‘We are taking the opportunity to develop medical tourism and healthcare facilities in this country’

The new Philippine leadership represented by President Duterte sets its objectives to play a more crucial role within the region. The Philippine economy was a top performer in South-east Asia in 2016, according to a November report from rating agency Standard & Poor’s (S&P), due to its growing middle class, a business process outsourcing (BPO) boom and expansionary fiscal policy that emphasises public infrastructure. GDP growth reached 6.8% in 2016, up from the 5.9% posted in 2015. What is your expectation on the new administration’s 10-point economic agenda, 2017 budget, proposed IPPs and tax reform and what impact do you expect on the investment climate?

The investment climate is very positive right now, particularly in the health sector. The identifying areas for joint investment are for example the geriatric facilities and nursing homes, and even medical tourism is an area for development. One of the things that we are considering is also the increased investments in health infrastructure, which is the highest ever, which results in a robust health system and infrastructure and eventually more investment. There is a need for more instruments such as CT Scans, patient monitors, and similar, for which a greater budget has already been allocated.

For the first time in Philippine history, the health budget is higher than the defence budget. The DOH is number three in the government portfolio. Education is number one, followed by Public Works. We are looking at the expansion of our hospitals and health facilities. In that light, it is not only the pharmaceuticals and medical supplies, but also the equipment that we’re considering. There will be companies that will invest in manufacturing of equipment, which would create a win-win solution for the Philippines, as that will create jobs and fuel the economy. Moreover, this will also result in hastening the investments in health as it will become easier to acquire the equipment that we need.

In our strive to improve the health sector, we have been visiting Cuba to study the health system there. That country has one of the best health outcomes in the world and yet their per capita expenditure on health is not as high as in the US or other developed countries. After learning about the Cuban health care system, I have presented my findings to the cabinet and we are now implementing a similar approach of building health centers and family clinics. The system in Cuba is more geared to preventive measures rather than the curative and rehabilitative. Visiting their hospitals, we noticed that they had a very low occupancy rate of only 60% to 70%. That is because they have these clinics that are spread all over the country that offer regular preventive check-ups to facilitate early detection.

We started doing exactly that. We have approached the 20 million poorest Filipinos and started to do annual check-ups with that group. We are planning to increase our focus group and simultaneously calculate how much more equipment we will need in order to provide this service to the entire population. In the past, our records for annual check-ups, especially for the formal sector, those who are employed, was less than 20%. This is an utterly low percentage. If we want to increase this number, this will also mean a tremendous investment in terms of the equipment, supplies, and materials needed. This is additional to a potential move from doctor’s clinics to poly clinics which are not just material but also labor intensive. To achieve this, major investment is needed.

It is very interesting to see how you are building synergies with other countries in exchange of knowledge. Considering the administration’s move to more regional integration, what synergies do you have with countries like Japan or other Asian countries? How do you compare your health system with those countries?

In terms of the synergies, there is a lot of potential for Japanese companies that produce vaccines. We used to have a budget of less than 3 billion pesos for vaccines. Now, our budget is around 7 billion for vaccine procurement alone. This is a big jump in terms of the resources that we would need. Additionally, we used to have a budget of 1 billion pesos for drugs and medicine to be distributed to the poorest Filipinos. Nevertheless, if we go ahead with our annual check-up plan this will not be enough. We are therefore looking towards a budget of 3 billion pesos. So, there is a lot of room for synergy. Japan can help us to provide the needed supplies and equipment for the gaps that we are seeing because of the change in our health system policies.

You have been mentioning that health budget might not be enough to finance your plans. What is your opinion on the possibility of public-private partnerships and what opportunities do you see for international companies?

We actually have an office in Japan, which is sponsored by JICA and dedicates its operations to PPPs exclusively. It is an entire office that looks at how the health sector can invite PPP projects into the country. We are therefore very active in facilitating this kind of investment. We hope that that would fill in the gaps in terms of the budget requirements. Right now, the current trend is to have all Filipinos covered by the national health insurance program. Setting up PPPs with Japan or with other international partners makes me confident that the hospitals and health facilities will be able to meet our commitments of offering health care for every Filipino, covered by the health insurance. It is, however, very difficult to go into PPP, because all the financial management of the hospitals is dependent on subsidies from the government.

What will be the effects of your plans for free health insurance, not only in the social sphere, but also on an economic level? How does it go hand-in-hand with internationalization or regionalization?

This is one of the reasons why the private sector is expanding. They know that due to the fact that everybody is covered, they get paid. They can now take it as an opportunity to attract international clients and investments. There are a lot of positive developments now for the health sector to expand. Not just to address the local growth, but also international expansion. What we are looking at by talking to several private sector partners are the pacific small islands. It will be very difficult for them to put up a training center or medical school in their own countries. We would like to encourage them to send their doctors or health professionals here for training. We’re trying to look at that as one of the avenues for developments by the Philippines which might create an opportunity for us to create an investment climate in other countries for Filipino-owned and operated hospitals.

Just a month ago I was in Qatar. We were talking to the Minister of Health. We have this Filipino group of doctors who would like to put up a Filipino-owned hospital in Doha, Qatar. Many of the Filipinos that are working there, are earning quite well. However, when they need medical services, they come back here to get treated. With that first initiative, we’re trying to see a future where we have a Filipino hospital in many of the Middle Eastern countries, that can cater to the extensive population of OFW there.

In you plans to penetrate the Asian market two industries are especially interesting – the pharma market and health tourism. Several pharmaceutical companies are already operating in the Philippines. What are the benefits for these companies to come here?

The situation here in the Philippines is that the labor is very cheap while their skills are very high. Filipinos also have that way of adapting very easily. This comes all on top of the investment climate. We offer economic zones that can also provide tax breaks and tax holidays and also provides the necessary infrastructure. The major attraction point definitely are the economic zones that are well-situated, and offer all the facilities needed.

Due to the infrastructure investment health tourism is increasing. In terms of health tourism attractiveness, the Philippines now ranks 8^th worldwide.

This is true and it came as a surprise to us in first instance taking into account our very advanced neighbors such as Thailand, Hong Kong or Singapore. Nevertheless, at second glance looking at our health worker production and their quality, we’re probably one of the leaders. It is the human resource that triggers this development.

However, we are not relying on this. We are developing our unit for medical tourism. There is a unit now in the DOH that looks into that. Even the licensing and accreditation requirement for quality assurance is now taking shape and the standards are being developed. There still is a lot of work to be done, though. We hope to get there very soon.

You have been mentioning that the Philippines might not be the first country that would pop into your mind when talking about pharmaceuticals, health, and health tourism. What message would you personally send to other nations in order to invite them to come to the Philippines either as a health or medical tourist or as an investor?

The strength of the Philippines is its human resources. It is the people who make this country. We might not be comparable in terms of the infrastructure at this point, but I believe that our strength lies elsewhere – the development and training of our people their compassion, their EQ etc. In short, the personal relationships and caring atmosphere should be highlighted. That’s the strength of the Philippines, and we hope to capitalize on that. If our neighbors such as Japan, Korea, or China are complementing this by investing in infrastructure and equipment we will succeed. We are taking the opportunity to develop medical tourism and all the other healthcare facilities in this country.