Investing in Health:

the Role of LGU Officials in

Health Sector Development

Building Partnerships for Health

Clark Special Economic Zone
August 2010
 Outline
• Health in the context of overall local developmen
t
– Role of government in the health sector
– Health sector goals
– Means of achieving health sector goals
• Strengthening local governance in health
• Health sector reform (FOURmula ONE)
• Province-wide investment planning
• Finding the Money to Finance Health Programs
• USAID technical assistance
• Key ideas for local policy action

HealthGov August 2010 2

thank you
Health and Local
Development

HealthGov August 2010 3

 Two ways of looking at health
• Health as a component of development
that is valued in its own right.
• Health as an asset that generates wealth.

HealthGov August 2010 4

 Health as a component
of development
• Development is the sustained capacity to
achieve a better life.
• Better life includes the length of life and the
quality of life that people succeed in living
• Quality involves capabilities “to do” and “to be”
– To be free from premature death
– To be free from preventable illness
– To be free from avoidable disability
– To be free to achieve one’s fertility goals (desired
family size – number and spacing)
• Hence development is also about expanding
freedom and the range of choices.
Adapted from Amartya Sen (1988)
HealthGov August 2010 5
Development is freedom from premature death
Life expectancy at birth is lower than
neighboring countries
Male Female
Singapore 77 81
South Korea 74 81
Malaysia 72 76
Thailand 68 75
Vietnam 69 73
Philippines 66 71
Indonesia 66 70
Source: Estimates from UN ESCAP (2006)
Life expectancy at birth is the average number of years that a person
can expect to live from birth given the mortality conditions of the time.
HealthGov August 2010 6
 Development is freedom from premature death
Maternal mortality has But it still remains high
declined in the past 20 compared to other
years countries
• Maternal mortality ratio (MMR) • Estimates for other countries in
estimated for Philippines 2006:
– NDHS (1987-1993): 209 – South Korea: 20
– NDHS (1991-1997): 172 – Malaysia: 41
– FPS (1999-2006): 162 – China: 56
• MMR = maternal deaths per – Thailand: 24
100,000 births – Vietnam:130
– Indonesia: 230
Sources: 1993 and 1998 NDHS;
Source: UN ESCAP 2006
and 2006 FPS

Status

HealthGov August 2010 7

Development is freedom from premature death
Infant and child mortality rates are still high
compared to other countries in 2006

Infant Child
Singapore 3 4
South Korea 4 5
Malaysia 9 12
Thailand 17 21
Vietnam 18 24
Philippines 25 29
Indonesia 36 45
Source: Estimates from UN ESCAP (2006)
Infant mortality is the number of infant deaths per 1,000 births.
Child mortality is the number of deaths of children under five years per 1,000 children under five
years.
HealthGov August 2010 8
 Development is freedom to achieve one’s fertility goals
(The poor are less able to achieve their
fertility goals than the rich)

Total fertility and desired fertility rate by wealth status, 2003

Wealth status

Indicator Low Second Middle Fourth High Total

Total fertility rate 5.9 4.6 3.5 2.8 2.0 3.5

Desired fertility rate 3.8 3.1 2.6 2.2 1.7 2.5

Difference (total less

desired) 2.1 1.5 0.9 0.6 0.3 1.0
Source: NSO and ORC Macro, 2003 NDHS, 2003
HealthGov August 2010 9
 Health as an asset:
its role in local development

Health sector Health outcomes

Economic
resources
Key idea 2:
• Better health increases the
productivity of investments in
non-health sectors, e.g.,
education, agriculture and
industry contributing to better
non-health outcomes.
Non-health Non-health sector
sectors: outcomes
Education, Key idea 1:
agriculture, • Better non-health sector
environment, outcomes, e.g., higher
infrastructure, etc. education, higher incomes,
better infrastructure, facilitate
healthy behavior and access
of health care services,
contributing to better health
HealthGov August 2010 outcomes. 10
 Health as an asset:
recent scientific findings
• High economic cost of TB: productivity losses in
the Philippines due to premature deaths from TB
estimated at PhP 26B yearly (Peabody, 2003, cited
in NOH 2005)
• Nutrition and health in early childhood affect
future success of children in education,
employment and productivity, and health in later
life (Studies in Bukidnon and Cebu)
• Unforeseen large spending for health care
reduces consumption of other goods and
services that promote well-being.
HealthGov August 2010 11
The Health Sector and the
Role of Government

HealthGov August 2010 12

 Local Health Sector
What is the role of government?
Insurance PhilHealth, premium Local and
market other financing national
failure agents government
reimbursements;
capitation funds
premium subsidy
taxes

Consumers/ services Providers/ Public goods,

households: dispensers: e.g., disease
Imperfect surveillance;
information economic & Public and
social groups user charges private sanitary
Services with large regulations
Unequal externalities, e.g., child
distribution immunization; treatment of
of income infectious disease
HealthGov August 2010 13
 Role of government in health care
markets: efficiency and equity
• To correct for market failure arising from (and the
nature of possible response):
– Imperfect information (public information)
– Public goods (public financing and/or production)
– Externalities (public subsidies or regulation)
– Insurance market failure (development of social
health insurance)
• Improve equity - provision of cost-effective
services to the poor as an effective and socially
acceptable approach to poverty alleviation
HealthGov August 2010 14
 Local Health Sector

PhilHealth; premium Local and

other financing national
agents government
reimbursements;
capitation funds
premium subsidy
taxes

Consumers/ services Providers/

households: dispensers:
economic & Public and
social groups user charges private

Outline
HealthGov August 2010 15
 Part II
Health Sector Development
and the Role of Local
Governance

HealthGov August 2010 16

 Local Health Sector
How do we achieve our goals?
Strengthen lo
PhilHealth; premium Local and cal governanc
other financing national e for health
agents government
reimbursements;
capitation funds
Implement hea
premium subsidy lth sector refor
m
taxes

Consumers/ services Providers/

households: dispensers:
economic & Public and Adopt provinc
social groups user charges private e-wide invest
ment planning
for health

Outline
HealthGov August 2010 17
 Local officials as the stewards
of the health sector

Stewardship = the careful and

responsible management of
something entrusted to one’s care

HealthGov August 2010 18

Strengthening Local Governance for Health
through evidence-based participatory local decision making process

Management
information system
(field services,
hospital, income & PIPH
expenditures, local • MIPH
surveys, program • ILHZ
reviews, M&E) • CSR plan
• Nutrition plan
• HIV/AIDS plan Health
LGU decision • PHIC plan Policies sector
making: • Facility Budgets performance
(LHB, LCE, rationalization System and
Sanggunian) plan s outcomes
• Systems Service
(logistics, s
Stakeholder procurement,
participation financing, quality
improvements,
• LGU officials etc.)
• Public/private
providers
• NGOs/CSOs

HealthGov August 2010 19

 Strengthening Local Governance for Health
through evidence-based participatory local decision making process

Management
information system
DOH, (field services,
CHD, hospital, income & PIPH
PHIC, expenditures, local • MIPH
partners surveys, program • ILHZ
reviews, M&E) • CSR plan
• Nutrition plan
• HIV/AIDS plan Health
LGU decision • PHIC plan Policies sector
making: • Facility Budgets performance
(LHB, LCE, rationalization System and
LGU Sanggunian) s outcomes
plan
officials • Systems Service
(logistics, s
Stakeholder procurement,
participation financing,
quality
• LGU officials improvements,
• Public/private
etc.)
providers
• NGOs/CSOs

HealthGov August 2010 20

Achieving ..
 Health Sector Reform
• An implementation framework that
consists of strategies, organizational and
policy changes, and public investments
needed to improve the way health care is
delivered, regulated, and financed
• It has four instruments: financing,
regulation, service delivery, and
governance

HealthGov August 2010 21

 Health Sector Reform
Reform instruments:
Goals:
1. Financing (more, better and
sustained financing for
• Better health
health)
outcomes
2. Regulation (assured quality
• Equitable health care
and affordability of health
financing
goods/services)
• More responsive
3. Service delivery (ensured
health system
access and availability of
essential basic health
packages)
4. Governance (improved health
system performance)

HealthGov August 2010 Achieving… 22

 Investment Plan for Health
(PIPH/MIPH/CIPH)
• The IPH provides the framework for the development of
public investment plans in health covering utilization,
mobilization and rationalization of the LGU’s resources,
capabilities, and stronger institutions to attain health
system goals.
• A plan prepared and adopted by LGUs within a province
and agreed to be supported by DOH and its
development partners in health, that defines local health
systems improvements to be attained in the province
through the proposed application of public investments
jointly funded by LGUs, DOH and development partners.

HealthGov August 2010 23

PIPH: Key Features and Steps

HealthGov August 2010 24

 Key features of Province-Wide
Investment Plan for Health (PIPH)
• Health sector perspective
• Planning using a health sector/F1 frame
• Province-wide* with component LGUs and ILHZ
• Medium-term strategic time frame
• Well-defined critical interventions and targets
• Sound financial plan
• Implementation through performance-driven
agreements
*Region-wide in the case of ARMM Achieving ..
Source: DOH Guidelines in PIPH Development, 2007
HealthGov August 2010 25
 Where are you now?
• Provinces have completed their PIPH
• Municipalities/Cities have their MIPH
• Preparation of the Annual Investment
Plans for Health (AOP) for 2011
• Completion of the Health Facility
Rationalization Plans as a subplan of the
PIPH
• Utilization of the MNCHN grants (2008,
2009, 2010)
HealthGov August 2010 26
Finding the Money to Finance
Health Programs
Reality Check at the LGU Level
1. PIPH/MIPH
increase health
budget
2. IRA will be too
crowded
Local Budget
3. MHOs/PHO will
need assistance
4. Lots of advocacies
will be required
Regular
PIPH Budget 5. The LGC provides
Health
opportunities to
Budget generate
sustainable
resources
6. Hard decisions
have to be made
by the LGU
HealthGov August 2010 28
 Health Stakeholders
Office Role
LGU Health Office Proponent and Main Driver
Governor / Mayor Issuance of Mandate and Authority
to Implement
Sangguniang Provision of Supportive Ordinances
Planning and Development Office Integration to the Plan and Overall
Development Strategy
Treasury Raising of Revenues/Cashiering
Budget Office Preparation of Funding Allocation
Accountant’s Office Identify fund support/ Rendering of
Financial Reports
General Service Office Administration of Procurement and
Distribution Systems
HealthGov August 2010 29
 Approaches to Sustainable
Financing
Track 1-- Develop financing sources for
Health
– Improve the collection of local taxes, fees and
charges
– Create new sources for health
– Access grants and other forms of assistance
– Develop facilities into an economic enterprise
– Take advantage of private sector support

HealthGov August 2010 30

 Sustainable Local Funds
• Central Transfers
– Internal Revenue Allotment
– Others (share from wealth, etc…)
• Internally Sourced Revenues
– Local Taxes
– Regulatory and Fees
– Charges
– Economic Enterprise
– Other Taxes, Fees and Charges (sec 186)
• Philhealth Capitation & Reimbursements

HealthGov August 2010 31

INTERNAL REVENUE ALLOTMENT
A. Base Gross Internal Revenue Collections based
on third preceding Calendar Year

B. Level
1992 = 30%

1993 = 35%
1994 & succeeding
years = 40%

C. LGU Allocation

Provinces Cities Municipalities Barangays

23% 23% 34% 20%

D. Intra LGU Allocation

(1) Total BRGY.SHARE – BRGYs. with 100
inhabitants = NET Brgy.Share
50% Population (NSO)
(2) Net Brgy.Share
25% Land Area (LMB)
1992 1993 1994 forward
25% Equal Sharing
40% Pop. 50% Pop. 60% Pop.
60% E.S. 50% E.S 40% E.S.

HealthGov August 2010 32

 Local Taxes
Provinces
Real Property Amusement Places Transfer of Real Property
Professionals Sand, Gravel & Quarry Delivery Vans & Trucks
Franchise Printing & Publication Idle Lands

Municipalities
Business Taxes Community Tax
Cities
All taxes which can be imposed by the Provinces and Municipalities
combined and the rates can be 50% higher

Note: 1) Tax Rates can be increased once every five (5) years at the rates not exceeding 10%.
2) Section 186 of the LGU allow LGUs to impose other taxes, fees and charges under certain
limitations HealthGov August 2010 33
 Fees and Charges
Building Permit Agricultural Mayors Permit Burial Permit Fishing Permit Market
Machinery
Electrical permit Other Heavy Mining Claims Reg. of Large Hawkers Hospital fees
Equipment Cattle
Mechanical Carts and Parades Parking Mineral Lands Health
Permit Sledge Services
Plumbing Cockpits Pedicab Tax Clearance Video Tape Terminal Fees
Permit Operations Rental
Demolition Special Tricycle Civil Registry Secretary’s Traffic
Permit Cockfighting Franchising Fees Certification Violations
Sanitary Gaffers and Weights and Exhumation of Tuition Fees for Towing
Permit Cockpit Pers. Measures Cadaver LGU Colleges Charges
Fire Filmmaking Court Fees Firearms Garbage Fees Water and
Certification Permit Power
Annual Bicycle Permit Sheriff’s Fees Police Overnight P. Slaughterhouse
Inspection Clearance Fees & Corrals
Caretela and Boats Permit Fiscal’s Holding of Toll Fees & Bus Terminals
Calesa Clearance Benefits Charges
Storage of Marriage Impounding of Fee on Physical Exam Rental of
Flammable Permit & Stray Animals Occupation or &Medical Facilities
Materials Solemnization Calling Certification

HealthGov August 2010 34

 Revenue Reforms
• Coverage

• Assessment

• Collection
HealthGov August 2010 35
 Expanding Coverage
• Updating Local Revenue Codes
• General Revision of Real Property Assmt
• Explore Section 186
• Revalidate Exemptions
• Investment Incentives Code
• Fiscal Cadastre/GIS Mapping
• Special Levies and Variants

HealthGov August 2010 36

Improving Assessment Methods
• Examination of Books of Accounts
• Technical Trainings
• Use Presumptive Income Levels
• Market Based Valuation in RPT

HealthGov August 2010 37

 Improving Collection
• Tax Information
• Issuance of Demand Letters
• Field Collections
• Enforcement of Civil & Adm. Remedies
• One Stop Shops
• Billing Through Barangays
• Computerization

HealthGov August 2010 38

 Support of MHO/PHO to Revenue
Collections
MHO/PHO can be actively involved in
supporting revenue collections.
• User fees for cost recovery
• Strict enforcement of health fees
• Requiring CTC to those seeking health
care in RHUs, Public Hospitals

HealthGov August 2010 39

 Earmarking Funds for Health
• Budgetary
• Share from Proceeds of Collection of
Taxes and Fee
• Retention of Income (user fees) from
Operations of Health Facilities
• Convert Health Facilities to Economic
Enterprises

Note: LGUs may need to pass a specific ordinance allocating share of the
proceeds to health and putting the proceeds to a special account
under the general fund

HealthGov August 2010 40

 External Support
• Grants
– NGAs
– Donors
– Other Sources
• Borrowings
– Internal (GFIs, PFIs, MDFO, Bond Float)
– External
• Public-Private Partnership
HealthGov August 2010 41
 Grant Assistance (NG)
• DOH (wide range of health support in cash and kind
through CHDs)
– Regular assistance (vaccines, drugs, medicines and medical
supplies etc…)
– MNCHN, FP and other forms
– Technical Assistance
• Philhealth
– Capitation fund for enrolment of indigents in the sponsored
programs
– Reimbursements of health facilities for the conduct of benefit
packages

HealthGov August 2010 42

 Grant Assistance (Donors)
• Foreign (USAID, EU, AusAID)
– Technical assistance (e.g. CSR; advocacy and
promotion; capability building of providers; identification
of the poor; health systems development ; public
finance management; monitoring and evaluation; etc)
– Commodity support
• Charitable Institutions (PCSO)
• Congressional Funds
– Premium payment of families to Philhealth sponsored
programs
– Other grant support
• Corporations, NGOs and Private Individuals
HealthGov August 2010 43
Critical Steps for External Support
• Knowledge on the coverage and rules of
assistance
• Proposal/applications
• Approval
• Written instrument
• Delivery report/Impact assessment
• Liquidation of Funds

HealthGov August 2010 44

 Borrowings
• LGUs can borrow funds from any of the
following sources:
– Government Financial Institutions(GFIs)
– Private Financial Institutions (PFIs)
– Municipal Development Fund Office (MDFO)
– Other LGUs
• Maximum debt service shall not exceed
20% of annual regular income

HealthGov August 2010 45

 MDFO-Facilities
Windows Eligible LGUs Focus Terms Repayment

HSRA Provinces Health 11% With grant

depending on
income class
PROLEND Provinces Policy Fixed interest Max of P200M
Development, based on 10 year
Infrastructure T-bond
MDGF Prov, Cities, Support to MDG 7.5%-8.0% fixed Max of 10years
Municipalities Goals interest

MDFP Prov, Cities, Urban Infra 9% fixed 15 years with 3 yrs

Municipalities grace period on
the principal
MBUSSP Prov, Cities, Urban Services 9% fixed 15 years with
Municipalities grace period of
principal
DMAF Prov, Cities, Climate Change 0%-5% 3 yrs for category
Municipalities Adaptation 1; Other max 15
years with grace
period
PWRF Prov, Cities, Water Supply, Variable rate Max of 20 years
Municipalities Sanitation

PTACF Prov, Cities, Project 0%-1.5% Full payment

Municipalities Preparation and during the term of
Contingency LCE
Other Windows Prov, Cities, To be prepared
HealthGov August 2010 46
Municipalities
 Public-Private Partnership
Arrangements
• BOT and its Variations
• Joint Venture
• Service Contract
• Management Contracts
• Lease or “Affermage”
• Concession Arrangements
• Combinations
HealthGov August 2010 47
 Approaches to Sustainable
Financing
Track 2 – Lessen expenses and optimize
effectiveness of the health budget
– Focused Service Targets
– Enhance Efficiency of Operations
– Additional Support from lumps sums and
other departments’ budgets
– Results oriented allocation

HealthGov August 2010 48

 Location of the LGU Funds
Internal (Province and Component LGUs)
• Regular Budget
• Lump Sum Appropriations
• Supplemental
External (Assistance passing the LGU)
• DOH/NGAs Support
• Projects
• Direct Assistance (e.g.PDAF, private sector)

HealthGov August 2010 49

 Focused Costing
• Service Targetting – (e.g. population vs
poor only; clear indicators of indigents)
• Policy Initiatives (e.g. requiring tricycle
drivers to enroll to philhealth as a requisite
for renewal of franchise)
• Cost Efficiency in Operations (e.g. Tie-up
instead of outright purchases to support
accreditation of facilities; time sharing or
job orders instead of plantilla positions)
HealthGov August 2010 50
 Lump Sums and Parallel
Appropriations
• 20% Development Fund
• 5% Gender and Development Fund
• 5% Calamity Fund
• 10% Sangguniang Kabataan
• RPT Special Education Fund
• 2% RPT Discretionary Fund
• Funds for the Elderly
• Others
HealthGov August 2010 51
 Justifying for Lump Sum
While the slant is health, charging from the lump sums will
be possible if the focus for its creation can be retained
such as the following:
• GAD – purchase of FP commodities; FP Promotion
gender sensitive activities
• SK – Adolescent and Youth Health Programs on FP; Vit
A; feeding program
• SEF – School Based IEC activities

However, charging from lump sums will always require

negotiations

HealthGov August 2010 52

Support from other Departments
The other departments may have health
oriented programs which the MHO/PHO
can support:
– Traffic enforcement and engineering
– Potable water supply
– Sanitation and cleanliness drives
– Support to healthy lifestyle

Outline
HealthGov August 2010 53
Conclusion

HealthGov August 2010 54

Key ideas for local policy action
1. Health as a component of well-being is valued
in its own right. (People have basic right to
health and government has the responsibility
to make essential health services available.)
2. Health as an asset generates wealth. Ill health
contributes to income poverty. (Additional
rationale for policy to invest in health.)
3. The poor are more handicapped by poor
health. (Policies to better target government
subsidies towards the poor.)
HealthGov August 2010 55
 Key ideas for local policy action
4. Large unforeseen household out-of-pocket payments
for health care reduces consumption of other goods
and services that promote well-being. (Policies to
provide financial protection to the poor.)
5. Individual interventions implemented in isolation will not
work, it might even do more harm. (Implement an
integrated package of mutually supporting interventions
– health sector reform.)
6. Health sector reform is a complex undertaking; it
requires participatory decision-making for it to succeed.
(Strengthen stakeholder participation in local decision
making.)
Outline
HealthGov August 2010 56
Health is not valued until sickness
comes
– Dr. Thomas Fuller

He who has health, has hope.

And he who has hope, has
everything
- Arabian Proverb

HealthGov August 2010 57

Thank You
and
Mabuhay

HealthGov August 2010 58