You are on page 1of 10

Philippines government expands health care

coverage
PhilippinesHealth
Overview
View in online reader
Text size +-
Recommend

Given the remarkable strides in improving health outcomes since the 1970s, Filipinos
are generally living longer and healthier lives. But despite these advances, the country
lags behind many of its neighbours on key health indicators, such as the maternal
mortality rate and incidence of tuberculosis, and its health expenditure is considerably
less than other countries in South-east Asia. At the same time, lifestyle diseases are
emerging as a new health challenge, requiring different responses. These are the issues
that the Philippines faces as it moves forward with its commitment to achieve universal
health coverage, ensuring that all Filipinos have access to quality, affordable health
care.

Health System
The Philippines has a mixed public-private health care system, with private services
modelled along the lines of the US’ system. The private segment caters to about 30%
of the population, but is far larger than the public system in terms of financial resources
and staff. According to the most recent data from the National Health Facility Registry
(NHFR) at the Department of Health (DoH), the Philippines has 1581 hospitals,
including 591 public. About 24% of them do not have licences. Hospitals are tiered
according to the facilities they provide, with Level 1 being little more than an infirmary
and Level 4 covering facilities with the most advanced equipment and expertise.

There are also 1428 fully licensed birthing stations – 630 public and 798 private – and
480 infirmaries – 207 public and 273 private – two of which do not have a licence,
according to the NHFR. The government also operates 20,123 Barangay Health Stations
and 2588 rural health units. These are mostly run by local and provincial authorities
under a devolved management scheme introduced in 1991, with the DoH providing
technical assistance and being responsible for the operation of only a few tertiary
facilities.

Indicators
Since the 1970s successive governments have lifted life expectancy at birth to 72 for
women and 65 for men, according to World Bank figures, through structural reforms
and increased spending, as well as by improving access to clean water, sanitation and
vaccination programmes. Spending on health has also risen over the past decade,
although not as quickly as it has in the rest of the Asia-Pacific region.

The DoH’s budget was P122.63bn ($2.6bn) in 2016, compared with P86.97bn ($1.8bn)
the previous year. Spending in 2010 totalled only P24.65bn ($521.5m). The passage of
Republic Act 10351, also known as the Sin Tax Reform Law, in 2012 increased duties on
tobacco and alcohol and helped boost the amount of money available for health
expenditures.

According to DoH figures, by 2015, 83% of children were fully immunised, with 73%
coverage achieved for the measles vaccine. This has helped reduce the infant mortality
rate from 28 per 1000 live births in 2008 to 21 in 2015, and the under-five mortality
rate from 34 per 1000 live births to 27 over the same time period. The under-five
mortality rate now matches the targets that were set under the UN’s Millennium
Development Goals (MDGs), and while the infant mortality rate is still higher than the
MDG, the trend is downwards. The attendance of skilled midwives and other birth
attendants, as well as improved antenatal coverage and more deliveries at hospitals
and clinics, has also helped reduce maternal mortality to 114 per 100,000 live births in
2015, compared with 129 in 2010. Again, while this is higher than is ideal and not yet in
line with the MDG, the mortality rate is improving.

Moving Forward
Health authorities in the Philippines are now focusing on the UN’s Sustainable
Development Goal (SDG) 3: good health and well-being. The aim is to achieve universal
health coverage and ensure that the poorest Filipinos have access to affordable and
effective health care. In her presentation at the Health Summit in Pasay City in
September 2016, Paulyn Jean B Rosell-Ubial, secretary of health, noted that the country
struggled with “persistent inequities” in health outcomes. A Filipino child born to one of
the country’s poorest families is three times less likely to reach his or her fifth birthday.
Moreover, with around a quarter of the population living below the poverty line,
according to World Bank figures, childhood malnutrition and related development issues
remain a problem. After 25 years of improvement, the prevalence of nutritional stunting
actually increased to 33% in 2015, compared with 30% in 2013, according to a report
by the Save the Children Fund. The international NGO added that childhood
malnutrition costs the country nearly $7bn, or 3% of GDP, per year in terms of
education spending and lost productivity.

Spending
Total health expenditure rose to P585.3bn ($12.4bn) in 2014, up 10% from P530.3bn
($11.2bn) the year before, with private out-of-pocket sources accounting for more than
half of total health spending. Under the 2010-20 Health Care Financing Strategy, the
government set itself a target of increasing health expenditure to 4.5% of GDP, national
government spending to 10% of health spending and national government spending on
public health to P10bn ($211.6m). While it had surpassed all these targets by 2014, it
has still to reach five others: lifting the health budget as a percentage of total
government spending to 6%; reducing out-of-pocket health spending as a percentage
of total health expenditure to 45%; increasing local government spending as a
percentage of health spending to 11%; ensuring local government spending on health
reaches P29bn ($613.5m); and raising the contribution of the National Health Insurance
Programme ( PhilHealth) to 19% of total health expenditure.

In a bid to achieve its goals, such as financial protection from the high cost of health
care, better outcomes and a responsive system, the new administration of President
Rodrigo Duterte has devised the ACHIEVE framework under the Philippine Health
Agenda 2016-22, which aims to leverage additional funds from the Philippine
Amusement and Gaming Corporation. “This is really something positive. Before, the
government could not even reimburse the expense of a hospital. [Now] hospitals will be
ready to deal with sick Filipinos,” Climaco Caliwara, executive director of the Philippine
Hospital Association, told local daily the Manila

By 2030, in line with the UN’s SDGs, the Philippines aims to reduce maternal mortality
to less than 70 per 100,000 live births, and the under-five mortality rate to as low as 25
per 1000 live births. Other targets include an end to the AIDS epidemic, tuberculosis,
malaria and neglected tropical diseases, as well as reducing incidences of premature
mortality due to non-communicable diseases (NCDs) by one-third.

Role Of Private Care


The scale of demand for health care services in a country like the Philippines, given the
government’s limited finances, means private health care companies have long played a
major role in the health sector. Private operators are mostly local companies, as foreign
investment is restricted to 40% – which is the lowest rate in the region after Malaysia.
They are market oriented, mainly for profit and concentrated around the more affluent
areas of central Luzon and Metro Manila. Salvador P Castro Jr, chairman and president
of medical project services firm SP Castro, told OBG, “The health care industry has
faced high growth and significant investment as demand for health services grows in
tandem with an expanding middle class. Metro Manila, in particular, has seen a surge in
investment in new facilities or expansion of existing ones, primarily driven by the
private sector.”

Local Units
Under the Local Government Code of 1991, responsibility for public health care was
devolved to local government units (LGUs) across the country. The decision divided
health care providers along municipal, provincial and regional lines, leaving LGUs
responsible not only for health care in their regions, but also for the management of
provincial- and district-level clinics and hospitals within their area. LGUs now operate
most public-funded facilities. But the devolution also led to the breakdown of the
country’s integrated referral system, putting further strain on the service.

The World Health Organisation (WHO), in a 2011 review and report of the country’s
health care system, reported that, “The involvement of three different levels of
government in the three different levels of health care has created fragmentation in the
overall management of the system. Local and provincial authorities retain considerable
autonomy in their interpretation of central policy directions, and provision of the health
services is often subject to local political influence. As a result, the quality of health care
varies considerably across the country.”

The Philippines had 1.8 hospitals per 100,000 people according to the WHO’s “World
Health Statistics 2015” report. According to the most recent available figures, in 2012,
for a population of around 100m people, the country had 98,155 hospital beds, with
49,372 in public hospitals and 48,783 in private facilities. The Philippines’ hospital bed
density rate is the fourth-lowest in ASEAN, after Myanmar, Laos and Cambodia,
“reflecting the potential for growth,” according to a Frost & Sullivan study prepared for
UK Trade & Investment, now the UK Department for International Trade.

Public Sector
Government hospitals have been criticised for long waiting times, overcrowding, poor
hygiene and a lack of respect for confidentiality. This generally negative perception has
encouraged those with higher incomes to seek private treatment. Moreover, the
standard of health care is uneven, with both public and private hospitals situated in
developed and urban areas. Some 34% of all hospital beds are situated in the National
Capital Region, although it is home to only around 12% of the country’s population,
according to the Philippine Institute of Development Studies.

Every year some 600,000 patients pass through Philippine General Hospital, which has
1500 beds. Its emergency room deals with 2000-3000 patients every day, according to
Dr Jose Joven Cruz, assistant director at the Philippine General Hospital. The hospital
has asked for funding to add an additional 500 people to its staff of 4000 and is looking
to build additional floors. “We are at the apex of the system,” Cruz told OBG. “We are
always full. All the specialities are represented in this hospital, and we get patients from
all over the country.”

New Partners
In order to address problems in the public sector, previous governments have
implemented public-private partnership (PPP) programmes to allow private firms to
finance, design, build, operate and maintain a hospital for a maximum of 25 years, after
which it must be handed over to the DoH. PPPs can also take the form of technology
transfer, training and funding such as La Union Medical Centre, which was set up as a
joint venture with private investors to secure a haemodialysis machine and other
equipment, as well as staff, under which the investors keep a share of the revenues.
The investors pay the necessary staff, rental and other costs, and share 15% of the
revenues with La Union Medical Centre. The authorities have also worked with foreign
aid agencies to improve health care facilities, with three hospitals in Iloilo province
reopening in October 2016 after a three-year renovation programme funded by the
Korea International Cooperation Agency. The hospitals now have more beds and better
equipment, ensuring local people have access to better treatment.

Ayala Corporation, through its Ayala Healthcare Holdings unit (AC Health), which it set
up in 2015 to lead its expansion in the industry, is among the most active in the
industry. It has a joint venture with Mercado Group to operate three private hospitals
and six clinics, and, through its Globe Telecom unit, runs a medical hotline service in a
joint venture with Mexico’s Salud Interactiva. Under the QualiMed brand, Ayala also
plans to build a chain of 10 hospitals and 10 clinics over the five years to 2020. It has
also been acquiring stakes in medical retailers. In February 2017 Paolo Borromeo, the
chief executive of AC Health, told the Nikkei Asian Review that the company sensed the
Philippines health care sector was “ripe for disruption”. Meanwhile, in an effort to target
the more affluent, Metro Pacific Investments has taken over 13 tertiary hospitals with
nearly 3000 beds. The country’s largest private hospital group is now considering an
initial public offering to fund further expansion in the health sector.

Social Insurance
The considerable cost of health care for ordinary Filipinos has long been a concern to
the country’s governments. The National Health Insurance Act of 1995 established
PhilHealth, which is managed by the Philippine Health Insurance Corporation (PHIC).
The aim was to reduce out-of-pocket expenditure and address inequities in health care
financing by pooling the funds contributed by healthy members to subsidise those who
could not afford care, but over the years, it became clear that the country’s poor benefit
from the system at around the same level as richer citizens amid concerns about the
quality of care and the risk of co-payment. In 2012 the WHO described the Philippines
health care financing system as “fragmented with insufficient government investment,
inappropriate incentives from providers, weak social protection and high inequity.”

Successive governments have attempted to revise the programme to broaden coverage.


In 2013 the Philippines introduced the Universal Health Care Act to ensure that all
Filipinos, especially the poor, receive health insurance coverage from PHIC. The Duterte
administration has renewed the government’s commitment to achieving universal
coverage, from about 92% currently, by prioritising the poor and marginalised. It is
low-income Filipinos who work in the informal sector who tend to fall through the gaps,
because those who are employed are guaranteed health services, while the very
poorest are sponsored by the government.

Care For All


To address this problem, the plan is to consolidate categories within the covered
population to just two: formal and non-formal work. This is in addition to simplifying the
rules and committing to “no balance billing” for poorer patients in basic hospital
accommodation. The latter was first introduced in 2011 but not properly enforced.
Previously, those who had used up their premium were asked to pay the excess, which
they often could not afford. There will also be a fixed co-payment for non-basic
accommodation. PhilHealth will also be the main gateway for free or affordable care,
with all Philippine nationals being members – the employed will pay their premiums
through payroll and the rest through a tax subsidy. The national health scheme is also
expected to become the main revenue source for all health care facilities, with benefits
expanded to cover a wide variety of services and health care providers grouped into
networks to ensure services are more efficient.

The hybrid health system, and the limitations of PhilHealth – which offers a defined set
of services at predetermined rates and does not cover items such as dental check-ups –
has helped fuel the development of health maintenance organisations (HMOs), with
about 28 HMOs now registered across the country. Now regulated by the Insurance
Commission, after regulatory control was transferred from the DoH in 2015, the
country’s HMOs provide access to a wide range of health care services to their
members, depending on the fees paid and the package bought. HMO plans for
corporate accounts are always integrated with PhilHealth benefits because employers
pay 50% of their employees’ PhilHealth premiums. There are few individual and family
plans, which tend to be more expensive.

New Packages
In line with government initiatives to insure all Filipinos have health coverage, HMOs
are also rolling out micro-health plans that are targeted at the working poor – people
who make a living as fishermen, drivers, farmers and labourers. “It is just the cost of a
bottle of beer – about P36 ($0.76) a day – and the benefits are good,” Carlos Da Silva,
executive director of industry body Association of Health Maintenance Organizations of
the Philippines, told OBG. “These products should be able to bridge health care gaps
across the labour force.” Under HMO policies, accredited doctors are not allowed to
charge private rates when a patient has exceeded their maximum limit per illness or
injury for the year, but only at the HMO agreed contractual rate.
Keeping Costs Down
The cost of medicines has traditionally been one of the largest out-of-pocket costs for
Filipinos in the health care system, but the Generics Act of 1988, which required the
production of drugs identified by their generic names and that providers to write out
prescriptions using only generic terminology, has helped rein in costs and contributed to
the development of a local drug manufacturing industry.

The country’s pharma segment is the third largest in ASEAN, after Indonesia and
Thailand. The market is expected to be worth $4.1bn by 2020, up from $3.4bn in 2015,
according to research and consulting firm GlobalData. IMS Consulting Group,
meanwhile, forecasts growth of 5% both in 2017 and in 2018.

Furthermore, the Universally Accessible and Affordable Quality Medicines Act of 2008
introduced price caps on medicine prices and led to the adoption of measures that
promote access to affordable and good quality drugs to protect public health. The
following year the Food and Drug Administration (FDA) Act ensured access to patented
and non-patented medicines, as well as registered drugs, medical devices and
diagnostics. The focus on affordability has also fuelled the expansion of pharmacy
chains specialising in generics, increasing the choice of drugs available to patients.
Burgeoning demand has also prompted more established pharmacies to stock the
drugs. About 85% of medicines in the Philippines, including nutritionals, are sold over
the counter rather than through doctors and hospitals, according to DoH figures. Botika
ng Barangays, government-licensed pharmacies that are privately owned and operated,
have also appeared in villages across the Philippines, selling drugs at lower prices and
providing rural communities with access to quality medicines. In 2014 there were more
than 7700 Botika ng Barangays, compared to 2000 in 2010.

The market’s potential is such that local conglomerates have begun to buy stakes in
local generic pharmacies. In May 2016 Robinsons Retail Holdings of the Gokongwei
Group bought 51% of The Generics Pharmacy, a network of 1800 largely franchised
chemist shops. In February 2017 the Ayala Corporation, which bought 50% of Generika
in 2015 with the intention of opening 1000 stores by 2020, took a minority stake in
Wellbridge Health, which operates an online pharmacy. Local drugs manufacturers have
also benefitted from the growth in demand for generics. United Laboratories has about
48% of the market.

Clinical Trials
The Philippines is also an emerging destination for global clinical trials. According to the
US Food and Drug Administration, the number of clinical trials in the Philippines
increased by 31% in 2009, the eighth-highest annual growth rate in the world in that
year. In 2015 there were 461 clinical trials under way, most of them part of global
programmes and subject to strict international conditions, according to a joint report by
IMS Consulting Group and the Pharmaceutical and Health Association of the Philippines
(PHAP).

According to the most recent figures from the Philippine Council for Health Research
and Development, there were 113 registered research studies in 2013, 74 of which
were clinical trials, three times the number of registered studies the previous year.
Contract research organisations (CROs) and research-based pharmaceutical companies
funded 65 of the 113 studies, and the budget for these could reach more than P1bn
($21.2m), according to the PHAP report. Research-based pharmaceutical companies
conducting local trials are also working with CROs in the Philippines in a move that the
Philippines FDA expects to lead to further improvements in the quality of clinical
research. The University of the Philippines’ National Institutes of Health has also
teamed up with publicly listed Philab Industries to work on research relating to
improving diagnostics, with a focus on diseases that affect the country. Under the
partnership, announced in August 2016, the plan is to construct an 18-storey, P1.6bn
($33.8m) building to house 10 health institutes.

This focus on research is likely to have a number of benefits for Filipinos. One area of
study that has garnered much attention and investment is stem cells. “There are now
more than 80 approved applications for cord blood stem cells, primarily for some forms
of leukaemia and other blood disorders,” Michael Arnonobal, CEO of Cordlife Philippines,
told OBG. “Numerous clinical trials are also ongoing worldwide investigating the use of
stem cells in the treatment of various diseases, from cerebral palsy and diabetes, to
other neurological and degenerative disorders. This is an indication of the strong trend
towards cellular therapy.”

Infectious Diseases
Straddling the tropics, the Philippines has long struggled with the presence of certain
infectious diseases. Vaccination programmes and improved sanitation have helped
reduce the incidence of some communicable diseases, particularly those affecting young
children and the elderly. A free pneumococcal vaccination for those aged 60-65 was
introduced in May 2016, providing protection against diseases such as pneumonia,
meningitis, and middle-ear and sinus infections. The PHAP also reported that research-
based pharmaceutical companies have introduced more than 55 vaccines in the
country, focusing particularly on diseases that affect women, children and the elderly,
such as pneumonia, measles and rubella, and firms in the segment have also released
76 new molecules or combinations for the treatment of NCDs, including cardiovascular
diseases, cancer, chronic respiratory infections and diabetes.

While it has managed to control some diseases, others are emerging as major public
health concerns. Along with Afghanistan, the Philippines has the fastest-growing HIV
rate in Asia. “Right now, the Philippines runs the risk of letting the infection get out of
control,” Steven Kraus, director of the Joint UN Programme on HIV/AIDS (UNAIDS)
told The New York Times in February 2017. Although the actual number of people living
with HIV remains low at 39,600, UNAIDS estimates the rate of new infections increased
by more than 50% between 2010 and 2015. Some 841 cases of the disease were
reported in June 2016 by the DoH – the highest monthly figure since 1984. Efforts by
the DoH and Department of Education to raise awareness about HIV and tackle the
virus’ spread have been hampered by conservative politicians and religious groups,
which remains hugely influential in the country. A plan to distribute condoms and
expand sex education in public schools was scrapped in January 2017, and legally
anyone under the age of 18 is required to demonstrate a parent’s consent to buy
condoms or get tested for HIV.

In his state of the nation address in July 2016, President Duterte indicated he would
implement the Reproductive Health Law, despite opposition from the religious groups.
The law was passed in 2012 in the face of objections from religious leaders and took
effect after the Supreme Court ruled it constitutional two years later. Under the law, the
government would be able to lead a public information campaign on sexuality and
ensure the distribution of contraceptives.

Dengue & Zika


The Philippines also has to contend with mosquito-borne diseases such as dengue.
From 2013 to 2015 the country ranked first in dengue incidences in the Western Pacific,
according to the WHO. The Philippines also participated in the clinical trial for the
world’s first dengue vaccine, Dengvaxia, developed by Sanofi Pasteur and said to be
90% effective against the most severe strains of the disease. A mass vaccination
programme worth P3.5bn ($74m) was launched across schools in April 2016, the first in
the region, and aims to vaccinate 1m children aged nine and above.

The zika virus, another mosquito-borne disease, has also become endemic. The
Philippines reported 12 cases in 2016. Zika causes what seems like a case of the flu, but
is thought to result in birth defects such as microcephaly. The government has
committed to eradicating rare tropical diseases such as zika by 2030, and in March 2017
it announced plans to start a nationwide registry of rare diseases to better help those
afflicted seek medical treatment. In early 2017 the DoH announced that in 2016, 10 of
the country’s 28 provinces had reached the goal of eliminating schistosomiasis as a
public health problem, and 35 out of 45 endemic provinces had eliminated lymphatic
filariasis, 41 areas were declared rabies-free, and 17 out of 79 provinces surveyed had
managed to reduce the prevalence of soil transmitted helminthiasis to less than 20%.

NCD
The leading causes of death in the Philippines for both men and women are now
lifestyle diseases such as heart disease, which was the top killer in 2012, accounting for
15.4% of deaths, followed by strokes (11.1%) and diabetes (5.9%), according to WHO
data. The crude death rate for each has been increasing since 2000, and the result has
been a decline in healthy life expectancy – nine years less than overall life expectancy
for both men and women in 2012 – with heart disease and diabetes being the most
likely to cause poor health and premature mortality. Filipinos aged 30-70 have a 28%
probability of dying from an NCD, according to the WHO. The increase in NCDs also has
consequences for an economy that lost an estimated $10bn of GDP due these illnesses
in 2010, a figure that is set to triple by 2030, according to the PHAP.

With the burden of NCDs expected to increase threefold by 2030, the DoH recently
established a specialised NCD unit and, given the costs involved, is focusing not only on
treatment, but also prevention. The DoH is encouraging people to live healthier lives,
including the poorest and most remote communities, as well as emphasising the need
to catch potential problems early by seeing a doctor more often (see analysis).

The TseKap coverage package, introduced in early 2015, provides Filipinos with a basic
health check-up and laboratory tests. The scheme is designed to reduce health care
outlays, principally for poor households. Teodoro Ferrer, president of Generika, told
OBG, “Health is not only about the cure, but more important and with longer lasting
benefits are wellness and prevention. However, for preventive health care initiatives to
succeed, they need to be done on a mass level, with the involvement of LGUs and
NGOs.”

Outlook
The Philippines continues to face several challenges in its bid to achieve universal
health care and reform a system that is not working for those who need it most. The
country’s population is not ageing as fast as elsewhere in South-east Asia – by 2020
about 6% of its population will be aged 65 or over, compared with 4.2% in 2010 –
which should ensure some relief from the health needs associated with an ageing
population, but policymakers will need to work together if they are to reach their goals
and not be afraid to take on political and religious interests to protect the nation’s
health.