Opening Statement – Senate of the Whole: Ricardo C. Morales, President and Chief Executive Officer, Philippine Health Insurance Corp. Inc.


Honorable Ladies and Gentlemen of the Senate;  my fellow workers in PhilHealth:

We have come full circle. We are witnessing the latest edition of what is turning out to be an annual bash PhilHealth frenzy that gets the PCEO fired, the executives dragged over the coals, the board replaced, and renewed promises of change and reform declared. Anyone keeping track of this cycle must be reminded of Einstein’s caveat of doing the same thing over and over again and expecting different results.

The problem of fraud and inefficiencies in PhilHealth were here long before I got here and will continue to be here long after I am gone, if the right things are not done.

These problems are but symptoms of a  bigger problem, what management experts call a “wicked problem” – a problem that defies solution. Unless this wicked problem is broken down and  the sub-elements addressed in detail, kahit lingo-linggo ho tayong magpapalit ng presidente, hindi ho mawawala ang problemang ito.

How much fraud is there in PhilHealth? In a study completed in December last year, the  estimated  PhilHealth’s fraud index was  7.5%. In other words, of the P 136 billion PhilHealth spent last year on benefit payments, P 10.2 billion was potentially lost to fraud. Next year, if the right thing is not done, of the P 240B planned benefit expenditure, this potential loss will balloon to P 18 billion. The Global average for healthcare fraud is 10 to 20%.There is no health care system in the world that is entirely fraud free.

In this context, the so-called reports appearing in media, some of which ae inaccurate anyway, appear as mere pin pricks. This 7.5% fraud index is the mother, the strategic level on which management wishes to focus. Certainly, all reports of wrongdoing have to be investigated and if evidence warrants, the law will have to take its course. But the resources of the Corporation are limited and priorities have to be established.

I have maintained  in Day 1 of my tenure that the main solution to this systemic fraud problem lies in a robust, integrated and harmonized information management system running a clean, complete and updated membership database. Only such a system can keep track of the 109 million members, the 40, 000 accredited health care professionals, the 8,500 health care facilities, filing 35,000 claims a day and paying  P 2 billion a week.

Supporting this information galaxy is a fragmented, ageing and over-extended information system running a hundred applications, a database that handles 370 transactions per second, ministered by 12 overworked IT professionals (last year there were 15), catering to 4,000 internal and 20,000 external users, distributed among 130 offices and branches nationwide. This is the same IT team that is supposed to introduce the proposed Information system strategic plan including the IT infrastructure to support the ambitious Universal Health Coverage Law…and then COVID-19 hits. Even under “normal” times, an organization as huge and as complex as PhilHealth was never an easy organization to run.

It is important to take note of this detail.  If the Corporation stands to lose tens of billions a year thru fraud which can be avoided by information technology, then the alleged overpriced P2.1 B IT program over three years appears paltry indeed.  This is the strategic shift in outlook I would like the organization to adopt.  In the information system development the size and complexity of PhilHealth, the smaller the budget, the bigger the risk of failure.

Careful observation of this year’s series of accusations will reveal an unmistakable pattern.  The theme and sources are uncannily familiar not only with last year’s but with all the previous years.  This information can only come from within the organization.  There are a malevolent few who want to believe that it is they who are the real power in the organization, who determine the course it takes and the tenure of its PCEOs.  They only pretend to be interested in reform but in fact are only interested in protecting their respective turfs.  And they may be right.  Make no mistake, there are many good, loyal and hardworking people in PhilHealth who have devoted the better part of their lives to the Corporation.  There are sufficient internal channels for grievance and redress within the Corporation, both formal and informal.  And certainly, when the evidence warrants, the law will have to take its course.

Unfortunately, this was part of the organization that I inherited.  I have tried to calm and smooth the internal waters of the Corporation.  I have not fired anyone without cause and tried to re-integrate those who had falling out with previous administrations.  I have brought in only a handful of carefully selected and highly qualified individuals.  But results will take time and there are no silver bullets in the real world.

Nevertheless, despite its imperfections PhilHealth last year paid for the health benefits of 14 million Filipinos, about 12% of our population, many of them indigents.  That it collected from those who could pay and applied these to those who could not pay.  And that during this pandemic PhilHealth provided much-needed funds that kept many hospitals open.  That in the coming years, if PhilHealth succeeds in what it is supposed to do under the Universal Health Coverage Law, more and better health services will be provided to more and more Filipinos, literally lifting their quality of life.

PhilHealth is not perfect but I believe it would take less to fix it than to bury it and create a new organization in its place. The same skills, specialties, processes and organizational structures will be required of any  organization that pays for healthcare in any society.

This management team that I had labored mightily to create in the year that I was with this organization, is not yet ready to throw  in the towel. Reform does not happen overnight and some stability is required for it to take root. The record will show that my campaign against corruption is not of recent vintage. While in the active service I paid dearly for my outspokenness. I was not an armchair soldier and have the scars to show it. But being honest, hardworking, loyal, good-looking is not good enough to succeed. One must do the right thing. And right now, at this moment, the right thing to do for PhilHealth is to get a that robust, integrated and harmonized information system and to clean up its membership database.

A problem that defies solution is a condition, a way of life. Ngunit, hanggang dito na lang ba tayo?

Before I close let me share with you a real-life story. Last June 30,54 year old Tatay Alex, because he wanted to save money, walked six kilometers from his home in Sapang Putik to the Bayad Center along the national highway in San Ildefonso, Bulacan to pay his premium. Unfortunately, the rates had been raised and he was short by P300. His dilemma was noticed by another member, a total stranger, Ms. Jasmine, who offered to pay Tatay Alex’s full premium while letting him keep his P300. Makikita nyo naman ho sa itsura na ang mga taong ito mahalaga sa kanila ang bawat sentimo

Why do they keep paying their premiums in spite of all the bad things being said about PhilHealth? Tatay Alex’s wife suffered a stroke in 2018. The hospital bill was P29,000 but he  paid P3,000. Ms. Jasmin delivered a daughter in 2019. The hospital bill was P8,000,she paid P2,000. The child acquired pneumonia, the total bill was P15,000; she paid P1,500.

And this is what she has to say. “Thank you po dahil sa sobrang tulong ng PhilHealth lalung-lalo na po sa akin, dahil nagamit ko po siya sa panganganak ko at noong na-ospital ang baby ko. Kung walang PhilHealth paano na kaming mahihirap?”

Ladies and Gentlemen,  I humbly submit that when PhilHealth suffers to from premature and negative publicity, the interest of people like Tatay Alex and Ms. Jasmin inadvertently are also hurt. Marami pong dapat ayusin sa PhilHealth .PhilHealth needs help. It has taken too many body blows. Tulungan ho natin ang PhilHealth, kung maaari ho huwag pagtulungan.

If this cycle continues, this body might have to make the fateful decision whether to pull the plug on this organization.

Until that happens, this management will pursue what it believes to be the right thing to do. Yun lang po maraming salamat at magandang umaga.

Facebook Comments