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THIRTEENTH CONGRESS OF THE 1 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
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EXPLANATORYNOTE 
As a policy of the State, health care delivery system should be modernized 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. 
Towards this end, this bill seeks the modernization program of the health care 
delivery system in the country. 
In view of the foregoing, immediate passage of this bill is strongly urged. 
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THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
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INTRODUCED BY HON. MANUEL B. VILLAR. JR. 
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AN ACT PROVIDING FOR THE MODERNIZATION OF THE HEALTH CARE 
DELIVERY SYSTEM, APPROPRIATING FUNDS THEREFOR AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Short Title. - This Act shall be known as the "Health Care Delivery 
Modernization Act of 2004." 
SECTION 2. Declaration ofPolicy. - 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. Towards this end, the thrusts of 
this modernization program under this Act shall be the following: 
a. The development of an efficient and effective health care delivery system 
throughout the country; 
b. The integration of the promotive, preventive, curative and rehabilitative 
aspects of health care delivery to be under the local chief executive (LCE) 
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 nongovernment 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 charter; 


h. The development of partnership among local government units (LGUs) and 
between LGUs and the DOH in the establishment of health care delivery 
facilities; and 
The adoption of a system and procedure by the LGUs and the DOH to attain 
a maximum level of transparency in the procurement of equipment and 
medicines. 
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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 by adopting a comprehensive, 
consistent and systematic approach to health issues and concerns which 
will be complemented by state-of-the-art technology; 
b. To further enhance local autonomy by granting LGUs full powers in the 
formulation of policies and by mandating the DOH to perform'its 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 LGUs to support and improve the provision, 
and operation and maintenance of health facilities and equipment; 
d. To enhance inter-agency multi-sectoral cooperation; 
e. To enhance the capability of hospitals by requiring the DOH to provide each 
LGU competent physicians to assist the local chief executive as may be 
appropriate, in the monitoring of health care delivery functions; and 
To encourage the employment and retention of doctors in rural areas. 
f. 
SECTION 4. Definition of Terms. . The following terms used in this Act are 
defined as follows: 
a. "Health Care Delivery Modernization Program" refers to an integrated 
approach to health care which as detailed under Section 5 hereof shall have 
the following program components: a delineation of the role of the LGUs and 
the DOH, the strengthening of the capability of the provincial hospitals, and 
the establishment of hospital health boards. 
b. "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. 
c. "Primary hospital'' refers to a hospital with capabilities and facilities for 
providing first contact emergency care and hospitalization in simple cases. 
d. "Secondary hospital" refers to a hospital which has 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. 
e. "Tertiary Level I hospital" refers to a hospital which has capabilities for 
providing medical care to cases requiring sophisticated diagnostic and 
therapeutic equipment and the expertise of trained specialists and 
sub-specialists. 
f. "Tertiary Level I1 hospital" refers to a departmentalized hospital with 
teaching and research capabilities and which have accredited Residency 
Training Programs in the fields of surgery, pediatrics, medicine, OB-Gyne, 
EENT, orthopedics, anesthesia and other ancillary disciplines. It likewise 
offers dental services. 
g. "Tertiary Level I11 hospital" refers to a hospital which has been particularly 
selected to provide tertiary hospital services, with teaching, training and 
research functions. 
h. "Tertiary Level IV hospital" refers to a tertiary hospital with expensive and 
sophisticated diagnostic and therapeutic facilities for a specific medical 
problem area. 
i. "District hospital" refers to the front-line hospital, which has its own 
catchment area, and with capabilities and facilities for providing secondary 
medical care to cases requiring hospitalization and the expertise of trained 
doctors. 
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"Provincial hospital" refers to a central district hospital with its own 
catchment area which provides at least a minimum of Tertiary Level I 
hospital care. 
k. "Regional hospital" refers to a departmentalized hospital which provides 
Tertiary Level I1 hospital care. 
1. "Medical center" refers to a hospital which provides Tertiary Level I11 hospital 
care. 
m. "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 using highly specialized 
equipment for a specific medical problem area. It provides Tertiary Level IV 
hospital care. 
n. "Competent physician" refers to a licensed medical doctor who possesses 
both technical and managerial knowledge or expertise in health care. 
0. "Local government units (LGUs)" refer to provinces, cities, municipalities, 
barangays and other political subdivisions as may be created by law. 
SECTION 5. Health Care Delivery, Modernization Program. - In order to meet its 
objectives, there shall be created a Health Care Delivery Modernization Program which 
shall have the following components: 


a. Delineation of the Role of the Local Government Units and the Department 
of Health (DOH). - The Leagues of Local Government Units (LGUs) and the 
Department of Health (DOH) 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 
shall be under the responsibility of tile LGU concerned. They shall 
also undertake an annual review of health program in their areas of 
jurisdiction; 
The Integrated Provincial Health Office (IPHO), with the assistance 
of the DOH resident consultant, shall continue to coordinate with 
the municipal or city health officer in all activities pertaining to 
public health at the municipal or city level. 
2. The DOH shall, in addition to the powers vested in it under existing 
laws, be responsible for the following: 
(a) Delivery of health care services higher than or more 
sophisticated than that provided by LGUs; 
(b) Provision of competent physicians for each province or qualified 
cities or municipalities to assist the local chief executive, as 
may be appropriate, in the management and monitoring of 
devolved health care functions; 
(c) Upper tertiary hospital care where the expertise in the different 
organ specific medical-surgical specialty is needed; 
(d) Operation and maintenance of medical centers, including those 
in Metro Manila, and specialty hospitals whose functions are to 
provide tertiary expertise: Provided, however, That a specialty 
hospital Gth original charter shall continue to be governed by 
its own charter; 
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(e) Supervision of the operation of the more sophisticated organ- 
specific medical centers; 
(4 Initiation and assistance 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; 
(g) Provision of doctors in rural communities under its program of 
doctors to doctorless areas, who shall be assigned by the 
regional field units in consultation with the local chief executive, 
as may be appropriate to qualified communities; and 


(h) Creation and funding of positions for doctors to doctorless areas 
including their incentives and benefits, in addition to those 
granted under existing laws, to wit: 
(h.1) Free legal representation and consultation services 
shall be immediately provided by the Public Attorney's 
Office in cases of coercion, interference, and in 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 
(h.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 provincial 
hospitals shall be developed into responsive, efficient and modern 
institutions with the capability to handle Tertiary Level I to 11 hospital care. 
In pursuance thereof, the following necessary steps shall be undertaken: 
1. The establishment of a residency training program and acquisition of 
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. 
2. The Improvement and Upgrading of Provincial and Highly Urbanized 
City Hospitals. - The DOH shall extend technical and financial 
assistance relating to the establishment of diagnostic centers and 
acquisition of 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 and 
subjected to the laws on public bidding. In provinces with a 
population of at least one million, and in island provinces as well as 
in highly urbanized cities, the DOH may establish an extension of the 
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regional hospital in the province or city, as the case may be. The 
extension hospital to be established shall have the capability of 
Tertiary Level I1 hospital care: Provided, further, That the DOH shall 
also extend assistance equivalent to the cost of maintenance of 
equipment and personnel, and if necessary, the replacement or 
improvement of equipment in the abovementioned hospitals. 
c. Establishment of Hospital Health Boards. - This component of the Program 
is gearedtowards the realization of a genuine local autonomy. In 
furtherance thereof, there shall be established a district hospital health 
board, medical center health board, including those 
in Metro Manila, 
and specialty hospital health board: Provided, however, That there shall 
also be established hospital health boards in municipalities or cities which 
have hospitals: Provided, further, That specialty hospitals with original 
charters, namely: National Kidney and Transplant Institute, Lung Center of 
the Philippines, Philippine Children's Medical Center and Philippine Heart 
Center, shall continue to be governed by their respective charters. 
1. District Hospital Health Board 
(a) Composition - The composition of the district hospital health board 
shall be as follows: 
(a, 1) Chairman: Chief of the District Hospital. 
(a.2) Members: representative of the Congressional District for 
hospitals in his political district; a mayor of the catchment 
area of the district; member of the sangpniang panlalawigan 
of the political district; representative of the Philippine 
Hospital Association; representative of the Philippine Medical 
Association; representative of non government organizations 
involved in health services; representative 
of 
the 
religious sector; and representative of the private sector. 
(a.3) The members of the District Hospital Health Board, except 
the chairman and the representative of the congressional 
district, shall be appointed by the provincial governor. 
(b) Powers and Functions - The powers and functions of the district 
Hospital health board shall be as follows: 
(b.1) To assist the provincial governor in the operation and 
management of the district hospital; 
(b.2) To review and endorse the budgetary requirements of the 
district health services; 
(b.3) To devise a mechanism for internal control; 
(b.4) To enhance the participation of LGUs and community 
involvement in hospital service and public health activities; 
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(6.5) 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; 
(b.6) To be responsible for the recruitment of volunteer barangay 
health workers 
who shall be entitled to monthly 
honorarium and other benefits as provided for by the law; 
(b.7) To deposit, in trust, all the earnings of the district hospital 
and rural health units derived from whatever source with the 
Provincial Treasurer's Office or with any authorized 
depository banks; 
(b.8) To determine the utilization of the earnings of the hospital 
and rural health units for the betterment of hospital and 
rural health services; and 
(b.9) To perform such other functions as may be deemed 
necessary for the effective management of the rural health 
units and hospitals. 
(c) Meetings and Quorums - 
(c. 1) The Board shall meet at least once a month or as often as 
may be necessary; 
(c.2) A majority of the members of tile Board shall constitute a 
quorum but the 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 allowances chargeable against the funds of the district 
hospital health board subject to the accounting and auditing 
rules and regulations. 
2. Medical Centers and Specialty Hospitals Health Boards 
(a) Composition - The composition of tile Medical Center and Specialty 
Hospital Health Boards shall be as follows: 
(a.1) Chairman: Chief of Medical Centers or Specialty Hospitals, as 
the case may be; 
(a.2) Members: a senator of tile Republic; a representative of the 
Congressional District where the medical center or specialty 
hospital is located; a representative of the Philippine Hospital 
Association; a representative of the Philippine Medical 
Association; a representative 
of 
the 
non 
government 
organizations involved in health services; a representative of 
the religious sector; and a representative of the private 
sector. 


(a.3) The chairman of the Medical Center Hospital Health Board, 
including those in Metro Manila, and Specialty Hospital 
Health Boards shall serve by operation of this Act without the 
need of any appointment. 
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(a.4) The chairman of the Senate Committee on Health shall 
choose from among the senators, who shall represent the 
Senate as a member of each of the Medical Center or 
Specialty Hospital Health Boards. 
(a. 5) The representative from the non government organizations, 
sector in the Medical Center and 
appointed by 
religious and the private 
Specialty Hospital Health Boards shall be 
the chairman of the respective health boards. 
(b) Powers and Functions - The powers and functions of the Medical 
Center and Specialty Hospital Health Boards shall, as they are 
applicable be the following: 
(b.1) To assist the Secretary of health, administrator or chairman 
of the boards of trustees, as the case may be, in the operation 
and management of medical centers and specialty hospitals; 
(b.2) To review and endorse the budgetary requirements of the 
medical centers and specialty hospitals; 
(b.3) To devise a mechanism for internal control; 
(b.4) To screen and recommend to the Selection Board the 
appointment of qualified applicants to fill vacant positions in 
the medical centers and specialty hospitals, as the case may 
be; 
(b.5) To deposit, in trust, all the earnings derived from whatever 
source with any authorized depository banks as part of their 
General Fund; 
(b.6) To determine the utilization of funds of the .specialty 
hospitals or medical centers, as the case may be, for the 
betterment of hospital health services; and 
(b.7) To perform such other functions as may be deemed 
necessary for the effective management of the medical 
centers and specialty hospitals. 
(c) Meetings and Quorums - 
(c. 1) The Board shall meet at least once a month or as often as 
may be necessary. 
(c.2) A majority of the members of the Board shall constitute a 
quorum but the chairman must be present during meetings 
where budgetary proposals are prepared or considered. 
Members thereof who are not government officials or 


3. 
employees s h d  be entitled to necessary traveling expenses 
and allowances chargeable against the funds of the health 
boards of the medical center and specialty hospitals subject 
to the accounting and auditing rules and regulations. 
Municipality or City Hospital Health Board 
(a) Composition - the composition of 
the 
Municipal or City 
Hospital Health Board shall be as follows: 
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(a. 1) Chairm'an: Chief of the municipality or city hospital. 
(a.2) Members: Representative of the congressional district for 
hospitals in his political district; the municipal or city mayor 
of the area where the hospital is located; member 
of 
the 
sangguniang 
bayan 
or 
sangguniang 
panlungsod; 
a 
representative of the Philippine 
Hospital 
Association 
a 
representative of the Philippine Medical Association; a 
representative of non government organizations involved in 
health services; a representative of the religious sector; and, 
a representative of the private sector. 
(a.3) The members of the Municipal or City Hospital Health Board 
except the chairman and the representative of 
the 
congressional district, shall be appointed by the municipal or 
city mayor, as the case may be; 
(b) Power and Functions - The powers and functions of the Municipal 
or City Hospital Health Board shall be as follows: 
(b. 1) To assist the mayor in the operation and management of the 
municipal or city hospital; 
b.2) To review and endorse the budgetary requirements of the 
municipal or city health services; 
(b.3) To devise a mechanism for internal control; 
(b.4) To enhance the participation of local government units and 
community involvement in hospital service and public kiealth 
activities; 
(b.5) To screen and recommend to the Selection Board the 
appointment of qualified applicants to fill vacant positions in 
the rural health units and municipal or city hospitals; 
(b.6) To be responsible for the recruitment of volunteer barangay 
health workers who shall be entitled to monthly honorarium 
and other benefits provided for by the law; 
(b.7) To deposit, in trust, all the earnings of the municipal or city 
hospitals and rural health units derived from whatever 


source with the municipal or city treasurer's office, as the 
case may be, or with any authorized depository banks; 
(b.8) To determine the utilization of funds of the hospitals for the 
betterment of hospitals and rural health services; and 
(b.9) To perform such other functions as may be deemed 
necessary for the effective management of the rural health 
units and hospitals. 
(c) Meetings and Quorums - 
(c. 1) The Board shall meet at least once a month or as often as 
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may be necessary; 
(c.2) A majority of the members of the Board shall constitute 
quorum but the chairman must be present during meetings 
where budgetary proposals are prepared or considered. 
Members therefore who are not government officials or 
employees shall be entitled to necessary traveling expenses 
and dlowances chargeable against the funds of 
the 
Municipal or City Hospital Health Board subject to the 
accounting and auditing rules and regulations. 
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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. - The Secretary of Health shall immediately include 
in the Department's program the implementation of this Act, the funding of which 
shall be included in the annual General Appropriations Act. 
For the implementation of the devolved health services, the amount necessary 
shall be taken from the Internal Revenue Allotment of the LGU concerned. 
Funds may be augmented by grants, donations, endowment from various 
sources, domestic or foreign. 
SECTION 8. Implementing Rules and Regulations. - The 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 publication in two (2) newspapers of general 
circulation. 
SECTION 9. Separability Clause. - If, for any reason or reasons, 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. 


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SECTION 10. Repealing Clause. - All 
regulations inconsistent with the provisions o 
modified accordingly. 
SECTION 11. Effectivity. - This Act shall tal 
Approved, 
iws, orders, decrees, rules and 
this Act are hereby repealed or 
effect upon its approval.