Local hospitals are among those disputing the rationality of the government’s retrieval of P89.9 billion in funds from the Philippine Health Insurance Corp. (PhilHealth), even as our healthcare system is considered among the worst of developing nations.

Private hospitals provide basic health services to the poor through a reimbursement scheme with PhilHealth — which was crucial in saving lives during the pandemic years.

The hospitals, however, have been claiming huge arrears from the government in unpaid billings which makes the insistence that PhilHealth had idle funds unacceptable.

The Private Hospitals Association of the Philippines Inc. (PHAPi), the group of the biggest health institutions in the country, said the state health insurance firm has payables of up to P6 billion to them.

The government has been remitting its payments but the collectibles remain big, thus the organization expressed surprise that PhilHealth had accumulated idle funds through the years.

“PhilHealth is overflowing with funds yet it has been slow in paying for the rendered health services,” said PHAPi president Dr. Jose Rene de Grano.

The association said that in 2023, PhilHealth owed private hospitals at least P10 billion. While the government has been releasing payments, this was not enough to wipe out its obligations since hospitals are required to continue to treat poor patients under PhilHealth grants.

De Grano stressed the importance of PhilHealth promptly settling these claims, pointing out that, unlike public hospitals, private institutions do not receive government subsidies.

“All costs of medicines and supplies, as well as health worker salaries, have increased. These factors affect hospitals, especially private ones because we do not receive any subsidy from the government. That’s why hospitalization costs in private hospitals are rising,” De Grano explained.

The accumulated debts affected hospitals to the point they considered not accepting patients or beneficiaries of PhilHealth. The hospitals, however, had pledged to prioritize the welfare of patients who rely heavily on the state insurer.

“Around 90 percent of hospital bills are covered by PhilHealth which is a big help, especially for those with small earnings,” De Grano said.

Economists said the inefficiency of PhilHealth was the primary reason the institution has ended up with huge idle funds, meaning that it has not been performing its mandated services such as covering the entire population with health insurance as provided under the Universal Health Care (UHC) Act.

According to the state think tank Philippine Institute for Development Studies (PIDS), PhilHealth is still far from functioning effectively to shape healthcare provider network (HCPN) behavior and drive UHC goals.

It indicated that PhilHealth’s contribution to the country’s total health expenditure continues to be stunted, and reliance on household out-of-pocket (OOP) spending is still prominent.

Moreover, PIDS said PhilHealth’s contribution to financing local government unit health services, for both hospital and primary health care, was weak compared to consolidated expenditures by LGUs themselves.

PhilHealth benefit payouts on inpatient claims also significantly overwhelm hospital payments and outpatient care.

The public research institution said hospitals have consistently constituted 40 percent of total health expenditures in the Philippines.

With health service delivery concentrated largely in hospitals, understanding their financial health is integral in ensuring that they continue to operate.

In any health system, healthcare providers must have both financial sustainability, such that they can continuously deliver healthcare services without bankruptcy, and sufficient profits to maintain and improve the quality of their services.

Compromising the financial condition of hospitals through the siphoning of PhilHealth funds puts many Filipinos who rely on PhilHealth support at risk.

The situation becomes unbearable when the funds hijacked from healthcare are redirected to line the pockets of members of Congress under the outlawed pork barrel.