FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Rewlar Session 
SENATE 
Senate Bill No. 494 
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INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Constitution, Art. XIII, Sec. II, provides: 
"Sec. 11. The State shall adopt an integrated and 
comprehensive approach to health development, which shall 
endeavor to make ... services available to all the people at affordable 
cost.. 
Despite the constitutional mandate, health services have become a 
precious commodity available only to the moneyed few. Health care costs have 
skyrocketed to such levels that people are forced to resort to alternative medicine 
rather than seek expensive professional medical intervention. 
This bill seeks to reduce health care costs by requiring tertiary and 
specialized hospitals to share certain services and equipment. 
Hence, the immediate passage of this bill is highly recommended. 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
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Senate Bill No. 4 9 -1 ' 
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INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
TO REDUCE HEALTH CARE COSTS BY REQUIRING TERTIARY AND 
SPECIALIZED HOSPITALS TO SHARE CERTAIN SERVICES AND 
EQUIPMENT 
Be it ena'cted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act may be cited as the "Health Services 
Cost Control Act. " 
SEC. 2. Declaration of Policy. - It is the purpose of this Act to reduce 
health care cost by encouraging cooperation between tertiary and specialized 
hospitals in order to contain costs and achieve a more efficient and effective 
health care delivery system through the elimination of unnecessary duplication of 
expensive medical or high technology services or equipment while preserving 
services in geographical proximity to the communities traditionally served by the 
facilities. 
SEC. 3. Definition of Terms. -As used in this Act: 
(a) The term "administrators" refers to the Secretary of Health and the 
presidents and owners of tertiary and specialized hospitals, which are covered by 
this Act. 
(b) The term "tertiary hospitals" means hospitals that have complete, 
advanced and departmentalized facilities and services for the diagnosis, 
treatment and care of individuals suffering from all types of illness, disease, injury 
or deformity, or in need of obstetrical or other medical and nursing care. A tertiary 
hospital may be government or privately-owned. 
(c) The term "special" or "specialized hospitals" means hospitals that 
devote their services full-time for the diagnosis and treatment of specific types of 
illness such as, but not limited to, hear-related ailment, lung disease, kidney 
problem and abnormal mental state. The term hospital shall also be construed as 
any institution, building or place where there are installed beds, or cribs, or 
bassinets for twentY-four-house use or longer by special classes of patients like 
children and patients suffering from tuberculosis. A special hospital may likewise 
be government or privately owned. 


(d) Government "hospital" means a hospital operated and maintained 
either partially or wholly by the national, provincial, municipal or city government 
or other political subdivision, or by any department, division, board or other 
agency thereof. 
(e) "Private hospital" means one which is privately owned, established and 
operated with funds raised or contributed through donations, or by private capital 
or other means, by private indiViduals, association, corporation, religious 
organization, firm, company or jOint stock association. 
SEC. 4. Technology and Services Sharing Demonstration Program. -
(a) Not later than one year from the approval of this Act, the Secretary of 
Health and the presidents and owners of the country's tertiary and specialized 
hospitals shall jointly design a demonstration program to determine the extent to 
which health care services and equipment can be shared to reduce health care 
cost. 
(b) On the second year after the establishment of the demonstration 
program under this section, the Administrators shall prepare the guidelines for 
the kind of cooperative agreements that may be entered into in accordance with 
the results of the demonstration program. 
SEC. 5. Service Area. - The Administrators shall determine the area to be 
served by a demonstration program under Section 3 (a). 
SEC. 6. Grant Funds and Tax Breaks. -
a) Tertiary and specialized hospitals that enter into cooperative 
agreements under Sec. 3 (b) and (c) of this Act shall receive grant funds and tax 
breaks to be determined by the Administrators and the Commissioner of Internal 
Revenue. To be eligible to receive a grant or tax break, a tertiary or specialized 
hospital shall prepare and submit to the Administrators an application at such 
time, in s'uch manner, and containing such information as the Administrators may 
require, 'including -
1) a statement that such entity desires to negotiate and enter into a 
voluntary agreement with another tertiary or specialized hospital for the 
sharing of medical technology or services; 
2) a description of the nature and scope of the activities contemplated 
under the cooperative agreement; 
3) a description of the financial arrangement between the entities that are 
parties to the agreement; 
4) a description of the geographical area generally to the served by the 
entities; 
5) a description of antiCipated benefits and advantages to the providers 
and to individuals; and 
6) any other information determined appropriate by the Administrators. 


b) Development of evaluation guidelines. The Administrators shall develop 
regulations, including criteria and evaluations guidelines, with respect to 
applications submitted under paragraph (a) in determining which applications to 
approve for purposes of awarding grants and tax breaks under subsection (a), 
the Administrators shall consider whether the agreement described in each such 
application meets the criteria and guidelines developed under this paragraph and 
is likely to result in -
1) the enhancement of the quality of care; 
2) the preservation of services in geographical proximity to the 
communities traditionally served by the applicant; 
3),improvements in the cost-effectiveness of high technology services by 
the entities involved; 
. 4) improvements in the efficient utilization of the entities resources and 
capital equipment; 
5) the provision of services that would not otherwise be available; 
6) the elimination of unnecessary duplication of hospital resources; 
7) a reduction in costs to individuals; or 
8) no undue harm to the care provided individuals seeking services. 
SEC. 7. Allocation of Grant Funds. -
In general. Amounts provided under a grant awarded under Section 6 
shall be used to facilitate collaboration among entities. Such permissible uses 
may include reimbursements for the expenses associated with specialized 
personnel, 
administrative 
services, 
support services, 
transportation 
and 
instructional programs. Funds may not be used to purchase expensive, capital 
intensive medical technology or other highly resource-intensive services not 
previously owned or provided by the facility. 
Grant award amount. Entities applying for grants under Section 6 shall 
specify the desired grant award amount. The Administrators shall determine the 
appropriate amount in granting such award. 
SEC. 8. Medical Technology and Services. -
(a) In General. Cooperative agreements carried out under this Act shall 
provide for the sharing of medical technology or eligible services among the 
entities which are parties to such agreements. 
(b) Medical technology. For purposes of this section, the term "medical 
technology" includes the drugs, devices, equipment, medical and surgical 
procedures utilized in medical care and the organizational and support systems 
within which such care is provided, that -
(i) have high capital costs or extremely high annual operating costs; 
(ii) are technologies with respect to which there is a reasonable 
expectation that shared ownership will avoid a significant degree of the 


potential excess capacity of such service in the community or region to be 
served under such agreement. 
(c) Eligible Services. With respect for services that may be shared under 
an agreement entered into under this section, such services shall -
(i) 
either have high capital costs or extremely high annual 
operating costs; and 
(ii) 
be services with respect to which there is a reasonable 
'expectation that shared ownership will avoid a significant 
degree of the potential excess capacity of such services in 
the community or region to be served under such 
agreement. Such services may include mobile services. 
SEC. 9. Term - Cooperative agreements under this Act to reduce 
healthcare costs shall continue for the period agreed upon by the participating 
entities. 
SEC. 10. Reports-
(a) In general. The participants to health-cost reduction programs entered into 
under this Act shall submit annual reports to the Administrators containing 
information on the programs funded under this section, as required by the 
administrators. 
SEC. 11. Appropriations - To carry out the demonstration program in 
Section 5, such sum as may be necessary is hereby authorized to be 
appropriated from the National Treasury. Thereafter, such sums necessary for 
the gran~ funds shall be included in the annual appropriations of the Department 
of Health. 
SEC. 12. Separability Clause - If any provision or part hereof is held 
invalid or unconstitutional, the remainder of the law or the provision not otherwise 
affected shall remain valid and subsisting. 
SEC. 13. Repealing Clause - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regUlation 
contrary to or inconsistent with the provisions of this Act is hereby repealed, 
modified or amended accordingly. 
SEC. 14. Effectivitv Clause - This Act shall take effect fifteen (15) days 
after its publication in at least two (2) newspapers of general circulation. 
Approved,