
Pneumonia 2,301 877 3,280 1,215
CVD/HPN 457 174 2,129 789
Peptic Ulcer Disease 253 97 672 232
UTI 317 121 756 280
PTB 450 171 435 161
Accidents/Violence – – 416 154
Number and rate per 100,000 population.
Source: Provincial Health Office, Misamis Occidental
Over the past five years, cardiovascular diseases followed by pneumonia have
been the primary causes of death in the province. Cancer is the second leading
cause of death during the period 1996-2000 and fell to third during the year 2001.
The other causes of mortality are relatively similar between 1996-2000 and 2001.
In terms of infant mortality, there is a general trend of decline from 1996 to 2000.
The lowest rate noted is at 7.27 per 1,000 live births. In 2001, it increased to
8.65 per 1,000 live births, but the level was still less than the 1996 figure. This
trend is also similar to maternal mortality where there is a general decline. The
lowest is 0.21 per 1,000 births in 2000, which slightly increased to 0.23 per 1,000
births on the following year.
85
Health Sector
There are 31 hospitals in the whole province (7 public, 24 private). The provincial Reform Technical
and municipal government also operate a combined total of 14 rural health units Assistance Project
and 77 barangay health stations.
Table 2. Ten Leading Cause of Mortality: Comparison of Five-Year Average

(1996-2000) and Year 2001, Misamis Occidental.
5 Year Average Year 2001
N Rate N Rate
CVD/CHD 251 336
Pneumonia 177 169
Cancer 194 93
PTB 80 79
Renal Disease/Failure 31 63
Accidents/Violence 72 59
Bleeding Peptic Ulcer 28 26
Liver Disease/Cirrhosis 16 25
Diabetes Mellitus 20 22
Septicemia 12 11
Number and rate per 100,000 population.
Source: Provincial Health Office, Misamis Occidental.
Table 3. Six-Year Trend of Infant and Maternal Death 1996 to 2001, Misamis
Occidental.
Infant Death Rate Maternal Death Rate
N Rate N Rate
1996 55 10.4 3 0.57
1997 42 8.56 4 0.82
1998 38 8.42 2 0.44
1999 38 7.78 3 0.61
2000 34 7.27 1 0.21
2001 38 8.65 1 0.23
Number and rate per 1,000 Birth/Deliveries.
Source: Provincial Health Office, Misamis Occidental.
2. Health Sector Reform
The province of Misamis Occidental took up the challenge of decentralization by

considering health as a main concern. The provincial government conceptual-
ized the a set of flagship programs collectively called CHAMPS, which stands for
"Competence, Health, Agriculture, Maintenance of Peace and Order, Preserva-
tion of Environment and Social Services." With health as a flagship program,
financial allocation from the provincial government was secured. This resulted
into renovation of public hospitals and health centers.
One positive indicator was the significant improvements done on the structure
and facilities of the Misamis Occidental Provincial Hospital. With investments on
structure and improvement in the quality of its services, the hospital won the
Sentrong Sigla Award with a cash prize of P2.4 million. This cash prize was used
for further renovation and addition of new facilities. The Misamis Occidental
Provincial Hospital is now very competitive with the private health sector. With
the success demonstrated by this strategy, other government hospitals in the
province are also undergoing significant improvements.
86
Health Sector
The initial experience of the province in implementing health programs in a Reform Technical
decentralized setting is very favorable. The province is one of the pilot conver- Assistance Project
gence sites under the Health Sector Reform Technical Assistance Project. The
project is designed to provide assistance and guidance to the local government
to ensure that health sector reform initiatives are directed towards a common
goal.
A convergence workshop was held in the province in August 2001. Its objectives
were to: (a) discuss the problems of the local public health sector, (b) agree on a
set of targets for each health sector reform area (HSRA), (c) identify the strate-
gies to attain the targets, and (d) develop an action plan for each strategy. In
general, the workshop objectives were attained. It ended with the development
of an action plan and identification of HSRA advocates.
The workshop was facilitated by Management Sciences for Health (MSH). It was
participated by different LGU stakeholders (like the Mayors, Sangguniang Bayan
members, Integrated Provincial Health Officer/s and key management personnel,
Chief of Hospitals/representatives, City and Municipal Health Offi-
cers/representatives and other LGU top officials), Undersecretary Fernandez,
DOH National representatives, Director Fuentes (CHD X), CHD X key personnel,
PhilHealth executives, and NGO representatives.
Table 4. Total LGU vs. Health Budget Allocation and Expenditures,

Misamis Occidental (1999-2002).
BUDGET ALLOCATION EXPENDITURES
YEAR Total PLGU Total Health Total PLGU Total Health
(PhP) (PhP) (PhP) (PhP)
1999 230,590,373.00 58,712,280.00 163,967,790.11 55,428,959.52
2000 263,000,000.00 64,409,801.00 224,916,575.44 61,560,159.18
2001 284,555,000.00 71,218,385.50 293,208,311.06 69,962,636.19

– –
2002 295,905,000.00 74,996,493.00
Source: Provincial Budget Office.
With regard to health financing, the province has set the following targets:
• 85% of the target population are covered by social health insurance in 2004,
of which 40% (40,000 HH) are indigents, 35% are employed and 20% are
individual paying members
• RHU accredited per municipality
• Collection centers (banks and other units) identified and established in

strategic sites/every city or municipality
87
• Efficient and prompt processing of claims by PhilHealth and providers (in 30
Health Sector
days) Reform Technical
Assistance Project
• Quality health services available and accessible for social health insurance
members and dependents
3.1 Indigent Program
The PHIC oriented all the municipalities and cities of Misamis Occidental to the
PHIC Indigent Program. All have expressed support to the program. As of
November 2001, 7,440 indigent households had already enrolled in the program.
In December 2001, a total of 5,814 identification cards were issued to Indigency
Program enrollees.
The PHIC also oriented the local government officials about the “capitation
scheme.” The scheme entitles an accredited Rural Health Unit a subsidy from
PHIC at an amount of P300 per enrolled member of the indigent program in their
locality. Thus, for a municipality with 1,000 enrollees, the RHU will receive
P300,000 per year. Such fund can be used for improving its services.
In Misamis Occidental, there are 7 out of 17 towns that have indigents enrolled
into the program. As of April 2002, more than 9,000 households have been
enrolled. The program hopes to reach the target of 20,000 households enrolled
by the end of the year and 40,000 for 2003 approximately 85% of the indigent
population of Misamis Occidental. According to the PHIC Indigent Program Unit
of Region 10, it will most likely achieve this target because of the following
factors: (a) aggressive promotion of the program package, (b) good relation with
the local leadership, (c) proper understanding of local needs and culture (since
most members of the unit came from the locality) and (d) the current cost of
health services.
Enrollment of indigents to the program is cited as among the significant activities

with effects on the convergence. The number of enrollees to the program de-
pends on the discretion of local chief executives. Lopez Jaena LGU enrolled
2,000 indigent families while Calamba enrolled 100 indigent families to the
program. All LGUs in the Oroquieta ILHZ decided to enroll in the program.
Other than the PHIC and LGUs, the Social Welfare Office has also been
conducting information dissemination and advocacy for the PHIC Indigent
Program. They are marketing the social health insurance by encouraging
patients to enroll.
3.2 Rural Health Unit Accreditation
The Quality Assurance and Accreditation Unit of PHIC Region 10 has informed
all the rural health units of Misamis Occidental the necessary requirements for
accreditation. Accreditation is necessary so that the unit can avail of the “capita-
tion” payment scheme of PHIC indigent program.
Based on the initial evaluation of the rural health units, the most common missing
requirements are some laboratory equipment, like the centrifuge and the regular
medical technologist. In some areas where there is 1 medical technologist
88
serving 3 municipalities, the RHUs within the catchment area are constrained on
Health Sector
said requirement and cannot be accredited by the PHIC. PHIC X is strict in Reform Technical
following the national policy. It is not flexible, even if the utilization rate of labora- Assistance Project
tory service in RHUs is low compared to hospitals.
According to the PHIC Quality Assurance and Accreditation unit, accreditation

approval is fast as long as the facility meets all the requirements. Thus, hospi-
tals, city and rural health units are upgrading their facility for accreditation. Long
before, Calamba and Plaridel RHUs had submitted their application to PHIC, but
they are still waiting for the approval. According to PHIC representative, ap-
proval of first application is at the national office, which prolong the processing
time and cause delay in approval of applications. Approval of accreditation
renewal is at the regional office. At present, there are 7 out of 17 accredited
RHUs in Misamis Occidental.
3.3 Capitation Fund
The capitation fund calculated at P300/member of the Indigency Program is

released every quarter vis-à-vis LGUs lump sum payment of premiums. This is
an issue between accreditation and indigency program enrollment. PHIC Re-
gional and Provincial Offices have no control on it since the national guidelines
indicate that capitation fund release will be based on quarterly monitoring.
Moreover, for LGUs that have no accredited health facility/unit, the capitation
fund will be given to the provincial or district hospital. This agitated an issue on
the cost and return of premiums for some LGUs, but for others, they treat it as a
subsidy on top of their health budget.
A suggestion was presented to focus group participants with PHIC representa-

tives on the utilization of capitation fund to augment Indigency Program cover-
age, procurement of equipment and medicines for patients.
The City Health Office of Oroquieta is PhilHealth accredited, but it has not
received the capitation fund. It is still on process according to latest update from
PHIC personnel during the focus group discussion. Oroquieta is on a losing end
if the LGU dwells on the cost of Indigency Program premiums and capitation fund
issue. PHIC is also processing the capitation fund for Bonifacio at P120,000 per
quarter.
3.4 Patient’s Experience of Indigent Program
The patient’s experience of the benefits of the indigent program was also deter-
mined by conducting patient interviews. Of 4 clients interviewed, 2 were non-
members of PHIC. One was an Indigency Program member and the other was a
paying member. All were aware of PhilHealth, but non-members were not
knowledgeable of PHIC programs. One informant heard about PHIC on TV.
Except for the IP member, the informants have never heard of the Indigency
Program in their area. One of them had heard it in Oroquieta City yet did not
know about the details of the program. IP member’s knowledge about PhilHealth
is the free hospitalization benefits “when sick, during emergency and accidents.”
He did not know the cost of premium because it was the LGU who paid for it. For
89
the paying PhilHealth member-informant, the premium is affordable because it is
Health Sector
an automatic payroll deduction, although she did not know the exact amount. Reform Technical
Assistance Project
Services availed by social health insurance member-informants were hospitaliza-

tion benefits, which included free room accommodation, doctor's fees, ultra
sound and x-ray services and refund of medicines purchased outside the hospi-
tal. For the paying client, it was their first time that they availed of their social
health insurance. They spent out of pocket for medicines purchased outside the
hospital pharmacy. However, they were aware that PHIC would reimburse them.
PHIC non-members did not approach their political leaders to avail of social
health insurance. One informant wanted to avail it but she could not afford to pay
the premium. The other informant expressed a capacity to pay the premium.
The IP member was aware of MOPH only as a service facility of PhilHealth, but
the paying member was aware of other facilities accredited by PHIC. Informants
preferred government hospitals because the cost was lower compared with
private facilities.
The IP member was satisfied with the services of the Indigency Program.
Satisfaction was expressed in terms of financial assistance for hospitalization,
which lightens their financial burden, free medicines, quality time and service
given by services providers, and clean facility and equipment.
3.5 Identified Problems of the PHIC Indigent Program
The following are identified as problems associated with the PHIC Indigent
Program:
• The first is the slow and lengthy application process. PHIC personnel are in a
hurry to get LGUs’ application, but approval and ID distribution have always
been delayed. This worries local officials because it harms their credibility as
well as the credibility of the program. The double survey (DSWD entry inter-
view and PHIC means test survey) could be the main contributor to this
lengthy process. Perhaps, there should be only one standardized survey.
• The second is the discrepancy in accomplished application forms, which

delays the process. Application forms are not properly filled up.
• The third is inadequate information given to IP members about available

services, facilities, benefits and other program information.
3.6 Policy Directions of the Province on PHIC Indigent Program
An interview was also done with the current provincial governor regarding his
policies on health financing. According to the Governor, “he is ashamed and at
the same time challenged by the situation that Misamis Occidental is behind and
slow in the Indigency Program.”
He would like to lobby to President Arroyo for walk-in clients social health insur-
ance on the premise that everybody has the right to be treated, and when sick,
90
he/she should be admitted to the hospital. This was based from his observation
Health Sector
of PHIC’s policy for enrolling indigents, which he described as “strict bureauc- Reform Technical
racy.” The Indigency Program application process is long and tedious. There is Assistance Project
a need for alternative and radical innovations to cut the bureaucracy and red
tape, not only in health but also in other development sectors like agriculture.
PhilHealth insurance is the second issue that the Governor would like to lobby to
President Arroyo on the contention that 60% of the province’s population is poor.
Thirty five thousand households are targeted for Indigency Program coverage.
Records show that there are 18,000 household-enrollees of the program.
The Governor decided that the Provincial Government would pay the premium to
facilitate and fast track Indigency Program implementation. If they wait for
Municipal LGUs counterpart, it will result to sluggish program implementation.
The Provincial Government will cover all the premiums in a cost-sharing scheme
of 90:10 (10% being the LGU counterpart). However, the Governor does not like
the policy on step increment in the cost-sharing scheme. “It is just an entice-
ment.” From his viewpoint, medicines or health should be “service” and must
not be mixed with “business.”
Eighty-five percent to 90% percent of patients are indigents, which resulted to a

big drain of the province’s financial resource. The Governor wanted to convert
indigents to paying patients through the Indigency Program. He is thinking of a
certain credit facility so that indigents can avail credit assistance to buy for
medicines.
The Governor agreed on the concept of sustainability of health services. He

said, “nothing here on earth is free, everything has a price, and that’s the es-
sence of accountability and responsibility.” It is his challenge to change the
attitude of his people into empowered constituents. In Women’s Health program
assisted areas, there is P500 – P1,000 financial assistance for hospitalization.
There are two key elements of hospital reforms being done in the province. One
is quality improvement and the other is financial sustainability. These two areas
or reforms in the hospital have gained much attention in the province and support
from the political leadership.
Hospital improvement is considered as a top priority by the political leadership in

the province. It has set these two targets:
• Self-sustaining hospital operation through generation and retention of hospital

income
• Upgraded diagnostic and therapeutic capabilities of six (6) public hospitals
It was found out during the interview with hospital management staff that there
are also other sources of funds for hospital operations other than the provincial
government. The Misamis Occidental Provincial Hospital for instance has operat-
ing expenses of P23 million, vis-à-vis an income of P3 million. The Provincial
91
Hospital income is 13% of the total budget. Apparently this indicates a big deficit
Health Sector
of LGU’s investment over time. The prevailing scenario has implications on Reform Technical
perennial budget limitations and inability to self-sustain hospital operations. Like Assistance Project
many LGUs, Misamis Occidental depends on the Internal Revenue Allotment

(IRA).
To avoid total dependence on the provincial government, the management staff

of the provincial hospital taps other donors like NGOs and civic organizations
(e.g., People Helping People). The latter is a private initiative composed of
private practitioners, government employees, LCEs and religious groups. It is
headed by the NGO representative in the Oroquieta Health Board. It receives
donations from the United States, which it has used for hospital equipment and
beds.
Another hospital, the Calamba District Hospital, is a secondary care facility. It

has a 50-bed capacity similar to the MOPH. There are 6 semi-private and 11
Medicare beds. The rest are charity beds. The hospital is run and served by 52
employees who also educate their patients. The budget in 2001 was
P11,722,420. It has an income of P1.9 million, approximately 16% of the total
budget. Hospital income is low because 80% of patients are indigents. Occu-
pancy and service fees are very minimal.
4.1 Strategies to Increase Hospital Revenues
One of the key elements in hospital reform is the issue of financial sustainability.
A basic research on MOPH’s financial data was in preparation for the costing
program designed to increase revenues for the district hospital.
One way of increasing revenue is through charges, but the political leadership is
not comfortable with the idea. Both the MOPH and Calamba District Hospital
collects charges and fees for semi-private rooms. Medicare room is charged
P220/day, semi-private/non-Medicare patients at P100/day and free of charge for
the ward. Any additional increase in hospital fee for services must be approved
by the Sangguniang Panlalawigan. This causes difficulty to increase revenues
through charges.
There was a resolution proposed to the Sangguniang Panlalawigan to increase

hospital fees/charges, but the Governor and the Sangguniang Panlalawigan did
not approve it. The Provincial Government determined Service fees and room
rates. This is supported by legal mandates, such as the Sangguniang Panla-
lawigan resolution and Executive Order. Aside from the legal mandates, the
hospital management has difficulty in increasing service fees because most
patients are indigents. Additional private rooms are the most common response
of informants to increase hospital income.
Another strategy to increase revenue is to increase utilization of hospital services

as an avenue of improving hospital operations. However, hospital management
and health providers are constrained on their inadequate regular budget. In line
with this strategy the hospital management had submitted a facility-upgrading
proposal to the Provincial Health Board for possible funding, which includes
additional private rooms.
92
Health Sector
It was also raised in the discussion with the management staff of Calamba Reform Technical
District Hospital and the members of the Calamba District Health Board that Assistance Project
another way of increasing revenue is to encourage enrolling indigents to PHIC

Indigent Program.
One of the problems in hospital income is the issue of collectibles. The very slow
rate of processing and reimbursement by PHIC is a problem. This problem is
shared by both the Misamis Occidental Provincial Hospital and the Calamba
District Hospital. Their experience revealed two to six months for processing and
reimbursement. Document deficiencies, slashing and denying of claims were
observed to be minimal. Based on PHIC policy, it takes 60 days of processing
for reimbursement from the date of beneficiary discharge. At the regional level,
the PHIC reduced the processing timeframe to 30 days. It will still go through the
usual accounting procedure. Although processing time is reduced, the regional
office is bounded to some constraints, like limited available funds and delayed
fund transfer from central to regional office. Another attributing factor pointed out
in the delay of reimbursement is the delay in postal services.
The hospital has undergone significant physical improvements and because of

this it became more competitive with the private sector in terms of income and
revenues. There are more private rooms built and the old “Medicare” facility is
refurbished. These attract the employed sector to be admitted in the hospital,
thereby increasing revenue. In the case of paying client-member, they heard
feedback that clients prefer the MOPH private rooms than private hospitals.
However, they need to make advance reservation due to very limited rooms. It
was suggested that it would be better if Medicare ward has private or semi-
private rooms.
The hospital started charging other services like issuance of medical certificates,
increased its laboratory charges to levels competitive with the private sector but
affordable to the middle income and with subsidy to the indigents.
4.2 Strategies to Decrease Operations Costs
Misamis Occidental Provincial Hospital functions as a 130-bed capacity facility

vis-à-vis a 100-bed budget. Average rate of occupancy is 30-35 patients per
day, but on the date of visit, it registered 69 occupants. A strategy adopted by
the hospital to decrease operations cost is to limit the number days of stay of
patients in the hospital.
In terms of decreasing operations cost, the hospital is also actively pursuing its
participation in the Parallel Drug Importation Program of the Department of Trade
and Industry and the Department of Health. It has already placed a bulk order
together with the other members of the district health zone. lt also adopted
guidelines that shorten hospital stay and ensure efficient delivery of health
services for admitted patients. A ceiling for subsidy to charity patients is now in
place to decrease operations cost. So far, these strategies have been successful
because of social preparation and information campaign to patients.
93
With these efforts to achieve financial sustainability, there is still much to be
Health Sector
desired. There is still a perceived need to external source of funding. Charitable Reform Technical
organizations and non-governmental agencies are now being tapped to help Assistance Project
further improve the operations. A proposal was already made to use hospital
income to augment its operations cost instead of reverting the income back to the
provincial government.
Basic quality improvement training using the 5S technique was conducted for key
officers of the provincial health office and provincial hospital. It directed at
reorienting the work ethics of health personnel to complement the physical
improvements done for the hospitals. Its consequences are enhanced staff
competence, maintained hospital cleanliness and compassionate care to pa-
tients. The overall result revealed increase in morale of staff and perceived
improvement in services by the patients.
The Governor has expressed plans of buying CT scan equipment. To date, no

hospital in the province has a CT scan. The Governor, however, supports
HSRTAP’s suggestion for the province to initially conduct a market study. This is
to ensure that the province will be able to recover its planned investment, con-
sidering that there are reports that other private hospitals also have plans of
acquiring it.
4.3 Quality Improvement Strategies
Aside from the physical improvements of the hospital, the MOPH also underwent
significant training for the quality improvement of its services. They have adopted
the 4Cs of quality assurance:
Conducive facility
Competent staff
Compassionate management and staff
Courtesy
Other activities related to quality improvement are:
• Ensuring availability of consultants per department
• 3 – 4 days confinement of patients to avoid congestion
• Do away unnecessary examinations
• General rounds in the facility every Wednesday
• Regular conference with hospital management and staff (“no holds bar”)
• Come up with standard treatment guidelines
• PA system and television set showing health video programs and promotions
as information media for hospital clients/patients.
94
A feedback system from the patients regarding their experience in the hospital
Health Sector
has also been set up. They try to learn what patients want and institute the Reform Technical
necessary changes through the suggestion box, one on one contact with pa- Assistance Project
tients, direct or individual feedback from people who are empowered in airing
their concerns directly or in media/radio program, feedback from the Mayor and
Dr. Conor (consultant) and Peoples Organization feedback (e.g. Women’s
Organization).
Feedback from the suggestion box accounts a small percentage, which usually
reveals complaints like "hospital is dirty", "don’t like the nurse" and "don’t allow
religious group singing during siesta time". Hospital management seemed to
have difficulty in getting direct feedback from patients because of the latter’s
reservations. They heard complaints from the radio program especially on "no
available medicines in the hospital pharmacy". Complaints from the public radio
program do not come frequently
There is also a hospital grievance committee. Health educator and program

officer also conduct survey and rounds in the hospital. It was emphasized that
information should be given properly and in the right time to resolve high expec-
tations from the people.
One patient interviewed said, she was quite satisfied with the facility and its
services. The quality of service provided is characterized as accommodating and
good. Service providers are facilitative, the facility is clean, and equipment is
available. However, some drugs were not available in the hospital pharmacy,
which forced them to use their money. Furthermore, the hospital has a limited
number of doctors, which caused longer waiting time and delay in admission.
Only 1 doctor did the rounds.
Non-PhilHealth member-informants revealed their satisfaction in terms of the

following:
• They were attended immediately by service providers (“alisto ang mga

doctors ug nurses” – "the doctors and nurses were alert")
• Available drugs in hospital pharmacy, in case not available – the doctor

provided them with medicines
• Clean facility
• Accommodation is okay and they were provided with materials
• Laboratory and other services provided are okay
• No problem during discharge of patients, especially with indigent certification

from the LGU and Social Welfare Office
4.4 Overall Assessment of Hospital Reforms
Hospital reform interventions under the HSRA technical assistance have been
focused first on the Provincial hospital. It started replicating in other health
95
facilities. Based on actual observation, in-depth interviews and focus group
Health Sector
discussion, Misamis Occidental is strong in hospital reforms at provincial and Reform Technical
district levels. Assistance Project
Proposals and strategies presented to minimize or close the gap between limited
budget and income to sustain hospital reforms include lobbying to the Sang-
guniang Panlalawigan (SP) to allocate the users fee or hospital income back to
the hospital through a trust fund that will be utilized for other operations costs and
reimbursements. Dr. Conde requested the HSRA visiting team to include users
fee utilization for hospital operations in the recommendations. Hospital man-
agement wanted to improve facility services and make it competitive with private
facilities.
Implement parallel drug importation and pooled procurement to reduce drug cost
are proposed. This will increase the number and volume of available drugs and
offer cheaper price to patients.
Another area for improvement is in terms of adopting the service program (e.g.
indigent patient’s watcher/relative renders janitorial service/s in lieu of cash
payment). This should be integrated in watchers class. This will result to reduc-
tion in personnel services for facility maintenance. So such cost cutting mecha-
nism will be a saving in operations cost that can be utilized to augment drug or
other hospital operations requirements. In this way, there is no money lost, but
gain in service and augmentation of other budget items, especially for drugs.
Most likely, it will have a rippling effect on increasing hospital revenues.
Lobbying to Local Chief Executives and Provincial Administration to increase

budget allocation and allow increase service fee collection are also proposed
(e.g. additional private rooms, increased charge of hospital services).
When asked about what made hospital reforms successful in Misamis Occiden-
tal, the Oroquieta District Health Board cited the following factors:
• Political will and strong support of Local Chief Executives (both in previous
and current administrations), of which health has been a development priority
of the province. Basically, this attributes to the finding that Misamis Occiden-
tal is strong in hospital reforms at provincial and district levels.
• Positive attitude and openness of hospital management and staff to adopt

changes/reforms.
• Technical assistance of MSH on quality assurance and hospital reforms.
• Cooperation of clients and service providers.
In the area of drug reforms, an orientation-workshop on the different ways of

shortening the procurement process and the significant features and advantages
of pooled procurement and the parallel drug importation program was done. A
therapeutics committee training was also conducted with participants coming
96
from the different government hospitals therapeutics committees and local health
Health Sector
zones. The training resulted in the organization or reactivation of therapeutics Reform Technical
committees in all government hospitals in the province and subsequently in the Assistance Project
different local health zones.
With regards to drug management reforms, the province had set the following
targets:
• Creation of hospital and provincial therapeutic committees
• Capacity building through training
• Creation of provincial formulary
• Creation of drug procurement committee
5.1 Drug Procurement
Just like in other provinces or hospitals, drug procurement in Misamis Occidental

entails a long process. Before devolution, the province had no problem on drug
procurement because it purchased drugs directly from the sole distributor with
the lowest price. After devolution, the drug procurement process takes longer,
about 25 working days or more. The average time flow from the requesting office
to PGSO is 2 weeks or 10 working days. COA guidelines indicate 10 days
allowance prior to bidding. However, the PGSO shortened it by conducting an
open bidding every Friday. It takes another 5 working days after bidding up to
delivery of purchased drugs/supplies. It takes months for the hospital to receive
the requested drugs and supplies from the start of the procurement process.
Aside from policy regulations there are also other problems such as availability of
funds for the purchase and disapproval of requests. If the Administrative Officer
disapproves drugs/supplies purchase request due to unavailable budget, the
purchase request is left on the drawer. Their experiences show that drug pro-
curement requests were disapproved even if justifications were made. Some-
times justification is okay with certain minimal allowance (for instance, if the
allowable procurement quantity is pegged at 250 but actual request is 300).
Another reason for delays in drug procurement is the practice of pharmacists to

request only when there is “zero” stock level. The PGSO has already notified the
pharmacists to practice proper inventory operations and timely request for drug
and supply procurement to prevent shortage and stock out.
Aside from the long process, there are also other concerns like the cost and
quality of drugs. The lowest bidder policy is sometimes not followed by PGSO on
the basis of some supplier’s credibility. Negotiated bidding will only be practiced
when and if 2 successive open biddings failed. PGSO is doing follow-up calls to
suppliers to ensure that stocks are available even if the purchase order is still on
process. Requested drugs/supplies are delivered within one week after the
bidding.
97
According to the PGSO, the specification of drugs in prescriptions and purchase
Health Sector
requests either branded or generics also facilitates the process of drug procure- Reform Technical
ment. Branded drugs are really more costly than generics. Incomplete drug Assistance Project
specifications from the requesting party (e.g., not specified if it is a 250 mg or 500
mg Amoxicillin) have been a problem of PGSO. This also stretches the process-
ing time.
The PGSO encountered “fly-by-night” suppliers. In 1994, the province had a

bad experience in bulk procurement, which resulted in an accumulated inventory
of expired drugs because the doctors did not prescribe those drugs. It was a big
loss to the LGU. Findings also show that the PGSO has not thought of any other
strategy of reducing drug cost aside from PDI and pooled procurement.
5.2 The Hospital Therapeutics Committee
The Hospital Therapeutics Committee meets as the need arises. Topics of

discussion during meetings are as follows:
• Pharmacy requirements
• Policies on proper drug management and procurement
• Seminar on proper drug management and procurement
• Essential drug list. Each doctor submits list of preferred drugs used for their
prescriptions.
Hospital Therapeutics Committees have been organized in MOPH and in

Calamba District Hospital. The Hospital Therapeutics Committees of both hospi-
tals have failed in convincing doctors to adhere to the principles of the Generic
Law. In the two hospitals, doctors prefer branded drugs in their prescriptions to
patients. Their preference is based on their clinical practice with the perception
(undocumented) that generic drugs are less reliable in terms of quality than the
branded. The IPHO and Chief of Hospital convinced the doctors to prescribe
generics instead of branded drugs.
However, doctors have strong position on preferred drugs. They had discussed
generic drug prescription but doctors have no confidence on the quality of
generics. Based on their experience, branded drugs are more effective based on
patient’s shorter recovery period. In fact, they practice double dosing for gener-
ics as alternative of branded drugs. They also anchor on the contention of
questionable sources of generic drugs.
Furthermore, doctors have the prerogative to prescribe drugs of their choice

because the Governor had promised to purchase preferred drugs prescribed by
doctors. This is based on their professional capability and medical expertise.
Seldom those doctors prescribe generic drugs, if not there is a preferred drug in
the prescription. In other words, generic prescription with specified brand has no
substitution. Doctors and members of the Therapeutics Committee are not
sensitive on drug price, but on the quality of drugs. Doctors refuse to accept and
prescribe drugs, which are not of their preference.
98
Figure 1. Schematic Flow of Drug Procurement Process.
Health Sector
Reform Technical
Assistance Project
Hospital Pharmacy/ist Hospital Therapeutics Committee
y Responsible of pharmacy Composed mostly of doctors from each

operations, conducts inventory department, administrative officer and
management and informs the chief nurse. The committee is
Hospital Therapeutics Com. on the responsible of identifying and approving
critical stock level and need to essential drugs for procurement based
purchase drugs. on the Philippine National Drug
y Waits for the approval of the Formulary, PHIC list of accredited drugs
Therapeutics Com. before preparing and doctors preference for
the final list of essential drugs for prescriptions.
procurement.
y Submit drug request (EDL) to IPHO
supply officer.
Provincial General Service Office
y Process purchase request from the

IPHO. Requires recommendation of
the Therapeutics Committee,
10 specification of brands & drug source. 15
IPHO Supply Officer days y After final approval, conducts pre- days
bidding qualifications.
y Prepares purchase order and other y Screens bidders and conducts final
related documents. bidding.
y Process and route purchase order y Procurement of requested drugs and
with attached documents to supplies.
Administrative Officer for budget y Endorses procured drugs and
allocation approval, prior to the payment charges to IPHO Supply
signature of IPHO. Officer.
y Endorses procured drugs to IPHO
pharmacist.
Provincial Budget Office
Validates approval of purchase request

based on available budget and
IPHO Administrative Officer payment charges.
y Validates, approves/disapproves
purchase request based on available
budget and payment charges. Provincial Treasurer Office
y Returns papers to Supply Officer
Validates and prepares fund allocation
for purchase order and payment.
Provincial Governor
Integrated Provincial Health Officer
y Validates purchase request.
Approves and endorses purchase y Final approval/disapproval of purchase
request. request and payment.
99
Another contention on doctors’ preference as cited by the PGSO is “the need of
Health Sector
medicines is one thing that one cannot dictate.” Patients rely on doctors’ pre- Reform Technical
scription/s even if drugs are expensive. There are also instances wherein pa- Assistance Project
tients prefer branded drugs in doctors’ prescription or even over-the-counter

purchase. Hence, doctors’ requests for drugs are based on their preference of
quality drugs, which are expensive. They are not too sensitive on affordability of
drugs and the patients’ financial capacity. In such manner, it can be deduced
that doctors have strong influence on the kind of drugs to be purchased and are
the ones dictating drug procurement.
In order to solve problems related to drug prescription, the therapeutics commit-

tee plans to adopt hospital formulary and treatment guidelines. Members of said
committee are about to finish the treatment guidelines and hospital formulary.
They based it on existing guidelines, which they adapted from guidelines of the
World Health Organization and their records on morbidity and mortality.
With regards to the issue on doctors’ preference in drug prescription, the Provin-
cial Therapeutics Committee chair is banking on parallel drug importation and the
committee’s advocacy in prescribing generic drugs. Likewise, “she has been
convincing her colleagues little by little to adopt the Pharma 50 program of the
DOH (now known as "Gamot na Mabisa, Abot-kaya” or "Effective, Affordable
Medicine" program). There is a campaign for the public pharmacy initiated by the
Provincial Government. The informant has a drastic plan to overhaul the Hospi-
tal Therapeutics Committee by changing its composition for an empowered and
active membership.
There are also attempts to organize an ILHZ Therapeutics Committee in

Calamba District Health Zone. The plan is still being developed and the commit-
tee is not yet functional.
5.3 The Public Pharmacy
A Provincial Therapeutics Committee was organized to take charge of the public

pharmacy. Its main function is to oversee, establish guidelines and manage
public pharmacy operations. They perceived parallel drug importation as “a big
help to lower drug price.” They adopt the “per demand procurement,” which will
be usually done every quarter. As of this time, they have not been planning to
venture on bulk purchase, but would like to coordinate with the ILHZ Board for
pooled drug procurement. The committee meets bi-monthly, but there were
series of meetings in the process of conceptualization and organization stage.
The hardest part as well as challenge of the committee is “how to get things
started for public pharmacy operations.” The Provincial Therapeutics Committee
composition registers 3:3 ratio of doctors and non-doctors.
The public pharmacy is envisioned to operate like a business venture with no

credit policy to maintain financial sustainability. It has a seed money of P700,000.
The Department of Health gave P100,000, which encouraged Oroquieta City and
the Provincial Government of Misamis Occidental to allocate a share of P300,000
each for the initial capital. It is a trust fund managed by the Botica Provincial
Task Force under the chairmanship of Dr. Rachel Micarandayo. Although it is a
trust fund, it is subject to the same processes, although not as lengthy as that of
100
the Provincial Hospital pharmacy. Replenishment of stock is late, depending on
Health Sector
availability of funds, inadequate budget and supply is not proportional to demand Reform Technical
requirements. Assistance Project
The public pharmacy will be under the direct supervision of the Provincial Hospi-
tal pharmacist, Ms. Rosario L. Mejia. A DOH paid pharmacist and a province
paid clerk will be responsible in the operations. The Provincial Therapeutics
Committee still needs to identify the business manager who will oversee the
inventory, financial reports and the business operations status.
During the discussion about the public pharmacy, the following were identified as
potential problems:
• Replenishment problem or reorder and procurement of drugs and supplies
• Delayed PhilHealth reimbursements
• Senior citizens privilege, which is a 20-percent discount on drugs and sup-

plies purchased; the public pharmacy mark up is only 10% (this was based
on the result of their survey of pharmacies, indicating a usual mark up of
12%-15%
Solutions were also discussed for the possible problems that will be encountered
by the public pharmacy. Some of the possible solutions discussed are:
• No credit policy except for PhilHealth and adopt ceiling on allowable drug
purchase
• Pooled procurement by coordinating with the DOH regional office or through

the Provincial Therapeutics Committee with the ILHZ Board (just get the or-
ders and needs of different RHUs) and through the parallel drug importation
program
• Impose utilization of generic drugs on stock to avoid expired inventory.
• Adopt a running inventory/checklist of essential drugs posted in nurses’

stations and different departments. Pharmacist should make the list and
double efforts in reminding and posting of drug inventory. Moreover, distrib-
ute the checklist/running inventory during grand rounds every Wednesday.
• Adopt hospital formulary and treatment guidelines. They are about to finish
the treatment guidelines and hospital formulary. They based it on existing
guidelines, which they got from WHO and their records on morbidity and mor-
tality.
• Inform doctors about PhilHealth drug guidelines.
• Open to external technical assistance on drug and hospital management

inclusion of Administrative Officer, Supply Officer and client representative/s
in Provincial and Hospital Therapeutics Committees
101
• Stop misinforming or influencing the perception of patients on branded and
Health Sector
generic drugs. There is a need to inform patients on available, alternative, Reform Technical
and/or generic drugs. Assistance Project
• There is a need to review policies and convince doctors to prescribe generic

drugs
5.4 Problems and Solutions Associated with Drug Management System
• Inadequate budget for medicines and supplies has always been considered a
perennial problem. Availability of funds/ceiling has been a problem in pro-
curement. As of the second quarter, the IPHO was utilizing the third quarter
budget. The pharmacy cannot cater and meet the demand requirement be-
cause of limited funds. Quantity of drug purchase is based on available funds
as reflected on the annual procurement plan.
• The long bureaucratic process, which accounts to lengthy processing with

many validation and signatories (from 37 to 29 signatories). The problem in
drug procurement is not on the concerned people involved in the whole proc-
ess, but the tall bureaucracy and process.
• Procurement thru open bidding also attributes to delays in serving the pur-
chase request. Sometimes there is only one bidder, so another open bidding
has to be conducted. A negotiated bidding will be adopted after 2 successive
failures in open bidding.
• Doctors’ preference on branded drugs in their prescriptions, especially for

antibiotics. Apparently this defines the gap in meeting drug requirement vis-à-
vis limited budget because branded drugs are expensive. It consequently lim-
its the quantity and variation of drugs for procurement. In a way, it is also a
hindrance to bulk procurement.
• Communication gap between requisitioning and processing officers. The

pharmacist had emergency request since year 2000, but did not receive the
order. Only to find out lately that it was waived due to unavailability of alloca-
tion as validated by the IPHO Administrative Officer. It’s only now that they
are aware of the scenario on the actual drug procurement process.
To address the problems considered above there is a need to lobby for increase
in drug fund allotment to meet demand requirements. The Supply Officer also
suggested to minimize or shortened the bureaucracy in the drug procurement
process. Involvement of stakeholders in the Therapeutics Committee with the
inclusion of Budget and Supply Officers, and Peoples Organization/s representa-
tive/s to level off economies of scale in drug procurement. With multiple mem-
berships, availability of members to attend meetings is an apprehension. This
can be offset through advance scheduling and proper notice. The PGSO per-
sonnel are willing to spend time every month to attend Therapeutics Committee
meeting. A regular monthly meeting is deemed necessary for Therapeutics
Committee to level off issues and concerns on drug management system.
102
Advocacy on the utilization of drugs available in the pharmacy and prescribe
Health Sector
generic drugs have to be done. This will cut costs both for the health facilities and Reform Technical
patients while increasing the quantity and variation of available drugs in hospital Assistance Project
pharmacy and city/rural health units. This entails strong advocacy, political will
and determination of facility management on changing service providers’ and
patients’ unfavorable perception on generic drugs.
With regard to the local health systems, the province has set the following
targets:
• Four inter-local health zones established with effective and efficient local
health system. Reorganize functional management structure and technical
committee.
• Signing of MOA and launching of Inter-Local Health Zone (ILHZ).
• Conduct quarterly meeting by ILHZ.
• Conduct year-end program review by zone.
Prior to the HSRTAP, Misamis Occidental has already organized a province-wide

health board composed of the different sectors, like the provincial government,
hospital management staff, public health officials, social services and various
non-government agencies. This board is responsible for planning and implement-
ing the health programs of the provincial government.
The Provincial Government formalized its commitment to fully support the inter-
local health zone through Sangguniang Panlalawigan resolution, which author-
ized the Governor to enter into a Memorandum of Agreement with Municipal
LGUs and other health sector reform stakeholders. The Governor issued an
Executive Order to LGUs regarding the organization of the inter-local health
zone. Four inter-local health zones with effective and efficient local health
system have been targeted in the health sector reform convergence.
The inter-local health zone adopts the collective approach and networking to
improve the health system and condition of the people through appropriate health
programs and better services and facilities. Even if the President does not have
the program on reducing drugs cost and increasing the coverage of the Indigency
Program, still the Provincial, City and Municipal LGUs have prioritized health in
development program. The perception of LCEs is that “healthy people are
associated with progress and less complains from them.”
Organizing the inter-local health zone was a felt need of LGUs and health service
providers after and during the devolution. It was not a forced issue from the
national to operationalize a local health system. Their experiences on decen-
tralization of health services, of which LGUs and health providers were unpre-
pared on drastic changes in protocols and management functions, necessitate
collaborative efforts to improve delivery of health services. LGUs had difficulty in
meeting budget requirements for health programs and services. Thus, there is a
103
need for complementation of resources (financial, manpower, facility, equipment,
Health Sector
logistics and others) among LGUs within the health district. Moreover, doctors Reform Technical
were unprepared as managers. Assistance Project
Before the Convergence activity, Misamis Occidental already formed the District
Health Boards in 1999. It is separate from the Provincial Health Board. Local
stakeholders are in the stage of developing a structural organization of the ILHZ
when the convergence strategy was introduced. The Oroquieta District Health
Board meets every two months, while the Calamba District Health Board meets
as the need arises. The Technical Management Committee is to be organized
as a separate body to provide recommendations to the District Health Board.
Said committee will be composed of MHOs, medical technologists, IPHO man-
agement and selected staff.
The local health board is effective in making resolutions for the implementation of
different public health programs. The board also requested PHIC to minimize
document requirements, shorten the application and reimbursement processes.
Misamis Occidental PHIC Field representatives feed forward the request and
concerns of LGUs and health providers to PHIC higher authorities. At the
regional level, PHIC authorities expressed commitment to facilitate and cater field
(ILHZ board/LGUs) requests.
Initiatives of the local health board for public health programs include partnership
with NGOs, advocacy through IEC, facilitate the implementation of vegetable
gardening/ FAITH program and barangay self-sufficiency program. For the self-
sufficiency program, every barangay adopted the cooperative system in planting
trees, vegetables and other income generating crops. Proceeds will go to the
barangay for health facility improvement, medicines and other needs. Oro-
quieta’s initiative will be adopted by the provincial government. Replicability
potential of said initiative in Lopez Jaena is positive but requires advocacy and
program marketing. The Oroquieta Health Board is willing to share their experi-
ence to other LGUs. It was also revealed that the Mayors gave P30,000 for the
self-sufficiency program. Trees along the highway are part of the self-sufficiency
program.
The Oroquieta City Health Board has expanded its membership. It includes
representative from other offices, namely: Agriculture, Social Welfare, Budget
and Department of Environment and Natural Resources. It was during this stage
that the convergence strategy for the Health Sector Reform Agenda was intro-
duced to the province.
6.1 The Oroquieta District Health Zone
The Oroquieta District Health Zone (ODHZ) is composed of Oroquieta City, the
municipalities of Aloran, Pana-on, Jimenez, and Lopez Jaena. The Memoran-
dum of Agreement is accomplished on March 22, 2002. This signifies the
intention of the different member municipalities to share health and social re-
sources and explicitly allocate funds that can be used for the operations of the
district health zone. From the various ILHZ’s in the province, the ODHZ was
chosen as the model zone because of the commitment and interest shown by the
participating LGUs. The Technical Management Committee is managing the
104
zone. It is composed of key members of the district health board. The district
Health Sector
health board meets every 3 months to discuss current implementation of projects Reform Technical
and future plans. Assistance Project
The willingness of the LGUs to commit its resources and openness to undertake
developmental activities are crucial elements that could facilitate the attainment
of reform objectives and targets in the pre-defined geographic area, like in this
case the ODHZ. One initial sharing of resource project is the drug-sharing
scheme for patients admitted at the Misamis Occidental provincial Hospital.
Certain amount of dugs are allocated to admitted patients referred by the differ-
ent municipalities of the district health zone.
In terms of resource contribution, the different member municipalities agreed to

different financial contribution scheme depending on the income of the municipal-
ity. Before Health Sector Reform Agenda intervention, the province had organ-
ized and started operating the local health district system, which is now termed
as inter-local health zone. There was a Memorandum of Agreement, which
stipulated P200,000 revolving fund contribution per municipality. This was based
from the previous commitment of the former governor to give P1 million to
supplement medicines and other needs for hospital operations.
Although the monetary contribution was not realized, still the inter-local health
zone has been functioning without the cash or revolving fund. For them, “the
cash could have been a big thing if it was realized.” Oroquieta City will contribute
a larger amount compared to Aloran, a 5th class municipality. The DOH also
pledged a certain amount to make the operation of the district health zone
successful. The district health zone is strongly supported by the provincial
government and city government of Oroquieta. At present a minor problem being
sorted out by the district health zone is to develop policies of fund disbursement
that will not be against COA rules.
The district health zone also serves as the venue for inter-LGU collaboration on
health activities. Development issues and concerns like increasing membership
to the PHIC Indigent Program, bulk procurement of drugs and implementation of
DOH program activities at district level are being discussed in a collective man-
ner. The active participation of the DOH representative has facilitated smooth
implementation of DOH programs (e.g., the renewed polio vaccination campaign,
non-communicable diseases programs, etc.).
The district health zone has also started formulating the referral system to
facilitate admission of patients to health facilities within the district. The referral
system was developed with technical assistance from MSH. A referral form is
already designed and tested during the last two months. It was considered to be
relatively successful. There were no reports of professional conflicts between
staff of health facilities since the implementation of the referral form.
Another activity being done by the district health zone is sharing of resources and
inter-RHU support so that all health care facilities in the zone will be PHIC and
Sentrong Sigla accredited. This was considered a priority in order to ensure the
delivery of quality health service in public health and hospital facilities within the
zone.
105
Health Sector
6.2 The Calamba District Health Zone Reform Technical
Assistance Project
The Calamba District Health Zone is younger than that of Oroquieta. It is organ-
ized based on the old district health system/zoning. There are five member-
LGUs, namely: Plaridel, Calamba, Baliangao, Sapang Dalaga and Concepcion.
Organization of the ILHZ Board is one of highlights of convergence. The local
health board started its organizational phase last year. The board met three
times last year and had met once in this year last May 13. In principle, the Board
agreed to meet every quarter, but attendance of Local Chief Executives was a
concern at the same time a limiting factor in the convergence meeting. Municipal
Health Officers attend regularly during meetings and would echo whatever
information and concerns to their respective LCEs.
The Memorandum of Agreement is not yet accomplished. In principle all LCEs

are supportive and amenable to the convergence. There are still lacking signa-
tures of some LCEs. The delay of MOA signing is attributed to non-attendance
of Mayors during ILHZ Board meetings. The District Health Officer is taking the
challenge to facilitate MOA signing by going to different LGUs/LCEs, despite
constraints on mobility and available staff to do the legwork. The District Health
Officer was committed to accomplish the MOA within the month of May.
Another factor that delays the accomplishment of the MOA is the standard
monetary contribution of P200,000 per LGU (formerly agreed prior to the conver-
gence strategy intervention) for their revolving fund, regardless of classification
and size. The Local Chief Executive of a 6th class municipality requested to other
member-LGUs of the ILHZ to lower their contribution, but the members disap-
proved it. This is another issue that the ILHZ Board is facing. The Local Chief
Executive is in turn hesitant to give the contribution because it would turn out that
the LGU would be doubling its investment while they will be enrolling to the
Indigency Program.
Another contention of the said LCE is the limited funds of the LGU as a 6th class
municipality. In the case of another LGU, the LCE is willing but there is a faction
of the Sangguniang Bayan who is responsible for the approval of fund allocation
and disbursement. While other LGUs are willing to share the agreed contribution
of P200,000, still the ILHZ Board has not decided on who will and where to keep
the money. However, they managed to continue their convergence activities
even without the revolving fund and accomplished MOA.
Based on the latest development of the ILHZ, the Board will meet once a month.
Points of discussion during previous ILHZ Board meetings are:
• Medical outreach (Surgical Outreach Mission), which was already done.
• Contribution per LGU for their revolving fund (please refer to above discus-
sion). The original intention of the revolving fund is for the improvement of
the District Hospital. There was a commitment of P1,000,000 from the former
Provincial Administration for the revolving fund of the health zone, but they
have not received it.
106
PHIC is willing to enroll all indigents but it has to be LGU initiated. Thus, there is
Health Sector
a need to strengthen the Inter-local Health Zone. The challenges for the younger Reform Technical
Calamba District Health Zone are to: Assistance Project
• Prepare plan of activities / program of activities for one year to entice enthu-
siasm, commitment and priority of Local Chief Executives to convergence
activities and programs.
• Convince the LCE of a 6th class municipality to hire a doctor for the RHU.
Although said municipality is used to the situation of no doctor at the RHU,
but the service providers are overloaded with responsibilities, especially
those cases requiring the technical expertise of a doctor. Likewise, the peo-
ple are relatively deprived of such service provision.
6.3 Favorable Outcome of the Inter-local Health Zones
Sharing and complementation of resources is a significant convergence under-

taking of the inter-local health zone. This has been facilitated with a functional
ILHZ Board; otherwise, it could have been difficult. The inter-local health system
further helps and facilitates sharing of resources. LGUs resource complementa-
tion is classified as follows:
a. Monetary/cash contribution for the ILHZ revolving fund.
Member LGUs of the Oroquieta ILHZ decided to put up standing fund. Aloran
and Lopez Jaena LGUs pledged P200,000 each, Panaon with P100,000 and
Oroquieta City with P500,000. They have not set a target for the remit-
tance/collection of monetary pledges. Likewise, they are still confused on fund
management as to where to put the money and to which or whom to give the
amount. They have not decided on the details of fund utilization. So there is a
need to convene all Mayors to deliberate on said matter. In their last meeting,
there was a proposal to create a fund management committee and refer to COA
for technicalities.
b. Sharing of medicines/supplies and other logistics.
LGUs health providers are accustomed to borrowings or sharing of vac-

cines, medicines and other supplies in case one RHU lacks or run out of
stock. Another example is the Calamba District Hospital counterparts for
drugs, medical supplies and other logistics during the Surgical Outreach
Mission.
c. Complementation of manpower and other services.
Member LGUs practice complementation and sharing of manpower and other

services. Like in the case of Jimenez Medicare Hospital, which has 2 doctors,
the MHO of Panaon complements service duty if one doctor is not available or
absent.
For medico legal cases, the MHO of nearby municipality takes the responsibility if
the assigned MHO in the area is not available. The ILHZ convergence resolved
107
the medico legal issue and concern in the past, which was basically jurisdictional
Health Sector
in nature. Reform Technical
Assistance Project
Strengthening of the referral system is another major collaborative activity of the

inter-local health system. The Misamis Occidental Provincial Hospital (MOPH) is
the co-referral facility for all district and community hospitals, as well as from the
CHOs/RHUs. Jimenez Medicare Hospital, which is a PhilHealth accredited
facility, is also a referral unit in the LGU, but it is only a 15-bed hospital.
Establish and develop medico legal guidelines. Medico legal was the “battle-
ground” between hospitals and rural health units. Issues and concerns in the
past among field and hospital doctors on medico legal is now resolved.
Empowerment of political leaders and their constituents through social prepara-

tions for local development has also been noted to be an important effect of the
district health zone. With the inter-local health zone, LCEs revealed that they
share a common thrust on the empowerment of political leaders and their con-
stituents. This is an indirect, yet salient strategy in the course of convergence. It
would develop the capabilities of local officials and service providers to be more
grounded and responsive in implementing appropriate development programs
and meaningful initiatives. It is also in the same context that the people in the
communities are capable and empowered as stakeholder and participant of local
development. It is very important, lest critical to change the conventional devel-
opment paradigm to progressive. Hence, it takes a lot of concerted efforts to
make the constituents as participants and stakeholders of local development,
instead of mere beneficiaries or recipients of any development program.
6.4 Factors for Successful Implementation of Inter-local Health Zones
During the interview with the key members of the district health zone, the factors
that led to the successful implementation are: (a) strong will of the stakeholders
to serve the people of Misamis Occidental, (b) presence of people with technical
knowledge and expertise, (c) unified vision since all local executives in the zone
belong to a single political party, and (d) social preparation of all the stakeholders
including patients.
Support of political leaders and political will of LCEs and health service providers
are cited as facilitating factors of the health sector reforms in the province.
Competent and service oriented health officials and service providers are among
the key factors of the province’s health reforms.
Technical assistance provided by the Management Sciences for Health is also

considered to be important. The partnership of the town of Lopez Jaena with
Consultants from the Department of Family and Community Medicine of the UP
College of Medicine is also considered to be helpful.
Political maturity and cooperation of local chief executives, program managers,

health providers and other stakeholders in their efforts toward local development.
The province is cited as “very fortunate” on this aspect. Political color is neither
an issue nor a deterrent in the HSRA convergence. One good thing in Misamis
Occidental is the maturity level and oneness of political leaders in implementing
108
local development priorities and programs. Although Mayors do not belong to
Health Sector
the same political party, still they exemplified unity and cooperation towards a Reform Technical
common vision and direction of local development, which is “for the people.” This Assistance Project
also makes Misamis Occidental as one of the pilot sites in Mindanao for health
development programs even then.
Multi-sectoral membership of the local health board facilitates implementation of

health development programs. Likewise, adequate social preparation is consid-
ered important.
6.5 Unresolved Issues for the Inter-local Health Zones
Despite the encouraging success pointed out previously, there are some chal-
lenges for strengthening of the inter-local health zones in Misamis Occidental.
There is a need to do the following:
• Strong lobbying for increase in health budget from the LGU.
• Convince LCEs to implement the Magna Carta. During the Health Summit,
the LCEs made a commitment to fully implement the Magna Carta. For
Panaon LGU, capitation is an option to solve the Magna Carta issue.
• Strengthen the ILHZ with strong commitment and priority of local chief
executives.
• Convince the LCE of a 6th class municipality to hire a doctor for the RHU to
provide what is due and better health services to the people.
• Adopt a participatory development approach in strengthening the local health

system, wherein patients/clients and other stakeholders will have representa-
tion, responsibility and ownership of any initiative, program or activity. Pro-
grams and activities of the ILHZ should be grounded on community-based
needs in order to come up and implement appropriate and meaningful inter-
ventions/activities that would ensure sustainability, desired outcomes and im-
pact of health sector reforms.
• Institutionalize health information system in every LGU, inter-local health

zones and the province.
7. Gains in Public Health Services
Most of the target set by the province related to public health services is also
related to the target set for creating a functional inter-local health zone as dis-
cussed earlier. Some additional targets but may be related to the ILHZ are:
Upgrading of RHU facilities, Integrating RHU and hospital services, and Training
of RHU personnel.
The province is still implementing the DOH programs. During devolution the
implementation of some of these programs was slightly affected. For example,
the availability of vaccines for the EPI and anti-TB drugs for the NTP was very
low immediately after the devolution. Local health facilities (hospitals,
109
CHOs/RHUs) continue to implement the DOH regular public health programs on
Health Sector
Expanded Program on Immunization (EPI), Nutrition, Family Planning, National Reform Technical
Tuberculosis Program (NTP), Communicable Diarrheal Disease (CDD), Cardio- Assistance Project
vascular Disease, Acute Respiratory Infection, Maternal and Child Health,

Leprosy, Sexually Transmitted Diseases, Cancer Control Program, Environ-
mental Sanitation and Breastfeeding. As implementers of public health pro-
grams, they receive supplies/logistics on national grant programs, trainings and
technical assistance from the Department of Health.
These programs are more on preventive than curative. Bulks of health providers’
workload are on Maternal and Child Health, EPI, breastfeeding, FP, NTP and
consultations.
The creation of the district health zones lead to revival of the public health
programs and services. Through the health zones, implementation of new
programs like the “Patak Polio” program and the personnel training for the new
Visual Screening Program were done with ease.
The municipal health officers are also going to barangay health stations to
perform preventive and curative services. During their trip to the barangays they
also take the opportunity to conduct information and education activities. One
example is their promotion of the local government programs like the “Food
Always in the Home” program and the “Plant a Tree Grow with Me” campaign.
These programs being promoted in coordination with the local government units
are very good example of the cooperation of political and health leaders in the
province. Such activity also becomes a well-rounded approach to health promo-
tion, integrating socio-economic and environmental concepts in health care.
Implementation of public health programs should be associated with socio-
economic programs to ensure sustainability and impact.
7.1 Routine Activities of Rural Health Units
Oroquieta City Health Office has 4 doctors, and one of them handles consultation
and IEC. There is a television set for IEC while clients are waiting for their turn.
Normally, it takes 4 hours for consultation service in the facility. Most clients
come to the health center in the morning, so the doctor usually does fieldwork in
the afternoon. Each barangay is visited once in two weeks. However, it rela-
tively depends on the availability of medicines because it is useless to go to the
barangays without medicines.
The mentality of rural folks is always to expect consultation service with free
medicines every time the doctor visits the barangay. It has been a common
notion that doctors go to the barangays for curative services, when in fact should
also visit there for preventive service or program. In the case of Oroquieta,
doctors also go to puroks and households in different barangays to conduct IEC
and attend BHWs regular meeting. They have three purok-household classes in
a month.
Lopez Jaena has only 1 doctor, 7 midwives plus 1 casual serving 28 barangays.
So the midwife to barangay ratio is 1:4, which is quite low. It has implications on
110
the availability, quality of time and service provided per area. Health programs
Health Sector
promotion is done during cluster meetings. Reform Technical
Assistance Project
There is no resistance from the church or any religious sector on Family Planning
program (NFP and modern methods). They have no target for FP and NTP
programs, so now there is no issue on coercion of clients.
Misamis Occidental experienced failures on implementing NTP utilizing relatives

as patient partner for TB patients. Thus, they find it more effective to implement
the program with BHWs as patients partner.
Oroquieta City gives a P200 honorarium for BHWs on top of the barangay
honorarium. Lopez Jaena gives the lowest because their BHWs receive only
P75 from the barangay. Honorarium of Aloran BHWs ranges from P100 – P200.
It depends on the capacity of the barangay. BHWs have health card, which is
also coined as amelioration card. The BHW can avail a maximum of P10,000
hospitalization benefit at the Misamis Occidental Provincial Hospital. Their other
incentive is free CBC service. BHWs gathering and convention is supported by
the local government. Training support for BHWs is also provided by local health
offices.
8. Best Practices and Lessons Learned
Overall, the best practice that can be considered in the experience of Misamis
Occidental is in the area of hospital reforms. The initial financial support from the
provincial government allowed significant improvement of the Misamis Occidental
Provincial Hospital in terms of structure and facilities. With the improvement in
facilities, the hospital became more competitive with the private hospitals. Further
quality development and services improvement led to increase in revenues. With
the potential being seen by the political leadership, increasing financial support
resulted to more improvements. It eventually paid off for the province when the
Misamis Occidental Provincial Hospital won the Sentrong Sigla Award two years
in a row (hall of fame). The prize money of PhP2.4 M was later used for further
improvements. Now, the Misamis Occidental Provincial Hospital can be consid-
ered as the best hospital in the province and is now considered to be better than
its private counterparts.
The integration of health, social and economic programs led to a holistic ap-
proach in providing health care. Health workers when they visit their respective
barangays also promote social programs like the FAITH and ANT program of the
provincial government. Their initial participation in an environment program called
“Plant a Tree Grow with Me” fostered better relationship with the political leader-
ship of the province. With this partnership, health was considered as one of the
priority program of the political leadership as evidenced by its key program - the
“CHAMPS.” It serves as the guiding principles of the province’s style of leader-
ship. It stands for Competence, Health and Education, Agriculture, Maintenance
of Peace and Order, Protection of Environment and Social Services - the priority
action areas for the political leaders of the province. With this integrated ap-
proach to health care the province was able to attract external financial assis-
tance to its programs like the DOH Matching Grants, AusAID and other charitable
organizations.
111
Health Sector
A unified political leadership was also pointed out as the reason for successful Reform Technical
implementation of the health sector reform in the province. The experience of the Assistance Project
smooth implementation of the Oroquieta District Health Zone can be attributed to

a common objective of the political leaders of the different member municipali-
ties. Their willingness to share resources and contribute financial assistance to
the ILHZ consequently boosted the morale of health workers. Issues and con-
cerns are resolved. They give their best in serving not only the health needs but
also the social needs of their constituents.
With this initial experience, the implementation of the health sector reforms will
be easy in the province of Misamis Occidental. In fact, with the initial social
preparation undertaken by the province, the “convergence strategy” for health
sector reform may have just formalized what is already in place.
There are some areas for improvement, though while the improvement has been
enormous. The question of sustaining the achievements becomes of paramount
importance. Financial sustainability of health programs maybe jeopardized if the
political leadership continue to believe that health services should be provided
free for everybody. Public sources of funding are very limited. Budgetary deficit
has always been a complaint of most health units. The province may consider
imposing charges on its health services. The annual hospital income is only
about 10% of its annual operations expense. Increasing revenues may be the
only way to sustain quality health services.
There must be a more efficient way of implementing the PHIC Indigent Program.
The double-checking of the included indigents by the DSWD and PHIC may be
seen as redundancy. While it is true that misclassification may be seen in about
10%, this is a small proportion considering the delay of the provision of health
services to those who need them most. The PHIC Indigent program may also be
a solution to the limited budgetary allocation for the rural health units. The
capitation fund that will be given to the RHU will surely be a significant
augmentation of its operating cost and improvement of services.
112
Health Sector
Appendix 1. Key Informants and FGD Participants. Reform Technical
Assistance Project
PHIC Region 10
1. Mr. Madet Bataran, Jr., Indigency Program Unit Head
2. Dr. Diomel A. Anuta, Accreditation Unit Head
3. Datu Masiding M. Alonto,Jr., AVP/Regional Manager
IPHO
4. Dr. Jose Conde, Officer-in-Charge/Chief of Provincial Hospital
5. Dr. Rachelle Micarandayo, Public Health Officer I
6. Mr. Arturo Batoy, Supply Officer
7. Mrs. Rosario L. Mejia, Hospital Pharmacist
8. Dr. Griselda Santamaria, Chair, Provincial Therapeutics Committee
Governor’s Office
9. Gov. Loreto Leo S. Ocampos, Provincial Governor and Chair of the Regional
Development Council
Oroquieta ILHZ
10. Hon. Leonardo R. Regalado II, Chair/Mayor of Aloran
11. Hon. Melquiades D. Azcuna, Jr., Mayor of Lopez Jaena/President of Mayors
League
12. Hon. Catalina Mangubat – Sanggunian Bayan member/Chair, Health
Committee of Panaon
13. Dr. Blanche Flores, DOH Representative/City Health Officer, Oroquieta City
14. Dr. Lita Paroan – Municipal Health Officer, Aloran
15. Dr. Arden Mangubat, Municipal Health Officer, Panaon
16. Dr. Bernardita Gaspar, Municipal Health Officer, Lopez Jaena
17. Ms. Eloisa Taban – Philippine Health Insurance Corporation Misamis
Occidental Service Officer
18. Mr. Elijah Beleno D. Demetrio II, Philippine Health Insurance Corporation
Misamis Occidental Service Office
19. Ms. Erlinda Maturan, City Health Office Nurse
Calamba ILHZ
20. Dr. Rodolfo A. Nazareno, Chief of Calamba District Hospital/Health District
Officer
21. Dr. Rachel Micarandayo, Public Health Officer I
22. Dr. Rogelio Yap, Municipal Health Officer, Plaridel
23. Dr. Annie Bacarro, Municipal Health Officer, Calamba
24. Hon. Roldan Chion, Mayor, Concepcion
25. Mr. Reo Durac, Administrative Officer, Calamba District Hospital
26. Ms. Naome Jumalon, Chief Nurse, Calamba District Hospital
27. Ms. Jeme Dora Olandag, Nurse, Calamba District Hospital
28. Ms. Sirena M. Dalogdog, Midwife, Calamba District Hospital
29. Ms. Teresita Lumantas, Public Health Nurse, Sapang Dalaga
30. Ms. Julieta Awa, Public Health Nurse, Concepcion
31. Ms. Stella Armada, Public Health Nurse, Baliangao
113
Clients
Health Sector
32. Ms. Fely Caboral, Jimenez Reform Technical
33. Ms. Corazon Marcelino, Oroquieta City Assistance Project
34. Mr. Marcelino Lumanog, Lopez Jaena

35. Ms. Milagros Catane, Oroquieta City
Provincial Social Welfare Office

36. Ms. Narda P. Umandam, Provincial Social Welfare Officer I
Provincial General Services Office

37. Mr. Cesarito N. Chiong, Provincial General Services Officer
38. Mr. Crispolo Secang, Assistant Provincial Gen. Services Officer
39. Ms. Candelaria Andoy, Supply Officer IV
114
V
Health Sector
Reform Technical
Assistance Project
BULACAN (REGION 3)
Bulacan has 53 municipalities and 1 city. Most of the municipalities belong to the
third to first class range with only Bustos and Pandi remaining as fourth class
municipalities. The total population is 2,229,266 as of the 2000 Census, growing
at a rate of 4.02% annually. There are 463,886 households with an average
household size of 5. The rapid increase in population and high density has
brought about an increase in unemployment rates and environment related
problems.
Correspondingly, there is an increased demand for bigger expenditures for social

services, particularly health services. The high incidence of poverty results in an
increased dependency on public health services. Drug addiction, violence
against women, and child abuse have become public health issues and the
health sector realizes the need to address such multifarious concerns.
Table 1. Provincial Administrative Profile.

District Municipality # of barangays Ave. annual income (PhP) Classification
Bulacan 14 12,862,704.00 Third
Calumpit 29 16,111,767.00 Second
Hagonoy 26 28,607,966.42 First
1st
Malolos 51 36,581,570.49 First
Paombong 14 16,582,736.05 Second
Pulilan 19 16,176,226.12 Second
Balagtas 9 18,072,640.91 Second
Baliuag 27 32,333,285.75 First
Bocaue 19 21,085,214.64 First
2nd Bustos 14 11,193,671.11 Fourth
Guiguinto 14 14,602,604.74 Third
Pandi 22 10,192,342.69 Fourth
Plaridel 19 19,800,429.05 Second
Angat 16 13,108,781.37 Third
Doña Remedios Trinidad 8 14,315,531.70 Third
Norzagaray 12 23,546,412.27 First
3rd
San Ildefonso 36 17,152,558.40 Second
San Miguel 49 22,989,231.07 First
San Rafael 34 14,994,824.58 Third
Obando 11 12,779,211.36 Third
Marilao 16 25,746,549.89 First
4th Meycauayan 26 54,021,142.25 First
San Jose del Monte 59 35,430,882.87 First
Sta. Maria 24 28,725,274.71 First
115
Health Sector
The major causes of infant mortality in the province are birth injury, pneumonia, Reform Technical
congenital anomalies and prenatal morbidity. The mortality and morbidity profiles Assistance Project
of Bulacan show the simultaneous incidence of infectious and lifestyle diseases,

a clear indication of the interface of traditional and modern diseases that present
a difficult challenge to the health sector in the province.
There is a strong private sector in Bulacan that assists the public sector in the
provision of health services. The active participation of the health private sector
decreases the burden of the public sector in ensuring good health.
Table 2. Bulacan Selected Socio-Demographic and Economic Indicators.

Indicator 1990 1995 2000
Total Population (in ‘000) 1,505 1,784 2,230
Rank in Region 3 2nd largest 1st 1st
Rank in Region 3 1st or fastest 1st 1st
1990 1994 1997
Human Development Index 0.790 0.763 0.700
Rank in Region 3 1st or highest 1st 2nd
Life expectancy at birth 68.6 69.8
Not available
Rank in Region 3 2nd highest 2nd
School Enrollment Rate 92.22
Not available Not available
Rank in Region 3 1st or highest
Real per capita income 26,141
(at 1994 prices) Not available Not available
Rank in Region 3 2nd highest
Poverty Incidence* 20.4 (1991) 17.3 Not available
Rank in Region 3 6th or lowest 6th
Source: Time to Act: Needs, Options, Decisions, State of the Philippine Population Report 2000, Commission on Population, January
2001, pp. 83-87; 11980-1990, 2 1990-1995, 3 1995-2000.
*Philippine Human Development Report 1997.
Table 3. Leading Causes of Morbidity and Mortality 2000.

Morbidity Mortality
Diarrhea Heart Diseases
Acute Respiratory Infection Cancer
Pneumonia Pneumonia
Influenza Pulmonary TB
Diseases of the Heart Cerebro Vascular Accidents
Pulmonary TB Accidents
Table 4. Selected Health Indicators.

Indicator 1990 1995
Infant Mortality Rate* 43.85 34.83
Rank in Region 3 2nd lowest lowest
Rank in Region 3 2nd lowest lowest
Rank in Region 3 2nd lowest 2nd lowest
2001, p. 88.
116
Health Sector
Reform Technical
Table 5. Nutritional Status, 1998. Assistance Project
Indicator Bulacan Region 3 (mean) Philippines (mean)
Wasted 5.1 5.9 6.0
Stunted 21.1 23.3 34.0
Pregnant Women
Lactating Women
Source: 5th National Nutrition Survey.
Table 6. Profile of Provincial Health Facilities.

No. of government hospitals 8
No. of private hospitals 57
No. of rural health units 57
No of barangay health stations 318
2. Convergence in Bulacan
Bulacan Governor Josie de la Cruz has shown support for the provincial health
program through “Sulong pa Bulacan para sa kalusugan” ("Bulacan, go forward
further in health"). The phrase indicates that there is a continuous effort to meet
health goals. For 2002, budget of approximately P200 million that represented
20% of the total provincial budget was allocated for health.
Dr. Manuel Roxas III, a former undersecretary for health, serves as consultant for
health. Together with the staff of the Provincial Heath Office headed by Dr.
Carlito Santos, the DOH and the NGOs formed a group of health sector reform
advocates to push for programs in the areas identified in the convergence
strategy. The team is tasked with improving the local health system to achieve
the provincial health sector goals within the framework of the health sector reform
agenda.
Prior to the inauguration of the convergence strategy, Bulacan was one of the
lead provinces that supported the reintegration of the health system through the
establishment of inter-local health zones (ILHZ). The restoration of the features
of the district health system became evident with the establishment of the unified
local health systems that sought to integrate the public health services and
hospital services in a district that serves as a catchment area for the health
needs of communities located in member municipalities.
The support of local government units was an important component of the

concept. To initiate the process, Region 3 Center for Health Development (CHD)
117
led by Dr. Ethelyn Nieto offered a P1-million grant to LGUs in the region that
Health Sector
would organize themselves into an interlocal health zone under its local health Reform Technical
assistance and development program. Assistance Project
The Baliwag Unified Local Health System was organized in 1999 with a grant of
P1 million from Region 3 CHD and the amount was matched by a P3-million
grant from Bulacan Governor Josie de la Cruz. The amount was used to reno-
vate the Baliwag District Hospital that served as a core referral hospital with a
network of rural health units (RHUs) in surrounding municipalities. The forma-
tion of a district health board was conceptualized and a draft memorandum of
agreement was prepared for signing by member mayors in the catchment area.
A convergence workshop was held at Hiyas ng Bulacan on June 7-8, 2001.

Bulacan is one of the pilot sites under the two-year Health Sector Reform Tech-
nical Assistance project (HSRTAP) funded by the United States Agency for
International Development (USAID). The workshop succeeded in generating
interest among major stakeholders that included 72 representatives from the
national, regional, and local health workers, PHIC representatives, municipal/city
public officials and support institutions, and health NGOs. With the use of
participatory mechanisms, the various stakeholders crafted targets, strategies
and health plans that were doable.
The workshop defined the policy environment by identifying problems and issues
that affected the local health sector. The participants were briefed about the
basic concepts of current initiatives that included the Health Sector Refom
Agenda, the Health Passport strategy and the Convergence Strategy. Together
they defined the vision for Bulacan in the HSRA areas that became the basis for
a draft convergence plan that included strategies to be used. The Bulacan
Health Sector Reform Advocates would serve as strategy champions.
Bulacan is among the provinces that supports the Indigent Program of the
Philippine Health Insurance Corporation (PhilHealth) through its social marketing
initiative and with the support of the Department of Health have encouraged local
government units to enroll their indigent constituents. Governor Josie de la Cruz
responded by conducting a province wide selection of indigents through its
Provincial Social Welfare and Development Officer (PSWDO). The Provincial
Government also released an executive order encouraging the mayors to commit
some budget to the program and even promised that the province would subsi-
dize some amount.
The Governor gave the PSWDO the task to oversee the selection of indigents
and the office conducted surveys utilizing volunteers called “Lingkod Lingap sa
Nayon” and local mother leaders. They used the Minimum Basic Need (MBN)
survey form and identified pertinent information to be used as criteria.
Initially, the province enrolled about 4,515 indigents representing all 24

towns/cities. Not to be outdone, congressmen followed by subsidizing their own
indigents in their districts and they have enrolled 1,120 Bulakeños. Some
118
mayors also provided some funds for the program by initially enrolling some 570
Health Sector
indigents. A total of 11,809 Bulakeños have been enrolled. Reform Technical
Assistance Project
Table 7. Status of Indigent Program in Bulacan (May, 2002).

Number of enrolled indigent members/no. of towns/city Total
By the Province By the City/Municipality By the Congressman
6,665 (24 towns/city) 2,952 (6 t/c) 2,193 (12 t/c) 11,809
By 2004, Bulacan is targeting to cover 252,000 households or 52% of the total

population of 485,000 with social insurance broken down as follows:
• 40,000 families - 50% of indigents

• 53,000 families - 25% of the informal sector
• 159,000 families - 90% of the formal sector
The targets will be achieved through social marketing and advocacy by Phil-
Health that has created an Indigent Program Unit that is responsible for encour-
aging LGUs to enroll their indigents with PhilHealth. LGUs are encouraged to
make their facilities Sentrong Sigla certified and PhilHealth accredited to enable
them to access PhilHealth funds through reimbursement of hospital expenses
and provision of capitation to RHUs. As of July 2002, San Jose del Monte and
Norzagaray are willing to enroll indigents with PhilHealth as their RHUs have
been Sentrong Sigla certified by the Region 3 CHD but PhilHealth has not yet
officially approved their accreditation.
4. Gains in Hospital Reform
4.1 Public-Private Sector Cooperation
The provision of hospital services in Bulacan is shared with a strong private

sector. By virtue of its proximity to Manila, Malolos and many parts of Bulacan
are highly urbanized and provide attractive opportunities for private investments
in the provision of health services. The province is the site of many private
hospitals with Malolos itself as the location for numerous private secondary
hospitals and a private primary hospital. In addition, there are private laborato-
ries and private health practitioners who are able to support their activities from
user fees charged from their patients. Health seems to be a viable business in
the densely populated sections of Bulacan.
Among the important functions of the Provincial Health Board is to review and
approve proposals from the private sector to operate health related services.
Some private organizations including medical societies and health cooperatives
offer to purchase and operate expensive hospital equipment under a profit
sharing scheme with the provincial hospital. The Provincial Health Officer has
established linkages with some private hospitals in Malolos regarding some
laboratory procedures.
119
Health Sector
As an example, the provincial hospital has forged a memorandum of agreement Reform Technical
with the Sacred Heart Hospital and the Santos Clinic to perform some laboratory Assistance Project
procedures for their patients. Indigent patients referred to these private facilities
by the PHO are charged lower rates. But first, the PHO visits the facilities that
wish to provide their services before they are accepted as service providers for
patients of the provincial hospitals.
With the approval and encouragement of the Provincial Health Board, the PHO
actively networks with the Bulacan Medical Society, the Association of Municipal
Health Officers of the Philippines (AMHOP) and other NGOs who are willing to
work with the provincial public health sector. The Governor actively solicits the
support of private individuals and health groups to work with the province in the
health delivery sector.
Bulacan's public hospitals are distributed in the various parts of Bulacan to serve
the needs of both urban and rural population. The public hospitals continue to
prepare their own budgets subject to the approval of the Office of the Governor
and the Sangguniang Panglalawigan. The Bulacan Provincial Hospital is a 200
bed tertiary hospital that is evolving into a Bulacan Medical Center with a new
building with 40 private beds to compete with private hospitals at the same time
that it maintains the old building to service indigent patients.
Table 8. List of Licensed Private Hospitals by Category, 2002.

Hospital Category Bed capacity Municipality
1. AMOS Hospital Primary (P) 15 Norzagaray
2. B. A. Hospital Secondary (S) 10 Meycauayan
3. Castro Maternity Clinic P 12 Baliuag
4. Community Medical Clinic P 12 Balagtas
5. De Castro Medical Clinic P 10 Baliuag
6. De Jesus Hospital S 14 Baliuag
7. De Leon Medical Center S 60 Paombong
8. Dr. Yanga’s Clinic & Hospital S 50 Bocaue
9. Ed & Tita Cruz Maternity and Surgical Hospital S 22 Sta. Maria
10. Emmanuel Hospital P 20 San Miguel
11. FM Cruz Orthopedic & General Hospital S 15 Pulilan
12. Grace Memorial Maternity & General Hospital S 20 Balagtas
13. Gubatan Clinic P 6 Balagtas
14. Holy Family Hospital S 25 Balagtas
15. J.N. Gran General Hospital S 25 Calumpit
16. Jesus of Nazareth Hospital Guiguinto
17. Jesus The Good Sheperd Hospital S 10 Pulilan
18. Lozada’s General & Maternity Hospital S 25 Meycauayan
19. Ma. STMA. Dela Paz Hospital S 25 Marilao
20. Malolos EENT Hospital S 10 Malolos
21. Malolos Maternity S 11 Malolos
22. Malolos San Ildefonso County Hospital S 14 Malolos
23. Malolos San Vicente Hospital S 10 Malolos
24. Marcelo Hospital S 20 Baliuag
25. Marcelo-Padilla Children’s and Medical Hospital P 6 Plaridel
26. Mateo’s Diagnostic Hospital S 15 Sta. Maria
27. Medical Center San Miguel Inc S 25 Guiguinto
28. Mendoza General Hospital S 23 Sta. Maria
29. Mt. Carmel Clinic S 25 Bocaue
120
Table 8. List of Licensed Private Hospitals by Category, 2002.
Health Sector
Hospital Category Bed capacity Municipality Reform Technical
30. Nazarenus Clinic and Hospital P 15 Meycauayan Assistance Project
31. Our Lady of Salambao Hospital S 14 Obando
32. Padriguilan Maternity and Medical Clinic S 6 Meycauayan
33. Plaridel County Hospital S 25 Plaridel
34. Poscablo Clinic and Hospital SS 16 Pandi
35. Roquero Hospital S 25 San Jose Del Monte
36. Sacred Heart Hospital S 43 Malolos
37. Sagrada Familia Hospital S 10 Baliuag
38. Saint Michael Clinic & Maternity Hospital P 6 Malolos
39. San Agustin Hospital S 10 Hagonoy
40. San Diego General Hospital S 20 Plaridel
41. San Roque Hospital S 12 Malolos
42. Santiago Hospital P 10 Baliuag
43. Santos Clinic Inc S 10 Malolos
44. Santos General Hospital of Malolos S 25 Malolos
45. St. Annes S 6 Balagtas
46. St. Martin of Tour Hospital S 15 Bocaue
47. St. Mary’s Hospital S 25 Sta. Maria
48. St. Michael’s Family Hospital S 25 Marilao
49. St. Paul Hospital Tertiary (T) 50 Bocaue
50. St. Vincent EENT Hospital S 16 Bustos
51. Sta. Ana Hospital P 15 Hagonoy
52. Sta. Cruz Hospital S 16 Calumpit
53. Sta. Dolorosa County Clinic P 8 Norzagaray
54. Sto. Nino Clinic P 18 Bustos
55. Tolentino Clinic P 8 Baliuag
56. Montefalco Medical Center T Meycauayan
57. Our Lady of Mercy Medical Center T Pulilan
Table 9. Provincial Government Hospital Profile, (1994-1999).

Ave. # of Ave. # of
Occupancy Rate
Bed Out-Patients In-Patients
Hospitals
Capacity 5-Yr 5-Yr 5-Yr
1999 1999 1999
Ave. Ave. Ave.
Bulacan Provincial Hosp. 200 72.63 69.00 191 249 138 138
Calumpit Distric Hosp. 50 74.01 54.43 114 150 37 27
Emilio Perez Dist. Hosp. 50 58.59 75.00 111 152 31 37
Gregorio del Pilar Dist. Hosp. 50 66.16 107.85 108 119 21 29
Baliuag District Hosp. 75 49.06 87.32 107 149 38 66
San Miguel Dist. Hosp. 50 52.44 70.42 99 125 26 35
R.M. Mercado Memorial Hosp. 100 74.98 112.81 159 211 75 112
Sapang Palay Dist. Hosp. 50 86.71 91.60 158 191 43 46
Felix T. Reyes Memorial Hosp. 10 56.94 60.00 11 11 6 6
TOTAL 635 67.78 80.94 1,059 1,357 416 496
All district hospitals serve as the catchment areas of the unified local health
systems or the interlocal health zones except for the Calumpit maternity hospital
that remains as a specialty hospital. In support of the integration of the local
health system initiative, district hospitals are being upgraded to make them
Sentrong Sigla certified and PhilHealth accredited. The Baliuag District Hospital
has 11 private rooms within its 75-bed capacity and has a total of 90 persons to
comprise its personnel. As it is also able to generate its own income from user
fees, such funds have helped sustain its health services.
121
Health Sector
As of 2002, the Sapang Palay District Hospital has been transferred to the city Reform Technical
government and has become the Ospital ng Lungsod ng San Jose del Monte and Assistance Project
the Felix T. Reyes Memorial Hospital has stopped operation.
4.2 Financial Flexibility
The provincial government has realized the income potential of the provincial
hospital as well as district hospitals and has set income targets for each hospital
to achieve. In 2001, an income target of P18 million was set for the provincial
hospital and the target was exceeded by P2 million. Income from the private
wards is an important cost recovery scheme for the maintenance of quality care
in provincial hospitals. It becomes relatively easier for the PHO to make financial
requests from the provincial treasury, given the income generated through
hospital operations.
Hospital chiefs and top management in the PHO are encouraged to perform well
as they are given incentives like trips abroad and service vehicles. They are
given support to develop professionally through Lakbay Aral trips that enable
them to attend local and international conferences and short-term training.
The motto in the hospital is “best quality, cheapest pay” and that is achieved
through a cross subsidy strategy of socialized care. Private room charges are
competitive with the private sector while the service wards continue to accept
indigent patients. Each department in the provincial hospital is given the task of
preparing its budget that it presents and defends before the PHO. The practice
gives the various departments the opportunity to participate in the budget proc-
ess and makes them conscious about the importance of cost effectiveness and
cost containment.
Through its income, the hospital is able to acquire new equipment, hire consult-
ants from Manila and the private sector, construct buildings and increase bed
capacity and develop its capability to become a teaching hospital. At present,
the provincial hospital has residents in the Obstetrics-Gynecology and Pediatrics
departments while the departments of Medicine and Surgery have been identified
as the next areas of specialization.
At present, all hospital income are remitted to the provincial government where
their values and origin are properly recorded. There is a move among hospital
chiefs to make a request for the provincial government to allocate all hospital
income for the use for the operation of each hospital. MSH has also introduced
the use of a costing software and the hospital staff are in the process of adjusting
data collection techniques as inputs for the program. The process is capable of
providing valuable information towards improvement of financial operation of
hospitals for efficient and quality care.
122
Table 10. Comparative Income and Budget of Hospitals, 2000-2001.
Health Sector
2000 2001
Bed Reform Technical
Hospitals Budget Income Budget Income
Capacity Assistance Project
(PhP) (PhP) (PhP) (PhP/%)
PHO 200 79,431,510.00 14,930,622.79 (17%) 87,767,880.00 20,324,526.90 (23%)
RMMMH 100 26,509,109.00 13,033,755.43 (49%) 34,194,330.00 13,945,197.65 (41%)
BDH 75 17,083,360.00 6,871,828 (28%) 23,590,638.00 8,132,852.00 (34%)
SPDH 50 15,315,339.00 4,353,001.70 (28%) 16,461,604.00 3,961,452.80 (24%)
EPDH 50 13,344,543.00 3,318,578.15 (25%) 15,780,975.00 3,670,860.15 (23%)
SMDH 50 13,804,568.00 2,947,686.50 (21%) 15,873,104.00 3,251,008.92 (20%)
CDH 25 12,880,519.00 2,785,529.85 (22%) 11,027,503.00 3,079,668.75 (28%)
GPDH 25 11,148,668.00 1,864,915.48 (17%) 11,184,571.00 2,140,164.96 (19%)
TOTAL 575 189,517,616.0 50,105,917.81 (26%) 215,880,605.00 58,505,732.32 (27%)
Quality standards are being developed at the provincial hospital and district
hospitals. At the provincial hospital, rating systems are being developed for each
section and are to be piloted during the latter part of 2002. At the Baliuag District
Hospital, the district core referral hospital, quality improvement of health services
is being undertaken by strengthening specialty clinics in Medicine/Internal
Medicine; supporting the formation of various health clubs like the Happy Hearts
Club, the Pulmo Club and the Diabetic Club; strengthening home based nursing
care where nurses are given the opportunity to follow up their patients in the
community; medical and surgical outreach missions; inviting consultants from the
Jose Reyes Memorial Medical Center in the fields of medicine, pediatrics and
neurosurgery; and making low cost medicine available.
To improve its service to its patients, the Bulacan Provincial Hospital and all
district hospitals launched a public excellence program by conducting training
workshops and focusing on service orientation by its human resource depart-
ment. A client feedback mechanism has also been established by placing
suggestion boxes in different departments and conducting exit interviews among
patients. The governor also monitors the quality of provincial services including
health by setting up a “Isumbong Mo kay Josie” ("Tell it to Josie") section as a
feature of the Bulacan website. As resources are being increased to upgrade
hospital facilities, their occupancy rate has also significantly increased due to
improved service, facilities and equipment.
Table 11. Comparative Occupancy Rate by Hospitals, 2000-2001.

Hospitals Bed Capacity Occupancy Rate
2000 2001
PHO 200 57.29 84.81
RMMMH 100 138.25 119.69
BDH 75 93.32 101.63
SPDH 50 102.00 108.00
EPDH 50 70.70 67.59
SMDH 50 65.21 87.26
CDH 25 90.79 85.03
GPDH 25 87.55 99.41
123
Health Sector
4.3 Hospital Personnel Profile Reform Technical
Assistance Project
The hospital personnel profile of the Bulacan Provincial Hospital corresponds to

Sentrong Sigla and PhilHealth standards for a tertiary hospital. The personnel
profile of the Bulacan Provincial Hospital is shown in the succeeding table.
Table 12. Bulacan Provincial Hospital Personnel Profile.

Total No. of Personnel 328 *Medical Pool 10
Plantilla Positions 312 *Nurses (Medical Pool) 5
Total No. of Med. Pool 16 Admin Officer 1
Doctors 56 Record Officer 1
Vacant Position (Anes.) 3 Cashier 1
Nurses (plantilla) 73 Supply Officer 1
N.A. (Plantilla) 46 Clerk 14
Med Tech 7 Account Clerk 1
Med. Lab. Tech 4 Computer Operator 1
Dentist 5 Engineer 1
Dental Aide 1 Planning & monitoring/ evaluation staff 0
Pharmacist 4 Medical Officer VI 1
Midwife 1 Midwife 2
Utility Worker 56 HEPO 1
Driver 7 Statistician 1
Social Worker 2 Nut. Diet 2
Nut. Dietitian 2 Nurse IV 2
Cook 3 Computer Operator 1
Radio tech. 5 Engineer 1
Med. Eqpt. Tech. 1 Sanitary Inspector 1
*Medical specialists and nurses who are members of the pool perform the work of relievers in any provincial hospital where they are
needed. Once the need for their services in any provincial hospital has been established, they may be assigned permanently to an
identified location.
5. Gains in Drug Management
To ensure proper drug purchase, management and supply, a therapeutics

committee has been set up in all public hospitals in Bulacan. In principle, all
departments in the hospital are represented in the committee that takes care of
identifying needed drugs, setting quality standards and making sure that they are
in accordance with the National Drug Formulary. The committee meets every
month and makes recommendation for drug purchase.
A Provincial Therapeutics Committee (PTC) has likewise been organized made

up of all district hospital chiefs and they meet on quarterly basis to monitor the
work of district therapeutics committees. This body has the function of making
policy recommendations related to drugs. Subcommittees have been created to
check the quality of drugs that are being offered or have been delivered by
124
suppliers. The PTC also takes care of formulating a provincial drug formulary
Health Sector
based on the national drug formulary. The Assistant PHO for hospitals acts as Reform Technical
chair of the PTC. Assistance Project
The order for drugs from the various district hospitals are consolidated at the
PHO and forwarded to the Provincial General Services Department that conducts
bidding for the bulk purchase of drugs. Through the bidding process, the prov-
ince is able to buy drugs at the cheapest price made possible by volume dis-
counts through bulk purchase. However, sometimes the supplier for the lowest
bid is not able to supply all the requirements and hospitals are forced to purchase
drugs at higher prices. The General Services Department is responsible for the
purchase and procurement of drugs based on a list given to them by the PHO
and the hospitals. They do bulk purchase in order to get the best/lowest cost for
the drugs they purchase. They follow the COA rules when it comes to purchases
and they make requests for bids from accredited suppliers.
Bulacan was able to allocate money for the parallel importation as per request of
Malacañang but they said that they have given their request as early as February
but in May, they have yet to receive word regarding they status of the said
purchase request. They were informed that this kind of purchase takes a long
time (6 months) and the money they have allotted can no longer be touched even
if it does not earn any interest.
The province has availed of the services of the Department of Trade through its
parallel drug importation scheme. The drugs on the parallel importation list are
mostly tablets and capsules. The Assistant PHO for hospitals sees the need for
high demand hospital items like intravenous drugs and antibiotics, which are
expensive items in the local market. But these are commonly used and needed
by hospital patients. The delay in the parallel importation scheme of purchase of
drugs for the hospitals has discouraged LGUs from making subsequent orders.
The hospital also derives income from drug sales as 20% is remitted back to the
provincial coffers while 80% is utilized as revolving fund to be used as seed fund
for drug procurement by the hospital. The use of the fund while originally in-
tended for medicines has been expanded to include other important hospital
needs. Again, the 80% retention fund allows for fiscal flexibility for hospital
operations. Hospital chiefs are gladdened by the measure. There is a move to
retain all 100% of drug sales and to use this money as revolving trust fund for
drugs. Under this scheme, the province need not allocate any budget for drugs
as the funds grow and become capable of meeting the hospital’s drug require-
ments.
A situation analysis of the effects of devolution manifested the effects of fragmen-

tation as evidenced from the lack of coordination between the hospital and the
public sector, the breakdown of the referral system, the disintegration of the
health management information system, drug procurement problems, the lack of
joint planning and training of personnel. Fragmentation affected health care
delivery characterized by the low quality of health services at the local setting.
125
The province of Bulacan suffered from the same fragmentation brought about by
Health Sector
devolution as the hospitals were under the responsibility of the provincial gov- Reform Technical
ernment while the rural health units and the barangay health stations were under Assistance Project
the responsibility of the municipalities. But the provincial political leadership was
also quick to adopt measures intended to address such fragmentation. Governor
Josie de la Cruz provided the leadership to initiate the organization of interlocal
health zones in Bulacan.
6.1 Bulacan Unified Local Health System
The components of the UHLS as specified by the Center for Health Development
in Region 3 consists of (a) district hospital serving different municipalities,
(b) two-way referral system, (c) technical supervision of district health office over
RHUs, (d) personnel complement, (e) continuing education to ensure competent
personnel, (f) district health board, (g) facilities and equipment, (h) partnership
with LGUs, (i) community participation, (j) health information system, and
(k) CHD technical supervision over district hospitals.
The Baliuag Unified Local Health System (BULHS) is composed of the munici-
palities of Angat, Baliuag, Bustos, Dona Remedios Trinidad (DRT) and San
Rafael. Baliuag and Bustos belong to the second congressional district while
San Rafael, Angat and DRT are part of the third congressional district of Bula-
can. The BULHS was organized in 1999 by virtue of a memorandum of agree-
ment unifying the five municipalities, the province and the DOH Regional Health
Office 3 (BUHLS, 2000). The unified health network includes the 75-bed Baliuag
District Hospital in Baliuag, four RHUs in Baliuag, two RHUs in San Rafael and
one RHU each in the towns of Bustos, Angat and DRT.
The Baliuag Unified Local Health System Board is made up of the Provincial
Governor as chair, the District Health Hospital Director as vice-chair, the mayors
of five participating municipalities (often represented by their municipal health
officers), the provincial DOH representative, a representative from the Sang-
guniang Panlalawigan, and a representative from NGOs. The District health
board meets quarterly and approves the Integrated BULHS health plans from
disparate municipal and district hospital plans. It prepares a strategic plan that
becomes the basis of an investment plan. It also takes up ongoing concerns
within its catchment area.
The municipality of Baliuag that serves as the core of the BULHS is a first class
town with a land area of 4,505 hectares and a population of about 110,000 and
20,708 households. The Baliuag UHLS has a population coverage of approxi-
mately 277,384 people composed of 46,767 households in 1999 (BULHS,1999 ).
Baliuag is the site of about 30 private clinics and 4 private hospitals.
After BULHS, the Sta. Maria Unified Local Health System was organized in 2000
and four more are being organized in the catchment areas of Malolos, Bulacan,
Hagonoy and San Miguel to complete the organization of the province of Bulacan
into interlocal health zones. Interlocal health zone workshops were held on July
4, 2002 and drafts of letter of commitment have been prepared. The stake-
holders consider a letter of commitment as a document that has better chance of
getting approved due to its flexibility and adaptability.
126
Health Sector
6.2 Roles and Functions of Key Players Reform Technical
Assistance Project
The major stakeholders signed a Memorandum of Agreement in the Baliuag

Unified Local Health System on July 21, 1999. The signatories were the mayors
of the participating municipalities, the governor of Bulacan, Region 3 CHD
director, the PHO, the Baliuag district hospital chief and the congressman for the
first district of Bulacan. The document stipulates the roles and functions of the
various stakeholders.
According to the MOA, the District Health Board is be the coordinating authority
that shall perform the functions such as the identification and prioritization of
health needs or problems of the catchment municipalities/ barangays and the
district hospital; resolve problems emanating form health services; review and
approve the work and financial plan of the Unified Local Health System; facilitate
release of funds from the Governor’s Office; approve requests for construction/
repair of the health facilities within the catchment areas and formulate or renew
existing policies within the catchment areas.
It also serves as the source of funds for the system. The Municipal and Provincial
Health Boards, on the other hand, maintain their functions. However, the policies,
problems or issues that cannot find local solution shall be brought to the Provin-
cial Health Board for discussion and action.
The Province under the governor is responsible for administrative supervision

and guarantees the provision of the MOOE, the creation of policies and stan-
dards and performs monitoring and evaluation functions. Governor Josie de la
Cruz matched the initial grant of P1 million from the CHD with a grant of P3
million to upgrade the Baliuag District Hospital. Her initiative was crucial to the
start up of the unified local health system initiative in Bulacan. The fund was in
addition to the regular budget that the province provides for the operation and
maintenance of all hospitals.
The Provincial Health Office operates the Provincial Hospital and oversees the
public health programs as well. The Provincial Health Officer acts as provincial
hospital chief with two assistants, one for hospitals and another for public health.
The PHO exercises supervisory functions over the unified local health system as
the Assistant PHO for hospitals monitors hospital operations while the Assistant
PHO for public health works with the MHOs to monitor public health concerns.
The Assistant PHO for public health is a new creation and came as a result of the
Unified Local Health System (ULHS) initiative where the PHO involvement in
public health has become an important area of concern for the province.
In the ULHS, the District Hospital/ District Health Office acts as the core of the
catchment area. It provides hospital services to its clients, leads the training and
continuing education of personnel at the district, municipal and barangay level. It
is the coordinating center of activities in within the catchment area. The services
at the district hospital include preventive, promotive, curative and rehabilitative
functions. According to the respondents from the Baliuag district hospital, they
perceived the services available as being geared towards the curative aspect.
While Medical, Pediatric, OB- GYN services are commonly availed by in and out-
127
patients, the hospital also renders surgical, family planning, laboratory and x-ray
Health Sector
services. Reform Technical
Assistance Project
The Municipal government, with its Barangay Health Stations and Rural Health
Units, provide for basic and public health services and refer cases to the District
Hospital or to other appropriate health facilities when needed. It is likewise
responsible for networking with other stakeholders, social mobilization, monitor-
ing and evaluation, creation of policies and standards, provision of the MOOE
and other funds, and promotion of the Health Information system, research and
development. The most common primary services availed by the clients at these
levels include the following programs: Expanded Immunization, Maternal and
Child Health, Nutrition and Family Planning. There are also other locally initiated
programs that are participated in by the communities. Among these are the Zero
Waste Management Project, Friendly Hearts’ Club for the Cardio-Vascular
Disease Control and Prevention Program and Stress Management.
The Center for Health Development of Region 3 played a crucial role in the
establishment of the Unified Local Health System in Bulacan. Regional Director,
Dr. Ethelyn Nieto championed the establishment of ULHS areas in the region in
1998 that included the provinces of Bataan, Bulacan, Nueva Ecija, Pampanga,
Tarlac, and Zambales. Baliuag ULHS was one of six UHLS pilot areas in Region
3. The goal is to improve health care delivery systems in communities through
community participation, sharing of resources and expertise and an effective
collaboration among local government units. The objectives include the follow-
ing:
• To provide an efficient, workable district referral system

• To develop a health information system suitable to the needs of the district
hospital and catchment municipalities
• To create a district health board to oversee ULHS implementation
• To develop LGU capacity to improve health care delivery system through
effective collaboration among LGUs
• To strengthen the technical capability of district hospitals and RHUs in district
catchment areas and
• To upgrade district hospitals and RHUs through the provision of necessary
equipment
The Department of Health as represented by the Regional Health Office 3 or the

Center for Health Development 3 provides the technical supervision, training and
planning. Its expansive role includes the monitoring and evaluation, formulation/
renewal of policies, protocols and standards, promotion of Health Information
System as well as research and development.
In 2000, CHD in Region 3 was able to extend assistance to 15 district hospitals

and 49 municipalities by awarding P 6 million to the 6 pilot district hospitals as
incentive for reorganizing their services to serve the district. In addition, P 10
million was provided to cover the costs of supplies. In terms of technical assis-
tance, they have provided for staff training, facilitated the drafting and
implementation of a MOA to create the BULHS, advocated for the need for the
UHLS, facilitated planning for future activities of the UHLS and conducted
orientation on the implementation of the referral system.
128
Health Sector
They have also advocated for the ULHS to provide financial, logistic and techni- Reform Technical
cal support to upgrade services in the local health facilities. The CHD has given Assistance Project
P50,000 for each RHU in the ULHS to upgrade its facilities in addition to medi-
cine to augment the supply available in the RHU. This has earned the recogni-
tion of the Sentrong Sigla movement. The CHD has also worked for the approval
of a Regional Development Council (RDC) Executive Committee Resolution No.
03-16-99 endorsing the ULHS to the RDC.
6.3 Operations of the ILHZ
The Unified Local Health System District Health Board has conducted quarterly
meetings since its establishment in July of 1999. Health officials including the
District Chief of Hospital, DOH Representatives, Municipal Health Officers and
Public Health Nurses and Hospital Administrative Officer regularly attended
district health board meetings. These regular meetings resulted in forging bonds
among the various health personnel. Whereas before, MHOs hardly knew and
coordinated with one another, now at the district level, they discuss common
health concerns and share resources.
Among the topics tackled during meetings were annual health plans, resource
generation through fund raising activities, planning activities, presentation of
results of health programs and accomplishment reviews of the performance of
the ILHZ units. One effective means of raising funds is the sponsorship of Prince
and Princess of Nutrition where parents of children candidates solicit monetary
contribution for their children to earn the titles at stake.
During district board meetings, commitments also were forged to enhance the
role of the Baliuag District Hospital in providing health services. In September
13, 2000, the members of the District Health Board identified the Nutrition
Program as its flagship project for the Baliuag Unified Local Health System. In
relation to this commitment, the Administrative Officer of BDH has pledged to
support Bethlehem, a charitable institution in Baliuag, and its nutrition activities
though monitoring of rehabilitation program and check-up of children by BDH
doctors.
In the municipality of Bustos they have initiated a Sikap Angat Program, a

primary health care partnership project between the local government and non-
government organizations in the community. They targeted third degree malnour-
ished children with the help of private organizations. Each organization adopts a
family with a third degree malnourished child. The Catholic Women’s League
(CWL) and the Department of Education (DECS) have given support to the
program in the form of food assistance to children and giving jobs to parents.
Volunteer health workers help implement the improvement of the health man-
agement system, one of the policies instituted by the municipality of Bustos.
This is done through the barangay health workers (BHW) who monitor exten-
sively the solid waste management program. RHU health programs such as EPI
are also utilized as results are regularly reported to midwives. An RHU staff
conference is conducted every Monday to discuss problems of every barangay
within the municipality.
129
Health Sector
At the Provincial level, the Governor has appointed Dr. Manuel G. Roxas as Reform Technical
over-all Health Consultant for Bulacan. The governor is committed to improving Assistance Project
the health in Bulacan as manifested by the budget allocated to health, incentives

given to provincial health professionals, support for District Hospitals, focused
targeting of health beneficiaries, and PhilHealth benefits for indigents. This same
commitment is not seen at the municipal level. Some mayors of municipalities
under the BULHS are not actively participating in the health activities as evi-
denced by their frequent absences in meetings. Some local officials are not
interested and are not familiar with concepts related to the formation of interlocal
health zones. Thus, policy making in relation to health and the BULHS is per-
ceived to be a difficult task, despite the initial steps to pursue the goals of the
BULHS.
6.4 Common Funds and Resources
There is sharing of resources among member municipalities in the Baliuag ULHS

in terms of sharing equipment, ambulance and a referral system. Financing that
is provided at the local level from the municipalities seem to be provided in kind:
medicines, transport money or donation of equipment. Local support in terms of
line budget items i.e. MOOE support was not evident. Support for personnel
services is provided by the municipalities and the province in terms of providing
honoraria for contractual employees and volunteers, as well as salaries of
personnel with plantilla items.
At the district hospital the various municipalities and the province also maintain
an open account system where indigents referred by local officials are given the
hospital care they require and the municipality concerned is later billed for the
service. Senator Ople has set aside a portion of his Countryside Development
Fund (CDF) for Hagonoy residents where Mayor Ople may charge the hospitali-
zation of his constituents to this fund. Already, municipalities are entertaining the
idea of reserving a number of beds for their indigents at the district or provincial
hospital.
6.5 Human Resources in Public Health
The provincial government has created the position of PHO I for public health in
2001 to address public health concerns and take a leadership role for the imple-
mentation of public health programs. The newly created office also takes care of
coordinating public health concerns as epidemics are monitored, and assistance
in terms of medicines and equipment are provided by the province. The provin-
cial thrust in public health is to improve the quality of care by encouraging
Sentrong Sigla certification among RHUs and barangay health stations. In
Bulacan, as of May 2002, 51 rural health units and 76 barangay health stations
are Sentrong Sigla certified.
130
Table 13. Field Health Workers – Service Workers by Category, 1999.
Health Sector
Position Number Percent Reform Technical
Assistance Project
MHO/Rural Health Physician 57 7.92
Public Health Nurse 68 9.44
Rural Health Midwife 440 61.11
Sanitary Inspector 47 6.53
Medical Technologist 27 3.75
Public Health Dentist 57 7.92
Dental Aide 23 3.19
Nutritionists 9 1.25
Non-Technical Personnel 19 2.64
TOTAL 720 100.00
6.6 Referral System
Workshops in the referral system have been conducted as part of the regular
activities of a unified local health system. The referral system will help coordi-
nate the work of the various parts of the system. Primary health care is provided
at the barangay health stations and the rural health units, secondary care at the
district hospital and tertiary care at the provincial hospital. There is now better
understanding and implementation of the referral system as a result of the unified
local health system concept.
The MSH has conducted the most recent referral system workshop with the end
in view of developing a referral system manual. A technical working group has
been identified and has been given the task of preparing the draft of the manual
for Bulacan.
6.7 Management Information System
The Field Service Health Information System (FSHIS) is being utilized as a

means of getting information from the various communities. The report is done
monthly and consolidated quarterly to get updated information about health
concerns. At the same time, the Provincial Epidemiology Service Unit (PESU)
organized in 1995 continues to monitor epidemics through weekly gathering of
information from hospitals.
6.8 Fostering Community Participation
The Baliuag District Hospital as well as the MHOs in the district actively solicits
community participation. Support form NGOs come in terms of donations for
medicines, equipment, and organizing medical missions. Good health has also
become a community concern and various groups have organized aerobic
sessions, ballroom dancing and disease awareness and prevention activities
organized by groups like the Happy Hearts Club, Diabetic Club, etc.
At the province-wide level, civic organizations like the Rotary Club, Lions and
other organizations adopt projects to help improve the health of people. Various
131
types of health facilities in the province become the beneficiaries of initiatives of
Health Sector
civic organizations. Reform Technical
Assistance Project
7. Updates on the Bulacan Convergence Initiative
Table 14. Reform Area: Local Health System.

A. Strategy: Upgrading of all government facilities (SS Standards)
Activities Expected Output Status
1. Inventory of health facilities and Master list of health facilities and On-going
manpower capabilities manpower
2. Identification of resources (local Work and finished plan identified Done
and national) approved
3. Allocation of funds by the LGUs in Budget endorsed and approved by Not yet done, only budget from DOH
the Local Health System legislators
4. Upgrading of health facilities Upgraded government facilities 39 RHU Sentrong Sigla certified
57 RHUs 7 Hospitals SS certified
8 Hospitals
B. Establishment and strengthening of ULHS
1. Total participation of LGUs in LHS Advocacy on ULHS 2 ULHS district functional
Advocacy on 4 ULHS on-going
2. Local health planning per district LHP Conducted plans for 6 districts,
medium-term planning two weeks
ago
3. Endorse local health plans and Local health board resolution signed Only 2 municipalities signed the LHB
budget to SP/SB by LCE plan
4. Implementation of functional Referral system in place 2 district referrals in place
referral system in all districts
5. Establishment of health Established guidelines for HMIS Not yet done
management information system in
all systems
6. Development of maintenance of Established guidelines for HMIS On-going
database of health facilities
C. Strategy: Sustaining quality health service in Bulacan
1. Development of performance Protocol for performance indicator Done
indicators system
2. Ordinance from SP/SB earmark- Resource generation from social Done (province and 2 towns)
ing income from PHIC (health) insurance for quality service
Table 15. Reform Area: Social Health Insurance.

A. Strategy: Social marketing and advocacy
1. Issuance of MCs from LGUs >LGU compliance Done in at least 6 towns/city
>Budget allocated
2. Conduct of IEC/Seminars >70% LGUs under servicing >On-going (at least for LGUs,
>90% clientele awareness congressmen and clientele, not yet
>100% congressmen measured)
>75% NGOs/COs
B. Strategy: Expansion of resources
Lobbying for more sponsorship 3 NGOs/municipalities to 5 indigent No private/NGO sponsorship yet
NGOs families/year
Private corporations 10 corporation
2. Partial subsidy scheme 9300 indigent HH starting to pay –
partial subsidy
132
C. Upgrade health facilities (Quantity and Quality)
Activities Expected Output Status Health Sector
Reform Technical
1. Government health facilities SS 8 RHUs SS certified Done Assistance Project
certified
2. Regular monitoring by PHIC and All PHIC facilities and HC Providers >Done in all PHIC facilities
DOH accredited >PHIC conducted inspection in the
HCs/RHUs but no accreditation yet
3. Comprehensive referral system MOU between RHUs, private clinics Task force established
and hospitals fully implemented
Table 16. Reform Area: Hospital Reforms.

A. Strategy: Enactment of local ordinance on financial flexibility
1. Formulate proposal Draft proposal Done
2. Policy advocacy to local health Statement of support by LHB Done in the province
board
B. Strategy: System Improvement
1. Train budget officer on RA Budget officer trained –
(Responsibility Accounting Tools)
2. Advocate/Echo RA Concerned staff knowledge on RA –
C. Strategy: Strategic plan for Infra development for Bulacan hospital
1. Organize TWG TWG organized Done
2. Review of related plans Plans reviewed Done
3. Data gathering Data gathered processed and On-going
analyzed
4. Hold planning sessions Framework plan developed On-going
Table 17. Reform Area: Drug Management.

Target 1: Availability of low cost, quality, essential drugs.
Strategy: Operational/Functional Committees in all government health facilities
1. Strict compliance to standard STG completed at provincial district Done
treatment protocols in all govern- level
ment health facilities
2. Creation and maintenance of Provincial formulary created and On-going
provincial formulary maintained
3. Establishment unified procure- Trained on new system of all existing On-going
ment system districts of ULHS
Target 2: Improve drug use
Strategy: Established drug distribution center
1. Advocate for local ordinance Local ordinance resolution passed Not yet done
resolution for proper drug distribution and implemented
Strategy: 50% Increased awareness of community on rational drug use
1. KAP/QRS on drugs Baseline data on level of awareness Not yet done
2. Massive mass-based IEC Conducted Not yet done
3. Reproduction, distribution of IEC IEC materials produced Not yet done
materials
4. Community assembly Class/well reformed community Not yet done
5. Mother’s class Assembly of mothers On-going
6. Media Local media promotions Not yet done
133
Table 18. Reform Area: Public Health.
Health Sector
A. Strategy: A properly managed Unified Public Health System Reform Technical
Activities Expected Output Status Assistance Project
1. Advocacy to LGUs, Pos, OGOs, Increase in budget for public health Done
and NGOs promotion
Proper management of public health On-going
Functional Local Health Board Functional- Provincial Health Board

and 2 Local Health Board
Capability building of health On-going
implementors
Reorientation of health workers HWs reoriented, competent and Done, on-going

motivated
Rewards/Incentives/Recognition Outstanding health implementor Budgeted for this year (2002)

given recognized
3. Formulation of one Bulacan health One plan formulated and adopted Conducted a medium-term plan for
plan Bulacan recently, not yet integrated
though
4.Establish MIS inventory of MIS in place On-going
computers
Development of system computeri-
zation of health data
B. Strategy: Coordinated operations by health care providers
Establishment of link- Networking established On-going
ages/networking
Advocacy/Fund sourcing/Service Additional funds generated

coordination Health activities coordinated
2. Monitoring/evaluation of health Monitoring and evaluation done Performance indicators developed
workers Health workers rated
3. Strengthening of referral system Functional referral system Functional in two districts
established
4.Disease reduction services Mortality and Morbidity from On-going
communicable diseases reduced
C. Strategy: Health programs acceptable to all
1. Improve health services Health services improved On-going
Objectives attained
2. Information, education, IEC disseminated On-going
communication (IEC) development
3. Exit interview of RHU clients Clients satisfaction gauged None
4. Evaluation of health indicators Health indicators evaluated On-going
8. Best Practices
8.1 Hospital Reforms
Bulacan represents a different model from other convergence areas because it

has a different socio-economic profile. The province has a high rate of urbaniza-
tion, high population growth, high population density, and lower poverty incidence
compared with the national average. It has a very strong private sector and
provision of health care is a viable enterprise in the province. As privatization of
public services has become a recurrent theme due to the limited financial capac-
134
ity of government to provide for basic services, Bulacan serves as a good model
Health Sector
of cooperation between the public and private sector in the provision of health Reform Technical
care. Both sectors realize that they serve to benefit from each other’s areas of Assistance Project
strengths and weaknesses.
The Bulacan Provincial Hospital is able to face the challenge of being competitive
with private hospitals in terms of quality facilities and competent medical staff.
The new building that houses the private wards is able to offer the convenience
and comfort of private health care facility at a cheaper price. It is able to gener-
ate income from the private wards to enable it to upgrade its physical plant,
facilities, equipment as well as availability of drugs. The concept of socialized
care becomes possible with income generated from user fees being used for
improved operations to benefit the indigent patients as well. The provincial
government watches the financial bottom line of hospital operations and makes a
conscious effort to make hospital operations viable by setting income targets that
hospital chiefs are encouraged to achieve. Hospital chiefs are better prepared to
become good financial managers who should be effective in terms of quality
health care delivery and efficient in terms of being able to augment their budgets
with income from hospital operations.
The provincial government has allowed some mix of market forces to influence
hospital operations through an incentive system. Operating heads are provided
with incentives to achieve their targets. As a profit center in a limited sense, the
hospital chief is given some leeway in the purchase of supplies and equipment
badly needed by the hospital.
The hospital develops a client friendly atmosphere as client suggestion boxes are
distributed in the various departments. Exit surveys and interviews of patients
are conducted regularly. Patients with complaints may also inform the governor
through the website created for the purpose. Client satisfaction becomes an
important factor as the hospital staff tries to improve its services to increase its
patient load and correspondingly its income.
Non-government organizations like medical societies and health cooperatives

make their services available to the public sector under a networking arrange-
ment with the hospitals. Indigents are provided the service at reduced fees while
those who can afford to pay are charged the regular rates. Private clinics and
hospitals also make some of their facilities available to public hospital clients.
8.2 Inter-local Health Systems
Bulacan health officials realize that the formation of Unified Local Health System
will provide the infrastructure towards the achievement of the goals of health
sector reform. As the expansion of social insurance coverage proceeds at a slow
pace, they hope that the formation of ULHS will hasten the Sentrong Sigla and
eventual PhilHealth accreditation of hospitals and RHUs. As of May 2002, 51
RHUs and 76 barangay health stations have been Sentrong Sigla certified.
Bulacan could be considered a model in the improvement of public health
facilities. The political leadership in the province and many municipalities give
priority to the development of primary care facilities to improve people’s health.
135
At the same time, CHD has been creative in providing monetary incentives to
Health Sector
push for facility improvement. Reform Technical
Assistance Project
There is conscious effort to promote a healthy lifestyle in communities through

the support given by MHOs and district hospitals for private health clubs, like the
Happy Hearts Club and the Diabetic Club. Doctors and their staff from both the
hospital and public health sectors initiate activities to promote health as well as
educate people about health hazards and healthy lifestyle. Health promotion
posters, videos and other materials are readily available in various health cen-
ters.
While a common fund does not exist, Bulacan has been innovative in sharing
resources in terms of an open account system in the district hospital to serve the
needs of indigent patients. Service for indigent patients are charged to LGUs
that use funds from various sources including municipal budget and CDF to pay
the hospitals. Municipalities are already looking at the possibility of buying into
hospital operations by reserving and paying for a number of beds for their
respective indigents.
8.3 Drug Management Systems
The Bulacan provincial government has allowed retention of 80% of sales

generated from drugs for the use of the hospital for its drug and other require-
ments. The income that is retained will go a long way to augment the budget of
the hospital. The mechanism is another form of financial flexibility to improve
hospital operations. Hospital officials are making use of the practice to develop
models for income retention. With lessons that they will learn from the drug
experience, they hope that they will be able to evolve good practices of financial
accountability towards expansion of fiscal autonomy, which the provincial gov-
ernment has allowed them to enjoy.
9. Convergence Concerns
At a PhilHealth workshop conducted on April 11-12, 2002, Bulacan Governor

Josie de la Cruz expressed her apprehension about making further contributions
to the indigent program. According to her account, Bulacan paid 8.5 million to
PhilHealth but the Bulacan health service only got 2.5 million in reimbursement.
She then cited the experience of the municipality of Las Piñas that put their
money into facilities development of their health centers rather than to PhilHealth
and got better infrastructure. They linked with their private hospitals in the area
and set aside a fund that can be used by indigents with some co-payment. They
have karaoke for the patients who are waiting to be seen in their centers leading
to greater patient satisfaction and perceived better health services. Considering
that Bulacan was shortchanged by P6 million, the governor is seriously consider-
ing alternative means of spending money to provide for health.
In Bulacan, the researchers also found out that while RHUs are Sentrong Sigla
certified, they are not yet PhilHealth accredited as of May 2002 and Bulacan
indigents cannot avail of the out patient package despite the fact that some of
them are card bearing PhilHealth members. Their package of benefits is still
limited to hospital benefits while PhilHealth indigent members are already able to
136
avail of the outpatient package in areas like Pasay and Bukidnon. It seems that
Health Sector
despite the convergence strategy, there is a communication gap in terms of Reform Technical
informing the health sector about requirements of the RHU PhilHealth accredita- Assistance Project
tion.
Convergence advocates in Bulacan in a way feel burdened about the additional

responsibility of implementing the convergence strategy. Convergence is seen
as a separate and additional program that has to be implemented separate from
regular programs. The health staff feels burdened with additional forms and
reports that have to be made and meetings that have to be attended. The
provincial hospital staff in particular thinks that they are quite adequate and
capable in the performance of their functions and they do not learn anything new
in the hospital reform component of convergence. At the regional CHD, a staff
has observed that there are important programs that have been left out by the
convergence strategy. The convergence strategy advocates have conveniently
left out the national public health programs that comprise the health sector reform
agenda.
Bulacan health officials think that the health sector reform agenda is important
and the convergence strategy is an effective means to achieve it. They also
believe that convergence should be customized to meet the needs of each
province. They suggest that some form of social preparation should first be
undertaken and preparatory communication should be sent to each province
identifying information that will be needed for the workshop. While the conver-
gence strategy puts emphasis on the need for data, they felt that they were just
made to recall their experiences during the workshop. The timing of the work-
shop should also be considered to enable the maximum participation of various
stakeholders. Pre-convergence workshops would better prepare the stake-
holders to make a commitment to the convergence idea.
Bulacan has complied with the basic requirements of the convergence strategy.
It has initiated the establishment of the unified local health system in Baliuag
where reintegration and networking within an identified catchment area is evi-
dent. Sta. Maria has likewise been organized and other four sites are being
organized. Bulacan is at the forefront of hospital reform initiatives as it has
undertaken moves for financial flexibility, facility and quality service improvement
even before the convergence strategy. It is also trying to rationalize its drug
management program and its officials have allocated funds to enroll Bulacan
indigents into PhilHealth.
The convergence concept is being introduced ten years after the devolution of
health services. Admittedly, it has been ten years late in addressing the prob-
lems and implementation issues that resulted from devolution. The health sector
leadership has flip-flopped for long on whether to continue devolution or to
change gear and revert back to renationalization. Finally, the convergence
strategy is an attempt to address the fragmentation of the health sector. It takes
political will from all sectors involved in health to support the objectives of con-
vergence. It requires social marketing to sell the concept and to convince key
players like PhilHealth and the LGUs that convergence will serve their institu-
137
tional agenda. Convergence has laudable objectives but its implementation
Health Sector
should be customized to suit local conditions. What will work in Mindanao or Reform Technical
Visayas will not necessarily work in Bulacan. The policy environment should be Assistance Project
properly analyzed to identify factors that will work in favor of convergence and
factors that will delay its implementation.
Social insurance is an important factor to make convergence successful. The

universal coverage by PhilHealth will oil the convergence machinery, as indigents
who need it will be covered through enrollment in the PhilHealth indigent pro-
gram. PhilHealth additional benefits (both hospital and outpatient package) will
make it attractive for health stakeholders to toe the convergence line. Stake-
holders will always ask, “What is in convergence that will benefit me?” Local
governments will be attracted by the possibility of being able to access the 50%
share of the national government for the health of their indigent population.
Admittedly, poor provinces have more to gain than rich provinces, as poor LGUs
require smaller contribution during the first three years before a 50-50% sharing
is required. Poor LGUs have made the suggestion that their PhilHealth contribu-
tion should be pegged to the classification of municipality based on income. Rich
LGUs should pay more and poor municipalities should pay less. But PhilHealth
regional and provincial bureaucrats should do social marketing and be proactive
in doing their work in Bulacan. While many RHUs and BHS have been Sentrong
Sigla certified, there are no indications that PhilHealth is fast tracking their
PhilHealth accreditation. Health officials in Bulacan complain about the slow
pace of work among the PhilHealth bureaucracy.
The convergence cycle begins with PhilHealth as LGUs are required to upgrade
their health facilities to access the capitation fund for RHUs. The sum of PhP300
per indigent enrolled would go a long way to improve the supply of medicines in
RHUS, as well as provide additional income to the professional staff. However,
enrollment of indigents with PhilHealth should go hand in hand with the start of
PhilHealth accreditation process so as not to shortchange LGUs that enrolled
their indigents. PhilHealth should be more proactive in promoting their indigent
program and work double time to hasten the accreditation process. PhilHealth
should also develop a more client friendly orientation to gain supporters of its
programs.
The drug importation scheme of the Department of Trade also needs to improve
its service delivery schedules for LGUs to make repeat orders and for the pro-
gram to really create an impact in the reduction of prices of medicines. The
organization of unified local health systems in the remaining areas of Bulacan
should be hastened as donor and funding agencies tie up grants to the inter-local
health zone approach. Already, the Matching Grant Program of USAID makes
the organization into inter-local health zones a pre-requisite to access their funds.
The ULHS provides the organizational structure to coordinate the various areas
of HSRA.
138
Health Sector
Assistance Project
The Arayat United Health System in Pampanga. 2001. Management Sciences

for Health – Health Sector Reform Technical Assistance Program (HSRTAP).
Manila.
The Baliuag Unified Local Health System in Bulacan. 2001. Management

Sciences for Health – Health Sector Reform Technical Assistance Pro-
gram (HSRTAP). Manila.
Community-Based Monitoring and Information System: A User’s Manual.

2001. Management Sciences of Health – Integrated Family Planning and
Maternal Health Program (IFPMHP). Manila.
Comparative Analysis of Five Inter-Local Health Zones: Current Practices,

Policy and Program Directions. 2001. Management Sciences of Health -
Health Sector Reform Technical Assistance Program (HSRTAP). Manila.
Convergence Orientation and Planning Workshop, 19 September 2001,

Cebu Plaza Hotel, Cebu City. Philippine Health Insurance Corporation
and Department of Health. Philippines.
Establishing the Inter-Local Health System in South Cotabato. Integrated

Community Health Services Project (AUSAID Assisted). 2000. Depart-
ment of Health.
Health Referral System Manual, Province of South Cotabato, Philippines 2001.

Integrated, Integrated Provincial Health Office, South Cotabato. Philippines.
Health Sector Reform Agenda, Philippines (1999-2004), Monograph

Series No. 2. 1999. Department of Health. Manila, Philippines.
The Integrated Health Planning System (IHPS) Manual. No date. De-

partment of Health, Manila. Philippines.
King, T.L. No date. Drug Management Systems Reforms. Bureau of

Food and Drugs.
Quality Standards List for Rural Health Units and Health Centers Level 1,
Certification and Recognition Program. 2000. Sentrong Sigla Movement.
Department of Health, Manila, Philippines.
Sta. Bayabas and CVGLJ: Inter-LGU Health Systems in Negros Oriental.

2001, Management Sciences of Health – Health Sector Reform Techni-
cal Assistance Program (HSRTAP). Manila
139
Updates from the Field: Best Practices, Using the Community-Based Health Sector
Monitoring and Information System to Help Reduce Unmet Needs. No. 4 Reform Technical
Assistance Project
Series of 2001. <<http://www.msh.org.ph>>
Updates from the Field: Technical Notes, Pooled Pharmaceutical Pro-

curement in Pangasinan. No. 2 Series of 2001.
<< http://www.msh.org.ph>>
Updates from the Field: Technical Notes, Setting Up a Community-Based

Disease Surveillance System. No. 4 Series of 2001.
<<http://www.msh.org.ph>>.
Vicente, W.C. No date. Referral System Protocol.
140
VI
Health Sector
Reform Technical
Assistance Project
SOUTH COTABATO (REGION 11)
South Cotabato is home to several indigenous peoples such as the T’boli, B’laan,
Tagabili, Ubo and Tasaday. Muslim settlers arrived in the 15th century, while
migrants from Luzon and Visayas came as part of a government program to
develop Mindanao starting from 1939. These later settlements have been fol-
lowed by successive migration waves and provide a dynamic force that has been
a factor in the growth surge experienced by the province in the last decade
South Cotabato lags behind national averages in health. Leading causes of

death in the province reflect the state of transition where infectious diseases are
competing with chronic and lifestyle diseases within the top ten. It is worth noting
that “assault” figures prominently in the top ten causes of mortality for the prov-
ince, indicative of the volatile peace and order situation in Mindanao.
Table 1. Selected Socio-Demographic & Economic Indicators.

Indicator 1990 1995 2000
Total Population (in ‘000) 1073 673 689
Rank in Region 11 2nd highest 2nd 3rd
Rank in Region 11 2nd 1st 1st
1990 1994 1997
Human Development Index .548 .586 .532
Rank in Region 11 2nd 1st 1st
Life expectancy at birth 64.9 66.3
Not available
Rank in Region 11 2nd 2nd
School Enrollment Rate 70.9 72.0
Not available
Rank in Region 11 2nd 3rd
Real per capita income 12,285 15,187
(at 1994 prices) Not available
Rank in Region 11 1st 1st
Poverty Incidence* 54.8 41.3 25.4
Rank in Region 11 1st or highest 4th or lowest 4th
2001, pp. 83-87; 11980-1990, 2 1990-1995, 3 1995-2000.
*Philippine Human Development Report 1997
141
Table 2. Selected Health Indicators: Mortality Rates.
Health Sector
Indicator 1990 1995 Reform Technical
Infant Mortality Rate* 51.17 55.37 Assistance Project
Rank in Region 11 3rd 3rd
Rank in Region 11 3rd 3rd
Rank in Region 11 1st 1st
* Source: Time to Act: Needs, Options, Decisions, State of the Philippine Population Report. 2000, Commission on Population,2001.
Table 3. Selected Health Indicators: Leading Causes of Deaths.

Condition 1999 2000
No. Rate No. Rate
Cerebrovascular Disease 211 10.7 108 5.3
Pneumonia 161 8.1 99 4.9
Pulmonary Tuberculosis 72 3.6 85 4.2
Malignant Neoplasms 112 5.7 70 NA
Other Heart Disease 8 0.9 56 2.8
Glomerular/ Renal Disease 55 2.8 49 2.4
Ischemic Heart Disease 8 0.4 48 2.4
Septicemia 65 3.3 47 2.3
Assault 108 5.5 36 1.8
Diabetes Mellitus 27 1.4 19 0.9
Source: ICHSP Project Status Report, Dec 2000.
Table 4. Selected Health Indicators: Nutritional Status, 1998.

Indicator South Cotabato Region XI (mean) Philippines (mean)
Wasted 4.8 5.3 6.0
Stunted 45.0 40.5 34.0
Pregnant Women
Lactating Women
Source: 5th National Nutrition Survey, FNRI 1998.
South Cotabato, as a participant in the Integrated Community Health Services

Project (ICHSP) was included in the Local Health Accounts pilot phase as one of
six provinces where local financial data was collected. Data from 1998 (see
Appendix 1) shows that of the P1,041,443,300 the province spent for health care,
74% was spent for personal health care which are predominantly hospital ex-
penses, 14.5% on public health care/rural health unit expenses and 11.5% on
administrative and other expenses including research and training. Out of pocket
expenses account for 64% of personal health care with all forms of insurance
covering 10.4% of these expenses. The bulk of insurance coverage came from
PhilHealth pegged at 88.6% of all insurance costs. Most of the out of pocket
expenses (36%) were spent on government hospitals and medicines (32.5%),
12.5% went to non-hospital presumably private MDs and 9.7% to private hospi-
142
tals. Data for the province’s local health accounts for the year 2000 are avail-
Health Sector
able, but have not been released as of this time and would be useful in assessing Reform Technical
progress in terms of financial goals for HSRA. Assistance Project
2. Convergence In Health Reform
Health services in South Cotabato were seriously affected by devolution in 1992.

Most of the LGUs were not ready to provide and manage health services.
Personnel were demoralized. The referral system disintegrated – “patients would
go straight to the hospital without passing the health centers” – and procurement
of drugs and medications was affected. The LGUs were not prepared to accept
the responsibility. Their health budgets only went to personnel services. As a
result, there was physical deterioration of the health facilities and equipment
since no funds could be allotted for maintenance and capital outlay.
In 1993, the Department of Health (DOH) asked USAID to conduct a rapid

appraisal assessment of South Cotabato. The DOH was planning to assist the
province by extending technical assistance to strengthen the health delivery
system from the barangay level to the hospital through the ICHSP project. Dr.
Edgardo Sandig, South Cotabato’s Provincial Health Officer (PHO), believes that
the area was chosen for the project because of its big population, relatively good
peace and order, reasonably good roads and the presence of an NGO network.
A project proposal was prepared by the PHO, consisting initially of infrastructure
and equipment needs. At the same time that ICHSP was being readied, LPP was
also being launched in the province. South Cotabato was among the first twenty
provinces selected for the LPP projects in the Philippines.
It was in the last quarter of 1997 that the DOH finally implemented ICHSP in
South Cotabato and five other provinces with funding from AUSAID and Asian
Development Bank. AUSAID was assigned to finance and assist South Cotabato.
By this time, the focus of the project had changed to systems development in
order to strengthen the management capacity of the LGUs at provincial and
municipal levels. The goal of the ICHSP in South Cotabato was to “promote the
well-being of the people of South Cotabato through a sustainable health care
delivery system in full partnership with non-government organizations (NGOs)
and the community”. It has the following objectives and strategies:
2.1 Objectives
• Revitalization of the health system through collaborative health focused

management and delivery of health services within South Cotabato;
• Improved access to an appropriate level of health care targeted at services

that have the greatest health benefit for the population as a whole;
• The efficient and effective allocation of resources based on strategic devel-

opment plans and networks developed with the private medical and commu-
nity-based NGO sector.
143
2.2 Strategies
Health Sector
Reform Technical
• Clustering of municipalities into five Local Area Health Development Zones; Assistance Project
• Development of a management structure for LAHDZs and a supportive

management structure at the provincial level;
• Provision of a defined minimum package of activity for public health services,

complimentary package of activity for core referral hospitals and tertiary
package of activity for the provincial referral hospital;
• Development of a well-functioning and comprehensive health referral system;
• Strategically identified development requirements and implementation

schedule for the integrated health system.
Sub-systems such as Integrated Health Planning, Health Care Financing, Health

Delivery and Referral, NGO/ Community Mobilization, Human Resource Man-
agement and Development (HRD), Health Management Information, and Moni-
toring and Evaluation were set up, with manpower from the province assigned to
these units. A series of planning and consultative meetings were conducted,
spearheaded by the PHO and participated in by the LGUs, the Sanggunian
Panlalawigan, the private sector, NGOs and the Chiefs of Hospitals of the district
hospitals.
By June 1999, five Local Area Health Development Zones were organized in the
province as the operating mechanism for the integration of the different compo-
nents and sub-systems. This preceded the signing of Presidential EO 205, which
mandated the organization of Inter-Local Health Zones throughout the country.
The LAHDZ vary in terms of the number of component municipalities, the catch-
ment population of each core referral hospital and the number and level of
hospital services within each area. Catchment areas are generally determined
by geography, road networks, transportation and availability of other services.
Local chief executives once informed of the goals and planned processes were
generally supportive.
Table 5. LAHDZ Areas in So. Cotabato, Their Core Referral Hospitals,

and Catchment Areas.
LAHDZ Catchment Areas Core Referral/ District Hospital
Upper Valley Lake Sebu Lake Sebu Government Hospital
LAHDZ 1 Selected barangays of Surallah
LAHDZ 2 Norala, Sto. Niño Norala Government Hospital
Selected barangays from Surallah, Banga, and Sultan Kudarat
LAHDZ 3 Surallah Lariosa Private Hospital
Banga Januaria Private Hospital
T’boli Edwards Evangelical Hospital
Lower Valley Koronadal,Tantangan, Tampakan South Cotabato Provincial Hospital
LAHDZ 4 Selected barangays from Sultan Kudarat
LAHDZ 5 Polomolok, Tupi Polomolok Government Hospital
Selected barangays from T’boli
* Excluding population of Barangay Ned that currently access hospital services in Sarangani and Sultan Kudarat.
Source: (South Cotabato Provincial Health Office, 2000.)
144
Health Sector
3. The Convergence Strategy Reform Technical
Assistance Project
The MSH Convergence strategy was launched in the province on June 14-15,
2001 during the South Cotabato Health Sector Reform Convergence Workshop.
The participants to the workshop included Chiefs of Hospitals, Provincial Health
Office staff, Municipal Health Officers, local government officials, representatives
from the DOH, PHIC, CHD, MSH, NGOs and the private sector.
Participants to the workshop identified health problems and issues related to the
implementation of health sector reform in the province. Current and planned
actions were discussed together with strategies, activities and targets for each
reform area for 2001-2004. Norala district (LAHDZ 2) was selected as the
convergence area.
South Cotabato's Health Sector Reform Targets for the period 2001-2004 are as
follows:
• Social Health Insurance
- 60% of population Health Passport holder

- 50% of Health Passport holders availing of increasing benefits
- All health facilities PHIC accredited (4 government hospitals, 11 RHUs)
• Local Health System
- 5 fully functional and provincially integrated LADHZ

- All facilities Sentrong Sigla certified: 4 hospitals, 11 RHUs, and 25% of
BHS
• Hospital Reforms
- Fiscal autonomy for all public hospitals – income retention, sub-allotment

- QA Benchbook fully implemented resulting in quality service provision
- Hospitals upgraded – SCPH as medical center, NDH as secondary hospi-
tal
• Drug Management
- Pooled procurement system for the province and all municipalities, pro-
vincial formulary developed
- Five functional therapeutic committees
- Essential and parallel import drugs available at health facilities
- Fifty percent increase in knowledge, attitude and skills on RDU by
consumers
- Standard treatment guidelines
• Public Health
- All 11 RHUs and 25% of BHS Sentrong Sigla certified

- Ninety percent of households with safe water supply and sanitary toilets
145
- Sixty percent of health personnel trained on IMCI
Health Sector
- Decrease in the number of cases of infectious diseases: TB, DD, ARI, Reform Technical
filariasis Assistance Project
- Increasing budget for public health
The Convergence Workshop participants also made pledges and commitments.

The LGU representatives (Tampakan Mayor Barroso, Surallah Mayor Bendita,
Tupi Mayor Mariano, Norala Kagawad Cerveza) pledged to prioritize health and
include budget allocations for enrollment of their constituents to the PHIC Indi-
gency Program. Dir. Dolores Castillo of CHD Reg. XI pledged to provide techni-
cal and counterpart support to HSRA activities. She promised transparency and
equity in the provision of support. Mr. Amario Morales of PHIC promised full
support –funds, workforce and effort for HSRA. Dr. Edgardo Sandig of the IPHO
said South Cotabato is committed to health reform and to making devolution
work in the province. He says the convergence workshop added flavor to some-
thing, which already existed. “Parang bibingka na linagyan ng mantekilya” ("like
adding icing to a cake").
A Provincial Health Summit was held in July 2001 where the local chief execu-
tives signed pledges of commitment to the strategies and activities put together
during the convergence workshop. A third summit is being organized for the third
week of July 2002 to coincide with the foundation day of the province.
Activities by the convergence group cited by Dr. Sandig/Dr. Magan are: assis-
tance in health assessment, health planning, drug management (train-
ing/workshops), advocacy with PhilHealth and DOH in social health insurance,
some activities for hospital reforms like the 5S, monitoring and improving local
health systems, Lakbay Aral and regular monitoring/assessment of health
situation/management in the province. Dr. Sandig and other health personnel of
the PHO/hospital believe that the activities of the MSH are complementary to the
programs of ICHSP. They also expressed that some health reforms have been
initiated in the province even before the convergence program. However, MSH,
according to them, has cemented whatever reforms have been initiated.
4. Gains in Health Financing Reforms
4.1 Social Health Insurance
In 1995, the law creating the Philippine Health Insurance Corporation (PHIC) was
enacted. The law broadened insurance coverage to include the informally
employed and indigent sectors, in addition to the formally employed sector
already covered by the then Medicare Commission. PHIC Regional Field Offices
(RFO) were established in 1998. South Cotabato was then under the Region 11
office. Advocacy and initial meetings for the PHIC Indigency Program were
started by PHIC Central office staff at this time.
By 1998, all 11 towns of South Cotabato allotted funds for their indigents but
these were not released due to the election ban on certain finances. On August
16, 1999, the Region 12 PhilHealth Office, now known as PhilHealth Regional
Office (PRO), was established in Koronadal, South Cotabato. However, the “all
146
out war” in Mindanao affected the drive to increase coverage. Differences of
Health Sector
opinion between the PHO and PHIC also needed to be ironed out. Reform Technical
Assistance Project
After conducting “massive information dissemination”, with focus on the Indi-

gency Programs in the local government units, seven towns from South Cotabato
had MOA signings in October 1999. These were Banga, Norala, Tupi, Sto. Niño,
Tampakan, Lake Sebu, and T’boli. The provincial government, under then Gov.
de Pedro, provided P450,000 as initial allocation to be divided equally among
each of the participating LGUs, which also provided their counterparts for addi-
tional enrollees to the program.
In 2000, two LGUs, Banga and Tampakan, signed the MOA for the Out-Patient
Benefit Package (OPB)/Capitation Fund program. The two towns have since
received their capitation funds. Two more LGUs, Tupi and Norala, signified their
intention for the same program.
The package requires coordination between the DOH, LGU, and PhilHealth.
This is because the LGUs are responsible for upgrading facilities in order to
make it PhilHealth accredited. DOH grants the Sentrong Sigla accreditation
(which is part of the PhilHealth accreditation requirement) and PhilHealth will
provide capitation.
Enrollment to the Indigency Program entails a length process that could take as
long as 1 to 1 ½ years to complete. This has been met with consternation by
local chief executives who have paid the premiums and built up people’s expec-
tations. There have been reports of IDs about to expire that have not been
distributed. This is a serious hindrance to further expansion because local chief
executives are now looking more closely into the returns on their “investments” in
health and may decide that there are more attractive uses for their money.
4.2 PhilHealth RHU Accreditation for Outpatient Benefit Package and

Capitation
With the assistance of ICHSP, the RHUs have been upgraded starting with those
of Norala and St. Niño in the convergence area. At present, 10 RHUs have been
accredited and only the Polomolok RHU has not yet received its PhilHealth
accreditation.
By 2001, all 11 LGUs of South Cotabato have enrolled indigents from their
communities. Even barangay chairmen (Norala) tapped their funds to enroll their
indigents. However the two LGUs that wanted to participate in the OPB program
for RHUs withdrew because they disagreed with the provision on honorarium that
gives 10% of capitation funds to the Municipal Health Officer (MHO). This was
interpreted as “double compensation” to the MHO who already gets a higher
salary than the mayor because of the Magna Carta and other benefits for health
personnel.
In one town (Norala), barangay chairmen are planning not to renew their enrol-
lees next year despite the fact that the MHO has waived her part of the honorar-
ium in favor of the LGU. The SB for health has already communicated their
queries and objection to the above provision to the PHIC central office. The PHO
147
maintains that this should be seen as an incentive for the MHO similar to the
Health Sector
sharing of fees under the former Medicare Program rather than as “double Reform Technical
compensation.” Assistance Project
In June 2001, Pres. Gloria Macapagal Arroyo, in her State of the Nation Address
(SONA), announced her target to enroll about 17,000 households in each prov-
ince in PhilHealth's indigent program. At present, PRO 12 has accomplished
about 58% of its SONA commitment. (PhilHealth staff argue that if their earlier
accomplishments were counted, then they have already exceeded their target.)
Seven other towns have already applied for the RHU accreditation/OPB program
although only four of these have enacted an ordinance in support to the program.
4.3 Facilitating Factors
The PhilHealth Regional Office says it has no difficulty implementing the indigent
program in South Cotabato. The advocacy efforts of the PHO and partner NGOs
has kept the PRO busy trying to cope with the demands for enrollment. The
following factors facilitate implementation of social health insurance in South
Cotabato:
Early and sustained advocacy from several sectors including CHD Region 11,
Provincial Health Officer, Provincial Governor and PHIC central office. This is
supplemented by active information dissemination of PRO 12 through regular
radio programs, newsletter (Sprikitik), LGU orientation, and posters. Consultative
fora with stakeholders and translation of materials to the local language have
helped communicate goals and processes of the program. There is good coordi-
nation with other agencies like DOH, PHO, DSWD and LCEs/LGUs and support
from NGOs in advocacy like ICHSP, MSH.
Political and technical support starting with the pro-active indigent officer and
staff/leadership of the PHIC Regional Manager, together with support from the
Technical Working Group (TWG) of the province as well as at the municipal level.
In one town (Norala), the TWG meets monthly and has been very instrumental in
enticing the mayor and barangay chairmen to provide funds for enrolling indi-
gents. Provincial, LAHDZ, and municipal health boards have worked together to
pass the needed resolutions and budget allocations.
The enabling environment of a relatively stable peace and order situation and
good dynamics between the health leaders and politicians. Health workers and
local politicians say that “politics is only during the election; pagkatapos ng
election magkasama na ulit” ("after the elections, we're all friends again").
4.4 Setting up a User’s Fee System
To help ensure sustainability of services, the province implemented a User’s Fee

System in 1996. Fees collected for similar services were set based on level of
care, so that the lowest cost would be at the Rural Health Units (RHUs), followed
by the District Hospitals and the most expensive would be those at the Provincial
Hospital. The ordinance implementing this system was hotly debated at the
Sangguniang Panlalawigan and in the public hearing that followed. The winning
148
argument in favor of the fees, however, was the observation that even those who
Health Sector
can afford to pay avail of government health services. Reform Technical
Assistance Project
The rationale for the fees therefore was for those who are able to pay to do so in
order to help support those who cannot. The truly indigent are certified by a
social worker and are exempted from paying fees, but only after being informed
of the amount that the government has spent for their care. The PHO wants the
people to know the extent of support being extended to them. There were initial
reports of a reluctance to pay, but with consistent implementation and continuous
explanations through the media, these have diminished.
Data at the RHU level shows that the fee system needs to be built up for it to
substantially contribute to the sustainability of services. At the Sto. Niño RHU,
records for laboratory fees from January to May 2002 showed a total collection of
P1,040. Income from medical certificates during the same period was P1,360.
There does not appear to be a clear-cut accounting system. In the town of
Norala, records were not available, although fees have been collected.
This is an innovative feature of the HSRA implementation in South Cotabato that

needs to be better documented. Health providers have the sense that there has
been no decline in service utilization despite the implementation of the fee
system, but this needs to be validated.
4.5 Integration of Services, a Cost- and Resource-Sharing Mechanism
Since the Norala RHU is walking distance from the District Hospital, one of the
ways conceived to make the delivery of services more efficient was the integra-
tion of the laboratory services. The RHU laboratory would be integrated with that
of the District Hospital. This would minimize duplication of services while still
ensuring access to clients. One of the hurdles that had to be overcome was the
PHIC accreditation of the RHU, which was required to provide laboratory ser-
vices. The PHIC guidelines were modified to accommodate this situation. Under
discussion are the handling of income and delineation of lines of responsibility of
the laboratory between the RHU and the Hospital management.
This same mechanism is under negotiation between the RHU and District
Hospital in LAHDZ 1 (Lake Sebu). Negotiations for cost sharing are also on-
going with the province of Sultan Kudarat in LAHDZ 4 because the referral
hospital (the Provincial Hospital) there serves several barangays of that province.
4.6 Retention of Income
The PHO has been advocating for the income retention of devolved hospitals
since 1999 in order to augment appropriations for Maintenance, Operating and
Other Expenses (MOOE). This is particularly true for the LAHDZ referral hospi-
tals whose smaller budgets (compared with the Provincial Hospital) are eaten up
by personnel salaries and benefits. The current discussions center on setting up
a trust fund where the retained income would be used as a revolving fund for the
hospital.
149
The PHO, however, realizes that for this scheme to be viable, the quality of
Health Sector
services needs to be improved in order to attract a larger client base for the Reform Technical
district hospitals. For the last three years, the occupancy rate of the Norala Assistance Project
District Hospital has, in fact, been declining. While discussions regarding the
financial management of the potential funds from income retention are on going,
equal attention to improving the services at the hospital must be given. There is
also a need to “market” the district hospitals to encourage utilization.
An observation made is that the perennial lack of medicines serves discourages

PhilHealth cardholders from patronizing the district hospital. These clients would
prefer to go to a private hospital where medicines are always available so that
there will be no out-of-pocket expense on their part. The drugs will be charged to
their PhilHealth plan. At the Norala District Hospital, because medicines are not
available, clients need to buy their own and then have to go through the reim-
bursement process at PhilHealth.
4.7 Community-based Health Financing
Together with the Davao Medical School Foundation’s (DMSF) Institute of

Primary Health Care, the PHO set up the “Barangay Maibo Bulig-Bulong Pro-
gram” in Tantangan in 1996. Seed money from the DMSF and contributions
from the members help support hospitalization and other health needs. However,
this project seems to have been superceded by the PHIC Indigency Project.
Members to this community-based financing program avail of their benefits only
after PHIC benefits have been exhausted. Some mechanism to link the two
insurance schemes should be worked out to improve efficiency and coverage.
As of 1998, the province had 22 hospitals, of which 5 are government (4 primary,

the District Hospitals, and 1, the Provincial Hospital, secondary) and 17 are
private (15 Primary, 1 Secondary and 1 Tertiary). With help from the Investment
Plan of the Governor’s office and the ICHSP, government hospital facilities have
been upgraded (ER, new OPD building, OR expansion, district hospital renova-
tion). The wards have been improved with the help of private institutions. The
PHO established an “Adopt a Room” program accessing support from private
groups. In the planning stage, with funds already allocated from the province, is
the construction of 50 beds for a private ward in the hospital.
This is expected to increase hospital revenue. Training programs have been

started with the medical internship, Family Medicine Residency programs.
Eleven private consultants have been hired on an honorarium basis in Surgery,
OB, Pediatrics Medicine, Family Medicine, Pathology, and EENT to augment the
hospital staff. The goal is for the Provincial Hospital to be a Regional Medical
Center under local government management.
The LAHDZ system has facilitated the linkages between the RHUs and the
hospitals. User charges, where district hospitals charge lower rates than the
provincial hospital and RHUs charge even lower rates than district hospitals for
the same services, are expected to decentralize the management of primary and
secondary cases and encourage the utilization of the RHUs and district hospitals.
150
This is supported by a strict referral policy. The sign “No referrals, No Consulta-
Health Sector
tion” is posted in all facilities. Reform Technical
Assistance Project
According to the MHO and the District Chief, although initially resisted and
ignored by the people, the people are now following proper referral. Accordingly,
it has had a significant impact on the attitude of the patients and the types of
disease being handled at different health facility levels. However, according to
the SB for health in Norala, some people still cannot follow the logic of the
referral system especially if the patient lives near the hospital.
A Quality Assurance program was started last year after the chief nurse, hospital
administrator and the chief of clinic attended a training workshop on QA. The
following achievements through the efforts of the three-man QA team are:
a. Echo of the training to the LGUs/District health
b. Establish quality circle in the LGUs/District health and each section of hospi-
tals
c. Each section circles identified their problems then present it to a bigger circle
led by the hospital management. The problems identified are prioritized and
solutions are discussed
Table 6. Examples of Problems and Solutions Addressed

During Quality Circle Discussions.
Problem Solution
Long waiting period of patients for consultation in ER and Hiring of consultants and doctors; doctors work schedule
OPD, understaffing and work overload for physicians organized so they come to clinic on time
Delays in operation/procedures in ER/OR due to lack or Budget of supplies for the two sections was increased
insufficient supplies
Lack of anesthesiologist in the hospital Government negotiated with the private anesthesiolo-
gists and secured an agreement for government to pay
for services to indigent patients for a fixed rate of
P2,000.00 per case
d. Inclusion of QA in weekly management meetings
e. Values orientation to the staff (with emphasis on being conscientious and

awareness of the needs of the patient/watchers and other staff)
f. Emphasized cleanliness in the hospital
The QA program has been echoed to the district hospitals but has not yet been
implemented outside the Provincial Hospital. The province is supporting the
residency training and other higher short course training of hospital personnel to
upgrade their staff and as an incentive for them.
The PHO is implementing preventive maintenance with support from ICHSP by

training maintenance crew in the hospitals as well as in the RHUs. A preventive
maintenance team will be pooled in the province and will be provided with
151
knowledge and logistics to repair and maintain medical equipment. A workshop
Health Sector
and spare parts depot is also being established in the hospital. A mechanism is Reform Technical
in place for immediate purchase for spare parts using cash advance for parts not Assistance Project
more than P40,000.
The development of clinical protocols was started only this year involving all
consultants and some MHOs. Each department identified the most common
causes of mortality and morbidity and each specialist conducted workshops to
develop disease management guidelines. The flow of patients from presentation
till admission and discharge is analyzed. Referrals are also discussed in the
process; as they are strictly enforced from the BHS, to the RHUs, district hospital
and provincial hospital. Treatment protocols are in accordance also with the
hospital formulary.
The Department of Health with the support of ICHSP included South Cotabato in
the implementation of an electronic management information system program. At
present the provincial hospital has installed computers in the sections of admis-
sion, billing, records, cashier and social services. A central server/office is
provided in the provincial hospital. Encoding of the past record is on going and
new patients/records are both recorded on paper and in the computer. Double
recording is necessary since the program has no back-up capabilities yet. In the
district hospitals, a stand-alone computer is installed.
Some problems noted with this program are: (a) most staff are not computer
literate, (b) no budget for repairs/maintenance of CPUs, (c) No back-up server,
(d) duplication of work (double recording), (e) No local technician trained for
computer repair, (f) when a computer/program crashed, it took three months
before it was addressed, (g) the system is currently limited to the provincial
hospital.
Initially though its functions/effects are noticeable. Records for the sections with
installed programs can be easily accessed and retrieved for patient care or to
make reports. Some bills with very minimal assessment but with many services
provided to the patient have been monitored. These cases have been brought to
the attention of the management because they may not have been assessed
correctly. But the program head was not yet satisfied with the project, especially
with the current funding support phasing out next year.
Dr. Sandig acknowledges the workshops/support conducted by the MSH for the
drug management reforms. Procurement of drugs and other health supplies
have been fast-tracked by reducing signatories and the process has been
streamlined. The Therapeutic Committees have been strengthened. A Hospital
formulary was created in accordance with the national formulary. Drugs were
classified into VEN (Vital, Essential and Necessary). Through ICHSP, seed
money was provided for the Provincial hospital (P300,000) and the district and
municipal hospitals (P100,000) for these activities.
The province has worked out a bulk procurement system for its hospitals and
increased the budget for drugs. In principle, each hospital is asked for a list of
152
drugs and supplies it needs for one quarter. The Therapeutics committee of each
Health Sector
unit/ hospital assesses its needs. These lists are consolidated and bid out by the Reform Technical
provincial government. The results of the bidding are sent back to the hospitals Assistance Project
that decide whether the winning brands and amounts are acceptable. Delays
occur when the hospitals prefer a more expensive brand than the lowest bid
(usually generic), which the Provincial General Services Office will, of course
prefer. Meetings and discussions are held to reconcile these differences. Alloca-
tions for one quarter are thus usually available about 6 months after they are
requested.
Until this system can be ironed out, it is unlikely that the RHUs will choose to join
in the bulk procurement process since at the moment they are able to secure
their needs within a few days of request since they only need a few signatures
from their municipal offices. Some LGUs have also expressed their preference
for specific suppliers who may not be the same as the provincial suppliers.
Other possible interventions to reduce delays would include considering only

DOH accredited suppliers in the bidding process, and ordering during the period
when there is still budget available for the drugs. The PHO also needs to make
the doctors understand that their drug “preferences must match government
resources”.
Parallel drug importation process has been attempted but delivery has been
delayed. It was learned that the problem is BFAD’s requirement of a Certificate of
Product Registration (CPR). This is not required in international bidding and the
process to secure one is lengthy. This creates a bottleneck, which slows down
the parallel import. Orders placed in October 2001 were finally delivered only this
June 2002.
A Cooperative Pharmacy, a project of the federation of Barangay Health Workers

(BHWs) was set up on March 11, 1996. It is located in the provincial hospital
itself and is being supported by the province but is run as a private entity. The
PHO and other officials were not included in management to avoid conflicts of
interest but they may be members of the cooperative. Not faced with the gov-
ernment accounting rules, the pharmacy is able to procure medicines in a short
time and canvass and secure consignment with drug companies. Being run by a
cause oriented group, the cooperative marks up a small profit only, thus lowering
the selling price. For example, the private pharmacy sells IV fluids for P70 while
the cooperative store prices it at P35 only. If the hospital lacks some supplies
they turn to the store, which extends them credit. The store has existed for six
years and has provided dividends to its members and even scholarships for the
children of BHWs. They also provide health assistance to their members.
Faced with a recurrent problem of lack of medicines, a revolving drug fund for
hospitals was set up in February 1999 with assistance from ICHSP. The fund
provides seed money for the hospitals to secure medicines during an emergency.
Patients pay on cash basis. The payment is returned to a Trust Account man-
aged by the Provincial Treasurer’s Office so it can be “revolved” when the next
emergency arises. However, this is only a back up to the regular procurement
process.
153
Dr. Sandig says that the drug procurement program has to date not necessarily
Health Sector
decreased prices and still needs a lot of work. Reform Technical
Assistance Project
7. Gains in Local Health Systems Development
Plans for an Integrated Health System had been laid out in South Cotabato long
before the health sector reform agenda launched by former Secretary of Health
Alberto Romualdez, Jr. in 1998. There were already consultations with the local
chief executives and MHOs on improving health care and referrals. These
consultations were mostly initiated by the PHO. The PHO believed in the motto “
initiative to initiate.” LCEs were motivated to sign up because of their desire to
improve the access and quality of health services at the provincial (“to decon-
gest the provincial hospital”) and municipal (“'yung kaya sa RHU, dapat sa RHU
na” – "what can be done at the RHU level should be done at the RHU") levels.
The Zone formation also created a somewhat bandwagon effect because the
mayors did not want to be seen as “napag-iwanan” or left behind by the rest of
the province. The potential for attracting donor funding by being a pilot area was
also a factor.
In 1999, during an LPP Provincial Health Summit, the Local Area Health and
Development Zone System for South Cotabato was organized. The LCEs agreed
with the option to organize a local health care system in their district. Support
from agencies such as AUSAID, the province and DOH was secured and the
implementation is on going.
The province has well laid out plans for their health system. Roles and responsi-
bilities are carefully defined for each level of care and each level of management.
Primary, secondary and tertiary packages of care have been described to clarify
access, referral and provision of services. What is even more impressive is that
all these are documented and disseminated at the RHU, LAHDZ and provincial
levels. A Referral Manual has been developed for the purpose. The Manual
contains the policies, guidelines, procedures and forms needed for the referral
process.
Interviews with health providers show that they are aware of these policies and
their role in implementing them. They have used the LAHDZ meetings as oppor-
tunities to discuss modifications to these policies and thresh out problems and
issues that arise during actual case management.
However, interest in the LAHDZ needs to be sustained, particularly when exter-

nal funding support ends. Already there are reports that some mayors have not
been attending LAHDZ meetings because they do not see any benefits going to
their municipalities. At least one LCE has complained that some of the promises
for their area have not been fulfilled.
7.1 Gathering Data for Decision-making
The PHO is completing a study to identify the specific catchment areas of the
referral hospitals and RHUs in order to rationalize the areas of responsibility of
these units. With this study, they will be able to address the concerns of people
from Tupi, for example, who prefer to go to the Provincial Hospital as it is more
154
accessible to them than their assigned referral hospital in Polomolok. They will
Health Sector
also be able to determine the extent to which a neighboring LAHDZ or province Reform Technical
should be involved in cost-sharing depending on the proportion of their constitu- Assistance Project
ents who are availing of services in a given health unit.
Another study being undertaken is the review of the impact and successes of the
health zones. Meetings and resolutions are being documented to determine how
responsive the system has been to identified needs and problems.
One problem that may need to be addressed is meeting people’s expectations. A

health provider in the pilot district claims that the expansion to other districts has
contributed to the slowing down of reforms in their area. He is apprehensive that
their reform model was not perfected yet but is already being carried out in other
areas. Also the support initially aimed for the pilot areas was spread thinly to
other districts. Discussions, particularly about funding support and allocation,
need to realistically couch so that people will have reasonable expectations of
the initiatives.
7.2 Health is Good Politics
Most of the health reforms in the province have been made possible through the
support of the provincial health board, which conducts discussions of the health
issues and recommends ordinances and even funding for health activities. The
former governor expanded the health board to fifteen members including other
stakeholders for health not identified in the law. It was also instrumental in the
following health reforms/activities: formalization of inter-local health zones,
indigent health insurance, drug procurement, cooperative pharmacy, hospital
infrastructure enhancement (provincial counterpart funding), health summit,
health advocacies, increase health budget and hiring of health personnel
Health managers believe that the former governor (Gov. de Pedro) supported all
the needed reforms in health and other sectors being one of the authors of the
Local Government Code when he was in Congress. He wanted decentralization
to succeed in his province.
Another factor was the multi-pronged strategy employed by the PHO to get the
SP members on his side. Dr. Sandig says he makes it a point for health to be
always in the news and gives interviews and press conferences on a regular
basis. When nothing is happening, he makes things happen, such as the holding
of a rally for the recent Garantisadong Pambata campaign to drum up interest in
the activity. This brings health concerns to the top of people’s awareness.
A second strategy is to give the SP members important roles to play in health

activities and decision-making. Each LAHDZ is organized so that an SP member
is its head, with the District Hospital Chief as the coordinator. During LAHDZ
meetings and functions, Dr. Sandig plays up the role of the SP members, which
they recognize as important to their constituency building. The experience of SP
Siapno, the author of the controversial User’s Fee Ordinance, who won by more
than 20,000 votes during the last elections, shows that “health is good politics”.
155
A third strategy is to organize study tours for the SP Board members to “broaden
Health Sector
their horizons”. That way, they become advocates for health themselves. The Reform Technical
current governor, Gov. Daisy Avance-Fuentes has made health her priority Assistance Project
program and has continued and even expanded the health programs of her
predecessor. She says she has seen the benefits and determines her “politics
based on need and not along party lines”. Her concern, building on the momen-
tum generated by the strengthening of local health systems and the hospital
reforms, is to provide an integrated preventive health care program that would
incorporate strategies for nutrition, immunization, and healthy lifestyles among
others.
7.3 The Private Sector
The province has tapped its private sector in many ways. Among the most
notable has been the involvement of the private hospitals as the referral hospital
for the Surallah, Banga, T’boli area (LAHDZ 3). The relationship with these
hospitals apparently started even before the HSRA, with lump sum funding from
the CHD, Region XI to support the care of indigent patients. The province has
also solicited ambulances from the PCSO for these private hospitals.
Private practitioners in the province have also been recruited to serve as con-
sultants on an honorarium basis to supplement the hospital staff at the Provincial
Hospital and the Norala District Hospital. However, even this support may not be
enough. The doctor who has been recruited to serve at Norala as regular staff,
appears to be having second thoughts and is considering changing to part-time
status so he can develop his practice elsewhere. Since the hospital is struggling
to be upgraded to a secondary hospital, it is important to attract competent staff
to meet the minimum requirements for this level. Other incentives may need to
be given.
Through a small grants component, the ICHSP provides P 400,000 – 500,000 as

support for NGOs to engage in projects on community health development,
health promotion, and community mobilization for health. These initiatives in 28
barangays help to broaden awareness regarding health and to engage people in
a health activity. Examples of these community-based projects include: Botica ng
Barangays, Healthy Barangay Project, IEC campaign for Voluntary Blood Dona-
tion, Training on diarrhea management for Cholera-prone barangays, Linis
Kalusugan Program, and Iodized Salt Drive among others.
7.4 Health Summits
To show the importance of health care in the province, the province through the
PHO with the support from the office of the governor launched a health summit in
2000. Now on their third consecutive year of the summit, the activity showcases
the best practices in South Cotabato and enjoins all the health stakeholders in
working for the health plan of the province. During the summit best practices are
awarded and there is keen competition among the LAHDZs for the awards.
156
8. Best Practices
Health Sector
Reform Technical
There are a number of possible best practices for the province of South Cota- Assistance Project
bato. The province takes pride in its well-developed LAHDZ system that has
operationally led to a better referral system, the integration of services to mini-
mize duplication and reduced cost without sacrificing access or quality and closer
links between the health sector and other stakeholders. The “secret is in main-
taining strong links with the LGUs.”
The province also can be cited for its innovations in health financing - the user’s
fee system and its aggressive push for the PHIC’s Indigency Program. It may be
one of the few provinces where all municipalities have enrolled indigents and
where the municipal counterpart matches or exceeds that of the province. There
is a strong partnership among the PRO, the PHO and the political leaders of the
province that has created a bandwagon for the Indigency Program. The LAHDZ
is an important factor in this strong partnership. Other notable consequences of
drug management systems intervention is the strengthening the hospital thera-
peutics committees and reduction of signatories, which shortened the procure-
ment process.
While not strictly speaking a best practice in the sense that it is not entirely
replicable, the province serves as example of how a dedicated and committed
health sector can work in a devolved setting. Under the able stewardship of Dr.
Sandig, the province has weathered changes in political leaders, the “all out war”
in Mindanao, the Abu Sayyaf terrorism on top of the challenges brought about by
decentralization. Data from the Provincial Hospital’s Cost of Operations and
Maintenance as well as its utilization rates (see Appendix 2) show how the
hospital exemplifies the province’s health sector’s growth since devolution.
9. Lessons Learned
9.1 Roles and Expectations of Stakeholders
The PHO has mastered the art of partnership, within and outside the health
sector. In its manuals and documents, the roles of stakeholders are explicitly
stated. One key stakeholder, however, that is not always considered is the DOH
Regional Office. The Regional Office appears to have taken an active role in the
early stages of ICHSP implementation when the proposal was being prepared
and negotiations with the Central Office and AusAID were being carried out. Its
role was identified in terms of providing technical support to the province.
However, the physical distance between the province and the Regional Office,
and the limited manpower of the region has prevented regular interaction be-
tween the two. In the light of South Cotabato being a pilot province for the HSRA,
upscaling of the HSRA would have benefited from a stronger participation of the
region in the province’s implementation so that the region would also have
learned from the process. At this stage of implementation, South Cotabato would
now be in the position to help the Regional Office in providing assistance to other
areas for HSRA.
157
There is a need to clarify and be transparent about fund allocations so that
Health Sector
stakeholders are not disappointed. The early promise to provide a certain amount Reform Technical
of money to the convergence site that was not fulfilled has led to the disillusion- Assistance Project
ment of some of the LAHDZ 2 members. There is a need to renew commitments

and rekindle the enthusiasm for the LAHDZ. Perhaps the presentation of data
showing the improvements that have resulted from the reforms will help in this
process.
9.2 Social Health Insurance
A common observation is the lengthy PHIC procedures that lead to delays in

utilization of benefits both for the Indigency Program and the Out-Patient Benefit
Package/ RHU Capitation Fund Scheme. It is imperative that PHIC shorten the
processing time by the decentralization of most functions/processes from na-
tional to regional. PHIC stands to lose the momentum and interest of its advo-
cates if it does not deliver on time. It will also find it difficult to convince new
enrollees as word of mouth spreads about its problems.
There is a need to address the concerns regarding the use and monitoring of the
capitation fund while there are still only a limited number of RHUs availing of this.
The problems will compound as more and more RHUs operate by capitation.
PHIC needs to develop and put in place its monitoring and evaluation systems
for the Indigency Program and the OPB package as soon as possible. The data
generated from this would inform both policy and process as well as provide
evidence that PHIC is fulfilling its mandate. Local/ provincial, regional and central
PHIC databases need to be electronically linked to facilitate enrollment and
availment of benefits.
9.3 Drug Management
One of the key challenges to the PHO is to ensure the availability of medicines in
the district hospitals. The current mechanisms being used by the province are not
sufficient to either bring down drug prices or ensure supply. There is a need to
increase the revolving funds for immediate drug procurement. There is a need to
re-examine the policy on end-user preference, as this appears to cause delays in
the procurement system. The promise of PDI has been delayed in South Cota-
bato.
9.4 Link between Systems Improvement and Public Health Programs
The Convergence Strategy is intended to bring out improvements in public health

program implementation through the strengthening of local health systems,
although there is no explicit technical assistance for public health programs. This
means that there is a need to allow time for the system changes to take root
before public health program changes can be seen.
South Cotabato, as one of the pilot HSRA provinces, bears the burden of this
expectation. Its local systems have been strengthened and the fruits are being
anticipated. The province has set as its public health goals a decline in cases of
selected diseases and an increase in the public health budget, aside from
158
Sentrong Sigla accreditation of its health facilities and provision of safe water and
Health Sector
toilets. The expressed interest of Governor Fuentes in preventive health meas- Reform Technical
ures needs to be tapped even as the province builds upon its LAHDZ systems to Assistance Project
achieve these goals.
The province, through its ICHSP has singled out TB, DD, CVD and Mental Health
as sentinel conditions to illustrate the public health effects of these system
improvements. Improvements in TB-DOTS Cure Rates (from 38% in 1999 to
70% in 2000) shows that they seem to be going in the right direction but more
time is needed to see whether these changes are sustained.
The province has expressed the need for better indicators that would reflect the
improvements in the health system that has affected public health programs.
The concept of the convergence strategy is that each of the sector reforms are
interlinked within local health systems, such that simultaneous improvements in
each reform area would lead to a synergistic improvement in the system that
would be greater than the sum of the individual interventions. This vision is on its
way in South Cotabato with its strong LAHDZ systems, its burgeoning health
finance mechanisms and the continuing quality improvements in its hospitals.
However, there is a need to address its drug management problems and
strengthen the system links with public health programs. With the phasing out of
donor support, South Cotabato has to prove that it has achieved the “irreversible
momentum” needed for it to pursue the reforms on its own.
The province would benefit from a network of provinces and other local govern-
ment units, which have operating ILHZs so that they can continue to share
experiences and learn from each other. There is deep appreciation for the
“lakbay aral” which has served as both an advocacy and training opportunity. In
the same way, the province intends to continue its Health Summits where its
municipalities and LAHDZ interact and share best practices and lessons learned.
There is a need to continue and strengthen further partnerships outside the

health sector including those with political leaders, PHIC, the NGOs and the
private sector. This has served the province well and will continue to do so. At
the same time, the province needs to rekindle its ties with the DOH Regional
Office so that it can both assist and be assisted in HSRA implementation.
159
Appendix 1. Local Health Accounts, 1998, South Cotabato. Health Sector
Reform Technical
Assistance Project
S o u r c e s o f F u n d s
Uses of
Local Gov’t Mandatory Insurance Local Hlth Private Total (PhP)
Funds Natl Gov’t
Prov’l Mun’l Medicare EC* Insur OOP* Insurance Employer Schools
Personal
1,980,186 43,114,876 77,662,663 71,015,028 4,998,546 0 493,140,588 4,116,970 69,810,334 4,416,308 770,255,499
Health Care
Government
1,322,180 43,114,876 77,662,663 5,529,666 0 176,986,338
Hospitals
Private
65,485,362 47,679,639
Hospitals
Non-Hospital
658,006 61,656,792
MD
Other
4,998,546 5,713,058 4,116,970 69,810,334 4,416,308
Professionals
Dental 14,272,563
Traditional 26,512,205
Home care
(Drugs, Med. 160,319,993
Durables)
Public Health
22,156,804 15,943,348 113,005,379 0 0 151,105,531
Care
Other 16,615,203 19,796,655 62,729,290 12,128,995 769,697 0 0 8,042,430 0 0 120,082,270
Administration 15,519,816 19,796,655 62,729,290 12,128,995 769,697 8,042,430
Research &
1,095,385
Training
TOTAL 40,752,193 78,854,879 253,397,332 83,144,023 5,768,243 0 493,140,588 12,159,400 69,810,334 4,416,308 1,041,443,300
*EC – Employees Compensation, OOP – Out of Pocket
Source: Local Health Accounts, M. Gorra, HEWSPECS for ICHSP, DOH
160
Appendix 2. South Cotabato Provincial Hospital, Occupancy Rates and Health Sector
Budget, 1990-2000. Reform Technical
Assistance Project
South Cotabato Provincial Hospital Occupancy Rates, 1990-2000.
South Cotabato Provincial Hospital

Occupancy Rates, 1990-2000
120
Occupancy Rate
100
80
60
40
20
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Year
South Cotabato Provincial Hospital Budget 2000-2001.
South Cotabato Provincial Hospital

Budget, 2000-2001
50,000,000
Amount in Pesos
40,000,000
Personnel
30,000,000 MOOE
20,000,000 Capital Outlay
10,000,000 Total Budget
0
2000 2001
Year
161
Health Sector
Appendix 3. Norala and Sto. Niño Health Budgets, 1998-2001. Reform Technical
Assistance Project
Total Health Budget of Norala, South Cotabato, By Appropriation, 1998-2001
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000 Personal Services
2,500,000 MOOE
Capital Outlay
2,000,000
Total
1,500,000
1,000,000
500,000
0
1998 1999 2000 2001
Health Budget of Sto. Niño, South Cotabato, By Appropriation, 1998-2001
3,500,000
3,000,000
2,500,000
2,000,000 Personal Services

MOOE
Total
1,000,000
500,000
0
1998 1999 2000 2001
162
Health Sector
Appendix 4. List of Interviewees, South Cotabato. Reform Technical
Assistance Project
1. Gov. Daisy Fuentes, Governor, South Cotabato

2. Dr. Edgardo Sandig, Provincial Health Officer, Chief of Provincial Hospital
3. Mr. Eduardo Siapno, SP for Health
4. Dr. Louella Estember, Provincial DOH Rep, Chief, Technical Division
5. Dr. Emilio Arenas, Prov’l Dentist, Point Person for Health Planning
6. Ms. Luz Decio, DOH Rep-LAHDZ 3, NGO &Community Dev’t Point Person
7. Ms. Dinah Poral, DOH Rep, LAHDZ 5, Child Health Point Person
8. Mr. John Salcedo, ICHSP, Project Health Officer
9. Ms. Rosalina Jaictin, Human Resource Development Point Person
10. Ms. Lorna Lagos, Health Financing Point Person
11. Ms. Nelvie Capiz, Process Documentor
12. Ms. Lucheria Larong, Midwife 4, Provincial Health Office, Technical Division
13. Dr. Alicia Magan, PH-Chief of Clinics (QA Member)
14. Ms. Brigido Usita, Provincial Hospital (PH) Administrator, (QA Member)
15. Ms. Elena Arciaga, HOMIS
16. Ms. Vilma Ligo, RN , QA Lead person, Provincial Hospital Supply Officer
17. Mr. Ramon Aristoza, PHIC Vice-President, PRO XII Regional Director
18. Dr. Antoinette Ladio, PHIC Accreditation Officer
19. Mr. Amario Morales, PHIC Indigent Officer
20. Ms. Emily Bismar, PHIC Dev’t Management Officer, Indigency Program
21. Ms. Merle Sabog, Head, PHIC Membership & Collection Unit
22. Dr. Gonzalo Braña, Norala District Health Officer
23. Dr. Lamelita Amido, Norala MHO
24. Ms. Elsie Cervesa, Norala Councilor for Health
25. Dr. Ervin Luntao, Mayor, Sto. Niño
26. Dr. Evelyn Diosana, MHO of Sto Niño
27. Hon. Nema Cornejo, Vice-Mayor, Tupi
28. Dr. Apolinar Hatulan, MHO of Tupi
29. DOH Regional Office, Davao City
30. Dr. Mary Joan Bersabe, CHD XI, Chief, Technical Division
31. Dr. Rose Padilla, Regional Point Person for Social Health Insurance
163
VII
Health Sector
Reform Technical
Assistance Project
NEGROS ORIENTAL (REGION 7)
Negros Oriental has a population of 1,124,000, a population density of 220

persons per square kilometer, and a population growth rate of 2.03% in 2000.
About 95% of its population are Cebuano speaking; the rest speak Hiligaynon
(Ilonggo). It has 20 municipalities and 5 cities. Two of the cities are classified as
second class and 45% of LGUs are fourth and fifth class municipalities. It is a
first class province with an annual income of over P30 million. The average
annual family income is P49,403. The average poverty incidence is 40.6%, but
there appears to be maldistribution of income as 80% of the population in rural
areas is classified below the poverty line.
2. Health Sector Reform
Negros Oriental is one of eight pilot sites under the two-year Health Sector
Reform Technical Assistance Project (HSRTAP) funded by the United States
Agency for International Development (USAID). The experience in this province
began with a convergence workshop held at the Bethel Guest House in Duma-
guete City on April 19-20, 2001. The workshop succeeded in generating interest
among major stakeholders that included 72 representatives from the national,
regional and local health agencies, Philippine Health Insurance Corporation
(PhilHealth) representatives, municipal/city public officials, support institutions,
and health NGOs. With the use of participatory mechanisms, the various stake-
holders crafted targets, strategies and health plans that were doable.
The workshop started by defining the policy environment and identifying prob-
lems and issues that affected the local health sector. The participants were
briefed about the basic concepts of current initiatives that included the Health
Sector Reform Agenda, the Health Passport Strategy and the Convergence
Strategy. Together they defined an HSRA vision for Negros Oriental. This
became the basis for a draft convergence plan. A group of Negros Oriental
Health Sector Reform advocates was constituted to serve as strategy champi-
ons.
3.1 Community Financing - Peso for Health
The “Peso for Health Program” was implemented before PhilHealth approached
the LGUs. It is community-designed, community-based and community-
164
managed. Its implementation started in May 2000. The program aims to mobilize Health Sector
resources for sustainable health services, and strengthen health service delivery Reform Technical
Assistance Project
through community, LGUs, and hospital participation. The Peso for Health
Program is open to any resident person certified by the LGU. Community
resources from individual members’ minimal monthly contribution, LGUs’ fund
support, and donor contributions are pooled to sustain community health care
financing under the Fund Management Committee of the district health system.
The Peso for Health Program will get 25% of LGUs’ pledges in the ILHZ.
Monthly contributions are based on A, B, and C categories with corresponding
benefit packages as shown below.
Bracket Premium/month Benefits

Category A 1.00 P200 benefit package for
drugs/medicines plus discount in
diagnostic services and other medical
facilities
Category B 5.00 P1,000 benefit package for
facilities
Category C 10.00 P2,000 benefit package for
facilities
Drugs are prioritized in the coverage of the benefit package. Any remaining
amount from the ceiling set per bracket will be utilized for hospital bills. The
patient will pay only half (50%) of the excess bill. This covers all hospital services
like medicines, inpatient and outpatient services/laboratory, diagnostic services
(e.g., newborn screening), room accommodation, and emergency transport from
the District Hospital to the Negros Oriental Provincial Hospital (NOPH). Identifi-
cation cards are distributed to individual members. The card is non-portable and
color coded by municipality (yellow, blue and green IDs). A member can avail of
the benefit package only after six months and when the accumulated contribution
has been paid.
Barangay health workers (BHWs), barangay officials, and assigned health

workers of the program are the collectors of members’ monthly contribution either
cash, in kind or in service. The Fund Management Committee has P5,000 in
petty cash every week. Expenses or charges from 2001 to the present has
amounted to over P100,000. With 10,000 members, they now have P38,000 in
the bank. Cash inflow vs. outflow is break-even. The program targets to reach
P200,000 or 50,000 enrollees which is the critical mass. When they reach the
critical mass, they would like to include OPD in the benefit package. Based on a
rough estimate, the average cost per patient is approximately P900. This indi-
cates that health care cost is almost doubled from January 2001 with an average
of P500 for Bracket B. Latest records show approximately P650 out-of-pocket
payment per member, mostly on obstetric and sometimes medical cases.
Program records also reveal that health care cost of members normally did not
165
exceed the ceiling of the benefit package. Members have difficulty making the Health Sector
yearly payment, especially if the family has many members enrolled in the Reform Technical
Assistance Project
program.
The advantages of the Peso for Health program are the following:
• less bureaucratic
• genuinely autonomous
• community-based, owned and managed
• cost sharing or responsibility sharing
• accessible, available, acceptable and affordable
• people empowerment is assured
The problems and limitations of the Peso for Health program include:
• Miscommunication between members and program implementers. This is

relative to limited funds to produce information materials like a brochure.
• Irregular collection of monthly contribution of members. Not all contributions

are collected by BHWs regularly, and there are cases when the remittance is
in lump sum. Sometimes there are members who pay in advance, depending
on the availability of cash.
Other provisions or policies of the program that are worth noting are:
• For three months delay in the payment of contribution, the member can only
avail of 50% of the benefits;
• Six months delay in payment means dropping of membership and requires

re-enrollment; and,
• Benefits can only be availed of if the enrollee has been a member for six
months.
There is a six-month grace period prior to availment of the benefit package

because: (a) this is a counter strategy to patients taking advantage of the benefit
package; (b) this helps to accumulate funds on the assumption that the number
of enrollees is increasing; and, (c) this makes sure that funds will not be ex-
hausted.
There are many PhilHealth members who are Peso for Health members, but in
the community, indigents depend on Peso for Health Program for health care
financing. There is no double membership in the Indigency Program and Peso
for Health Program since PhilHealth's Indigency Program is not present in Sta.
Bayabas ILHZ.
3.2 PhilHealth Indigent Program
The target of the Indigency Program (IP) is that by year 2004, 25% of all LGUs
will be enrolled in the program. As of May 2002, PhilHealth records show that 10
166
LGUs have enrolled in the program, which indicates 40% accomplishment of the Health Sector
target number of LGUs. Reform Technical
Assistance Project
The program was presented initially at the regional level, which was attended by
members of the Regional Development Council, DOH VII and Provincial Health
Officials and Social Welfare Officers. The program was also presented to the
League of Mayors at the provincial level, to the Sangguniang Panlungsod (SP) /
Sangguniang Bayan (SB), Committee on Health, Health Officers and other LGU
personnel assigned by the local chief executive to take charge of the program.
Usually, the Municipal Health Officers (MHOs) took the responsibility of initiating
the adoption and facilitating program implementation in the LGU.
In Negros Oriental, the IP premiums are covered by municipal LGUs (MLGU).

There is no provincial LGU (PLGU) counterpart due to differences in political
party affiliation. The PLGU also wanted MLGUs to take the initiative in lobbying
for the PLGU’s counterpart. The Governor is very supportive of the Indigency
Program but he has no control of the Sangguniang Panlalawigan. Majority of the
SP members do not belong to the same political party. This was cited as a
limiting factor in facilitating SP resolution to support legally the provincial gov-
ernment’s partnership. It also entails cost sharing with municipal and city LGUs
and the national government through PhilHealth.
PhilHealth key informants revealed, “although advocacy was properly handled,

the former Vice-Governor who was the presiding officer of the Sangguniang
Panlalawigan had his own program called Valencia Program, which he wanted
the province to adopt.” Amlan’s enrollment to the program is an exemption
because it has a counterpart from the province. It had successfully lobbied with
the provincial government. Their resolution was passed after the May election
last year, which was timely then since the former Vice-Governor did not win in
the election.
PhilHealth then suggested to the PLGU to make one resolution for the adop-
tion/implementation of the Indigency Program in Negros Oriental. However, the
provincial administration prefers to do it on a per LGU basis like what Amlan did.
While there was some delay in acceptance of the PhilHealth indigent program in
some municipalities in Negros Oriental, the experience in the municipality of
Bindoy was different. In August 2001, the Management Sciences for Health
facilitated the Health Sector Reforms orientation in Binata health district. Social
health insurance was one of the priority interventions, which in turn encouraged
Bindoy’s Local Chief Executive and other local stakeholders to adopt the pro-
gram. However, they found it difficult to market any program if constituents have
to pay. This perception was based on their unfavorable experiences with Phil-
Health’s services (e.g., very bureaucratic, policy restrictions, issues on late
reimbursements, low utilization rate, etc.).
To counter this, the Mayor and the officer in-charge of the Indigency Program of
Bindoy took the lead in conducting IEC in different barangays with other local
stakeholders, health workers and barangay officials. Advocacy through informa-
tion dissemination per barangay has been effective. Indigency Program cover-
age, entitlements, benefits, processes, and cost sharing schemes were the focus
167
when conducting IEC. Another strategy of the LCE in marketing the program is Health Sector
to emphasize to the constituents that health is not only a concern but also a Reform Technical
Assistance Project
responsibility of every individual. This has helped to persuade the people to
contribute 50% of the total premium to sustain the program.
Another issue is that of affordability and sustainability. To address this, the Mayor
of Bindoy conducted a comparative study on cost sharing for the Indigency
Program premium and capitation fund within a six-year period. It was presented
to the different stakeholders in Bindoy and other LGUs in the health zone.
Bindoy relies on different fund sources for the Indigency Program premiums.
These sources are the Municipal LGU (20% development fund), Barangay
Internal Revenue Allotment (1% of Barangay IRA), Provincial LGU and house-
holds (enrolled indigent families). The proposed cost-sharing scheme of Bindoy
applies to other 4th – 6th class municipalities because of the following features:
• At P118.80 annual premium per enrollee, the Provincial LGU covers 50%
share at P59.40 in the first year. The remaining half is equally divided by the
Municipal and Barangay LGUs.
• In the second year, the household-enrollee will have to contribute 50% of the
total premium while counterparts from the three LGUs (province, municipal
and barangay) will be reduced to half of its first year share.
• To meet the premium contribution of P237.60 per enrollee for year 3, all
counterparts from the four fund sources will be doubled (HH = P118.80,
PLGU = P59.40, MLGU and BLGU = P29.70 each).
• Sharing scheme for year 4 will reflect the same amount of HH contribution in
year 3 (P118.80) but it accounts one third of the total premium (P356.40).
LGUs’ (province, municipal and barangay) counterparts will be doubled
based from year 3.
• Household contributions for succeeding years 5 and 6 remains the same, but
it will account 25% (year 5) and 20% (year 6) of the total contribution. LGUs’
shares will be increasing.
3.3 Enrollment in PhilHealth Indigent Program
It took almost a year for most LGUs to accomplish the MOA from the time that
the LGU passed the resolution. In the case of Zamboanguita (the first LGU to
implement the IP), it only took two months to have their MOA signed. The normal
timeframe after the MOA was signed to validation (verifying the list) is six
months. Zamboanguita did the shortest period in four months.
PhilHealth provides family data survey forms (FDSFs) to LGU thru the Social
Welfare Office (SWO). FDSF is patterned after the existing DSWD form. There
is only one form used by PhilHealth and SWO in identifying qualified indigents.
PhilHealth hires enumerators, usually BHWs to administer the FDSFs in the
barangay. The survey is under the supervision of the Social Welfare Officer and
the Barangay Chair. For LGUs that conducted their own survey, they just trans-
168
ferred their data to FDSFs and have their list of indigents. Certification of the Health Sector
Social Welfare Officer is sufficient for PhilHealth. Thus, there is no need to Reform Technical
Assistance Project
conduct another household survey. There are patients who approached to in-
charge of the social health insurance (IP) for membership inclusion.
Figure 1. Schematic Flow and Estimated Timeline of the IP Application Process.
PHIC Æ LGU/SWO SWO PHIC/LGU PHIC
HH survey Listing of qualified MOA signing Validation

(FDSFs) indigents ~ 1 year 4 - 6 months
IP enrolment/ID distribution
Billing
3 wks – 4 months
PHIC PHIC Æ LGU
Verifying the list to ID generation/distribution took four months when the IDs were
generated at the National Office. Recently, IDs have been made at the Regional
Office, which shortened the timeline to three weeks (e.g., in the case of Bindoy).
Bindoy targeted around 4,000 enrollees for this year with budget augmentation
from the Binata ILHZ common health fund. As of June 2002 data, the LGU
enrolled a total of 1,902 indigent families from all (22) barangays. Enrollment
was carried on three batches with a total payment of P225,957.60 made to
PhilHealth from the Municipal and Barangay LGUs share. A total of 196 applica-
tions have been submitted to PhilHealth for approval. The provincial counterpart
(P200,000) is not yet released, but it will be used for additional enrollment to
meet this year’s target.
Table 1. Status of Indigency Program Enrollment, Contribution and Capitation

Fund Received as of June 2002, Bindoy, Negros Oriental.
Amount paid to PHIC Capitation fund received
Batch no. No. of enrollees Validity date
(PhP) (PhP)
1 784 2/16/02 – 2/15/03 93,139.20 107,146.67
2 898 4/16/02 – 4/15/03 106,682.40
3 220 6/01/02 – 5/31/03 26,136.00
Total 1,902 225,957.60 107,146.67
* Capitation fund received – initial and 2nd quarter of 2002.
Source: Bindoy LGU Indigency Program TWG record.
The benefit package offered to indigents under the program are categorized as
regular benefits – refers to hospital benefit package that includes room accom-
modation, medicines, laboratory and x-ray services, doctors’ fee with certain
ceiling and the outpatient benefits are provided at the RHU level.
169
Health Sector
The PhilHealth National Office is also into private sponsorship. The Regional Reform Technical
Assistance Project
Office already identified and communicated potential benefactors including
congressmen for sponsorship strategy. All congressmen in Cebu are interested,
but only the second district has started implementing. So far, there is no re-
sponse from private benefactors.
Policy restrictions limit PhilHealth to alternative ways in expanding coverage like

allowing qualified indigents/clients to cover the P120 premium payment. The
staff cannot do it since billing has to be done by LGUs as stipulated in the
national policies and guidelines. Clients who do not qualify in the program will be
classified as individual paying members with a monthly premium of P100.
There are four LGUs in Negros Oriental (Amlan, Bindoy, Dauin and Zamboan-
guita) that enrolled in the Indigency Program with a total of 6,063 active mem-
bers. Three (3) LGUs are still in the survey stage of the application process and
there are nine (9) LGUs with MOA on IP-OPB having a total commitment of
14,372 households.
3.4 PhilHealth Rural Health Unit Accreditation
Most LGUs wanted to avail of the out patient benefits (OPB) because of the
capitation fund from PhilHealth to LGUs with accredited RHUs. Hence, LGUs
wanted their RHUs to be PhilHealth accredited. PhilHealth representatives have
visited and pre-assessed all RHUs in Negros Oriental. Now, they are working on
the requirements for accreditation.
During the interview, some reasons for the delay of the approval of accreditation
were as follows:
• Policy restriction on equipment and laboratory apparatus limits accreditation

approval of CHOs/RHUs, while only 10% - 20% of patients availed of labora-
tory services of the out patient benefit package due mostly from non-
compliance with equipment and laboratory apparatus requirements, such as:
centrifuge, test tubes for laboratory exams, urinalysis, CBC, fecalysis equip-
ment, etc.
• Another identified problem on accreditation is the failure of LGU-RHU appli-

cants to comply with the requirement on one medical technologist per facility.
Region VII is flexible on this particular requirement. The accreditation unit al-
lows complementation of medical technologists among LGUs within a health
zone. This is based on transitory provisions of the policy, which are applica-
ble to hospitals and inter-local health zones. This has been to the advantage
of Negros Oriental. With the ILHZ, LGUs can share the services of the medi-
cal technologist, facilities and equipment within the catchment. This could be
possible through a referral system. So, the medical technologist requirement
is no longer a “must requirement” as long as they have an ILHZ, which has a
referral facility (e.g., another RHU).
• A MOA is a requirement for accreditation. Accreditation application may start

as long as the Mayor signifies intention, even if there is no list of indigents.
170
The MOA could be accomplished at the same time with accreditation applica- Health Sector
tion as long as the LGU has started the process of accomplishing it. Reform Technical
Assistance Project
Up to the present, Negros Oriental has three (3) accredited RHUs in the munici-
palities of Ayungon, Bindoy, and Amlan. Willingness of the political structure,
LCEs and health providers, particularly the Municipal Health Officers to upgrade
the facility and comply with accreditation requirements, is considered as the main
factor that facilitated accreditation. Policy restrictions on the part of PhilHealth,
like strict implementation and compliance to accreditation standards, the top-
down approach in policymaking and implementation, were identified as the main
barriers to facility accreditation.
However, the respondents agreed that some RHUs were liberally approved by
PhilHealth even if they failed to comply with equipment and laboratory require-
ments. Such consideration is based on the assumption that the capitation fund
will be utilized for procurement of lacking equipment/laboratory apparatus.
The structural improvements of Amlan and Bindoy RHUs in the BINATA ILHZ are
worth noting. Bindoy invested P200,000 in year 2000 and another P100,000 in
the following year for RHU rehabilitation and upgrading of facility and equipment.
The buildings were repainted, tiled flooring, new windows, landscaped RHU area,
television, video-audio and karaoke sets used for IEC while clients are waiting.
This shows significant improvement in providing access and better health ser-
vices to the people.
3.5 Capitation Fund
Amlan is a fifth class municipality that was already accredited by PhilHealth and
is now entitled to the capitation fund of the PhilHealth indigent program. The
Municipal Health Officer admitted that they needed the fund badly because there
was a cut in health budget caused by slashed internal revenue allotment of last
year. Although she did not have a breakdown on the proposed expenditure for
the fund, she believes that the fund will be helpful in terms of the following:
• Additional budget for medicines

• Upgraded facility
• Better and more services available to people
The LGU enrolled its indigents on February 15, 2002 and the RHU is also
PhilHealth accredited. In April 2001, the MOA was signed and the Provincial
Government gave a counterpart, but it was withheld due to the election bond.
The approach of Amlan was quite different from other RHUs in terms of payment
for the IP enrollees. Each indigent member is required to give a counterpart of
P60 on installment at P10 per month for the premium to ensure sustainability of
the program. Said mechanism also inculcates responsibility and ownership of
each member. The LGU has a trust fund. They had a program before where
people who want to be covered by the health support program contribute P10 per
month. It will be used to sustain the Indigency Program if in case the LGU
cannot afford to cover the premium.
171
It took about two months for the approval of Amlan’s application for RHU accredi- Health Sector
tation. They applied last March 2002 and just received the PhilHealth accredita- Reform Technical
Assistance Project
tion certificate during the third week of May. The LGU has not received the
capitation fund and based on PhilHealth feedback, it is still being processed at
the regional office. They have not set the details on capitation fund utilization,
but will prioritize procurement of drugs and equipment. They still have to comply
the centrifuge and equipment requirements. The LGU is aware that the capita-
tion fund is for health services. So deviating from the utilization of said fund is
very remote.
Amlan RHU also continues to provide innovative services and introduced

charges to these services to maintain sustainability of their operations. Innova-
tive programs include women’s health, newborn screening, rehabilitation, acu-
puncture and laboratory services like blood typing, blood count, blood sugar,
urinalysis, cholesterol and sputum microscopy. They charge P40 for blood sugar
and P70 for cholesterol examinations. They continue to provide consultation and
medical services with minimum of 30 patients per day for consultation. There is
no service charge for consultation, but they accept donations for facility mainte-
nance. For minor surgery service, they charge or require the client to provide
their own supplies for sutures.
To formalize charging for services, the MHO submitted to the LGU a proposal on
the collection of minimal fee for services availed by non-members of the Indigent
Program of PhilHealth.
Amlan has a track record of being recognized for their innovative services. The
LGU received the Sentrong Sigla P1 million cash award prize. They used it in
supplementing other health resource requirements. Seventy percent (70%) of
the amount was used for drug procurement and the remaining funds for facility
maintenance and repair.
Another innovative and community-based program implemented was the “Singko

[Five Centavos] for Health Program” for medicines. It was patterned after the
“Peso for Health Program.” Each individual member contributes P5 per month.
This is equivalent to P1,000 -ceiling of the benefit coverage for medicines. Now,
they adopt a new policy with a ceiling of P250 for first year of membership and P
500 for the second year. They had experienced before that funds were ex-
hausted because members bought medicines for three months and they discov-
ered dishonesty of some members.
Another is the Hospitalization Program, which gives P2,000 subsidy for indigents.
LGU health program stakeholders are planning to establish a cooperative phar-
macy. Prescriptions will be issued to clients but direct it to the pharmacy in order
to provide cheaper drugs and avoids dishonesty of Singko for Health members.
Returns or consequences of their local efforts and health development initiatives
are: (a) minimized dole out at the RHU level (e.g. transportation fare of clients
covered by health providers), and (b) reduced RHU referrals to hospitals.
A similar experience can be seen in Bindoy. Just like the standard application
procedure for accreditation, the LGU complied and submitted the requirements
on November 25, 2001. It was not difficult for them to comply the requirements
172
since their facility was already upgraded and SS certified, the RHU has an Health Sector
existing laboratory and medical technologist. RHU accreditation approval was in Reform Technical
Assistance Project
January 2002.
The LGU already received P107,146.67 as initial and 2nd quarter capitation fund
on May 29 this year for the first 784 enrollees. What is certain in terms of its
utilization and management for the moment is to follow the standard appropria-
tion guideline set by PhilHealth, such as:
• 20% for administrative cost (half of it or 10% of the total fund will be given to
the doctor and the other 10% will be shared among the medical technologist,
nurse and midwives), and
• 80% for drugs, supplies and equipment
The LGU has not prepared the capitation fund utilization and program plan. So,
the money is still intact. Hopefully within the third quarter of this year, the LGU
will be able to prepare the program plan indicating the utilization and manage-
ment of the capitation fund after the supplemental budget of P400,000 for equip-
ment from the Congressman and another P400,000 for medicines will be
exhausted. The P400,000 allocation for equipment will be used for the procure-
ment of semi-automated analyzer, equipment for microscopy procedures and
other laboratory equipment.
3.6 Patient’s Experience on PhilHealth Indigent Program
Records show a high utilization rate based on number of households enrolled in

the Indigency Program and indigent benefit claims. The total LGU investment is
P254,640 for 2,122 households at P120 LGU counterpart for the premium per
household. LGU investment is about 35% of members utilization cost, which is
pegged at P730,011.65. Thus, there is no negative perception or losing end
concept of LGUs on their investment to the program. On the contrary, it would
mean loss for PhilHealth. The data further indicate that PhilHealth reimbursement
is calculated at 68% of actual hospital charges (P1,073,249.47). This accounts
for 32% loss or deficit of the claimant facility.
Interviews with patients admitted at Negros Oriental Provincial Hospital was also
done. The PhilHealth member informant did not know the cost of his premium
since it is the employer who pays it. One of the non-PhilHealth members had
heard of PhilHealth in the hospital but did not know its details. The informant has
limited knowledge on his benefits as a member. He cited hospitalization benefits
like room accommodation and laboratory service fees, but he was unaware of the
details of social health insurance coverage and members’ benefits. Most of them
are aware of available health facilities accredited by PhilHealth. Government and
private hospitals (District, Provincial and Medical Center) were enumerated as
service providers accredited by PhilHealth. The respondent expressed dissatis-
faction of PhilHealth’s ceiling for patients’ benefits, especially for medicines.
Hospital pharmacy only allowed P1,700 for medicines and P250 room rate per
day. He wanted that the ceiling and coverage be increased to minimize their
financial burden on hospitalization.
173
Two of the respondents have never heard of the Indigency Program and Phil- Health Sector
Health promotional activities. The other one had heard about it over the radio but Reform Technical
Assistance Project
not in Siaton. One non-PhilHealth member respondent wanted to enroll in
PhilHealth social health insurance but cannot decide to be an individual paying
member because she wants to consult first her husband. The other non-member
wants to avail social health insurance but cannot afford to pay the premium.
When she was informed about the Indigency Program, she wanted to avail it
because hospitalization cost (particularly on medicines) is very expensive and
too heavy for their pocket. Room accommodation and doctors fee are free. The
hospital accepts donation but they buy medicines in hospital pharmacy and pay
laboratory fees. Overall, PhilHealth members expressed dissatisfaction of the
benefit package.
In Bindoy, people are no longer afraid to go to health facilities for treatment.

They are aware of the social health insurance coverage, the benefit package and
their entitlements. Hence, there is a gradual positive shift in their perception and
practice on health care. Before they used to go to the RHU or hospital for severe
illness or condition, but with the Indigency Program membership, they are aware
of their entitlements and services, which consequently enabled them to avail both
preventive and curative services. Constituents/IP enrollees’ reactions:
• Very happy
• Very grateful/thankful
• Proud (it was their first time to have an id)
• There were questions on renewal and when others can avail the program
There are other LGUs in Negros Oriental that have a community based health
insurance scheme. Ayungon has an endowment plan for indigent patients. It
also has a community-based health financing program called “Sustainable Health
Care Initiative of the People” or SHIP. The local officials under Mayor Edcel
Enardecido initiated the program in 1999. It is the response of local officials to
urgent needs for medicines and other health needs of their constituents. It is
supported by two legal mandates, the SB Resolution No. 146 and Ordinance
No. 8, which stipulates the adoption of a health care program – SHIP. Target
beneficiaries are all Ayungon residents from three months old and above. Non-
residents but working in the municipality either government or private employee
may join the SHIP. Monetary involvement includes a lifetime membership of P20
and P50 for the annual contribution.
Benefit package of the SHIP health care financing program;
• Free consultation by the MHO or any government doctor

• Free medicines of not more than P1,000 prescribed by the physician at the
OPD or during admission availed only once a year
3.7 Problems on the PhilHealth Indigent Program
Sustainability of the Indigency Program depends on utilization rate and the same
membership over time. If utilization is low, it implies loss of LGU investment and
a problem of the LGU. If utilization is high, it becomes a problem of PhilHealth.
The experience of Bago City on low utilization rate based on actual servicing
174
(P950,000 for two years) vis-à-vis the LGU investment for the Indigency Program Health Sector
(P6 million) also influenced the reluctance of Sta. Bayabas to adopt the program. Reform Technical
Assistance Project
Based on statistics, there are roughly about 4,000 admissions in all district
hospitals and health providers have an apprehension that it would be a losing
investment for LGUs to join the Indigency Program since the utilization rate is
low. Thus, they are not receptive to the program.
There is no program sustainability if PhilHealth relies only on members’ contribu-

tions. So, it is up to the national office on how to invest and implement mecha-
nisms to sustain the program. The regional office is not allowed to invest, but
being in the forefront of program implementation. It should be responsible of
taking the initiative/s in developing sustainability mechanisms. The fund for the
indigent program also depends on the timely remittance of the national govern-
ment’s share.
Limiting factors in implementing and sustaining the Indigency Program are: (a)
lengthy application process / red tape. It takes about 1½ years for LGUs to enroll
their indigents to the program. This will have an implication on indigents’ timely
service utilization, (b) lack of manpower for groundwork activities and monitoring.
PhilHealth’s present structure limits extensive promotion and coverage of the
Indigency Program, (c) management and implementation of the program is only
at the Regional Office. Thus, the service or field office has no direct involvement
and hands on of the program.
Although all (7) staff of the Indigency Unit in the Regional Office are capable of
presenting the program, still the ratio of staff over LGUs coverage is 1: 19, which
is apparently high. There are areas where telecommunication and email are not
available. So, physical presence of IP Unit staff is needed to follow-up LGU
application and other program implementation activities. Ideally, there should be
one service office for every ILHZ. This connotes additional staff requirement for
ILHZs as PhilHealth desk officer or contact person. There are also other con-
cerns that PhilHealth representative should address. However, field staff
has/have some limitations and restrictions in program implementation. They
need approval from the regional office. PhilHealth representative was hesitant in
going with health providers, when in fact they should exert more effort in promot-
ing the Indigency Program.
Some key informants made a comment that “PhilHealth’s information campaign

strategy is ineffective or inappropriate in a sense that they were so aggressive in
membership campaign while the infrastructures are not ready.”
Fund source of LGU for IP premiums is another big concern and issue of pro-
gram sustainability. Cost sharing scheme can be a hindrance to program sus-
tainability. Can the LGUs afford, especially if reclassified into higher income
class? Income classification of municipalities is not based on total income of
LGU but on per capita income, which is population based. With the 50:50 cost-
sharing scheme, the LGUs might discontinue their enrollment in the program.
Financial incapacity of some LGUs to enroll all indigents and sustain program
membership may result to political liability of the LGU. Hence, the program could
not be sustained.
175
Unfavorable political environment is also a critical factor that attributes to Indi- Health Sector
gency program implementation and its sustainability. Differences in political Reform Technical
Assistance Project
party affiliation among local leaders at the provincial, city and municipal LGUs
also affect the status and development of Indigency Program in Negros Oriental.
Opportunity of politicians to take advantage of the program by issuing medicines
charged to PhilHealth reimbursement. The Indigency Program has political
connotations. Sometimes, LGUs feel that it becomes an obligation of the
LGU/LCE to pay the excess bill of indigent PhilHealth member when hospital-
ized. This is a way of strengthening the dole out system, unless health is linked
with socio-economic programs toward the direction of a holistic development
approach. There has to be a livelihood program component to complement
Indigency Program’s sustainability.
The Provincial Administration’s perception is that the Indigency Program is

subsidizing PhilHealth members in the employed sector. Now the LCE would like
to do it the other way – let PhilHealth members of the employed sector subsidize
the indigents. This is another adverse perception of PhilHealth social health
insurance.
Other LGUs were encouraged to enroll in the Indigency Program because of the
capitation fund. Some health providers prefer local/community health insurance
for accessibility of funds, ease in processing and shorten the bureaucracy. The
convergence strategy does not necessarily make things work on improving and
sustaining the social health insurance. The key informant could not cite signifi-
cant effect or impact of the convergence on this particular reform component. It
may not work because of the attitude of politicians.
Negros Oriental is one of the few provinces that have allowed public hospitals to
retain their income for their use. Aside from the regular budget allocation from
the province, the income earned by hospitals from user fees are plowed back to
the hospital for their maintenance and operating expenses. At the outset of
devolution when there were insufficient funds for hospital operations, then
Governor Macias explored the possibility of allowing hospitals to keep their
income. Provincial funds for hospitals were reduced to one half and there was
need for an innovative scheme to be able to maintain hospital operations.
Appropriate local legislation was passed - allowing the provincial treasurer to
keep in trust funds generated by the hospitals at the provincial and district and
community levels. Up to the present, user fees are remitted to the provincial
treasurer and an accountant is assigned to keep records and keep track of all
hospital remittance forwarded to the Provincial Treasurer. The hospital makes
periodic requests for release of funds and a budget sub-allotment is prepared
and approved by the Sangguniang Panlalawigan. Each hospital has its own
board that decides how the funds are to be spent.
The creation of hospital boards also prepared various sectors of Negros Oriental
society for participation in district health boards. The hospital board is multi-
sectoral in membership and has policymaking as well as financing functions. It
approves the work and financial plan prepared by the hospital staff and dis-
bursement by the province is in accordance with the approved plan and budget.
176
Health Sector
The multi-sectoral membership made hospital operations a joint concern and Reform Technical
Assistance Project
ensured transparency in budgeting and financing. Collaboration was also easier
to pursue as various sectors contribute to meet hospital needs. In the provincial
hospital, it is a common practice to donate in kind in the form of hospital equip-
ment or undertake renovation of rooms. Hospital officials do not receive cash but
simply become the recipients during the turnover of rooms or equipment for
hospital use. Private donors, religious groups and organizations like the Rotary
Club undertake projects to benefit the hospitals. The Women’s Auxiliary actively
solicits donations for the hospital and religious groups like Sinag also do the
same simultaneously with the performance of their religious ministry. The idea of
inter-sectoral collaboration as espoused in the inter-local health zone concept
was no longer a novel idea but an expansion of the hospital board concept. It
was no longer difficult for the DOH through the regional office to promote the
ILHZ. Various sectors of Negros Oriental society were already prepared and had
previous experience with inter-sectoral collaboration. In terms of hospital re-
forms, the province had set the following targets for 2001-2004 for its eight
hospitals:
• Sentrong Sigla and PhilHealth accreditation

• Creation of quality assurance committees
• Financial autonomy
• Availment of sub-allotment scheme
• Generation of income equivalent to 40% of MOOE
4.1 Negros Oriental Provincial Hospital (NOPH)
The NOPH is the tertiary referral hospital for the province of Negros Oriental
located in Dumaguete City. It also serves as the core hospital of the ILHZ com-
posed of Dumaguete City and the municipalities of Dauin, Bacong, Sibulan, San
Jose, Amlan and Valencia. It is accredited by both DOH and PhilHealth as a
tertiary facility. It has authorized capacity of 250 beds. It serves not only the
province but also some areas of the nearby provinces of Siquijor, Southern Cebu
and Northern Mindanao.
It appears that many of their cases may be served by the lower levels of the
health system. The referrals received increased from 675 in 1993 to 1,463
(116.7%) in 2000. This reveals 46% increase. It is interesting to note that
throughout the period, majority (85% - 95.%) of the cases were referred by other
hospitals/centers. The hospital staff reported that many of the cases seen at the
outpatient department, as well as birth delivery in the hospitals could be handled
by the lower levels of the health system.
The facility registers an occupancy rate of 90% in 2001 with an average 5 days
length of stay of patients. Total admissions last year was 16,824, out of which
medical services accounted for 30% of total admissions. Hospital records shows
that pediatrics and under five consultations were highest at the outpatient service
department (OPD). Surgical and medical services ranked second and third in the
OPD. The hospital had served a total of 68,638 OPD clients (data based on year
2001 record).
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Acute respiratory infection and urinary tract infection rank first in consultation Health Sector
cases. Wounds with minor surgical interventions rank second, followed by ARI Reform Technical
Assistance Project
with pneumonia. Moderate to severe dehydration secondary to diarrhea is the
top leading cause of discharges, followed by ARI with severe pneumonia.
Pneumonia ranks third in leading causes of discharges, but it is the number one
cause of mortality. Cerebro vascular disease is second followed by malignancies
due to cancer.
The cost of maintenance is high vis-à-vis the perceived impact of prolonging the
life of patients. This is cited as one of the impact programs of the former provin-
cial administration, but it also raised a critical issue on sustainability based on
economic analysis. From an objective perspective of economics and program
sustainability, it is a losing venture of the LGU even if the machines/equipment
were donations. The net income for dialysis is only P180-P200 while sustainabil-
ity of hospital services is an important consideration for LGUs.
Fund allocation for medicines is 25% of total hospital budget. Dumaguete City
has an endowment fund from the LGU for indigents’ hospitalization financial
assistance.
Among the problems identified in Negros Provincial Hospital are:
• Personnel management. When they were devolved, they wanted to stan-

dardize operations. However, the Provincial Government cannot afford to
hire the desired plantilla positions.
• Inadequate resources for hospital operations and services to meet real

demands of clients.
• Despite its problems, the Negros Provincial Hospital has positive attributes:
• Utilization of hospital income for its operations. It is now categorized as

restricted fund for facility operations. Although users’ fees were given back to
the hospital, the funds were utilized by charging contract services. It should
have been used for hospital operations improvement that would focus on
maintenance, operations and ultimately provision of better services.
• A Hospital Board sets policy, approves budget and monitors operations.
• Complementation from active NGOs and civic organizations.
Renovated private rooms thru the help of Women’s Auxiliary Service, a non-
government organization complementing health service delivery.
Networks with Dumaguete and Florida Rotary Clubs. These linkages en-
abled hospital management to access seven dialysis machines/equipment.
The rationale for acquiring the equipment was based on the life saving impact
and specialization of donor. Acquisition of said machines/equipment was
during the former Provincial Administration. The equipment caused additional
income to the facility, but the charge is low and liquidity of income posed an
issue due to many outstanding debts. NOPH charges only P3,500 for first
178
use compared to P5,500 (private facility) and P1,800 for re-use. So there is Health Sector
a big difference of service charge between government and the private facil- Reform Technical
Assistance Project
ity.
• Facilitating factors in implementing hospital reforms are: (a) openness and

cooperation of health management and providers to undertake reforms, and
(b) users fee utilization to augment hospital operations. The Provincial Gov-
ernment allows hospital income to be used by the facility to augment budget
for hospital operations.
• Sustainability through privatization/corporatization is not the goal of hospital

management and staff. They adhere to sub-allotment in order to facilitate
operations with some sense of autonomy and fiscal administration. The po-
litical leadership somehow supports this view.
4.2 Bais District Hospital
Bais District Hospital is categorized as secondary health facility operating a 50-

bed capacity but with a budget of a 25-bed hospital. The facility has increased
the number of beds to 150. It is operating beyond its capacity. Occupancy rate
is 93%.
Hospital budget is sourced from the Provincial Government and Bais City Gov-
ernment. Provincial budget has been limited since devolution. At the outset, the
former Chief of Bais District Hospital (Dr. Ely Villapando) had convinced Bais
LGU to complement funds for hospital operations. Total hospital budget for this
year is P20 million. The Provincial Government’s share accounts 55% of the
total budget (P11 million), while Bais City LGU contributes P9 million. Hospital
income is P 2.4 million, which is 12% of its total budget.
Two LGUs within Bais ILHZ pledged a total of P5 million for hospital improve-
ment. The Local Chief Executive of Bais City pledged P2 million and P3 million
from Tanjay City Mayor.
The facility has 12 well-trained doctors, but it is constrained by an inadequate

budget for hospital operations. A limiting factor in hospital operations is lack of
supplies, which is attributed to inadequate budget. Supplies are not available for
local purchase, even if patients are willing to buy it. Bais health providers work
with PhilHealth. They exert more efforts compared to PhilHealth representatives.
Key informants’ remarks indicated inadequacy of PhilHealth’s advocacy, “mahina
[weak] compared to hospitals.”
The hospital has adopted some strategies to increase its revenues and achieve
sustainability. They are: (a) increase hospital fees/charges (level with PhilHealth
rate), (b) billing of patients if they have money, and (c) Medicare para sa Masa or
Indigency Program. RHUs are aggressive in promoting the Indigency Program.
Most LGUs enrolled their indigents in the program. The District Hospital is
banking on the Indigency Program as a means of increasing its revenues.
Health providers at the facility are also encouraging indigents to enroll in the
program. They are the prime advocates of the Indigency Program in their
catchment thru the inter-local health system.
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Health Sector
4.3 Limiting factors in implementing hospital reforms. Reform Technical
Assistance Project
• Inadequate budget for facility and equipment upgrading, and other hospital
operations needs and requirements.
• Patients’ biased perception and preference. Patients prefer tertiary facility

services especially for major operations. The District Hospital wants to in-
crease surgical operations but patients prefer tertiary facility services prevent-
ing district hospitals from achieving their health delivery targets.
4.4 Bayawan District Hospital
Bayawan District Hospital is a secondary facility with a 50-bed capacity. The

hospital is PhilHealth accredited catering to three municipalities in the southern
part of the province.
The budget for fiscal year 1999 (P12,424,429) and 2000 (P12,969,605) is almost
the same, but there is a big difference from 2000 to 2001 and 2002. Capital
outlay allocation for equipment, building and structure in two recent years caused
a remarkable leap in hospital budget. Hospital budget for 2001 has increased by
almost 42% of previous appropriation, and the increment for 2002 from last year
is calculated at around 6%. Appropriation for maintenance and other operating
expenses (MOOE) and personnel services has been increasing over the four-
year period, except for 2000 budget, which decreased at a very minimal amount.
This difference could be explained by the absence of allocation for monetization
of leave credits in 2000, which costs more than the overtime line item budget,
which the previous year did not have. The average increase of MOOE is calcu-
lated at 38% over the period. MOOE allocation for 2002 accounts almost 25% of
the total hospital budget. It is 10% higher compare to 1999 statistics.
Fig. 2. Comparative detailed budget of Bayawan District Hospital, 1999–2002.
20,000,000
18,000,000
Personnel Services
16,000,000
Budget (PhP)
14,000,000 MOOE
12,000,000
8,000,000
6,000,000 Total Hospital Budget
4,000,000
2,000,000
0
1999 2000 2001 2002
Year
Source: Bayawan District Hospital.
180
Table 2. Comparative budget of Bayawan District Hospital, 1999 – 2002. Health Sector
Year Budget (PhP) Reform Technical
Assistance Project
1999 12,424,429
2000 12,969,605
2001 18,352,887
2002 19,386,781
Source: Bayawan District Hospital.
Bayawan District Hospital has a higher budget compared to other hospitals in the
province. The hospital has excess funds and the management is thinking of
sharing part of it to other health units. This was a result of innovative financing
strategy adopted by the hospital. The Chief of District Hospital recognized the
“barter system” principle as part of the local culture. Thus, he took advantage of
such practice but not thinking then that it would help in their dietary operations.
Hospital management accepts goods in lieu of cash payment for hospital bill of
patients. With this innovative strategy, the management established guidelines
and came up with a list to identify the equivalent cost of local products.
The collection of some form of service fees has been established and the medi-
cal social worker has been instructed to explain the policy. The policy is no
charity or free service, which is based on the premise that “if you value your life,
you must be willing to give something.” They developed the promissory note as
mechanism for installment/staggered payment of hospital bills or service
charges. The hospital adopted a follow-up mechanism to ensure high turnover of
promissory note payments. Payment may be made in cash, in kind or service.
Payments in kind or goods and services are given their cash equivalence. The
hospital staff buys patients’ goods or monetizes the services rendered by a
patient’s watcher. An example cited was for caesarian. They ask patients if they
can pay in kind like lechon or 10 kilos of sweet potato. This is a local strategy of
empowering the clients to be responsible of their health care needs and obliga-
tions. If all hospital managers have the same perception on the social responsi-
bility of clients for their health care, then the Indigency Program is not an issue or
an immediate option to increase hospital revenues while serving majority of
indigents. Based on their experience, 70% of promissory notes were fulfilled and
accomplished.
The “Peso for Health Program,” has been established as a local initiative of
hospital management before HSRA convergence. It is a community health care
financing program of Sta. Bayabas ILHZ.
It is the first district hospital of Negros Oriental that implemented the newborn
screening. It is a locally initiated service at a cost of P500. The following are
newborn screening related-activities:
• Advise patients to follow the steps indicated in newborn screening

• Encourage the community on cost sharing for newborn screening
• Retrieval of statistics and program
• Recording of all in-house deliveries
181
The hospital also adopted quality assurance activities and improvements made Health Sector
on the following: (a) implementation of the 5 S, and (b) conduct of monthly client Reform Technical
Assistance Project
evaluation survey on health personnel behavior and attitude.
A patient admitted at the hospital is also interviewed to give feedback about the
hospital services. The patients and respondents were generally satisfied with the
services provided by the facility. Patients expressed satisfaction for good doc-
tors, caring health providers who attended to patients needs, cleanliness of the
facility and availability of equipment. Another comment of clients was that most
drugs were purchased outside.
The challenge taken by the hospital is to continue the social preparation of the
patients in Bayawan through health providers’ advocacy. There is a call for
strong willed health providers to encourage clients to pay for the services, as well
as teach them how to earn money.
4.5 Siaton District Hospital
Congressman Lamberto L. Macias Memorial Hospital (Siaton District Hospital) is

a secondary facility accredited by PhilHealth and Sentrong Sigla with 25-bed
capacity. Occupancy rate is fifty 58%. It has a total workforce of forty-six em-
ployees, of which forty-two are permanent. The facility is the lead coordinating
partner in the inter-local health system governed by the Siazam ILHZ Board.
The hospital has four doctors who served 16,605 patients in 2001. Outpatient
services catered to 91% of total clients. Charity patients accounted for about
86%. The cost per patient discharged is calculated at P1,260.
The hospital budget has increased over three years but actual expenditures
exceeded the appropriation in the last two years. Total hospital budget has
increased by 5% from the base year (1999) to 2000 and has doubled in the
following year. Actual MOOE in 1999 is 12% of total expenditures, while the
succeeding years indicate the same percentage calculated at 17%. Increase in
hospital expenditures in 2000 is calculated at 14% from the base year. Opera-
tions cost in 2001 has increased by 7% from the previous year. Year 2001
indicated the highest income and its corresponding percentage over hospital
operations cost. Increase in hospital income is pegged at 7% from 1999 – 2000
and has declined by 4% from 2000 – 2001. Based on the modal value, hospital
income is 12% of the expenditures. Therefore, the gap of income over expendi-
tures is high, which has an implication on the sustainability of hospital reforms.
Table 3. Comparative Hospital Budget, Expenditures, Income and Proportion of

Income Over Expenditures of Siation District Hospital, 1999-2001.
Hospital Budget Hospital Hospital Income Income/Expenditures
Year
(PhP) Expenditures (PhP) (PhP) (%)
1999 7,967,287 7,801,909.94 974,370.46 12
2000 8,381,770 8,897,809.54 1,183,170.60 13
2001 9,219,795 9,524,971.20 1,131,539.95 12
Source: Cong. Lamberto L. Macias Memorial Hospital, Siaton.
182
Health Sector
Figure 3. Comparative Detailed Expenditures Reform Technical
of Siaton District Hospital, 1999-2002. Assistance Project
12,000,000
10,000,000
Budget (PhP)
8,000,000
PS
6,000,000 MOOE
TOTAL
4,000,000
2,000,000
0
1999 2000 2001
Year
The key informant cited that the former provincial administration prioritized health
in the development agenda. Health providers gained favorable support as well.
The current provincial administration continued previous development efforts.
The facility is the only hospital in health zone.
Four medical outreach activities were conducted, bringing medical consultation

and treatment, circumcision and dental extractions to local communities. It is one
of hospital’s support services to rural health units.
The hospital pharmacy operates with 10% mark up on the cost of drugs and
supplies. Pharmacy income is kept as a trust fund. There is a plan of the ILHZ
Board to standardize service charges. The hospital collects lower fees than
other health facilities. The issue on sustainability is self-sufficiency, but the key
informant’s point of view was that “they need to maintain balance, where the
Provincial Government should allocate regular budget and whatever excess
operations costs will be covered by the trust fund. It is difficult to adopt privatiza-
tion.
The facility has not accepted payment in kind because they find it difficult to
convert goods into cash. However, they would like to implement the service
program and payment in kind. These matters are subject for discussion in their
next ILHZ Board meeting.
PhilHealth reimbursement is quite okay and up to date based on their normal

reimbursement process. They are less likely to complain compared to private
health facilities. However, in the case of Siaton, the hospital management is
struggling on PhilHealth categorization of health facilities vis-à-vis their compli-
ance to all requirements for accreditation, except for the non-functional incubator.
The hospital is categorized as primary, so they raised this issue to PhilHealth.
The hospital like other hospital in Negros Oriental Has been conducting quality
improvement activities like: (a) survey of patients in assessing the quality of
183
services provided, (b) health education for patients, which is an activity to attract Health Sector
patients, and (c) cost-cutting measures in operations expenditures (e.g. light and Reform Technical
Assistance Project
water).
During the interview with patients, all respondents were satisfied of hospital
services in terms of the following citations: (a) health providers attend immedi-
ately to their needs, (b) available medicines in the pharmacy, (c) regular rounds
of doctors and other hospital staff to check and monitor patients, (d) good attitude
of health providers, and (e) clean facility. However, they made a comment that
the hospital lacks the capability for major surgical operations. Likewise one of the
informants expressed discontentment of hospital service since there was no
regular monitoring and follow up of health providers to patients.
In the experience of Siaton, a strong political will of provincial administration to

support hospital reform initiative was instrumental in implementing reforms. The
former Governor ensured that that hospital income will be given back to the
facility for other hospital operations needs and requirements (usually medicines
and supplies). The strong cooperation and support of health providers were also
considered to be very important.
4.6 Bindoy District Hospital
Not to be outdone, Bindoy District Hospital has also made significant improve-
ments. The hospital is licensed by the DOH as secondary health facility but
accredited by PhilHealth as primary hospital. It has 25-bed capacity, of which 15
are charity beds and ten are Medicare. Occupancy rate is pegged at 67%.
Total manpower complement registers 29 personnel, of which 3 are doctors and
5 of the staff accounts to LGU’S augmentation. Like any other government and
LGU operated hospitals, majority of Bindoy District Hospital’s clientele are
indigents.
The improvements done were:
• Physical improvement as reflected with the new and spacious OPD and
waiting room, spacious District Health Office, improved ventilation (repaired
windows, electric fans, repaired pumping station, repainting of hospital build-
ings, rooms were repaired, and constructed new kitchen for watchers).
• 5 S orientation meeting was conducted.
• Improved work flow/patient flow thru signages and flow charts in the emer-
gency room and other areas of the hospital.
• Acquisition of beds for the recovery room.
• Manpower complementation (medical technologist from the RHU also ren-

ders service in the hospital when the facility’s medical technologist is absent).
However, this has been practiced even before the convergence.
• Improved hospital services by providing surgical operations, mostly minor

surgeries and seldom for major operations. The hospital management and
staff also conducted outreach activities, bringing consultation, dental, and mi-
184
nor surgical services in far-flung barangays. These medical outreach activi- Health Sector
ties are part of the hospital’s support mechanisms to inter-local health sys- Reform Technical
Assistance Project
tems and the convergence, with the support of local chief executives and
rural health units.
Revenue enhancement has been one of the objectives of the hospital manage-
ment even before the convergence. The dole out system was discouraged but
there was minimal increase in hospital income. There was a move to increase
service charges and adopt uniform rates for services in all government/LGU-
managed hospitals in the province. However, said move was pending due to
policy and legal requirements and processes. All hospitals have been allowed to
retain and use their income, but experience revealed restrictions to some extent
on regular budget appropriation. Matters related to income retention and utiliza-
tion have been discussed by the Hospital Board.
4.7 Quality Improvement Strategies
In Negros Oriental, all hospitals have systems on quality assurance. All key
personnel had attended training on quality assurance intervention. The following
activities are undertaken: (a) waste management/segregation of wastes, (b)
institution of the 5S approach, and (c) implementation of a Public Service Excel-
lence Program (institutional, involving all health service providers to be client
friendly, signage/flow charts and shorter waiting time
Survey tool for total quality improvement (leadership, client, process improve-
ment, standards and measurements). A survey was conducted to patients per
section after implementing reform interventions. At first, clients expressed
inadequate services, no linens and longer waiting time. Thus, they install televi-
sion sets as health information medium for health programs. However, NOPH
has only one OPD physician, so this intervention did not actually shorten the
waiting time but diverts clients’ patience through health education and other
media programs.
One client survey done indicated patients complaining about health providers’
behavior or attitudes. But health providers just laughed off the results. There was
no follow-up survey that was conducted.
The province set the following targets for 2001-2004 to establish an effective and
efficient drug management system through the following:
• Pooled/bulk procurement
• Parallel drug importation
• Adequate budget for drugs
• Affordable, adequate, quality and timely drugs
The budget for drugs and medicines is about P 5.5 million. It is insufficient to
meet real demands. The budget is not enough to purchase the annual provincial
requirement and budget release is done every quarter. Allotment for the first
quarter is usually released in March or early second quarter. The process
185
restrains the procurement of drugs and supplies and the problem is most acute Health Sector
during the first quarter. Reform Technical
Assistance Project
In order to decrease the cost of medicines and supplies, the method and process
of pooled procurement is being formulated and refined in the province. Bulk
procurement started two years ago for hospitals. They experienced failures
before but they’re learning through time and experience. The LGU encountered
a problem last year when there was a medical alert on Philippine Pharma
Wealth. This in turn encouraged them to facilitate bulk bidding, streamlining the
facility and process as well. With the ILHZ, they can expand it to include RHUs
whose funds come from the municipalities.
To ensure that only qualified bidders participate, some bidding requirements are
enforced like: (a) Mayor’s permit, (b) DTI permit, (c) Certification from BFAD, (d)
Certificate of Good Manufacturing Practice, etc. The award is usually given to
the lowest bidder, but there are also cases where the award is not given to the
lowest bidder when consideration is given on the quality of products.
The IPHO is making representation with the Provincial Administration for direct
purchase of drugs and if through pooled procurement, the process should be
revised and shortened. There are also proposals to solve pharmacy inventory
stock out. Ideally, the purchase request is prepared and processed when the
pharmacy is at the critical inventory level, pegged at 50% stocks. However,
procurement based on critical inventory level is difficult to follow in the hospital
because of high and erratic demands of patients.
One of the problems identified regarding drug utilization is the poor prescription
of generic drugs by doctors. Hospital health providers are not patronizing
branded drugs but they cater to doctors’ preference based on their clinical
experience. Doctors are not favorable to generic drugs because of the following
reasons: (a) substandard drugs of fly-by-night suppliers, (b) difficulty of doctors in
memorizing the long list of generic drugs, and (c) issue on the length of drug
validation if they send samples to BFAD. During the interview however, the
respondents agreed that the supposed adverse findings and effects of substan-
dard or less quality drugs are undocumented experiences and may just be
personal perceptions of clinical practitioners and clients. Doctors do not prefer
the lowest bidder after adopting stricter requirements; instead they recommend
three branded drugs per illness/disease based on their preference.
Doctors have a strong position on their preference, considering that they are in
the frontline and if they prescribe substandard drugs to patients who will eventu-
ally die; consequently they will take the burden of liability to patients, not anybody
else in the Provincial Government. The Provincial General Services Office
(PGSO) also gives the benefit of the doubt on this issue because even house-
wives and common people have their own preference on the kind of drugs they
want to take. However, patient preference is also attributable to doctors’ prefer-
ence. The PGSO has no capacity to convince doctors to use less expensive or
lower cost drugs because the latter have the medical knowledge and technical
capability.
186
Another way of procuring drugs at lesser cost is through the Parallel Drug Health Sector
Importation Program of the DTI and DOH. The goal of PDI is good but in reality it Reform Technical
Assistance Project
takes time before purchase orders are served. Siaton placed two orders but has
not received any of their orders. Negros Oriental is discouraged about parallel
drug importation due to delayed delivery, which took six months. Bayawan is an
exception because they ventured on PDI. They just received their orders. But in
other towns, more than 6 months had passed that they have not received drugs
ordered through parallel importation.
Emergency purchase of drugs is done if the prescribed drugs are not available in
hospital pharmacy. The cost is doubled and increases the financial burden of
patients.
Just like in other provinces, the drug procurement process tends to be a long
process. Before, the requisitioning officer decided where to purchase drugs and
supplies, even if it is the highest bidder.
Most of the hospitals in Negros Oriental including Bindoy District Hospital is into
pooled procurement. Drug purchase is based on the annual procurement plan,
which is done by quarter, depending on the available/allocated budget. Appro-
priation for 2001 and 2002 is just the same at P460,000 per year. Bindoy’s
pooled procurement process and experience is the same with the Provincial and
other District Hospitals. Bidding is associated with price monitoring viable for 6
months. Each hospital submits purchase request/s to the Provincial General
Services Office (PGSO). It took 2 – 3 months that purchase requests are served
to the hospital. In principle, bulk procurement is associated with price monitoring.
Drug procurement is based on the annual procurement plan of each hospital, the
Philippine National Drug Formulary and DOH -BFAD. The annual procurement
plan limits purchase of drugs but the LGU is flexible in giving allowance to new
drugs.
Figure 4. Minimum Timeline of Bulk Procurement Process at the PGSO.
1 - 2 days
Emergency
Purchase
Receipt of 10 days
Purchase Request Public Notice
from IPHO/District for Bidding
Hospitals 10 days
Regular Purchase
Bidding Order
10 days
The minimum timeline of bulk procurement process at the PGSO will take more
than 30 days on the average. Sometimes bulk procurement took 4 to 5 months.
The most common reason for the delay is in the process of going after the
signatories. Before, it took three to four months (3 – 4 mos.) from the start of
187
drug purchase request to delivery. The whole process is now reduced to two (2) Health Sector
months. Reform Technical
Assistance Project
The PGSO admitted that they have not perfected the bulk drug purchase. They
had several bulk biddings for drugs and supplies of hospitals, but they experi-
enced failure due to the following factors/attributes:
• Pre-qualification of bidders is patterned from the DOH requirements, which is

not very strict as long as the bidder is DOH accredited.
• Doctors’ preference on drug distributors and suppliers. Awarded bidders

were not acceptable by hospital doctors.
• The price index they conducted was a failure.
The following strategies were identified to improve the bulk bidding process of
drug procurement:
• Require a certificate of good manufacturing practice to eliminate fly by night

suppliers.
• Disallow bidders supplying substandard drugs.
• PGSO is in the process of developing stricter guidelines. They will endorse it

to the Sangguniang Panlalawigan for the resolution to make it legal, with a
safety net committee that will defend the LGU against suppliers’ accusations
on strict bidding requirements.
• Recommendation of the Provincial Therapeutics Committee.
5.1 The Hospital Therapeutics Committee
All district and provincial hospitals have their respective therapeutics committee
and established hospital drug formulary. Although the hospitals have their
existing committee, revitalization was done with the technical assistance of the
MHS-HSRTAP. Strengthening of the Therapeutics Committee was legally
supported by an executive order, stipulating the organization, functions, respon-
sibilities and scope. A training course was conducted. A series of seminars on
rational drug use, review on drug utilization and a seminar workshop with 7
points recommendation were conducted as part of health sector reform – techni-
cal assistance interventions to improve drug management system. Generic drug
utilization was encouraged during the seminar.
The committee decides and recommends drugs to be purchased and stocked in

hospital pharmacy. It requires doctors to submit the list of drugs used in their
prescriptions based on the ten leading causes of mortality and morbidity, as well
as the standards on clinical guidelines. Doctors and committee members calcu-
late their drug requirement based from the standard clinical guidelines using
mortality and morbidity statistics. The essential drug list is a requirement for drug
purchase request. The Hospital Therapeutics Committee also initiated a policy
188
on routing of prescription through hospital pharmacy. This policy is supported by Health Sector
a Sangguniang Panlalawigan resolution. Reform Technical
Assistance Project
The Provincial Therapeutics Committee is responsible for rational drug selection

and procurement. Majority of the members of the Provincial Therapeutics
Committee are doctors. The members of the Provincial Therapeutics Committee
are as follows:
Chair Provincial Administrator

Co-Chair Integrated Provincial Health Officer (Dr. Ely Villapando)
Member Prov’l. General Services Officer
Prov’l. Accountant
President of the Medical Society
Prov’l. Pharmacist
Chief of District Hospitals
Supervisor of 6 Community/Primary Hospitals (Calamboyan, Amio,
Nabilog, Tayasan, Pacuan, Inapoy and Luz Sikatuna)
BFAD and NGO representatives.
The Negros Oriental Provincial Hospital Therapeutics Committee is developing

the treatment guidelines that will serve as standards on the uniformity of treat-
ment and minimize treatment variation. All department heads of hospitals have
to sit down for finalizing the treatment guidelines. This is viewed as an improve-
ment in effect of capability building interventions (e.g., training).
The Bayawan District Hospital Therapeutics Committee conducts regular meet-

ing to discuss issues and concerns in drug management system, pharmacy
inventory and ensures that the essential drug list is followed. Procurement is
based on the PNDF and essential drug list. The hospital drug formulary is also
established. Choosing of drug brands is based on the clinical experience of
doctors on drugs prescribed for certain disease/s and length of drug’s effect to
patients. They purchase branded and generic amoxicillin. Patients’ choice on the
brand of amoxicillin prevails even if doctors prescribe and advocate the generics.
Members of the Therapeutics Committee prefer branded drugs, especially those

who are also connected with the private hospital. They have their own undocu-
mented experiences indicating that branded drugs are more effective than
generic drugs. As cited by some doctors in local health zones, “drug companies’
promotional strategies have nothing to do with doctors’ perception on branded
drug preference.” Promotional activities of drug companies in the area are very
minimal since the campaign for generic drug utilization.
5.2 Problems and Solutions Associated with Drug Management System
The identified gaps/problems/issues/concerns on drug management system are:

(a) lack of drugs and supplies due to limited budget, and (b) lengthy procurement
process/tall bureaucracy. The bottleneck in drug procurement was cited at the
PGSO. The process involves 56 signatories, which they now reduced to 39.
This is indicative of the tall bureaucracy in the LGU, which leads to the delay of
drug procurement.
189
The mode of procurement through bulk bidding has been a problem. Only 15% Health Sector
of their purchase requests were awarded during their bidding before. It took Reform Technical
Assistance Project
several months for re-bidding of remaining requests. Thus, the hospital man-
agement recommends direct purchase of drugs instead of the normal bulk
bidding process. They do not trust some drug companies and prefer direct
purchase from credible distributors.
Proposals to improve the Therapeutics Committee operations include: (a) multi-

stakeholder membership with equal representation of medical and non-medical
members in the Therapeutics Committee, and (b) develop a policy to counter
doctors’ preference. In Bayawan, they implement the drug utilization program by
monitoring doctors’ prescriptions, assess and make feedback.
The network of Inter-local Health Zones in the province of Negros Oriental is

referred to by its old name "district health system.” As early as 1981, Executive
Order 851 created health districts where the district hospital exercised supervi-
sion over all field health units. The rural health units (RHUs) and specialized field
health units served as the outpatient components of the district hospital. The
barangay health stations (BHS) served as extension of the RHUs. The same EO
merged the PHO and provincial hospital and integrated the promotive, preven-
tive, curative and rehabilitative components of health services. In 1987, the
District Health Office (DHO) was created by Executive Order 119 and patterned
after the World Health Organization model.
The district is defined as "a more or less contained segment of the national
health system which comprises a well defined administrative and geographic
area, either rural or urban and all institutions and sectors whose activities con-
tribute to improve health." The health district system consists of a large variety of
interrelated elements that contributes to health in homes, schools, workplace and
communities through the health and other sectors. It is described "a smallest
manageable health unit in areas small enough to be managed without being
hampered unnecessarily by bureaucracy yet large enough to make it feasible to
include most of the ingredients required for self reliant health care. (WHO,
1997).”
The district health system sought to achieve the following outcomes:
• Unity of command
• Holistic approach in health care
• Two-way referral system
• Sharing of facilities in manpower
• Constant monitoring and evaluation of service coverage (hospital and public
health) through district wide program review
• Updating of health information system
• Knowledge by the district health office of the health status of the entire
catchment area
• Integrated and realistic approach to planning and program implementation
• Allocation of budget for hospitals and catchment RHUs to district health office
190
The leaders of the health sector in the Negros Oriental explained that they really Health Sector
never broke away from the spirit of the district system, despite the onset of Reform Technical
Assistance Project
devolution that has been viewed as responsible for the fragmentation of the local
health system.
Congressman Emilio Macias II, a doctor by profession and one of the leading
exponents of devolution, became Governor of the province during the transition
to a devolved setting. He was committed to a strong health sector by virtue of his
profession and to devolution as shown by his political record. He would not allow
any of these two ideas to flounder as he was convinced that health, his center-
piece program, should continue to remain strong. Also, major stakeholders in the
health sector of the province who held important positions realized the impor-
tance of maintaining links with one another despite the fragmented organizational
structure that devolution brought about. Other health professionals (nurses,
doctors, etc.) in the province would explain that they had a health sector alliance
that included various types of health workers that was organized before devolu-
tion and continued to function after devolution. The health sector in Negros
Oriental manifests certain characteristics of maturity as evidenced by the close
cooperation with their strategic partners.
The Goretti Foundation, a church-based NGO together with the provincial

government and some municipal governments took note of the need for collabo-
ration in health and with encouragement from the DOH undertook advocacy work
for ILHZ. Silliman University is also an active partner in community health
research and social mobilization. Foreign funding agencies like the Belgian
Integrated Agrarian Reform Support Program (BIARSP) and the USAID took
interest in the integrated health delivery system and provided some funds for
some components of the projects. The Negros Oriental Provincial Health Board
passed Resolution No. 5 in 1999 recommending the development of six district
health systems province wide and the formation of the corresponding inter LGU
District Health Board.
Negros Oriental has organized six ILHZs that are also known as district health
systems or Inter-LGU Health Systems. The five districts and their corresponding
catchment areas and population size as of 2001 are as follows:
CVGLJ District Health System (19.7%)

a. Canlaon City 44,073
b. Vallehermoso 35,242
c. Guihulngan 1 49,536
d. Guihulngan 2 38,922
e. La Libertad 35,604
f. Jimalalud 25,288
Total population 228,665
191
Sta. Bayabas District Health System (17.4%) Health Sector
a. Sta. Catalina 74,833 Reform Technical
Assistance Project
b. Bayawan City 1 59,588
c. Bayawan City 2 48,729
d. Basay 19,429
Binata District Health System (9.8%)

a. Bindoy 31,370
b. Ayungon 41,709
c. Tayasan 40,000
Mama Bata Pa District Health System (23.9%)

a. Mabinay 1 33,999
b. Mabinay 2 33,931
c. Manjuyod 37,773
d. Bais City 71,795
e. Tanjay 1 32,566
f. Tanjay 2 36,693
g. Pamplona 30,777
NOPH District Health System (21.3%)

a. Dumaguete City 109,427
b. Datuin 22,285
c. Bacong 21,833
d. Valencia 22,816
e. Sibulan 36,658
f. San Jose 17,875
g. Amlan 17,082
SIAZAM Inter-local Health Zone (7.76%)

a. Siaton 68,794
b. Zamboanguita 21,227
Certain mechanisms have been put in place in support of the local health sys-
tems. Public health programs are handled by the RHUs and the barangay health
stations supported by the municipalities while a community health care financing
has been put in place through the Peso for Health initiative. The regulatory and
192
technical functions are implemented by the DOH through the regional office that Health Sector
has been renamed as the “Center for Health Development.” The district health Reform Technical
Assistance Project
system provides the organizational structure for integration of the local health
system.
6.1 Organizational Structure and Management Procedures
In terms of the organizational structure and management processes, the ILHZ

board is the unifying and coordinating body composed of representatives from
LGUs that contribute to the health zone operation:
• Provincial LGU representative

• Sangguniang Panlalawigan (SP) representative of the health zone
• IPHO
• Municipal LGU
• Association of Barangay Captains (ABC) President
• DOH representative
• Health insurance organization
• CHO
• MHO
• NGO/PO representative
According to the standard template of ILHZs in Negros Oriental, the ILHZ or

district health board shall have financial and policy-making functions to supple-
ment existing LGU policies. New ILHZ policies shall be presented and approved
by the provincial health board and the Sangguniang Panlalawigan. It also
approves the integrated health work and financial plan.
The ILHZ technical committee is composed of the technical staff from the RHU
and hospital personnel and assisted by the administrative staff designated by
participating LGUs on a part time or full time basis. Other members may include
the DOH representative or the patient representative. Technical assistance is
provided by the DOH and MSH. Meetings are convened on a monthly basis to
discuss the operations of the ILHZ based on the approved health work and
financial plan. It initiates a participatory health needs assessment that becomes
the basis of an integrated zonal plan for both the district hospital and the RHUs.
It also sets minimum standards for health services at all levels in conformity with
national health policies. It also plans a system of pooling human resources to
attend to leave of absence, retirement, etc.
The other local health boards (Municipal Health Board and the Provincial Health
Boards) mandated by the Local Government Code continue to exist. The mu-
nicipal health boards continue to meet regularly to discuss their internal affairs
and support or action needed by the ILHZ. The Provincial Health Board also
retains its function mandated by law. The PHO and the SP member in the ILHZ
present the district work and financial plan to the Provincial Health Board once a
year.
There is a separate District Hospital Health Board that is responsible for assuring
quality care and services in the district hospitals. It approves the hospital budget
and helps the Governor with the financial management of the hospital. It ensures
193
the participation and financial support from the LGUs and the community for Health Sector
hospital services. The Inter District Hospital conference and the bi-annual review Reform Technical
Assistance Project
led by the PHO have become the inter-zonal conference and participation has
been enlarged to include public health staff to be able to discuss ILHZ related
issues and problems. Issues that cannot be solved locally are elevated to the
Provincial Health Board for deliberation. Matters that require action of the
Sangguniang Panlalawigan are accordingly elevated to the SP for endorsement
or adoption of a resolution.
Each LGU member of the ILHZ is expected to implement its share of responsibili-
ties contained in the memorandum of agreement (MOA).
• The municipality with the help of its local health board is responsible for
formulating and implementing an integrated municipal health plan using the
framework identified in the Provincial/District Health Plan and based on
analysis of relevant information. It implements projects of the Integrated Dis-
trict Health Plan; enforces regulatory measures at the municipal level; man-
age, finance and maintain municipal health facilities; promote health together
with NGOs and the private sector; and conduct research for improvement of
health services. It commits to maintain one functioning RHU per 10,000 to
20,000 population and one BHS for every 3,000 to 5,000 population. It main-
tains the road network to facilitate referral among health facilities and pro-
vides transportation and communication facilities for emergency cases. It
provides financial and technical support for volunteer health workers like
BHWs and provides financial assistance to existing health projects.
• The province will formulate and implement the provincial/district policies and
plans in support of national health policies after an analysis of existing health
conditions. It provides administrative and technical assistance to district hos-
pitals and ILHZs. It manages and finances provincial/district and community
hospitals to meet PhilHealth requirements. It collects and analyzes health
information from the lower levels and submits reports to the DOH. It pro-
motes coordination among various sectors for health promotion. It conducts
or promotes training and research for better health services. It provides fi-
nancial assistance to ILHZs and conducts semi-annual assessment of ILHZ
health programs. It recommends the passage of laws to comply with the
Sanitation Code of the Philippines and it improves roads and provides trans-
port and communication facilities to improve access to health facilities. It as-
sists municipalities to fulfill their health roles.
• The DOH through the Center for Health Development Region 7 and DOH
representatives manages tertiary and specialized health facilities; provides
technical supervision of local health services; extends technical, logistic and
financial advice to LGUs; formulates and oversees implementation of health
regulations; collaborates with other sectors to formulate and implement hu-
man resources policies and plans; mobilizes external and internal funding for
health development; and conducts/promotes research for better health ser-
vices. The DOH through its representatives should maintain constant dia-
logue with ILHZs to play a lead role related to technical coordination;
establish a trust fund for community health projects from DOH and other
agencies; assist the LGUs in generating and allocating resources and find
194
qualified personnel for ILHZs; participate in LGU training needs assessments Health Sector
and make the necessary recommendations. Reform Technical
Assistance Project
6.2 Management of Health Funds
LGUs shall commit to progressively increase their health budget every year and
increase percentage allocated to MOOE, commensurate to the LGU financial
position. The LGU will contribute the equivalent of 1% of the 20% economic
development fund but taken from the general fund based on budget of the
preceding years. The ILHZ board shall establish a common health fund from the
LGU appropriation of member municipalities in the catchment area in addition to
other funds from other sources like foreign funding.
There may also be a health insurance fund, DOH grants, community financing
fund and other private sector contribution. All funds may be deposited to the
ILHZ account and disbursed in accordance to the integrated work and financial
plan. The common health fund should be deposited under one collaborating
LGU as agreed upon by participating LGUs and managed by the ILHZ Technical
Management Committee. The ILHZ Health Board and the technical manage-
ment committee (TMC) shall maintain separate books of account and keep
financial records available anytime for monitoring and auditing by an authorized
agency. The TMC shall submit a financial statement and narrative report.
6.3 Monitoring and Evaluation
The PHO, DOH and an NGO shall perform supervisory and monitoring functions
at all levels of the ILHZs. The St. Goretti Foundation, a private entity monitors
and evaluates periodically the ILHZ in Bayawan independent of the same func-
tion performed by the PHO and DOH. The NGO presumably performs the role of
an independent auditor that is capable of assuming an outsider or a client's
perspective in making its evaluation. Baseline and other surveys should assess
achievement in terms of ILHZ objectives.
6.4 CVGLJ District Health System
The CVGLJ ILHZ is made up of Canlaon City, Vallehermoso, Guihulngan, La

Libertad and Jimalalud and located in the northern part of Negros Oriental with
an extensive land area of 930.4 sq.km. The municipalities/city in the district
belong to different income levels with Canlaon as a third-class city; Guihulngan, a
second class municipality; Vallehermosa and La Libertad, both fourth class
municipalities and Jimalalud, a fifth class municipality and the poorest of all. The
top five leading causes of morbidity are ARI, diarrhea, skin disorder, malnutrition,
skeletal disorder while the top five causes of mortality are cardio-vascular dis-
eases, tuberculosis, pneumonia, malnutrition and hemorrhage.
The CVGLJ ILHZ is the first to be organized in Negros Oriental and serves as a
model for the other health zones. Initial talks between the health sector and
political leaders were held to explore the mechanics of forming an ILHZ. During
this period, the Belgian government through its Belgian Integrated Agrarian
Reform and Support Project (BIARSP) was looking for a project to fund in
agrarian communities. DOH identified Negros Oriental as a possible recipient of
195
foreign funding and the possibility of BIARSP funding for the formation of the Health Sector
ILHZ was explored. The local LGUs seized the opportunity to upgrade health Reform Technical
Assistance Project
facilities in their respective areas.
Chair Governor or his representative (automatic)

Vice Chair Mayor (chosen)
Secretary Elected member
Members Other mayors
PHO
DOH Representative (province)
NGO representative
PO Representative
Executive Director (Health District MANCOM)
DAR Representative
Belgian Integrated Agrarian Reform and Support Project (BIARSP)
Project Management Officer (during project time)
The CVGLJ health zone’s vision is to create a healthy and empowered ILHZ
community through integrated quality health services that are accessible, afford-
able and sustainable have been adopted in other health zones. The composition
of its District Health Board has served as model for other ILHZs in the province.
The main function of the District Health Board is policy making and overseeing
the finances of the district. Its specific functions include:
• Setting up a health district organizational chart,

• Formulating policies toward an integrated health care system
• Approving an integrated health work and financial plan,
• Creating a common health fund,
• Acting as communication channel for health services,
• Appointing or dismissing MANCOM members,
• Holding monthly management meetings with partners or as needed for the
proper operation of a health district.
The board also takes up matters related to requests for capital outlay (vehicles,
renovation, etc.), distribution of ILHZ personnel, training programs and approves
the district strategic plan drawn from inputs from its constituent units (hospitals
and public health facilities). A district health management committee (MANCOM)
has been created to assist the ILHZ board and its members are representatives
of various positions from the health sectors
The function of the MANCOM is to provide technical assistance to the District

Health Board to manage the day-to-day operations of the health services and to
oversee the hospital and public health functions as well as activities of the private
sector and other government agencies. It also provides advice regarding health
personnel matters and manages the health zone trust fund. In addition, the
members of the MANCOM are also responsible for the rehabilitation of facilities,
community organizing, health information, referral, supervision, monitoring and
evaluation, training, drugs and supply management, health insurance and
general management.
196
The ILHZ board maintains a common health fund derived from BIARSP funds Health Sector
and contribution from the participating municipalities. The CVGLJ district has Reform Technical
Assistance Project
been registered with the Securities and Exchange Commission and the board
has opened a bank account for the common fund. The board has the power to
decide how the funds are to be disbursed.
Health District Budget for 2000, CVGLJ District Health System,

Negros Oriental, 2000
1. PERSONNEL SERVICES
Honorarium for MANCOM for 12 months (12 members) 252,000.00
Honorarium for District board for 12 months (6 members) 86,400.00
Utility worker 25,080.00
Sub-total P 363,480.00
2. MOOE
Operating expenses 95,000.00
Purchase of emergency drugs and medicines 120,000.00
Other services 21,520.00
Sub-total P 236,520.00
3. Capital Outlay
Health insurance 600,000.00
Drug recycling 1,000,000.00
Sub-total P1,600,000.00
Total P2,200,000.00
Source: CVGLJ Inter-LGU Health Zone Profile, Negros Oriental, 2001
The district hospital is the Governor William Villegas Memorial Hospital and is
located in the municipality of Guihulngan. It is accredited by DOH as a secondary
hospital, but only as a primary hospital by PhilHealth. It has an authorized
capacity of 75 beds but implements only 50 beds because of resource con-
straints. The occupancy rate showed a steady decrease from 103 % in 1992,
94.36% in 1995, 80.19% in 1997 and 68% in 2000. The average occupancy rate
was 34 patients per day and the average length of stay per patient was 4 days.
Some residents in Vallehermosa prefer to go to the San Carlos City Hospital,
which is nearer their place than Guihulngan. It is cheaper for them to go to San
Carlos and they also think that it has better facilities.
6.5 STA. BAYABAS ILHZ
The STA. BAYABAS district covers within its catchment area the municipalities of
Sta. Catalina and Basay and Bayawan City. It is located in the southern part of
Negros Oriental. The district hospital compound in Bayawan also serves as the
district health office. The district's adult population is made up of seasonal
agricultural workers or sacadas employed in the nearby sugar facilities, small
farmers and fishermen.
The ILHZ in STA. BAYABAS was set up by Dr. Fidencio G. Aurelia, the Bayawan
Dsitrict Hospital chief. Given his experience in setting up the ILHZ in Guihulngan,
he improved on the previous strategies to set up the STA. BAYABAS ILHZ with
the use of his social marketing skills. He was successful in making each of the
three LGUs pass a resolution to authorize their mayors to join the ILHZ collabora-
197
tion. The Sangguniang Bayan of Bayawan, Basay and Sta. Catalina met in joint Health Sector
session on August 8, 2000 at the Bayawan Market Social Hall to adopt the draft Reform Technical
Assistance Project
of the memorandum of agreement for the creation of the STA. BAYABAS district
health system. Subsequently, all the three areas agreed to put up a common
health fund with their contribution being determined by their income and type of
LGU. Bayawan City contributed P200,000, Sta. Catalina contributed P150,000
and Basay contributed P130,000 with total initial contribution amounting to
P480,000. Bayawan City as the site of the district hospital acts as trustee of the
fund.
The absence of foreign funding at the setting up stage makes the STA.
BAYABAS model different from the CVGLJ model. While foreign funding is
perceived to have jumpstarted the ILHZ in Guihulngan, STA. BAYABAS has
successfully launched its ILHZ by relying on goodwill and funds from the LGUs
within its catchment area. Foreign funds came later when the STA. BAYABAS
ILHZ has stabilized. The local health fund has been augmented by foreign funds
from the Matching Grant Program that contributed P500,000 per municipality to
improve family planning and maternal and child health services.
The Bayawan District Hospital serves as core referral hospital of the STA.
BAYABAS convergence area that networks with RHUs (Bayawan RHU I, Bay-
awan RHU II, Sta. Catalina RHU, Basay RHU), their BHS network as well as
nearby primary hospitals (Kulombayan Primary Hospital and the Amio Primary
Community Hospital). The top five causes of morbidity are gastro-intestinal
disorders, bronchitis, ARI, pneumonia and UTI. The top causes of mortality are
pneumonia, gastroenteritis, meningitis, and tuberculosis. The District Health
Board has the same composition as CVGLJ and is also referred to as the Ex-
panded Hospital Health Board.
The St. Maria Goretti Foundation has been designated as the NGO representa-
tive in the ILHZ board and has been given the monitoring and evaluation func-
tion. The health workers themselves do internal monitoring, while Goretti, which
looks at the implementation of the health agenda and action plan, also does
external monitoring. A Technical Management Committee (TMC) made up of
health providers has been formed to be fully responsible for the operational
management of the district health system.
6.6 BINATA ILHZ
The BINATA ILHZ is composed of three municipalities: Bindoy, Ayungon and

Tayasan. The total district/health zone population is 110,165. Their health
needs are being served by a district and primary hospitals, 3 RHUs, 30 BHSs
and 2 private clinics. Even prior to the formation of inter-local health zones, the
features of the former district health system were evident under a devolved
setting. The organizational linkages were further reinforced through USAID’s
Local Partnership Project (LPP) Matching Grant Program. The formation of the
BINATA inter-local health system and the health sector reform convergence
strategy enabled the LGUs to commit resources to health as part of a holistic and
integrated approach. The local health officers at the province and district levels
met with the local chief executives to forge agreements for a better and improved
local health system.
198
Health Sector
The formation of the BINATA ILHZ was supported by local legislation from each Reform Technical
Assistance Project
member LGU. Resolution No. 72, series 2000 of Bindoy authorized its mayor to
enter into a memorandum of agreement with the provincial government and the
municipal governments of Ayungon and Tayasan to form a partnership and
cooperate for the establishment of an inter-local health zone. The Sangguniang
Bayan from each municipality passed and approved a Board resolution to adopt
and support the BINATA ILHZ. Resolution No. 63, series 2001 (Bindoy, ap-
pended document) is a legal evidence of LGU’s commitment to an integrated
health care system within a health zone. The formal signing of the ILHZ Memo-
randum of Agreement was on February 6, 2002.
The ILHZ organizational structures were formalized one month after the MOA
was signed in March 2002 and 18 members were made to constitute the ILHZ
board. Like other Negros Oriental district boards, the overall/honorary chair is the
governor while the co-chair/acting chair is the Sangguniang Panlalawigan
member. One of the 3 LCEs serves as vice chair while the other 2 are members.
The other members are: the Sangguniang Bayan Health chair of the 3 LGUs,
Chief of Bindoy District Hospital, MHOs, resident physician of Nabilog Commu-
nity Primary Hospital, representatives from the religious sector, IPHO, DOH,
Hospital (District chief nurse) and NGO. The board functions as the coordinating
and policymaking body of the health zone, while the execution and management
of health reforms are under the Technical Management Committee (TMC). The
BINATA TMC was formed by the ILHZ Board. It is chaired by the Chief of Bindoy
District Hospital, with the 3 MHOs as vice chair and 17 other health service
providers from the staff of the hospital and RHUs as members.
A common health fund was created with the LPP-MGP providing P500,000 for
each member municipality for a total of P1.5 million and a counterpart contribu-
tion of P150,000 from each of the 3 municipalities amounting to P450,000. The
money is deposited in a trust account of Bindoy, the depository LGU and its
mayor and treasurer are authorized by the BINATA ILHZ to do business transac-
tions related to fund management and safekeeping.
Various local stakeholders of BINATA ILHZ implement the agreed activities. An

important activity is the on-going community-based monitoring and information
system in every barangay for each LGU. The training of BHWs on the proper
conduct of the CBMIS and family planning have been done and has become a
continuing activity of the health zone. Part of the common health fund has been
utilized for CBMIS training of BHWs. The ILHZ is also responsible for the com-
plementation of resources in terms of manpower and services within and among
the health zone members.
The following constitute the gaps and bottlenecks in implementing the ILHZ:
• The hospital is not ready in terms of resources (budget, manpower, logistics,

etc.) to cater to Indigency Program enrollees.
• The hospital management does not admit any patient, including indigents,
without any deposit. This policy was adopted by hospital management to en-
sure that patients would comply with PhilHealth requirements for the hospital
199
to avail of PhilHealth reimbursement. Based on their experience, there were Health Sector
patients that never returned to the hospital to settle their bills. Reform Technical
Assistance Project
• Some health providers manifest an indifferent attitude toward patients.
It is proposed that there should be an upgrading of hospital facility, equipment

and services and additional hospital staff should be hired. There should also be
a leveling off among LGUs, the PhilHealth personnel and hospital staff to iron out
differences and improve organizational effectiveness.
The public health programs in the BINATA health zone have been improved with
the accreditation of 3 RHUs by PhilHealth. These public health facilities are able
to provide outpatient services to all types of patients including the indigents. The
solid waste management program has also been incorporated as part of public
health. Furthermore, a community based monitoring information system
(CBMIS) has also been put in place to watch out for the outbreak of epidemics
and other illnesses.
6.7 Provincial Referral System
The first workshop conference on strengthening the referral system was on

February 20 –22, 2002. The referral system is one of the nineteen (19) concerns
and areas identified for hospital reforms. The objective of the activity was to
come up with a comprehensive and improved healthcare delivery system.
The most recent update of the draft of the referral system was presented and
some important points were discussed. The issues were: (a) flow from MHO to
RSI, (b) flow of patients at the BHS and RHU/CHO (change RSI in line with
PHN/RHN), (c) policy on direct or walk-in patients from municipalities, a referral
is required by Negros Oriental Provincial Hospital and District Hospitals, City and
Municipal Health Offices, and (d) flow chart of patient in the ILHZ referred for
treatment or laboratory examination and refining the system further to minimize
discomfort to the patient.
The reason for referral is limited resources and services in a referring unit. One
limiting factor cited by the MHO within the Bais ILHZ is the preference of the
patient to go to the provincial hospital instead of the district hospital in their ILHZ.
They cited comparative advantage of NOPH over the District Hospital in terms of
available services, doctors, medicines and supplies. Likewise, it also redounds
to patients’ preference. They don’t like transferring from one referral facility to
another co-referral facility (e.g., from the District Hospital to NOPH). On the
contrary, Bais District Hospital has the technical capability compared to other
District Hospitals. It has twelve well-trained doctors. It took time convincing the
MHO to change her and clients’ frame of mind on facility preference vis-à-vis the
developed referral system.
It was emphasized that one of the pillars of the health sector reform is decentrali-
zation of health care delivery system. Local health facilities need to be upgraded
to solve congestion at the NOPH, which caters referrals from six municipalities
within the Dumaguete ILHZ and the whole province. With this strategy the
preference of patient to go to the provincial hospital might decline.
200
Health Sector
7. Best Practices Reform Technical
Assistance Project
Negros Oriental sets the pace in the establishment of inter-local health zones as
the whole province has been subdivided into 6 zones. Its success in the creation
of effective structures in its local health system is due to the following factors:
• The legal framework is well defined, as there are resolutions at all legislative
levels from the Sangguniang Panlalawigan to the Sangguniang Bayan to
support the health district system and establishment of the Provincial Thera-
peutics Committee.
• There is financial support from the LGUs that have contributed to the com-
mon health funds that support the activities of the health district system.
There is a tradition and a culture that health is a priority and politicians outdo
each other to present more innovative schemes to promote health.
• The various health boards at all levels are operational. The Provincial Health
Board meets regularly to take up province-wide concerns; the health district
boards are active and have set up common funds to run their operations; the
hospital boards perform policy and financial functions; the local health boards
at the municipal level continue to meet to discuss local concerns.
• Hospitals are given some form of financial autonomy as they are allowed to
keep their income. The hospital boards approve a work and financial plan to
determine hospital expenditures. The user fees in the hospitals are kept in
trust by the Provincial Treasurer and supplemental budgets are approved by
the SP to enable the hospitals to access these funds.
• There is NGO and PO support for the ILHZs as shown by their active mem-
bership in the various boards. In Negros Oriental, the NGOs do not only per-
form medical missions. The health workers alliance is active in promoting the
interests of the health workers while the Goretti foundation performs monitor-
ing and training functions. Various rooms in the provincial hospital have been
renovated from contributions from civic organizations and private individuals.
• There is community health financing into the health district concept among
the major stakeholders from the form of the Peso for Health. It is an innova-
tive program that is affordable and enables poor members who have no
money to contribute in kind to pay their monthly contributions. It encourages
people to take care of their health, since they are made to cover part of the
costs through their contributions.
• Requiring certificate of good manufacturing practice as one of the criteria for

supplier accreditation is considered a good practice in drug procurement to
get rid of fly by night suppliers and ensure quality of drugs.
While Negros Oriental is successful in organizing its inter-local health zones, in

achieving some form of fiscal autonomy for its hospitals in doing pooled drug
201
procurement and in creating community-based health financing scheme, its Health Sector
weakest link in its convergence strategy is its PHIC Indigent Program. Reform Technical
Assistance Project
8.1 Challenges for the PHIC Indigent Program
With the successful implementation of small scale and community managed

social health insurance in the province of Negros Oriental, there are so many
challenges for PHIC. There seems to be a need to establish strong inter-local
health zone (ILHZ) interface with PHIC to facilitate a well-coordinated program
implementation. The STA. BAYABAS health zone is a strong ILHZ but there is
no Indigency Program in the area because there is no guideline interfacing the
Peso for Health and Indigency Programs. LCEs are not convinced of the Indi-
gency Program.
Extensive advocacy on social health insurance/IP coupled with RHU accredita-

tion to increase coverage must be undertaken. This challenge requires man-
agement complementation between Regional and Provincial Field Service
Offices and additional staff to conduct orientation and other information dissemi-
nation activities, monitor and follow-up LGUs on their applications. Although
PHIC presented the program to all LGUs since 1999, still there is a need for
another presentation to the new set of elected officials. Demonstrate success
stories to encourage other political leaders is also part of the advocacy chal-
lenge.
It was also found out that majority of PhilHealth members and beneficiaries are
not aware of their benefits and privileges. Hence, there is a call for intensive
information dissemination on members’ benefits and privileges. Dr. Espallardo
cited a strategy on addressing the aforementioned concern by printing the
benefits and privileges of members at the back of PhilHealth member’s identifica-
tion card.
There is also a need to adopt the bottoms-up approach in program implementa-

tion in order to come up appropriate interventions and effective policies. The
regional office should not wait for the national office in taking the initiative/s for
program sustainability. It should also be allowed to introduce modification into
the Indigent Program for smoother and sustainable implementation, such that:
• Lobby LGUs’ proposal for amendment of the law on step increment of premi-
ums cost sharing scheme. Majority of LGUs are apprehensive on their ca-
pacity to cover the 50:50 cost sharing in the 5th or 6th year. In the case of
Cebu for instance, Glaxo Drug Company is willing to cover 2,000 families but
the LGU refused it because of sustainability issues/concern.
• Interface mechanism of enrolling Peso for Health members in the Indigency

Program. The District Health Officer of STA. BAYABAS is working on it. Re-
insurance schemes should be liberally adopted to supplement and not mo-
nopolize social insurance activities.
• Advocate on improvement of health facilities first before Indigency Program

enrollment. It happened in one district that the LGU is entitled to the capita-
202
tion fund but the LGU cannot utilize the money because there is no accred- Health Sector
ited facility. Reform Technical
Assistance Project
Based on the experience of the province, the strong advocacy of health providers
is also instrumental in encouraging the LGUs to participate in the PHIC Indigent
Program. At the start, all district hospitals were downgraded by PHIC; thus each
district hospital tried to improve and upgrade their facility. It caused strained
relationship between PHIC and hospital management and health providers,
which affects the attitude and extent of advocacy efforts of health providers on
the Indigency Program.
In the experience of Amlan, the members’ and barangays’ counterpart for the
premium may also be adopted to instill a sense of responsibility to the beneficiar-
ies of the program. Bindoy and Amlan indigents and barangays have their
counterparts for the premiums in order to sustain the program. The municipality
of Bindoy has developed a cost sharing scheme for the next 5 years of imple-
menting the PHIC indigent program. The cost sharing scheme was designed to
make the program sustainable with emphasis on self-reliance on the part of the
patient and local government.
8.2 Policy Directions of the Province on PHIC Indigent Program
With the cited scenario, the Provincial Government with City and Municipal LGUs
are now conceptualizing their own local health financing scheme (e.g., they
generate P15 million and at the same time expanding benefit package). They
feel that if they manage their own resources, they can facilitate the process and
ease service utilization. This will minimize the lengthy process of PHIC. More-
over, the money is with them (PLGU), not with PHIC and will revolve within the
province. However, there is an apprehension on the sustainability of local health
financing since local investment is limited and rates on investment are low.
203
Health Sector
Appendix 1. Key Informants and FGD Participants. Reform Technical
Assistance Project
PHIC Region 7
1. Ms. Jenet Ann R. Ayson, Indigency Program Unit
2. Ms. Flavia U. Aranas, Indigency Program Unit
3. Dr. Agnes Dizon, Accreditation Unit
4. Mr. William Chavez, AVP/Regional Manager
5. Mr. Paul Oyales, Service Field Officer,Negros Or.
IPHO
6. Dr. Ely Villapando, Integrated Provincial Health Officer and Chief of Provincial
Hospital
7. Dr. Virgilio Cines, Chief, Bais District Hospital
8. Dr. Ma. Elizabeth Sedilio, Municipal Health Officer, Tanjay
9. Ms. Emalyn M. Gadingan, Chief Nurse, MOPH
PGSO
10. Atty. Ismael Martinez, Provincial General Services Officer
STA. BAYABAS ILHZ

11. Dr. Fidencio Aurelia, Chief, Bayawan District Hospital
12. Ms. Flor Pagaduan, Program Officer, Peso for Health
13. Ms. Sabina Valde, Client informant/wife of patient
14. Mr. Leonardo Valde, Client informant/patient
15. Dr. Victor O. Nuico, Municipal Health Officer, Sta, Catalina
16. Dr. Jacqueline Ann Borja, Municipal Health Officer, Valencia
17. Dr. Edalin L. Dacula, RHP, Bayawan
18. Dr. Estephen S. Estacion, Municipal Health Officer, Bayawan
19. Ms. Helen Gagoa, Chief Nurse
20. Ms. Lucia C. Canto, President, Federation of BHWs
SIAZAM ILHZ
21. Dr. Sozelon Zerrudo, Chief, Siaton District Hospital
22. Ms. Rica Gaga-a, Chief Nurse
23. Ms. Donna Villadolid, DOH Representative
24. Ms. Jocelyn Ege, Administrative Assistant, ILHZ
204
VIII
Health Sector
Reform Technical
Assistance Project
PASAY (NATIONAL
CAPITAL REGION)
Pasay City is the third smallest political subdivision in the National Capital
Region. It is adjacent to the City of Manila and is bounded to the south by
Parañaque, to the northeast by Makati and Taguig and to the west by Manila
Bay.
In 1995, Pasay City had a population of 408,610 (National CSP statistics up-
date). There is considerable movement of migrants into the city's low-income
areas. Zone 20 has the highest growth rate, which is due to the proliferation of
squatters in the area. Zone 6, a blighted area, has the second highest growth
rate. The average Pasay household is 7 persons per household. The city has a
total of 73,846 households.
2. Convergence in Pasay
The Health Sector Reform Convergence Workshop under the auspices of the
Department of Health (DOH) and Management Sciences for Health (MSH), with
USAID funding support, was conducted at the Heritage Hotel, Pasay City, on
October 11-12, 2001, with the theme "Tulong Sulong sa Kalusugan.” The aim
was to facilitate the adoption and implementation of the Health Sector Reform
Agenda (HSRA) at the local level. Pasay City is among the advance implemen-
tation sites of the HSRA. The workshop focused on the five components of the
Health Sector Reform Agenda, which are:
• Hospital Reforms
• Social Health Insurance
• Drug Management
• Local Health System
• Public Health
At the end of the workshop, the Pasay City Mayor and the members of the
Sangguniang Panglungsod, along with other stakeholders, pledged to carry out
the five reform components for the next three years by signing a Memorandum of
Agreement.
205
3. Gains in Social Health Insurance Health Sector
Reform Technical
Assistance Project
In social health insurance, Pasay City, as one of the pilot areas of the Health
Passport (now PhilHealth Plus) set the following targets to be achieved by year
2004: 15,000 indigent households enrolled, 100% of business establishments
PhilHealth registered, a 20% increase in enrollment in the Individual Paying
Program (IPP), expanded benefits to indigents, monitoring system installed in all
health centers, and a permanent functional PhilHealth Office at the City Hall.
3.1 Pasay City Health Passport Initiative
On December 9, 1997, after a series of meetings with the City Health Officer
(CHO) and the Department of Social Welfare and Development (DSWD), the City
council passed and approved a resolution (No. 978-S-1997) adopting a National
Health Insurance Program R.A. 7875. This became known as the National
Insurance Act of 1995. This authorized the appropriation of funds from the city
treasury for the development of an indigent health insurance package. Vice
Mayor Wenceslao B. Trinidad was authorized to enter into an agreement with the
Philippine Health Insurance Corporation. In 1998, the City granted P2 million for
the project. This was increased to P4 million in 1999, P5 million in 2001, and P6
million for 2002. The program was piloted in December of 1999. A memoran-
dum of agreement was signed in February of 2000 and the program was pro-
moted to the public though a launch in June 23, 2000 held at the Cuneta
Astrodome with then President Joseph Ejercito Estrada.
In this program, the Local Government Unit (LGU) provides insurance premiums
with a counterpart contribution from PhilHealth. The package includes an
outpatient consultation and diagnostic benefit package that covers primary
consultations with general physicians and basic laboratory examinations (i.e.
chest x-ray, CBC, fecalysis, urinalysis, and sputum microscopy). This is provided
by the different health facilities of Pasay City. After the primary consultation, the
enrollee may be referred to a PhilHealth accredited facility if warranted. A
referral system has been designed for this purpose.
Other LGU support came in the form of institutional development and quality
assurance services. Institutional development includes upgrading of facilities
(provision of infrastructure and equipment), human resource development and
manpower augmentation. Quality Assurance includes certification of health
facilities. All Pasay City Health facilities have been certified as Sentrong Sigla
awardees. Also, all Pasay City Health facilities are accredited by the PhilHealth.
The Health Passport initiative was not without problems. At the start, 1,990 were
recruited. DSWD workers did the initial recruitment. However, on validation of
the initial enrollees, 77 were found to be unqualified. Recently, the Pasay city
treasurer has requested that validation of enrollees be certified by the office of
the City Health Officer. The tool used for determining eligibility is the means test.
A family data survey form is accomplished. This takes into account the educa-
tional attainment, occupational skills, employment status, monthly income, and
insurance benefits of each household member.
206
Health Sector
Reform Technical
Assistance Project
Figure 1. Algorithm for Primary Consultation and Referral.

PhilHealth
member/dependent
* Presents PhilHealth ID card
MIDWIFE
* Verifies if the indigent is in the list
* Gives the family card
* Finds the family envelope
* Records the member’s chief complaint
and vital signs in the clinical record
* For follow-up/contiuation of management, e.g., dressing of
wound, continuation of injection
PHYSICIAN
* With chest x-ray result * Examines and evaluates the patient
* Laboratory procedure is not needed * Registers patient in

* Needs referral * Diagnostic procedure is needed the laboratory logbook
* Prescribes the indicated medicines * Fill up request form * Performs the
indicated procedure
* Gives result to the
physician
NURSE/MIDWIFE MEDICAL
TECHNOLOGIST
* Not for referral

* Gives relevant home teachings
* Fill up referral slip * Registers the indigent in the Patient
Treatment Summary
HOME
* For further evaluation

and management
* For chest x-ray
PhilHealth
Accredited
PhilHealth Hospital
Accredited/
Authorized
Government
facilities with x-ray
services Admitted
(PhilHealth in- HOME
patient package
HOME
Legend
benefit is within the OPB
benefit is available but not within the OPB
207
Health Sector
In addition, disabilities, health and nutritional status as well as immunization Reform Technical
Assistance Project
status are noted. The total monthly household/ family income, total annual
household / family income and the annual per capita income are computed.
Previously, if this amounts to P14,000 and below, the family will be eligible for the
indigent insurance program. This cut-off was a bit stringent and many house-
holds, although poor, were not eligible for enrollment. Recently, the cut-off level
has been adjusted to P18,000.
For year 2002, the local government increased its contribution to P6 million and
its target number of enrollees to 10,000. Because of the active and dedicated
staff of the City Health Officer, more than 8,000 new households have already
been enrolled within a 6-month period.
According to Pasay City General Hospital director Dr. Oscar Linao, convergence
efforts in the area of hospital reform have only recently started. Even prior to the
convergence meeting, however, the director points out that hospital reform and
physical improvement has already been ongoing. The hospital improved from an
initial 50-bed capacity to a 150-bed capacity hospital in 1999. As a testimony to
an improvement in hospital capability, the hospital was classified as tertiary in
August 31, 2000.
Events that led to this improvement include the accreditation of the hospital
training programs, and upgrading of the equipment and hospital facilities. Pasay
City General Hospital boasts of accredited residency training programs in Pediat-
rics, and Obstetrics and Gynecology. The departments of Internal Medicine and
Surgery are scheduled for visitation and possible accreditation this year. Defi-
ciencies in imaging requirements and dialysis have prevented accreditation in
internal medicine, but this is being addressed. The presence of accredited
residency training programs has been observed to improve patient care and
hospital services in general.
Along with the expansion of services is a corresponding increase in hospital staff.

This currently reaches around 255 and consists of consultants in various special-
ties, resident physicians, chief residents, and support personnel.
Table 1. Hospital Personnel.

Medical 53 Consultants in various specialties/subspecialties
37 Resident Physicians
4 Chief Residents
Administrative 49 Personnel
Nursing 85 Personnel
Ancillary 27 Personnel
208
Upgrading of equipment and hospital facilities is the second strategy that has Health Sector
been instrumental in the improvement of hospital services. The important Reform Technical
Assistance Project
revenue centers of the hospital have been identified to include the radiology
services, the pharmacy, and the laboratory. The procurement of an ultrasound
machine in year 2000 significantly increased hospital revenue since all of the
hospital's ultrasound examinations could be done in-house. Similarly, in the
laboratory, the purchase of culture and sensitivity equipment also increased
hospital revenues. The only non-performing cost center is the pharmacy. At the
moment, the hospital finds it difficult to improve pharmacy services because drug
purchasing is done at the local government level.
Other problems were outlined by the hospital director. The most important is the
non-issuance of the approved hospital budget. In year 2001, the approved
hospital budget was P14 million. Only about P7 million of this was given to the
hospital. This led to problems with the procurement of supplies, reagents, and
the provision of dietary privileges for the patients and hospital staff. Despite the
deficit, the hospital still managed to earn P9 million. Because of this, the director
is looking forward to pushing for fiscal autonomy. Representations and consulta-
tions have already been made with the Vice Mayor, the city council, and the city
treasurer. It is envisioned that the LGU can still provide the budget for operations
and personnel services but the hospital should be allowed to manage and re-
invest its own income. Lobbying will be done to push for a council resolution in
this regard.
The hospital is also working on a comprehensive equipment maintenance

program. This is done in cooperation with the Arci Cultura Svillupo, an Italian
NGO. The NGO has already prepared the necessary documentation of the
equipment situation of the hospital. The program still needs to be presented for
approval and implementation by the city council.
As far as convergence activities are concerned, the hospital is in the process of

reviving the Quality Assurance teams and committees of the hospital. Once this
is done, there will be problem identification and application of Total Quality
Management (TQM) principles to address these problems. At present the
infection control committee and the therapeutics committee are practically the
only ones that are functional. According to the director, their clientele now has
wider coverage. The patient profile of PCGH now includes patients coming from
Taguig, Cavite, and Laguna.
Table 2. PCGH Thrust.

Development thrust for PCGH.
• Fiscal autonomy
• Improvement of the pay wards and pay services
• Additional medicare rooms for Internal Medicine, Pediatrics and Surgery
• Repair of the present imaging facilities
• Procurement of another ultrasound machine
• Procurement of Computerized Tomography (CT) equipment
• Creation of a program or revitalization of the hospital cooperative to ensure availability of supplies and reagents
for the laboratory and X-ray facilities.
• Accreditation of Internal medicine and surgery residency training programs for the year 2002.
209
Health Sector
5. Gains in Drug Management Reform Reform Technical
Assistance Project
Based on an interview with Dr. Cesar Encinares, the Health Operations Division
chief of Pasay City, a centralized drug procurement program is in place in the
city. The local government procurement program, however, only serves to
augment the drug supplies provided for by other regular sources. These other
sources include the Department of Health, the Sentrong Sigla fund, the Phil-
Health capitation fund, UNICEF (which provides vitamins and iron), and the
drugs provided under the LGU Performance Program (LPP). Local government
procurement, therefore only makes up a small percentage of the total drug
supply of the city health system. However, the centralized local government
procurement program makes up for all of the drugs and supplies of the Pasay
City General Hospital.
The presence of a centralized drug procurement program, however, has not

resulted in a lowering of drug prices. The City Health Office has enrolled in the
parallel drug import program of the Department of Trade and Industry (DTI).
However, the list of available drugs for parallel import is limited and as of this
report, the hospital's purchase order has not yet been filled.
5.1 Constraints and Limitations
First, an active therapeutics committee does not determine the drug needs. At
the health center level, the medical staff (more often the physician) determines
the needs. In the Pasay City General Hospital, the therapeutics committee is
new and not yet fully functioning. This means there is no rational method of
determining which drugs are very essential, essential or necessary, or top
priority. There is no hospital drug formulary in the PCGH.
Second, the drug purchase program has to work within a budget. Thus, even if
the health centers and hospital determine a need, if this need is over the budget
allocation or cannot covered by the budget, the purchase cannot be made. At
the health center level, all the drugs are given for free and the local government
purchase makes up only a small proportion of the total drug supply of the center.
In the PCGH, the hospital is dependent on the centralized procurement program
for its drug supply. The needs of the hospital cannot be met by the budget for
drugs and supplies.
Given this constraint, the hospital will always lack drugs and supplies. This is
one of the arguments for fiscal autonomy. With fiscal autonomy, the hospital will
be allowed to manage its revenue centers (laboratory, imaging, and pharmacy).
The reinvestment of income derived from the pharmacy will ensure an adequate
supply of drugs and reagents.
The city of Pasay prides itself on having a very efficient and functional local
health system. Local health has always been under the Local Government Unit
and has not been affected by devolution. The city has been divided into zones,
each of which has a local health center that serves a well-defined catchment
210
area. The number of households and members are registered per barangay. Health Sector
The front liners are the Baranggay Volunteer Health Workers (BVHW). The Reform Technical
Assistance Project
BVHWs take care of the primary and public health needs of each household.
They concern themselves with the promotive as well as the preventive aspect of
disease such as nutrition, public sanitation, water supply, and specific disease
conditions that may arise such as dengue outbreaks.
Should there be a need, patients are referred to the Local Health Center using a
well-defined referral system. A physician who is directly under the City Health
Officer mans the local health center. The BVHWs have undergone training in
Integrated Management of Childhood Illnesses (IMCI) in 1999 under a research
conducted by Dr. Lulu C. Bravo of the University of the Philippines College of
Medicine, sponsored by Arci Cultura e Svillupo . The BVHWs have also under-
gone training in the referral system (under a research authored by Dr. Sandra
Tempoko) and values formation (under a research by Dr. Jaime Z. Galvez Tan)
on the same year. These training programs and the strong Social Health Insur-
ance program have contributed to the success of the Pasay City local health
system.
Equally important in addressing the health needs at the Barangay level is the
relationship of the health workers and City Health Office with the Barangay
Captains. The CHO conducts community assemblies and maintains a harmoni-
ous relationship with the Barangay Captains. It was pointed out by the CHO that
the presence of committed and dedicated BVHW is one of the secrets of the
Pasay City Local Health system. The BVHWs are volunteers but they have
maintained the respect of the community due to their genuine concern and
commitment to the promotive and preventive aspect of community health.
The City Health Officer oversees 11 health centers, 1 lying in clinic, 1 STD clinic,
1 employees' clinic, and 1 pharmacy. To date, all 11 health centers have been
certified by the DOH as Sentrong Sigla awardees. On the first year of the
Sentrong Sigla awards, 6 of the 11 health centers of Pasay City were awarded as
among the first 45 awardees. The Doña Marta Health Center was awarded as
one of last year’s Sentrong Sigla National Awardees and the Kalayaan Health
Center has just been named an awardee. The inclusion of 6 Pasay City health
centers as Sentrong Sigla awardees in the first year of the Sentrong Sigla
program has been hailed as the biggest achievement of the Pasay City Health
Office. This is the most number of national awards given to a single city or
municipality in the nationwide search for outstanding health facilities with quality
health services.
Based on an interview with Dr. Pilar Perez, the current City Health Officer, the
success of Pasay in upgrading its facilities, services, and personnel can be
attributed to its former City Health Officer, the late Dr. Elvira M. Lagrosa. Dr.
Lagrosa personally visited the health centers and along with her staff assessed
what it would take to make the health centers qualify for a Sentrong Sigla award.
The most difficult was upgrading of the infrastructure to provide interview areas
and examination areas. With the help of then Mayor Jovito Claudio and a soft
loan from the World Bank under the Urban Health and Nutrition Program (UHNP)
of the DOH, Dr. Lagrosa succeeded in upgrading all 11 health centers. She
made her staff undergo capacity building and provided training for her personnel
211
in quality assurance. Dr. Perez also relates the resourcefulness of Dr. Lagrosa in Health Sector
assembling an improvised food testing kit. Reform Technical
Assistance Project
This remarkable performance by the local health system has been recognized
and has led to Pasay being made a pilot area for health reform. This led to the
Health Passport program being piloted in Pasay City.
The City of Pasay is in the process of planning for the construction of two new
health centers, one in the reclaimed area and the other in Villamor village for
civilians. In recognition of her achievements and contribution to the overall
health of the people of Pasay, the Main Health Center will be rededicated and
renamed after Dr. Elvira Lagrosa.
Table 3. Pasay City Health Centers, Addresses and Contact Numbers.

Cuyegkeng Health Center Cuyegkeng St. cor Layug St., Pasay City. 526-5283
Dr. Marylin M. Leoncio
Leveriza Health Center Leveriza St. cor Gil Puyat., Pasay City. 526-5283
Dr. Filipinas C. Vitug
San Isidro Health Center Dominga St., Pasay City. 931-5275
Dr. Rebecca F. Bolilia
Main Health Center Pasay City Sports Complex, F.B. Harrison St., Pasay City.
Dr. Anthony San Juan, Dr. Annabelle M. Espalmado 551-1652
Ventanilla Health Center Ventanilla St. cor. Layug St., Pasay City. 887-54-59
Dr. Mercedes T. Salle-Noble
M. Dela Cruz Health Center M. Dela Cruz St., Pasay City
Dr. Dirk Roland B. Rogasa
Doña Marta Health Center Don C. Revilla St., Pasay City. 851-7804
Dr. Marie Irene R. Sy, Dr. Manuel Dubungco Jr.
Malibay Health Center Malibay Plaza, Pasay City. 854-28-64
Dr. Alfredo M. Barranco
San Pablo Health Center St. Peter St., Maricaban, Pasay City. 854-0684
Dr. Madonna Felisa C. Abad
MIA Health Center Mia Road cor NAIA Avenue, Pasay City. 851-9707
Dr. Leslie Joy D. Tolentino
Kalayaan Health Center Kalayaan Village, Pasay City. 824-55-52
Dr. Armando C. Lee
Lying-in Clinic Dona Marta Health Complex, C. Revilla St., Pasay City.
Dr. Eduardo Cabildo 851-7804
Dr. Rudy Rosa Barranco
Dr. Francisco Antonio F. Corpuz
STD Clinic Pasay City Hall, F.B. Harrison St., Pasay City. 551-4180
Dr. Rosalinda L. Mangonon
Employee's Clinic Pasay City Hall, F.B. Harrison St., Pasay City. 551-2026
Dr. Pedro Miguel S. Padpad
Pharmacy Doña Marta Multi Health Complex, Don C. Revilla St.,
Susana P. Lacuesta Pasay City. 851-78-04
6.1 Pasay City Referral System
The Pasay City has a functional referral system, which was designed to stream-
line the referrals to and from facilities with different levels of care. The referral
system was designed with the following philosophy:
212
a. Agencies providing health care services can be categorized according to the Health Sector
kind and extent of their resources and facilities and the nature and magnitude Reform Technical
Assistance Project
of problems each is prepared to handle;
b. It is the responsibility of health agencies to provide the best care, in terms of

quality, within the limits of their resources;
c. For maximum efficiency, health agencies providing health care services

should coordinate with each other which includes, among others, agreement
on, and arrangement for a clear delineation of areas of responsibility; and,
d. Patients need guidance from the providers of care in the proper utilization of
available resources for health care. Based on the above philosophy, the pro-
gram had the following objectives:
• To link consumers of care to the appropriate health service resources;

• To ensure continuity of care from one health service facility to another;
and,
• To maximize the utilization of existing health agencies and personnel.
The staff of the different health centers of Pasay City along with selected mem-
bers from the PCGH underwent training on the referral system in 1998. This was
under a research of Dr. Sandra Tempoko from the University of the Philippines
Institute of Public Health, sponsored by Arci Cultura e Svillupo. Very important in
this referral system is the role of the Baranggay Volunteer Health Worker who
would address the primary needs of a family. The BVHW has a gatekeeper
function and would advise the patient or his family if there is need for a higher
level of care.
Under this program, the different health centers would entertain and treat only
patients and families who are under their specific catchment areas. Should a
patient from another catchment area consult in a different health center, these
patients are entertained and given initial treatment but are encouraged to follow-
up and seek primary care under the appropriate health facility. Should a patient
need a higher level of care, the patient is referred to the PCGH. Under the terms
of reference, patients without a referral slip from a health center are generally not
entertained in the PCGH, unless extremely necessary. Should a patient need a
higher level of care that PCGH cannot provide, this patient is referred to the
Philippine General Hospital (PGH).
A Memorandum of Agreement has been signed by the Mayor of Pasay City with
PGH formalizing the relationship and referral efforts between the City of Pasay
and the Philippine General Hospital. This is under the “Ugnayan para sa
Kalusugan” program of the Philippine General Hospital. The PGH has similar
MOAs with the cities of Parañaque, Muntinlupa, Las Piñas, and Manila. This
effort helps to decongest the emergency and outpatient facilities of the PGH.
One of the limitations of the program is the inability to monitor the flow of referrals
to and from the health centers to the PCGH and the flow of patients from PCGH
to PGH. At present this is being addressed by the PGH during its monthly
213
meetings with the other members of the alliance. Another limitation is the Health Sector
inability to determine utilization rates and success of the referrals. Reform Technical
Assistance Project
7. Best Practices
Of the practices that led to the overall improvement of the health of the people of
Pasay City, it is recognized that one of the best is the public or local health
system. An efficient public health system has been established and in place that
addressed the health needs of the barangay. A remarkable feature of the public
health system is the presence of committed and dedicated volunteer health
workers. It should be pointed out that the success of the local public health
system is anchored not only on the volunteer health workers but also on the
cooperation and harmony between the City Health Officer and the barangay
captains.
Related to this is the best practice of making all the health facilities Sentrong
Sigla accredited. It was after Pasay City garnered six Sentrong Sigla awards that
the city became a magnet for pilot programs in the areas of the Health Sector
Reform agenda of the DOH.
According to incumbent City Health Officer Dr. Pilar Perez, the credit should be
given to the former City Health Officer, Dr. Elvira M. Lagrosa and her dedicated
staff. There is no secret in the method used by Dr. Lagrosa in streamlining the
local health system. Dr. Lagrosa is described as one who loves to work and her
commitment is inspiring. Also, she pays attention to a lot of details and puts her
personal touch in everything she does. Her commitment to work has been
described as inspiring.
The steps employed by Dr. Lagrosa to achieve the Sentrong Sigla recognition
include:
• Getting the support of the local executives;
• Personally visiting all health centers and overseeing training in Quality

Assurance;
• Facilitation of renovation of the building (this was done with funding from the
World Bank-funded Urban and Health Nutrition Project (UHNP) of the DOH;
• Completion of facilities and testing requirements; and,
• Staff development and capability building.
The excellent record of the Pasay City Health Office attracted yet another pilot
program, the Healthy Passport Initiative of the Department of Health. After
realizing that the basic outpatient consultation and diagnostic benefit package
could be provided by all of Pasay City’s Health Centers as a result of its Sentrong
Sigla awards, it was but natural that Pasay be one of the pilot areas of the DOH
Healthy Passport Initiative which is now known as the PhilHealth plus.
214
At present, not all of the components of the HSRA have been fully implemented. Health Sector
The Convergence workshop was held in October 2001. Because of the devel- Reform Technical
Assistance Project
opment of the Pasay City health zones and the Social Health Insurance, how-
ever, it will not be difficult for Pasay to achieve the vision of convergence.
Perhaps, the component, which needs the most development, is Hospital Re-
form. However, local legislation has already been drafted to pave the way for
fiscal autonomy in the Pasay City General Hospital. Improvements by way of
infrastructure and training programs are already in place.
Efforts still have to be made to improve quality assurance and drug procurement.
It has been pointed out that despite the equal level of responsibility of the city
health officer and the hospital director, there seems to be a discrepancy in the
extent of the development of the hospital sector in comparison with that of the
public health sector. It should be pointed out that the staff of Dr. Lagrosa has
remained intact despite changes in local government and has remained consis-
tent in pursuing its vision for comprehensive and equitable health care for the
people of Pasay City. In contrast, the hospital director of Pasay City General
Hospital has been changed as often as there has been a change in the local
executives. This has led to an inconsistency in the thrusts and programs imple-
mented by the different administrators of the hospital.
Finally, It should be noted that even before the convergence efforts, Pasay has
always been outstanding in promoting health and providing services to its con-
stituents. The convergence efforts of the Health Sector Reform Agenda of the
DOH identified the components that need reform and coordinate and harmonizes
the efforts necessary in improving the individual components of the agenda.
8. Lessons Learned
Just like the other convergence areas surveyed, Pasay has the three identified
key components that make for an effective health care delivery system. These
important components include: (a) A very committed and dedicated person and
staff who will champion the health of the city or province, (b) a very supportive
local executive or health board and (c) the support of an outside agency such as
an NGO who can provide support in the form of funding, training and technical
support.
The committed and dedicated champion of the health care delivery system has
been identified as the late Dr. Elvira Lagrosa. Dr. Lagrosa was instrumental in
streamlining the local health system, in making the health centers Sentrong Sigla
awardees and in lobbying for both the support of the local executives and the
funding agencies. There remains consistency in the vision and thrusts as
envisioned and outlined by Dr. Lagrosa as she has been ably replaced by her
former assistant, Dr. Pilar Perez, the incumbent city health officer.
It goes without saying that the LGU support is very evident in Pasay. The health
board meets regularly and several legislation and resolutions have been passed
in support of the health efforts of the city.
Pasay has been described as a magnet for attracting pilot studies, reforms and
programs. These programs were piloted and / or supported by both GOs and
215
NGOs. The healthy passport was initially a DOH initiative. Examples of NGO Health Sector
support include the renovation of the local health centers by the UHNP, the IMCI Reform Technical
Assistance Project
workshops, values formation workshops, referral system project and the compre-
hensive preventive maintenance program (in PCGH) by the ARCS. The “Ka-
patid” NGO provides NGO support in the Pasay City General hospital and of
course recently, the MSH is supporting the convergence efforts.
In conclusion, though the convergence concept has only been introduced quite
recently in Pasay City, the city has already had many of the key components in
place through its own efforts. The public health system and the social health
insurance components need very little improvement. Improvement of the drug
management program will not impact on the local health system but should be
improved as part of Hospital reform efforts. Hospital reform should be a priority
and once this is addressed and improved, convergence will no longer be a
concept but a reality.
216

Health Sector Reform Agenda

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Health Sector Reform Agenda

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HEALTH SECTOR REFORM TECHNICAL ASSISTANCE PROJECT (HSRTAP)

Health Sector Reform Agenda

University of the Philippines National Institutes of Health –

A publication of Management Sciences for Health–Health Sector Reform Technical

I CAPIZ (REGION 6) .................................................................................... 6

II NUEVA VIZCAYA (REGION 2) ............................................................... 41

III PANGASINAN (REGION 1) .................................................................... 60

3. Gains in Health Financing ................................................................ 87

V BULACAN (REGION 3).......................................................................... 115

VI SOUTH COTABATO (REGION 11)........................................................ 141

VII NEGROS ORIENTAL (REGION 7)......................................................... 164

1. Socio-Economic and Health Profile ................................................ 205

The convergence strategy initiated by the Management Sciences for Health-

Convergence is an attempt to bring together the local political leadership, the

Capiz Province has a population of 624, 469. It consists of 16 municipalities,

Table 1. Selected Socio-Economic Indicators.

A. Leading Causes of Illness, CY 2000, from Provincial Health Office Data

Causes Total Cases

3. Background of Health Sector Reform

In August 1999, the province organized a Strategic Directions Workshop Integrat-

Table 4. Cost Sharing Scheme of the Indigency Program Premium, Capiz.

• A Memorandum of Agreement to formalize participation in the Program

• Membership cards would be distributed by February 2000 and a general

4. Gains In Health Financing

4.1 Policy development activities

The outpatient benefit package to be provided by PHIC-accredited hospitals and

pressure; measurement; annual digital rectal examination; anthropometric

4.2 Policy implementation activities

Release of PhilHealth Passports. The Indigency Program, re-named the Health

Selection of beneficiaries. A Minimum Basic Needs Survey was first conducted

To further document information dissemination activities at the community level,

Nine of 11 respondents reported that BHWs, social workers, health service

Coverage expansion. At present, 526 families per municipality have been

Although all 16 municipalities have enrolled members, the roster of participating

Table 5. Number of Enrolled IP Members by Municipality and Batch.

Many beneficiaries needed on-site assistance during claims processing prior to

The 11 interviewees reported enjoying hospitalization benefits from their social

The development of a monitoring tool to document LGU utilization of the capita-

Accreditation of RHUs. PHIC has developed accreditation standards for the

• Examination room with provisions for privacy

4.3 Current issues and solutions

Difficulties in premium collection. The setting up of local payment centers has

Table 6. Health financing program updates, identified gaps and propositions.

PHIC to take active

Kinks in chest x-ray

5. Gains in Hospital Reforms

5.1 The hospital network system of Capiz

Systematization of work and patient flow in the Outpatient Department. Interde-

Upgrading of personnel salaries.

Training programs – the local administration is very supportive of conducing

Networking schemes. NGO volunteers from Gerry Roxas Foundation comple-

Staff items from the regional and national levels.

On hospital facilities. In the case of RMPH, Physical facilities enhancement –

Signages were provided to guide patients.

Users fee utilization in Capiz is fixed, not graduated.

On hospital management. Policy directive from the governor, which separated

Adoption of systematic hospital billing and collection procedures after MSH

Innovative financing schemes through PhilHealth Indigency Program, which

Systematization of drug procurement, inventory, and distribution processes to

Implementation of new policies covering ambulance use, number of patients and

Province-wide policies in drug procurement and distribution were adopted to

Creation of a grievance committee in Bailan District Hospital to accept and act on

5.3 Program outcomes