Health Sector Expenditure Framework

(HSEF):A Multi-year

Spending Plan for the Department of Health

Rosario G. Manasan

Outline of presentation

• HSEF/ Purpose

• Estimates of resource requirements and gaps in the context of DOH budget reforms

• Alternative HSEF scenarios

• medium –term expenditure estimates for the health sector

• compares cost estimate-requirements with the amount of funds that is projected to be available for the implementation of priority and critical programs and projects i.e, Fourmula One for Health PPAs

What is HSEF ?

WHY HSEF?

IMPORTANT INPUT FOR THE IMPROVEMENT OF PUBLIC FINANCE MANAGEMENT

• Injects policy and strategic focus at the budget preparation stage

• Strengthens the impact of policy priorities on budget allocation

• Commits decision-makers to a sustainable fiscal policy and a clear set of sectoral priorities

• Encourages a medium –term/ multi-year perspective to decision-making

POLICY AND STRATEGIC POLICY AND STRATEGIC FOCUSFOCUS

MTPDP

MDGs

F-1

NOH

• Estimates of resource requirements for various programs in health sector derived in this study are reflective of some efficiency improvements in service delivery

estimates assume lower wastage factors

estimates assumes better targeting of subsidies

Estimates of resource requirements

How much is needed to meet MDGs? Table 11. Summary of DOH Resource Requirements for Public Health to Meet MDG

(in million pesos)

Available in

2006 budget 2007 2008 2009 2010

Child care

EPI (including hepatitis) 290.29 294.76 303.31 312.10 321.12

2nd dose of measles vaccine 23.13 23.80 24.49 25.20 25.93

Vitamin A (50%) 9.08 21.03 21.51 22.01 22.51

Maternal care

Tetanus toxoid immunization 21.54 22.47 23.43 24.42 25.45

Vitamin A (50%) 18.05 40.43 41.36 42.32 43.29

Iron (50%) 5.71 40.43 41.36 42.32 43.29

BEMOC/CEMOC training w/ LGU share 2.29 2.29 2.29 2.29 2.29

Reproductive health w/ LGU share 51.08 51.08 51.08 51.08 51.08

Diseases

STI treatment 0.00 148.98 151.96 155.00 158.10

HIV/ AIDS treatment 11.00 35.82 37.75 39.77 41.91

Malaria treatment 9.22 9.22 9.22 9.22 9.22

Lab supplies for malaria 1.40 1.40 1.40 1.40 1.40

Mosquito nets (50%) 164.00 205.00 205.00 205.00 205.00

Spraying (50%) 0.60 17.50 17.50 17.50 17.50

Malaria training w/ LGU share 4.40 4.40 4.40 4.40 4.40

Tuberculosis treatment

adults 314.40 414.40 414.40 414.40 414.40

children 7.20 79.20 79.20 79.20 79.20

Laboratory supplies 9.45 9.45 9.45 9.45 9.45

TB training w/ LGU Share 17.20 17.20 17.20 17.20 17.20

IEC for TB 19.83 19.83 19.83 19.83 19.83

TOTAL 979.87 1,458.69 1,476.14 1,494.09 1,512.56

Requirements

How much is the resource gap? Table 12. DOH Resource Gap for Public Health Services

(in million pesos)

2007 2008 2009 2010

Child care

EPI (including hepatitis) 4.47 13.02 21.81 30.832nd dose of measles vaccine 0.67 1.36 2.07 2.80Vitamin A (50%) 11.94 12.43 12.92 13.43

Maternal care

Tetanus toxoid immunization 0.93 1.89 2.88 3.91 Vitamin A (50%) 22.38 23.31 24.27 25.24 Iron (50%) 34.73 35.66 36.61 37.59

Diseases

STI treatment 148.98 151.96 155.00 158.10HIV/ AIDS treatment 24.82 26.75 28.77 30.91Malaria treatment 0.00 0.00 0.00 0.00Lab supplies for malaria 0.00 0.00 0.00 0.00Mosquito nets (50%) 41.00 41.00 41.00 41.00Spraying (50%) 16.90 16.90 16.90 16.90

Tuberculosis treatment adults 100.00 100.00 100.00 100.00 children 72.00 72.00 72.00 72.00

IEC for TB 0.00 0.00 0.00 0.00

TOTAL 478.82 496.27 514.22 532.70

How much is required for SHI-IP? How much is the resource gap?

Table 15. Resource requirement for premium contributions to PHIC indigent program

(in million pesos)

2007 2008 2009 2010

Resource requirement

NG based on total number of indigent HH 3,360.09 3,287.28 3,188.10 3,097.94

LGU based on total number of indigent HH 1,448.61 1,408.84 1,366.33 1,327.69

Resource gap (estimated rel. to budget cover of PhP 2.9 B in 2006)

NG based on total number of indigent HH 460.09 387.28 288.10 197.94

DOH Spending patterns and trends (1)

Figure 3. Distribution on DOH Budget

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1998 1999 2000 2001 2002 2003 2004 2005 2006

GASS Policy Regulation SD - Public Health SD - Hospitals

DOH Spending patterns and trends (2)

Figure 4. Real Per Capita DOH Expenditure on Public Health and Hospitals

(2000 Prices)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

1998 1999 2000 2001 2002 2003 2004 2005 2006

SD - Public Health SD - Hospitals

Reduction in real per capita spending on public health is dramatic. Reduction in real per capita spending on tertiary care is less so.

What needs to be done?

Need to increase or secure allocations for public health; justified because of public good nature of public health

Need to secure nat’l subsidies for premium to indigent program of PHIC and to ensure sustainability of retained hospitals

What needs to be done? (2)

Need to reallocate funds or liberate funds by increasing cost recovery and reducing subsidies to retained hospitals and regulatory agencies

Why liberate funds from hospitals?

National government subsidies to retained hospitals is said to be inefficient and inequitableInefficient because hospital subsidies

can benefit more people if converted to social health insurance premium subsidies

Inequitable because access to retained hospitals tends to be limited to residents of mostly well-off urban centers

Budget for service delivery – hospitals (1)

PS MOOE CO Total % share

NCR hospitals 1735.94 744.54 2.64 2483.1 40.6Non-NCR hospitals 2291.07 1282.49 60 3633.6 59.4

All retained hospitals 4027.01 2027.02 62.64 6116.7 100

Table 1. Budget of Retained Hospitals by Area, 2006

Budget for service delivery – hospitals (2)

MOOE Total Budget MOOE Total Budget MOOE Total Budget

1. Jose Reyes Memorial Medical Center 37.9 10.4 121.9 33.6 125.9 34.72. San Lazaro Hospital 5 1.6 9.4 4 10 4.33. Jose Fabella Memorial Hospital 9.1 2.4 85.4 19.7 108 254. East Avenue Medical Center 33.7 9 63.2 22.3 87.7 30.95. Philippine Orthopedic Center 35.2 10.3 46.7 15.6 54.1 18.16. National Center for Mental Health 8.7 2.6 24.1 6.7 28 7.87. National Children's Hospital 4 0.9 32.6 10.5 34.9 11.38. Tondo Medical Center 21.8 3.9 83.7 21.2 82.4 20.99. Quirino Memorial Medical Center 23 4.1 128.7 46.8 186 67.610. Amang Rodriguez Medical Center 13.3 2 109.9 29.2 139.8 37.111. Rizal Medical Center 20.5 5.2 103 28.5 122.2 33.912. Research Institute for Tropical Medicine 23.3 5.1 21.1 6.3 24.5 7.3

Total 20.5 5.2 60.2 18.7 73.1 22.7

Table 2. Ratio of Hospital Income to Hospital MOOE and Total Hospital Budget, 1995-2004(in percent)1995-2000 2003 2004

Budget for service delivery – hospitals (3)

MOOE Total BudgetNCR 73.6 23.1Region I 102.3 35.7CAR 53 19.6Region II 81.3 31.3Region III 51.2 51.2Region IV 31.7 11.4Region V 85.8 31.7Region VI 86.3 32.2Region VII 73.6 19.8Region VIII 42 14.4Region IX 35.7 15.5Region X 54.8 22.1Region XI 142.8 44.5Region XII 47.8 18.9CARAGA 45.4 15.3Philippines 70.4 24

Table 3. Ratio of Hospital Income and Hospital MOOE across Regions, 2004( in percent)

Budget for service delivery – hospitals (4)

Budget % share Income % share (in million pesos) (in million pesos)

NCR 2,649 42.5 611 40.8Region I 262 4.2 93 6.2CAR 251 4 49 3.3Region II 235 3.8 74 4.9Region III 336 5.4 71 4.8Region IV 261 4.2 30 2Region V 293 4.7 93 6.2Region VI 302 4.8 97 6.5Region VII 441 7.1 87 5.8Region VIII 135 2.2 19 1.3Region IX 232 3.7 36 2.4Region X 255 4.1 56 3.8Region XI 287 4.6 128 8.5Region XII 162 2.6 31 2CARAGA 136 2.2 21 1.4Philippines 6,237 100 1,496 100

Table 5. Distribution of Hospital Budgets and Hospital Income, 2004

Given this perspective , there is scope to reallocate resources away from retained hospitals.

“Financing F1” paper proposes that retained hospitals contribute at least 5% of their MOOE allocations to support essential F1 programs in exchange for greater access to and more flexible use of user fees and PHIC reimbursements.

Budget for service delivery – hospitals (5)

With greater cost recovery from the DOH’s regulatory services, there is scope for reallocating resources away from regulatory bureaus of the department.Sustainable revenue generation of

regulatory agencies depends on their credibility to set standards, verify/ enforce compliance.

For this to happen, critical investments to build capability in these agencies needed.

Budget for DOH regulatory services (1)

Budget for DOH regulatory services (2)

Budget Revenues

(in million pesos) (in million pesos)

BFAD 120 130 108.3BHDT 23 5 21.7BHFS 27 30 111.1BQIHS* 45 60 133.3Total 215 225 104.7

Table 6. Budget of regulatory agencies, 2004Agency Rev/

Budget (%)

Alternative HSEF scenarios Health budget ceiling pegged at

2006 levels

Case 1a. Reallocation from hospitals and

regulatory bureaus equal to 5% of MOOE in 2007 and 10% MOOE in 2008-2010

Order of priority – FAPs then public health

no additional allocation for premium subsidies for health insurance of indigents

Alternative HSEF Scenarios (2)

Table 17. HSEF - Low Assumption; High Priority to FAPS(in million pesos)

2006 2007 2008 2009 2010

Governance & mgt support 1,439.3 1,553.9 1,583.7 1,332.7 1,332.7 Policy development & TA 279.4 279.4 279.4 279.4 279.4 Regulatory services 211.7 208.0 204.3 204.3 204.3 Service delivery - public health 1,418.4 1,418.4 1,503.2 1,754.3 1,754.3 Service delivery - hospitals 6,628.6 6,517.6 6,406.7 6,406.7 6,406.7 Indigent premiums 2,900.0 2,900.0 2,900.0 2,900.0 2,900.0

Total 12,877.4 12,877.4 12,877.4 12,877.4 12,877.4

DOH only 9,977.4 9,977.4 9,977.4 9,977.4 9,977.4

Budget ceiling pegged at 2006 levels

Case 1b. Reallocation from hospitals and

regulatory bureaus equal to 5% of MOOE in 2007 and 10% MOOE in 2008-2010

Order of priority – public health then FAPs

no additional allocation for premium subsidies for health insurance of indigents

Alternative HSEF Scenarios (3)

Alternative HSEF Scenarios (4)

Table 18. HSEF - Low Assumption; High Priority to Public Health(in million pesos)

2006 2007 2008 2009 2010

Governance & mgt support 1,439.3 1,439.3 1,439.3 1,332.7 1,332.7Policy development & TA 279.4 279.4 279.4 279.4 279.4Regulatory services 211.7 208.0 204.3 204.3 204.3Service delivery - public health 1,418.4 1,533.0 1,647.7 1,754.3 1,754.3Service delivery - hospitals 6,628.6 6,517.6 6,406.7 6,406.7 6,406.7Indigent premiums 2,900.0 2,900.0 2,900.0 2,900.0 2,900.0

Total 12,877.4 12,877.4 12,877.4 12,877.4 12,877.4

DOH only 9,977.4 9,977.4 9,977.4 9,977.4 9,977.4

Alternative HSEF Scenarios (5) Budget allowed to grow

Case 2a: Reallocation from retained hospitals

equal to 5% of MOOE in 2007 and 10% of MOOE in 2008-2010

full coverage for FAPs increased support for public health so

as to reduce gap initially by 50% in 2007, 65% in 2008 and 100% in 2009-2010

increased support for subsidies to indigent premium from 25% of gap in 2008; 50% of gap in 2009-2010.

Alternative HSEF Scenarios (6)Table 19. HSEF - Medium Assumptions

(in million pesos)

2006 2007 2008 2009 2010

Governance & mgt support 1,439.3 1,555.1 1,583.7 1,332.7 1,332.7 Policy development & TA 279.4 279.4 279.4 279.4 279.4 Regulatory services 211.7 208.0 204.3 204.3 204.3 Service delivery - public health 1,418.4 1,657.8 1,743.9 1,932.7 1,951.1 Service delivery - hospitals 6,628.6 6,517.6 6,406.7 6,406.7 6,406.7 Indigent premiums 2,900.0 2,900.0 2,996.8 3,044.0 2,999.0

Total 12,877.4 13,118.0 13,214.8 13,199.8 13,173.2

DOH only 9,977.4 10,218.0 10,218.0 10,155.8 10,174.2

growth in DOH + IP 1.9 0.7 (0.1) (0.2) growth in IP 0.0 3.3 1.6 -1.5growth in DOH 2.4 - (0.6) 0.2

Case 2b: Reallocation from retained hospitals

equal to 5% of MOOE in 2007 and 10% of MOOE in 2008-2010

full coverage for FAPsincreased support for public health so as

to reduce gap by 100% in 2007-2010 increased support for subsidies to indigent premium initially from 50% of gap in 2008 and by 100% of gap in 2009-2010.

Alternative HSEF Scenarios (7)

Alternative HSEF Scenarios (8)Table 20. HSEF - high assumption

(in million pesos)

2006 2007 2008 2009 2010

Governance & mgt support 1,439.3 1,555.1 1,583.7 1,332.7 1,332.7Policy development & TA 279.4 279.4 279.4 279.4 279.4Regulatory services 211.7 208.0 204.3 204.3 204.3Service delivery - public health 1,418.4 1,897.3 1,914.7 1,932.7 1,951.1Service delivery - hospitals 6,628.6 6,517.6 6,406.7 6,406.7 6,406.7Indigent premiums 2,900.0 2,900.0 3,093.6 3,188.1 3,097.9

Total 12,877.4 13,357.4 13,482.5 13,343.9 13,272.2

DOH only 9,977.4 10,457.4 10,388.8 10,155.8 10,174.2

growth in DOH + IP 3.7 0.9 -1.0 -0.5growth in IP 0.0 6.7 3.1 -2.8growth in DOH 4.8 -0.7 -2.2 0.2

There is a resource gap!

We need to enhance capacity of hospitals to capture a larger share of the market and acquire a lion’s share of PHIC reimbursements but without compromising access to care by the disadvantaged

We need to enhance capacity of regulatory agencies to improve services

We need to have financial reforms through the HSEF and other PPAs

Last words…