IN the House of Representatives, two lawmakers filed a bill against the privatization of government hospitals to ensure that health care services are affordable and accessible to Filipino people.
Reps. Rufus Rodriguez (2nd District, Cagayan de Oro City) and Maximo Rodriguez Jr. (Partylist, Abante Mindanao) say House Bill 3994, to be known as Government Hospitals’ Privatization Act, prohibits the Secretary of the Department of Health to privatize, sell or offer for sale all government hospitals.
The lawmakers reacted to reports that the National Orthopedic Hospitals in Quezon City and other government hospitals were being offered for “privatization” under the Public-Private Partnership Scheme of the government.
“While it is true that the government is experiencing difficulty in infusing the much needed funds to continually upgrade and acquire sophisticated and advanced medical equipment, it is a reality that majority of the people rely on these government hospitals for their medical and health needs,” Rodriguez said.
Rodriguez said the corresponding increase in medical costs would ensue once the privatization of government hospitals is pursued and the increase in cost of hospitalization will be an additional burden to the poor.
Are the Congressmen Rodriguezes right? Is their HB necessary to stop this government from making health care so expensive to be beyond the ordinary citizen’s means?
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According to Health Secretary Enrique Ona, in fact, all 72 Department of Health (DOH)-run hospitals in the country are candidates for the public-private partnership (PPP) program of the government.
“All of our DOH hospitals are candidates for PPP. But we have a lot of options how to do this. For example, we can subject to PPP major equipment, such as CT (computed tomography) scans and MRI (magnetic resonance imaging), and even our oncology centers,” Ona says.
He stressed that the health department’s recourse to PPP, a flagship program of the Aquino administration, was a broad strategy to modernize the country’s public hospitals.
There are 72 DOH-run hospitals and more than 700 district and provincial hospitals across the country.
The tertiary 700-bed Philippine Orthopedic Center (POC) will be renamed “Center for Bone and Joint Diseases, Trauma and Rehabilitation Medicine,” and the build-operate-and-transfer (BOT) project awarded to Megawide Construction Corp. and World Citi Inc.
“We want to modernize the Philippine Orthopedic Center. How much will it cost us? Probably at least P3 (billion) to 5 billion to have a modern hospital,” he said.
Ona said he foresaw the new POC under the PPP to be the most modern orthopedic hospital not only in the country but in the entire Southeast Asia.
“We have already studied this based on the experience of others. We have looked into all the gaps and difficulties,” Ona says.
In describing the modernization of the POC through PPP, Ona says the country would have a modern hospital essentially without the difficulty of spending or borrowing money for it.
Under the BOT arrangement between the DOH and the private companies making up the consortium that was awarded the PPP project, the consortium will design, build, finance, operate and maintain the facility for 25 years. At the end of the 25-year concession period, the hospital is returned to the DOH.
During the 25-year program, there will still be free services for the poor even as the modernized hospital makes its money from other patients as a return on their investment.
There is nothing to fear about the government’s plan. It will modernize our hospitals without forgetting its public services for everyone, including the destitute.
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Here is an explanation from Atty. Sherry Ann N. Austria, the Director of Policy Formulation, Evaluation, and Monitoring Service (PFEMS) of the PPP Center:
“The private sector involvement in the delivery of public goods or services makes PPP indisputably and confusingly similar to privatization. Despite this similarity, both concepts differ in various ways.
“The vital distinction between PPP and privatization relates to ownership of an infrastructure asset or facility. When a publicly-owned asset or facility is privatized, the ownership is permanently transferred to the private sector together with the concomitant attributes thereof like operation and control. This asset or facility is viewed as better managed or owned by the private sector. However, regulatory control remains with the government. In PPP, ownership is retained by the government save in cases of Build-Own-and-Operate and Rehabilitate-Own-and-Operate contractual arrangements. In privatization, the ultimate objective is to shift the responsibilities to the private sector. This is not the case of PPP projects. Government retains ownership of the projects as well as defines the extent of private sector’s participation in a PPP project.
“The government remains accountable to its citizenry for the provision of a particular service in a PPP project. In privatization, accountability to provide service is oftentimes transferred to the private sector while the public sector gets paid for selling its assets. In the case of PPP, the private sector gets paid for delivering an asset or facility.
“Another difference between PPP and privatization is on how risks are being allocated to both the government and private sector. In PPP, risks are assumed by the party that is best able to manage and assume the consequences of the risk involved. The same does not apply in a privatized asset because the private sector assumes all risks associated with the project.
“The distinction between PPP and privatization is quite explicit: ownership. In the case of the Modernization of the Philippine Orthopedic Center (POC), this is clearly and distinctly a PPP project. What this means is that the POC is and will always remain as a government-owned hospital. It will however be built and operated by a private company who will bring in its vast expertise and resources to make POC a more reliable and efficient government hospital.
“By undertaking its modernization plans through PPP, the iconic Philippine Orthopedic Center will now have a new lease on life– reenergized by the private sector’s capital and competencies. Government undertakes PPP projects to make sure that our people will get the best possible service it deserves from its government at the least cost to the Filipinos. “
01 April 2014
By Ducky Paredes
