Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas
Vol. XXVIII No.4
Editor's Notes Consider this scene: A long line of people — many coming from nearby towns and provinces — is seen queuing up for emergency treatment and admission in a government-sponsored hospital. Chances are, though, that not all of them will be attended to immediately nor be accepted for hospital admission. There are simply not enough medical personnel or space for hospital confinement that will be able to accommodate them. The ones to be served will mostly be those with the most critical condition. But almost every Filipino dreams of being able to access inexpensive (if not totally free) but adequate health care service from the government for his health needs, be they critical or not. This is true especially for those in the lower income strata. After all, to be poor is already difficult; and to suffer from illnesses without resources to hold on to nor services and facilities to access to makes it doubly aggravating for them. Traditionally, an ordinary citizen would go to a clinic or barangay health unit (BHU) for his immediate or primary health needs. If his health requirements call for more complicated solutions, then he would be referred to the next higher level of health care unit and so on. 16
What's Inside 8 Regional forum scores institutional problems in water service delivery
12 World report: low carbon economy key to global development
14 PIDS Corner launched in Butuan City 15 Philippines hosts annual conference on East Asia cooperation
DEVELOPMENT RESEARCH NEWS July - August 2010
ISSN 0115-9097
How are government hospitals performing?
http://www.doh.gov.ph/qmmc
PHILIPPI NE INSTITUTE FOR DEVELOPMENT STUDIES
H
ealth care service in the country is designed to be delivered under a referral network. It starts with the barangay health workers (BHWs) incharge of barangay health stations (BHS). The BHWs, in turn, report to city health offices (CHOs) in cities or rural health units (RHUs) in towns. The CHOs and RHUs employ doctors, nurses, midwives, and other relevant health workers who refer patients to primary hospitals which, on the average, are small and only have 25 beds. Consistent to its term, primary and noncritical conditions are to be attended at the primary hospitals. Secondary hospitals attend to acute cases while final referrals are brought to medical centers, regional, and specialty care hospitals, collectively called tertiary hospitals. However, with the passing of the Local Government Code in 1992, facilities were devolved to different LGUs, with BHS and RHUs being assigned to municipalities and cities, hospitals to provinces while specialized hospitals remain under the Department of Health(DOH). The consequence was the fragmentation of the referral network. In cases where primary healthcare facilities experience stock-outs and personnel shortages, households opt to go directly to hospitals for treatment. Patients with conditions ranging from stable up to critical prefer to visit tertiary hospitals for check-ups and treatments. The DOH-retained tertiary hospitals which are programmed to accommodate serious cases are compelled to cater to those that primary or secondary hospitals should handle. These DOH-retained tertiary hospitals thus need more financial resources to attend to all their patients as these become overcrowded with many patients who are waiting for check-ups, laboratory procedures, and admission. But how well do these hospitals spend their resources? While admittedly, DOH-retained hospitals play a key role in the health care sector and deserve to have respectable budgets for their needs, are they able to properly allocate and monitor their budgets so that the affordability and quality of their services are ensured?
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DEVELOPMENT RESEARCH NEWS
July - August 2010
In a paper1 titled “How are government hospitals performing? A study of the resource management in government-retained hospitals,” Philippine Institute for Development Studies (PIDS) Senior Research Fellow Dr. Rouselle Lavado,together with Abby Dunleavy, Jeanette Jimenez, and Yasuhiko Matsuda of the World Bank, examined and analyzed the planning, budgeting, allocation, and budget execution in DOH-retained hospitals in order to assess the efficiency and effectiveness of their service delivery. Some highlights of their analysis are presented in the succeeding sections. Overview of the hospital sector As of 2007, there are 1,578 hospitals registered with the DOH. Of these, 617 (39%) are public and 961 (60.90%) are private. From the original 45 DOH-retained hospitals after the devolution of the health sector in 1992, 21 renationalized and six (6) newly established hospitals have been added, bringing the total number of DOH-retained hospitals to 72.
graphic and Health Survey shows that among those who utilized any health care facility in the preceding six months, 52 percent came from the urban areas and 48 percent from the rural areas. Barangay health stations (BHS) and rural health units (RHUs) are utilized primarily for immunization, family planning, health education, and maternal care. Private clinics and hospitals are utilized for the same purpose as public ones. There are, however, a considerably higher percentage of patients seeking immunization, family planning, health education, and maternal care in private facilities compared to public hospitals. Given the figures in Table 1, it can be inferred that the rich people prefer private clinics and hospitals even for services that can be offered by the barangay health station and the rural health unit for free or for a minimal fee. These trends confirm the findings of Solon et al. (1998) that low-income families are capturing public subsidies for primary health through public health facilities.2
Utilization of hospital facilities is affected by geographic barriers, cost of medical care, and demography. The 2003 National Demo-
Poorest
Poorer
Middle
Richer
Any health facility
18.4
21.1
20.6
20.2
Barangay health station
28.2
27.6
21.4
14.9
Rural health unit/urban health center
20.0
24.4
23.0
21.0
Municipal hospital
19.2
26.4
19.8
22.4
District hospital
21.3
23.4
22.5
18.3
The DOH has been spending more than half of its total budget for tertiary level hospitals in order to keep them operational. In the 2007 General Appropriations Act (GAA), allocations for hospitals comprised 61 percent of the DOH total budget of PHP 11.4 billion. A total of PHP 2.7 billion was appropriated for national hospitals Richest while PHP 4.17 billion of appropriations were provided for health facilities 19.7 under the centers for health develop7.9 ment (CHDs) such as regional hospi11.7 tals and medical centers. These account for 24 and 37 percent of the DOH’s to12.2 tal budget, respectively. 14.4
Provincial hospital
16.0
26.0
20.7
21.5
15.8
Regional hospital/public medical center
19.8
20.5
20.6
20.0
19.1
Table 1. Uses of health facilities by wealth quintile, 2003
Private clinic
7.5
13.0
18.2
27.1
34.1
Private hospital
4.5
8.9
16.6
24.7
45.3
22.9
19.8
19.8
21.3
16.3
Others
Source: Authors’ calculations based on the 2003 National Demographic and Health Survey.
1
Based on a study commissioned by the World Bank. Solon, Orville, Getler, Paul and Alabastro,Stella (1998). Insurance and Price Discrimination in the Market for Hospital Services in the Philippines. Quezon City. University of the Philippines.
2
DOH’s budget allocations to hospitals, however, have declined from a range of 60 to 66 percent in 2003 to 59 percent in 2007 and 35 percent in 2008 (Table 2). The decline is attributed to the shift in DOH’s priority from personal care to public health programs. Resource management DOH-retained regional and special hospitals and medical centers receive their bud-
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DEVELOPMENT RESEARCH NEWS
gets directly from the Department of Budget and Management (DBM) and are given the authority to procure medicine, medical and dental supplies, equipment and instruments in bulk under the special provisions of the GAA.
July - August 2010
Table 2. Budget for DOH-retained hospitals, nominal and real values In million pesos
2003
2004
2005
2006
2007
2008
Total Budget for Hospitals
6,119
6,084
6,099
5,997
6,777
6,594
Total DOH Budget
9,281
9,281
9,725
10,038
11,399
18,912
Total Budget for Hospitals
5,377
5,045
4,699
4,349
4,779
4,304
Total DOH Budget
8,156
7,696
7,492
7,279
8,039
12,345
66
66
63
60
59
35
In Nominal Terms:
In Real Terms:
The DBM Central Office (CO) releases the funds for the specialty hospitals in Metro Manila while regional DBM offices coordinate with the respective hospitals in the regions.
% Allocation for Hospitals
Source: General Appropriations Act, various years
Apart from the regular budget the hospitals receive from the GAA, they also receive supplemental funds from varied sources such as program funds, priority development assistance fund (PDAF) from Congress, special purpose funds (SPFs), and hospital incomes (Figure 1). Retention of Net Income DOH-retained hospitals were permitted to hold on to their income under special provision no. 6 in the 2003 GAA. In this provision, 25 percent of the income will
be used to acquire and upgrade hospital equipment used for direct delivery of health services. On the other hand, 75 percent or less of the retained income can be used to supplement MOOE and capital outlay or other equipment that may be directly or indirectly used for health services. Retained income, however, is not to be used as payment of salaries and other allowances. In the 2005 and 2007 GAA, most of the DOHretained hospitals posted a significant increase in income from their 2003 levels ex-
Figure 1. Sources of funds
Total Funds Available for DOH-retained Hospitals (100%)
Hospital Income (20%)
GAA (80%)
Out-of-pocket payments
Special Purpose
DOH-Budget (70%)
Funds (10%) Philhealth reimbursements Direct Release
Sub-allotment
(67%)
(3%)
PDAF (1%)
Other SPFs (Calamity Fund, MPBF,
Others (PCSO, training fees,
PGF) (9%)
certification fees, rental income, etc.)
Acronyms: GAA – General Appropriations Act; PDAF – Priority Development Assistance Fund (Pork Barrel); MPBF – Miscellaneous Personnel Benefits Fund; PGF – Pension and Gratuity Fund; PCSO – Philippine Charity Sweepstakes Office
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DEVELOPMENT RESEARCH NEWS
Table 3. Net income of DOH-retained hospitals Year
Net Income
% YoY Increase
2000
646.05
2001
737.00
14.1
2002
829.30
12.5
2003
1,182.29
42.6
2004
1,489.25
26.0
2005
1,876.49
26.0
2006
1,997.34
6.4
2007
954.50
Up to June 30 only
Source: National Center for Health Facility Development
cept for those located in the Zamboanga Peninsula and SOCCKSARGEN. The total net income of all DOH-retained hospitals grew to PHP 1.18 billion (42.6%) in 2003 from PHP 0.83 billion (12.5%) in 2002. It continued to increase by 26 percent in 2004 and 2005. However, for the first half of 2007, it went down to PHP 0.95 billion (Table 3). Planning and budgeting Before the preparation of the 2008 budget, the budget levels for CHDs were already preset in high-level meetings in accordance to ceilings given by the DBM. These levels were then passed on to the CHDs, which in turn will inform DOH-retained hospitals to amend their budget based on the respective ceilings. On the other hand, upon the preparation of the 2008 budget, DOH issued Administrative Order 2009-0005 which tasked all hospitals to submit their budget proposal to their Field Implementation and Coordinating Office (FICO). Formulation of the budget proposal, however, was done without considering a ceiling and is based on the hospitals’ perceptions of their actual spending needs. The hospitals’ respective cluster heads will then review and recommend the budget for deliberation at the executive level. It will then be presented to the DOH Secretary and afterwards be submitted to the DBM. What then is the basis for the budget? Does the budget depend on number of beds, geog-
July - August 2010
raphy, type of hospitals, number of patients they subsidized, and the hospital's income-generating capacity? Allocation per bed capacity shows that while hospitals with the least number of beds received the smallest share, hospitals with the most number of beds do not necessarily get the largest share of the budget. As mentioned in the study conducted, mental and sanitaria hospitals have more than 2,000 beds but their allocations are reasonably lower compared to other types of hospitals. Medical centers, regional hospitals, and special hospital-regular that have 100 to 1,999 beds and cater to more difficult cases receive lower per bed allocations than extension and district hospitals with 300-350 beds. However, hospitals that tend to more complicated cases such as medical centers and regional hospitals receive lower per bed allocations than extension and district hospitals. Regionally, on the other hand, the budget share shows that the National Capital Region (NCR) and the Cordillera Administrative Region (CAR) are given significantly higher hospital subsidy per capita compared to other regions. Meanwhile, in nominal terms, the DOH-retained hospitals' budget has been stable. In real terms, though, it has been on a downward trend. The sanitaria and extension hospitals received the largest decrease in allocation at 6 percent . Only research hospitals (from 2000–2008) received a 1 percent increase in the budget allocation. For the number of service patients, the link between the MOOE and the number of service patients who were able to avail of the discounted/free service in hospitals is determined by the use of data from 10 hospitals in 2007. Data also showed that the comparison in the numbers of service patients served and MOOE ranking for selected hospitals indicates that hospitals with the highest MOOE subsidy do not necessarily provide their services to the most number of service patients. In terms of income-generating capacity, there is a high correlation (0.97) between the distribution of hospital budget and that of hospital
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DEVELOPMENT RESEARCH NEWS
income which shows that budget allocations are given regardless of the income-generating capacity of a hospital. This means that DOHretained hospitals receive their operating budgets every year regardless of hospital performance. In reality, what is happening is incremental budgeting. Results indicate that all things held constant, when a hospital’s income increases by PHP 1 million in the previous year, the MOOE for the following year will decrease by PHP 137,700. Moreover, an increase in MOOE in the previous year will lead to an increase in MOOE of PHP 529,700 the following year. In essence, budget planning of the hospitals is typically based on historical accounts. In this regard, the paper by Lavado et al. highlighted the lack of oversight arrangement in the planning and budgeting at the hospital level as well as the absence of a clear rule in the budget preparation for hospitals. In terms of budget utilization ratios, DOH-retained hospitals show high budget execution ratios in the years analyzed by the study. Allot-
July - August 2010
ments for all expense classes were also fully released by the end of the year. One issue seen as the reason for the high budget utilization rate of DOH-retained hospitals is the use of savings as payment for Magna Carta benefits. Republic Act 7305 or Magna Carta of Public Health Workers mandated the entitlement of subsistence allowance, laundry allowance, longevity pay, hazard pay, and higher salary grade upon retirement, among others, to public health workers. It is unfortunate, though, that past administrations have failed to provide the full budget for the payment of said benefits. Thus, in turn, some of the payments are being taken from the hospital savings (Table 4). Monitoring and control The Hospital Operations and Management Information Systems (HOMIS), Income Utilization Reports, Statement of Allotment and Obligations and Balances (SAOBs), and the PhilHealth Monthly Hospital Report are the mechanisms in place to control and monitor the budget. However, incomplete or no reports have been submitted by the DOH hospitals. Statiscal data have not also been con-
Table 4. Comparison of appropriations and obligations for provision of Magna Carta benefits for Metro Manila specialty hospitals (2007), in thousand pesos Name of Hospital
Appropriations (In ‘000) Hazard
Sub.
Total
Obligations (In ‘000) Hazard
& Laundry
Sub.
Difference (In ‘000)
Total
Hazard
& Laundry
Sub.
Total
& Laundry
Jose R. Reyes MMC
877
14,504
15,381
3,422
19,307
22,728
(2,545)
(4,803)
(7,347)
Rizal Medical Center
438
7,213
7,651
1,090
6,039
7,129
(652)
1,174
522
East Avenue MC
803
10,566
11,369
-
18,036
18,036
Quirino Memorial MC
321
7,337
7,658
321
7,337
7,658
-
Tondo Medical Center
292
5,097
5,389
292
5,097
5,389
Dr. Jose Fabella MH
877
12,884
13,761
18
17,062
17,080
803
859
National Children’s Hosp.
365
5,351
5,716
365
5,351
5,716
-
Natl. Ctr. for Mental Health
1,607
24,412
26,019
44,122
21,644
65,766
(42,515)
Philippine Orthopedic Ctr.
877
13,553
14,430
17,183
17,153
34,336
(16,306)
San Lazaro Hospital
657
10,987
11,644
657
10,987
11,644
-
Res. Inst. for Tropical Med.
219
5,541
5,760
219
-
219
-
“Amang” Rodriguez MC
-
4,247
4,247
-
4,247
4,247
-
121,692
129,025
132,259
199,948
Total
7,333
67,690
(60,357)
Sources: General Appropriations Act, Department of Budget and Management, and Department of Health reports
(7,470)
(6,667)
-
-
-
-
(4,178)
(3,319)
-
2,768
(39,747)
(3,600)
(19,906)
-
5,541
(10,567)
5,541 (70,923)
DEVELOPMENT RESEARCH NEWS
6
solidated since 2004 and statistical data from 2005 onwards were no longer prepared due to the resignation and retirement of key staff involved in the HOMIS. Moreover, since the data have not been consolidated since 2004, no analysis has been made on the data. And at present, data from the report are used only as input to the DOH Annual Report. Health sector reform strategy In 2005, FOURmula ONE for Health (F1) was adopted by the DOH as the framework in implementing health sector reforms in financing, regulation, service delivery, and good governance. Primarily, performance-based budgeting (PBB) was implemented under the health financing scheme. From the usual historical or incremental budgeting system, financing of health agencies were to be changed to PBB, in which budget allocations and releases would be dependent on the achievement of the desired performance targets. It was however acknowledged that full implementation of the F1 framework was not possible since the resources available were not sufficient. It was thus established that there is a need to reform the structure, allocation, and execution of direct subsidies going to the central and regional health agencies.
July - August 2010 Thus, Administrative Order (AO) No 20060023 was issued by the DOH in June 2006 to give guidelines on financing F1 investments and budget reforms. This AO recognized that current resources were not sufficient to support the full implementation of the F1 framework. It was then advocated that funding should be based on the capacity to generate revenues from operations. With this, it was determined that the budget for DOH-retained hospitals would be allocated on the basis of their capability to generate their own income. In addition, funds for facility upgrading were proposed to be pooled and competitively assessed through the submission of proposals. Specifically, 5 percent of the MOOE of DOHretained hospitals will automatically be assigned to the public health fund pool to finance F1 public health programs. The basic allocation fund (BAF) and performance-based operations fund (PBOF) will share in the remaining 95 percent wherein BAF will be equal to 70 percent of net MOOE and not connected to the performance targets to ensure that hospitals have the capacity to cover their overhead cost. The PBOF, meanwhile, comprises the remaining 30 percent of the MOOE and are linked to the performance objectives. Since the launch of the F1 strategy, the issuance of (AO) No 2006-0023, and the introduction of the PBB, shifts in the budget structure have been made and implemented in the proposed 2008 budget. Implementing bed capacity has also become the basis for hospital budget allocation from the previous authorized bed capacity. The PBB, along with the other terms in the AO 2006-0023, however, has not been implemented as of 2008 in the DOH-retained hospitals but should have been implemented from CY 2006-2010.
Most tertiary government hospitals are overcrowded with patients and while the Department of Health (DOH) has been spending more than half of its budget to keep DOH-retained hospitals operational, they still need more financial resources.
According to the analysis made by Dr. Lavado et al., there are no specific criteria being utilized in the budget allocation among DOHretained hospitals. And although performance-based allocation is a good step, it is nonetheless still conceptually flawed. For example, if hospital A has a higher income compared to its MOOE, it may not be interested to attain PBB because only 28.5 percent of its
DEVELOPMENT RESEARCH NEWS MOOE will be taken out from its budget. On the other hand, if hospital B has a higher MOOE, it might be of interest for it to follow the PBB but will not work hard to attain higher income since it will lead to a lower MOOE. Likewise, PBB may be interpreted as a disciplinary action instead of a motivation to perform better. Given the scenario of hospitals that were able to perform well, they will be able to get the budget due to them. On the other end, if they did not, their budget will be cut. As the paper stressed, decreasing MOOE will disrupt hospital operation because in reality, all hospitals use up 100 percent of their MOOE. Conclusion The study pointed out that the failure of the referral network of the country’s health system has led to a more expensive health care delivery system. In terms of budgeting, the authors noted the lack of an overall plan for budget preparation in the central office as well as at the hospital level. In most cases, budgets are based on historical account and not grounded on the actual needs of the entire health system. Income retention for DOH-retained hospitals has indeed helped assuage fund shortages up to the extent of supplementing their funds. However, reducing MOOEs due to the hospitals’ capability to raise their own revenue has induced undesirable effects on income collection efforts. There is also a need for reliable data in assessing hospital performance. At present, while hospitals are required by the DOH to submit reports on hospital activities, the reports are sometimes incomplete and lacking in key components. At the hospital level, collecting and using information for planning and budgeting purposes do not appear to be an important priority. Recommendations In order to implement a feasible overall plan for all DOH-retained hospitals, a
7
July - August 2010
The DOH has been spending more than half of its total budget for tertiary level hospitals in order to keep them operational. In the 2007 General Appropriations Act (GAA), allocations for hospitals comprised 61 percent of the DOH total budget of PHP 11.4 billion. A total of PHP 2.7 billion was appropriated for national hospitals while PHP 4.17 billion of appropriations were provided for health facilities under the centers for health development (CHDs) such as regional hospitals and medical centers.
strong authority is needed to enforce the reforms. There is also a need to draft a clear policy on income retention. While there are pressures for DOH-retained hospitals to increase their incomes, the poor segment of the society should not be disregarded in public hospitals. Thus, the paper suggested that enrolling the poor in the indigent program of Philhealth will help ensure that the hospitals will be able to earn while at the same time making hospitalization affordable for the poor. Meanwhile, hospital level data collection should be considered as one of the hospitals’ priorities. A trustworthy set of data is crucial before any performance benchmarking can be made. In today’s world of information technology, a hospital statistician should have long stopped the manual tabulation of data. The DOH-CO should also re-examine the reasons why the HOMIS has not been successfully adopted by most hospitals. Finally, while performance-based budgeting (PBB) offers a lot of promise, there is still a need to find how to operationalize the concept within the prevailing incentive structure surrounding hospital managers and the hospitals’ information management capacities. There is also a need to re-examine standards used in assessing performance of hospitals. Moreover, the incentive structure behind the PBB should be assessed and should encourage better and consistent performance of hospitals that are lagging behind to truly reward good performers.CSM
8
DEVELOPMENT RESEARCH NEWS
July - August 2010
Regional forum scores institutional problems in water service delivery
O
ne way of achieving the Millennium Development Goals (MDGs) is to improve the delivery of basic services, especially to the poor. How services on education, health, and water are delivered in a decentralized setting such as the Philippines presents a useful way of understanding the country’s level of achievement of the MDG targets. In this connection, a discussion forum on “Improving Local Services Delivery (LSD) for MDGs in Asia: The Case of the Philippines” was held in Butuan City on July 28, 2010. The forum was conducted by the Philippine Institute for Development Studies (PIDS) and the United Nations Children’s Fund (UNICEF) in collaboration with the National Economic and Development Authority Caraga Regional Office. In his opening remarks, PIDS President Dr. Josef T. Yap related how the local government units (LGUs) can take advantage of the opportunities presented by regional economic integration or enhanced cooperation among
Asian economies in improving delivery of basic services. The Philippine economy Presenting a macroeconomic view of the country’s performance, Dr. Yap stressed that in order to maintain a certain level of development, the Philippines needs to address its lack of economic transformation by enhancing its manufacturing sector. He reported that in 1980, the share of manufacturing to the country’s total output was 25.7 percent. In 2008, the sector stagnated and its share fell to 22.6 percent. As a point of comparison, meanwhile, Indonesia’s share in 1980 was 13.5 percent, almost half of the Philippines’ (Table 1). But in 2008, Indonesia’s share was close to 30 percent and has overtaken that of the Philippines, effectively transforming its economy. Presently, in terms of ranking, Indonesia is already ahead of the Philippines. The message, he emphasized, is that the Philippines has not been able to transform its economy and has not been able to build a robust manufacturing sector.
Table 1: Share of manufacturing in GDP (%) 1980
1985
1990
1995
2000
2006
2007
2008
China
43.9
37.0
35.5
40.6
40.7
43.1
43.0
42.8
Indonesia
13.5
18.1
23.0
26.6
27.7
27.5
27.0
27.3
Malaysia
21.6
19.3
22.8
24.7
29.9
29.0
27.4
25.8
Philippines
25.7
25.2
24.8
23.0
22.2
22.9
22.0
22.6
Thailand
21.5
21.9
24.9
28.7
33.6
35.1
35.6
37.6
Viet Nam
16.1
16.4
12.3
15.0
18.6
21.2
21.3
21.1
Source: UN Statistics Division. [http://unstats.un.org/unsd/snaama/dnltransfer.asp?fID=16; accessed, 23 Nov 2009]
DEVELOPMENT RESEARCH NEWS
9
July - August 2010
One of the main reasons for this is the low investment rate. Looking at an economy as a whole, output is either allocated to consumption or to investment. The latter is an important factor for future economic growth. In 2009, the share of the Philippines’ investment to output was 14 percent compared with Indonesia’s 31 percent. Before the crisis in 1997, most of the economies in East Asia had investment rates of 30 percent and above. The Philippines’ rate was 34 percent then. After the crisis in 1997, the investment rates fell across the board because of the lack of confidence. Eventually, however, most other countries’ investment rates recovered but not that of the Philippines. Since 2000 up to the present, while there was a very minor increase in 2007, the country’s investment rate over output has been consistently falling. There is hope, though, and one way to go around this falling investment rate, as Dr. Yap mentioned, is to take advantage of the opportunities that are provided by regional economic integration among the different countries in Asia. One way is through production networks which create opportunities for local governments. In order to do that, there has to be an efficient delivery of local services in order to attract investments. Moreover, there is a need to support the small and medium enterprises (SMEs) because the employments generated by SMEs are much higher than the ones generated by large firms. Dr. Yap further emphasized that improving SMEs will also improve income distribution and thus help to alleviate poverty more quickly. Decentralization and the MDGs Meanwhile, Dr. Augusto Rodriguez, Social Policy Specialist at UNICEF, gave a brief background of the study which emanated from a regional undertaking of the United Nations Development Programme, emphasizing, first and foremost, that the study on LSD is all about achievement of the MDGs. The study aimed to broaden regional awareness on and improve the local delivery of basic MDG-related services such as education, health, water, and sanitation. Specifically, the study
Philippine Institute for Development Studies Senior Research Fellow Dr. Danilo C. Israel discusses the highlights of the joint PIDS-UNICEF study "Improving Local Services Delivery for MDGs in Asia: The Case of the Philippines" during a discussion forum held on July 28, 2010 in Butuan City, in partnership with the National Economic and Development Authority Caraga Regional Office. Photo: NEDA-Caraga.
wanted to understand how roles and responsibilities in the provision of said services and how different actors in the national, local, line agencies, nongovernment organizations, and private companies can work together to deliver the services. Second, the study aimed to understand how the service providers are funded in order to deliver these services. Third is to understand what accountability relationships exist with and within service providers, and lastly, the study aimed to identify what capacity service providers need to acquire in order to perform their responsibilities better. Highlights of the report The forum’s highlight is a presentation by Dr. Danilo Israel, Senior Research Fellow at PIDS, of the integrative report on improving local services delivery for MDGs in the Philippines. Before proceeding to a discussion on the aspects of education, health, and governance, Dr. Israel first focused his presentation on the findings of an institutional review of potable water service delivery in the
10
DEVELOPMENT RESEARCH NEWS
July - August 2010
Table 2. Water service providers in the Philippines, as of 2005 Estimated Number
Type of Provider
% to Total
Water Districts
580*
9.2
LGU Utilities
1,000
15.9
Rural Water Supply Associations (RWSAs) Barangay Water Services Associations (BWSAs)
500
8.0
3,100
49.4
Cooperatives
200
3.2
Private Firms
900
14.3
6,280
100
Total
*As of 2003-2004, 127 water districts were considered nonoperational (without a Board or denied financing by the LWUA due to nonviability) Source: World Bank (2005)
Philippines and provided a background of service delivery nationally and in the case study sites. He likewise discussed the performance of service delivery in the case study sites in light of national and MDG goals and identified key problems and recommendations for service delivery in said sites, particularly Agusan del Sur. Dr. Israel reported that the national and local actors involved in the delivery of potable water include local government units (LGUs), Local Water Utilities Administration (LWUA), Department of Interior and Local Government (DILG), National Water Resources Board (NWRB), National Economic and Development Authority (NEDA), Department of Public Works and Highways (DPWH), Department of Finance (DOF), and government financial institutions (GFIs), and the National Anti-Poverty Commission-Water Sanitation Coordinating Office (NAPC-WASCO). On the other hand, there are more than 6,000 providers of potable water to local areas, including all barangays in the country. Table 2 shows the type and the estimated number of water providers as of 2005. The multiplicity of institutions, uncertainty in implementing laws, and weak regulatory framework constitute the institutional problems that affect the delivery of potable water.
The MDG targets that 86.6 percent of the population would have adequate access to safe drinking water by 2015. For its part, the Philippine government aims that 92 to 96 percent of its citizens would have sufficient water supply by 2010. In the case study sites, several pricing and household use issues were identified. These were: (a) water from the water districts in Agusan del Sur is priced much higher than from the water district in Dumaguete City; (b) water from the water district in Bayugan is priced much higher than water from the water district in Prosperidad; (c) the water district in Dumaguete City is earning while the water districts in Agusan del Sur are barely earning or actually losing money; and (d) price or water tariff of the water districts is a major reason why households do not apply for a connection. In terms of local water service delivery, denuded watersheds and water contamination that endanger potable water sources top the list of problems that were identified by the study. Other problems identified include disparities in water service delivery between barangays and rural areas; existence of waterless barangays; low levels of financial support and low technical qualifications of manpower; and lack of integrated planning and implementation. The lack of local regulations, particularly on small-scale groundwater extraction, and the limited participation of NGOs and the private sector in local water service delivery were likewise cited in the study. In the same manner, Dr. Israel enumerated some recommendations that would help address the issues and problems related to local water service delivery. Foremost is the strengthening of the vigilance of local governments on illegal logging and water pollution, among others. To address disparity, distribution of local resources for water services delivery must be based on equity and fairness. Workable approaches for service delivery to waterless barangays must be developed such as small-scale independent providers (SSIPs) and barangay waterworks and sanitation associations (BWASAs). The private sector must also be considered as fund
DEVELOPMENT RESEARCH NEWS sources, together with local governments and other local actors. Education, health, and governance Dr. Israel presented some of the key findings and recommendations of the PIDSUNICEF study on local service delivery affecting education, health, and governance. Other recommendations pertain to the setting of high standards in personnel selection, conduct of relevant trainings and seminars, investment in database and overall knowledge management, and passage of local legislation to regulate small-scale extraction of water. Reacting to the findings of the study, Department of Education (DepEd) Region XIII Director Dr. Gloria D. Benigno said that the Department should not be politicized to avoid tension between itself and LGUs in determining outcomes and priorities. The local governments should prioritize education, however, no matter what inputs the LGU provides and the DepEd should be insulated from politics. According to Dr. Benigno, while it is true that the allocation of classrooms and school buildings suffers from leakages due to some congressional representatives not concurring with the list of recipient schools prepared by DepEd, the latter should nonetheless not be devolved to avoid politics and leakages. As for health services, Department of Health (DOH) Region XIII Assistant Regional Director Dr. Cesar C. Cassion said that in general, the DOH agrees to the findings of the study. Factors like infrastructure and health facilities are some of the matters that must be looked into and emphasized that the DOH has been continuously helping LGUs acquire these facilities by seeking foreign grants and soliciting DOH resources. Essentially, he said, the issue is being addressed, albeit at a slow pace. Other factors such as population growth also contribute to low outcomes in health that cannot be addressed by providing facilities alone. On the finding that the national figures and Caraga region are better off in terms of the reduction of infant mortality rate and are
11 thus on track in achieving the 2015 MDG goal, Dr. Cassion noted that this may be accounted for by the inputs provided by the national government through the DOH. Meanwhile, Engr. Anselmo L. Sang Tian, general manager of the Butuan City Water District, affirmed the study’s claim that there are management problems in small water supply systems, particularly the lack of enough qualified personnel. Engr. Sang Tian likewise cited the lack of coordination among the many agencies in charge of providing water. The LGU-controlled water districts also compete with private water districts. On the investment side, on the other hand, initiatives must focus on safeguarding watersheds which are the source of water supply, according to Engr. San Tian. In terms of governance, DILG Region XIII Director Atty. Rene K. Burdeos commented that the case study presented is reflective of the whole gamut of performance of LGUs in the two study sites. According to Atty. Burdeos, in terms of framework, Agusan del Sur is one of the richest provinces in the Caraga Region, considering that a number of its municipalities are within the first class level and also receive a large amount of internal revenue allotment (IRA). On the cross-cutting findings of the study, DILG is aware of these issues especially on institutional governance, policy, and financial sustainability. Atty. Burdeos shared the optimism that more impetus shall be given on how the LGUs would be able to create their own wealth and be less IRA-dependent, and instead depend on locally generated incomes and resources. He called on local governments to build on their competence, justice, and innovation, especially in local service delivery. Concluding remarks The LSD report argues that improving local service delivery is about improving people’s lives. And to achieve this, the local governments—the forerunners of development— should exercise a significant amount of political will and creativity to overcome the challenges in the policy arena, institutions, and resources.MAG
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World report: low-carbon economy key to global development he transnational corporations or TNCs, being major carbon emitters themselves, are inevitably part of both the problem and the solution to climate change, says the World Investment Report (WIR) 2010.
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foreign investments benefit developing countries specifically through strengthened productive capacities, enhanced export competitiveness, a contribution to global climate change mitigation, and acceleration of their own transition to a low-carbon economy.
The report, which was launched in a forum organized jointly by the United Nations Conference on Trade and Development (UNCTAD), United Nations Information Centre (UNIC) – Manila and the Philippine Institute for Development Studies (PIDS) on July 22, 2010 at the Romulo Hall of the NEDA sa Makati Building, focuses on investing in a low-carbon economy, particularly the role of TNCs in supporting the transition of developing countries into such type of an economy or “green economy.”
Policymakers, said the WIR, need to maximize the benefits and minimize the risks of low-carbon investments. In addition, the Report calls for national strategies to promote low-carbon foreign investment and related technology dissemination to be coordinated with climate change and investment policies at the international level. However, the Report also recognizes the lack of experience, financial resources, and institutional capabilities of many developing countries to achieve such low-carbon investment tasks effectively.
“TNCs can contribute to reducing carbon emissions by improving production processes in their operations and along their value chain and by producing and marketing cleaner goods and services. In the process, this would bring much-needed capital and cutting-edge technology to global efforts to combat climate change,” said Professor Jovi Dacanay of the University of Asia and the Pacific (UA&P) during the launch. The TNCs’ capital and technology will complement the developing countries’ two major challenges in investing in a low-carbon economy: securing financing for investment in appropriate activities and generating or accessing relevant technology.
The case of the Philippines During the Manila launch of the WIR 2010, United Nations Resident Coordinator Dr. Jacqueline Badcock said that “of all the countries in the world, the Philippines is the most vulnerable to tropical cyclones or typhoons and ranks 3rd highest in most number of people exposed in such seasonal events. Climate change can only make things worse for the Filipinos. It is most ironic that the Philippines is and will continue to be among those hardest hit by extreme temperature but like many developing countries, counts more insignificant global greenhouse gases emissions when compared to developed countries.”
The UNCTAD estimates for 2009 showed that TNCs’ low-carbon foreign direct investments (FDIs) amounting to $90 billion alone flowed into three low-carbon business areas of renewables, recycling, and manufacturing of products related to environmental technology. The Report states that low-carbon
To cut deep and to cut early from the developed countries’ greenhouse gases emissions has been the advocacy of Secretary Heherson Alvarez of the Philippine Climate Change Commission. As a response to the Report, Secretary Alvarez said that giving incentives and allowing the flow of market forces alone
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Technological responses to the threats of climate change should be made well within reach of developing countries.
to reduce carbon dioxide emissions will not be sufficient to combat climate change. One global approach to climate change, said Alvarez, is free technology transfer from the developed to the developing countries. In this way, the most significant technological responses to reduction of fossil fuel, creation of solar, wind, and tidal waves will be within the reach of developing countries and eventually transform themselves into green economies. On the other hand, Resident Representative Jesse Ang of the International Finance Corporation (IFC) presented the private sector efforts to help build a green economy in the Philippines. The IFC provides advisory services to businesses and governments and specifically educates national banks about environmental issues and climate change and advise them to lend financing to energyefficient projects. Mr. Ang emphasized the need for more longterm investments on infrastructures like energy-efficient or green buildings in the country. Legislation, said Ang, is needed to enforce making green buildings in the country and also for infrastructure developers to reconsider this “green” way of doing business. In connection to legislation, what the country needs is a regulatory environment that
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has a concern for investors and revenues. Thus, the Philippines has to balance and harmonize legislature processes but the president of the country has to be on top of everything as it will pass through him, said Professor Leonor Briones, Faculty at the National College of Public Administration and Governance (NCPAG) of the University of the Philippines, in her reaction to the report.
On the point of view of the Social Watch Philippines, Prof. Briones stressed that the issue of climate change transcends education, culture, health, and environment and that the bottomline is how climate change impacts on poverty. She challenged everyone to promote awareness on and to advocate for climate change and most especially, demand for a real policy framework for a green economy. The Philippines lacks economic transformation compared with other Asian countries and low investment rate has been one of the factors for the country’s poor performance, explained PIDS President Dr. Josef T. Yap in his closing remarks. Poor governance and weak institutions are the causes of the country’s relatively slow progress and the inability to take advantage of whatever progress is present. Thus, the new administration should also prioritize accountability of the private sector. Overall, the WIR 2010 projects investment in a low-carbon economy as one of the keys to a global sustainable development. With the strengthening impact of climate change on all countries, the need for international investment becomes greater than ever. The rights and obligations of countries and investors alike should be upheld without damaging their relationships and with the continuous effort to ensure the opportunity of a green living for everyone in the world. APQ
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July - August 2010
PIDS Corner launched in Butuan City
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n the next decade, the fortunes of the Philippine economy will lie with local governments.
This is the view that Philippine Institute for Development Studies (PIDS) President Dr. Josef T. Yap shared during the launching of the 15th PIDS Corner at the Butuan City Library in Butuan City. In his opening remarks during the launch held on July 29, 2010, Dr. Yap said that aside from the performance of its mandates, the PIDS is also aware of the importance of local communities in development. To emphasize this, the PIDS President related the previous themes of the annual Development Policy Research Month (DPRM) which centered on local governance. To support the thrust toward local development, Dr. Yap said that the Institute initiated the establishment of PIDS Corners in strategic areas in the country to make sure that PIDS’ research outputs would reach all parts of the Philippines. He thanked the local government of Butuan City for agreeing to host one of the Corners and hoped that this would contribute to the thrust of disseminating research outputs on a wider scale, scoring that this is also key to Philippine economic development.
Meanwhile, Butuan City Mayor Dr. Ferdinand M. Amante, Jr. shared that while it is true that people are now swamped with information accessible through various sources, especially through the Internet, the need for dependable sources like copyrighted publications and books readily-at-hand and in hard copy form is an imperative. More so that the PIDS Corner contains research and dissertations on development and other studies that could be used to enhance Butuan City’s research activities and further studies in the locality. The chief executive expressed gratitude to the PIDS, saying that from among the many requests submitted by various LGUs, it is honored that the Institute chose Butuan City especially during this time when, according to Mayor Amante: “the local government is marshalling all resources to chart a direction that would set the city in a course toward development that can be felt and experienced by the most marginalized among our people.” In turn, he promised that their local government and people would take care of the PIDS Corner materials and safeguard these, and put to maximum use for their city’s further growth and development. MAG
Butuan City Mayor Hon. Ferdinand M. Amante, Jr. (left) and Philippine Institute for Development Studies President Dr. Josef T. Yap (right) formally opened the PIDS Corner at the Butuan City Library in a ribbon-cutting ceremony held on July 29, 2010. The two representatives likewise signed the Memorandum of Agreement between Butuan City LGU and the PIDS. The PIDS Corner at the Butuan City Library is the 15 th PIDS Corner that has been established so far, but this is the first in the Caraga Region. Photos courtesy of Butuan City Information Office.
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July - August 2010
Philippines hosts annual conference on East Asia cooperation
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his year, the Network of East Asian Think Tanks (NEAT)Philippines, through the Philippine Institute for Development Studies (PIDS), hosted the network's annual conference and country coordinators’ meeting. Supported by the Department of Foreign Affairs (DFA), this year's conference provided a forum to discuss in detail the reports of the NEAT working groups, which include: (a) East Asia’s evolving regional architecture (NEAT-Thailand); (b) East Asian financial cooperation in the post-CMI era (NEATChina); (c) East Asian trade and investment facilitation (NEAT-China); (d) East Asian food security (NEAT-Japan); (e) cultural exchange through education; and (f) water resource management (NEAT-Singapore). Endorsed by the East Asian Study Group (EASG) and initiated largely by the People’s Republic of China, NEAT was established during the 2002 ASEAN+3 Summit imbued with the following functions: (1) pool together academic resources of East Asian countries to provide intellectual support to East Asia cooperation and provide a platform to promote communication and exchanges between East Asia and the rest of the world; (2) study issues and initiatives brought forward by the 10+3 Summit meetings; and (3) study major issues concerning East Asia cooperation in key areas and work out strategic ideas and concrete policy suggestions for regional integration and submit research reports to the 10+3 Summit. To facilitate these objectives, NEAT holds annual conferences in rotation among East Asian economies which are attended by NEAT members who consist of reputable academic and research institutions from ASEAN+3 countries. Past conferences have discussed many important subjects, ranging from how to move toward East Asia cooperation to key ap-
For 2010, the Philippines hosted the 8th Annual Conference and 13th Country Coordinators Meeting of the Network of East Asian Think Tanks (NEAT) with the aim of studying key issues pertinent to East Asia, crafting policy recommendations and serving as a venue for future joint workshop and research works.
proaches on consolidating East Asia cooperation and the priority areas. Policy recommendations formulated from these activities were forwarded to the subsequent meetings of ASEAN+3 leaders. The NEAT country coordinators’ meetings, on the other hand, lay the groundwork for these annual gatherings. NEAT activities for future cooperation, including issues for further studies, agenda for future workshops and roundtable discussions as well as possible areas for joint research undertakings, are finalized and set out during these meetings. Based on the reviews and discussions in the annual conference, a joint memorandum outlining the policy recommendations and actions will be prepared for submission to the next ASEAN+3 Leaders’ meeting. Being this year’s host country, PIDS was tasked to finalize the memorandum and to submit the document to the East Asian Leaders Summit in Viet Nam through the DFA. The country shall also host and manage the NEAT website which is being developed. DRN
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Ed notes...from p. 1
The devolution of health services to local government units (LGUs) in the 1990s, however, caused a breakdown in this network of referral system, with BHUs being managed by municipalities of one province and then higher-level health units being under the jurisdiction of and located in another province, albeit nearby, of which the municipalities are not a contiguous part. In this sense, referral has become difficult as the unity and integration of the old referral system network had broken down. In many instances, this has led to cases where the first unit of health care, which should have attended to the most immediate needs of the public, is lacking in equipment, medicines, and personnel to respond to such needs simply because the LGU that is supposed to manage and maintain it lacks the necessary fund to do so.
notice.
It has also led to many situations where patients prefer to go directly to the higher–level hospitals because they are the only facility in the area where medical needs such as doctors, medicines, and equipment may be availed of. As a result, health care availment has become more costly. Where patients could have gone di-
rectly to health stations nearest their place of residence for simple medical attention, they would however opt to go to tertiary hospitals precisely because of the above reason. And these hospitals have to attend to their needs, which thereupon eats into their own resources that are supposed to cater to more complicated and serious medical cases. What can be done to address such situation? The lead feature of this DRN issue looks into the hospital situation, specifically that of the Department of Health (DOH)-retained hospitals. Should their budgets be increased? Are they capacitated to effectively handle their budgets? How do they allocate and monitor their respective budgets? And are they able to attend and give to all the patients who flock at their doors? “Health is wealth” is a universal mantra. And for this to be a reality for all Filipinos, the country’s entire health care system, not just the hospital system but also primary health and health financing, among others, must be seriously looked into, assessed, and re-assessed. The bottomline, after all, is to have a quality, affordable and accessible health care delivery system for all Filipinos. DRN