Guidelines on the Retention and Use of Hospital Income Pursuant to Special Provision No. 6 of the DOH Appropriations under the FY 2003 General Appropriations Act, RA No. 9206

July 16, 2003 DOH-DOF-DBM JOINT CIRCULAR NO. 2003-0001 TO : The Secretary of Health, Regional Health Directors, Chief of Hospitals, Chief of Finance and Management Services, Chief Accountants/Heads of Accounting Units and Budget Officers of the Department of Health (DOH), Auditors of the Commission on Audit (COA), Officials and Technical Staff of the Department of Finance (DOF) and the Department of Budget and Management (DBM), the Presidents of the Land Bank of the Philippines, Development Bank of the Philippines and Philippine Veterans Bank, and All Others Concerned SUBJECT : Guidelines on the Retention and Use of Hospital Income Pursuant to Special Provision No. 6 of the DOH Appropriations under the FY 2003 General Appropriations Act, RA No. 9206 1.0 PURPOSES 1.1 To prescribe the guidelines relative to the implementation of Special Provision No. 6 of the appropriations of the Department of Health (DOH), page 295 of the FY 2003 General, Appropriations Act (GAA), Republic Act (RA) No. 9206, quoted as follows: "6. Use of Income. All income of Special Hospitals, Medical Centers, Institute for Disease Prevention and Control, and Other National Government Hospitals of the DOH shall be retained and constituted as a Trust Fund for the use of the said hospitals, medical centers, institute for disease prevention and control and other "DOH-retained" national hospitals: PROVIDED, That, at least twenty five percent (25%) of the said income shall be used to purchase and upgrade hospital equipment used directly in the delivery of health services: PROVIDED, FURTHER, That no amount of the said income shall be used for the payment of salaries and other allowances." 1.2 To prescribe the required reports covering the receipt and utilization of income by the subject hospitals. 2.0 COVERAGE This joint circular shall cover all income collected by all government hospitals and research institutions providing hospital services under the DOH, which shall be referred to as "DOH hospitals" in this joint circular. 3.0 GENERAL GUIDELINES 3.1 DOH hospitals concerned shall maintain separate books of accounts to cover the receipt and utilization of all income collected pursuant to the guidelines prescribed in this joint circular. 3.2 Such income as enumerated below which shall be referred to as "hospital income" in this joint circular shall be constituted as trust fund and shall be deposited in any authorized government depository bank (AGDB): 3.2.1 Hospital fees; 3.2.2 Medical, dental and laboratory fees; 3.2.3 Rent income derived from the use of hospital equipment/facilities; 3.2.4 Proceeds from the sale of hospital therapeutic products, prosthetic appliances and other medical devices; 3.2.5 Diagnostic examination fees; 3.2.6 Donations in cash from individuals or non-government organizations that are satisfied with hospital services, which are in turn given as assistance to indigent patients. 3.3 All other collections (not enumerated in item no. 3.2 above) including the following income, shall be deposited with the Bureau of the Treasury (BTr): 3.3.1 Interest income arising from current account deposits as income of the general fund; 3.3.2 Grant proceeds treated as Special Accounts in the General Fund; and 3.3.3 Affiliation/medical/professional fees treated as trust receipts under Executive Order No. 338 and implemented under COA, DBM and DOF Joint Circular No. 1-97 dated January 2, 1997. 3.4 Revolving Fund for drugs, medicines, medical/laboratory supplies shall continue to be utilized subject to the provisions of National Budget Circular No. 321 dated February 6, 1980 Re General Guidelines and Related Procedures for the Establishment of Fund for Medicines and Drugs in Hospitals/Sanitaria. AIHDcC 3.5 The hospital income shall be used to augment the requirements of DOH hospitals for maintenance and other operating expenditures including repair and maintenance of existing hospital facilities: PROVIDED, That at least twenty five percent (25%) of said income shall be used to purchase and upgrade hospital equipment used directly in the delivery of health services such as radiologic equipment, surgical, dental and other laboratory and medical equipment. 3.6 Such hospital income shall not be used for salaries and other allowances and benefits whether in cash or in kind. 3.7 The utilization of income collected shall be approved by the Chief of Hospital upon the recommendation of the Hospital Executive or Management Committee in the form of a Resolution, copy furnished the DOH-Office of the Secretary (OSEC) and Regional Directors concerned and Department of Budget and Management Central Office/Regional Offices (DBM CO/RO) concerned. 4.0 PROCEDURAL GUIDELINES 4.1 Effective January, 2003, DOH hospitals shall be authorized to deposit their collections (as enumerated in item no. 3.2 above) in a current account in any AGDB, provided that income already deposited with the BTr shall be released to them by the DBM following the guidelines enumerated hereunder: 4.1.1 DOH hospitals shall transfer income (under item no. 3.2 above) as deposited with the BTr from January, 2003 to date, recorded in their respective general fund books to trust fund through journal entry voucher (JEV). 4.1.2 DOH hospitals shall request BTr to transfer income referred to in Item no. 4.1.1 above from the general fund to trust liabilities. 4.1.3 BTr shall issue a certification supported by JEV attesting to the transfer of the subject hospital income from the general fund to trust liabilities. 4.1.4 DOH hospitals shall request DBM to issue Notice of Cash Allocation (NCA), supported by their latest trial balance, copy of the BTr certification and JEV. 4.1.5 DBM shall issue the NCA corresponding to the income certified by BTr, to be credited to the regular account under the Modified Disbursement System (MDS) of the individual DOH hospital. 4.1.6 Upon receipt of the NCA, the DOH hospital concerned shall draw MDS check to transfer the amount to the current account which was opened for this purpose. 4.2 The DOH hospital concerned shall advise the AGDB where the current account referred to in item no. 4.1 of this joint circular to automatically transfer to the BTr any interest income accruing to the said current account and furnish the BTr with the credit advice for purposes of recording such interest income. The DOH hospital shall also be furnished with copies of the credit advice for reference purposes. 5.0 REPORTING REQUIREMENTS The DOH hospitals shall submit to the DBM CO/RO concerned, copy furnished the DOH-OSEC, a Quarterly Report of Estimated Income Collection and Utilization and a Status of Actual Quarterly Income Collection and Utilization as indicated in the attached Forms A and B, respectively, certified correct by the Chief Accountant, recommended by the Hospital Executive or Management Committee and approved by the Head of the DOH hospital. 6.0 RESPONSIBILITY OF HEAD OF DOH HOSPITALS It shall be the responsibility of the Head of DOH hospitals concerned to strictly implement the provisions of this joint circular subject to sanctions provided for under applicable laws. 7.0 APPLICABILITY CLAUSE The provisions of this joint circular shall be applicable until such time that Special Provision No. 6 of the appropriations of DOH as stated in item no. 1.1 above is superseded/deleted. 8.0 GOVERNING CLAUSE Cases not covered by the provisions of this joint circular shall be referred to the DBM which shall resolve the matter in coordination with the DOH. 9.0 EFFECTIVITY This joint circular shall take effect immediately. (SGD.) MANUEL M. DAYRIT (SGD.) JOSE ISIDRO N. CAMACHO Secretary Secretary Department of Health Department of Finance (SGD.) EMILIA T. BONCODIN Secretary Department of Budget and Management Form A Quarterly Estimate of Income Collection and Utilization Form B Actual Quarterly Income Collection and Utilization