Mario M Silos, Chairman and President, Intellicare: Interview

Interview:  Mario M Silos

How can health maintenance organisations (HMOs) bridge health care gaps in the Philippines?

MARIO M SILOS: Total health care expenditures are segregated between the public and private sectors. Around 20 years ago expenditure was shared between the two sectors evenly. However, while most South-east Asian countries have moved towards increased government participation in health care expenditures, the scenario in the Philippines is the opposite. In the Philippines, government health care expenditure has fallen, while private sector ownership is now close to 70%. This steady trend is a result of the government’s health care budget, which represents 5% of its annual budget. In comparison, most developed or developing economies dedicate between 8-12% of their annual budgets to health care.

The question is, how has the private sector been able to absorb a greater share of health care costs, which largely consist of out-of-pocket expenses? From the 70%, HMOs contribute as much as 10% in absolute terms, and 7% is covered by private insurance and employer-based plans. Out-of-pocket expenses is where the biggest potential lies for HMOs to create a way for expenditures to be rationalised and health care made more affordable. Although the government health care programme is expanding, it covers only a component of total expenditures, and the private sector still has to cover the balance of out-of-pocket expenses.

The market is approaching a tipping point where full penetration will materialise, as people can suddenly afford health care due to sustained economic expansion. Cost management by HMOs helps to make the health care system sustainable, as they are able to tap into the wider population base and channel new patients to hospitals, many of whom would not have been able to afford health care otherwise. This drives investment into health care infrastructure and encourages human capital development and demand for doctors in both urban and rural areas. As corporations bolster their workforces and benefit packages improve and extend to employees’ dependents, the industry is positioned to greatly expand from its currently low membership base of 5% of the population.

In what ways are HMOs crafting programmes to address the health concerns of members?

SILOS: A substantial number of the HMO memberships are corporate accounts. This segment is now highly conscious of the issue of affordability, primarily because the cost of health care benefit packages for employees has risen significantly. HMOs are trying to focus on promoting healthy lifestyles, with particular focus on business process outsourcing, where employee utilisation is highest after the first few years due to the rigours of demanding work hours and the attendant unhealthy practices. The health care cycle begins with prevention and is followed by treatment and management.

While focus in the past relied on treatment and management, today more than 30% of HMO efforts concern prevention, whether through vaccinations, wellness programmes or interventions in lifestyle, all of which lower the cost of managing health care dramatically. On the individual and family fronts, various innovations in products, services and distribution are on the rise to address the risk of adverse selection, an issue that is inherent to this segment.

Additionally, the industry acknowledges that over 90% of corporations registered in the Securities and Exchange Commission are small and medium-sized enterprises, which demand customised products largely dictated by budget constraints and geographical limitation, yet hold the greatest potential where expansion could favourably impact a significant portion of our society. We have overcome the formidable challenges that faced us and opened an era of unprecedented growth in the health care landscape.