Given the remarkable strides in improving health outcomes since the 1970s, Filipinos are generally living longer and healthier lives. But despite these advances, the country lags behind many of its neighbours on key health indicators, such as the maternal mortality rate and incidence of tuberculosis, and its health expenditure is considerably less than other countries in South-east Asia. At the same time, lifestyle diseases are emerging as a new health challenge, requiring different responses. These are the issues that the Philippines faces as it moves forward with its commitment to achieve universal health coverage, ensuring that all Filipinos have access to quality, affordable health care.
Health System
The Philippines has a mixed public-private health care system, with private services modelled along the lines of the US’ system. The private segment caters to about 30% of the population, but is far larger than the public system in terms of financial resources and staff. According to the most recent data from the National Health Facility Registry (NHFR) at the Department of Health (DoH), the Philippines has 1581 hospitals, including 591 public. About 24% of them do not have licences. Hospitals are tiered according to the facilities they provide, with Level 1 being little more than an infirmary and Level 4 covering facilities with the most advanced equipment and expertise.
There are also 1428 fully licensed birthing stations – 630 public and 798 private – and 480 infirmaries – 207 public and 273 private – two of which do not have a licence, according to the NHFR. The government also operates 20,123 Barangay Health Stations and 2588 rural health units. These are mostly run by local and provincial authorities under a devolved management scheme introduced in 1991, with the DoH providing technical assistance and being responsible for the operation of only a few tertiary facilities.
Indicators
Since the 1970s successive governments have lifted life expectancy at birth to 72 for women and 65 for men, according to World Bank figures, through structural reforms and increased spending, as well as by improving access to clean water, sanitation and vaccination programmes. Spending on health has also risen over the past decade, although not as quickly as it has in the rest of the Asia-Pacific region.
The DoH’s budget was P122.63bn ($2.6bn) in 2016, compared with P86.97bn ($1.8bn) the previous year. Spending in 2010 totalled only P24.65bn ($521.5m). The passage of Republic Act 10351, also known as the Sin Tax Reform Law, in 2012 increased duties on tobacco and alcohol and helped boost the amount of money available for health expenditures.
According to DoH figures, by 2015, 83% of children were fully immunised, with 73% coverage achieved for the measles vaccine. This has helped reduce the infant mortality rate from 28 per 1000 live births in 2008 to 21 in 2015, and the under-five mortality rate from 34 per 1000 live births to 27 over the same time period. The under-five mortality rate now matches the targets that were set under the UN’s Millennium Development Goals (MDGs), and while the infant mortality rate is still higher than the MDG, the trend is downwards. The attendance of skilled midwives and other birth attendants, as well as improved antenatal coverage and more deliveries at hospitals and clinics, has also helped reduce maternal mortality to 114 per 100,000 live births in 2015, compared with 129 in 2010. Again, while this is higher than is ideal and not yet in line with the MDG, the mortality rate is improving.
Moving Forward
Health authorities in the Philippines are now focusing on the UN’s Sustainable Development Goal (SDG) 3: good health and well-being. The aim is to achieve universal health coverage and ensure that the poorest Filipinos have access to affordable and effective health care. In her presentation at the Health Summit in Pasay City in September 2016, Paulyn Jean B Rosell-Ubial, secretary of health, noted that the country struggled with “persistent inequities” in health outcomes. A Filipino child born to one of the country’s poorest families is three times less likely to reach his or her fifth birthday. Moreover, with around a quarter of the population living below the poverty line, according to World Bank figures, childhood malnutrition and related development issues remain a problem. After 25 years of improvement, the prevalence of nutritional stunting actually increased to 33% in 2015, compared with 30% in 2013, according to a report by the Save the Children Fund. The international NGO added that childhood malnutrition costs the country nearly $7bn, or 3% of GDP, per year in terms of education spending and lost productivity.
Spending
Total health expenditure rose to P585.3bn ($12.4bn) in 2014, up 10% from P530.3bn ($11.2bn) the year before, with private out-of-pocket sources accounting for more than half of total health spending. Under the 2010-20 Health Care Financing Strategy, the government set itself a target of increasing health expenditure to 4.5% of GDP, national government spending to 10% of health spending and national government spending on public health to P10bn ($211.6m). While it had surpassed all these targets by 2014, it has still to reach five others: lifting the health budget as a percentage of total government spending to 6%; reducing out-of-pocket health spending as a percentage of total health expenditure to 45%; increasing local government spending as a percentage of health spending to 11%; ensuring local government spending on health reaches P29bn ($613.5m); and raising the contribution of the National Health Insurance Programme ( PhilHealth) to 19% of total health expenditure.
In a bid to achieve its goals, such as financial protection from the high cost of health care, better outcomes and a responsive system, the new administration of President Rodrigo Duterte has devised the ACHIEVE framework under the Philippine Health Agenda 2016-22, which aims to leverage additional funds from the Philippine Amusement and Gaming Corporation. “This is really something positive. Before, the government could not even reimburse the expense of a hospital. [Now] hospitals will be ready to deal with sick Filipinos,” Climaco Caliwara, executive director of the Philippine Hospital Association, told local daily the Manila
By 2030, in line with the UN’s SDGs, the Philippines aims to reduce maternal mortality to less than 70 per 100,000 live births, and the under-five mortality rate to as low as 25 per 1000 live births. Other targets include an end to the AIDS epidemic, tuberculosis, malaria and neglected tropical diseases, as well as reducing incidences of premature mortality due to non-communicable diseases (NCDs) by one-third.
Role Of Private Care
The scale of demand for health care services in a country like the Philippines, given the government’s limited finances, means private health care companies have long played a major role in the health sector. Private operators are mostly local companies, as foreign investment is restricted to 40% – which is the lowest rate in the region after Malaysia. They are market oriented, mainly for profit and concentrated around the more affluent areas of central Luzon and Metro Manila. Salvador P Castro Jr, chairman and president of medical project services firm SP Castro, told OBG, “The health care industry has faced high growth and significant investment as demand for health services grows in tandem with an expanding middle class. Metro Manila, in particular, has seen a surge in investment in new facilities or expansion of existing ones, primarily driven by the private sector.”
Local Units
Under the Local Government Code of 1991, responsibility for public health care was devolved to local government units (LGUs) across the country. The decision divided health care providers along municipal, provincial and regional lines, leaving LGUs responsible not only for health care in their regions, but also for the management of provincial- and district-level clinics and hospitals within their area. LGUs now operate most public-funded facilities. But the devolution also led to the breakdown of the country’s integrated referral system, putting further strain on the service.
The World Health Organisation (WHO), in a 2011 review and report of the country’s health care system, reported that, “The involvement of three different levels of government in the three different levels of health care has created fragmentation in the overall management of the system. Local and provincial authorities retain considerable autonomy in their interpretation of central policy directions, and provision of the health services is often subject to local political influence. As a result, the quality of health care varies considerably across the country.”
The Philippines had 1.8 hospitals per 100,000 people according to the WHO’s “World Health Statistics 2015” report. According to the most recent available figures, in 2012, for a population of around 100m people, the country had 98,155 hospital beds, with 49,372 in public hospitals and 48,783 in private facilities. The Philippines’ hospital bed density rate is the fourth-lowest in ASEAN, after Myanmar, Laos and Cambodia, “reflecting the potential for growth,” according to a Frost & Sullivan study prepared for UK Trade & Investment, now the UK Department for International Trade.
Public Sector
Government hospitals have been criticised for long waiting times, overcrowding, poor hygiene and a lack of respect for confidentiality. This generally negative perception has encouraged those with higher incomes to seek private treatment. Moreover, the standard of health care is uneven, with both public and private hospitals situated in developed and urban areas. Some 34% of all hospital beds are situated in the National Capital Region, although it is home to only around 12% of the country’s population, according to the Philippine Institute of Development Studies.
Every year some 600,000 patients pass through Philippine General Hospital, which has 1500 beds. Its emergency room deals with 2000-3000 patients every day, according to Dr Jose Joven Cruz, assistant director at the Philippine General Hospital. The hospital has asked for funding to add an additional 500 people to its staff of 4000 and is looking to build additional floors. “We are at the apex of the system,” Cruz told OBG. “We are always full. All the specialities are represented in this hospital, and we get patients from all over the country.”
New Partners
In order to address problems in the public sector, previous governments have implemented public-private partnership (PPP) programmes to allow private firms to finance, design, build, operate and maintain a hospital for a maximum of 25 years, after which it must be handed over to the DoH. PPPs can also take the form of technology transfer, training and funding such as La Union Medical Centre, which was set up as a joint venture with private investors to secure a haemodialysis machine and other equipment, as well as staff, under which the investors keep a share of the revenues. The investors pay the necessary staff, rental and other costs, and share 15% of the revenues with La Union Medical Centre. The authorities have also worked with foreign aid agencies to improve health care facilities, with three hospitals in Iloilo province reopening in October 2016 after a three-year renovation programme funded by the Korea International Cooperation Agency. The hospitals now have more beds and better equipment, ensuring local people have access to better treatment.
Ayala Corporation, through its Ayala Healthcare Holdings unit (AC Health), which it set up in 2015 to lead its expansion in the industry, is among the most active in the industry. It has a joint venture with Mercado Group to operate three private hospitals and six clinics, and, through its Globe Telecom unit, runs a medical hotline service in a joint venture with Mexico’s Salud Interactiva. Under the QualiMed brand, Ayala also plans to build a chain of 10 hospitals and 10 clinics over the five years to 2020. It has also been acquiring stakes in medical retailers. In February 2017 Paolo Borromeo, the chief executive of AC Health, told the Nikkei Asian Review that the company sensed the Philippines health care sector was “ripe for disruption”. Meanwhile, in an effort to target the more affluent, Metro Pacific Investments has taken over 13 tertiary hospitals with nearly 3000 beds. The country’s largest private hospital group is now considering an initial public offering to fund further expansion in the health sector.
Social Insurance
The considerable cost of health care for ordinary Filipinos has long been a concern to the country’s governments. The National Health Insurance Act of 1995 established PhilHealth, which is managed by the Philippine Health Insurance Corporation (PHIC). The aim was to reduce out-of-pocket expenditure and address inequities in health care financing by pooling the funds contributed by healthy members to subsidise those who could not afford care, but over the years, it became clear that the country’s poor benefit from the system at around the same level as richer citizens amid concerns about the quality of care and the risk of co-payment. In 2012 the WHO described the Philippines health care financing system as “fragmented with insufficient government investment, inappropriate incentives from providers, weak social protection and high inequity.”
Successive governments have attempted to revise the programme to broaden coverage. In 2013 the Philippines introduced the Universal Health Care Act to ensure that all Filipinos, especially the poor, receive health insurance coverage from PHIC. The Duterte administration has renewed the government’s commitment to achieving universal coverage, from about 92% currently, by prioritising the poor and marginalised. It is low-income Filipinos who work in the informal sector who tend to fall through the gaps, because those who are employed are guaranteed health services, while the very poorest are sponsored by the government.
Care For All
To address this problem, the plan is to consolidate categories within the covered population to just two: formal and non-formal work. This is in addition to simplifying the rules and committing to “no balance billing” for poorer patients in basic hospital accommodation. The latter was first introduced in 2011 but not properly enforced. Previously, those who had used up their premium were asked to pay the excess, which they often could not afford. There will also be a fixed co-payment for non-basic accommodation. PhilHealth will also be the main gateway for free or affordable care, with all Philippine nationals being members – the employed will pay their premiums through payroll and the rest through a tax subsidy. The national health scheme is also expected to become the main revenue source for all health care facilities, with benefits expanded to cover a wide variety of services and health care providers grouped into networks to ensure services are more efficient.
The hybrid health system, and the limitations of PhilHealth – which offers a defined set of services at predetermined rates and does not cover items such as dental check-ups – has helped fuel the development of health maintenance organisations (HMOs), with about 28 HMOs now registered across the country. Now regulated by the Insurance Commission, after regulatory control was transferred from the DoH in 2015, the country’s HMOs provide access to a wide range of health care services to their members, depending on the fees paid and the package bought. HMO plans for corporate accounts are always integrated with PhilHealth benefits because employers pay 50% of their employees’ PhilHealth premiums. There are few individual and family plans, which tend to be more expensive.
New Packages
In line with government initiatives to insure all Filipinos have health coverage, HMOs are also rolling out micro-health plans that are targeted at the working poor – people who make a living as fishermen, drivers, farmers and labourers. “It is just the cost of a bottle of beer – about P36 ($0.76) a day – and the benefits are good,” Carlos Da Silva, executive director of industry body Association of Health Maintenance Organizations of the Philippines, told OBG. “These products should be able to bridge health care gaps across the labour force.” Under HMO policies, accredited doctors are not allowed to charge private rates when a patient has exceeded their maximum limit per illness or injury for the year, but only at the HMO agreed contractual rate.
Keeping Costs Down
The cost of medicines has traditionally been one of the largest out-of-pocket costs for Filipinos in the health care system, but the Generics Act of 1988, which required the production of drugs identified by their generic names and that providers to write out prescriptions using only generic terminology, has helped rein in costs and contributed to the development of a local drug manufacturing industry.
The country’s pharma segment is the third largest in ASEAN, after Indonesia and Thailand. The market is expected to be worth $4.1bn by 2020, up from $3.4bn in 2015, according to research and consulting firm GlobalData. IMS Consulting Group, meanwhile, forecasts growth of 5% both in 2017 and in 2018.
Furthermore, the Universally Accessible and Affordable Quality Medicines Act of 2008 introduced price caps on medicine prices and led to the adoption of measures that promote access to affordable and good quality drugs to protect public health. The following year the Food and Drug Administration (FDA) Act ensured access to patented and non-patented medicines, as well as registered drugs, medical devices and diagnostics. The focus on affordability has also fuelled the expansion of pharmacy chains specialising in generics, increasing the choice of drugs available to patients. Burgeoning demand has also prompted more established pharmacies to stock the drugs. About 85% of medicines in the Philippines, including nutritionals, are sold over the counter rather than through doctors and hospitals, according to DoH figures. Botika ng Barangays, government-licensed pharmacies that are privately owned and operated, have also appeared in villages across the Philippines, selling drugs at lower prices and providing rural communities with access to quality medicines. In 2014 there were more than 7700 Botika ng Barangays, compared to 2000 in 2010.
The market’s potential is such that local conglomerates have begun to buy stakes in local generic pharmacies. In May 2016 Robinsons Retail Holdings of the Gokongwei Group bought 51% of The Generics Pharmacy, a network of 1800 largely franchised chemist shops. In February 2017 the Ayala Corporation, which bought 50% of Generika in 2015 with the intention of opening 1000 stores by 2020, took a minority stake in Wellbridge Health, which operates an online pharmacy. Local drugs manufacturers have also benefitted from the growth in demand for generics. United Laboratories has about 48% of the market.
Clinical Trials
The Philippines is also an emerging destination for global clinical trials. According to the US Food and Drug Administration, the number of clinical trials in the Philippines increased by 31% in 2009, the eighth-highest annual growth rate in the world in that year. In 2015 there were 461 clinical trials under way, most of them part of global programmes and subject to strict international conditions, according to a joint report by IMS Consulting Group and the Pharmaceutical and Health Association of the Philippines (PHAP).
According to the most recent figures from the Philippine Council for Health Research and Development, there were 113 registered research studies in 2013, 74 of which were clinical trials, three times the number of registered studies the previous year. Contract research organisations (CROs) and research-based pharmaceutical companies funded 65 of the 113 studies, and the budget for these could reach more than P1bn ($21.2m), according to the PHAP report. Research-based pharmaceutical companies conducting local trials are also working with CROs in the Philippines in a move that the Philippines FDA expects to lead to further improvements in the quality of clinical research. The University of the Philippines’ National Institutes of Health has also teamed up with publicly listed Philab Industries to work on research relating to improving diagnostics, with a focus on diseases that affect the country. Under the partnership, announced in August 2016, the plan is to construct an 18-storey, P1.6bn ($33.8m) building to house 10 health institutes.
This focus on research is likely to have a number of benefits for Filipinos. One area of study that has garnered much attention and investment is stem cells. “There are now more than 80 approved applications for cord blood stem cells, primarily for some forms of leukaemia and other blood disorders,” Michael Arnonobal, CEO of Cordlife Philippines, told OBG. “Numerous clinical trials are also ongoing worldwide investigating the use of stem cells in the treatment of various diseases, from cerebral palsy and diabetes, to other neurological and degenerative disorders. This is an indication of the strong trend towards cellular therapy.”
Infectious Diseases
Straddling the tropics, the Philippines has long struggled with the presence of certain infectious diseases. Vaccination programmes and improved sanitation have helped reduce the incidence of some communicable diseases, particularly those affecting young children and the elderly. A free pneumococcal vaccination for those aged 60-65 was introduced in May 2016, providing protection against diseases such as pneumonia, meningitis, and middle-ear and sinus infections. The PHAP also reported that research-based pharmaceutical companies have introduced more than 55 vaccines in the country, focusing particularly on diseases that affect women, children and the elderly, such as pneumonia, measles and rubella, and firms in the segment have also released 76 new molecules or combinations for the treatment of NCDs, including cardiovascular diseases, cancer, chronic respiratory infections and diabetes.
While it has managed to control some diseases, others are emerging as major public health concerns. Along with Afghanistan, the Philippines has the fastest-growing HIV rate in Asia. “Right now, the Philippines runs the risk of letting the infection get out of control,” Steven Kraus, director of the Joint UN Programme on HIV/AIDS (UNAIDS) told The New York Times in February 2017. Although the actual number of people living with HIV remains low at 39,600, UNAIDS estimates the rate of new infections increased by more than 50% between 2010 and 2015. Some 841 cases of the disease were reported in June 2016 by the DoH – the highest monthly figure since 1984. Efforts by the DoH and Department of Education to raise awareness about HIV and tackle the virus’ spread have been hampered by conservative politicians and religious groups, which remains hugely influential in the country. A plan to distribute condoms and expand sex education in public schools was scrapped in January 2017, and legally anyone under the age of 18 is required to demonstrate a parent’s consent to buy condoms or get tested for HIV.
In his state of the nation address in July 2016, President Duterte indicated he would implement the Reproductive Health Law, despite opposition from the religious groups. The law was passed in 2012 in the face of objections from religious leaders and took effect after the Supreme Court ruled it constitutional two years later. Under the law, the government would be able to lead a public information campaign on sexuality and ensure the distribution of contraceptives.
Dengue & Zika
The Philippines also has to contend with mosquito-borne diseases such as dengue. From 2013 to 2015 the country ranked first in dengue incidences in the Western Pacific, according to the WHO. The Philippines also participated in the clinical trial for the world’s first dengue vaccine, Dengvaxia, developed by Sanofi Pasteur and said to be 90% effective against the most severe strains of the disease. A mass vaccination programme worth P3.5bn ($74m) was launched across schools in April 2016, the first in the region, and aims to vaccinate 1m children aged nine and above.
The zika virus, another mosquito-borne disease, has also become endemic. The Philippines reported 12 cases in 2016. Zika causes what seems like a case of the flu, but is thought to result in birth defects such as microcephaly. The government has committed to eradicating rare tropical diseases such as zika by 2030, and in March 2017 it announced plans to start a nationwide registry of rare diseases to better help those afflicted seek medical treatment. In early 2017 the DoH announced that in 2016, 10 of the country’s 28 provinces had reached the goal of eliminating schistosomiasis as a public health problem, and 35 out of 45 endemic provinces had eliminated lymphatic filariasis, 41 areas were declared rabies-free, and 17 out of 79 provinces surveyed had managed to reduce the prevalence of soil transmitted helminthiasis to less than 20%.
NCD
The leading causes of death in the Philippines for both men and women are now lifestyle diseases such as heart disease, which was the top killer in 2012, accounting for 15.4% of deaths, followed by strokes (11.1%) and diabetes (5.9%), according to WHO data. The crude death rate for each has been increasing since 2000, and the result has been a decline in healthy life expectancy – nine years less than overall life expectancy for both men and women in 2012 – with heart disease and diabetes being the most likely to cause poor health and premature mortality. Filipinos aged 30-70 have a 28% probability of dying from an NCD, according to the WHO. The increase in NCDs also has consequences for an economy that lost an estimated $10bn of GDP due these illnesses in 2010, a figure that is set to triple by 2030, according to the PHAP.
With the burden of NCDs expected to increase threefold by 2030, the DoH recently established a specialised NCD unit and, given the costs involved, is focusing not only on treatment, but also prevention. The DoH is encouraging people to live healthier lives, including the poorest and most remote communities, as well as emphasising the need to catch potential problems early by seeing a doctor more often (see analysis).
The TseKap coverage package, introduced in early 2015, provides Filipinos with a basic health check-up and laboratory tests. The scheme is designed to reduce health care outlays, principally for poor households. Teodoro Ferrer, president of Generika, told OBG, “Health is not only about the cure, but more important and with longer lasting benefits are wellness and prevention. However, for preventive health care initiatives to succeed, they need to be done on a mass level, with the involvement of LGUs and NGOs.”
Outlook
The Philippines continues to face several challenges in its bid to achieve universal health care and reform a system that is not working for those who need it most. The country’s population is not ageing as fast as elsewhere in South-east Asia – by 2020 about 6% of its population will be aged 65 or over, compared with 4.2% in 2010 – which should ensure some relief from the health needs associated with an ageing population, but policymakers will need to work together if they are to reach their goals and not be afraid to take on political and religious interests to protect the nation’s health.
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