Overview of The Philippine Health System and The Implementation Framework For Health Reforms

Overview of the Philippine Health System and the Implementation
Framework for Health Reforms
Published by the Department of Health (DOH) Philippines

San Lazaro Compound,
Rizal Avenue, Sta. Cruz,
Manila, Philippines
2008
This document was published through the European Commission Technical

Assistance for Health Sector Policy Support Programme (EC-TA-HSPSP) in the
Philippines
Technical Writers and Coordinators
Chairperson
Usec. Mario C. Villaverde, MD, MPH, MPM, CESO I
Co-Chairperson
Dir. Maylene M. Beltran, MPA
Members
Mar Wynn C. Bello, MD, MPA

Ms. Ligaya V. Catadman, MM
Ms. Antonina U. Cueto, MM
Ms. Alma Lou A. dela Cruz, MM
Ms. Mitos S. Gonzales, MM
Ms. Glenda R. Gonzales, MPH
Ms. Josephine A. Salangsang, MM
This document is accessible at:

http:// www.doh.gov.ph
i
TABLE OF CONTENTS
Foreword 1
Acknowledgements 2
Overview of the Philippine Health System 3
Goals of the Philippine Health System 4

Health Status of the Filipinos 5
Life Expectancy at Birth, Crude Birth Rate and
Crude Death Rate 5
Leading Causes of Morbidity 5
Leading Causes of Mortality 6
Infant, Under-Five and Maternal Mortality 6
Disaster and Emerging/Re-emerging Illness 7

Responsiveness of the Philippine Health System 8
Responsiveness of Health Facilities and Services 8
Satisfaction with Health Facilities 8
Equity in Health Care Financing 9
Challenges to the Philippine Health System 10
Implementation Framework for Health Reforms: FOURmula

ONE for Health 12
Defining the Roadmap for Health Reforms 12

Starting the Race With the End in Mind: FOURmula ONE
for Health Goals and Objectives 13
Building on the Gains of Previous Health Reforms: Drawing
Impetus for FOURmula ONE Implementation 15
Defining the Rules of Engagement: Seven (7) General Guidelines
for Health Reform Implementation 16
Carrying Out the Game Plan: Winning Strategies to Attain
FOURmula ONE for Health Component-Specific Objectives 18
Health Financing 21
Health Regulation 26
Health Service Delivery 34
Health Governance 42
Running the Health Reform Race: Operational Framework for
FOURmula ONE for Health 48
Pump-Priming Health Reform Implementation: F1 Financing
Mechanism and Strategies 53
Reaching the Finish Line: Setting New F1 Strategies and Objectives 54
Bibliography 55
ii
FOREWORD
To improve the health status of the

population, the Department of Health
(DOH) has taken a bold step of reforming
how health services are delivered,
regulated and financed by espousing health
sector reforms which are anchored on good
governance.
The DOH launched the FOURmula ONE for

Health (F1) in 2005 as the operational
framework for health sector reforms.
Health sector reform under the F1 has the strategic framework that includes
operationalization of key flagship programs on financing, service delivery,
regulation, and governance in both national and local levels. It is envisioned that
F1 will bring about improvement in health outcomes, make health financing more
equitable, and increase public satisfaction with health care services. In essence,
F1 embodies all priority programs, projects and activities that the health sector
must embark to attain “Health for All Filipinos.”
To implement health reforms, the DOH engages the cooperation of its various
partners under the Sector Development Approach for Health in planning,
organizing, coordinating, and evaluating national and international support and
assistance under a common sector policy and investments program led by the DOH.
Related to this, there is a need to inform all stakeholders including all Filipinos of
F1 strategies as guiding principle and strategic approach in health planning, policy
and program development, implementation and for monitoring and evaluation.
Together, we can overcome any roadblocks that will impede our progress toward
health reforms so that we can triumphantly share the fruits of a healthy,
productive and progressive nation for all generations of Filipinos.
1
ACKNOWLEDGEMENTS
The F1 Technical Working Group led by the technical staff of the Health Policy
Development and Planning Bureau (HPDPB) which directed the preparation of this
document are grateful to a pool of writers, technical experts, resource persons which are
enumerated below:
A. Department of Health
Dir. Juanito D. Taleon, Dir. Angelina K. Sebial, Dir. Yolanda E. Oliveros, Dir. Criselda G.
Abesamis, Dir. Enrique A. Tayag, Dir. Carmencita Banatin, Dir. Leticia Barbara Gutierrez,
Dir. Nicolas B. Lutero III, Dir. Agnette P. Peralta, Dir. Edgardo Sabitsana, Dir. Joshua
Ramos, Dr. Shirley Domingo, Mr. Ruben John Basa, Dir. Kenneth G. Ronquillo, Dr. Ma.
Virginia G. Ala, Dir. Crispinita A. Valdez, Dr. Julito Sabornido, Dr. Lakshmi Legaspi, Dr.
Ivanhoe Escartin, Ms. Edna Nito, Ms. Rose Aguirre, Ms. Luz Tagunicar, Mr. Adel Azuelo, Ms.
Rowena Bunoan, Dr. Mario Baquilod, Dr. Aleli Sudiacal, Dr. Melecio Dy, Dr. Victoria
Mandai, Dr. Agnes Segarra, Dr. Marilyn Go, Dr. Edna F. Red, Ms. Virginia Francia C. Laboy,
Mr. Manuel G. Guevarra, Dr. Ma. Theresa G. Vera, Dr. Ma. Brenda C. Pancho, Engr. Bayani
San Juan, Engr. Ma. Cecilia Matienzo, Dr. Robert dela Torre, Dr. Alwyn Asuncion, Dr.
Jennifer Celestino, Ms. Nona Asilom, Ms. Violeta Padilla, Ms. Mary Jean Lim, Dr. Agueda
Sunga, Dr. Regina Sobrepeña, Dr. Erlinda Guerrero, Ms. Erlinda Domingo, Dr. Dorie Lynn
Balanoba, Ms. Menchu Equia, Ms. Jean Bernas, Dr. Lilibeth C. David, Ms. Charity Tan, Ms.
Jovita Aragona, Mr. Laureano Cruz and Ms. Agnes D. Marfori.
B. Consultants and Other Partners

Dr. Orville Solon, Dr. Bernardino Aldaba, Dr. Carmela Mijares-Majini, Dr. Irwin Carlo
Panelo, Mr. Mario Taguiwalo, Ms. Thiel B. Manaog, Dr. Edwin Bolastig and other partners.
2
OVERVIEW OF THE PHILIPPINE
HEALTH SYSTEM
According to the World Health Organization (WHO), “a health system is composed of all
activities whose primary purpose is to promote, restore or maintain health”. It is
composed of health care institutions, supporting human resources, financing
mechanisms, information systems, organizational structures that link them together
and collectively culminate in the delivery of health services to patients.”
The Philippines has a dual health system consisting of a public sector and a private sector.
The former is largely financed through taxes, allowing services to be given for free or
following socialized user charges; while the latter is largely market-oriented and utilizes
user fees to finance health services. Hence, the poor obtains health services from health
facilities operated by the government while the rich opt for health services from private
facilities.
Since the devolution of health services under the Local Government Code of 1991, health
services provided by the public sector became shared by the Department of Health (DOH) and
the local government units (LGUs). The DOH, as the lead agency for health, became
responsible for the development and implementation of national policies and plans,
regulations, standards and guidelines on health, as well as the innovation of strategies in health
to improve the effectiveness of health programs. It also acts as the administrator of national
health facilities, and sub-national health facilities. Moreover, it provides services for emergent
health concerns that require complicated new technologies deemed necessary for public
welfare upon the direction of the President of the Philippines and in consultation with the LGUs
concerned. On the other hand, the LGUs shall assume primary responsibility over the delivery
of health services and the provision of health facilities devolved to them. The DOH shall in
coordination with LGUs shall design and instill mechanisms providing for an integrated and
comprehensive approach to health care delivery among LGUs, through the referral system and
the networking of local health agencies.
The DOH has adopted the sector-wide approach as the means to manage the implementation of
FOURmula ONE for Health (F1) to be known as Sector Development Approach for Health
(SDAH). The DOH and SDAH partners shall stimulate LGU participation to adopt F1 and national
priorities in their respective localities such as advocacy on the economic and socio-political
advantages of instituting health reforms, provision of incentives and forging performance-based
agreements between the national and local governments among others.
3
Goals of the Philippine System
The Philippine health system has three primary goals that correspond to the goals of health systems as
defined by the WHO. These goals are: better health outcomes, more responsive health system and
equitable health care financing.
Better Health Outcomes

The health system’s main purpose is to ensure that the health status of the people are as good as
possible throughout their lifecycle by the appropriate use and adequate provision of health care.
There is a need to attain the best level of health status for the general population and achieve the
least possible variation in health status among individuals, groups and geographic areas in the
country (World Health Report, 2000; World Health Organization, 2000).
More Responsive Health System
The health system needs to meet the expectations of the population it is serving. Responsiveness is
a measure of the adequacy on how the health system is attending to the people’s expectation of
how they should be treated by the health service providers. It is focused on the client centeredness
of health care and encourages better performance towards it. This includes the patients’ and their
families’ right for choice, respect, dignity, confidentiality and quality health care. Satisfaction
with the health system on the other hand reflects the people’s evaluation of how their expectations
were met by health care providers. The health system should provide patients and their families
greater public satisfaction in the overall performance of the health system.
Equitable Health Care Financing
Equitable health care financing means that financial risks are distributed in a population based on an
individual’s capacity to pay rather than his or her risk of illness. The health system should ensure that an
individual or family will not be forced into poverty due to the payment of health care or prohibited to
avail of health care because of costs. Financial risk protection is provided by risk spreading strategy
wherein revenues from people are pooled and utilized for the payment of those who get sick.
4
Health Status of the Filipinos
The health status of Filipinos is improving but the rate of improvement is not as good as the health
status of other countries in South-East Asia.
Life Expectancy at Birth, Crude Birth Rate and Crude

Death Rate are Improving Figure 1. Life Expectancy at Birth by Sex and by Year
Figure 1. LifePhilippines,
Expectancy 1995-2005at Birth by Sex and by Year
Philippines, 1995-2005
Source: Philippine Statistical Yearbook, 2007
Filipinos are living longer now with an average life Source: Philippine Statistical Yearbook, 2007
expectancy at birth of around 70.5 years in 2005. This 74
.08
74
.78
73
.48
72
72
.18
may be attributed to the improving health status of the
72
.08
.88
72
.78
.58
73
71
.48
.28
72
71
72
.18
.98
72
71
.88
.68
72
70
.58
.4
71
70
70
.28
.08
70
71
people and other socio-economic factors.
.98
71
70
.68
70
.4
70
70
.08
70
70
68
Life in Years
.83
.53
67
.23
68
67
Life in Years
.93
67
.83
.63
66
.53
.33
66
67
66
.23
.03
67
66
.93
.73
67
66
.63
.43
Between the years 1980 to 2004, crude birth rate
66
65
.33
.13
66
66
65
.03
66
65
.73
66
.43
64
65
.13
65
.49
65
decreased from 30.2 to 20.5 births per 1,000
64
63
.49
62
63
62
population, while crude death rate decreased from 6.2 60
60
to 4.8 deaths per 1,000 population (Philippine Health 58
58 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Statistics, 2004). 1995 1996 1997 1998 1999 2000

CalendarYears
2001 2002 2003
Male
2004
Female
2005
CalendarYears Male Female
Leading Causes of Morbidity

As in the past, most of the ten leading causes of morbidity are communicable diseases. The leading
causes of morbidity from infectious causes include acute lower respiratory tract infection and
pneumonia, bronchitis/bronchiolitis, acute watery diarrhea, influenza, pulmonary tuberculosis,
acute febrile illness, malaria, chicken pox, measles and dengue fever from 1996 to 2006. Morbidity
rates of these diseases have been observed to be declining over the last couple of years. Two of the
top ten leading causes of morbidity are non-communicable diseases which are hypertension and
diseases of the heart. Malaria is still the most common and persistent mosquito-borne infection in
the country and drug resistant cases are on the rise.
Table 1. Ten Leading Causes of Morbidity

Source: Field Health Service Information System, 1998-2007
Rank 1998 2000 2002 2004 2006 2007
1 Diarrheas Diarrheas Pneumonias Acute lower Acute lower Acute lower

respiratory respiratory respiratory
tract infection tract infection tract infection
and and and
pneumonia pneumonia pneumonia
2 Bronchitis/ Bronchitis/ Diarrheas Bronchitis/ Acute Watery Acute Watery
Bronchiolitis Bronchiolitis Bronchiolitis Diarrhea Diarrhea
3 Pneumonias Pneumonias Bronchitis/ Acute Watery Bronchitis/ Bronchitis/

Bronchiolitis Diarrhea Bronchiolitis Bronchiolitis
4 Influenza Influenza Influenza Influenza Hypertension Hypertension
5 Hypertension Hypertension Hypertension Hypertension Influenza Influenza
6 TB respiratory TB respiratory TB respiratory TB respiratory TB respiratory TB respiratory
7 Diseases of Diseases of Diseases of Chicken pox Diseases of Diseases of

the heart the heart the heart the heart the heart
8 Malaria Malaria Malaria Diseases of Acute Febrile Dengue Fever
the heart Illness
9 Dengue Fever Chickenpox Chickenpox Malaria Malaria Malaria
10 Chickenpox Measles Measles Dengue Fever Dengue Fever Chicken Pox
5
Other infectious diseases such as rabies, filariasis, schistosomiasis, leprosy and human
immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS) remain relevant public
health problems even though they are not leading causes of illness and death. Rabies incidence in
the Philippines is the 6th highest in the world. Filariasis is the second leading cause of permanent
disability among infectious diseases. Schistosomiasis remains endemic in the country although it has
been eliminated in most South East Asian countries. And while the leprosy has been considered as
eliminated based on national prevalence levels, certain areas still have prevalence rates above the
elimination target. Dengue fever is known to have sudden increases in the number of outbreaks
within a year. There is no vaccine or specific drug regimen to cure it. HIV/AIDS prevalence is
estimated to be low in the Philippines but, high risk behaviors appear to be increasing and could
lead to high incidence over time.
Leading Causes of Mortality

Despite the positive developments in the life expectancy, Filipinos are still affected by a double
burden of disease, both from communicable and non-communicable diseases. Non-communicable
diseases are responsible for majority of deaths in the
country. The trends of the causes of death are from Figure 2. Mortality Trends of Communicable Diseases, Malignant
Figure 2. Mortality Trendsofofthe Communicable Diseases, Malignant
disease of the heart and malignant neoplasm which Neoplasm and Diseases
Neoplasm and Diseases
Heart per 100,000
of the
Population
Heart per 100,000 Population
comprise more than a third of the total causes of Source:Philippines,
Philippine Health 1953-2004
Statistics, 2004
600 100
deaths. Meanwhile, deaths due to accidents doubled Source: Philippine Health Statistics, 2004
600
90
100
from 21.5 per 100,000 population in 1994 to 41.3 per

500 90
Deaths per 100,000 population

Deaths per 100,000 population
80
500
Diseases)
and
Diseases of the Heart
population
per 100,000 population
80
100,000 population in 2004 (Philippine Health

70
of the Heart)
(Communicable Diseases)
and
400
Neoplasm
70
Diseases of the Heart)

400 60
Neoplasm
Statistics, 2004). Deaths caused by communicable 300 50
60
(Communicable
Malignant Neoplasm
per 100,000
300 50
diseases have been reduced by more than half in the

40
Malignant Neoplasm
Diseases
( Malignant
200 40
30
last twenty years. This is quite evident in the
( Malignant
200
Communicable Diseases 100

20
30
Communicable Diseases
decrease of pneumonia deaths from 86.4 per 100,000
20
10
Deaths
Deaths
100
10
0 0
population in 1984 to 38.4 per 100,000 population in

1956 1958
1962 1964
1968 1970
1976 1978
1980 1982
1982 1984
1988 1990
1996 1998
2000 2002
1954
1954 1956
1958 1960
1960 1962
1964 1966
1966 1968
1970 1972
1972 1974
1974 1976
1978 1980
1984 1986
1986 1988
1990 1992
1992 1994
1994 1996
1998 2000
2002 2004
0 0
2004
2004, a 55.5% reduction (Philippine Health Statistics,
Communicable
Diseases
Communicable
Malignant Neoplasm
Years
Diseases
2004). Deaths from all forms of tuberculosis have also Years

Malignant Neoplasm
decreased by 40% in the last two decades. This is the

result of more aggressive disease prevention and control efforts of the government and
improvements in curative care.
Infant, Under-Five and Maternal Mortality
The infant mortality rate (IMR) and under-five Figure 3. Trends in Infant and Under-Five Mortality Rates
mortality rate (UFMR) per 1,000 livebirths in the Figure 3. Trends in Infant and
Philippines, Under-Five Mortality Rates
1993-2006
Source: National Demographic Survey, 1993; National Demographic and Health Survey, 1998 and 2003 and
Philippines have been declining through the years, but the

Family Planning Survey 2006
Source: National Demographic Survey, 1993; National Demographic and Health Survey, 1998 and 2003 and
Family Planning Survey 2006
rate of decline has slowed down during the 1990s. The 70 IMR 64
Mortality Rate per 1,000 live births
70 64
Mortality Rate per 1,000 live births
was estimated at 30 infant deaths per 1,000 livebirths in

60 48
60 48
50 38 40
1993 then decreased to 24 per 1,000 live births in 1996 40 50 38 35
35
40
29
32
3224
40
(National Demographic Survey, 1993 and Family 30
20 30
29
24
Planning Survey, 2006). The three most common 10

20
causes of infant deaths are pneumonia, bacterial 0

10
0
1993 NDS 1998 NDHS 2003 NDHS 2006 FPS
sepsis, and disorders related to short gestation and low Years

Under-Five Mortality Rate Years
Infant Mortality Rate birth 1993 NDS 1998 NDHS 2003 NDHS 2006 FPS
weight. On the other hand, UFMR was estimated at 64 Under-Five Mortality Rate Infant Mortality Rate
deaths per 1,000 livebirths in 1993 then declined to 24 per 1,000 livebirths in 2006. The most common
causes of under-five mortality are pneumonia, accidents, and diarrhea (refer to Figure 3).
6
Figure 4. Trends in Maternal Mortality Ratio
Fourteen percent of all deaths in women aged 15- Figure 4.Philippines,
Trends in Maternal1993-2006 Mortality Ratio
49 years are maternal deaths. The country’s Philippines,
Source: National Demographic 1993-2006
and Health Survey, 1993 and 1998 and
Source: NationalFamily Planning
Demographic Survey,
and Health2006
Survey, 1993 and 1998 and
maternal mortality ratio (MMR) was estimated at Family Planning Survey, 2006
Maternal Mortality Ratio per 100,000 live births

209 per 100,000 livebirths between 1987 and 1993 250
Maternal Mortality Ratio per 100,000 live births

250 209
(National Demographic and Health Survey, 1993). 200
209
172
162
This improved to 162 per 100,000 livebirths in 2006 200 172
162
(Family Planning Survey, 2006). Maternal deaths 150

150
are mainly due to hypertension, postpartum 100
hemorrhage and complications from abortions. 100
50
50
0
There is regional variation in the attainment of 0 1993 NDHS
1993 NDHS
1998 NDHS
1998 NDHS
2006 FPS
2006 FPS
health outcomes such as infant and maternal Year
Year
mortality rates. Some regions are performing better
than the national average while the others are performing poorer than the national average.
Problems in administrative reporting are also aggravating the situation (refer to Figure 5 and 6).
Figure 6. Maternal Mortality Rates, Philippines Figure 5. Infant Mortality Rates, Philippines
Figure 6. Maternal Mortality Rates, Philippines Figure 5. Infant Mortality Rates, Philippines
and Regions, 2006 and Regions, 2006
and Regions,
Source: Field Health Service Information 2006of Health, Philippines, 2006
System 2006, Department and Regions,
Source: Field Health Service Information 2006of Health, Philippines, 2006
System 2006, Department
Source: Field Health Service Information System 2006, Department of Health, Philippines, 2006
Source: Field Health Service Information System 2006, Department of Health, Philippines, 2006
Philippines 0.63
NCR
Philippines 0.37 0.63
Philip 10
CARNCR 0.37 0.63
NCRPhilip 10 21.7
I
CAR 0.38 0.63
CARNCR 10.1 21.7
II I 0.38 0.62
I
CAR 10.6
10.1
III II 0.22 0.62
II I 6.5 10.6
IV-A III 0.220.32
III II 5.1 6.5
IV-BIV-A 0.32 0.96
IV-A III 5.1 7.5
VIV-B 0.96 1.19
IV-BIV-A 7.5 11.5
VI V 0.89 1.19
VIV-B 10.6 11.5
VII VI 0.47 0.89
VI V 10.6
11.2
VIII VII 0.47 0.93 VII VI 6.7 11.2
IX VIII 0.69 0.93 VIII VII 6.7 11.5
X IX 0.75
0.69
IX VIII 8.9 11.5
XI X 0.75 1.04 X IX 8.2 8.9
XII XI 0.6 1.04 XI X 8.2 12.9
Caraga XII 0.6 1.18 XII XI 5.2 12.9
ARMM
Caraga 1.18 1.31 Carag XII 5.2 7.4
ARMM 1.31 ARMMCarag 4.4 7.4
0 0.2 0.4 0.6 0.8 1 1.2 1.4 ARMM 4.4
0 0.2 0.4 0.6 0.8 1 1.2 1.4 0 5 10 15 20 25
0 5 10 15 20 25
Disasters and Emerging / Re-emerging Illness
The Philippines, being in the so-called Circum-Pacific belt of fire and typhoon, has always been
subjected to constant disasters and calamities such as floods, typhoons, tornadoes, earthquakes,
tsunamis, volcanic eruptions, drought, and flashfloods. Man-made disasters such as land, air and
sea disasters, civil and armed conflict also take their toll in lives and properties.
The country is also threatened by emerging and resurgent diseases. Emerging infectious diseases
are newly identified or previously unknown infections, such as severe acute respiratory syndrome
(SARS), while re-emerging infections are secondary to the reappearance of a previously eliminated
infection or an unexpected increase in the number of a previously known infectious disease, such as
avian influenza, mad cow disease and meningococcemia. Both types can cause serious public health
problems if not contained as close as possible to its source.
7
Responsiveness of the Philippine Health System
The availability of data for the overall responsiveness and satisfaction of the Philippine health
system is very limited and there is a need to improve its process of collection. The level of public
responsiveness and satisfaction with the health products, facilities and services are cited below:
Responsiveness of the Health System

Table 2. Percentage of People Receiving Poor Responsiveness in Hospital Inpatient Care Facilities
and Ambulatory Services in Selected Domains, Philippines, 2000
Source: World Health Survey, 2000
RESPONSIVENESS DOMAINS INDICATOR PERCENTAGE WHO GAVED POOR RATING

HOSPITAL IN- HOSPITAL
PATIENT CARE AMBULATORY
SERVICES
Prompt attention  Waiting time 43.4 40.0
Dignity  Privacy 37.1 37.6
Autonomy  Treatment information 41.3 41.3
 Involvement 47.4 45.5
Privacy and Confidentiality of Records  Talked privately 44.4 42.3
 Confidentiality of records 45.5 44.1
Choice of health care provider  Choice of health care provider 52.3 46.9
Basic amenities  Cleanliness 42.5 38.2
 Space 50.3 44.7
Social support  Family visit 43.3
The responsiveness of the hospital inpatient and ambulatory health care services in the Philippines
is generally acceptable as shown by the result of the World Health Survey in 2000. There were less
than half of the clients who rated with poor responsiveness the hospital in-patient care and
ambulatory health services in the domains of being provided prompt attention, respect for dignity,
autonomy, privacy and confidentiality of records and availability of basic amenities and social support.
However, the choice of health care provider and availability of adequate space have been rated poorly by
more than half of the respondents for hospital in-patient care (refer to Table 2). There is limited or no
data on the responsiveness of primary health care facilities.
Satisfaction with the Health System
Table 3. Net Satisfaction with Health Facilities with

Most Used Health Facility by Area
Philippines, 2000
Source: Filipino Report Card on Pro-Poor Services, World Bank, 2000
Philippines Metro Manila Luzon Visayas Mindanao
Over-all Satisfaction +87 +87 +88 +88 +83

For –profit hospital +96 +95 +96 +100 +93
Traditional healers +94 +100 +88 +97 +93
Non-profit hospitals +91 +100 +71 +100 +100
RHU +82 +100 +90 +81 +62
Government hospital +79 +72 +85 +70 +76
BHS +74 +50 +59 +84 +75
8
In 2000, the Filipino Report Card on Pro-Poor Services showed that there was a high level of overall
satisfaction with health facilities. Satisfaction was significantly higher for private facilities than
government facilities. For profit hospitals were rated +96, while the government hospitals were
rated +79, rural health units (RHUs) were rated +82 and barangay health stations (BHS) were given
a rating of +74. Although in the same survey, government hospitals got higher ratings from the
rural households and those from the lower socio-economic class.
In the same report, private facilities when compared to government facilities ranked superior on
quality aspects, at par on convenience of location but inferior on cost aspects. In other words, cost
was the only categorical advantage of government facilities over private facilities. Health services
provided by public facilities were used mainly by those who could not afford the widely preferred
private services.
Equity in Health Care Financing
In 2005, a total of P180.8 billion was spent on health related expenditures which is equivalent to
3.1% of the Gross National Product (GNP) in 2005. Of this, 59.1% or P106.9 billion was taken from
private sources which include out-of-pocket, private insurance, health maintenance organizations,
employee-based plans and private schools. Around
48.4% or P87.5 billion is primarily from out-of Figure 7. Distribution of Health Expenditure
Figure 7. Distribution
by Source ofofFunds Health Expenditure
pocket which means that the burden of paying for by Source
Philippines, 2005 of Funds
health care is still predominantly shouldered by Philippines,
Source: Philippine 2005 2005
National Health Accounts,
Source: Philippine National Health Accounts, 2005
individual families instead of the government or
Local
insurance. National and local governments spent a Local
Government Others
Others
1.2%
total of P51.9 billion, or 28.7% of total health Government
12.87%
12.87% 1.2%
expenditures, while social health insurance paid

P19.9 billion or 11%. Other sources accounted for
1.2% or P2.1 billion (Philippine National Health National
Accounts, 2005). National

Government
Government
15.84%
15.84% Private Sources
Social Health Private
59.1%Sources
Social Health
Insurance
The above sources of funds reflect different Insurance
11.0%
59.1%
insurance mechanisms with varying degrees of 11.0%
ability to pool resources and spread health risk. The individual family, through direct out-of-pocket
expenditure, is the least effective and most inefficient health insurance institution. A family’s
income and size limit the resources that can be pooled for health expenses. And since members are
often exposed to similar health risks, the family has limited risk-pooling capacity.
Until now, there has been limited progress made in expanding social risk pools which includes
government budget and social insurance funds for health. In 1994, social risk pools financed only as
much as 44% of total health spending and decreased to 42% in 2005 (Philippine National Health
Accounts, 2005).
On the average, families spend only 1.9% of their Figure 8. Family Expenditure on Health by Category
Figure 8. FamilyPhilippines,
Expenditure 2000on Health by Category
annual family expenditures on health care, based on a Source: Family Philippines, 2000
Income and Expenditure Survey, 2000
Source:Expenses for dental
survey conducted in 2000. The average health Family Income
Expenses
and Expenditure Survey, 2000
charges,for dental
Other medical
expenditure amount of a family then was roughly charges
Other medical
charges,
contraceptives and
othercontraceptives
health servicesand
charges
3.5%
P2,660 and ranged from P572 to P4,430. Of this Medical charges
3.5%
other4.3%
health services
4.3%
amount, 46.4% was spent on drugs and medicines, Medical

21.7% charges
21.7%
24.1% on hospital room charges, 21.7% on medical
charges including the doctors’ fees, 3.5% on medical
goods, and 4.3% on combined expenses for dental
charges, contraceptives, and other health services. Hospital room
Drugs and
charges
Hospital room
24.1%
charges
Drugs and
medicines
24.1% medicines
46.4 %
46.4 %
9
Challenges of the Philippine Health System
Given the scenarios presented in the previous sections, it is evident that the Philippine health
system is confronted with challenges in achieving its three goals: improving the health status of the
population, developing a health system that is more responsive to the health needs of the people
and ensuring equity in financing health care.
Table 4. Comparative Trade Prices of Branded Medicines (in Peso)

Philippines, India and Pakistan 2004
Source: MIMS 2004, Philippines; IDR 2004, India & Red Book 2004, Pakistan
Medicine Generic Name Medicine Medicine Brand Manufacturer Philippines India Pakistan
Preparation Name
Mefenamic Acid tab 300 mg tablet Ponstan Pfizer 20.98 2.80 1.46
Hyoscine-N-butylbromide 10 mg tablet Buscopan Boehringer 9.26 2.45 0.60
Cotrimoxazole 400/80 mg tablet Bactrim Roche 14.80 0.75 1.09
Nifedipine 20 mg tablet Adalat Retard Bayer 37.56 1.50 3.85
Gemfibrosil 300 mg capsule Lopid Pfizer 34.66 13.17 2.89
Furosemide 40 mg tablet Lasix Aventis 8.56 0.53 1.28
Enalapril maleate 5 mg tablet Plendil ER AstraZeneca 35.94 5.95 8.25
Gliclazide 80 mg tablet Diamicron Servier 11.00 7.57 5.00
Salbutamol 50 mg Ventolin Glaxo 315.00 132.38 65.88
Diclofenac 50 mg tab Voltaren Novartis 17.98 0.92 3.92
Isosorbide dinitrate 5 mg SL tab Isordil Wyeth 10.29 0.26 0.23
Loperamide 2 mg cap Imodium Janssen 10.70 3.27 1.94
Ceftazidime pentahydrate 1g vial inj. Fortum Glaxo 980.00 418.72 322.75
There are also problems in the accessibility and quality of health products, facilities and services.
The access to cheaper but quality drugs and medicine is poor. In 2003, the Philippine
pharmaceutical market was estimated to be P65 to 70 billion and accounted for roughly 45% of
health spending. Despite the large pharmaceutical market, local drug prices are 2 to 30 times
higher than in Canada or neighboring Asian countries. This situation exists partly because low cost
quality generic medicines comprise only 15 to 20 percent of the market while the rest are
dominated by high-priced branded medicines (See Table 4). Furthermore, drug distribution is
controlled by a few big distributors, mostly private drugstores; 85% of all drugs sold in the country
are dispensed from these private pharmacies.
The access to health facilities and health professional is also poor. In 2003, around 60% of all births were
attended by a trained health professional in a health facility but the rest were delivered by hilots or
unlicensed midwives and other untrained attendants (NDHS 2003). In the same year, around 34 out of
100 deaths from all causes and around 65% of deaths from certain conditions originating in the perinatal
period were attended by a medical or health professional (PHS 2003).
Government primary health facilities are conveniently located as 94% of households are within 15-
minute walking distance to a Rural Health Unit (RHU) or Barangay Health Station (BHS). However,
these facilities were frequently bypassed resulting in overcrowding of higher level facilities that are
supposed to be reserved for more specialized care.
On health facility utilization, the Filipino Report Card on Pro-Poor Services in 2000 showed that 77%
of households surveyed used health facilities of one type or another (See Table 5). Urban
households tend to use health facility services more compared to rural households. Government
facilities were more frequented than private facilities due to the cheaper cost of health services
being offered. Those who used the private facilities were predominantly rich households and urban
respondents, although poor respondents reported using private facilities as well.
10
Table 5. Utilization of Health Facilities by Area
Philippines 2000
Source: Filipino Report Card on Pro-Poor Services, World Bank, 2000
Philippines M. Manila Luzon Visayas Mindanao

(%) (%) (%) (%) (%)
Visited health facility 77 82 68 84 82
Mainly used government facility 39 35 36 44 42
Government hospital 20 20 24 16 16
BHS 10 6 4 21 14
RHU 9 9 8 7 12
No private facility (4) (2) (3) (5) (9)
Mainly Used facility 30 46 28 27 24
For profit 28 44 27 25 22
Non-profit 2 2 1 2 2
No govt. facility (2) (2) (4) (0.2) (3)
Traditional healers 8 2 3 12 17
These challenges have been in the forefront of major reform initiatives in the health sector and
remain as the focus of the implementation framework for health reforms that will be discussed in
the next section.
11
IMPLEMENTATION FRAMEWORK FOR
HEALTH REFORMS: FOURMULA ONE
FOR HEALTH
Defining the Roadmap for Health Reforms
To respond to the major challenges in the health sector there is a need for more
aggressive health reforms to be implemented across all levels of the health sector. Thus,
an implementation framework for health sector reforms was developed - the FOURmula
ONE for Health (F1). This approach is designed to implement critical and concrete health
interventions as a single package, and incorporates effective management infrastructure
and financing arrangements. It shall be implemented throughout the medium term, from
2005 to 2010.
F1 is both a philosophy and an approach. As a philosophy, it aims to improve health sector

performance by enhancing the way health goods and services are financed, regulated and
delivered, anchored on good governance. As an approach, it employs critical policy
instruments to implement programs, projects and activities directed at priority health
outcomes which are determined based on need and strategic contribution to overall
reform effort.
F1 engages the entire health sector to include the public and private agencies, national
agencies and local government units, external development agencies, and civil society in
the implementation of health reforms. Everyone is invited to join the collective race
against fragmentation of the health system of the country, against the inequity of
healthcare and the impoverishing effects of ill-health. With a robust and united health
sector, the race towards better health and a brighter future can be won.
12
Starting the Race with the End Goal in Mind:
FOURmula ONE for Health Goals and
Objectives
Over-all Goals
FOURmula ONE for Health objectives
The implementation of FOURmula ONE
for Health (F1) is directed towards and the health system goals
achieving the end goals of the Philippine Reform Mechanisms
Health System --- better health Objectives
outcomes, a more responsive health Health Systems Goals
system, and more equitable healthcare 1. Financing (higher, better
• Better health
financing. These goals are in consonance and sustained)
2. Regulation (assured outcomes
with the Millennium Development Goals
(MDGs) and Medium Term Philippine quality and affordability)
3. Service Delivery • More responsive
Development Plan (MTPDP), and are health system
(ensured access and
articulated in more detail in the National availability)
Objectives for Health 2005 -2010. 4. Governance (improved • Equitable health
health system care financing
performance)
General Objective
FOURmula ONE for Health (F1) is aimed at achieving critical reforms with speed, precision and
effective coordination directed at improving the quality, effectiveness, equity, and efficiency of
the Philippine health system in a manner that is felt and appreciated by all Filipinos.
General objective
To undertake critical reforms with speed,

precision, and effective coordination
towards improving the quality, efficiency,
effectiveness and equity of health care
delivery
NOH MTPDP MDGs
FOURmula ONE for Health (F1) will strive within the medium term to:
 Secure higher, better and sustained financing for health;
 Assure the quality and affordability of health goods and services;
 Ensure access to and availability of essential and basic health packages; and
 Improve performance of the Philippine health system
13
The F1 Objectives and Strategies
Health Financing
Objective: Secure higher, better and sustained financing for health
Strategies
1. Mobilizing resources from extra-budgetary sources
2. Coordinating local and national health spending
3. Focusing direct subsidies to priority programs
4. Adopting a performance-based financing system
5. Expanding the national health insurance program
Health Regulation
Objective: Assure the quality and affordability of health goods and services
Strategies
1. Harmonizing licensing, accreditation and certification
2. Developing a “seal of approval” for quality assurance
3. Pursuing revenue enhancement with income retention for health
regulatory agencies
4. Ensuring access of the poor to essential health products, specifically
drugs and medicines
Health Service Delivery

Objective: Ensure access and availability of essential and basic health
packages
Strategies
1. Making available basic and essential health service packages by
designated providers in strategic locations
2. Assuring the quality of both basic and specialized health services
3. Intensifying current efforts to reduce public health threats
Good Governance
Objective: Improve performance of the health system
Strategies
1. Improving governance in local health systems
2. Improving national capacities to manage and steward the health
sector
3. Pursuing the development of rationalized and more efficient national
and local health systems
14
Building Gains of Previous Health Reforms:
Drawing Impetus for FOURmula ONE for
Health Implementation
The current implementation of health reforms builds upon the lessons and experiences from the
major health reform initiatives undertaken in the last 30 years -- from the Primary Health Care
approach in the late 1970s, the Generics Act in the late 1980s, the devolution of public health
system in the early 1990s, the National Health Insurance Act of 1995, to the Health Sector Reform
Agenda (HSRA) conceptualized in the late 1990s.
Since the inception of the HSRA in 1999, health reforms have made inroads in at least 30 provinces.
In health governance, municipalities have joined together to form Inter-Local Health Zones (ILHZs)
to optimize sharing of resources and maximize joint benefits from local health initiatives. A total of
151 out of 183 organized ILHZ (82%) became functional in 2005.
Under health regulation, the parallel drug importation of drugs and medicines lowered the cost of
ten therapeutic classes of their local counterpart by at least 50% from their 2000 prices. Access for
cheaper but quality drugs were promoted through the establishment of Botika ng Bayan and Botika
ng Barangay as well as the promotion of generic pharmaceutical products.
In health service delivery, key LGU facilities have been upgraded to meet accreditation
requirements and be entitled for capitation or reimbursements from PhilHealth. All DOH hospitals
underwent income retention and utilized their income to improve health care services. Four
specialty hospitals were rationalized into corporate hospitals wherein they started to be managed
by autonomous governing boards. Such hospitals include the Philippine Heart Center, Lung Center
of the Philippines, National Kidney and Transplant Institute and the Philippine Children’s Medical
Center.
For health financing, LGUs have increased contributions needed to enroll indigents into the social
health insurance program. Not only is the coverage of health services being improved in these
localities, invaluable lessons are also being learned to bolster confidence in the implementation of
these reforms nationwide.
15
Defining the Rules of Engagement: Seven (7)
General Guidelines for Health Reform
Implementation
F1 Rule No.1
FOURmula ONE for Health (F1) will organize the critical reform initiatives into four
implementation components, namely: Health Financing, Health Service Delivery,
Health Regulation and Good Governance.
F1 Rule No. 2:
The implementation of FOURmula ONE for Health (F1) will focus on a few manageable
and critical interventions. Such interventions will be identified using the following
criteria:
Doable given available resources - Critical interventions identified for each
component must be deemed doable given the available time, human and financial
resources.
Sufficient groundwork and buy-in - The chosen interventions must be backed by
sufficient groundwork and buy-in from implementation partners, especially in the
development of reform packages for local implementation.
Triggers a reform chain reaction - These critical interventions must be able to
trigger a chain of reaction that will spur the implementation of other FOURmula ONE
for Health (F1) interventions, within and across the four components.
Produces tangible results and generates public support - These critical
interventions must be able to show tangible results within the immediate and medium
terms, which in turn generate support and cooperation from the public.
F1 Rule No. 3
The reforms will be implemented under a sector-wide approach, which encompasses a

management perspective that covers the entire health sector and an investment
portfolio that encompasses all sources.
F1 Rule No. 4
The National Health Insurance Program (NHIP) will serve as the main lever to effect
desired changes and outcomes in each of the four implementation components, where
the main functions of the NHIP including enrollment, accreditation, benefit delivery,
provider payment and investment are employed to leverage the attainment of the
targets for each of the reform components.
16
F1 Rule No. 5
The functional and financial management arrangements will be defined in terms of

specific offices having clear mandates, performance targets and support systems,
within well-defined time frames in the implementation of reforms within each
component.
F1 Rule No. 6
The functional clustering of teams and assignment of specific Team Leaders shall
facilitate implementation, monitoring and supervision in a coordinative manner and
shall not, in any way, prejudice the corporate nature of the DOH-attached agencies
or the autonomy of Local Government Units.
F1 Rule No. 7
The selection of FOUR-in-ONE Convergence Sites will be governed by the following

criteria:
▫ Willingness of the LGU to participate in the F1 implementation, in terms of

commitment to shoulder the requisite counterpart resources, and willingness
to enter into formal national government to local government, inter-local
government and government to private sector networking, partnership and
resource sharing arrangements
▫ Presence of local initiatives or start-up activities relevant to F1 strategies, to

include, but not limited to: development of inter-local health zones,
enrollment of indigents into the social health insurance system, improvement
in drug management systems, among others
▫ Relatively high feasibility of success and sustainability, to include factors

such as capacity to enter into loans, capacity to absorb investments and
sustain the reform process
▫ Availability of funds from Government of the Philippines (GOP) and external

sources for capital investment requirements.
17
Carrying Out the Game Plan: Winning
Strategies to Attain FOURmula ONE for
Health Component Specific Objectives
Critical interventions under F1 are packaged under the four reform components: Health Service
Delivery, Health Regulation, Health Financing, and Good Governance. It is envisioned that all the
reform components shall be implemented as a single package in areas which shall be called as the
FOUR-in-One sites. Greater investments, more technical assistance and more intensive
implementation processes and arrangements shall be focused in the FOUR-in-One sites. As such,
16 provincial LGUs were selected as initial implementation sites for F1 and additional provinces if
not all provinces in the country shall be selected as roll-out sites.
The provinces that are not selected as F1 sites are encouraged to implement the different F1
programs, projects and activities (PPAs) within their means even without the support from other
partners. However, it is recognized that the implementation of many F1 PPAs shall be done at
national scale such as the different priority public health programs and projects for maternal and
child health, tuberculosis, HIV/AIDS and enrollment of indigent families to the Sponsored Program
of PhilHealth among others.
To better operationalize each reform component, flagship PPAs has been defined. The said PPAs
shall be implemented at the national and local levels.
The PPAs at the national level shall focus on health policy formulation and program development;
capability building for LGUs and other stakeholders; leveraging services for priority public health
programs; regulation of services, products and facilities, health promotion and advocacy;
improvement of management systems and processes; tertiary care development; and monitoring
and evaluation among others.
The PPAs at the LGU level focus on the adoption and implementation of health policies and
programs. The LGUs shall also strive for the improvement of their management systems and
processes. The preceding section shall focus on the details of the PPAs for the national and LGU
levels.
18
F1 Programs, Projects and Activities
National Level LGU Level
I. Health Financing I. Health Financing
1. Expansion of the National Health Insurance Program (NHIP) 1. Support to the Expansion of National Health Insurance
a. Attainment of Universal Coverage for Social Health Insurance Program (NHIP)
b. Assurance of National Government Premium Counterpart a. Support to the Attainment of Universal Coverage for Social
c. Development and Implementation of Tool/s to Identify the Indigent Families for Health Insurance
PhilHealth Sponsored Program Enrolment b. Assurance of Local Government Premium Counterpart
d. Accreditation of Health Care Providers c. Adoption of PhilHealth Approved Tool for Identifying
e. Expansion of PhilHealth Benefit Packages Indigent Families and Ensure their Enrolment to PhilHealth
d. Compliance to PhilHealth Accreditation Standards
e. Rational Use of PhilHealth Capitation and Reimbursements
2. Budget Reforms in DOH and Attached Agencies 2. Increasing LGU Investment for Health
a. Development of the Health Sector Expenditure Framework (HSEF) a. Increasing Budget Allocation for Health
b. Establishment of a System for Budget Allocation, Utilization and Performance b. Revenue Generation and Mobilization of Extra-Budgetary
Monitoring Resources
c. Mobilization of Extra-Budgetary Resources c. Income Retention of Health Facilities
d. Coordination of National and Local Health Spending
3. Establishment of Local Health Accounts
II. Health Regulation II. Health Regulation

1. Upgrading, Harmonization and Streamlining of the Regulatory Systems and 1. Enforcement of National Health Legislation, Policies and
Processes Standards
a. Establishment of a One-Stop Shop for Licensure of Health Facilities
b. Automation of Regulatory Systems and Processes
c. Decentralization of Appropriate Regulatory Functions to Regional Offices and
LGUs
d. Upgrading of the Critical Capacity of Regulatory Agencies
e. Strengthening of Enforcement Mechanism and Regulatory Oversight Functions
of DOH
2. Development of Quality Seals for Health Products, Food, Devices, Drug 2. Legislation and Localization of Health Regulatory Policies
Establishments, Facilities and Services
3. Harmonization of Systems and Processes of DOH Regulatory Offices with

ASEAN Standards
4. Improving the Availability and Access to Low-Cost and Quality Essential 3. Improving the Availability and Access to Low-Cost Quality
Medicines and Other Health Commodities Essential Medicines and Other Health Commodities
a. Promotion of High Quality Generic Pharmaceutical Products a. Promotion of High Quality Generic Pharmaceutical Products
b. Expansion of Pharmaceutical Distribution Networks b. Establishment and Operation of Pharmaceutical Distribution
c. Identification of Alternative Local and Foreign Sources of Low-Priced Quality Networks
Drugs and Medicines c. Implementation of Pooled Procurement among Health Facilities
d. Development of Mechanisms for Pooled Procurement Among Health Facilities across LGUs
Across LGUs
5. Institutionalization of Cost Recovery and Revenue Enhancement

Mechanisms for Health Regulatory Agencies
a. Income Retention Policy
b. Fee Restructuring
19
F1 Projects Programs and Activities
National Level LGU Level
III. Service Delivery III. Service Delivery
1. Public Health Development Program 1. Public Health Development Program
a. Establishment of Disease-Free Zones a. Establishment of Disease-Free Zones
 Filariasis Elimination Services  Filariasis Elimination Services
 Schistosomiasis Elimination Services  Schistosomiasis Elimination Services
 Rabies Elimination Services  Rabies Elimination Services
 Leprosy Elimination Services  Leprosy Elimination Services
 Malaria Control Services  Malaria Control Services
b. Intensifying Disease Prevention and Control b. Intensifying Disease Prevention and Control
 Tuberculosis Control Services  Tuberculosis Control Services
 HIV/AIDS Control Services  HIV/AIDS Control Services
 Dengue Control Services  Dengue Control Services
 Emerging and Reemerging Infection Prevention and Control Services  Emerging and Reemerging Infection Prevention and Control
Services
c. Improving Reproductive Health Outcomes c. Improving Reproductive Health Outcomes
i. Enhancement of the Child Health Programs i. Implementation of Child Health Programs
 Expanded Program on Immunization  Expanded Program on Immunization
 Breastfeeding Program  Breastfeeding Program
 Integrated Management of Childhood Illnesses (IMCI)  Integrated Management of Childhood Illnesses (IMCI)
 Nutrition Services  Nutrition Services
ii. Enhancement of the Maternal Health Programs ii. Implementation of Maternal Health Programs
 Safe Motherhood Policy  Safe Motherhood Policy
 Reproductive Health to Include Family Planning and Adolescent  Reproductive Health to Include Family Planning and Adolescent
Health Health
 Maternal Nutrition  Maternal Nutrition
d. Intensifying Healthy Lifestyle and Management of Health d. Intensify Healthy Lifestyle and Management of Health Risks
Risks  Advocacy campaigns for risk behaviors
 Advocacy Campaigns for Risk Behaviors  Water and Sanitation Programs
 Water and Sanitation Programs  Risk factor screening
 Risk Factor Screening
e. Strengthening the Surveillance and Epidemic Management e. Strengthening the Surveillance and Epidemic Management
System System
 Creation and Strengthening of Epidemic and Surveillance Units  Creation and Strengthening of Epidemic and Surveillance Units
 Creation of Regional Epidemic Management Committee (REMC)  Creation of Provincial Epidemic Management Committee (PEMC)
 Set up Surveillance Systems  Set up Surveillance Systems
 Linkage with Private Sector  Linkage with Private Sector
f. Strengthening the Disaster Preparedness and Response System f. Strengthening the Disaster Preparedness and Response System
g. Intensifying Health Promotion and Advocacy g. Intensifying Health Promotion and Advocacy
 Review of Health Promotion Interventions and Technology Upgrade  Localization of Health Promotion and Advocacy Materials
 Strengthening Health Promotion in Service Packages  Behavior Change Communication (BCC)
 Integration of Patient Education in Clinical Practice Guidelines  Intensification of Patient Education in Clinical Practice
 Creation of Health Promotion Foundation
2. Health Facilities Development Program 2. Health Facilities Development Program
a. Rationalization of Health Facilities and Services Including the Provision a. Rationalization of Local Health Facilities to Include BEmOC/ CEmOC
and Capacity Building of Human Resources for Health and the Provision and Capacity Building of Human Resource for
b. Integration of Wellness Services in Hospitals Health
c. Hospital Development Planning b. Integration of Wellness Services in Hospitals
c. Compliance to PhilHealth Accreditation Standards for Health Facilities
d. Compliance to DOH Licensing Standards for Health Facilities
IV. Good Governance IV. Good Governance
1. National and LGU Sectoral Management 1. LGU Sectoral Management
a. Strengthening the Stewardship of National and Local Health Systems a. Strengthening the Local Health Systems Development
b. Strengthening the National Human Resources for Health Program b. Strengthening the Local Human Resource Management System
c. Sector Development Approach for Health (SDAH) Implementation c. Sector Development Approach for Health (SDAH) Implementation
d. Institutionalization of the Monitoring and Evaluation of Health Reforms d. Support to the LGU Scorecard Implementation
e. Strengthening the Philippine Health Information System e. Strengthen Local Health Information System Development and
Utilization
2. DOH Internal Management 2. LGU Internal Management
a. Strengthening the Public Finance Management a. Strengthening the Public Finance Management
b. Strengthening the Procurement and Logistics Management b. Strengthening the Procurement and Logistics Management
c. Asset Management c. Asset Management
d. Strengthening the Internal Audit d. Strengthening the Internal Audit
20
Health Financing
I. STRATEGIES
The objective of health financing reforms is to secure higher, better and sustained investments in
health to provide equity and improve health outcomes, especially for the poor. The key strategies
for attaining this objective are as follows:
1. Mobilizing resources from extra budgetary sources

Additional resources for health shall be mobilized by increasing the revenue generation
capacities of health agencies and facilities through user fees from personal health care;
regulatory services; and rationalized use of government properties and assets without
compromising access by the poor. Resources from official development assistance and the
private sector can also be tapped. Health agencies and facilities with significant revenue
generating capacities shall not only support its own requirements but also contribute to
meet the needs of non-revenue generating priority programs. However, such mechanisms
need to be designed in a way that do not penalize or restrain fiscal performance of revenue
generating agencies.
2. Coordinating local and national health spending

The overall management of total health investments shall be undertaken using a sector
wide approach, where health resources are pooled and allocated rationally across all levels,
based on priority areas. The implementation of health reform interventions shall be
financed jointly by national and local governments, PhilHealth and development partners.
Mechanisms to mobilize private sector resources shall be developed. The DOH shall take the
lead in coordinating national and local health spending and ensure that there is no
duplication in health expenditure by different sources of financing.
3. Focusing direct subsidies to priority programs

Efforts to mobilize more investments for health shall be coupled with measures to improve
efficiency in the system on two accounts: (1) maximizing the expected performance outputs
using the available resources; and (2) properly allocating the resources where they shall
yield the optimum health impact. Existing resources for health shall be focused on
identified priority areas and programs. Specifically, direct subsidies from national and local
governments shall be focused on basic and essential health goods and services commonly
used by the poor.
4. Adopting a performance based financing system

Financing of health agencies and programs shall be shifted from historical or incremental
budgeting system into one that is performance based. The budget allocations and releases
shall therefore be conditioned on the achievement of performance targets. A multi-year
budget scheme shall be developed to support selected priority programs that require long
term financing.
5. Expanding the national health insurance program

The national health insurance program shall be further strengthened by expanding
enrollment coverage, improving benefits and leveraging payments on quality of care.
PhilHealth shall strengthen coordination and continue engaging partners at the local level.
21
II. PROGRAMS, PROJECTS AND ACTIVITIES
A. National Level
1. Expansion of the National Health Insurance Program
a. Attainment of Universal Coverage for Social Health Insurance
The Philippine Health Insurance Corporation or PhilHealth shall continuously conduct advocacy to
increase membership and collection for the National Health Insurance Program (NHIP) to achieve
its goal of universal social health insurance coverage. This shall include social marketing
mechanisms to increase and sustain coverage as well as ensuring timely and accurate premium
remittance for the following: a) indigent families under the Sponsored Program; b) Overseas
Filipino Workers (OFWs); c) voluntary and self-employed individuals under the Individually Paying
Program (IPP); and d) government and private employees under the formal sector. In order to
establish a truly equitable social health insurance program, PhilHealth shall develop a more
responsive contribution structure such that those who have more resources bear the bigger
burden compared to that of the poor.
b. Assurance of National Government Premium Counterpart

DOH and PhilHealth shall develop mechanisms to ensure financing for the national government
counterpart of the PhilHealth premium for the enrollment of indigent families in the Sponsored
Program through the General Appropriations Act and other funding mechanisms initiatives.
c. Development and Implementation of Tools to Identify the Indigent Families

for PhilHealth Sponsored Program Enrolment
PhilHealth shall adopt the Proxy Means Test (PMT) protocol of Department of Social Welfare and
Development (DSWD) which predicts income per capita at household level. The variable to be
estimated is income instead of consumption because the Philippine official statistics are income-
based. In order to ensure consistency among national poverty programs, the DSWD declared that
the PMT methodology will eventually be the national tool to identify indigents.
d. PhilHealth Accreditation of Facilities

PhilHealth shall continue to accredit public and private hospitals and other health care facilities
such as ambulatory surgical clinic, free-standing dialysis clinics, maternal care package, and TB-
DOTS providers to increase access of members to NHIP.
e. Expansion of PhilHealth Benefit Packages

The PhilHealth benefit packages shall continuously evolved to respond to the needs of the
greater number of members in support to the National Objectives for Health and within the
context of F1 of the DOH. Among the new benefits to be rolled out before the year 2008 ends are
the following:
a) payment for the 4th normal spontaneous deliveries;

b) outpatient benefits for the treatment of malaria and HIV / AIDS (the reduction of the
incidence rates of these diseases is part of the MDGs), of which the Philippines is a
signatory; and
c) malaria package of P600 which will include payment for laboratories, diagnostics, and
some of the drugs and administrative costs, and will be made available through RHUs.
Steps shall also be taken to ensure that benefits remain within the range of targeted support
value. Clinical Practice Guidelines (CPGs) or treatment protocols for the proper management of
patients shall also be developed to ensure rational use of drugs, medicines and services and to
prevent excessive claims of health providers from the purchasers of health services such as
PhilHealth and the general population.
22
2. Budget Reforms in DOH and Attached Agencies
a. Development of the Health Sector Expenditure Framework
A medium term Health Sector Expenditure Framework (HSEF) will be developed to facilitate
linking budget allocation to performance. This will be the basis for planning, budgeting, utilizing
funds and monitoring other project components, harmonized with DOH’s own management
processes.
b. Establishment of a System for Budget Allocation, Utilization and

Performance Monitoring
Financing of health agencies and programs shall be shifted from historical and incremental
budgeting system into one that is performance-based. Budget allocation and releases shall
therefore be conditioned on the achievement of performance targets. Performance-based
budgeting initiatives shall include the following:
i. Performance-based Commodities Allocation. Public health commodities shall be given

to LGUs which are willing to partner with the DOH in the implementation of priority
public health programs such as disease eradication initiatives (e.g. Schistosomiasis,
Filariasis); or intensified efforts for disease prevention and control (e.g. hepatitis B
vaccine provision for LGUs with already high fully immunized children coverage).
Incentives for performance shall be given to the LGUs based on achievement of clearly
defined and measurable improvement in the delivery of selected public health programs
and objectives. These awards may be linked to the LGU scorecard and to the
development of “LGU League Tables” to publish the relative performance of LGUs in
different priority areas of their public health responsibility. Performance-based
allocations and awards for public health would be based on performance agreements
between the DOH and participating LGUs.
ii. Performance-Based Budgeting for DOH Retained Hospitals. A fund pool contributed to
by DOH retained hospitals for upgrading of hospital facilities and services shall be
established. Access to this fund shall be competitively determined and will be based on
compatibility with local health care networks, competitiveness with the private sector,
and contributions to clinical research and training, and performance. Special
consideration shall be made on how well a facility can recoup and sustain support for
the recurrent cost implications of proposed upgrading or investments.
c. Mobilization of Extra-Budgetary Resources

The DOH shall lead in mobilizing extra-budgetary resources from official development assistance
(ODA) and other development partners through the principles of Sector Development Approach
for Health (SDAH) which shall be utilized for health reforms at the national and local level.
Additional resources for health shall be mobilized by increasing the revenue generation
capacities of health agencies without compromising access by the poor. This shall include
revenues from user-fee charges from personal health care and regulatory services and
rationalized use of real property assets belonging to government health agencies. Health
agencies and facilities with revenue generating capacities shall not only support its own
requirements but also contribute to meet the needs of non-revenue generating priority programs.
However, such mechanisms shall be designed and introduced in a way that do not penalize or
restrain fiscal performance among revenue generating agencies.
d. Coordination of National and Local Health Spending

The DOH shall lead in coordinating national and local health spending especially in the
implementation of national health programs and in the implementation of reform initiatives. This
shall ensure that there shall be no duplication in health expenditure across all levels. Efforts to
mobilize more investments for health shall be coupled with measures to improve efficiency in the
system for maximizing the expected performance outputs using the available resources and
properly distributing or allocating the resources where they shall yield the optimum health
impact. Existing resources for health shall be focused on identified priority areas and programs
specifically, direct subsidies from national and local governments shall be focused on basic and
essential health goods and services commonly used by the poor. The overall management of total
health investments shall be undertaken through the principles of SDAH where health resources
shall be pooled and allocated rationally across all levels based on identified priority areas. The
financing of F1 PPAs shall be jointly undertaken by the central and local government, PhilHealth,
ODA and other partners. The mechanisms for mobilizing private sector resources shall likewise be
undertaken.
23
B. LGU Level
1. Support to the Expansion of the National Health Insurance

Program
a. Support to the Attainment of Universal Coverage for Social Health

Insurance
Social marketing strategies shall be conducted among the LGUs to increase the enrolment of the
indigent families to the Sponsored Program of the NHIP. The LGUs shall also assist in the
implementation of social marketing strategies to increase the enrolment of the informal sector to
the NHIP.
b. Assurance of Local Government Premium Counterpart

The municipal, city and provincial LGUs shall ensure the allocation of budget from their Internal
Revenue Allotment (IRA) for the payment of their premium counterpart in the enrolment of
indigent families to the Sponsored Program. The LGUs may pursue legislation to peg a portion of
their IRA to enroll the indigents identified in the tool for identification of the poor.
c. Adoption of PhilHealth Approved Tools for Identifying Indigent Families

and Ensure their Enrolment to PhilHealth
The LGUs shall adopt the PhilHealth approved tool for identifying indigent families for enrolment
into the Sponsored Program to ensure that the true poor families will be given financial risk
protection from catastrophic illnesses through social health insurance.
d. Compliance to PhilHealth Accreditation Standards

The municipal, city and provincial LGUs shall ensure that their facilities such as the RHUs and
hospitals shall meet the accreditation criteria of PhilHealth for them to qualify for the release of
capitation and reimbursement from PhilHealth.
e. Rational Use of PhilHealth Capitation and Reimbursement

The municipal and city LGUs shall ensure that capitation from PhilHealth shall be spent rationally
following PhilHealth policies for its utilization. The hospitals of LGUs shall also ensure that they
are claiming appropriate reimbursement from PhilHealth based on benefit packages and
treatment guidelines and that the reimbursements are properly utilized according to PhilHealth
policy.
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2. Increasing LGU Investments for Health
a. Increasing Budget Allocation for Health
Advocacy for the increased health budget allocation for capital outlay, maintenance and other
operating expenses and personal services from the IRA shall be conducted among municipal, city and
provincial LGUs.
b. Revenue Generation and Mobilization of Extra-Budgetary Resources

The LGUs shall conduct revenue generation initiatives to sustain their financial resources for health
such as collection of user-fee charges from health facilities without compromising the access of the
poor and through the rationalized use of real property assets of health facilities such as
establishment of income generating projects and economic enterprise within their areas of
responsibility. The LGUs shall also be encouraged to mobilize extra-budgetary resources from
donations, grants and loans coming from ODA and other partners in health. Other sources of
financing for health can also be identified.
c. Income Retention of Health Facilities

Advocacy to policy makers at the LGU level to allow income retention and utilization among LGU
hospitals and other health facilities through local legislation shall be conducted. This shall ensure
availability and increase resources for the provision of health services in LGU health facilities until
they achieve fiscal autonomy.
3. Establishment of Local Health Accounts

A Local Health Account, which is a system of monitoring and tracking the sources and uses of health
funds, shall be established among LGUs. This shall serve as basis for planning to improve and sustain
the investments for health at the local level.
25
Health Regulation
I. STRATEGIES
Health regulation reforms aim to assure access to quality and affordable health products, devices,
facilities and services, especially those commonly used by the poor. Strategies under this reform
component include the following:
1. Harmonizing and streamlining licensing, accreditation and

certification systems
On the supply side, systems and processes for licensing, accreditation and certification
shall be harmonized and streamlined to make health regulation more rational and client-
responsive by: (1) establishing a “one-stop shop” for licensing of health facilities; (2)
automating regulatory systems and processes; (3) integrating accreditation and
certification into a unified “seal of approval” system; (4) introducing intensive but less
frequent and incentive-based regulatory procedures; (5) decentralizing appropriate
regulatory functions to regional offices and LGUs; and (6) strengthening enforcement
mechanisms and regulatory oversight functions of the DOH.
2. Developing a “seal of approval” system on health products,

facilities and services
On the demand side, a “seal of approval” system shall be developed. Such seal shall
indicate that a certain level of standard or competency has been achieved, assuring
providers and clients that fair and ethical standards are met. The presence or absence of
such seals shall enable consumers to make informed decisions and demand quality products
and services. The use of the seals shall be expanded and operationalized to include public
and private health facilities, laboratories, pharmacies, and devices. These seals shall be
linked to incentives to meet progressively higher standards for safety, effectiveness and
quality.
3. Pursuing cost recovery and income retention for regulatory

agencies
Consistent with the over-all financing strategy for health reforms, cost recovery and
income retention for health regulatory agencies and other revenue-generating mechanisms
shall be pursued to ensure financial sustainability. However, use of retained revenues shall
be backed by a rational and approved expenditure plan.
4. Assuring the availability of quality and affordable medicines
The availability of low-priced quality essential medicines commonly used by the poor shall
be assured through the following mechanisms: (1) promoting high quality generic
pharmaceutical products; (2) expanding pharmaceutical distribution networks; (3)
identifying alternative local and foreign sources of low-priced pharmaceutical products;
and (4) developing mechanisms for pooled procurement among health facilities and across
LGUs to realize economies of scale.
26
A. National Level
1. Upgrading, Harmonization and Streamlining the Regulatory

Systems and Processes
The regulatory systems and processes of the DOH need to be upgraded, harmonized,
streamlined and simplified. In the process, personnel and manpower implements would be
rationalized and dedicated to more productive activities. On the side of the regulated, this
agenda would derive customer trust in the system and, ultimately, satisfaction on the
regulatory services provided.
a. Establishment of a One-Stop Shop for Licensure of Health Facilities

In order to harmonize and streamline regulatory processes for health facilities; to reduce
transaction costs and the costs of provision of regulatory services; and to increase customer
trust and satisfaction, a One-Stop Shop System for the Licensure of Health Facilities shall be
established at the DOH Central Office and the Centers for Health Development (CHDs). Initially
the system shall include the licensure of hospitals, but would eventually cover other regulated
health facilities that provide ancillary services such as dialysis clinics, ambulatory surgical
clinics, medical facilities for overseas workers and seafarers and similar health facilities.
In the One-Stop Shop Licensure System, a single license to operate shall be issued to the health
facility which would cover all services provided within the premises of the health facility,
including diagnostic and other ancillary services. There shall be a single license application
process and unified inspection of the health facility that shall be conducted by a composite
team of professionals with the technical expertise to determine compliance to regulatory
standards.
Another important feature of the One-Stop Shop Licensure System shall be the automatic
renewal of license. With this feature, the license to operate shall be renewed upon submission
of required documents without prior inspection of the health facility. Compliance to regulatory
standards shall be determined during intensified monitoring visits by the regulatory officers
from the CHDs and DOH regulatory bureaus. Automatic renewal of license shall necessitate a
more intensive, less frequent regulatory procedures that focus more on providing incentives for
timely submission of applications such as discounts on license fees.
The implementation of the One-Stop Shop Licensure System shall be evaluated by 2009-2010.
The system is expected to promote efficiency in health regulation, which shall in turn lead to
the achievement of the F1 goals of responsiveness and client satisfaction.
The Bureau of Quarantine (BoQ) shall set up a One-Stop Shop for the issuance of Certificate of
Compliance to Criteria for Establishments’ Sanitation and Employees’ Hygiene for all
establishments located inside the perimeter of airports and seaports nationwide.
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b. Automation of Regulatory Systems and Processes
Upgrading of regulatory systems and processes shall be realized through the establishment of a
“central regulatory hub” that will facilitate transactions in the regulatory bureaus and
improve their information management system. This shall entail software development for the
automation of systems and procedures for the regulation of health products, food, devices,
drug establishments and facilities. Automation will increase efficiency in the regulatory
bureaus as well as client satisfaction through better, faster and more convenient public
service.
For the Bureau of Health Facilities and Services (BHFS), there is the ongoing development and
implementation of the computer-based Integrated Drug Test Operations and Management
Information System (IDTOMIS). Its objective is to make efficient and effective the current
systems and procedures for accreditation of drug testing laboratories and drug abuse treatment
and rehabilitation centers through on-line application and payment systems, registration of
clients, and verification and confirmation of drug test results through the development and
implementation of computer-based systems.
The Bureau of Food and Drugs (BFAD) is currently undergoing automation of its regulatory
systems and processes. Likewise, automation of its systems and processes is being proposed by
the Bureau of Health Devices and Technology (BHDT) as well as the BoQ.
c. Decentralization of Appropriate Regulatory Functions to Regional Offices

and LGUs
The decentralization of appropriate regulatory functions to CHDs and LGUs would help
streamline regulatory systems and processes, to the benefit of both the government and the
private sector by improving efficiency and reducing the cost of regulation as well as reducing
transaction costs incurred by the latter. Decentralization would also free-up resources that
could be used to strengthen standards development, enforcement, surveillance and oversight
functions of the DOH regulatory offices.
Decentralization to the CHDs shall initially be undertaken for the licensing process for hospitals
and clinical laboratories. Other health facilities and other health regulatory functions shall be
targeted later on, based on the evaluation of initial decentralization efforts. Similarly, the
decentralization of selected regulatory functions to LGUs shall be based on the experience with
decentralization to CHDs. In addition, a research study on the capacity of LGUs to undertake
health regulatory functions shall be conducted. The data that will be obtained shall serve as
basis for policy decisions on decentralization of regulatory functions to LGUs.
The BoQ shall decentralize appropriate regulatory functions to major quarantine stations
nationwide.
In the background of decentralization, the DOH regulatory bureaus shall re-orient their
organizational goals and functions, focusing more on regulatory standards development,
supervision and monitoring, surveillance and oversight. They shall endeavor to build up the
capacity of CHDs, other field units (i.e. quarantine stations) and LGUs to perform decentralized
regulatory functions, particularly the training of personnel.
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d. Upgrading of the Critical Capacity of Regulatory Agencies
The regulatory bureaus shall develop and implement their master plans to upgrade laboratory
equipment, services, systems and processes including the retooling and retraining of their health
human resource.
e. Strengthening of Enforcement Mechanism and Regulatory Oversight Functions

of the DOH
Legislation that will strengthen and expand the regulatory mandates of the DOH shall be proposed.
In the background of decentralization of selected regulatory functions, the regulatory oversight
functions of the DOH regulatory bureaus shall be emphasized in the proposed legislation, as well as
in any policy initiatives on health regulation.
Outsourcing is the contracting out or buying in of goods or services from external sources, whether
government or private, instead of the regulatory bureaus providing such services themselves. This
can take the form of a regulatory bureau transferring the operation of a certain regulatory service to
a private firm.
Initial efforts on outsourcing or contracting out of selected regulatory services to other government
agencies or the private sector shall be evaluated for efficiency and effectiveness, particularly in
terms of strengthening enforcement and promoting compliance to regulatory standards. The
regulatory bureaus shall also determine which among their remaining regulatory functions may be
outsourced or contracted out.
The presence of specialized service support systems and expert services is needed to assure
continuous compliance with the technical requirements of the regulatory bureaus. There should be a
regulatory mechanism to recognize or deputize specialized or expert service providers through
accreditation or certification systems.
In order to promote geographic access to hospital facilities and to maximize the use of limited health
resources, the DOH shall expand the scope of hospital regulation by controlling the establishment of
new hospitals through the institution of the Certificate of Need as a requirement for the issuance of
a permit to construct and license to operate a hospital. Similarly, there is a need to promote access
to medical equipment to where they are needed most by coming up with a list of essential health
technologies for each level of health care systems.
2. Development of Quality Seals for Health Products, Food, Devices,

Drug Establishments, Facilities and Services
The DOH regulatory bureaus shall develop an operational framework for the implementation of seal
of approval system for health regulated products, devices, and facilities. The quality seal system is
intended to take quality a notch higher than the regulatory requirements for the issuance of permits,
licenses or authorization to enter the market. The quality seal issued for products, devices and
facilities will serve as signal for the public as to conformance with internationally accepted
standards of quality and that fair and ethical standards are met. The seal will enable the consumers
to make informed decisions and demand quality health products, devices and facilities in a
competitive market.
The BoQ has integrated all accreditation into a Unified Seal of Approval by subscription to the
Hazard Analysis Critical Control Point and the Good Manufacturing Practice since 2004. BoQ also
developed the Quality Seals for Food Service Establishments within the perimeter of airports and
seaports.
29
The DOH and PhilHealth shall harmonize the Sentrong Sigla Certification (Phase II level 1) and the
PhilHealth accreditation of RHUs and BHSs by integrating PhilHealth accreditation standards for
RHUs/BHSs into the basic certification standards of the Sentrong Sigla.
3. Harmonization of Systems and Processes of DOH Regulatory

Offices with ASEAN Standards
Globalization has already facilitated economic exchanges including trade in health services and
goods among countries. However, the currently different regulatory requirements of each
country are viewed as technical barriers to trade. This led the different countries to standardize
their regulatory systems and processes within an agreed time frame known as the road map
leading to ASEAN harmonization. Failure of the Philippines to harmonize their standards and
processes will not protect the consumers from the possible dumping or entry of substandard or
counterfeit products coming from other countries.
The BoQ has a long standing coordination and cooperation with other ASEAN countries: Brunei
Darussalam, Indonesia, Malaysia and the Philippines East Asia Growth Area. There is a continuous
quarterly meeting in each country by rotation attended by representatives from their Customs,
Immigration, Quarantine and Security since 1994.
For medical devices and equipment, the ASEAN countries are looking for integration measures on
the regulatory systems and processes such as:
 A common submission dossier for product approval;
 An abridged approval process for medical devices which Regulatory Authorities of
benchmarked counties or regional RAs have already approved;
 A harmonized placement of medical devices into the ASEAN market based on common
product approval process; and
 A formalized post marketing alert for defective or unsafe medical devices and equipment
Along these activities, the Philippine DOH joined the ASEAN Harmonization Working Party and
worked in parallel with Global Harmonization Task Force on technical harmonization efforts.
4. Improvement of the Availability and Access to Low-Cost and

Quality Essential Medicines and Other Health Commodities
According to the World Medicines Situation, a 2004 publication of the World Health Organization
(WHO), only 66% of the country’s population had access to essential medicines. Access is
measured based on the estimated percentage of the population with access to at least twenty
(20) essential medicines. The latter must be continuously available and affordable at a health
facility or medicine outlet and within an hour’s walk from the patient’s home.
Access to essential life-saving drugs depends on the availability and affordability of such,
especially in areas of high morbidity and mortality. Moreover, other factors also influence and
have direct or indirect effects to access to essential drugs and medicines namely: rational
selection and use of medicines, tailored procurement, sustainable financing and reliable health
and supply systems.
In line and espoused within the National Objectives for Health to achieve the Medium Term
Philippine Development Plan and Millennium Development Goals, the following interventions
have been prioritized to achieve our envisioned goal of better health outcomes through the
provision of essential drugs and medicines, especially for the poor and underserved.
30
a. Promotion of High Quality Generic Pharmaceutical Products
Promotion of high quality generic pharmaceutical products shall be pursued among producers,
distributors, retailers, medical and dental practitioners and consumers. BFAD shall ensure that
generic pharmaceutical products are of high quality through their regulatory systems and
processes. Rational prescribing of drugs and medicines among medical and dental practitioners
shall be enforced according to the Pharmacy Law (RA 5921) and Generics Act (RA 6675). Rational
drug use shall be promoted among patients and consumers of drugs and medicines to ensure safety
and attainment of desired therapeutic effects. The advocacy for the establishment of functional
therapeutic committees in government and private hospitals shall be strengthened. Another
strategy is the P100 program which is being implemented by the DOH. This program has the main
objective of ensuring access to drugs and medicines which are packaged within an affordability
parameter of 100 pesos or below. This program shall be piloted in 100 hospitals (DOH and LGUs).
b. Expansion of Pharmaceutical Distribution Networks

On the objective of achieving availability and access to low-priced quality essential drugs and
medicines commonly bought by the poor are enhanced, the intent is to saturate the market with
low-cost essential drugs and medicines through the following strategies:
i. Botika ng Barangay (BnB). The BnB program seeks to make quality essential drugs and
medicines more affordable and available to the Filipino people down to the Barangay level
among the poorest of the poor. Regulatory requirements for establishing BnB were
streamlined for facility and seed capital investments were planned and provided for from
the DOH to assist LGUs in pushing for and realizing the objectives of the Program. The
current target is to establish one BnB to serve three adjacent barangays. To date, there are
more than 11,000 BnBs all over situated even in the most far flung areas of the country.
ii. Botika ng Bayan (BNB).The DOH together with the Philippine International Trading
Corporation (PITC) launched in December 2004 the BNB project to set up a nationwide
network of privately-owned and operated accredited pharmacies that sell low-priced
parallel imported or generic drugs with the aim of competing with commercially priced
drugs and medicines in the market. At least 1,500 outlets have been opened so far.
c. Identification of Alternative Local and Foreign Sources of Low-Priced Quality

Drugs and Medicines
Alternative local and foreign sources of low-priced and quality essential drugs and medicines shall be
identified. PITC’s Parallel Drug Importation (PDI) of cheaper drugs and medicines of similar brands and
therapeutic dose of that which is locally produced shall be carried on. This scheme shall challenge the
local manufacturers to lower down the market prices of their drugs and medicines. Currently, there are
fifteen (15) essential drugs and medicines under the PDI that are sold in 72 DOH hospitals and three (3)
LGU hospitals.
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d. Development of Mechanism for Pooled Procurement among Health Facilities
across LGUs
Mechanisms for pooled procurement among health facilities across LGUs shall be developed to
capture the benefits of economies of scale through the execution of Memorandum of Agreements
(MOAs) or Memorandum of Understanding (MOUs).
5. Institutionalization of Cost Recovery and Revenue Enhancement

Mechanisms for Health Regulatory Agencies
Regulatory fees are drawn from the regulated entities in order to defray the cost of administration.
This stems from the principle that the granting of a license to operate in a regulated market is a
privilege and not a right. The fees to be derived should be commensurate to the administrative
cost which necessitates the restructuring of current regulatory fees.
The BoQ has restructured its regulatory fees in 2005. This was followed by the BHFS in 2006, when
it started to implement a rationalized schedule of fees for the regulation of health facilities. BFAD
and BHDT shall also re-structure their own regulatory fees based on actual administrative costs.
The BoQ is mandated to retain and utilize at least fifty percent (50%) of its income by virtue of
Republic Act 9271 of 2004.
DOH shall continue to push for the approval of the special provision on income retention and
utilization by BFAD, BHDT and BHFS under the General Appropriations Act or its enactment in a
Republic Act (RA).
The BHFS shall continue to propose the implementation of the provision in Section 17 of the
Hospital Licensure Act or Republic Act 4226 that allows the hospital licensing agency to retain
funds collected from permit to construct, registration and license to operate fees for hospitals and
other health facilities covered by the RA.
Income retention and fiscal autonomy, with appropriate control and auditing systems, is expected
to result in better performance of the health regulatory bureaus.
32
B. LGU Level
1. Enforcement of National Health Legislation, Policies and

Standards
The LGUs may exercise their health regulatory functions through the localization, implementation
and enforcement of national health legislation, policies and standards, such as the Expanded Child
Care Development, Asin Law, Food Fortification Law and Sanitation Code, shall be pursued in
public and private health facilities.
2. Legislation and Localization of Health Regulatory Policies at the

Local Level
The adoption and localization of national health regulatory laws and policies shall be pursued
among LGUs through legislation, creation of resolution and executive issuances at the municipal,
city and provincial levels. The LGUs may also pursue local health policy development appropriate
to their prevailing situation.
3. Improvement of the Availability and Access to Low-Cost Quality

Essential Medicines and Other Health Commodities
The LGUs shall conduct promotion of high quality generic pharmaceutical products among
physicians and consumers. Pharmaceutical distribution networks shall be established at the LGUs
such as the Botika ng Barangay, Botika ng Bayan and Health Plus. Rational drug use shall be
promoted among consumers and rational prescribing of drugs and medicines shall be advocated to
medical and dental practitioners according to the Pharmacy Law and Generic Act. Advocacy for the
establishment of therapeutic committees in LGU and private hospitals shall be pursued.
Development and implementation of mechanisms for pooled procurement among health facilities
across LGUs shall also be advocated through the execution of MOAs and MOUs.
33
Health Service Delivery
I. STRATEGIES
The objective of service delivery reforms is to improve the accessibility and availability of
basic and essential health care for all, particularly the poor. The following strategies are
utilized to attain this objective:
1. Ensuring availability of basic and essential health

service packages
Basic and essential health service packages shall be made available in all localities
while specific and specialized health services shall be made available by designated
providers in strategic locations. This will ensure the continuity of health services
from the primary, secondary up to tertiary levels of care.
2. Assuring the quality of both basic and specialized

heath services
The quality of both basic and specialized health services shall be assured through
the following mechanisms: (1) health facilities shall be upgraded and human
resource capability of these facilities shall be strengthened to comply with licensing
and accreditation requirements; (2) these facilities shall follow accepted standards
of care such as clinical practice guidelines or diagnostic related groups; and (3) the
provision of specialized diagnostic procedures and services as well as specialty
services involving the management of complicated diseases and conditions which
shall be assigned to preferred providers as incentive for delivering quality and
affordable services.
3. Intensifying current effort to reduce public health

threats
Current efforts to reduce public health threats shall be intensified by: (1)
undertaking disease-free zones initiative targeting malaria, filariasis,
schistosomiasis, rabies, leprosy and vaccine-preventable diseases for elimination as
public health threats in endemic areas; (2) implementing intensified disease
prevention and control strategies for priority diseases such as tuberculosis and
HIV/AIDS; and (3) enhancing health promotion and disease surveillance activities
directed at prevention and control of communicable and non-communicable
diseases and health risk-taking behaviors.
34
A. National Level
1. Public Health Development Program
a. Establishment of Disease-Free Zones Initiatives

The disease-free zone initiative aims to “mop up” diseases such as leprosy, schistosomiasis,
filariasis, rabies, and malaria in selected localities in support of the NOH goals to eliminate these
diseases as public health problems. This would entail stratification of areas according to the
burden of disease, validation of the status of potential disease-free areas, and identification of
appropriate interventions. The DOH shall pursue policy and standards development, provision of
technical assistance to improve service delivery at nationwide scale, monitoring and evaluation
as well as bulk procurement of commodities necessary for the implementation of disease-free
zones initiatives.
b. Intensifying Disease Prevention and Control Programs

Intensified disease prevention control strategies shall be implemented to reduce morbidity and
mortality from vaccine-preventable diseases, tuberculosis, HIV/AIDS, dengue and emerging and
re-emerging diseases such as SARS and avian influenza. These efforts are particularly geared
toward the attainment of the MDG targets. DOH shall continue to provide policy directions,
monitor program implementation and mobilize resources from budgetary and extra-budgetary
resources to finance diseases prevention and control programs and conduct bulk procurement of
commodities for the vaccine-preventable diseases, rabies, tuberculosis, HIV/AIDS and index cases
of emerging and re-emerging diseases as necessary for distribution to appropriate facilities.
c. Improving Reproductive Health Outcomes

i. Enhancement of Child Health Programs. The improvement of child health outcomes
such as the Neonatal Mortality Rate (NMR), Infant Mortality Rate (IMR), Under Five
Mortality Rate (UFMR) and Child Mortality Rate (CMR) depend on strengthening
maternal and child health programs, development and implementation of new policies
and standards, and ensuring availability and accessibility of public health commodities
and services. This includes attendance during the delivery of neonates by skilled health
professionals in health facilities; implementation of the Expanded Program on
Immunization (EPI) through the administration of BCG, DPT, OPV and Hepatitis B
vaccine; deworming; ferrous sulfate and Vitamin A supplementation to children;
administration of tetanus toxoid to pregnant mothers for the protection of neonates
from tetanus neonatorum; breastfeeding program; Integrated Management of
Childhood Illnesses (IMCI) and nutrition services among others.
35
ii. Maternal Health Programs. The improvement of reproductive health outcomes such as
the Maternal Mortality Ratio (MMR),Total Fertility Rate (TFR), Contraceptive Prevalence
Rate (CPR) depend on the strengthening of maternal health programs, development and
implementation of new policies and standards, and ensuring availability and
accessibility of public health commodities and services. This includes provision of
ferrous sulfate, Vitamin A, and tetanus toxoid; conduct of prenatal and postnatal
check-ups and assistance during delivery by skilled health professionals and delivery in
health facilities capable of providing Basic or Comprehensive Emergency Obstetric Care
(BEmOC or CEmOC); family planning; Contraceptive Self Reliance (CSR); adolescent
health and other reproductive health initiatives as well as maternal nutrition among
others.
The promotion of Safe Motherhood Policy, in which all pregnancies are treated as high
risk, and maternal death reviews shall be considered for all maternal deaths. BEmOC
and CEmOC facility mapping and upgrading shall be advocated by the DOH including the
creation of Women’s Health Team, implementation of CSR and other Reproductive
Health (RH) programs among LGUs.
d. Intensification of Healthy Lifestyle and Management of Health Risks

The advocacy and promotion on healthy lifestyle for the prevention of cardiovascular diseases,
diabetes mellitus, chronic obstructive pulmonary disease, breast and cervical cancers shall be
intensified. Campaigns against risk behaviors such as physical activity, healthy diet and smoking
cessation shall be promoted. Risk factor screening such as blood pressure monitoring, breast
examination, digital rectal examination and others shall be advocated as part of routine
examination of patients. Strengthening of networks with professional and other private groups
shall be undertaken to set up local support and advocacy teams for Healthy Lifestyle
campaigns. Advocacy for safe water and sanitation programs shall also be conducted.
e. Strengthening the Surveillance and Epidemic Management System
Threats of emerging and re-emerging infections such as Severe Acute Respiratory Syndrome
(SARS) and avian influenza necessitates the creation and strengthening of the disease
epidemiology and surveillance network through enhancing the Epidemiology and Surveillance
Units (ESU) at all levels of government units – municipal level (Municipal Epidemiologic and
Surveillance Unit or MESU), city level (City Epidemiologic and Surveillance Unit or CESU) and at
the level of the province (Provincial Epidemiologic and Surveillance Unit or PESU). Tracking of
disease incidence as well as the development and implementation of prompt response shall be
greatly facilitated by the institutionalization of ESU networks in all LGUs. Regional Epidemic
Management Committee (REMC) shall be created at the regional level. In line with these
initiatives, linkages with private sector practitioners who serve a significant part of the
population shall be strengthened and be made more efficient.
36
f. Strengthening the Disaster Management System
Prevention of loss of lives during emergencies and disasters requires strengthening of health
emergency and disaster preparedness, response, recovery and rehabilitation including poison control
across all levels. This shall be done through the organization, integration and coordination of the
entire health sector for emergency and disaster preparedness and response and by providing and
augmenting the necessary logistic resources for effective and efficient response to the same. The
National Disaster Coordinating Council (NDCC) Memorandum Order No. 5, s. 2007 has institutionalized
the cluster approach in the Philippine Disaster Management System from the national to the
provincial level where the DOH is the main interlocutor or lead agency in the four clusters (Health;
Nutrition; Water, Sanitation and Hygiene (WaSH) and Psychosocial Services) with the counterpart
Inter-Agency Standing Committee Country Team as support, with defined roles and responsibilities.
The DOH, as the national policy institution, shall formulate, disseminate and implement the policy on
health emergency management from which the local government, non-government organizations and
other members of the health sector will anchor their thrusts and directions for health emergency
management. The DOH shall take the lead in the development and advocacy of the all–hazard
approach in health emergency preparedness, response and recovery (HEPRR) plan in all DOH health
facilities (CHDs and DOH Retained Hospitals). The development of the plan defines in advance the
arrangements, procedures, advocacy awareness, health emergency response coordination and
monitoring, logistics pre-positioning and donations tracking and other related activities that will
enable these health facilities to effectively prepare for, response to and recover from emergencies
and disasters.
The CHDs and the DOH Retained Hospitals shall continue to serve as the regional front liners to
any emergencies and disasters in their respective area. The CHDs take care of the
institutionalization and coordination of health emergency preparedness and response at the
local level, while the DOH Retained Hospitals provide the needed pre-hospital care (first aid
care, ambulance transfer and referral) and hospital care. The Regional and Hospital Emergency
Operation Centers shall be established or sustained in order to report and update the DOH
Central Monitoring Center all the emergencies and disasters in their respective jurisdiction.
The Regional Health Emergency Network (RHEN) shall be established at the regional level
through a MOA with different stakeholders. Policy formulation, advocacy, networking,
coordination and monitoring shall also be implemented for the promotion of Safe Community
and Safe Hospitals assisting in building awareness to effect changes and improve disaster risk
reduction capacity in emergency management.
g. Intensification of Health Promotion and Advocacy
i. Review of Health Promotion Interventions and Technology Upgrade. Effective health

promotion activities will save the government a substantial amount of money as people
change their lifestyle and health-seeking behaviors. Thus, current health promotion
interventions need to be reviewed and appropriate technology upgrades be undertaken.
ii. Strengthening Health Promotion in Health Service Packages. Health promotion shall be
strengthened and incorporated into health service packages. Aggressive promotion of
F1 adoption to stakeholders, especially the LGUs and the public, will be undertaken.
iii. Integration of Patient Education in Clinical Practice Guidelines. Patient education

shall be integrated into clinical practice guidelines to ensure that patients and their
caregivers receive relevant information on disease causes, management, and
prevention.
iv. Creation of a Health Promotion Foundation. A Health Promotion Foundation shall be

established to facilitate health education and promotion activities. The start up fund
for this foundation could be initially taken from revenues derived from excise taxes on
alcohol and tobacco products.
37
2. Health Facilities Development Program
a. Rationalization of Health Facilities and Services Including the Provision and
Capacity Building of Human Resources for Health
Rationalization of the health facilities and services guarantees the delivery of quality health care
services by providing appropriate access to the right facilities in the right places and with the right
professionals. It also drastically limits the rapid rise in cost of the health care system by reducing
excess capacity; removing wasteful duplication of services and ensuring a continuity of care from
primary or home based care to specialized care.
Health care facilities and health providers operating within a health care delivery system of a
specific area shall follow a set of guidelines that would enable them to rationalize their facilities and
services based on the health needs of the community they serve. This covers public and private
health care providers, national and local health facilities such as health centers and RHUs, BEmOC
and CEmOC, drug outlets, laboratories and hospitals. DOH shall pursue facility mapping for public
and private facilities for all these facilities to ensure access of the population to health care
services.
Assistance for the rationalization of facilities and services shall be provided to include critical
upgrading of facility and equipment. The DOH shall also ensure health human resource capability
building and venue for professional enrichment.
b. Integration of Wellness Services in Hospitals

Retained hospitals shall re-establish themselves as “Centers for Wellness,” to enable them to provide
promotive and preventive care to patients on top of curative care. There is a need to evaluate the
previous implementation of this program in order to identify key areas for improvement.
c. Hospital Development Planning

DOH hospitals shall complement local health facility networks to protect the poor and exert pressure on
the private sector to deliver competitively priced quality health care. This applies especially for specialty
services if continued access to national subsidies were to be justified. Hospitals must also contribute to the
production of health technology by conducting research and training. Retained health facilities need to be
competitive and must undergo critical upgrading of infrastructure, staffing, and equipment in order to
provide quality services to clients. A pool of funds from the contributions of DOH hospitals shall be created
for hospital upgrading. Access to this fund shall be determined in a competitive manner with special
consideration on how well the facility can generate and sustain support for the recurrent cost implications
of proposed upgrading and investments.
38
B. LGU Level
1. Public Health Development Program
a. Disease-Free Zones Initiatives

The LGUs shall implement the policies, programs and initiatives to “mop up” diseases to include
leprosy, schistosomiasis, filariasis, rabies, and malaria in support of the NOH goals to eliminate
these diseases as public health problems. The LGUs may pursue local legislation of policies to support
the disease-free zones initiative such as vaccinating all dogs to control rabies and regular clearing of
waterways to remove breeding sites of mosquitoes harboring malaria among others. Awards and
incentives for frontline workers and facilities may be developed to enhance the implementation of
disease-free zone initiatives at the local level.
b. Intensified Disease Prevention and Control Programs

Intensified disease prevention control strategies shall be implemented among the LGUs to reduce
morbidity and mortality from vaccine-preventable diseases, tuberculosis, HIV/AIDS, dengue and
emerging and re-emerging diseases. Local legislation to facilitate the implementation of disease
prevention and control programs as well as to provide incentives to health workers may be developed.
c. Improving Reproductive Health Outcomes

i. Implementation of Child Health Programs. The LGUs shall implement child health programs
that include EPI, breastfeeding, IMCI, nutrition services, deworming, distribution of ferrous
sulfate, Vitamin A and tetanus toxoid vaccination among others. The LGUs may legislate
policies to increase the incentives and benefits of health workers to increase their morale in
the implementation of child health programs and projects.
ii. Implementation of Maternal Health Programs. The LGUs shall ensure the implementation of
maternal health programs such as the delivery of pregnant mothers in BEmOC and CEmOC
facilities by skilled health professionals; conduct maternal death reviews; tetanus toxoid
immunization; prenatal and post-natal check-ups; distribution of iron supplements to pregnant
mothers and distribution of iron and Vitamin A to lactating mothers among others. The LGUs
shall develop Women’s Health Teams consisting of physicians, nurses, midwives, trained
traditional birth attendants and volunteer health workers. The Women’s Health Team will
attend to deliveries and implement family planning and other RH programs. The LGUs may
develop family planning, contraceptive self reliance and reproductive health ordinances among
others to ensure the improvement of maternal health.
39
d. Intensifying Healthy Lifestyle and Management of Health Risks
The LGUs shall intensify programs and activities that promote healthy lifestyle to prevent
cardiovascular diseases, diabetes mellitus, chronic obstructive pulmonary disease, breast and
cervical cancers. This shall include promotion of smoking cessation, right diet, exercise, stress
management, safe water, and sanitation among others. The LGUs shall network with
professional and other private groups in setting local support and advocacy teams for healthy
lifestyle. The LGUs may develop health ordinances such as a Tobacco Control Ordinance to
support the implementation of healthy lifestyle and the management of health risks.
e. Strengthening the Epidemic Management and Surveillance System

The disease epidemiology and surveillance networks shall be enhanced at all LGU levels to
include PESU at the provincial level, MESU at the municipal level and CESU at the city level
including their close linkage and collaboration with the private sector in their localities.
Provincial Epidemic Management Committees shall also be established at the provincial levels.
f. Strengthening the Disaster Preparedness and Response System

The LGUs are the first and frontline agencies to deal with disasters. With the growing number
of emergencies and disasters happening in the country, strengthening the capability of the
LGUs in emergency preparedness and coping mechanisms on natural and human induced
hazards are high priorities. The LGU’s disaster risk management plans and activities are aimed
in strengthening and enhancing their capability in affecting the course of the preparedness,
mitigation, response and recovery from disasters. The LGUs shall establish, institutionalize and
strengthen their disaster management and response system at the municipal, city and
provincial levels. The LGUs shall ensure the formulation of Health Emergency Preparedness,
Response and Recovery Plan for the LGU health facilities to minimize the effect of disasters
while at the same time capitalize on opportunities in improving their over-all capabilities in
health emergency management. Provincial, Municipal and City Health Emergency Network
(PHEN / MHEN / CHEN) shall be established through a MOA with stakeholders at the provincial,
municipal and city levels. These networks will plan and identify deliverables at their levels to
reduce the impact of disasters. The LGUs shall also support the passage of ordinances and
executive issuances to strengthen the disaster management system at all levels. Advocacy
activities shall also be conducted for the development of safe community and safe hospitals
aimed at strengthening and enhancing the capability of the communities to protect the
development gains of the communities against threats posed by natural and human-induced
disasters.
g. Intensifying Health Promotion and Advocacy
i. Behavior Change Communication. The promotion of behavior change for health shall be
intensified to improve the health seeking behavior, attitude and values of the local
population towards health and health related matters.
ii. Localization of Health Promotion and Advocacy Materials. Health promotion and
advocacy materials shall be localized using the vernacular or dialect for easier
understanding of the population in a particular area.
iii. Intensification of Patient Education in Clinical Practice. Patient education shall be

incorporated in the treatment and management of patients in public and private health
care facilities.
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2. Health Facilities Development Program
a. Rationalization of Local Health Facilities to Include BEmOC / CEmOC and
the Provision and Capacity Building of Human Resources for Health
Rationalization plan of LGU health facilities shall be developed and implemented to ensure that there
is a continuity of care from primary, secondary and tertiary level. This shall cover the BHSs, RHUs,
BEmOC and CEmOC facilities. The LGUs should ensure that core referral hospitals and CEmOC
facilities are offering regular and emergency services on a 24-hour basis. This shall entail the
merging of adjacent facilities and their health human resource, facility level adjustment and
reconfiguration including facility and equipment development. Facility mapping shall be
conducted among LGUs to serve as basis for the rationalization plan. The LGUs may develop local
ordinances to ensure the implementation of rationalization plans to optimize the utilization of
health facilities.
LGUs which are lacking in HRH shall be encouraged to develop mechanism to ensure the
application, hiring and retention of necessary HRH to include legislation, executive issuances and
memorandum of agreements for salaries and benefits. The DOH shall also assist in the training
and professional development of LGU HRH.
b. Integration of Wellness Services in Hospitals

The LGU hospitals shall provide promotive and preventive care to patients on top of curative
care.
c. Compliance to PhilHealth Accreditation Standards for Health facilities

The health facilities of the LGUs should be able to meet the accreditation standards of PhilHealth
to ensure the release of capitation and reimbursements. LGU facilities may need to improve the
health facilities and equipments, human resource complement and training.
e. Compliance to DOH Licensing Standards for Health Facilities

The health facilities of the LGUs need to follow the licensing procedures and criteria of the DOH
regulatory agencies to ensure the provision of quality services and to prevent legal encumbrances
that may occur during the operation of their health facilities.
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Good Governance
I. STRATEGIES
The objective of good governance in health is to improve health systems performance at the
national and local levels. This involves interventions that cut across all areas of health reform and
employs these key strategies:
1. Improving governance in local health systems

Governance in local health systems shall be improved by: (1) establishing inter-local health
zones which shall undertake integrated implementation of health reform components; (2)
developing and employing a performance assessment system (LGU Scorecard system) to
track progress of health reforms; and (3) institutionalizing a health professional
development and career track system where competent and dedicated health personnel
provide quality health services.
2. Improving national capacities to manage and steward the

health sector
National capacities to manage and steward the health sector shall be improved through: (1)
strengthening technical leadership and management capability at central and regional
levels; (2) improving public finance and procurement management systems; (3)
strengthening information and communication technology capability to improve
connectivity of the health sector and ensure access to quality health information; and (4)
strengthening monitoring and evaluation, research and knowledge management systems to
support a more rational performance assessment system and an evidence-based health
policy development and decision-making process.
3. Developing a rationalized and more efficient national and

local health systems
The development of rationalized and more efficient national and local health systems shall
be pursued through strengthening networking mechanisms and referral systems, sharing of
resources, organizational transformation and restructuring, and capacity building.
42
A. National Level
1. National and LGU Sectoral Management
a. Strengthen Stewardship of National and Local Health Systems

Governance over the Philippine health system entails effective and responsive stewardship of
national and local health systems. The development of rationalized and more efficient national
and local health systems will be pursued through strengthening of networking mechanisms and
referral systems, sharing of resources, organizational transformation and restructuring, and
capacity building among others.
The DOH shall lead the LGUs towards effective stewardship of their local health systems through
the institution of health reforms at the local level. This shall be done through the establishment
of FOUR-in–ONE convergence sites where all four reforms - health financing, health regulation,
health service delivery and good governance are implemented initially in 16 provinces then
eventually in the rest of the country. The key elements in the implementation of these FOUR-in-
ONE sites are: investment planning; service delivery flow and referral network in a province-wide
system; formation of inter-local health zones leading to province-wide governance mechanisms
and institutions for the health system; and rationalization of central support to F1 convergence
sites. A roll-out framework and plan shall be developed and implemented for the expansion of F1
convergence sites to other areas based on lessons learned from pilot convergence sites.
LGUs that may not yet have the capacity to adopt a convergence approach to implement health
reforms shall be assisted in the development of functional inter-local health systems based on
learning derived from best practices. Improvement in the capacity of local health authority to
manage and coordinate the functions of the local health system shall be pursued.
Promotion and advocacy for increased inter-LGU cooperation and coordination as well as public-
private partnership shall also be intensified.
b. Strengthen the National Human Resources for Health Program

The Philippines is producing more and better human resources for health (HRH) compared to
most Asian countries. Ironically, some areas in the Philippines suffer from lack of professional
health providers. This is partly due to the uneven distribution of HRH across the country and the
large exodus of nurses and physicians in the last four years which is a phenomenon that is
unparalleled in the migration history of the country. In lieu of this, an HRH Master Plan will be
developed to mitigate this growing problem.
Technical leadership and management capability at the central and regional levels will be
strengthened through retooling and retraining of central office and CHD personnel as well as
tapping DOH representatives to serve as vital links to the LGUs.
i. Human Resource for Health Planning and Production. HRH Planning shall be done by
getting the total workforce requirements and corresponding costs based on parameters
like current population and population growth, current stock of HRH category and
attrition rate, and preferred health worker to population ratio. It should then follow
that the production of health manpower shall be based on the actual and projected
requirements of the health delivery system.
43
ii. Human Resource for Health Utilization and Placement. A recruitment and selection system
shall be developed based on actual job competencies. At the same time, rewards and
incentive mechanism through a performance management system shall be developed to
motivate health professionals to continue personal development and improve job
performance. Actual career development and management shall be conducted to support
health manpower through retention planning, individual career planning, career pathing and
succession management. These processes shall also ensure that a qualified professional will be
ready to continue the service of a vacated position.
The DOH shall continue to augment necessary HRH at the local level when necessary through
the implementation of the Doctors to the Barrios and Rural Health Practice Program, provision
of a pool of Medical Specialist and provision of Medical Officers.
iii. Human Resource for Health Learning and Development. Strategy driven, competency-based
training and development interventions shall be aggressively pursued to equip HRH at the
national, regional and local levels with knowledge, attitudes and skills required to carry out
reforms in the country’s health care system.
iv. Human Resource for Health Information System. Different HRH Information Systems shall be
installed to capture employee information, support HRH Management and Development
systems, announce job vacancies in the health sector and generate baseline HRH data for use
in planning. There is a need to communicate these health human resource thrusts and
resources to both the health workers and the communities.
c. Sector Development Approach for Health Implementation

The Sector Development Approach for Health (SDAH) is a major strategy to ensure that there is a
coordinated national effort towards the thrusts and strategies of the country. This shall strengthen
government leadership in implementing a health sector program where development partners
cooperate and contribute according to priority thrusts. Effective donor and LGU coordination and
harmonization of procedures shall be established.
d. Institutionalization of the Monitoring and Evaluation of Health Reforms

A monitoring and evaluation system shall be developed, tested, and applied in order to monitor F1
implementation of all stakeholders at all levels. This shall be called the Monitoring and Evaluation for
Equity and Effectiveness (ME3) which shall include scorecards for DOH central offices, CHDs, hospitals,
LGUs and donor agencies. Monitoring and evaluation tools shall be developed through a consultative,
iterative and objective process. Qualitative and quantitative means of evaluation shall be utilized.
To maximize the use of the monitoring and evaluation system and keep it responsive to changes during
the medium term, there is a need to develop the monitoring and evaluation capabilities, including
research skills of DOH central office and CHD personnel.
44
e. Strengthening the Philippine Health Information System
Health information should be managed, disseminated and utilized effectively. In line with this, a
Philippine Health Information Network (PHIN) shall be institutionalized which shall serve as the “data
portal” or a search engine for all health information. Easily accessible data shall make not only
health planning easier but also support cooperative efforts with partners. With both public and
private sector using the same information source to monitor and plan, efforts and interventions shall
become more complementary.
Efforts in this regard shall include harmonization of information systems of different stakeholders in
health. This will include information systems on human resource, vital registries and health
statistics, disease surveillance, national and local health accounts, health regulations, and health
facilities. To maximize the use of the information system, the DOH as well as the other health sector
stakeholders shall develop systems on knowledge management which includes not only information
systems but also development of knowledge management oriented decision-makers, staff and
processes.
2. DOH Internal Management
a. Strengthening the Public Finance Management

The financial management capacity at DOH central office and CHD levels shall be strengthened by
developing a comprehensive and integrated financial management and information. This shall be
done through the computerization of budgeting and accounting systems, monitoring and evaluation
of fund sources, and development of feedback mechanisms for fund utilization at all levels, and
strengthened internal audit capacities. Such systems shall include the Electronic National
Government Accounting System (e-NGAS) and Medium Term Expenditure Framework (MTEF) among
others.
b. Strengthening the Procurement and Logistics Management

The DOH procurement, logistics and warehousing management system shall be strengthened. This
shall cover the inventory system, supply chain mechanism, efficient storage, database of goods and
supplies with standard specifications, pooling, monitoring, and feedback mechanisms incorporated in
the procurement systems, database of suppliers with performance monitoring, standardization of
specifications and documents, and the implementation of ethical practices.
d. Asset Management
The DOH shall undertake a comprehensive and systematic process of effectively acquiring,
maintaining, upgrading, operating and disposing its assets to maximize the utilization and worth of
these assets.
e. Strengthening the Internal Audit

The systems and procedures for internal audit of DOH shall be strengthened to monitor the financial
and internal operations and performance of the DOH to make sure that all resources are managed
and utilized in accordance to prescribed laws and regulations.
45
B. LGU Level
1. LGU Sectoral Management
a. Strengthening the Local Health Systems Development

The DOH shall lead the LGUs towards effective stewardship of their local health systems through
the institution of health reforms at the local level. This shall be accomplished primarily through
the establishment of FOUR-in-ONE convergence sites where interventions under all four F1
reform components: good governance, health regulation, health financing and health service
delivery shall be implemented. Systems and processes for inter-LGU cooperation, public-private
partnership and community participation shall be established.
b. Strengthening the Local Health Human Resource Management System

Strengthening
Parallel to national efforts, a local health human resource strategy shall be developed and
implemented at the LGU level. Efforts shall include the development of a health professional
development and career track.
c. Sector Development Approach for Health Implementation

The establishment of effective donor and LGU coordination and harmonization of procedures
shall be implemented at the local level.
d. Support to the LGU Scorecard Implementation

The LGU Scorecard system shall be developed and piloted in convergence sites to assess LGU
performance during the medium-term. The LGU Scorecard shall not be limited to benchmarking
the progress of site development but may also serve as basis for incentives. Monitoring and
evaluation tools shall be developed through a consultative, iterative and objective process.
Qualitative and quantitative means of evaluation shall be utilized.
e. Local Health Information System Development and Utilization

Local Health Information System shall be developed to provide accessible data for local health planning
and policy development. This shall require harmonization of information systems of different
stakeholders in the local health system, inclusion of information systems on human resource, vital
registries and health statistics, disease surveillance, national and local health accounts, health
regulations, and health facilities.
46
2. LGU Internal Management
a. Strengthening the Public Finance Management

Advocacy and technical assistance for the improvement of Public Finance Management (PFM)
among LGUs shall be done. This shall cover planning, budgeting, accounting, procurement,
external and internal audit, performance monitoring and evaluation, and records management.
The technical assistance shall mainly focus on improvement of PFM systems and procedures.
b. Strengthening Procurement and Logistics Management

The municipal, city and provincial procurement and logistics management system needs to be
strengthened. The reform initiatives shall improve the inventory system and a supply chain
mechanism, efficient storage, database of goods and supplies with standard specifications, pooling,
monitoring, and feedback mechanisms incorporated in the procurement systems, database of
suppliers with performance monitoring, standardization of specifications and documents, and the
implementation of ethical practices.
c. Asset Management
The LGUs shall undertake a comprehensive and systematic process of effectively acquiring,
maintaining, upgrading, operating and disposing its assets in the health facilities to maximize the
utilization and worth of these assets.
d. Strengthening Internal Audit

Advocacy and technical assistance in the establishment of internal audit system in LGUs as
prescribed by the national government under Administrative Order No. 70 shall be pursued to
improve their internal operations and performance. A functioning internal audit system will ensure
that all resources are managed and utilized effectively in accordance with prescribed laws and
regulations.
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Running the Health Reform Race: Operational
Framework for FOURmula ONE for Health
Functional Management Arrangements
To ensure its effective and efficient implementation, FOURmula ONE for Health (F1) shall adopt
the following management approach:
 Institutionalizing interagency steering committee
 Designating implementation teams
 Providing dedicated coordination teams
 Integrating resource management and
 Strengthening management of communications and advocacy.
An effective and functional management infrastructure responsible for implementing various

components of F1 as well as monitoring and evaluation of target outcomes and performance
benchmarks will be put into effect.
Key units within the DOH shall be formally clustered and then designated to manage the
implementation thrusts of F1. Within these units, there has to be a corps of dedicated staff that
shall be tasked solely to perform functions attendant to the day-to-day operations of F1
implementation. All other offices in the organization shall focus their efforts to contribute towards
achieving F1 objectives.
Management and implementation teams at all levels of the health system shall communicate and
advocate the goals, objectives, strategies and activities of F1 to build a public constituency behind
it.
At the national level, F1 management shall be organized into three (3) major clusters and their
respective component teams:
Governance and Management Support
 Sectoral Management and Coordination Team
 Internal Management and Support Team
Policy and Standards Development and Technical Assistance
 Policy and Standards Development Team for Regulation
 Policy and Standards Development Team for Service Delivery
 Policy and Standards Development Team for Financing
Field Implementation Management Office
 Field Implementation Management Office for Luzon and National Capital Region
 Field Implementation Management Office for Visayas and Mindanao
At the regional level, Regional Implementation and Coordination Teams shall be organized,
consisting of the DOH-CHD, PhilHealth Regional Office, POPCOM Regional Office, National Nutrition
Council Regional Office, all retained health facilities and other related agencies and organizations
at the regional level.
At the local level, Local Implementation and Coordination Teams shall be organized. Existing Local
Health Boards and Inter-Local Health Boards shall serve as the Local Implementation and
Coordination Team, which may be expanded to secure wider participation from the community,
civil society and the private sector.
48
The relationship of the above teams to the National Steering Committee for Health, the attached
agencies and special concerns and to the Office of the Secretary shall be defined as shown in the
figure:
FFiigguurree 77.. FFuunnccttiioonnaall M

Maannaaggeem
meenntt
A
Arrrraannggeemmeennttss ffoorr FF11 IIm mpplleem
meennttaattiioonn
Secretary
National Steering Attached Agencies & Special
of Health
Committee on Health Concerns
Governance & Management

Sectoral Management & Support Internal Management
Coordination Team & Support Team
Policy & Standards Development & Technical Assistance Field Implementation and Coordination
Policy and Policy and Policy and Field Field

Standards Standards Standards Implementation Implementation
Development Development Development Management Management
Team for Team for Team for Office for Luzon Office for
Regulation Service Financing & NCR Visayas &
Mindanao
Delivery
Regional Regional
Implementation Implementation
& Coordination & Coordination
Teams
Local Reform Local Reform

Implementation Implementation
Team Team
49
Roles and Responsibilities
The Executive Committee (ExeCom) – provides policy directions for implementing FOURmula ONE
for Health. The ExeCom is chaired by the Secretary of Health and is composed of all
undersecretaries, assistant secretaries and selected Directors in the DOH.
Governance and Management Support Teams

There shall be two teams to assist and provide support to the Secretary of Health in the
governance and management of F1. As such, these teams will operate directly under the Office of
the Secretary.
a. The Sectoral Management and Coordination Team (SMC Team)

The SMC Team ensures that all four thrusts of F1 are effectively coordinated, synchronized, and
properly monitored.
The SMC Team is responsible for the overall development, monitoring and coordination of policies,
mechanisms and guidelines for the health sector, encompassing financing, regulation, service
delivery and governance concerns as approved by the ExeCom. This includes concerns in
rationalizing public subsidies in health and the management and implementation of the needed
DOH budget reforms required in the course of implementation of F1.
The SMC Team will also coordinate and manage inputs to the Field Implementation and
Coordination Teams from the other F1 management teams concerning policies, standards and
technical assistance related to financing, service delivery, regulation, and good governance.
Furthermore, the SMC Team shall oversee the development of information and communication
technology (ICT) requirements including building the information and communication technology
infrastructure necessary for the F1 implementation.
b. The Internal Management Support Team (IMS Team)

The IMS Team is responsible for implementing DOH financial, procurement and logistics
management reforms and other management support services. The IMS Team shall focus on the
administration of the DOH’s finance and logistics management of F1 implementation.
As a special committee, the Central Office Bids and Awards Committee (COBAC), including the
Procurement Division-PLS oversees the implementation of procurement management reforms.
The Policy and Standards Development and Technical Assistance Teams shall focus on the provision
of technical guidance and policy support for implementation at the field level. A Policy and
Standards Development Team for each major function will be assigned to develop policies and
standards, and provide technical assistance to field level implementation in areas of regulation,
service delivery, and financing.
The Policy and Standards Development Team for Health Regulation

(PSD Team for Regulation)
The PSD Team for Regulation will exercise its mandate and function to ensure the quality and
affordability of health products and services. This pertains to the development of policies,
standards and guidelines, as well as technical capability for regulating health products, including
drugs and medicines, and health facilities and services, in tandem with the accreditation and
quality assurance systems of PhilHealth.
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The Policy and Standards Development Team for Health Service
Delivery (PSD Team for Service Delivery)
The PSD Team for Service Delivery ensures the development of policies, standards and guidelines
for health programs and the provision of technical assistance to health service providers. This
includes the development of disease surveillance systems, program design for essential health
packages and specialized health services, health promotion and advocacy, and upgrading of health
facilities, among others.
The Policy and Standards Development Team for Health Financing

(PSD Team for Financing)
The PSD Team for Financing will ensure that the NHIP is further strengthened by expanding social
health insurance coverage, improving benefits and leveraging provider payments on quality of
care.
The PSD Team for Financing will coordinate with the PSD Team for Regulation with regard to the
harmonization of regulatory systems and processes.
The Field Implementation Management Office (FIMO)

FIMO will focus on the F1 implementation, management and coordination in their respective
geographic assignments – one for Luzon and NCR and one for Visayas and Mindanao.
The FIMO Teams provide over-all coordination of the CHDs, PhilHealth Regional Offices (PRO),
POPCOM Regional Offices, NNC Regional Offices and retained health facilities in their area. Each
team will also initiate and maintain the development of the regional coordinating facility involving
government health offices such as the DOH-CHD, PRO, and the POPCOM Regional Office, NNC
Regional Office, other government agencies, NGOs, the private sector and other stakeholders at
the regional level.
Its main goal is to oversee and coordinate the implementation of F1 in partnership with the LGUs,
the private sector and other government agencies, in consonance with the principle that reforms
implemented and operated in a decentralized manner brings results closer to the people.
The FIMO will deal with technical supervision and coordination of the implementation activities of
F1 at the local level. Specifically, these tasks refer to FOUR-in-ONE Convergence Site development
and institutionalization of LGU governance management structures.
As the lead in health reform implementation, the FIMO will promote and ensure the quality of the
services provided for by the DOH retained hospitals in support of, and within, the context of local
health system development.
Regional Implementation and Coordination Teams (RIC Teams)

The RIC Teams will carry out the following responsibilities: (1) provide technical assistance to
define the package of minimum health care for the LGUs; (2) strengthen technical and managerial
capability at the local level to improve LGU performance; (3) facilitate compliance to
accreditation requirements of health facilities, products and services; (4) provide venues for inter-
agency coordination, including other players in the health sector in a given locality; (5) monitor
and evaluate the LGU performance through the LGU scorecard; (6) develop incentive mechanisms
for LGUs towards better performance in the delivery of health care; and (7) rationalize the role of
DOH hospitals to complement health care services provided by the LGUs and the private sector.
These teams are primarily responsible for the technical supervision and coordination of health
reform implementation in the Four-in-One convergence sites. Part of the evaluation to be
conducted by the regional teams is to determine the effective performance of the Four-in-One
convergence sites, based on the LGU scorecard.
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Local Implementation and Coordination Teams (LIC Teams)
The LIC Teams are responsible for the over-all implementation of F1 activities in their respective
local government units or Four-in-One Convergence sites.
Chaired by the Local Chief Executives (LCEs) or their duly designated representatives, the LIC
Teams will ensure local health governance through the institutionalization of management
structures consistent with F1 implementation.
Local Government Units (LGUs)

The LGUs shall ensure that the basic essential health service packages are being delivered to its
constituents.
The LGUs shall organize themselves into Inter-Local Health Zones that will integrate the
implementation of F1 reform strategies.
The LGUs shall enact the necessary legislative issuances (ordinances, resolutions, etc.) in support
of F1 implementation at the local level.
They shall provide counterpart funds for implementing and sustaining their investment plan.
They shall promote and advocate for the implementation of F1 as the health sector reform
implementation framework in their respective localities.
Civil Society
Civil society and other private sector partners are expected to assist the DOH and the LGUs in
achieving desired health objectives.
Civil society will help point out people’s health needs, particularly those of the vulnerable groups
and bring to the attention of the LCEs and/or LIC Teams such felt needs.
They will contribute towards enhancing the equity, accountability and transparency of F1
implementation at the Four-in-One Convergence sites.
52
Pump-Priming Health Reform Implementation:
F1 Financing Mechanisms and Strategies
The financing of FOURmula ONE for Health or F1 implementation follows a two-pronged strategy:
1. The first one, described earlier in the section on financing, refers to the rational use of
public subsidies, both national and local, and the increasing role of social health insurance in
paying for the health services of Filipinos. This likewise requires aligning these resources to
sustain the strategic thrusts and programs of F1.
2. The other strategy entails using available resources, mainly those from the foreign
assistance pipeline to pump prime F1 implementation in the immediate term.
The financing portfolio for FOUR-in-One Convergence Sites consists of the following:
Grants will come from development agencies such as the European Union (EU), the German
Technical Cooperation (GTZ) and the Government of Belgium among others.
LGU Counterpart will come from the respective Internal Revenue Allotments (IRA) and other
revenue sources of the LGUs; or from loans that may be accessed from the Asian Development
Bank (ADB) or the Kreditanstalt für Wiederaufbau (KfW) through the Municipal Finance Corporation
(MFC), an attached agency of the Department of Finance, and other such development or
commercial banks.
National Government Counterpart will come in the form of technical assistance, training and
capability building, systems development support, logistics support or other non-cash assistance
from the Department of Health. One source identified for the national Government counterpart is
the World Bank (WB), in the form of a budget support loan.
Other Partners like the World Health Organization (WHO) and other United Nations-attached
agencies, the United States Agency for International Development (USAID), the Japan International
Cooperation Agency (JICA) and other funding agencies will also be tapped for technical assistance
and support.
Given the diversity of funding sources and priorities, F1 will offer a rational menu of interventions
to finance, organized in a way that individual donors can support, while reflecting their own
priorities and preferences.
This menu provides a venue where various donors, the DOH, the LGUs and other agencies can
dialogue and jointly answer how the full package of F1 implementation can be supported. The end
goal of this dialogue shall be an optimal foreign assistance portfolio that:
 Ensures that the full package of F1 implementation is fully supported;
 Ensures that there is a balance between loans and grants, between funds for project
preparation and funds for implementation in supporting targeted FOUR-in-ONE
convergence sites;
 Ensures that funds are applied in a timely manner, i.e. present and future support for F1
are made available over a longer planning horizon;
 Ensures that funds are applied in a manner compatible with improving the capacities to
manage the reforms, thus avoiding parallel funding agency operated agendas and
management infrastructures; and
 Any health project that will be developed in the future shall as much as possible be
consistent with and brought into the F1 framework.
53
Reaching the Finish Line: Setting New F1
Targets and Objectives
As previously emphasized, working on reforms for the health sector will never be
done in a single medium term. It is a long-term, dynamic and iterative process
such that reaching the F1 finish line means starting on a new track all over again.
Components and strategies may be added, refocused or redirected as health

reforms are implemented but the basic reform areas will remain.
It is the intention of F1 to put the building blocks in place now and trigger more
reforms in the future.
All stakeholders for health are encouraged to join the race against fragmentation,
inequity and ill-health to reach a brighter and healthier tomorrow for many
generations of Filipinos to come.
54
BIBLIOGRAPHY
Administrative Order 2005-0023: Implementing Guidelines for FOURmula ONE for
Health as Framework for Health Reforms, Department of Health, Philippines
Administrative Order 2008-0005: Functional Arrangement for Managing Field

Implementation in Support of Health Sector Reform Efforts
Family Planning Survey 2006, National Statistics Office, Philippines. 2006
Field Health Service Information System 2004, National Epidemiology Center,

Department of Health, Philippines. 2004
Filipino Report Card on Pro-Poor Services, World Bank, 2000
FOURmula ONE for Health Primer, Department of Health, 2005
National Demographic and Health Survey 1998, National Statistics Office

(Philippines), Department of Health (Philippines), and Macro International Inc.,
Manila, Philippines. 1999
National Demographic and Health Survey 2003, National Statistics Office, Manila,
Philippines, and ORC Macro, Calverton, Maryland. 2004
National Demographic Survey 1993, National Statistics Office (NSO), Manila,

Philippines. 1994
National Objectives for Health 2005 to 2010, Department of Health, Philippines,

2005
Philippine Health Statistics 2004, National Epidemiology Center, Department of

Health, Philippines. 2004
Philippine National Health Accounts 2005, National Statistical Coordination Board,

Philippines, 2008
Philippine Statistical Survey 2007, National Statistical Coordination Board,

Philippines, 2007
55

Overview of The Philippine Health System and The Implementation Framework For Health Reforms

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Overview of the Philippine Health System and the Implementation

Framework for Health Reforms

Published by the Department of Health (DOH) Philippines

This document was published through the European Commission Technical

Technical Writers and Coordinators

Mar Wynn C. Bello, MD, MPA

This document is accessible at:

Overview of the Philippine Health System 3

Goals of the Philippine Health System 4

Disaster and Emerging/Re-emerging Illness 7

Implementation Framework for Health Reforms: FOURmula

Defining the Roadmap for Health Reforms 12

To improve the health status of the

The DOH launched the FOURmula ONE for

B. Consultants and Other Partners

Better Health Outcomes

More Responsive Health System

Equitable Health Care Financing

Life Expectancy at Birth, Crude Birth Rate and Crude

expectancy at birth of around 70.5 years in 2005. This 74

Statistics, 2004). 1995 1996 1997 1998 1999 2000

CalendarYears Male Female

Leading Causes of Morbidity

Table 1. Ten Leading Causes of Morbidity

1 Diarrheas Diarrheas Pneumonias Acute lower Acute lower Acute lower

3 Pneumonias Pneumonias Bronchitis/ Acute Watery Bronchitis/ Bronchitis/

5 Hypertension Hypertension Hypertension Hypertension Influenza Influenza

6 TB respiratory TB respiratory TB respiratory TB respiratory TB respiratory TB respiratory

7 Diseases of Diseases of Diseases of Chicken pox Diseases of Diseases of

Leading Causes of Mortality

from 21.5 per 100,000 population in 1994 to 41.3 per

Deaths per 100,000 population

100,000 population in 2004 (Philippine Health

Diseases of the Heart)

diseases have been reduced by more than half in the

last twenty years. This is quite evident in the

Communicable Diseases 100

population in 1984 to 38.4 per 100,000 population in

2004). Deaths from all forms of tuberculosis have also Years

Diseases of the Heart

decreased by 40% in the last two decades. This is the

Infant, Under-Five and Maternal Mortality

Philippines have been declining through the years, but the

was estimated at 30 infant deaths per 1,000 livebirths in

Planning Survey, 2006). The three most common 10

causes of infant deaths are pneumonia, bacterial 0

sepsis, and disorders related to short gestation and low Years

Maternal Mortality Ratio per 100,000 live births

Maternal Mortality Ratio per 100,000 live births

(Family Planning Survey, 2006). Maternal deaths 150

Disasters and Emerging / Re-emerging Illness

Responsiveness of the Health System

RESPONSIVENESS DOMAINS INDICATOR PERCENTAGE WHO GAVED POOR RATING

Satisfaction with the Health System

Table 3. Net Satisfaction with Health Facilities with

Over-all Satisfaction +87 +87 +88 +88 +83

Equity in Health Care Financing

expenditures, while social health insurance paid

Accounts, 2005). National

insurance mechanisms with varying degrees of 11.0%

amount, 46.4% was spent on drugs and medicines, Medical

Table 4. Comparative Trade Prices of Branded Medicines (in Peso)

Philippines M. Manila Luzon Visayas Mindanao