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Hospital Checkup

September 5, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Hospital and medical care is an essential service for all the citizenry. It is also big business for Puerto Rico’s economy.

According to top hospital administrators interviewed in our front page story, hospitals must be run like businesses and the government ought to realize that they comprise a very important industry. Like any other industry, with adequate incentives and promotion, our hospitals and medical system could turn into a bigger engine for Puerto Rico’s economic development.

The local hospital industry (55 private, eight public) generates more than 40,000 direct jobs and contributes between $5 billion and $7 billion to the local economy each year. That compares favorably with, say, the tourism industry’s 14,000 employees and $2.4 billion contribution to Puerto Rico’s gross domestic product (in visitor expenditures).

Hospital administrators pose an intriguing question: if every other industry that creates jobs and contributes to Puerto Rico’s economic development–whether it is manufacturing, tourism, or agriculture–is showered with government incentives to make them more competitive and viable, why shouldn’t the hospital industry receive equal treatment? Good point.

Although hospital revenue has continued to grow in the last few years as a result of having more patients and expanding their services, hospitals are struggling to turn a profit. Without improved earnings, hospitals will find it ever more difficult to reinvest in newer technologies and more advanced services.

Some of the challenges to private hospitals’ bottom lines include the high cost of the government health reform, increased medical malpractice insurance costs, increasingly expensive and sophisticated equipment, and limited Medicare reimbursements as compared to the states.

But hospitals are fighting back. By adopting cost containment measures, specializing the healthcare, and expanding the services they offer, local private hospitals are managing to stay financially afloat.

During the last decade, Puerto Rico took an affirmative step forward in the modernization of the island’s healthcare system by privatizing the government’s old and rundown public hospital system and using the government resources instead to provide health insurance coverage for the indigent.

Admittedly, there have been some glitches in the implementation of the government’s health reform, as there would be in the implementation of any new and innovative idea or program. But overall, the reform, in particular the privatization of hospitals, helped lay the foundation for what could be the propulsion of the island as a regional and even international center of top-notch medical and hospital services.

For that to happen, Puerto Rico’s hospitals ought to be run with a business-like mentality, and the government ought to focus on what kind of incentives it could give hospitals to ensure their financial viability, instead of what it seems to be doing right now which is lying in wait for the privatized hospitals to fail in order to have an excuse to take them over again for political goals.

Puerto Rico is blessed with having top-notch doctors and medical professionals, as well as the most advanced medical technology. In many areas of medical practice, the treatment a patient receives at a hospital on the island has nothing to envy the treatment that many seek stateside. The challenge to both the government and our mostly private hospital system is to build on those strengths.

A step in that direction would be for the government, now that it has mostly gotten rid of actually having to run a hospital system, to undertake a comprehensive review of what kind of assistance and incentives it could offer private hospitals in order to turn Puerto Rico into a Houston, Cleveland, Baltimore, or New York–all destinations for the excellence in medical treatment they offer.

This Caribbean Business article appears courtesy of Casiano Communications.
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