Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS.
First Regular Session

House Bill No. 2880

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT
PROVIDING FOR THE MODERNIZATION OF THE HEALTH CARE DELIVERY
SYSTEM, APPROPRIATING FUNDS THEREFORE AND FOR OTHER PURPOSES

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, something which has been admitted

1


by the department. 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 % have a barangay health station. These government health
facilities have been notoriously described as “death stations” for their lack of equipment,
medicines and able staff.

This bill humbly attempts to respond to such an urgent need to effectively
address pressing health issues in order to rationalize the health care delivery system in
our country.

In view of the foregoing, the expeditious passage into law of this proposed

measure is earnestly requested

DIOSDADO GAL ARROYO GLORIA MACAPAGAL ARROYO
Second District, Camarines Sur Second District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City

SIXTEENTH CONGRESS,
First Regular Session

House Bill No._2880

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

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 Phil
Congress assembled:

SECTION 1. Short Title. — This Act shall be known as the "Health Care Delivery
Modernization Act of 2013."

SECTION 2. Declaration of Policy. - It is hereby declared a policy of the State to
modernize the health care delivery system to a level where it can fully and effectively
perform its constitutional mandate to protect and promote the right to health of the
people and instill health consciousness among them. Toward this end, the principal
thrust of this modernization program under this Act shall be as follows:

(a) The development of an efficient and effective health care delivery system
throughout the country;

(b) The integration of the promotive, preventive, curative and rehabilative aspects
of health care delivery to be under the local chief executive whenever
appropriate;

(c) The transformation of government hospitals into self-governing components,
together with their respective rural health units;


(d) The development of cooperation among the local and national government
agencies, members of Congress and the private sector, including the civic,
religious and non-government organizations;

(e) The implementation of a residency training and accreditation program and
accreditation of private specialist practitioners in provincial hospitals and medical
centers;

(f) The establishment of a dependable two-way referral system between the
public and health worker up to the successive higher level of health care stations
reaching up to the specialty hospitals and vice versa;

(g) The delineation of specific and specialized functions that will enable the
Department of Health (DOH) to concentrate its efforts in establishing and
maintaining adequately equipped state-of-the-art medical centers at the regional
level, including those in Metro Manila, and specialty hospitals in the country,
including those with original charters;

(h) The development of partnership among local government units and between
local government units and the Department of Health (DOH) in the establishment
of health care delivery facilities; and

(i) Local government units shall adopt a system and procedure to attain
maximum level of transparency in the procurement of equipment and medicines.

SECTION 3, Statement of Objectives. —- The Health Care Delivery Modernization
Program, hereinafter referred to as the Program, shall be implemented in accordance
with the following objectives:

(a) To modernize the health care delivery system by adopting a comprehensive,
consistent and systematic approach to health issues and concern to complement
the state-of-the-are technology;

(b) To further enhance local autonomy by granting local government units full
powers in the formulation of policies and by mandating the Department of Health
to perform tasks under Section 5 of this Act relative to the operation and
maintenance of hospitals and public health services under its supervision and
control;

(c) To implement a program of extending technological, financial and
administrative assistance to local government units to support and improve the
provision, operation and maintenance of health facilities and equipment;

(d) To enhance inter-agency multi-sectoral cooperation;


(e) To enhance the capability of hospitals requiring the DOH to provide each
local government unit, competent physicians to assist the local chief executive as
may be appropriate in the monitoring of health care delivery functions; and

(f) To encourage the employment and retention of doctors in rural areas.

SECTION 4. Definition of Terms. — The following terms shall be understood in
this Act to mean:

(1) "Hospital" refers to a place devoted primarily to the maintenance and
operation of facilities for the diagnosis, treatment and care of individuals suffering
from illness, disease, injury or deformity, or in need of obstetrical or other medical
and nursing care.

(2) "Primary Hospitals" refer to those with capabilities and facilities for providing
first contact emergency care and hospitalization in simple cases.

(3) "Secondary Hospitals" refer to those which have capabilities and facilities for
providing medical care to cases requiring hospitalization and the expertise of
physicians with training of not less than six (6) months on certain specialties.

(4) "Tertiary Level | Hospitals" refer to those which have capabilities for providing
medical care to cases requiring sophisticated diagnostic and therapeutic
equipment and the expertise of trained specialist and in the sub-specialties.

(5) "Tertiary Level II Hospitals" refer to a departmentalized hospital with teaching
and research capabilities and accredited Residency Training Programs in the
fields of Surgery, Pediatrics, Medicine, OB-Gyne, EENT, Orthopedics,
Anesthesia and other ancillary disciplines. Dental services is part of the
professional services.

(6) "Tertiary Level Il Hospitals" refer to hospitals which have been particularly
selected to provide tertiary hospital services, with teaching, training functions and
research.

(7) "Tertiary Level IV Hospitals” refer to a tertiary hospital with expensive and
sophisticated diagnostic and therapeutic facilities for a specific medical problem
area

(8) "District Hospital" refers to the front-line hospital with capabilities and facilities
for providing secondary medical care to cases requiring hospitalization and the
expertise of trained doctors.

(9) “Provincial Hospital" refers to a central district hospital with its own
catchments area which provides at least a minimum of Tertiary Level | hospital
care,


(10) "Regional Hospital" refers to departmentalized hospital which provides
Tertiary Level I! hospital care.

(11) "Medical Center" refers to a hospital which provides Tertiary Level III
hospital care

(12) "Specialty Hospital" refers to a hospital which provides services for one
particular illness or disease or health medical care need, with the highest medical
care rendered by medical experts and using highly specialized equipment for a
specific medical problem area. It provides Tertiary Level IV hospital care

(13) "Competent physician" refers to a doctor who possesses both technical and
managerial knowledge or expertise in health care.

(14) "Local Government Units" refer to provinces, cities, municipalities,
barangays and other political subdivisions as may be created by law.

SECTION 5. Components of the Program. - The Program shall consist of the
following components:

a) Delineation of the role of the local government units and the Department of
Health. - The leagues of local government units and the Department of Health
shall support the implementation of the Health Care Delivery Modernization
Program by performing the mandated tasks herein defined, to wit:

1) The province shall be responsible for the promotive, preventive,
curative and rehabilitative aspects of health care delivery except in places
where municipal and city hospitals exist, in which case these municipal
and city hospitals shall be under the responsibility of the local government
unit concerned. They shall also undertake an annual review of health
program in their areas of jurisdiction.

2) The District Health Board shall be responsible for the recruitment of
volunteer barangay health workers, who shall be entitled to monthly
honorarium and other benefits as provided for by law.

3) The Department of Health shall, in addition to the powers vested in it
under existing laws, be responsible for the following:

(3.1) Health care delivery higher than or more sophisticated than
that provided by local government units;

(3.2) Provide each province or qualified cities or municipalities
competent physicians to assist the local chief executive as may be


appropriate in the management and monitoring of devolved health
care functions;

(3.3) Upper tertiary hospital care where the expertise in the different
organ specific medical-surgical specialty is needed;

(3.4) Operation and maintenance of medical centers, including
those in Metro Manila, and specialty hospitals whose functions are
to provide tertiary expertise: Provided, however, That specialty
hospital with original charter shall continue to be governed by its
‘own charter.

(3.5) Supervise the operation of the more sophisticated organ
specific medical centers;

(3.6) Initiate and assist in the establishment of a residency training
program with the participation of the private practicing specialist, as
much as practicable, as consultants in each provincial hospital; and

(3.7) Provide doctors in rural communities under its program of
doctors to doctor-less areas, who shall be assigned by the local
chief executive as may be appropriate to qualified communities.

The Department of Health is hereby authorized to create positions of, and
provide the necessary funding, as a national aid to local government units, for
doctors to doctor-less areas including their incentives and benefits, in addition to
those granted under existing laws, to wit:

(1) Hazard allowance in an amount to be determined by the district
hospital health board of the local government unit concerned;

(2) Subsistence allowance equivalent to the meals they take in the course
of their duty which shall be computed in accordance with the prevailing
circumstances as determined by the local government unit concerned; and

(3) Automatic promotion to the position of Medical Specialist | or to the
next higher rank, as the case may be, under the Revised Compensation
Classification System

The doctors to the doctor-less areas shall be entitled to incentives and
benefits to be provided under this Act by other government agencies, to wit:

(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

(b) 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 | to Il 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

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.

2) The abolition of regional hospitals and offices. All equipment, records,
and other assets of both the regional offices and hospitals shall be
transferred to the Regional Medical Center. Personnel shall be absorbed
by the Medical Centers or assigned to the provincial government to assist
the governors in managing the devolved functions; Provided, That the
rights accorded to such personnel pursuant to the civil service law, rules
and regulations, shall not be impaired

3) The improvement of each provincial hospital. The provincial
government shall strive to establish diagnostic centers and to provide
modern and quality equipment to improve the capabilities of the provincial
hospitals pursuant to its modernization objectives: Provided, That, the
acquisition of new equipment shall be synchronized with the phasing out
of obsolete major equipment. Provided, further, That, the acquisition of
new equipment shall be subject to the laws on public bidding.


c) Establishment of the District Hospital, Medical Center and Specialty Hospitals
Health Boards. — This component of the Program is geared towards the
realization of a genuine local autonomy. In furtherance, thereof, there shall be
established a district hospital, medical center, including those in Metro Manila,
and specialty hospital health boards.

The composition of the district, medical center and specialty hospital health
boards shall, as they are applicable, be as follows:

Chairman: (1) For district hospital, A Sangguniang Panlalawigan member
representing the district where the district hospital is located;

(2) For medical center, the Chairman of the Regional Development Council. In
Metro Manila, the Mayor where the medical center is located.

(3) For specialty hospital, the Chairman of the Board of Trustees for specialty
hospital with original charter; the Secretary of Health for specialty hospitals under
its control and supervision

Vice Chairman; Chief of the District Hospitals, Medical Centers and Specialty
Hospitals

Member: (1) Representative of the Congressional District for hospitals in his
political district;

(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 health
services, medical centers and specialty hospitals;

(3) To devise a mechanism for internal control;

(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;

(7) To determine the utilization of funds of the hospitals and medical centers for
the betterment of hospital health services; and

(8) To perform such other functions as may be deemed necessary for the
effective management of the rural health units, hospitals, medical centers and
specialty hospitals: Provided, however, That the Board of Trustees of specialty
hospitals with original charter, shall exercise the powers and functions of the
hospital health board under this section, in addition to the powers vested in it
under existing laws.

The Board shall meet at least once a month or as often as may be necessary.


A majority of the members of the Board shall constitute a quorum but the
chairman and the vice-chairman must be present during meetings where budgetary
proposals are prepared or considered. Members thereof who are not government
officials or employees shall be entitled to necessary traveling expenses and allowance
chargeable against the funds of the health boards of the district hospital, medical center
and specialty hospitals subject to accounting and auditing rules and regulations.

SECTION 6. Period of Implementation. - The Program shall be implemented
over a period of three (3) years from the approval of this Act.

SECTION 7. Appropriations. - a) Initial Appropriations. ~ For the first year of the
implementation of this Act, the amount of One Billion Pesos (P1,000,000,000.00), is
hereby appropriated out of any funds of the National Treasury not otherwise
appropriated.

b) Continuing Appropriations. ~ The Department of Budget and Management
(DBM) is hereby mandated to include in the annual General Appropriations Act the
amount necessary for the implementation of this Act.

Other sources of funds shall from the following

(1) The total cost of devolved functions to be deducted from the Internal Revenue
collections subject to the following principles:

(2) Internal revenue allotment shares be based on the total amount collectible for
internal revenue, including value-added tax collected by the Bureau of Customs,
proceeds from the sin taxes and the like;

(3) The cost of devolved functions shall be taken from the sixty percent (60%)
share of the national government;

(4) Twenty percent (20%) net earnings from the Philippine Amusement and
Gaming Corporation (PAGCOR);

(5) Twenty percent (20%) net earings of the Public Estate Authority; and

(6) Loans, grants, bequest, or donations, whether from local or foreign sources.

SECTION 8. Implementing Rules and Regulations. - The Department of Health
(DOH) and the Department of the Interior and Local Government (DILG) shall, in
coordination with the League of Provinces, promulgate the rules and regulations for the
implementation of this Act within sixty (60) days from its effectivity

SECTION 9. Repealing Clause. — All laws, orders, decrees, rules and regulations
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.


SECTION 10 . Separability Clause. — If any part or provision of this Act shall be
declared to be unconstitutional or invalid, other parts or provision hereof which are not
affected thereby shall continue to be in full force and effect.

SECTION 11. Effectivity. — This Act shall take effect fifteen (15) days following its
publication in at least two (2) newspapers of general circulation.

Approved,