Top-heavy, riddled with power blocs: Reorganize PhilHealth along corporate lines

/ 04:01 AM September 16, 2020

PhilHealth, the center of current investigations of widespread anomalies, is also the central vehicle for the implementation of Republic Act No. 11223, the Universal Health Care Act, which provides health care to all Filipinos.

According to resigned PhilHealth anti-fraud legal officer Thorsson Keith during the Aug. 4 Senate hearing, an estimated P15 billion was lost to corruption by a “mafia” within the organization. Now, RA 11223 could be similarly at risk.


PhilHealth in 2016 had gross receipts of around P102 billion coming from formal and informal sectoral contributions; an almost equal amount was paid out to beneficiaries. How such gross anomalies could remain undetected and kept under the lid for so long baffles many, unless there is systemic connivance in the system.

In the accounting profession, one of the first things done in any new organization is to set the proper internal control system of check and balance, such that no single individual can completely make a go of any transaction.


Custodians of funds, moreover, cannot be given responsibility over recording functions. However, the internal control system can fall apart when the check and balance setup is disregarded and the two controlling parties supposedly checking each other end up colluding, or when the organization tolerates power blocs within, such that the line of authority to the top becomes blurred. Both these factors appear to have brought down PhilHealth.

The organization is vulnerable with its regional power blocs; regional vice presidents are given control of hospital reimbursements and claims in their regions, some of which have turned out to be ghost claims and fabrications. Theoretically, there is supposed to be final approval by the head office to effect the payments, but that oversight function, weakened by collusion, has been rendered inutile.

The unauthorized payments under the internal reimbursement mechanism (IRM) is a totally different issue. The Board cannot escape responsibility for the clear violation of the legal requirement that only hospitals with COVID-19 cases, or anticipating cases, should be given reasonable proportional advances. It raised questions on the PhilHealth Board’s integrity, or at the very least its gross negligence — and that includes its chairman, the health secretary — when the policy was obviated to favor unauthorized beneficiaries, as revealed in the Senate hearings.

The organizational structure is top-heavy for comfort. The Head Office has 12 SVPs or VPs and 27 VPs or AVPs, and the branches have 40 VPs and senior managers. The pockets of power and authority are palpable in such a quasi-government office, where delegated local authorities become magnets for corruption. The duplication of functions is also perceived in some head office roles, as can be seen from the top-heavy bureaucratic structure.

Two directions are being taken to save the organization from imploding. One is the justice department’s prosecution of the cases, which will be protracted. The more urgent task is to save the future of the UHC Act, by reorganizing PhilHealth along purely corporate lines, where the line of responsibility is direct to the CEO from all the departments, including the branches.

Delegated authority should really be limited and, if any, should be rationalized. Infractions at all levels cannot be tolerated. PhilHealth employees should not be hired as civil servants, but employees subject to the corporate policies of the new corporation, particularly the policies of hiring and firing. In short, to save PhilHealth, let’s get it out of the bureaucracy engendered by politics.

Marvel K. Tan
[email protected]


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TAGS: Letters to the Editor, Marvel K. Tan, PhilHealth anomalies, PhilHealth mafia
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