FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. .122 
) 
) 
Introduced by Senator S. R. Osmeiia III 
EXPLANATORY NOTE 
The Constitution explicitly provides that the State shall protect and 
promote the right to health of the people and instill health consciousness among 
them. The enactment of the Local Government Code in 1991 sought to give 
meaning to such mandate. Under the Code, local government units (LGUs) were 
granted more powers, authorities, responsibilities and resources. A year after its 
enactment, the Implementing Rules and Regulations" on the devolution of health 
services was created. 
Among those devolved to the LGUs were hospitals and field health 
services of the Department of Health (DOH). The full implementation of the Local 
Government Code in 1993 transferred the operation of provincial and district 
hospitals to the provincial governors and rural health units (RHUs) to the city and 
municipal mayors. This translates to 580 hospitals being operated by the 
governors and 2,000 RHUs under the mayors, and a total of 45,082 health 
personnel devolved to the local government. Meanwhile, DOH's residual powers, 
functions and responsibilities remain. These include the oversight (general 
supervision) monitoring and evaluation functions, formulation of standards and 
guidelines, and technical and other forms of assistance to the LGUs. 
Notwithstanding the 
devolution of health 
services in 
1993, 
the 
deterioration of health facilities and equipment remains deplorable, as even the 
Department of Health has to admit. As early as 1995, the DOH reported in its 
Hospital Devolution Study that LGU funds to finance operations of devolved 
health services were inadequate. 
The problems brought about by devolution led to the deterioration of 
health services particularly in far-flung areas where services are needed most. 
Only 1/3 of the total number of hospitals and about % of hospital beds are public. 
Out of the country's 41,000 barangays, only Y. have a barangay health station. 
These government health facilities have acquired increasing notoriety for their 
lack of equipment, medicines and staff. 
This bill attempts to respond to an urgent need to effectively address 
these health issues in order to rationalize the health care delivery system in our 
country. 
SI.m~=N: 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. 122 
) 
) 
Introduced by Senator S. R. Osmena III 
AN ACT 
PROVIDING FOR THE MODERNIZATION OF THE HEALTH CARE DELIVERY 
SYSTEM, 
APPROPRIATING 
FUNDS THEREFORE AND 
FOR OTHER 
PURPOSES 
Be it enacted by the Senate and House of Representatives of the R,epublic of the 
Philippines in Congress assembled: 
1 
Section 1. Short Title. -- This Act shall be known as the "Health Care 
2 
Delivery, Modernization Act of 2010." 
3 
Sec. 2. Declaration of Policy. -- It is hereby declared a policy of the State 
4 
to modernize the health care delivery system to a level where it can fully and 
5 
effectively perform its constitutional mandate to protect and promote the right to 
6 
health of the people and instill health consciousness among them. Toward this 
7 
end, the principal thrust of this modernization program under this Act shall be as 
8 
follows: 
9 
(a) 
The development of an efficient and effective health care delivery 
10 
system throughout the country; 
11 
(b) 
The integration of the promotive, 
preventive, 
curative and 
12 
rehabilative aspects of health care delivery to be under the local chief executive 
13 
whenever appropriate; 
14 
(c) 
The transformation of government hospitals into self-governing 
15 
components, together with their respective rural health units; 
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(d) 
The development of cooperation among the local and national 
2 
government agencies, members of Congress and the private sector, including 
3 
the civic, religious and non-government organizations; 
, 
4 
(e) 
The implementation of a residency training and accreditation 
5 
program and accreditation of private specialist practitioners in provincial hospitals 
6 
and medical centers; 
7 
(f) 
The establishment of a dependable two-way referral system 
8 
between the public and health worker up to the successive higher level of health 
9 
care stations reaching up to the specialty hospitals and vice versa; 
10 
(g) 
The delineation of specific and specialized functions that will enable 
11 
the Department of Health (DOH) to concentrate its efforts in establishing and 
12 
maintaining adequately equipped state-of-the-art medical centers at the regional 
13 
level, including those in Metro Manila, and specialty hospitals in the country, 
14 
including those with original charters; 
15 
(h) 
The development of partnership among local government units and 
16 
between local government units and the Department of Health (DOH) in the 
17 
establishment of health care delivery facilities; and 
18 
(i) 
Local government units shall adopt a system and procedure to 
19 
attain maximum level of transparency in the procurement of equipment and 
20 
medicines. 
21 
Sec. 3. 
Statement of Objectives. 
The Health Care Delivery 
22 
Modernization Program, hereinafter referred to as the Program, shall be 
23 
implemeoted in accordance with the following objectives: 
24 
a'. To modernize the health care delivery system by adopting a 
25 
comprehensive, consistent and systematic approach to health issues and 
26 
concern to complement the state-of-the-are technology; 
27 
b. To further enhance local autonomy by granting local government units 
28 
full powers in the formulation of policies and by mandating the Department of 
29 
Health to perform tasks under Section 5 of this Act relative to the operation and 
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maintenance of hospitals and public health services under its supervision and 
2 
control; 
3 
c. 
To implement a program of extending technological, financial and 
4 
administrative assistance to local government units to support and improve the 
5 
provision, operation and maintenance of health facilities and equipment; 
6 
d. 
To enhance inter-agency multi-sectoral cooperation; 
7 
e. 
To enhance the capability of hospitals requiring the DOH to provide 
8 
each local government unit, competent physiCians to assist the local chief 
9 
executive as may be appropriate in the monitoring of health care delivery 
10 
functions; and 
11 
f. 
To encourage the employment and retention of doctors in rural 
12 
areas. 
13 
. Sec. 4. Definition of Terms. -- The following terms shall be understood in 
14 
this Act to mean: 
15 
(1 ) 
"Hospital" refers to a place devoted primarily to the maintenance 
16 
and operation of facilities for the diagnosis, treatment and care of individuals 
17 
suffering from illness, disease, injury or deformity, or in need of obstetrical or 
18 
other medical and nursing care. 
19 
(2) 
"Primary Hospitals" refer to those with capabilities and facilities for 
20 
providing first contact emergency care and hospitalization in simple cases. 
21 
(3) 
"Secondary Hospitals" refer to those which have capabilities and 
22 
facilities for providing medical care to cases requiring hospitalization and the 
23 
expertise of physiCians with training of not less than six (6) months on certain 
24 
specialties. 
25 
(4) 
"Tertiary Level I Hospitals" refer to those which have capabilities for 
26 
providing medical care to cases requiring sophisticated diagnostic and 
27 
therapeutic equipment and the expertise of trained specialist and in the sub-
28 
specialties. 
3 


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(5) 
"Tertiary Level II Hospitals" refer to a departmentalized hospital with 
2 
teaching and research capabilities and accredited Residency Training Programs 
3 
in the fields of Surgery, Pediatrics, Medicine, OB-Gyne, EENT, Orthopedics, 
4 
Anesthesia and other ancillary disciplines. 
Dental services is part of the 
5 
professional services. 
6 
(6) 
"Tertiary Level III Hospitals" refer to hospitals which have been 
7 
particularly selected to provide tertiary hospital services, with teaching, training 
8 
functions and research. 
9 
(7) 
"Tertiary Level IV Hospitals" refer to a tertiary hospital with 
10 
expensive and sophisticated diagnostic and therapeutic facilities for a specific 
11 
medical problem area. 
12 
(8) 
"District Hospital" refers to the front-line hospital with capabilities 
13 
and facilities for providing secondary medical care to cases requiring 
14 
hospitalization and the expertise of trained doctors. 
15 
(9) 
"Provincial Hospital" refers to a central district hospital with its own 
16 
catchments area which provides at least a minimum of Tertiary Level I hospital 
17 
care. 
18 
(10) 
"Regional Hospital" refers to departmentalized hospital which 
19 
provides Tertiary Level II hospital care. 
20 
(11) 
"Medical Center" refers to a hospital which provides Tertiary Level 
, 
21 
III hospital care. 
22 
(12) 
"Specialty Hospital" refers to a hospital which provides services for 
23 
one particular illness or disease or health medical care need, with the highest 
24 
medical care rendered by medical experts and using highly specialized 
25 
equipment for a specific medical problem area. 
It provides Tertiary Level IV 
26 
hospital care. 
27 
(13) 
"Competent physician" refers to a doctor who possesses both 
28 
technical and managerial knowledge or expertise in health care. 
4 


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(14) 
"Local Government Units" refer to provinces, cities, municipalities, 
2 
barangays and other political subdivisions as may be created by law. 
3 
Sec. 5. Components of the Program. - The Program shall consist of the 
4 
following components: 
5 
a) 
Delineation of the role of the local government units and the 
6 
Department of Health. 
The leagues of local government units and the 
7 
Department of Health shall support the implementation of the Health Care 
8 
Delivery Modernization Program by performing the mandated tasks herein 
9 
defined, to wit: 
, 
10 
1) 
The province shall be responsible for the promotive, preventive, 
11 
curative and rehabilitative aspects of health care delivery except in places 
12 
where municipal and city hospitals exist, in which case these municipal 
13 
and city hospitals shall be under the responsibility of the local government 
14 
unit concerned. 
They shall also undertake an annual review of health 
15 
program in their areas of jurisdiction. 
16 
2) 
The District Health Board shall be responsible for the recruitment of 
17 
volunteer barangay health workers, who shall be entitled to monthly 
18 
honorarium and other benefits as provided for by law. 
19 
3) 
The Department of Health shall, in addition to the powers vested in 
20 
it under existing laws, be responsible for the following: 
21 
(3.1) Health care delivery higher than or more sophisticated than 
22 
that provided by local government units; 
23 
(3.2) Provide each province or qualified cities or municipalities 
24 
competent physicians to assist the local chief executive as may be 
25 
appropriate in the management and monitoring of devolved health 
26 
care functions; 
27 
(3.3) Upper tertiary hospital care where the expertise in the 
28 
different organ specific medical-surgical specialty is needed; 
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(3.4) Operation and maintenance of medical centers, including 
2 
those in Metro Manila, and specialty hospitals whose functions are 
3 
to provide tertiary expertise: Provided, however, That specialty 
4 
hospital with original charter shall continue to be governed by its 
5 
own charter. 
6 
(3.5) Supervise the operation of the more sophisticated organ 
7 
specific medical centers; 
8 
(3.6) Initiate and assist in the establishment of a residency training 
9 
program with the participation of the private practicing specialist, as 
10 
much as practicable, as consultants in each provincial hospital; and 
11 
(3.7) Provide doctors in rural communities under its program of 
12 
doctors to doctorless areas, who shall be assigned by the local ':. 
13 
chief executive as may be appropriate to qualified communities. 
14 
The Department of Health is hereby authorized to create positions of, and 
15 
provide the necessary funding, as a national aid to local government units, for 
16 
doctors to doctorless areas including their incentives and benefits, in addition to 
17 
those granted under existing laws, to wit: 
18 
(1) 
Hazard allowance in an amount to be determined by the district 
19 
hospital health board of the local government unit concerned; 
20 
(2) 
Subsistence allowance equivalent to the meals they take in the 
A. 
21 
course of their duty which shall be computed in accordance with the 
22 
prevailing circumstances as determined by the local government unit 
23 
concerned; and 
24 
(3) 
Automatic promotion to the position of Medical Specialist I or to the 
25 
next higher rank, as the case may be, under the Revised Compensation 
26 
Classification System. 
27 
The doctors to the doctorless areas shall be entitled to incentives and 
28 
benefits to be provided under this Act by other government agencies, to wit: 
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(1) 
Free legal representation and consultation services shall be 
immediately provided by the Public Defenders Office in cases of coercion, 
interference, and other civil, criminal and administrative cases filed by or 
against such doctors arising out of or in connection with the performance 
of their duties as such; and 
(2) 
Scholarship benefits in the form of tuition fees in state colleges or 
universities to be granted to their legitimate children. 
(3) 
Strengthening the Capability of the Provincial Hospitals. 
-
The 
Program shall develop the provincial hospitals into a responsive, efficient 
and modern hospital with the capability to handle tertiary level I to II 
hospital care. In pursuance thereto, the following necessary steps must 
be undertaken, to wit: 
1) 
The establishment of a residency training program and tertiary 
diagnostic facilities with, as much as practicable, the participation of the 
private sector or private specialist practitioner as consultants in each 
provincial hospital subject to the following conditions: 
, 2) 
a) 
Consultants, who shall be accredited to practice in the 
hospital, may be entitled to honorarium to be determined by the 
district hospital health board; 
b) 
Provincial hospital residents participating in the residency 
training program shall not be permanent employees but shall be 
considered employed for the whole duration of the Residency 
training period; and 
c) 
Participants in the Residency training program shall be given 
preference in case of reemployment as residents of district 
hospitals and shall occupy the position of Medical Officer IV. 
The ,abolition of regional hospitals and offices. All equipment, 
28 
records, and other assets of both the regional offices and hospitals shall 
29 
be transferred to the Regional Medical Center. Personnel shall be 
7 


1 
absorbed by the Medical Centers or assigned to the provincial government 
2 
to assist the governors in managing the devolved functions; Provided, 
3 
That the rights accorded to such personnel pursuant to the civil service 
4 
law, rules and regulations, shall not be impaired. 
5 
3) 
The improvement of each provincial hospital. The provincial 
6 
government shall strive to establish diagnostic centers and to provide 
7 
modern and quality equipment to improve the capabilities of the provincial 
8 
hospitals pursuant to its modernization objectives: Provided, That, the 
9 
acquisition of new equipment shall be synchronized with the phasing out 
10 
of obsolete major equipment. Provided, further, That, the acquisition of 
11 
new equipment shall be subject to the laws on public bidding. 
12 
c) Establishment of the District Hospital, Medical Center and Specialty 
13 
Hospitals Health Boards. - This component of the Program is geared towards the 
14 
realization of a genuine local autonomy. In furtherance, thereof, there shall be 
, 
15 
established a district hospital, medical center, including those in Metro Manila, 
16 
and specialty hospital health boards. 
17 
The composition of the district, medical center and specialty hospital 
18 
health boards shall, as they are applicable, be as follows: 
19 
Chairman: (1) For district hospital, A Sangguniang Panlalawigan member 
20 
representing the district where the district hospital is located; 
21 
(2) For medical center, the Chairman of the Regional Development 
22 
Council. In Metro Manila, the Mayor where the medical center is located. 
23 
(3) For speCialty hospital, the Chairman of the Board of Trustees for 
24 
specialty hospital with original charter; the Secretary of Health for specialty 
25 
hospitals under its control and supervision. 
26 
Vice Chairman: Chief of the District Hospitals, Medical Centers and 
27 
Specialty Hospitals 
28 
Member: (1) Representative of the Congressional District for hospitals in 
29 
his political district; 
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(2) Senator of the Republic for all medical centers and specialty hospitals; 
(3) A mayor of the catchments area of the district; 
Members common to the district hospitals, medical centers and specialty 
hospitals health boards; 
. (1) Representative of the Philippine Hospital Association; 
(2) Representative of the Philippine Medical Association; 
(3) Representative from the non-government organizations involved in 
health services; 
(4) Representative of the religious sector; 
(5) Representative of the private sector. 
The Chairman, Vice Chairman and the members of the District Hospital 
Health Board, except the Representative of the Congressional District, shall be 
appointed by the provincial governor. 
The Chairman and Vice-Chairman of the Medical Center, including those 
in Metro Manila, and specialty hospital health boards shall serve by the operation 
of this Act without the need of any appointment. 
The representative from the non-government organizations, religious and 
the private sector in the medical center and specialty hospital health boards shall 
be appointed by the Chairman of the respective health boards. 
The powers and functions of the district hospital, medical center and 
specialty hospital health boards shall, as they are applicable, be as follows: 
(1) 
To assist the provincial governor, the Secretary of Health, 
Administrator or Chairman of the Boards of Trustees, as the case may be, 
. in the operation and management of devolved functions, medical centers 
and specialty hospitals; 
(2) 
To review and endorse the budgetary requirements of the district 
27 
health services, medical centers and specialty hospitals; 
28 
(3) To devise a mechanism for internal control; 
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(4) 
To enhance the participation of local government units and 
community involvement in hospital service and public health activities; 
(5) 
To screen and recommend to the Selection Board the appointment 
of qualified applicants to fill vacant positions in the rural health units and 
district hospitals, medical centers and specialty hospitals, as the case may 
be; 
(6) 
To deposit, in trust, all the earnings of the district hospitals and rural 
health units derived from whatever source with the Provincial Treasurer's 
Office or with any authorized depository banks; for medical centers and 
specialty hospitals, with any authorized depository bank as part of their 
General Fund; 
To determine the utilization of funds of the hospitals and medical 
13 
. centers for the betterment of hospital health services; and 
14 
(8) 
To perform such other functions as may be deemed necessary for 
15 
the effective management of the rural health units, hospitals, medical 
16 
centers and specialty hospitals: Provided, however, That the Board of 
17 
Trustees of specialty hospitals with original charter, shall exercise the 
18 
powers and functions of the hospital health board under this section, in 
19 
addition to the powers vested in it under existing laws. 
20 
The Board shall meet at least once a month or as often as may be 
21 
necessary. 
22 
A majority of the members of the Board shall constitute a quorum but the 
23 
chairman and the vice-chairman must be present during meetings where 
24 
budgetary proposals are prepared or considered. Members thereof who are not 
25 
government officials or employees shall be entitled to necessary traveling 
26 
expenses and allowance chargeable against the funds of the health boards of the 
27 
district hospital, medical center and specialty hospitals subject to the accounting 
28 
and auditing rules and regulations. 
10 


1 
S~C. 6. Period of Implementation. - The Program shall be implemented 
2 
over a period of three (3) years from the approval of this Act. 
3 
SEC. 7. Appropriations. - a) Initial Appropriations. - For the first year of 
4 
the 
implementation 
of 
this 
Act, 
the 
amount 
of 
One 
billion 
pesos 
5 
(Pi ,000,000,000.00), is hereby appropriated out of any funds of the National 
6 
Treasury not otherwise appropriated. 
7 
b) Continuing Appropriations. -
The Department of Budget and 
8 
Management (DBM) is hereby mandated to include in the annual General 
9 
Appropriations Act the amount necessary for the implementation of this Act. 
10 
Other sources of funds shall from the following: 
11 
(1) 
The total cost of devolved functions to be deducted from the 
12 
Internal Revenue collections subject to the following principles: 
13 
(2) 
Internal revenue allotment shares be based on the total amount 
14 
collectible for internal revenue, including value-added tax collected by the 
15 
Bureau of Customs, proceeds from the sin taxes and the like; 
16 
(3) 
The cost of devolved functions shall be taken from the sixty percent 
17 
(60%) share of the national government; 
18 
(4) 
Twenty percent (20%) net earnings from the Philippine Amusement 
19 
and Gaming Corporation (PAGCOR); 
20 
(5) 
Twenty percent (20%) net earnings of the Public Estate Authority; 
21 
a"nd 
22 
(6) 
Loans, grants, bequest, or donations, whether from local or foreign 
23 
sources. 
24 
SEC. 8. Implementing Rules and Regulations. - The Department of Health 
25 
(DOH) and the Department of the Interior and Local Government (DILG) shall, in 
26 
coordination wi~n the League of Provinces, promUlgate the rules and regulations 
27 
for the implementation of this Act within sixty (60) days from its effectivity. 
11 


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SEC. 9. Repealing Clause. -
All laws, orders, decrees, rules and 
2 
regulations inconsistent with the provisions of this Act are hereby repealed or 
3 
modified accordingly. 
4 
SEC. 10 . Separability Clause. - If any part or provision of this Act shall be 
5 
declared to be unconstitutional or invalid, other parts or provision hereof which 
6 
are not affected thereby shall continue to be in full force and effect. 
7 
SEC. 11. Effectivity. - This Act shall take effect fifteen (15) days following 
8 
its publication in at least two (2) newspapers of general circulation. 
ARproved, 
12