SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
170 
. S. B. No. __ _ 
,ri q -,\ 
) 
) 
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'13 
JllL ·-1 
P 4 :()3 
Introduced by Senator Sergio 05 men a 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 theLGUs. 
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 1/2 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_ 


SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
S, B. No. 
170 
) 
) 
) 
St'tUlh" 
(~th: r (If nF ~itrfrbf1l-
'13 
JUL -1 
P 4 :03 
Introduced by Senator Sergio Osmei'ia 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 the House of Representatives of the Republic of the 
Philippines in Congress assembled: 
1 
SECTION 1. This Act shall be known as the "Health Care Delivery, 
2 
Modernization Act of 2013." 
3 
SECTION 2. Declaration of Policy. -- It is hereby declared a policy of 
4 
the State to modernize the health care delivery system to a level where it can 
5 
fully and effectively perform its constitutional mandate to protect and promote 
6 
the right to health of the people and instill health consciousness among them. 
7 
Toward this end, the principal thrust of this modernization program under this 
8 
Act shall be as 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 
rehabilitative aspects of health care delivery to be under the local chief 
13 
executive whenever appropriate; 
14 
(c) The transformation of government hospitals into self-governing 
15 
components, together with their respective rural health units; 
16 
(d) The development of cooperation among the local and national 
17 
government agencies, members of Congress and the private sector, including 
1 


1 
the civic, religious and non-government organizations; 
2 
(e) The implementation of a residency training and accreditation program 
3 
and accreditation of private specialist practitioners in provincial hospitals and 
4 
medical centers; 
5 
(f) The establishment of a dependable two-way referral system between 
6 
the public and health worker up to the successive higher level of health care 
7 
stations reaching up to the specialty hospitals and vice versa; 
8 
(g) The delineation of specific and specialized functions that will enable 
9 
the Department of Health (DOH) to concentrate its efforts in establishing and 
10 
maintaining adequately equipped state-of-the-art medical centers at the regional 
11 
level, including those in Metro Manila, and specialty hospitals in the country, 
12 
including those with original charters; 
13 
(h) The development of partnership among local government units and 
14 
between local government units and the Department of Health (DOH) in the 
15 
establishment of health care delivery facilities; and 
16 
(i) Local government units shall adopt a system and procedure to attain 
17 
maximum level of transparency in the procurement of equipment and medicines. 
18 
SECTION 3. 
Statement of Objectives. The Health Care Delivery 
19 
Modernization Program, hereinafter referred to as the Program, shall be 
20 
implemented in accordance with the following objectives: 
21 
a. To modernize the health care delivery system by adopting a 
22 
comprehensive, consistent and systematic approach to health issues and 
23 
concern to complement the state-of-the-are technology; 
24 
b. To further enhance local autonomy by granting local government units 
25 
full powers in the formulation of policies and by mandating the Department of 
26. 
Health to perform tasks under Section 5 of this Act relative to the operation and . 
27 
maintenance of hospitals and public health services under its supervision and 
28 
control; 
2 


c. To implement a program of extending technological, financial and 
2 
administrative assistance to local government units to support and improve the 
3 
provision, operation and maintenance of health facilities and equipment; 
4 
d. To enhance inter-agency multi-sectoral cooperation; 
5 
e. To enhance the capability of hospitals requiring the DOH to provide 
6 
each local government unit, competent phYSicians to assist the local chief 
7 
executive as may be appropriate in the monitoring of health care delivery 
8 
functions; and 
9 
f. To encourage the employment and retention of doctors in rural areas. 
!O 
SECTION 4. 
Definition of Terms. -- The following terms shall be 
11 
understood in this Act to mean: 
12 
(1) "Hospital" refers to a place devoted primarily to the maintenance and 
13 
operation of facilities for the diagnosis, treatment and care of individuals 
14 
suffering from illness, disease, injury or deformity, or in need of obstetrical or 
15 
other medical and nursing care. 
16 
(2) "Primary Hospitals" refer to those with capabilities and facilities for 
17 
providing first contact emergency care and hospitalization in simple cases. 
18 
(3) "Secondary Hospitals" refer to those which have capabilities and 
19 
facilities for providing medical care to cases requiring hospitalization and the 
20 
expertise of physicians with training of not less than six (6) months on certain 
21 
specialties. 
22 
(4) "Tertiary Levell Hospitals" refer to those which have capabilities for 
23 
providing medical care to cases requiring sophisticated diagnostic and 
24 
therapeutic equipment and the expertise of trained specialist and in the sub-
25 
specialties. 
26 
(5) "Tertiary Level II Hospitals" refer to a departmentalized hospital with 
27 
teaching and research capabilities and accredited Residency Training Programs 
28 
in the fields of Surgery, Pediatrics, Medicine, OB-Gyne, EENT, Orthopedics, 
3 


1 
Anesthesia and other ancillary disciplines. Dental services are part of the 
2 
professional services. 
3 
(6) "Tertiary Level III Hospitals" refer to hospitals which have been 
4 
particularly selected to provide tertiary hospital services, with teaching, training 
5 
functions and research. 
6 
(7) "Tertiary Level IV Hospitals" refer to a tertiary hospital with expensive 
7 
and sophisticated diagnostic and therapeutic facilities for a specific medical 
8 
problem area. 
9 
(8) "District Hospital" refers to the front-line hospital with capabilities and 
10 
facilities for providing secondary medical care to cases requiring hospitalization 
11 
and the expertise of trained doctors. 
12 
(9) "Provincial Hospital" refers to a central district hospital with its own 
13 
catchments area which provides at least a minimum of Tertiary Level I hospital 
14 
care. 
15 
(10) "Regional Hospital" refers to departmentalized hospital which 
16 
provides Tertiary Level II hospital care. 
17 
(11 ) "Medical Center" refers to a hospital which provides Tertiary Level 
18 
III hospital care. 
19 
(12) "Specialty Hospital" refers to a hospital which provides services for 
20 
one particular illness or disease or health medical care need, with the highest 
21 
medical care rendered by medical experts and using highly specialized 
22 
equipment for a specific medical problem area. It provides Tertiary Level IV 
23 
hospital care. 
24 
(13) "Competent physician" refers to a doctor who possesses both 
25 
technical and managerial knowledge or expertise in health care. 
26 
(14) "Local Government Units" refer to provinces, cities, municipalities, 
27 
barangays and other political subdivisions as may be created by law. 
28 
SECTION 5. Components of the Program. - The Program shall consist 
29 
of the following components: 


1 
a) Delineation of the role of the local government units and the 
2 
Department of Health. The leagues of local government units and the 
3 
Department of Health shall support the implementation of the Health Care 
4 
Delivery Modernization Program by performing the mandated tasks herein 
5 
defined, to wit: 
6 
1) The province shall be responsible for the promotive, preventive, 
7 
curative and rehabilitative aspects of health care delivery except in places where 
8 
municipal and city hospitals exist, in which case these municipal and city 
9 
hospitals shall be under the responsibility of the local government unit 
10 
concerned. They shall also undertake an annual review of health program in 
11 
their areas of jurisdiction. 
12 
2) The District Health Board shall be responsible for the recruitment of 
13 
volunteer barangay health workers, who shall be entitled to monthly honorarium 
14 
and other benefits as provided for by law. 
15 
3) The Department of Health shall, in addition to the powers vested in it 
16 
under existing laws, be responsible for the following: 
17 
(3.1) Health care delivery higher than or more sophisticated than 
18 
that provided by local government units; 
19 
(3.2) Provide each province or qualified cities or municipalities 
20 
competent physicians to assist the local chief executive as may be 
21 
appropriate in the management and monitoring of devolved health 
22 
care functions; 
23 
(3.3) Upper tertiary hospital care where the expertise in the different 
24 
organ specific medical-surgical specialty is needed; 
25 
(3.4) Operation and maintenance of medical centers, including those 
26 
in Metro Manila, and specialty hospitals whose functions are 
27 
to provide tertiary expertise: Provided, however, That specialty 
28 
hospital with original charter shall continue to be governed by its 
29 
own charter. 
5 


1 
(3.5) Supervise the operation of the more sophisticated organ 
2 
specific medical centers; 
3 
(3.6) Initiate and assist in the establishment of a residency training 
4 
program with the participation of the private practicing specialist, 
s 
as much as practicable, as consultants in each provincial hospital; 
6 
and 
7 
(3.7) Provide doctors in rural communities under Its program of 
8 
doctors to doctorless areas, who shall be assigned by the local 
9 
chief executive as may be appropriate to qualified communities. 
10 
The Department of Health is hereby authorized to create positions of, and 
11 
provide the necessary funding, as a national aid to local government units, for 
12 
doctors to doctorless areas including their incentives and benefits, in addition to 
13 
those granted under existing laws, to wit: 
14 
(1) Hazard allowance in an amount to be determined by the district 
15 
hospital health board of the local government unit concerned; 
16 
(2) Subsistence allowance equivalent to the meals they take in the 
17 
course of their duty which shall be computed in accordance with the prevailing 
18 
circumstances as determined by the local government unit concerned; and 
19 
(3) Automatic promotion to the position of Medical Specialist I or to the 
20 
next higher rank, as the case may be, under the Revised Compensatior,J 
21 
Classification System . 
. 22 
The doctors to the doctorless areas shall be entitled to incentives and 
23 
benefits to be provided under this Act by other government agencies, to wit" 
24 
(1) Free legal representation and consultation services shall be 
25 
immediately provided by the Public Defenders Office in cases of coercion, 
26 
interference, and other civil, criminal and administrative cases filed by or against 
27 
such doctors arising out of or in connection with the performance of their duties 
28 
as such; and 
6 


1 
(2) Scholarship benefits in the form of tuition fees in state colleges or 
2 
universities to be granted to their legitimate children. 
3 
(3) Strengthening the Capability of the Provincial Hospitals. -
The 
4 
Program shall develop the provincial hospitals into a responsive, efficient and 
5 
modern hospital with the capability to handle tertiary level I to II hospital care. In 
6 
pursuance thereto, the following necessary steps must be undertaken, to wit: 
7 
1) The establishment of a residency training program and tertiary diagnostic 
8 
facilities with, as much as practicable, the participation of the private sector or 
9 
private specialist practitioner as consultants in each provincial hospital subject to 
10 
the following conditions: 
11 
a) Consultants, who shall be accredited to practice in the hospital, may 
12 
be entitled to honorarium to be determined by the district hospital health board; 
13 
b) Provincial hospital residents participating in the residency training 
14 
program shall not be permanent employees but shall be considered employed 
15 
for the whole duration of the Residency training period; and 
16 
c) Participants in the Residency training program shall be given 
17 
preference in case of reemployment as residents of district hospitals and shall 
18 
occupy the position of Medical Officer IV. 
19 
2) The abolition of regional hospitals and offices. All equipment, records, and 
20 
other assets of both the regional offices and hospitals shall be transferred to the 
21 
Regional Medical Center. Personnel shall be absorbed by the Medical Centers 
22 
or assigned to the provincial government to assist the governors in managing 
23 
the devolved functions; Provided,That the rights accorded to such personnel 
24 
pursuant to the civil service law, rules and regulations, shall not be impaired. 
25 
3) The improvement of each provincial hospital. The proVincial 
government 
26 
shall strive to establish diagnostic centers and to provide modern and quality 
27 
equipment to improve the capabilities of the provincial hospitals pursuant to ItS 
28 
modernization objectives: Provided, That, the acquisition of new equipment shall 
29 
be synchronized with the phasing out of obsolete major equipment. Provided, 
7 


further, That, the acquisition of new equipment shall be subject to the laws on 
2 
public bidding. 
3 
c) Establishment of the District Hospital, Medical Center and Specialty 
4 
Hospitals Health Boards. - This component of the Program is geared towards 
5 
the realization of a genuine local autonomy. In furtherance, thereof, there shall 
6 
be established a district hospital, medical center, including those in Metro 
7 
Manila, and specialty hospital health boards. 
8 
The composition of the district, medical center and specialty hospital 
9 
health boards shall, as they are applicable, be as follows: 
10 
Chairman: (1) For district hospital, A Sangguniang Panlalawigan member 
11 
representing the district where the district hospital is located; 
12 
(2) For medical center, the Chairman of the Regional Development 
13 
Council. In Metro Manila, the Mayor where the medical center is located. 
14 
(3) For specialty hospital, the Chairman of the Board of Trustees for 
15 
specialty hospital with original charter; the Secretary of Health for 
16 
specialty hospitals under its control and supeNision. 
17 
Vice Chairman: Chief of the District Hospitals, Medical Centers and 
18 
Specialty Hospitals 
19 
Member: (1) Representative of the Congressional District for hospitals in 
20 
his political district; 
21 
(2) Senator of the Republic for all medical centers and specialty hospitals; 
22 
(3) A mayor of the catchments area of the district; 
23 
Members common to the district hospitals, medical centers and specialty 
24 
hospitals health boards; 
25 
(1) Representative of the Philippine Hospital Association; 
26 
(2) Representative of the Philippine Medical Association; 
27 
(3) Representative from the non-government organizations involved in 
28 
health services; 
29 
(4) Representative of the religious sector; 
8 


1 
(5) Representative of the private sector. 
2 
The Chairman, Vice Chairman and the members of the District Hospital 
3 
Health Board, except the Representative of the Congressional District, shall be 
4 
appointed by the provincial governor. 
5 
The Chairman and Vice-Chairman of the Medical Center, including those 
6 
in Metro Manila, and specialty hospital health boards shall serve by the 
7 
operation of this Act without the need of any appOintment. 
8 
The representative from the non-government organizations, religious and 
9 
the private sector in the medical center and specialty hospital health boards 
10 
shall be appointed by the Chairman of the respective health boards. 
11 
The powers and functions of the district hospital, medical center and 
12 
specialty hospital health boards shall, as they are applicable, be as follows: 
13 
(1) To assist the provincial governor, the Secretary of Health, 
14 
Administrator or Chairman of the Boards of Trustees, as the case may 
15 
be, in the operation and management of devolved functions, medical 
16 
centers and specialty hospitals; 
17 
(2) To review and endorse the budgetary requirements of the district 
18 
health services, medical centers and specialty hospitals; 
19 
(3) To devise a mechanism for internal control; 
20 
(4) To enhance the participation of local government units and community 
21 
involvement in hospital service and public health activities; 
22 
(5) To screen and recommend to the Selection Board the appointment of 
23 
qualified applicants to fill vacant positions in the rural health units and 
24 
district hospitals, medical centers and specialty hospitals, as the case 
25 
may be; 
26 
(6) To deposit, in trust, all the earnings of the district hospitals and rural 
27 
health units derived from whatever source with the Provincial Treasurer's 
28 
Office or with any authorized depository banks; for medical centers and 
29 
specialty hospitals, with any authorized depository bank as part of their 
9 


1 
General Fund; 
2 
(7) To determine the utilization of funds of the hospitals and medical 
3 
centers for the betterment of hospital health services; and 
4 
(8) To perform such other functions as may be deemed necessary for the 
5 
effective management of the rural health units, hospitals, medical centers 
6 
and specialty hospitals: Provided, however, That the Board of Trustees of 
7 
specialty hospitals with original charter, shall exercise the powers and 
8 
functions of the hospital health board under this section, in addition to the 
9 
powers vested in it under existing laws. 
10 
The Board shall meet at least once a month or as often as may be 
11 
necessary. 
12 
A majority of the members of the Board shall constitute a quorum but the 
13 
chairman and the vice-chairman must be present during meetings where 
14 
budgetary proposals are prepared or considered. Members thereof who are not 
15 
government officials or employees shall be entitled to necessary traveling 
16 
expenses and allowance chargeable against the funds of the health boards of 
17 
the district hospital, medical center and specialty hospitals subject to the 
18 
accounting and auditing rules and regulations. 
19 
SEC. 6. Period of Implementation. - The Program shall be implemented 
20 
over a period of three (3) years from the approval of this Act. 
21 
SEC. 7. Appropriations. - a) Initial Appropriations. - For the first year of 
22 
the 
implementation 
of this 
Act, 
the 
amount 
of 
One 
billion 
pesos 
23 
(Pi ,000,000,000.00), is hereby appropriated out of any funds of the National 
24 
Treasury not otherwise appropriated. 
25 
b) Continuing Appropriations. -
The Department of Budget and 
26 
Management (DBM) is hereby mandated to include in the annual General 
27 
Appropriations Act the amount necessary for the implementation of this Act. 
28 
Other sources of funds shall from the following: 
10 


1 
(1) The total cost of devolved functions to be deducted from the Internal 
2 
Revenue collections subject to the following principles: 
3 
(2) Internal revenue allotment shares be based on the total amount 
4 
collectible for internal revenue, including value-added tax collected by the 
5 
Bureau of Customs, proceeds from the sin taxes and the like; 
6 
(3) The cost of devolved functions shall be taken from the sixty percent 
7 
(60%) share of the national government; 
8 
(4) Twenty percent (20%) net earnings from the Philippine Amusement 
9 
and Gaming Corporation (PAGCOR); 
10 
(5) Twenty percent (20%) net earnings of the Public Estate Authority; 
11 
and 
12 
(6) Loans, grants, bequest, or donations, whether from local or foreign 
13 
sources. 
14 
SEC. 8. Implementing Rules and Regulations. - The Department of 
15 
Health (DOH) and the Department of the Interior and Local Government (DILG) 
16 
shall, in coordination with the League of Provinces, promulgate the rules and 
17 
regulations for the implementation of this Act within sixty (60) days from its 
18 
effectivity. 
19 
SEC. 9. Repealing Clause. - All laws, orders, decrees, rules and 
20 
regulations inconsistent with the provisions of this Act are hereby repealed or 
21 
modified accordingly. 
22 
SEC. 10 . Separability Clause. - If any part or provision of this Act shall 
23 
be declared to be unconstitutional or invalid, other parts or provision hereOf 
24 
which are not affected thereby shall continue to be in full force and effect. 
25 
SEC. 11. Effectivity. - This Act shall take effect fifteen (15) days 
26 
following its publication in at least two (2) newspapers of general circulation. 
27 
Approved, 
11