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Health Reform Contract Changes Are Beneficial, Insurers Say

Hospitals Struggled To Survive In 2002


December 26, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Health industry news this year was dominated by the renegotiation of the government Health Reform contracts with health insurance companies and other changes in the program. The increasing malpractice insurance rates and other trends negatively affecting the industry, such as the brain drain of health professionals to the States and the rising health costs, also topped the news.

Health Reform

The Health Reform seems to be in good shape, according to participating health insurers. The presidents of Humana, Medical Card System (MCS), and Triple-C applauded the government’s strategy of extending contract periods from one year to three years. They said it allows them to know and serve their beneficiaries better. They also agreed that the reduction in the number of regions from 10 to eight might help reduce costs.

However, they continuously warned that the incorrect use of emergency rooms could increase Reform costs tenfold. "We need to educate beneficiaries on how to use the resources provided to them correctly. Only in this way can they continue benefiting from these services in the long run," said Humana President Victor Gutierrez.

MCS, which increased its written premiums from $40 million in 2000 to an expected $502 million in 2002, is the island’s second largest health insurer, with a 20% market share. President Carlos Muñoz said MCS’ participation in the Health Reform grew 40% this year, for a total 590,467 beneficiaries in the northeast, west, and San Juan regions.

To continue growing, the company has also created new products for private clients, among them MCS Personal; MCS Life Cost Plus for groups; MCS Solutions, which integrates an employee assistance program with mental healthcare coverage; MCS Alivia, which focuses on alternative healthcare therapies; Pharmaflex, a standalone pharmacy-benefit management program that can be combined with other kinds of health insurance, and Medilinea, a hotline for those seeking health information.

Triple-C, a subsidiary of Triple-S Management Corp., is in charge of the north, metro-north, and southwest regions in the Health Reform. Although the Health Insurance Administration’s figures indicate the number of people insured by Triple-C has fallen 8%, or 59,335, the company still has the lion’s share of beneficiaries, according to Triple-C President Luis Marini. "We cover 40% of all beneficiaries," he said.

Humana Inc., which covers the east and southeast regions, has 464,161 beneficiaries, an 8% increase from the previous year, according to information provided by the Health Insurance Administration (ASES by its Spanish acronym). In an effort to increase revenue, Humana recently announced the launch of new products for the private sector. PPO Choice, for example, is designed to give beneficiaries greater flexibility in determining their healthcare coverage. Rx-4 is a new pharmacy coverage product.

The insurers are positive that the Health Reform’s budget is enough to cover expenses, but they expect rates to be revised in summer 2003.


A 59% hike in malpractice insurance rates that took place in 2000 was another of the health industry’s main concerns in 2002 as physicians asked that the medical malpractice litigation process be reformed. The high incidence of malpractice suits is the cause of expensive insurance rates, according to Insurance Commissioner Fermin Contreras. He said Simed faces a historical premium insufficiency. Simed is a syndicate, formed by law, of property & casualty insurers doing business locally to cover malpractice claims.

"Simed’s coverage rates hadn’t been increased since 1986 and then in 2000, to bring rates up-to-date, they were increased by 59%. Something that could have been done in steps was done in one shot, yet it’s still not enough."

He also explained that the problem with malpractice insurance coverage is that "about 3% of Simed’s insured physicians cause 38% of all of its losses. This means some 60% of physicians are subsidizing the irresponsible practices of those who have been sued for malpractice with some frequency," he said.

Challenges in the health industry

The year 2002 saw hospital executives sounding the alarm about how increasingly difficult it has become to attract skilled employees to the industry. "Professional nurses are moving to the U.S. mainland, where they receive better pay," Juan Rivera, executive vice president of the Puerto Rico Hospital Association, told CARIBBEAN BUSINESS. According to hospital executives interviewed by CB, the most sought-after health professionals are nurses and technical staff, and the availability dwindled even further when early this year, the state of Florida began accepting graduates of Puerto Rican institutions as job candidates.

Health costs in Puerto Rico are said to increase an average of 10% every year, according to industry sources. Still, local hospitals continued investing millions of dollars not only in new technology but also in compliance with federal regulations.

Despite rising health costs, a shortage of healthcare workers, and problems with malpractice insurance coverage--all of which threaten to reduce the availability of such specialized services as emergency medicine, all kinds of surgical procedures, and even ob-gyn--hospitals in Puerto Rico have been able to keep operating.

They Said It This Year

"The Diagnostic & Treatment Centers (CDT by their Spanish acronym) were the health centers for the medically indigent for 50 years; they were the social spot of the town. Now, with the Health Reform, the formerly indigent have access to any hospital they like and have used them--especially the emergency rooms--for social gatherings instead of for treating real medical emergencies."--Humana President Victor Gutierrez


This Caribbean Business article appears courtesy of Casiano Communications.
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