two meals a day may be best for type 2 diabetics

THE LA UNION MEDICAL CENTER

Towards Universal Health Care: Policy Options for the Philippines, 27-28 October 2010

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Medicines Transparency Alliance (MeTA) - Philippines page 1

LA UNION MEDICAL CENTER

Health Financing and Service

Delivery Programs of Local

Governments Initiatives and Best

Practices

Fernando A. Astom, MD, FPCS, FPSGS, FICSChief Executive Officer

The first provincial hospital transformed into non-stock, non-profit local government owned controlled corporation by R.A.9259

About La Union Medical Center

Old Doña Gregoria Memorial Hospital

Issues After Devolution

Defining the Problem Before Autonomization

Major Identified Problems

Choice of Reform Modalities

Autonomization / Corporatization

Financing: Financial Reports

Presentation Outline

POLITICAL WILL / TRANSFORMATIONAL LEADERSHIP

Advantages of an Economic Enterprise

• Galing Pook Awardee for Excellence and Innovation• Covered by Probe (Che-che Lazaro), Emergency (Arnold Clavio),

NHK World (Japan Broadcasting Network) and Philippines Council ofYouth Leaders (PCYL)

• 30 provinces visited and studied the Economic / Corporate Sustainability Framework and Policy Developments

• Number of beds: 100• Clinical department: 15• Services Offered in established

multi-specialty clinics:

Diabetology NephrologyAdult Cardiology Pediatric

General Surgery Endoscopy Ophthalmology Orthopedic

Urology Radiology

ENT OB-Gyne

About La Union Medical Center (Level III)

MANPOWERCY 1998-2001

(BEFORE)CY 2002-2008

(AFTER)

DGMH LUMC

EMPLOYEES 138 employees 278 employees

Doctors 28 57

Nurses 30 50

Nursing Attendants 18 33

Medical Technologists 2 13

Pharmacists 2 6

Radiologic Technologists 2 6

Nutritionist-Dietitians 1 2

Administrative staff 25 75

Support Services 30 36

Organizational Corporate Human Resource Restructuring For Efficiency

Dona Gregoria Provincial Hospital had an annual budget of P35,000,000.00 (Traditionally managed /operated)

The following were the internally generated revenue from 1997-2001 (5 years) before La Union MedicalCenter opened.

DOÑA GREGORIA MEMORIAL HOSPITAL

YEAR ANNUAL INCOME

1997 P 2,065,975.87

1998 P 2,295,52.74

1999 P 3,398,348.84

2000 P 3,297,111.85

2001 P 3,736,500.20

TOTAL P 14,793,474.5014

It was projected that the estimatedannual budget is between P80 to 100million pesos; therefore La UnionMedical Center must earn about P45million to P65 million pesos a year.

How to operate, manage, finance, and sustain a donated P650 million world class local governmentowned provincial hospital situated in a developing province of La Union with a population of 720,000located in the municipality of Agoo using the same amount of annual budget of the old DoñaGregoria Memorial Provincial Hospital.

Challenge:

Old Doña Gregoria Memorial Hospital

The Philippine health care system was administered by the Department of Health (NCR-DOH) in terms ofpolicy, program directions, financial resources, technical and administrative supervisions. However, theinherited “traditional” way of management from the Department of Health (DOH) carried several operationalissue and problems within the hospital system. After the implementation of R.A. 7160 the following healthservices were transferred to Provincial and Municipal Local Government Units.

Parameters of Devolved Health Care Delivery System

Preventive

Promotive

Curative

Rehabilitative

Protective

Public Health Concern

Hospital Care Concern• Patient Concern

vs Poor Quality of Care

• Hospital Concern

vs Legal Complaints

• 3rd Party Payor Concern

Quality & Cost of CareAccountability

• Poverty related diseases:

- Tuberculosis

- Pneumonia

- Malnutrition

- Parasitism

• Environmental related diseases:

- Dengue fever- Leptospirosis

- Gastroenteritis

- Typhoid Fever

•Lifestyle related diseases:

- Hypertension

- Vehicular accidents and other trauma- Cancer

- Cardiovascular

- Cerebrovascular

- CPOD due to smoking and drug

addiction

•High population rate(more than 2%)

•High pregnancy rate

� 78 provincial governments

� 72 Retained DOH Hospitals

Public Health� 1,536 Municipal Governments

� 82 city governments, city hospitals if any and their public health

� One (1) Autonomous Regional government

The following health care delivery system were devolved:

Issues after the devolution:After the implementation of R.A. 7160 or better known as the Local Government Code of 1991.



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AFTER DEVOLUTION

DOH RO1

PG LU

CMCH

NLUDH

RDH

BDH

NDH

LUMC

20 RHU

5 DISTRICT HOSPITAL

100 BED HOSPITAL

ITRMC

BROKENLINKAGE

The chain of

continuity was

broken

Curative – Provincial Local Government Unit (PLGU)

Public Health – Municipal Loc al Government Union (MLGU)

As of 2001, there are 623 licensed government hospitals in the Philippines

divided into the following:Primary hospitals - 304 (48.7%)

Secondary hospitals - 242 (39.0%)Tertiary hospitals - 77 (12.3%)

623 (100%)

Out of the 623 licensed government

hospitals, 551(88.44%) were transferred to the Provincial Governments and 72 (12.56%) were retained by the

Department of Health(DOH).

ISSUES AFTER DEVOLUTION� Linkage missing between the hospital

curative system and the preventive public

health system.

� No linkage between adjacent

municipalities since diseases have no

boundaries.

� Policy and program implementation lack

coordination.

� Inadequate social health insurance for the

poor from the private sector, among some

of the Provincial Local Government Unit

(PLGU) and Municipal Local Government

Unit (MLGU).

Issues after the devolution:

THE STATUS OF HOSPITAL SERVICE AFTER DEVOLUTION

(Hospital Care Concern)

At the Provincial and District Hospitals in La Union

Major Identified Problems

IDENTIFIED PROBLEMSMAJOR IDENTIFIED PROBLEMS BEFORE THEIMPLEMENTATION OF ECONOMIC / CORPORATESUSTAINABILITY AND DEVELOPMENT FRAMEWORK.

A. SERVICE DELIVERYDelivery of efficient, effective, equitable and qualityresponsive hospital care are impaired because of thefollowing:

� Inadequate medicines / supplies.

� Lack of adequate medical / surgical specialist as well asnurse, medical technologist, radiologic technologist,pharmacist, etc..

� Lack of diagnostic and therapeutic equipments� Inadequate infrastructure development, dilapidated

termite infested buildings, constricted unresponsivebudget resulting in the delay of service i.e. delay inmedicines / supplies, repairs, etc.

� Lack of innovative strategic reforms for the betterment ofservice delivery output.

� Over utilized hospital facilities.� Inadequate plantilla positions for promotion and career-

pathing.

Major Identified Problems ADDITIONAL OPERATIONAL ISSUES ENCOUNTERED:Resistance to change to paradigm shift from “FREE SERVICE” to “FEE FOR SERVICE”.

� Comfort zone from the “STATUS QUO” by employees and Chief of Hospital

� Resistance to a “NEW SYSTEM” in management and leadership by the former employees and

former Chief of Hospital.

� Inadequate understanding of the noble objectives of change for the better.

Inherited Financial and Commercial Problems:

� Budgetary constraints for PS (70%- 80%), MOOE(30% - 20%) no Capital Outlay

� No capital investment

� Practically minimal income from (2M – 3M a year)

Legal and Institutional Issues:

� The following were not available before the Economic Enterprise:

� Public / Private partnership.

� Joint Venture Agreement.

� Payments according to capacity to pay.

� Memorandum of Agreement between the corporate hospital and the company partner.

� Inadequate manpower and inadequate trained personnel.

� No fiscal autonomy and management latitude.

� Income not retained.

� No computerization.

� Transparency and accountability were not fully well develop.

� Still under the Provincial Government.

Defining The Problem Before Autonomization

Type of Governance

� Centralized in the provincial government� No management autonomy.� The hospital is just one of the many provincial

agencies resulting in the delay of procurement ofsupplies / medicines etc. (delay in the delivery ofservice).

Financial System� No fiscal autonomy. � Income is not retained.

A. Budgetary Organization

� Hospital is regarded as just one agency under the provincial government, competing additional resource allocation department, the manager of the hospital is

essentially an administrator.

� Government hierarchy of officials rules, controls strategic issues and day to day

decisions. i.e accounting, financial management, methods salaries.

� Revenues are determined through direct allocation.

� Excess revenues generated belong lo local government.

� The local central governments are responsible for monitoring the hospital and managerial

performance.

Disadvantage

� No fiscal autonomy and management latitude.

� Lack of control of resources

� Weak financial performance

� Socio-economic functions same as the other department

� Accountability mechanisms are inadequate

� No effective structure to monitor managerial performance

B. Autonomized Organization

� Let the manager, manage-shifting the day to day management from the central hierarchy

to management

� Some fiscal autonomy and management latitude are attained

� Can now generate their own income

CHOICE OF REFORM MODALITIES



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� Can retain their income

� The local government and hospital management can agree on performance targets.

� Employees are still government employees subject to security of tenure and salary standardization.

� Financial and management latitude are increased

� Can be established thru an enactment of an executive order with a provincial board resolution.

� Can have a set of board of trustees whose membership are the highest elected public officials with representatives from the

private sector.

� Can enter into joint venture agreement with the private sector for outsourcing of equipments and personnel thru a board

resolution.

� Can prepare own budget for procurement and investment based on hospital projected income.

Disadvantage:

� Can be repealed by another executive order and provincial board resolution.� Financial accountability and supervision remain in the central provincial hierarchy.

C. Non-stock, Non-profit Government/Corporatized Organization

� Mimics the structure and efficiency of private corporations.

� All assets and personnel of the provincial government are transferred to the corporation thereby reducing the 45% ceiling for

Personal Services

� Employees are covered by civil service with security of tenure and subject to salary standardization.

� Social objectives are still primary through public ownership.

� Legally established as an independent entity thru an enactment of a law.

� Have separate juridical personality

� Transfer of control is more durable than under autonomization

� Hospital is fully accountable for its financial performance

� Can retain revenue but is also responsible for losses

� Accountability mechanism are anchored in the Board of Trustees thru ownership accountability

� Presence of a corporate plan that is binding between the hospital board and relevant supervising agency

� Infrastructure, quality and availability of services are increased.

� Management autonomy and fiscal flexibility is increased

� Member of the board of trustees are not covered by civil service law.

Disadvantage:� Financial subsidy is still necessary because of high percentage of non-paying patients

� Independent from the central government so that additional financial subsidy for mandated government salary

increase may no longer be possible.

Privatized Organizations

� Extreme version of “marketing”

� Entails conversion of public hospital to private ownership either as for profit or non-profit organization

� Removes all direct control from the hierarchy of government hospitals.

� Incentives come from profit that drives the high incentive features – complete exposure to market forces

� Return of equity and dividend sharing to stockholders

Disadvantages:� Profit motive at times and social responsibility to the poor is weakened.

� Anticipation of problems in dealing with maximizing hospital profit providers are leading many countries toexplore non-profit corporatization or privatization as an alternative model

� The government exerts a strong indirect “involuntary control trough a mandated non-profit regulation.”

� No private claimants for excess revenues.

� In a fully privatized hospital for profit the institution must succeed in the marketing competing with other

hospitals to increase revenues for the stockholders return of equity plus profit objective.

Autonomization

� Autonomization has improved performance in some cases however an intensive institutional arrangementsand strong political will to support the transformation is required in some cases. The establishments of the

Board of trustees for policy making and delegating the day to day operations to the appointed Chief ExecutiveOfficer and management staff have worked well for La Union Medical Center.

Answer to the Major Identified Problems and Operational Issues

. Transform La Union Medical Center into Economicenterprise (Autonomization) for sustainability anddevelopment thru the issuance of Executive Order –(004-2002)

. Promulgation of the Economic Enterprise Conceptwas done immediately after opening of the Hospitalon April 2002.

. Two years after, on March 2004 Corporatization wasdone to preserve the achievements ofAutonomization.

Implemented Major Strategic ReformsIDENTIFIED PROBLEMSMAJOR IDENTIFIED PROBLEMS BEFORE THEIMPLEMENTATION OF ECONOMIC / CORPORATESUSTAINABILITY AND DEVELOPMENT FRAMEWORK.

A. SERVICE DELIVERYDelivery of efficient, effective, equitable and qualityresponsive hospital care are impaired because of thefollowing:

� Inadequate medicines / supplies.

� Lack of adequate medical / surgical specialist aswell as nurse, medical technologist, radiologictechnologist, pharmacist, etc..

� Lack of diagnostic and therapeutic equipments� Inadequate infrastructure development, dilapidated

termite infested buildings, constricted unresponsivebudget resulting in the delay of service i.e. delay inmedicines / supplies, repairs, etc.

� Lack of innovative strategic reforms for thebetterment of service delivery output.

� Over utilized of hospital facilities.� Inadequate plantilla positions for promotion and

career-pathing.

Implemented Major Strategic Reforms Implemented Major Strategic Reforms



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Implemented Major Strategic Reforms LA UNION MEDICAL CENTER (LUMC) GALING POOK AWARDEE

THE ECONOMIC / CORPORATE SUSTAINABILITY FRAMEWORK

Autonomization / Corporatization

Hemodialysis

State-of-the-art laboratory equipments

I. Joint Venture(Public/Private Program) PPP

� Acquisition of vital diagnostic /therapeutic equipment at no costto the hospital (gov’t).

� Acquisition of skilled personnelat no extra cost to the hospital.

II. Socialized user’s fees� Accurate categorization of patient’s depending upon capacity to pay.

� Adoption of the rates of Phil-Health Insurance and Standards at thelocal community.

� PIK (Payment in Kind / Service) System.

4. PAYMENT IN KIND (PIK System)(Total Quantified Amt given 841,840.17pesos for the past 83 months)

OCJECTIVES

A. To restore the “Bayanihan way” or the ancient barter

trade concept through the exchange of goods and

services.

B. To remove “Dole Out” mentality

C. To empower people in community participation in the

hospital

4.1. Donate Vegetables

Or other farm products

4.2. Voluntary services

III. For online accounting auditing, internal control with inventory business and budget template.

OBJECTIVE: To achieve efficiency, transparency in the accounting department.

� Installation of Integrated hospital financial information system.

MIS

- HOMIS SERVER- CDTR SERVER- PMIS SERVER- INTERNET SERVER- BACK UP SERVER- SWIPING MACHINE- (1) WORKSTATION

AO’S OFFICE3 workstations

LAB1 workstation

NICU1 workstation

OR1 workstation

PEDIA WARD1 workstation

SUPPLY1 workstation

PROPERTY1 workstation

PHARMACY2 workstations

OB WARD1 workstation

ICU1 workstation

EMERGENCY ROOM1 workstation

XRAY1 workstation

RECORDS 2 workstations

OPD1 workstation

ACCOUNTING1 workstation

CASHIER2workstations

CHIEF NURSE OFFICE1 workstation

DISBURSING OFFICE1 workstation

HRM OFFICE3 workstations

BILLING OFFICE2 workstations

6. INSTALLATION OF INTEGRATED COMPUTERIZED HOSPITAL FINANCIAL MANAGEMENT INFORMATION SYSTEM (ICHFMIS) for transparency and accountability C H A IR M A N

B O A R D O FT R U S T E E S

1 5 M E M B E R S

C H IE F E X E C U T IV EO F F IC E R IV

A D M IN IS T R A T IV E /A N C IL L A R Y D E P A R T M E N T

N U R S IN GD E P A R T M E N T

M E D IC A L S T A F F

- A N E S T H E S IO L O G Y

- D E N T A L

- E M E R G E N C Y R O O M- O U T P A T IE N T

- S U R G E R Y

- M E D IC IN E

- O B S T E T R IC S &G Y N E C O L O G Y

- P E D IA T R IC S

- R A D IO L O G Y - L A B O R A T O R Y &

P A T H O L O G Y

- N IC U- IC U

A D M IN IS T R A T IV E- H R M O- S U P P L Y

- P R O P E R T Y

- M E D IC A L R E C O R D S- S O C IA L S E R V IC E S

- M IS

- T R A N S P O R T & M O T O R P O O L- S E C U R IT Y

A N C IL L A R Y- D IE T A R Y- R A D IO L O G Y

- L A B O R A T O R Y- P H A R M A C Y

S U P E R V IS O R SO R / D R

P E D IA W A R DM E D IC A L W A R D

S U R G E R Y W A R D

O B -G Y N E W A R DC S R

E RO P D

F IN A N C ED E P A R T M E N T

- B IL L IN G- C A S H

- B U D G E T

- A C C O U N T IN G

R e p u b lic o f th e P h i lip p in e s

P R O V IN C E O F L A U N IO NP R O V IN C E O F L A U N IO NP R O V IN C E O F L A U N IO NP R O V IN C E O F L A U N IO NLA UNION MEDICAL CENTER

DIVISION OF MEMBERSHIP OF THE BOARD OF TRUSTEES

• Seven (7) from the elected provincialofficials namely: Governor, Vice Governor,Five (5) SPMembers (Chairman on Health &Sanitation & Population Control, Chairmanon Ways and Means, Chairman on Trade,Commerce and Industry, Chairman onFinance, Budget & Appropriations,Chairman on Barangay Affairs)

• host town Mayor• Chief Executive Officer- appointed• Provincial Health Officer,• Provincial Administrator (Corporate

Secretary)• Provincial Treasurer (Corporate).• One (1) from the Department of Health –

Regional Director• Four (4) from the private sectors.

VI. Creation of a Corporate Organizational Structure from 138-326 employees for promotion and career pathing

Policy formulation direction Board of Trustees

System Management Chief Executive Officer• Planning• Performance

management• Costand efficiency

• Revenue enhancement• Quality assurance

Resourcing and administrationof services

Middle management andquality improvement teams

Delivery of patient care • Support services (Admin,, Lab., Radiology, Ancillary)

• Cure Services (Clinical services)

• Care services (Nursing services)

RegulationDOH,PHIC,Sang.Panlalawigan,Business permits

IV



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BILLINGBILLINGBILLINGBILLING

OPDOPDOPDOPD PEDIA WARDPEDIA WARDPEDIA WARDPEDIA WARDICUICUICUICU

LABLABLABLAB

CASHIERCASHIERCASHIERCASHIER

PHARMACYPHARMACYPHARMACYPHARMACY

INTEGRATED INTEGRATED INTEGRATED INTEGRATED

HOMISHOMISHOMISHOMIS

Services Offered:

State-of-the-art laboratory equipments

Blood Bank B

Refrigerated Centrifuge

The main objective of the Health Care Financing are mainly the following:

Resource Mobilization – collection Philhealth

InstitutionsDOH, DBM, Congress

Local Government Unit

National Government

We should include from “poor” patients.

Administrative Efficiency Activity – retention of income the hospital achieving fiscal autonomy more management latitude

Equity in Access – universal coverage of Philhealth

Main target: the poor marginalized patients Financial Protection – reduction if not complete removal of OOP (out-of pocket expenses) for the real poor patients in government

hospitals (Class D)

HEALTH CARE FINANCING: HOW IT SHOULD BE IN 2017Total health expenditure = 4.5% / GDP

Per capita health expenditure = P4,200

Government spending on health = 7% of budget

34% out-of pocket expenditure = better financial protection

Philhealth is the main health service purchaser

HEALTH CARE FINANCING CONCERNSPatient – how to pay the hospital

Provider – how to get paid

Public Health Manager (CEO) owner – where to get funding for the health facility to be able to provide a competitive affordable

responsible quality service.

SOURCES OF FINANCING IN THE YEAR 200559% - employer

HMO (private insurance)

Out-of pocket

11% - Philhealth insurance

16% - National Government (DOH-ODA)

13% - Local Government Unit

Financing Financing: LUMC Financial ReportFINANCIAL PERFORMANCE REPORT

RATIO OF PATIENTS SERVED

APRIL 2002- SEPTEMBER 2010

TOTAL TOTAL AMOUNT

NUMBER OF OF SERVICES

PATIENT TYPE DISCHARGED RENDERED PER PERCENTAGE

PATIENTS PATIENT(In Pesos)

Charity Patients 54,013 1,979.68 52%

Philhealth Covered Patients 42,998 4,640.50 41%

Private Pay Patients 7,428 4,249.21 7%

TOTAL 104,439 100%

101 MONTHS PERFORMANCE REPORT

APRIL 2002-SEPTEMBER 2010

Total Number of Hospital Admissions 104,518

Total Number of Out-Patient Consultations 390,801

Missed Income is 54,013 x 4,640.50 = 250, 647,326.50 pesos

FINANCIAL PERFORMANCE REPORT

101 MONTHS PERFORMANCE REPORT

April 2002-September 2010

Out-Patient Consultations 390,801

Hospital Admissions 104,518

TOTAL NUMBER OF PATIENTS SERVED 495,319

FINANCIAL REPORT

April 2002-September 2010

Amount of Free Services Rendered to the Poor 113,634,957.47

Payment in Service/Kind 1,449,364.88

Amt.of Actual Cash Collections -Reg.hosp. Services 395,539,934.72

Philhealth Accounts Receivable 11,985,151.95

TOTAL AMOUNT OF SERVICE RENDERED (in Pesos) 522,609,409.02

SUMMARY OF PHIC COLLECTIONS

April 2002- September 2010

PERIOD COVERED AMOUNT

YEAR 2002 1,066,424.36

YEAR 2003 9,469,681.86

YEAR 2004 15,576,983.58

YEAR 2005 21,051,118.55

LUMC Financial Report LUMC Financial Report

YEAR PGLU SUBSIDY ADD'L SUBSIDY/EDF TOTAL %TO TR IGI*** %TO TR TOTAL

CY2002 30,000,000.00 2,427,877.13 32,427,877.13 96% 1,509,176.08 4% 33,937,053.21

CY2003 30,000,000.00 1,361,635.32 31,361,635.32 55% 25,541,207.61 45% 56,902,842.93

CY2004 29,734,323.69 0.00 29,734,323.69 46% 35,427,263.15 54% 65,161,586.84

CY2005 30,000,000.00 0.00 30,000,000.00 39% 46,199,781.98 61% 76,199,781.98

CY2006 30,000,000.00 0.00 30,000,000.00 37% 50,756,343.92 63% 80,756,343.92

CY2007 30,000,000.00 2,174,827.79 32,174,827.79 36% 56,081,178.97 64% 88,256,006.76

CY2008* 35,000,000.00 719,400.00 35,719,400.00 38% 58,452,892.31 62% 94,172,292.31

CY2009** 35,000,000.00 4,190,818.55 39,190,818.55 39% 62,018,915.06 61% 101,209,733.61

TOTAL 249,734,323.69 10,874,558.79 260,608,882.48 44% 335,986,759.08 56% 596,595,641.56

No. of Times of 17% 73% 4009% 198%Increase (in %)-8yrs.

NOTE:

Due to autonomization, the internally generated income increased from 4% (2002) to 61%(2009) and financial subsidy also decreased from 96% (2002) to 39%(2009)

COMPUTATION:

*Percentage increase from Previous Year as against Current Year

**Average Increase from 2002-2009

***Internally Generated Income (IGP)

LA UNION MEDICAL CENTERSUMMARY OF REALIZED INCOME AND ACTUAL EXPENDITURES

FOR THE YEARS 2002-2009REVENUE COLLECTIONS



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YEAR TOTAL EXCESS

SUBSIDY HOSPITAL SERVICES TOTAL PS MOOE EXPENSES

CY2002 32,427,877.13 1,509,176.08 33,937,053.21 18,373,958.99 11,326,501.47 29,700,460.46 4,236,592.75

CY2003 31,361,635.32 25,541,207.61 56,902,842.93 30,261,621.39 22,489,063.44 52,750,684.83 4,152,158.10

CY2004 29,734,323.69 35,427,263.15 65,161,586.84 30,318,405.13 28,114,106.29 58,432,511.42 6,729,075.42

CY2005 30,000,000.00 46,199,781.98 76,199,781.98 33,024,544.33 36,260,296.79 69,284,841.12 6,914,940.86

CY2006 30,000,000.00 50,756,343.92 80,756,343.92 39,496,340.00 39,834,263.44 79,330,603.44 1,425,740.48

CY2007 32,174,827.79 56,081,178.97 88,256,006.76 43,238,470.90 42,630,938.34 85,869,409.24 2,386,597.52

CY2008 35,719,400.00 58,452,892.13 94,172,292.13 48,407,850.26 43,332,286.23 91,740,136.49 2,432,155.64

CY2009 39,190,818.55 62,018,915.06 101,209,733.61 58,667,463.77 48,225,378.77 106,892,842.54 (5,683,108.93)

TOTAL 260,608,882.48 335,986,758.90 596,595,641.38 301,788,654.77 180,655,169.77 574,001,489.54 22,594,151.84 NOTE:1. Total Realized Income includes Subsidy from PGLU.2. The increase in Personal Services are due to the following reasons: 2.a Full implementation of 10% increase in Basic Salary per DBM Circular No. 88 dated June 2008

2.b Increase in Government Shares covering Premiums for GSIS and PHIC.

2.c Increase of Employee's Benefit such as Bonuses and Hazard Pay.

2.d Continuing Salary Step Increment of permanent employees.

2.e Personal Services also include upgrading of position titles and salary grade assignments of positions.

3. The increases in Maintenance and Other Operating Expenditures involves the following reasons: 3.a Supplies and Materials especially Medical and Laboratory supplies for use in the operation of the hos-

pital have augmented due to increase in the bed capacity from 100 to an average of 134 beds.

3.b Food Supplies expenses contributed to the increase due to the ascending number of admitted patients

(134% annual bed occupancy rate)

3.c Added to the increase are the repairs for termite infected buildings, other structures as well as furni-

tures and fixtures.

3.d Gasoline ,Oil and Lubricants and Electricity also increased due to inflation rate and increased con-

sumption.

3.e Increase in the Office Supplies for the accomplishments of various requirements by the different agencies

like DOH licensing, Philhealth requirements, etc.

4. Net Loss has been incurred after eight (8) years of operation in the amount of (P5,683,108.93).5. The Hospital received a monthly subsidy of P3,500,000.00 from January to October and the internally generated income of the Hospital forms part of the total budget for PS,MOOE and Capital Outlay.6. The increase in Capital Outlay would comprise on the appropiation alloted to the rehabilitation of buildings

LA UNION MEDICAL CENTER

SUMMARY OF REALIZED INCOME AND ACTUAL EXPENDITURES

FOR THE YEARS 2002-2009

ACTUAL EXPENDITURES*REALIZED INCOME

LUMC Financial Report CONTINUING POLITICAL WILL STABILITY AND TRANSFORMATIONAL LEADERSHIP

For the past 16 years after devolution (1992-2008). The following

are the three Provincial Governors with their respective contributions in so

far as improving the health situations in the Province of La Union is

concerned. The Theme of the three Governors was “continuity andinnovation.”

Years 1992-2001 Governor Justo O. Orros Jr.

� Organization of the La Union Provincial Health Board instituted

“Health in every Home” project. Shifted from “Case waiting” of

diseases in health units to “Case finding” of diseases in the 576

barangays of La Union.

� Organization of Barangay Health Worker’s.

� Strengthened the Integrated Midwives Association of La Union.

The Province of La Union won the “ Gems and Jewel Award” of devolution given by the Department of Health awarded

then by Secretary of Health Juan Flavier.

Year 2001 – 2007 Governor Victor F. Ortega

� Continued the good project’s of the previous provincial administration.

� Instituted the ECONOMIC ENTERPRISE

Concept of governance for the sustainability and furtherdevelopment of the six devolved provincial and district hospitals.

The La Union Medical Center (LUMC) a 100 bed, P 650 million

pesos hospital donated by the European Union opened and the

old provincial hospital was closed. Immediately after LUMCopened, Governor Victor F. Ortega issued Executive Order 004-s-

2002 transforming the hospital into economic enterprise for

sustainability and development.

La Union Medical Center won the GAWAD GALING POOK Award.

A TRIBUTE FOR INNOVATION AND EXCELLENCE IN LOCAL GOVERNANCE.

In the year 2005 following the good example of La Union Medical Center as an

economic enterprise, Governor Victor F. Ortega transformed the other five devolved district

hospitals into an Economic Enterprise, then backed by a Provincial Board Resolution No. 038-s-

2005.

YEAR 2007-TO PRESENT

Governor Manuel C. Ortega then theCongressman of the first district of la union wasthe primary author and primary sponsor of thecorporation law under RA 9259 transforming LaUnion Medical Center as the first non-stock,non-profit local government controlledcorporation in the Philippines. Governor ManuelC. Ortega is now the incumbent Chairman of theBoard of Trustees of La Union Medical Center.

Signing of the R.A. 9259 by President Gloria Macapagal-Arroyo last March 2, 2004 at the Provincial Capitol of La Union.



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Advantages of an Economic Enterprise(Cost-recovery Program)

thru the establishment of a non-stock, non-profit governmentowned corporation - a brand of decentralization from the centraladministration (Provincial) to the hospital – under the economic /corporate enterprise the hospital is required to develop revenuesenhancement programs through socialized users fees.

I. For the Local Government

a. Decrease cost to operate hospital- the income derived fromoperations will decrease the hospitals complete reliance ongovernment subsidy.

b. Freedom from operating problems – the hospital managementteam with guidance from the hospital board becomes

responsible for the day-to-day operations of the hospital.c. Can concentrate on core role i.e. regulation, public health.

II. For the hospital management.

1. More management latitude –through the exercise of the hospital corporate powers.

2. Separate and distinct legal personality from members, trustees or officers.

3. Separate and distinct legal personality from members, trustees or officers.

4. Right to acquire, own or dispose of property or assets.

5. Power to enter into transactions and contracts.

6. Continuity and stability.

7. Power to appoint/elect officers/employees as allowed by its charter as wellas establish other permanent plantilla for “career pathing” and promotionsof the employees.

8. Receive subsidies/assistance from the government/foreign agencies andinstitutions.

9. Cannot be affected by change in local administration or government.

10. Its charter can only be amended or repealed by an Act or Law passed byCongress, but not by mere executive orders, or ordinances or resolutionsof the local government or agency.

III. For the patients and clientsa. Access to improved hospital services.b. Availability of drugs, medicines, and equipment.

IV. For the employeesa. May avail more benefits from earning of the

corporate hospital.b. Better working environment.

V. For the communitya. Able to participate in the policy making of the

hospital.

VI. For public healtha. Availability of more funding derived from savings due

to lesser subsidy requirements of hospitals.

THANK YOU!

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