The healthcare business
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - September 19, 2017 - 4:00pm

A change has been happening over the last decade or so in the healthcare business that is probably for the better. Conglomerates are buying hospitals and introducing efficient business practices in the process. Cost of hospital care hadn’t been going down so far, but at least hospitals have become more sustainable as going business concerns.

Up until then, hospitals were owned by doctors, and doctors are not always good business executives. Dr Alran Bengzon is the rare doctor who is also an outstanding manager and entrepreneur who turned the ABM Sison Hospital into Medical City today.

 Running hospitals is expensive and cumbersome and can detract from a doctor’s supposed main mission. Indeed the practice of medicine and the conduct of business seem in conflict with the traditional view of the humanitarian doctor whose only objective should be to save lives.

It was not surprising that until Metro Pacific bought control of Makati Medical Center, the country’s supposed premier hospital was in financial trouble. The doctors who owned and managed Makati Med were not managers. And as the original incorporators got older, things started to unravel.

It took just a while before Rose Montenegro, the no nonsense business executive Manny Pangilinan reassigned from PLDT, managed to instill order and efficiency. MMC was soon in the black and enhancing its reputation as a top local hospital again.

Encouraged, MVP started buying more hospitals. The three bigger ones that come to mind are Cardinal Santos Memorial Medical Center in Greenhills, Asian Hospital in Alabang and the Delos Santos Hospital on Espana Extension. They have been buying several smaller hospitals in the process of creating a network of about 30 hospitals in 10 years.

Apparently, MVP isn’t the only one out to buy and run hospitals. Unilab, the giant drug manufacturing firm, is also on a buying spree. They have just bought Capitol Medical Center in Quezon City, the VR Potenciano Medical Center in Mandaluyong and the Medical Center Manila on UN Avenue in Manila. All three hospitals were owned and managed by doctors and their families.

The death of the founding owners probably made it easier for Unilab to acquire the hospitals. Perhaps, the families figured it made sense to cash in now. Otherwise, they must pour in big money to rehabilitate the buildings and to acquire state of the art facilities.

The entry of Unilab in the hospital sector is an interesting development. It had been in the drug manufacturing industry for decades. It is also probably one of very few Filipino enterprises that have successfully penetrated the Asean market way before market integration was even thought of.

Now managed by a grandson of its founder, Unilab will provide the deep pockets that the hospitals they bought require. From Unilab’s perspective, branching out to hospital management looks like a natural expansion, even if there may be those who might think a conflict of interest is also present.

But I don’t think Unilab will be silly enough to ban the use of drugs manufactured by its competitors, the way PAL used to ban San Miguel beer in favor of brands manufactured by Lucio Tan’s Asia Brewery. I imagine Unilab will manage the hospitals as separate businesses with their own needs and interests to protect. They will also be busy upgrading their new acquisitions in the next few years to improve competitiveness.

The corporatization of our hospital industry is probably a good thing. Other than acquiring existing hospitals, they should also be building new ones. We still do not have enough beds even in the cities and even if you can afford it.

And it gets worse. Health Secretary Paulyn Ubial told CNN Philippines that the biggest challenge in Philippine health care is fragmentation and disparity in the quality of health care services.

"You have the private sector that usually takes care of the rich, and the public sector that usually takes care of the poor…then down the line you have different local government units.  For public hospitals, it's under the government. For the rural health units and barangay health section, it's under the mayor." Dr Ubial thinks LGU officials do not always have the funds, nor see the need to prioritize hiring doctors to care for their constituents.

Getting competent attending physicians in the metro areas is not that much of a problem provided you can afford it. But if you live in the rural areas, you may not even see a doctor in your lifetime. 

Health Secretary Ubial pointed out we must improve on the 2,300 new doctors produced annually. I am also shocked with her revelation that only 30 to 40 percent of medical graduates pass the board exams, which she said is way below the 98 percent in Cuba.

Not too many doctors want to practice outside of the cities and the few dedicated ones like Dr Bobby dela Paz and Dr Juan Escandor were killed in anti insurgency operations. A young doctor, Dr Dreyfuss Perlas, who volunteered to serve in Lanao del Norte was recently shot to death by an unknown assailant.

The other problem people have is cost of hospital care. PhilHealth and the HMO companies do not always cover costs of hospitalization. And if you happen to have what they call a “catastrophic illness” you really have a problem only the PCSO can help solve.

During the wake for the mother of my colleague Cito Beltran, her sister recalled that their mother’s “neighbor” in the ICU at the National Kidney Institute was so poor his family had to worry more about covering costs than the patient’s recovery. It is a government hospital, a good one, but even then, there are costs.

I come from a family of doctors. My father taught generations of doctors in his over 40 years teaching at UST and FEU. My mother’s patients were mostly the children in the squatter areas near our home in Paco. A sister, two brothers-in-law and two nieces are also doctors. So I understand where doctors are coming from.

The humanitarian side of their profession is pronounced. But they also have to support their family.  I have seen many doctors go out of their way to help really needy patients. But in the end, seeing to it that every Filipino gets the health care he needs is society’s obligation.

Hopefully, the corporatization of the major hospitals will provide the hospitals with more financial clout to provide not just world class patient care, but also attention to humanitarian needs. It is disgraceful that it is necessary for Congress to pass a law that prohibits hospitals from demanding a deposit before patients are given emergency and other medical services.

The last thing we want to hear is how even a single life was lost because the patient was too poor to afford medical services. Sure, running hospitals is a business but it isn’t just any kind of business. It is a business imbued with social responsibility.

 Hopefully the entry of big corporations into the hospital business is not just about the profit potentials, but also the opportunity to respond to an urgent and deep social need.

 Boo Chanco’s e-mail address is Follow him on Twitter @boochanco

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