How a Governor Slew a Bureaucratic Dragon with Common Sense

Leyte Governor now Secretary of Energy Carlos Jericho Petilla (Photo from www.voanews.com)

When Carlos Jericho L. Petilla assumed the post of Leyte governor in June 2004, the Leyte Provincial Hospital had 25 beds, a staff of 10 physicians, and shared the ills of most public hospitals. The doctors were straddling both government and private hospitals. But while private hospitals were doing well by way of profit, government hospitals were “hemorrhaging.” By sucking up one-third of the annual budget, Petilla noted, the provincial hospital was actually draining dry the capitol itself.

The Governor’s solution assumed the obvious: “No hospital can operate without doctors.” What the provincial hospital needed, however, were full-time government doctors, with fewer or no private doctors. Persuading doctors to work full-time would take more than reminding them of the Hippocratic Oath. It would take giving them good pay.

“Incentive” is the glamour word. Its function to motivate is universally acknowledged in the private world. But in the world of government, the age-old civil service mindset seems to find something obscene in giving good pay, except when you can give it across the board. This mindset finds expression in the law that standardizes salaries, including those of local government officers and employees.

Leyte governor Petilla (right) tours the renovated Ormoc District Hospital. With him is Ormocanon International president Imelda Sacay-Berndt, provincial board member Ebon Bertulfo and Dr. Gregorio Yrastorza, Jr. (Source: evmailnews.com)

Here’s how the Local Government Code of 1991 refers to it in one of its provisions: “No official or employee shall be entitled to a salary rate higher than the maximum fixed for his position or other positions of equivalent rank by applicable laws or rules and regulations issued thereunder.”

In the Provincial Health Office, the highest paid officer is the Provincial Health Officer II, enjoying Salary Grade 26. The highest salary rate fixed for the position in a first class province like Leyte is P62,646 ($1,430) per month. The Chief of Hospital III, being in the same Salary Grade, is entitled to the same monthly salary rate. The province has no power to change the rate. If you want it changed, you would need both Houses of Congress to pass a joint resolution for the purpose. So, this was one impediment to the Petilla solution.

Another one came from a provision in the Local Government Code that sets a cap on the annual budget for Personal Services (salaries, bonuses, etc. of employees). The issue was: How do you raise the pay of the doctors without increasing the total provincial budget for salaries?

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“Persuading doctors to work full-time would take more than reminding them of the Hippocratic Oath. It would take giving them good pay.”

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The practical challenge was in addressing at least two operational issues. One, where do you get the money to fund the increases? Two, if you got the money, how would you ensure it would go as incentives to the doctors, and not earmarked by the sanggunian for other purposes?

As new fund sources, Petilla thought of two things: the patients and PhilHealth. He believed that hospital services should come free only to indigents, but not to those who could afford them. The rates of fees and charges were standardized in 2005; then new rates were adopted in 2011.

In 2009, the Governor allowed the provincial hospital to collect “Special Service Fees,” which are also called “special donations,” from patients with their written consent. The move was complemented by an ordinance “governing the disposition of cash donations to hospitals”: The attending physician gets 70 percent; the provincial government, 10 per cent; and the support staff, 20 percent.

As donations or contributions, special service fees appear in the books under special accounts, neither as salaries or bonuses nor service fees. By strength of the ordinance, the donations can only be used in the manner prescribed by the sanggunian. In 2012, total donations for that year amounted to a little less than P4 million ($9,000).

Petilla (second from right) handed out Philhealth cards to beneficiaries in Barangay Culasian, Capoocan, Leyte at the inauguration festivities at Mother Bless birthing facility. (Source: evmailnews.com)

Leyte’s use of PhilHealth as another fund source was simple and straightforward. In the regular scheme of things, a PhilHealth member goes to an accredited government hospital to avail herself of its services, charged to PhilHealth. The hospital bills PhilHealth for the services it gives to the patient, including professional fees. But because the attending professionals are salaried employees of government, the PhilHealth payments should go to government coffers.

By the time Petilla was appointed to his current post as Secretary of the Department of Energy, the hospital’s beds had doubled to 50, with a physician staff that almost doubled to 19. Total income going to the LGU’s General Fund for 2012 was reported at P25 million ($570,593).

By some account, doctors working full-time in the hospital have been getting an average monthly pay of P180,000 ($4,108).

Everybody is happy.

President Benigno Aquino III swears in Carlos Jericho Petilla as Secretary of Energy (Photo from Official Gazette)

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Mar R. Galang is a local government specialist and a fellow of Action for Economic Reforms. This article first ran as “Good Health and Common Sense” in BusinessWorld, June 1, 2014