Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

THIRTEENTH CONGRESS
First Regular Session

HOUSE BILLNO.___ 41

INTRODUCED BY: HON. EMILIO C. MACIAS IT

EXPLANATORY NOTE

The health of the nation determines its own level of energy and vigor and
therefore, ultimately, its performance in social and economic development. Implicit in the
development process is the existence of a reasonable citizenry capable of carrying out
development goals, It is thus, clear that the promotion of health is always an urgent
business of society not only because it is the very foundation of an active and useful life
but also the right of every Filipino,

Cognizant of this reality, the Constitution explicitly provides that the State shall
promote and protect the right to health of the people and instill health consciousness
among them. In pursuance of this mandate, Republic Act No. 7160 otherwise known as
the Local Government Code of 1991 was enacted devolving among others the functions
of managing public health and district hospitals to local government units.

However, inspite of the time that has elapsed since the effectivity of the Code,
there is still confusion and duplication of functions among health care deliverers — the
Department of Health still involves itself with the day to day public health work and
hospital care (primary, secondary and level I tertiary) when these functions have long
been devolved to local government units

This situation clearly defeats the noble objectives of the Local Government Code.
Besides, it drains the Department of Health of essential funds to provide for higher
tertiary capability for its hospitals in different regions which should be their primary
concern, Moreover, local government units are still denied the funds: for the cost of
devolved functions. Numerous district hospitals had been re-nationalized in contravention
of the policy on local government autonomy embodied in the Local Government Code.

‘There is an urgent need therefore, to pass a curative and comprehensive
legislation that will effectively address these health issues and concem in order to
rationalize the health care delivery system in our country.

This piece of legislation seeks to institute the modemization of the health care
delivery system in the Philippines. This modernization program consists of several
components that will ultimately phase out the antiquated system of health care delivery to
complement state-of-the-art equipment and technology. It includes strong advocacy that
leans towards the realization of a genuine local autonomy by transforming devolved
hospitals, together with their respective catchment rural health units into self-governing
components with the establishment of district health boards in every district, health
boards in regional medical centers, and in specialty hospitals. In effect, the local health
boards embodied in the Local Government Code shall be abolished.



It is also the intention of this bill to introduce among others, the active
participation of the members of Congress in different district and hospital health boards;
the private sector participation in the management of their own health care program; the
delineation of specialized functions to enable the Department of Health to concentrate in
establishing and maintaining fully equipped medical centers; the institutionalization of a
dependable two-way referral system from the public health units at the grassroots level
up to specialty hospitals and vice-versa; and encourage partnership among local
government units and between local government units and the DOH in establishing
modem health care delivery facilities. All these things are geared toward the promotion
and protection of the general health of the Filipino people, which shall ultimately enhance
the socio-economic conditions of the country.

Considering all the foregoing reasons, the House of Representatives during the
Twelfth Congress approved this bill, which was originally House Bill No. 1. However,
due to lack of material time, the Senate failed to act on it. Thus, the need to re-file this
bill.

The foregoing reasons warrant the immediate passage of this important piece of
legislation.

N
ead
[0 C. MACIAS Il, M.D.
Representative
Second District, Negros Oriental



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Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

THIRTEENTH CONGRESS
First Regular

HOUSE BILL No. Al

BY REPRESENTATIVE EMILIO C. MACIAS IT

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 Howse of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Health Care Delivery Modemization Act of
2004."

SEC. 2, Declaration of Policy. - It is hereby declared a policy of the State to modemize the heslth 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 modemization program under this Act shall be the following:

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

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

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

(@ The development of cooperation among the local and national government agencies, members of
‘Congress and the private sector, including tho civic, religious and nongovernment organizations;

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

(©) 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;

(@) 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;

(b) 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
‘tansparency in the procurement of equipment and medicines.

SBC. 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:



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(a) To modernize the health care delivery by adopting a comprehensive, consistent and systematic approach
1o health issues and concems 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;

(©) To implement « 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;

(@ To enhance inter-agency multi-sectoral cooperation;

(©) To enhance the capability of hospitals by requiring the DOH to provide each LGU competem physicians
‘10 assist the local chief executive as may be appropriate, in the monitoring of health care delivery functions; and

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

SEC, 4. Definition of Terms. - The following terms used in this Act are defined as follows:

(8) “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 capabitiy 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
agnosis, treatment and care of individuals suffering from iliness, disease, injury or deformity, or in need of
obstetrical or other medical and nursing care,

(©) “Primary hospitel” refers to a hospital with capabilities and facilities for providing first contact
‘emergency care and hospitalization in simple cases,

(@ “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

(©) “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

(“Tertiary Level It hospital” refers to a departmentalized hospital with teaching and research capabilities
‘and which have socredited Residency Training Programs in the fields of surgery, pediatrics, medicine, OB-Gyne,
ENT, orthopedics, anesthesia and other ancillary disciplines. It likewise offers dental services

(@) “Tertiary Levet 111 hospital” refers to a hospital which has been particularly selected to provide tertiary
hospital services, with teaching, training and research functions,

Gh) “Tertiary Level TV hospital” refers to a tertiary hospital with expensive and sophisticated diagnostic and
‘therapeutic facilities for a specific modical problem area.

“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.

“Provincial hospital” refers to a central district hospital with its own catchment area which provides at
least a minimum of Tertiary Level ! hospital care.

(k “Regional hospital” refers to a departmentalized hospital which provides Tertiary Level If hospital care.

“Medical center” refers to a hospital which provides Tertiary Level III hospital care.



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(an) “Specialty hospital” refers 10 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.

(a) “Competent physician” refers to a licensed medical doctor who possesses both toctmical and managerial
‘nowledge or expertise in health care.

(0) “Local government units (LGUs)” refer to provinces, cities, municipalities, barangays and other political
subdivisions es may be created by law.

Sec. 5. Health Care Delivery Modernization Program. ~ in order to meet its objectives, there shall be
created 2 Health Care Delivery Modemization Program which shall have the following components:

(A) Delineation of the Role of the Local Goverment Units and the Department of Heelth (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 the 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 shail, in addition to the powers vested in it under existing laws, be responsible for the
following:

(0) 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;

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

(@ 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 with original chaster
shall continue to be governed by its own charter;

(© Supervision of the operation of the more sophisticated organ- specific medical centers;

(0) 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;

(@) Provision of doctors in rural communities under its program of doctors to doctoriess 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

(4) 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

(12) Scholarship benefits in the form of tuition foes in state colleges or universities 10 be granted to their
legitimate children.



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(B) Strengthening the Capability of the Provincial Hospitals. - The provincial hospitals shall be developed
imo responsive, efficient and modem institutions with the capability 10 handle Tertiary Level I to II hospital care
Jn pursuance thereof, the following necessary steps shall be undertaken:

(1) The establishment of a residency training program and scquisition 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:

(®) Consultants, who shall be accredited to practice in the hospital, may be entitled to honorarium to be
determined by the district hospital health board;

(®) Provincial hospital residents participating in the residency training program shall not be permanent
‘employees but shall be considered employed forthe whole duration of the residency traning period; and

(©) 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
cbjectives: 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 @ population of at least one million, and in island provinces as well as in highty urbanized
cities, the DOH shall establish an extension of the regional medical center in the provincial or city hospital, as the
case may be, The extension hospital to be established shall have the capability of Tertiary Level Il 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.

(©) Establishment of Hospital 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 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 Instinwte,
‘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

(@) Composition - The composition of the district hospital health board shall be as follows:

(1) Chairman: Chief ofthe District Hospital

(a2) Members: representative of the Congressional District for hospitals in his political district; a mayor of
the catchment ares of the district; member of the sangguniang panlalawigan of the political district; representative
of the Philippine Hospital Association; represemative of the Philippine Medical Association; representative of
‘ongoverment organizations involved in health services; representative of the religious sector; and representative
of the private sector

(a3) 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.

(©) Powers and Functions - The powers and functions of the district hospital health board shall be 2s
follows:

(b.1) To assist the provincial govemor in the operation and management of the district hospital;



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(02) To review and endorse the budgetary requirements of the district health services;

(6.3). To devise a mechanism for internal control;

(b.4) To enhance the participation of LGUs and community involvement in hospital service and public
health activites;

(b.5) To screen and recommend to the Selection Board the appointment of qualified applicants to fill vacant
positions inthe rural health units and district hospitals;

(0.6) 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;

(6.1) 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;

(6.8) 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,

(© Meetings and Quorums -

(C.1) The Board shall meet atleast once a month or as often as may be necessary,

(6.2) A majority of the members of the Board shell 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 tothe accounting and auditing rules and regulations,

(2) Medical Centers and Specialty Hospitals Health Boards

(®) Composition - The composition of the Medical Center and Specialty Hospital Health Boards shall be as
follows:

(a1) Chairman: Chief of Medical Centers or Specialty Hospitals, as the case may be;

(22) Members: & senator of the 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 nongovernment organizations involved in health services; a
representative ofthe religious sector; and a representative of the private sector.

(a3) 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.

(@4) The chairman of the Senate Committee on Health shall choose ftom among the senators, who shall
represent the Senate as & member of each of the Medical Center or Specialty Hospital Health Boards.

(a5) The representative from the nongovemmment 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
Doards

(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:

(0.1) To assist the Secretary of health, administrator o¢ chairman of the boards of trustees, es 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 intemal control;



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(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;

(6.6) To determine the utilization of funds of the specialty hospitals or medical centers, as the case may be,
for the betterment of hospital heslth services; and

(©.7) To perform such other functions es may be deemed necessary for the effective management of the
medics! centers and specialty hospitals

(© Meetings and Quorums ~

(€.1) The Board shall meet at Yeast once a month or as often as may be necessary.

(©2) A majority of the members of the Board shall constitute a quorum but the chairman must be present
uring 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 health boards of the medical center and specialty hospitals subject to the accounting and auditing rules and
regulations,

(3) Municipality or City Hospital Health Board

(@) Composition - the composition of the Municipal or City Hospital Health Board shall be as follows:

(@.1) Chairman: Chief of the municipality or city hospital

(2.2) Members: Representative of the congressional district for hospitals in his political district; the
municipal of 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 nongovernment organizations involved in heath services; a representative of the
‘religious sector; and, a representative ofthe private sector,

(23) The members of the Municipal or City Hospital Heath Board except the chairman and the
representative of the congressional district, shall be appointed by the municipal or city mayor, asthe 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;

(©.2) To review and endorse the budgetary requirements of the municipal or city heslth services;

(03) To devise a mechanism for intemal control;

(6.4) To enbence the participation of local government units and community involvement in hospital service
and public health activites;

(b.5) To screen and recommend to the Selection Board the appointment of qualified applicants to fill vacant
‘Positions inthe rural health units and municipal or city hospitals;

(0.6) 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 deposi, 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,

(©.8) To determine the utilization of finds of the hospitals for the betterment of hospitals and rural health
services; and



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(6.9) To perform such other functions as may be deemed necessary for the effective management of the rural
health units and hospitals,

(©) Meetings and Quorums ~

(€-1) The Board shall meet atleast once a month or as often as may be necessary;

(€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 eruployees shall be entitled to necessary traveling expenses and allowances chargeable
‘against the funds of the Municipal or City Hospital Health Board subject to the accounting and auditing rules and
regulations,

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

‘Sec. 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 concemed.

Funds may be augmented by grants, donations, endowment from various sources, domestic oc foreign.

Suc, 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,

Sec. 9. Separability Clause. - If, for any reason or reasons, any part or provision of this Act shall be
declared 10 be unconstitutional or invalid, other pans or provision hereof which are not affected thereby shall
continue to be in full force and effect.

Sec, 10, Repealing Clause. - All laws, orders, decrees, rules and regulations inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

Sec. LL. Effectivity. This Act shall take effect upon its approval

Approved,