EXECUTIVE SUMMARY

INTRODUCTION

The Dr. Jose Fabella Memorial Hospital (DJFMH) started as a maternity clinic
with six beds when founded by Dr. Jose Fabellla on November 20, 1920. It became a
teaching hospital when it opened its school of Midwifery in 1922. As it expanded its
services, it has grown to become a 700-bed capacity hospital under the supervision of the
Department of Health (DOH).

The hospital is primarily mandated to provide health services to indigent patients

in need of obstetrical, gynecological and pediatric treatment. The following are among its
objectives:

1. Continue providing proficient, prompt and effective ante-natal and post-natal

care to clientele especially to high-risk mothers;

2. Continue providing competent and effective surgical care and management to

women afflicted with gynecological and obstetrical conditions;

3. Provide effective pediatrics health care from conception to adolescence;

4. Provide effective family planning control; and

5. Provide continuous human resource development and training in women’s

health.

The Dr. Jose Fabella Memorial Hospital (DJFMH) is headed by Dr. Ruben C.
Flores as Medical Center Chief II. Total manpower complement of the hospital for CY
2010 is 916 employees, distributed into six major services: Medical, Nursing,
Administrative, School of Midwifery, Family Planning and Human Resource
Development Service.

OPERATIONAL HIGHLIGHTS

The following are the accomplishments of the hospital in line with the current
programs of the Department of Health:

A. Safe Motherhood

Activities include pre-natal care, screening, monitoring and management of all

pregnant women who are at risk of developing complications during pregnancy, delivery
and postpartum period.

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 While there was a decreasing trend in the number of obstetric admissions over the
last five years (2005-2009), the bed occupancy rate has remained high mainly because of
the increase in the proportion of high risk mothers admitted and the prolonged average
length of stay for mothers with babies at NICU and those whose babies are potentially
septic.

Compared to 2009, there was a 15% increase in the number of obstetric

admissions in 2010. A contributing factor to the difference could be attributed to the fact
that the hospital deliberately limited admission in 2009 because of infection control
purposes.

B. Newborn Survival

With a full complement of Medical Specialists, the Department of Pediatrics has

achieved great strides in delivery of service. There was a decrease in mortality in the
Pediatric Intensive Care Unit noted. The Pediatric Cardiology Section is now capable of
diagnosing complete heart defects in the newborn and children with the help of 2-D
echocardiography.

On the other hand, the Department of Newborn Medicine has managed to keep
neonatal mortality rate at 3.8% despite increase in high risk pregnancy admissions and
prematurity rate.

The Milk Bank Unit was able to dispense 591,400 ml of pasteurized donor milk to
226 outside patients from 62 hospitals and medical centers in the country who availed of
donor milk.

Fabella has remained a consistent training center for newborn care program in
Neonatal Resuscitation Program, S.T.A.B.L.E. and Kangaroo Mother Care Program.

C. Blood Donation Program

While there was relative reduction in the number of blood donors bled by 16%
(from 6,410 in 2009 to 5,518 in 2010), there was however improvement in the CT (cross
matching to transfusion ratio) ratio from 13,018 to 11,979 thus reflecting a more rational
approach towards requesting and utilization of blood in the hospital.

D. Comprehensive Family Planning Service

For more than 40 years, DJFMH has been a nationally and internationally
recognized training service and research facility providing experience, expertise and
technical assistance to health workers and institutions involved in family planning. It was
part in the drafting and cascading of the Philippine Clinical Standards in Family Planning
Manual (CY2006) and the FP-Competency-based Training Modules (CY2009) utilized
for the nationwide training and updating of the knowledge and skills of health workers
and was directly involved in the training of many health personnel on all FP methods (but
more particularly in Bilateral Tubal Ligation through its Voluntary Surgical

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Contraception Courses, (6 batches in 2010) from many parts of the country. The hospital
has been providing FP (IECC and method provision) on an in-house (more than 10,000
new acceptors in 2010) and itinerant service (having gone to ten remote and underserved
areas of the country last 2010 benefiting more than 300 clients).

DJFMH was a World Health Organization Collaborating Center for Research in

Human Reproduction since 1970 up to 2007 and has been working for the renewal and
expansion of the collaboration. It has joined the Consortium on Family Planning for such
purpose, as supported by the UNFPA with other major FP facilities/institutions, with the
hope also of promoting and ensuring the attainment of the Millenium Developmental
Goal (MDG) especially four and five.

E. BEMONC (Basic Emergency Obstetric and Neonatal Care)

In 2010, DJFMH continued to lead as a training center for BEMONC:

 Ten skills training Courses conducted for 290 doctors, nurses and
midwives from 14 provinces not only in Luzon but also in Visayas and
Mindanao.
 Post training evaluation and monitoring was done in Oriental Mindoro.
 Training of Trainers course conducted for OB and Pedia Medical
Specialists and nurses in BRTH and Bicol University nursing professors.
 Resource persons for DOH project on harmonization of training programs
for midwives (BEMONC for Midwives), various dissemination for on
BEMONC and Essential Intrapartum and Newborn Care and others.

F. Mother-Baby Friendly Hospital Initiative (MBFHI) Program

As part of the Memorandum of Agreement (MOA) between DJFMH and National

Nutrition Council (NNC), 20 batches of Training of Trainers on Lactation Management
under Accelerated Hunger Mitigation Program were conducted nationwide in addition to
the 51 batches of trainings conducted last 2009.

The hospital completed the 67 batches of trainings as per MOA plus an additional
of four batches for an overall total of 71 batches of trainings conducted from 2009-2010.

Following are the accomplishments of the hospital during the year in connection
with its mandate and objectives, showing the targets vis a vis the actual accomplishments
and percentage:

Activities Performance Indicator Planned Actual %

I. Patient Care & Treatment
1.) Provision of Services
 
a.) In Patient No. of In-patients served 176,828 172,346 97.47%
No. of Roomed-in babies
b.) Roomed in Babies served 84,505 109,493 129.75%

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 Activities Performance Indicator Planned Actual %

c.) Out-Patient No. of Out patients visits 122,541 88,723 72.40% 

 
d.) Emergency Room No. of patients Seen 65,208 37,649 57.74%
II. Training & Development
 
A. Conduct of Residency  
Training (man-month) No. of Residents trained 2,130 2,114 99.25%
 
B. Undergraduate Course No. of students trained 448,972 464,705 103.50%
C. Human Resource  
Development No. of Participants trained 44,071 210,626 477.92% 
III. School of Midwifery  
No. of enrolees 120 120 100.00%
No. of Postgraduate Courses 8 25 312.50% 

FINANCIAL HIGHLIGHTS

The DJFMH’s assets, liabilities, government equity and sources and application
of funds for CY 2010 are presented below:

Particulars CY 2010 CY 2009 Increase(Decrease)

Assets P314,091,305.86 P313,369,401.14 P 721,904.72

Liabilities 86,211,354.43 115,768,887.33 (29,557,532.90)

Government 227,879,951.43 197,600,513.81 30,279,437.62

Equity
Sources of 524,407,805.81 471,030,296.25 53,377,509.56
Funds
Application of P 61,986,053.18
P 496,309,820.02 P 434,323,766.84
Funds

SCOPE OF AUDIT

Our audit covered the operations of the Dr. Jose Fabella Memorial Hospital for
CY 2010. It was conducted to: (a) verify the level of assurance that may be placed on
management’s assertions on the financial statements; (b) recommend agency
improvement opportunities; and (c) determine the extent of implementation of prior
year’s audit recommendation.

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INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL
STATEMENTS

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements and the results of operations of the hospital as of December 31, 2010
due to material exceptions noted in audit which are stated in the Independent Auditor’s
Report and discussed in detail in Part II of the report.

SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS

Below is the summary of the audit observations and recommendations, together

with management’s responses/actions which were discussed in detail in Part II of the
report.

1. The Project for the elevation of flooring of various offices including fixtures and
roofing, replacement of asbestos ceiling, retrofitting works, and procurement of hospital
equipment costing P16,335,000 for CYs 2009 and 2010 remained unimplemented and
undelivered as of year-end thereby depriving the hospital and its clientele the immediate
use and benefits from the improved hospital facilities and upgraded equipment (Paras. 1-
9).

We recommended that Management require:

 the Engineering Department, upon receipt of funds for future projects, to

fast track the implementation of vital projects and procurement of hospital
equipment for the timely use of improved hospital facilities and upgraded
equipment; and

 the Head of the Engineering Department to be prompt in the preparation of

the necessary documents as those stated above.

2. Failure of the Hospital to canvass the market price of the goods being procured
before the preparation of its Approved Budget Cost (ABC) pursuant to Section 4 of the
Government Procurement Policy Board, resulted in unrealistic/overpriced ABCs for the
procurement of liquid oxygen and 22 sets non-branded desktop computers, and awarding
of the delivery of the items to suppliers whose price offers are higher by 13.75% to
47.29% or even unreasonable when compared to other hospitals (Paras. 10-33).

We recommended that Management require:

 the Budget Officer to explain why their office was the one preparing the
ABC instead of the end-users of the items procured;

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  the Bids and Awards Committee to explain the non-conduct of public
bidding in CY 2010 for the procurement of liquid oxygen; and

 the concerned PMO/end-users to (i) prepare the ABC for the item taking into
consideration the requirements of Section 4 of the GBBP Guidelines to come
up with fair and reasonable price of the item; and (ii) as circumstances
warrant, update the prices of items in the ABC before the conduct of actual
bidding/procurement.

3. Laxity in the collection of receivables resulted in the accumulation thereof to

P13,920,874.11 which remained uncollected as at year-end. Of the said amount,
P734,763.91 was aged over three to five years while the P1,133,109.39 represents
Philhealth disapproved claims, the collectibility thereof is deemed remote which
rendered the validity of the receivable balances doubtful (Paras. 34-41).

We recommended that Management require:

 the Billing Section (i) to intensify collection of receivables by referring past

due accounts, over one year and onwards, to the Legal Officer for
appropriate action; and (ii) on a periodic basis, send demand letters to the
concerned parties; and

 the Chief Accountant, (i) after establishing the uncollectibility of the

receivables to include those from the Philhealth and the dormant/non-
moving accounts, to finalize the letter-request to the Audit Team Leader for
the write-off of accounts; and (ii) to coordinate with the Procurement Service
and National Printing Office for the refund of the amount representing
undelivered items.

4. The practice of recording the issuances based on the Report of Supplies and
Materials Issued (RSMI) by the Property Section instead of from those of the Pharmacy
and ancillary units which actually consume/dispose the items understated the balances of
Inventory accounts and overstated the corresponding expense accounts by the amount of
supplies transferred to the Pharmacy and ancillary units. On the other hand, the absence
of periodic reconciliation of accounting records with those of the Property Section,
Pharmacy, Dietary and various ancillary units and physical inventory reports rendered the
accuracy of the reported P20,226,030.45 inventory balances unreliable as of year-end
(Paras. 42-54).

We recommended that Management require:

 the Accounting and Property Sections as well as the Pharmacy and ancillary
units to exert efforts to reconcile their respective inventory balances and
determine the causes of the disparity noted;

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  the Property Section to stop the practice of submitting the RSMI to the
Accounting Section for the supplies issued to the Pharmacy and ancillary
units;

 the ancillary units to prepare the RSMI to report the actual

issuances/consumptions to be submitted to the Accounting Section; and

 the Accounting Section, based on the RSMI submitted by the ancillary units,
to prepare a Journal Entry Voucher (JEV) to record the issuances made to
reduce the balances of inventory accounts.

5. The non-recording of various procured properties costing P755,074.00 charged

against the funds received from National Nutrition Council for the Training of Trainers
on Lactation Management of the Council and the erroneous recording of the procured IT
equipment and furniture worth P84,978.00 resulted in the understatement of three
Property, Plant and Equipment accounts and Government Equity account by their
respective amount as of December 31, 2010 (Paras. 55-60).

We recommended that the Chief Accountant:

 reclassify from account Office Equipment to the proper PPE accounts the
procurement of IT equipment and furniture amounting to P84,978.00; and

 record other procured PPE amounting to P755,074.00 to their respective

proper accounts.

6. No Inspection and Inventory Report of Unserviceable Property (IIRUP) was

prepared for the condemned equipment and building valued at P14,497,382.31 and
P10,804,006.76, respectively, as required under Section 64 of the Manual on the NGAS
Vol. II. This resulted in the overstatement of the accounts Property, Plant and Equipment
and Government Equity both by P25,301,389.07 at year end. Moreover, the delay in the
disposal of condemned equipment resulted in their accumulation, diminished value due
to prolonged exposure to natural elements which would further reduce their salvage and
saleable value, while the condemned building poses imminent danger/risk to the
occupants of nearby buildings and to the Hospital as well in case of unexpected natural
calamity (Paras 61-70).

We recommended that Management require:

a. the Property Officer to facilitate the preparation and approval of the IIRUP
(i) as basis of the disposition of condemned equipment in accordance with
Section 64 of the Manual on the NGAS Vol. II; (ii) to deter their further
deterioration and their immediate disposition as well as to generate income
funds; (iii) to clean and clear spaces of the stockrooms; (iv) prevent
occurrence of any untoward incident; and

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 b. the Accountant, after the submission of the approved IIRUP by the Property
Officer, to record in the books of accounts the dropping from the books of
the cost of the condemned property.

7. Equipment purchased during the year totaling P8,770,377.18 charged against the
Special Fund (Use of Income) and General Fund were not included in the approved
Annual Procurement Plan (APP) contrary to Rule II, Section 7.1 of the Implementing
Rules and Regulations of Republic Act No. 9184, the Government Procurement Reform
Act. Of the said procurement, the P4,322,612.04 charged against the Special Fund (Use
of Income) was only covered by Executive Committee resolutions while the
P4,447,765.14 charged against the General Fund was not covered with any such
resolutions (Paras. 71-79).

We recommended that the Bids and Awards Committee:

 after receipt of the approved resolutions of the Executive Committee and

subject to availability of funds, include in the APP all procurement of
equipment of the Hospital; and

 as circumstances warrant, update the APP every six months or as often as

may be required by the Hospital pursuant to Section 7.5 of the said IRR.

IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

The status of implementation of prior year’s audit recommendations embodied in

the CY 2009 Management Letter is shown below:

Status Number Percentage

Fully Implemented 1 33.3%
Partially implemented 2 66.6%
Total 3 100.00%

The recommendations on the following findings/observations were partially

implemented as of December 31, 2010:

1. Receivables amounting to P13,574,036.64 representing Accounts Receivable,

Due from NGAs, due from GOCC and Other Receivables accounts remained
outstanding for over two years and continued to exist in the books of the
Hospital, thereby rendering the validity of the receivable balances doubtful.

2. The hospital did not have concrete programs/activities for GAD due to inadequate
information and orientation on the issue.

The details of the Status of Implementation of Prior Year’s Audit

Recommendation are presented in Part III of the report.

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