WHAT DOES it take to give good health service to people? Common sense. The former governor of Leyte wanted to get and keep the good doctors for the provincial hospital by giving them competitive pay, but standing laws wouldn’t allow him. What he did to overcome the hurdles was ingenious.

When Carlos Jericho L. Petilla assumed the post of Leyte governor in June 2004, the Leyte Provincial Hospital had 25 beds, a staff of 10 physicians, and shared the ills of most public hospitals. The doctors were straddling both government and private hospitals. But while private hospitals were doing well by way of profit, government hospitals were “hemorrhaging.” By sucking up one-third of the annual budget, Petilla noted, the provincial hospital was actually draining dry the capitol itself.

The Governor’s solution assumes the obvious: “No hospital can operate without doctors.” What the provincial hospital needed, however, were full-time government doctors, with less or no private doctors. Persuading doctors to work full-time would take more than reminding them of the Hippocratic Oath. It would take giving them good pay.

“Incentive” is the glamour word. Its function to motivate is universally acknowledged in the private world. But in the world of government the age-old civil service mindset seems to find something obscene in giving good pay, except when you can give it across the board. This mindset finds expression in the law that standardizes salaries, including those of local government officers and employees.

Here’s how the Local Government Code of 1991 refers to it in one of its provisions: “No official or employee shall be entitled to a salary rate higher than the maximum fixed for his position or other positions of equivalent rank by applicable laws or rules and regulations issued thereunder.”

In the Provincial Health Office, the highest paying officer is the Provincial Health Officer II, enjoying Salary Grade 26. The highest salary rate fixed for the position in a first class province like Leyte is P62,646 per month. The Chief of Hospital III, being in the same Salary Grade, is entitled to the same monthly salary rate. The province has no power to change the rate. If you want it changed, you would need both Houses of the Congress to pass a joint resolution for the purpose. So, this was one impediment to the Petilla solution.

Another one came from a provision in the Local Government Code that sets a cap on the annual budget for Personal Services (salaries, bonuses, etc. of employees). The issue was: How do you raise the pay of the doctors without increasing the total provincial budget for salaries?

The practical challenge was in addressing at least two operational issues. One, where do you get the money to fund the increases? Two, if you got the money, how do you ensure they would go as incentives to the doctors, and not earmarked by the sanggunian for other purposes?

As new fund sources, Petilla thought of two things: the patients and PhilHealth. He believed that hospital services should come free only to indigents, but not to those who can afford them. The rates of fees and charges were standardized in 2005; then new rates were adopted in 2011.

In 2009, the Governor allowed the provincial hospital to collect “Special Service Fees” from patients, with their written consent, which are also called “special donations.” The move was complemented by an ordinance “governing the disposition of cash donations to hospitals.” The attending physician gets 70%; the provincial government, 10%; and the support staff, 20%.

As donations or contributions they appear in the books under special accounts, neither as salaries or bonuses nor service fees. By strength of the ordinance, the donations can only be used in the manner prescribed by the sanggunian. In 2012, total donations for that year amounted to a little less than P4 million.

Leyte’s use of PhilHealth as another fund source was simple and straightforward. In the regular scheme of things, a PhilHealth member goes to an accredited government hospital to avail herself of its services charged to PhilHealth. The hospital bills PhilHealth for the services it gave to the patient, including professional fees. But because the attending professionals are salaried employees of government, the PhilHealth payments should go to government coffers.

As Governor, Petilla opted to create a trust fund for these reimbursements, along with a defined distribution and utilization scheme. The Provincial PhilHealth Development fund gets 20%. The remaining 80% is distributed to attending and assisting professionals, including nurses, and more. Professional fees for 2012 amounted to a total of P15 million.

By the time Petilla was appointed to his current post as Secretary of the Department of Energy, the hospital’s beds had doubled to 50, with a physician staff that almost doubled to 19. Total income going to the LGU’s General Fund for 2012 was reported at P25 million.

By some account, doctors working full-time in the hospital have been getting an average monthly pay of P180,000.

Everybody is happy.

(The author is a local government specialist and a fellow of Action for Economic Reforms.)