FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. No. 1002 
Introduced by Senator Manuel "Lito" M. Lapid 
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. 
Inspite of the lapse of time since 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. f;.s 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. 
In view of the foregoing, early passage of this bill is earnestl .requested . 
• 
EEL "LITO" M. LAPI~ 
Senator 
I' 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. 1002 
) 
) 
) 
Introduced by Senator Manuel "Lito" M. Lapid 
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 Republic of the 
Philippines in Congress assembled: 
Section 1. Short Title. -' This Act shall be known as the "Health Care 
Delivery Modernization Act of 2010." 
Sec. 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 rehabilitative 
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 ofa 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 spe,cific 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 
1 


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. 
Sec. 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 ~nder 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. 
Sec. 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 I Hospitals" refer to those which have capabilities for 
providing medical care to cases requiring sophisticated diagnostic and therapeutic 
equipment and t-he 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 
2 


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 III 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 I hospital care. 
(10) 
"Regional Hospital" refers to departmentalized hospital which provides 
Tertiary Level " 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. 
Sec. 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 provideq for by law. 
3) 
The Department of Health shall, in addition to the powers vested in 
it under existing laws, be resp,onsible for the following: 
3 


(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 orfginal 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 doctorless 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 
doctorless 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 I or to the next 
higher rank, as the case may be, under the Revised Compensation Classification 
System. 
The doctors to the doctorless 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. 
(3) 
Strengthening the Capability of the Provincial Hospitals. - The Program 
shall develop the provincial ,hospitals into a responsive, efficient and modern 
4 


hospital with the capability to handle tertiary level I to " 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 m'uch 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. 
b) 
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 distr.ict, medical center and specialty hospital health 
boards shall, as they are applicable, be as follows: 
Chairman: 
(1) 
For distri'ct 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. 
5 


Vice Chairman: 
Chief of the District Hospitals, Medical Centers and Specialty 
Hospitals: 
Member: 
(1 ) 
(2) 
(3) 
Representative of the Congressional District for hospitals in 
his political district; 
Senator of the Republic for all medical centers and specialty 
hospitals; 
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 
6 


(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 the accounting and auditing rules and regulations. 
SEC. 6. 
Period of Implementation. - The Program shall be implemented 
over a period of three (3) years from the approval of this Act. 
SEC. 7. 
Appropriations. -
a) Initial Appropriations. - For the first year of 
the implementation of this Act, the amount of One Billion Pesos (Php1,000,000,000) 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 s,in 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 earnings of the Public Reclamation Authority 
(PRA); and 
(6) 
Loans, grants, beque.st, or donations, whether from local or foreign 
sources. 
SEC. 8. 
Implementing Rules and Regulations (IRR). - 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. 
7 


SEC. 9. 
Repealing Clause. -
All laws, orders, decrees, rules and 
regulations inconsistent with the provisions of this Act are hereby repealed or modified 
accordingly. 
SEC. 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. 
SEC. 11. 
Effectivity. - This Act shall take effect fifteen (15) days following its 
publication in at least two (2) newspapers of general circulation. 
Approved, 
8