Capitalism with Consequences: In Refutation of the Privatization of Public Hospitals in the Philippines.docx

Running Head: PRIVATIZATION OF PUBLIC HOSPITALS

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Capitalism with Consequences: In Refutation of the Privatization of Public Hospitals Mia Agnes M. Tacoloy University of Asia and the Pacific

Abstract Under the Aquino administration, the Public Private Partnership (PPP) program aimed for reform in the country’s health sector. One way the government seeks to do this is by awarding Build Operate and Transfer (BOT) projects to private entities who would finance, build and operate the public hospital maintained in the contract. This is so because as many government health officials have made clear, the current administration is lacking in funds needed to upgrade these health facilities and are looking towards private firms to help implement true quality reform. However, there are consequences to this recourse of action, some that may be far-reaching and defeats the principle of the

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Filipinos’ right to quality, affordable health services. This paper explores the topic of privatization in the Philippines, focusing on why the author is not in favor of its implementation in terms of public or state-owned hospitals. There are three main points that are discussed supporting the idea that the impending privatization of public hospitals should be stopped. One point of refutation is also discussed which seeks to contradict one of the most common arguments of privatization proponents: inefficiency in the government. Keywords: privatization, modernization, PPP, gov’t employees, underprivileged

Capitalism with Consequences: In Refutation of the Privatization of Public Hospitals There has been significant debate in our country, involving experts and the public alike, on the issue of privatization. Defined as the “transfer of ownership, property or business from the government to the private sector” (The Economic Times, n.d.), the Philippine government has given private firms many opportunities for operation of public services. The healthcare industry is one social service that has become increasingly deregulated, which can be shown through the gradual privatization of state-owned hospitals. Currently these health facilities are further developed

using

the

Build-Operate-and-Transfer

(BOT)

method

under

the Aquino

administration’s Public-Private Partnership (PPP) program. PPP deals, among other targets, are aimed at reform through rehabilitation of public hospitals; in early 2014, then Health Secretary Enrique Ona conveyed that all DOH-owned hospitals were “candidates for privatization” (Calleja, 2014). The impending maintenance of hospitals by the private sector is beneficial,

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especially in appropriating funds and providing medical expertise. However, the government should regain these hospitals because actively promoting and administering to the people’s basic needs, including that of accessible and affordable healthcare, is both an ethical and constitutional responsibility. According to the 1987 Constitution, “the government must adopt an integrated and comprehensive approach to health…to make essential goods, health and other social services available to all people at affordable costs”. The impending privatization of public hospitals should then be halted for the protection of social equality and public interest. Amid public disapproval to reports regarding the privatization of at least 20 hospitals under DOH, Secretary Janette Garin upheld in September 2015 that state hospitals will not be privatized; clarifying instead to the public that facilities under the PPP were for “modernization” (Luci, 2015). When a hospital is modernized, services are usually sold at higher costs. This is so because upgrading a hospital covers acquiring medical equipment of better quality and administering innovative procedures for treatment, among others, which the government cannot afford. The private sector is more than capable of providing for these yet the need to return investments immediately and generate profit is often prioritized. Hospitals would then be dependent on customers to shoulder its expenses. Two years ago, public outcry occurred at reports of a “Modernization of the Philippine Orthopedic Center” project; the hospital had been awarded as a BOT project to bidder Megawide Construction Corp. in late 2013. Various groups filed a petition before the Supreme Court seeking to halt its implementation (Calleja, 2014). The opposition grew amid fears that healthcare would ultimately become unaffordable, and therefore inaccessible, to indigent patients. This is warranted; the basic right to quality and affordable healthcare would be largely disregarded should privatization continue to grow. It would be at the expense of the underprivileged as treatment in state-run hospitals would be beyond their reach.

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The Philippine Orthopedic Center (POC) is the sole hospital in the nation specializing on bone diseases and its patients currently avail of free medicines and supplies. For this facility and many others, many lives may be compromised should extra commercial fees be charged, especially those that rely on the free services of a public hospital. It would be an added burden particularly to those who are in need of great care or treatment. In this light, the modernization of hospitals can prove to oppress a large portion of society as basic healthcare becomes increasingly unattainable. Upon the privatization or modernization of a public hospital, it is inevitable that major changes will be applied to its core management. A private firm may usher in its own personnel and the status of human resources can undergo modifications. As a result, government employees are at risk of losing their jobs or face the possibility of earning lower income. This is because the hiring of personnel may be lessened and wages may be reduced for the facility to maximize profits. Consequently, the advent of low salaries might have serious effects in the quality of care rendered to patients. The facility’s workforce would be mostly private due to a contract; those who would like to remain in government service can maybe transfer to another public facility, since absorption in the new workforce may not be guaranteed. Referring to the public workforce at the POC, former Health Secretary Enrique Ona explained that employees will have three options. First, they can continue public service at the New Philippine Rehabilitation Center, located within the compound of the POC. Or they can apply for a new position at the privatized hospital. Lastly, those of a certain age can opt for early retirement (Romero, 2015). An uncertain future as to employment puts many livelihoods at risk, including healthcare professionals, clerical staff, and pharmacists. The privatization of public hospitals, should it continue, affects

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those who treat and care for the sick besides the patients themselves; employment may be rendered inaccessible for many. Without proper regulation by the government, privatized hospitals may not meet certain standards of service. This very much applies to PPP deals that use the BOT method where the private firm handles operation of the hospital while the state retains ownership. Under new management, the facility may implement practices where a firm line is placed between paying and non-paying customers. Since the generation of profit is considered to be a primary goal of private entities, prejudice is more likely to occur against the poor in acquiring necessary treatment. A study conducted in 2012 to compare the private and public healthcare systems in low- and middle-income nations reveals that while regulatory conditions do affect both the public and private sector, adequate regulation in low- and middle-income countries is much weaker (Basu, Andrews, Kishore, Panjabi & Stuckler, 2012). The study further concluded that while public hospitals usually lacked the availability of supplies, hospitals managed by the private sector tended to “lack published data by which to evaluate their performance”, “had greater risks of low-quality care” and “served higher socio-economic groups”. Under the PPP, better regulatory procedures should be adopted and monitored by the government so as to prevent abuse of management in privatized hospitals. If private firms are given extensive freedom in operating government facilities, discrimination due to social status would become the norm. In many reported cases, patients who cannot afford a down payment are denied admission into hospitals. Those who cannot receive a badly needed operation due to financial difficulty cannot expect to be treated, and those who cannot pay the full amount upon time of discharge from a prolonged stay will not be allowed to do so. Another relevant case would be the POC, where it is claimed by Third World Health Aid Philippines in a recently launched book entitled

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"Critical Condition: Privatized Health in the Philippines" that its privatization would automatically reduce beds for non-paying patients from 85% of the bed capacity to 70% (Aytin, 2015). Similarly Robert Mendoza, Secretary General of the Alliance of Health Workers (AHW), cited the Philippine Heart Center (PHC) among many corporatized hospitals where services have become inaccessible. In 2010 the number of charity beds, which caters to the underprivileged in the PHC has decreased to 20% of total bed capacity from 70% in 1975 when the hospital was first established (Umil, 2012). Since the current administration still needs to improve upon regulation, healthcare services under privatized hospitals would only truly cater to a particular margin of society. Many will argue that the government does not have the financial capacity nor technical expertise to ably manage hospitals for the public. While it is true that the current administration is lacking in funds, it is nonetheless the government's duty to provide and ensure the proper distribution of healthcare services to Filipinos and not solely the private sector. By leaving healthcare in the hands of private firms, the state may as well be turning a blind eye to the effects privatization will have on Filipinos. As such, steps can be taken to address the dilemma of financial capacity: with the proper allocation of taxpayer funds and a suitable increase of the annual budget for the health sector, the government will be able to devote efforts in improving areas of health where it is needed. Funds should be allocated for quality infrastructure, major equipment and innovative service implementation, as well as due maintenance of these. As the standards of public facilities improve, and free services become widespread, more Filipino will flock to public hospitals instead of resorting to expensive fees anywhere else as a result of illequipped government hospitals. The World Health Organization (WHO) recommends that nations allot at least 5% of their GDP to the budget for health; in the Philippines’ current and past

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administrations this is not the case. According to the Gabriela Women’s Party (GWP), at P56.8 billion, the allocated budget for the DOH in 2013 represented only 1.89% of the GDP (Umil, 2012). If the government follows this recommendation, most of the budget can be apportioned to the improvement of public hospitals without having to mostly rely on PPP deals. Another way to in which privatization can be prevented is the efficient training and hiring of competent personnel. In existing government-led initiatives such as TESDA, the quality training of personnel can be much improved on such that more people will be attracted to work for the government despite considerable appeal coming from the private sector. The government can increase the competence of skilled medical workers and give incentives as well, so that public hospitals would be ably managed and would cater to every sector of society. By doing so, facilities will also become less motivated by profit and more for genuine service. In conclusion, the modernization or privatization of state hospitals may work to an advantage in a country like the Philippines. However, it is prone to many adverse effects which can deprive the common Filipino citizen of the right to appropriate and competent healthcare; the same right that the government should uphold, ensure and provide for as a moral and constitutional responsibility. Contrary to what the government aims to achieve through its PPP deals, the public healthcare system can weaken further; exorbitant service fees, risks in employment security and inadequate regulatory conditions that trigger social inequality are dilemmas to be encountered. The impending privatization of public hospitals under the current administration should then be stopped in the interest of public welfare and general improvement of the country’s public health system.

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References Aytin, A. (2015). TWHA Philippine partners launch a book on the impacts of privatization on people's access to health. Third World Health Aid. Retrieved from http://twha.be/blog/twha-philippine-partners-launch-book-impacts-privatization-peoplesaccess-health Basu, S., Andrews, J., Kishore, S., Panjabi, R., & Stuckler D. (2012). Comparative Performance of Private and Public Healthcare Systems in Low- and Middle-Income Countries: A Systematic Review. PLOS Medicine, 9(6). Retrieved from http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001244#s4 Calleja, N. (2015). All 72 DOH-run hospitals candidate for PPP. INQUIRER.net. Retrieved from http://newsinfo.inquirer.net/578114/all-72-doh-run-hospitals-candidate-for-ppp

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Luci, C. (2015). DOH: Gov’t hospitals won’t be privatized. Manila Bulletin News. Retrieved from http://www.mb.com.ph/doh-govt-hospitals-wont-be-privatized/ Romero, J. (2015). Fears abound in Orthopedic Center's privatization. Rappler.com. Retrieved from http://www.rappler.com/business/industries/208-infrastructure/87692-orthopediccenter-modernization-not-privatization The Economic Times. (n.d.). Definition of 'Privatization'. Retrieved from http://economictimes.indiatimes.com/definition/privatization Umil, A. M. (2012). Privatization of government hospitals, further marginalizing the poor in the name of profit. Bulatlat.com. Retrieved from http://bulatlat.com/main/2012/08/29/privatization-of-government-hospitals-furthermarginalizing-the-poor-in-the-name-of-profit/