Macroeconomics II 1st Semester 2024-2025 PDF

TOPIC: MACROECONOMICS (II) SUBMITTED BY: Aliswag, Arthea Jade C. Bernanke, Jonathan Jean A. Canute, Jonafe N. Es-esa, Daiseree R. Garcia, Jade Zhythelle A. Logan...

TOPIC: MACROECONOMICS (II) SUBMITTED BY: Aliswag, Arthea Jade C. Bernanke, Jonathan Jean A. Canute, Jonafe N. Es-esa, Daiseree R. Garcia, Jade Zhythelle A. Logang-a, Cheslie S. Mawagay, Florianne M. Perez, Japhet Sekizu S. Salbino, Angela Mae I. Tabora, Ykaterina Noemi A. Wangiwang, Jericho Lee D. SUBMITTED TO THE FACULTY OF THE UNDERGRADUATE SCHOOL OF BENGUET STATE UNIVERSITY, LA TRINIDAD, BENGUET IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE COURSE HEALTH 12- Health Economics BACHELOR OF SCIENCE IN NUTRITION AND DIETETICS SUBMITTED TO: SHANE MAY M. LOZANO, RND Course Facilitator 1ST Semester SY 2024-2025 Financing the hospital services The Philippine Health Financing Situation The Philippines, like other nations in the WHO Western Pacific Region, has significant challenges with financing health care. These include: a) Persistent underfunding; unequal funding sources (poor public investment resulting in high out-of-pocket spending). b) inefficiencies in the distribution of scarce financial resources. c) Payment methods driving up health care expenses. d) Overlap and fragmentation among the many health finance organizations, including DOH, PhilHealth, and LGUs. Health financing main functions: (Casas et al., 2021) 1. Revenue generation - Premiums are collected by PhilHealth similarly to a designated taxes, from populations with the means to do so (e.g. those who are technically employed, professionals, etc.). The cost of individuals without the means to pay is covered by the government of the country. These two sources of income when combined provide the funding for the National Health Insurance Program (NHIP), which can only be utilized to cover the cost of medical services provided to members of PhilHealth. 2. Pooling (consolidating resources) - The goal of PhilHealth is to enroll every Filipino, so that both the Health costs are shared by the rich and the poor, the ill and the well and needs (i.e., the concepts of risk pooling and cross-subsidization) might balance one another out. The institution obtains the most purchasing power by pooling the funds generated in the same way. 3. Strategic purchasing (World Health Organization, 2019) - PhilHealth purchases medical services on behalf of its members using the combined money pool. Specifically, financial resources are used to: a. Ensure that members may access desired services; b. Hire providers through contracting or accreditation c. Pay these providers in a systematic way to ensure the timely, high-quality, and financial-risk free delivery of the specified services. 4. Governance - increased fiscal and budgetary space by making effective use of the current government budget in addition to increased accountability and transparency in the funding of healthcare (DOH, 2023). Republic Act 11223 or the Universal Health Care (UHC) Act - Law established ensuring clear defining financing roles of key players in the sector, with PhilHealth identified to be the national purchaser of individual health service UHC Law: 1. PhilHealth serves as the national purchaser, meaning dominance in the health system's financing of healthcare. Like a monopsony, or the dominant buyer in a particular market, a national purchaser can use its vast resource base to impose regulations on the types of services provided, how they are provided, and how much they are paid for. 2. PhilHealth as an institution can theoretically help steer service delivery towards a primary health care (PHC) orientation by shifting a greater share of its payments and incentives to cover these services. 3. The leveraging capacity of an institution like PhilHealth can also help facilitate equitable delivery of health services by virtue of cross-subsidization of the healthy and rich to the sickly and poor. The Philippines' current health financing system is made up of several overlapping levels of funding from various institutions, government structures, and health service providers. This reduces any one entity's strategic purchasing power, including PhilHealth. The country’s health financing system is an intersection of five main sources: 1. National government 2. Local governments units (LGU) 3. Social health insurance through PhilHealth 4. Household out-of-pocket (OOP) spending 5. Other private spending which may include private health insurance, donor funding, among others (Dayrit et al., 2018; Solon et al., 2017). FINANCING FLOWS IN THE PHILIPPINES (DOH, 2023) (Casas et al., 2021) To achieve universal health coverage, health financing systems must be designed to: a) Provide all people with access to needed health services, including prevention, promotion, treatment, and rehabilitation, that are of sufficient quality to be effective. b) Ensure that the use of these services does not expose the user to financial hardship. The Health Care Financing(HCF) Strategy contributes to the attainment of the intermediate outcomes of Universal Health Care (UHC) on: 1. Service coverage - Ensuring that all Filipinos have access to needed health services, including prevention, promotion, treatment, and rehabilitation, that are of sufficient quality to be effective. 2. Equity and efficiency in service use - Promoting fair and effective utilization of health services with preferential regard for the unserved or underserved. 3. Efficiency in service production (quality) - Enhancing the quality and efficiency of health service delivery. 4. Transparency and accountability - Establishing mechanisms for monitoring and evaluating the performance of the health financing system (DOH, 2023). Evaluation of the efficiency and effectiveness of the various financial schemes for hospitals Achieving proper balance in policy and implementation across these three functions is necessary to: (a) ensure sufficient funds to pay for population health needs and (b) align health provider behavior to health system goals through financial incentives. For health care providers, such as hospitals, country health financing arrangements form the financial landscape that influences their financial health. Moreover, health financing systems must help keep providers of health care financially sustainable (Casas et al., 2021). In order to evaluate the financial schemes of hospitals, the following must be done: 1. Collection and Analysis of Hospital Financial Statements - hospitals annual financial statements are collected and encoded into a standard data structure for analysis. 2. Ratio analysis of hospital financial statements to gauge the financial health and performance of hospitals. Four types of 10 financial ratios analyzed: (Casas et al., 2021) A. Size and Capital Structure 1. Total Assets - Measure of hospital size and includes everything that the hospital owns (e.g. cash, receivables, equipment). - Formula: Cash + Cash Equivalents + Inventories + Property and equipment + Investments + Receivables 2. Financial Leverage - Hospital’s use of debt to finance its operations and capital investments. - Formula: Total Liabilities / Total Assets B. Profitability 3. Total Margin - Measure of how much out of every peso of revenue the hospital keeps as earnings or profit. - Desired Trend: Upward over time - Formula: Net Income / Total Revenues 4. Operating Margin  - Measure of financial performance in providing patient care (hospital’s core business) and control of operating expenses. - Desired Trend: Upward over time - Formula: Income from operations / Total Revenues C. Assets Liquidity 5. Current Ratio - Measures the hospital’s ability to pay for short-term obligations due in one-year using its available assets. - Desired Trend: Upward over time - Formula: Current Assets / Current Liabilities 6. Days Cash on Hand - Number of days the hospital can operate and pay for its operating expenses if they earned no additional cash. - Desired Trend: Upward over time - Formula: (Cash + Cash equivalents) * 365 / Operating expenses D. Operating Efficiency 7. Average Age of Plant - Average age in years of the hospital’s fixed or long-term assets used to provide health care services (e.g.., buildings, equipment, vehicles). - Desired Trend: Downward over time - Formula: Accumulated depreciation / annual depreciation expense 8. Assets Turnover - Measure of efficiency in how a hospital generates revenues per peso of assets. - Desired Trend: Upward over time - Formula: Revenue / Total Assets 9. Days Patients Accounts - Measure of how efficient a hospital is in collecting debts for its health care services: Number of days it the hospital to collect outstanding payments to itself. - Desired Trend: Downward over time - Formula: Receivables[(Accounts receivables - allowances for uncollectible) * 365] / Total Revenue 10. Salary to Revenue - Measure of staffing efficiency: proportion of revenues consumed by salary expenses. - Desired Trend: Downward over time - Formula: Salary Expense / Total Revenues  Poor financial health may lead hospitals to cut costs and focus on operational efficiency to stay sustainable. Results to: 1. Decreased funding for skilled human resources (e.g., quantity, opportunities for continuous education, wages) and affects 2. Essential technology and infrastructure (e.g. maintenance of equipment, upkeep of sanitation facilities, limited stocks of supplies and medicines). In any healthcare system, hospitals are essential healthcare facilities. It is crucial to keep an eye on their financial health, since funding is a component that comes before and affects a hospital's capacity to operate and provide quality medical services. Hospitals need to be able to support themselves financially so that they can continue to provide healthcare services by earning enough money without closure (Casas et al., 2021).  LITERATURE CITED: Casas, L. D., C. E., Ulep, V. G., Uy, J., Nuevo. (2021, December). The Financial Health of Select Philippine Hospitals and the Role of the Philippine Health Insurance Corporation as the National Strategic Purchaser of Health Services. Philippine Institute for Development Studies. https://pids.gov.ph/publication/discussion-papers/ Dayrit, M., Lagrada, L., Picazo, O., Pons, M., & Villaverde, M. (2018). The Philippines Health System Review. World Health Organization. Department of Health. (2023). Health Care Financing Strategy of the Philippines 2023-2028 Towards Universal Health Care. Manila, Philippines: Department of Health. Solon, O. J., Herrin, A., & Florentino, J. (2017). Health Care Financing. UP Econ Health Policy Development Program. https://cids.up.edu.ph/wp-content/uploads/ppj-16-17- solon-2017.pdf World Health Organization. (2019). Financing for Universal Health Coverage: Dos and Don’ts. https://p4h.world/en/news/financing-universal-health-coverage-dos-and-donts