State Support For Private Sector Innovations: A Deep-Dive Into The Philippines

By Val Ulep, PIDS

State Support For Private Sector Innovations: A Deep-Dive IntoThe Philippines

The Center for Health Market Innovations (CHMI) profiles more than 1,200 programs that engage the private sector in low- and middle-income countries (LMICs). CHMI works through Regional Partners around the world to identify programs using innovative delivery and financing mechanisms to improve access to high quality, affordable healthcare for vulnerable communities.

Our partners at the Philippine Institute for Development Studies (PIDS) have documented 79 programs in the database. Of these programs, 36 receive support from government entities. We asked PIDS’ Val Ulep to shed light on the role of government in supporting health innovation.

The government’s role in health innovation

The programs we profile for CHMI are exciting, pioneering, and groundbreaking. The government takes an active role in stimulating and scaling up innovation in the Philippines—a role that, as we have written before, is critical. With its vast regulatory powers, government can nurture a suitable business environment for the private sector to participate in innovation development and implementation.

Addressing health system challenges

Many of the 79 innovative health programs we’ve identified since 2010 focus on health challenges common to the Philippines and other LMICs. These include:

High birth rates and resulting unmet need for maternal and child health services.
Provider shortages, from 3.38 providers per 10,000 people in 2000 to 2.95 in 2008.
High out of pocket spending, which accounts for 52.7% of total health expenditures.
Growing burden of non-communicable diseases, which are complex, expensive, and involves long-term treatment.

Below, we detail how government is addressing these health system challenges through its support for health market innovations.

Target: Provider shortages and insufficient capacity for maternal and child healthcare

Innovative programs are harnessing private providers to deliver quality maternity services, with government stepping up to finance care. Of the 36 government-funded programs, 7 focus on maternal and child health or family planning. PhilHealth upped its maternity coverage package in 2009.

With revenue assured by this program, a public-private partnership (PPP) in Leyte Province has converted 60 formerly abandoned government health posts into accredited birthing centers. KaKaK Foundation repairs, renovates, and equips these barangay health posts to create Mother Bles Birthing Clinics. The nonprofit also administers supplies and logistics and liaisons with private practicing midwives. Midwives receive financial payments for each birth attended at these facilities, providing an incentive to recruit women in the community to deliver in clinics rather than at home with traditional birth attendants. Finally, KaKaK helps enroll pregnant women with PhilHealth.

Two leading maternity franchises now participating with PhilHealth

Launched in 1997, Well-FamilyMidwife Clinics – which offers franchisee midwives a range of financial, business, training, and quality assurance services – includes 132 outlets in 20 provinces. According to the Social Franchising for Health team at UCSF, 95% of….

BlueStar Pilipinas franchised-midwives, which operate 282 clinics in 34 provinces, can claim US$120 in reimbursement for each delivery of a PhilHealth-enrolled woman, which help franchised-midwives cover operating costs. According to SF4Health, 53% of franchisees—which operate within the Marie Stopes International network—were accredited with PhilHealth in 2012.

Target: Out of pocket spending

Of the 21 government-supported programs that finance care for the poor, 12 are insurance programs, many under the PhilHealth umbrella. Some programs work to expand coverage, such as Kasapi (now known as iGroup), which covers self-employed workers, and Remittance-by-Air, which facilitates mobile phone premium payments. Many programs focus on the poor, like Pinoy Health Pass and the Revolving Drug Insurance Fund, which allow low-income PhilHealth members to purchase medication from private pharmacies for a minimal co payment.

Other programs seek to increase members’ utilization of coverage. PhilHealth targets universal health coverage and purports to have enrolled 79% of the population…, but some members are not aware that they are enrolled. PhilHealth Link offers members a call center to stimulate benefits utilization; the program is paid for by provincial government units seeking to maximize PhilHealth reimbursements. Since 2010, PhilHealth Link has received 51,680 inquiries, and several of the region’s hospitals have reported significant increases in members using PhilHealth benefits.

Target: Non-communicable diseases

To marshal resources to address expensive long-term care for chronic diseases, the government is tapping into existing private sector resources and introducing efficiency-enhancing incentive structures not present in pure public ownership and management.

Government-owned hospitals in the Philippines like the National Kidney Transplant Institute, Southern Philippines Medical Center and La Union Medical Center worked with private partners to expand their services without compromising their equity goal.

The National Kidney Hospital – contracted to Fresnius Medical Care Phil – is one of the earliest and largest PPPs of its kind. Fresenius provides state-of-the-art machines for patients. Hemodialysis treatment costs USD $75, compared to other privately owned or government hospitals where treatment can cost more than $350. The cost structure has worked well in that its earnings, about $6.2 million in 2012, have been sufficient to sustain the operating, direct, and indirect costs of dialysis treatment in order to improve the facility and services. PhilHealth has evaluated the hospital, which performed more than 45,000 treatments in 2012, as a Center of Excellence.

Navigating risks and accelerating support for innovation

While government creates many opportunities by supporting market-driven innovation, state entities must also navigate risks. For example, when a government body implements a scheme and a private entity provides technical support, schemes are vulnerable to political transience and higher direct costs.

However, it’s clear that with so much potential, government could play a much greater role in accelerating the scale up of innovative health programs. One challenge is limited awareness about schemes other entities are trying out; thus, PIDS has stepped in to disseminate knowledge about these and many other programs through forums like the Galing Likha-Kalusugan Awards. What’s more, we would strongly recommend fast-tracking the creation of Department of Health policies covering innovative business processes such as consignments and PPPs. These policies will not only officially acknowledge these schemes as solutions to health system problems, but foster the necessary regulatory environment for proper implementation and adoption of innovations.

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