Chapter 1

Introduction
Did you ever wonder why medical symbols is a snake on a stick with wings? This
image is very familiar in pharmaceutical packages and hospitals alike. This is actually
called a Caduceus, which is the staff of the Greek god Hermes, the messenger of the
Gods. The double snakes represent the concept of yin and yang, representing duality
and unification. He was also the patron for travelers, which is connected to role of
medicine because in the old days, doctors have to travel far in foot just to visit their
patients.
When you first hear about snakes, it does not seem suitable for healthcare, ill-fitting
to think about it, but this is actually an ancient emblem which became the symbol of
medical profession.
History and Background
Filipinos has always been relying on traditional way of medicine and healing even
before the pre-Spanish era, and it was widely used before modern medicine was
introduced which helped a number of people from their sicknesses. Even before
hospitals in the Philippines came along, the persistent use of traditional medicine by
healers or folk doctors are what most Filipinos rely on. After quite some time, because
of the yearly Manila-Acapulco Galleon Trade, medical supplies came pouring into the
Philippines wherein these supplies come mainly from Spain. Including a number of
physicians, surgeons and other pharmacists worked in the Philippines and trained
others as well in order to localize the use of medical personnel. The establishment of
hospitals came along by the Spaniard government including the Franciscan priests and
other lay government officials and built the first ever hospital in Cebu that was the San
Lazaro Hospital in 1965 until this was transferred to Manila for treating the wounded and
sick military persons. After hospitals, health and charity institutions were built as well.
The establishment of hospitals has constantly evolved and expanded around the

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country in order to meet the growing needs of the population and the citizens in a
constant basis.
The healthcare industry is becoming widespread since there are many becoming
health conscious and more corporations are building hospitals to cure patients and treat
illnesses which makes healthcare an expanding market here in the Philippines.
Hospitals are now having their own innovative ways of delivering services in different
places in the country, either public or private hospitals, to medical clinics, mobile clinics
and satellite clinics. The innovation of technology has played a very important part and
has created a huge impact in hospitals and other health care services in improving its
capabilities and providing advanced services to patients. In the Philippines, majority of
the government-owned hospitals and health centers are not fully equipped with the
latest and advanced facilities due to insufficient resources for health care. Private
hospitals and clinics acquire sophisticated technology, modern equipment and complex
health care services. It includes the most high-tech and innovative equipment and
facilities. Examples of that are the x-ray machines are no longer printed in film paper but
printed in a normal paper. As a result, it will reduce the expenses in paper consumption
of clinics and hospitals. The equipment and facilities used in private hospitals are mostly
computer operated. It makes various medical process and operations accurate and
viable leads to superior results.

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Chapter 2
Number of Players

Figure 1.1 - Number of Hospitals by type of ownership, by region 2011

Figure 1.1, shows that as mandated by the DOH or the Department of Health,
hospitals are required to secure a license to operate from the Bureau of Health Facilities
and Services or the BHFS. In the Philippines, licensing rate for private hospitals is at
95%, which is sustained since 2005. Comparing the licensing rate of government and
private hospitals, it can be inferred that public hospitals are more likely to secure a
license compared to private hospitals. Overall, there are 1,075 private hospitals in the
country.

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Market Share of the Selected Hospitals

Market Shares of Private General Hospitals (2011)

St Luke's Medical Center

15%
11%
64%

10%

(Medical Doctors Inc.) Makati

Medical Center
(Professional Services Inc.)
The Medical City
Others

Figure 1.2 Philippines Top 25,000 Corporations in Human Health and Social Work
Activities (2011)

Figure 1.2, shows the Market Shares of Private General Hospitals as of 2014.
The leading hospital is St Lukes Medical Center with a percentage of 15% and ranks
first in obtaining a revenue of PHP5, 198,025. Medical Doctors Inc. ranks second with a
percentage of 11% obtaining a revenue of PHP3,327,350 Professional Inc. that ranks
third in obtaining a revenue of PHP3,593,781 with a percentage 10% and last are the
other hospitals with a percentage of 64% obtaining a total revenue of PHP5,
592,000,000. The total revenue of the private general hospitals in the Philippines is
PHP38, 988,999 for the year 2011.
Among the 1,075 private hospitals in the Philippines, there are the best hospitals
that are ranked in the top three and they are all tertiary care hospitals, Makati Medical
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Center, The Medical City and St. Lukes Medical Center according to the Business
World 2014s Top 1000 companies in the Philippines.
St. Lukes Medical Center is the number one and the best hospital in the
Philippines and it has provided consistent high quality medical care by successfully
combining the most advanced medical technology and locally-trained medical
management and staff to patient safety and customer service that is located at
Bonifacio Global City and another branch at Quezon City. The second best hospital is at
Makati Medical Center located at Makati City. Its aim is to set up a world-class hospital.
Makati Medical Center also became the first and only Philippine health institution to be
certified with the 4th edition Joint Commission International accreditation and the 4th
hospital in the country to be accredited. The third private hospital after MMC is The
Medical City which is located at Ortigas Avenue, at Pasig, Metro Manila and has
maintained over forty years of experience in hospital operation and administration. They
have a medical staff with over 1,000 physicians who are established experts in their
various fields of specialization.
When it comes to market dominance, St. Lukes Medical Center is the market
leader, since the company has substantial market share and is typically the industry
leader in developing better medical services and business methods. While the Medical
City and the Makati Medical Center are considered market challengers, the
competitiveness is stiff between the three, they are strong, but not dominant position
that is following an aggressive strategy of trying to gain market share. Last is the market
followers who are the others composed of the different private hospitals in the
Philippines that are not included in the top 3 and does not have the biggest market
share. Theyre organization is also strong, but not dominant position to and is content to
stay in that position, they have a low risk of competitive attack and the market leaders
and market challengers will not bother to have problems with the competitors.
Types of Products/Services Produced
Private General Hospitals in the Philippines are classified as the Level 3 in the
healthcare system, also called the Tertiary healthcare while level one is called Primary
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Healthcare and the second is called Secondary Healthcare. They provides services for
all kinds of illnesses, diseases, injuries or deformities. In addition, in these medical
centers, the facilities provide highly specialized, technical, inpatient medical services
and complex medical procedures. The hospital operations in the Philippines are very
similar to their western counterparts.
Health Care Facilities
The private sector includes for-profit and non-profit health providers. Their
involvement in maintaining the peoples health is enormous. This includes providing
health services in clinics and hospitals, health insurance, manufacture and distribution
of medicines, vaccines, medical supplies, equipment, other health and nutrition
products, research and development, human resource development and other healthrelated services. Various health facilities serve the health needs of the Filipinos.
According to (Avestruz, 2009), The DOH or the Department of Health categorizes
hospital services and departments according to their operational functions.
A. Medical Services
1. Department of Surgery
This department is responsible for major and minor operations such as the removal of
cysts and warts, appendectomy, orthopedic cases, etc. It is furnished with instruments,
equipment and supplies to meet the medical needs of the patients. These include
anesthetic agents, drugs, and supplies to combat shock and hemorrhage, special
lighting for illumination of the operating field, sterilizing facilities, and many others.
2. Department of Pediatrics
This department is responsible for the prevention, diagnosis, care, and treatment of
children's diseases. It embraces the care of all children under 21 years. This section is
composed of the immediate care room for the newborn - one for babies born in the
hospital and another for those born outside. Low birth weight infants and full term ones

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that are weak are confined in the nursery until their conditions permit home care;
otherwise, the newborn stays only for two to three days after birth.

3. Out-Patient Department
This is the connecting link between the hospital and the community, and is charged with
the following functions: 1) maintenance and good health, 2) disease prevention and
promotion of community health, 3) health education, and 4) care of the sick and family
welfare. It participates in the training of the resident staff and the medical students.
Aside from the prenatal clinic, this department also has clinics for well babies and sick
babies both premature and mature ones; gynecology clinic with the sterility, tumor and
cancer detection clinics; dental; and nutrition clinics.
4. Department of Gynecology
This department is concerned with the diagnosis and treatment of its woman patients
with conditions affecting the female generative organs. It is also concerned with
preventive and promote functions as in cancer detection, including breast cancer, and
lactation management.
B. Secondary Medical Services
1. X-Ray Unit
The X-ray service is one of the most important facilities of the hospital. It provides
service to all the hospital patients. This facility has been a valuable adjunct in the
management of medical, surgical, obstetrics, pediatrics, and gynecological cases. There
also caring provisions that are made to protect patients and employees against over
exposure to X-ray radiation, radiation from radium and other radioactive incidents.
2. Pharmacy Service

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The Pharmacy service provides the drug and medicine requirements for both in-patients
and out-patients.
3. The Dental Health Service
The Dental Health Service provides and maintains standard dental health services to
hospital patients. Aside from the care of in-patients, this service also takes care of
patients in the out-patient department.
4. The Nursing Service
The Nursing Service provides safe, effective, and well-planned nursing care for patients
in the medical departments of the hospital. This service includes activities pertaining to
the care of patients, technical care or the carrying out of treatment prescribed by the
physicians, and those relating to prevention and rehabilitation. It is also involved in
research work for the improvement of patient care.
5. Laboratory Department
This department provides facilities for the application of scientific techniques for the
diagnosis and control of associated with the disease. This department performs all
laboratory examinations and provides facilities that will help arrive at the correct
diagnosis.
6. Anesthesia Unit
The Anesthesia Unit of the hospital provides and maintains standard professional
anesthesia service to operative and delivery cases. It is concerned with two specific
functions: first is to render patients insensible to pain, and to provide supportive therapy
for surgical patients before, during, and after the operation.
C. Administrative Services
1. The Administrative Services

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The Administrative Service directly supervises the following sections: business,

personnel, cashiering, dietary, and linen, laundry, property and procurement,
maintenance and motor pool, dormitory, housekeeping and security.
2. The Accounting Service
The accounting Service maintains a recognized system of accounting and is
responsible for all accounting data and the financial records of the hospital including
cost analysis and billing.

3. Budget Office
The Budget Office is responsible for providing assistance to the management of the
hospital in the preparation of the annual, quarterly and other levels and types of
budgets. It also monitors budgetary overruns and other discrepancies from the
approved budget.
4. Admitting and Medical Records
The Admitting Department functions mainly as the center for admissions, transfers,
referrals, discharges or deaths.

Type of Market Structure

The type of competition for the private hospitals is the model of oligopolistic
competition since they have three primary characteristics; the hospital industry has a
few number of firms, either small or not; the services of are almost similar, but different
in terms of the cost that varies in every hospital; and there is difficult barrier entry like
the government licenses, economies of scale, patents, access to expensive and
complex technology, and strategic actions by incumbent firms designed to discourage or
destroy nascent firms. Additional sources of barriers to entry often result from
government regulation favoring existing firms making it difficult for new firms to enter the
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market. Brand name is used to differentiate the products. Each hospital is providing a
service that buyers perceive to be somewhat different than that offered by other sellers.
The decision of the firms when it comes to the pricing of their services depends on the
quantity and quality of production because it depends on what each business firm in the
hospital industry decides to supply. Nowadays they have this tendency to underutilize
their physical plants, turning their interiors to be cost-worthy, which is the main reason
why health care and hospital charges costs high including the equipment and service.
The patients do not just pay for the service they receive, at the end of their stay, they
also pay for unused beds and other equipment. Private hospitals are for a fact costly
since the company makes their own rules and are privately funded than the public
hospitals which are funded by the government and cannot turn away patients.

Degree of competition among the players

When it comes to healthcare, in private hospitals, existing firms range in size,
from high-tech to the large firms, specialist hospitals up to the small, and rural hospitals
and clinics. The larger hospitals face intense rivalry, and competes on efficiency, and
also the quality of care and price. The improvement in any of these areas means there
are much patients in the hospital, which generates higher revenues to the firm. Such
large companies benefit from economies of scale, meaning they can negotiate more
intensely on price.
The hospital industry increases rivalry especially for the Makati Medical Center,
The Medical City and The Asian Hospital and Medical Center, since they are all under
the model of oligopoly, they all want to be the best in the industry especially they
compete most for the similar customers and resources which makes them all very
competitive. High fixed costs also results in the economy of scale and therefore
increases rivalry. When the total costs of the company is mostly fixed costs, they must
produce close capacity to achieve low unit costs. In the hospital industry, the pricing of
the firms affects other firms and therefore there is intense rivalry. There is also
undifferentiated product, since almost all of the top three hospitals offer the same
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service but only differs in price which also means there is low level in product
differentiation in terms of specialist care that slightly increases rivalry. Fixed costs are
high,

and

include

among

others,

employee

wages,

medical

devices

and

pharmaceuticals.
The market is also hard to exit in the hospital industry, it places a high cost in
abandoning the product. Some certain assets, such as the equipment, and the
significant real estate holdings of larger hospitals, may be hard to divest, these assets
may not be easily be sold to other buyers in another company. Diversity of rivalry also
exists in these companies, just like in Makati Medical Center, the company before was
established by American Episcopalian missionaries as a charity ward and a dispensary
hospital that started out as an out-patient clinic, The Medical City has over forty years of
experience in hospital operation and administration, which is also a for-profit enterprise
while The Asian Hospital and Medical Center is a non-profit enterprise.
Low switching costs also increases rivalry among the three major hospitals. In
the eyes of the generic consumers, these hospitals have very similar features: they offer
the same services, they are expensive and that has always been the image of
becoming a world-class hospital with top-notch equipment. An individual buyer faces
fewer switching costs, mainly because of the time, effort and cost of traveling to a
different hospital if the location is further away from their preferred hospital. Some
buyers also have been treated in the same hospital in the past where they receive their
care so it would be difficult to switch for this reason. Overall, the degree of competition
is highly competitive.

Pricing Behavior used by the Players for Revenue Generation

Although the price elasticity of demand for medical care in general is relatively
low, certain types of care are found to be somewhat more price sensitive. Preventive
care and pharmacy benefits are among those medical services with larger price
elasticity. The finding that the demand for preventive care is more price sensitive than
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the demand for other types of care is not surprising. The number of available substitutes
for a product is a major determinant of demand elasticity. In the case of preventive care,
a number of goods and services could possibly serve as substitutes. As a result, when
the price of care increases, consumers are able to substitute away from preventive care
toward other goods and services that promote health such as nutritional supplements
and healthy foods. In addition, preventive medical services may be seen more as a
luxury than a necessity and, thus, may be put off when the price of such care increases.
Further, the opportunity cost of obtaining preventive care is much higher than it is when
the patient is sick, particularly if the illness keeps the individual out of work. It is also
likely, that since the benefits of preventive care accrue in the long-term, and they are
heavily discounted.
The hospital industry is inelastic. If a person is sick, he/she will not be price
sensitive. Especially on crucial situations and terminal illnesses, it is a matter of life and
death and therefore, people will not have second thoughts because the only thing that
matters is to cure the patient. Although they will have the option to choose the best
hospital depending on the cost.
The pricing strategy of the top 3 hospitals; the Makati Medical Center, The
Medical City and The Asian Hospital and Medical Center, are depending on different
factors. Patients may visit The Asian Hospital and Medical Center when it comes to
quality service, but SLMC has taken the image of having high expectations which
equals to costly amount of services. The Medical City and the Makati Medical Center
are also competitive in terms of pricing behaviors. In fact there are two types of
healthcare services that are priced differently. First are the routine procedures that
mostly applies to clinics while the second type is the specialized procedures where
hospitals fall in. The pricing behavior of The Asian Hospital and Medical Center falls
under the premium pricing. This means that they have value for money and establishes
a price higher than the competitors which is one of the reasons why AHC is ranked the
top hospital in the Philippines besides from the two. The pricing behavior of The Medical
City and Makati Medical Center is also premium pricing which is used to maximize profit

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in areas where customers will pay more depending on the service including the facility
of the hospital as well even the unused necessities.

Production and Cost Behavior of the Hospital Industry

Private hospitals do not produce their own machine and equipment for the use of
healthcare to patients. They are more focused in the installation of more
efficient equipment especially in the private hospitals where they regulate and give
importance to a modern environment and give world-class service to those in need. We
can consider doctors and hospital administrators especially for the private hospitals for
being ultimate shoppers because they are spending large sums of money on expensive
equipment and systems that can save lives. Most of the hospitals nowadays are more
consistent in turning to digital resources, with their trusted connections and sellers in
order to look and gather information to help administrators decide. There is already a
constant changing of B2B or business to business transactions for the companies to
order and buy specific machines to use for their hospitals. Every phase of their decision
journey is evolving thanks to the web, from information gathering to post-sale and back
again.
Some hospitals also use the help of the original equipment manufacturer (OEM)
to have service contracts for maintenance repair before or after the warranty period of
the equipment. Most of these are expensive contracts and many times the maintenance
and repairs can be done for less by on-site technicians or through a local service
partner.
The usual way of how hospitals purchase their machines is through a trusted
distributor from a foreign company outside the country since the Philippines is not
capable of creating machines and having their own factories because the machines
needed by these private hospitals are specialized machines and therefore shipped from
different countries abroad and then introduced in the country. GPOs or the Group
Procurement Organization are used by these private hospitals and other healthcare
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providers in order to get the right products at the best price. They offer economies of
scale to the healthcare supply chain. By aggregating the purchasing power of hospitals,
GPOs help balance the negotiating equation between purchasers and vendors. Most
healthcare providers join in group purchasing selections in a committee setting, where it
is usually comprised of healthcare professionals, such as doctors, nurses and other
clinicians or hospitals that are have huge market share and are big in the industry.
These committees help determine which medical supplies are most appropriate from a
clinical standpoint and what is needed at the present time. Once a decision is made,
GPOs work to negotiate contracts with healthcare manufacturers, distributors and other
suppliers.
GPOs do not purchase or buy any products. What they do is they negotiate
contacts that hospitals can use when making their own purchases. When the contract is
created, the hospital still has to decide which product is the most appropriate in each
circumstance and make the most appropriate purchase.
Hospital Revenues
Hospitals get their revenues mostly from their patients, which also acts as their
payors, since they are the ones that run the companys revenues. They get their
revenue in a variety of ways: by providing medical care and attention, even non-medical
services, donations from individuals, foundations and the government, and also through
investments. In Figure 1.3, hospitals has a way of determining how they make their
money through operating revenue, other operating revenue, and gains and losses.

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Operating revenue is what the hospitals earn by delivering patient care which is
the first and primary way that hospitals make money. It is the most important and the
standard way of gaining revenue by differentiating gross and net income: the Gross
Patient Service Revenue (GPSR), and the Net Patient Service Revenue (NPSR). The
Gross Patient Service Revenue is the money that hospitals would make if they were
paid in full while the Net Patient Service Revenue is the money that hospitals make after
deducting the charitable care, also called free care where the payment was never
expected even if the patient is in the care of the hospital; and contractual adjustments
which are payment arrangement from organized payers such as private insurance
companies.
Hospital Expenses
It is a responsibility of hospitals to spend money in order to have better service
and to function and provide very good healthcare to their patients. Hospital expenses
include the salaries, wage benefits, supplies, depreciation, interest, and bad debt
expenses.
The payment for employees or the salaries and wages are actually the largest
part of the hospitals expenses. Physicians who are employees of the hospital are also
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included. Non-salaried physicians are paid directly by the patients after their session or
treatment. Supplies make up the second largest part of expenses in the hospital. There
is also interest expense when hospitals are paying in the current accounting period for
borrowing funds because they often borrow money for mortgages and other large
purchases. Depreciation cost also incur in the hospital expenses, when a process of
expensing a fixed asset for its expected length of use. Lastly, there are the bad debts,
which are the service charges that the hospitals must receive but failed to do so
because they did not receive payment.

III. Major Problem/s Encountered or Currently Encountering by the Industry and

its Policy Implications
The major problems of private hospitals are classified among the different
players in the industry: the payors, patients, and physicians. The existing relationship or
even competition among the players which evolved over the years and recent
developments on their areas were considered even the problems and current trends
encountered.
Payors
Payors can be classified into self-pay patients, and health maintenance
organizations or (HMOs). The self-pay patients are individual patients who can spread
the good news to other member of his family or friends or word of mouth for a good
service provided. They can remain loyal to the doctors and the hospital where they are
comfortable and satisfied. But sometimes, they can be disloyal and base their decision
on factors as price, location and service. They can always find substitutes which is what
hospitals does not want to happen. Self-paying patients rely heavily on doctors loyalty
and advice of family members. They also are now basing their decisions for doctors and
health care provider based on competence, location, convenience, price and other
added value services.

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Health maintenance organizations have a huge membership base and these

companies and their bargaining power over the health care providers. They can use
their power to leverage on price or rate reductions, accrediting or non-accrediting a
health service provider for their members access to medical services. They can dictate
their rates to the doctors who want to be accredited as coordinators using their leverage
as the strength of their membership base. In addition, HMOs are now beginning to offer
comprehensive plans and very affordable package plans to members with flexible plan
offerings. These changes are a big problem to the private hospitals or to the hospital
industry as well mainly because patients will be using their HMOs membership where
they will not pay for their hospital charges because it is insured in the HMO.

Patients
The patient is what drives the healthcare industry. They are the people who go to
hospitals in order to be treated. The patient can either be paying from his own pocket or
a part of the HMO contract or a health plan holder. They are also the source of revenue
for the doctors and hospitals/clinics and greatly influence the business or practice of
health care. Patients has the final choice in the selection of a physician, heath care
provider, and HMO. The power of digital information is also helpful and makes it easy
for the patient to access data and information that is important before he makes nay
decision. The problem for the hospitals is that patients are more knowledgeable and
have all the information which makes them have the power to go hospitals of their
convenience and it is challenging on the part of the health care provider or physician to
stand out if they cannot prove their worth to this changing and highly competitive
environment. Their loyalty is one of the factors, but it is not as important as in the past
because patients now can shift easily on the basis of new technology, price or even
location.
Physicians

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The physician play a key role in the overall cycle of healthcare dynamics. The
power of a physician emanates from expertise or skills developed over the years of
practice. Failure to do so will result in their performing tasks that they find unsatisfying
and wasteful of their talents and that could greatly affect their patients if mistreated
correctly. The problem with the physicians is that their role is changing in a way that
they have no longer control of the evaluation, treatment and patient, they are more of a
health coach and counsellors who help patients take care of themselves. Also in some
cases they are becoming more of an entrepreneurs and have begun to explore
business opportunities where they invest in some stand-alone clinic and not in the
hospitals anymore. Which is a problem for some private hospitals because they do not
want to lose doctors in any way possible. Some doctors are also sued because of the
malpractice of certain procedures and that must be taken action which ruins the
companys name as well.
Another problem is the issue on brain draining in the Philippines which affects the
hospitals too because brain drain is when skilled workers or doctors leave the country
and migrate to another place in search of a better life and a better job with higher
wages. It is a big problem especially to the hospitals because no one will be able to cure
patients when they are sick because doctors are gone. There are also economic
problems that affects the country just like the closing of hospitals from the years of 2002
to 2007 where over 200 hospitals where forced to close because of the lack of doctors
who left to find high paying jobs in other countries and also because the hospitals
cannot fund them. This has a very negative impact in the country because citizens did
not have proper healthcare or if there is an accident, there is no hospital nearby. When
the skilled professionals of the country leave, the country cannot develop properly
because they lose people who create progress in the country in building the medical
field.
In addition, another problem is when some doctors are plenty and are assigned
in their specific hospitals but some specialist doctors are not properly distributed in the
country or not all the private hospitals outside Metro Manila or the metropolitan area

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have the best specialist doctors just like in the NCR or the National Capital Region,
most specialist doctors are around the private hospitals unlike in other regions of the
country.
Specific Actions in Addressing the Problem
These key players in the industry are what drives the hospital and has created a
huge impact, but these are the problems that cannot be avoid by the hospital industry in
any way possible. Even if there are current trends that affects these players, the
hospitals are doing their best to maintain quality healthcare at the best prices in order to
treat patients and give them the medical care that they deserve.

Political Factors: Specific Government Policies that addressed the problem:

Other major problems encountered and are currently encountering by the private
general hospitals industry are the following cases: the use of the private hospitals in
emergency cases, the use of generic drug rather than brand drugs, the use of health
insurance programs or health maintenance organizations (HMOs), the privatization of
public or government hospitals that is supported with the specific government policies
below.
There are a number of government regulations and laws which were identified
and explained below with their relevant impact to the industry. The public policy changes
and these government actions that affect public health and the healthcare system are
likely to be given more attention to rising costs, access to medical care, approval and
licensing of specialty clinics, new medical treatment such as stem cell treatment facility
and medical device concerns become increasingly important.
Republic Act No. 8344 AN ACT OF PENALIZING THE REFUSAL OF HOSPITALS
AND MEDICAL CLINICS TO ADMINISTER APPROPRIATE INITIAL MEDICAL
TREATMENT AND SUPPORT IN EMERGENCY CASES.

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RA 8344 states that during an emergency or serious cases, it is unlawful for any
proprietor, president, director, manager or any officer, and/or medical practitioner or
employee or hospital or clinic to request, solicit, demand, or accept any deposit or any
other form of advance payment for confinement or medical treatment of a patient. This
is to prevent undue stress which could lead to death or permanent disability of a patient.
If the condition of the patient stabilizes and the case needs more medical capabilities,
the patient may be transferred to any hospital or medical clinic by the physician without
the patients consent if he/she is unconscious, incapable of giving consent, or
unaccompanied. Incompliance will be punishable by law.
Relevance to the problem The enactment of RA 8344 necessitates any health care
facility to accommodate any emergency or serious case without prior payment. An
emergency is defined as a state wherein the patient is in immediate danger in which the
delay of the treatment may cause loss or life or may cause permanent disability if left
unattended. In the case of the poor or indigent patients, where their condition stabilizes,
they may be transferred to any hospital that can be provide their needs, preferably a
government hospital.

Republic Act No. 9502 Universally Accessible Cheaper and Quality Medicines
Act of 2008
AN ACT PROVIDING FOR CHEAPER AND QUALITY MEDICINES, AMENDING FOR
THE PURPOSE REPUBLIC ACT NO. 8293 OR THE INTELLECTUAL PROPERTY
CODE, REPUBLIC ACT NO. 6675 OR THE GENERICSS ACT OF 1988, AND
REPUBLIC ACT NO. 5921 OR THE PHARMACY LAW, AND FOR OTHER
PURPOSES.
The primary purpose of this act is to protect public health by adopting appropriate
measures to promote and ensure access to affordable drugs and medicines. The power
to impose maximum retail prices over any or all drugs and medicines is vested in the

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office of the President of the Philippines upon the recommendation of the Secretary of
the Department of Health.
This act also amended the Republic Act No. 6675, otherwise known as the
Generics Act of 1988 which provide that all government health agencies and their
personnel as well as other government agencies, all medical, dental, and veterinary
practitioners, including private practitioners, any organization or company involved in
the manufacture, importation, repacking, marketing and/or distribution of drugs and
medicines, drug outlets, including drugstores, hospital and non-hospital pharmacies and
non-traditional outlets such as supermarkets and stores shall use generic terminology or
generic names in all transactions related to purchasing, prescribing, dispensing and
hospital pharmacy.
The amendment of Republic Act No. 5921, otherwise known as the Pharmacy
Law stipulated that no-medicine, pharmaceutical, or drug, except for those which are
non-prescription or over-the-counter, of whatever nature and kind or device shall be
compounded, dispensed, sold or resold, or otherwise be made available to the
consuming public except through a prescription drugstore or hospital pharmacy.
Relevance This Act provides protection to the public in terms of the quality assurance
of the drugs and medicines available in the market. This also imposes a problem to the
hospitals mainly because the prescription drugs that the doctors or health practitioners
must be affordable and generic drugs are what patients want so they can afford it. The
lack of availability of medicines is one reason why patients (even poor members of the
PhilHealth Indigent Program) resort to higher priced private hospitals and selfmedication. Moreover, there is a lack of confidence in the quality of cheap generics on
the part of doctors and many patients. This lack of confidence in generics is one of the
main reasons why the pharmaceuticals market remains segmented doctors prescribe
by brand and patients who can afford to, prefer to purchase higher-priced brands, which
they perceive to be higher quality. It also gives power to the president to entail the
maximum prices of drugs and medicine which helps to prevent opportunistic
manufacturers and retailers to manipulate and increase its prices beyond its appropriate
Page | 21

value. It also gives the public an access to safe and cheaper and affordable drugs and
medicine prescriptions from government health agencies or any public and private
medical practitioners which gives an ease to the public to avail these medicines and
drugs. This act prohibits public and private companies, agencies or institutions to
distribute and prescribe branded drugs and medicines which are costly to the public.

Republic Act No. 7875 National Insurance Act of 1995

AN ACT INSTITUTING A NATIONAL HEALTH INSURANCE PROGRAM FOR ALL
FILIPINOS

AND

ESTABLISHING

THE

PHILIPPINE

HEALTH

INSURANCE

CORPORATION FOR THE PURPOSE.

The National Health Insurance Act of 1995 declares that the State shall
implement an integrated and comprehensive approach to health development in
providing essential goods, health and other social services available to all the people at
an affordable cost. The needs of the underprivileged, sick, elderly, disabled, women and
children shall be prioritized. Likewise, it shall be the policy of the State to provide free
medical care to paupers.
Relevance This act gives financial access to the Filipinos of the programs and
benefits for different health care services prioritizing the needs of those that cannot
afford such services. It provides different benefit packages to all eligible beneficiaries to
help the public especially those who are in the marginalized sector to avail of health
care services at an affordable and minimum price.

House Bill 6069: An Act Creating National Government Hospital Corporation

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AN

ACT

CONVERTING

GOVERNMENT

HOSPITALS

INTO

NATIONAL

GOVERNEMNT HOSPITAL CORPORATIONS PROVIDING FUNDS THEREFORE

AND FOR OTHER PURPOSES.
This act aims to provide Filipinos an affordable but quality and efficient hospital
care and medical service delivery system. There are currently twenty-six national
government hospitals under the direct supervision of the Department of Health that shall
be given a government-owned corporation status. These medical institutions will be
allowed to engage in income-generating activities to acquire more funds that can be
used for a more efficient and effective delivery of health care.
Relevance This is also relevant to the Philippine Privatization Program or the
PPP where the government has developed a policy environment that strongly supports
private sector participation in its development activities. This program is the so-called
privatization of state-owned assets where strategy draws significant benefits like
efficiency in service delivery, innovation, access to private capital, cost savings, among
others. This will change the public and private hospitals where everyone is affected.
Privatization of government hospitals in the Philippines would further deprive the
marginalized sector of the access to free healthcare services for the sake of generating
more profit that could worsen the situation of the countrys health industry. It would also
increase the death rates from diseases and chronic illnesses due to the lack of
treatment from government medical institutions. Privatization of government hospitals
would also bring about new competitors among the private hospitals and clinics.
Republic Act No. 2382 The Medical Act of 1959
THIS ACT PROVIDES FOR AND SHALL GOVERN (A) THE STANDARDIZATION
AND REGULATION OF MEDICAL EDUCATION; (B) THE EXAMINATION FOR
REGISTRATION OF PHYSICIANS; AND (C) THE SUPERVISION, CONTROL AND
REGULATION OF THE PRACTICE OF MEDICINE IN THE PHILIPPINES.
The Medical Act of 1959 has stated regulations for individuals to qualify as a registered
physician. The primary key point constitutes that medical education will be standardized
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by the board of medical education in which admission to the medical course requires a
minimum number of units taken. The medical course shall be at least five years with not
less than 11 rotating internship in an approved hospital consisting of subjects such as
Anatomy, Physiology, Biochemistry and

Nutrition,

Pharmacology, Microbiology,

Parasitology, Medicine and Therapeutics, Genecology, Ophthalmology, Otology,

Rhinology, and Laryngology, Pediatrics, Obstetrics, Surgery, Preventive Medicine and
Public Health and Legal Medicine, including Medical Jurisprudence and Ethics.
Relevance If hospitals do not have the best doctors then they wont have good
services and wont be able to give a better healthcare to a lot of people. Therefore, in
hospitals, it shall be ensured that all medical practitioners have complied with the
standards under this article. Medical practitioners must be fully knowledgeable of their
skills in all medical specialties and to be continuously trained on new studies and on
how to use modernized medical equipment to equip them with more knowledge and
improve their competencies.
Strength and Limitations of the Industry and Government
The hospital industry has been rapidly growing in the country, either it be public
or private hospitals. The strength of private hospitals is to serve better quality care with
the quality improvement programs in top-notch health facilities with the latest and
advanced equipment to use. Since hospitals are essential since it is normal for a person
to pay a visit and also it is always possible to have patients anywhere in the country.
There is also clear price advantage in many medical procedures in the different private
hospitals. They also have the corporate funds allocated for their employees with
medical benefits. The doctors, physicians and health practitioners are also trained well,
since they provide care and treatment for individual patients and make decisions that
are necessary for the patients health. In addition, since there are many hospital
establishments, it is easy for the patients nowadays to look for their preferred hospital
even though they have a lot of substitutes because of their variety.
In addition, Hospitals nowadays already are using technology which result to
better healthcare. Technology is improving healthcare because it makes everything
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easy, robust and reliable. Just like the internet, all the information about healthcare is
just one click away. More and more people use the internet in order to research about
medical issues. Not just exploring symptoms, but also the treatment and medicines on
the web. There is also better treatment and less suffering because of the latest
machines that private hospitals use in order to help patients with their diseases. It is
very obvious that technology has become a great help for the hospital industry to grow
and save lives.
When it comes to the limitations of the industry, there is intense competition from
the current market leaders as well as rapidly emerging destinations for the patients to
go to. There is also lack of price transparency and wide variation of local prices since
each hospital has different cost of their services either in hospitals or clinic procedures.
The malpractice behavior of some doctors for cutting-edge procedures must be taken in
action too, since it affects the image of the hospital as well.
Moreover, private general hospital capacity is concentrated in Metro Manila and
other major metropolitan areas. There are two types of hospitals, the government and
the private hospitals. The private hospitals are mostly general where they provide
services for all kinds of sickness. But there are also private hospitals outside Metro
Manila who are Primary and Secondary hospitals but the Tertiary hospitals who are
providing intensive care found are mostly centered in Metro Manila and other major
metropolitan areas mainly because of the high population therefore, there arent a lot of
people who can receive intensive care because of the distance of the tertiary hospitals
that are located in Metro Manila.
The specific government policies that were mentioned are also important and
indeed became a great help for the hospital industry to grow and become more patientcentered even if services are costly. Some limitations are the potential crowding out of
domestic poor patients who cannot pay for the services from the private hospitals and
must be transferred to another hospital which also disturbs the patients treatment even
if the law permits to do so. The use of generic drugs from the pharmacy also creates a
problem for the hospitals because of the cheaper medicines but it is what the law
Page | 25

mandated even the health insurance program. The laws that were stated are essential
for the hospitals and not just hospitals but also the other industries as well because
regulates the practice and the protection of the public from hospital operations and
administrations who do not comply with the government.

Chapter 4
Page | 26

Areas for Future Policy Prescriptions

Recommendations
The researchers recommends having a brain exchange policy by the
government that should be augmented if other countries assist developing nations in
sustaining their domestic supply of physicians in order to avoid brain drain in the
Philippines. For instance, other countries can provide financial support for foreign
students, allowing them to study overseas and work for a pre-determined number of
years but they have to return to their homeland. Other countries can also aid developing
countries in sharing medical technology advances that may be difficult to learn about in
isolated areas. This can help a lot in the economy of the country and also for the
hospital industry in order to avoid losing doctors and medical practitioners to leave the
country and get another job.
In addition, the researchers recommend for hospitals either in private and
government to have more cooperation in activities such as purchasing supplies and
equipment. Bulk purchases of supplies provides hospitals with more bargaining power
to negotiate for more affordable prices of both locally and foreign produced supplies.
This system must be organized so that equipment sharing will go a long way in making
possible the availability of modern diagnostic and treatment equipment to all patients to
serve them better and provide the best healthcare they should receive even in the small
hospitals, at reasonable costs.
Moreover, the government should also assist private hospitals in providing staff
training and equipment maintenance even though these hospitals are privately funded,
it would be great help if the government will do their best to support private hospitals.
Also, the equipment maintenance of government hospitals may be extended to private
hospitals for economies of scale.
Furthermore, the researchers recommends that since most private general
hospitals are already internationally accredited, globally recognized and became more
credible providers in the international community like the top 3 players, there should be
Page | 27

programs, launched by the government to encourage hospitals, clinics and other

healthcare providers in the country to provide intensive trainings and workshops on how
to give better quality healthcare and services to their patients. Hospital owners,
administrators,

quality

personnel,

medical

professionals,

nursing

supervisors,

professionals, and practitioners in the healthcare industry are invited to this training
sessions with the help of the government.

Page | 28

Sales Forecast of the top 3 Private General Hospitals

6,000,000,000
5,000,000,000
4,000,000,000
Axis Title 3,000,000,000
2,000,000,000
1,000,000,000
0
2013

2014

2015

2016

2017

2018

It is shown in the Figure 1.4 the sales forecast of the top 3 private general
hospitals in the Philippines from the year 2014 up to 2018. The total revenue for St.
Lukes Medical Center is PHP5, 410,557, 369 for the year 2013 and the forecast for the
year 2014 is PHP5,209,254,680 with the growth of -3.7%, PHP5,161,051,655 for the
year 2015 with -0.93%, PHP5,112,848,631 for the year 2016 with also -0.93%,
PHP5,064,645,607 for the year 2017 with -0.94%, and PHP5,016,442,583 for the year
2018 with the growth of -0.95%.
For The Makati Medical Center, the total revenue for the year 2013 is
PHP4,443,000.000 and the forecast for the year 2014 is PHP4,127,082,843 with the
growth of 1.1%, PHP4,297,043,008 for the year 2015 with the growth of 6.4%,
PHP4,467,003,173 for the year 2016 with the growth of 6%, PHP4,636,963,338 for the
year 2017 with 5.7%, and PHP4,806,923,503 for the year 2018 with the growth of 5.3%.
The third best hospital which is The Medical City, their total revenue for the year
2013 is PHP4,369,000.000 and their forecast for the year 2014 is PHP4,416,578,759
with the growth of -6.9%, PHP4,699,444,620 for the year 2015 with the growth of 4.1%,
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PHP4,982,310,481 for the year 2016 with 3%, PHP5,265,176,342 for the year 2017 with
3.8%, and PHP5,548,042,203 for the year 2018 with the percentage growth of 3.7%.

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