Philippines

HEALTH SYSTEM
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Ministry of Health's mission, vision and objectives

The Department of Health's vision is to be "The leader of health for all in the Philippines". Its mission is to
"guarantee equitable, sustainable and quality health for all Filipinos, especially the poor, and to lead the
quest for excellence in health".

The goals of the health department align with the WHO health systems framework. Better health for the
entire population is the primary goal. This means making the health status of the people as good as possible
over the entire life cycle. The second goal is related to how the health system performs in meeting people’s
expectations and satisfaction with the services it provides. Equitable health care financing is the third goal
because health and illness involves large and unexpected costs that may result in poverty for many people.

The strategic thrusts to achieve the three primary health goals mentioned above are anchored in the current
programme of health reforms, labelled ‘Fourmula One for Health’. It is designed to undertake critical reforms
with speed, precision and effective coordination, with the end goal of improving the efficiency, effectiveness
and equity of the Philippine health system. Vital reforms are organized into four major implementation
components: health financing; health regulation; health service delivery; and good governance in health.
Implementation will focus on four general objectives: (1) health financing, the general objective of which is
to secure increased, better and sustained investments in health to provide equity and improve health
outcomes, especially for the poor; (2) health regulation, which aims to assure access to quality and
affordable health products, devices, facilities and services, especially those commonly used by the poor; (3)
health service delivery, where health interventions are aimed at improving the accessibility and availability
of social and essential health care for all, particularly the poor; and (4) good governance in health, aimed at
improving health systems performance at the national and local levels.

Organization of health services and delivery systems

With the devolution of health services to LGUs under the Local Government Code of 1991, fragmentation of
services became evident. Service provision is regarded as ‘dual’, consisting of both the public and private
sector. The public sector has three largely independent segments or sets of providers: (1) national
government providers, which include, among others, hospitals run by national government agencies (e.g.,
hospitals of the Department of Health and the Department of National Defense), central and regional offices
of the Department of Health; (2) provincial government providers, which include provincial hospitals,
provincial blood banks and the Provincial Health Office; and (3) local (municipal or city) government
providers, including rural health units or RHUs, city health centres and barangay health stations or BHSs.
Each BHSs is staffed by a midwife, and each RHU by a doctor, a nurse and midwives.

The Department of Health's role now focuses on regulation, technical guidelines/orientation, planning,
evaluation, and inspection, while the provincial government is responsible for provincial and municipal
hospitals, health centres and health posts, although funding flows do not exactly match responsibility. The
municipal government-level role is not well defined and capacity is reportedly weak.

With the decentralization of service delivery, local chief executives became core players in the health sector.
The number of actors involved multiplied and hence the need for coordination and policy monitoring. On
health financing, for instance, the Department of Health and the Central Government are no longer in
control of resource allocation. The need for better coordination and a better working relationship with the
local government units and other stakeholders is well recognized.

Private providers are predominantly located in highly urbanized areas. The private sector consists of a wide
range of privately operated facilities, such as pharmacies, physicians in solo or group practices, small
hospitals and maternity centres, diagnostic centres, employer-based outpatient facilities, secondary and
tertiary hospitals, traditional birth attendants and indigenous healers.

Ongoing reforms in health service delivery are aimed at improving the accessibility and availability of basic
and essential health care for all, particularly the poor. Public primary health facilities are perceived as being
low quality, hence they are frequently bypassed. Clients are dissatisfied due to long waiting times; perceived
inferior medicines and supplies; poor diagnosis, resulting in repeated visits; and the perceived lack of
medical and people skills of the personnel available, especially in rural areas. The result is that secondary
and tertiary facilities are inundated with patients needing primary health care. Since public primary facilities
are more accessible to households and are mostly visited by the poor, improving the quality of those
services particularly demanded by the poor would improve their health. Furthermore, referral mechanisms
among different health facilities across local government units need to be strengthened.

Pharmaceutical challenges remain due to asymmetric information, income distribution and the inadequacy of
the regulatory system. This stems from various factors such as massive campaigns and lucrative incentives
from multinational drug firms, prolonged patent rights cases and a lack of appropriate public understanding
regarding generics.

Health policy, planning and regulatory framework

The Government's policy to achieve improvements in health includes a perspective on the integral value of
health for any nation, the coordination of resources from all sectors, the right to access quality care, and the
presence of socioeconomic fundamentals. While the Government provides the leadership and stewardship to
ensure that all efforts in the health sector lead to a common goal, greater support to local health systems
development and emphasis on strong management and administrative support systems at all levels of
governance is critical. Better coordination between national policies and external development partner
priorities would also play a major role in fostering the harmonization of resources for health.

The Department of Health remains inadequate in regulating the quality of health services in the country.
This is attributed to the immense gaps in health regulations caused by the lack of specific legal mandates,
inadequate expertise, an inadequate number of health regulation officers, a lack of expertise and
infrastructure in specialized services and laboratory facilities, and weak health regulatory systems and
processes.
Health care financing
The financial burden on individual families remains high. The latest (2005) national health accounts show
that the most common source of funds for health in the country today is still out-of-pocket payments
(around 49%). Paying for health care is an issue because of its poverty impacts. Under the current health
care financing arrangements, low-income families are pushed into poverty due to payments for health care.
Almost 80% of total health expenditure is spent on personal health care services. In contrast, only 11% is
used for public health care services. About 10% is used for the administrative spending needed to run the
entire health system. These are signs that the Philippines is not spending enough or effectively for health.

Health care financing resources are spent largely on hospital-based curative services and not enough on
preventive and promotive health services, and subsidies for health services are poorly targeted. The large
hospitals in Metropolitan Manila and other urban areas get the biggest share of spending, while non-hospital
health services face difficulties in getting adequate funding.

Meanwhile, the national health insurance programme has seen only a relatively slow and cautious increase
in its share of total health expenditure. Possible reasons for this include its low benefit package and the fact
that coverage of the informal economy has not increased. The limited financial protection of the national
health insurance programme, PhilHealth, is closely related to its benefit coverage and provider payment
system. As physicians provide more services and raise prices under the current fee-for-service system,
medical care expenses increase rapidly. However, PhilHealth pays only up to the rather low benefit ceiling
and patients pay the rest of the expenses. At the same time, physicians’ have the freedom to bill without fee
regulation. Discussions are now ongoing to explore the feasibility of extending benefit coverage by raising
the benefit ceiling.

Public health facilities are funded through a mix of public subsidies, such as Philhealth reimbursements, user
fees and, to a limited extent, private health insurers. At the primary care level, public subsidies and
Philhealth capitation allocations are funding services for both insured and non-insured members and for both
public health and personal care. At the hospital level, the mix of funding is not well understood by
regulators. Moreover, several schemes may be working at the same time, depending of local priorities and
management styles. Drugs are mainly purchased out-of-pocket from private for-profit retailers. The
Government has recently introduced thousands of non-profit community outlets, but their impact on access
and the costs supported by patients remains to be seen.

In response to these issues, the Government is finalizing its health care financing strategy to improve health
care financing polices that would realistically enhance access, equity and effectiveness in resource
mobilization and allocation, as well as the use of health services.

Human resources for health

In 2004, there was one physician for every 880 people, one nurse for every 235, one dentist for every 1800,
and one pharmacist for every 1664. However, these ratios have most likely changed, especially with the
exodus of nurses in the past five years. The country is purportedly the leading exporter of nurses to the
world and the second major exporter of physicians. Prevailing challenges include unmanaged immigration of
Filipino health workers; a weak and inadequate human resources for health (HRH) information system; and
an existing distribution imbalance, among others. Responses to HRH issues in the past have often been
stopgap measures. In addition, the interventions of the agencies concerned have not always been well
coordinated.

In order to address such complex and multi-faceted issues, a comprehensive approach is needed. A master
plan for human resources for health has been developed and implementation of activities is underway. A
high-level coordinating body and multisectoral working group was established in 2006 to mobilize political
commitment, donor/partner support and the funding needed to accomplish the priority activities of the
master plan. Called the Human Resources for Health (HRH) Network, this group was able to successfully
convene a policy forum to advocate their policy agenda, which aims to resolve issues related to production,
entry and retention of health professionals, as well as their exit and re-entry.

Strategic thrusts for 2005-2010 include development of HRH policies and strategies to address out-
migration; sustaining incentive mechanisms for HRH distribution and complementation in underserved
areas; and making education, training and skills development more appropriate to local needs. The
strategies that are being undertaken include, among others, the institutionalization of the health human
resource management and development system; improvement of the technical competence and relevant
skills of health professionals through education and training; provision of targeted and performance-linked
compensation benefits; strengthening of the coordination mechanism between the education sector,
regulatory agencies and HRH users; and installation of and HRH information system.

Partnerships
The attainment of national health goals has significantly progressed given the well-defined, commonly-
shared vision and framework for health (now called ‘FOURmula ONE’). Department of Health experience has
shown that better harmonization of efforts among the various stakeholders at all levels is critical. Currently,
assistance for the health sector comes mainly in the form of grants, loans and technical assistance. A
sectorwide development approach for health (SDAH) between government and partners is being initiated to
maximize investments, minimize duplication of initiatives and generate the necessary resources for the
health sector. The Department of Health is also working closely with international organizations and global
initiatives to strengthen implementation of priority health programmes.

Challenges to health system strengthening

The publicly funded health system has been undergoing a major reform programme since 1999. At the
broadest level, this has included a review of the Department of Health’s primary functions, roles and
responsibilities and the suitability of the existing organizational structure to support these at both the
strategic and service-delivery level. Introducing and pilot-testing the different concepts and strategies of
heath sector reform in selected provinces has showcased some gains in health systems development.
However, one of the gaps then was the absence of a comprehensive operational framework to implement
the reform strategies. Thus, the FOURmula ONE framework was launched in August 2005 to set the direction
and implementation arrangements for strengthening the way health care is delivered, governed, regulated
and financed.

FOURmula ONE is now on its third year of implementation and both the Department of Health and the LGUs
are being challenged with operational issues, such as procurement. In addition, the health care delivery
system has yet to address some major issues and challenges including, among others: the absence of data
disaggregated at provincial/municipal level (for baseline and monitoring); the absence of a workable means
of identification of the poor for targeted health interventions; the minimal involvement of the private sector
in the delivery of public health programmes; the still excessive reliance on the use of high-end hospital
services rather than primary care; the slow improvement in maternal mortality reduction; and population
growth. Issues such as geographic inequity, where people who live in rural and isolated communities receive
less and lower quality health services, and socioeconomic inequity, where the poor do not receive health
services due to inaccessibility and/or unaffordability, continue to abound in the country.

More specific issues like out-migration of skilled health workers, low salaries/wages and lack of incentives
and poor work environments, including shortages of basic medical equipment and supplies, continue to
contribute to the worsening shortage of workers in rural areas, where health needs are greatest. Hospitals,
both public and private, all over the country lament the loss of senior experienced nurses and doctors. The
University of the Philippines-Philippine General Hospital (UP-PGH), the largest hospital in the country, loses
300 to 500 nurses of their 2000 nurse workforce every year. Midwives, the front liners in providing health
services, are also seeking jobs as caregivers in other countries in need.

There is a lack of reliable, disaggregated and integrated health and health-related data, evidence and
information, and inability to use health information to ensure knowledge-based policies and programmes
remains a major challenge. There is also low investment in health research and development systems, as
well as in information management systems.

In the area of health care financing, the following challenges remain: high out-of pocket spending;
inadequate government spending on health; low spending for cost-effective public health interventions; low
social health insurance benefit spending; and identification of the ‘true’ poor for social health insurance
(sponsored programme).

The high cost of drugs and medicines also remains a major challenge, as prices range from two times to as
much as 30 times higher than in other neighbouring Asian countries. To date, the ‘Cheaper Medicines’ Bill,
which aims to effectively reduce the cost of medicines in the country, is yet to be signed by the President of
the Philippines.

The devolution of health services created new challenges for the Government in overseeing that local actions
are in accordance with national policies and goals. Good governance in health at the local levels, particularly
in improving transparency and accountability in finance and procurement, and logistics management
remains a big challenge. With FOURmula ONE, systems of accountability and transparency are being
established to minimize unscrupulous behaviour, thereby ensuring efficient use of available resources for
health.