Republic of the Philippines
House of Representatives
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

House srutno._ 6145_

——

Introduced by Honorable Raul A. Daza

EXPLANATORY NOTE

In pursuit of the primordial goal of providing the citizenry with the best health care
services at the most affordable cost, this bill seeks to introduce a proactive approach
which is consistent with the integrated and comprehensive health development program
currently being undertaken by the goverment through its Ka/usugang Pangkalahatan
Program (Universal iealthcare) thereby affirming the State's policy on health.

Towards a national hospital care delivery system that is state-of-the-art and of global
quality yet affordable and efficient, this bill will showcase @ Corporate Restructuring
Program for National Government Hospitals.

Under this restructuring program, state heeritais or medical institutions shall be
converted into corporate entities allowing them to engage in revenue-generating
activities that shall help subsidize medical care to indigent patients. Under this
dutonomy, a more efficient delivery of health care will be ushered particularly in the
effective stewardship of hospital assets, funds, management and personne!
supervision. And given the corporate nature of these hospitals, they will be self-
sustaining allowing the national government to save funds and devote them to other
health efforts.

By virtue of this bill, twenty-six (26) national government. hospitals currently under
the administrative supervision of the Department of Health will be converted into
government corporate entities thereby vesting in them the powers of a corporation
‘and the capacity of perpetual succession.

In view of the foregoing, the passage of this Bill is earnestly requested.

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“ UL A.DAZA


Republic of the Philippines
House of Representatives
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILLNo.___ 6145

Introduced by Honorable Raul A. Daza

AN ACT INSTITUTING A CORPORATE RESTRUCTURING PROGRAM
FOR NATIONAL GOVERNMENT HOSPITALS, PROVIDING FUNDS
THEREFOR AND FOR OTHER PURPOSES.

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

Section 1. Short Title - This Act shall be known as the “National Government
Hospital Corporate Restructuring Act”.

Section 2. Decfaration of Policy and Principles -\t is the policy of the
State to adopt an integrated and comprehensive approach to health
development which shall endeavor to make healthcare, medicines, and
‘other social services available to all the people at affordable cost under
the program of Universal Health Care or Kalusugan Pangkalahatan. There
shall be priority for the needs of the poor, underprivileged, sick, elderly, and
disabled, women and children. The State shall likewise endeavour to provide
free medical care to paupers, It is further the policy of the State to
establish and maintain an effective food, and drug regulatory system and
undertake appropriate health manpower development and research activities
responsive to the country's health needs and problems. In the pursuit of
this Policy, a Corporate Restructuring Program for National Government
Hospitals shall be instituted in this Act with the following as its guiding
principles:

a. The provision of health services remains one of the most
essential functions of the government;

b, The goverment should provide all citizens with an acceptable,
modem, and national hospital care delivery system that is affordable
and efficient;

c. The provision of health care to indigent patients is a substantial
expenditure requiring close cooperation between the State, the Local
Government Units (LGUs} and the private sector. The formulation of
consistent over-all policy directions at al! levels of government is
therefore necessary.


|. Through the operation of corporate hospitals, the government may

engage in proprietary and revenue-generating activities to help
subsidize medical care to indigent patients;

. Fiscal autonomy of goverment hospitals will lead to more efficient

delivery of health services;

The corporate form of organization will give hospital administrators
the necessary flexibility for the effective stewardship of hospital assets,
funds, management and personnel supervision; and

. The corporate nature makes the hospital self-perpetuating at the

same time saves funds of the national government which it could use
for other health efforts.

Section 3. Purpose and Objectives - The National Government Hospital
Corporate Restructuring Program aims to:

a.

b.

Provide the Filipinc people an affggdable but quality and timely hospital
care and medical service delivery system;

Institute reforms in the organization, administration and financial
management of national hospitals as a means of reducing the
cost and improving the quality of public health care primarily
through the corporate restructuring of these hospitals, ie. converting
them into corporate entities; and

Develop the present DOH Hospitals into government owned, non-
profit corporate hospitals with its attendant rights and privileges.

Section 4. Conversion of National Goverment Hospitals into Government
Owned Corporations - Twenty-six {26} national government hospitals listed
hereunder which are currently under the administrative supervision of the
Department of Health are hereby converted into government corporate
entities. As such, they shall have the attribute of perpetual succession
and shall be vested with the powers of a corporation. They shail continue
to exist until dissolved for a lawful cause and/or by joint resolution of Congress.

erprepesgraArrseseaoge

Cagayan Valley Medical Center

Veterans Regiona! Hospital n

Baguio General Hospital and Medical Center

Ilocos Training and Regional Medical Center

Region I Medical Center

Dr. Paulino J. Garcia Memorial Research and Medical Center
Jose B. Lingad Memoriat Medical Center

Batangas Regional Hospital

Bicol Medical Center (Naga City)

Bicol Research Training and Teaching Hospital (Legasp! City)
Quirino Memorial Medical Center

Jose R. Reyes Memorial Medical Center

|. Rizal Medical Center

Amang Rodriguez Medical Center

San Lazaro Hospital

Vicente Sotto Memorial Medicai Center

Eastern Visayas Regional Medical Center

Corazon Lacsin Montelibano Memorial Regional Hospital
Western Visayas Medical Center

Northern Mindanao Medical Center

Southern Philippines Medica! Center


NSE KES

Zamboanga City Medical Center

Cotabato Regional and Medical Center

CARAGA Regional Hospital

Davao Regiona! Hospital; and

Mayor Hilarion A. Ramiro, Sr. Regional Training and Teaching Hospital

Section 5. Purpose and Objectives - Each of the foregoing corporatized
hospitals, in accordance with its area of specialization, shall have the following
objectives:

To provide and maintain affordable, quality and modem hospital
care through a more efficient health service delivery system with
priority for the needs of the underprivileged, sick, elderly, disabled,
women and children;

To ensure the development of hospital facilities into modern
medical centers;

To continuously improve hospital and medical service operation
conditions conducive to the efficent delivery of health care to the
public;

To promote, encourage and engage in scientific research on the
prevention of diseases and the care and/or treatment of patients and
related activities, including sponsorship and conduct of relevant
congresses, conventions, seminars and conferences;

To encourage and/or undertake the training of physicians, nurses,
medical technicians, health officers, social workers and other health
professionals on the practical and scientific conduct and
implementation of health and medical services, and related activities;
and
To engage in public-private partnership (PPP) activities in accordance
with the declared policy of the State to recognize the indispensable
role of the private sector as the main engine for national growth and
development and provide the most appropriate favorable incentives
to mobilize private resources for the purpose.

Section 6. Powers and Functions - Each of the corporatized hospitals shail
have the following powers and functions: _

a.
b.

G

To adopt a code of by-laws to complement this Charter;

To adopt and use a corporate seal which shall be a matter of judicial
notice;

To determine its organizational structure and the number and
salaries of its officers and employees, subject to the pertinent
provisions of Republic Act No.1 0149 (RA 10149), also known as the
GOCC Governance Act of 2011;

To establish and maintain professional and technical educational
systems for the sustained development of the necessary manpower to
manage and operate its affairs and business;

To invest its funds as it may deem proper and necessary, but
subject to applicable laws, rules and regulations, in any activity
related to hospital or medical care operations, including in any
bonds or securities issued and guaranteed by the Government of the
Philippines;


f. To acquire assets, real or personal, or interest therein and
encumber or otherwise dispose the same as it may deem proper
and necessary in the conduct of its business;

g. To borrow money from local or foreign sources as may be necessary for
its operations, subject to applicable laws, rules and regulations;

h. To accept any gifts, contributions, endowments, grants, bequests
and devices of any kind of real or personal property which are
necessary and proper for the attainment of the purpose of the hospital;
and

i. To perform such acts and exercise such functions as may be necessary
and proper for the attainment of the purposes and objectives herein
specified.

Section 7. Contracts - Every corporatized hospital shail have the authority to
enter into contracts with any person“6F"entity, domestic or foreign and
with government for the undertaking of the varied aspects of hospital
and health care operation, including the acquisition, by way of purchase,
lease or rent or other deferred payment arrangements of equipment and/or
raw materials and supplies, as well as for services connected therewith
under such terms and conditions as it may deem proper and reasonable. In the
acquisition and disposal of property real or personal, a bidding process shall be
necessary to conform to the requirements of public bidding as provided for in
Republic Act 9184 and related laws.

Section 8. Soard of Trustees - The affairs and business of each corporatized
hospital shall be directed; its properties managed; and its corporate
powers exercised, unless otherwise provided in this Charter, by its own
Board of Trustees which shall be composed of seven (7) members, as
follows:

a. The Secretary of the Department of Health as Chairman of the Board
or his duly authorized representative;

b. The Operations Cluster Undersecretary/Assistant Secretary of the
Department of Health;

c. The Regional Director of the Department of Health Center for
Health Development;

d, Three (3) members from the private sector preferably with
experience in finance, administration or management; and

e. The Medical Center Director.

The terms of office, manner of appointment of the trustees and other
matters pertaining to the governance of each corporate hospital shall be
determined in accordance with the pertinent provisions of RA 10149.

The Board of Trustees shall be governed by a set of by-laws, which shall
contain, among others, an enumeration of each of the member's
responsibilities, accountabilities, and cause of termination,

Section 9. Powers and Functions of the Board - The Board of Trustees which
shall be the policy-making body of the corporate-restructured hospital shall have
the following powers and functions:
a. Determine the general policies of the hospital within the scope of its
powers, objectives and financial resources;


Establish the organizational structure of the hospital, define the
duties and responsibilities of all officials and employees and adopt a
compensation and benefit scheme, subject to the pertinent provisions
of RA 10149;

To acquire, hold and own in any manner, property of whatever
nature or description, and to. dispose_of such property under any
mode of encumbrance or conveyarse;

To enter into, make, perform and carry out contracts of every kind
and for any lawful purpose with any person, firm, assodation or
corporation, whether public or private, domestic or foreign;

To mortgage, lease, sell, transfer, conveyor otherwise dispose of Its
properties;

To solicit and receive donations, endowments and funds in the
form of contributions, whether in cash or in kind, from both the
public and private sectors and from domestic or foreign sources;

‘To open such accounts in banks and other financial institutions,
and to disburse such funds or invest the same as the Board of Trustees
may direct to accomplish or advance the purposes or interest of the
hospital;

To invite foreign or local health specialists and similar experts in the
various medical fields to train the personnel, trainees or residents of the
hospital;

To send the personnel of the hospital to research institutes,
medical institutes or universities for advance training or observation
and to attend international or regional conventions, conferences,
congresses or seminars as the Boaru‘ of Trustees may deem necessary
to accomplish the purposes and objectives of the hospital;

To enter into such agreements and arrangements with other
medical or similar institutions, domestic or foreign, as may be deemed
desirable by the Board of Trustees toward promoting the purposes
and objectives of the hospital;

To continuously develop its capabilities so that the hospital
becomes the referral center for specialized care of its catchment area;
To adopt a set of by-laws, rules, regulations, policies, guidelines
and procedures consistent with law and the provisions hereof to
govern the administration and operation of the hospital; and

. To do all such other acts and things as are or may be

necessary for or incidental to the accomplishment of the purposes
and objectives of the hospital.

Section 10. Duties and Responsibiliées of the Chief Executive Officer - The
Chief Executive Officer of each corporete-restructured hospital shall have the
following duties and responsibilities:

a.

To prepare the agenda for the meetings of the board, and to
submit for consideration of the board such policies and measures
as he believes necessary to carry out the purposes and objectives of
this Act;

To execute, administer and implement the policies and measures
approved by the board;

To direct and supervise the operations and administration of the
hospital;


d. To represent the hospital in all dealings with all other offices,
agencies and instrumentalities of the government and with all
persons and other entities, domestic or foreign; and

e. To exercise such other powers and perform such other duties
provided in the by-laws and as vested to him by the board.

Section 11. Remittance of Income - Al corporate hospitals are hereby
authorized to retain and utilize their™"fome derived from the hospital
operation and non-patient related activities for the maintenance of the
other operating expenditures, including capital outlay especially in the
acquisition of equipment and medical supplies, subject to auditing rules and
regulations. Further, no amount from such income shall be used to augment
the salaries and other compensation of hospital personnel beyond the
amounts determined by the Governance Commission for Government-
Owned and Controlled Corporations (GCG), as provided for in RA 10149. The
Department of Health in coordination with the Department of Budget and
Management shall issue the necessary rules and regulation to implement this
provision.

Section 12. Exemption from Taxes - Each of the corporate-restructured
hospitals shai! be exempt from the payment of taxes on all contribution thereto
and all accruals on its Income and investment earnings. Any donation,
contribution, bequest, subsidy or financial aid which may be made to it shall
constitute allowable deduction from the income of the donor for income
tax purposes and shall be exempt from donor's tax subject to such
conditions as provided for in the National Internal Revenue Code. Every
corporate-restructured hospital shall be exempt from all other taxes, whether
direct or indirect, on its income, properties and operations.

Section 13. Supervision- All the corporate-restructured hospitals shall be
under the direct supervision of the Department of Health for purposes of
policy direction and control. It shall submit an annual report, pursuant to
the pertinent provisions of RA 10149.

Section 14. implementing Rules and Regulations - Within thirty (30) days
from 20 the compietion of the appointment of its members, the
Corporation's Board of Trustees shall convene to formulate the rules and
regulations necessary for the implementation of this Act.

Section 15. Transitory Provisions - This Act reinforces and broadens the
corporatization program initiated by the DOH prior to the passage hereof.
Hospital corporations organized out of the hospitals enumerated under
Section 4 hereof prior to this Act shall be transferred by the Secretary of
Health within ninety (90) days from its organization. Current government
subsidy to the various hospitals shall be nsintained or increased until such time
that financial sustainability is achieved.

Section 16. Separability Clause - Should any provision of this Act be held
unconstitutional, no other provision when able to stand by itself shall be
affected thereby.

Section 17. Repealing Clause - All laws, acts, executive orders,
administrative orders, rules and regulations inconsistent herewith, including


but not limited to the charters of the hospitals enumerated in Section 4
hereof, are hereby repealed, amended or modified accordingly.

SeCTION 18, EVECUVEY ~ Line Aut Sia GARG GHEE HCO (ivy Uys Gree
itspublication in the Official Gazette or in any newspaper of general circulation,
ae 7

Approved,