CHAPTER 5 FINANCIAL MANAGEMENT

FOURmula One Plan (F1)

• Created by DOH

• Launched under A.O. 2005-0023 dtd. 30 August 2005

FOURmula One Plan (F1)

• Supports better and sustainable health investments

• Involves strategic action plans

• Seek to provide equity

• Aimed at improving health financing and outcomes

a. Mobilizing resources from extra budgetary sources

b. Coordinating local and national health spending

c. Focusing direct subsidies to priority programs

d. Adopting a performance based financing system

e. Expanding the National Health Insurance Program (NHIP)

The following are F1 components:

Mobilizing resources from extra budgetary sources

Improving the earning capability of the health agencies without prejudice to its services for less privileged people.

Mobilizing resources from extra budgetary sources

Examples: service fees, charges for personal health care, property assets

Mobilizing resources from extra budgetary sources

This requires improving the earning capability of the health agencies without prejudice to its services for our less privileged countrymen.

Mobilizing resources from extra budgetary sources

"This may include revenues from user fees and charges for personal health care and regulatory services, and rationalized use of real property assets belonging to government health agencies."

Coordinating local and national health spending

entails maximizing the expected performance outputs using the available resources and properly distributing the resources where they would produce optimum health impact.

Focusing direct subsidies to priority programs

Direct subsidies from national and local governments will focus on priority programs, specifically on basic and essential health goods and services used by the poor.

Adopting a performance based financing system

The budget allocation shall be conditioned on the achievement of performance targets.

Expanding the National Health Insurance Program (NHIP)

Strengthening of NHIP through expansion of enrollment coverage and improved benefits and leveraging payments on quality of care..

• Assists in the establishment of an effective formulary system in collaboration with the Pharmacy Therapeutics Committee (PTC) and hospital administration.

• Initiates strategies that aim to control drug product costs.

• Implements DOH policies on procurement and resale of drug products that aims to control drug product costs.

• Promotes rational drug use among health professionals.

• Improves, data recording and facilitate drug product/medicines Statistics dissemination through electronic information and implementation of Integrated Hospital Operations Management Program (IHOMP).

• Ensures minimal waste of drug-product preparation

• Prepares a reasonable and realistic plan based on statistics that would assist management in accurately predicting the volume of activity of the Pharmacy Service.

The chief pharmacist has assumed the responsibilities in the delivery of an effective hospital financial management and undertakes the following with the aid of the pharmacy staff:

• Priority Development Assistance Fund (PDAF)

• DOH Indigency Fund

• Philippine Charity Sweepstakes Office (PCSO)

• INSURANCE ( PhilHealth, Philamcare, GSIS, SSS, etc)

• Non-Government Organizations (ex. Caritas, TZU-CHI Foundation)

• Local Government Units (ex. City Aid)

The following are the sources of funds that can be availed of by the patients

Integrated Hospital Operations Management Program (HOMP)

Hospital computer or electronic systems developed from business computing systems in the previous years through the ___of the DOH are used for accounting, billing, inventory and similar related functions. It was also developed for storing patient information to be used by medical and other concerned staff. In the pharmacy, utilization of the said program facilitates charging of dispensed medicines.

Administrative Order No. 49-A s. 2000

price for a pharmaceutical product is based on the provision under __ which states that" Drugs and medicines, biologicals, medical supplies, etc shall be sold at a maximum mark-up of 30% to be added to the cost.

Administrative Order No. 2006- 0039

likewise, for goods acquired through consignment, provisions under reselling and Dispensing Conditions of ___dtd. December 8, 2006 (Amended Policies and Guidelines for the Institutionalization and Decentralization of the Department of Health Drug Consignment System) states, " The DOH hospitals shall be authorized to dispense consigned drugs and medicines with mark-ups provided that the resultant retail price, ie, with the mark-up will not result to a price higher than the prevailing market price. "

Administrative Order No. 2005-00010

In addition, for hospitals engaging in wholesale procurement and distribution of essential drugs, _____ (Guidelines for the Department of Health Retained Hospitals to Engage in Wholesale Procurement and Distribution of Essential Drugs) explicitly stipulates that" the end-user organizations shall be allowed to exact a mark-up not exceeding thirty percent (30%) of the transfer price from the DOH Retained Hospitals or as may be determined by the DOH Hospital in comparison to the prevailing market price. The mark-up shall in no case result to a higher retail price than 50% of the prevailing market price. A progressive mark-up structure may be devised by the DOH Hospitals that is drug or drug type specific provided that such will not exceed the 30% mark-up ceiling or will not result to a price higher than 50% of what is prevailing in the market.

Joint National Budget Circular No. 321 and COA Circular No. 80-128

dated, February 06, 1980 "Guidelines and Related Procedures for the Establishment of funds for Medicines and Drugs in Hospitals/Sanitaria" This circular was created to establish the revolving fund exclusively for stock and resale of drugs and medicines.

Administrative Order No. 49-A

s. 2000 dated May 09, 2000, "Policy Guidelines in the Implementation/Operations of the DOH Botica in all DOH Retained Hospitals" DOH hospitals were authorized to establish a DOH Botica to meet the needs of the patients and consumers.

Administrative Order No. 51-A

s. 2001 dated October 12, 2001, "Implementing Guidelines on the Classification of Patients and on Availment of Medical Social Services in Government Hospitals".

Class C-1 (partial)

the patient shall pay 75% of hospital charges for medicines given, ancillary services, rendered and others, if any.

Class C-2 (partial

the patient shall pay 50% of the charges of medicines
given and ancillary services rendered.

Class C-3 (partial)

the patient shall share any affordable amount for medicines provided and ancillary services rendered.

Class D (full)

free room and board, professional services, linen and ancillary services and available medicines. Patient shall not pay for hospital charges incurred.

Cost Minimization Analysis (CMA)

 is the simplest of the pharmacoeconomic tools and is applied when comparing two drugs of equal efficacy and equal tolerability. It compares the cost of therapies that achieve the same outcome. The relevant cost is the total cost of therapy not just the acquisition cost.

Cost Effectiveness Analysis (CEA)

is a form of economic analysis that compares the relative expenditure (costs) and outcomes (effects) of two or more courses of action. This is often used where a full cost-benefit analysis is inappropriate e.g. the problem is to determine how best to comply with a legal requirement.

Cost Utility Analysis (CUA)

is a form of economic analysis used to guide procurement decisions. The purpose of this is to estimate the ratio between the cost of health-related intervention and the benefit it produces in terms of number of years lived in full health by the beneficiaries.

Cost Benefit Analysis (CBA)

is a term that refers to:A formal discipline use to help appraise, or assess, the case for a project or proposal, which itself is a process known as project appraisal; and

Cost Benefit Analysis (CBA)

An informal approach to making decisions of any kind.