UP-PGH has faced and is facing more administrative problems, Government records show

By Chanda Shahani

The University of the Philippines (U.P.) Philippine General Hospital (PGH) consistently lost more money than it should have from 2004 to 2009 due to a series of managerial lapses, documents from the Commission on Audit (COA) and the Department of Justice (DOJ) show.

 The lapses from 2004 to 2008, combined with a lack of availability of additional funds from the national government, contributed to an overall budget gap of PhP 1.7 billion in 2008 from its official budget of PhP 1.3 billion in the same year. COA says that the PGH needs an annual budget of at least P3 billion to maintain its ISO status. Another major lapse is the U.P. Administration's stunning blunder where it rushed to sign a contract in 2009 that is now opposed by the Department of Justice to privatize portions of PGH, leading to an estimated revenue shortfall of PhP 84 million a year for the premier state hospital.

The 2008 Consolidated Audited Annual Report (CAAR), authored by COA and available online (http://www.coa.gov.ph/) is an audit of the entire Philippine government, including the U.P. System which includes PGH, and was transmitted to U.P. President Emerlinda Roman in a cover letter by COA Director Villaflor S. Fernandez and received on September 23, 2009 by President Roman's office.

 The 2008 CAAR of COA cited budget losses for PGH stemming from disallowed Philealth claims amounting to PhP 8.7 million (See: “Former U.P. PGH Executive Director Robustly defends Financial Record, while 2008 COA Report reveals more details,” Diliman Diary, March 3, 2010). But it goes much deeper than that. Other details, buried beneath a forest of links at the COA website show an emerging pattern of managerial lapses, contributing to the PGH's PhP 1.7 billion budget gap.

 The 2008 CAAR of COA said that:

• Procedural deficiencies in the operation of Newborn Screening Services caused an estimated PhP 27 million in uncollected and unrecorded  revenue and other procedural deficiencies in the operation of the Newborn Screening Services of PGH, a procedure required by law (R.A. 9288 or the Newborn Screening Act of 2004) due to inadequate enforcement of policies and procedures on billing and collections.
• Uncollected 20 percent discount granted under the Expanded Senior Citizens Act of 2003 (R.A. 9257) resulted in the PhP 64.9 million out-of-pocket expenses incurred by PGH due to funding constraints from the Department of Budget and Management and a lack of strong representations from the U.P. Administration to both houses of Congress who are the holders of the nation's purse strings.
• Indigent patients who are the historical constituency of PGH's Medical Assistance program were deprived of some PhP 9.9 million in government funding from legislator's pork-barrel funds, otherwise known as Priority Development Assistance Funds (PDAF) since it should have been truly indigent patients who were the beneficiaries of this fund, as intended by law, and not richer and wealthier pay-in patients who wee the beneficiaries screened by the staff of the legislators.
• Hospital Fees of PhP 131.6 million excluding interest due from Corporate, Government and Individual accounts remained uncollected from one to 12 years in U.P. PGH due to inadequate and inconsistent implementation of existing policies on admission and collection for pay-in patients, which depleted PGH's financial resources to continue its operations.

(To read more details regarding the the numerous problems pointed out by COA in its 2008 CAAR and U.P. PGH's specific responses to them, please click on: http://tinyurl.com/yz8eea2 ).

Adding to the problems cited by COA, which its auditors say are correctible, and if totalled together, amount to a PhP 232.8 million contribution to PGH's PhP 1.7 billion annual budget gap; is the issue of the privatization of portions of PGH through a contract signed on June 18, 2009  for the UP PGH Faculty Medical Arts Building (FMAB) Project by U.P. President Emerlinda Roman and Dr. Edwin Mercado, President and Chief Executive Officer of the Daniel Mercado Medical Center (DMMC) and witnessed by then U.P. PGH Director Carmelo Alfiler whose term spanned 2004 to 2009, leading to another major contribution to PGH's budget gap.

According to U.P. PGH Executive Director Jose Gonzales, who is the immediate successor of Dr. Alfiler, but whose position as Executive Director is now the subject of an administrative and legal dispute after the BOR replaced him with Dr. Enrique Domingo on February 25, 2010 (See Diliman Diary, February 25, 2010); the FMAB project, while beneficial in some respects, would nevertheless still hurt the essential constituents of U.P. PGH, who are the disadvantaged poor, by siphoning away much-needed income needed by PGH for its programs and benefitting DMMC instead.

Dr Gonzales said that the pharmacy of PGH generated PhP 8 million a month or PhP 96 million a year. DMMC operated facilities would compete against PGH facilities and aside from operating a competing pharmacy within the bowels of PGH, the U.P. FMAB Project would allow DMMC the lease with conversion, rehabilitation, development and operation of the PGH Dispensary Building as the UP-PGH FMAB for a period of 25 years. Under the contract, DMMC is given an 18-month rent-free construction period starting from the time of contract signing. Under the Terms of Reference, DMMC shall lease the building from UP-PGH and sub-lease the clinic spaces to accredited PGH consultants. DMMC is responsible for the fiscal and non-medical operations of FMAB and is allowed to manage and operate the concession areas which include the following: Laboratory, Radiology, Pharmacy among others. The other concession areas would also compete against PGH's other revenue centers, Dr. Gonzales said.

A legal opinion rendered by the DOJ on February 9, 2010, said the deal was contrary to law (see Diliman Diary, March 3, 2010). The DOJ opinion also said that when U.P. entered into a negotiated bid with DMMC, its minimum expected revenue from the lease of PGH facilities to DMMC was PhP 1 million a month or PhP 12 million a year.

The Diliman Diary compared the PhP 96 million a year generated by PGH's own pharmacy alone to the PhP 12 million in rental income from DMMC, and found that there would still be PhP 84 million in unrealized income for PGH. This unrealized income should have been allocated  for indigent patients, who comprise the majority of patients in PGH. In 2008 alone, the PGH served a total of 560,218 patients. Of this total, 49,340 (9%) were admitted in Charity Wards, 14,274 (3%) in Pay Wards and the remaining 496,604 (89%) were outpatients. The unrealized income of PhP 84 million, added to the other problems at PGH cited by COA totalling PhP 232.8 million, added up to a grand total of PhP 316.8 million in combined losses due to U.P. administrative lapses. The PhP 316.8 million in combined losses due to U.P. administrative lapses represents 19% of PGH's 1.7 billion annual budget gap.

COA says that the PGH's budget shortfall results in inadequate facilities, a poor nurse to patient ratio, unpaid utility bills, and underpaid medical personnel, which may adversely affect the premier state hospital's goal of becoming one of the best national university hospitals in Asia, and achieving the International Organization for Standardization (ISO) 9001:2000 Certification.

COA is pressing the U.P. Administration to make a strong and persistent representation with the DBM thru the UP System for the approval of the proposed Budget and the Actual Personnel Requirements of PGH including the release of the 20 percent Senior citizens discounts and raise more funds to augment government subsidies thru intensified collections of accounts receivables and creation of more income generating projects in line with the Hospital’s mandate.

(To read more details regarding the numerous personnel and staffing problems pointed out by COA in its 2008 CAAR and U.P. PGH's specific responses to them, please click on: http://tinyurl.com/yg6umqu)

Former U.P. PGH Executive Director Robustly defends Financial Record, while 2008 COA Report reveals more details

By Chanda Shahani

The administration of former University of the Philippines (U.P.) Philippine General Hospital (PGH) Executive Director Dr. Carmelo A. Alfiler which began in January 2004 and ended in December 2009 was able to turn over a budget surplus to its sucessor, despite numerous problems, Dr. Alfiler said in a statement uploaded in March 5, 2010 on the website of the University of the Philippines at: http://www.up.edu.ph/

But Dr. Alfiler's remarks, and the entire contents of U.P.'s website, which are all uploaded by the Office of the Vice President for Public Affairs, Dr. Cristina Pantoja-Hidalgo, who reports to U.P. President Emerlinda Roman, continue to remain silent on other important issues regarding PGH raised by the Commission on Audit (COA) in its 2008 Consolidated Audited Annual (CAAR) report of the entire U.P. System (http://www.coa.gov.ph/) , which includes PGH, and was transmitted to President Roman in a cover letter by COA Director Villaflor S. Fernandez and received on September 23, 2009 by President Roman's office.

“As a result of the problems, PGH was compelled to secure a Resructuring Agreement with Meralco on September 12, 2007 to cover the period October 2006 – December 2009. It must be emphasized that since January 2004, PGH never had any disconnection; on the contrary, Meralco prioritized resumption of power to PGH in cases of wide outages due to whatever cause,” Dr. Alfiler said.

“Our administration has endorsed sufficient funds for hospital operations in 2010 to the next administration. Together with the projected 2010 Internal Operating Budget (IOB) of some PhP2,000,000,000, the new PGH leadership is assured of a very sound financial status at the start of the 2010-2012 term,” he added.

(To see more details of Dr. Alfiler's official clarificationn, please click on: http://tinyurl.com/yzbma4y)

However, Dr. Alfiler's statement uploaded on U.P.'s website, and therefore, a component part of the U.P. Administration's official position on PGH, did not cover other critical issues pointed out by COA which arose during his term of office, and are documented by the 2008 CAAR. Neither does the U.P. website even refer to the commercial contract signed on June 18, 2009 between U.P. President Emerlinda R. Roman and Dr. Edwin Mercado, President and Chief Executive Officer of the Daniel Mercado Medical Center (DMMC) for the UP PGH Faculty Medical Arts Building Project witnessed by Director Alfiler and UP Regents Abraham Sarmiento, Nelia Gonzalez and UP Manila Chancellor Ramon Arcadio.

The deal between U.P. and DMMC agrees to allow DMMC to private portions of U.P. PGH after the Department of Justice opposed the deal, saying it was contrary to law in a legal opinion (See Diliman Diary, March 3, 2010). The Manila Chapter of the All-U.P. Worker's Union and other groups have submitted the official DOJ position to COA for analysis and investigation but no findings have yet been released by COA and the 2009 CAAR has not yet been released.
DISAPPROVED OR DISALLOWED PHILHEALTH CLAIMS REACH PhP 8.7 MILLION

The 2008 CAAR criticized the U.P. PGH for losses in revenues amounting to P 8.7 million for disapproved/disallowed Philhealth hospital claims from CY 2004 up to May 2008 due to insufficient compliance of Philhealth documentary and timeline requirements, as well as erroneous data provided by the patients.

Citing Rule VII of the Revised Implementing Rules and Regulations of the National Health Insurance (NHI) Act of 1995, COA said that Philhealth may deny or reduce any benefit when the claims are attended by any of the following circumstances: over- utilization and under-utilization of services; unnecessary diagnostic and therapeutic procedures and intervention; irrational medication and prescriptions; fraud; gross unjustified deviations from currently accepted standards of practice and/or treatment protocols; inappropriate referral practices; use of fake adulterated or misbranded pharmaceuticals, or unregistered drugs; or use of drugs other than those recognized in the latest Philippine National Drug Formulary (PNDF) and those for which exemptions were granted by the Board.

The 2008 COA Report said that a verification of the PGH’s Accounts Receivable from Philhealth showed a balance of P29,374,556.92 from CY 2004 up to May 2008 and that, 30 percent or P8,714,571.64 were disallowed/disapproved claims due to the inability of PGH's Billing Section to comply with pertinent Philhealth policies. This prevented the hospital from recovering the full cost of medical services rendered.

COA CRITIQUES PGH'S PHILHEALTH CLAIM PROCEDURES BUT PGH ANSWERS BACK

COA recommended that UP PGH revisit its existing procedures on Philhealth claims to minimize receivables in particular:

• Request for reconsideration for those cases wherein the hospital was aggrieved by Philhealth decision/disallowance;
• Send bill with demand letters regularly to patients with denied claims due to erroneous information provided for, or those who have exceeded the allowable claim limits;
• Coordinate with Philhealth for the establishment of an on-line system wherein the Hospital could verify member patients’ confinement records;
• Require the Billing section to strictly observe and comply with all the requirements of Philhealth in filing hospital claims including the deadline set for filing and appeals to ensure full recovery of the claimed reimbursements; and
• Require the Accounting Division to up-date the subsidiary ledgers for Philhealth claims.

The Administration of Dr. Alfiler replied to COA, as documented in the 2008 CAAR report that:

• They will review the reported figure of P8,714,571.64.
• Management is only dependent on the information provided by patients and doctors. The doctors are constantly reminded of Philhealth guidelines. For the patients, the difficulty occurs when they rush their forms shortly before discharge.
• Concerning incomplete documentation, these are likely with respect to patients who file their claims directly to Philhealth and NOT through the hospital. PGH is unable to countercheck the supporting documents which will only be required if the Member’s Data Record (MDR) from Philhealth has not been retrieved. Claims are carefully reviewed if the required documents are complete before such are accepted by the accounting department. So the PGH staff gets surprised when claims are returned by Philippine Health Insurance Commission with a note for incomplete documents. Because the PGH staff claims otherwise, they have begun putting an inventory checklist per claim so that PHIC is aware of the submitted documents that may be lost while in their possession. If a refiling needs to be done, patients are informed of this requirement, but oftentimes the patient does not supply the necessary documents. Efforts by PGH's Philhealth assessors are documented.
• Many patients overlook, either intentionally or unintentionally, a previously filed claim. PGH's accounting office has no way of verifying recent claims that have been partially or fully consumed.
• PGH has previously proposed an on-line system to help hospitals check on the status of patients’ Philhealth, but PHIC has been so far unable to grant the request.
• As for medicines not listed in the PNDF, PGH staff is always being reminded agasint prescribing such drugs.
• The data of disapproved/disallowed claims are a mix of reimbursements of patients with fully paid bills and charity patient claims. Currently, the hospital is making all efforts to communicate with the concerned claimants. A request was previously transmitted to Philhealth regarding this matter, which response, as “they will see what they can do”. Henec, we shall send another formal request regarding the issue. This is doable for Philhealth claims beginning 2004.
• Patients who filed their claims directly to Philhealth are not included in the receivables of the Hospital from PHIC.