THE PETILLA HEALTH INITIATIVES:

LEYTE HOSPITAL INCENTIVE SCHEME

A RAPID APPRAISAL REPORT

FOREWORD

The idea of looking out for good practices among local government units in providing
health care and looking into them through a rapid appraisal stems from an advocacy by
the Action for Economic Reform that saw the passage of Republic Act No. 10351,
otherwise known as the Sin Tax Law.
The law has made available to the Philippine Health Insurance Corp. (PhilHealth),
through the Department of Health, some P35 billion for 2014 to fund the insurance
coverage of almost 15 million families, identified as the poorest among Filipinos.
When these families come to avail themselves of the benefits due them as members, they
go to health facilities owned by their respective local government units. Provinces and
cities own hospitals; cities own city health centers; municipalities own rural health units.
PhilHealth pays for the services provided.
Good practices are those that find ways to deliver the services better and optimize the
available resources, especially PhilHealth resources. And these ways are worth
replicating, replicable and sustainable.
The Leyte Hospital Incentive Scheme came to our attention through the web after it has
received an award for innovation. It was worth knowing more deeply. Hence AER
commissioned the conduct of a rapid appraisal that aimed to know the conditions that
prompted the scheme, the hurdles it faced along the way, the solutions it came up with,
and the results from the initiative. If other local government units were to do the scheme
in their area, what key steps would they have to take?
The following report presents the appraisals findings. Mr. Mario M. Galang, a local
government specialist and Senior Fellow of the AER, conducted appraisal activities and
wrote the report. The Australian Agency for International Development (AusAID),
through The Asia Foundation (TAF), provided support.
The analysis and opinion expressed in the report are those of the consultants, and do
not necessarily reflect the views of AER, AusAID or TAF.
AER
July 2014

THE PETILLA HEALTH INITIATIVES:

LEYTE HOSPITAL INCENTIVE SCHEME
A RAPID APPRAISAL REPORT

The Petilla health initiatives refer to those activities initiated by Hon. Carlos Jericho L.
Petilla when he was the governor of Leyte from June 2004 up to November 2012
activities that hoped to help in improving the health care system in the province. Two of
these are known for the awards that each won for meritorious innovation: the Mother
Bles Birthing Clinics and the Hospital Incentive Scheme.
The incentive scheme is the easy first choice for this appraisal because it demonstrates
how a local government unit can tap the resources of the Philippine Health Insurance
Corporation or PhilHealth to fund an incentive program for hospitals. It shows how and
why PhilHealth is wealth. And it shows its a no-sweat how.
This report gathers the result of activities held mostly in June 2014 aiming to get a closer
look into the scheme.

The Need
It is not a hospital in the pink of health. The building is decrepit, bearing the marks of
neglect. Several rooms offer a clear view from the outside and enough space for rusty
steel beds that are hardly usable for lack of better beddings. Vinyl tiles are peeling off
the floors. And there is a makeshift kitchen black with soot, looking alien to the concept
of sanitation.
These are what the photos show of the Leyte Provincial Hospital in 2004 some months
after citizen Carlos Jericho L. Petilla took his oath as the newly elected governor of the
province of Leyte.
Service was poor: so poor that those who enjoyed the luxury of choice chose to avoid it.
Only the indigents sought its services. There were 5,867 of them in 2003, which even
went down to 5,531 in 2004. For Gov. Petilla, here precisely lay the challenge, and it was
a no mean one. Good health is a service that government can and must deliver.
Into his second month in office, he created the Provincial Adhoc Committee on Health to
look more closely into the issue. The composition included the chiefs of hospital, nurses,

and some administrative (non-doctor) staff. What the committee found out over time
amounted to a proposition that was as simple as it was obvious - no physician, no
hospital. In the words of the former governor: No hospital can operate without good
doctors.
Back then, the provincial hospital was attended by ten physicians. They were hardly
enough for giving quality patient care. Making matters worse were physicians living up
to the words of an American sociologist who said: The physician is not so much part of
the hospital as the hospital is part (and only one part) of the physicians practice. The
Leyte physicians were straddling both the provincial and private hospitals, fired less by
their zeal for pursuing a Hippocratic mission than by their desire to earn more.
The committee reported many, many cases of physicians charging indigent patients
for their services, ranging from 5 to 25 thousand pesos, depending on the case. The fees
were even unconscionably asked in advance, following an unwritten rule, pay before
you lie down.
Physicians on duty, when they were not charging their patients, were not attending to
them at all. You would need to organize a search mission to locate their whereabouts.
The committee counted a good number of cases where midwives by themselves assisted
mothers in childbirth, even when doctors were around, who should be doing the job
instead.
For bringing out these and similar cases of disservice into the open, the ad hoc
committee and the governor himself had gained not a few haters and bashers. Ad hoc
had sown fear and had come to reap a fitting tribute by way of an apt title, hadlok
committee. Hadlok being Visayan for fearsome.
Fear tends to preempt and prevent; but it tends also to aggravate. Fear had kept the
physicians from doing business as usual, without necessarily addressing the question of
why they were doing it in the first place. The local job market, however, is a sellers
market for physicians. The pay is fixed and low; although the job is secured as a career
choice, its oftentimes a dead end one. In other words, doctors are not exactly tripping
over each other to get the job. What this situation implied was articulated in jest by Gov.
Petilla in an interview for this appraisal, through a fictional dialogue:
Governor: [Dresses down a physician] Been getting reports youre charging
patients again.
Physician: [Arrogantly shoots back] OK, you want me to leave?
Governor: [Meekly] Hindi naman joke lang. Just kidding.

The hospital wanted to get good doctors, it wanted to keep them as full-time employees.
Waving the stick wont do the job. But good pay may work wonders. The Petilla health
initiative rested its success in opting to give good pay as incentive to good behavior and
good performance.

The Challenge
At least two sets of constraints presented themselves as challenges to the Petilla health
initiative, namely: policy and resource. Policy constraints are provisions of applicable
laws that limit the scope of your initiative to what they allow, which may not be readily
changed just to accommodate your reform needs. Resource constraints are those that
make you ask that one crucial question: where do I get the money for all this?

Policy
By law (i.e., Republic Act No. 6758, known to most as the salary standardization law),
all positions in government, national and local, are each assigned a title and a
corresponding salary grade. A prescribed salary schedule, in turn, assigns a fixed
amount of monthly salary for each and every grade in eight-step increments. You get
promoted and a pay hike in two basic ways: you move up to the next higher Salary
Grade or you move sideways to the next higher step within the same Salary Grade.
In the scheme of things, the highest you can become is President of the Republic of the
Philippines, Salary Grade 33. When the law took effect on July 1, 1989, the assigned
monthly salary for that Grade was P25,000. A joint resolution passed by both Houses of
the Congress in June 2009 authorized the modification of the pay and position
classification system, including the salary schedule. Salary Grade 33 has been given a
raise and assigned a monthly salary of P120,000. Good enough perhaps for the next 20
years.
The highest paid government official in a First Class province carries the title Provincial
Governor, Salary Grade 30, who was to receive in 1989 a monthly salary of P18,975. By
virtue of the same joint resolution, the position has been assigned a Step 1 monthly
salary of P78,946, or up to P85,230 under Step 8.
The sample monthly rates cited above may give an idea on how high a salary one can
expect to get, given the rates that the highest paid officials are allowed to receive, at least
officially.

With this law apparently in mind, the Local Government Code of 1991 stressed the point
further by providing (in Sec. 325) that: No official or employee shall be entitled to a
salary rate higher than the maximum fixed for his position or other positions of
equivalent rank by applicable laws or rules and regulations issued thereunder;
How do you surmount this?
Even without the monthly rates fixed by law, one may invoke the Local Government
Code to keep local governments from going into a salary spending spree. The right
provision is better known as the budgetary limitation on personal services, which says
(in Sec. 325): The total appropriations, whether annual or supplemental, for personal
services of a local government unit for one (1) fiscal year shall not exceed forty-five
percent (45%) in the case of first to third class provinces, cities, and municipalities, and
fifty-five percent (55%) in the case of fourth class or lower, of the total annual income
from regular sources realized in the next preceding fiscal year.
The key variables are personal services (PS) and income from regular sources (IRS).
If you want your PS to grow without breaching the 45% barrier, your IRS should also
grow in proportion which, as LGUs may attest to, is easier said than done.
The data on this for Leyte were not accessible as of this writing, but online sources
yielded figures that are illustrative enough. For budget year 2012, personal services
amounted to P565,596,300 accounting for 40.78% of the total LGU budget. For budget
year 2013, the amount grew to P668,331,999 or, 42.54% of the total LGU budget.
If the figures look way lower than the cap of 45%, it s because the PS is compared to
the total LGU budget, which is appropriate for a budget message to say, instead of
the total annual income from regular sources realized in the next preceding fiscal year.
The income from regular sources is definitely smaller than the total LGU budget, in
relation to which the PS ratio would grow bigger.
So, how do you raise the pay of doctors and other hospital staff without increasing the
expenditure for personal services beyond the limits?
All LGUs invariably adhere to the one-fund concept as a matter of fiscal policy. After
all, that is what the Local Government Code requires (in Sec. 308), like this: Every local
government unit shall maintain a General Fund which shall be used to account for such
monies and resources as may be received by and disbursed from the local treasury. The
General Fund shall consist of monies and resources of the local government which are

available for the payment of expenditures, obligations or purposes not specifically

declared by law as accruing and chargeable to, or payable from, any other fund.
Accordingly, the Commission on Audit requires that: Separate fund accounting shall be
done only when specifically required by law or by a donor agency or when otherwise
necessitated by circumstances subject to prior approval of the Commission. (Chapter 2,
Sec. 04 NGAS Vol. 1)
Assuming money becomes available to fund the pay increases of doctors and medical
staff, how do you make sure it is taken up as such and spent for the purpose for which it
was raised? How do you keep it from getting dropped into the general fund bucket and
lose its purpose as it co-mingles with other funds?
Resource
When hospitals in the province eat up as much as one-third of the total LGU budget, its
almost obscene to even think of spending more to upgrade the income of physicians and
other hospital staff. For where will you get the money?
Leyte reported to the Bureau of Local Government Finance a total income for 2003 of
over P784 million; for 2004, a little below P755 million. In 2003, total subsidy for the 12
hospitals in Leyte amounted to more than P220 million, which increased slightly to P223
million in 2004: hospital subsidy was 28% and around 30% of reported income for the
respective years. As Gov. Petilla put it, the entire provincial government was
hemorrhaging from hospital subsidy.
The money for hospital incentives could come from anywhere but the Capitol.
Untold in this account of the Petilla initiative is the story of how the provincial hospital
rebuilt its capability in physical terms building, equipment and all and become the
hospital that we had seen before Yolanda struck. The rebuilding process is assumed to
be running quietly on the side, unnoticed, but giving premise to the narrative that
follows.

The Solution
In an interview for this appraisal in his office as Secretary of the Department of Energy,
the former governor elaborated on the one idea that undergirded his approach to
running hospitals, thus:

I am for privatization, he said, except when it comes to provincial hospitals: I think

they should remain in the hands of government. He thinks the moment you turn a
hospital into an enterprise, it would strive to be self-sustaining; it would start thinking
and behaving like a private hospital. It would get its drive from the profit motive, and
hence avoid attending to all non-paying poor patients. Part of that costly burden would
have to fall on the shoulder of private hospitals. If so, thats also the moment we will all
fail. In due time, you would find the system collapsing before you.
This inspires his mantra: The secret of success of a private hospital is a government
hospital nearby.
Government hospitals should not compete with private hospitals. They should just try
to find out instead, ano ba ang kulang nila? What do private hospitals lack? When you put
up a hospital, you define the kind of hospital that you want and its role. You look at
your clientele. Your clientele is the general population. The general population is poor.
Up to a certain extent these are the kind of patients, the kind of illnesses that you should
cover in the government hospital.
He is not against subsidizing public hospitals, excluding waste. Although earning profit
is out of the question, earning income is not. Its good to raise money, bad to raise cost.
Charge free service to poor patients; charge fee-for-service to those who can afford it.
You need not stretch the logic further to find a source of fund that lies in wait. The
patient.
Regular Service Fees
The first Sangguniang Panlalawigan measure that Gov. Petilla signed into an ordinance in
March 2005 adopts standard rates of fees/charges on services rendered by the different
hospitals under/operated by the Provincial Government of Leyte.
Section 5 exempts an indigent patient who is resident of the Province of Leyte with no
PhilHealth insurance coverage, and who has no capacity to pay, from paying the fees.
On the other hand, the prescribed rates for Room and Board Per Day seem to
anticipate a market of non-indigent patients who can pay the bill. The hospitals, for
example, may offer semi-private room with aircon for P500 a day and a private room
with aircon for P750 a day.

After this fact, the combined income of all 14 hospitals in Leyte (Table 1) grew
dramatically by around P17 million, or 62%, from over P10 million in 2004 to over P27
million in 2005.
Five years later, in December 2011, new rates were again prescribed for a reason. Costs
were going high. To maximize insurance claims, hospital rates need to match the
allowable rates adjusted by PhilHealth earlier on. New diagnostic, laboratory, surgical
and other services had been added to the menu, and fees had to be assigned to them.
An ex-post indicator of change in terms of hospital income is shown again in Table 1.
Combined income grew by a high of about P28 million, from over P90 million in 2011 to
over P118 million in 2012.
Table 1. Income of 14 Leyte Hospitals, 2003 -2013
Year

Combined
Income of 14
Hospitals (P)

Amount
Increase
(Decrease)

% Increase
(Decrease)

2003

7,285,060

2004

10,361,726

3,076,666

30%

2005

27,213,961

16,852,235

62%

2006

35,217,069

8,003,108

23%

2007

41,311,263

6,094,194

15%

2008

49,742,482

8,431,219

17%

2009

56,561,880

6,819,398

12%

2010

75,687,040

19,125,160

25%

2011

90,418,415

14,731,375

16%

2012

118,380,756

27,962,341

24%

2013

149,938,980

31,558,224

21%

LGUs normally use the collected regular service fees in either of two ways: 1) put the
monies straight into the local coffers as part of the General Fund, in compliance with the
one-fund rule, and spend them according to the usual process; or 2) if the hospital
operates as an economic enterprise, it may retain the collected fees and use them to pay
for the cost of improvement, repair and other related expenses of the economic
enterprise and for the return of the advances or loans made therefor, if any before
any excess accrues to the General Fund (LGC, Sec. 313).
Leyte chose to explore a path of its own. A part of the monies go to the General Fund
and a part is retained by the hospital, where the parts are moving following a formula.
A provincial hospital committee, reporting directly to the governor, agrees every year on

a benchmark amount that varies across the hospitals. If the gross income exceeds the
benchmark, the hospital and the Capitol splits the difference between them, 50-50. The
bigger the gross, the bigger the difference, the bigger the share.
The hospitals 50%% share is earmarked as follows:
-

30% maintenance and other operating expenses

30% capital outlay
40% employees share, distributed as follows
o 80% non-medical hospital staff
o 20% hospital doctors

Actual figures for Leyte Provincial Hospital covering the years from 2005 to 2013 are
shown in Table 2 to illustrate the sharing scheme.
Table 2. Leyte Provincial Hospital Income Distribution (in PhP), 2005-2013

Year

Gross
Income

Net Income*

50%
Hospital
Share

30%
MOOE

30%
Capital
Outlay

40%
Employee
Share

80% Non-
med Staff

20%
Doctors

2005

3,317,741

2,193,298

1,096,649

328,995

328,995

438,660

350,928

87,732

2006

5,533,523

4,409,080

2,204,540

661,362

661,362

881,816

705,453

176,363

2007

8,270,611

7,146,168

3,573,084

1,071,925

1,071,925

1,429,234

1,143,387

285,847

2008

11,176,828

9,939,941

4,969,971

1,490,991

1,490,991

1,987,988

1,590,391

397,598

2009

13,085,089

11,848,202

5,924,101

1,777,230

1,777,230

2,369,640

1,895,712

473,928

2010

16,662,422

15,425,535

7,712,768

2,313,830

2,313,830

3,085,107

2,468,086

617,021

2011

19,981,727

18,744,840

9,372,420

2,811,726

2,811,726

3,748,968

2,999,174

749,794

2012

25,066,334

18,803,104

9,401,552

2,820,466

2,820,466

3,760,621

3,008,497

752,124

2013

29,512,448

23,249,218

11,624,609

3,487,383

3,487,383

4,649,844

3,719,875

929,969

*Gross income Less Benchmark

Benchmarks:

2005-2007

1,124,443

2008-2011

1,236,887

2012

6,263,230

There are some gray areas in this scheme that this appraisal has sought to clarify but
failed for lack of time and access to LGU information. For example: a) Can a mere
ordinance allow hospitals to keep or retain a portion of their income in the manner of an
economic enterprise? b) How is the retained income accounted for or taken up in the
books?

10

The scheme moves in paradoxical ways. It wants to enjoy the advantages allowed by
law for economic enterprises, but it resists the idea of turning the hospital into an
economic enterprise. It wants to keep a part of the income to support MOOE, Capital
Outlay and Personal Services expenditures. And yet the Local Government Code has
this need exactly in mind for providing thus (in Sec. 313):
Profits or income derived from the operation of public utilities and other
economic enterprises, after deduction for the cost of improvement, repair and
other related expenses of the public utility or economic enterprise concerned,
shall first be applied for the return of the advances or loans made therefor. Any
excess shall form part of the general fund of the local government unit
concerned.
To enable the distribution of the income share of hospital, the scheme needs the
sangguniang panlalawigan, by virtue of its power of the purse, to approve a
supplemental budget every so often. This is done away with in an economic enterprise.
Another downside of the scheme is in its implication on the limitations on personal
services. Unlike in an economic enterprise, the incentives distributed to hospital staff
shall be included in the annual budget and in the personal services cap computation.
There must be another better way of giving incentives aside from this.
Special Service Fees
In December 2009, Gov. Petilla issued an executive order (No. 021, s. 2009) allowing the
collection of special service fees particularly from non-indigent patients who desire to
avail [themselves] of special service from any physician, medical specialists or
consultants in any hospital in the province.
Five months later, the Sangguniang Panlalawigan complemented, in effect, the order by
passing an ordinance (No. 2010-01)governing the disposition of cash donations to
provincial government hospitals. The donations are meant to fund a pay-forperformance scheme chiefly among hospital physicians and augment their income as
well.
One notices here a double oversight. Nothing in the EO makes reference to special
service fee as cash donations (although key informants from the Capitol confirm thats
actually the case). The ordinance, on the other, while apparently complementing the EO,
uses cash donations as its operative term, and makes reference neither to the EO nor
to special service fee.

11

In any case, the ordinance authorizes the governor to grant incentives to the attending
physician, charged exclusively against the special account covering all donations. Cash
donations are distributed in this manner:
- 70% Attending physician
- 10% Retained by Capitol
- 20% Support staff, distributed as follows:
50% Assisting the physician/OR-DR nurses
30% Chief Nurse; AO; monitoring; billing; pharmacist
20% Chief of Hospital/Chief of Clinics
Patients availing themselves of special service take the following steps:
1. Patient tells her doctor shes availing herself of special service; the doctor refers
her to a front-line staff;
2. Front-line staff explains to patient the purpose of the special service scheme,
assesses patients ability to pay; and confirms patients willingness to sign the
consent form and give donation of the amount indicated;
3. Patient signs consent form indicating her doctor of choice; the form states
explicitly that the donation is made over and above of [sic] the hospital bills.
4. Doctor signs Special Donation (charge) Slip to serve as record as to whose
account the donation is made.
All cash donations are received by the cashier (not by the attending physician) and duly
acknowledged with an official receipt. To what local fund they accrue has not been
clearly established. One scenario is that they accrue to the general fund, but taken up
under a special account to ensure that the monies, although not kept in the cashiers
vault as such, are ring-fenced for the purpose for which they were donated. This is
highly likely because Provincial Ordinance No. 2010-01 created the special account.
The Commission on Audit requires, on the other hand, that: Grants and donations
coming from foreign funding institutions, other levels of government and private
institutions/individuals for specific projects/purpose shall accrue to the Trust Fund.
(NGAS-LGUs, Vol. I, Sec. 95) Trust funds, by definition, are specially dedicated funds
because they can only be used for the purpose for which they were created. But there are
no indications that the cash donation scheme opted to take up the collections under a
trust fund.

12

The incentives are sourced solely from the cash donations and released monthly. Total
donations received in 2013 amounted to P3.7 million. Table 3 illustrates the lowest and
highest share that certain medical specialists received from cash donations in August of
that year.
Table 3. Cash Donations: Highest and lowest share received by
physicians, August 2013 (PhP)
Physician

Lowest Share

Highest Share

Pediatrician

12,250

13,441

OB-GYNE

51,450

80,780

Surgeon

1,200

7,160

Int. Medicine

7,224

22,750

42,844

Anesthesiologist

Issue: Is it within the prescribed powers of the provincial governor to allow physicians,
medical specialists or consultants employed by the provincial government to collect
reasonable Special Service Fees particularly from non-indigent patients who desire to
avail [themselves] of special service from any of them? Or, is it part of the power of the
purse vested only in the sanggunian?
Professional Fees
Here is one case to show how and why PhilHealth is wealth.
Youre a card-bearing member of PhilHealth. You consult with your physician who
works in the provincial hospital, where both physician and hospital are PhilHealth
accredited. You are never billed for the professional service you received; the hospital
bills PhilHealth instead. When PhilHealth pays the facility, it is for the account of the
facility, not for the personal account of your physician. If a local government owns the
facility, payments normally go to its coffers (general fund) and get spent in whichever
way decided by the local officialdom. Except when the law says otherwise.
Well, the law says otherwise, like this: All payments for professional services rendered
by salaried public providers shall be allowed to be retained by the health facility in
which services are rendered and be pooled and distributed among health personnel.
(Sec. 34-A, RA 7875, as amended by RA 10606).
To tap this fully as an income source, the LGU would only need to attend to some key
variables that is, the number of PhilHealth members in its area and how many of them
avail themselves of its health care services.

13

The scheme sounds simple and straightforward. But Gov. Petilla heard a dissonance
between idea and reality before the old PhilHealth law was amended in 2013. Back then,
LGUs were required to pay for a portion of the premium contributions of sponsored
indigents, the demand side of health care provision. At the same time, they also happen
to be on its supply side for being the owners of health care facilities in the area. Buyer
and seller are in one and the same entity, splitting its personality. If you want focus in
your work, thats one state of mind you would least find it.
Focus is what you need if you have scarce resources. If I invest more on enrolling new
members with PhilHealth, with the hope of increasing the potential demand for health
services, how much less money would this leave me to improve my capacity to provide
the same services? How much is my potential gain from reimbursements against my
shell-outs for premium contributions and facility upkeep and upgrade?
Eight years were what Leyte needed before it took a more serious look at the law
provision. To enable its implementation in the province, Gov. Petilla issued an executive
order (No. 06, s. 2011) creating a trust fund to which will accrue PhilHealth payments for
professional fees and charges paid for use of facilities, and prescribing its distribution,
among other things. The EO was to take effect on January 1, 2012. A dramatic ex-post
indicator of its result is suggested in Table 4.
Table 4. Leyte families covered by PhilHealth, 2011 & 2012
Year

Total Families

PhilHealth Covered

Percent of Total

2011

360,000

112,000

31%

2012

360,000

250,000

69%

It was either a move that was too long in coming or an action too precocious to foresee
whats coming. When finally the new law (RA 10606) was enacted in 2013, the
responsibility for paying the premium contributions for sponsored, indigent members
was given to the Department of Health, thus leaving LGUs into doing the solo role of
providing health services to their clientele. Leyte was all set to mine PhilHealth of its
wealth.
Table 5 shows the amount of professional fees paid by PhilHealth to each of the Leyte
hospitals over a three-year period.

14

Table 5. Professional fees paid by PhilHealth and retained by Leyte hospitals, 2011-First Qtr 2014
Hospital
2011*
2012
2013 1st Qtr 2014
Leyte Provincial Hospital
16,408,917 17,076,863
6,920,681

Abuyog District Hospital
4,823,656 7,007,973
3,001,669

Western Leyte District Hospital
6,145,738 9,224,665
3,826,690

Burauen District Hospital
4,793,911 7,480,105
2,527,805

Northwestern Leyte District Hospital
667,951 1,757,123
547,241

Carigara District Hospital
2,392,087 5,010,537
1,764,442

Hilongos District Hospital
3,966,993 5,437,873
2,300,246

Ormoc District Hospital
8,759,034 17,689,809
5,528,908

Manuel B. Veloso Memorial Hospital
2,516,673 3,958,057
1,464,237

Tabango Community Hospital
1,105,577 1,435,619
515,002

Matalom Community Hospital

108,958 936,450
Villaba Community Hospital
354,200
Total 26,819,761 51,689,495 77,015,074
28,751,121
Amount Increase (Decrease)
24,869,734 25,325,579
% increase
48%
33%
* Breakdown not available as of appraisal

As the EO provides, the professional fee payments shall be distributed in this way:
20% Provincial PhilHealth Development Fund (disbursed through
the governors office)
80% Professional Fee shared as follows:
85% Attending MD with no assist; or
75% MD on surgical cases with assist
10% Assisting MD or nurse on surgical cases; and
DR nurse or midwife who assisted mothers in childbirth
5% Chief of Hospital, OIC or the like
10% All-Medical staff pool
Table 6 illustrates how the distribution translates into the monthly take of selected
salaried specialists.
Table 6. Professional fees: Highest and lowest share received by
physicians, August 2013 (PhP)
Physician
Lowest Share
Highest Share
Pediatrician

121,901

212,152

OB-GYNE

110,382

130,471

Surgeon

38,414

59,559

Int. Medicine

85,631

143,662

Anesthesiologist

57,348

88,213

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The ten physicians attending to patients in the Leyte Provincial Hospital have grown to
19 by 2012, with more doctors applying for a job. Service has tended to improve as
doctors vie for patients and work to keep them pleased the miracle of tying pay to
performance. Its life taking a full 360-degree turn.
PhilHealthLink
Professional fees grow in direct proportion to the number of PhilHealth members who
avail themselves of medical service from the hospital. So, how do you make this number
grow?
As the PhilHealth office in Region 8 found out, its simply a matter of knowing if the
patient is a member or not. Its an effort to make up for lapses in memory: members
who forgot if they are members or not, who lost their IDs, and the like.
PhilHealthLink is a discovery scheme involving at least three key players: the patient;
the point-of-service (POS) staff; and the PhilHealth-based Call Agent. Access to
PhilHealths Database is crucial. Discovery is a simple process with a few short steps.
1.
2.
3.
4.
5.
6.

Hospital admits patient for medical care.

POS staff verifies with patient if shes a PhilHealth member.
If the reply is not yes, POS staff asks her consent if she wants it checked.
If yes, POS staff asks her for some uniquely identifying information.
POS staff sends information (via SMS) to Call Agent.
Call Agent accesses and queries Database using information as search input;
sends back result to POS Staff.
7. POS staff informs patient of result and offers appropriate assistance for
availment, if found member; for membership application, if not a member.
The discovery rate is high, mostly among the poor. For the whole of Leyte in 2012, the
total number of admitted patients was placed at almost 50 thousand: total number of
inquiries made from out of this was less than 45 thousand, or 89%. The number of
discovered members was 31,422, or 70% of total inquiries.
In Leyte Provincial Hospital, for the second half of 2011: the total number of inquiries
was recorded at 3,437; discovery was 2,750, or 80% of total inquiries.

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PhilHealthLink builds a link in this sense. In another sense, PhilHealth and Capitol
agree to undertake the project jointly and share resources and responsibility, showing
the strength of a tie that binds.

The Results
The Petilla hospital incentive initiative aimed at raising the pay of physicians and other
staff in Leyte hospitals, with the end in view of getting and keeping the good ones and
improving service quality. The challenge calls for doing so without straining further the
local coffers, while bearing in mind the applicable laws on personnel. Table 7 organizes
some actual pay figures to illustrate what the initiative has achieved as of 2013.
The average monthly statutory pay of the 10 physicians is less than P40,000. The amount
represents their average pay before the incentives were put in place. After these were
put in place, the lowest average monthly pay grew to more than P150,000, while the
highest grew to more than P206,000.
Table 7. Highest and lowest total pay of selected Leyte government physicians, August 2013

Basic
Salary

Physician

Pediatrician

Lowest
Incentive Bonuses

Statutory Pay
ACA/PERA
Subsistence

35,685

Sub-
total

24-hr
Duty

Reg.
Fees
sharing

Sub-
total

Pay-for-Performance Incentives
Spl
Fees
Sharing

PhilHealth
Prof Fees

Sub-
total

Total
Monthly

3,000 38,685 5,000 4,183 9,183 11,250 121,901 133,151 181,019

OB-GYNE

38,633

3,000 41,633

5,000

4,183

9,183

51,450

Surgeon

35,685

3,000 38,685

5,000

4,183

9,183

1,200

38,414

39,614

Int. Medicine

37,620

3,000 40,620

5,000

4,183

9,183

7,224

85,631

92,855 142,658

Anesthesiologist

36,158

3,000 39,158

5,000

4,183

9,183

22,750

57,348

80,098 128,439

Physician

Pediatrician

Basic
Salary

Highest

Statutory Pay

Incentive Bonuses

ACA/PERA
Subsistence

Reg.
Fees
sharing

35,685

Sub-
total

24-hr
Duty

Sub-
total

110,382 161,832 212,648

87,482

Pay-for-Performance Incentives
Spl

Fees
PhilHealth
Sharing Prof Fees

Sub-
total

Total
Monthly

3,000 38,685 5,000 4,183 9,183 13,441 212,152 225,593 273,461

OB-GYNE

38,633

3,000 41,633

5,000

4,183

9,183

80,780

130,471 211,251 262,067

Surgeon

35,685

3,000 38,685

5,000

4,183

9,183

7,160

Int. Medicine

37,620

3,000 40,620

5,000

4,183

9,183

7,224

143,662 150,886 200,689

Anesthesiologist

36,158

3,000 39,158

5,000

4,183

9,183

42,844

88,213 131,057 179,398

59,559

66,719 114,587

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The single biggest contributor was PhilHealth payments for professional fees. Its lowest
average contribution was almost P83,000; its highest, less than P127,000. No other
incentive came close to these amounts. Special Service Fees augmented the lowest
monthly salary by more than P18,000; the highest by more than P30,000.
Thus told is a little story of success.

How-To Hint
The ideas are fairly familiar, or even regular: they are not of the type that would fetch
you a novel prize. What LGU doesnt know about user fee or fee-for-service? What
sanggunian doesnt know how to pass an ordinance charging service fees? Whats the big
deal about asking for cash donations? A trust fund for professional fees paid by
PhilHealth? Its in the law.
So, what sets Leyte apart from most, what makes it different? The former governor
quipped: We do it.
Above all, said Peter F. Drucker, innovation is work rather than genius: hard, focused,
purposeful work.

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