Position on House Bills No. 2475, 3491, and 3857.

HB 2475 has described privatization as including, but not limited to, outright sale, public-
private partnerships, corporatization, contracting out of equipment and services, joint ventures,
franchising, management control, leasing and user-charges. Given this comprehensive definition
of privatization, PHA can neither approve nor disapprove of the privatization of government
hospitals as contemplated in HB 2475.

As noted in one study from the World Health Organization which included the Philippines
national health financing system as among those reviewed, countries should not adopt
dogmatic views on the role of the non-state sector in health care.1 PHA likewise subscribes to
this idea. While there remains to be a dearth of strong evidence on the beneficial impact of
specific practices that may be construed to be privatization, studies on the matter seem to
support a more flexible approach to privatization with national policies designed in accordance
with context-specific subtleties1 which is consistent with the common experience of public
hospitals in the Philippines.

Notably, HB 2475 does not define the specific practices that it enumerated were included
in the term privatization. Hence, we make our comments thereon on merely our humble
understanding of what those terms are intended to mean.

While the outright sale and franchising of the government hospitals to the private sector
appear to be quite blatantly abhorrent to universal access to health care, leasing parts of the
hospital may augment the income of the hospital and ultimately the quality of health care
delivery without necessarily increasing out-of-pocket payments (OOP). On the average, in low-
income countries, medicines accounted for the largest share of OOP in public hospitals.1 Thus, it
appears leasing parts of the hospital that has nothing to do with dispensing medicines possibly
may not affect OOP. In the same vein, contracting out services that are not directly related to
health care delivery should be considered a legitimate practice which could improve efficiency of
the hospital services without necessarily increasing OOP.

The experience with devolved hospitals, which struggle more so than the already limping
DOH hospitals, have taught us that at least some practices of those corporatized may be
beneficial to health care delivery. It is our position that the simplistic prohibition against income
retention and abolition of user-fees would bring more harm than good. These user-fees and

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income retention have helped provide the much needed funds to cover maintenance and other
operating expenses and capital outlay for which government has consistently failed to give
enough funding. There is simply no logical way in covering these expenses without the
augmentation from user-fees and income retention given the way the costs for running DOH
hospitals have continuously ballooned while the budget allotted by government therefor has
stagnated and the inability of PhilHealth to cope and increase coverages. It is well to note that
the quality of many DOH hospitals has improved in the past 15 years that they have been allowed
income retention. On the other hand, the quality of devolved hospitals whose income have been
retained by the local government units, the dispensation of which have beenwith due
respecttainted by political interests on many an occasion, have perceivably not so improved.

PHA believes that improving quality of services and facilities at government hospitals
would attract the paying population, and the income that generates may in turn subsidize the
charity patients. Thus, we humbly urge Congress to consider approaching the problem of the
health financing system in this manner, focusing instead on improving quality of services than
prescribing a blanket prohibition on all practices that may be construed as privatization. This
approach would not only improve access to health care but likewise improve the quality of health
care rendered to the poor through the participation of the paying population. Notably, there has
at least been two studies that suggested that the combination of user-fees and improvements in
quality can increase health service utilization.2

Nevertheless, PHA recommends that before formulating national policies regarding

privatization of government hospitals which undoubtedly would create an earthquake in the
countrys health care system, a thorough study be made on the impact on health service
utilization and cost of specific practices that may be construed as privatization. Congress is
strongly urged to determine policy questions of such importance upon the basis of sound
scientific evidence.

As to the bed allotment for indigent/service/poor patients in Sec. 6 of HB 2475, PHA

humbly submits this is no longer necessary to provide by law. R.A. 1939 already requires that all
government hospitals shall operate with not less than 90% of its bed capacity as free or charity
beds.

Insofar as HB 3491 and 3857 appears to limit the prohibited acts to sale or offer for sale
of government hospitals to the private sector, PHA fully supports the same. However, the singling
out of the Secretary of the Department of Health in HB 3491 may be too restrictive and could be
contested on equal protection clause grounds. The use of the term privatizing and privatize
in Sec. 4 of both bills may have to be expressly defined as these terms are open to much
construction.

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 Finally, it is humbly suggested that it be provided that the drafting of the Implementing
Rules and Regulations of the proposed law be made in consultation with the PHA at least to
ensure that a main stakeholder shall be given the opportunity to participate in the drafting of
such rules.

In summary, PHA recommends:

The adoption of a more flexible approach to privatization of government

hospitals with national policies designed in accordance with context-specific
subtleties

That policy questions on health care system financing be determined upon the
basis of sound scientific evidence

That the terms privatizing and privatize be expressly defined under the
proposed law

That the Implementing Rules and Regulations for the proposed law be made in
consultation with PHA

We remain your humble partners in providing the best care for the Filipino. Should you
have any questions or clarifications, please do not hesitate to contact our Secretariat.

Done this 12th day of October, 2017.

1
Saksena P et al. (2012) Utilization and expenditure at public and private facilities in 39 low-income countries.
Tropical Medicine and International Health 17(1), 23-25 doi: 10.1111/j.1365-3156.2011.02894.x
<http://onlinelibrary.wiley.com/doi/10.1111/j.1365-3156.2011.02894.x/epdf accessed 12 October 2017>
2
Lagarde M, Palmar N (2008) The impact of user fees on health service utilization in low- and middle-income
countries: how strong is the evidence? Bulletin of the World Health Organization 86(11), 817-908
<http://www.who.int/bulletin/volumes/86/11/07-049197/en/ accessed 12 October 2017>

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